Surviving a credit crisis is pretty hard. What makes it harder for a lot of people, though, is that they don’t act as soon as trouble rears its ugly head. If you’re finding yourself in a situation where you’re having trouble keeping up with your credit card bills, for whatever reason (and reasons are plenty in this economic crisis), you should know that there are places you can turn to. Among others, you can get help from government agencies and nonprofit groups.

The kind of help you’re going to be looking for is going to depend on how dire your situation is. We’ve divided what we call plastic problems in three categories, in order of increasing severity: if you’re a little late on a payment, if you’re consistently late, and if you’re drowning under credit card debt. Here are your options in each case.

Sporadic Late Payments On Credit Card Bill

If you can’t pay your credit card’s monthly minimum, or if your payment is already late, the first order of business should be picking up the phone and making a call to your credit card company. Your credit card issuer will talk to you unless you’ve been missing quite a few payments. This is a very competitive industry and getting a new customer costs those companies upwards of $100. So they’ll do what they feel is right (within reason) to keep their current customers, especially when they know that it only takes a web search to compare credit cards and see what the competition is offering.

The main factor that’s going to determine what treatment you get is your payment history. If you’re only been late once or twice in the past twelve months, credit card issuers may waive the late fee. But before they agree to do so, they will either have to see you make the payment or they will ask for very precise details as to when said payment will be received. You might think this is trivial but taking this step will save you more than the late fee. Should you fail to take care of this, your issuer will increase your interest rate to penalty levels (up to 29%), which triggers what the industry calls “Universal Default“: the issuers of other cards you hold increase your interest rates too.

Chronic Late Payments On Credit Card Bill

Let’s say your situation is different and you’re consistently making late payments, and coughing up hefty fees in the process. The problem might be a simple cash flow issue, meaning that your credit card payment might be due at the same time as all your other bills and you don’t have enough money left to pay it, or it might be due at a time of the month where you simply have no cash, like a few days before you get paid. In these situations, you can ask your credit card company to reschedule your due date so that your payment falls at a time that makes it easier for you to pay for it.

If you’re heavily in debt and are having trouble making your minimum payments, your best bet would be to ask your credit card issuer to lower your interest rate. You might need a couple weeks of preparation for this one, but it’s really not complicated. Simply keep all the credit card offers you receive over a few weeks, and call your credit card company. Just make sure that you’re made good on your payments for the last six months. Ask to have your interest rate lowered so you can keep making your payments. Many credit card issuers would rather agree to that than lose you to a competitor.

Drowning Under Credit Card Debt

The least enviable situation is the one where you’re just staggering under a mountain of credit card debt that you just can’t keep up with. If that’s your situation, then getting professional help might be the best thing to do. Look for a certified credit counselor. He/she will examine your income versus your expenses, help you address your financial problems, and on that basis, will negotiate with credit card companies on your behalf. In many cases, you will be able to work out a satisfactory deal where your interest rate is lowered, new penalties are eliminated, and sometimes the balance that you owe is reduced.

It’s important though to keep in mind that the Federal Trade Commission (FTC) warns that not all credit counselors are reputable. You should really do some due diligence to find one that will help you out instead of leaving you worse off than when you contacted them. Another issue to contend with is the tax implications of having a portion of your debt forgiven or written off. When you settle your credit card debt and a portion of it is written off, that forgiven portion is considered by the IRS to be taxable income for you and you will have to pay taxes on it.

When it comes to dealing with debt problems, swift action is often the best thing to do. Knowing your rights and getting the correct information also helps. As I like to say, when it comes to financial matters, ignorance is not bliss.

Credit Card Problems And How To Solve Them

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What Is ChexSystems And Why Do Banks Use It?

ChexSystems Inc. is a reporting agency that provides a continually updated deposit account verification service to its members, which are banks, credit unions, and other financial institutions (there are few banks that do not use ChexSystems). This network of financial institutions all contribute information to the company concerning negative information on checking and savings accounts. This information is then shared to assess the risk tied to prospective customers opening new accounts and to screen out applicants that they’d rather not have as clients. For instance, people who repeatedly write bad checks have their information recorded in ChexSystems, since the service helps the financial institutions to be aware of fraud and other attempted abuses of the system. Viewed from this angle, it’s a very useful service.

Yet it is entirely possible to end up in ChexSystems without engaging in criminal activities. If you had a checking account that was overdrawn and failed to pay the negative balance in time, it’s very likely that the bank will report the incident to ChexSystems. It’s important to point out, though, that ChexSystems itself does not actually have the power to deny or accept a given account. The decision to report you relies solely on the financial institution, who forwards the names and addresses of account holders whose accounts have remained unpaid. All they do is provide your financial history to financial institutions to which you apply to allow them to make an informed decision. But since Chexsystems is also licensed as a debt collection service, they are allowed to take the necessary measures to attempt to collect that debt.

Every report that is submitted to them remains on file for at least 5 years, unless the financial institution that originally reported the information requests that it be removed, or ChexSystems becomes obligated to remove it under applicable law. Just to clarify the latter case, ChexSystems, much like the three major credit bureaus, is regulated by the Fair Credit Reporting Act. This law (the FCRA) requires Consumer Reporting Agencies to let you dispute any information that’s inaccurate or incomplete and to delete anything they can’t prove after investigation.

