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Managing Your Precious Dollars Smartly – Will This Give You A Debt Free Future?

Written by Mike

By: Alden Smith

Did you ever knew that a time will come when you will have to check where your precious dollars are going out every month? Well, this might not have even come in your mind unless you found that you’re falling short of cash by the middle of every month. If this is happening with you, then chances are high that you’ve incurred huge debt problems. So, what are you thinking to do now so that you do not fall into debt? Do you really know what personal finance actually is? Many people aren’t aware about it since this subject is not taught either in schools or in colleges. You will have to be find it yourself where your bucks are going out actually. If you want, you may also seek help of the financial experts who will guide you as to how you should deal with your hard-earned money. Try to pay down the debts quickly so that you can lead a debt free life.

Some ways to deal with finances wisely and do not incur debt

Are you falling into debt problems too often? Do you want to get rid of it? Well, there are definitely suitable ways that will help you deal with your finances smartly so that you may not get entrapped into unnecessary debt. Check out how this is actually possible.

Draft a suitable budget you can follow - Are you spending almost all your income every month? If you are doing so, then you’ll end up with enormous debt soon. What should you do so that you do not fall into debt problems? You can draft a good budget and spend your bucks according to that. Consider your monthly income as well as your expenses and see how much you can save from your salary. It’s important that you stick to your budget otherwise, you may fall into debt problems again.

Know your needs and wants – Do you know the difference between your needs and wants? Most people don’t know about it and this is why they buy almost everything they see around. If you’re also doing the same, then it means that you too don’t know the difference between your needs and wants. This way, you actually waste a lot of your bucks and thus fall into debt. Know your needs and wants and purchase things according to that. Your needs are food, clothes and shelter without which you can’t live. Your wants are the luxurious items that you can buy even in future. Thus, by not buying your wants, you can stay away from debt problems.

Pay off the the credit card dues on time – Do you have the tendency to swipe your plastic money very frequently? If yes, then you must have accumulated huge credit card debt. So, what are you thinking to do now? You must take the necessary steps to do away with your credit card debt as soon as possible. Keep in mind that the more you delay in repaying the outstanding dues, the more interest rate you’ll have to pay on them. Thus, once your credit card debt burden gets eliminated, you can take a step ahead towards improving your personal financial condition.

Create a fund and save some amount every month – Have you build up a savings fund? If you haven’t done so yet, then what are you still waiting for? Savings is important as soon as you get your first job since this is going to secure your future. Besides this, if you’ve sufficient savings, then you may not have to borrow money from the other sources. This way, you can avoid incurring debt problems too. Savings also helps you know the importance of your hard-money money and manage your finances better.

The above-discussed ways will help you deal with your personal finances efficiently so that you may not fall into the debt trap.

Is Law School Worth The Cost?

Written by Mike

Given the economic crisis that is going on, the difficulty new lawyers are having getting jobs, and the soaring cost of law school, I’m doing a little analysis to see if law school is worth it for many prospective students. A lot of people go into graduate or professional school believing the debt and time spent will pay off in a more rewarding/higher paying career. While this may be happen for some, it’s by no means a guarantee.

Let’s break this down by numbers:

Cost of tuition (three years): $60k up to $140k depending on the school.

Opportunity cost of not working (three years, let’s assume $50k a year, which is by no means a guarantee but I think is a fair average assumption): $150k

So if you’re going to a state school, you’re looking at about $210k cost, and most private schools closer to $300k. Assuming a 30 year career (again a major assumption), it would seem law school would have to make you $9-$10k+ over a regular job to justify the cost. Of courese, this doesn’t assume the interest on the debt (and the interest you could theoretically make from your savings working a normal job), so it’s likely more around $15k+ a year.

The thirty year horizon also neglects that people often shift careers a lot. If you end up just using that law degree for 10 years, you really need to be making $35k+ a year from law school. That’s something that just won’t happen for most people.

Going to law school isn’t just a brunt calculation of future earnings. Most of all, it matters if you want to actually be a lawyer (or at least go to law school). But I think it’s a good question to ask yourself if that law degree really will open significant doors for you to justify that sort of cost.

What If I Were Debt Free?

Written by Brett McKay

I’ve been tagged in the “What if I Were Debt Free?” meme by Rocket Finance.

What if I were debt free? Man, that’s a heavy question. I sometimes forget the reason that I’m doing this whole frugal living thing is so I can become debt free as soon as possible. I focus so much on the process of becoming debt free, that I really don’t think about why I’m doing it.

