Student Loans, Investment or Downfall?

Here I am, happy AF I just paid off all my private student loans! In your face Sallimae|Navient| NaviRefi. Glad those suckers are gone…

Here I am, happy AF I just paid off all my private student loans! In your face Sallimae|Navient| NaviRefi. Glad those suckers are gone and although I’m not done paying off my federal loans, this has given me a great sense of achievement.

It’s been almost 10 years since I graduated with my bachelor’s and almost 8 years since I graduated with my Master’s and like many of you, I’m still here paying on this investment that allowed me to attend college.

Investment is a word I often heard when people referred to having a college education–and I get it, I really do. All education, whether formal or not, is a great investment, but at what cost? The people who preached to us that loans were just a minor investment into our better future forgot to tell us that graduating with a degree did not guarantee a high paying job right after college. They forgot to mention that employers will want a degree but will also require extensive experience to bypass mediocre entry-level jobs. They forgot to mention there was a high probability that your first job out of college would not provide enough of a salary to afford all your bills with one income; forcing you to choose between paying your loans or staying at home to afford the other. They also forgot to say that most likely you will have to have a roommate or have a second gig to be able to split your regular expenses. They forgot to tell us that eventually we will have to come to the realization that we will want to buy a home and in order to afford the down payment, many other sacrifices will be made.

Don’t get me wrong, I know I am in a better position due to my education and for that I’m grateful. I knew that nothing was going to be handed to me and hard work was necessary but I wish someone told me more details as to what I should expect after graduation so I could have made a more conscious decision.

I mean, I don’t know how much an 18 year old would listen but I know I would have really considered community college as an option before attending a 4-year institution, I would have applied for more scholarships than the ones I did, I would not have taken the little bit of extra money I received as a refund check, I would have applied to resident assistant positions all 4 years. I would also have probably worked more rather than participate in multiple extra-curricular activities, and I probably would have studied abroad during the semester rather than summer so some grants would have applied.

Those 4 years were some of the best years ever and although I now say I would have made some tweaks if I knew better, I don’t regret the experiences I enjoyed. But as I lived them, I genuinely believed I was going to be able to pay them off very quickly as soon as I got my first job after graduating. Little did I know, life was going to happen. Priorities shifted and although I could have been able to pay off all my loans way sooner if I stayed at home with my parents, I reached a point where I had to leave and renting did not become an option. Saving enough for a down payment and still balancing life while not depriving myself were the ways I chose to live and no regrets on that either.

Would I consider student loans a downfall? Well, no–they allowed me to attain a university education that seems to be a commodity nowadays, it allowed me to make my parents proud and fulfill a dream they were not able to accomplish but fought really hard for all their kids to have. They left a country and their lives for a better opportunity for us and this was just a small price (with interest) that we had to pay. I just still hope that some reform will happen that would allow more young adults to gain the opportunity to finish college without accumulating massive amounts of debt. Tuition continues to rise, universities continue to expand, buildings become more modern, technology continues to update but I don’t really see the education or salaries across professions getting much better. Many say get government out of the student loan business and that would alleviate this crisis we are in, but those same federal or direct loans were the ones that gave me a chance at a better life, so for now all the advice I can leave you with are the ones below.

3 tips to attack your student loans:

  • Check into Public Service Loan Forgiveness Plans. Here is the application if you qualify. Read details here. After making 120 payments (10 years) under a qualified repayment plan, your balance is forgiven. You must work full-time for certain non-profits or government agencies. This is for Direct Loans.
  • Make extra payments when you can, even if you are in an income based plan and the minimum payment is 0, interest accumulates and eventually you still have to pay it off.
  • If you have private loans, make sure you are checking if your rates are variable or fixed, don’t get surprised and check your balances, rates and terms. I suggest a quarterly check-in with your student loans. Get a journal and don’t be afraid to call your service provider with any questions. By doing this, I noticed my best option was to refinance my private loans, for a better fixed rate, shorter term and lower payment, which did not matter at the end because I made it my goal to pay them off in one year after refinancing.

