Equifax Finance Blog » Mechel Glass

How to Resist Peer Pressure and Stick to a Spending Plan

Mechel Glass — Mon, 13 May 2013 12:53:30 +0000

There are obstacles to any major change in behavior, whether it’s losing weight, making a career change, or saving money. So once you’ve started a new spending plan, how do you resist the temptation to backslide into old habits? Here are a few tips I use to keep my spending plans on track:

Keep focused on your long-term goal. So you’ve decided to reduce your spending to achieve a specific goal, whether it’s to slash debt, increase savings, or afford a new car or dream vacation. Now you need to take action to motivate yourself to fulfill that goal.

Whether it’s writing down daily reminders or pinning photos somewhere that you will see them every day, keeping that goal at the forefront of your mind will help you stick to your budget.

Find others with similar goals and band together. Bringing your lunch to work and avoiding dining out is a good way to cut expenses, so find co-workers and others who are looking to do the same. Conversely, avoid hanging out with the crowd that eats out two or three times a week.

Find ways to reward yourself for short-term achievements. If your goal is to reduce your spending by $50 a week, reward yourself at the end of the week when you achieve that goal. It may be a ticket to a ball game or a movie—something small you would normally do or buy that you cut out of your budget to meet your goals.

Keep a daily spending journal. It’s much easier to see where your money goes—and where you can reduce your spending—if you just write it down. It may be a bit depressing to see how much money you spend on coffee, soda, and snacks, but it makes it that much easier to stop spending money on such non-essential items once you see it in writing day after day.

If you can’t keep a journal, make a note to check your online bank account daily and jot down all your expenses.

Consider closing one or more credit cards. Shopping these days means having access to an iPad and a credit card. If you spend too much money shopping online, consider giving yourself fewer options by having fewer credit cards. While this may have a short-term impact on your credit score, it may be a good long-term strategy.

Ask for the support of family and friends. Talking about money with family and friends can be difficult, but if you want help from people, ask for their support. If that means cutting out costly trips to your favorite stores and night clubs, let them know you simply can’t afford to spend money at these places and meet your financial goals. Instead, get friends and family involved in the process by organizing inexpensive activities, such as potluck dinners and game nights, as opposed to dinner and drinks out on the town.

Schedule monthly and quarterly check-ups. Review your spending habits and goals at the end of each month and every quarter. Determine if you met your goal and if not, adjust your spending and savings plan. If you’ve fallen short, see if there are new areas where you can reduce spending and also make certain that your spending goals are realistic.

If you can’t make any more cuts, think about more serious changes, including selling your car (especially if public transit is an option), taking on a roommate, or getting a second job.

Mechel Glass is the Director of Education for CredAbility. In this position, she is responsible for developing the curriculum and educational materials for online classes including webinars, podcasts, videos and listen-on-demand classes. She is responsible for managing the agency’s community outreach programs and staff, including financial education specialists in a 14-county area throughout metro Atlanta and north Georgia. She also manages the development and reporting of education partnerships online for the agency.

Pay Off Credit Card Debt in the New Year

Mechel Glass — Mon, 07 Jan 2013 17:48:37 +0000

Year after year, the two most popular New Year’s resolutions are losing weight and paying off debt. The interesting thing is that people know what must be done to achieve either goal: If you want to lose weight, you need to eat less and exercise more. If you want to pay off debt, you need to cut your everyday expenses and use more of your income to pay down credit card balances.

Whether losing weight or paying off debt, the tough part is repeating the same process month after month. That’s where a monthly plan can help anyone stay on track.

Starting a debt management plan

A debt management plan is a monthly repayment plan for paying down your outstanding debt. You can work with your creditors, directly or through nonprofit agencies that offer this type of assistance, to design a debt repayment program that minimizes monthly payments, interest, and related fees. This enables consumers to repay their entire debt obligation at more favorable terms and on a plan that is within their ability to pay.

Just like a plan for weight loss, a debt management plan takes time. The repayment period varies based on the amount owed and the repayment terms, but for most people the average plan is structured to repay debt in 36 to 60 months.

Many people make the choice to start this type of plan soon after the holidays—or any time that late payments have caused their credit card interest rates to soar. Consumers who develop a debt management plan often see interest rates on all of their credit cards drop to 6 percent to 10 percent. Lower interest rates can result in lower payments and can help cardholders repay their balances.

