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My Free Personal Finance Boot Camp – MyMoneyCircles.com

themoneycoach — Fri, 06 Jan 2012 04:51:03 +0000

MyMoneyCircles is a personal finance boot camp that helps you improve your financial health one step at a time.

I know what it’s like to struggle with money problems, like bad credit or too much debt. Fortunately, those days are long gone for me. For nearly a decade, I’ve been advising people on how to achieve their financial goals.

That’s why I’m so happy to be leading the MyMoneyCircles boot camp, along with a team of other personal finance experts. From my experience I found that what helps people stick to their financial goals are these 4 keys to success: trusted advice, step by step guidance, practical tools that provide recommendations based on your situation, and a support community. The MyMoneyCircles program is designed with these key ideas in mind.

1. Trusted Advice

I have partnered with other personal finance experts, and each of them brings many years of experience and deep knowledge in specific areas of personal finance – savings, mortgages, insurance, or credit & debt.

2. Step by Step Guidance

We break each Success Guide into manageable steps that you spend just 20-30 minutes on, a few days a week for 4 weeks. You can also choose to go at your own pace. Regardless of how you use MyMoneyCircles, we’ll get you to take action and see an immediate improvement in your financial health.

3. More Than “Just Advice”

We don’t just give you advice. We have selected practical tools that provide recommendations based on your situation and help you narrow down your choices.

4. A Support Community

When you’ve got questions, our team at MyMoneyCircles, myself included, will be there to answer them. When you want to share your successes or struggles, you can do so without revealing your identity. When you are curious about what other people with similar financial goals are doing, you can form circles that are specific to your financial situation.

So what are you waiting for? Go ahead and join MyMoneyCircles today. You’ll be glad you did.

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Dealing with a Delinquent Tax Notice That Isn’t Yours

themoneycoach — Wed, 02 Nov 2011 05:30:49 +0000

Q: “My mom is getting a delinquent tax notice for royalties that she never received nor has she ever signed with an oil or gas company who drilled a gas well on her neighbor’s property. We are working to get it off. What if we can’t get a resolution from the gas company?”

A: This sounds like a complicated situation for which you’ve given me very little information. But since my in‑laws recently sold a home that was located on many acres of land where an oil and gas company wanted to buy leasing rights in order to do drilling, I think I may have a clue as to what you’re talking about.

It sounds as if your mom lives adjacent to a neighbor who, perhaps, has allowed someone to drill a gas well on that neighbor’s property. In exchange for those drilling rights, that neighbor likely received royalties or payments from the gas company. Those payments are taxable. In this case, though, it seems as if your mom is the person who actually received the tax notice for those royalty payments.

The simple solution here is to write to the local tax authority that has corresponded with you ‑‑ it might be the city, the county, or the state ‑‑ and indicate to them that your mom, does not have ownership of that neighbor’s property, nor does she have ownership of the oil rights to that property, and has not, in fact, ever received any royalties from the oil or gas company in question.

The key here is not necessarily to get a resolution from the gas company. The key is to get a resolution from whomever it is that’s sending you the delinquent tax notice, and I assume that is not the gas company.

Your strategy should be to go to the government agency that is sending you the tax notice, and notify them that this is not your property.

You can also include, if you have it, some proof of your mother’s correct address.

Perhaps you can send the state or local taxing agency a copy of a driver’s license with your mom’s true address on it. Maybe she has a property survey or something similar that indicates her lot size, address and its particular boundaries. All of this would help show that she does not own, nor is she financially responsible for, that neighbor’s property.

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Even Before BofA Dropped Its Debit Fee, Occupy Wall Street Had Already Won

themoneycoach — Tue, 01 Nov 2011 17:09:37 +0000

Ever since the Occupy Wall Street protests that launched in New York City began, many people have questioned whether this loosely defined group will “succeed” – and if so, how its success will be measured.

In my view, even before the news broke that Bank of America was dropping its planned $5 debit fee, Occupy Wall Street had already won – and done so in an epic way.

Here are 5 reasons Occupy Wall Street is an undeniable success for the cause of economic justice, and why we all should be thankful for its existence.

