Quick Tip: Email Reminders and Calendars

1)Use google calendar or equivalent for all of your bill due dates.
2)Make sure the due dates are the earliest possible day those bills will be due (take into account shorter months, etc).
3)Setup Email Reminders for 1 week and 3 days in advance
4)When you check your email obsessively you will never miss a bill reminder

Tadah, now get back to living your life and stop stressing about bills!

Also enroll in Auto-pay if you have a good cash buffer.

Letters of Reconsideration

A great way to get a bank to give you a second look is through letters of reconsideration.

A lot of times their system may auto-deny you without much of a good reason. This could be because of your age, number of accounts, etc. Each bank has its own standards, but they often overlook good customers because they are acting conservatively. Of course, they don't particularly care unless you take the time to tell them that you are a great customer.

Make sure when you send this letter, or one like it, that you send it via CERTIFIED MAIL. Otherwise they won't pay much attention and you will get lost in the crowd.

Here is a template that you can add or remove details from. Make sure you actually fill it out.

I have been denied for many a line of credit or credit card and after one, two or three (yes I said three!) letters of reconsideration, gotten them to approve me.

Remember, responsible people are lower risk, only responsible people send three letters of reconsideration :D

I provide no guarantees and am not liable for any repercussions that occur as a result of you using my template.

The template:


Name of Bank
Address of Bank

Hello,

I am writing requesting reconsideration of the denial of my recent Bank Name card application (case number XXXXXXX).

It appears I was denied after you pulled my TransUnion report. While the letter I received did not include specific reasons as to why I was denied, I would still like to go over the potentially negative information on my report.

Number of recent credit inquiries

I do have high credit inquiries at this time. Some of these are due to my credit report being run multiple times from the same companies that did so. I am in the process of disputing many of these anyway. Some are for refinances of already existing lines of credit. Aside from that, I am trying to build a solid credit history for myself and have applied for credit a few times only to build a solid history. Every line of credit I have ever received has been paid on time.

Insufficient length of revolving credit history

I am curious as to what length is necessary for your company as I have had revolving credit cards for X years.

Insufficient number of consumer accounts
Again I am curious as to the requirements for this as I have 7 consumer accounts ranging from several hundred dollars to several thousand. The highest being $XXXX and $XXXX.

Insufficient average credit limit on open revolving accounts

Although I do have maybe 1 or 2 cards with limits under $XXXX, the rest are of higher amounts including $XXXX, $XXXX and $XXXX.

You will notice I have no late payments, collection accounts or, general negative items on my report. I have had credit for X years with several open trade lines with perfect payment history. I am still building this history and I wish to have bank name be part of it as it will continue to be pristine. I appreciate you taking the time to reconsider my application. I hope my explanation clears things up so I can be another proud Bank name card holder and customer.



Sincerely,

Your signature in pen
Your name
Your address

Cosigning, don't do it!

Don't cosign loans for your parents and don't let them cosign for you! You shouldn't have to anyway, lenders just want to get more people on the hook!

Even if you aren't paying back a loan that your parents took out and that you cosigned or if they aren't paying one back that you took out and they cosigned. IT STILLS SHOWS UP ON BOTH OF YOUR CREDIT REPORTS.

Even if the main endorser is responsible and makes the payments on time, it still shows the loan balance on the consignors credit. Which effects your debt to income ratio and your overall credit score!

Now that is the best case scenario. The worst case is what happens if the primary on the account is late with a payment? Or if they become delinquent? That also shows up on the consignors credit!

So a word to the wise say no to cosigning.

AES Scam Continued - Electronic/Online Payments

Turns out that AES and Sallie Mae decided to put in some extra fine print when you go to make that payment online. You essentially forfeit your right to apply any extra amounts towards the principle! So your ONLY option is to mail in a check with a letter indicating that any extra amount be applied toward the principal.

What a rip off!

AES Repayment Scam - Paid Ahead Status

So when you pay more than your monthly minimum, you are thinking to yourself "I am going to save money by paying my loan off faster by making payments for more than the statement amount". Well thanks to paid ahead status, that assumption is WRONG. Other lenders may call it something different, but most of them have this stipulation in there somewhere.

So what do you do about these chicken f****** rules? Well, you could:

1) Refuse to pay all of your student loans on principle and have them destroy your credit and garnish your wages

2) Refuse to pay all of your student loans on principle and have them destroy your credit and live incognito for the rest of your life

3) Refuse to pay all of your student loans on principle and have them destroy your credit, but move out of the country and laugh at them because they CAN'T garnish your wages. And only move back when you are dead or the government has collapsed.

