DesperateDollars.com Personal Finance

Credit Cards

Pay off your credit card statement balance in full every month. If you can afford to do this then it should save you from interest fees and keep you on top of your spending.

Read and properly understand all the terms, conditions, fees, and rate of your credit card.

Be really careful when buying stuff with Same-As-Cash or similar type credit. This credit is usually extended as some mix of 0% interest, no payments for 6 month or more period of time. That all sounds great, but if you are late on just one payment many of these credit companies will charge you all of the interest from the first day of the loan. They may also charge you all the way back to the first months interest if you don’t pay off the entire balance before the end of the 0% XYZ month time frame expires. So at this point you will be paying all of the deferred interest and interest on that interest and remaining balance. If that’s not bad enough the interest rate is usually well above the national average. The credit card companies know that many people make this mistake and so they continue to extend these, 0% interest no payment for whatever amount of time loans. With that said, if you are great about paying on time and can afford the item anyway. Then these credit card deals can be a great way to buy big ticket items. You could put the cash you would have used into a savings type investment that can earn you interest dollars. Then take the money out and pay off the item when the bill comes due.

Don’t use more than 30% of the available credit line on any one card. In other words, your balance should not be over 30% of your available credit on any single card you hold. If you do it may affect your credit score.

Don’t take out loans on your credit card. Those loans can have high interest rates and put you in a bad spot going forward.

Don’t get tempted by those paper checks they send you in the mail. They want you to use them at places that don’t take credit cards. They won’t care about how much it costs you to use them, but you will. M
Sign up for automatic payments to avoid late fees. These day’s credit cards allow you to pay online and with prescheduled automatic payments.

Look out for “teaser rates” and bad terms for credit cards. They will start you off with a low rate and then some time later, hike it up sky high.

Know if your card has an annual fee. Understand the late fees and any other fees that may come with the terms of the card. If you are currently paying an annual fee and your credit is good, it may be a great time to try for a new card without the annual fee.

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Always look for a better interest rate on your credit card. Ask your company to reduce the interest rate or shop around for better rates if they don’t comply with your request.

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Don’t pay any upfront fees to get a credit card. Unless you are getting a secured credit card and even then you need to understand how and where the money you use to secure the card will be used.

Pay close attention to your credit statements. Specifically look for unauthorized purchases and odd fees. Double check your interest rate has not changed for the worst. Some companies will increase it for any reason they feel warrants it. They can and will do it so be careful.

Use credit cards that give you a little something back for using them. Rewards come in many forms and it’s a good idea to find a card that gives you the most towards thing you want. Cash back, travel, random goods are just some of the ways they reward you.

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Expect the unexpected and have three or more months of credit card payments saved for an emergency. You never know when your life will get turned upside down, so keep proper cash reserves.

Keep your good eye on your credit score and any suspicious activity. Not catching these problems in the beginning could cost you lots of time and money.

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Don’t go over your credit limit because many credit cards will charge you a fee for doing so.

Dispose of your paper statements and personal information properly. Destroy them in the most complete way you have available to you. Never toss them away whole and readable. Protect your credit and identity at all times.

Don’t give your credit card or other personal information over the phone or in person to any individual or business you are not confident about trusting during the transaction.

Probably shouldn’t gamble with online casino games like poker or bet on sporting events with your credit card. If you do, set a limit before you start playing and don’t break that number. It’s still real money that you will have to payback should things not go your way and that’s easy to forget while you are playing or betting.

Get help before things get out of control. Seek credit counseling or advice from a trusted source. Don’t fall prey to bad counseling, consolidation, and credit repair services either. Even when you look for help you should watch out for bad dealing.

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Banks & Brokers

Choose a bank that does not charge you fees to maintain a checking or savings account. Pay attention to the requirements of a no fee account. They may require you to maintain a minimum balance to avoid paying the fees. There are free accounts and there are free accounts with conditions.

Try to join a credit union. They usually give better rates for loans and return most of the income from banking activities to union members as dividends. You can join one through certain organizations or some allow you to join if you are friends or family of a current member.

Don’t get stuck paying overdraft protection fees on your checking account. Make sure you have enough money in your account to cover any checks or transactions. The cost of making this mistake can add up fast. The fee can be as high as $40 and that’s per transaction. Some people throw away hundreds of dollars a year with this fee.

Pay attention to the fees involved when using ATMs. You could be charged fees for using an ATM that does not belong to your bank. And your own bank may charge you a fee for using another banks ATM. So you could possibly get charged from both sides, and end up paying as much as $5 per withdrawal.

Choose a broker that makes sense to you and has a good track record. Decide if a fee-only, fee-based broker or commission-based broker is better for your needs and wallet. Many people prefer to go the fee-only route.

Insurance & Loans

Loans - Refinance school, car, home, appliance and other loans if the new rate and fees are beneficial to you.

