Retirement Debt Problems Can Come From These Situations

Retirement Debt Problems Can Come From These SituationsThere are retirement debt problems that you need to be on guard for when you are nearing that stage in your life. It would be a shame to undo decades of hardwork just because you did not manage your retirement money well. You might be on track with your saving but a few wrong moves and you start to entertain the thought of going back to work because you do not have enough to retire on.

Retirement should be fun and it needs to excite you because you are about to enter a new phase in your life. You are about to disengage from the nine to five rat race and spend time doing what you love to do. This is a lot more exciting if you really did not love what you have been doing for the past few years. These things tend to happen and make retirement all the more appealing.

This thought makes it more important to take note of potential retirement debt problems. This helps you stay the course and be able to enjoy your golden years. If not, you will need to keep working for a few more years just to reach your goal. That is if you reach your goal because small miscalculations can end up costing you big time.

Compound interest is a great tool that helps you grow your savings and investment over time. When you miss out a few years of using it to your advantage, it might be hard to catch up to your goal. Not only will you save for the actual amount you should have put in, you need to factor in for the lost interest for all the time that you did not save. Here are a few more pitfalls in retirement planning you need to be aware of.

Co-signing loans

One of the retirement debt problems you can get into when you hit your golden years is deciding to help with loan applications of family and friends. It is not uncommon for family and friends to come up to you asking if you can co-sign a loan so they can be approved. The reason for this is that they believe you do not have any big purchases looming in the near future. That and the fact that you might have a good credit score. This is a quick way to get into financial trouble in retirement.

Once you agree to this, think of it like you are applying for a new loan under your name as well. Even if the other person assures you that they will keep up with the payments, once they miss one or two, your score will be affected as well. Worse, if that account goes into collection, you will start to get harassing phone calls.  

Grabbing quick-rich schemes

Retirement debt problems usually start when you begin to gabel with whatever amount you have saved up. You can make the argument that you are simply trying to increase your nest egg but the end will never justify the means. It takes a lot of hardwork and planning to ensure that you have enough funds saved for the future.

It will be enticing when someone approaches you promising you unbelievable returns on your investment with minimal risk. If it sounds too good to be true, there is a big chance that it is. What you might be thinking is that it gives you the chance to reach your goals faster. However, you might end up adding a few more working years. This is because you lost your investment and you are now further away from your goal from when you started.

Spending too much in a hurry

Once you hit retirement, you might be eager to spend your retirement money rather quickly. You go out and neglect the fact that you have a budget to stick to and run up quite a long list on credit card purchase. You lose your sense of direction and just go out and paint the town red. This is because you believe this is what retirement is all about.

Retirement debt problems will not be too far behind if this is your way of thinking. You need to remember that you worked long and hard to save up money for retirement. If you keep on spending like there is no tomorrow, you will soon find the need to go back to work. This is because you have used up all your retirement fund too quickly.

One you hit retirement, you need to stick to your budget and your plan. It is an exciting time for you but you need to keep your emotions in check. Be careful and continue to monitor your finances even in retirement. This is one way of guarding your funds and ensuring that you get to enjoy your golden years with your funds intact.

Charging too much in your credit card

This is a lot similar to being too excited at the beginning of your retirement years. However, this can happen over a long period of time. This might even be one of those financial habits that you need to change. Credit card use can help you manage your finances and even your budget better when done right.

However, when you lose control and start using your credit card aimlessly, you tend to rack up some big debt amounts. CNBC shares that credit card balances of Americans is over $6,000 so you better keep track of your spending. Try not to use your card for a purchase which you cannot pay for in cash. Once you use it to cover your cash shortage, your problems will start to come rolling in. You might even start to alternate and transfer credit card debt just to stay afloat. Debt is something you need to avoid when you get to retirement.

Lending money left and right

One of the most common retirement debt problems is lending money to family and friends. There is nothing wrong with your desire to help but not to the extent where you put your own finances in peril. There are a few reasons why family and friends seem to flock to you asking for help while you are in retirement. One is that they might think that you have no need for cash since you are already retired.

