Buying on credit is so easy to do today. But, before you buy anything your need to ask yourself these 3 questions. They are:

• 1. Shall I use credit for this particular purchase?
• 2. Have I found the best credit “buy” that I could?
• 3. How is my credit rating?

In this 3 part series we’ll look at the questions one-by-one.

Question 1. — Shall I use credit for this purchase?

Before you answer this question, ask yourself and answer – several others:

(a) How will the payments fit into my family’s regular spending? If you haven’t been in the habit of budgeting (planning expenses before you spend), now is the time to start – before you take on installment payments. Will you have to go without necessities or other items that are more important to your family than this purchase? No one else can give you the answer. Sometimes it’s learned the hard way, by living with installment payments that are too big for your income. Sitting down together as a family and figuring all your living expenses ahead of time isn’t easy – but it might save a great deal of real trouble.

(b) How much will credit cost us? What’s the difference between the cash price and the price you’ll pay if you buy “on time”? Is it worth the cost to you to be able to make the purchase now on credit, and pay later? Or would it be better to use savings? Or to wait until you can save enough to pay cash?

(c) Will whatever we are planning to buy outlast the time we’ll be making the payments? Give long service? (It’s no fun to pay for “dead horses” !)

(d) Is this something that we will want as much when we are making the payments as we do now?

(e) Will it mean better family living? (Save time? Save energy? Give satisfaction to the family? Protect health? Make it possible for you to increase income?)

(f) Is our income certain for the length of time that payments will run? And do we have enough life insurance protection to cover the debt?

On to Question 2 – Have I found the best credit use “buy” that I could?

Managing family credit whatever your reasons, using credit in itself isn’t necessarily good or bad. It’s the way you use it that creates either benefits or problems for you and your family.

You have to manage credit. If you don’t, your debts will manage you and keep you from doing and having many things you really want.

You may not have thought of it in this way, but actually your credit, that is the confidence others have in you which makes it possible for you to borrow money or to buy on time, is indeed a valuable personal asset.

The purpose of the next few articles is to bring together some ideas which may help you use credit to your advantage.

We’re Talking About “Consumer” Credit

We are not talking about the mortgage on your home.

Our concern is only with consumer credit. By this, we mean the kind of credit families use to buy consumer goods and services – cars, flat screen LCD televisions, washing machines, computers, vacations, clothes, college expenses, in general things that are “consumed” (used to provide the kind of living a family wants). Consumer credit is short-term credit – usually within the range of 1 to 36 months.

Its use has exploded over the past 20 years, and buying on credit (using the ease of a credit card) rather than paying cash now seems to be the usual pattern of family money (credit) management Moreover, retail dealers and lending agencies all compete with each other to get more and more of us “on the cuff.”

It’s Your Money

In general, extending credit widely has provided a useful service for families, but it is not a free service. It costs money to buy “on time” or get “instant cash” from a lender. So it is worth your time to compare costs of credit from different sources – just as you compare costs of furniture or automobiles.

There’s another hazard. Credit purchases often are promoted in such a fashion that people may be tempted to buy more than they can afford. One more “small monthly payment” may seem hardly worth thinking about but when all the payments are put together they can add up to trouble. The very characteristic that makes installment credit a convenient means to provide a better living can result in a burden of debt that takes half a man’s pay check or more.

So it pays to ask a few questions before you sign the contract.

Managing credit, debt and the flow of money in a family often goes something like this…

Alice Smith lets out a sigh as she looks over the bills for the month, trying to think how they’ll stretch the paycheck her husband Jim will bring home tonight. Groceries will take $800. Then there’s the house payment, light bill, payment on the new washer, payment on the car, shoes for the kids, and the cell, cable and telephone bills.

Already it adds up to almost as much as Jim’s paycheck will be.

And there’s that bill for the things she charged on Visa. A birthday gift to buy for Susan. Allowances for the children. And Jim really needs a new suit before his trip to New York at the end of the month. They’ve been planning to get it from month to month but there never seems to be enough cash to go around.

Alice decides she’ll talk with Jim about getting the suit on some type of installment plan. They never have bought clothes “on time,” but she sees no other way to get the suit by the time he needs it.

And so it goes… another “easy” payment !

More Debt: Good or Bad?

