Debt Zapper - 3/7 - Finding ways to reduce and stay out of debt, while saving for the future.

Understanding your credit score


Photo Source: MyFICO

I consistently hear people talking and asking about their credit score, and how to understand it, because the algorithm is tricky, and to the best of my knowledge it’s not published publicly anywhere. The best anyone can do is rely on experts and articles they’ve researched to try and gather information to make a best guess. The chart I’ve featured above is one I have seen on many sites, and seems to be a generally accepted model that is a pretty good estimate. Some of the percentages aren’t within a consumers direct control, but a few are.

  • New Credit: Don’t be overzealous in applying for credit. Apply for what you need, when you need it.
  • Payment History: The most recent 24 months of payments makes the largest impact, so make every effort to pay on time each month to keep 35% of your score at its highest amount.
  • Amounts Owed: If you already have high balances, this is no longer in your control. If not, congratulations, and remember to be conscientious of what you are charging and not paying in full each month. The remainder of this article is for those who need to reign in their amounts owed, and is based on tips to get the amounts you owe down to manageable levels. Continue reading Understanding your credit score

How to settle with Credit Card Collectors

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I got a question from a reader this week, regarding how she can settle with her credit card collectors. She’s read the tips on my other articles, and is in a position where she has found herself struggling as a single mom of 4, a job that barely covers the bills, and a mound of credit from her dissolving marriage. Since she is getting a fresh start for herself and her kids, she wants to get her financial affairs in order as well. She’s considered that she may have to consult a bankruptcy attorney if she can’t negotiate an affordable arrangement with her creditors, and needs some tips to use while she tries to make these arrangements. I did some research, and these are the tips I came up with: Continue reading How to settle with Credit Card Collectors

Textbooks can be affordable

Textbooks can be affordable:

I recall my Freshman year of college like it was yesterday. I remember how excited I was that first time on campus, registering for classes, meeting new friends, pledging my sorority, and then…..going to the bookstore and getting a huge shock. The price of college textbooks is outrageous. Sure, you can save a bit of money by purchasing used books, but it’s still an enormous amount of money. Credit Card companies know this, and are often on hand with representatives near the bookstore, offering students what may often be their first credit card. They have specials, some with 0% interest for a (very) limited time to (few) well qualified borrowers (many students are NOT) and they’ll throw in a FREE college T-shirt or some promotional goods when they apply. Then, they can use the card to buy their books, so they don’t have to spend a huge chunk of their budget for the semester before classes even start. It sounds great (to some) and can be (for few), but in reality, most students won’t pay the bill in full when it comes, they’ll carry a balance, and with the added interest charges, they’ll pay a ridiculous amount of money for those books. Yes, they can sometimes sell them back for a fraction of the price, but do you really think they will use that money to payoff the credit card? I can tell you, it’s VERY unlikely.

Textbooks CAN be affordable though. CampusBookRentals offers students the ability to RENT textbooks for a quarter, semester, or summer session. They can save 40-90% off bookstore prices, get FREE shipping both ways, are able to highlight in the textbooks, and they will make a donation to Operation Smile for every textbook rented. When I mentioned this on Facebook, one friend noted that she rented her textbooks from Amazon via Kindle. When I compared prices myself, the Kindle rental was more expensive AND it’s a digital copy of the book, NOT a physical copy, so that’s something to take into consideration.

Here’s an example. The book, Principles of Macroeconomics, is listed for sale on Amazon for $164.99 for a NEW copy, and used from $116.84 (plus shipping) in “good” condition. I’ve been asking friends on facebook for names of textbooks that their kids are currently using, so I can independently compare rates on books that real people I know are using. This particular person paid $205 for a USED copy in their school bookstore. At CampusBookRentals, Principles of Macroeconomics by Mankiw, N. Gregory textbook, is listed at $102.69 for one semester, $93.45 for a quarter, and $89.34 for a 55 day (summer) session. While it may be “just” $14 for this one book (if she had bought at Amazon, it’s actually $103 cheaper than what she paid at the school bookstore), when you consider she has 8 textbooks for this semester, that’s a significant savings. ONE of the books she needed was cheaper at Amazon, the rest were cheaper here, and ALL of them were much less expensive than the school bookstore, where she actually purchased books this semester. Had she rented all of her textbooks from here, her total would have been under $500. Instead, she paid $1200 at the school bookstore. That’s a $700 difference!