Home Mortgage - Check if refinancing your home mortgage is a good move for you. You have to be very careful that the fees involved with doing this don’t wipe out the saving you realize from the rate reduction. Also make sure that the terms of the loan are to your benefit and fair to you. Watch out for adjustable rates and other complicated lending products. Adjustable rate products are good for some people and problematic for others. Always pay attention to what the current cost of borrowing is because it can save you lots of money. I have met some people that are still paying 12%+ interest on their mortgage, when they could have been paying 5% or 7%. It’s always worth a look. This could save you thousands when it is done correctly.

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Homeowners Insurance - See in you can get a lower rate on your homeowner & flood insurance.

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Auto Insurance - Shop around to find better rates on your auto insurance or if you really like your company talk to them about reducing your rate and maybe unlocking some extra savings. You could get breaks on premiums for having your car parked in a garage, being married, having certain security features, driving less miles to work, if you moved recently you could be in a zip code they consider to be safer and may give you more saving because of that. Taking driver safety courses could also help ease the cost of auto insurance. The point is to call them and ask lots of question about discounts and changes that could reduce your price.

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Understand that if you buy certain types of cars the insurance difference could start to make things less affordable. Convertibles and sports cars will usually come with higher premiums. Going from your old clunker and jumping into new hot wheels will likely cost you more in premiums. Check what these costs will be before you buy that car.

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If you drive around in a car that’s close to junk yard status, then you may want to consider dropping the collision coverage. Proper liability coverage should never be messed with. Also, some auto insurance companies offer a type of medical coverage that can usually be purchased for a few dollars a month. If you don’t have health insurance it could really help out if you get into a nasty accident.

See if buying your auto insurance together with home insurance or other types of insurance coverage will yield any savings. Sticking with the same insurance company for all of your needs can be rewarding, but it could also turn out to be a financial disaster. Take the time to compare and check every year or before renewals for better prices and coverage.

Always check to see if you can reduce your premiums. Also, be careful not to inadvertently increase your premiums by driving like a wild man, driving drunk, and getting tickets. Don’t be the person that ruins other peoples’ lives with dangerous driving habits. It could have a huge emotional cost and will likely cost you lots of money.

General Insurance - Consider going with the higher deductible on some of your insurance plans. The savings over a certain period of time could possibly cover the deductible going forward. Instead put the extra money in an interest bearing account and reserve it for deductible payments. Be realistic on what you could afford to pay should an emergency require you to cover that higher deductible.

Education Savings

See if you qualify for grants or aid.

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Try to save for college.

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Look into the benefits of a 529 college savings plan. Typically there are two types of these plans a Prepaid Tuition Plan and a Savings Plan. Check to see if they can be purchased directly from the school of your choice, because you could face fees going through a broker. Always understand the tax implications and eligibility restrictions from other college financing programs that could result from using the 529 plans. It could offset the rewards depending on your situation.

529 Prepaid Tuition Plans are college savings plans that are usually guaranteed to increase in value at the same rate as college tuition. The main benefit of this plan is that it allows a student to lock in tuition at current rates. If the student attends an in-state public college, the plan pays the tuition and required fees. If the student decides to attend a private or out-of-state college the plans typically pay the average of in-state public college tuition. The student will be responsible for the difference, if any.

529 Savings Plans are tax-exempt college savings vehicles with a low impact on need-based financial aid eligibility. Unlike prepaid tuition plans, there is no lock on tuition rates and no guarantee on principal. Most 529 college saving plans offer an adaptive asset allocation strategy based on the age of the child or the number of years until enrollment. These plans start off aggressively when the child is younger, and gradually switch to more conservative investments as college approaches.

Think about doing your first two years of college online or at a community college. Make sure that the one you choose will allow you to transfer smoothly to your preferred college. This could amount to huge savings.

Consider using the public school system instead of private schools. Save some money and maybe even find yourself at a better school. Check if you have any well respected public school options in your area.

Try looking into trade schools for some educational savings. If you know that you want to be a steel worker, then see if there is a trade school that can offer you specific education in the field. You could avoid the higher education fees and get started on your career even sooner.

Potentially increase your earning power by gaining certificates and certifications in your field of work or study.

Taxes

Understand and be aware of all available tax deductions. Do some research and see which ones you qualify for.

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Know what tax credits you may be able to qualify for. There are many different credits for various situations.

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Make sure your W-4 is reflecting your current status. If you have gotten married, had children, or only have one job instead of two now. You might be able to claim another withholding.

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Look for tax breaks that could be available to you for buying or using alternative or cost efficient items, like hybrid cars, or solar panels on your home.

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General Info

Pay your bills on time. You are going to have to pay them anyways so avoid the late fees and get it over with. It’s always hard to part with your money, so why put yourself in a position to part with even more due to late fees.