Hope this info was somehow helpful, we will have to deal with these suckers for a while so let’s make sure we have a plan. Hasta la proxima (until next time).

10 Ways to Save: Holidays are Approaching!

With only 10 weeks before Christmas and other holidays, I decided to prepare earlier this year rather than to just wait until the week of. Every year I realize I get overwhelmed with shopping and more often than I want to, I have to dig into my main savings account. This year I made a simple plan…

With only 10 weeks before Christmas and other holidays, I decided to prepare early this year rather than wait until the week of to purchase gifts. Every year I realize I get overwhelmed with shopping and more often than I want to, I have to dig into my main savings account.

This year I made a simple plan, I budgeted about 4 months in advance, you can still try to do this in 10 weeks. Here is how:

  1. Set a Definite Goal|Make a Plan|Set a Time-Frame: Let’s say you want to save $500 for Christmas gifts. Set the goal and stick to it but make a plan with a time-frame. For example since there are 10 weeks left until Christmas, that means saving $50 weekly. Work around your pay period and if you get paid every two weeks, double the amount to $100. Make sure as soon as you get the direct deposit, you are withdrawing the cash and putting it in an envelope dedicated for this only. You can use this same technique for larger savings. Let’s say I want to save $5,000 in one year. I get 26 paychecks, therefore I need $192.40 saved from each paycheck. $5,000 / 26=$192.40.
  2. Insurance: See if you can have your primary health insurance be your primary medical portion for car insurance to save on premiums. In NJ, a big portion of your car insurance is the medical part. I was told to contact my health insurance first to see if they cover car accidents and they did. I called back my car insurance and asked them to have my health insurance be my primary in case of a car accident. Disclaimer: I am no expert in this area, and thanks to God I have not been involved in any car accidents and hope I never do. I cannot tell you more details about the exact process if a claim went through, all I know is my health insurance is pretty amazing. Before making any decisions consult with an expert.
  3. Ask for Discounts: Call your homeowners insurance or car insurance for discounts in bundling or if there are other offers. I recently increased my homeowners insurance to their suggested coverage amount and by doing so they gave a discount which resulted in my premium going down while my coverage went up. Thank you NJM Insurance.
  4. Check if your Health Insurance Offers Rewards Programs:  I get $250 for just going to my doctors, getting an annual physical and getting a flu shot along with other online short activities. NJ Well is the program I am enrolled in.
  5. Cable: Call to see if there are current promotions running that can help lower your bill. Also, see if buying a modem can save you money in the long run since you pay a rental fee for using their modem (Comcast). You could also get rid of the extra cable box from a guest room you really don’t use.
  6. Meal Preparation instead of Eating Out:  This is my weakness but I have cut down a lot. Make sure to have a grocery list and a menu list for the week. Being prepared will really help you avoid eating out or buying takeout.  Here is a freebie for you. Meal Planner Menu & Grocery List.
  7. Side Jobs: I came across this article for 50 Ways to Make Money in 2018. Hope there’s something creative you may like in there.
  8. Subscriptions: Analyze your expenses, especially subscriptions and see what you need and what you don’t and cancel those immediately.
  9. Take Advantage of Free Trial Periods: to get free shipping or free audio books, from Amazon Prime, Pandora, Apple Music, etc. Just make sure you set multiple reminders to cancel them prior to the free trial period. If you are forgetful, just throw away this tip all together.
  10. Skip Extended Warranties: Now, I always say no whenever I’m asked to purchase extended warranties and I only rely on the free manufacturer’s warranty that may last 1 or 2 years. I’ve noticed that if something is going to go wrong with a product, it may be during the first year anyway. I have contacted companies for replacements for a portable heater and Nikon’s wireless adapter and they have sent me a new one by submitting a claim–again without any extended warranty. However, I have to tell you a story, the only time we bought an extended warranty was for a huge TV (the warranty was paid by someone else as a gift) and it just so happens that this year the TV was damaged by a thunderstorm and thanks to the extended warranty we were able to get a new one. I don’t know if this warranty jinxed it or saved it but this is just my opinion, you buy whatever gives you peace of mind I guess.

