Are Loans a Good Idea to Pay Off Credit Card Debt?

Credit CardsThe following article is brought to you by Travis Holmes.

Credit cards are open lines of revolving credit, often charging high interest rates and tempting the consumer to run up a high amount of debt without really thinking about it. By the credit card companies own admission, this form of credit is not meant to be used often or extensively, and no one should carry a debt.

When facing a situation where you are carrying credit card debt, it is vital to find ways to pay as little interest as possible, without doing anything to damage your credit score. One of the better ways of handling this is to transition the debt to a personal loan, and close all but the oldest credit card account you have. Here are a few reasons why you should do this.

Lower Interest Rate
Credit card companies can often charge over twenty percent in interest. This can result in the average consumer spending a great deal of money in maintaining a debt, rather than paying it off. Over the long haul, having to spend money on interest decreases the fiscal strength of the borrower and actually increase the amount of debt carried.

A personal loan has a fixed interest rate, and since it is not a revolving line of credit it is impossible to add new principal to it. In short, it is a one-shot deal, with limited interest and a payment plan that is predictable.

Take note not all loans will have a lower interest rate. Some quick loans might be good for your situation but may carry a higher rate. It’s best to verify the rate and do the math yourself.

One Line of Revolving Credit
By closing out all but the oldest credit card account, the consumer is doing two things. The first is limiting the potential for future debt, by decreasing the amount of available credit at any given time. Since you will have less free credit to utilize, it would be harder to make impulse purchases that land people in debt to begin with. This article helps you weigh the pros and cons of both.

The second reason for keeping the oldest account open is to take advantage of long term credit on the consumer’s credit report. A credit report is only as strong as the oldest item on it, so it makes more sense to keep a credit card in play if the consumer has had that account for several years. Doing so can reduce the amount of interest paid on other forms of credit, including the personal loan.

Additionally, having an open line of credit is a good thing in an emergency. It can provide an emergency cushion if you encounter an expense that you cannot fit in your monthly budget, but can pay over the course of two or three months. This becomes less needed as the consumer starts saving money, but starting out this flexibility is crucial.

Transitioning debt from a higher interest rate, revolving account to a lower interest rate, closed account, can serve as a way of lowering the amount of hard earned money wasted on interest.

Doing so can set the stage for a better, more stable financial future as long as certain steps are taken at the same time. Eliminate most of your open credit, in order to limit potential exposure to negative forms of debt. Start putting back the extra cash each month, to provide a means of paying for emergency expenses without having to turn to credit.

A personal loan can be invaluable when trying to improve one’s fiscal health. By taking the time to formulate a plan, it is possible to create a system that will lead the consumer to a better and more stable financial future. All it takes is the ability to take advantage of the lower interest rates.

Tips For Spending Less Money

Spend Less Cash When you look over your budget and realize that you’re spending more money than you’re making, you have two options. Your choices are to find a way to make more money or to work out a way to spend less money. Although increasing your income may be outside of your realm of control and is something I’ll be discussing in a future post, finding some pad in your monthly expenses can be as easy as looking through your list of expenditures and making a few simple adjustments. I’m not suggesting this will be entirely painless. However, if you undertake a thorough accounting of your expenses, you are sure to find a least a few you can eliminate or cut back on that will have the least affect on your current lifestyle:

Tips for Spending Less

Review your cable or satellite television bill

No, I don’t mean that you have to give up cable channels entirely, although dropping cable would make a huge difference in your monthly budget. Instead, consider removing a few extra services you subscribe to. Do you really need HBO, Cinemax, and Showtime? Just cutting a couple of movie channels can save you as much as $250 each year. We recently downsized our Dish Network subscription. We noticed the price had been slowly creeping up over the last few years and most of the channels we weren’t watching anyway. Netflix or Redbox are other ways to feed your movie habit at a much lower price.

Downsize Dining Out

Even though it’s been mentioned a lot, the cost of take outs and going out for dinner really adds up. If you can’t imagine the thought of giving up dining out, then at least set some boundaries for when you do so, i.e. only go when you have a coupon, eat lunch only, once per week, etc. Small changes can lead to big savings. Scary as it sounds, cooking at home really does lead to substantial savings in your grocery budget.

Can You Adjust the Thermostat?

By allowing your home to be a couple of degrees warmer in the summer and a couple of degrees colder in the winter, you can cut some of the expensive heating and cooling costs that have been plaguing homeowners so much these past few years. Combine this with other strategies to cut your electric bill and see savings on your home utilities.

What’s Going On With Your Phone Bill?

There are often extra charges hiding there for services that you don’t even use. Call waiting, long distance calling plans, and caller ID service charges can really add up. As cell phones continue to grow more and more popular, you may even find that you don’t need a regular phone line at all.

