PRO TIPS: Answers From Real Personal Finance Experts

real-personal-finance

Let’s say you have a question about your personal finances. Maybe it’s about how to find a copy of your credit report—is that something you have pay for? Or maybe you want to learn more about building a great monthly budget, like how much room should you leave for unexpected expenses?

With your question firmly in mind, you sit down at your computer, open up Google and type it in. Google responds by delivering you page after page of tips, tricks and … cute panda videos? How do you know that these random web pages delivered to your digital doorstep contain the best advice? Are you really going to put your future into the hands of an algorithm?

Well, we’ve reached out to real life financial professionals from all across the country and asked them what kinds of questions they most commonly received, and what answers they give to them!

Think of it as your “personal finance crib sheet.” Enjoy!

  1. Mark Kantrowitz, Publisher and VP of Strategy, Cappex.com, @cappex
  2. The most common questions I hear about how to pay for college, especially questions about student loan debt. For example, how much student loan debt is reasonable and affordable?

    I find that people want short answers, and are more likely to follow the advice if it is encoded as simple rules of thumb. In this case, I usually say that the student loan debt should be kept in sync with income. Total student loan debt at graduation should be less than the annual starting salary, and, ideally, a lot less. If total debt is less than annual income, the borrower should be able to repay their student loans in ten years or less.

  3. Angel Radcliffe, MBA – CEO, CAS Consultants, @Cas_Dallas
  4. Some of the common questions I receive are:

    Why do I have three credit reports & scores? Equifax, Transunion & Experian are the largest credit reporting agencies in the US. Years ago, the bureau's only reported by region, they now all report country-wide. A creditor is only required to report to 1 credit bureau, although some creditors may report to all 3, hence why data on your report may vary. (Example: Credit Card A with a 2 year payment history is reporting to Equifax & Experian. You apply for a new card 'Credit Card B' which checks your Transunion report. Transunion is showing no payment history for any account (assuming credit card A is your only credit account) Credit Card B denies you)

    How do you budget? When budgeting you want to look at your NET income. Many make the mistake of budgeting from their gross, NET is what you actually bring home AFTER taxes. I teach my clients the 50/30/20 rule, no more than 50% of net income should be spent on needs, no more than 30% on wants, and save at minimum 20% of net income.

    What should I look for when applying for credit? When applying for credit, always look for the lowest interest rate. If you are applying for a credit card, look to see if you will be charged any type of annual/program fee, what the interest rate is and if the card has any perks such as cash back or mileage offers. If you are applying for a loan or line of credit, shop around for the best interest rate, be cognizant of the loan terms/length.

    How much of a balance should I carry? If you ever have to carry a balance, be sure it's below 30%. 30% is a magic number when it comes to your available credit ratio. Staying below this number will help keep your credit score up, if you should ever carry a balance greater than 30% , you will see your credit scores slump at the drop of a dime. Creditors see you as a risk when you carry high balances and you may be denied credit or your credit limits may be reduced if you carry a high balance for long periods of time.

  5. Kelvin Jiang, CFA – Buysidefocus.com, @buysidefocus
  6. How to balance one’s long-term debt to asset ratio is the most common question I get.

    Just like corporations that take on loans to fund their growth, people can take out 1-3 years loans to fund personal projects such as home improvement, large purchases, and starting a personal business. Especially given the low-interest rate environment we are in, personal loans has never been as affordable. The question is, what is the right amount of loans for you?

    My advice is, create a personal budget to assess what amount of principal and interest payment you can afford each month. Use the interest you could afford and work backward to calculate the total amount of loans you can take out. If your project produces income in the future, the cost of the loan would be more than covered by your future cash flows.

  7. Katie Ross, Education and Development Manager, American Consumer Credit Counseling, @TalkCentsBlog
  8. Many of the questions we frequently get from clients are related to common financial myths or where to access certain information. When it comes to credit and personal finance, there is a lot of misinformation floating around. Here are the three most common questions we get:

    1) Can I close a credit card account if there is still a balance on the card? Yes, you can! It is a commonly held belief that an account with an outstanding balance cannot be closed until the balance is paid. The money does have to be paid back, of course, but borrowers can close their accounts at any time. While closing an account is not always beneficial to a credit score, it is often necessary to discourage unwise spending habits and preventing deeper debt problems.

    2) How can I access my credit report/score? Many consumers want to know what creditors see when they assess creditworthiness. Any consumer can receive one free copy of their credit report each year from each of the three major credit reporting agencies (Transunion, Equifax, and Experian). To access their free credit reports, consumers should go to www.AnnualCreditReport.com. Each credit report is requested separately, so it is recommended to spread out the three free requests throughout the year in order to monitor for identity theft or fraud. Credit scores are a little trickier. Many banks and credit card companies are beginning to include credit scores on monthly statements. If this service is not offered by a consumer’s account holders, they can buy their score directly from www.MyFICO.com. It is possible to get access a credit score for free, but many sites will only package the “free” score with a credit monitoring subscription service, so consumers should read all conditions before accessing their score.