Hope this helps. As always, please share your tips with us and don’t forget to follow and subscribe!

“THE BEST TIME TO SAVE MONEY IS WHEN YOU HAVE SOME.”

10 Tips to Improve your Credit.

The best way to predict your future is to create it. Here are 10 tips to improve your credit score.

Majority of us will need good credit for a multitude of reasons, to get competitive rates on a car loan, private student loans, to get a rental property and to eventually buy a home. By any means, if you have enough cash on hand why get in debt; just pay up front in cash. To the rest of us, we need to be savvy enough to make good decisions to keep and to better our credit.

Facts: Just so you know, there are many items that will remain in your credit report for 7 years according to Experian, items such as late payments, bankruptcy (chapter 13) and civil judgments.
Bankruptcy (Chapter 7) will stay in your history for 10 years. Tax liens, depending if paid or not, will stay either 7 or 10 years from date of filing.

Even if we have made bad decisions in the past we can still move forward and work on the present and future. We first have to have an idea what determines our credit score.

There are 5 factors determining our credit score and they are:

  1. Payment History (35%)
  2. Total Debt compared to Limits or Amount Owed (30%)
  3. Length of Credit History (15%)
  4. New Credit Open (10%)
  5. Types of Credit Lines Used (10%)
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I have almost a perfect score and I don’t say this to brag but simply to tell you it’s possible with discipline and you can have it as well. I have followed many tips and I have helped others with the same advice. Here are 10 tips for you to start improving your Credit Score:

  1. Don’t Close Credit Card Accounts: These accounts will show the length of your credit history. Even if you are not using them and don’t want to be tempted, just put them away in a safe place.
  2. Don’t Max Out Your Cards and Do Not Go Above 30% Of Your Limit: For example if you have a $1,000 limit, do not charge or carry a balance over $300 dollars. Your utilization is a big factor in your score. If you have 2 cards, 1 with a $1000 limit and the other with a $2000 limit, now your overall limit is $3000. 30% of $3000 is $900(.3*3000=$900), so you should not have over $900 charged in those two cards combined.
  3. Pay On Time, Pay On Time, Pay On Time: This is the most important factor here. If you were late before, get caught up. If you can get a separate checking account for bills only and set automatic payments, do that so you won’t forget again and you won’t ever make a late payment. To date, the only bills that are not in auto-pay are my gas, electric and mortgage. Either because they fluctuate based on the season and because my mortgage is the largest payment and we get a 15 day grace period to pay depending on our pay date.
  4. Pay Off Delinquent Accounts: Remember that utility bill you stopped paying for at an old apartment? That urgent care bill or copay you forgot and went to collection?–yes–all of them, pay them off. Even if they stay on your report, showing it has been paid off is a plus for you and the clock will start, so it can be erased down the line. This will not help you increase your credit fast, the fastest way may be submitting a claim to all credit bureaus so they can ask the collection company for validation of debt.
  5. Reduce Your Overall Debt: First, know your debt to income ratio. The lower it is the better because it shows a good balance between your debt and your income. Whenever you are applying for any loan or even to rent, your debt to income ratio will be a factor. Add up all your monthly debts (mortgage, car loan, student loans, credit cards). Then add your monthly gross (before taxes) income. For example, let’s say your mortgage is $1,000, car loan is $300, student loans are $300 and credit cards are $200 with a total of $1,800. For this example, let’s say your total monthly gross income is $5,000, therefore you would divide your total monthly debt payments by your total monthly gross income.
    Total Monthly Debt Payments/ Total Monthly Gross Income= Debt to Income Ratio.
    $1800 /$5000=36% debt to income ratio.
  6. Check Credit History Report and Remove Errors If Any: Do an overall review of your report and make sure there aren’t any open accounts that you have not opened, if an account has been paid and the report does not reflect it, make sure to dispute them with each credit bureau. I found this article that discusses this tip in more detail, How to Dispute Credit Report Errors in 3 Steps. Don’t forget to access your free report Here.
  7. Get a Lower Interest Personal Loan: If you have a large balance on high interest credit cards but your credit is still good, you may qualify for a lower interest rate on an unsecured personal loan that you can use to pay off your cards. These loans will have a fixed term, meaning an established number of years for you to pay off the loan, so your payments will most likely be higher than the minimum payments you were paying on your cards. You will save money in the long run with this because the rate will be lower and you will pay it off sooner. When getting a loan ask for the rate (make sure it’s fixed), term, if there are any prepayment penalties and see if by enrolling in auto-pay you can get your interest rate lowered.

