Whats Better a Personal Loan or a Credit Card?

You want to paying off your debts in the most economically way. You have a choice between an old fashion unsecured personal loan from your bank or a credit card. Which do you use?

The Good.

With the personal loan you have a fixed interest rate and you make regular monthly payments over time, maybe 3 or five years. No variable rates. No confusing rules. You don't risk your home as with a home equity loan. If you default, you will just have to deal with a collection agency.

Among the banks promoting personal loans now: Wells Fargo, Discover Financial, Citi and CapitalOne. Wells Fargo says that it will lend from $3,000 to $100,000 for a term as long as five years. From Citi, you can borrow from $300 to $7,500. The banks keep the rates top secret until you apply, because they are “risk-based” — in other words, they vary according to your credit score.

The Bad.

The interest rates you will encounter on a personal loan will be between 10 and 15 percent. It will never change like credit cards can if you miss a payment.

With credit cards you could swing a zero or low interest balance transfer, beating the rate for a personal loan. You also have the flexibility to just make the minimum payment if one month the car breaks down and you need the money. Even if you can't get the low interest credit card balance transfer and just get your regular rate you still have more flexibility.

What about fees? With personal loans there is a an origination fee, of on average between $50 and $100 dollars, but with the credit card balance transfer you also have a fee which is between 3 and 5 percent of the loan amount.

The Ugly.

Now comes the best part, the psychology. How many times have you vowed to pay $500 on your bankcard balance transfer only to wimp out and pay $300 because you spent too much at Starbucks that month — or eating out. The $200 you didn’t pay stayed on your balance and accrued more interest for the bank. A payment, by the way, for a $10,000 loan for five years at 15% would be $238 a month.

The bottom line is credit cards have flexibility and personal loans don't. The flexibility has it's benefits and it's problems. If your undisciplined you could always just pay the minimum and also run the balance up again.

With the personal loan the discipline is built in, you have a fixed payment with a fix time frame. You could be paying higher interest for this benefit.

Reader: Which type of loan do you think is better?

Financial Education Is Not Enough To Save You From Yourself

Do you think you have enough financial knowledge to handle your own finances? I'm talking about all facets of your finances, from soup to nuts. If your response is no, thanks for being honest, I'll get back to you in a minute. If you said "Yes", we need to pursue this further.

I believe there are 3 types or levels of financial knowledge. The first is "Financial Literacy". Financial Literacy is a general knowledge of financial vocabulary, financial instruments, and when and why they are used. This consists of knowing of what an investment is and the different types. In banking you know the difference between a checking and savings account.

Next there is "Financial Knowledge". This a deeper knowledge of all things financial. You know about investments. You know the difference between mutual funds, ETF's, IRA's, cash accounts, derivatives, and types of brokers. You can actually tell me if a mutual fund is better than another mutual fund. You know when it's good to own bonds and when it's not. You have knowledge of health, disability, life, and long term care insurance. You can tell me all about fixed and variable annuities.

The third and final type of knowledge is "Financial Capability". This kind of knowledge is when you actually put into effect what you know and are successful at implementing it. The evidence of this knowledge is an emergency fund, a hefty retirement account in the correct vehicles, your living below your means, you have no credit card debt, you have a college fund for your children and your home is paid for or your close to paying it off.

Financial Capability is the final step in the journey of financial education because it describes financial knowledge, competence, confidence and practical skills, such as balancing a checkbook or household budgeting.

Are you at this last step yet? If not, why not? Where on the journey are you? You will never succeed financially if you don't reach this last step. We all know what's good for us, but do we do it?

For those of you who were honest enough to say No to my question, what are you going to do? You admit you don't have the knowledge to run your own finances. Is this a lack of knowledge or a lack of will? If this is a lack of knowledge then find the knowledge. Read a book. A complete book that will help you is Dave Ramsey's Total Money Makeover, read it, do exactly what it says and you will be successful with money.

If you have a lack of will, we call that being lazy in my house. That can be fixed to but not by reading a book. That problem has to fixed on the inside. Make the decision and be a financial winner.

5 Things You Need To Know About Homeowners Insurance

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I am coming up on my homeowners insurance renewal time. Going through Money Magazine I found a great check list of ways to save money on your homeowners insurance. My insurance went up last year 20%, quite a leap. I was glad to have it because it is hard to get insurance in South Florida with all the fears of hurricanes. 

It's so bad many companies have bailed out of the state or are just refusing to write new policies. It was back after Hurricane Andrew when I had State Farm insurance. Just four years after, I missed a premium and they dropped me. They would not take me back even though I had my car insurance with them. Also multiple vehicles and equipment insured with them under my company. They had no loyalty to me even though I had coverage with them for the last 15 years.

Choosing Homeowners Insurance, just like all business decisions, comes down to dollars and cents. So for you and me, we must also do what's right for us. Here are 5 tips to help in your adventure in purchasing your homeowners insurance.

