The US Has A Borrowing Problem And Easy Money Is Making It Worse

What is it with all the borrowing these days – credit card debt, low down payment mortgages, car loans and leases, college tuition loans, and the revival of the $100,000 five-minute loan? It’s like the American Consumer is addicted to easy money. Now with interest rates at historic lows, and the FED considering negative interest rates like the EU and Japan there are investment groups taking advantage of those and then lending money here. It seems like every day I read about more offers for easy consumer credit, get some credit card offer in the mail, or am enticed by some marketing company or corporation to buy something on credit. Let’s talk.

You see, there were two troubling articles in the Wall Street Journal recently; “Subprime Auto Loans Flash Signs of Trouble,” by Serena Ng, published on March 14, 2016. Unfortunately that first article was buried in the paper, only one column and hardly noticed. The other article did make the front page of Section II, it was titled; “The Five-Minute, $100,000 Loan,” by Ruth Simon and this article discussed how shrinking application times is good for small business – but five-minutes? Hmm? How is that good for Small Companies?

We have well over a trillion dollars in student loans, much of which is in the rears over 90-days, and we have challenges with subprime auto-loans, and our real estate prices are rather toppy, and thank god we are in an election year, but what happens after that? When it comes to tuition loans 40% are in borderline default status, even if those loans are not easily discharged. On the Subprime Auto Loans, 12.5% are over 30-days in the rears.

Easy money and low interest rates seem to have consequences. We have businesses large and small borrowing, consumers borrowing, and our government borrowing – no one is saving, and to keep all this going what are most Central Banks doing?

More stimulus, ouch, and exactly how, here in the USA, are college students going to continue to borrow for tuition if those loans are continually in default, whose paying for that? If car loans collapse, auto makers cannot sell cars and that means layoffs, meaning more loans default. We seem to be running redline in debt, and I do not see a way out of this without growth, but if all the growth is fake, stimulated growth from easy money, then at some point the whole thing collapses, and it doesn’t take a rocket-scientist, or economist to see that.

Student Loans and Credit Scores

Discussing family accounts as a way to build credit, it was mentioned that people starting out will usually have student loans as their first credit account, unless they obtain a car loan or credit cards tied to a family member with credit history. Student loans are a tricky area of installment credit history because they are not looked on as favorably as you would imagine.

You might think that having opened student loan accounts when you first went to college would show a history of the account, but in actuality, only when you start making your first payment will student loans count as “credit payment history.” Most student loans are in a deferred status as long as you are in school. Once you are out of school, you have one to four months before the companies begin asking you to make monthly payments that pay down the principal and interest.

Yet, when you have student loans, you have an “amount owed.” This amount owed can actually be reducing your credit scores. One the one hand, you feel that making payments should increase your scores, but then you get dinged for having a high amount owed.

So what can you reasonably do about student loan debt? Do you want to pay it off right away?

According to people like Stephen Snyder and Robert Kiyosaki, if you have student loan debt, you want to leave it as the last items you pay off. It comes down to an IRS strategy. The history of this strategy has existed since student loans became necessary for people to go to college. The minute the IRS allowed you to use your student loan interest paid as a deduction is when this strategy came into being.

How it Works

  • Each month you make a payment you pay interest and a little towards your principal, when you are newly paying on the account.
  • When you file taxes, you are asked to enter the amount in student loan interest you paid.
  • The amount paid is a deduction.
  • During this same period, you are paying a little of the “amount owed,” thus reducing your overall debt amount.
  • You are also making payments, and as long as they are on time and the full monthly amount, you are helping your scores.
  • When you get to a point in the loan, where you are barely making any interest payment at all towards the balance, pay off the debt.

Summary

Student loans, when you first start taking them out appear on your credit report, but without any payment history. It is just an open installment account. The lack of payment history does not help your score, nor does it hurt it. The debt utilization ratio on the other hand will hurt your score a little. It is due to having this debt that makes your score a little lower than if you had no debt at all.

If this is the only debt you have, then it is also considered “little to no debt,” which also does not help when you are trying to get new loans to build your credit history.

When it comes time to make payments to the student loan companies as part of your installment agreement, you need to be on time and pay the monthly amount asked for. If possible, pay more than the monthly amount.

Paying interest helps lower your taxes owed. You want this deduction and the payment history. The deduction may be the only thing you have helping you get a tax refund. The payment history is also helping you increase your score, as the balance goes down.