    What’s the difference between debt consolidation and debt settlement? If a consumer is looking for help with their debt, there are a lot of “debt relief” services available that offer different methods of solving debt problems. Debt Settlement or Debt Resolution services are generally considered riskier because they require consumers to allow their debt to go into default so that creditors will accept a lump sum payment to settle the debt. This has severe credit implications as well as tax liabilities. Debt Consolidation or Debt Management on the other hand usually allows those with debt to safely pay down their debt gradually by reducing interest rates and structuring a repayment plan that is designed to fit the consumer’s budget.

    To learn more about the ins and outs of personal finance, you can follow these experts on Twitter. And check back next week when we’ll have even more expert advice on the OppLoans Blog.

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The OppLoans Guide to Consolidating Student Loan Debt

Student Loan Debt Consolidation

Congrats! You worked hard for years and now you’ve finally got that diploma in hand. But, as you certainly know, that Associates, Bachelors, or Master’s Degree wasn’t free. And if you’re one of the 71% of American students graduating from a four-year college, chances are you took out a loan (or rather multiple loans) to finance that education.[1]

If you have more than one student loan and you’re struggling to stay on top of all the various interest rates, terms, and due dates, there are options available to you.

One of the most common tools in the struggle against student loan debt is a “debt consolidation loan.” If you need to simplify your student loans, this could be the solution for you. But what is it and how do you start? This OppLoans “How-To” guide for consolidating your student loan debt is here to help.

Facts about Student Loan Debt

  • 40 million Americans owe money on their student loans.
  • $35,051 is the average individual amount of student loan debt.
  • $1.2 trillion is the total outstanding US student loan debt.
  • One out of four borrowers are delinquent or defaulting on their student loan(s).[1]

So What is a Debt Consolidation Loan?

A debt consolidation loan is a large loan that effectively combines multiple loans together into one single loan. This simplifies the repayment process because the borrower then has only one loan to pay off rather than many. And people with better credit might can sometimes secure a debt consolidation loan with a lower interest rate than they were previously paying.

Taking out a debt consolidation loan can mean a much simpler, easier process for the borrower. However, it may also mean extending the life of the loan. And while that might mean lower monthly payments, it will probably mean you’re paying more on the loan overall.[2]

To learn more about the math behind debt consolidation, check our blog post, Debt Consolidation: The Movie!

What kinds of student loans can be consolidated?

It’s important to note that federal and private loans cannot be consolidated together.

Federal Loans

Most federal student loans can be consolidated. This includes:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans
  • Federal Perkins Loans[2]

Private Loans

Requirements for consolidating private loans will vary from lender to lender. When engaging a lender or creditor to consolidate your private loans, you will want to make sure you understand all of the details, terms and conditions. Questions you will want to ask include:

  • Are there extra fees?
  • Are there pre-payment penalties?
  • Is the interest rate fixed or variable?[3]

Who should consider a Debt Consolidation Loan?

You may consider a debt consolidation loan if …

You have multiple loans. Debt consolidation loans only make sense if you have multiple student loans that you need to juggle.

You can’t afford your payments. If your monthly payments are too much for you, a consolidation loan can significantly lower your monthly bills (although, as a result, you can expect to be in debt longer).[4]

How can I get started consolidating my Federal Loans?

To consolidate your federal student loans, you’ll need to apply for a “Direct Consolidation Loan”. This can be done at StudentLoans.gov. There you’ll complete what’s known as the “Federal Direct Consolidate Loan Application and Promissory Note.”

There is no application fee and no pre-payment penalty.

If you have questions, contact the Loan Consolidation Information Call Center at 1-800-557-7392.2

How can I get started consolidating my Private Loans?

Since private loans cannot be consolidated with federal student loans, you’ll need to consolidate these separately with a debt consolidation loan from a private lender. Borrowing money is always a very serious decision. Consult the OppLoans Guide to Safe Personal Loans for tips on how to evaluate lenders and make the right decision for you!

Will the student loan pain be over?

Yes! With determination, focus and commitment, you can conquer your student loan challenges. For help with Federal Loan issues, consult the US Department of Education Federal Student Aid website or contact the Federal Student Aid Information Center at 1-800-4FED-AID. For assistance with private loans, reach out to your lender directly. If you have complaints, contact the Consumer Federal Protection Bureau Student Loan Ombudsman or submit an online complaint form at http://www.consumerfinance.gov/complaint/.

Don’t worry, you can manage your student loans. You may just have to give it the old college try.

References:

  1. “A Look at the Shocking Student Loan Debt Statistics for 2016” StudentLoanHero.com. Retrieved October 5, 2016 from https://studentloanhero.com/student-loan-debt-statistics/

  2. “Loan Consolidation” StudentAid.ed.gov. Retrieved October 5, 2016 from https://studentaid.ed.gov/sa/repay-loans/consolidation

  3. “Consolidation Your Private Student Loans” AllTuition.com. Retrieved October 5, 2016 from https://www.alltuition.com/library/student-loan-repayment/lower-monthly-payments/private-student-loan-consolidation/

  4. Frank, Michael. “Student Loan Consolidation vs. Refinancing – Which Is Your Best Option.” Credible.com. Retrieved October 5, 2016 from https://www.credible.com/blog/student-loan-consolidation-vs-refinancing-which-is-your-best-option/

Longer Terms or Lower Payments: Which Debt Consolidation Strategy is Right for You?

