What Is Debt Snowflaking?

None of us like to have a large amount of debt hanging over our heads. It makes us feel nervous, and adds to our fears about the future. It’s no surprise, then, that most people want to pay off their debt as soon as possible, and are waiting for the day when they will get a large windfall to make that happen. This is called a debt snowball. It’s a large amount of money that accumulates over years, or that you get at one time, which is used to pay off a debt.

The problem with debt snowballing is that most people don’t win the lottery or inherit a large amount of money. Saving up large amounts is difficult, too, in today’s economy. While you are saving up, your debt is also accumulating, and in some cases, skyrocketing.

Then there is always the problem of getting your spouse to agree that a large amount of money should be used to pay off a debt, when so many other things look so much more attractive to spend it on.
There is another kind of debt payment system that can solve this problem, called debt snowflaking. What is it, and how does it work?

Small Extra Payments

In debt snowflaking, You use small extra payments, and apply them to your outstanding debt. The first step before you do this is to write down all of your debts, from the smallest amount to the greatest. Then plan how to accumulate small amounts of money that can be applied to the debt in a frequent payment program, over and above the minimum payment due on the debt. Be sure to pay at least the minimum on every debt.

The extra money may come from weekend jobs, selling something online, birthday money, or any other source. It could also be a small amount taken out each week from a paycheck. For this payment system to be really effective, it should be deliberate and intentional. Your goal is to make small extra payments frequently, starting with your smallest debt first. When that debt is paid off, you continue up the ladder till you get to your largest debt.

Benefits Of Snowflaking

Obviously, snowflaking is easier than snowballing for many people to do. It also has the positive result of making you feel successful about paying off a small debt. Many people need that positive reinforcement to keep going until all their debt is paid off.

The shock of throwing an entire large amount of money down the debt tube is avoided. So you probably won’t have to fight with your spouse about it!
Snowflaking can be combined with other forms of debt payment, such as snowballing and debt stacking, when the opportunity becomes available.

Don’t wait for a large windfall to start paying off your debt. Start where you are now, and begin paying off that debt in small extra increments. You’ll be surprised at how effective it can be, and how good it feels.

Paying Off Debt or Saving for Retirement

There are numerous reasons to save for retirement, although they are not all obvious.

Once you retire, it is hard to obtain a full time job and keep yourself financially stable. Medical reasons can be a reason to retire and the cost of living is increasing year on year so it is hard to support yourself. Even the most frugalof retirements can set you back a little bit.

Although medical advances have increased the amount of life you will lead, they also have the implication that you will need to fund yourself during this period.

Compound Interest- Friend or Foe?

In debt, compound interest can work against you although in saving it can be your friend. The more you have in your Roth IRA, the more interest that you accrue, as things can be compounded. It makes sense to start saving earlier for retirement so that you can earn more money.

The argument for Debt Payoff

Debt costs a significant amount of money. Debt can stop you from moving to the next phase of your life and progressing to where you want to be in life. Paying off debt can give you some increased freedom.

Whatever manner you choose to pay your debt off, you need to pay in excessof the minimum payments so that you can keep making progress and pay your debt off at an accelerated rate.

However, if you are living in anticipation of your next paycheck then it can be quite difficult to pay your debt off. Even if you are not in this situation, then it can be quite hard to pay debt off particularly if it is compounding and there is not much you can do about that. You need to have the dedication and discipline to donate any extra money that you have to paying debts off and then everything will be ok.

The Balance

It is possible to strike a balance between paying debt off and saving for retirement. You don’t have to go for one or the other, it is entirely possible to do both. Ceasing accruing debt is the first step to a healthier financial future as is setting achieveable targets.

An alternative method of striking a balance is utilising the retirement resources which are at your disposal already such as a 401 (k) employer match. If your employer matches your contributions this gives you a chance to double your retirement funds and keep things ticking along quite nicely.

Bankruptcy Basics

If you are an individual facing bankruptcy then you need to know that Chapter 7 for liquidation and Chapter 13 for reorganization are the two types of proceedings that apply to you. You will need Chapter 7 if you have assets than can be liquidated. No two people are the same bankruptcy will not work for some people but maybe the best way round a situation for others.

Chapter 7 Bankruptcy Proceedings
Chapter 7 is the most common proceeding for individuals and this proceeding determines how much property you can keep and what should be liquidated. In order to claim under Chapter 7 you can’t have a lot of money sitting in your bank account as you’ll be required to pay this to your creditors. What property and how much of it you can keep will vary, depending on the asset laws of the state that you live in, as well as your circumstances. In many states you would retain assets such as your family home but you need to enquire into how the ruling works in your particular state. Some debts cannot be discharged no matter what state you live in, these include income tax, child support and outstanding student loans.

