Personal Finance

The truth of the matter is that debt consolidation does not make your debts go away. In fact it doesn’t do a lot to help resolve your debts. It does nothing to improve your spending habits which got you into debt in the first place. The debts are still there and so are the same old bad spending habits. You can never get out of debt by creating more debt. All you do with most debt consolidation loans is dig a deeper hole. Contrary to popular belief getting out of debt is never quick or easy which is the promise of most debt consolidation companies. Many people think that their debts are the problem. Wrong! Debts are the symptom of bad spending habits. People with a lot of debt overspend and never save. Most financial coaches will never recommend debt consolidation because it simply does not work. The Statistics Of Debt Consolidation Most debt consolidation companies will tell you that approximately 75% of people that have their debts consolidated are back into debt within a year. So why does this happen? Because many people after getting their debts consolidated still have not corrected their spending habits and are still overspending and not saving for the “unexpected events” in life. Nothing has been corrected. Debt consolidation loans are tempting since they have lower interest rates and lower payments than traditional loans. However research has indicated that the lower payments are not actually lower. The payments appear lower because the term of the loan is extended longer than traditional loans. Obviously if you stay in debt for a longer period of time you pay less, however, what most people don’t realize is that you are also paying the lender more money in the long run. An Example Of Debt Consolidation For example, if you are in debt for $30,000 which includes a loan for $10,000 with an interest rate of 12% and a 4-year loan for $20,000 with an interest rate of 10%. The $30,000 loan has a monthly payment of $517 while the $30,000 loan has a monthly payment of $ 583. That’s $1100 a month. You go to a debt consolidation company and they tell you that with them you will only have to pay $640 a month with an interest rate of 9%. How they can do this is by negotiating with your creditors and rolling all of your debts into one. Of course anyone would jump at the chance to pay less every month. What they never tell you is that now it will take about 6 years to pay off the loan. That still doesn’t sound too bad until you take the time to understand how long that actually is and that now this loan will take $46,080 to pay it off instead of $40,392 for the first two loans. In reality you just paid $5,688 more than you would have before. Now you know the truth about debt consolidation that they are in it for the money not to help you out of debt. The Only True   Way To Get Out Of Debt The answer isn’t in the low interest rates. The answer is a complete makeover of your finances and your spending habits. You need to write down how you are going to spend your money and commit to it. The next step is to get a second job and pay off your debts and live on money much less than what you bring home. It’s not hard to do but it can create a lot of tension and be an emotional rollercoaster. Your best option is to consult a financial advisor that can walk you through the process.

The other day I was thinking about how to make some extra money on the side. As much as I love frugality, making more money is a great thing too. One idea that may seem completely obvious to you, but slipped by me, was to formally help people manage their money. I've been writing here for 7 years about my own money and occasionally answering reader questions (hint: mail me your questions). If I can parlay this knowledge to looking at a person's finances directly and helping them out, why not? It would be a win for them and perhaps I could make a couple of hundred dollars in the process. In a strange way, this would almost piggyback on my computer science degree as I love to optimize systems. (In this case, the system would just be the other person's finances.) So the first thing that I did was research what I'd need to be a Certified Financial Planner (CFP). It looks like there are three main parts: Take the Classes Pass the Exam Meet the Experience Requirement Taking the classes wouldn't be a big deal to me provided I can take them online. Honestly, I didn't get too far into this one due the third item on the list. It did look like most of the things that you'd expect like classes in retirement planning, investment planning, estate planning, etc. Investopedia says that the average student will spend 1,000 hours on the coursework. That's about a half year presuming that you do it full-time, 40 hours a week. In addition to the coursework, you must have a Bachelor's Degree or better. So you are pretty close to a 5 year Master's level program, perhaps a little less. After that you have pass the exam. That makes sense, I've got no problems with that. Then you get to the back breaker, the experience requirement. After you have done all that work, you then have to report your experience to the CFP board. There are two main ways to get experience, the 3-year (6,000 hour) plan and the 2-year (4,000 hour) plan. The 2 year way requires an apprenticeship under a licensed CFP. The 3-year plan allows you to do your work without a licensed CFP watching over you. One thing that hurts from my perspective is that I have to do all the prior work before knowing if my extensive work as a personal finance blogger counts as any experience. I'm not trying to be negative, but I imagine that they laugh at it, despite my following. It's clearly not individual planning experience like they are looking for, but it's not like I am the Average Joe who is looking to be a CFP. The experience requirement also has to be completed within 5 years of taking the test, so if you wanted to take some time in between to pursue other endeavors, you risk having to start all over again (or at least having to pass the test again). So adding it all up, it's a 3.5 year full-time commitment (I'm going to be conservative and assume that I can't find a CFP to be an apprentice under). If I wanted to put that much time into something, I'd go with business or law school. There's even a pharmacy school option for those who excel at that kind of thing. The median CFP salary of around $67K simply doesn't warrant spending nearly 8 years of education. I guess there's a difference in that you can still make money while you are getting experience. I'm not sure how much money you can make while you are getting your experience. Given the requirements, I can't understand why anyone would pursue the career. Maybe he/she had a Bachelor's Degree that isn't in demand? Even so, why not going into some of the above professions if you are looking to maximize your income potential. At this point, I probably don't need to put this in writing, but this clearly not the kind of thing that I can do part-time to earn some extra money. As a software engineer with around 10 years of experience (admittedly I'm rusty since I've been focusing on personal finance), it would be kind of foolish to put this effort into something that would pay me less than I made 2 years out of co