1. The Movement Has Gone Global

Although Occupy Wall Street originated Sept. 17^th in Zuccotti Park/Liberty Square, to date the movement has spread to hundreds of American cities. That’s impressive in and of itself. But the Occupy movement in the U.S. is really a fraction of what is taking place around the globe.

On October 15th, as part of a global day of action, “Occupy” protests were held in North and South America and throughout Asia, Africa and Europe, with over 1,500 events occurring in 82 countries. And the movement continues to swell every day – from the bottom up. That is grass roots protest at its best.

2. It’s Prompted Major Changes

The backlash against rising bank fees shows the ability of the masses to vote with their feet and their wallets, resist the establishment, and force whole industries to change. Just as Netflix found out that their horribly misguided pricing policy was a wrong and costly move that lost them at least 800,000 customers, so too are banks discovering that nickel and diming Americans simply isn’t going to work anymore.

That’s why Bank of America has decided to nix its proposed $5 a month debit fee. Likewise, several other major banks have announced they too will not enact planned or potential debit fees and other surcharges that have driven consumers crazy. We should all thank Occupy Wall Street for this. If it wasn’t for the extreme public pressure put on banks – including the Nov. 5^th Bank Transfer Day organized by Occupy Wall Street – it’s doubtful that many banks would have buckled and backed off these planned fee hikes.

3. It’s Not Just an Anti Wall Street Protest

By refusing to be defined by one specific agenda, or to launch with one spokesperson or one list of demands, the Occupy Wall Street movement let its momentum build and allowed itself to grow organically. This strategy – whether by design or by happenstance – allowed people all around the globe to project onto the Occupy movement their own grievances and complaints.

The result is that some people are protesting exorbitant healthcare costs, some are railing against Big Business, others decry financial bailouts of Wall Street firms, and yet others are raising their voices about high unemployment. And even amid the seeming dissonance there is cohesion in the single outcry that says the 99% of the U.S., or even the world’s population, should not be economically and politically subjugated to the 1% elite.

For the protestors, banks are just a good symbol of all that’s wrong in terms of economic disenfranchisement and the working classes being asked to increasingly shoulder unfair costs.

My prediction: the success of the occupy Wall Street movement will also show Americans that similar protests and pressures can be brought to bear beyond the financial services sectors, to other industries such as healthcare, airlines/travel, and even colleges and institutions of higher learning.

4. It’s Reminded Americans About the Power of Protest

After the Arab Spring earlier in 2011, which included uprisings in Egypt, Libya and Tunisia, it was easy for Americans to say: “look at residents of the Middle East fighting for democracy and justice.” But it took the Arab those protests to show us that massive upheaval can bring about massive change. Indeed, Occupy Wall Street organizers cite the Arab protests as a catalyst and inspiration for the Occupy movement. It’s little wonder that Americans had to look all the way across the globe for such inspiration.

When was the last time Americans them seriously took to the streets – en masse and for a protracted period of time – and demanded economic change? The 1960s? For a while, it seemed Americans had forgotten how to protest. Thankfully, the Occupy Wall Street movement has reminded us all shared sacrifice, protracted struggle and an I-refuse-to-quit tenacity can literally change the world.

Now those in the younger generation won’t need to turn on the TV and watch a decades-old civil rights documentary to see peaceful protest and resistance at work. They can view a YouTube video, check their Twitter feed or see Facebook (and network TV) updates about civil disobedience in action right now. And 30 years from now, lots of people from today’s Generation X and Gen Y will be able to say to their kids and grandkids: “I was there. I was part of the Occupy movement.”

5. It Has Captured the Political and Moral High Ground

Finally, Occupy Wall Street has garnered its share of politicians – including President Barack Obama himself – who have lauded the protestors’ right to engage in civil disobedience and who have, in essence, said that their grievances have merit.

Meanwhile, the Catholic Church is also tacitly siding with the Occupy Wall Street movement – albeit not in a formal way. In late October, the Vatican’s Pontifical Council for Justice and Peace issued a harsh critique of the global financial system. Many of the issues the Church raised echo very closely the themes and grievances espoused by Occupy protestors.

The Vatican report was careful to say that it was not issued in response to the demonstrations around the world, but it nevertheless highlighted the need for “ethics over the economy” and “embracing the logic of the global common good.”

