Tag Archives: Budgeting

Everything You Need to Know about Credit Card Cash Advances

Credit card cash advances are amounts of money which people are permitted to “borrow” from their credit card companies. These advances are generally processed via ATM withdrawals or deposited checks. Unlike other types of loans, credit card cash advances almost always come along with hefty interest rates, usually notably higher than the interest rate of the associated credit card. Furthermore, the interest tied to credit card cash advances generally begins on the day one borrows the funds.

There are a variety of reasons why an individual may consider taking out a credit card cash advances. In most scenarios, doing so is ill-advised, but regardless of the decision which one ultimately makes, having an awareness of the following information is paramount.

There are Many Strings Attached

One of the massive pitfalls of credit card cash advances is the plethora of attached strings. As previously stated, credit card cash advances generally come along with sky-high and immediate interest rates. ATM fees are also part of the deal, as are payment allocation rules. Of course, certain logistics will vary depending upon the bank/credit union and their rules regarding credit card cash advances.

At the end of the day, credit card cash advances are not truly worth it. The amount of money will which be paid in combined interest and fees will undoubtedly surpass the amount of originally borrowed funds. In essence, someone who takes out a $500 cash advance may wind up paying $1000 (or more!) by the time they’ve covered all of the subsequent monetary charges.

You Could Have Deeper Financial Issues

In light of the multiple expenses associated with credit card cash advances, resorting to taking one out could be indicative of deeper financial issues. In most cases, individuals who take out cash advances do so because they need cash, yet have no other way of getting it. Even in today’s world, there are still certain situations where merchants may not accept credit or debit cards as payments. Unfortunately, there are other people who resort to cash advances for unwise purposes, such as gambling.

How to Steer Clear of Credit Card Cash Advances

It goes without saying that the pitfalls of credit card cash advances vastly outweigh the upsides. For this reason, people should employ the proper financial strategies so they are never completely unable to access cash if they truly need it. Thankfully, there are several ways of going about this. The first and most obvious strategy involves saving money. The amount of money which can be saved will greatly depend upon the amount of one’s income and their expenses. Ideally, the former should always outweigh the latter. This, in turn, allows for people to gradually build an emergency fund to be used in times of need.

If someone’s expenses outweigh their income, then the person has a few options: increase income, decrease expenses, or both. Income can be increased by seeking a raise, requesting additional working hours, or pursuing economic ventures outside of one’s day job (such as freelance work). Decreasing expenses is viable by simply reducing the money which is being spent. Most people do this by going out less often, canceling monthly subscriptions, and shopping with coupons. This may not seem glamorous, but it certainly beats having to take out a credit card cash advance due to a lack of funds.

Finally, the best way to avoid credit card cash advances is by always having some cash on hand. This could mean storing a few hundred dollars in a safe or keeping some bills in a wallet. Regardless of the financial means one takes to save money and maintain readily available cash, just about anything is better than taking out a credit card cash advance.

 

Authored by Gabrielle Renee Seunagal

Building an Emergency Fund on a Tight Budget

The existence of a healthy emergency fund is absolutely paramount for any adult. Unexpected expenses and occurrences happen all the time, often when people least expect them. A plentiful emergency fund can, and often does, determine whether or not an individual or family is ruined by financial hardship or able to foot the unexpected bill.

Despite the importance of an emergency fund, not everyone has one. One of the most common reasons is a tight budget. Of course, saving money is critical, but how does one go about doing so when they’re living on a tight budget. Thankfully, there are various strategies which can be used to create an emergency fund, regardless of one’s budget.

Build in Moderation

Many people believe that they can only build an emergency fund by putting aside large sums of money. However, this is not necessarily true. Emergency funds can be built slowly and moderately — and should be for individuals who are on a tight budget. Putting aside $20, $10, or even $5 per week may not seem like much money, but with time and consistency, it will add up fairly quickly.