There will come a point when you are going to pay off the debt in full. Do this when the deduction on your taxes is no longer significant. The reduction of debt owed will also help at this point. The reason behind this key point lies in the other credit you have built. You should be in your 30s or 40s, with a mortgage, credit cards, and other credit that weighs more significantly on your ability to get credit. You no longer need the payment history from the student loans. In fact, given the amount of debt you might have at this point, you want to reduce the “amount owed” you have overall.

The Smart Woman’s Guide to Planning for Retirement by Mary Hunt – Personal Finance Book Review

Money maven, Mary Hunt, returns with a new book, “The Smart Woman’s Guide to Planning for Retirement,” to help women prosper financially in the New Year and beyond. While geared toward females, men can also benefit from Hunt’s money knowledge, honed after she amassed over $100,000 in debt earlier in life; and took 13 years to erase.

“Have you had a retirement wake-up call?” Hunt asks early in the book. “I can promise you they intensify with age.”

Hunt sites a 2012 survey that found that 92 percent of women of all ages do not feel educated enough to reach their retirement savings goals.

Saving for retirement requires determination and hard work; and Hunt believes women can succeed. “If we lack confidence, it’s because we lack knowledge and desire, certainly not because we lack intelligence and ability,” Hunt says.

Time trumps all factors when saving for retirement. The sooner you start, the better. But, Hunt emphasizes, regardless of what stage you are in life, you must begin now. “It’s only too late if you don’t start now. No matter where you are or how little you think you have, start now. Today. Start. Saving.” Take baby steps to produce long-term results.

Hunt’s teachings feature:

Retirement Savings Plan. Hunt promotes a six-step Retirement Savings Plan, which includes:

Build an emergency fund. Also known as a Contingency Fund. Save money for life’s unexpected expenses (car repairs, home repairs, etc.) This money needs to be liquid (easily accessible within two or three days), safe from erosion (build in a risk-free savings account) and able to fund at least six months of living expenses should a job loss or other compromised income event occur.

Get out of debt. Eliminate all unsecured debt (credit card debt, student loans, personal loans). Hunt says they’re like cancer stealing your future. Incorporate Hunt’s Rapid Debt-Repayment Plan (RDRP) to abolish the debt.

Own your home outright. Buy half as much house as your mortgage approval. Make monthly mortgage payments equal to the full approval amount to own your residence in half the time. Fiercely protect your home equity (the difference between your home’s market value and mortgage balance). Avoid taking a home equity loan or line of credit, which resets the clock on a thirty-year mortgage.

Consider hiring a financial planner once debt is eradicated or managed, a respectable amount in savings is amassed, retirement funds are growing, or an IRA inheritance or other cash windfall appears.

Hunt describes three types of financial planners:

  1. Commission-based. This planner doesn’t charge based on time, but by selling investment products. He or she earns commissions on those sales.
  2. Fee-based. This planner works on a fixed fee or charges by the hour. Fees are stated up front and the planner is a registered investment advisor (RIA). They’re required by law to meet fiduciary standards, making them responsible for putting the best interests of their clients first.
  3. Combo. This planner is a combination of the first two. Clients pay a fee, fixed or hourly and the planner earns commissions when the client buys financial products based on their recommendations.

Choose a financial planner with at least five years experience Hunt suggests. Ensure they act in your best interests, and can explain financial concepts on your level. Be wary of any planner who claims to be able to beat the market. Ultimately, collaborate with a planner; yet make your own investment decisions. Hunt underscores that, “An advisor’s or planner’s primary loyalty will be to the hand that feeds her. That is simply human nature.”

Hunt educates in a conversational tone, avoiding jargon, charts and mind-numbing data, which makes for an engaging read. A Christian, she teaches faith-based money management. Hunt believes that God is the source of all life’s blessings, including money. An employer, spouse, investments, trust account, parents or any other entity are the channels through which money flows, but not the ultimate source. She’s making reasonable preparations for retirement without obsession; and trusting God for the outcome.

While having a retirement nest egg is important, Hunt reminds readers there is more to life than money. Health, spirituality, nurturing relationships, staying active, continual learning and volunteering are some attributes of a well-balanced existence.