Join our Tweetchat this Thursday at 12:00 pm Pacific for lively conversation and a chance to win prizes! Use #WBChat to participate. This week's topic: Dinner ideas on a budget! Learn about meal planning, making enough to have leftovers, and finding frugal meal ideas! Tell us about your favorite cheap meal to cook and let us know your #1 way to save money on dinners! For an easy way to keep track of the conversation, try using our special Tweetchat Chatroom. Anyone can participate, but you must be following @WiseBread and RSVP below to win our prize! To make it easier for us to keep track of attendees and pick our winners, please RSVP below with your twitter ID (put that in the "Link Title" field), email address, and your twitter URL (put that in the "URL" field, do not put your blog's url in there). Winners will be selected at random from RSVPs. If a winner is chosen who RSVPed but did not attend a 2nd winner will be chosen. New Parenting Chat Immediately Before #WBChat Our sister blog Parenting Squad (@ParentingSquad) will be hosting a parenting chat every Thursday at 11:00 am Pacific. Drop by for fun parenting conversations and a chance to win prizes! Use #PSChat to participate.ShareThisWritten by Ashley Jacobs and published on Wise Bread. Read more articles from Wise Bread.Join Our Tweetchat on Thu 6/13, 12pm Pacific for a Chance to Win Prizes Join Our Tweetchat on Thu 11/3, 12pm Pacific for a Chance to Win Prizes Join Our Tweetchat on Thu 6/30, 12pm Pacific for Chance to Win Prizes Join Our Tweetchat on Thu 9/6, 12pm Pacific for a Chance to Win Prizes Join Our Tweetchat on Thu 3/8, 12pm Pacific for a Chance to Win Prizes

It takes $1.23 to buy today what $1 bought in 2003, according to the federal government.If you think that's bad, then you probably don't want to hear which prices rose even more than that.Yahoo compiled a list of items with the worst price hikes in the past decade. Here are some of them, along with the main reason for the jump:Read 3 remaining paragraphs on MoneyTalksNews.com.