  8. 0% Interest Credit Cards: Again, if you have a large balance on high interest credit cards but your credit is still good, you may qualify for 0% interest credit cards. Keep in mind these 0% cards only have a short promotional period ranging from 6 months to 18 months give or take. Also, almost every time you transfer a balance to these cards, you usually pay a transfer fee which could be 3% or more of the total amount transferred. So let’s say you want to transfer $3,000 from a high interest credit card to a 0% card, if you transfer this amount now, your new balance, with a 3% transfer fee, will be  $3,090 ($3,000*1.03%). Now, let’s go a step farther, and let’s assume this card has a 12 month promotional period for 0% interest, this means after 12 months the card’s interest will sky rocket to God knows what-(well you will know, they have to tell you). I only recommend a transfer if you can pay off the full balance during the promotional period. In this case, you will have to pay $257.50 monthly ($3,090/12) assuming you will not charge one additional penny on this card just because you think “well it’s interest free.” Remember, this is a way to pay off debt faster not accumulate debt faster. Disclaimer: I only recommend the 0% interest and personal loans to people who have a plan and know they will stick with it. You have to be intentional with your financial goals and this is not a matter of just moving debt around. You have to be disciplined or you are just going to be in a non-ending debt cycle.

  9. Don’t Open Cards Just To Open Them: Remember 10% of your credit score is attributed to new credit lines opened. Going around opening every department store credit card just to save 10% on your new pair of shoes is not smart, in reality it’s costing you 10% of your credit score; do the math.
  10. Get A Secured Credit Card: I have no experience with this one but I have been told that you could go to some banks or online and get a secured credit card to start helping you build credit. With these cards, you have to put money down to be able to use it, kind of like a debit card but debit cards don’t help you with your credit. I think this is good for young adults trying to establish and build credit responsibly and for adults who may not qualify for major credit cards. I came across this post about some secured cards, but again I cannot personally recommend one so do your research and ask around or please drop a comment below if you have experience with a good one.

Additional Tip: Become An Authorized User: This tip didn’t make it to my list above due to its riskiness but it could help you if done right. If you have someone who is financially sound and you trust completely and they are willing to add you as an authorized user, do it. Pretty much the credit card company will issue a card with your name on it on your friend’s limit and already existing credit card. Now, the person responsible for this account is someone you trust, so I am not saying go ahead and go on a shopping spree on their name. I’m actually encouraging you to not even touch the card, but let this person just continue to use it so it helps you with building credit. This can backfire on you though if your friend stops making payments or is late on any payments. Think this tip thoroughly because it can also lower your credit.

“THE BEST WAY TO PREDICT THE FUTURE IS TO CREATE IT.”

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3 Tips For First Time Homebuyers.

Today, I will be giving you three tips you should highly consider prior to starting the home-buying process and a free worksheet I use to keep track of my credit score and credit report history.