After pondering on this question for the past few days, the conclusion that I reach is that I wouldn’t do anything different from what I’m doing now. 

Even after the debts were paid off, I’d probably continue living frugally. Saving money isn’t the only thing that attracts me to frugality.  Frugality forces me to be creative and come up with new ways to do things. It’s something that oddly excites and entertains me.  So, I think I would have a hard time leaving that behind as soon as my debts are paid off.

I guess there is one change that would occur. With the extra money no longer going to pay off debts, I would increase the amount I’m currently investing to build up my retirement even faster. It would be nice to retire early and devote time to volunteering, my family, or a hobby.

OK, I guess its my turn to tag some people. Let’s see…. who to pester?

What about you all? What would you do if you were debt free? I’d love to read your visions of a debt free future, so drop a comment in the comment box.

Laws Every Consumer Needs To Know About Debt Collectors

Written by Brett McKay

Here at The Frugal Law Student I constantly encourage people to avoid credit card debt as much as possible. Because credit card debt is unsecured, it can create the biggest problems for consumers.

If you fall behind on your payments, creditors will often hire debt collectors in order to get their money back from you. While the majority of debt collectors are civil when collecting your debt, many are abusive and coercive. Thankfully, we have the Fair Debt Collection Practices Act to protect consumers from these debt collecting bullies. But if you want to protect yourself with this law, you’re going to need to know the law.

Disclaimer: As of this writing, I am not a licensed attorney. I’m still in law school. I’ve taken this information the Federal Trade Commission’s website. This article is for general education only. If you need legal advice, consult a lawyer licensed in your jurisdiction.

  • You can stop a debt collector from contacting you. Debt collectors can be a persistent bunch because their pay depends on whether they get money from you. However, many overstep the bounds of being persistent to being stalker-like. If this becomes a problem, write the debt collector a letter telling them to stop. Make sure to keep the copy of the letter for yourself. You should also ask for a confirmation when you mail the letter so you can have proof that the debt collector received the letter. Once the collector gets the letter, they can no longer contact you. However, this doesn’t mean your debt is gone. If you still don’t pay, a creditor can take you to court and sue.
  • If you have an attorney, a debt collector MUST contact your attorney. If you’re behind on your debt payment, chances are you can’t afford an attorney. But if for some reason you can afford an attorney, make sure to direct debt collectors to them.
  • Debt collectors cannot use threats of violence or harm in order to collect. If a debt collector happens to do this, make sure to record the day and time of the call.
  • Debt collectors cannot publish a list of names of people who refuse to pay debts.
  • Debt collectors cannot use obscene or profane language. If a collector does, make note of the date and time of the call.
  • Debt collectors cannot repeatedly use the telephone to annoy you. Again, record the date and time of every call made to you by a collector.
  • Debt collectors cannot call you before 8AM or after 9PM.
  • Debt collectors may not state that you will be arrested if you don’t pay your debt.
  • Debt collectors may not state that they will seize, garnish, attach, or sell your property or wages, unless the collection agency or creditor intends to do so, and it is legal to do so.
  • Debt collectors may not state that you will be sued if you don’t pay your debts.

These are a few of the regulations that debt collectors must follow under the Fair Debt Collection Practices Act. See this link for a more detailed list.

What if you think a debt collector has violated the law?

If you think a debt collector has violated the law, you can sue them in a state or federal court within one year the date the law was violated. If you have a stong case, you can be rewarded damages plus up to $1,000. In order to make your case, you’ll need evidence. That’s why it’s so important to keep a record of all your interactions with debt collectors.

You should also report any problems with debt collectors to your state Attorney General’s office of the Federal Trade Commission. These guys will bring criminal charges against the crooked debt collector and punish accordingly.

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Featured Resource

When dealing with financial Laws it may be prudent a reputed Lawyer. If your personal or business credit is in dire straits, a Bankruptcy Attorney may be advisable. It is also smart to choose a specialist by state like a Florida Attorney for trouble in the sunshine state.

What’s the Difference Between a Credit Report and a Credit Score?

Written by Brett McKay

You see the commercials all the time on TV. You call a 1-800 number and you get a free credit report. Then the commercial mentions something called a credit score. If you’re not paying attention, you might think that a report and score are the same thing. Well, they’re not. Today we’ll discuss the differences between a credit report and a credit score and why those difference matter to you as a consumer.

