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Financial Information

Financial Information

  1. Five ways to grow your income by 20 percent
  2. Here's how you can stick it to your bank
  3. What Debit Card Companies don't tell you.
  4. What Credit Card Companies don't want you to know.

  6. Forms

  7. Budget
  8. Monthy Cash Flow
  9. Babysteps
  10. Balance Transfer
  11. Microsoft Budget Templates

Five Ways to Grow Your Income by 20 Percent

 

One of the things I like most about the new Yahoo! Finance format is the immediate feedback I get from readers. Just last month, my column "Five Ways to Save $2,500 in 20 Minutes" received enormous positive feedback.
I also received comments from concerned readers who basically said, "Your ideas won't work for me -- what else can I do to stop living from paycheck to paycheck?"
These readers certainly aren't alone. I completely understand that too many people today simply can't make ends meet with the salary they're earning. If that's the case, it's time to consider ways to grow your income.
Meet the Egglestons
Over the past year, I've had the honor and pleasure of appearing on The Oprah Winfrey Show as an expert money coach for her Debt Diet series. The mission of this life-changing program is to start a worldwide movement helping millions of people get out of debt and finally realize their goal of true financial freedom.
On the show, I coached an amazing couple -- Dan and Sally Eggleston. Dan and Sally are both elementary school teachers earning a combined income of $92,000, and live in Indiana, where they're raising three wonderful kids. When I first met them a year ago, they were $100,000 in debt and on the brink of bankruptcy.
Working together, we managed to find ways to cut back on about $500 of unnecessary expenses each month (using what I call the Double-Latte Factor). That was a great start. But due to the huge amount of debt Dan and Sally had accumulated, they had to do more.
In order to make measurable progress toward paying down all their debt, they not only needed to seriously cut back on their expenses, they also required a solid plan to grow their income by at least 10 percent over the year. The Egglestons didn't just succeed -- they crushed my goal by growing their income by over 20 percent!
Grow Your Income, Not Your Lifestyle
I'm going to coach you through the same steps I used for the Egglestons, but first I want to stress an important point that can make or break your success.
Please read closely: Earning more money won't make a bit of difference if you don't save it or apply it to paying off your debt. Many people fall into the trap of "the more you make, the more you spend." It's a vicious cycle that will keep you living from paycheck to paycheck regardless of how high your salary is. The bottom line is that you've got to grow your income, but not your lifestyle if you want to make financial progress.
Now for the five steps the Egglestons followed to grow their income:
1. Change your thinking by asking better questions.
Often, when we're struggling financially we ask the wrong questions. Asking negative questions like why you're always broke or can't get a raise can lead to negative answers. If you believe you can't make more money and consequently do nothing to change, you'll prove yourself right. If you think it's just too hard, it will be.
But if, instead, you empower yourself by asking, "What can I do to make more?" then you'll change your life. I asked Dan and Sally, "What can you do to earn more money" They focused on the answer, and together we went to work on their plan.
It took a lot of work (theirs, not mine): Dan picked up an additional coaching job and grew his summer lawn-care business, while Sally picked up summer school teaching jobs and started a mini-eBay business. It wasn't easy for them, but they did it.
2. Start a side business.
Starting your own side business for extra money doesn't have to be complicated, nor does it have to take a lot of money.
For instance, a few years ago Dan started his own lawn-care service in the summer months with just a lawnmower. He created some flyers, knocked on a few doors in the neighborhood, and soon enough he was in business. Sally taught herself how to open an eBay seller's account and in a matter of hours started selling used clothing online.
Depending on your interests and abilities, there are all sorts of things you can do to develop an additional income stream. You can perform a service (like painting houses or editing resumes), make something and market it (like cookies or jewelry), and buy something and resell it (think eBay or Amazon.com).
You can even turn a hobby into a side business -- if you cook you can cater, and if you sew you can do tailoring. Be creative and see what else you can come up with.
3. Raise your rates.
If you have a business or service you offer right now, raise your rates. It's the fastest way I know to earn more money, and it helped Dan immediately.
He'd been running his lawn-care business for five years, and not once in that time had he raised his fee. I coached him on how to go about increasing his rates without losing business.
He started out by writing a letter to his customers, letting them know how much he appreciated their business and loyalty over the years. He simply shared with them that in order to keep up with the rising cost of gasoline and other expenses, he would be raising his rates by 10 percent this year.
Dan not only retained all of his current customers, but got a few new referrals as well. The business ended up pulling in an additional $2,000 in profits compared to the previous year.
It's time give yourself a raise. If you think your customers wouldn't stand for it, consider Dan's experience. Right now, someone somewhere is raising the price he charges for his services. Why aren't you?
4. Get extra work -- at work.
As I mentioned before, Sally and Dan are both teachers. Sally asked her district about teaching summer school and landed a position that earned her an extra $4,200. Dan signed up to coach his school's baseball team and earned another $4,900.
You don't have to be a teacher to find opportunities like these. Ask about overtime or additional projects that you might be considered for. Can you increase your hours or work an extra shift? You won't know until you ask.
5. Get a raise.
Unfortunately, if you work for a union or government agency, this advice might not apply.
But for everyone else, nothing will increase your income faster than getting a raise. Dan recently completed his bachelor's degree, which earned him a whopping 30 percent increase. While you may not have earned a new degree, getting a raise can still be as simple as asking for one.
Start by preparing yourself for a meeting with your boss. Know exactly how much you want to ask for, and consider putting it in percentage terms. A humble request for a 5 percent raise starting in the next 90 days may be easier for your boss to handle than a demand for $2,500 more per year -- even if both amount to the same thing.
Have confidence in yourself. After all, you're a hard-working, dedicated employee, right? Consider that it will probably cost your employer more to replace you than it would to give you the raise you deserve.
Share Your Story
The Egglestons' story has a happy ending. They managed to grow their income by $19,000 in 12 months, and they've paid off $26,000 in credit card debt so far and are well on their way to becoming millionaires. Dan and Sally took a seemingly hopeless situation and turned it into a true success story -- and you can too.
I'd love to hear how you were able to increase your income. Post a comment and share your success. My goal is for this column to become a positive place for readers to learn from others and grow in the process.