Continue reading Textbooks can be affordable

5 keys to Financial Security and Success


Photo Source: CPA Review Materials

In this era of recession and financial disaster for so many people, many people are finding it necessary to re-evaluate their financial situation and priorities. Regardless of where you are on that spectrum, the first step to financial freedom is to take an honest and thorough evaluation of where you stand financially, so you can take the first step TODAY to becoming more financially stable. Here are 5 keys to financial security and success to help you get started:

  1. Put your budget in writing. If you look in my sidebar (or message me), I have some templates to help you get started. It’s pretty difficult to set a budget you can stick to if you don’t know how much money you have coming in, or where it’s being allocated to.
  2. Spend less than you earn. Sometimes this means you need a second job, better job, or to make some hard budget cuts. You need to make sure that at a minimum, your income exceeds your obligations. Preferably, you will get into a situation where you are saving a significant portion of your income.
  3. Payoff your debt. The obvious first choice here is to eliminate credit card debt. Follow that up with secured debt, up to, and including, your mortgage. For inspiration, play around with a mortgage calculator and see how much money you’d save in interest by simply paying one additional payment each year. Seeing that amount should inspire anyone to stick to their plan!
  4. SAVE. If you’ve read my other articles, you know by now that having an emergency savings account is crucial for many reasons. It’s also a good idea to max out contributions to your 401(k), and you know I am a huge believer in keeping 5-10% of your salary in a Money Market account for longer term goals or larger emergencies. After those goals are met, consider investments!
  5. Keep good records, and make sure you are taking advantage of all of your benefit options: These kind of go hand in hand. If you are a good record keeper, you’ll be aware of what benefits are available to you through your employer, insurance company,and other organizations you belong to. You want to make sure you have a will and your final arrangements are planned for, to protect loved ones. You want to make sure you have adequate coverage for all of your needs, but not double coverage that would only pay once. Keeping records of accounts paid in full will protect you if a company later claims you owe them money, not to mention for tax reasons!

Get Out of Debt Spreadsheet Goal

I had a couple of users contact me with questions about how they could track their progress as they work their way out of debt, after my Top 10 Tips to Start Getting Out of Debt post. For privacy reasons, I can’t share the ACTUAL spread sheet I use, but this is a model of what it looks like, more or less. When I copy/paste it, it loses some of the settings.

I am more than happy to share via email this mock up, and then you can personalize it with YOUR personal figures. I am happy to email a blank template for FREE. This is what I use to help me keep track of what the debt ratio of each account is. I can quickly sort by that, the amount owed, the min payment due, or the interest rate.

For those who struggle with Excel, but are interested in help, just message me. I emailed this to one user and she wanted me to fill it in for her. She emailed me her statements (PLEASE BLACK OUT ANY PERSONAL INFO & ACCT #’s, I DO NOT WANT/NEED THOSE) and I spent about an hour filling everything in for her. It was a bit more detailed than this, and personalized for her. I DO NOT do this professionally, I just try to help where I can, so I do not have a fee schedule, but she paid a VERY reasonable rate for the amount of time and work involved (Less than $25). Now, she just has to update each month when her statement comes, and she is more motivated to stay on track. I included a Due Date feature, a link to each Account Website, etc. so all she has to do is click the link and make her payment.

*Note, I also have a budget sheet, savings worksheet, etc. Continue reading Get Out of Debt Spreadsheet Goal