A Homes History Matters.

If your shopping for a new home it may seem unfair but claims associated with the property before you by it can result in your paying more than you would otherwise. Certain locations may be more prone to certain kind of claims.

To get past info on claims ask for a copy of the homes CLUE (Comprehensive Loss Underwriting Exchange) report. this will show all past claims. The homes past history of claims will impact all future insurance rates. If you like the house and purchase it you will be stuck with it's history. This could work in your favor because if the report is negative you could negotiate a lower price for the home.

Small Claims Can Cost You Money.

Go with the highest deductible you can afford and use the savings for all minor repairs. If you file a claim for every broken window or leaky pipe you can drive up your premiums 10 to 15 percent. Insurance agents say even just inquiring about a claim can raise red flags. Increasing you deductible from $500 to $1000 can substantially save you money on your premium. Check with your insurance agent for quotes of insurance with higher deductibles.

A Bad Reputation Can Cost You Higher Premiums.

When insurance agents give you an insurance quote they tap into the Comprehensive Loss Underwriters Exchange to see your relationship with past insurance companies. They want to see your history of past claims. To many claims raises a red flag and may increase your premiums.

You can check your insurance report for errors at Choicetrust.com, it's free if you have been denied coverage, otherwise it costs $19.95.

You May Have to Much Coverage.

You may have an inflation-protection clause in your policy. This automatically increases your premium with inflation rising. This adjustment may be erroneous. Switch it off and keep an eye on your home value yourself. Sometimes the costs of replacement could be less than when you originally purchased the policy. You could of paid a premium for your home, way above the actual replacement value. Check on your actual replacement cost and lower your premium.

Loyalty is Overrated.

Insurance companies that are associated with banks may be using you to make up for losses in the banking part of the company. Remember insurers are still competing for your business. You may be able to get a better deal as a new policy holder than as a existing one. When it's time to renew check Insweb.com and Netquote.com to see if you can get a better deal. Try to bundle it with your car insurance company, you may get a premium cut of 5% to 15%.

Check out Money Magazine online

Here are some Related Stories:

Insurance Coverage Changes If Your Home Is Uninhabited or Rented

Get a CLUE Report if your buying a home

Related articles

• Why Your Homeowner's Insurance Bill Is Still Through The Roof (walletpop.com)
• Top 7 Ways to Save on your Homeowners Insurance (homeownersinsurance.org)
• Know What Your Homeowners Insurance Covers (homeownersinsurance.org)

4 Ways to get FASFA Help

It's that time of year again to fill out your FASFA forms. In my house we have three to do. We have been doing it for a few years now so the initial trauma has subsided. But if you were like me and were confused at first I have listed a few helpful resources to get you started. Good Luck.

1. FAFSA on the Web.

When you’re wrestling with the FAFSA, you can get help from the FAFSA help line courtesy of the U.S. Department of Education. Here is the FAFSA phone number: (800) 433-3243. When you are working online with the application, you can also obtain help by clicking the “Live Help” button.

Before tackling the financial aid form, I’d recommend using the FAFSA on the Web Worksheet, which you can download from the federal student aid website.

2. TuitionCoach.

This free site contains videos, financial aid backgrounders and a FAFSA calculator that can help you determine what your college costs could be. You’ll also find worksheets that can help you complete the FAFSA and the CSS/Financial Aid PROFILE.

3. College Goal Sunday.

This free program, which is sponsored by the YMCA and the Lumina Foundation, offers personal FAFSA advice at weekend events in January and February through the nation.  Some events are starting as early as this week. You can find a calendar of events on the College Goal Sunday website.

4. Student Financial Aid Services.

This is a paid service that helps families prepare and file the FAFSA via the phone and Internet. Depending on the services, the prices range from $79.99 to $99.99.

Here are some additional helpful articles:

4 Misconceptions About College Financial Aid

How To Go To Medical School For Free

Divorced Families Cause Problems For College Students

5 Things You Need to know When Dealing With Debt Settlement Companies

We have had our experiences with debt collectors. The calls all day long and on weekends also. Starting in the morning, sometimes starting at 9:00 A.M. Sunday morning. We have learned to screen our calls but it's still annoying.

Two of our children have had some credit card debts go into default. The debt collectors started to call. There are probably 5 different debt collectors that still call on a regular basis. I talk to them to explain that my kids don't live here anymore and that they are wasting their time. It usually goes well, the caller is business like and we're done but I had one bad call with a nasty debt collector who was insulting. I can see how the tactic works. They make you feel so upset that you give them the rent money to make them quit calling.

With the constant daily calls you become desperate to in trying to pay your debts. That's when you think of trying that debt settlement company. Most debt settlement companies don't succeed in cleaning up your debt. The fees are enormous and the process is long and stressful. Sure there are some that succeed but the success level is low. When dealing with these companies you have to very careful. I have listed a few tips to help you navigate them.