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Here's How You Can Stick It to Your Bank

 

Fees, fees and more fees.
Ten bucks a month for checking. Fifteen to print checks.

It's time to do something about it. Here are my three ways to deal with these Goliaths.
Vote With Your Feet
This one's simple: leave. Banks operate with the mentality that they can push you around. Why? Because it's too much time, work and trouble for you to gather your stuff and move somewhere else.
They've often got it right, for it is a hassle to move, especially if you have checking, savings, credit cards, mortgages and equity lines all with the same institution. And -- bigger problem -- most traditional banks offer pretty much the same thing.
But here's what they forget: There are alternatives to traditional banks. Credit unions have been around for years and generally offer better deals across the board. They're getting bigger, so you get geographic coverage, and they're making deals with each other and waiving ATM fees to overcome some of their inherent disadvantages.
And Internet banks and banking services tied to brokerages, such as E*Trade Bank, have, in a similar way, become more competitive.
Let Them Know You Exist
Moving is one option. Threatening to move is quite another.
For those of you, like me, who would rather fight than switch, it shouldn't be a surprise that a bank will usually try at least a little to hold on to your business. It knows that if you leave, it'll have to invest precious resources just to replace you, and it won't exactly help its reputation -- especially if you're a good customer (more on that below).
So here's what you do. Next time something bad happens, call. Be nice about it, but be firm and businesslike -- let them know you're really unhappy about the $35 XYZ fee and that you don't believe, as a good customer, you should be responsible for it.
Many agents are empowered to address your issue, but it also helps to ask for a manager. You'd be surprised what they can do if they want to -- and if you don't abuse the privilege. If nothing else, they'll help you migrate to a preferred customer status so that the issue, whatever it was, doesn't happen to you again.
Become a Better Customer
What? Stick it to your bank by becoming a better customer? Hmm, is that logical?
Here's the reality. If you elevate yourself above the masses -- which today usually means signing up for some kind of package deal including checking, savings, loan and even brokerage services -- guess what? You'll get rid of an awful lot of those fees.
As an example, Wells Fargo has several programs, two of which I'll mention: The Portfolio Management Account (PMA) and the Complete Advantage account.
The PMA requires a minimum of $25,000 in a savings or investment account. You can get a bit better than 3 percent interest on this account, but the real payback is eliminating a broad assortment of fees, including checking, check printing, online banking and a host of other banking services.
You can also get overdraft protection for $10 per day of overdrafts, instead of $34 per transaction. Finally, you get preferred interest rates on both savings and loan products. You may save hundreds over the course of a year.
The similar Complete Advantage account requires $5,000, and it features a required automatic $75-per-month transfer from checking to savings.
These accounts give you a good way to manage household cash, including your emergency reserves. Most large banks offer similar products.
Maybe these choices -- from taking a hike to cozying up to the Goliath you once so despised -- seem too broad. But it's all part of becoming a good consumer, and you may save a lot of money and grief in the process.
And you just might be treated with the dignity you deserve in the first place.

