Kristy's Blog

Geeky Financial Observations along the Digital Highway

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Don’t Panic: Six Ways to Be Smarter About Managing Your Student Loans

June 6th, 2015 · No Comments

Student Loans

As higher education costs soar outside the reach of the average middle class family, student loans are becoming an increasing necessity. Once you finish your academic studies, the loans loom over you and become a source of overwhelming stress. But before you curl up in the fetal position and choose to ignore your new shackles, take a deep breath and follow a few basic steps to get control of your debt.

  1. Take stock of your loans. Review how many you have, what the interest rate is for each, and how much debt you have per loan. Set up your own records to track your payments and balances, using a tool like Excel or Google Spreadsheets, so that you are not relying on your loan companies to be your record-keepers. If a discrepancy or dispute ever arises in your account, you need to be able to refer to your own records. If you haven’t already, set up your online account with each loan company and consider connecting it with a personal finance service like Mint to help you track your payment progress.
  2. If you do not yet have steady employment, or you are in other tough financial straits, reach out to your loan company to rework your repayment plan, apply for forbearance or ask for a deferment. Be prepared to do this any time during the life of your loan when you are unable to pay for any reason. Ultimately, lenders want to be paid back, and they will do what it takes to keep you from defaulting. They will help you navigate your limited finances to find a payment schedule that works for you. If you lose your job, have a financial emergency that drains your assets, or run into other problems, let your loan company know immediately and try to work out a deal until you can resume the full minimum payments again. Never skip payments without reaching out to your loan company, since this can ding your credit score.
  3. If you are employed after graduation, create a loan road map for yourself, complete with goals, and stick to it. Consider how much time it will take to pay off each loan and add this estimate to your loan tracking tool. Set milestones to help motivate yourself along the way.
  4. Prioritize loan payoffs. The highest priority should be given to either your smallest loan or your highest-interest loan. Choosing your smallest loan will mean paying off one loan more quickly, resulting in the satisfaction and motivation that comes with being free of one of your debts. Choosing your highest-interest loan will mean paying less money in the long run, since it will prevent as much interest from accruing; but depending on how large this loan is, it could take much longer to pay off. Whichever method you choose, be sure when you submit additional payments on this loan to specify to your loan company that it should apply the money toward the principle. Otherwise, the extra money is likely to be applied in the way most favorable to the loan company, for example, toward the following month’s payment or only toward the interest accrued on the loan.
  5. Supplement your income. It can be difficult to make ends meet while also paying off your loans, especially if you’re putting extra payments toward one of your loans. Consider your skills and how you may be able to leverage them to supplement your income. You could create a monetized blog or YouTube channel, set up a shop on an e-commerce site like Etsy, do work online, or pick up a second job. Even if you are working at minimum wage, paying off the principle of a high-interest loan with your wages will mean saving yourself much more money in the long run. Paying $10 toward a loan today could mean having $15 extra in your pocket in a few years.
  6. Delay investing and major purchases. Plan on having an emergency savings fund to serve as a safety net if you have a financial emergency or lose your job. However, hold off on any major savings, investments, and major purchases like a house or a car, which will cut into your ability to put as much money as possible toward your student loans. Because loan interest rates are almost always higher than interest rates on savings accounts and investment portfolios, paying your loans quickly will usually save you money. The one exception to this rule is if your employer matches contributions to your 401(K); in this case, max out your employer’s match if you can, but don’t exceed it.

As you begin your new life after graduation, don’t make the mistake of letting your student loan debt overwhelm you into inaction or complacency. By seizing control of your debt early–even if that means applying for deferment or forbearance due to financial hardship in the short term–you can be smarter and more strategic about freeing yourself from debt in the long term.

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Debit Card Scams: Six Steps to Protect Yourself

April 11th, 2015 · No Comments

Debit Card Scams: Six Steps to Protect Yourself

With a debit card, you can make a purchase in real-time using money in your checking or savings account. If thieves gain access to your debit card number, they can use it to make unauthorized purchases or withdraw cash. Thieves gain access to account numbers using the debit-card processing equipment of legitimate retailers. They do so by placing a “skimmer” on debit-card processing equipment, which records debit card numbers and personal identification numbers, or PINs. You can lower the risk of falling victim to this crime by implementing a number of countermeasures.