You can’t file for Chapter 7 bankruptcy until you have completed an online government run credit counselling course, which takes up to an hour to complete. Once you have actually filed, you have to take another online government course. Once you have filed for bankruptcy, stop is put on any proceedings there may be against you. Around four to six weeks later you will have to attend a meeting with an assigned trustee and your creditors. You don’t need to go to court for this short, ten minute meeting and creditors rarely attend this.

Providing there are no particular problems or objections to your filing then after 60 days the authorities will put in an Order of Discharge. The bankruptcy will stay on your credit report for ten years and you won’t be able to obtain credit during that time. After two years, however, you may be able to apply for an FHA mortgage.

Chapter 13 Proceedings
Chapter 13 is quite different from Chapter 7 and you have to provide a proposal for repayment of some of your debts. The repayment schedule and amount will be set by the court. The payments would go to an appointed trustee and this will last for about five years. Unlike Chapter 7 you need money coming in to make the repayments and there are limits on the debt $365,475 of unsecured debts and $1,081,400 secured debt. Reasons for filing under Chapter 13 include earning too much, falling behind on mortgage and car repayments and unpaid taxes.

You repay your debts in order of their importance so car, mortgage and tax repayments will come before any unsecured debts, for example, credit card debt. How much you have to repay will be determined by your specific circumstances and this ruling will stay on your credit report for seven years.

How To Pay Off Car Loans Faster

Making One Extra Payment a Year Makes a Difference

Monthly payments are expensive enough, the thought of making extra payments can be overwhelming and stressful. However, if you take your monthly payment of, let’s say $360.00, and you divide it by 12, the total number of payments per year, you would get $30.00. If you add that $30.00 to your monthly payment, at a total of $390.00, you would make one full monthly payment early. In comparison to the $360.00 monthly payments, $30.00 isn’t much, but little figures over an extended period of time really stack up and lower your total vehicle loan balance as well as reduce interest payments.

Rounding Your Payments Up Can Help

Another method you can use to pay off your vehicle loan a little faster, is to round your payments up. Assuming your budget allows it, you could add an additional $40-$50 to your monthly payment, reducing the principle balance each month by that little bit extra in your payment. For instance, using the example given above, and assuming that your monthly required payment was $360.00, you could round that monthly payment up to $375.00 or $400.00, effectively reducing not only the principle balance of the loan, but also the interest payments. This may seem like a stretch, but consider the fact that this method allows you to pay off the balance of the loan 2 months early.

Refinancing Strategies to Lower Your Interest Rates

One of the fastest methods of saving money on interest and lowering your car loan payments is to refinance your car loan. Larger commercial banks and financial institutions usually offer refinancing options with higher interest rates than most local community banks and smaller credit unions. Researching and comparing the available resources in your area allows you to determine whether you will be able to refinance for a lower interest rate or not. Generally speaking, a 1% reduction in your interest rate would be worth taking when you factor in that you could maintain the same monthly payment total and ultimately reduce the time it would take to completely pay off your car loan.

Make Bi-Weekly Payments of Half Your Monthly Payment Total

Some lenders and creditors will allow you to make payments every 2 weeks rather than making the once-a-month payment. If your bank or credit union offers this service, take the advantage and use it. By increasing the frequency of your payments, the principle balance of your car loan is credited faster than by making less frequent, or once-a-month, payments. Verification that your lender doesn’t charge extra for this service, and that your contract has no other payment requirements, grants you the ability to save a lot of money on interest payments.

Doing Side Jobs to Generate an Extra Income

Extra income is another great efficient way to pay off any loan a little faster. Putting in overtime at work, offering services on sites like Craigslist, or Fiverr, to tutor, to landscape, paint, or any service you’re good at on the weekends are all good choices, but remember, you’re not restricted in options. Keep in mind that, while working extra hours or weekends for a little more money may be overwhelming, it’s only temporary until you can pay off your car loan comfortably. Also, as a note, think of all the time and money you can save by combining extra income with one of the previously mentioned methods to pay your loan off faster!

What Happens When Your Car Payment Is Late

Not matter how punctual you can be, there is usually a time when you are late paying for your car payment. You have to learn the consequences of making a late payment.

The outcome of missing one car payment

To begin with, if it is the very first time to miss this kind of payment, your lender is likely to give you a call reminding you of the same. He or she will like to know when you need to make the payment. Should you set a date which is not far away, he may end up helping you make some adjustments to your payment plan.

Is a penalty or rate fee likely to be charged?

You ask yourself whether your credit score is likely to be impacted. In most cases, most lenders do not report their clients to the credit bureaus that soon. This gives you a grace period of ensuring your credit core is in order. Though that is the case, it is not likely to last for a long time.