When asked about the similarities – and the timing of the Vatican report – Bishop Mario Toso, secretary of the council said: “It is a coincidence that we share some views. But after all these are proposals that are based on reasonableness.”

Call it a “coincidence” or whatever you want, but this was a case of the Vatican speaking out about the very same Wall Street practices and financial system that Occupy protestors believe is inherently unfair and unjust. Will Pope Benedict IVI show up at Liberty Square and give a formal blessing to protestors? Fat chance. But this Vatican report was a moral shot in the arm for Occupy Wall Street protestors – and one, like the movement itself, that didn’t go unnoticed around the globe.

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Should You Start a 401(k) After Age 60?

themoneycoach — Tue, 01 Nov 2011 05:30:00 +0000

A reader of AskTheMoneyCoach.com wanted to know whether or not it’s a smart decision for them to launch a 401(k) or 403(b) investment plan later in life. The person asked me simply:

Q: “Should I start a 401(k) or 403(b) investment plan at 63 years of age?”

A: Yes! Actually, I think it can be a good idea to start a 401(k) plan at any point during your working years. You may know that a 401(k) or 403(b) is an employer sponsored retirement savings plan. But you may not know the full range of benefits associated with these plans.

For starters, you get three primary advantages with saving for your Golden Years using a 401(k). The first advantage is that you can set aside retirement funds on a pre‑tax basis; this lowers your annual tax bill. The second benefit is you get the potential for get capital appreciation when you invest your 401(k) funds in investments such as individual stocks or mutual funds. Finally, a third benefit of a 401(k) is that you may receive matching funds from your employer – which helps turbocharge your savings.

A 401(k) also gives you a more disciplined approach to investing for retirement, because you’ll be consistently contributing to your retirement assets – every pay period – regardless of what the market is doing. Such consistency also helps takes emotion out of the investing equation – making you less likely to be driven by fear or greed when the stock market swoons or surges.

Even if you wind up retiring in a few short years – say, at the age of 65 or 70, it’s still worth it for you to put aside more money into that nest egg and help to build your savings cushion.

That way, when you do leave the work place, you are not simply dependent upon your own savings that you might have had, which may be limited. You also won’t be solely dependent upon government funds such as Social Security.

Currently, the average Social Security recipient is only receiving roughly $1,000 per month. That’s not a lot of money to live off of.

If you’re 63, you’re probably at a higher level of earnings power, so you have the option to go ahead and put aside more money.

And here’s a bonus for you: The IRS recently announced that starting in 2012, the maximum amount you can sock away in a 401(k) plan is being raised to $17,000 for those under 50 and to $22,500 for those 50 and older. That’s a $500 increase over 2011 levels. (That $22,500 figure includes the “catch up” contributions that individuals 50 and older are permitted to contribute to a 401(k), as a way to help Americans who may have started saving for retirement later in life).

So let’s assume you did sock away at least $17,000 a year for five years. Well, that’s $85,000. If you saved $22,500 a year for five years, you’d amass $112,500, not assuming any increases (or losses) to your savings.

Hopefully, though, the funds you put aside for your retirement will grow and collect interest. Also, as I mentioned, you may even get some form of an employer match as well. It might not be dollar for dollar, but even if it’s $0.50 cents on the dollar or $0.25 cents for every dollar that you put in, that’s an additional kicker that you can look forward to.

All of this means you have many great reasons, even past age 60, to save in a 401(k) or 403(b) plan – and I would encourage you to do just that.

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College Scholarships for Students in High School, Middle School and Kindergarten

themoneycoach — Mon, 31 Oct 2011 05:30:09 +0000

Since my oldest daughter entered high school in September, I’m going all out to help her hunt for scholarships and aid her in scoring some free money to pay for college.

I figured we’d be getting an “early” start, by looking for scholarships while she’s just now in 9^th grade. Boy, was I wrong!

Little did I know that we’re actually a bit late when it comes to nabbing scholarships, grants and free money to help pay for college.

Here’s some of what I’ve learned lately – and how it can help your family or someone you know with children.

