Journal of Finance and Accounting – TanasiJournal

Archive for March, 2010

If you are a college student, you are probably concentrating on your studies and trying to get an education that will benefit you in the future. One thing that you may not be thinking about is how to handle your money, and failing to do so can leave you in a pretty big financial mess by the time you are out of college. It is important that you take control of your finances now if you want your financial future to be bright. The following are some tips that can help you with your finances to avoid any college financial disasters.

Tip #1 – Only Use Credit Cards in Emergencies – Once you get a credit card it can be all to easy to start racking up the credit card debt. This is a bad way to start out and you will probably end up with bad credit if you are using credit cards all of the time. Remember, the money you spend on credit cards will need to be repaid. It is best if you save your credit card for emergencies instead of buying that new pair of shoes or paying for an evening out.

Tip #2 – Pay Off the Balance Every Month – It is also important that you pay off your balance each month if you have a credit card. Leaving a balance on the card can result in you paying extra money on interest, so you will save money if you pay off the balance every month. This will also keep you from getting in credit card debt over your head as well.

Tip #3 – Pay Bills on Time – Now is the time to start building your credit history, and you can do this by always paying your bills on time. If you fail to pay your bills on time, it can get quite expensive. Many companies will charge late fees if you do not pay on time and your interest rates may go up as well, costing you even more money for being late.

Tip #4 – Start Saving Now – Many college students do not realize how important saving really is, but if you can start saving while you are in college, you can reap from great benefits when you are older. Saving now will get you in the habit of saving, you will earn money from the money you save, and you will have extra money set aside in case of any emergencies as well.

Tip #5 – Look for the Best Checking Account – You can actually save a great deal of money if you look around and find the best checking account. Look for an account that has no fee for starting an account and no minimum balance. You may also want to check into any debit card fees, and fees for deposits of withdrawals. Some banks will actually offer totally free checking for college students, so take advantage of this and you can save a great deal of money every year.

Most people don’t realize that they can drive down their credit scores even if they have a near-perfect record of paying their bills. The five classic mistakes you need to avoid are:

1. If you are applying for a mortgage, never pay off old collections, judgments or tax liens until the closing. (Ask your mortgage lender if you pay these debts at your closing.)

When you pay these debts off before applying for a mortgage, they are treated and scored as new and recent accounts with delinquent activity. This drives your credit scores down.

2. Closing credit card accounts initially lowers your scores. Again, this is due to your action showing up as new and recent credit activity. Any new or recent activity will have an initial detrimental effect on your scores.

Of course, after you close inactive or unnecessary accounts the scores will eventually come up because you will have less credit or potential credit risk. But it may take months for this to occur. Unfortunately most people close superfluous accounts right before applying for a loan thinking that it will improve their scores. If you want to close these accounts, do so well in advance of applying for a loan.

3. Don’t keep high balances on credit cards and revolving debt. Maintaining balances under 30 percent of the available credit on each card can improve your scores. For example, if your available credit on a card is $1,000 keep the balance under $300. Also remember to pay off debt instead of moving it to other revolving accounts. Moving balances to zero- or low-interest credit cards can actually lower your scores.

Lured by credit card offers with low initial rates, many consumers move their credit card balances over and over again to keep their accounts at lower rates. This creates new activity on your credit report and lowers your scores.

4. Don’t apply for credit you don’t need. Many people are tempted by department store promotions offering them 10 percent to 20 percent off their purchases if they apply for a credit card. What may look like a great deal really isn’t because the new account will lower your credit scores.

Use credit cards wisely. Remember that someone who has a good credit card history is viewed more favorably by credit bureaus than someone who has no credit cards. To build an effective credit history, have a mix of installment credit (cars, furniture, etc) along with credit cards and mortgages.

5. Don’t assume the collection account, judgment or tax lien you paid has been reported to all three credit bureaus. Likewise if you close an account, don’t assume that has been reported to all three bureaus.

Unfortunately, agencies and creditors are quick to report you when you owe them money or have made a recent mistake. But they can be slow to report the final resolution to that account when you have paid them off. Collection agencies and the creditors that have sold your account to the collector are both extremely poor at reporting the account paid in full. If you have declared bankruptcy you need to be especially vigilant. Less that 50 percent of the accounts, collections and judgments discharged in a bankruptcy will show up on your credit reports after the completion of the bankruptcy.

It is your responsibility to make sure that all three bureaus have the most recent and accurate information about you. You can write to them or file online disputes with each individual bureau. Be sure to supply them with copies of paid receipts and any correspondence you may have to ensure that your record is recent and correct.

Ron Cahalan is a 26-year veteran of the mortgage lending industry. His controversial new book, “Lenders Are Liars,” exposes what he calls the greed and lack of ethics in the industry. It provides steps homeowners and borrowers can take to get the best rates and negotiate lower closing costs and other essential information homeowners must know.

Controlling a family budget could be a more challenging task than planning it. It turns out to be even harder when gas price goes up unpredictably and it really strangles your neck, both yours and your partner’s.

Living without gas is nearly impossible. However, saving your money through gas is not. How? These 5 great tips below will help you save gas…. and money.

1. Save Gas Money Through Fuel

Learning to conserve gas can save you a great deal of money. You should avoid aggressive driving, such as speeding and reviving the engine and breaking the pedal too fast. These actually waste gas. Indeed, slamming the breaks is also an example of wasting gas. So, if you want to save your money, try to eliminate those forceful actions. If you happen to wait for something while you’re in the car, it’s best to turn off the engine. This will lessen your gas spending, thus lessen your costs, too.

2. Save Gas Money by Taking Good Care of Your Car

You need to take more attention on your car. Good maintenance leads to spending lesser amount of money. You’d better have a regular tune up and do not fail in emission test. Keeping an eye on the tires is also beneficial. Don’t let them get over or under inflated. If you can fix those problems earlier, it will save your money up to about 3 percent of your fuel.

3. Get a Gas Membership Card

You should get a credit card that you will use particularly for your gas purchases. Some of the credit cards provide excellent gas savings when you use the card. To bring you there, all you need to do is to get a gas membership card. Some gas stations offer some pretty good incentives with their memberships.

4. Get a Hybrid Vehicle

If SUVs are your great desire, it’s too bad, because that’s absolutely not a good choice of saving your gas and money. Sedans may be more economical than SUVs, but still they are probably not your preference. So, a better option for it is to get a Hybrid SUV. This will not cause you to pay for the extra gas. However, you know that SUV is pricey, so it’s best if you think about deciding it if it is really worth it.

5. Improve Your Fuel System

You know previously that it’s easier when you take good care of your vehicle. Using a quality fuel additive, such as a fuel system cleaner or conditioner is a great attempt. A fuel system cleaner is able to clean up harmful deposits, which can cause a problem for the fuel injectors. It can also stop them before they get there in the first place. In the meantime, a fuel conditioner can also keep residue from forming in your car’s fuel system, prevent varnish or gum from building up in the engine, and throws away the moisture that may have developed from condensation.