Pay off debt now so you can avoid paying more interest in the future. You need to see the benefit of not giving your money away slowly to creditors. Take the hit now to protect your future dollars. If you can afford to pay things off now consider doing it.

Spend less then you earn. Reduce stress and get your financial future in order by controlling spending habits. Learn to enjoy what you already have and only buy things when you have the money to pay for them. That’s cash money, not credit.

Budget your life. Know where and on what your money is being spent on. Then make cuts anywhere you can comfortably do so. Take what dollars you have left and use them wisely. Create spending limits for the month or week on food, entertainment, shopping, and any other spending areas. The key is to control yourself from spending more than you earn. If you can put extra money aside for saving and investing then you can slowly start to bring positive financial change into your life.

Educate yourself before you make a big ticket item purchase. Learn how to get a good deal on your car. Avoid fees when buying a home. Buying with the lowest interest rate possible and when cash is the best option. Compare prices and side-by-side features before you buy. Ask lots of question and don’t get pressured into a purchase. Walk away and rethink the purchase, odds are it will still be there for you later and probably at an even lower price.

Take inventory of all the things in your home. Then evaluate the list and try to find items you can sell or do without. Use the list to avoid repurchasing similar items in the future. Some items can become new useful things with a little creativity. Give some of the things you don’t really want or need as gifts or consider donating it to help others.

Refinance school, car, home, appliance and other loans if the new rate and fees are beneficial to you.

Consider going with the higher deductible on some of your insurance plans. The savings over a certain period of time could possibly cover the deductible going forward. Instead put the extra money in an interest bearing account and reserve it for deductible payments. Be realistic on what you could afford to pay should an emergency require you to cover that higher deductible.

Car Buying Tips

Do your research before stepping onto a new or used car dealership. Know the approximate value of your trade-in. Know some details about cars in your price range. Compare different models fuel economy, safety, reliability maintenance and insurance costs. Also, look at used cars because the first 10,000 miles driven on a car depreciate it the most. You could pick-up a certified used car with nice warranty coverage for thousands less than buying new.

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Always try to arrange for your own financing before stepping onto a car lot. Credit unions are a great place to look for fair rates. Check with banks and other resources to figure out the best rate and way to finance your car. But, pay attention to the financing at the dealership because it could still be far better than anything you could get at your bank. You should take time to compare rates and choose the one with the best terms and rate.

Do not start negotiations until you have a good idea of what the vehicles price will be. Below is a light read on how this might be done.

Try to figure out what price the dealership actually paid for the car. The dealer invoice price may be printed on the pricing guides or may be found online. Know that the invoice price is not always the actual price the dealership paid for the car. Many times the dealership gets factory-to-dealer incentives, rebates, wholesale finance reserves and holdbacks to increase profits. These usually come off the price of the car after you buy it and then drop right into the dealerships pocket. All of these should be open for negotiation.

Once you figure out about how much the dealership paid for the car you can start to figure a reasonable starting price to begin negotiations on the cars price. As a general rule you should always make your first offer to the dealership low. And as a general rule a reasonable first offer from the dealership to you would be at 4-8% above the dealerships cost of the car. So if the dealer’s price is $30,000 then you can figure maybe seeing an offer that’s 6% of the cars price or in this case $1,800 above the dealer’s price. So in this example you would see an offer from the dealership for $31,800. Don’t forget to include any dealer incentives you find in your final price figures. Grind them down until you are happy with the price. If you don’t like what they are willing to sell it for then you can always just walk away.

Always negotiate each of the parts involved in buying a car separately. Keep financing, trade-ins, warranty and leases from being bundled together in one confusing price. They like to sell you on the monthly payment you can afford rather than telling you about the actual cost of the purchase. The reality is likely that a crazy high interest rate, disability insurance, warranty, and a host of other unwanted products are rolled into the monthly payment amount they try to sell you on. This “how much can you afford to pay a month” method leaves the dealer to an advantage as they can charge you more for one thing and twist the reality of the true cost of the car. When you ask for a more affordable payment they take out one of the previously added products and pretend to have done you a favor. Or they will lower the crazy high interest rate they used to calculate the previous monthly payment they gave you. This is yet another reason why you need to negotiate everything separately. And double check none of these added products are packed into your final price.

Negotiate your cars financing, price, lease, and trade-in price separately. Remind the salesman that you are looking at other dealerships and will go with the best price and terms offered. Walk away if you are not satisfied with the results of the negotiations. You might even get a better offer for doing so.

Finally when all the negotiations are done you will likely face some more sales attempts. Dealers will likely try to sell you fabric protection, rust proofing, paint protections, and even try to charge you $100 plus dollars to etch your vehicle identification number ( VIN ) in the window. Don’t bother paying for these because in most cases they are very unnecessary. If you still really want to have them done you can do them yourself later for a fraction of the price.

