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Ask the Readers: Consolidating Debts?

digging out of credit card debt

I love following personal finance blogs and one of my favorites is Free Money Finance.

This week FMF shared one reader’s money question and I thought it would be interesting to share with you guys. You’ve had some great thoughts and solutions.

Here’s the situation:

I am looking to consolidate my credit card debt into one personal loan. Unfortunately my credit is not perfect.  Right now my credit score is 630 and I have loads of credit card dept.  I’ve estimate I would need a personal loan of at least $15,000.  Since I don’t own a home this loan would have to be unsecured.

I currently have a car loan which I pay monthly and student loans that I have been paying on for 4 years and I have never missed a payment.  I rent and pay utilities on time.  I have a full time job where I bring in about $50,000 a year.  So would joining a credit union boost my chances for getting a sizable personal loan as opposed to going through my current bank (PNC)?

I’m curious to see what their current rates are for their debts. I didn’t see it in the comments either, so I’ll estimate 18.9% based on Bankrate’s report.

My Two Cents on Consolidating and Paying Off Debt

Getting an unsecured loan for $15,000 seems a bit of a stretch to ask from a financial institution, whether it’s a bank or credit union. My personal experience has been that credit unions have better loan rates, but they still have to run the numbers before giving out a loan.

I would suggest being aggressive and paying off one of the credit card debts on her own with her current income. She can then decide if she wants to keep her debt reduction plan or she can shop around for a loan. An added bonus with paying down the debt is that she can may get a better loan rate if her credit score improves.

Here’s my suggestion for handling it all:

  • Run the numbers. Grab or create  a debt reduction spreadsheet and list all your creditors, the interest rates, and the total amount you owe.
  • Keep cards away. If she hasn’t already, she should not dig any further into debt. some people prefer shredding their cards, others freeze them, but I just took my cards out of my wallet.
  • Find money for your debt reduction plan. Eliminating and cutting back on unnecessary expenses that don’t really matter to you can be be redirected instead reducing debt. Use either a debt snowflake, snowball, or even an avalanche to work your way to being debt free.
  • Automate payments. You can bypass a lot of mistakes and relapses if you automate your credit card payments with online bill pay. Most banks and credit unions offer this feature for free.

Don’t get too hung up on the method. Highest interest rate method is the financially sound decision, but paying off the lowest debt amount first  is the psychologically empowering decision. Do what works for you.

I would suggest Prosper or Lending Club as options if she gets denied by the credit union. However these sites are businesses and don’t just give out loans – she’d still have to fill out an application and share her finances.

Thoughts on Consolidating Loans

I know many of you have some wonderful thoughts on reducing debt so I’d like to hear your explanations.Should she consolidate her debts or just go ahead and tackle them? Do you think she’ll get a $15,000 unsecured loan easily from a credit union?

Photo Credit: BigTallGuy

Using Mint to Spot Our Money Leaks

cash in hand

As we’re working harder to reach our savings goal, we decided to look at our spending over the last four months closely to see if we could find any money that we’ve unwisely used. The tool of choice of us? Mint.

It’s packed full of features and it’s free. Mint allows us to quickly find our money leaks and get a system in place to help us fix it.

Mint’s Trend Feature

It’s easy for us as the data from our joint account are automatically pulled and Mint organizes it for us. With a few clicks we can check month to month and we can compare them against each other. You can also drill down to get to the individual transaction. The only hard part is remember certain charges from stores like Wal-mart where you may have shopped for several items. - Take Control of Your Money

Our Areas of Increased Spending

So where is the extra money going?

  • Food -By far our food expenses were higher than normal. Last month it was a bit more than double what we normally spend. I haven’t been shopping with list lately as I’ve made several small trips.
  • Household Items – Getting things ready for the baby’s arrival has added to our expenses. We’re reorganizing what was in the baby’s room to different places and that means we need shelves for storage and containers to get everything in order.

I think most of this is due to lack of planning on our part. We used to do big shopping trips together, but lately I’ve done small shopping trips during the day. That has lead to more impulse buying instead of taking our time and examine prices with different stores. The price of convenience has been expensive for us.

Use Mint to manage your budget

Our Plans to Fix Our Money Leaks

We can’t just ignore problem, we’re going to tackle it. Here’s how we plan to stop the money leaks from draining our checking account.

  • Set up a monthly budget for the new baby related expenses.
  • Have Mint track the expenses and alert us if we’re close to our spending limits.

Mint allows you to simply login to your account and create or adjust a budget. I lowered a few of the categories, just so we can keep a closer eye on our spending. We have to get back on the ball and focus on our goals. Both of us have been distracted as we’re just trying to keep up with the changes.