For starters, did you know that there are educational scholarships for kids as young as five or six years old? This blew me away, but it also made me even more determined in the hunt for scholarships. After all, in addition to my first-born daughter, who turned 14 in September, my youngest daughter is about to turn six. I also have an 11-year-old son.

Sure, we’re saving for our kids’ college education with 529 plans. But I’m also realistic enough to know our savings may not be enough considering that the price tag of college has been skyrocketing the past decade – and it’s only heading higher.

Should I Use My 401(k) To Pay My Child’s College Tuition?

In fact, according to the College Board, in the 2011-2012 school year, 123 colleges in the U.S. charged more than $50,000 a year for tuition, room and board alone.

That means all of us parents – with newborns on up to adult children in graduate school – would be wise to learn about all the resources available to pay for higher education expenses.

Winning Scholarships is a Numbers Game

Another thing I’ve learned: getting scholarships is largely a numbers game. Not only do you have to be “in it to win it,” but you also have to be committed to applying to a lot of scholarships. Three or four won’t cut it. Plan on applying for at least a dozen – two dozen is even better – to greatly improve your odds of landing one or more scholarships.

Does this mean a lot of time spent on your scholarship search? Yes, absolutely. But the payoff is more than worth it. Getting thousands of dollars worth of scholarships now – for yourself or your child – means you won’t have to do things like take out a home equity loan, co-sign for student loans, or use credit cards to pay for various college expenses.

So if you or your child is serious about winning scholarships, make it a quasi part-time job. Spend at least 15 to 20 hours a week (more, if you can spare it) hunting for scholarships, putting together applications, writing essays, etc. You’ll likely have to do this for several weeks (even if the time is spaced out over a few months).

Successful scholarship winners – and I won a few scholarships of my own back when I attended graduate school at USC – will tell you that you’ll only get out of your scholarship search whatever you put into it.

7 Financial Tips for Parents of College Students

Finally, utilize Internet based tools to help you streamline your scholarship quest. A website like FastWeb.com is priceless because it’s free to use, saves you time, and it lets you set up a profile and get automatically matched to scholarships that fit your unique circumstances.

If you or your high-school child needs free money soon to cover the cost of tuition, books, supplies, room and board or other college-related expenses, check out the three scholarships below. Two of these scholarships are also open to children as young as five years old:

Name: Federal Junior Duck Stamp Art Competition

Sponsor: U.S. Fish and Wildlife Service, Department of the Interior

Amount: $2,000 to $5,000

Eligibility: Students in grades K-12; U.S. Citizens and resident aliens

Deadline: March 15

Requirement: Students must submit a painting, drawing or sketch of any North American waterfowl species. Each state or district has its own competition and “Best of Show” winners advance to the national competition. One of the 53 Best of Show images will be selected as the next Junior Duck Stamp.

Application: http://www.fws.gov.juniorduck

Name: Toshiba/NTSA ExploraVision Science Competition

Sponsor: Toshiba and the National Science Teachers Association

Amount: $5,000 to $10,000 savings bond (There are four divisions: grade K-3; grades 4-6; grades 7-9; and grades 10-12; within each divisions there is one first place price ($10,000) and one second place prize ($5,000)

Eligibility: Students in grades K-12; U.S. and Canadians residents

Deadline: January 29

Requirement: Students must create a project (in written and visual form) that showcases their vision of what technology will be like 20 years into the future.

Application: http://www.exploravision.org

Name: Young Naturalist Awards

Sponsor: American Museum of Natural History

Amount: $500 to $2,500 (2 awards for each grade level)

Eligibility: Students in grades 7-12; U.S. and Canadian residents

Deadline: January 3

Info: Students must enter a research-based science essay contest.

Application: http://www.amnh.org/nationalcenter/youngnaturalistawards

This brief sampling of scholarships, of course, is but a drop in the bucket. There are literally tens of thousands of scholarship opportunities that abound for students of all types, ages, skills, interests and abilities.

Don’t think scholarships only go to poor students, minorities, high school kids with “A” grades or the children of alumni. If you are willing to put in the work, I can guarantee you that there are scholarships out there that are tailor made just for you or your child.

Good luck in your scholarship hunt!

