Tips to Enjoy Life & Less Debt

Tips to enjoy life and stay away from debt

Do you want to live within your means? Well, this is possible if you are ready to part with some of your spending for the time-being. Frugal living is actually spending less money and in turn, increasing your savings so that you can get out of debt problems with ease. You should find out where you are spending your money in excess and try to reduce them by as much as possible. If you are facing debt problems, you should try to pay them off so that you can get out of debt soon.

Tips to live frugally and stay out of debt

1) Do not use credit cards too often – If you are swiping credit cards for making daily purchases, then you should stop it immediately. This is because credit cards should only be used during emergencies. Thus, if you’ve used plastic money and did not repay the balance, then you’ve already accumulated debt. Try to eliminate the debts soon so as to avoid the high interest charged on them.

2) Make proper plans and stick to your budget – You should make proper plans and also draft a suitable budget in order to enjoy a frugal life. Make sure you stick to your budget and spend according to that. This will enable you to reduce the unnecessary expenses and stay away from debt. At the same time, you can save more for your future.

3) Eliminate the outstanding dues and come out of debt – If you’ve taken out more than one loan and you are finding it difficult to pay them off, then you may combine all the loans into one. This way, you will be making only one payment every month towards eradicating the loan. You will be able to come out of debt burden quickly.

Just like earning is important, similarly it is important to save enough for a secured future. Follow the above-discussed tips to live a great life and avoid falling into unnecessary debt. For more information click here.

Article By Guest Writer

Benjamin Beckwith

Fico vs Beacon Credit Scores

I’m sure at some point, you have wondered what the difference is between a FICO vs Beacon Scores?

There are certain stipulations that have a huge effect on obtaining the car you desire, the home of your dreams, the college of your choice, or even the business you wish to open that determines your fate. Have you heard of a Fico vs Beacon credit scores?  You know one of the most important numbers to your life?  Just in case you forgot, your credit score is the number that strongly indicates to lenders and creditors how likely you are to pay back debt which is based on your past borrowing behavior.

Collectively, creditors and lenders analyze these Fico vs Beacon credit scores to see what kind of quality of life you deserve (I’m just the messenger).  Your credit score is a very important number that should be taken seriously.  It’s a measure of your financial responsibility – the higher your score, the more willing lenders and creditors will be to lend you money. The effects of credit scores can affect many things; most affected is the borrowing rate; the higher your score, the lower the interest rate.

There are 3 different credit rating agency scores that have an effect on the quality of your future.  They are:

  1. FICO Score- Used by Experian, ranges between 330 and 830
  2. Beacon Score-  Used by Equifax, ranges between 300 and 850
  3. Empirica Score- Used by TransUnion, ranges between 150 and 934

The main differences between these credit scores are the algorithms (formulas) the credit agencies use to figure out a credit rating.  These algorithms can be heavily dependent on what the credit agency deems as important, which can explain the difference in scores. For example, Credit agency A compared to credit agency B may deem Payment History more important than Outstanding Balances and because so, they weigh Payment History harder than Outstanding Balances compared to credit agency B, vice versa.

Credit scores are calculated by combining a number of pieces of information such as:

  • Payment History: Late payments have the greatest negative impact on your score.  Bankruptcies and tax liens also affect your score.
  • Outstanding Balances: Owing a great deal of money on many accounts or “maxing out” on various credit cards can indicate that person is overextended, and is more likely to make some payments late or not at all.
  • Length of Credit History: How long has your credit accounts been established in general, how long specific credit accounts have been established, and how long it has been since you used certain accounts.
  • New Credit: Multiple requests for new credit accounts can negatively affect your credit score, especially when you get rejected by the lenders.
  • Types of Credit: The score will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans.  Your score also looks at the total number of accounts you have.

To qualify for a good interest rate, lenders typically require a score of 650 or higher.  A credit score of less than 500 is considered extremely poor and that person most likely would not qualify for a loan.

All 3 credit scores combine the same pieces of information. The two main factors affecting your credit score are debt history and the amount of available credit.  Try to avoid request for credit and don’t max out your credit cards.  To improve your credit rating, pay down debt and avoid excessive applications for additional debt.