Are you a candidate for a debt management plan?

Are you:

Using credit cards to cover daily living expenses?
Making only minimum payments on credit cards—or struggling to make even minimum payments?
Carrying multiple credit cards and rotating their use to juggle balances and due dates?
Making payments late or missing payments for more than one month?
Charging more each month on your credit cards than you are paying toward the balance?
Juggling credit cards that are at or close to their limit?
Unaware of how much you owe?
Receiving calls from creditors?

Ignoring the problem won’t make it go away, so take action at the first sign of trouble. It can make the difference between a financial setback and a financial disaster.

TIP: Once you’re on a plan to pay off debt, consider checking your credit report to see the progress you’ve made.

Saving for College and Applying for Student Loans

Mechel Glass — Mon, 24 Sep 2012 15:25:20 +0000

If you are the parent of a high school senior who plans to go to college next year, now is the time to determine how you will pay for that education. You might have been saving for college for years, but you will still want to decide whether your child will also need to apply for a student loan to help pay for tuition and other costs. Your credit score may be considered for your child’s student loan, so it’s important to make sure your credit report is accurate.

Financial educators at CredAbility speak regularly with students who have student loans. Unfortunately, even though counseling is now required for students, many receive counseling online and still don’t understand how it will affect their financial life after college. In fact, our financial counselors find that most students don’t understand how much college costs until the bills start rolling in.

As you begin to consider how to pay for college, here are some tips to help you make some important decisions:

Understand how much college will cost. Many high school students dream of leaving home and going off to a new city or state only to find out that the full cost of an out-of-state education can be $30,000 a year or more. Once a school has accepted your child, schedule an appointment with the financial aid office to discuss the full cost of classes, housing, meals, and other expenses. Ask this simple question: How much is it going to cost each semester?
Investigate all your options. Identify how much money you have to pay for college, calculate any shortfall, and determine other sources of funds. Such sources may include selling assets, such as cars, furniture, and other valuables. If your income and the sale of assets still do not cover the costs, consider applying for a student loan.
Understand how a student loan works. Unfortunately, most people do not know how much money they will owe, and they may also not understand that the longer they stay in school, the more they will owe. During your meeting with your school’s financial aid office, ask the officer to discuss what type of loan you have and how repayment works.
Know the difference between the types of student loans. Federal government loans are based on financial needs and have low, fixed interest rates. Those provided by lenders are for tuition and other educational purposes and are based on your creditworthiness. The loan amount, interest rate, and repayment terms will vary.
Understand the rules covering repayment of student loans. Six months after a student graduates, he or she must begin repaying any student loans. The loans must be repaid on time and in full, Non-payment of a student loan could result in a lower credit score, late fees, the withholding of any income tax refund, and possible wage garnishment.
Discuss the student loan and who will repay it. The student loan application process is a series of complex electronic forms, but the hardest part is actually paying back the loan. If your child has received approval for a student loan, sit down with him or her and discuss how the loan works. Your child needs to know how much will be owed, when payments will start, and how nonpayment could affect future opportunities.

Saving Money by Living on Less

Mechel Glass — Mon, 11 Jun 2012 01:05:14 +0000

Even though the nation’s employment picture is improving, many Americans continue to struggle to make ends meet. Many people with full-time jobs make less money than they did before the recession began and may pay more for medical and other benefits. If you are in this position, you know that paying basic monthly bills is a challenge and it’s tougher than ever to cover unplanned expenses or think about saving money.

In previous blogs, I’ve discussed the importance of money management and creating a priority spending plan. In addition, people need to find ways to eliminate stress and identify resources that will help them achieve stability in their lives. It’s important to know where to buy food and medicine at lower costs, volunteer, join a ‘networking’ group or take up a hobby.

To create a priority spending plan, I advise people to take the following actions:

List your current income and expenses. If your expenses exceed your current income, you will have to adjust your spending plan.

Develop and follow a spending plan that eliminates all unnecessary expenses. These include cable television, newspaper delivery, upgraded cell phone plans, gym memberships, magazine subscriptions and dining at restaurants.

