Master Your Credit and Debt

Credit Cards

How to Get Them, Manage Them & Keep Them

Living life without a credit card can feel like getting by without cable TV. You can function; you just might feel like you’re missing out sometimes. Over here your credit score says as much, if not more, about you than your social profiles. And credit cards provide the foundation for that score. Without it, achieving many of the financial goals that are most important to you would be nearly impossible.

There are other 'pros' too, including:

• Convenience
• Using credit card statements to track your spending
• Revolving credit equates to quick loans when you need them
• Perks, incentives and rewards
• Less cash tied up when renting cars and hotels

There are also a number of cons including:

• Credit cards make it too easy to spend beyond your means
• Credit card statements equal more paperwork
• Fees if you carry a balance or miss a payment
• Fees for ‘conveniences’ like cash advances
• High interest rates that often outweigh a credit card’s benefits

So, plastic is not always fantastic. In financially irresponsible hands, a credit card can lead consumers into all manner of pitfalls, valleys and catastrophes. In your hands, however, a credit card is tool, one you should use wisely to build a solid credit reputation.

Student Loans

Saving Dollars & Making Sense of Student Loans

Obtaining a college degree could be one of the most important achievements of your life…don’t ruin it by becoming hopelessly in debt. Considering the staggering costs of higher education, it may prove difficult to stay out of the red. Whether you’re still paying off college or grad school-related debt, or about to sign on, it pays to educate yourself on the dollars and sense of financial aid management and repayment.

What is financial aid anyway?

Financial aid comes in many forms and from different sources, including the federal government, private institutions, endowments, and even your home state. Scholarships and grants are the most desirable (and competitive) types of aid because you don’t have to pay them back; the rest comes from savings, parents, part-time employment or, as a last resort, from loans.

Step 1: Get a handle on all of your financial aid options.

Though financial aid may be an essential element in the pursuit of higher education, it’s not the only option. In fact, because it can be so difficult to re-pay student loans when you first graduate from college, you should exhaust every other option before committing to a student loan.

Step 2: Understand your student loan re-payment obligations.

When it comes to paying off your student loans, there may be several options available to you.

Step 3: Know what you are signing on for, long-term.

The promissory note you sign(ed) to obtain a student loan comes with a tremendous financial obligation, but it needn’t be a burden too heavy for you to carry. Not if you take these two steps:

1. Calculate the annual and monthly payments required by all of your student loan contracts.
2. Based on a realistic estimate of your future income, determine if you can comfortably make the payments calculated above.

You’re a grown up, and you know what’s good for you, your career and your future.

Going back to school as an adult?

You also know a thing or two more about life than your average freshman, and have more responsibility. As such, going back to school is going to be more complicated – yet rife with opportunities and alternatives. Before you invest in another round of school, map out your life goals again to confirm that school is the way to go for you. After that, be sure to:

• Establish a family/friend support network
• Look for programs designed for adult students
• Consider part-time school, night classes, and distance learning
• Sharpen your pencils…and delve in!

Mortgages

The Mortgage Survival Guide

Purchasing a house? Bring on the paperwork! And don’t forget your favorite pen. Qualifying, securing, and signing a mortgage can be multi-faceted, confusing, and stressful—especially for a first-timer. Fear not, new homeowner. At the end of road is home, sweet, home... a home of your very own.

Step 1. Clean up your credit report

Get a copy of your credit report and make sure it's accurate. If not, dispute incorrect information. Correcting en error can take time, so don’t wait until the last second to handle.

Step 2. Gather your own paperwork

Before you qualify for a mortgage, your potential lender is going to require a lot of information from you, including:

• All of your bank information, from its name and address to account numbers and statements
• Investment statements for the past three months
• Proof of employment and income in the form of pay stubs and W-2 withholding forms
• If you’re self-employed, balance sheets and tax returns
• Consumer debt information, as in account numbers and amounts due
• Divorce settlement papers, if applicable
• Authorizations allowing the lender to verify your income, bank accounts and credit

Step 3. Prequalify or seek preapproval

Prequalification is the lender’s determination of how large of a mortgage you might qualify for based on its 'standard ratios.' For instance, your ratio of monthly housing expenses versus your gross monthly income should not exceed 28 percent.

Preapproval is the amount a lender will commit to based on your income and credit, which they’ve already checked out. It also gives you more credibility as a buyer, and may differentiate you from other potential buyers

Step 4. Finalize the application

Within three business days of applying for your loan, the lender must provide:

• Information on the mortgage's effective rate of interest, or annual percentage rate (APR)
• Consumer information on adjustable rate mortgages
• An itemized ‘good-faith’ estimate of your closing costs

Step 5. The lender’s appraisal

Your home will serve as collateral for the loan, therefore the lender will order a market value appraisal of the property. Also, if your down payment is less than 20 percent of the value of the property, you’ll require private mortgage insurance.

Step 6. Mortgage approval

If the lender has not already verified your employment and bank accounts for the preapproval process, they’ll do so now, as well as obtain and evaluate your credit report.

Otherwise, that’s it! Congrats! You’ve got a grown-up, ‘real life’ mortgage to pay off.

Retirement

Because One Day, You’re Going to Want to Retire

You only get one shot at saving for retirement, as in now. It might not feel like it, but the future is hurtling towards us at the speed of time itself – and time can be a relentless thing. When it catches up with you, Social Security might be a thing of the past; pensions may be as extinct as dinosaurs; and you could very well live to 100 or beyond (with no income to speak of).

It’s a scary thing, that ticking clock. But time is also your biggest ally.

Thanks to the mathematic marvel that is compound interest, the abundance of retirement planning tools available to you, and your new found sense of financial realism, the future is now a thing that can be faced with confidence.

Let's get started.

• Step 1: Establish Your Retirement Needs and Goals. With so many immediate goals in front of you, determining retirement needs might feel rather abstract. But it’s critical to set a baseline. It begins with a modest percentage of your income.
• Step 2: Start Funding. Now that you’ve determined what percentage of income you’ll need to save to fund your retirement, it’s a matter of putting it in the right place. Here are the most powerful retirement accounts out there.
• Step 3: Put Some Thought Into the Unthinkable. The future is full of uncertainty. However, there is one inevitability we all share in common. You might not have a lot, but you will need these documents to protect your estate, your family, and your finances.