Credit Basics

Credit is the use of someone else’s money when you have the availability to pay. The shop owner may offer you credit if you have left your wallet at home and he knows you will return to make the payment.

Debt is the use of someone else’s money because you are not in a position to pay for the item with your own funds. A mortgage for a home is the most common form of debt because few people have the ability to save enough money to purchase a home with cash.

Credit can be the perfect way for an entrepreneur to make the most of available assets. Reading the fine print on credit agreements, staying organized and doing a little basic math allows the entrepreneur to use credit cards instead of finding that the credit cards are using the entrepreneur.

Best Tips for Using Credit Cards

Know the due date for payments (and the cut off time for that day). When in doubt, pay early. Paying late will result in late fees and an increase in percentage rates.

Pay in full. Avoid finance charges by keeping your balance at zero.

Review rewards programs. Some credit cards offer cash back plans on all purchases. Choose a rewards program that works best for the needs of the individual entrepreneur or business.

Keep accounts open. Closing credit card accounts may adversely affect a credit rating.

Compare interest rates. The amount of interest being made on the investments of the entrepreneur should always be more than the amount of interest being paid to use the credit cards.

Read the paperwork. Entrepreneurs can avoid unexpected credit card costs by reviewing all the materials received by the credit card companies. Companies have been known to change due dates or times, interest rates and more by hiding the information in “junk” mail.

Use different cards for different needs. Some cards offer higher rewards for specific purchases. Entrepreneurs make the most of credit cards by using them in a way that reaps the highest payback.

Entrepreneurs should NOT be afraid of credit cards. Keeping the plastic as credit (by only spending what can be paid in full) will allow the entrepreneur to use the credit cards and keep the credit cards from hijacking the entrepreneur or the business.

Many people are facing tough decisions in their finances these days. Economic experts are predicting that things will likely get worse before they get better. It is a scary thought when the bills start coming in with “late” stamped on them. The best thing to do to save your home and to save your credit rating is to start dealing with trouble before it becomes an issue.

Tips for Keeping Your Mortgage out of Foreclosure

1. Get your head out of the sand – the financial problems will not go away if you just ignore them. The sooner that you contact your lender with a potential problem then the more time you give both of you to come up with a solution that will help.

2. Get assistance – the government is trying to come up with ways to help homeowners that are struggling. Lenders are also developing programs for homeowners in good standing that are coming into tough times.

3. Call for a time out – many lenders will understand that temporary trouble happens. If you know that your financial trouble is only short term then you may be able to get a payment waiver from you lender for a couple of months.

4. Make the big cuts – it is better to cut all extra expenses, no matter how painful at the time, rather than to risk losing your home. Look at classes, trips, extra vehicles and other toys as the first place to cut.

Troubles happen and even lenders can understand that. You only compound any troubles if you try to ignore them. Deal with financial difficulties as soon as possible and you can find several ways to help keep your mortgage out of foreclosure.

I heard someone mention the other day that this economic crisis is good because it’s forcing people to look at money in a different way. I think this economic crisis is partly due to the fact that people HAVE been looking at money differently. There was no way that the country could continue to spend like it has been in the past few decades (the government included) and trouble not be an end result.

Things might be tight right now, but this wave of change will pass and the waters will settle down on their own. It would happen much faster if people would quit sending out so many boats to try and save the economy. All the boats are doing is stirring up the water even more.

Change is coming – and this is a change to more fiscally responsible living for everyone. It would be nice if the government would get on board without the need for the ordinary citizens turning the harbor into a big ole cup of tea once again.

1. Don’t build up debt. There is a difference between credit and debt. Credit is borrowing against money you have (like when you use a credit card to buy something that you have been saving for – the money is in your savings drawing interest while you put the purchase temporarily on your card). Debt is when you borrow money with no means of paying back the purchase (like when you run low on funds at the end of the month so you begin buying things on one of your many credit cards. The new month will not bring enough income to cover the purchases).

2. If you already have debt you can’t pay, call the creditors BEFORE your payments start being late. If you are up front with a company while your account is in good standing then that company is more inclined to work with you during your problem times.

3. Don’t make promises you can’t keep. If you aren’t going to have the payment at the end of the month, then don’t say you will. Be realistic in your promises. A lie now will only hurt you even more next month.

4. Seek financial counseling. There are people out there who make a living helping others get their finances under control. Some of them charge a fee, but some of them do it as a ministry. Look on line, look through the yellow pages, or call a local church to find someone who can help you find your way to debt freedom.

5. Stop buying now. If you are already in debt over your head then you don’t need to buy anything other than basic (food and a roof over your head) necessities. Cut every other spending that you might want to do. Get out of debt and make it a habit to stay that way.

6. Pay off highest interest loans first. Many systems recommend paying off the loan with the lowest balance. This is a good morale booster, but in the long run you will save more money by paying off the loans that have the highest interest.

7. Do consider a consolidation loan. If you have changed your spending habits and you have some equity in your home then you might look at remortgage to consolidate all the smaller debts into one loan that is a lower interest loan. Don’t borrow more than is needed to payoff the current debts. It can be tempting to get cash back for a spending spree – but it won’t help your situation in the end.

Getting into debt is easy. Credit card companies and other lenders send borrowing opportunities to everyone (even the family dog at times). Getting out of debt requires commitment, consistency, and sacrifice.

A debt free life will be a better one for you and your family now. It will also lay the foundation for a better life for you children.

It seems like an endless cycle – but you can get out now!

A traditional mortgage will cost you three times what you agreed the house was worth – if you pay off in the full amount of time allotted. If you make one extra payment per year, the number of years decreases. Now pay on the principle each month, and you could decrease your mortgage term to as little as seven years. That means you will be debt free AND you will have paid thousands less in interest.

There are mortgages that are beginning to make their way into the United States that are designed to help you pay off the loan faster. Basically, you put money into an account to pay your mortgage. At the end of the month, everything that is left over (after paying your monthly payment) is rolled over to principle. If you don’t have a mortgage already, this could be the path for you.

If you are already locked into a mortgage, you don’t want to go to the expense of moving to a new lender. It is possible to use the same concept – if you will just be disciplined about it. Set aside ¼ of your normally monthly payment. At the end of the month, if you haven’t HAD to use the money, then pay it on your principle.

It’s really just one simple step that will buck the system and have you debt free before your children can even spell the word.

The last two months have been tight, and I slipped on my payments. The interest isn’t hurting too much, but if I don’t do something fast then I’m going to negate the whole reason for getting the card in the first place – the cash back program.

1. Stop using the card! Go back to paying cash or using the debit card until the credit card is paid in full.

2. Quit pretending. Once interest starts accumulating the rewards programs become moot. Stop acting like money is being lost.

3. Pay before the due date, and pay more than once. As extra money becomes available or as money gets set aside, pay it on the credit card balance. Interest accrues every chance they get.

4. Go back to what works. If the cash isn’t on hand (in the bank or in savings) then don’t charge it – plan and simple.

I made a mistake (which I still haven’t admitted to my hubby, so don’t you tell him ). Instead of getting all pious about it, I’m just going back to what I know works. It will all be sorted out soon enough if I do. It’s waiting that usually ends up getting you in a mess that you can’t deal with on your own.