Thoughts on Money Leaks

I’d really like to get your thoughts and feedback. How have you’ve been doing to get on top of your finances? Have you noticed any money leaks or lifestyle inflation creeps happening?Hhow frequently do you examine your budget and your goals?

Photo Credit: mynameisharsha

Rainy Days Are Cleaning Days

rainy day

With the rain this weekend, we’re going to stay in town and get some cleaning and organizing projects done around the house. This weekend my husband and some friends will be moving the last of the furniture out of the baby’s room so we can get it ready.

We’re also going to finish painting over some spots where the nail posts were fixed. Finally I’m cleaning out the home office which has became an unoffical storage room as we figure out what to do with the last of the furniture.

We already gave away a television that we had around the house and I think we’ll donate the rest. What are you doing this weekend?

Deals and News of the Week

There are some great contests going on this week

Which contests are you going to enter?

Personal Finance Posts to Catch Up On

If you have some free time this weekend and want some tips and information for your finances, be sure to read some of these wonderful posts.

I hope you enjoy reading them as much as I did. I also recommend checking out my blogroll to pick up some great personal finance blogs to follow. Please also let me know what are some of your favorite blogs that you enjoy reading on a regular basis.

Have a wonderful weekend with your family!

Photo Credit: amandabhslater

Income Stream: Affiliate Programs

extra income

Lately I’ve been sharing how we’ve tried to save money or how we’re trying to plug our money leaks. After some thought, I realized that I wasn’t addressing the other side of the equation – increasing and building our income. I do freelance work online and offline that allows me to work on a more flexible schedule.

Today I’ll share one income stream that I have here on Couple Money – affiliate programs. While  this post’s scope may be of interest fellow bloggers and some readers, the main point I want to make is to encourage find ways to increase your income doing things that you’re already doing and enjoying.

Why I Use Affiliate Programs

Earning extra income is a wonderful benefit and if I’m already writing about financial services and products, I thought it would seem logical to make a little bit of money. That’s not the only reason I include affiliate links. It’s also a way for me to keep Couple Money running. It’s been my goal to keep the content on Couple Money free and not to charge a fee for being a subscriber.

Being frugal even on how I run the site keeps the costs low, which helps me to be pickier when it comes to affiliate programs.

Strategies That Help Me with Affiliate Programs

If you’re looking for an affiliate guru, then you’ll probably want to check out some other site. I try to keep it simple and so far it’s worked well for me. It boils down to two main things – believe in the product and match it with your audience. Everything is secondary for me.

Believe in the Product and/or Service

I don’t think you can be successful in the long term without having this tenet in your head – you should love it. I think people can spot something that’s just up there for the money versus a product or service that you genuinely believe is a good deal.

With a personal finance site, I get a ton of pitches and I know there are a ton of options. However the majority are garbage or aren’t real helpful for most Couple Money readers. Many of the programs I’ve signed up for are services that I use or have used.

Match It With Your Audience

I admit it’s a bit of testing when figuring out what works and what doesn’t. For Couple Money, I try to focus on financial and entrepreneurship programs. I want to help you save and earn money. On that note, if you have a suggestion or some feedback on financial services and products you love, let me know.

I work hard on choosing who to work with and I want to maintain the trust of my readers. I occasionally will do review that contain affiliate links which I think can be a mutually beneficial arrangement. The reviews are based on the product or service itself. I include affiliate links for readers who find the review helpful and want to purchase it. I’m choosy when it comes to credit cards – I try to find deals that seem to be a good fit. That’s why you don’t see many credit card reviews on the site.

So far, I think how I handle things on Couple Money works well and hopefully it’ll continue to be mutually beneficial.

Affiliate Programs I Use

Here are some of my current affiliate partnerships that I participate in, both here on Couple Money and a few other sites.

ING Direct: Love them! We’ve been banking with them for years and have wonderful service with them on the very rare occasions when we needed some help. I recommend the bank to all of my friends and it was a no brainer to include the bank here on the site.

Market Samurai: Long story short, I come up with the topic for my posts and then I look at use Market Samurai to see what keywords could work. For me it’s about balancing what I’m interested and what could be popular with potential readers.

MailChimp: This is my email list management provider and they have been wonderful. It’s free for the first 1,000 subscribers on your list, so for many people who are just starting to blog, this is the most affordable option. It is extremely easy to use and I’ve found the customer service to be top notch.

Perkstreet: There is a segment of Couple Money readers who don’t want to use credit cards – they live on cash, not credit. They do however want to get some kind of reward for the purchases. When I heard about Perkstreet’s 2% cash back debit card, I felt like this had to be included on the site.

Thesis Theme: I use Thesis along with a skin for Couple Money because it’s a great framework for me to run my blog. I’ve used Thesis for a couple years and with skins I’m given a lot of options to customize if I need to along with less need for adding plug-ins. Out of the box, Thesis has been really helpful with SEO.