Looking back to when I was house hunting for my first house, I remember the million questions I had, but I also remember the trustworthy people along the journey that helped me through this process.

Today, I will be giving you 3 tips you should highly consider prior to starting the home-buying process. Also, don’t forget to check out my Real Estate website. 

  1. Check your Credit History and Credit Score: Scores run from 300 to 850 and of course the highest your score the better your mortgage rates may be. You are entitled to 1 report annually for free and you can get it here. Also, if you have a credit card, many offer credit scores for free as a cardholder benefit, if not look into sites like Credit Karma. Some of the things you can start to enhance your credit is pay down debt, credit card debt, pay off delinquent accounts and remove paid debts or errors that appear in your credit history report. This can take a while so it’s always a good idea to start now. Here is a free worksheet I use when I review my score and report annually.
  2. Get a mortgage Pre-Approval: Would you ever go to the grocery store with a list without knowing how much cash you have in your wallet or how much you have in your bank account? No, right? So this concept applies here as well. Doing this step is essential to know exactly how much mortgage and property taxes you can afford. Be mindful that mortgage lenders are different but some of the typical requirements for a pre-approval include tax returns, pay stubs and bank statements. You can shop around for a lender or you can also ask a trusted Real Estate Agent for a lender recommendation.
  3. Save your Pennies|Down Payment|Closing Costs & Other Expenses: The sooner you start saving the better you will be. Needing 20% as a down payment is a myth, nowadays you can buy a home with as little as 3% or 5% down depending on your mortgage lender. However, keep in mind that if you can’t put 20% down, you have to pay a monthly payment towards Private Mortgage Insurance (PMI), this is protection for the lenders. But don’t let this stop you either. Although I am not a mortgage lender and do not know the factors they use for their underwriting and to figure out this payment, I’ve seen some PMIs at around $30 monthly, which is still better than paying hundreds towards a rent and you see nothing in return at the end of the lease.  Keep in mind you will also need funds towards closing costs which can be some thousands of dollars; make sure to ask your future lender all these questions.
    As a homeowner having an emergency fund is necessary to prepare for unanticipated repairs, maintenance and or renovations. You will no longer have a landlord to run to when a problem arises but it’s a beautiful feeling knowing something is yours.

“DON’T WAIT TO BUY REAL ESTATE, BUY REAL ESTATE AND WAIT.”

Make Credit Cards Work for You.

Credit cards can be your friend but also one of your biggest enemies…

First things first, credit cards can be your friend but also one of your biggest enemies. While I have been able to make credit cards work for me by using their rewards and even booking trips for free, I cannot recommend this to everyone. I practice huge self control and I have never carried over a balance since I got my first credit card when I was 18 years old. I’m proud to say my credit score is at is highest right now at 821!

Let’s face it, in the words of Ye, we have a problem of spending before we get it, and thanks to these plastic little cards we can just swipe and maintain this illusion of grandeur. But credit cards are essential, as they will probably be the first source to help you build credit. I got my first card from Sears and then from a whole bunch of retail stores. I currently only use two to three cards out of at least 10. I always wonder why companies don’t just close my account for inactivity but somehow that has not happened to me yet (with the exception of Walmart and Target).  Today, I want to share a few do’s and don’ts to make credit cards work for you.