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5 Ghoulish Financial Scams That Can Wreck Your Budget on Halloween and Beyond

themoneycoach — Fri, 28 Oct 2011 18:52:24 +0000

5 Ghoulish Financial Scams That Can Wreck Your Budget on Halloween and Beyond

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Author: The Money Coach

Foreign Lottery Scam – Here’s one straight from Transylvania. You get a letter telling you that you’ve won a million dollars. All you have to do is sacrifice your personal identification and you are on your way to riches. Don’t let some financial blood-sucker take a bite out of your bank account with the foreign lottery scam. Just say no.

Mystery Shopper Scam – Some invisible man wants to mail you a check to deposit into your bank. Once the check has cleared (which it never will) he says you will get to go on a shopping spree or you’ll qualify for a job as a mystery shopper. Of course there is no real job. This is totally fictitious. The only mystery here is the identity of the financial predator you’ve just turned your bank account information over to. Do yourself a favor and tell this phantom “thanks, but no thanks.”

Debt Collection Scam – You killed that ancient evil department store credit card balance over a decade ago. But alas, long after the statue of limitations has expired, some zombie debt collector is demanding payment — with interest and penalties too! Shoot this one in the head with a debt verification letter.

Home Repair Scam – Your driveway looks like hell, but here comes an “angel” who just happened to be in your neighborhood (you know, right after a storm or natural disaster has occurred). But oh blessed day, he wants to “save” you with some left over concrete to fix up your driveway. Either that or you can pay him an upfront deposit and at a much later date, he promises to magically re-appear to fix your broken windows. Beware of the driveway/home repair scam, and send this fallen angel back to whence he came.

Work from home scam – You’ve heard the pitch: Make a thousand dollars a day stuffing envelopes. That means you will earn up to $365,000 per year! Sounds like a tempting deal, which isn’t surprising because in this case you’d be making a deal with the devil. Wanna work from home? Just clean up your house or apartment – isn’t that work enough?! Seriously, though, to earn big bucks from home, take a tip from the Small Biz Lady Melinda Emerson and start your own business or a legitimate side hustle. That way you can laugh (fiendishly, if you like) all the way to the bank. Muahh ha, ha, ha, ha!!!!!!

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Posted in Uncategorized

All information on
this blog is for educational purposes only.

Lynnette Khalfani-Cox,
The Money Coach, is not a certified financial planner, registered investment
adviser, or attorney.

If you need specialty
financial, investment or legal advice, please consult the appropriate
professional.

Per FTC guidelines, this site
may accept advertising, affiliate payments or other
forms of compensation from companies mentioned.

Details of any products,
services, prices or offers highlighted on this site may change, so check with
the company or provider for up-to-date terms.

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Will My Credit Score Be Hurt By a High Default Interest Rate?

themoneycoach — Fri, 28 Oct 2011 18:00:18 +0000

Will My Credit Score Be Hurt By a High Default Interest Rate?

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Author: The Money Coach

Q: If you were to hit a high default interest rate on a 0% interest intro credit card; will it place a negative mark down on your credit report?

A: If I understand your question, you had a credit card with a teaser rate of 0%, but then were late on a payment and it went to a default rate. Those default interest rates typically range from 25% to 30% or so.

Even though you were late on your payment, it will not necessarily be reported to the credit bureaus. It depends on how late the payment was received. Banks and credit card issuers can legally report your delinquency if it is 30 days or more late. But if you were just a day or two late, or even a week or two, that will not show up on your credit reports.

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Posted in Credit Scores |
Tags: High Interest Rate

All information on
this blog is for educational purposes only.

Lynnette Khalfani-Cox,
The Money Coach, is not a certified financial planner, registered investment
adviser, or attorney.

If you need specialty
financial, investment or legal advice, please consult the appropriate
professional.

Per FTC guidelines, this site
may accept advertising, affiliate payments or other
forms of compensation from companies mentioned.

Details of any products,
services, prices or offers highlighted on this site may change, so check with
the company or provider for up-to-date terms.

Peer to Peer Loans: 6 Things You Need To Know

themoneycoach — Fri, 28 Oct 2011 15:00:01 +0000

Many people who have heard of peer to peer lending understand that it is a form of social lending that removes the bank as the middleman.