TurboTax: I’ve used this software for our own taxes for the last few years. It’s easy to use, reliable, and the support for it is incredible. When signing up I thought it would add some great value to the site and I hope its helped readers with their taxes.

Unconventional Guides: Quite frankly I love many of Chris’ projects and found them to be extremely useful. I’ve purchased his Empire Building Kit and shared my thoughts on it. It’s helped me organize my freelance work and become more productive. Whether you want to work for yourself part time or full time, I think Unconventional Guides offers a lot of practical products.

If you’re interested, please try them out and see if they work for you.

Making money just to make some money isn’t an interest of mine. I would like to help others whenever possible. As I mentioned before I set aside 5% of affiliate sales towards charities that I’m interested in.  They include:

So if you want to support these wonderful causes, please go ahead and visit their respective sites. Giving directly is a wonderful feeling and makes you more invested.

Thoughts on Building Income Streams

I just shared one of my income streams, I’d love to get your thoughts and ideas. I’m curious – what are some of your income streams? How did you get started? How long did it take for your to develop it? How do you use the money (savings, debt reduction, reinvest the money, etc)?

Share Your Income Streams!

Please go ahead and join in on the fun, there are 3 ways you can be a part of it:

  1. Leave your tips in the comment section. I  love reviewing thoughtful comments from readers.
  2. Submit your stories for future posts. If you’re not into writing, but have some great income generating ideas, please email me at elle [AT] couple money [DOT] com.
  3. Write a blog post about your experience. Please include a link in your bio for your site and if you have a relevant post on your site that delves further into the topic, please link to it.

Thank you to those who have participated already. I look forward to sharing stories, tips, and advice from others here.

Photo Credit: stopnlook

Credit vs. Debit With the Fraud Protection Title On the Line

credit card pile

No one wants to be defrauded. No one wants to have their identity stolen. No one wants to lose their hard-earned money. As a result, fraud protection is often one of the key concerns consumers have, and the question that comes up over and over again is: Does a credit card or a debit card protect my money better? Well, why don’t we find out once and for all?

The Perception of Fraud Protection with Debit and Credit Cards

People naturally assume that a debit card’s fraud security exceeds that of a credit card for a number of reasons. Many think that because a debit card only affects what’s in your checking account and doesn’t give users access to a line of credit, a thief could only do so much damage. Others consider debit cards to be the electronic version of checks, which themselves are considered far more secure than credit cards.

Much has also been made of issues within the credit card industry over the past couple years, and some people have grown to distrust credit cards. Besides, you hear an awful lot about credit card fraud on the news, so that must mean they aren’t too trustworthy, right?

The Fact of the Matter

Both credit cards and debit cards have $0 fraud liability, which means you won’t be held liable for unauthorized charges whether you’re using a credit card or a debit card, and there is technically no difference in the fraud protection they provide. Still, let’s consider an example to see if there are any practical differences in their protection.

The Practical Application

Imagine your debit card account number gets stolen right around the end of the month, and unbeknownst to you, your checking account gets wiped clean. When your mortgage statement arrives the next month you notice that you’re classified as delinquent and have been assessed a hefty late fee, so you quickly look through your check book and confirm that you did indeed send a payment on time.

What’s going on? Well, when you call your bank you’re told that the check bounced due to insufficient funds. Fraud has obviously taken place, and while the bank says you’ll be reimbursed for the unauthorized charges, you still have to sort things out with the mortgage company.

This is only one side of the coin, however, so let’s replace a debit card with a credit card in the same hypothetical situation.

Money isn’t automatically removed from your banks accounts when a credit card is used for payment. You typically have at least 21 days to pay for charges after receiving your monthly statement, meaning you have a buffer with which to deal with any fraud. Therefore, not only will you ultimately recover any money spent fraudulently, but the simple fact that you were defrauded won’t have a ripple effect that damages other aspects of your financial life, like your mortgage or your credit standing.

Thoughts on Fraud Protection for Credit and Debit Cards

Ultimately, there is really no difference between debit cards and credit cards in terms of the fraud protection they provide. Both spending vehicles have $0 fraud liability guarantees, meaning you’ll get your money back no matter which you’re using.

However, the simple fact that money is removed from a checking account immediately upon a debit card being used makes debit card fraud more difficult to deal with than credit card fraud. As a result, we have our answer. Credit cards provide better protection against fraud than do debit cards.

This article was written by Card Hub’s CEO, Odysseas Papadimitriou. Card Hub is a personal finance website that helps consumers find prepaid cards, gift cards and the best credit card deals.

Photo Credit: Andres Rueda