How many times has the cashier across from you asked you this question: “Would you like to apply for our store credit card?” When you hesitate, they follow up with: “It will qualify you for 10 percent off on all your purchases, including this one.” It is easy to say “yes.” After all, signing up for the store credit card seems to make financial sense. You were already going to buy the items in front of the cashier. Why not sign up for the card, get your discount and spend less money? Then, when you pay off the item, you can cancel the card. That does sound smart. Problem is; too many of us never follow through with that “payoff the charge and cancel the card” part. That could lead to financial problems done the road. The truth? Retail credit cards rarely offer the best terms. There are some benefits to using these cards, just not many. The problem Here is the main problem with retail credit cards: They usually come with higher interest rates than do standard bank or credit union issued cards. This is important if you have a habit of not paying your credit cards in full each month. You might intend to pay off your retail credit card in full as soon as your first statement arrives. However, what if you do not have the money? Then you’ll pay only part of your bill. Then interest will kick in. Also, retail credit cards are famous for having interest rates in the high teens and low 20s. The interest on these cards can build quickly, leaving you with a debt load that gets larger and larger. These cards, then, are far from ideal if you struggle each month to eliminate your credit card balances. The cons Those high interest rates are the biggest drawbacks of retail credit cards. However, they are not the only one. They are also not flexible. You can use traditional credit cards most anywhere, at grocery stores, gas stations or area department stores. Store credit cards, though, only work at the retail establishment printed on the front of the card. That is a limited card. Remember, having too many open credit card accounts can damage your three-digit credit score. Why waste a credit account on a card that you can use with one retailer? Another problem with store credit cards? They often have onerous terms, too. Yes, the interest rates are usually awful. However, so are the penalties. The late fees associated with store credit cards can be hefty. Those late payments will often also send your card’s interest rate even higher. At the same time, many store cards do not give you as much time to make your payment as do traditional credit cards. Finally, there are simply better credit card options out there. Banks, credit unions and other card issuers offer a wide variety of credit cards that come with lucrative rewards programs. These cards might provide you with a cash-back bonus at certain times of the year. They might let you earn free airline miles. Others will provide you with points that you can cash in for hotel stays, airplane reservations or retail merchandise. Also, these rewards cards often come with interest rates that are far lower than those offered by store credit cards. The pros If you pay off your balance each month, store credit cards might not be a bad financial decision. That is especially true if you sign up for a card with a retailer where you spend a steady amount of money each month. Store credit cards often offer discounts on store merchandise, something that can save you money … as long as you do not keep a balance each month. Store credit cards might also be an attractive choice for consumers with no credit histories or bad credit. It is easier to qualify for retail credit cards. You can then use these cards to demonstrate sound financial behavior — paying your credit-card bills on time. This practice will gradually help you rebuild damaged credit or establish a credit history if you do not yet have one. Before accepting your cashier’s offer for store credit, make sure to consider your financial habits and credit status. In most cases, you’ll find that a retail credit card does not make sound financial sense. 

The Pros and Cons of Retail Credit

View Resource The Pros and Cons of Retail Credit
When you are getting a new car, you have a big choice to make between buying and leasing. Assuming you cannot make the purchase in cash, buying or leasing can feel pretty similar because, in both cases, you are making a monthly payment for your car. However, there are some key differences between them, and it is important to understand how leasing a car works before you take out a lease. On the surface, a lease looks a lot like a long-term rental agreement. You decide how many years you want to drive the car, and you pay a fixed monthly amount during those years. At the end of your lease term, you return the car and pay for any damage beyond normal wear and tear. You also will pay extra if you go over the mileage cap set in your lease. However, there are some key differences between a lease and a long-term rental. One of the main differences is that you have control over several aspects of your monthly payments. When you lease a car, you are paying the leasing company for the reduction in the car’s value over the course of your lease, but you can negotiate the starting value just as if you were buying the car. The other component of your monthly payment is interest on the value of the car. The rate you pay is based primarily on your credit score. Key terminology you need to understand about leases: Factors to consider as you look into car leases: Leasing a car is ideal if you like to drive a new car every few years. It helps keep your monthly payments low and makes it very easy to bring in your car at the end of your lease and sign a new lease on a different car. On the other hand, if you could see yourself driving the car for five or more years, consider buying it instead. This allows you the freedom to drive it even longer than five years, and to own an asset that you can trade in to reduce the cost of buying your next car. Your family situation should play a role in determining whether to buy or lease a car. For example, kids are messy, and they can cause damage to the car’s interior that you would have to pay for at the end of a lease. Also, if you have a growing family, you may want to change to a different vehicle before your lease term is up, and it is very difficult to get out of a lease. On the other hand, if you have limited income now and just want a car to drive for a few years, low lease payments are a very attractive option.

