If you're like most people, you probably use plastic for many of your daily purchases. Since more places take credit or debit cards and many of these cards offer rewards or cash back, it is no wonder they are so easy to use. But this convenience can come at a cost. If you don't keep detailed records of your spending, using the card can lead to spending more than you normally would.
When you use cash for your regular daily purchases, you have a physical connection to your available money, and you can visually see how much you have and how much you spend. With a card, it's all digital and you may not review your purchases until the end of the day, week, or even month. By then, the money has long been spent. But with cash, you open your wallet or purse and immediately know how much you have available to spend, and it may keep you from buying something you don't need. So, if you have trouble keeping your spending under control, you may want to consider giving cash a try.
Keep Spending Under Control By Using Cash originally appeared on About.com Financial Planning on Tuesday, January 31st, 2012 at 20:42:52.
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With the housing market still in the dumps and mortgage rates at record lows, a lot of people are considering buying a home for the first time. Taking advantage of depressed real estate prices and cheap lending does indeed make this a buyer's market. But buying a home is no simple decision. In fact, it may be one of the largest financial decisions many people make in their lifetime. So rather than jump in head first it pays to make sure owning a home is really the right decision. Here's how to determine if you are ready to buy a home.
Ready to Buy a Home? originally appeared on About.com Financial Planning on Tuesday, January 24th, 2012 at 11:44:57.
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People love the idea of owning a home, and sometimes that allure makes people do the wrong thing. That's where risky mortgages come in. For decades, the 30-year fixed-rate mortgage was the gold standard. You put 20 percent down, you got a 30-year loan, and that was all she wrote. But in recent years the types of mortgages offered have made a mess of the marketplace, as can be seen with the current financial crisis. Now you can get interest-only loans, 40-year loans, adjustable rate mortgages, and so on. All of these new loans make it easier to make payments on a house, but the problem is they usually put you in a worse financial situation. Here's what you need to know to avoid some of the more risky home loans out there.
Pick The Right Mortgage originally appeared on About.com Financial Planning on Sunday, January 22nd, 2012 at 20:02:50.
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Gas prices are relatively high and the cost of groceries are increasing faster than inflation. People everywhere are feeling the financial pressures of today's economy, and for most, the thought of saving money is a distant one. When times are tough, saving money can be difficult. Even if you're living paycheck to paycheck, there are ways you can save if you follow a few simple rules
Start Small
Saving money is a marathon, not a sprint. If you want to save up $1,000, it is much easier to accomplish that goal in a year compared to two months. In order to put your savings plan to work, the key is to start small. Can you find a way to save $5 each week? Think about it--five dollars a week is less than a lot of fast food value meals or even a few fancy coffees. Five dollars could be shaved off of each weekly grocery bill by buying a few things on sale or buying store brands. When you start with a small amount, you can find ways to save, and it adds up over time.
So, saving five dollars a week doesn't sound like much, but that's okay. If you saved just the five dollars a week for a year, you'd have $260, less any interest. If you're married and your spouse does the same, you will have amassed over $500 painlessly. But the idea isn't to start small and stay small. You may start at five dollars a week, but once a few weeks or a month goes by and you're used to saving that money, bump it up to $7 or even $10 each week. If you could live without five extra dollars, you could probably find you can get by without seven dollars just as easily.
These small incremental weekly increases will gradually change your spending habits so that you become accustomed to how much money you have available, and before you know it, you're stashing away a nice amount of money.
Make Saving Automatic
You've heard it before, but to make saving work, you need to pay yourself first. If you wait until all the bills are paid, groceries bought, and money otherwise spent before seeing what is left over at the end of the week, you'll always come up empty. The key to saving is to treat your savings as a bill. You find a way to pay the phone bill each month, don't you? Well, think of your weekly or monthly savings as a bill that has to be paid, and pay it before it gets spent on frivolous things.
To make sure you pay yourself first, you need to create an automatic savings plan. This is best accomplished by setting up direct deposit with your paychecks so that a little bit goes into savings on the day you get paid. That way, on payday you don't have to worry about making a deposit yourself, and you have already put that savings out of sight and out of mind.
If you don't have direct deposit set up, you can always create an automatic transfer between accounts with your bank. You can schedule a weekly, bi-weekly, or monthly automatic transfer that moves money from your checking to savings. If you don't have to think about it, it's much more likely to get done.
Saving Money in a Tough Economy originally appeared on About.com Financial Planning on Sunday, January 15th, 2012 at 18:46:50.
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For a few years now interest rates as a whole have generally been falling or remain very low. Of course you may have some instances where rates are increasing, for the most part when it comes to savings accounts, CDs, and even mortgage rates, they are down sharply compared to a few years ago.
Good for Debt, Bad for Savings
Lower interest rates are good for borrowing money since it means you will be paying less in interest. The bad news is that the Fed rate cuts don't directly translate into lower rates for consumers. These cuts can take many months before the effects are felt on your bottom line, but you can begin shopping for lower rates now. Once you can begin to benefit from the lower rates, you'll have more money in your pocket as less is being spent on interest payments.
While lower interest rates saves you money when borrowing, the opposite is true when you are saving money at the bank. As interest rates fall, the rate of return on your checking, savings and CD accounts will likely follow suit. If you enjoyed the comfortable savings rates during most of 2007, you're probably not very excited as many rates have now dropped below the rate of inflation. If you can, make sure you're getting the best rate possible and explore other banks to ensure you're getting as much interest on your savings as possible.
Learn more about interest rates:
How to Plan for Lower Interest Rates
What Are Interest Rates?
The Federal Reserve and Interest Rates
Dealing With Low Interest Rates originally appeared on About.com Financial Planning on Sunday, January 8th, 2012 at 18:56:10.
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Owning a home is part of the American dream. It has long been considered one of the cornerstones to building wealth. Even so, there is more to buying a house than simply finding one you like and buying it. You need to take into consideration the true costs of buying a home, the things you gain and the things you lose, how much you can afford to spend, and even what type of mortgage is best. So, before you jump into this major purchase, take the time to consider everything that is involved.
Things to Think About Before Buying a Home originally appeared on About.com Financial Planning on Wednesday, December 28th, 2011 at 10:41:25.
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In these difficult financial times more and more people are turning to bankruptcy. Bankruptcy isn't pretty, but it's often the option of last resort. If you've been considering bankruptcy and aren't sure of your options it can be a daunting task and a difficult decision. Here is a little background on the different types of bankruptcy and how bankruptcy works.
How Bankruptcy Works originally appeared on About.com Financial Planning on Wednesday, December 21st, 2011 at 12:54:23.
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