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What Debit Card Companies Don't Tell You

 

A Debit Card Boom
I can relate. I also switched to a debit card after getting myself deep into credit card debt when I was in college. By using only my debit card, I became more disciplined about spending.
Carol and I aren't alone: Debit card use today is at an all-time high. You may be surprised to know that consumers are actually using debit cards more often than credit cards now. In fact, according to market research firm Mintel, debit card use surpassed a trillion dollars last year.


The Benefits of Debit Cards
Using a debit card for purchases is convenient, and it keeps you out of debt. After all, you can't spend what you don't have in your account. There's also no bill to worry about -- which means no interest, no late fee, no over-the-limit fee, no annual fee, and so on. Make a purchase and the money comes directly out of your bank account. What could be simpler?
But the same things that make a debit card so simple to use is also what makes it so risky. When your debit card information is compromised, thieves have direct access to your bank account.


Seven Tips for Debit Card Use
Obviously, it's important to understand the risks of debit card use, and how to protect yourself from those risks. Here are seven tips you need to keep in mind about debit cards:


1. Know your debit card's liability policy.
Many banks advertise that they offer "zero liability" debit cards. This means that if an unauthorized charge is made on your card and the transaction is signed for, you are not liable for the fraudulent purchase -- much like if you were to use a credit card.
However, it's really important to understand that in most cases, this zero-liability policy only applies to signature-based transactions when you're using a debit card with the Visa or MasterCard logo.
This means that if an unauthorized purchase is made using your debit card with your personal identification number (PIN), in most cases the zero-liability policy won't apply. What's more, the zero-liability policy for debit cards is just that -- a policy, not a federal law.
Ultimately, then, liability for fraudulent transactions are subject to review by the bank that issued the card. That said, it's possible that your bank offers a zero-liability policy even on PIN transactions, although very few do. Check with your bank.


2. Lose your PIN, lose your money.
Because PIN-based debit card transactions (regulated by the Electronic Funds Transfer Act) generally don't carry the same protection as signature-based debit card transactions (regulated by the Truth in Lending Act), you want to do everything possible to safeguard that PIN. If your debit card information is stolen along with your PIN and you don't notify your bank right away, your entire bank account could potentially be wiped out.
According to the law that governs electronic fund transfers, in order to limit your liability you must report suspicious debit card use for PIN-based transactions to your bank within two business days -- which will only put you on the hook for $50. Losses reported after two days will increase your liability to $500.
That's not all -- if you report unauthorized use of your debit card after 60 days from the time you received your statement, the bank doesn't have to reimburse you at all. In fact, you might even be liable for the maximum overdraft line of credit they extended to you. It's possible that your bank could have a greater protection policy than what the law requires; check to make sure you know what yours is.