What are the consequences of delaying the Car Payment for 30 days?

Serious consequences are accorded to those who exceed paying for more than 30 days. You may risk being reported to major credit bureaus such as: TransUnion, Equifax and Experian. Additionally, your lender may give you a number of calls persuading you to pay the due amount.

The frequency of the calls increases till you have accumulated more than 30 days.

What are the consequences of delaying the Car Payment for 90 days?

You may be declared by your lender to have defaulted a loan once 90 days are over. Once the loan is in default, it may be handed over to a debt collection agency. This means that the collection agency will be entitled to some fraction of the total amount you owe your lender. At this situation, you may end up loosing your vehicle since the repossession process has begun.

Should your vehicle be repossessed, you have to remember that all belongings in the car still belong to you. The lender will still give you your possessions even if the vehicle was taken while you were away.

What option do you have if you still are not in a position to pay for you car once it has been repossessed? You have to research the number options available to get out of debt. Various options are usually dependent of the amount of debt. You can file for bankruptcy or save a lump some amount of money a clear the debt at once. This is when you need the services of a reputable credit counselor.

Outfitting A Home Recording Studio On A Budget

Something that I have been interested in for quite some time now is setting up my own little mini recording studio in my apartment. I don’t have a lot of space or a lot of money, which is what has kept me from doing this before now. It all started back in college when I got a cheap acoustic guitar for beginners after wanting to learn to play all throughout high school. I spent many an afternoon out in the quad under the big oak tree attempting to teach myself how to play and woo some of my crushes. Though I did not end up successfully wooing anyone, I did manage to teach myself to play guitar on a pretty decent level.

Fast forward to today and I’ve been using that same guitar to write my own music for the past couple of years or so. And, I’ve gotten so many of them complete that I think the time has come to start assembling a mini recording studio here in the apartment so that I can start laying down some of these songs. But home recording studio gear is expensive. Even if you’re going bare bones. Fortunately, I already have the instrument, a decent enough computer and a USB microphone that I can use for now. But that still leaves me needing to buy a few things.

First up is a good set of speakers so that I can be certain that I’m getting the sound that I desire. I don’t really have to spend a lot on these as I’ve come across some of the best studio monitors under 200 that will help me keep my spending down. So that is pretty great.

Next up, I need to come up with a solution for a good mixing board that is also low priced. Or, I can go completely digital with it and use some software. Of course, the software is not exactly cheap either. In a dream world, I’d be using something like Pro Tools and making kick ass music with no money worries. But, that’s not real life when you’re paying off debt, eh? So, I’m not really sure that I’m going to do about this just yet. Currently, I am using Audacity as it is free and it is pretty good too but not as robust as what I’m looking for right now.

Soundproofing is something else that I need to work on sound that I don’t end up with a lot of reverb issues and the like. Fortunately, this is something that I do not think that I will have to spend money on as I’ve got a few things around the apartment that I can use for this purpose. Taking the old egg shell mattress cover and putting it on the ceiling and then covering the walls with some old blankets. For the window? A few layers of bubble wrap should just about cover it. And since there are bookcases in the room that I will be using, that should take care of any other sound issues that I might encounter.

So what do you think? Am I leaving anything out?

Reducing Your Travel Costs

When it comes time to create the budget for a little weekend trip or longer vacation, those travel costs can really start to add up. And while some of them can be reduced, not all of them can. So, let’s look at some of the more costly areas of travel and a few ways to reduce them so that you travel budget does not get maxed out before you even leave home.

Transportation is probably the biggest of the travel expenses. At least if you are not single. Think about it – there are lots of ways to travel but what is most expensive really varies by family size. For instance, flying is very costly for a family of five while it may be the cheapest for a single person. So, you need to add up the costs to see which is cheapest for you. For most people, the transport ways to choose from would be:

  • car (road-trip style)
  • plane
  • train
  • bus

If you are leaning towards driving your own vehicle, then do not forget to include the cost of gas and any tolls – as well as wear and tear to the vehicle. I like to use the Gas Buddy website to get an estimate of fuel costs for a potential road trip.

If you are flying, then you can use sites like Travelzoo to look for any airline discounts that you can use for some low airfare. You can also use the same site for hotel deals, if you plan on staying in a hotel.

Speaking of hotels, lodging is probably the next biggest area for people’s spending when traveling.  While you can find great deals on rooms using sites like the one mentioned above, you do not actually have to stay in a hotel when traveling. You might prefer to spend less and stay in a hostel, a vacation rental or even do a bit of camping. Each of these can offer substantial cost savings depending on the number of people in your traveling party.

Food is another one of those big budget areas when taking a trip away from home. This is because most of the time you do not have access to a stove, refrigerator or any other way to make some of your own meals. That leaves you to dining out, which is usually overpriced compared to grocery store prices. However, you can save money on food a few different ways.