Understanding Car Leases

View Resource Understanding Car Leases

Does it make better sense to buy or lease a new vehicle? That depends on a number of factors, such as the residual value of the car you intend to purchase, the amount of money you pay up front as a capitalized cost reduction and the cost of financing. A lease will usually be a more attractive option when compared to a vehicle purchase when measured over a comparable term. Keep in mind that with a lease, you will have to return the vehicle at the end of the lease term, whereas you will own the vehicle and will be able to continue driving it after the term expires.

Purchase or Lease a Vehicle

View Resource Purchase or Lease a Vehicle

As the price of gasoline continues to rise the question often arises as to whether it makes financial sense to trade-in a ‘gas guzzler’ for a more fuel-efficient vehicle. There are many factors that go into that decision, including the cost of the new vehicle, the amount of miles you drive and the cost of fuel. You can calculate your monthly fuel savings based on your current miles per gallon, miles driven per month and cost of fuel and estimate how much you’ll save by purchasing a more fuel efficient vehicle and when you’ll breakeven on the fuel efficient vehicle purchase.

Gas Mileage Savings with a Fuel Efficient Vehicle

View Resource Gas Mileage Savings with a Fuel Efficient Vehicle

The purchase price of the vehicle you can afford is based on several factors, including the monthly payment you can afford to make, your down payment, net value of any vehicle you’ll be trading in and any rebates or cash back offers available from the dealer or manufacturer.

Vehicle Affordability by Loan Term

View Resource Vehicle Affordability by Loan Term
Between the loose home lending practices common about a decade ago, and the housing decline and economic difficulties that followed, home foreclosures have been a common occurrence across the United States. If you are facing foreclosure, know that you are not alone. You have many steps you can take to work through the process. Avoiding foreclosure The best way to avoid foreclosure is to keep up with your mortgage payments. Even if your home is worth less than you owe on your mortgage, the bank cannot initiate a foreclosure unless you fall behind on payments. Therefore, plan your finances carefully to budget for your monthly payments if you want to keep your home. This may mean cutting back on other things you’ve become accustomed to, like cable TV, eating out, or having a gym membership. If you can tell you are not going to be able to afford your payments, act quickly to do everything you can to keep up. Perhaps you have some assets you can sell, like an unneeded car or some valuable jewelry. Another option is to get a part-time job to help make up the shortfall in your monthly cash flow. Working with lenders The lender is not your enemy when it comes to foreclosure. Ultimately, the lender’s preference would be for you to keep your home and continue making payments on it. Because of this, lenders are willing to work with you; especially if you are confident you can get back on track with your payments. Be quick to respond to all communications from your lender about your mortgage or the potential for foreclosure. Even take the initiative to call your lender if you know you’ll miss a payment. If you explain your situation, the lender will sometimes allow you to postpone payments or pay only interest for a short time. If you show you are willing to make financial sacrifices, lenders are often happy to work with you. Understanding your options Despite your best efforts, you may have a situation in which you really can’t keep up with payments. In this scenario, you have two major options. The first is to work out a solution with your lender, whether it is refinancing, going through a loan modification or having a temporary change in required payments. The second is to allow the lender to foreclose on your house, which means you will move, and the lender will sell the house at an auction to repay your mortgage. Watching out for scams Thousands of individuals and companies prey on people who are facing foreclosure. You should never pay for third party help during a potential foreclosure, nor should you sign any documents unless you fully understand them. If it sounds too good to be true, that is probably because it is. You may unknowingly be signing over the title to your home! Instead, find a HUD-approved housing counselor by calling (800) 569-4287.

Dealing with a Home Foreclosure

View Resource Dealing with a Home Foreclosure
Unexpected medical bills are one of the most common financial setbacks a family can face, so you should have a plan in place to handle them should they occur. Of course, the best plan is to have a great health insurance plan, or money saved to pay the bills for which you could be responsible. Those options are not feasible for everyone, however. You can still use plenty of wise strategies to reduce the impact of a medical emergency. Avoiding unnecessary treatments and expenses The cost of medical treatment depends on what care you get and where. For example, if you have health insurance, you may be able to call a nurse’s hotline through your insurance company when you first notice non-emergency symptoms. The information you receive can dictate your next step, whether that be scheduling an appointment with your regular doctor, or heading to a clinic or a drugstore to have a prescription filled. If you do need care right away, consider whether an urgent care facility would be adequate. The wait there is often about the same as any emergency where your condition does not warrant getting to the front of the emergency room line. If you do need to go to the emergency room, drive yourself unless you need immediate ambulance care. Understanding insurance The amount you’ll have to pay for the medical care you receive depends on the type of medical insurance you have. If you have an HMO or PPO plan, you’ll likely have a co-pay for each doctor or hospital visit. If you have a high-deductible plan, your insurance may not pay for anything until you have satisfied the annual deductible. You also may have different costs depending on whether you use medical care providers within your insurance company’s network. Therefore, it is important to know in advance what hospitals and facilities are part of the network. In some cases, you may even need to call for pre-authorization before getting care unless it is a true emergency. Questioning your bills When you receive your medical bills, don’t assume you have to pay the full amount stated. Instead, take a look at the itemized bill to ensure it is accurate. If you received care in an emergency room, you might have seen several doctors and nurses, and perhaps had tests ordered, but not completed. Those could result in billing inaccuracies. If you have questions about any of the charges, call to ask about them. In addition, question anything you are getting billed for that you think is covered by your health insurance plan. Working out payment plans Once the bill is correct, it is time to figure out how to pay it. Hospitals and other medical facilities understand that most people cannot afford to pay a large bill all at once. As a result, they are typically willing to let you use a payment plan. Call the billing department to discuss the options, and make sure you understand whether there are any interest payments or fees for paying the bill in installments.