4) (Most realistic) - Mail in your payments by check and write a letter indicating that you want the extra amounts (make sure you state what amount is extra) to be applied towards the principal, NOT towards future payments. Also feel free to write nasty things in the memo field of your check.

Remember, STAY VIGILANT and check out the back of your student loan bills. This is what mine from AES said, but after research it turns out that Sallie Mae also states something similar.

Paid Ahead Status: When you make a payment that is greater than your monthly installment amount, the payment is credited first to satisfy any outstanding installments due and then any additional amount is applied toward future installments (and is pro-rated across all loans).

Lending Club Investing

Lending Club out performs most investments and at a risk less than traditional investments (not including CDs, Savings Accounts and Money Market). Diversification, however, is the key to maintaining low risk. Never invest large amounts in one loan, split it in $25 increments and you should be fine.

Yes lending is risky, but banks have been lending forever. If you qualify your risk properly you won’t have any problems. I'm currently looking at no defaults and net annualized return of 9.7%. Granted your results may vary, but why not play around with it for a while?

www.lendingclub.com

Credit Card Rate Increases... Fuck!

So I've received credit card rate purchase APR increase notices from:

American Express, Chase, Bank of Nevada, Pentagon Federal Credit Union, WAMU (now owned by Chase), Cabela's Card. All of these rates have increased by at least 5% and simultaneously switched to variable APRs.

All I have to say is, FUCK YOU banks and underwriters of the world. And why not? Fuck the government too! Somehow you have been able to get monies from the government (the government which is paid for by regular people like myself) while simultaneously fucking over your customers with ridiculous and in many cases unjustified (even on a risk basis) changes to your credit relationships. So you weren't happy with the money that you have made historically from encouraging people to swim in debt? You blew all the money you "earned" and didn't put anything aside for when everyone decided to stop paying you the 20% interest because they have no money left? That was poor planning on your part! But wait, who gets caught paying for you being irresponsible? The other customers that are STILL paying you and every person that pays taxes in our country.

Student Loan Repayment Surprise

I just received a letter that my student loans are going into repayment even though last time I checked they weren't going to officially enter into repayment until the end of 2010! Not a big deal because I've been paying them anyway, but now I "have" to pay them. And I don't like being told what to do!

I figured out that the school I was attending provided the loan companies with an "estimated" graduation date. But as soon as I didn't re-enroll they sent out some kind of notice to the loan companies, that recalculated when I actually stopped going to school. So not only is it way sooner than expected, but since they have to back date it, it starts in 30 days!

Again, if you are paying on your loans already, this shouldn't be a big deal, but if you aren't you could end up with a nasty surprise.

Of course if I enrolled in another class they would probably get pushed back again, but I can't think of anything I want to learn! Plus I don't really have the time anyway.

Bank Scoring System

Apparently for businesses (and I assume personal accounts) banks have a scoring system that assists them in determining if you are worth lending to that accompanies your credit score, regular income, etc. This is the bank that you have an existing relationship with. Basically they look at your average daily balance to determine your repayment ability.

So if you have under $999 you are a high 3 (or is it low 3?)

If you are between 1000 and 5000 you have a separate rating

And 5000-10000, another rating (low 5 I think)

Basically for any type of business loan you want to be above 10000 for at least a 3 month period. So even if it means borrowing the money from someone with interest, it would help significantly.

Invest in your mind at the expense of... everything

One of the greatest benefits of being young is that you have a lot of time to recover from any mistakes you make. It provides a great opportunity for you to attempt to learn all that you can, even at the expense of your lifestyle, money, credit, etc.

There is definitely something of value in learning from other people that have gone through similiar experiences, but too often people never make the jump to trying something that may seem "risky" because they want to make sure everything is "right". The truth is there will always be a reason not to do something, so what the heck are you waiting for?

Now I'm not saying jump into just anything, you should calculate your risks to some extent, but too often we never get out of the calculating stage! And there are definitely a lot of bad directions (see posts on multi-level marketing). But sometimes you have to go to a MLM rally in order to realize it is madness despite what everyone says.

:Example:

I want to: Open a coffee shop

Obstacles:
I've never worked in a coffee shop
I don't know how one operates
I don't have the money to start one
What if I lose my money
How will I pay my living expenses?

Solutions:
Get a job in a coffee shop, try to absorb as much info. about the business as possible
Read as many resources as you can about coffee shops!
Research success stories like Starbucks, Bigby
Budget how much you would need to barely survive and then set EVERYTHING else aside for the business

Results:

• Best/Least Likely: You open a coffee shop and it does well, you continue to make it operate more efficiently and look into opening others
• Average Result/Very Likely:You open a coffee shop and it fails, you reflect on your journey and what you did wrong/right. You don't have the money to try again, but you vow to do so. 9/10 Business start ups fail in the first 1-3 years, so you just need to try 10 times to make it happen (odds are if you are moderately intelligent that you will hit success earlier, but other factors may prevent this from happening). You learned a hell of a lot at the cost of your investment, but that knowledge will pay off eventually.
  