Many other families are in the same boat as the Smith’s – using more and more credit to buy the things they want.

Some folks say this is a bad situation. Others say it’s good – that wide use of credit is one of the things that helps to give us such a high standard of living in America.

Good or bad, many families and individuals do use credit in order to enjoy today… instead of waiting until they can save the purchase price of such things as automobiles, refrigerators, washers, Big screen TV’s, education, and even vacation trips. Others use credit in the form of a charge account simply as a convenience. Still others borrow money to meet emergencies, such as illness or being out of work. And some folks say that buying electronic equipment and furnishings for the home on the installment plan is a way of saving – that they wouldn’t be able to save the purchase price of such items without a contract to make them do it. Moreover, some will say, even though it costs more to buy “on time,” it’s worth the extra cost to have certain conveniences and comforts while the family is growing, rather than to wait until enough savings can be accumulated.

Does that sound like your situation? That’s one of the reasons so many are experiencing such difficult times. There is a way out… and we’ll be digging deeper into the world of consumer finance. Get ready to make some changes in the way you handle money!

You hear it everywhere: Wages must be kept high in order to increase the purchasing power of the wage earners, so that they can buy back the products they make in our factories, and thus keep everybody working and prevent depressions.

But in both theory and practice, that “high wage and spending” cliché confuses the issue in two ways. First, regardless of the division of industrial income between wage earners and dividend earners, that income will still be spent in one way or another for more goods and services. Thus, the issue is not “spending” as such, but rather who does the spending and for what. Second, it is capital investment (which is also “spending”) that builds the factories and provides the jobs here under discussion.

Actually, when there is an increase in the percentage of total income going for wages, there is also likely to be an increase in unemployment.

Here is how it works : When a company has losses or earns comparatively small profits, a higher percentage of the income available for distribution obviously goes to employees rather than to owners. During such “red ink” recessions and depressions, the owners get little or nothing; the employees sometimes get it all. Yet it is precisely during these loss-and-low-profit periods that unemployment is highest.

The Department of Commerce will confirm the following: When the percentage of national income going to capital is higher than usual (that is, when industrial profits are above average), jobs are plentiful and unemployment is comparatively low. That correlation between high profits and more jobs should be obvious to everyone, since you can easily deduce it from the fact that companies go broke and close down when there are losses or inadequate profits. But for some unknown reason, that direct and observable relationship between industrial jobs and profits is usually denied by union leaders and government officials.

Since 1930 and our government’s deliberate policy of maintaining wages above the free market level, peacetime unemployment has become our most persistent economic problem. And millions of American workers are still unemployed today, in spite of the highest consumer purchasing power (and spending) in our history. Yet, for the most part, union leaders and lawmakers claim they will correct the situation by raising wages at the expense of profits!

All the “consumer purchasing power” in the world cannot create even one permanent job in an economy where the return on capital is negligible or nothing. That is, if every person in the world had twice as much money as he now has to spend, not one job would thereby be created unless the owners of the factories believed they could earn adequate profits. It is the actual and anticipated return on capital, not consumer purchasing power as such, that causes investment in new buildings and machines, and the resulting creation of more production and more jobs. Thus, laws and coercive union policies that increase wages at the expense of profits do not create jobs; they destroy them.

You are famous in the neighborhood because of your fiery Jaguar. In your garage do you hide a vintage car you inherited from you grandfather. But with all these highly expensive cars have you checked your car insurance? Is it the right one for you? Does it have enough coverage?

Unfortunately, most people become too engrossed with their cars that they tend to give less attention to their insurance coverage not until they meet an accident. Choosing the right car insurance is tough but is oftentimes overlooked by many. Teenagers, for instance, fail to weigh price versus coverage for their own car insurance after being help as extension to their parents insurance policy. Minus pessimism, let us be open-minded and take a look at what we can do in case we get involve in an accident.

First Stop: Types of Insurance Coverage

Car insurances were born for the primary purpose of protecting the policy holders assets and health. It is therefore important to get a complete grasp of the basic types of insurance coverage.

Required in many states, the Liability Insurance Coverage for automobile insurance can help pay for the injuries, death-related claims, and property loss resulting from the accident.

