Archive for the Miscellaneous Category

A frugal Thanksgiving: Traditional celebration on a budget

We are just a week past Halloween and the holiday season is about to begin. Winter is setting in and with only a couple of weeks till Thanksgiving, it’s time to start digging the trenches and prepare for one of the more extravagant days of the year. Loads of good, home cooked food, deserts and of course, the indispensable Thanksgiving turkey makes its way on to the grocery shopping list. As the number of items on the list keeps increasing, the bills tend to get a bit out of control.

Given the tough times and the slow economic growth facing Americans, it is but natural to cut corners and go in for a more unorthodox, frugal approach to celebrating one of the most traditional holidays on the American calendar. Let us take a look at how to organize a memorable but frugal Thanksgiving Dinner this year.

Plan in advance

You must have observed generally that the best and the biggest discount during the holiday season are generally made available well before the actual day of celebration. This holds true for the special dinner groceries and supplies that you would need for the day as well. Moreover, you can even buy a larger quantity of certain supplies, like dressed turkeys, which are sold at a pretty heavy discount prior to Thanksgiving. If you have a freezer big enough to store the stuff, you can easily run 3 months with four to six large turkeys.

If you want to cut out on the shopping rush in the week before the big Thursday and spread out your spending over the weekly paydays, you could start your shopping and little by little, over the weekends, gather your supplies without having to run between the bank and the grocer’s.

Assemble your decoration

Most people tend to spend a fortune in one afternoon buying tableware and decorative items which are going to be used just for a day. Sounds a little pointless, right? Thanksgiving is all about traditions and of course when the Pilgrims and the Indians sat down for dinner at the table, they were not really using silverware or fine china.

Go seasonal and use fall leaves, heath foliage, pine cones, dried nuts, acorns and pumpkins and spread them unevenly around the table to give it a ‘put together’ look. Use simple dinnerware and compliment the entire table setup with a few candles. A dinner table decorated with candles has a charm of its own which cannot be substituted by the best silverware. Moreover, all the leaves, pine cones and the candles would only cost you 20 minutes of a walk in the garden and a couple of dollars.

Smartly set the dinner menu

Here again, looking to the original Thanksgiving dinner of the Pilgrims and the Indians would give a lot of frugal ideas on how to set up a cost effective menu. On the First Thanksgiving, it is said that there was peas, pumpkins, beetroots, onion, fish, shellfish, bread, fowl and berries on the table.

Now if you are looking to save some money but still rustle up one of the best dinners you ever cooked, limit the number of items on your menu to 4 or 5 so that you are able to put in your entire heart and soul into each dish. For example, you can keep the traditional items like turkey (the old bread and celery stuffing is the best) and cranberry sauce on the menu, throw in a sauté of mixed seasonal vegetables along with creamy mashed potatoes, a yam casserole on the side and a delicious pumpkin pie to finish.

Thanksgiving is a family affair and you should have everybody around the house engaged in the dinner preparations. Designate tasks to each member of the family to cut down on the work load. Even if the boys in the house are glued to the TV watching football, you can just make them sit there with a knife and have them peel and chop up the vegetables.

Reduce, reuse and recycle

In some households, thanksgiving is a pretty large event and given the general size of the dinner turkey and the copious quantities of food which is prepared to mark the occasion, there is inevitably a large quantity of leftovers. Starting from corn and stuffing to turkey, you can use all of it jointly and severally in various preparations for lunch, breakfast and dinner over the next few days and you will not even need to spend an extra dollar.

Written by admin

November 09th 2012 02:42:31 am

Posted in miscellaneous

An inquiry into credit report inquiries

Credit, not the dollar is the most exchanged form of currency within the United States. People live and swear by plastic money. It does not end there. The money market of America is entirely based on credit in multiple forms, from mortgages and HELOCs to Best Buy cards and installment loans. If you have ever applied for a credit card or a home loan, you would definitely know what a credit report is and how it works.

