Tag Archives: Finances

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

Things to Know Before Taking Out Student Loans

As the amount of student loan debt surges with each passing day, more and more people are beginning to question whether or not borrowing money from the government for the sake of attending college is truly worth it. The economy and job market are changing; more and more young people are opting to find employment within the gig economy as freelancers and independent contractors. Others, however, are still deciding to take out student loans for the sake of pursuing a higher education.

Student Loans are Not Free Money

There are a shocking amount of young people who truly lack an understanding of the nature of student loans. Individuals who borrow money from the government will, in fact, have to pay it back. Usually, recipients of student loans will have to make monthly payments; although the specific dollar amount depends upon a variety of factors, with one of the main ones being how much money was borrowed in the first place. Countless young adults make the mistake of borrowing much more than they actually need.

People who are considering taking out loans should also be aware that they may not be able to pay them back very quickly. Months, years, or even decades can pass by before borrowers are truly debt-free. This can be quite daunting to the young, ambitious 22-year-old who wants to enter the workforce and make a name for themselves. Likewise, such high amounts of debt can ruin opportunities which would otherwise be available to individuals who do not owe thousands of dollars to the government.

There are Other Ways to Pay for College

Believe it or not, taking out student loans is not the only way for young people to fund their college careers. Academic scholarships, military service, university employment, and even working for certain companies are potential avenues for covering the costs of university. Granted, the aforementioned alternatives generally come with certain stipulations, although many people would argue that the stipulations are better than the crippling debt which often accompanies student loans.

Furthermore, students who maintain good grades throughout their time in high school are likelier to have more opportunities for academic scholarships. Parents should encourage their children to do well during their high school careers so that they have options for college which extend beyond taking out student loans.

College is Not for Everyone

While many people attend college and go on to live comfortable, middle-class lives, college is definitely not for everyone. One of the gravest mistakes in today’s education system is failing to educate students about all the options which are available to them after high school. So often, young people are automatically indoctrinated into believing that attending university is their only choice.

Another common malpractice is telling students that they will be statistically poorer than individuals who choose to go to college. Considering the variety of options which exist post-high school (such as freelancing, trade school, independent contract work, entrepreneurship, etc), educators who fail to inform students of the other paths they can take besides college are doing students a disservice.

A Final Word

At the end of the day, each individual has to decide whether or not borrowing student loans is the best choice for them. Sometimes it works out well, but other times it doesn’t. Regardless of the decision which someone ultimately makes, there is never any harm in having complete information and an awareness of the alternatives and potential consequences.

 

Authored by Gabrielle Renee Seunagal

What is a Debt Collection?

It goes without saying that financial lenders expect to get their money back. The borrower (i.e. the individual in debt), however, may not always be able to pay back funds which were loaned to them. After a certain amount of time passes, financial lenders may decide to contact a debt collection agency, also referred to as debt collectors.

An Overview

Debt collectors are simply members of companies who are tasked with the responsibility of collecting unpaid debts. Collectors must also adhere to certain rules and guidelines as they work to make borrowers pay up. First and foremost, collectors cannot contact people before 8AM or after 9PM. They are also prohibited from making back-to-back calls and, in certain cases, debt collectors cannot call borrowers at their places of employment. However, members of debt collection agencies are allowed to send texts, emails, letters, and, of course, make calls, so long as they remain in accordance with the aforementioned stipulations.

How to Handle Debt Collectors

There are a variety of ways people can go about managing debt collectors. Indebted individuals can either pay off the debt or ignore the debt collectors altogether. Obviously, the former option is more advisable than the latter, however, there are many people who simply don’t respond to collectors in the hopes of them eventually going away.

More often than not, setting up a payment plan with the collections agency is the best route to go. Ignoring debt collectors is extremely risky, seeing as they can initiate lawsuits which can subsequently lead to wage garnishments. Most collectors are more interested in getting individuals to pay up than they are in going through legal battles. Even so, those who willfully ignore debt collectors are doing so at their own risk.

Do Debt Collections Impact Credit?

It goes without saying that debt collections are absolutely terrible for any person’s credit. Collections can prompt extreme declines in one’s credit score; the individual may also be subsequently denied for loans or credit cards in the future. Some people may believe that they can counteract the damage with certain practices, but this is more difficult than most realize. A debt collections account can remain on an individual’s credit report for as long as seven years. The only true way to reduce the damage is by paying off the debt. With time, and other wise financial habits, the damage will eventually subside.

How to Avoid Debt Collections

The surest and most effective way to avoid debt collections is by not going into debt. This is quite simple, yet still remains a feat that countless people struggle with. Having a budget, saving money, and living within one’s own means are some of the best ways to steer clear of debt. People are furthermore advised to stay away from loans, if at all possible, and not swipe their credit card unless they know they’ll be able to pay off the balance when the time comes.

