Since this is a money focused blog I am about to share the top 5 ways cash can leak from your life. It’s hard enough to make money, so why allow any of it to be pilfered (stolen) from your purse? But it can happen without even realizing it. I know I’ve been bitten a time or two, but with financial education comes transformation. Now I am alert to the ways my money can slip away almost undetected.
Overdraft Loans
If you have a bank account you know what this is. You bank covers a payment when your money runs dry but you pay a heavy price. Most banks charge $35 per incident which can put your account further in the negative. The way to prevent this from happening is to closely monitor your account and be aware of your balance. You can check online or with your bank’s mobile app. It only takes a second to avoid paying extra money to your bank.
An overdraft loan is a transaction that your bank pays when you have insufficient funds in your account to cover a payment. Banks typically charge $35 per overdraft, which can be triggered by debit card purchases, ATM withdrawals, checks, or other payments from your bank account. Some banks charge a second fee if not repaid within a few days. Banks collect payment by deducting the overdraft amount and fees from the next deposit into your account. Overdrafts are the most expensive bank credit.
Tax Refund Anticipation Loans (RALS)
The first year this came out I used it because I desperately wanted my tax refund sooner than later. In the years that followed I weighed the cost of getting the money faster and paying as much as 50-500% in fees against waiting 8-10 days and getting all of the money I was expecting. I’ve chosen the latter option every year and have not regretted being patient.
RALs are extremely high-cost bank loans sold by tax preparers and secured by the taxpayer’s expected tax refund – loans that last about 7-14 days until the actual IRS refund repays the loan. RALs cost 50 to 500% APR when all loan fees are included. Some tax preparers also charge a separate fee, often called an “administrative” or “application” fee, in addition to the RAL bank’s fees. Tax preparers and their bank partners also offer an “instant” same day RAL for an extra $20 to $39. RALs are a declining product due to action by bank regulators and the IRS.
Car Title Loans
I have never done this because I value my transportation too much. I couldn’t stand the sleazy commercials either and before I knew how much you’d end up paying an arm and a leg to repay the loan. A typical car title loan costs 300% APR, must be paid in one month, and is made for much less than the value of the car. Most cars are repossessed so you lose money and your car.
A car title loan is a short-term cash loan where the car title is used as collateral. Title loans are typically made without regard to borrowers’ ability to repay. Borrowers risk repossession if unable to repay at the end of the month.
Check Cashing
This is another service I refuse to use because the high fees they charge. Most people who use these services don’t have a banking or credit union account so they feel they have to use this service.
Check cashers sell basic financial transaction services, such as check cashing, money orders, money transmittal, or prepaid debit cards. Many check cashers also make payday loans in states that authorize that product. Check cashers provide these services in exchange for often high fees.
Prepaid Cards
Prepaid cards can be a blessing or a curse depending on your perspective. I’ve used them when I purchased them from a retailer like Walmart or Target. I’ve also used them when I wanted to cash a refund check and that was the primary form of money issued.
I’ve had a prepaid card from a bank once to use like a credit card. I had to deposit money into the account and the transactions would be reported on my credit report. It is used as a credit rebuilder. The down side to it are the fees that are deducted from your total amount.
Prepaid debit cards, often called stored value cards, are a payment method used by unbanked and underbanked consumers to make transactions. Funds are loaded onto the card and then spent when consumers swipe the cards at retailers or withdraw cash via ATMs. Prepaid cards can be useful to consumers but often come with steep fees and are not clearly protected by the federal laws that apply to debit and credit cards.
So there you have the top five sneaky cash leaks. In a nutshell:
1. Overdraft Loans because of insufficient funds come with a heavy fee for each overdraft incident
2. Tax Refund Loans hit you with a heafty fee to take out the loan, sometimes as high as 50% of your expected refunds in fees.
3. Car Title Loans put you at risk of losing your car on top of paying up to 300% in interest.
4. Check Cashing services charge very high fees to cash the check. In addition to paying taxes to Uncle Sam on your paycheck you are also paying to have your check cashed.
