Tag Archives: income

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, resortingĀ 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 Getting Your First Credit Card

There are many upsides to having a credit card, such as building one’s credit score, making certain purchases, and even earning cashback points. With the right practices and money management habits, people can do quite well and set themselves up for financial success. However, without the proper knowledge, individuals who manage to obtain credit cards can wreak serious damage upon their financial standing and sink themselves into debt for years or decades to come. For these reasons and more, an awareness of the following facts, prior to getting one’s hands on a credit card, is absolutely paramount.

The Charges Must Be Paid Back

Most people are very young (18-22 years old) when they receive credit cards within their own names. While individuals in the foregoing age range are, in fact, adults, they may not necessarily have the knowledge of everything which comes along with credit card ownership. Virtually everyone has heard horror stories of someone swiping their card repeatedly and then being unable to pay the monthly bill. An inability to pay the bill when it comes due results in subsequent interest charges.

Interest is a hole which can take years, decades, or even a lifetime to climb out of. For this reason, starting off with a low credit limit (no more than $500) is usually best. However, regardless of the credit limit, people must be sure to pay back the money which they “borrowed.” It’s worth noting that certain credit card plans provide grace periods before charging interest on unpaid balances. Not all credit cards plan do this and, to be on the safe side, anyone who charges a credit card should be sure to make the appropriate payments before or when the bill comes due.

Building Good Credit Takes Time and Discipline

Merely having a credit card and paying off the balance will not immediately engender good credit. Time and consistency are considerable factors in the development of good credit; people who are truly serious must ongoingly pay off their charges and abstain from incurring any interest. Moreover, credit card users are advised not to spend more than 30% of their credit line. There are no penalties for surpassing the 30% threshold, but adhering to it truly helps one establish their credit and finances.

Credit Cards are Not For Everyone

Despite the upsides of credit card ownership, they are only applicable when people punctually pay off their balances and avoid debt. Individuals who struggle with money management skills or suffer from low income might do well to hold off on obtaining a credit card. Credit should only be used by people who know they can afford to pay back what they’ve charged. Credit cards are not free money; at some point, the bill always comes due.

 

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

How to Repay Debt

In the best of worlds, nobody would incur any debts. Unfortunately, there are countless people who are up to their eyeballs in debt. Ideally, incurred debt is something which should be paid off as quickly as possible; yet, many individuals find themselves struggling to pay back the money they owe. The subsequent interest which often accompanies unpaid debt doesn’t make matters any less complicated. Thankfully, there are a variety of strategies which can be employed in order to effectively pay off debt.

Make Ongoing Payments

Indebted individuals have a tendency to avoid their debt. The avoidance is often motivated by dread and reluctance to face the large sums of owed money. However, avoiding the debt will never erase its existence. The only way to free oneself of debt is to make ongoing payments.

In this day and age, merely paying the minimum balance is not going to cut it. Payments should be made as frequently as possible. Each time an indebted individual receives a check, he or she should be putting aside a percentage of funds (or a specific dollar amount) to pay off what they owe. Initially, this can be uncomfortable and may even require some budget modifications. However, repaying debt in a timely manner is always wiser than idly wasting time and allowing interest to accumulate.

Increase Income and Profit

Despite the massive pitfalls of failing to repay debt, a lack of funds is a problem which many people struggle with. Therefore, individuals who literally cannot afford to pay down their debt should strive to increase their income. This can be done via asking for a raise, advancing one’s career, or even starting work in the gig economy or freelance market to create an additional stream of revenue.

Live Within Your Means

Countless people incur debt in their attempts to live above and beyond their means. While this type of money management is irresponsible and reckless, it’s particularly dangerous for individuals who have yet to repay owed funds. Anyone who is struggling with debt should proactively work to lower their expenses; this can almost always be done. Cutting back on unnecessary purchases, eating at home, and limiting entertainment fees are some prime examples of ways to reduce costs. Some people spend their entire lives in debt all because of poor money habits.

Avoiding Debt

Having to repay debt is no fun whatsoever. Debt holds people back from financial success, home ownership, the ability to live independently, and many other opportunities which life has to offer. Those who are able to take advantage of certain opportunities, even in spite of their debt, will not have the same quality of experience as their debt-free counterparts.

To make a long story short, debt should always be avoided. In the event that avoidance is not feasible, repayment should occur as quickly as possible.

 

Authored by Gabrielle Renee Seunagal

Comparing & Contrasting a Roth IRA vs. 401K

At some point, many individuals will become serious about saving money and putting aside funds for retirement. This often, in turn, prompts the opening of various retirement savings accounts. At this point, Roth IRAs and 401Ks are some of the most popular options. However, these two accounts are not the same, by any means, and should not be treated as such.

Some people are better suited for 401Ks while others do exceptionally well with putting money into a Roth IRA. Nevertheless, a critical and thorough understanding of the differences and features of the aforementioned accounts is absolutely paramount.

An Overview

One of the greatest distinctions between Roth IRAs and 401Ks is the functionalities of the two accounts. Investopedia explains that while Roth IRAs are started between an investment firm and the people which come to them, 401Ks are plans where workers permit their employers to put a percentage of their pay into the account. Each individual has their own ideas of which retirement savings account is best for them. Both Roth IRAs and 401Ks each come with their own upsides, guidelines, and stipulations.

The Benefits

Both Roth IRAs and 401Ks come with their own benefits which are designed to appeal to prospective customers. The Simple Dollar lists the following benefits which are associated with Roth IRA accounts:

  • Future tax-free withdrawals
  • Ability to withdraw contributions without facing penalties
  • Ability to select desired brokerage firm and choices pertaining to investments

401K retirement savings accounts also come with their own unique upsides, which read as follows:

  • Potential annual tax savings
  • Opportunities for monetary employer match
  • Options to set up automatic deposits
  • Gradual increase on allowed contributions

Which One is Best For You?

Ultimately, each individual will have to decide which retirement savings account is best for them. Believe it or not, choosing whether or not to set up a Roth IRA or 401K does not have to be an “either/or” decision. There are some people who have both accounts and others who employ alternative means to save money and invest in their retirement.

However, for individuals who are interested in setting up one (or both) of the aforementioned accounts, Fidelity has some helpful hints and advice:

  • 401Ks may prove to be slightly more beneficial for long-termĀ savings.
  • Roth IRA accounts are usually better for individuals who see tax increases in their future.
  • People who wish to diversify funds put aside for retirement may find that setting up a 401K and Roth IRA accounts is advantageous.

 

Authored by Gabrielle Seunagal