 

 

Derick Gant

Smart Money System

Reaffirm Your Mortgage

Over the past few years we have worked with several clients that have continued to pay on their home mortgage and didn’t know why their credit hadn’t improved. Well, you must reaffirm your mortgage after filing bankrupt.

When you file bankruptcy and do not reaffirm your mortgage, your lender will report to the credit bureaus that it has also been discharged. When it is reported this way, it appears much like a credit card would be on a charged off account. Your lender will no longer be reporting to the credit agencies a negative or positive payment history on your account.

Most homeowners are unaware of this as they continue making mortgage payments, thinking that they are rebuilding a new credit history after bankruptcy.

When you do not reaffirm your mortgage obligation after bankruptcy, this means that you are not personally liable on the promissory note associated with your mortgage. Your home will remain under the original loan agreement as you resume making payments. The title does not change and you still own the home. You are just not personally liable.

Not reaffirming the mortgage after bankruptcy simply means that you are no longer personally liable for the mortgage. This can be great news for many BK filers who cannot be held personally liable if they were to walk away from their homes because they cannot be sued for any deficiency judgments.

Your credit report will note that the mortgage was discharged in bankruptcy and even though you are making payments, your report will not reflect your newly established good payment history. This is because you do not have to make payments and you are not utilizing credit. You might think you are actually rebuilding your credit score back up by paying your mortgage on time and paying period but you may not be gaining anything at all. When it comes to some people, they do not know this and years later when they want to take out a larger loan, they wonder why their credit score is still so low. They may even get denied for the loan because of the low credit score or lack of mortgage history.

However, if you do pay off your mortgage, you will still receive title to the home. Once the home is paid in full, the home is yours. Whether you reafirm your home loan or not.

After you file bankruptcy, you will have to make a choice to reaffirm your mortgage or not to reaffirm. Some homeowners will elect not to do this because they plan to walk away from their homes and do not want the personal liability hanging over their heads. While others who want to stay in thier homes with the benefits of good credit will most likely decide to reaffirm their mortgage.

The Little Middle Class

The little Middle Class has left the building.

Today I was watching Morning Joe and a remarkable chart came on displaying the net worth difference between 2005 and 2009 by race. As a matter of course, I looked to see where each race landed and  what it means to my business and clients the little middle class.

As you can see, the divide between wealth is dramatically different and almost undeniably tragic. I’m not here to place blame. The original television discussion of course revolves around who is better equipped to get the economy and wealth back in the game.

I am simply looking at the level of net worth of Hispanics and African Americans. What does this chart say to you?

The little middle class is virtually non-existant. The chart clearly indicates that hispanics and blacks are mostly:

  • Renters not Owners 
  • Borrowers not Lenders
  • Owe not Owed
  • Consumers not Producers
  • Spenders not Savers

Living a life of you are in control of is all a matter of mindset. As long as people turn a blind eye to the reality that everyday a choice is made as to how we will live our lives. The choice is not made by the president of the United Stated, Congress, the Governor, the Mayor, or City Council. It is made every time you decide to impulse shop, to buy more then you need, and to compete with your neighbor.

The little middle class will get smaller and smaller until each and every person demands control of their personal habits and decisions.

Every day I coach some client desperate to get ahead see that they are not their financial past. I explain that every time they pull out their wallet they are making a choice as to what tomorrow will look like.

Until the little middle class begins to invest in appreciating assets:

  • Savings
  • Stocks
  • Bonds
  • Real Estate

There will always be a gap as wide as the Pacific Ocean between the haves and the have-nots. There is no shame in being in the little middle class after all it is what America was built on. Just don’t be blind to the fact the the drop isn’t far from there.

Graphics Source: PCW Research Center

Why I’m not sharing My Millions

Mega Millionaires’ Big Tax Bills

Winners of the recent Mega Millions jackpot face some serious tax hits. Here’s the breakdown.