5. Prepaid Cards tack on fees to use the card and it’s hard to get a refund if something goes wrong.
Samantha A. Gregory is an author, consultant, and speaker. She’s a single-mom lifestyle, money, and parenting expert featured in The Washington Post, The New York Times, Essence Magazine, HuffPost, ABC News, and Mint.com.
Samantha founded the award-winning RichSingleMomma.com™, the first online magazine featuring personal finance, parenting, and personal development content and courses for single moms.
She aims to inspire women who are ready to thrive and not just survive in their single motherhood journey. Connect with her on Instagram @richsinglemomma.
Some rules are meant to be broken – like the one about not wearing white after Labor Day. Others should remain sacrosanct, such as the rules of good credit. Those are the kind of rules that can make life easier and happier when you follow them – and help ensure your finances stay in good order, too.
Unlike fashion rules, the rules of good credit are really not subject to interpretation or personal opinion. They derive from the formula that credit bureaus and lenders use to calculate your credit score.
So what are the 10 unbreakable rules of good credit? Here they are in descending order, a la David Letterman:
10. Create a budget and stick to it. Your budget should cover everyday expenses and allow for the smart use of credit.
9. Use credit cards wisely. Smart use of revolving credit – not carrying a balance, paying the full balance immediately – is an important component of a healthy credit score. Unwise use, such as running up debt, can lower your score. And in that vein …
8. Always pay more than the minimum balance on your credit cards. Ideally, you would pay off the entire balance right away, but if that’s not possible, pay more than the minimum – as much as you can afford. Paying only the minimum balance means it will take years – and thousands in interest charges – to pay off your debt.
7. When applying for a loan – which includes applying for new credit cards – do so wisely. Comparison shop and make your applications (if you’ll be making more than one) in a short amount of time, so that those credit inquiries will only count against your credit score once. Stretching applications over time, or making too many in a short amount of time, can negatively impact your credit score.
6. Your credit utilization ratio – the amount you owe compared to the amount of credit you have available – is a key factor in determining your credit score. Avoid maxing out your credit – including credit cards or home equity lines of credit. At any given time, try to keep three quarters to two thirds of your total available credit free for use.
5. Don’t immediately close a credit card account just because it’s paid off. Doing so can skew your credit utilization ratio. Before you close an account, be sure you understand what impact – if any – the action will have on your credit score.
4. Practice identity theft protection measures. From shredding sensitive paper documents before trashing them, to keeping your PC’s virus protection software up to date, it’s important to take steps to protect your credit from identity theft and fraud.
3. If you’re in financial trouble, don’t practice avoidance. If you can’t pay your bills, contact your creditors to work out a payment plan, but know that not making minimum payments may negatively impact your credit score. Being proactive may not solve your financial woes but it can help minimize the negative impact on your credit.
2. Keep an eye on your credit score. Maybe you’re in the habit of reviewing your credit report once a year, or only check it when you’re planning to apply for a loan, but it’s important to stay on top of your credit score all the time. Fortunately, the Internet has made it easy to monitor your credit report and score. Enrolling in membership of a product like freecreditscore.com can help you understand your credit. With enrollment, you get credit score alerts, identity protection alerts and fraud resolution support if you find an error on your credit report.
And, the No. 1 rule of good credit:
1. Pay your bills on time. A consistent, long-term history of timely bill paying goes a long way toward a healthy credit score. In fact, a solid payment history can pull up your score even if there are other negatives on your credit report, such as a high ratio of credit used to credit available. Not paying your bills on time – or at all – is a surefire recipe for bad credit.
Samantha A. Gregory is an author, consultant, and speaker. She’s a single-mom lifestyle, money, and parenting expert featured in The Washington Post, The New York Times, Essence Magazine, HuffPost, ABC News, and Mint.com.
Samantha founded the award-winning RichSingleMomma.com™, the first online magazine featuring personal finance, parenting, and personal development content and courses for single moms.
She aims to inspire women who are ready to thrive and not just survive in their single motherhood journey. Connect with her on Instagram @richsinglemomma.
One of the most exciting parts of parenthood is watching your children learn as they grow. Of course, life’s lessons can be tough just as often as they can be pleasant. And as you want to protect kids from falling off their bike or scraping a knee, you also want to set them up for a successful financial future, as free from worries as possible.