Pack a cooler with cold items that won’t spoil like salad stuff, bite size veggies and bottled waters. This is a great way to have snacks and drinks on hand without having to spend anything else. And if you end up staying in a place with a mini-fridge, then you can transfer stuff from the cooler to the fridge.

If you’re a coffee drinking, then those coffee shop visits will really add up and bite a hole out of your budget. Instead, check out some of the best portable travel coffee makers so that you can make your own cup o’joe and save a lot of money in the process. Or, book a room at a hotel with a coffee maker!

If you are doing a hotel stay, then you can opt for one that kitchenette so that you can do a bit of cooking. Or, just a simple microwave gives you an easy way to heat up some soup or other food on your own.

I hope that these tips have made your travel planning a bit more affordable. If you have some tips of your own to share, just leave them in the comments below.

Ways To Save Money On Back To School Shopping

It’s that time of year again – the time when the summer starts to wind down and the kids and teachers have to return to those early morning alarm clock calls for the back-to-school routine to set back in.

And with the return to school comes an increase in the expenditure for most families. This can be anything from just your normal school supplies like notebooks, pencils and backpacks to things like special uniforms for school and high tech gear like scientific calculators

One thing is certain though – you can end up spend a lot of money during this time of year if you do not keep your spending in check. Fortunately, there are some great ways that you can keep those costs down and stay in budget while getting everything that your child needs for the new school year.

Probably the biggest way to save money and get cheap school supplies is just by watching the sales ads each week to see if there is anything at a fire sale price that you need to buy. Often the office superstores, like Staples and Office Depot, run penny sales where you can get things like notebooks and for just $0.01.  Sometimes the sales are at a higher price, but almost always they are well under a buck. I do not even have kids but still use this time of year to stock up on office supplies at a steep discount.

Buying only what you need is another way to save money when back to school shopping. For me, it is hard to not buy lots of the stuff under $1.00 just cause it is so low priced and there is the chance (small chance) that I might need something like it before the same sale rolls around next year.  But buying things that you do not need does not make good financial sense. For me or for you! So, create a list of things that you need before you leave the house and stick with it. Most schools these days offer parents a list of supplies that are needed, which makes it super easy to do your shopping from a list.

Shopping around also saves you money. By comparing price and selection between different stores, you can determine who has the lowest price and the best products. You’d be surprised how effective this is at lower your overall spending amount when shopping like this.

What are some ways that you and your family cut costs when doing a little back to school shopping?

Is Dining Out Ever a Good Idea

Going out to restaurants is one of those things that we all do from time to time.  Some of us more than others though. And a lot of personal finance blogs and gurus say that this is one of those things that we all need to cut back on.  But is it really?

Sure the cost of a meal at a rrestaurant is a lot higher than if you made it yourself.  But whar about the time value of money?

For instance, it takes me a really good long time to make a meal at home as I’m not so great in the kitchen. And when you consider the time value of money, it looks like dining out is a good thing for me since it frees up time for me to work on income producing projects.

But there is a catch.  My income potential is only so high.  That means that meals out for me are only worth it up to a certain degree. And I believe this is true for a lot of people out there.

Granted, if you just lay around watching the television all night then it is not a good return on the time saved for you to dine out at a restaurant.

Another thing to consider – what if you would not be spending the time saved on something that produces an income but on something else beneficial, such as your health. Say you do a little working out in your home gym like this site recommends with the time saved by grabbing restaurant food. Or, maybe you can spend the time working on some personal development or something like crafty items that you post up for sale on Etsy or a similar site.

So, no, dining out is not always a bad idea. And for some people and some situations, it is even a good idea when you consider the time value of money that comes into play.

Poker – Is Patience is a virtue?

Table Tales – Patience

I was having a bit of fun today in a tourney over at Everest Poker.

Anyway, finally I made it down to the last three without much drama and then got on top through some blind stealing as the other guys seemed kind of passive. The weakest of these guys fell in the end as he ran out of chips to play with and got penned in the corner… leaving 2 of us heads up.

Next thing, it got to the point where I had 65% of the chips and got a tasty enough looking hand (QJs). The other guy goes “all-in” off the bat so I call him… he’s holding J6… he hits the straight with the 6… I call him a “nice guy” and “pat” my monitor;)

Anyway, I have been playing like a muppet all week so am playing for my pride here and stay patient. I get QQ and he goes all in again… this time I win… I now have 70% of the chips. He goes all one more time… this time my J10 against his 107… I am waiting for him to get lucky again… my fist is ready… not this time… my hand wins out.

I don’t always have it, but patience is a virtue and I think the beats and what have you will even out… just bear it in mind.