• Worst Result/Don't Do: You open a coffee shop and it fails, you say it was never a good idea and give up. You lose your money, learn nothing. What are you investing in here? NOTHING!

Okay so this doesn't cover every possibility but you get the idea. Of course you could discover that you hate running a coffee shop and instead want to run an ice cream parlor. Well you better believe the business knowledge is going to be relevant for that too.

Resume Tailoring in a Down Economy

Resume tailoring is simply the art of tailoring your resume to the job you are applying for. I thought I'd post briefly about this because a lot of people just need A JOB regardless of what it entails. Some people may think of this as immoral because you may be competing for a job that someone else genuinely wants, but when times are tough everyone has to do what they can to survive.

• So obviously the first step is to have a resume if you haven't already put one together. There are a lot of resources out there for putting one together but the basic idea is to present yourself as clearly and concisely as possible. Remember to make it sound professional and accomplished without going over the top. Stick to action words like "Managed, Organized, Maintained, etc" as the start of your job duty bullet points under each job. Make sure you have an appropriate email address preferably using your name like First.Last@gmail.com. Avoid potentially offensive addresses unless you think it will actually give you a better chance of getting hired lol.
  
• Refine your job duties and eliminate those that do not apply to the position or industry. Focus on duties you may actually be performing for that specific job. You risk sounding over qualified if you boast about your management experience for a job that requires no managing. But don't over simplify it or downplay your valid experience either.
  
• Don't limit it to strictly your work experience either. If you have done a lot of maintenance work but never held an official job title or worked on a lot of side-jobs, simply use the name of the person you worked with as a company name and add the type of projects you worked on. Bob Smith Auto Repair, Bob Smith Carpentry, Plumbing, etc. You can even put your own name if you were working alone and use that to your advantage as an experienced entrepreneur.
  
• Research the company, the industry and the job if you aren't sure what the job would entail. You can do even better by targeting your resume to one specific company and make it stand out that much more, but this process takes a lot of time and research (which you may have a lot of if you don't have a job!). By tailoring your resume to the job and industry you already have an advantage over your competition, why not add more?
  
• Last but not least, don't give up! Take your resume a step further and call in or stop by the company offering the job! You will stand out in their memory when they are looking through resumes. You may even get offered the job on the spot (I've seen it happen). Don't take no for an answer and if you do get denied, ask them why! Then use what you learn and change your resume/behavior for the future! Don't let failure defeat you, learn from it and improve yourself!
  

Job Opportunity Scams - The Team

I've talked to a lot of people lately that are either thinking about joining or frustrated and leaving all of these scams that are out there. You know what I'm talking about: Pyramid Schemes, Multi-level Marketing, etc. The bottom line is, all of these organization make ridiculous promises to desperate people and end up wasting their time and money.

Specifically I have been hearing a lot about one particular organization, The Team.

It really frustrates me that these organizations go out there and talk about "opportunity and leadership" while at the same time not mentioning how their program actually works. What they do is they try to win you over on principle. Ironically, the team actually claims to be a Judaeo-Christian organization which helps them infiltrate community events. Their entire business model is based off of selling via personal relationships. That means convincing the lower-level people to go out there and sell to all of their friends and family (typically ruining their relationships).

Members are also encouraged to purchase numerous cds, books and other useless add-ons that they make even more money on. This is in addition to ordering through "The Team" catalog for all of their personal items.

Here are some first person accounts on how The Team is a scam: http://www.ripoffreport.com/reports/0/169/RipOff0169625.htm
http://www.ripoffreport.com/reports/0/100/RipOff0100532.htm
7 Years: http://www.ripoffreport.com/reports/0/172/RipOff0172129.htm

So please, warn your family and friends of this empty promise, show them these websites and save them (and you) the headache!

I invite you to check out some resources on the subject:

http://skepdic.com/amway.html
http://en.wikipedia.org/wiki/Pyramid_scheme
http://en.wikipedia.org/wiki/Multi-level_marketing

Funny Comic #2

I found this one amusing, how much of our book knowledge is actually put to use? I'm surprised she didn't use a graphing calculator, isn't that what we were trained to do?