Assuming that, lets skip over all the grimy and gory details of how exactly a credit report works, what goes into calculating your credit score and its importance as far as personal credit availability is concerned. Rather, let’s focus on something far simpler and yet entirely confounding when it comes to understanding and assessing your credit report and your FICO score.

Most people who have ever checked their own credit report or went out shopping for a mortgage or a car loan knows what an inquiry is. TransUnion, one of the leading credit reporting agencies (CRAs) in the country, defines an inquiry as a record which is generated when someone takes a look at your credit report.

Types of inquiries

Urban legends have somehow managed to convince the masses that all kinds of credit inquiries are bad, whether it is the mortgage company agent pulling a copy of your report or be it you checking an online copy to see if everything is in order. Most people think that generating an inquiry is the shortest path to ruining your perfect 750 points FICO score.

Soft inquiries are generated when you sit down in front of your laptop at the end of every few months and pour over your credit report to see if something is being reported incorrectly or to find out if any collection agencies are coming after you. Soft inquiries are also generated when employers, insurance companies and banks extending pre-approved credit offers take a peek at your credit report.

Soft inquiries have no negative impact whatsoever on your score. Therefore, contrary to what most people would have you believe, checking your own credit report does not ding your score.

Hard inquiries on the other hand, are generated when a lender pulls your credit report to assess risk factors implied by your creditworthiness. They are mostly generated by lenders reviewing your credit report in connection with an application which you submitted requesting a new line of credit or an increment on one you currently hold. Collection agencies also generate a hard inquiry when they pull your report.

Unlike soft inquiries, hard inquiries do damage your credit score. One single hard pull can ding your score by as much as one to five points. This might sound a little discouraging, especially if you are in the market looking for the best rates or quotes. The good news is that FICO Model 8 encourages rate shopping by consolidating all hard pulls generated for a car loan or a mortgage within a period of 2 weeks into a single hard inquiry.

Why are credit report inquiries generated?

Credit report inquiries, both hard and soft, are generated and recorded for one simple reason. Although inquiries are not given the same importance as payment history or the credit utilization ratio, it forms an integral part of FICO’s risk assessment formula. FICO insiders say that a large number of hard inquiries is directly correlated to increased lending risks. People with six or more inquiries on their credit report within a period of 30 days are eight times more likely to file for bankruptcy as compared to a person with no inquiries on his report.

How long do inquiries stay on your credit report?

Unlike the credit information which appears on your credit report and has a shelf life of 7 to 7 years and 6 months, both hard and soft inquiries have a considerably shorter life span. Soft pulls are generally visible on your report for at least one year from the date it was generated.

Experian delists hard pulls after 2 years and one month from the date it was generated. TransUnion and Equifax choose to delete hard inquiries exactly 2 years from the date it was generated.

Written by admin

November 02nd 2012 03:54:53 am

Posted in miscellaneous

Money management for single parents

Being a parent and raising a child is one of the most joyous things in life. Although it is the most rewarding affair, it is also one of the hardest tasks you will ever engage yourself in. Most parents would agree to that. Raising a child is easier when you have someone, namely a spouse, to depend on and delegate at least half of the work involved. The 2009 statistics published by the US Census Bureau shows that there are nearly 14 million single parents raising 21.8 million children in America.

The cost of raising a child is not meager in itself. It takes about $226,920 to raise a child till adulthood according to the 2010 report by the Department of Agriculture. Most single parents struggle to come to terms with raising a child alone and there are good reasons for it.

Adjusting work schedules, daycare and childcare, schooling and education and the idea of you being the sole breadwinner and caregiver for your child and your household are just a few of the challenges faced regularly by single parents. Lets discuss some solutions to make life as a single parent easier.

Setting up an appropriate budget

Single parents have it tough. Costs are going up on a monthly basis but the paychecks hardly ever seem to catch up with the expenses. You need to set your priorities first and as a single parent, you child should be among the top 3 on the list. If you sit down and analyze your items of expenditure, you will be able to clearly group them into 3 major categories.