One of the best things you can do to prepare your kids for a lifetime of handling money is to get them started early. But it isn’t only about timing – following through with lessons and providing plenty of explanation is essential.
Keep these tips in mind to give your kids a leg up in learning about finances.
* Start saving. The earlier you can get your kids into the habit of saving, the more they’ll have to enjoy down the road. The concept doesn’t need to be overly complex – and it shouldn’t be, when you’re dealing with very young children. Piggy banks are a perfect tool for starting saving habits; a simple glass jar works, too, and gives kids an exciting visual to associate with their savings. As your children grow, so should their ideas about saving money. Opening a real savings account in your child’s name is not only an exciting event for her, it builds an early understanding of banking. Some schools and banks even have partnerships that allow students to make deposits at school. If your school doesn’t offer such a program, make trips to the bank with your kids and show them how to monitor their accounts.
* Have ongoing conversations about money. Making your children comfortable with discussing finances is a gift that, while not flashy, will serve them well throughout their lives. Start conversations about needs versus wants, budgeting and life’s necessary expenditures. Encourage price comparison skills by going grocery shopping together and looking at different brands. Set an example by telling kids how you save up to buy an item that you want and ways that you cut costs – and what you can get from the savings. If there’s something your child wants, provide guidance and ideas for how to save up the amount needed to make the purchase.
* Effectively use an allowance. An allowance is a tricky thing – it can be a good teaching tool, but you don’t want your kids to view it as a handout. Whether or not you choose to associate chores with an allowance is up to you, but you should have discussions with your children about when allowances will be paid, and how they can be spent – or saved. Encourage savings by providing two bank envelopes – one for savings and one for spending. If your budget allows for it, consider a “match” program in which you contribute a percentage every time your child makes a savings deposit.
* Don’t be afraid of mistakes. Some of the most powerful lessons lie in making mistakes, so don’t be afraid to let your children make some less-than-perfect decisions. Whether they overspend their budgets or waste money on something frivolous and later regret it, it’s important for them to learn the consequences of financial mismanagement early in life.
Teaching kids about money can be daunting, but doing so lays the groundwork for a stable financial future. Whenever possible, make lessons about money fun, yet practical; emphasize that money doesn’t have to be scary, and that good things come from using it wisely. –
Visit the Equifax Finance Blog (blog.equifax.com) for more useful information and tips on managing family money matters. – (BPT)
Samantha A. Gregory is an author, consultant, and speaker. She’s a single-mom lifestyle, money, and parenting expert featured in The Washington Post, The New York Times, Essence Magazine, HuffPost, ABC News, and Mint.com.
Samantha founded the award-winning RichSingleMomma.com™, the first online magazine featuring personal finance, parenting, and personal development content and courses for single moms.
She aims to inspire women who are ready to thrive and not just survive in their single motherhood journey. Connect with her on Instagram @richsinglemomma.
Turn on the television or read the newspaper at any given time, and there are plenty of stories that have to do with money. Unfortunately, it’s usually negative news how people don’t have enough money and are struggling to get by. Sadly, the richest country in the world has plenty of people living in poverty. People everywhere are struggling with credit card debt, car payments, education loans and for the average person getting financially ahead seems impossible.
This April is National Financial Literacy month, and whether your finances are in order or not, it’s a good reminder for everyone to not only understand the basics of money, but to think about how to acquire more.
I grew up in Iran and the work ethic over there is completely different. My dad would leave very early in the morning and come home very late at night, and the only day I would see him was on Friday, the one day he was off from work. When you see Middle Easterners having so much success in America, it’s their amazing work ethic. They’re used to working six days a week and they don’t understand the 9-5 work philosophy of Americans.
The good news is there are some simple things everyone can do to take control of their financial situation:
Look for new ways to earn money
Americans seem so focused on saving money. If you’re not earning enough money, how can you save any money? If you’re serious about getting ahead, start a side business learning to cut hair, selling jewelry or iPhone cases, cleaning houses or whatever. It doesn’t matter what. Just start a business! With the opportunities presented by today’s technology, it isn’t that hard to do.
Next time you’re inclined to complain about not having enough money, really ask yourself if you’re doing everything you can to make more. Don’t be afraid to start a business, either. While it’s true that many small businesses fail, sometimes you just have to take the leap. Being successful in business can lead to a world of riches and opportunity.