If expenses still exceed your income, contact your creditors and ask for the ‘hardship’ department. Explain your situation and ask if there are payment programs available to assist you. Often, creditors are willing to lower interest rates, fees and monthly payments in times of financial hardship.

Next, identify organizations where you can buy food and medicine at lower prices, as well as find ways to reduce child care costs. These include:

For child care assistance programs, visit http://www.childcare.gov or for information on help paying for childcare, contact Child Care Aware at www.childcareaware.org or call
800-424-2246.

For information and assistance in paying for medical care for you and your family, visit the U.S. Department of Health & Human services at www.hhs.gov/children.

For prescription assistance contact the Partnership for Prescription Assistance at www.pparx.org or call 888-477-2669

Next, you need to relieve stress by exercising, eating properly and maintaining healthy relationships with friends and family members. Achieve these goals by volunteering or joining networking groups. You can also take advantage of various events, programs and resources in your community, at school or at your place of worship. Finally, consider taking up a hobby, including one that could turn into an additional source of income.

For free exercise programs, visit http://www.fitclick.com for free exercise plans, ideas and tips. For nutrition, www.nutrition.gov offers free meal planning and menus as well as nutritional tips and ideas. To volunteer, go to www.volunteermatch.org.

Finally, to enhance your financial education and skills, visit www.CredAbility.org/education to take advantage of a variety of free courses on demand to enhance your knowledge and financial capability.

What Every Graduating Senior Needs to Know about Money

Mechel Glass — Fri, 25 May 2012 04:00:00 +0000

High school graduation represents a milestone for teenagers. For parents who have spent eighteen years trying to prepare their children to lead productive and successful lives, graduation is an indication that they are well on their way.

Your graduating senior may be ready to leave for college or get a job, but what does she know about money management, saving money, handling credit, and how to avoid the pitfalls of debt and financial crisis?

For most young adults, a single event isn’t typically what leads to financial crisis, but a lack of basic money management skills—skills they won’t likely learn in school. Parents need to take the lead in providing their children with information and hands-on practice that will lead to sound financial management down the road.

Here are a few things every graduating senior needs to know about money:

How to create and stick to a budget
Start with the basics: analyze your teen’s spending habits, create financial goals, and set spending priorities. Work with your teen to develop a budget. Estimate his monthly income, from work, odd jobs, allowance, etc., and his monthly expenses—everything from entertainment, gas, and cell phone to insurance costs.

If your teen is moving into an apartment with a roommate, he needs to consider what would happen if that roommate suddenly left—how would he handle the bills on his own?

How to use a checking account
This is an important skill whether your child is heading off to college or starting down her career path. Have her take responsibility for some of her expenses, even if you are providing the income, by letting her use her checking account to pay the bills. Have her sit with you when you pay the monthly household bills so she gets an idea of what it takes to cover groceries, utilities, rent, and other expenses. Consider having her sign up for a CheckWise course at www.CredAbility.org/checkwise, which will help her learn to manage an account responsibly and may help her get approved to open an account at a local financial institution.

How to save
If your teen doesn’t already have a savings account, help him open one. Talk with him about developing a savings plan and setting aside a portion of his income each month for savings and unexpected expenses. Consider matching some of his savings—a great way to teach him about the rewards that come from building a savings account.

How to use credit cards
Recent changes as a result of the Credit Card Accountability, Responsibility, and Disclosure Act will make it more difficult for students to get a credit card. The law states that consumers under age 21 who can’t prove an independent means of income or provide the signature of a cosigner age 21 or older won’t get approved for a credit card. In many cases, this will help prevent students from getting in over their heads.

A responsible first step in helping your teen learn to use credit wisely might be getting her a debit card that is tied to her checking or savings account and will prohibit her from overspending. If you do this over the summer, she will have a few months to monitor her finances online with your help before she heads off to college.

How to protect a credit score
A credit score tells potential lenders how well you have used credit in the past and how likely you are to repay in the future. The better your credit score, the better interest rates you will receive. Have your high school senior pull his credit report. This can be done for free at www.annualcreditreport.com. If he hasn’t established a credit history, he might not have anything on his report, but it is a good idea to monitor the report on a regular basis. Remind him that a credit report is a record of his past financial transactions and that an important part of using credit wisely is to annually review his credit reports. Checking his reports will help him spot errors and serve as a safeguard against credit fraud.