Fixed expenses like rent or mortgage, cable, internet, insurance and utilities are entirely unavoidable and you should do your very best to allot them top priority. Annual expenses would include taxes and holiday season spending. You can cut your cost in this sector by playing it smart. Itemize your tax filing to derive the maximum benefits out of deductions and you can shop around for holiday gifts during events like Black Friday to take advantage of heavy discounts.

Variable expenses are something which usually takes some effort to manage. The items of expenditure include things like groceries, dining out, travel and vacations. The trick is to match your income and your expenditures and cut corners wherever you see fit. For single parents, there are a few extra items to consider in their budget, like daycare, education and transport. These new costs can be partially, if not fully offset if you factor in other sources of income like child support and alimony.

Setting up a tax plan

There are some valuable tax credits and deductions which single parents can get access to, especially if their annual income is low. Here are some of the tax advantages you can get as a single parent:

  • Child Tax Credit (CTC) allows for $1000 in tax credit per child per year for children less than 17 years of age. Unless there are any legislative changes, the CTC would be reverted to the original $500 per child limit.
  • Income from child support is non-taxable although money received as alimony payment does count as taxable income. On the other hand, if you are the one paying the alimony, you can include it in your tax file as a deduction.
  • Having a dependent child also makes you eligible for additional tax exemptions and that detail must be included in your annual tax file.
  • Single parents (as well as families) earning less than $15,000 annually can claim tax credits of up to 35 percent (capped at $3000) of qualified expenses under the Child and Dependant Care Tax Credit. If the household income is more than $43,000 yearly, you can still avail a 20 percent tax credit for qualifying expenses.
  • Households earning less than $36,920 annually are eligible for Earned Income Credit given that there is at least one qualifying child in the family. EIC offers tax advantages in the form of deductions in lieu of tuition and fees while earning education related tax credits.

Being a single parent is no easy task. The everyday challenges of raising a child by yourself requires you to be fully prepared, both mentally and financially. Along the way, you will end up learning a lot more about managing money more efficiently, useful knowledge which you will then be able to pass on to your child when the time comes.

Written by admin

October 28th 2012 11:37:38 pm

Posted in miscellaneous

The truth behind the credit report updating system

It is one of those many questions consumers spend nights contemplating the answer to. The time frame within which making a payment or applying for a new line of credit is reflect on your credit report has been something of an enigma for most people. There are tons of extremely definite but equally inaccurate data floating about on the web which further confuses people and tends to push them in the wrong direction.

Most of these people who are worried about their credit report are either trying to spruce it up and improve their credit rating in general or are looking to apply for something big like a car loan or a mortgage. To be absolutely honest about it, there is no one definite answer to the question “How often does my credit report change?” It could change in a matter of seconds or it could take days depending on a number of factors.

How often can your credit report change?

When you are applying for a new line of credit, the lender usually runs what is known as a hard enquiry against your credit report. These hard enquiries usually show up when another lender checks your credit report.

Let’s assume that you have gone out shopping for a car loan and you have a couple of lenders you want to look into. You visit the first lender and you sit down with him, discuss the terms of the loan and he pulls your credit report to check your payment history thereby generating a hard enquiry (which is known to lower your score although after FICO 8 this has been changed). You visit the other lender within an hour and when he pulls your report, it would show something different from what you had seen an hour ago.

How often is your credit report updated?

Everything entirely depends on how often the records maintained by the credit reporting agencies like Equifax and TransUnion containing your credit information is updated with changes. Depending on your activities and the reporting cycle of lenders, your credit report could change on a daily basis.

To be precise, the credit reporting agencies do not actually maintain a file on you, rather, when you or a lender requests a copy of your credit report, the agency rummages through their database and compiles a report out of the information that is available with them. In short, your report is nothing more than the data the CRAs have available with them and you actually do not have a credit report in corporeal form till you have requested a copy of it.