Ignore the Joneses
We all know the expression, but the best advice is to ignore the Joneses altogether and live your own life. Get rid of the things you really don’t need. Cancel your cable TV. Stop drinking soda. Cut out Starbucks. Are you really using that pricey gym membership? Do you really need a landline these days? Only spend money on the basic essentials and don’t think of buying the extras until you have enough money than you know what to do with.
Be a smarter shopper
Make a promise to never pay retail for something and become a better buyer using websites like Overstock, Craigslist and eBay. Thanks to the Internet, getting a deal on items has become more commonplace. When you need to make a purchase, shop around. That savings will start to add up after a while.
Set your expectations high
Do you believe you can make one-million dollars? People usually make the amount of money they feel they are worth, and most people sell themselves short. If you have a high self-image, you will create a world for yourself that meets that self-image. Stop bringing yourself down and start building yourself up. Set your expectations high. Tell yourself you’re going to make $500,000 this year. You might not actually make that much, but you’ll be in the right frame of mind to start thinking like a success.
Get thick on cash
The notion that the American Dream is linked to buying a home is ridiculous. About 90 percent of middle-class America buys too early. When you have three years of your mortgage payment saved in cash, then you can buy a house. It’s much better to have liquidity. Cash gives you freedom. Get thick with cash before you think about major mortgage debt.
Both urgency and patience is important
Have patience while choosing what to do to make your money. Wealthy people typically choose one industry and become the best at it, and this can take time. Act with urgency because people think they have a lot of time when they really don’t. Finding the right balance of urgency and patience will help put you on the road to financial freedom.
As Financial Literacy Month approaches, make a commitment to better your financial situation. Making small changes in your lifestyle and spending habits, while looking for new ways to earn more money will change your life.
Patrick Bet-David is an entrepreneur, author and self-made success who emigrated from war-torn Iran to the U.S. and has made financial literacy his personal crusade. He came to America with nothing and built a financial services marketing empire, the PHP Agency. He is author of The Next Perfect Storm and Doing The Impossible. Visit http://www.patrickbetdavid.com/ and http://goasknewton.com/
Samantha A. Gregory is an author, consultant, and speaker. She’s a single-mom lifestyle, money, and parenting expert featured in The Washington Post, The New York Times, Essence Magazine, HuffPost, ABC News, and Mint.com.
Samantha founded the award-winning RichSingleMomma.com™, the first online magazine featuring personal finance, parenting, and personal development content and courses for single moms.
She aims to inspire women who are ready to thrive and not just survive in their single motherhood journey. Connect with her on Instagram @richsinglemomma.
Creating a budget can be intimidating. We see all the different variations and hear all the different opinions and it gets overwhelming. Fortunately, there is a way to create a budget that is easy and actually makes sense. It takes into account your income and relieves the guessing game.
Using the percentage-based budget method is easy because you are basing your budget on a recommended percentage of your income. These percentages are what most personal finance gurus recommend to live a sustainable life.
Consider Your Unique Situation
Your situation is unique so be sure to consider all your financial obligations. If it is still overwhelming, consider simplifying your finances by talking to a finance professional, reading a good personal finance book, or taking a financial literacy course.
Recommended Budget Percentages
The recommended percentages for dividing your income are as follows:
Samantha A. Gregory is an author, consultant, and speaker. She’s a single-mom lifestyle, money, and parenting expert featured in The Washington Post, The New York Times, Essence Magazine, HuffPost, ABC News, and Mint.com.
Samantha founded the award-winning RichSingleMomma.com™, the first online magazine featuring personal finance, parenting, and personal development content and courses for single moms.
She aims to inspire women who are ready to thrive and not just survive in their single motherhood journey. Connect with her on Instagram @richsinglemomma.
I’m a big believer in having the appropriate amount of insurance, especially when it comes to your health and personal liability. But if money is tight and you want to get the most bang for your buck, there are a few types of insurance you can probably do without – or that may duplicate coverage you already have elsewhere:
Extended warranties. When you buy a car, appliance or electronic device, the salesclerk usually will try to sell you an extended warranty. These policies often duplicate coverage already provided in the manufacturer’s warranty. Plus, many credit cards provide an additional warranty on items purchased with the card.