Longer Terms or Lower Payments (2)

Life is about choices. Do you want chocolate or vanilla, hardwood or carpet, Star Trek or Star Wars? Many times, there isn’t a “right” choice—it’s just about what you prefer. If you like the taste of chocolate better than vanilla, then chocolate is right for you. If you hate cold feet in the winter, then you should choose carpet. (This does not apply to Star Trek vs Star Wars. The correct answer is always Star Wars. Come at us, Twitter!)

The same is true when you’re choosing a loan to consolidate your debt. Any debt consolidation loan you choose will reduce the number of payments you need to make each month, but there are a lot of other factors that can impact your decision as well. And the most important choice you’ll have is between short-term relief and long-term savings. Do you want lower monthly payments, or to save money on your loan overall?

There is no “right” answer. However, there are downsides to each option that you may want to consider.

Can I Score Lower Monthly Payments and Save Money Overall?

No. Probably not. Here’s why:

The vast majority of debt consolidation loans are amortizing installment loans, which means that they come with set repayment terms. If you take out a five-year consolidation loan, you’ll be paying it off in monthly installments for the next five years. And if you take out a three-year loan, you’ll be paying it off for three (read more in What You Need to Know about Consolidation Loans).

Now, if you get the five-year loan, the amount you owe is going to be broken up into 60 monthly payments. If you get the three-year loan, that same amount of money is going to be broken up into 36 monthly payments. So by taking the five-year loan, each individual payment will be a smaller portion of the principal loan amount. The longer the payment term, the less you will pay each month. Make sense?

However, assuming that the three-year and the five-year loan both have the same annual percentage rates (APRs), the five-year loan will also be accruing interest for an additional two years. While your monthly payments will be smaller with the five-year loan, you will end up paying more overall.

The chances of finding a loan with a longer repayment term and a substantially lower interest rate are pretty much slim to nil. If you are taking out a debt consolidation loan, you are going to have to choose between lower monthly payments and paying less money overall.

So Which Strategy is Better?

It depends!

If you are someone who is struggling to afford all your monthly payments, getting a loan with lower monthly payments could give you some much-needed breathing room. You could use that extra money each month to build up your emergency savings or pay for additional necessities. Plus, you can always start paying more than your monthly minimum if your financial situation improves down the line. Either way, the benefits of temporary relief will still outweigh the long-term costs.

On the other hand, if you’re someone with a bit more breathing room in your monthly budget, getting a debt consolidation loan with shorter terms can help you save money in the long run. When you sit down and look at your long-term financial goals, spending less money on your debt will be key. Saving up for a home mortgage or for a new car means tightening your belt and finding savings wherever you can.

And you know what’s pretty great? Getting out of debt ASAP! The sooner you are debt free, the sooner you can start putting your money towards what really counts: Your future.

The Choice is Yours

As you can see, there are benefits and drawbacks to each debt consolidation strategy. But as long as you’re picking the one that’s right for you, you’re making the right choice.

If you have bad credit and need a fast, reliable loan, check out a personal loan from OppLoans. Our loans come with longer terms, lower rates, and more affordable terms than predatory payday and title loans. You can apply now from your computer, phone, or tablet. If you’re approved, we can have the money in your account as early as the next business day. To learn more, or to apply for a loan today, check out our homepage: www.OppLoans.com.

Debt Consolidation: The Movie!

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Check out the action-packed math behind debt consolidation!

There’s always that moment in action movies: the moment when the heroes realize that they have to work together to defeat the supervillain/terrorist/evil genius/British guy. This happens so much that it’s become a cliché.

But here’s the thing about clichés: they’re usually based in truth. People do have to work together to tackle big problems. It’s no different when it comes to tackling debt—combining your smaller debts together into one large debt can actually help you handle the load.

This is called debt consolidation. Taking out a single loan to pay off all your smaller debts can not only mean fewer monthly payments, it can mean you’re actually paying less per month.

Now, this is only true if you manage to secure a lower interest rate and/or a longer repayment term on your debt consolidation loan. Plus, unlike in the movies, getting your debts to team up comes with certain risks: A longer repayment term probably means you’ll end up paying more money over time.

So is debt consolidation worth the risk? To find out how debt consolidation really works, we have to look at the math.

Check out Table 1, depicting a typical debt load. There are four total debts—two credit cards and two loans—that total $24,000 in money owed. Each debt has its own monthly minimum payment, its own Annual Percentage Rate (APR), and its own repayment term.

Table 1: Typical Debt Load

ProductPrincipalAPRMonthly Min.TermTotal Interest
Credit Card #1$5,00025%$16648 months$2,958
Credit Card #2$7,00023%$19760 months$4,840
Personal Loan #1$4,00020%$14936 months$1,352
Personal Loan #2$8,00019%$23948 months$3,481
Total Principal Owed:$24,000
Total Monthly Payments:$751
Total Interest Paid:$12,631

 

If you made only the minimum monthly payments, it would take you a total of 60 months (5 years) to pay off these debts. Every month, you would be paying a total of $751, and over those 5 years you would paying a total of $12,631 in interest. No matter what loan you take out, you’ll always have to pay back the principal, while how much you’ll pay in interest will vary. The less you pay in interest, the less expensive the loan is overall.