What’s a credit report?

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Credit reports explain what you do with your credit. It states when and where you applied for credit, whom you borrowed money from, and whom you still owe. Your credit report also tells you if you’ve paid off a debt and if you make monthly payments on time.

Federal law mandates that all three major credit reporting agencies have to give you a free credit report each year. So, when those TV commercials talk about getting a free credit report, you’ll find out the information discussed above when you apply for one.

There are several sites out there from which you can get a credit report. FreeCreditReport.com and AnnualCreditReport.com are examples of those sites.

What’s a credit score?

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You credit score is determined by the information in your credit report. Credit scores are used by companies and banks to evaluate the potential risk posed by lending consumers money. Your credit score determines if you qualify for a loan, what your loan’s interest rate will, and what your credit limit is.

The company that came up with the idea of a credit score was the Fair Isaac Corporation. That’s why you’ve probably heard credit scores referred to as a FICO score.

Credit scores range from 500 to 850. If you have a FICO score of 500, you’re going to have a hard time trying to get a loan extended to you. Even if you manage to get one, the interest rates will be high. Any score above 720, you’ll receive the best rates available.

Unlike credit reports, which are free, credit scores cost you money to get. They cost about $15 to get access to and you’re given the offer to purchase your credit score after you get a credit report. Bankrate, however, offers a free FICO score estimator. The estimator asks you 10 questions about your loans and credit card balances and then spits out an estimate for your credit score. While not 100% accurate, you’ll at least have an idea of where your score is at and make adjustments in order to improve it.

How your credit score is determined

When coming up with your FICO score, credit reporting companies look at several factors. In no particular order here are some of those factors:

  • Payment record. If you have a record of bills being paid late, your credit score will go down.
  • How much credit you have and how much credit you’re using.
  • How long credit accounts have been open. The longer you have a credit account, the better your score will be.
  • “Hard” Credit Pulls. A pull is a type of inquiry into your credit. Hard credit inquires are made by lenders for the purpose of extending you credit. Inquires by lenders lower your score because lots of hard inquires is a signal that you’re looking for loans and are possibly a poor credit risk.
  • Signs of responsibility and stability. Pay your bills on time, keep your job for longer than two years, and enjoy a higher credit score.

Summary

OK, so the difference between a credit report and credit score boils down to two things: a credit report shows what you’ve done in your credit history; a credit score determines your creditworthiness. A credit report is free; a credit score costs money.

There, now you know the difference between the two. No more getting confused when those commercials come on.

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Additional Resources

There are many ways in which your Credit can be effected, from various bill Payments, like car loans and heating bills to your Business Credit Cards. Your credit score can even be influenced by store credit and Gas Cards that you may have for miscellaneous purposes.

Students Turning to Private Loans to Fund Education

Written by Brett McKay

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The New York Times recently ran an interesting article about students using private loans to pay for school. Education costs are getting more and more costly each year. Unfortunately for American students, the amount of federal financial aid stagnanted. As a result many students are turning to private lenders to fund their education.

According to the College Board, private student loans have tripled in growth in the past five years. During the 2005-06 school year, American college students borrowed $17.3 billion from private lenders. Unlike federal loans that have mandated interest rate, private loans carry rates that can reach up to 20%. Additionally, private loans don’t have limits to the amount of debt students can take on like federal loans do. Consequently, many young people are overextending themselves.

Last month, it came out that private loan companies like Sali Mae were basically paying off schools to steer students towards high interest rate loans. Many students would go to their school’s financial aid office thinking they were getting low interest federal loans. It isn’t until they graduate and start getting their bills do they realize that they actually received a high interest private loan.

Another problem with private student loans is that the rate is variable. Unlike federal loans which are locked in at a low rate, private lenders can change their rate whenever they want. Many students go into private loans thinking they’ll have one rate, but a few years down the line, they might see themselves paying more.

What Can You Do to Avoid Being Swindled?

There are few things you can do to avoid the private loan bait and switch.

  • Ask what type of loans you’re getting. Don’t assume just because you fill out a federal financial aid form you’ll be getting just federal loans.
  • Read the paper work clearly. Before you sign anything, make sure to read the paperwork. Make sure that you’re just receiving federal aid and not private loans. If you have any questions, ASK them.
  • Take the least amount of private loans as possible. If you do have to dip into private loans, take the least amount as possible. Learn to stretch your dollar. Live frugally.

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[tags]New York Times, student loans, debt[/tags]