Category Archives: Reducing Debt and Debt Management Advice

Questions to Ask Before Applying for a Personal Loan

Posted on by
Reply

Personal loans are a popular alternative to credit cards, because like credit cards – they are paid in monthly installments and come with a low interest rate if you have a good credit score. From debt consolidation to paying for life events, personal loans give borrowers money which can be paid back over time. Typically, payments are the same amount each month – as opposed to credit card payments that might vary depending on your balance. Keep reading to get all your questions about personal loans answered, and find out if this is the best financial option for you before you apply.

Is a personal loan right for me?

Personal loans are a way to consolidate high-interest debt at a lower rate. A personal loan can be used for just about anything – a home improvement project, wedding, debt consolidation, or other costly undertaking when you don’t have cash on hand or in the bank. Personal loans give borrowers money up front to be paid back in monthly installments over a fixed period, usually at a rate much lower than a credit card would have.

How much can be borrowed with a personal loan?

This amount will be based on your income, employment, financial history, and how much debt you currently have.  A lender will look closely at your debt-to-income (DTI) ratio, which is the percent of debt you currently have in relation to your before tax income. A favorable DTI is 43% or less, typically.

How much should I borrow?

Just because you get approved for a certain loan amount, doesn’t mean you should accept it. You also need to look at the other items you spend money on each month. Borrow the amount you know you will need to fund what you need the loan for, and don’t acquire extra debt. For help deciding what amount you should borrow or what your monthly payments might be, check out our financial calculators. Make sure your personal loan gets factored into your monthly budget and that you can comfortably afford the payments.

How can I get the best loan rate?

Do your homework ahead of time, and shop around. Often a loan with a shorter term will cost you less over the life of the loan, than one with a longer term will – though your monthly payments will be less on a loan with a longer term. Your credit score (the number that tells lenders if you are credit worthy and the financial risk you would pose) is another important component in receiving a competitive rate. The higher your score, the better your rate will be.

Is there a way to pay off my loan faster?

If you have room in your budget, it’s always a good idea to make extra loan payments when you can. Perhaps you can make bi-weekly payments instead of just once per month, or an extra payment every so often. This will only help you pay your loan off faster and you’ll also pay less in interest. Even rounding your monthly payment up can also help you pay your loan off quicker. For example, say your monthly payment is $173. If you round this amount up to $200 you’ll continue to pay the loan down and will ultimately pay less in interest over the life of the loan. Just be sure your loan doesn’t include any pre-payment penalties before you begin making extra payments.

Can a personal loan help my credit rating?

Part of your credit score is based on credit utilization, and lenders usually like to see that you’re not using more than 30% of your available credit. If you’re planning to use a personal loan to pay off credit card debt, you can actually lower your credit utilization – which should boost your credit score. Because a personal loan is considered an installment loan, whereas credit cards are considered revolving debt – adding it to your credit profile can demonstrate that you can successfully handle other loan types.

How can I apply?

If you live, work, worship, volunteer or attend school in Monmouth or Ocean Counties in New Jersey – check out our personal loan options! Our personal loans have a fixed rate, start at $500, have flexible terms up to 60 months, and no pre-payment penalties.* You can apply over the phone or right online, and we even have electronic closings available.

A personal loan is a great option that can help you save money instead of going through the high cost of retail financing or racking up high-interest credit card debt. Do your research and find the best option for your budget!

*APR = Annual Percentage Rate. Actual rate will vary based on creditworthiness and loan term. Subject to credit approval. A First Financial Federal Credit Union membership is required to obtain a Personal Loan, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan. Federally insured by NCUA.

Article Source: Gobankingrates.com

How to Stay Out of Debt this Year

Posted on by
Reply

Are you one of those people who continually carries debt into the new year? Let this be the year you really say goodbye to lingering debt. Here are a few tips for not racking up any new debt and paying off previous debt.

Forget about any extra money: It’s a new year, so more than likely your paycheck just got a little bump. If you do have some extra money in your paycheck due to a new year’s pay raise, do something productive with your extra cash before you can spend it on things you don’t truly need. Set your new year’s budget as if you are still making the same salary as last year. Put the extra money into your 401k or into your emergency fund. Another idea is to open a new savings account that will help you save for trips or entertainment plans for the year ahead that you’d normally put on a credit card.  Even if you only got a small raise, over time it all definitely adds up.