The truth, however, is the exact opposite. You actually need it now more than ever because you no longer have a steady source of income. When you retire, you are actually relying on what you have saved up for the past few years. This will be your main source of funds for all your retirement expenses and needs. Once you lend money to people, you are putting your retirement in danger.

Neglecting your health

When you retire, you need to make sure that you are still able to take care of your health. A healthy and sound mind and body keep you away from sickness. The healthier you are, the less you need to spend on doctor and hospital visits. It also helps that you get to enjoy a better quality of life when you are healthier in retirement. You get to do more activities even at old age.

There are a number of retirement debt problems you need to be aware of when you plan for your golden years. Knowing these potential pitfalls makes you more aware of what to avoid and help you prepare for them better.

Hard Money Lessons You Learn From Credit Card Use

Hard Money Lessons You Learn From Credit Card UseHard money lessons are experiences you wish would not happen to you but if they do, you get to learn a lot from them. Most of these hard lessons in life will usually come when you mismanage your credit card usage. A lot of people may not even realize that they already have a credit card problem because its use is so ingrained in society already.

So much so that some people even brag about their credit card balance with friends and even family. There are some who maintains a balance on their card because they believe it will help their credit score if they do. This line of thinking will not only put you in bigger debt but you will be in the red for a long period of time.

This is just one of the reasons why you need to either learn some of the hard money lessons from other people’s experiences or get through it as swiftly as you can. As with most problem, the first step in acceptance that you are having financial challenges. If you are in denial that you are having some money issues then you will not find the need to make changes.

Once you accept that you are having problems, you need to work your way to a solution. As you go on this challenging journey, there are a lot of lessons you can take away with you. This is one way to get out on top even with the lessons you get. Your finances might take a hit but some lessons can give what you need to stay on the right track. Here are a few of the lessons you might come across when you are having credit card problems.

Everything always has a return

When it comes to credit card use, the saying you reap what you sow is a perfect example of what can happen when you misuse credit. One of the hard money lessons you will learn from credit card debt is that when you are not careful with it, it will come back to haunt you. Oftentimes, this is sooner than you might expect.

When you receive your monthly statement, you will see all the purchases you have made with the card. There could be times when it seems so easy to forget that you used your card to buy things you want. When you lose track for one day, you can end up coming back home with a lot of shopping bags and several copies of your receipt.

When this happens, you will quickly realize that charging expenses on your card will always have a return in the form of a statement. You need to try and be more responsible with how you use your credit card. The better you monitor how you use it and where you use it, the more manageable your payment can be.

Financial management is a choice

One of the hard money lessons you need to understand when you are having a tough time managing your credit card is that choosing to fix it is a choice. You can be in deep waters but still, choose to ignore the problem. You might think that you will wake up one day where everything will be ok. That can happen but you have to work on it.

You might also fall into the trap of choosing a quick and easy way out thinking these are notable solutions to your problem. You gamble the little money you have left believing you will come home a winner. Going out and betting $2 on Powerball believing you will hit the jackpot should not be your idea of responsible money management. CBS News shares that there is a 1 in 292,201,338 chance of winning the Powerball.

You need to make sensible decisions to help you get out of your current credit card situation. It may be hard at first because oftentimes, you would have to make drastic changes which yield small results. This is one of the reasons why people choose not to do anything. The trick is deciding to make changes and sticking to them until you get out of your situation.

Your emotions play a big part

You may not realize it but one of the hard money lessons you need to understand is that your emotions play a big part in your financial problems. You might be an impulsive buyer and your emotions will compound that propensity to spend. When you are happy or sad or angry, these things can drive your eagerness to spend with your card.

As you struggle with your credit card problems, you also have to look at how you can control your emotions. One of the reasons why a lot of people decide to simply shop is because they feel it is better than binge eating, doing drugs, or even drinking alcohol. However, retail therapy to forget your problems will only compound your financial struggles.

If you already know that you cannot help but shop whenever you have problems, it is better to leave your credit cards at home when you get out. If online shopping is your weakness, try not to save any credit card details on your devices. You can also explore using prepaid cards to help you limit shopping. Put a small amount every month keep your shopping to that amount. Acknowledging and changing your attitude when it comes to your credit card use is hard but it will be worth it.