1. Most debt settlement companies charge regardless of whether they ever settle your debts. They usually collect most or all the fee from you long before they have helped to eliminate your debts. You pay the fee whether your debts are settled or not.

2. Debt settlement services don’t provide instant relief. Most debt settlement services require you to deposit a specific amount of money in a bank account each month until you have enough to make a reasonable settlement offer. While you are trying to save, the debt settlement company’s fees are being deducted from your bank account. Saving enough for a settlement can take a year or more. If you have multiple debts, you will save for them one-at-a-time, so the whole process could take several years.

3. Debt settlement services can be very expensive. The charge is often based on a percentage of the total amount of debt that you want help with when you sign up for the service. A typical fee of 15 percent (some are even higher) on four credit card accounts totaling $20,000 would be $3,000. You would pay that amount regardless of how many of the accounts, if any, are actually settled.

4. Claims for success rates can be very misleading. Debt settlement companies advertise big savings but those claims often don’t take into consideration the number of accounts that are never settled or the fees that customers pay. Industry figures show that the majority of debt settlement customers drop out of the programs within the first six months, after they have paid a large portion of the fees but before their debts are settled.

5. Debt settlement programs don’t stop debt collection. Banks and debt collectors don’t have to cooperate with debt settlement companies and they can keep trying to collect the money you owe. While you are saving for a settlement, your debt may increase because of interest and penalties, you may be hounded by collection agents, and you can be sued for the debt.

Debt Settlement companies are everywhere they want your business and may make promises they can't keep. At first, they may stay on top of your program but as time passes either you or the companies lose interest and your case just becomes another account in their computer. There are better ways to settle your accounts which I will cover in another post.


Here are some additional posts about debt:

The Early Warning Signs of Debt

Debt Collectors Are Calling me Everyday - What are my Rights?

Readers Question: A Debt Collector Is Threating me if I Don't Pay | What Should I Do?

Debt Snowball. What is it?

Related articles

• The Five Senses Of Debt Settlement Strategy (totaldebtrelief.net)
• Review: Debt Free for Life (thesimpledollar.com)
• How Debt-Settlement Companies Skirt the New FTC Rules (dailyfinance.com)
• Debt Settlement Companies: The New Rules That May Keep Them Honest (walletpop.com)
• Debt Settlement Companies: How to Tell The Good From The Bad (walletpop.com)

How to Lower Your Car Insurance the 21st Century Way

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Here's the problem, the cost of your car insurance is pretty steep these days. Your a careful driver, you have not gotten in any accidents and you have no tickets. For the insurance companies your the perfect customer. But why do you still have to pay these high insurance bills as if your a bad driver?

To solve this dilemma the car insurances companies have come up with a device to measure just how good a driver you really are. This device installs in your car and measures all the details of your driving. It measures the amount of miles you drive, how fast you go, how many times you use the brakes and the amount of time you drive your car.

GMAC Insurance’s low-mileage discount plan is a version for owners of General Motors cars who have OnStar service. OnStar, which also can alert an operator to call 911 in an emergency or remotely diagnose a car’s mechanical problems, reports actual miles driven for subscribers who sign up for the insurance plan. Discounts are based on how much less than 15,000 miles you drive in a year, though there is no penalty for driving more. For instance, if you drive between 7,501 and 10,000 miles annually, you would save 26% or $208 if the starting premium were $800. GMAC says it has 30,000 low-mileage customers so far.

The Snapshot program from Progressive Insurance has 100,000 customers and is available in 30 states. With Snapshot, you plug in a device about the size of a garage door opener into your car’s diagnostic port (often under the dash below the steering wheel). For 30 days, the gizmo sends data back to Progressive about how many miles you drive at what time of day and attempts to discern if you are an aggressive driver. (Lots of braking translates as aggressive since tailgaters hit their brakes a lot). After 30 days, Progressive will tell you, based on your mileage and driving habits, whether you qualify for a discount of up to 30%.

While other programs don’t measure your speed, Allstate’s DriveWise program doesn’t shy away from that. Now in effect in Illinois, the plan will be rolled out to other states during this year. The device installed for DriveWise will note any time you exceed 80 mph. In addition to your mileage and episodes of hard braking and aggressive acceleration, Allstate says such speeding could affect your rating and your premium.


Are you thinking about doing this than consider the issues:

• Will you cut back your mileage during this period. Are you considering a road trip.
• Will you really show up as a safe driver? You're going to reveal what kind of driver you really are. We all think we are great drivers. Do you change lanes a lot. Do you speed up quickly? All this will be revealed. 
• Understand what discounts will arise with this examination. Also check out the penalties if your considered a bad driver.
• Are you worried about your privacy? these devices could be used with your GPS revealing where your are going to and how long your there. 

This is definitely a win for people who drive very little or are good drivers. But if your a bad driver with a lot of claims are you going to add to the damage by attaching this device to your car revealing how bad a driver you really are?