Make sure the final paper work does not have any of the fabric protection, rust proofing etc…..costs cleverly hidden in the contract. If it does request they reprint a new contract or draw a line through them before signing. Have the dealer initial the change.

If you still want to work towards a better deal don’t buy the car after working out the deal. Instead go home and think about the negotiations and make sure that the car and everything attached to it are to your liking. In other words, sleep on it. Let them watch the car sit on the lot for a few more days, it might even sweeten the deal. Or you might realize that you don’t really need or want that car anyway.

The key to getting the best deal is to be educated about your options, price and product. Don’t allow yourself to be pressured and walk away from the negotiation table to take a breath and gather your thoughts.

Call around and ask people that have bought cars from dealerships about their experiences.

If you still don’t feel good about going the buying process alone. Ask a friend you trust with more intestinal fortitude for this kind of thing to come with you. You can walk away from any unfavorable deals together.

Dirty Dealer Tricks Revealed

Avoid committing to anything. It does you no favors to do so. They prey on your kindness. Don’t let the dealer put you into the, “I did this for you, now you have to do this” box. Don’t reduce your negotiating power by saying, “yes” to any of the commitment questions they may ask. Some of these statements include:

“If I can get you this price will you buy the car today?”
“If you want the car for this price, you'll have to buy it today.”
“This offer will end today.”
“If I can give you this payment will we have a deal?”
“What’s the most you could afford to pay per month?”

Expect to get a whole bunch of good cop, bad cop type treatment during the entire buying process. Your sales person will pretend that he really wants you to get the best price and financing, but the big bad boss won’t let the deal go through at those rates and prices. Know what you want and stick to it. Don’t let them play the fear of loss game on you.

Always negotiate each of the parts involved in buying a car separately. Keep the cars price, financing, trade-ins, insurance, leases and warranty from being bundled together into one confusing price. They like to sell you on the monthly payment you can afford rather than telling you about the actual cost of the purchase. The reality is likely that a crazy high interest rate, disability insurance, warranty, and a host of other unwanted products are rolled into the monthly payment amount they try to sell you on. This “how much can you afford to pay a month” method leaves the dealer to an advantage as they can charge you more for one thing and twist the reality of the true cost of the car. When you ask for a more affordable payment they take out one of the previously added products and pretend to have done you a favor. Or they will lower the crazy high interest rate they used to calculate the previous monthly payment they gave you. This is yet another reason why you need to negotiate everything separately. And double check none of these added products are packed into your final price.

Don’t fall prey to the “I have to feed my kids” type statements. They like to say things that make you feel guilty about making a better deal for yourself.

Watch out for the split the difference trap. You give them a price that’s $2000 dollars less than the dealer’s offer. The dealer walks away and checks with the manager if he can agree to your price. The manager then comes over and asks you to split the difference. What he’s really doing is asking you for half of the $2000 dollars you could have walked away with back. If you agree to this split, you are really just agreeing to pay $1000 dollars more than your offered price.

Then there’s the, “your credit is not good enough”, trap. Even if you know that you have let’s say a 740 fico score they will come back and tell you it’s a 620 score. They explain to you that their financing company has more strict guidelines and your 740 fico doesn’t matter to them. Then they bust out a big red marker and circle the 620 score to remind you that it’s a bad number that now forces you to pay for a higher interest rate. Don’t walk, but run away from this dealership as fast as possible.

Look out for last minute changes to your payments and car price. Just because you have a verbal agreement with the sales person doesn’t mean that he’s going to honor it. He may come back and say that they didn’t figure the sales tax into the deal. Or say you didn’t qualify for the loan at the rate you liked even though you do.

One of the worst ways they might stick it to you is by increasing your interest rate days after you bought the car and took it home. They will come back and blame you for not qualifying for the lower rate due to bad credit or other lies. Then raise your monthly payment to include the new costs associated with a higher interest rate. You want to keep your car and they have now left you feeling like you couldn’t get a car anywhere else with your credit, so you keep the car and pay more every month. This is another reason why getting your own financing is a good idea.

Watch out for the give it and take it away method. Just when you think everything is going well and the price for the car you want is sealed. The dealer starts to talk like you can’t afford to buy that car and introduces you to some terrible featureless look alike versions of your dream car for the same price. Then after making you feel like you can’t afford to buy your dream car, he reunites you with it and raises the price.

Don’t get suckered onto the showroom floor with a misleading advertisement in the newspaper. They like to advertise a great car for an unbelievably low price. This gets everyone and their mother to show up to buy it. You get there and it turns out they only had the one car and it’s already been sold, but they will gladly point you in the direction of more expensive alternatives. They got you on the lot and most times they don’t care much about how that happens. And if you are thinking that calling ahead to make sure it’s there helps, you would most likely be wrong. They will probably tell you that they have that special car and many more at even better prices. But, when you get there it’s the same old bait and switch story.