Smartphone insurance. After shelling out big bucks for a smartphone, you might be tempted to buy replacement insurance. Just be aware that you’ll probably pay a hefty deductible and likely receive a refurbished phone, possibly not even the same model. My advice: Keep your old phone to reactivate in case you drop or lose the new one.
Flight accident insurance. The risk of dying in a plane crash is miniscule and already covered by regular life insurance. Also check your credit card cardholder agreement, since many cover such accidents for tickets purchased with their card.
Child life insurance. Life insurance is intended to provide economic protection for a person’s dependents, so unless your children are movie stars supporting you, this coverage is probably unnecessary. You can better protect their future by stowing those monthly premiums in an emergency savings account or buying additional term life insurance for yourself.
Pet insurance. With veterinary treatments now rivaling human medicine (organ transplants, chemotherapy, etc.), you could easily spend a small fortune keeping Fido alive. Before buying pet insurance, however, compare plan features carefully and weigh the expense you’d pay out over your pet’s lifetime. For example, monthly premiums increase with your pet’s age, deductibles and copayments are typically higher than for human coverage and there are usually predetermined per-year and per-condition caps. Plus, preexisting and hereditary conditions usually are not covered.
Rental car insurance. In most cases, the optional insurance offered by car rental agencies duplicates existing coverage you already have. However, before automatically rejecting agency coverage, ask your insurance company and credit card issuer whether you are fully covered for rental cars. A few considerations:
Coverage through your auto policy often expires after 30 days or less of renting the car.
Sports cars, luxury models, SUVs and trucks are often excluded.
Travel outside service areas typically is forbidden – especially across foreign borders or in rough terrain.
If you don’t carry comprehensive and collision coverage on your own car, your insurance may not cover a rental. Also, ask whether such coverage is limited to your own car’s value, since most rentals are new.
Ask what happens if you violate rental agreement terms (e.g., driving recklessly or allowing unauthorized drivers).
Specified disease insurance. Some people take out supplemental health and life insurance against specific conditions such as cancer, heart disease or stroke. Before buying, make sure you have adequate major medical insurance, which already covers such conditions. And carefully review the policy for restrictions. For example, many cancer insurance policies won’t pay for outpatient care or cover skin cancer, and impose fixed-dollar limits on specific procedures.
When it comes to your budget – and your family’s security – it pays to know which insurance is essential and which you can probably skip.
Jason Alderman directs Visa’s financial education programs. To participate in a free, online Financial Literacy and Education Summit on April 17, 2013, go towww.practicalmoneyskills.com/summit2013.
Samantha A. Gregory is an author, consultant, and speaker. She’s a single-mom lifestyle, money, and parenting expert featured in The Washington Post, The New York Times, Essence Magazine, HuffPost, ABC News, and Mint.com.
Samantha founded the award-winning RichSingleMomma.com™, the first online magazine featuring personal finance, parenting, and personal development content and courses for single moms.
She aims to inspire women who are ready to thrive and not just survive in their single motherhood journey. Connect with her on Instagram @richsinglemomma.
Hi! Welcome to RichSingleMomma.com. I started this website almost a decade ago because I couldn't find any blogs back then that helped single moms with money. I was having some success in that area so I decided to share what I knew about side hustles, making extra money, and managing money. Read more...
Since this is a money focused blog I am about to share the top 5 ways cash can leak from your life. It’s hard enough to make money, so why allow any of it to be pilfered (stolen) from your purse? But it can happen without even realizing it. I know I’ve been bitten a time or two, but with financial education comes transformation. Now I am alert to the ways my money can slip away almost undetected.
2. Keep an eye on your credit score. Maybe you’re in the habit of reviewing your credit report once a year, or only check it when you’re planning to apply for a loan, but it’s important to stay on top of your credit score all the time. Fortunately, the Internet has made it easy to monitor your credit report and score. Enrolling in membership of a product like freecreditscore.com can help you understand your credit. With enrollment, you get credit score alerts, identity protection alerts and fraud resolution support if you find an error on your credit report.