Table 2 represents a debt consolidation loan.

 

Table 2: Consolidated Debt Load

ProductPrincipalAPRMonthly Min.TermTotal Interest
Consolidation Loan$24,00016%$47784 months$16,042

 

The total amount owed on the principal is the same: $24,000. But a lot of the other numbers are quite different. With this consolidation loan, you would only owe $477 per month—$274 less than you would owe on all those other debts. If you feel like you’re drowning in debt, that $274 could make a huge difference.

The lower monthly payment is because of the lower APR and longer repayment terms. With the lower APR, you’re getting charged a smaller percentage of the principal loan amount. With the longer repayment term, you’re paying a smaller percentage of the amount owed every month. You’re paying off the same amount overall, you’re just breaking it down into smaller chunks.

However, the downside associated with longer terms is that you will pay more overtime. Take another look at Table 2. You would pay $16,042 in interest on the debt consolidation loan, as opposed to only $12,631 in interest on all the smaller debts. That’s a difference of $3,411.00. Why is that?

Think about it like this: your loan is accruing interest every year, that’s what the APR measures. So if you repay your loan over seven years instead of five, your loan is accruing interest for an additional two years. This is why you end up spending more even though your monthly payments are less. Even if it’s a lower rate, the interest has much more time to add up.

Real life is not like the movies, there are no silver bullets, no magical spells, no neat and tidy “they lived happily ever after” kinds of endings. Every solution has its benefits, just like every solution has its costs. Is paying less per month and relieving that short-term burden worth paying more over the long run? If so, then debt consolidation might be the solution for you. You can learn more about consolidating debt in the article Debt Consolidation Loans – An OppLoans Q&A with Ann Logue, MBA, CFA.

And if you’re struggling with high-cost payday loans, a personal installment loan from OppLoans could be your consolidation solution. With longer terms (6 to 36 months), lower rates (70-125% less than other loans), and regularly-scheduled payments, you could use a personal installment loan from OppLoans to safely consolidate your payday debt. Our loans allow you to pay your debt off over time without busting your budget. To learn more, or to apply for a loan today, just check out our homepage, OppLoans.com.

 

Get in Shape: Consolidate! (3 of 3)

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Part III: Don’t Stop Believing

Hold onto that debt-free feeling…

The longer someone waits to start making healthy choices, the worse the damage to their body is. And it’s true with finances as well: The longer you delay taking action on your debt, the more you’ll hurt your long-term financial future.

In Part I of this series, we laid out making a budget. In Part II, we discussed reducing your expenses and increasing your income. Now we’re going to talk about the hardest part: not giving up.

Pace Yourself

Sticking to a plan to pay down your debt quickly is going to be much harder than actually making the plan. In this way, it’s really no different than going the gym or sticking to a diet. There’s going to be a lot of stuff that you want to buy that you won’t be able to. Little pleasures, like that extra cup of Starbucks, that movie ticket, or that Friday night dinner out at your favorite restaurant are going to be set aside in the name of getting out of debt.

But just like diet “cheat” days, there are ways to enjoy some of those little pleasures on the cheap, too! Lots of movie theaters have a discount night, often on a Monday or a Tuesday. If you just wait a few days to see the hot new Marvel movie, you can save yourself a lot of green. (And it goes without saying that you should skip the concessions; $7.00 for a small soda is not a wise investment.) You can also look for specials at your favorite restaurant, and limit that extra cup of Starbucks to one a week.

Some people are able to live on basically nothing, just like some people are able to basically live at the gym. Odds are, you’re probably not one of these people—and you shouldn’t try to force yourself to be. Know your limits and pace yourself; that way, you’re much more likely to succeed.

Keep Your Eyes on the Prize

Being in debt stinks, there’s no two ways about it. Constantly fretting about whether or not you’re going to be able to afford your bills will take a heavy toll on your nerves. And a lot of the ways that people deal with stress are not healthy: they eat junk food or they smoke or they drink too much. That leaves you feeling worse and it ends up eating into money that could be put to better use.

Getting out of debt is going to open up a world of new possibilities. It will improve your credit score, which will leave you with better lending options in the future. It will relieve the burden of constant worrying, which will make it easier to make healthy lifestyle choices. It will also do wonders for your self-esteem, which can make you productive at work, more agreeable in your personal relationships, and just generally make you happier.

In short: getting out of debt is worth the effort. So when you get a second, write yourself a letter that details exactly what living with burdensome debt is like, and all the ways it’s driving you crazy. Keep this letter by your bedside table—or even carry it with you—and read it once in a while to remind yourself what you’re getting away from.

It’s all too easy to get discouraged and go back to your old habits. (Anybody who’s tried to lose weight and knows this.) More importantly, it’s way too easy to forget just how bad things used to be. Take steps to remind yourself. It’ll help you stay the course.