In Case of Medical Emergency

View Resource In Case of Medical Emergency
None of us like to think about our parents getting older and needing our help. However, it is a fact of life that as parents age, they will inevitably need you to step in and get involved with their finances. With 46.2 million people aged 65 or over in this country today, that works out to many parents needing help as they reach their twilight years. When the parent and child roles shift, it can be hard, especially if you swap roles and become a caregiver to your mom or dad. It is natural to feel worried and overwhelmed at a time like this, however, it is imperative that you take control, rather than avoid the situation. As their adult child, you are the person best qualified to assist your parents when they need help. If you delay in this, it is likely that others, who may not have your parents’ best interests at heart will intervene. When to Step In There are many warning signs that you may notice that will indicate that all is not well with how your parents are handling their finances. These signs may include: It is important to remember that even if you aren’t currently concerned about the mental or physical health of your parents, it’s good to become familiar with their finances as they reach retirement age. The sooner you do so, the more receptive and comfortable they’ll be when it comes to including you in important financial decisions. It will also be far easier to step in and take control when that time comes. First Steps to Take It is best to talk with your parents about their finances while they’re self-sufficient and competent. Before you begin, there are a few things to consider: Always be respectful. Discussions of a financial nature need to be approached with the utmost sensitivity and respect. Neither of your parents won’t want to dwell on what may happen as they age and taking care of their emotional needs while discussing the future is incredibly important. The thought of losing the ability to maintain their financial independence as they age will be a frightening and frustrating thought for your parents. Try putting yourself in their shoes when discussing what the future may hold, and be ready for, and understanding of, any resistance they may present when you discuss their financial affairs. Organize important documents. Find out where your parents keep all papers of importance. Items such as Social Security cards, insurance policies, marriage, and birth certificates, and mortgage information should be kept in a safe place. If your parents rent a safety deposit box or own a safe, ensure you know how to access it. Remember that in the case of safety deposit boxes, you will need to be an authorized signer if you need to gain access. Find out if your parents have estate planning documents. It is important to know if your parents have made a will, living will (also known as a health care directive), living trust, financial power of attorney, or medical power of attorney. You also need to know where the originals of these documents are. If your parents do not have these documents, help them to get them created. These are essential documents regarding estate planning, especially if your parents own real estate or valuable personal property. Know your parents’ finances. Ensure you know all their sources of income, outgoing expenses, account access information, and so on. Create health care and durable powers of attorney. This will ensure that your parents can appoint a trustworthy person to manage both their health care decisions and their finances if they should ever become incapacitated. Stay Involved It is important for you to act swiftly to help your parents with their finances when it becomes apparent to you that they need assistance. The longer you wait, the more difficult it will become to work through the accounts and legalities you need to. It is also important to stay involved so you are aware of any financial changes, or issues your parents may be facing. With your help, they can be confident that their finances are being well managed. Seeking out good financial assistance, and planning ahead on behalf of your parents will help ensure that their later years are secure, comfortable, and stress-free. Working with your parents now is the best option both for them and you.