Help is needed

When you are going through financial problems, there may come a time where you will need help. It can be from family or friends or even finance professionals. There is nothing wrong with seeking out help. This is one of the hard money lessons you will come across when you are barely holding on and neck deep in debt.

Family and friends can help you in a lot of ways. Honesty can be one of them because they can tell you your mistakes to your face. Some may even be able to loan you some money to help you out of your situation. Finance professionals can also take an honest assessment of your situation and be able to lay out some debt repayment options like debt consolidation.

Debt consolidation can combine all your credit card debt into one account making it a lot easier to manage your payments. You only deal with one lender, one payment amount and due date, and more importantly, one interest rate. If you can transfer to a 0% card, you get to save interest payment as well.

Don’t spend more than what you can pay

One other money lesson you will learn as you go through credit card payment is how you charge expenses. The idea is to not spend more than what you can pay for. This is what credit cards have been giving you – the ability to spend over and above what you can pay back. In return, lenders get to assess fees and other charges on your account.

There are a number of hard money lessons you will learn as you go through your credit card problems. As you find a solution and pay your obligations, you will benefit from these lessons. It makes you smarter and you get to avoid the same mistakes in the future.

7 Ways To Tackle Your Credit Card Debt

7 Ways To Tackle Your Credit Card DebtCredit card debt was once frowned upon but has now been embedded into the finances of most American consumers. This has a lot to do with how credit cards have re-shaped the purchasing power of people to the point that they are buying items they cannot afford. As a result, they are trapped in a never-ending spiral of debt payment.

This is one of the instances why credit cards have a bad reputation. People are quick to put the blame solely on the plastic card. This has been an all too familiar problem as credit card problems can really destroy your finances. Especially so when you disregard your card debt not knowing that it accumulates interest, fees, as well as other charges that tend to increase that total payment amount.

On the other end of the spectrum, there are people who are able to use their credit cards to enhance their finances. Credit card debt does not bother them because they know what to do with it. They either pay everything at the end of the month, simply use the cards for the rewards, or have them to compartmentalize their expenses.

However, the sad reality is that a lot of people equate credit cards with financial debt not knowing that a lot has to do with how they actually use their cards. If you are having problems with card payments that lead to debt, here are a few things to look into to help you out in your situation.

Get your total credit card debt

One of the first things you need to do when you when you want to address debt on your credit cards is knowing what you are going to face. This simply means that you need to have an idea how much debt you are looking at. Knowing what you are up against is one of the initial steps you need to do. That being said, there are a few ways to get this done.

For one, you might be one of those people who is having a hard time opening their monthly statements. You need to start taking responsibility with your purchases and stop brushing it aside. The monthly statements on your credit card will give you an idea what your current financial obligations are based on your purchases.

If you have more than one card, you simply need tally all the total amounts to get a clear picture of your card debt. This is important as Fox Business shares that the consumers have already breached the $1 trillion level in card debt. As you take a look at your statements, it is a good idea to look into the breakdown as well so you can verify each expense.

Compare your debt amount with actual expenses

As you compare each expense, you might want to pull out your receipts so you can verify each item in your statement. This is one of the best ways to make sure that what is listed in your bill is something you bought. If there are any discrepancies, try to retrace back your steps before paying your credit card debt. This is because you might already be a victim of identity theft.

If you cannot recall some expenses in your statement, call your lender and get more details about it. If at all possible, call the establishment that charged the expense and talk to them about it. It is possible that you just lost track of the expense. Talking to the establishment would definitely help jog your memory. If you really cannot recall then you might be looking at something more serious.

Get a copy of your credit report

If you are getting suspicious about some of the activities in your credit card expenses, it is a good idea to get a copy of your credit report. According to the Federal Trade Commission, you are entitled to one free credit report copy every year. This applies to credit reporting agencies such as Equifax, Experian, and the TransUnion.

As you get your copy, take a look at some of the items and check whether they match your statement and the receipts you have. This helps verify the amounts you have to pay on your card debt. As you do this, check as well for errors in your report. There could be paid off debts in the past that is still being reported. It can even be wrong amounts in your report.