Leave Room for Savings

Lastly, while getting out of debt is super important, so is building up your savings. Lacking a rainy-day fund is what leads many people to taking out burdensome loans in the first place. Unforeseen expenses arise—like car repairs or a medical bill—and they don’t have the funds to pay for it. And people with poor credit scores in particular end up taking out predatory payday or title loans in order to afford those costs. This doesn’t just trap them in debt, it can lead to a cycle of debt, which is even worse.

At some point while you’re paying down your debt, you’re probably going to have a surprise expense. Life is funny that way. (Not ha-ha funny, just brutally unfair funny…which is to say, not funny at all.) And that expense could easily knock you off your game. It could undo all this great progress you’ve been making. Not only will it put you further into debt, but it could make you give up on paying down the debt you already have. It’ll cost you money now, and it’ll cost you money later.

So make sure to make room in your budget for saving! Having a savings, even if it’s just a couple hundred dollars in an envelope, is way better than having nothing at all. Our advice is to shoot for an even $1,000 and go from there. This is one way where getting your finances in shape can actually be easier than getting your body in shape. Trust us, if people could build up a $1,000 calorie savings for when that McDonald’s craving hits, they would do it in a heartbeat. You won’t regret it.

Consolidate!

Now this is where things get really interesting: You’ve taught yourself some safe financial practices and changed the way you spend (and save). Good for you! So how can you really take yourself from in-shape to a financial Olympian? Or how about just debt-free?

The answer may be to take out a “Debt Consolidation Loan”.

Think of it like “Cross Fit” for your finances, helping you shed those excess debts and tighten your credit score. Plus, debt consolidation doesn’t mean buying a DVD where a large sweaty man yells at you for an hour.

With debt consolidation, you take out one large loan—preferably at a much lower interest rate—to pay off all your smaller loans, credit cards and other debts. Not only does this lower the number of payments you have to keep track of, but scoring a lower interest rate could save you even more money over time. Consolidating your debt can be a big step towards getting your debt in shape. By taking out one big loan to pay off all your smaller loans, cards, and other debts, you can reduce not only how many payments you make each month but how much you’re actually paying. Plus, getting a loan with a lower annual percentage rate (APR) can potentially save you thousands. You can learn more about debt consolidation in our Financial Smarts Glossary.

But just like exercising more isn’t the only part of getting in shape, debt consolidation isn’t the only step you should take in order to achieve financial stability. Once you’ve consolidated your debt into one place, what you should be doing is trying to pay down that debt as fast as possible. The longer someone waits to start making healthy choices, the worse the damage to their body is. And it’s true with finances as well: The longer you wait to take further action on your debt, the more damage you’ll do to your long-term financial future.

To get started on a lower-interest personal debt consolidation loan today, click “Apply Online” below. It’s easy. You won’t even break a sweat!

Get in Shape: Consolidate! (2 of 3)

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Part II: Spend Less, Earn More

Budgeting is a great way to get your finances in shape. But what comes next?

In Part I of this series, we talked about making a budget. Now, we’re going to talk about minimizing your expenses and maximizing your income.

Cut Your Spending

Once you’ve made a budget, you’re going to have a much clearer picture of how you’re spending your money. You’re basically seeing your finances completely naked. And there’s a chance that you’re not going to like what you see.

But that’s good! If you feel a deep-seeded sense of shame when you look at how much you spend on coffee, candy, and fast food each month, it means that these are easy places to cut. Oftentimes, the things we can afford to cut back on aren’t all that beneficial to our health. Skipping that afternoon coffee break is good for you, and the same goes for that pre-commute candy bar.

One thing that is good for your health that you might still want to cut is your gym membership. This might sound a little crazy, but hear us out: If you don’t use your gym membership enough to justify the cost, get rid of it! There are plenty of inexpensive and downright free at-home workouts that you can do instead. The same goes for a lot of cable packages and streaming subscriptions. When you get right down to it, there are many people who don’t use these things enough to justify the cost.

Look for all the places in your budget where you’re spending more than you should and cut that spending back. That’s money that you could be putting to better use. For instance, you could be using it to pay down your debt! When people lose weight, they are shedding excess fat. Part of getting your finances in shape is also shedding excess spending.

Increase Your Income

If you’re serious about paying down your debt quickly, then increasing your income is something you’ll want to do. Think of this like putting on extra muscle as a part of working out. And just like people can go overboard with putting on muscle, they can go overboard with this too. You don’t need to work a full-time night shift along with your regular 9-5 job. Don’t get us wrong: we want you to sleep. At OppLoans, we are 100% pro-sleep, and we don’t care who knows it!

But a part-time gig, something that you do on the weekends or maybe a few evenings a week is going to bring in additional funds. And that’s money you can use to pay down your debt even faster.

You could drive for Uber or other ride-sharing services. You could pick up a shift working the counter at a local business. You could even offer to do yard work for your neighbors. There are any number of ways to make some money on the side. Working as event staff for a local venue or arena is another great gig that usually has a favorable schedule.

Just watch out for jobs on Craigslist that sound too good to be true. For example, there are some ads that advertise “reshipping” jobs, where you receive packages at home then you repackage the goods and send them off to a new address. The funny thing about these gigs is that—you’ll think this is hilarious—you might actually be helping criminals fence stolen goods! (We lied. It’s not hilarious.) In short: don’t do anything illegal.