Decade-by-decade financial planning, the five necessary tools for a money management system, investment basics (automate all payments to avoid not making monthly contributions (out-of-sight, out-of-mind), reverse mortgages, and parents paying for their children’s college education (not required), are other money-saving/building topics addressed in the book.

Anyone committed to improving their financial fitness in 2014, will reap life treasures, beyond the bounds of cash, by inheriting Mary Hunt’s money practices.

To establish your baseline financial status, and/or monitor your progress, order your free credit reports from the three big credit companies: Equifax, Experian, TransUnion, visit: Annual Credit Report.

Beware of Credit Repair Companies As They Do Not Provide Any Results

Non prime credit these days can be obtained very easily and by no fault of your own. Sure there are instances of financial mismanagement and job loss but the world is suffering from an identity theft epidemic as well. What used to be a unusual thing now it is something that has happened to you, a friend, or a family member at least once. Stealing a credit card number to make purchases is one thing, but the trail left behind from someone who successfully used your social security number can be quite long and difficult to remove. None the less, there has to a proven solution to not only fix those mistakes but also prevent them from happening.

So assuming that any of the scenarios have occurred to you, you don’t really find out until it’s too late. This is when you apply for some sort of credit and you get denied. Many of you may already know the status of your credit. Either way, let us assume that you are actually seeking to get it repaired. There are many reasons for better credit including a new or reliable car, moving to a better place to live (buy a new home or rent a nice place), perhaps a credit card because it is cheaper than payday loans by far, and other things. Oh yeah, there are employment issues as well.

Most of us do web searches for everything, including credit repair. In addition to the credit repair signs you see all over town, there are other ways credit repair companies or individuals get your attention. Once they have it, it normally goes like this… ” we are glad you are seeking to repair your credit… in order to repair your credit, we will need a copy of your most recent credit report and our service fee.” Remember, nobody works for free these days, and their fee can be an upfront free, usually in the hundreds or it can be with a monthly retainer, like a popular law firm that start with an L. Regardless of how you come to terms with them, they tell you that they are providing a service and based on the items of your credit report, this process will take some time. So if you are paying a monthly fee, this could be for… who knows…

One more thing, are you going to give someone the tools they need to steal your identity? (Your credit report which has your social, date of birth, addresses, employment info, and such).

Here is the worse part, let’s say, that you paid your fee or your monthly retainer and it has been 11 months since you started your credit repair. You go apply for a loan somewhere and you get denied. So you contact your company or so called law firm and ask them why you were not approved? Their automated response it’s similar to “well sir/ma’am, we offer to repair credit but we cannot guarantee that you will have your credit applications approved because we do not know what companies you have applied for and what they look for. We mainly focus on bad credit and try to repair it.” So after having that feeling of getting ripped off by someone, you try to get a refund because why on earth would you fix your credit if your credit applications are going to get denied… correct? again, their automated response goes like this… “We cannot give you refunds on a service because we have to pay our staff, this is not a product but a service, hence there are no refund on services… “

Unfortunately, it is not illegal in the United States to offer services, take money, and not provide what you offered. It just becomes a civil matter if you have the money to go that far, and normally the judge goes with the service provider. Not only is this a massive waste of money but if you value time more than money (like I do), it’s a double loss.

Lucky for you, there is actually a way to get your credit goals accomplished for real. Before we dive into that, let’s define accomplished. If you want to get your loan applications approved, get an UNSECURED credit cards, upgrade your vehicle, and buy a house, then this is for you. Also, if you wish to get your credit fixed without sharing your personal information such as your credit report with anyone, then this is also for you.

There is a way to correctly repair your credit regardless of what is on it, and turn it into a prime credit file that banks and financial institutions pay to get into their book of business. You ask how is this done? well, very simply actually. Banks and financial institutions have tactics that they use with their own clients to increase their book of business. You don’t do not need a crystal ball to know that every credit applicant does not get approved. Do you wonder what the banks do with the non approved clients? Well, depending on the type of business they are trying to bring and if it is a current client of theirs, they can walk them by the hand and take them from denial to approval. This only works if the client follows their instructions, step by step. And most of them do because they are seeking the financial product in the first place.

Not every bank will do this for their clients. Examples are, lets say the credit file will need more time than average to repair, lets say the clients loan request is not substantial for their time, lets say they are just too busy… bottom line is that not everyone gets the help they want, and normally get turned away because it is not illegal to not help someone with bad credit.

