Credit Counseling Blog

You’re excited about having a baby. But you may not realize that your little bundle of joy can cost a bundle.
According to the U.S. Department of Agriculture, the typical middle-income family will lay out $190,980 in today’s dollars to raise a child through age 17.

Start Budgeting Now

Financial planning experts suggest these basic moves:

Feathering the Nest

Start envisioning your perfect nursery and economize where it’s practical. You can:

Daycare Dollars

Most parents get sticker shock when pricing childcare. According to The National Child Care Information Center, the average childcare fees for just one infant range from $3,803 to $13,480 annually. To cushion the blow:

Long-term Financial Planning

As new parents, there are other financial needs to consider.

Childcare Deductions

The IRS is good to new parents at tax time. It allows an exemption for every new dependent, grants credits of $1,000 per child under age 17, and offers childcare credits to parents who need daycare to work.

Here are some tips for teaching kids about the importance of saving:

1. Make sure they have a piggy bank or some place to store loose change and other savings. It all adds up.

2. Give them a bonus amount with their allowance, but only if they agree to put it in savings.

3. Put extra money in their savings for every “A” on a report card.

4. Have them cut out a picture of something they want to buy. Then cut it into smaller pieces. Divide the cost of the item by the number of pieces. You can turn it into a puzzle or simply a reminder.

Every time they save a “puzzle piece amount,” they can add another piece until they’ve saved enough. This will teach them to save for a goal.

5. Mark a calendar as a special “Savings Day.” Create chores or simple tasks they can do to earn special savings amounts.

6. Set up a direct deposit into their savings account. Encourage them to make recurring deposits as well. Use your deposits as a way to match what they put in.

7. Hide a few dollars around the house in places no one ever looks, like the bottom of a sock drawer or in jacket pockets. When the kids find it, encourage them to save the “found” money.

8. Challenge siblings or even a group of friends with a savings contest. See who can save the most, and hand out rewards at the end. Reward everyone, and give the winner a little extra.

9. When you buy them little things, have them put the equivalent cost in their piggy bank

1. Piling Up Debt
Using credit cards  responsibly can help you build good credit so you qualify for lower interest rates on loans. But charging your cards to the max and not paying them off is a sure ticket to trouble. Pay in cash instead to keep spending within your means.

2. Ignoring Murphy’s Law
Bad luck would have it that you’re involved in an accident the day after your auto insurance policy expires. If that happens to you, the financial fallout can be devastating. Be sure you stay fully covered with auto, homeowners (or renters), health care and disability insurance at all times. And if someone else depends on your income, include life insurance.

3. Procrastinating on Saving
In the world of investing, time can be your best friend. Thanks to the power of compound earnings, your chances of achieving financial independence shoot up dramatically when you start at a young age. By waiting even just a few years, you make it much harder to meet the same goal. So find a way to start today.

4. Missing the Match
If your employer offers a 401(k) plan with a company match, make sure you take full advantage of it. Simply put, a company match pays you. If you’re not contributing enough on your own to get the full match, you’re giving away free money.

5. Not Using Cruise Control
Basing your investments on what you have left over at the end of the month will get you nowhere fast. Instead, set up an automatic plan that takes money out of every paycheck. You’ll probably never miss the dollars you don’t see.

6. Co-Signing for Loans
Next time a friend or family member asks you to vouch for them on a loan, politely run the other way. When a bank requires a co-signer, it’s because the person applying has no credible history of paying debts on time. If the person who received the loan is late on payments or simply doesn’t pay up, you’ll be responsible. And it could damage your credit.

7. Driving Upside Down
Let’s say you buy an expensive new car and finance it for five years. Since new cars depreciate quickly, after a short time you may owe more on the loan than the car is worth — being “upside-down” on the loan. To get the most for your money, put at least 20 percent down or, better yet, buy used and drive it ’til it dies.

HARTFORD, Conn - The Hartford reported that many Baby Boomers are tapping into thier retirement to start and pay for new businesses. A survey conducted by the The Hartford Financial Services Group, Inc. (NYSE: HIG), of 500 boomer business owners, 75 percent tapped their personal savings, compared to only 20 percent who used credit cards and 16 percent who relied on bank financing, to fund the start of their businesses.  

“More and more people are starting their own businesses later in life to pursue a personal passion or lifelong dream,” said John Diehl, senior vice president and leader of The Hartford’s Retirement Solutions Group. “We celebrate this entrepreneurial spirit, but also recognize that there are some practical issues these boomers should consider to effectively preserve and protect their wealth, such as understanding when and how to pay back any start-up costs, planning for cash flow crunches and availing themselves of potential tax advantages.”

 To read the full article click here

You will have access to credit cards as a college student. While credit cards are useful when used appropriately, the temptation to overspend can lead to expenses that could destroy your budget as well as your financial independence. Students sometimes wisely use credit cards to pay for unexpected expenses such as medical emergencies, with the full understanding that it costs money to borrow money if the credit card balance is not paid in full each month.

Your credit record begins when you establish credit in your name, and a history of repayment is recorded by credit reporting agencies. Your credit rating follows you wherever you go, and a bad credit rating can affect your ability to get a job or buy a car or house.

Credit Card Tips for College Students

• Set a credit card limit and stick to it. When possible, pay off credit card balances each month.
• If you pay only the minimum balance on credit cards each month, you will pay interest on the use of the money, and it will take time to pay off the total debt.
• Comparison shop for credit cards. On credit applications, compare the annual percentage rate (APR) including finance charges, methods used to compute charges, the grace period, annual fees, penalties for late payments and other charges. 

Your credit limit may increase when you pay your bills on time. To avoid overspending, make buying decisions based on a careful analysis of your financial condition rather than on the credit limit on your credit cards.

Two important federal laws protect women’s credit history and make it possible for them to obtain credit in their names. The Equal Credit Opportunity Act gives women the opportunity to establish their own credit history and identity, even if they are not employed. Under this Act, reports to credit bureaus must be made in the names of both husband and wife if both use the account and are equally responsible for repayment.

The Fair Credit Reporting Act establishes the procedure for correcting mistakes on a credit report. You have the right to see what is in your credit file and have any errors corrected. The law also gives you the right to add a statement in your credit report explaining your side of the story for any negative item. If you have negative information in your credit report, the Fair Credit Reporting Act gives you the right to add a statement explaining your side of the situation.

If you have applied for credit and were denied, find out why you were denied. It may be unrelated to your credit usage. It may be that you have not been with your current employer long enough or that your history has been combined with another persons’, or erroneous information was given by a business, or that there were too many inquiries on your credit report. An inquiry is noted on your credit report when anyone or business requests your credit report. Some businesses look at the number of inquires and may judge that you are trying to obtain more credit than you can afford.

As a Non-Profit organization, Consumer Credit Management Services has created a blog to help educate families and individuals. We’ll be talking about many financial subjects as well as news worthy issues.

What Subjects:

• Debt
• Credit
• Savings
• Budgeting
• Investments

Our Goals:

• To educate everyone in all matters of finances
• Through education, prevent more people from going into debt
• Through education, help people save for thier future

We welcome you to post comments and ask questions on all topics.  Thank You.