3. It's easier than you think to have your debit card information stolen.
Your physical debit card doesn't need to be stolen out of your wallet or lost in the mall parking lot in order for your information to be compromised. This month, the Wall Street Journal ran an article on an increasingly common debit card scam.
In this scam, criminals attach "skimmers" to the card-swiping devices at grocery stores, gas stations, and even banks. Undetected by consumers, these skimmers copy debit card numbers -- including PINs -- that are entered. Once the skimmer is retrieved by the criminal, the information is sold or used to create fake debit cards. (Actually, this scam applies to both credit and debit cards. However, thieves prefer to steal debit card information since credit cards are monitored more closely by banks.)
So be on the look out for physical tampering at your ATM or checkout line, which could indicate that a skimming device is present. Don't use unbranded ATMs, either -- the kind you find in convenience stores or gas stations.
Also be aware of people lurking too closely at ATMs, or even for hidden cameras when you're entering your PIN. Use your hand to shield the numbers you're entering on the keypad.


4. Check your bank statement online every day.
Does that sound extreme? Trust me, it's not. While you're online checking email every day, take two minutes to log on to your bank's web site (from a secure computer, of course) and pull up your current statement.
Glance over your recent transactions and make sure they're all legitimate. If you see anything suspicious, call your bank immediately. Don't wait for your paper statement in the mail. By then it might be too late.


5. Don't let your debit card out of your sight.
Make sure all your debit transactions are handled without the card being taken out of your line of sight. Once you take your eye off the card, anyone who handles it has the opportunity to steal the card information.


6. Check your credit report regularly.
If you suspect that your debit card information has been compromised, report it to the credit bureaus right away. Order a copy of your credit report and monitor it regularly.
For a (genuinely) free credit report, go to AnnualCreditReport.com. They offer a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies, in accordance with the Fair and Accurate Credit Transactions Act.


7. Know when not to use your debit card.
There are certain situations in which it simply makes sense to use your credit card instead of your debit card. If you're making a "sight unseen" purchase over the Internet, for example, you have more recourse with a credit card if the item arrives in poor condition or not at all.
Personally, I never use a debit card for online purchases. It's always much more difficult to have money returned to your bank account than to dispute a charge on your credit card statement.
Finally, if you can avoid it, don't use a debit card when paying for a hotel stay, car rental, or even at the gas pump. When you do, banks put a block on a certain amount of money in your account until the entire transaction is complete and posted -- which could take days. In the meantime, your money is tied up and you won't be able to access it, which could lead to fees being incurred for an overdrawn account.
When using a credit card in these situations, be sure to pay the balance in full as soon as your bill arrives.

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What Credit Card Companies Don't Want You to Know

Of all the games the credit card companies play that end up costing you thousands of dollars (late fees, over-limit fees, transfer fees, and so on), it's always been the interest rate game that hurt the most -- until now.
There's a new, completely legal game they're playing, and it can literally wipe you out financially if you're not careful.


The Universal Default Clause
If you own a credit card, you know by now that if you're late with a payment the credit card company will charge you a late fee in addition to raising your interest rate. But did you know that they can raise your interest rate if you've made a late payment on any of your other cards, including those issued by other companies?
Not only that, but your interest rates can skyrocket to 30 percent or more if you make a late payment on your car loan, mortgage, or even your phone bill!
"How can that be legal?" you may ask. The answer is found in the fine print of your credit card agreement, and it's called a universal default clause. According to the Institute of Consumer Financial Education, currently almost 40 percent of credit card issuers apply this policy to their customers.