Pay Down Your Debt

All this money that you save combined with the extra money that you’ve earned should be put towards improving your finances. Most likely, this means paying down your debt faster by paying more than the minimum payment. It’s putting in extra reps at the personal finance gym.

If you’ve decided to consolidate your credit card debt by transferring your balances to another card with a 0% APR introductory offer, this is going to be key. This sort of debt consolidation can be risky, because once that introductory offer has expired, you’re going to be paying interest. And because interest on credit cards is usually pretty high, this is not going to help.

However, if you can put as much money as possible towards paying down that balance during the 0% APR period, you can make this work beautifully. During that period, your balance is earning no interest whatsoever, and every dollar you pay is going towards reducing that balance. With careful planning and persistence, you can save a lot of money.

And even if you’ve just taken out a standard consolidation loan, paying it down ahead of schedule will still save you money. It will lower your balance, which will lower what you’re paying in interest. And if you pay it off early, you’ll save money that you would have been charged on interest over those final months. But check to make sure that your loan doesn’t have a prepayment penalty, which charges you more for paying off your loan early. (Can you believe that?! No, we can’t either.)

To learn more about what to do after you’ve consolidated your debt, made a budget, minimized your spending and maximized your income, check out Part III of this series.

References:

[1] “Did You Accept a Job to Reship Merchandise?” US Postal Inspection Service. Accessed May 2, 2016.PostalInspectors.USPIS.gov

[2] Konsko, Lindsay. “Credit Card Debt Consolidation Versus a Credit Card Balance Transfer: What’s the Difference?” Nerdwallet. July 10, 2014. Accessed May 2, 2016 NerdWallet.com

Get in Shape: Consolidate! (1 of 3)

Get in Shape: Consolidate!

Part I: Budgeting

Are your finances looking a little flabby? Do they get winded from something as easy as an unexpected doctor’s bill? Could your credit card balances maybe stand to lose a few pounds? If so, then it’s time to get your finances in shape! Here’s a workout plan to get your finances looking their best today!

Make a Budget

Making a budget is the most important thing that you can do for your personal finances. It’s everything. It’s the Alpha and Omega. Jordan and Pippen. Peanut butter and pickles (don’t knock it till you try it). Before you do anything else, you should make a budget.

Easier said than done, right? Self-discipline is definitely a big part of this. Because once you make a budget (which can be time consuming already), you also have to stick to it and keep track of your expenses. But while it might not be easy, that doesn’t you mean you can’t get help.

There’s an App for That

There are a whole slew of different budgeting apps and programs out there. Some of them even link up to your bank account to make tracking your finances even easier. Two of the best known programs out there are Mint and You Need a Budget.[1] If you’re a newbie to budgeting, getting a program to assist you is highly recommended.

Some of the programs are free, and some are not. Check them out to see which program works best for you.

See a Credit Counselor

If your finances are really in tough shape, you can also make an appointment with a credit counselor. Credit Counseling Agencies are not-for-profit companies that help people manage their personal finances. They can help you build a budget, and can also give you advice about responsible spending and credit use.

Now, not all of them are legit, and just because they’re not-for-profit doesn’t necessarily mean that they offer their services for free. To make sure that the credit counselor you’re seeing isn’t going to take you for a ride,[2] here are some steps you can take: Check out the US Department of Housing and Urban Development’s list of approved credit counseling agencies. Then check to see if the counselor is accredited by either the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA).

Categories, Categories, Categories

When you’re making a budget, you’re going to want to make as many categories as you can. This is because you’ll want as clear a picture as possible of how your money is getting spent.

Break your expenses into daily, weekly, and monthly. That daily three dollar cup of coffee may equal fifteen dollars a week, or sixty bucks a month. Seeing your expenses will help you cut back and ultimately save you more money. The more you drill down into the specifics, the better your understanding of your finances will be.

To read about the next steps you can take to improve your finances, check out parts II and III of this series.

References:

[1] Albright, Dann. “The Online Budget Battle: Mint vs. You Need a Budget (YNAB).” MakeUseOf.com. February 12, 2016. Access May 2, 2016. https://www.makeuseof.com/tag/the-online-budget-battle-mint-vs-you-need-a-budget-ynab/

[2] “Choosing a Credit Counselor.” Federal Trade Commission. Consumer Information. Accessed May 2, 2016. https://www.consumer.ftc.gov/articles/0153-choosing-credit-counselor

Debt Consolidation 101: 3 Mistakes to Avoid (Part 3 of 3)

 

Debt Consolidation 101

 

 

If you’re thinking about consolidating debt, here are some pitfalls you should avoid.

In case you were wondering, there’s no silver bullet that can magically kill your debt all at once. (Okay, maybe winning the lottery, but that’s pretty low on the list of advisable strategies.) Paying down your debt takes time and perseverance. It’s about making your payments month after month after month until the debt monster is finally slain.

Consolidation can be a great tool for getting your debt under control. By taking out one larger loan to pay off your smaller loans and credit cards, you can simplify your payments and even save some money. Depending on the terms of your new loan, lower interest rates and lower monthly payments can help you gain some breathing room.