Check out the rest of the credit stories here at the Equifax Personal Finance Blog for more advice on and help with building and maintaining a strong credit history.

How To Dispute Credit Report Errors
Four Things College Kids Need To Know About Credit
Four Myths About Your Credit History
Debt Reduction: Why Paying Down Your Credit Card Debt Helps Your Credit Score

Money Management for a Successful Marriage

Mechel Glass — Mon, 19 Mar 2012 01:38:00 +0000

Valentine’s Day’s is the biggest day of the year for marriage proposals. But now that Valentine’s Day has come and gone, it’s time for all engaged couples to make certain that their marriage gets off to a strong start with money management, an established budget and shared financial goals. While all engaged couples dream of marital happiness, they need to keep in mind that money is often the number one topic of conflict in marriage—and a leading cause for divorce.

If a couple has open and honest communication before they walk down the aisle, they can identify areas of concern and build a foundation for financial success and money management. Here are some tips that I recommend for engaged couples to be as happy financially as they are in other aspects of their relationship.

Calculate your net worth individually and as a couple. Share information about full-time, part-time, or supplemental income; monthly expenses; and existing loan and credit card debt. For better or worse, when you get married, you inherit all of your spouse’s finance issues.
Map out short-term and long-term financial goals, including preferred living standards. Does your future spouse have a desire to retire in his or her 50s? Does your beloved want a second house on the beach? What about retirement savings plans, insurance policies, life insurance plans, or investment accounts? Are either of you on a strict budget to pay off the debt you’ve accumulated? It’s important to talk now about long-term goals and any necessary short-term sacrifices.
Develop a plan to reduce debt redundancies and to pay off debt. Identify areas where bills unnecessarily overlap, and look for opportunities to use your married status to decrease expenses. Most cellular phone companies offer family plans that can cut monthly phone costs. If you are paying individual membership dues to a gym or other club, see if a family membership makes better financial sense. Use your savings to reduce credit card debt. Bear in mind that carrying significant debt into your marriage can affect the rates for which you might qualify when you are applying for a mortgage.
Create a comprehensive budget. Take into account your current income and expenses. While income generally increases with a marriage, oftentimes expenses increase, too. Take a realistic look at what your new monthly expenses will be as a married couple. Keep in mind that certain bills will increase, such as groceries, commuting costs, and even dry-cleaning expenses. Be sure to plan the amount of money you will place into savings each month to create a joint emergency fund, to save for a down payment on a house, or even to build a joint retirement nest egg. Consider also setting aside a small amount of money per week that each spouse can spend at his or her discretion.
Share your credit reports and credit scores. For many couples, marriage signifies the impending desire to purchase a new home or make other major purchases—but it is crucial to know about your partner’s credit report. Americans are entitled to a free credit report from each of the three credit reporting agencies every 12 months. Log onto www.annualcreditreport.com to obtain copies of your reports, and consider also purchasing your credit score (for a nominal fee). In the process, carefully review the reports and correct any erroneous listings. Be sure to examine both of your credit scores and debt-to-income ratios as lenders use this information when assessing loan applications.
Decide when to merge accounts. Discuss the pros and cons of maintaining separate or joint accounts. If your intended has bad credit, maintain separate accounts for the time being, but work with him or her to pay off the debt and begin the process of improving his or her credit score. If you both have good credit, consider opening joint accounts for household expenses and savings but possibly maintaining separate accounts for personal spending money.
Plan the wedding of your dreams—and of your financial means. Now that you are headed on the right path to financial bliss, be sure that the happiest day of your life does not become the one that ruined your finances and credit rating for years to come. Set a budget prior to planning the wedding and stick to it! There are lots of convenient ways to cut costs and still have a beautiful wedding.
Talk about the future. Discuss your plans for the future and how they can impact your finances. If you are planning to have children, talk about the expectations of what will happen when the baby comes. Will one of you stay home to care for the child? Will you both continue to work and need to consider daycare options? How about college? The cost of raising children is significant and can have an impact on the most prepared family.

