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January, 2011 | Financial Planning & Budgeting

Monthly Archives: January 2011

Debt Consolidation Loans for Bad Credit

Debt Consolidation Loans for Bad CreditThere are a number of seemingly undamaging financial behaviors that may put you at a credit disadvantage. The decision to whether you secure your financing option as well as the corresponding interest rate assignment is simply based on two important factors, your credit score and the details that are listed in your credit report. As per recent financial studies of Equifax Inc., the average US credit score increased to 695 in the month of May, 2011, the highest since the last 4 years. The ratio between the consumer debt payments to monthly incomes is the lowest since the year 1994 and debt delinquencies have fallen 32% since 2009, as per the data of the Federal Reserve. With the soaring debt burden and the unemployment rate, debt consolidationloans for bad credit are gaining importance though there has been drastic fall in the number of delinquencies.

Though the financial situation of the household sector has improved faster, yet there is a class of people who are being turned down on traditional loan offers due to exceptionally low credit score. As jobs are hard to find in today’s economy, an increasingly large number of people are defaulting on their loans as they’re falling short of funds. If you have an overwhelmingly large amount of debt burden and you’re looking for debt consolidation options, you can certainly take out debt consolidation loans for bad credit. Read on to know some mandatory steps to go through before taking the plunge.

  • Research your options: Though it needs no mention that there is a plethora of options to choose from, yet most people fail to inquire a number of companies before selecting a particular bad credit debt consolidation loan. Loan offers from different financial establishments will offer you different rates and therefore comparison shopping and research is mandatory before initiating the entire process.
  • Don’t believe in the headlines: There are some lenders who offer a flat rate to their client debtors. Though you may rush to get the quote that has been advertised in the newspaper, you must not always believe blindly in them. Most rates of such lenders may vary according to the projected risk of the debtor.
  • Check the interest rates: When you go for debt consolidation loans for bad credit, you can be sure about the sky-high interest rates. The interest rates on the loans are usually determined in accordance with the risk that you pose to the lender. Since you already have a tarnished credit score, you’re at a disadvantage and thus you’ll have to pay high rates on the loan. However, shopping around can still help you lower the rates on the loan as you can choose the lowest rate after checking out all the offers.
  • Check the redemption penalties on the loan: While taking out debt consolidation loans for bad credit, you must also check the redemption penalties. There might be some fees that you have to pay of you redeem the debt consolidation loan before the stipulated date.
  • Read the fine print: You must always read the fine print of the loan that you’re taking out. This is the only way to assure that you’re prepared for any worse situations while repaying the loan. Get to know what happens if you default on a payment or pay off the loan earlier.

With the present financial situation, almost everyone is resorting to loans to fulfill their dreams. But at times, when you apply for a debt consolidation loan, the lender might reject due to credit related problems. You may resort to debt consolidation loans for bad credit after checking the above mentioned options.

Posted in Getting Out of Debt. Tagged with , , .

Personal Finance Merit Badge

We’ve mentioned teaching your kids about money before here on Financial Planing & Budgeting, but we were a little surprised to see that some kids may know more than adults about money. How, you ask? It turns out that in order to become an Eagle Scout when you’re a young boy scout, you have to get something call a Personal Management Merit Badge, which, is mostly a Personal Finance Merit Badge. This may seem like a bit of a joke, but the requirements taught are important financial lessons that anyone should learn. You may want to see if you can go back and earn your own personal finance merit badge.

How To Earn a Personal Finance Merit Badge

1. Learn The Difference in Savings and Investing

This may not seem like an important distinction, and while both are beneficial, it’s important to know what your money is doing. You can save and save a lot, but to invest is to increase, with the knowledge of risk. You should know how to define interest and compound interest and how to measure your return on investment and the risk of that investment.

2. Learn How to Choose Publicly Traded Stocks

To gain your Personal Finance Merit Badge, you can practice by picking five publicly traded stocks from the business section of the newspaper or online. Take note of the current price, the difference of the price from the day before and the 52-week high and low prices. This may seem Greek to you, but it should just be motivation to find out what all of this means and get involved in trading stocks for profit.

3. Learn Different Ways to Save and Invest

If you have enough money to save or invest, look into each of these options and learn all you can about each:

  • Common stocks
  • Mutual funds
  • Life insurance
  • A certificate of deposit (CD)
  • A savings account or U.S. savings bond

4. Learn How to Effectively Borrow Money

Personal Finance Merit BadgeBorrowing money can be a really good thing, or a really … really bad thing. To get your Personal Finance Merit Badge, you need to learn what a loan is, what interest is and what the annual percentage rate (APR) is for a loan and what that means. Learn all you can about credit cards and charge cards and the best way to pay them off. And, last but not least, learn the best way to pay off debt.

I think we can all agree, learning these skills at a young age would’ve been very helpful and are helpful to those who are still young and have the chance to gain such financial knowledge. However, just because it’s something a boy scout would do, shouldn’t stop you from learn all you can and improving your financial knowledge and situation.

For an indepth look at what goes into earning a Personal Management Merit badge, visit here: Personal Management Merit Badge.

You can also download the Personal Management Merit Badge Worksheet here: Worksheet.

Posted in Financial Success. Tagged with , .