If you have overdrawn your bank account, the bank will send you a notice in the mail or try calling you to get you to pay up so that you have a positive balance. If you choose to ignore the bank, well just like a creditor reports to a Credit Reporting Agency, the bank will report you to their own agency and that is Chexsystems. Once this is done, over the next five years, you will have a very difficult time opening up an account at any other financial institution partnered with ChexSystems. Since the vast majority of financial institutions deny such customers the possibility of opening bank accounts, being reported to ChexSystems is a very serious matter that complicates your financial life to no end.

How To Find Out If You’re On ChexSystems’ List

Most people find out that they’re on ChexSystems once they go to a bank to open a new account, only to have the branch manager or customer service representative come back to tell them that they are denied because they are in ChexSystems. Pretty embarrassing. A more dignified way to find out is by ordering your ChexSystems report, a copy of which you can order online or by calling and following the automated instructions. It will typically take a couple of days before you receive it.

Once you have your copy, go through it with a fine-toothed comb. It will include the following sections: your name and “consumer identifier”, one or more items of “Reported Information” (this is the bad stuff that is being reported about your banking history!), one or more “Inquiries Initiated by Consumer Action” (these are things you have allegedly done that caused someone to pull your Consumer Report), one or more “Inquiries Not Initiated By Consumer Action” (these are reports pulled by others about you without your direct permission), one or more “Retail Information” items (from other check-writing databases such as SCAN), one ore more “History of Checks Ordered”, and then personal information about you, including your Social Security Number, and Drivers License.

How To Be Removed From ChexSystem’s List

If there is any error or inaccuracy in your report, you have a right to dispute it and ask that it be corrected or removed. Each item that you can have removed from your report puts you one step closer to being taken off the ChexSystems bank list. After you have carefully reviewed your report, it’s time to get to serious things and write a dispute letter. Gather all the information that can prove that the items are wrong. You should especially focus on the items in the section called “Reported Information”. If there are reports of debts you owe to banks that you know you have paid, gather your proof (do you have a receipt for paying the debt?, etc.). Collect all this information for your letter.

In this letter, you will write to ChexSystems and point out all of the errors or mistakes in your report, and ask them to reinvestigate those items and correct your report. Remember, the FCRA requires that credit reporting agencies take action within 30 days to reinvestigate the items you point out to them, so make sure to be clear and detailed in your letter. But please do not do this if you know for a fact that your file is accurate. Your inquiry will be tossed as a frivolous one.

Alternatively, you could possibly call your bank and try to work something out. It really depends on the bank. You can ask your bank if they can have you deleted from Chexsytems in you pay off your overdraft and see if they agree. If they do, get the agreement in writing because there’s no way to prove a verbal agreement. Once again, if the bank agrees to ask to remove you from Chexsytems if you pay the debt, get that agreement in writing in case ChexSystems asks for it.

If you have been reported to ChexSystems but still have open checking accounts, make sure you do not close them.

Banks That Do Not Use ChexSystems

If all else fails, you’re going to have to find banks that do not use ChexSystems so you can still have a checking account: banks that supposedly will not run a Chexsytems check on you when you apply for a checking account. These institutions are prepared to take on prospects with less than stellar credit ratings. Some will approve the application without placing too much weight on the ChexSystems report. Some will require a 1 year waiting period while you pay off your outstanding debts before opening an account.

The Internet is chock-full of offers for “banks without Chex Systems”, so you need a few pointers to navigate the offers. Before you get involved with any company that claims to give you a non-ChexSystems bank account, run the following tests and make sure it passes them with flying colors:

1. Make sure it’s an FDIC-insured bank. If you decide to open a bank account with an institution that isn’t FDIC insured, you could basically lose all of your money if that institution goes out of business. So it’s extremely important to verify the banks status before you open an account. The insured limit was previously $100,000 per person per bank but it has recently been upped to $250,000.

2. If it’s a credit union, make sure it’s NCUSIF insured. The NCUSIF is the credit unions’ equivalent of the FDIC. You should check it for the same reasons stated above.

3. It helps if the institution has a brick-and-mortar branch. Such institutions are almost always more reliable than strictly online ones, although legislation has tightened to protect customers and make online banks more legitimate.

4. Do some background work on the bank. Perform a WHOIS on the bank’s domain name: if it’s registered to a person and not a corporation, you should be concerned. Look on the banks web site. There should be separate telephone and fax numbers, and a legitimate street address – not a PO box. You can always call 411 to confirm that the telephone number matches the address listed, while keeping in mind that some banks have a central location where they answer general calls.

5. Make sure the bank DOESN’T require you to use direct deposit in order to open the account: if you switch jobs, and no longer receive your checks through direct deposit, then you’re basically back at square one.

6. Make sure the institution doesn’t charge you for common items like monthly statements, telephone services, and withdrawals, options that are normally provided for free through regular banks and credit unions.