Food Costs are Going Up – Are You Ready?

Evaluate the items you are purchasing at the grocery store. Certainly, if your family really enjoys name-branded cereal more than generic-branded cereal, you should purchase your regular box of Frosted Flakes. You’ll probably find, however, that your family couldn’t care less about the brand of ketchup or bread that you purchase. These little savings can quickly cut your grocery bill down to a more manageable size.

Budget cuts like these are great ways to get your budget under control without feeling like you’ve deprived yourself too much. Alone, none of these little sacrifices will save your family’s finances, but together these changes will really help you find some extra cash in your monthly budget.

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4 Things Your Fridge Needs to Work Less and Save More!

Inside of RefrigeratorThe following article is a guest post by Rheney Williams. Please see her bio at the end of the article.

If your refrigerator could quote movie lines, it would probably shout out: “Help me help you. Help ME! Help YOU!”

Indeed, how many times have you opened the refrigerator door, stood there for several minutes trying to decide what you want, heard the compressor kick on, and watched as the frosty air continued to pour out while you tried to make up your mind?

Or maybe you know exactly what you’re looking for – you know it’s in there because you just bought it two days ago! – but, you simply can’t find it. It could be buried behind taller items or underneath veggies in the bins? there’s really no telling.

The good news is that there are things we can all do to enhance our fridge’s efficiency and of course, help ourselves in the process. To help with that, here are four things your refrigerator needs from you in order to do its job more effectively and conserve time, money, and energy for you both.

1. Ditch the Dinge.

The first thing you should do is conduct a thorough deep clean of your fridge’s interior. Remove everything before you start cleaning and wait until all surfaces are thoroughly dry before you restock.

I usually start by pulling out my bins and lining things up on the counter while I allow the bins to soak in warm soapy water in my sink. Then I remove everything else and wipe down the entire inside of the fridge with a soft cloth soaked in distilled white vinegar.

While the fridge and the bins dry, go through and toss all of the food that has expired or make plans to use the ingredients immediately if they are close to their expiration date.

*Money-Saving Tip: Americans end up throwing out an estimated 10% of all groceries we buy, so by staying on top of your refrigerated items’ expiration dates, you ensure less food is wasted and more money stays in your pocket.

2. Cleanse the Clutter.

Every time you open the door, you lose some of the power that your fridge has built up, but the energy loss increases exponentially when you leave the door open for any significant amount of time. To save more of your time and the fridge’s energy, a better solution is to organize like items together and consolidate packages whenever possible.

One great example of this is butter. Because I bake frequently, I always need to have fresh butter on hand. But because the sticks come in bulky boxes, they can take up quite a bit of room in the fridge. Any time I buy more butter, I always remove the remaining sticks from the open box, discard that, and place the wrapped sticks on top of the unopened new box. This also helps me to see when I’m running low and need to buy more.

3. Stock Smarter.

After you cleanse, consolidate and de-clutter, load your fridge in a way that facilitates order and efficiency. Make sure that you can see all of your refrigerated options and that you don’t have to pull everything back out to access things.

  • Keep commonly used items front and center or stored in the side doors.
  • Function under the “First In First Out” method: Whatever went in to the refrigerator first goes out first. When you restock with fresh items, put those behind duplicates that have been in the fridge longer and arrange them according to expiration date.
  • Separate fresh produce from fresh and frozen meats and do not store them in the same bins.
  • Likewise, do not store fresh deli meats with packaged meats like raw hamburger or chicken.
  • Always keep raw meats on the bottom of the fridge in the event the packaging is punctured: The last thing you need is harmful, bacteria-laden uncooked chicken juices dripping down all over your fresh fruit.

4. Fill the Freezer.

Something else you may not realize is that a stocked fridge and freezer work more efficiently, but not when they’re crammed and filled to the brim. Find that balance between keeping them full without overflowing and always make sure that air can circulate around the items.

One simple trick that is especially effective in the summer is to fill water bottles with either water or all-natural fruit drinks, keep them stored in the freezer and pull them out as needed in the morning and they’ll be ready to drink by lunchtime! Not only does this keep your freezer sufficiently full – and appropriately efficient – but it also eliminates the need to add ice to your drinks when you’re out and about or worry about warm beverages when you and the kids need a cool drink after hours out by the pool or on the beach.

What other work-whittling ways have you found to enhance your fridge’s efficiency?

Rheney Williams writes about home décor and home efficiency tips for Home Depot. Rheney’s Charleston, S.C., home gives Rheney plenty of opportunities to test out her DIY plans. Refrigerator models similar to Rheney’s, as well as dozens of additional styles, can be viewed on the Home Depot website here.