Flickr | http://bit.ly/17mFboY Mortgage rates have seen a relatively sharp rise this month. The average 30-year fixed-rate loan hit 4 percent earlier in June. Higher rates tend to dampen the fervor of investors, who have been snapping up homes during the housing recovery. This is a big jump from the record lows of recent years. Some investors are now concerned that the housing recovery could be stifled if rates continue to rise quickly. The Federal Reserve has two objectives: they are looking to maximize employment and stabilize inflation. The current state of the economy presents both of these goals as challenging to say the least. The central bank has tried to protect the treading recovery by keeping interest rates low. One of the ways it does this is by purchasing massive amounts of Treasury bonds and mortgage-backed securities. The Feds bond-buying program schedules a purchase of $85 billion in bonds every month. The Fed also reminded investors that it will continue taking such steps until the jobless rate declines to 6.5 percent. But investors aren’t heeding the Fed’s assurances that, when the time comes, it will wind down its stimulus very slowly. Mortgage interest rates will rise. We can’t be sure exactly when rates will begin to climb or by how much, but we know what’s coming. Since 2009, other than for a three-month period, average monthly 30-year fixed mortgage interest rates have been at or below 5 percent (Yahoo Finance). Historically, that’s completely unprecedented. Why hasn’t housing affordability been dented by rising prices? Mortgage rates are so low that any increases are being offset by falling interest rates. This allows homeowners to qualify for more debt while keeping their current monthly payments. The current fear being raised by economists is stemmed from household incomes becoming more stabilized. Borrowers are able to withstand home prices for now but only because rates have been at all-time lows. Incomes need to be in line with home values for a strong recovery. Lower rates have helped spur some growth in the housing markets but there is a serious call for incomes to grow. Interest rates on mortgages will be watched closely in the coming months as there is chatter from the Federal Reserve in tapering off their bond-buying program. For more information on the latest interest rates, visit our mortgage rates page. Home Ownership Isn’t Right For You If… Related Stories: Bank of America Accused of Cheating Homeowners: 5 Things to Know for the Week Getting a Mortgage in 2013: Some Prep Work Required The Best 5 Ways to Save for a Home Rising Interest Rates Control the Housing Market

Google says you can pull an Internet signal from 12 miles in the sky, anywhere in the world.Baloney? No, balloony.The company is testing the idea of putting a network of helium balloons in the sky to provide Internet service to far-flung regions that largely lack it, including parts of Africa and Southeast Asia, The Associated Press says.Read 6 remaining paragraphs on MoneyTalksNews.com.

Lottery sales have been booming around the country, and states are looking for ways to rake in even more cash.How? By making tickets available in even more places, Time says.Tickets will be sold at select Missouri ATMs and gas pumps this fall. Customers will be asked if they want to add a ticket to their transactions. (Who ever expected upsell from an ATM?)Read 6 remaining paragraphs on MoneyTalksNews.com.

The average wedding in the US cost nearly $28,000 in 2012, according a survey conducted by The Knot. I’ll give you a minute to pick yourself up off of the floor after reading that figure. Just to give you some perspective, $28,000 is about the same as a year of college at some schools or the cost of a pretty nice brand new car. While you could spend that much on a wedding, you can just as easily not. There are plenty of ways to cut costs on your wedding day, without having the event seem poorly planned or unexciting. Many of these ways to save on wedding day planning make use of modern day technology, such as smartphone apps and the internet, to help you cut costs. Skip the Paper Invitations Beautiful wedding invitations printed on paper can be costly. You need to pay to have them printed, then pay for postage for the invitations and the reply cards. In today’s world, they can also be a bit of a inconvenience. When my cousin got married two years ago, she had to send out her invitations twice because the post office lost them the first time. She ended up spending twice as much and the invited guests ended receiving two invitations in the end. Instead of going the paper and mail route, one of the best ways to save on wedding invitations is to send them electronically. Websites such as Evites let you send free invitations. If you have money in the budget for invitations, a website such as Glo offers monthly or yearly packages for your invitations. Let Your Bridesmaids Rent Their Dresses Nearly every woman has some ugly bridesmaid dress languishing in her closet. If the guys get to rent their tuxes, why do the women have to pay full price for a dress they will wear once? Luckily, bridesmaid dress rental services are becoming an option. Little Borrowed Dress is a company that specializes in bridesmaid dress rentals. You pick the dresses you want your bridesmaids to wear a few months in advance. The bridesmaids receive the dress in the mail two weeks before your wedding. The company will send two sizes for the price of one rental, just in case one dress doesn’t fit. After your wedding, the bridesmaids send the dresses back to the company. Rent Your Rehearsal Dinner Dress You not only want to look great for your wedding day, you also want to look great for the rehearsal dinner. As with the bridesmaid’s dresses, you can rent a dress for yourself for the dinner. Rent the Runway is a company that allows you to rent beautiful designer dresses and accessories. You pay around 75 percent less than the cost of purchasing the dress to borrow it for either four days or eight days. A rental service is a great way to try out fun looks or try a new designer without paying the high price. Who Needs a Wedding Planner? Hiring a wedding planner will drive the price of your wedding way up. A tech-savvy, modern way to DIY to save money is to download an app that helps you keep track of all the details of your wedding, from the vendors to the guest list. Wedding Happy is an app for iPhone or iPad that lets you create tasks and plan your wedding without hiring another person. Even better, the app is free. DJIY Long gone are the days when hiring a DJ meant having someone bring in a few turntables and fancy sound equipment. Many DJs work off of iPods or other MP3 players these days, which you most likely own yourself. Instead of paying a DJ by the hour, spend $1.99 to download My Wedding DJ , an app that runs on iPod Touch or iPhone. With the app, you can program playlists for your entire wedding. Be Your Own Florist Flowers can add to the cost of your wedding considerably, especially if you choose fancy flowers from a high end florist. For example, Calla lilies and peonies tend to cost twice or three times as much as roses or daisies. One of the easiest ways to cut costs on your wedding day is to purchase cheaper flowers and arrange them yourself. If you aren’t comfortable in your floral arranging skills, you can get an app