Banks that do not use ChexSystems are important because for many people who are unfortunate to be on ChexSystems, they’re the only chance to open a second chance checking account. Being without a checking account is financially crippling. Fortunately, most states have local banks that offer second chance bank accounts and you can get around the Chexsystems penalty.

Second Chance Checking Accounts: Banks That Do Not Use ChexSystems

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What’s a Certificate of Deposit Loan?

If you have opened a CD at a financial institution and are in need of cash, instead of paying the early-withdrawal fee (some banks charge up to six months of interest), a very good option might be to get yourself a certificate of deposit loan. A certificate of deposit loan is a secured loan where the owner of the certificate of deposit account is allowed to avail a loan based on the existing CD as collateral.

What Are Certificates of Deposit?

Certificates of deposit (also known as CDs) are one of the best ways to save money and earn a decent profit from interest income. Stashing a few certificates of deposit in your portfolio is also a good way of investing cash, as long as you hold them to maturity. A certificate of deposit is a special type of account that usually offers a higher interest rate than a regular savings account. Investing in a CD means locking in your savings for a set amount of time, usually three months to five years, and in this time span, you’re paid interest based on the terms you agreed on when you opened the account. Like savings and checking accounts, CD’s are protected by federal deposit insurance up $250,000, and are thus pretty safe investments.

Why Get a Certificate of Deposit Loan?

The main problem, though, with a CD is that for the duration of the contract, your money is locked and you can’t get access to it. Savings accounts pay less interest, but your money is available to you anytime you need it. In the case of a CD, if you draw your funds early, you pay a penalty, known as an early-withdrawal fee. If you got your CD from a broker, he may have told you that there is no early-withdrawal penalty. That doesn’t necessarily mean, though, that you can’t lose money by trying to cash the CD early.

Here’s how: if you buy a CD through a brokerage firm and cash it before it matures, the broker may try and sell the CD to another investor. You can benefit from this only if interest rates are lower when you cash your CD than they were when you bought it. It is so because an investor will be willing to pay more for your CD if the interest it pays is higher than what the market is offering. If you have a three-year CD at 5.5-percent interest and you want to sell at a time when the highest rate on a three-year CD is 4 percent, you’ll get a premium for your CD. But if you’re strapped for cash and have to sell when the current best rate on a three-year is 6 percent, there’s less demand for your CD and you may have to sell it at a discount. The money you lose could be actually greater than the early-withdrawal penalty you’d pay if you had purchased the CD through a bank. You could even lose an amount equal to your original deposit. That’s where a certificate of deposit loan might come in handy.

How a Certificate of Deposit Loan Works

As previously mentioned, a good way to avoid paying early-withdrawal fees is to get a certificate of deposit loan. As its name suggests, a certificate of deposit loan is a loan that is granted to you with your certificate of deposit as collateral. If you had opened up a CD and find yourself in a situation that would require you to cash it out, remember that you still have options. Instead of paying the early-withdrawal penalty, consider borrowing against those funds instead by getting a certificate of deposit loan. You can borrow the money you need at low rates while the savings that you previously set aside will continue to grow. Depending on the financial institution and your credit history, you can get terms up to 60 months and borrow up to 100% of the CD’s face value. For a fixed dollar amount and a specified time period, a certificate of deposit loan may be arranged for nearly any project or purpose and you’ll continue to earn interest on your account while you’re enjoying the benefits of your new loan.

So whether you’re planning on taking a vacation but don’t want to drive up your credit card balance, want to consolidate some of your bills without paying high interest rates, or have to face urgent and unforeseen expenses, you can get a fixed rate and term certificate of deposit loan.

Certificate Of Deposit Loan

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A home improvement loan is a loan whose purpose is to to make repairs, expansions, or improvements to your house or real estate. Simply put, the best home improvement loan rate is the one that produces payments that are low enough that you can meet them with no problem. If you’re looking for low rate home equity loans, it makes sense that you shop around for a while. After all, how do you know you’ve secured THE best home improvement loan rate unless you’ve consulted several lenders and have a reasonable amount of offers to choose from?

You can only get that elusive good rate when you finally meet a lender who’s willing to work with you when it comes to interest rates, repayment terms, repayment options, and so on. And the primary factor for finding that kind of accommodating lender is your credit and whether it’s good or not. This is something that you can easily check, since there are a number of companies that can offer you a free credit report (no trial) so you can assess your credit situation.

Of course, every lender you approach will claim that they’re offering you the best home improvement loan rate for your particular situation. In many occasions, people apply for, and get, home improvement loans but they fail to secure the best possible rate because they didn’t bother doing their homework before applying (getting their credit report) and they didn’t do research after applying (doing some comparison shopping to find the best deal).

One are of concern for people shopping for the best home improvement loan rate is that they fear that doing some comparison shopping with several different lenders will impact their credit score negatively. While this was a concern a couple years ago, the credit reporting industry has adapted and now if you make all your inquiries within a set period of time (15 days, according to many sources), they all count as one inquiry.

Being a savvy shopper can help you secure the best interest rate considering your personal factors. Here’s what you should be doing.

1. