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Interest Rates

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I have been overhearing some concerning conversations out there – people who are waiting for the interest rates to keep falling. Let us address this misconception about interest rates with a little background. The Fed cuts interest rates by two main factors. The first are the rates charged to the banks when the bank borrows money from the Fed or other banks. The second affects the prime rate – which many unsecured loans are based on. Still, both of these rates don’t necessarily trickle down into the two places people most use debt – mortgage rates and credit card rates. … Continue reading →

DIY Debt Reduction – Multiple Creditors

Most people don’t have one type of credit account. Most of us have our debt spread out in multiple locations. This can often make managing our bills complicated. If you have many different types of credit accounts – loans, lines of credit, credit cards, overdraft accounts – and want to reduce your overall debt, you will need to get organized first. Start with a file folder and put in your most recent balance statements into this folder. Collect them all, even the ones you don’t use often. Next, take this folder to a quiet place. Using a calculator and piece … Continue reading →

Calculate your Payoff

Is one of your New Years resolutions to pay off some debt? This is a great goal! There are some different philosophies about how to get there, let’s learn about some of them. Debt costs us money from the interest we are charged. Let’s use an example… you have $1000 in debt with an interest rate of 20 percent a year; you are paying $200 a year for that debt. You have $100,000 in debt at 5 percent a year; you are paying $5000 a year. Then you have $10,000 in debt where you pay 30 percent for a cost … Continue reading →

Understanding Pre-Payment Penalties

When buying a home, you would go through a mortgage lender to secure your home loan. This loan could be any number of types depending on how much money you put down, number of years preferred, any military service time, income versus debt ratio, and so on. As a part of this loan, you would know the amount of money due each month, the date the payment is due, any late penalties that would apply, and the overall length of the loan. For instance, if you financed your new home with an Adjustable Rate Mortgage or ARM for a 30-year … Continue reading →