The same tactics that are used by these institutions are now available to you in a video course that takes less than a day to complete. These are not new tactics or procedures, but instructions that have been behind their walls for decades, with proven results. Here is the actual kicker, not every credit file is bad, in fact, there are many applicants that do not get their credit applications approved that do not have collections or other negative things on their credit report. Most are simply missing the other ingredients that banks look for before issuing credit approval. The procedures are designed generate credit approvals on many tiers but your credit gets repaired by default, but it is not the main purpose of the program.

In conclusion, do not get ripped off by these companies who say they will get your credit fixed only to find out the hard way that nothing was ever accomplished. This credit course comes directly from the only qualified source of information to properly accomplish your credit goal, which are the banks.

Car Servicing and Maintenance: Get The Best Maintenance Services From A Reputed Auto Repair Shop

Cars- A Costly Investment

Buying a car is an investment. Unfortunately, it’s going to cost you a lot of money involving loan payments, registration fee, insurance coverage, maintenance, servicing etc. Vehicle repair and maintenance expenses have now become a part and parcel of life. If you fail to take good care of your car then be prepared for an unexpected breakdown.

Maintenance Schedule- How Important It Is?

Vehicle maintenance and servicing is one of the best ways to keep your car in a flawless condition. Remember, your vehicle needs to undergo a maintenance check up every month. With the right maintenance and servicing it will last for a long time and you will also enjoy a smooth drive.

Most of the manufacturers usually offer free servicing packages to the new car owner for the first three months. So car owners don’t need to spend a single penny in the first three months for servicing. Always listen to the advice of the manufacturers because they can help you keep your car in a great shape.

If you are buying a car for the first time, you should first get some advice from your friends or family on vehicle maintenance. Moreover, you can also ask them to refer a reliable and trustworthy mechanic for repairs. You should never ever take your vehicle for granted. Just like you go for a regular health check up to your doctor your car also needs the same care and maintenance for a safe and smooth drive.

A DIY Approach For Vehicle Maintenance- Is It Right?

Never ever take a DIY approach for vehicle maintenance unless it is a very small problem and you know how to fix it. If you don’t have any knowledge about car problems it’s always advisable to visit a reputed servicing station. Have a look at some of the great tips to keep in mind to take care of your cars in the best way:-

· Regular Car Servicing And Maintenance

It is very important for an owner to follow the servicing schedule properly according to the distance/miles. Mostly, it’s the company who set the schedule for the owners.

· Oil change

Every vehicle owner should go for an oil change once a year. Oil change also depends on the distance travelled/miles. Always listen to your mechanic. With timely oil change you can enjoy a smooth drive.

· Check Fluid Level Of Your Car

Of course, you can check the fluid level of your car on your own. In case, you don’t know how to do it ask your mechanic to help you. Check coolant fluid, brake fluid and transmission fluids which are some of the most important fluids.

Conclusion

Educate yourself about automobile repairs and maintenance. It is a fact that there are good mechanics out there to help you with repairs but there are also bad ones who only want to cheat you. Take some time from your busy schedule to find the best repair shop.

Happy driving!

Taking Advantage Of A New York Car Loan

New York car buyers can benefit from a car loan, since it gives them an extended amount of time

to pay for their car. If their income increases, then the fixed cost of the loan will decrease as

a percentage of their total income.

We witness and era of machineries, automatic means to make our life easier, along with a burst of the automobile industry, as man’s most comfortable and easiest way to commute from one place to another. t would seem that cars multiply as days go by, and at first glance, many would say that everyone can afford to buy one. Their prices vary considerably; if some are highly expensive, there are a whole lot more, for the average consumer, which can be bought. However, many cannot buy one because of inadequate cash, and no matter how cheap, it still remains unreachable, and not for few. For them, the car loan is the helping hand and the key.

Many researches have agreed that buying a car with the help of a loan, remains the most profitable way to purchase a car, as opposite to traditional car finances, or car dealers, which are rather expensive and even risky. Certain costs may be kept hidden from you, but will reveal themselves when may be perhaps too late. If you fail to pay a few months in a row, the car will be seized and they are not joking. Another factor why the car loan is better than any other method of finance is that it gives you the freedom of haggling with the price of the car, even when finding the actual loan, as well. The dealers offer packages, which you are not obligated to accept. Thus, car loan offers a cost-effective means of getting the favorite car in your name.