Checking your credit report allows you to clean it up having a more truthful credit score. It can also help you verify the payments you need to make if they are really yours or if you are dealing with identity theft.

Plot your credit card debt payment in your household budget

Once you have an idea what your expenses are, you need to start plotting them in your household budget. This is one of the most important steps you can ever make because you need to find out how you can allocate funds over to it. As you integrate it to your budget, you get to see the big picture on your monthly financial movement.

Once you plot it out, you need to start to identify areas where you need to make adjustments. This will let you know if you have to cut back on some of your expenses and channel that to payments. Oftentimes, these are discretionary funds you use for entertainment and even shopping. This means sacrificing some “wants” in your budget to squeeze in some payments. If it is any consolation, this is not a permanent scenario because as soon as you pay off your debt, you can start moving funds around again.

Commit to a payment plan

As you now roll up your sleeves and take your debt payment seriously, it might be a good idea to look into debt repayment programs. One of the programs used by a lot of consumers is debt consolidation. As the name suggests, the program gives you the ability to combine your debt obligations under one simple and easy to remember account.

Rather than having to remember multiple payment due dates, payment amount, and even interest rates on your credit card debt, you now only have to remember one set of details. This is most helpful especially if you are trying to juggle multiple payments every month. It is because you lower the chances of missing a payment and compounding the amount you pay at month end.

Make some hard choices

Dealing with credit card payments is not simply sending out the amount every month. You also need to make some changes in your lifestyle and even your spending habits. This will help you control the amount of debt you take on every month and even allow you to focus on your current repayment efforts.

Some of these hard choices can be leaving your credit cards at home. Doing so lowers the chances of whipping out your cards for unnecessary expenses. You can even explore cutting out some of your newer credit cards. The reason for this is not only to lower the chances of misusing the card, you preserve your older cards as well. This is important because your credit score relies on credit history which your older cards have.

Focus on long term goals

One tip that will help you get through some tough repayment moments is to focus on your long term goals as well. Know that everything you are doing now is a step towards those goals. It can be that house you want to buy or even that vehicle you need for your growing family. It might even be setting up a business or setting your sights on early retirement.

Credit card debt will surely take its toll on your finances and even cash flow but there are ways to manage them effectively. You just need to make sure that you have everything listed down and have a repayment plan to help you get through it.

Debt Traps For Fresh Graduates

There are a number of debt traps young consumers need to watch out for early in their careers because these can put them in the red early.There are a number of debt traps that could put young people especially fresh graduates in a financial pickle. Their age becomes a factor as well because most of them lack the financial acumen to get through financial challenges. This can come from either experience in managing their own money, financial lessons or even both.

That being said, fresh college graduates are at the point where they are more prone to debt problems than ever before. As they enter the full-time working class, they are now more exposed to a multitude of financial tools. These can either help them get ahead and be able to plan their finances accordingly or put them under the crushing weight of debt traps.

This possibility makes it all the more important for younger consumers to be mindful on how to handle their finances. If you are part of the millennial generation who is just about to enter the workforce or already been working for a few years, here are some common potholes to watch out for. Knowing these beforehand will not only help you avoid them but learn from the process as well.

Charging too much on your card

There is no question that the use of credit cards is so deeply embedded in the financial practices and ways of Americans. In fact, it might even be a harder to find someone who is not using or has not used a credit card in their life. This day and age are mostly about charging to credit and taking care of the actual payment at the end of the month.

For one, it gives people the chance to manage their finances until payday comes along. However, it also poses as one of the trickiest debt traps for consumers much more, for the younger generation. For one, charging expenses could lead to unmanaged expenses. This can creep up and shock you when the statement comes around.

This is even more dangerous when you start to use multiple credit cards for specific expenses in your household budget. As effective as it can be for other people if you lack the discipline and commitment to stay within budget will be a cause for concern. You might start to charge more on your card simply because you have a lot to use. At the end of the month, you might not be able to meet all your payment obligations. This can force you to operate in the red and pay for penalties and other fees.