A Late Payment 'Trigger'
Generally, a universal default clause states that a creditor reserves the right to penalize you with an increased interest rate if you're late -- that is, in default -- of a payment to any other creditor. They justify this practice because, in theory, if you pay any of your creditors late, you pose a greater credit risk and are less likely to pay your debt.
Your creditors also have the right to routinely monitor your credit file. So a creditor with a universal default clause will be watching -- and waiting.
Let's say your Visa card has a universal default clause. Any late payment -- whether it's on your utility bill, home equity loan, or Macy's credit card -- acts as a "default trigger" allowing the bank that issued the Visa card to double or even triple your interest rate overnight. Your all-important credit score will be hurt as well.
According to a study by the nonprofit advocacy and education group Consumer Action, the top three default triggers that cause your interest rates to spike are a decline in credit score, paying your mortgage late, and paying your car loan late.


Other Triggers to Worry About
Under the universal default clause, your interest rates can be increased for several other reasons, including exceeding your credit limit, bouncing a check, having too much debt, having too much credit, getting a new credit card, applying for a car loan, and applying for a mortgage loan.
How does this affect your financial future? Take a look at the numbers. Let's say you're an average American household, with $8,000 of credit card debt. Assuming you make no additional purchases on your card, you have a 9 percent interest rate, and you make the minimum monthly payment, it'll take you 218 months (18 years) to pay off your debt and you'll end up paying $3,334 in interest.
Now let's assume that for whatever reason you were late one month with your car payment. This late payment triggers the universal default clause with your credit card issuer, and now your penalty rate gets increased to 24 percent (the average default rate in 2005). It'll now take you 679 months (56 years) to pay off your credit card debt, and get this -- you'll pay $30,813 in interest.


Staying Ahead of the Clause
Here are six ways to protect yourself from interest rate hike triggers:
1. Stay away from credit cards with a universal default clause.
If you're looking to open a new credit card account, be sure to choose one without a universal default clause. This means you have to truly read the fine print. If you're confused by the fine print (as many are), call the credit card company and ask what specific circumstances will affect your interest rate.
I read recently that Capital One cards don't have a universal default clause (although you should double-check before applying), and Citi has dropped its universal default policy as well. In addition, sites like CardWeb.com, Bankrate.com, and LowerMyBills.com let you compare credit card offers, so visit them before you apply.
2. Know your current obligations.
Check your current statements and credit card agreements to find out your current interest rates, and to identify which cards have a universal default clause that you weren't aware of until now. Again, if you're uncertain after reading the fine print, call your credit card company.
Consider transferring your balance from a card that has the universal default clause to one of your cards that doesn't. But don't rush to cancel the card altogether, because it could have a negative effect on your credit score.
3. Run your credit report.
Not only do you need to know exactly what your current interest rates are, you also need to know exactly what's on your credit report. Visit Freecreditreport.com or myFICO to order your credit report and credit score today.
4. Pay your bills on time.
According to the American Bankers Association, late payments for most types of consumer loans were on the rise during the third quarter of 2006. If you're having trouble with your credit card payments, at the very least strive to make your minimum payment on time.
5. Be proactive -- call your lender for relief.
If you're struggling to make monthly payments on your other bills, like utilities, car payments, or mortgage payments, call your lender to see what options they might be able to offer you. They might be able to adjust your monthly payments so that they're more manageable.
Your goal is to protect your credit report and credit score with a consistent record of on-time payments.
6. Fight back for your money -- write your local legislator.
Right now, there are amendments to the Truth in Lending Act that, if passed, would prohibit many unfair practices within the credit card industry -- including the universal default clause.
As a consumer, you can take action by letting Congress know that you want laws to protect your rights. For more information on how you can be heard, visit Consumer Action's web site.
As I write this, Congress is holding hearings to discuss the abusive and deceptive practices of the credit card industry. Read more about it here.


A Good Night's Sleep
Obviously, what you don't know really can hurt you. Check today and see if you have the universal default clause on your credit cards.
If you do, be careful to stay on top of your debt. Better yet, find a credit card that doesn't have the clause -- you'll sleep better at night.

 

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