Whether or not you are a careful and law-abiding driver accidents will still happen involving you. You might find yourself being hit by a truck while you are about to make a turn in a street corner. Here comes in the aid given by the Collision Insurance Coverage. Basically, this coverage pays for any damage resulting to repair of your car. If your car, however, is financed then you might find yourself paying for all the damages.

Car repairs are not only brought by road accidents. There are times when natural calamities strike your place causing some trees falling on your car, or your car got washed out by a flash flood, or the likes. In these cases, a Comprehensive Insurance Coverage can pay for just about anything. This coverage, however, is not recommended to those who paid for their car in cash or are fully paid in their car loan or when the car value is barely $5,000.

Drive Straight Ahead for Additional Insurance Coverage

Most insurance companies provide their clients with more than just the basic. Insurance coverage that covers more than just the basic requirement to insure an automobile includes:

Full Tort/Limited Tort: This coverage is given to people who give up their right to sue in case accidents happen. Although this is not a wise financial move, most peace-loving people get hold of this coverage.

Medical Payments/Personal Injury Protection: As the name suggests, this coverage pays for the cost of medical bills incurred after the policyholder and/or the passengers were hospitalized due to an accident. This becomes unnecessary, however, if one already has a health insurance.

Uninsured/Underinsured Motorist Coverage: Not all motorists are insured. So, if ever you encounter one in an accident, this coverage becomes very important. This pays for medical bills and property damage for you and for the un-insured motorist.

Towing: Obviously, this coverage pays for a tow or similar services if ever your vehicle can no longer be driven out after an accident. For those whose vehicle comes with roadside assistance provided by the manufacturer, this insurance coverage is no longer necessary.

Glass Breakage: In almost all accidents the usual scene is breaking of glass windows. Unfortunately, because of this common case, most insurance coverage does not include pay for this damage. But if you are lucky to have this included in your insurance, this will surely be worth it.

Rental: There are companies that offer car rental services. Sometimes their cars are rented with a driver but sometimes they also offer self-driving services. These for-rent vehicles, however, are not exempted from any road accident. Rental Insurance Coverage covers the cost of a rental car after an accident. This becomes important once the car is of high value.

Gap: Gap Insurance Coverage is a tough rival of Comprehensive Insurance Coverage with the former being able to bridge the gap between the blue book value of a vehicle and the amount of money still owed on the car. Thus if you are leasing a car or you have a financed car, gap insurance is perfect for you!

Insurance Rates

Insurances do not have a fixed amount. Their rates differ according to the following factors:

Deductible. This simply means your personal money being contributed to remedy any problem during an accident. The more money you give out, the lower your insurance bill.

Unfortunately, Age does matter in insurance rates. Younger and less experienced drivers are closely linked to being accident-prone, thus they have higher insurance rates.

If age matters, so is gender. Men are more likely to have higher insurance rates than women.

Prone-accident areas pay off to people who have automobile insurance. Demographics is another important consideration in calculating insurance rates.

Claims. The rule of the thumb is if you want to keep your rates low, keep the number of claims that you file to a minimum.

Violations. It is never hard to follow traffic rules. It is harder to pay off negative impacts on your insurance bill due to speeding and the likes.

Let’s admit it, car choice also affects the rate. The more expensive the car is, the higher is the insurance rate.

While you are thinking about moving violations affecting your insurance rates, it is best to think of your personal driving habits, as well. The distance may also matter.

Theft Deterrent Systems. These systems include alarm and similar devices. If you have these on your car, then you are in for a lesser insurance rate.

In addition to theft deterrent systems, safety devices also contribute to insurance rates. These devices include air bags, anti-lock brakes and others; all of these lower insurance bills.

Accident prevention training is helpful not only on your personal driving life but also on your insurance rates. Some companies would give training courses along with some discounts.

Speaking of discounts, keep in mind that the more policies you have signed in a company the higher the discounts that they can give you. Be alert always!

It pays off if you pay in advance. Some companies give their clients some discounts based on their payment plan. See if you can get some discounts if you pay your insurance bill all at once.

Yes, credit score is here again to play its game. Those who have poor credit tend to increase their insurance rates; while those who have good credit rating lower theirs.

The Hunt Begins

Searching for the right car insurance requires careful consideration of various factors. Basic factors to be considered may include price, coverage, benefits, and requirements.