By Bill Bischoff | SmartMoney

You hear it all the time: the rich don’t pay their fair share in taxes. Baloney! For proof, consider the daunting tax bills that will be faced by winners of the recent Mega Millions jackpot. Here’s the true story.

The jackpot for the March 30 drawing was a whopping $656 million. There were apparently three winners. Each could choose to receive an annuity that would pay out about $219 million over 26 years. However if a winner selects the cash option (the only sane choice in my opinion), he or she would collect about $128 million before taxes. The key words are “before taxes.”

Federal Income Tax

Lotto jackpots are fully taxable. And huge jackpots are currently taxed at a maximum federal rate of 35%. So the winner of $128 million will owe the Internal Revenue Service about $45 million. That leaves about $83 million.

State Income Tax

Say a new Mega Millionaire is “unlucky” enough to live in a state with a personal income tax. In most states, the tax rates on high-income individuals range from 5% to 10%. If the rate is 7%, the winner of $128 million will owe the friendly state tax collector about $9 million. That leaves about $74 million.

One of the big reasons why some lotto winners wind up bankrupt is failure to recognize the federal and state income tax hits before it’s too late.

Federal Gift Tax

Despite having already lost $54 million to the IRS and the state tax collector, your tax situation can quickly deteriorate even further if you share your newfound wealth generously with loved ones. That’s because you’ll owe a 35% federal gift tax after you’ve given away more than the $5.12 million exemption. Say you give away $25 million to siblings, children, parents, aunts, uncles, and friends. The gift tax bill would be about $7 million [($25 million – $5.12 million exemption) x 35% = $6.958 million].

Say you give away another $25 million to your grandkids. You will get socked with a 35% generation-skipping transfer tax (GSTT) on gifts in excess of the $5.12 million GSTT exemption. Worse yet, the GSTT is on top of the gift tax. The gift tax on the gifts to your grandchildren is about $9 million ($25 million x 35% = $8.75 million), and the GSTT is about another $7 million [($25 million – $5.12 million GSTT exemption) x 35% = $6.958 million].

Bottom line: you owe $77 million in taxes and you’ve given away $50 million to loved ones. Guess what? You only have $1 million left for yourself ($128 million – $77 million – $50 million = $1 million). Oops! Another big reason why some lotto winners wind up bankrupt is failure to understand the gift tax rules before it’s too late.

Federal Estate Tax

Now let’s assume you don’t give away any of your $128 million. You just pay the $54 million in income taxes and break even for the rest of your life, dying with a cool $74 million. If you kick the bucket this year, your estate will owe federal estate tax equal to 35% of the excess over the $5.12 million exemption. That would amount to about $26 million [($74 million – $5.12 million exemption) x 35% = $25.9 million]. Your heirs would get $48 million (nothing to sneeze at), but $80 million was lost to taxes. That’s a whooping 62.5% of what you started with. Ouch!

State Estate Tax

We’re not done yet. If you live in one of the 22 states with a state death tax, your estate could be whittled down even more. The tax hits just keep on coming!


It Could Get Even Worse

Unless Congress takes action and the president (whoever he is at the time) approves, the maximum federal income tax rate for 2013 and beyond will be 39.6% (up from the current 35%). The maximum federal gift and estate tax rate will be 55% (up from the current 35%), and the gift and estate tax exemptions will be only $1 million (versus the current $5.12 million). If these changes come to pass, the tax hits on future Mega Millionaires will be far bigger than what I’ve shown here.

The Last Word

Tax-wise, the only difference between Mega Millionaires and people who have gradually become wealthy through hard work over many years is the hard work. So it’s just plain wrong to claim that rich folks don’t pay enough in taxes, unless you really believe the government should be entitled to confiscate 60% or more of their wealth. On the other hand, it’s true that once you become rich you can take advantage of some nice tax breaks that are not readily available to the rest of us. For example, the new Mega Millionaires can invest what’s left of their dough after paying income and gift taxes and pay only a 15% federal rate (for 2012) on long-term capital gains (20% in 2013 and beyond). But they will have to take risks to get that low rate, and they can only invest what remains after paying the heavy tax hit on the front end.