But debt consolidation is not without its risks. If you’re thinking about consolidating your debt, here are some things to keep in mind:

1) Longer terms can mean increased costs.

In part II of this series, we talked about how getting a consolidation loan with longer terms can lead to lower monthly payments. The math here is simple, the longer you have before the loan has to be repaid, the less you have to pay each month in order to get there.

When you’re trying to get out of debt, you’re trying to save money, not spend more of it. If you’re looking to consolidate debt for the sole purpose of getting a lower monthly payment, be aware of the money you’re saving each month so you can actually save it.

2) Secured Loans: lower rates, higher risks

If you are a homeowner, there is likely going to be a difference between how much your home is worth and how much you still owe on your mortgage. (It helps if housing prices have gone up since you bought.) When a person owes less on their home then it’s worth, they can usually take out a home equity loan or line of credit in the amount of that difference.

These financial tools can help people pay for repairs or renovations to the house or even pay for a child’s college education. They can also be a great way to consolidate debt, because the interest rates are far lower than traditional loans. That’s because these loans are “secured” loans, which means that they are backed by collateral: in this case, the person’s home.

But there’s a downside to this arrangement, and it’s what happens to the collateral if the loan goes into default (meaning the borrower stops making their payments). If the loan goes into default, then the collateral gets seized by the lender. In the case of a home equity loan or line of credit, this means the lender gets to seize your house and put it into foreclosure.

And this will happen even if you are up-to-date on the payments for your mortgage. Failing to pay back a home equity loan (also known as a “second mortgage”) has the same consequences as failing to pay back your original mortgage: they sell your house out from under you.

That’s a big risk to take all for the sake of refinancing your debt, so be very, very careful.

3) Remember: you still owe the same amount of money

Debt consolidation is a way to make your debt more manageable, but taking out a new loan doesn’t leave you with any less debt than you already had. It can make things easier, it can make your monthly payments cheaper, and it can even save you money in the long run. But it doesn’t take care of your debt all by itself.

Debt consolidation is kind of like wine, in that it’s best when paired with other good financial practices. Before taking out a debt consolidation loan, look at making a budget and cutting back your expenses. Maybe even see about taking on second, part-time job to increase your income.

Even if your new loan comes with a lower monthly payment, you can get yourself out of debt faster by paying more every month. Don’t pay more than you can afford, of course, but do take the time to look at how much you could really afford if you spent your money more carefully. You’ll probably be surprised.

There is no silver bullet for paying down your debt, but with a debt consolidation loan, you can at least tame it. Learn about the different types of debt consolidation that could be a good fit.

If you have high-interest, short-term payday loans that have you trapped in a vicious cycle of debt, try consolidating those loans with a safe, affordable personal installment loan from OppLoans. We offer loans from $1,000 to $4,000 with terms between 6 and 36 months and rates that are 70-125% less than other personal loans. Our fixed rates and regular payment schedule mean that you can pay off your predatory payday loans without busting your budget. For more information, or to apply for a loan today, visit our homepage or give us a call at (800) 990-9130.

Blog Series: Debt Consolidation 101
Part 1: Debt Consolidation Basics
Part 2: How to Get the Most from Your Loan
Part 3: Three Mistakes to Avoid

Debt Consolidation 101: How to Get the Most from Your Loan (Part 2 of 3)

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Debt is stressful. So it’s not surprising that managing lots of different debts all at once can be really, really stressful—like taking a trip with your five-year-old kid to the Soda, Candy and Priceless Antique China store. Consolidating your debt can help.

In order to consolidate debt, you simply take out one larger loan and you use it to pay off all your smaller loans. It makes your debt load much easier to handle, and it can also save you money in the long run.

There are many ways to go about consolidating your debt, and some ways are definitely better than others. For those who are looking to simplify their personal finances, here are some OppLoans tips for how to best consolidate your debt:

1) Longer Terms, Lower Payments

There are three things that determine a loan’s monthly minimum payment: the principal, the APR and the term. The principal refers to the amount of money that’s borrowed, the APR (which stands for “Annual Percentage Rate”) is how much you get charged in fees and interest on a yearly basis, and the term is the period of time over which the loan is to be repaid. And it’s this last factor that will hold the key to lowering your monthly payments.

Simply put, a loan with a longer term is going to require a lower monthly payment than a loan of with a shorter term. (Of course, we’re assuming that these two loans have the same principal and APR.) If you have a personal loan with high monthly payments and a 12-month term that is putting a strain on your budget, consolidating it into a loan with a three-year term will result in a lower amount owed each month.

If you owe too much each month, consolidating into a loan with longer terms is probably worth it. Learn more in Debt Consolidation: A Small Solution to a Big Problem.

2) Lower Rates

If you have a lot of debt, odds are that some of it is on credit cards—and credit card debt comes with high interest rates. In fact, the rates on your credit cards are probably the highest rates out of all your debt. They’re like that friend who comes to your party, eats way more than their share of pizza, and insists on arguing about politics. Getting that kind of debt out of your life is going to be a huge relief to your finances and your mental health (plus more pizza).