In serious medical cases such as operation or prolonged stay in the hospital, the $10,000 pay does not weigh that much. The same is true when it comes to personal assets, considering that most expensive cars are priced above $30,000. This boils down to one conclusion that protecting one’s financial assets is of higher value more than anything else.

Before you lock yourself in a particular car insurance, it is best to do a little comparison shopping. This will help you compare insurance policies. Also, ask yourself whether you will go through online insurance offers or will you prefer a personal discussion with an insurance agent.

Testimonials and word of the mouth recommendations are important considerations before buying a policy. See if the company you are eying has lots of positive feedback in addition to their attractive offers.

Comparison shopping coupled with critical analysis of the policy you are about to sign can help pave the way towards acquiring the best insurance policy suited for you. Wise decision preceded by careful planning, work almost all the time.

Lots of published materials on relationships explain various reasons why couples fight and break up. Among these reasons are miscommunication, emotional issues, financial matters, sex, and more. Survey says, however, that sex and money are the top two and the usual reasons of break up and fights. Sex, which may come from miscommunication or may be caused by lack of compromise, is detrimental to relationships. But among all other reasons, money continues to be at the number one spot in terms of wrecking homes and relationships.

The Truth Behind the Great Money Debate

In order for a relationship to last, it should be nurtured. And one way of nurturing it is to keep an open communication about things – such as financial matters – which might affect things in the future.

Managing one’s finances is already a tedious task. It becomes more time-consuming when it already involves a family. But the burden gets light and easy when there is proper delegation. In most conservative and patriarchal countries, finances are solely handled by the male. But in recent times, when providing a family becomes harder and harder due to economic crisis, it is not uncommon to see wives sharing financial contributions to the family.

Most modern families employ 50/50 sharing of expenses and others. But still some spouses refuse to talk or to think about it due to the selfish belief that whoever holds the purse gets to make the decisions and earns more respect. Contrary to this belief, the one who is working might be not that concerned with the expenses, power, or control; but is actually more concerned with the savings. This is where open communication comes in. Different love and financial languages are threatening, thus it is important for the couple to talk and to understand each other. Compromise is another key ingredient when it comes to this issue. Discuss how one’s paycheck should be spent and consider working on ways how to save up together.

The Finance-Related Rules for Couples

Rules always prevent chaos. In relationships, although most of us hate rules, it must be present in order to minimize friction and to take control over things. A set of fixed and clear finance-related rules must be set and made clear to both parties in order to avoid disputes. It is never right to discuss financial issues in the middle of a fight or argument be it a loud fight, a tensed discussion, or a small seething fight. But when these arise, always remember to put your heart over money matters.

Never hide. Liars go to hell. Presumptions and assumptions are big NO NO. Once you get the knack of following these basic rules, you will find out that obtaining a financial harmony is not that hard to attain.

Your husband will surely get crazy if he finds out that you spent a hefty amount of money on that new Prada Bag. How much more if he finds out that you treated yourself in a salon or a spa? But who cares? Remember that love goes with understanding, thus your hubby will surely understand that a girl like you needs a break and pampering. It is therefore a must to tell him honestly about your total spending in a day rather than hide about it or tell him lies.

A stable relationship is usually determined by financial stability parameters. A couple who does not have much problems on where to get money to pay for debts are more likely to fight all the time versus a couple who compromises on their spending and saving concerns. Sometimes, you will end up with someone who does not care about the sticker price of an item as long as he or she wants it. In this case, you both must agree on implementing prudence or living a frugal life. This way, you will both realize that spending may be a good idea but saving is more rewarding in the long term.

There are times when people just know the rules but never follow it. There are others who just familiarize themselves with the rules only to break them. When this case happens to you and to your partner, now is the time to consider counseling. Nothing is positively generated and reached when it is just the two of you who discuss over matters. So, it is important to have someone between you who can help both of you see things clearly. However, counseling should be for a short time. Along the way you must develop how to handle things on your own. Eventually, you may be able to move and to decide on things on your own.

Now, if you are someone who is cursed with a selfish heart and is very much incapable of dealing finance-related matters, then be ready with the aftermath of your being immature. It will not be fair to your partner. You will even worsen the situation if you keep on complaining without even contributing anything. Simply put, you must, act, think, and share.