Reduce Expenses, Increase Revenue

The creation of a healthy emergency fund will inevitably require changes in money management. These changes will involve the reduction of expenses and an increase in revenue. It goes without saying that the more money one has, the more they can put towards their emergency fund. Reducing expenses and increasing revenue will also gradually allow people to put aside larger amounts of funds. Many working individuals have a tendency to consume in greater amounts when their profits increase. However, discipline is certainly required in the process of building an emergency fund.

Set Specific Goals

Believe it or not, having a specific goal in mind can simplify the process of achievement. In the case of establishing an emergency fund, having a specific dollar amount in mind for one’s emergency fund can make a nice difference. Generally, experts advise people to have three to six months worth of living expenses in savings. The amount of time required to establish this amount will depend on a variety of factors. However, each bit of money which is placed towards the emergency fund will ultimately make a difference.

A Final Word

Timing is a huge factor in the creation of an emergency fund. In most cases, the earlier one starts, the better. Even young college students can begin creating their own savings by putting modest amounts of money aside. Building an emergency fund also requires discipline. The temptation to spend money is everywhere; those who constantly dig into their savings in order to fulfill their desire for instant gratification will inevitably find themselves out of funds when a true emergency arises.

 

Authored by Gabrielle Renee Seunagal

Knowing Whether or Not to Loan Money to Someone

At one point or another, most people will find themselves in situations where they asked for a loan. The person making this request may be a relative, close friend, or even a co-worker. Loaning money comes with its own risks and stigmas; what if the borrower takes too long to return the money? What if they can’t afford to pay back the loan? Worst of all, what if they simply choose not to?

Most people feel inclined to provide aid to those who are closest to them. However, there are still certain factors which should be taken into account prior to handing out monetary loans. Keep reading if you’re interested in learning more.

Consider the Qualities of the Person

Not every person who asks for a loan should be told yes. Hence why the qualities and characteristics of the prospective borrower should be taken into account before any funds are exchanged. Integrity, personal responsibility, and even current financial standing each play a role in how likely the individual is to, not only, return the borrowed funds, but also do so in a decent amount of time.

Another point to take into account is whether or not the asker has previously borrowed money from other people. If so, has he or she paid it back in a timely manner? Believe it or not, borrowing history tends to be quite indicative of an individual’s forthcoming habits, as they pertain to money.

Look into Creating a Legal Contract

While amounts of borrowed funds can vary, WikiHow advises lenders to draw up legally binding contracts; this especially comes in handy when hefty sums of money are being loaned. This can be done by having the borrower sign the contract and also ensuring that the document is enforceable via the Uniform Commercial Code (UCC).

Instituting a clear payment plan and eventually getting the contract notarized are also critical steps towards legalizing the form. Although going through the process of creating a legal contract may seem like a bit much to some individuals, it can truly come in handy later on down the line. Moreover, if a prospective borrower is unwilling to sign a legally binding contract, they may not be the best person to loan money to.

Trust Your Instincts

At the end of the day, each person is tasked with the decision of whether or not they want to loan money to a friend or relative who asks. Considering their qualities and characters can be incredibly beneficial, as can creating a legal contract; however, at the end of the day, your instincts should always be the determining factor.

No matter how good or trustworthy someone appears to be on paper, if your gut tells you to turn down their request to borrow money, do so. You are under no obligation to hand out loans; furthermore, you must first help yourself before you can truly help others.

A Final Word

Hopefully, the preceding advice will prove helpful to anyone who is undecided about whether or not they should loan money to someone they know.

 

Authored by Gabrielle Seunagal

How to Pay Back a Loan

There are many people who wind up taking out loans at one point or another. Perhaps they needed the funds to invest in their education, pay bills, cover a sudden emergency, etc. However, regardless of the reason, the ultimate reality is that borrowed funds must be paid back.

Unfortunately, there are countless individuals who struggle with paying back loans which they took out. This ultimately doesn’t bode well, seeing as interest rates can be astronomical and quickly pile up with the passing of time. Therefore, people who are struggling with paying their back loans should adhere to the following steps.