Investing in the Stock Market

Seeing as how the stock market has been taking a hit lately, I bet a lot of you are considering picking up some stocks that have gone down. I personally do not see this as a terrible idea, but I think it is a serious decision and you should watch out for a couple of things:

Stocks go Up and Down
This is an easy thing to acknowledge when the market is pretty flat, but when it becomes more volatile people tend to panic. This is exactly what a lot of people are doing now. The thing is even if you buy stocks for cheap now, they make go down even more before they go up. Does that mean you shouldn't buy them? Well not necessarily, but you need to be patient and control your reactions.


Balance is Key
By having a diverse stock portfolio you can rest assured that even if some of them are going down, the loss is minimized because it stretches across the boards. Since most companies are not planning on going out of business, it is a safe bet that your stocks will level out EVENTUALLY

Do not "Hope and Pray"
The biggest mistake people can make is just blindly putting money into any stock. You want to do your research about a company to make sure it is in financial shape. An easy way to track general info. is through news sites like Yahoo Financial.

There are a lot of other things I could mention, but these are a good place to start. Remember to ask any questions you may have.

Starting a Business

While I was in school I started a business to earn some extra cash, it also looks good on a resume to say you were responsible enough to do it.

Starting a business is not as difficult as one may think. While there is a lot of work involved with the various aspects of marketing, cashflow, etc; actually filing the forms to start a company is pretty easy. This varies, of course, depending on the structure of the business you select. That is why to keep things simple, I'm going to talk about an LLC with only one owner (you!). Before you file your documents you really need to ask yourself a couple things:

1) What you are going to do or sell?
This can be a product or service. I have heard services fixing computers, selling on ebay, cutting hair, help writing papers/studying, etc. You could also try to sell something; maybe a unique item that you can make or a web page you can design.

2) What your name is going to be?
A good rule of thumb is to pick a name that describes what you do and what you stand for like "Friendly Computer Repair" or "Fast Hair Cuts". Of course these are simple and you could probably come up with something better, but you get the idea.

Now that you have the preliminaries done, you actually need to do it! Here is how:

1) Find the form

Once you are done with these you can head to your state's website and search for the forms section. You are going to be looking for "Articles of Organization". Do a little research about your state and make sure it is a state that is good for LLCs. Most are, but sometimes states have a history of treating various types of companies poorly.

2) Print and fill out the form and mail!
Not very complicated here, just make sure you spell everything correctly and sign! Usually there is a filing fee, so make sure you write a check!

Tadah!!!!

In a few days or weeks you will be sent back the same form stamped, approved, or what have you. You have now done the basic steps required to create your company!

In the future you will have to worry about:
Tracking Financial Info for your business, Taxes, etc. Feel free to ask me about these now, but I will be posting about them more in the future.

Paying Down Debt vs Investing

I think a very common quandary that people end up in is deciding whether they should pay down their debt or invest in their future (typically retirement accounts like 401(k)s. Although I intend to address this topic more thoroughly later I think there are some specific situations that have easier answers and I will attempt to sift through the main ones.

The Credit Card Rule: Alright, first and foremost you always want to pay your credit cards down. Having high revolving balances on credit cards is the most damaging to your credit score and usually your wallet (credit cards typically have higher interest rates).

The Private Loan Rule: Private college loans do not have nearly as many benefits in terms of taxes and interest rates as due federal loans. Because of this it makes sense to pay them down as much as possible. Ideally you don't want any debt, but private loans are generally worse than federal.

Always Plan Ahead: In general it is a good idea to at least invest some portion into an IRA, 401(k), etc. Even if it is only $50, for most people this is the easiest way to invest. Since it is pre-taxed dollars you save double time. Once your cashflow starts to really improve you may look into real estate investing or some other method where you have more direct control over your money (instead of leaving it up to the company and its management). You may even be interested in starting your own business!

Like I said, I will attempt to explain more of your options in future posts, but for now hopefully this helps you out!

Eating Frugally

Unfortunately with all of the advertising and marketing that is thrown our way (meaning recent college grads and college students in general) it is difficult to cut down on excessive spending. Especially when one of your friends is telling you how great their new gadget or outfit is.

The same can be said when you are in need of an energy boost in the form of some sort of energy drink or other caffeinated beverage or when you do not have time to pack a lunch.

Ipod: $200, Mocha Frap: $5, Jimmy Johns: $10
Not being able to figure out why it is going to take you 3000 years to pay back your college debt... priceless.