The changes and inquiries do not always show up instantaneously on your report. Lenders do supply the CRAs with regular updates but each have their own varying reporting cycles. For example, credit card companies usually make reports to the CRAs towards the end of a consumer’s billing cycle.

The changes to your credit report is caused by information being added to it as well as subtracted from it. Inactive accounts in good standing as well as key derogatory items are dropped from your credit report within 7 years from the last day of account activity. Larger items like Chapter 7 bankruptcy stay on your credit report for a longer period of time though.

It’s a good idea to keep checking your credit report on a quarterly basis and see if there are any discrepancies which need to be disputed. This is important simply because statistics say that almost 79 percent of consumers have some kind of error on their credit report which might negatively affect their score. Once you have disputed an item, check your report again after 30 days and see if the changes show up.

Written by admin

September 22nd 2012 04:20:54 am

Posted in miscellaneous

5 Hidden credit card charges

Credit cards have become a part of the general personal finance for millions of Americans. It is almost indispensible when it comes to taking care of everyday expenses like grocery and gas. Moreover, it helps people in organizing their finances and keeping all their money safely stowed away in a bank account while the card lets them access it anywhere and anytime. Likewise, credit cards also help consumers extend their spending when they are running short of cash and needs to take care of emergency expenses.

The credit card does have its multitude of advantages but there are times when you sit down to review your monthly statements and find that there are charges which you didn’t know existed and they can certainly add up to a significant amount which you may have a hard time paying. Here is a small list of credit card charges which most consumers unknowingly and unwittingly fall prey to.

Balance transfer fees

Although most of you are familiar with this category, the actual charge on this account can come off as a surprisingly rude shock. Most people resort to transferring balance from a high interest credit card account on to a zero interest card so that they can have an easier time paying off debts. The charges can be staggering and frankly, somewhat disproportionate, especially if you are transferring your balance to save money. The best option available is to look for a card which offers to waive the balance transfer charge.

Foreign transaction fees

You might be on a holiday abroad and you swipe your card when you check out of the hotel you have been staying in. You might even be using your card to make purchases while you are in a foreign country. Visa and Master card affiliated credit cards have made it easy for people to swipe almost anywhere in the world. On reviewing your card statement you will find that you have been charged an extra amount for every transaction which has taken place abroad and the charges might add up to a significant amount. To get around this problem, look for a credit card which doesn’t charge you extra for swiping it abroad. There are many such cards which also offer to waive the annual fees.

Overcharge fees

There are some credit cards which will still be usable and can be swiped successfully even if you have maxed them out previously. These cards carry what is known as an over credit limit fees and the charges can be well beyond $30 if it is swiped after having crossed the credit limit. Try and stay within your credit limit to avoid such an unnecessary charge and look for a card which cannot be used after it has been maxed out.

Cash advance fees

This is more or less a minor credit card trap which most people are not aware of and it can cause quite some financial problems. Using a credit card to withdraw money from an ATM or drawing foreign currency from a money booth will attract a cash advance charge which is well beyond 5 percent and above. Moreover, you will be paying a higher rate of interest on the money you withdrew right from the moment you make the transaction.

Second year annual fees

It a subtle ploy that many credit card companies use and it may come as a surprise to you when you receive your annual statement at the end of the year. Most reward cards usually waive the first annual fees to attract new consumers who generally wouldn’t opt for another credit card. The trick behind the waiver is the idea that you will forget that you need to pay the annual fees at the end of the second year of using the card. Some consumers do overlook this small subtlety and fall for this trick.

As a rule of thumb, try not to use more than 30 percent of your credit card’s maximum limit and avoid transacting wherever you think additional charges may be tacked on. This way you will never have to worry about one of these charges showing up on your monthly or annual statement.

Written by admin

July 06th 2012 04:06:53 am

Posted in miscellaneous

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