The 2nd Biggest Problem With Free Credit Score Websites

June 27, 2012

I’m sure you’re quite familiar with those uber-annoying commercials with that band peddling “free” credit scores. By now, most of us have caught onto the trick behind these offers; they’re only free if you cancel your membership during the trial period. If you don’t cancel, your credit card will be charged a big fat fee – typically $15 to $30 per month. Worse yet, some of these services will charge you for 3 months at once when you forget to cancel… ouch! Continue reading “The 2nd Biggest Problem With Free Credit Score Websites”

Boomerang Kids: How to Avoid Getting Financially Whacked When Your Adult Child Returns Home

June 20, 2012

It’s been said that a parent’s greatest gifts to a child are roots and wings. But what happens when a child must return to his roots because he cannot fly? This is the situation faced by many parents today: their adult children are moving back home, unable to find jobs or to afford life on their own. Continue reading “Boomerang Kids: How to Avoid Getting Financially Whacked When Your Adult Child Returns Home”

Why Spending Less Can Mean Living More

June 06, 2012

This morning on the radio, I heard an ad for refinancing your home mortgage, targeting us listeners by explaining that the savings that come from a lower interest rate could be used to buy a new car or take a luxury vacation. But there was nothing about using the savings to actually, well, save! Ads like this remind me that we live in a society where other people often judge your quality of life based on the amount you spend, while the amount you save is seen as painful deprivation, belittled as “cutting back.” But if spending less in order to save more is seen as something that limits your life rather than enhances it, something to be suffered rather than celebrated, it’s no wonder that it becomes so difficult for so many people to do. Continue reading “Why Spending Less Can Mean Living More”

How to Get Tax Relief for College Expenses

May 30, 2012

We’ve been talking for the last few months about the challenges of sending a child to college. First comes the choice of savings vehicles from the hundreds of options: state-sponsored 529s, private plans, Coverdell accounts, and self-managed investments. Then comes the crash course in financial aid, where parents and students have to figure out their eligibility for grants, scholarships, and government and private loans. Continue reading “How to Get Tax Relief for College Expenses”

Pros & Cons of a 529 College Savings Plan for Your Kids

May 16, 2012

Figuring out how to pay for your child’s college education can be overwhelming. The cost for one year of school at a public university is over $17,000 and is nearly $40,000 at a private school – and that doesn’t even include the price of room and board. Counting on scholarships to cover college costs is foolhardy and the availability of student loans (especially a loan with a good rate) is not guaranteed. Continue reading “Pros & Cons of a 529 College Savings Plan for Your Kids”

Learning to Become an Extreme Saver – Part 2 (How I live in NYC on $12,000/year)

May 09, 2012

I live in New York City and spend only $12,000 a year. Continue reading “Learning to Become an Extreme Saver – Part 2 (How I live in NYC on $12,000/year)”

Proper Mortgage Planning Helps Avoid Financial Challenges Later On

April 25, 2012

Financing a property is considered to be a good investment. If you plan properly and take out a mortgage for your home, down the road, it may turn out to be a great asset for you. However, if you make a wrong decision, then it can lead you to face severe financial challenges later on. So, proper mortgage planning is very important so that you can lead a stress free life after you take out a loan. Continue reading “Proper Mortgage Planning Helps Avoid Financial Challenges Later On”

A 6-Step Process to Starting Your Own Small Business

April 18, 2012

The phrase “start your own business” is typically met with fear, trepidation, and intimidation. However, you’d be surprised by how easily it can be done. If you possess creativity and ambition, starting your own business is literally just a few steps away. Continue reading “A 6-Step Process to Starting Your Own Small Business”

Learning to Become an Extreme Saver – Part 1

April 12, 2012

We’ve all heard about the many benefits of saving money. With money in the bank, you can pay for things you need or want without going into debt. You have an emergency fund to help tide you over in case you lose your job and you have the foundation for a nest egg that can be invested conservatively and grow over time into a substantial amount saved for retirement. There’s no question that being a saver has several advantages. But have you ever thought about the advantages of becoming an ‘extreme saver’? Continue reading “Learning to Become an Extreme Saver – Part 1”

Is It Time to Refinance Your Mortgage?