Putting off student loan payment

According to Forbes, the class of 2016 has an average of $37, 172 which forms part of the $1.3 trillion student loan debt in the country. This is already a big amount for consumers in their prime earning years, what more for fresh graduates taking on their first job? If you start to add basic necessities such as rent and food, their budget slowly becomes a tough balancing act to juggle.

As a result, some people might choose to put off their student loan payment. This decision then becomes one of those debt traps that is hard to escape. For one, student loans are a bit hard to discharge even in bankruptcy. Apart from mortgage loans, student loans are one of those payments that stick with people for a long time.

That being said, it is best to make sure that you prioritize student loan payments after you get your first job. This helps you develop the repayment habit early on which should make payments easier in the long run. Look into debt consolidation as well to combine your loans under one account. You might be able to take advantage of a lower monthly payment as well.

Sticking with minimum payments

Once you start talking about debt traps, one of the most overlooked factors is sticking to minimum payments. Fresh graduates usually rely on this to simply keep up to date with their payments. There is nothing wrong with minimum payments because it keeps penalties and fees at bay. However, you would end up paying more on interest as time goes by.

Sticking to minimum payments also keeps you paying on your debt for a lot longer time. True that it is your repayment schedule. However, sending in either extra monthly payments or principal payments can help your cause. It could shorten and pull your pay off date closer or even save you interest money in the process. There are a number of underlying factors when it comes to debt and minimum payments can be one of them.

Lifestyle inflation to show-off

If you are a fresh college graduate about to enter your first job, one of the biggest difference you would ever see is a spike in your income. If you are just like most college students who are broke, getting a steady pay could be a big jump in your finances. One of the first things that could change can be your lifestyle.

You can now afford things that may have been out of your league when you were still in school. This can result in lifestyle inflation and increase your expenses as well. What is worst is that there are times that you do this just to impress other people. As you continue with the charade, it becomes one of those debt traps simply because you cannot keep up. Your expenses will soon overrun your income. The time could come that you start to borrow money you cannot pay back to buy things you cannot afford to impress people you don’t even know.

Not checking your monthly statements

It could be tough for some people to start managing their finances on their own. They could have had some experience in college but doing it full time might be difficult. As the bills start to come in every month, young consumers might choose to just ignore their statements. They feel that they have a pretty good idea on how much they owe.

This financial approach can breed a multitude of problems that can lead to debt. For one, it would be difficult to see exactly how much you owe. As a result, there is a chance that you send out a lower amount which can result in penalties and fees. This increases the amount that has to be paid in the succeeding month. Not to mention the effect it would have on your credit score. As such, it is important to make it a habit to open and check your monthly statements. This can also be a good way to help protect yourself from identity theft.

Opting for payday loans

There are a lot of unexpected financial emergencies that can come your way. It is a lot harder for young people because they might not have an adequate emergency fund built yet to get them through it. This pushes some of them to look for ways to infuse cash on their budget. With this, they tend to take out payday loans simply because they know they can pay it back. The problem starts when the emergency takes longer than expected and they cannot pay back. This puts them in deeper debt as the interest starts to come in.

Here is a video about payday loans so you can understand it better:

There are a number of debt traps young consumers need to watch out for early in their careers because these can put them in the red early. The sooner they understand some of these potholes, the better they can prepare and steer clear of it.

Credit Card Benefits You May Not Know About

Credit Card Benefits You May Not Know AboutOne of the reasons why a lot of people prefer charging their purchases is to take advantage of credit card benefits. This varies in shape and form and each card could offer something the others don’t have. This is one of the reasons why consumers tend to have more than just one card with them.

As CNBC shared, 171 million consumers are carrying a total of 405 million of credit cards in circulation. On an average, that comes out to about more than 2 cards per consumer. This might not seem to be a lot of cards but there are also those that carry more than just two cards. They are in danger of using their cards up to their limit one after the other if they do not know how to use their cards.

There are consumers who make use of their cards as a budgeting tool. This is one of the credit card benefits that are utilized by consumers who has a good control over their impulses and emotions. This is because once you mix up your cards, you would have a hard time reconciling your expenses with the multiple cards you have.