1. Review Bank Account Activity to Identify Inappropriate Charges

Debit card issuers provide a monthly statement to debit card holders so customers can review their debit-card transactions frequently. To minimize your possible liability for unauthorized card transactions, review the debit card activity on your statement and validate each entry. If you detect an inappropriate entry, contact the card issuer promptly, ask for a refund and request the company’s help in resolving the issue. If the card issuer fails to resolve the issue promptly, the Better Business Bureau might be able to offer assistance in resolving the situation. Also, if you are a victim of fraud, contact the Federal Trade Commission. But if you are a victim of Internet crime, contact the Internet Crime Complaint Center.

2. Respond to Email Only If You Initiated the Contact

Because the Internet grants a criminal anonymity, it’s difficult to determine the true origin of unsolicited emails. While unsolicited email might have been transmitted by a legitimate company, it’s also possible it was sent by a criminal. For this reason, it’s wise to delete unsolicited emails, rather than follow any instructions contained in the message, such as a request for your debit card number by return email. Instead, respond to a company email only if you initiated the contact. Even then, carefully consider the possible negative ramifications of providing anyone your debit card number or other personal information via email. It’s equally important that you refrain from clicking on any link that’s contained within an unsolicited email.

3. Disregard Website Requests for Your Debit Card Number

The lack of knowledge of many individuals regarding the workings of e-commerce make some people vulnerable to criminal actions. For example, criminals may attempt to conduct malicious activities by creating a website that appears to be that of a legitimate company. So when visiting any website, it’s important to ignore requests for personal information even if the website’s design mirrors that of a legitimate company with which you periodically conduct business. You can confirm the validity of a site by comparing the links that are provided within an email to the web address you typically use to access the company on the Internet. If the two are identical, the link provided in the email might be legitimate. But it’s best to substantiate the authenticity of any company request stated in an email by contacting the business and speaking to a company representative directly.

4. Rely on Bank Automated Teller Machines

Federal law enforcement professionals warn states that automated teller machines located at convenience stores and other businesses might pose more risk of debit card scams than do bank ATMs. Banks offer added security measures, such ad surveillance cameras that record the withdrawals from customer accounts, as well as mirrors located near ATMS that alert customers to the approach of others. “Others” include those who might try to steal ATM cards or “shoulder surf” to learn your PIN. In addition, it might be easier for criminals to go unnoticed when installing skimming devices on ATMs located in non-bank locations than in bank locations. For these reasons, it may be best to withdraw funds or make deposits at a bank.

5. Rely on Secure Connections to Transmit Personal Information

Even if you initiate a financial transaction on the Internet, transmit your debit card number and PIN only if you use a secure connection. If a connection is secure, you will see a padlock icon located in the browser window. When you click on the padlock icon, the site will display the details of its Internet security. In addition, a secure webpage address will begin with “https.”

6. Turn Off Computer if Not in Use

Some people activate a computer’s sleep mode if they will be away for an extended time period, preferring not to restart programs and reopen files later, which is required if you shut down the computer. But turning off the computer is best because doing so requires any subsequent user to enter an operating system password. Without the system password, a thief will be unable to access data stored on the computer’s hard drive, which might include banking data such as your debit card number or PIN.

Federal law does not provide the same consumer protection mechanisms against debit card crimes as those afforded to credit card crimes. So it’s important that you protect your finances by taking certain steps when using your debit card. For example, you should withdraw money from an ATM located on a bank’s premises and confirm that a website is legitimate before making an online purchase.

→ No CommentsTags: credit and debt

Can I Get A Mortgage With Bad Credit?

March 11th, 2015 · No Comments

Can you get a mortgage with bad credit?

Q.
How do you get a mortgage if you don’t have a good credit score? How do you boost your credit score? How long does it take? I am looking for examples of a minimum credit scores and different types of mortgages that can help people with lower credit scores.

A.
If you have bad credit, you still have some options.

If you don’t have a good credit score, say 620 or lower, you can apply for:

  • An FHA loan. The FHA guidelines say that credit scores as low as 580 FICO qualify. The reality is that banks have their own standards, and you will be hard pressed to find a bank that will loan to anyone below a 620 credit score. A 620 score gives you lots of room for error – late pays, collections and even a bankruptcy can appear on your credit report and you will still exceed 620.
  • If you’re a veteran, you can apply for a VA loan with low credit scores. There is no minimum score requirement, but the money lent still comes from a bank. Banks are still insisting on a minimum 620 credit score in most cases.
    You can also apply for a hard money loan if you have sizable cash, in the neighborhood of 40-50% down payments on a home. These loans typically come with high interest rates and short loan term (6-12 months)
  • You can apply for a conventional loan if your score is 620 or higher, new regulations put into place on December 1, 2014 has had the affect of banks dropping their score requirements from 640. However, it is still difficult to get a conventional loan even if you do have good credit; the documentation is onerous.