There are a number of personal loans out there that carry lower interest rates than your standard credit card. And you might even be able to find rates that are lower than the rates on some of your other personal loans. Be careful though—especially if you are a homeowner—about taking out a second mortgage to consolidate your debt. There are additional risks with that kind of loan that you’ll want to take into consideration.

Now, this might not be possible for everyone. Getting lower interest rates depends on having a high credit score. For those out there who don’t have a great credit score, you might not qualify. Always make sure to do the math when you’re taking out a debt consolidation loan, so that you have a handle on the cost.

3) Introductory Offers

To be clear, this is not a maneuver for amateurs. This is like a blindfolded triple-luxe backwards half-pipe shimmy. It only works if you have a solid plan for paying down your debt, and for doing it ahead of schedule. We’d say don’t try this at home but…where else are you going to do it? The circus. (Disclaimer: Please don’t get a loan from the circus.)

Just like 70% of the earth’s surface is covered in water, 70% of all mail is actually credit card offers. A lot of those offers advertise stuff like “0% APR for 18 months,” and while that might sound like gibberish, it’s actually a pretty good deal. 0% APR means that you are not paying any fees or interest on that card’s balance. Every dollar you pay goes towards paying down the actual debt.

It’s easy to see how owing 0% in fees and interest on a credit card would be pretty handy. It allows you a window wherein the cost of borrowing is essentially free. If you are able to pay down that entire balance before the 0% APR period is off, then you’ve saved yourself a lot of money.

But if you don’t pay off the debt, then you’ve got another credit card with a high interest rate. That’s why this isn’t a good idea for people without a solid debt repayment plan. And make sure before you try it, that the 0% APR also applies to balance transfers. If it only applies to new purchases, then it’s pretty much useless.

For more information or to get started on a single personal loan you can use to attack your consolidated debt today, click below or call us at (800) 990-9130. The application process is quick and easy, and won’t affect your credit score.

Blog Series: Debt Consolidation 101
Part 1: Debt Consolidation Basics
Part 2: How to Get the Most from Your Loan
Part 3: Three Mistakes to Avoid

Debt Consolidation 101: The Basics (Part 1 of 3)

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When people talk about debt, they often talk about it like it’s one big chunk of money. But that’s rarely the way it works. Most folks don’t just have one source of debt, they have many. They have student loans, plus credit card debt after that Bachelor’s degree in Beyonce Studies didn’t lead to a job, then auto loans to buy a car, and also personal loans to repair the car, and mortgages, and in extreme cases even multiple mortgages.

What is Debt Consolidation?

People may have debt, but that doesn’t mean that they only have one debt. That is, unless they make the decision to consolidate their debt by taking out one large loan and using it to pay off all their smaller loans.

So what are the basics you should know about Debt Consolidation before deciding if it’s a solution for you? Check out the list below for the fundamental facts about Debt Consolidation.

1. Fewer Payments

This means that you only have one payment to make every month, which makes your finances easier to track and also makes you far less likely to miss a payment. Trying to get a handle on your personal finances is always going to be complicated, but debt consolidation can make it easier.

Keeping track of multiple due dates can be a real hassle, as can keeping track of all your minimum payment amounts. Missing a payment can end up having a negative impact on your credit score, which will make it harder to borrow money at affordable rates later on. And speaking of affordable rates, some of those older loans might carry higher interest rates that make them far more difficult to pay down. Debt consolidation allows people to not only simplify their debt load, but it can also save them money in the long run.

2. More Savings

People frequently take on loans when they’re just starting out on their own. Many of these loans—and this goes double for credit cards—come with higher interest rates since the person doesn’t have a long history of credit use. Banks and credit card companies consider them to be a higher risk and so they charge them a higher rate. Higher interest rates mean more money that you’re paying on what you’ve already borrowed, which means less money that you’re paying towards actually getting out of debt.

With debt consolidation, a person can often score a lower interest rate than what they’re already paying. Using a lower interest loan to pay off a high interest credit card will help you save money in most instances. Oftentimes, it will mean that you’re paying less each month towards your minimum payment. (Pro tip: if you can afford to pay more than the minimum payment, then do it.)

In many cases, the lower interest rate will save you money in the long run as well. Now, getting a loan with a longer term can sometimes mean you end up paying more overall, but if it makes the loan more manageable month to month, it might be worth it (read more in Debt Consolidation Loans – An OppLoans Q&A with Ann Logue, MBA, CFA).

3. Not for Everyone

Of course, this is all going to be partly dependent on your credit score. The higher your score, the lower the rates you’ll be offered. If you’re looking at consolidating your debt and the rates are going to be substantially higher than what you already owe, then don’t consolidate. The increased convenience won’t be worth the higher cost.

If you have questions or are interested in getting started on a single personal loan you can use to attack your consolidated debt today, click below or call us at For more information or to get started on a single personal loan you can use to attack your consolidated debt today, click below or call us at (800) 990-9130. The application process is quick and easy, and does not affect your credit score.

Blog Series: Debt Consolidation 101
Part 1: Debt Consolidation Basics
Part 2: How to Get the Most from Your Loan
Part 3: Three Mistakes to Avoid