March 28, 2012

The chance to refinance a home mortgage loan is rarely missed by a homeowner who is struggling to make his minimum monthly payments on time but this is not always the best option for every homeowner. Being able to refinance a loan doesn’t always give you the bragging rights in your neighborhood. Instead, you should give some thought behind the timing of your decision so that you don’t end up making the wrong decision about your rising mortgage debt level. Remember that multiple refinancings can reduce the overall financial benefit so when you decide to refinance your home loan, you should make sure you make the best decision in order to make it the final one. Don’t be a refinancing junkie as this will hurt your credit score and make you less able to get new lines of credit at an affordable rate. Continue reading “Is It Time to Refinance Your Mortgage?”

Choice is a Good Thing, Right?

March 22, 2012

In the 1970s, I lived in England before Margaret Thatcher came to power. In those days there wasn’t a lot of choice for consumers at the supermarkets: three types of cereal – Wheetabix, cornflakes or oatmeal – and two kinds of instant coffee. When I first returned to the U.S., I spent hours in the grocery store marveling that there was a whole aisle for cereals and another for cookies. And olives! Six different varieties, based just on the olive’s size. Continue reading “Choice is a Good Thing, Right?”

6 Easy Ways to Lower Your Homeowner’s Insurance

March 14, 2012

I used to think the cost of homeowner’s insurance was a fixed, non-negotiable expense. I bought my homeowner’s insurance 10 years ago and rarely thought about it thereafter. Since the bills were paid out of an escrow account, I didn’t have to specifically budget for it, which may be why I didn’t notice the “pinch.” Continue reading “6 Easy Ways to Lower Your Homeowner’s Insurance”

Getting Smart About College Costs

February 29, 2012

Just about every parent thinks about the day when his or her child leaves home with a blend of pride and sadness. Today’s parents with college-bound children probably add a measure of financial anxiety into the emotional mix. Not only are these kids emptying all their stuff from the upstairs bedroom, they may also be emptying their parent’s bank accounts and hopes for a secure retirement. Continue reading “Getting Smart About College Costs”

How I Recovered From More Than $30,000 in Credit Card Debt

February 23, 2012

When I was 18, I got my first credit card. What should have been an occasion to mark the beginning of wise financial habits instead began a three-year period of reckless spending and horrible choices. By the age of 21, I found myself in debt to the tune of $30,000 – in addition to nearly $10,000 of personal debt to my parents, who financed my college education. Unfortunately, like many other Americans, I wasn’t able to use credit cards and rewards wisely. Continue reading “How I Recovered From More Than $30,000 in Credit Card Debt”

What Would You Do With 19 More Hours of Free Time During the Week?

January 31, 2012

That’s the question I asked myself after recently reading an article suggesting that we shorten the standard work week from 40 hours to 21. With nineteen more hours during the week, I know there would be a lot more things I would do. I’d spend more time outdoors, enjoying fresh air and walks in the park. I’d learn new skills, like a new language and woodworking. And I’d spend more time with my family and friends, the people that make life worth living. Whatever you can imagine doing with more free time, it’s likely something that would make your life better and happier. Continue reading “What Would You Do With 19 More Hours of Free Time During the Week?”

How to Handle Old Debt and Debt Collection Agencies

January 25, 2012

With identity theft and fraud being such common threats, it’s important to exercise caution in every facet of your financial life. You likely know not to give out your social security number to anyone you don’t trust, nor should you ever invest in any get-rich-quick work or investment schemes. The list goes on.

If you have debt issues, you may be further at risk of having your identity or financial information stolen. You may also be pressed for payment for a debt for which you are, in fact, not liable, despite what a debt collection agency may say. If you have any old debt or are faced with the hassle of dealing with a debt collection agency, there are a number of ways you can deal with the situation.

Monitor Your Credit

Monitoring your credit is very important to not only avoid accruing debt, but to check and see if you have any old outstanding debt that is weighing you down. Be sure to review your credit report and continue to check it on a regular basis.