Helping Your Parents with their Finances

View Resource Helping Your Parents with their Finances
One of the most emotionally vulnerable times in your life is also one of the times when you’ll need to do the most financial paperwork. The good news is that there are plenty of resources to help. Don’t be overwhelmed by the tasks ahead of you. Seek support from other family members as you deal with the financial implications of a death in the family. When you take things step by step, you’ll make it through everything in the end. Gathering financial paperwork After a death in the family, you’ll need many types of legal and financial documents to sort out the deceased’s finances and how they might impact those immediately around them. The major documents needed include 10 to 20 copies of the death certificate, the original birth and marriage certificates. Find the deceased’s will, if there is one and any life insurance policies. You will also want the most recent financial statements for all bank accounts, credit cards, mortgages, auto loans, and investment accounts. In addition, you will need tax returns from the last couple of years and applicable Social Security statements. This information might be difficult to find if you were not responsible for the management of the deceased finances. Often, they are stored in filing cabinets at home or in a safe-deposit box at the bank. Check with those closest to the individual to see where they might have kept this type of documentation. Assessing the financial situation Once you’ve collected all of the documents, the executor of the will can begin sorting out the financial situation of your loved one. The first step is to file a probate petition in court to get legal authorization to handle the finances. The executor will then need to log all liquid and property assets, and identify any debts secured against them, such as a mortgage or auto loan. Other debts, called unsecured debts, are also logged. In general, assets left over after paying debts are distributed to heirs as outlined in the will. If it was your spouse who passed away, you’ll also want to assess your immediate financial situation and cash flow. Your deceased spouse will no longer receive paychecks, Social Security benefits, and other payments, which may leave you in a tough financial spot. Take a look at your immediate expenses and plan where you will get the money to pay for these. If you do not have any liquid funds or income, you’ll quickly need to collect benefits and transition assets to be able to continue paying your bills. Collecting benefits You’ll need to contact many institutions to notify them of the death and request benefits for which you are eligible during the weeks and months following your loved one’s death. First, contact the Social Security Administration to report the death and collect death benefits if you are eligible. You also may be able to get ongoing survivor benefits. If your loved one had a life insurance policy, you would need to contact the insurance company to report the death and arrange for dispersal of benefits to the beneficiaries. There are also other potential organizations to reach out to regarding death benefits. If the deceased was a member of the military, the Veteran’s Administration would issue benefits. Employers also may have benefits available, including a separate life insurance policy and payouts of accrued sick time, vacation time, and bonuses. When receiving all of these benefits, put them in a safe bank account or investment account to use them as needed, planning for your future rather than spending them rashly while you are grieving. Transitioning assets The last major stage to go through is to transition assets to their new owners, as outlined in the will. You will need to call all of the financial institutions at which the deceased held accounts and notify them of the death. Then you’ll need to either withdraw the assets to transfer them to new owners or change the name on the account to the new owners. When handling retirement accounts, such as an IRA or 401k, you may want to roll over funds to your account rather than withdrawing them. Cancel insurance policies, memberships, and subscriptions you no longer need. Your last step is to file an estate tax return within nine months of the death. In addition, you are responsible for filing a tax return for the deceased in the year of the death, presuming there was income during that year. When you have completed these steps, you’ll be done handling the finances and be ready to move forward on your own.

A Death in the Family

View Resource A Death in the Family
Nobody plans to be suddenly let go from a job, but, unfortunately, it happens more often than you would like to think. That sinking feeling of not knowing where your next paycheck is coming from or how you are going to pay your bills may feel overwhelming at first, but it does not have to be. With some careful planning, you can usually stay financially afloat during your time of unemployment and be ready to get right back on your feet when you find work again. The most important thing to remember is that you need to be active and involved each step of the way. Overhauling your budget Your first plan of action is to stop all unnecessary spending. Take a look at your records of expenditures from the last few months and separate them into categories of “needs” and “wants.” You may even be surprised when you realize what you can do without. For most households, typical “wants” to stop spending on include eating out, going to the movies or other entertainment, buying clothes and going on vacations. Don’t stop there, but take a look at your “needs” and consider whether you can cut back on any of those for a while. For example, you could cut your cell plan to the bare bones and switch to basic cable and Internet instead of the package with all the sports channels. Reduce grocery expenses by purchasing store brand instead of name brand foods and cut your utility bills by using your furnace or air conditioner less and turning off lights when you leave rooms. Applying for unemployment benefits You are probably eligible to receive unemployment benefits. Benefits usually range from 25% to 50% of your average weekly pay, depending on what state you live in and your prior income level. You need to apply for these benefits right away because they are not retroactive, and you will not start getting checks until you apply. Don’t let the paperwork scare you away. Spend your first day of unemployment on getting your benefits setup. Start at the state unemployment office website and don’t be afraid to call if you are not sure what you need to do. It may take a large chunk of your day, but you will have the satisfaction of knowing at the end of the day that you accomplished something important for your personal finances. Maintaining your personal and mental health The financial stresses of unemployment may not even be your main challenge. Take care of your physical and mental health as well so you stay upbeat and keep moving forward with your life. Maintain a schedule of job hunting on weekdays and participating in activities you enjoy during non-work hours. Even just going to the gym or heading out for a walk around the neighborhood every day can make a big difference. Continue surrounding yourself with friends and family, too, and don’t be afraid to talk about your struggles with them.

Suddenly Unemployed

View Resource Suddenly Unemployed