Minimizing Your Debt

minimizing your debt
minimizing your debt

The third step in the 7 steps to wealth is minimizing your debt.

It’s been a while so the first step is to equip yourself with the right tools, while the second step is to maximize your income.

I’ve read and studied how spenders can save money avoiding that daily cup of coffee or not buying gum in the grocery checkout line. Numbers don’t lie and I’m sure minimizing those debts will help. It sounds like a great place to start if you’ve tackled the real issues.

The problem is that most people look for the small ways to minimizing your debt while paying excessive fees and charges in other financial matters.

Minimize your debt the right way in order to see any true progress. This is crucial to seeing a real change in your monthly cash flow.  There are two simple areas to focus on.

Stop the bleeding!

You cannot get out of debt while you are adding new bills and expenses at the same time. This isn’t rocket science, however it is a regular oversight in most situations. Stop and check your accounts to see where fees are leaking out. The bleeding can be identified in several areas.

  • Late Fees on household bills can average $15.00 per bill per month.
  • Utilities:                        1.5%-2.0%
  • Charge cards:           $15.00-$30.00
  • Mortgages:                $50.00-$150.00
  • Banking Fees:          $8.00
  • Over draft Fees:       $37.00

 

Carrying Charge Card Balances challenges minimizing your debt!

  • Interest Rates: 21%
  • 90 days same as cash

Creating a debt elimination plan is a must in minimizing your debt.

Pull your credit report and compare the credit report bills owed to your daily bills mailed to your house.  Create a master bill list and strategically begin to wipe out the most manageable bills.

Part of your strategy should include contacting any debtor that has a balanced owed and negotiating reduced fees. The world is restructuring and fighting to collect past due funds. More now than ever the potential to have fees reduced is on your side.

Summary:

Creating a laser focus on minimizing your debt is a core strategy to creating wealth and specifically a mindset of prosperity. You have to physically control your spending habits as well as your core monthly spending. There are always opposing energies in life and the opposite of physical is mental. In financial matters, the mind is critical to a successful campaign towards minimizing your debt.

  1. Stop the Bleeding
  2. Pay your core bills on time
  3. reduce/eliminate charge card balances
  4. Negotiate fees & charges
  5. Create an elimination plan

Become a member and get a detailed plan that walks you through minimizing your debt like the wealthy!

Maximize Your Income

Maximizing your IncomeMAXIMIZE YOUR INCOME

An essential element of The 7 Steps to Wealth is to maximize your income. I’m certain that you read the title and immediately registered that you take every dime in your check.

What most fail to realize is many hands are reaching into your check and not for your benefit.  There are several ways to maximize your income while eliminating waste.

Insurance:

Review your all supplemental insurance payments in order to maximize your income.  In an effort to offer employees benefits, employers often allow carriers to pitch insurance policies. A widely purchased policy is the cancer policy. Insurers have actuarially calculated that by the time the potential purchaser needs the policy, they are long separated from service.

The premiums collected on these policies are mostly profit. Rarely premiums go to their intended purpose because the risk is removed.

Policies such as gap coverage for prescription drugs follow a similar rule. If you are so concerned with needing the extra coverage, put the funds in a savings account.  Maximize your income and your direct holdings.

Exemptions:

The biggest benefit is adjusting your  federal and state tax refund. If you are gettingMaximizing your income a few thousand dollars in a refund check, you need to get with a tax preparer. Ask how to adjust your deductions in order to maximize your income.

You are telling yourself and the world that you have no discipline and certainly willing to let the government mange your short term saving at no interest.  Get your money in your check and use it to eliminate debt and increase savings forever. DON’T make this a one-time deal by returning to poor spending habits.

Charity:

Let’s be honest, charity begins at home.  I am very philanthropically driven. I know that once I take care of Derick, the more I accumulate to help others. This is a major element to maximize your income.

Giving to the United way or the police charity union is nice. Consider allocating charitable funds just like corporations. Once a year corporations decide what they plan to give and to whom.  This is done after corporate expenses have been allocated and profits analyzed. BE YOUR OWN COMPANY, Maximize your income!

 

By Any Means Necessary