Make Payments

Although this step sounds obscenely obvious, it’s one that many individuals fail to truly follow through on. So often, people get caught up in other financial demands, thus putting off loan payments. In even more unfortunate circumstances, some borrowers are unable to pay off their loans and simultaneously cover their everyday living expenses. Both scenarios almost always engender higher interest fees, and in some cases, total financial ruin.

According to OneMain Financial, some of the best ways to pay back loans are on a biweekly basis and via extra income. Extra income could be bonus/pay raises at work or even money which is gifted as a birthday or holiday present. No matter what, finding a way to put money towards borrowed funds is absolutely critical. Depending on the terms and conditions of the loan, certain lenders may be well within their rights to sue if their money isn’t returned to them within a certain time period.

Increase Revenue Streams

Individuals who find themselves struggling to pay the bills and also pay back their loans should look for ways to increase their income. Thankfully, this is relatively easy in 2018; the freelance market and gig economy are absolutely full of opportunities for people who know where to look. Sites like Fiverr and Upwork are free, thus allowing people to create profiles and market skills which potential clients are in need of. Some of the most popular and well-sold skills on the aforementioned platforms include writing, video editing, website design, etc.

Additional opportunities in the gig economy include driving for rideshare services such as Lyft and/or Uber or even renting out rooms on Airbnb. Each of the preceding options should be strongly pursued, especially if someone finds themselves struggling to comfortably pay back money they have borrowed from a financial institution.

A Final Word

While the process of paying back a loan may feel inconvenient at the same, the long-term benefits truly do pay off. Debt is like a proverbial cloud looming over one’s head. Getting rid of that cloud truly makes a difference and allows the borrower to not only avoid interest fees, but also put their money in savings, towards bills, or even towards investments.

 

Authored by Gabrielle Renee Seunagal

How to Purchase a Car

Purchasing a car, especially for the first time, marks a monumental and significant milestone in any person’s life. In many regards, a new car represents freedom and the ability to go wherever one pleases without having to rely on public transportation, rides from friends/family, or rideshare services such as Lyft or Uber. Nevertheless, the freedom associated with car ownership simultaneously comes with responsibility.

Before one can get to the perks and duties of owning a car, they must first make the purchase. In and of itself, this task requires considerable preparation and financial security. Going forth, readers will learn about everything which comes along with purchasing a car.

Work Out the Logistics

Before the soon-to-be car owner goes to the dealership, they need to have the required logistics completely worked out and squared away. In this case, logistics means money. A concrete budget, preference in car make/model, and costs of ownership should all be settled and taken into account, explains Nerd Wallet. The individual getting ready to purchase the car should also remember that ownership costs include gas, maintenance, insurance, and upkeep.

Purchasing a car can be a considerably costly endeavor; hence, some people opt to consult a financial advisor prior to making such a major purchase. However, if one can budget and work out the logistics on their own and without the services of a professional, they’re more than welcome to do so.

Do Your Homework

Aside from budgeting and financial planning, another important step of purchasing a car involves research and ensuring that everything checks out. Therefore, soon-to-be car owners should not only check out the cars they’re thinking of purchasing but also the company or dealership which they are buying from. Virtually everyone is familiar with the stereotypes of snake oil car salespersons, but these type of people are quite real and crafty.

Going online and checking out dealership/company reviews is always helpful; both positive and negative reviews should be considered and taken under advisement. Even after the individual has chosen a dealership and found the car of their choosing, they should always take the vehicle for a test drive.

As Bryant Motors explains, a test drive will truly allow purchasers to get an idea of the car’s quality. Moreover, any dealership who refuses to allow their customers a test drive should be avoided at all costs; prohibited tests are always a huge red flag.

A Final Word

Many soon-to-be car owners bring friends or family with them to dealerships as they prepare to purchase their own vehicles. Not only can this decision be great for moral support, but friends and family can also pick up on red flags which the individual at hand may miss due to their lack of experience.

Happy car hunting!

 

Authored by Gabrielle Seunagal