Set goals and keep them: Money goals are key to keeping your finances on track. Your budget is probably your most important money goal. You know how much you make, and if you haven’t set a strict annual budget for yourself yet in the new year – it’s time to map out your monthly bills and truly stick to your spending allowance. Automating bills and direct deposit right from your paycheck is an easy way you can help yourself stay on track.

Stop using your credit card: Of all the cards in your wallet, your credit card should be the one you reach for last. If you’d like to see your debt disappear in the new year, you’re going to have to start telling yourself no. Sure, shopping is fun – but how often are things that aren’t necessities worth having more debt over?

If you need help creating a budget this year, check out our easy budgeting worksheet. For more tips on managing your credit and reducing debt, view our credit management and debt reduction guidebook.

Article Source:  John Pettit for CUInsight.com

3 Tips to Keep Debt Away

Posted on by
Reply

Sometimes we build up debt due to emergencies or situations that are beyond our control. Sometimes we just buy too many things we don’t really need. Here are three things to think about when it comes to your finances and how you can avoid debt as much as possible.

Set financial goals: Goal-setting is very important when it comes to your money. Your budget should be an easily attainable financial goal for you. If you’re having trouble staying within a budget, it’s probably a good idea to take a closer look at it. When it comes to saving money, have a defined purpose. Every time you get paid, set up your direct deposit to put money into retirement and an emergency fund automatically. This way you won’t physically be transferring the money and convincing yourself that you can do without putting anything into savings this month. If there is a large purchase you want to make or a vacation you want to go on, open a savings account for that wish list.

Have more self-control: It’s easy to buy something impulsively (especially when it’s inexpensive), but those small purchases can really add up if you’re making them all the time. You need to start saying no to yourself and be really disciplined if you want to be free of debt. Having new things is great and exciting, but are those items worth going into debt over?

Ignore pay raises: If you budget your paycheck as if you’re making less than you do, it’ll be easier to save for the things you want in the future. Plus, you won’t have to put yourself in debt to get them. It may not always be easy to cut back, especially if you have a big family, but every little bit helps. And when pay raises come, redirect those additional funds to your savings account and forget all about them!

Article Source: John Pettit for CUInsight.com

3 Ways to Consolidate Debt

Posted on by
Reply

Debt can be overwhelming, but there are definitely ways you can consolidate. The idea of putting all of your debt in one place, with one simple monthly payment can be a big relief.  So, what are your best options for consolidating your debt? Here are three to consider, that you may not have thought of.

A balance transfer credit card: If you’re looking at this option, you’ll want to first make sure that you find a card that will have a high enough limit to contain all of the debt you want to consolidate. If you can find a card with a zero percent introductory rate, this is ideal for paying off debt. If you have $3,600 in debt, and zero percent interest for 18 months – you can pay $200 a month for 18 months, and be completely debt free without paying a cent of interest. However, be advised that if you continue to use this card and rack up even more debt and you don’t pay it off in time – that interest rate could potentially sky rocket at the end of 18 months, and you could really dig yourself into a hole (which is what you were trying to get out of in the first place). This option only works if you stick to your plan, don’t use this card, and continue to pay off your debt during the introductory period.

You also want to transfer your existing balance(s) to a credit card that doesn’t have a balance transfer fee. First Financial has 3 great Visa Credit Card options that have no annual fee either!* Learn more here.

A home equity loan: After the introductory rate on a balance transfer credit card ends, the interest rate can be pretty high – as mentioned above. A home equity loan uses your home’s appraised value and what is still owed on your mortgage, and will provide you with a lump sum that you will agree to pay back over a set fixed rate term (this type of loan is also called a second mortgage). The main benefit of a home equity loan, is that the interest rate will be much lower. You will want to be careful if you go this route – if you default on the loan, you could put your home at risk.

To learn more about First Financial’s home equity loans and lines of credit options, and apply online 24/7 – click here.**

A personal loan: If you don’t like the idea of risking your home (or any other form of collateral), perhaps a personal loan might be the best option for you. If you have a good credit score, you’ll receive a favorable interest rate that is often lower than a credit card’s. If you think this may be a good option for you, ask your local credit union about any debt consolidation loans they have available.