Forget about the companies that want to charge you a fee for this service – you can request a free copy of your report once per year from all three credit reporting agencies via AnnualCreditReport.com. If you have any debt from the past seven years, this is where you will find it. Any debt older than seven years should not appear on your credit report.

Know the Law

It is important to realize that there is a statute of limitations on old debt, which varies by state. Usually, it ranges from three to six years.

Next, understand that if you do have old debt, the collection agency must send you a written notice explaining the amount of money you owe and to whom. If you respond to them within 30 days to dispute the debt, they cannot contact you again until they verify the debt. Send your response via certified mail and keep copies of all correspondence.

Know What Debt Collection Agencies Cannot Do

Here is a list of tactics that debt collectors are not allowed to employ:

Call before 8am or after 9pm
Use obscene language
Call you at your place of employment after you ask them to stop
Falsely claim to be someone else (such as a lawyer or someone associated with law enforcement)
Threaten to have you arrested
Continue to harass you after you’ve asked them to stop
Talk with friends, family, or professional references concerning the debt – they can only talk to you or your lawyer
Threaten you with wage garnishments unless they have the authority to do so (check with your state guidelines)
Threaten to sue, unless it is allowed in your state – in some states, suing is not an option

Hypothetical Situations

Here are four hypothetical debt situations and how to handle them:

Debt that is older than seven years and outside the statute of limitations: There is no liability here whatsoever. Due to the statute of limitations, no collection agency can come after you for payment, and it should no longer be included on your credit report. If it is, dispute it and get it removed.
Debt that occurred within the last seven years but is outside the statue of limitations: You may want to consider settling this debt to have it removed from your credit report. However, before you pay the entire amount, consider negotiating a settlement with the collection agency by offering to pay back a percentage of the total owed. However, realize that if you opt for a settlement (rather than paying the debt in full) this will more significantly hurt your credit score.
Debt that is older than seven years but is not outside the state of limitations: This is a very rare occurrence. Such a debt will no longer have an affect on your credit rating, but you still are exposed regarding collection agencies. Use your best judgment here as to whether you should pay off the debt in full or via a settlement.
Debt that occurred within the last seven years and is not outside the statute of limitations: Pay this debt in its entirety if you have the ability to do so. It is damaging your credit score, and collection agencies are legally authorized to come after you for it.

Additional Tips

If you are ever contacted by a collection agency, say as little as possible over the phone, and just hang up if anything makes you uncomfortable. Never agree to pay back the debt (even verbally), and do not acknowledge the validity of the debt over the phone. If you do either one of these, it could actually reactivate the debt and put you on the hook for the amount owed.

If you do get taken to court over an old debt, you must show up in court, regardless of the validity of the debt. Not showing up could result in a claim against you.

Finally, keep in mind that older unpaid debt cannot hurt you nearly as much as new or recent debt. If you have debt issues, focus on the more recent ones.

Final Thoughts

No matter the age of your debt, there is always the moral obligation to pay it back. You can address this issue as you wish; however, I would not suggest that you avoid paying back any valid debts in your life just because there is a loophole. But remember that there are many predatory collection agencies out there that may come after you for “zombie debt” that you do not technically owe.

Do yourself a favor: If faced with the issue of old debt, educate yourself. Know the ins and outs of the entire scenario before making any final decision, and do what’s best for you.

Do you have any old debt horror stories? What are your tips for dealing with collection agencies?

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GUEST BLOG POST: The Course to Financial Success: A Marathon, Not a Sprint

November 09, 2011

On Sunday, October 30^th, I ran the Marine Corps Marathon in Washington, DC.

Call it a “runner’s high,” or chalk it up to trying to distract myself from my painful feet, but I spent much of those five-plus hours in deep philosophical thought. I thought about the courage of our military, as I studied the faces and dates of too-short lives emblazoned on the backs of so many runners. I thought about the dedication of the spectators, who not only waited for several chilly hours to catch a 10-second view of their runner, but also propelled 19,999 other runners to the finish with their motivating and humorous signs. My favorite: “26.2 miles? Because 26.3 would just be crazy!!” Continue reading “GUEST BLOG POST: The Course to Financial Success: A Marathon, Not a Sprint”