READ MORE:
Consumers Paying Off Debt Helps Economic Recovery
Building a Strong Credit Report from the Beginning
Become a Better Borrower with Your Credit Score
When to Lock Your Equifax Credit Report
Saving Money On Banking Fees

Saving Money and Setting Financial Goals With Your Children

Mechel Glass — Fri, 13 Jan 2012 14:32:10 +0000

Raising Financially Responsible Children

As we begin the new year, I not only am making my own set of resolutions, but I am also revisiting my goals for my child. One of those goals is to raise her to be financially responsible. And while school may prepare my daughter academically, the financial lessons she learns will come from how she sees me handling and saving money rather than from what I tell her to do.

The first step in raising financially responsible children is to assess your own money management skills. What are your financial goals? Do you pay your credit card bills in full each month? Do you save up for things you really want or do you just use your credit card and pay for them later? Do you have a spending plan, and do you know where your money goes each month?

Making changes in your own spending and savings behavior will not only help you as you talk to your children about money, but it will also improve your financial outlook.

Start saving money early

A kindergartener who saves just five dollars per week in an account paying 2 percent compounding interest will have $3,867 when he or she graduates from high school. Even preschoolers can learn the basics of saving. A piggy bank, a jar, or a coffee can is a great first savings plan, and kids can see the immediate result of their efforts as the level of coins rises in the bank.

As your children grow, it is important that their savings plans grow with them. Consider taping a picture of an item they are saving for on their savings jar. Each time they make a deposit into their bank, they will be reminded how their efforts will pay off.

Elementary school is a good time to open your child’s first real savings account. Some schools offer banking programs in connection with a local bank. After an account is established, children can make deposits at school or at a local branch office. If your children’s school does not have such a program, take them to the bank with you so they can make their own deposits and monitor their balances and progress toward goals.

Talk about money with your children

As adults, it is sometimes tough for us to distinguish between wants and needs, so you can imagine how difficult it must be for a nine-year old who is convinced he needs the latest video game. Spend some time talking about the difference between something you need to live and something you would like to have.

When you go to the grocery store, let your children help you shop by finding items and comparing prices between brands, looking for the best deals. Give them a small budget and allow them to shop. They will need to make choices based on their budget, which will help them learn how much they can afford to spend. Consider letting them keep what they don’t spend as an added incentive to shop wisely.

Let your children see you identify something you would like and then make a plan of how you will save up for it. Perhaps you will give up your morning coffee stop for the next month to pay for a new purse or lamp you’ve got your eye on. Your commitment to saving money will speak volumes to your children.

Allowance

Giving children an allowance is a great way to help them learn how to handle money. Establish the amount and the schedule for when it will be paid, and talk with your children about the allowance and your expectations. Consider having your children set aside part of their allowance to be saved and let them spend the rest. You might even provide two banks or envelopes—one for saving and one for spending—so it is easy for your children to know the difference.

If your budget permits, you can encourage further saving by matching any of the spending money your children agree to save instead. If they save even a small portion of their allowance and you match it every week, their savings will grow quickly.

Help your child set and achieve goals

Once your child has identified something she would like to have, help her figure out how to get it. Do some comparison shopping online or with the weekly newspaper ads for the best price. She can create a written savings plan outlining how much the item costs, how much she will be able to save each week, and when she will likely have enough to make the purchase. If possible, provide opportunities for her to earn a little extra money to use toward reaching her goal. This is more than a great financial lesson. The sense of accomplishment that comes from setting and achieving goals is a feeling every kid should experience regularly.

Let your children make mistakes

You might be tempted to stop your children from spending his money in a way you might think is foolish or wasteful. Resist the temptation. Some of the best lessons your children will get will be from making mistakes. And lessons learned now will stick with them for a lifetime.

Saving Money and Setting Financial Goals With Your Children

Mechel Glass — Mon, 09 Jan 2012 03:45:47 +0000

Raising Financially Responsible Children

Making changes in your own spending and savings behavior will not only help you as you talk to your children about money, but it will also improve your financial outlook.

Start saving money early

Talk about money with your children

Allowance

Help your child set and achieve goals

Let your children make mistakes

Pay Off Debt and Take Advantage of Low Interest Rates

Mechel Glass — Thu, 06 Oct 2011 04:00:01 +0000

The pledge by the Board of Governors of the Federal Reserve System to keep interest rates low for at least the next two years provides an opportunity for consumers to get more for their money. Millions of people have taken the opportunity to pay off debt during the past three years, cleaning up their personal balance sheets, so now may be the time for them to take advantage of low rates. Especially for people who budget and plan accordingly, this can be a smart way to use credit wisely and get out of debt faster.