Two Heads and Two Hearts are Better than One

When you both agreed to enter into a relationship, you have actually mutually agreed to be a part of a beautiful life together in the future. A beautiful life is accompanied with inspiring dreams, realistic goals, and the promise to live together for better or for worst. How do you think can you reach your goals and materialize your dreams when you work like two parallel lines? The magic formula for a timeless relationship is TEAM WORK. It opens the door to understanding, honesty, and financial harmony, but closes the door to fights, arguments, and break ups.

Many people don’t realize this, but one very simple way to start saving money very quickly is to actually start tracking where you’re spending money on a day-to-day basis. Pennies add up. And every time you stop for a quick coffee or soda, pick up an extra magazine, or even buy a pack of gum or some candy, it takes money out of your budget. Most people have no idea how much money they actually spend by buying a little bit of this and a little bit of that every day.

In fact, if you make a habit of always paying things with paper bills but never any change, and just start sticking the change in one spot regularly, you may be surprised at how fast that money adds up.

If you need to reduce your spending bill, then you need to get a handle on where your money is going. And the only way to do this is to write it down consistently. Save every receipt you get, and sit down every day with those to add up how much money was actually spent that day. You may be surprised to find, that even though you only spend a little bit here and there, the total amount is much more than you expected it to be.

Keep track of every expenditure you have. When you pay a bill, write down the exact amount you paid. If there were any additional expenses added to the bill such as credit card fees, you need to note those down too.

If you track where you’re spending money every single day, and track exactly how much you’re spending down to a penny, you will start knowing without a doubt where all of your money is going. Once you have an idea of where the money is going, it will then be much easier to sit down and create a spending budget for your household. You may choose to create a budget for each individual person as well as the house in general, or you might just want to create a general family budget which is separate from the necessities budget for the house.

Trying to make a budget without first knowing where all of the money is going though will not work. In fact it will just be an act of frustration. Because money will be flowing out, or it will be short in one area or another, and you won’t be able to understand why.

By first writing down everything you’re spending you can get a much more accurate picture of where the money’s going. And you can also see where you may have some bad financial habits, so you can start working to correct those problems while also getting your budget working much more efficiently for your family.

One of the key elements in getting yourself out of debt is – organization. I’ve talked to many people who find themselves so anal and organized in parts of their lives which carry little impact on their future like keeping the garage floor swept at all times. Yet if you look at their finances it is chaos!

These people I have a special soft spot for… because it use to be me! My computer for example. For whatever reason I’ve always kept my hard drive organized and can find things quickly. But, walk into my office you’ll find papers stacked everywhere – this included the bills.

When I began my journey out of debt I discovered one reason for the debt was my total lack of organization. Who wants to face a mess? I told myself things were filed but the system existed more along the lines of… I’ll get to it later. Bills would be late many times because I did not pay attention to when they were due.

Listening to audio one day I learned a very simple concept that changed my life and not just in the money department.

This simple “idea” helped me get organized, on paper, in filing cabinets, with finances and in life overall.

The Organization Concept of Pain or Pleasure

If the truth be told we all would love to spend our days sitting under a palm tree on a sandy beach watching the waves roll in – that would be pleasure! For others pleasure may be going to a ball game, getting together with friends or movie night with the family. The simple enjoyable pleasures of life.

For myself the lack of organization played a pivotal part in my daily life resulting in pain. Once the connection was made between pain and pleasure being a part of the disorganization in my life… I tackled pain with focused intensity. Ever so slowly life started to become much more organized without much effort.

Most of us want to have pleasure in our life but I focused on pain! I vowed to start getting rid of the pain in my life. The less “pain” the more “pleasure.” The outcome has been transformational.

Let me give a few examples:

Clearing the Desk!

One of the first things I did was clear out my desk… on top and in the drawers. This also included the filing cabinets. If you’ve read any of those organizational books they tell you to only handle the paper once.

With a garbage can and shredder near by, each piece of paper got a look and a decision made on it – throw it, file it or handle it.

It wasn’t long before the discovery of long lost papers, notes and invoices less than 3 feet from my hand. We got rid papers wasting space plus causing clutter! Not everything went into the can or shredder, some items needed action!

When something financial, a bill, credit card, insurance, etc was “discovered” it simply went into a pile which would get a more complete review later on. This also went on with my hard drive as I purged, backed up and organized things to clean the clutter out as well.