It sounds funny, but the numbers really don't lie. If you fare on the more excessive side and eat out for all three meals you are probably spending around $5 for breakfast, $10 for lunch and $10-15 for dinner. Maybe at the same time you do get a coffee, pop or other snack totaling another $5 dollars. Your final number is about $35.... for one day! Multiply that by 30 and you are up to over $1000! If you are making $40000/yr out of college you are spending almost 40% of your income on food and snacks. Of course most people may only eat out once a day, but it still adds up:

5 X Sandwiches for lunch at a deli @ $6 = $30

1 Loaf of bread + deli meat/cheese = $10

If you really want to go the extra mile you can take the free packets of dressing from cafeterias, etc. My point is, even in this example you can save 66% and brown bag it.

Credit Card Offers

I just received another three credit card offers in the mail today, what a joke! Just read the fine print people, they claim a low interest rate but that "guarantee" is always subject to your credit score and history. Chances are if you have only had credit a short time you will not get that rate.


Some quick things to watch out for:

1) 0% balance transfer offers (these almost always include a fee based on the amount you are transferring

2) "Guaranteed" APR and credit limits, they are always subject to your credit score

3) Applying for too many cards (this results in a lot of inquiries that lower your credit score, it takes two years for these to go away)

4) Defaulting on cards: your interest rate will be bumped up to the highest APR that is legally allowed (usually around 24%!!!)

5) Pre-approved offers do not mean you get the card, they can still deny you. In fact, go to a website yourself and shop for a card that works for YOU. You have access to the same deals they send you in the mail that you can apply for yourself at any time, so don't feel rushed!

Want to compare cards? Try this site: http://www.creditcards.com/

There are options on there if you have no, little, or bad credit!

Image courtesy of thebicyclediary.blogspot.com/

Funny comic of the month

Another timeless bit about the irony of being "college educated".

Exit Loan Counseling

Although a lot of it is repetitive and not necessarily ground breaking, exit loan counseling can indeed provide some insight into your financial future after college. I found the question "Do I have to pay my student loans back?" to be a little silly, but there are at least some terms and explanations that I found useful. Hopefully I can help save you from reading every single detail. Here is what I found useful:

Repayment Options:

1)Standard repayment
2)Extended, long-term, Graduated repayment
3)Income-sensitive repayment (for Federal Stafford loans)
4)Income-contingent repayment (for Federal Direct Stafford Loans and Federal Plus loans)

Really, the names do a good job of summarizing what each type means.

Standard repayment comes down to equal monthly payments for up to 10 years (excluding periods of deferment and forbearance - more on these later). It's relative simple or "standard". This tends to be best if you can afford the payments. Typically it is ideal for people who have lower balances or people that can afford to pay higher balances. It is also ideal for minimizing the interest you will pay (it has the shortest term).

Extended/Long-term extends your repayment period so your monthly payments are less (and you have better cashflow). The problem is you will pay more in interest the more you drag the loan out. You also need to make sure your loans can be extended (guaranteed Stafford loans have to be consolidated first). This would be better if you really need the cash flow and cannot afford higher payments.

Graduated repayment is tricky because you do not have to be graduated!It just means your payments start low and increase over time. I personally do not recommend this route unless you can 100% guarantee you will be making significantly more money in the future (and I don't mean you hope you will). The problem is you can end up having large payments sneak up on you over time. This happens to a lot of mortgage owners that choose balloon payments!

Income-Sensitive Repayment is based off of your annual income. The benefit is that you will probably never have to worry about not being able to afford your loan payment. The downside is that you could potentially accrue the most interest and lose the most over time. Of course, in my opinion, why not choose this option and pay more towards your loan if you have the cash? At least it gives you the flexibility to say you cannot afford it in a month that you are strapped for funds.

Income-Contingent Repayment is for federal direct Stafford loans and is adjusted each year based on your income.

This is a great resource for answering any questions you may have, of course you can always ask me as well: https://www.dlssonline.com/borrower/BorrowerWelcomePage.jsp

Deferment/Cancellation/Forbearance

I'll get more into these later but to sum things up:

Deferment: Pospones principal and interest payments for specific periods of time when you meet the certain conditions. The conditions are typically set by the government and are usually based on financial need. This is the one you want though because the government is making payments for you. The payments are on the interest, however, not the principal (so they are saving you a minimal amount and some time).

Cancellation: Total or partial forgiveness of a loan for specific reasons. This could be like your school evaporates or closes its doors. This rarely happens.

Forbearance: A temporary suspension of payments, an extension of time for making payments, or a temporary reduction in the monthly payment amount. Most people end up getting forbearance if they get anything. Your loan companies will want to give you forbearance if it means getting payments on time. Typically they will work with you (as long as you are persistent) because it really is in both your and their best interests. You do not want to default or look like you made any late payments because it will damage your credit score.


Well hopefully that saves everyone some time, let me know if there are any questions (remember I am still learning a lot of this stuff as well!).