If your credit score is low, some fast fixes (results within 30-60 days).

  • Pay down your credit card balances. Optimal credit utilization is 25% of your credit limits.
  • Pull your credit report and fix any errors. annualcreditreport.com.
  • Don’t close out any accounts.
  • Some long term fixes (1 – 2 years):

    • Pay your bills on time. Consider yourself starting with a clean slate and start making payments on time. Negatives, such as late pays become less weighty for keeping your score down for 2 years.
    • Most people have their credit get out of hand because they are not spending optimally. Create a budget to make sure you make all of your payments on time. Timely payments will start raising your credit scores after about one year.

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    RV Hell

    March 10th, 2015 · No Comments

    travelling in motorhome

    Q.
    A friend suggested I talk with you about RVs. I am exploring the idea of living in one temporary with my children, less than a year. It would be great to take road trips later. Not looking into anything new or expensive. There seems to be some for sale in the $5K range and less. Naturally, these are older models that require some work. Does this seem like a good idea? Or are these older models, generally, more work and money then its worth? Thank you for any ideas and suggestions.

    A.
    It depends on what you want to do with your RV. If you are planning on living in it, finding a place to park it (like in an RV park) is quite expensive – you can see prices upwards of $70/day, the average is around $50. If you are planning on driving it around, gas is outrageously expensive for it.

    Then there is the issue of fixing it up. Anything that can go wrong will go wrong. And it’s not cheap. TIres are very expensive, and I had my RV break down on me while it was sitting in the driveway. Older models are full of problems. It’s cheaper to stay in a hotel.

    The other thing that’s expensive is parking the RV – plan on spending $100 a month. And you will need to tow a car behind you. Otherwise, once you’re parked, you have no transportation.

    → No CommentsTags: Burning Man

    Can an Employer Really Look at Your Credit Score?

    March 5th, 2015 · 1 Comment

    Employers checking curriculum vitae

    If you are losing out on jobs that fit your educational and employment background, the problem may not be your qualifications. With so many qualified job candidates to choose from, many employers are relying on a number of other criteria to make their hiring decisions. Specifically, some employers look at your credit history as well as your employment experience and educational background.

    While a would-be employer cannot actually see your numerical credit score, they can take a look at your credit history. They can see the types of accounts you have opened, from bank loans and mortgages to credit cards. They can also see the date you opened each account, along with the outstanding loan balance on each one.

    Employers can also view the inquiry information on your credit report, including the names of companies that have requested your report within the last two years. That means a potential employer will know if you took out a mortgage, requested a car loan or applied for a new credit card.

    Last but not least, potential employers can also view any collections history you might have. Those public records could include any judgments made against you, as well as bank liens and bankruptcy information.

    You might not think that your credit history would be anyone’s business but your own, but employers would beg to differ. The company could argue that an employee with a history of bankruptcy and financial problems would be more likely to steal from the company. If you are applying for a position that involves handling money or has a great deal of financial responsibility, you can be almost certain the employer will check your credit history.

    Even if the position you are applying for does not involve handling money, the company might worry that financial problems will distract you from your job. There is evidence to suggest that this is true, and it is one more reason many employers routinely pull credit reports for job applicants. If you have had credit problems in the past but are now cleaning up your act, it is best to be up front with potential employers. The hiring manager will appreciate your honesty, and that could improve your chances of landing the job.

    → 1 CommentTags: credit and debt

    5 Signs You Are a Jerk and How to Fix It.

    February 25th, 2015 · No Comments

    From Inc. Magazine, geared strictly towards work practices, like getting a resignation letter instead of firing someone, you get no feedback: http://bit.ly/1ajDjQP

    → No CommentsTags: On The Road

    10 Things You Should Never Put on Your Credit Card.

    February 23rd, 2015 · No Comments

    Bitcoins, bailbonds, medical procedures – and not because people know what you’re charging on your card! http://bit.ly/17N9g29

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    Drones are Coming

    February 15th, 2015 · No Comments

    http://time.com/3710391/faa-small-drone-rules/. Soon the skies will be filled with them. Good or bad thing?

    → No CommentsTags: Every day life · Geek Speak

    How Getting a Car Loan Affects Your Credit Score

    February 11th, 2015 · No Comments

    → No CommentsTags: credit and debt

    1 in 10 Americans having their wages garnished.

    January 28th, 2015 · No Comments

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