As my wife and I (by the way she is organized) started going through all the bills and papers we took the time to write down the balance, due date, minimum payment, and interest rate. We did this for credit cards, insurance, monthly bills, etc.

As all the file folders took shape we went through each one broking them into current year and archived (past years). Handling things became easier. Everything had its place.

The next step involved going through each file and looking at “what we were buying.” This included each line item on phone bills, insurance policies, cable bills or any bill. If we did not understand a charge we picked up the phone to understand the bill completely. Then we asked the question… Could we get rid of feature or service we bought each month and never used or took full advantage of.

This one exercise saved us almost $250 per month

With things in place from clearing clutter we could look at our debt to get a true picture of where we were and develop a spending plan to start eliminating debt. We had an additional $250 to begin adding to balances.

When teaching others about finance and the pain/pleasure principal I use this example.

The old bank account!

My father opened a bank account for me at a credit union when I was a young kid. The account was 30 years old. For years I’ve needed to change the mailing address on the account. It still went to my mother’s house.

Following my “less pain” mantra I finally took action. I cashed in the 103.17 in the account. Now what was the pain? The pain was:

• My mother would ask me about the account
• My wife would ask me about the account
• I would ask myself about the account
• The envelop needed to be opened
• The information read
• The statement needed to be filed
• The money was just sitting making no real interest
• A statement for taxes needed filing
• Time wasted dealing with something giving little or no value

The way to get rid of the pain was to cancel the account and take the money to pay down debt.

The end result was less pain and more pleasure. I’ve continued to keep looking for ways to get rid of the pain in my life… try it! It could change your life!

Thrifty used to be considered good quality. In today’s spend and consume it all society the thrifty in society appear to be the outcast. Even with the US consumer slipping deeper into debt, the media barking signals of “Black Friday” coming we must all still consume to keep the economy going. If you did not realize it yet… the media is about making money providing “news” through their sensational eyes. Individual and corporate spending got us as a nation into debt. We cannot stop spending, but we become smarter buyers…

Don’t always buy new. Buying a used item may not give the same feeling of joy felt in buying something in a factory sealed box does, but is that fleeting feeling worth a few hundred dollars? There’s absolutely nothing wrong with most used products on the market. People move, upgrade, and get rid of stuff more monetary reasons.

Very rarely will you encounter a used product in poor condition. With the availability of internet auction and ad sites like eBay, buying used is easier and often cheaper than ever. Big ticket items especially should be examined carefully in the used market. Whether it be appliances, electronics, power tools or other items, you can find hundreds of these products at numerous sites across the internet, or in pawn shops or your local papers.

One of the keys to buying used is to anticipate when you may need the item. If you’re in a situation where you absolutely need an item quickly, you may not feel like you have the time to buy it used. This really shouldn’t be a problem with big ticket items, as there should not be any real emergency on acquiring most of them, but it’s something to consider nonetheless.

Use Cash Is this one ever a biggie. If you don’t have the money for something, don’t buy it, plain and simple. Every household in America should be cutting up every credit card they own knowing as we now do what havoc they can wreck on our finances. The trouble is that once you get into that spiral, it’s difficult to get out, and many of you are probably forced to pay for things with credit because your cash goes towards paying the credit each month and you don’t have any left over to get ahead. Whatever you do, get out from under those cards, be they charging 1% or 20% interest rates. Don’t settle, it’s your money.

Buy Generic Many grocery stores have their own generic food brand, and the majority of them are actually of very good quality, hardly a step down from the major brands that can cost two to three times more money. Give these brands a try at the very least if you haven’t already. Just the process of saving money may make them taste all the more better alone.

These are just a few tips to spend while still saving money. There’s nothing wrong with being thrifty and there’s nothing wrong with being a smart shopper. Millions of American families wish they had the same traits right about now.

Mastercard is feeling some pressure as consumers slow in their purchasing.

Over the past few years there has been a growing trend as more and more US consumers pull out a debit card to purchase goods instead of a credit card. It could be more of an awareness as buyers realize they need to pay with money they already have and not financing the future.

Mastercard may feel the tightening of credit card use but Visa on the other hand is watching their debit card business grow and produce stellar growth.

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