Do’s

  1. Set up automatic payment as soon as you open any card to pay the balance in full every month. If you cannot do this in fear that you may overdraft your bank account, then maybe you have no business in getting cards in the first place. Retail credit card rates can start anywhere from 14% to 29% so unless you are paying everything in full or paying big chunks monthly, you are pretty much getting robbed; don’t let them fool you!
  2. Take advantage of their rewards especially the ones that give you miles or cash back. Now, this is a new concept for me but so far it has worked. I got a Chase Sapphire Preferred card during one of their promotions and after I spent $4,000 in a three month period, they gave me around 40,000 miles plus additional miles when I added an authorized user. I did this knowing I was going to have some large expenses during those months and I ended up cashing out and flying to Madrid, Spain, round trip, for free; I saved over $700!
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    But, this card had an annual fee and I don’t do those. I am too frugal to pay to have a card, so I called Chase prior to reaching the year and I switched my card for one without an annual fee called Freedom Unlimited. I really miss my Chase Preferred card because of the no foreign transaction fees and the best customer service I have had with any card company hands down. So, I am considering getting it again in the near future. I did the same thing with my Delta Skymiles card but I had to spend less, 2,000 in three months. I haven’t cashed out yet but I have over 52,000 miles right now and I hope it is as good as my Chase card.
    Disclaimer: Don’t just spend extra money to obtain the rewards. I am very anal.  I prepared myself to accomplish the above. I wrote down every expense I was going to incur in those upcoming months, I changed my phone bill, car insurance and cable’s payment card to add these cards to make sure I met their spending requirement for the reward points. Unfortunately, I could not pay my mortgage with a credit card but I got creative by paying a full six months of car insurance up front and we know Jersey’s car insurance is absurd compared to other states.
  3. Make your payments on time. Even if you can’t set your payments on automatic payment, make sure you are not late or you will get late fees and who wants those? If you are late and it’s your first time, call the card company and see if they can waive the late fee.
  4. Check your Credit score. Most credit card companies now offer you to see your credit score for free just for having an account with them. Make sure you are not paying for something you can get for free. If your cards do not offer this benefit, check out credit karma, I have friends and relatives who love it. While we are on this topic, don’t forget to get your credit reports, for free, at Annual Credit Report. You can get one report every 12 months from each credit reporting company: Equifax, TransUnion and Experian.

“YOU MUST GAIN CONTROL OVER YOUR MONEY OR THE LACK OF IT WILL FOREVER CONTROL YOU.”~ DAVE RAMSEY

Dont’ s

  1. Do not just open a card to get a 10% discount on a retail store. It takes a lot to keep up with cards’ bills and if you are not organized or do not pay the full balance each month, this could really affect you negatively over a tiny initial discount.
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  2. Do not just use cards to get additional discounts. If you already failed at the suggestion above, it’s okay, I’ve been there too. But remember that shopping only to get an additional discount does not benefit you. The interest will probably be more than the discount itself in the long run. It’s like buying things that are on sale just because of the sale and ultimately not needing them or just buying out of impulse thinking you are somehow saving.
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  3. Do not carry your cards with you. I know, what is she talking about? They are for emergencies; well, ask yourself when is the last time you had such an emergency that you were so thankful you had a credit card on you. Yeah, it doesn’t happen often but what happens often is temptation. I love clothes and whenever I know it’s outside of my monthly budget, I tell myself “it can go on my card and I will account for it next month,” well for people who cannot pay in full monthly, this is detrimental and you end up accumulating large debts by shopping little by little. So, out of sight,out of mind; if it’s not on you, you cannot use it as often as you would.
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Again, credit cards can work for you if you are disciplined and consistent. And even if you are not as obsessive as I am when it comes to paying balances, you can always practice better habits to improve what was taught or not taught to you.

Pay on time and pay in full is my only motto for credit cards. And, if you are in a mess and don’t know what to do to get out of debt, don’t let it put you down and please ask someone you trust, who is financially sound, to assist. Speaking about finances can be such a taboo at times but know that it is okay to seek advice. You won’t believe how many people are in the same place and stay there by not creating a plan.

Please share your tips, in the comment section below, about how you make credit cards work for you.

Don’t forget to subscribe, I’ll be discussing how to pay and attack student loans with the snowball effect soon! 

“TOO MANY PEOPLE SPEND THE MONEY THEY HAVEN’T EARNED TO BUY THINGS THEY DON’T WANT TO IMPRESS PEOPLE THEY DON’T LIKE.” ~WILL ROGERS.