Like most of us, I want the economy to show much more strength before I make any significant changes to my spending and investment plans. But for others, the time may be right.

Five major purchases or financial moves to consider while rates are low

Buying a home. While low interest rates are not reason enough to make the plunge into home ownership, for consumers already considering buying, it may just be the right time. In many markets, home sales and prices are relatively steady or have begun to rise slightly. Rates on long-term, fixed-rate mortgages are at their lowest in decades.

Not sure how much house you can afford? FHA and VA government loan programs may allow you to apply a higher percentage of your gross monthly income towards a home loan, and the various mortgage companies may also have a different percentage; at CredAbility we recommend no more than 38 percent of your income should go towards housing obligations.

Buying a car. While car loan rates have not dropped as significantly as mortgage rates, they have begun to come down, and many manufacturers are offering special financing options and other incentives. If you really need a new car, do your homework. Know what you want to buy, and compare offers to ensure that you are getting the best deal.

Refinancing. If you are in an adjustable-rate mortgage and plan to stay in your home, this is a great time to refinance into a fixed-rate loan. It may also be a good time to refinance your long-term, fixed-rate mortgage. If you purchased a $225,000 home five years ago and had a rate of 7 percent, your payment was about $1,500 per month and you have already paid more than $76,000 in interest. Refinancing the balance of that loan now at 3.5 percent for 15 years will save you almost $175,000 over the life of the loan and let you pay off your home almost 10 years sooner. Plus, your payments will only go up about $25 per month. Each situation varies; you can visit www.bankrate.com or Equifax Mortgage Match and use those calculators to compare rates and payment.

Paying off your debt. Even if you’ve paid down your mortgage, home equity, and credit card debt during the past three years, you still may want to pay off more debt. Many certificates of deposits and savings accounts are paying little to no returns, and consumers will be better off in the long run to reduce or eliminate their credit card debt. It may also be a good time to negotiate rates with your creditors, especially if you have maintained an on-time payment record and have continued to make at least minimum payments.

Reviewing your investment options. If you can afford to send more money to your 401(k) or 403(b) account, do it, especially if your employer continues to match or contribute to it as well. In addition, talk with your financial advisor about alternatives to savings and money market accounts. It may be the right time to expand your investment portfolio and explore options to earn greater returns on your savings.

4 Tips for Savvy Yard Sale Shopping

Mechel Glass — Thu, 15 Sep 2011 05:00:17 +0000

Did you read yesterday’s post with advice for hosting a successful and profitable yard sale experience? This week we have some tips for how to be a savvy yard sale shopper.

Tips for yard sale shoppers

For the careful shopper, yard sales offer a great way to get things you need at a fraction of the cost.

Plan your shopping strategy. Using the newspaper or an online resource (such as Craigslist.org), plan your shopping strategy. You might do this based on location of the sale or based on who seems to have items you are looking for. While you might want to arrive a little early, many sellers stick to a “no early bird” policy.
Be prepared. If you are looking for furniture, bring a truck, or have access to one quickly. Sellers are not interested in holding an item for you while you figure out how to move it. Have cash, and carry smaller bills so you are prepared to make offers and conduct transactions quickly.
Know what you are looking for. While you might stumble across an item that you just have to have, it’s a better financial strategy to know what you are shopping for before you leave your house. If you need clothes for your children, yard sales can offer great bargains—clothes are typically harder to sell and there may be opportunities to bundle many items for a single price. Resist the urge to buy something you don’t need just because it is a bargain. You won’t use it—and it will end up in your next yard sale.
Don’t be afraid to negotiate. Most prices are negotiable, so if you see an item you like, but you think the price is too high, talk to the seller about it. On the other hand, if you know you are getting a bargain, don’t haggle on price over every item. Sellers may be more willing to lower prices late in the day or on the last day of a sale. If you see something that is priced out of your range, consider giving the seller your number and asking for a call if the item hasn’t sold.

Good luck with your bargain hunting, and please leave comments with your suggestions for fellow yard sale shoppers.