However, there are a lot of other factors about peer-to-peer loans, the peer to peer lending process or the P2P industry in general, that many people don’t understand.

Here are six things you probably didn’t know about peer-to-peer lending.

1. Most borrowers are pretty good credit risks.

When some people think about peer-to-peer lending, they assume that the borrowers are individuals with bad credit or people who have had so many financial mistakes and problems in the past that no bank will touch them.

In reality, the opposite is actually true. At LendingClub.com, the world’s largest peer‑to‑peer lending network, they deal only with “prime” and “super prime” borrowers. In other words, these are people with very high FICO scores and excellent credit ratings.

According to Lending Club CEO Renaud Laplanche, his company accepts only 10% of the loan applications that they receive. The other 90% are actually rejected. This is one of the ways in which LendingClub.com is able to maintain high standards and assure the lenders, the individuals who are funding money to borrowers, that they will in fact get a return on their investment and that the money will be repaid. So, contrary to popular opinion, most borrowers in peer‑to‑peer lending networks are actually pretty decent credit risks.

2. Peer-to-peer lending capitalizes on market inefficiencies.

One of the reasons why peer to peer lending has evolved over the past five to seven years is because there are a tremendous number of inefficiencies in the traditional banking environment.

Here is an example of just one. Anytime a credit card company or a bank that issues credit cards decides to raise interest rates on its credit card users, the company in question typically does a uniform, across‑the‑board rate increase.

Therefore, the person who has been late paying their Visa card once or twice in the past year may have the same interest rate as the person who has a pristine credit record and who has never been late paying. But both cardholders would be subjected to the same unilateral, across‑the‑board rate increase.

But clearly, both are not credit worthy to the same extent. With peer to peer lenders, however, risk based pricing is critical. Peer to peer loans are priced based on a person’s credit profile in a way that credit card issuers typically do not consider. In other words, if you get a peer‑to‑peer loan and you have, say, an 800 FICO score, you can be assured that your interest rate on your peer‑to‑peer loan is going to be far lower than the person, who has a 600 FICO score. That’s not always true of credit card holders with far different credit scores.

3. The industry has gone beyond peer-to-peer or personal lending.

The traditional definition of peer‑to‑peer lending is one in which many individuals or “peers” loan money to another person or many people. For example, a single lender might invest $2,500 to fund 100 loans of $25 each. That’s a case of one person providing multiple small (and partial) loans to many people. When other lenders agree to fund a given loan, their funds get added to the mix until a borrower’s loan request is fully funded. All of this involves individuals as borrowers and lenders. In reality, however, peer to peer lending over the last year or two has grown to such a level that institutional investors and corporate lenders are now getting into the game as well.

Laplanche, the CEO of Lending Club, told me recently that he has spent a huge part of his time over the last year or so cultivating corporate business after pension funds, mutual funds and other institutional investors, such as insurance companies all expressed interest in being able to loan money through a peer‑to‑peer network.

So, while it is true that most of the lenders/investors in peer‑to‑peer lending networks are individuals supplying loans of perhaps $2,500 or so, it’s also the case that institutions are investing $20 million to $25 million at a time, at least at Lending Club. This goes beyond the pure, personal definition of P2P lending.

4. Some investors have a soft spot for newlywed couples.

This might come as a surprise to many people. But believe it or not, some investors who are funding loans through social networks specifically target certain types of borrowers they want help.

Among those lucky borrowers are newlywed couples. At LendingClub.com, 2% of the loans are actually made to specifically for couples that have just tied the knot. Lending Club has facilitated about $400 million worth of loans to date.

These investors (the 2% of them) are fond of helping young couples so they don’t start out with debt in their marriage or have linger credit card debt after trying to pay for wedding costs or a honeymoon.

5. Peer to peer lending is big business.

As of the end of 2011, the peer-to-peer lending industry totaled $1 billion. The volume of loans written in 2011, among the bigger networks like Lending Club and Prosper.com, tripled the amount of business that was done in 2010.

According to the CEO of Lending Club, they expect to do triple the volume in 2012 that they did in 2011. This shows you that peer to peer lending is growing by leaps and bounds, particularly as banks continue to have tighter loan standards and more stringent loan conditions for borrowers to meet.