 

Authored by Gabrielle Renee Seunagal

An Overview of Good Debt

The word “debt” generally has negative connotations and understandably so. Debt’s adverse impacts are extremely well-documented; it can also take years or even decades before people are able to escape its clutches. Individuals who go into debt at very young ages can often face ruined financial futures ruined and poverty. For these reasons and more, debt is overwhelmingly viewed as something to be avoided at all costs.

What Qualifies as Good Debt?

The concept of “good debt” remains highly debatable. There are many people who view debt, in any form, as negative and something to steer clear of. However, various financial experts do believe that certain types of debt can, in fact, qualify as “good debt.”

Higher Education

First and foremost comes higher education which is generally associated with going to college or university. Many individuals also associate a degree with better job opportunities and a higher quality of living. Also, it’s often stated that degrees will pay for themselves and pay for the subsequent student loans which many young adults take out in order to pursue higher education.

However, good debt is not without its risks. While many people view higher education as a source of good debt, the “good” part is contingent upon several factors. The economy, field of study, and overall flexibility of the individual at hand each play a role in whether or not student loans truly turn out to be good debt or bad debt. A rough economy can make it difficult for college graduates to find jobs and start paying back their student loans. Likewise, a poor field of study can also complicate the process of making a good living. Finally, individuals fresh out of university may have to accept entry-level jobs and work their way up to more lucrative prospects.

Entrepreneurship

As the job market becomes more and more competitive, many people are opting into entrepreneurship and starting their own enterprises. However, starting a business requires money. While aspiring entrepreneurs can seek financial backing from angel investors, venture capitalists, or even family/friends, many choose to take out loans from various institutions.

The benefits of being in business for oneself are overwhelming. Autonomy, independence, and profit growth are just the tip of the iceberg. However, these benefits only come to fruition if the enterprise is successful. If a business fails, the borrower will not only have to pay back the debt they owed (in addition to any subsequent interest), but they may also incur serious financial hardships. Like higher education, good debt in the form of entrepreneurship is a double-edged sword.

A Forewarning

At the end of the day, debt is something which should be avoided, if at all possible. While certain types of debt do have the potential to yield benefits, there are never any guarantees. Borrowing capital to pursue ventures is a trap which countless individuals have fallen into. It has worked out for some and devastated others. Ultimately, everyone has to make their own financial decisions and determine whether or not they are willing to take on debt.

 

Authored by Gabrielle Renee Seunagal

How to Build a Business Without Going into Debt

One of the greatest hurdles in building a business is capital, or lack thereof. A lack of capital and financial resources subsequently prompts aspiring entrepreneurs to believe that borrowing money is their only option. Of course, this belief is inaccurate. The pitfalls of going into debt are well-documented, but thankfully other alternatives do exist.

Build Gradually

Many ambitious and aspiring entrepreneurs aim to open their businesses as soon as possible. There is a certain excitement which often comes along with building a brand and starting a company. However, gradually building a business is one of the best ways to avoid going into debt. In many cases, this may require not giving up one’s day job until the business venture yields profit.

The process of building a business while still maintaining a day job may be initially frustrating and time-consuming. However, with patience, dedication, and consistency, the business will eventually become profitable. Following the generation of profit, the entrepreneur can then quit his or her day job. Gradually building a business is vastly more effective and beneficial than taking out loans and attempting to do everything at one time. Rome was not built in a day.

Know the Ins and Outs

Believe it or not, there are many aspiring entrepreneurs who want to go into business for themselves, yet lack critical knowledge. There are so many factors involved in starting a business; a business plan, budget, legal paperwork, website, proper management of funds, and sales tests are only the tip of the iceberg. Knowing the ins and outs means having a solid plan and being fully informed. So many people who want to go into business for themselves believe that simply borrowing money and spending during times of apparent necessity will help them. This is a common error which often engenders the downfall of businesses.

Hopeful entrepreneurs need to have their budgets in place and know exactly how much financial capital is needed to start their business.

Fund Your Own Business

At the end of the day, those who wish to go into business for themselves without also going into debt will have to fund their own enterprises. Thankfully, there are a variety of ways in which aspiring entrepreneurs can go about self-funding. Simply saving money is an option, although it can be time-consuming depending on the individual’s income and the costs of starting their business. In some cases, funding an enterprise purely through one’s own funds can take months, if not years, although it can still be done. Each hopeful business owner will have to decide whether or not this particular avenue is right for them.

However, saving money to fund one’s business is not the only option. Hopeful entrepreneurs can also consider pitching to an angel investor. Angel investors can be incredible assets for aspiring business owners, however, there are certain stipulations. True passion for the business, a solid execution plan, and awareness of the market are things which angels will look for before investing their money into a business.

A Final Word

Starting a successful enterprise is a tough venture. Starting a successful enterprise without going into any debt is even more challenging. However, with the proper preparation, knowledge, and expertise, it can be done.

 

Authored by Gabrielle Renee Seunagal