Improved credit score is one of the credit card benefits to look 

One of the main reasons why people have subpar credit scores is because of late payments. There are a lot of factors that comes into play when you try to understand why consumers are getting behind on their payments. There are those that are having a hard time managing multiple payments or some are still reeling from the effects of the financial crisis.

If you are looking for ways of improving your credit score, your credit card can help you out. First, you need to understand that a big part of your score reflects timely payment on your part. One thing you can do is to charge purchases on your card and pay them off every due date. This would reflect positively on your report and in effect, improve your score.

What you need to keep in mind is using your cards for non-essentials and out-of-budget items. The reason for this is that you could have a hard time meeting your payments at the end of the month. When all the bills start to come in, you would tend to prioritize other expenses. If you fail to pay up your credit card, you end up digging a deeper hole making it more financially challenging.

Making the most out of rewards

As mentioned earlier, a good number of credit card holders are encouraged to get cards because of the rewards it offers. Nasdaq even shared that from a current research they conducted, 52% chose a new card because of the rewards. This goes to show that people tend to gravitate towards cards that offer great rewards.

However, it should not stop there because you need to make sure that you understand your rewards system. Not just the basics but you need to have a clear understanding of the details of the program. What purchases gets you the most reward and how do you redeem them are just some of the things you need to know. If you want to make the most out of the rewards program of your card, you have to put in the time to learn them

Temporary emergency money

There are a number of credit card payment mistakes that you might be making which brings you closer to financial challenges. However, just as credit cards could lead you to trouble, it can also serve as your lifeline when push comes to shove. One of the many credit card benefits you can take advantage in times of emergency is using your card as your reserve fund.

This should be more of an exception rather than the rule because you need to save up for your reserve funds. But in the absence of it, your credit card can temporarily pick up and cover for your need. You just have to be careful because getting in too much credit card dependence can also lead to debt. This is especially true when you are using it as emergency money.

The fact that you are having problems with your finances can only complicate your credit card use. Once you start charging amounts without any clear plan on how you will repay them at the end of the month, you are setting yourself up for trouble. It is important to charge what you can pay off and start finding alternative sources of money to fund your emergencies.

One option you have is to conduct a garage sale of the things around the house you are no longer using. This can help you raise up cash quickly as well as declutter the house as well. It can be a great way of letting go of old stuff that is just lying around and help you mentally and emotionally let go of baggage in your life.

Fewer problems in case of theft

When someone gets a hold of and steals your wallet, you lose all of its contents. Your cash is as good as gone as well other identification cards inside. However, your credit cards are a different matter. Even if they get a hold of your card, as soon as you call up your lender about it, they can freeze your card.

Of course, you have to be proactive in these types of situations. The longer you wait to report the more time robbers have in getting access to your credit. They might find a way to forge your signature, use it for online purchases or even sell it to other people. With all these, it is still relatively safer to lose a credit card than cash.

This is because even with a credit limit on the card, it does not mean that they can get their hands on it immediately. The important thing is that you need to report it immediately to disable the card. Once that happens, all the crooks have on their hands are plastic cards that are practically useless.

Here is a short video to help you learn more about how credit card theft happens.

Credit card consolidation

Debt has been a constant companion for most consumers and most of them believe their credit cards are to be blamed. It surely is not one of the credit card benefits you are looking for but it is also one hurdle credit cards can be of great help. Credit card consolidation is a popular debt repayment method which helps consumers streamline finances and address their payments.

This is most effective for people who has a lot of credit cards on hand as well as high balances on each of them. If you are one of them, it can be a challenge to manage them on a monthly basis. There are a lot of payment amounts with multiple due dates, various interest rates, and different lenders to talk to.

Credit card consolidation will help you combine all these into a single account. This can drastically help you as you try to get a handle on your payments. You would have an easier time remembering your payment date. If you can consolidate with a 0% card, you get to save money as well.

In all these, you need to remember that credit card benefits are out there to help you manage your finances. However, as with anything in life, anything in excess can lead to trouble. That includes your credit card use. You need to make sure that as you take advantage of the benefits, keep a close eye as well on your credit card use.