P2P lending is “a new type of banking that has fundamentally changed things for consumers,” says Chris Larsen, Prosper’s CEO. He adds: “The larger environment is that banks are very unpopular and many are cutting back on (offering) credit, so people are looking for alternatives.”

6. Most peer-to-peer loans are to pay off credit card debt.

One of the interesting things about the peer to peer lending phenomenon that has emerged in just less than a decade is that the overwhelming majority of borrowers are seeking peer to peer loans to consolidate high rate credit card debt. This is little wonder, perhaps, when you consider that the average interest rate on a credit card in late 2011 was about 15%.

Certainly many credit card holders pay 18% to 21%, and some even pay rates as high as 30% of more. In the social lending space however, the interest rates for loans are often far cheaper.

At Prosper.com, where loans can be repaid over one-year, three-year or five-year periods, the typical loan carries an interest rate between approximately 10% and 13%, according to Larsen, the company’s chief executive. At Lending Club, the average loan there is 13%, LaPlanche said. Loans at Lending Club are issued only for three- and five-year terms.

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My Credit Cards Are Maxed Out. Which One Should I Pay Off First?

themoneycoach — Fri, 28 Oct 2011 09:30:08 +0000

My Credit Cards Are Maxed Out. Which One Should I Pay Off First?

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Author: The Money Coach

Q: I have about 6 credit cards that are maxed out. I recently got some money so I was wondering if it is better to pay off a couple of cards or pay down the balance on every card?

A: From a credit scoring standpoint, it would be better to pay off a couple of cards entirely – leaving them with zero balances. The reason this is a better strategy than paying some money on all the cards is because the FICO credit scoring model looks at the total number of credit card accounts you have, and analyzes many data points about those accounts.

For example, FICO will assess how many of your cards carry a balance. It’s better for you to have 2 or 3 cards with no debt on them, as opposed to having 6 cards that all have balances.

Read: Are You Suffering From Debt Disease?

Additionally, even if you paid down the balances on all 6 cards, if you spread that money out, you might not be able to get all your balances below 50% or 60% of their credit limit. In general, when you’ve charged 50-60% of your credit limit, the impact on your credit score won’t be much different than if you charged, say, 70% of your available credit. Though every bit of debt you pay off can help with your credit score. And needless to say, eliminating a credit card balance altogether means that’s one less bill you have to worry about each month.

So overall, it’s better to simply use the money to knock out a couple of credit card balances. Just don’t go back out there and charge up more debt once you have zero balances! Good luck.

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Posted in credit cards |
Tags: Maxed Out

All information on
this blog is for educational purposes only.

Lynnette Khalfani-Cox,
The Money Coach, is not a certified financial planner, registered investment
adviser, or attorney.

If you need specialty
financial, investment or legal advice, please consult the appropriate
professional.

Per FTC guidelines, this site
may accept advertising, affiliate payments or other
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What is a Peer-to-Peer Loan or Peer-to-Peer Lending?

themoneycoach — Fri, 28 Oct 2011 05:59:07 +0000

What is a Peer-to-Peer Loan or Peer-to-Peer Lending?

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Author: The Money Coach

Q: What is a peer-to-peer loan or peer-to-peer lending?

A: In the U.S., peer‑to‑peer lending is a relatively new form of social lending that removes banks as the middlemen in a loan transaction.

With a peer-to-peer loan, an individual – sometimes called the lender or the investor – provides funds to a borrower and does so through the help of an intermediary company Two of the most popular peer-to-peer lending companies in America are LendingClub.com and Prosper.com. They screen borrowers and facilitate the loan process for individuals who want loan money to other individuals or their “peers.”

The whole idea behind peer-to-peer lending is that individuals who have additional cash to invest are readily available to loan money to borrowers in need who might otherwise not be able to get the funds they require through traditional sources such as a bank.

Peer-to-peer lending is also called P2P or person-to-person lending.

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Posted in Peer-to-Peer |
Tags: P2P Loans

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this blog is for educational purposes only.

Lynnette Khalfani-Cox,
The Money Coach, is not a certified financial planner, registered investment
adviser, or attorney.

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