When someone thinks (or writes) about personal finance, there’s a big temptation to focus on the big stuff instead of the small stuff. When you write about big things like buying a car, you can immediately point to how one action can save you thousands. When you write about buying a house, you can point right to tens of thousands of dollars in savings because of a better decision. Here’s the catch: how often do you buy a house? How often do you buy a car? Those big opportunities don’t come along that regularly. I have been the primary driver on three cars in my entire life. My wife has the same count. We have purchased one home in our entire life. Without a doubt, knowing how to maximize the value of those purchases was very useful. Making a smart decision in each case saved us thousands, without question. On the other hand, we go to the grocery store once a week or so. If I can figure out how to save $10 on each grocery store visit, that’s $520 a year. That’s $3,120 every six years. In other words, shaving $10 off of a typical visit to the grocery store matters more than saving $3,000 off of a single car purchase that I make every six years. When it comes to your finances, the small stuff matters more for two reasons. First, there are more opportunities in your life to practice the small stuff. We spend money dozens of times a month – at the grocery store, online, on our bills, and on little incidental things. Each of those is an opportunity to spend less and seek out a greater “bang for the buck.” If you look around your life, you almost can’t help but find ways to spend a little less money. You have to be willfully avoiding any thought about all of the times in which you’re spending money in order to not see it. Every time you spend is an opportunity. Second, those opportunities tend to repeat quite often. As I said above, I buy a car once every several years, but I go to the grocery store once a week. I’ll buy two or maybe three primary residences in my life, but I pay my energy bill every single month. You can break those many opportunities down into sets of activities that you repeat. You pay an energy bill every single month. You visit the grocery store every week. You commute every single weekday. You eat a meal three times every single day. You flip a light switch in your home dozens of times a day. If you can figure out how to take each of those activities that you repeat so often and find a way to effectively trim just a little bit from each one, you’re going to end up saving a ton of money thanks to the repetition. Let’s say, for example, that you flip a light switch 25 times a day and you figure out some way through lightbulb replacement to essentially save a cent during each of those normal light switch flips. That’s a quarter a day. Let’s say, also for example, that you know how to save $500 on a car purchase every seven years. Both are good knowledge to have, but that tiny bit that saves you just a cent every time you flip a light switch? It’ll save you more. $638.75, to be exact. The small stuff adds up because of the repetition. Figure out a better way with the small stuff and that savings just keeps piling up and piling up thanks to your everyday routine. The post Why the Small Stuff Matters appeared first on The Simple Dollar.