First Financial’s personal loans have a fixed monthly payment, flexible terms, and are a great way to save money instead of opting for the high cost of retail financing.+ Get started here.

*APR varies up to 18% when you open your account based on your credit worthiness. These APRs are for purchases and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fees. Other fees that apply: Balance Transfer and Cash Advance Fees of 3% or $10, whichever is greater; Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa Credit Card and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties. See firstffcu.com for current rates.

**First Financial will waive closing costs at inception of loan. If loan is terminated within the first 2 years of opening, closing cost waiver is revoked and the borrower(s) will be required to pay back closing costs in full to FFFCU. A First Financial membership is required to obtain a home equity loan, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. See FFFCU for details or visit firstffcu.com for all current rates. Nationwide Mortgage licensing System & Registry ID # 685814

+APR = Annual Percentage Rate. Actual rate will vary based on creditworthiness and loan term. Subject to credit approval. A First Financial Federal Credit Union membership is required to obtain a Personal Loan, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan.

Article Source: John Pettit for CUInsight.com

3 Obstacles You’ll Encounter While Paying Off Debt

Posted on by
Reply

Debt can feel like a mountain that can take years to climb. The only thing you can do is take it one day at a time. There are some obstacles you may encounter on your way however, so here are three to keep an eye out for – and to make sure you don’t continue to fall victim to your debt and get yourself offtrack.

The unexpected: When you’re trying to pay down debt, you may be tempted to push your budget to the limit along the way. While it’s great to be more frugal, never forget that unexpected expenses can come out of nowhere. Your car may be great today, but tomorrow your transmission might call it quits. If your emergency fund isn’t in great shape, make sure you’re still setting aside a little extra cash each month for any expenses that might pop up.

The good life: It’s nice to have a budget that allows you to treat yourself every now and again, but if you’re serious about paying down your debt, you may need to take a closer look at your budget and reassess. There may be some areas of your budget that will have to be cut while you’re attacking your debt mountain. Need a budget guide? Check out this one.

The hole in the boat: If you’re not careful, paying down debt can sometimes be a little like bailing water out of a sinking boat. You’re on your way, your debt is decreasing a little each month, and then suddenly you find a reason to justify a purchase that puts you back to where you were a few months ago. If credit cards are the cause of your debt, you need to either cut them up or put them away until you’re ready to begin a new, healthy relationship with them. When you’re making a plan to tackle your debt, make sure that you and your significant other are also communicating so that you’ll be on the same page about spending habits.

Be sure to check out our debt payment financial calculators here. The most important thing to remember is to stay the course and don’t fall into any traps that will set you further back. Be strict with your spending and stick to a budget!

Article Source: John Pettit for CUInsight.com

5 Reasons You’re in Debt

Posted on by
Reply

Are you in debt and not sure how you got there? Some of these reasons may be the culprit.

1. You justify your purchases

Don’t try to rationalize unnecessary purchases. On some level, we are all guilty of this. Between “I deserve this” and “I need this,” we’re constantly making excuses for spending money. This doesn’t mean you can’t treat yourself, but do it affordably and make sure you budget for it.

2. You refuse to address your debt

The first stage of grief is denial, and dealing with debt can look very similar. Do not ignore your debt. As difficult as it is, you need to face your debt head on. Understand what you owe and create a plan of attack.

3. You are an impulse spender

With next day shipping and one-click shopping, this has never been a more prevalent issue for consumers. These purchases are beyond trying to justify, and that impulse is what is hurting your wallet. Try holding off on some purchases unless you’ve given them some thought, or saved up first.

4. You assume you are going to make more later

A great example of this is taking on student loans. Most students don’t have a choice if they want to go to college, and are now graduating with debt upward of $40,000 in hopes that they can land a job that will pay them enough to pay it back. In other cases, people are making purchases because they think they will be up for a promotion or have a raise around the corner. Even if all of these things do come to fruition, you will still be paying more in interest than if you’d waited.

5. You often dip into savings for expenses

J.P. Morgan once said, “if you have to ask how much it is, you can’t afford it.” When you look at a price tag and immediately start thinking about how to move money around, take a step back. Once that money goes into your savings, it should disappear from your thoughts. The only time you should ever spend money from savings is when there’s an emergency and you need to use your emergency fund.

Article Source: Tyler Atwell for CUinsight.com