Money Blog

DOs and DON'Ts

Nov 2, 2009

The infamous credit card! I personally believe in the theory that if you can't make a purchase with cash you don't need it. But with the world we live in today you need a good line of credit, so that means you need to have a credit card. So I'm going to give you the Do's and Don'ts of credit cards so that you don't become another debt statistic.

Don't:

• Use credit cards to make everyday purchases. Food, clothing and gas shouldn't be purchased with a credit card. Treating a credit card like cash will quickly lead you to debt.
• Making only the minimum payment each month actually increases the amount of time it will take to pay off your debt.
• Use your credit card to buy things you really can't afford. "If you can't afford a purchase today, the chances are you won't be able to afford it tomorrow, or next month".
• Close out an account without knowing the impact it will have on your credit. Sometimes closing a credit card account can hurt your credit score.

Do:

• Using your credit card responsibly means recognizing which things you need and which you just simply want. Make wise decisions about purchasing items you need.
• Contact your creditor if you're going to be late with a payment. No matter what the reason may be, the worst thing you can do is forgo on a payment.
• Your credit score is affected by the amount of debt you have. By keeping your balances low will in turn help you maintain a good credit score.
• Always negotiate a lower interest rate. Especially if your current rate is higher then the offers you receive. Evaluate your interest rate periodically to be sure you are getting the best deal possible.

Before you move forward and finally decide to get a credit card I highly recommend that you do some research and understand what exactly you're getting yourself into. Just remember that credit cards are a tool, don't abuse them and always remember the Do's and Don'ts!!

For some more information on credit cards check out these websites:

http://www.cardratings.com/

http://www.collegeboard.com/student/plan/college-success/9139.html

Student Loans 101

Oct 12, 2009

Student loans are a great source to fund your education but understand that they are a debt that must be repaid. Student loans are unique because they have some special features. For instance you often get an attractive interest rate and almost any student can borrow some money, regardless of income or credit history.

Some of the most common student loans: Perkins loans, Stafford loans and PLUS loans. Perkins loans should be on the top of your list because of their low interest rates that are fixed (meaning they do not fluctuate) Stafford loans are easy to qualify for in most cases. PLUS loans are unique because you can get really large loans depending on the cost of school. Interest rates are higher and fees are attached as well.

To get a student loan, you must first fill out the free application for Federal Student Aid also known as FAFSA. Submitting your application ASAP allows you to receive estimates and also correct the details later. After completing the application contact your schools financial aid office and ask what kind of aid to expect.

As I mentioned student loan must be repaid, typically repayment begins 6 months after your graduation date or if you are no longer enrolled into an institution. Your lender will set up an amortization re-payment schedule which allows you to pay the debt off over time. A portion of the payment covers the interest you owe and a portion of the payment pays down your principal.

Now if you come into some tough financial times you can postpone your repayments of your loan under a variety of conditions this is defined as deferment. This is a luxury that you have to qualify for. Some of the most common deferments are unemployment, in-school deferments, military and career related. However if you don't qualify for deferment you still have some alternatives: loan consolidation restructures your payments to make them more manageable, you can request specified payment days ex: (the 15^th of every month), and finally you can request a temporary forbearance.

Link to Federal Student Aid website http://www.fafsa.ed.gov/