The Simple Truth About Personal Debt

Debt is a part of most people’s everyday life. Whether that debt is in the form of a mortgage, personal loan, student loan, auto loan or a credit card the best thing you can do is take steps to reduce it and follow sound personal debt advice.

Now don’t get us wrong, we all have the same end game.

Paying off your debt to avoid the interest is the goal in all of this but we can’t go from zero to hero overnight and it’s not a perfect world.

Things can and often do happen that throw our finances for a loop, whether that is an unforeseen auto/home repair or another unexpected expense.

Furthermore, each and every time you apply for a credit card, pull equity out of your home mortgage or finance a new car, you MUST consider how each one affects the other.

Here’s the deal…

What most people don’t want to accept is that debt is often a result of many different factors over the course of time. And that applies to business and personal money management.

Main Reasons Most People Get Into Debt

Poor spending habits
Appreciating what credit can do FOR you without respecting what it can do TO you
They don’t know any better
Unforeseen events(we know some things you just can’t plan for)

Our goal is to help you along the roller coast ride that is finance and personal debt management.

So if you are currently looking to apply for your first credit card, manage your student loans or have years of debt management under your belt and are looking to secure a personal or home mortgage refinance loan we will be here to give you some tips and offer simple advice on lowering your personal debt.

Banking Advice 101: Actively Manage Your Money!

If You Want to Avoid Banking Fees…

checking bank statements

How often do you check your bank account? Do you review your most recent charges? Have you ever reviewed your entire statement?

These are important questions and if you want to take charge of your financial situation, I have some helpful advice for you.

Here it is…

Review your bank accounts daily!

Today, technology allows us to go on the computer or our smart phone and view our checking, savings, loan, retirement accounts and even our personal credit scores.

Heck, we can even businesses can monitor credit scores using free apps!

Banks invest tons of money into electronic banking, mobile and online, so rest assured, this is an extremely secure process.  

How Does Managing My Bank Account Actively Help Me?

The benefit of viewing your account daily is that you will not be caught off guard by any charges later down the road. Banks can change their pricing and account details at any time.

They’ll usually mail a notice or send an email. Let’s be honest, we typically will never read the entire letter or for that matter, ever open the piece of mail.

The point is, you may be getting a monthly service charge on your checking or savings accounts. Depending on the bank, the charge could be anywhere from $5-$15 a month!

Reviewing your statement or accounts routinely will also help you discover if any payment was double charged, if a check has or has not cleared, if a restaurant or bar has overcharged, see any bank fees, know balances and most importantly, if there has been any fraud on your account!

You may be wondering why any of this matters. Well, banks are pretty understanding but the longer it takes for you to bring one of the above mentioned occurrences to the banks attention, the lower the chance that it will actually be reversed.

If you review your accounts online this will only take 1-3 minutes a day!

So the classic, “I don’t have time” should be thrown out the window.

If you choose to review your mailed paper statement once a month, this will take only 3-7 minutes, depending on how many pages.

How Bank Fees Work

Ever wondered how bank fees work? I will explain how they operate which hopefully will allow you to avoid them in the future.

Here are a few examples.

Let’s say you make a purchase for $40, but you only have $15 in your account that day. If you don’t make a deposit or transfer to cover the -$25 by the end of the business day, you will receive an overdraft fee for that one purchase (overdraft fee is interchangeable with non-sufficient funds fee).

The amount of the fee will depend on your bank, typically it is in the $30 range with your large banks such as Bank of America, Chase, Citi and Bank of America.

Another example: Let’s say you began the day with $50 and, in order:

  1. You made a purchase for $20
  2. Had an electronic payment go through for $75
  3. Cleared a check for $100.

The $20 purchase goes through fine since you have the money. However, you don’t have enough money for the payment and the check.

A check will always clear at the end of the business day (*you will never see a check pending when it  initially clears). Again, if no deposit or transfer from another account at your bank is made by the end of the business day, you will receive an overdraft fee for both the electronic payment and the check!

Each item that clears when you don’t have the funds which results in an overdraft fee.

This can get extremely costly.

Actively review your accounts to ensure this doesn’t happen to you!

Additionally, many times people don’t realize their account is in the negative and leave it overdrawn for several days.

Guess what? Banks have a fee for that as well! It depends on your bank, but generally after 7 business days, an account in the negative will be charged a “continued overdraft fee” of $5-$8 a day for five consecutive days.

Review your account fee schedule at your bank to understand the costs of services and fees. You can only save money by building good habits of managing your money.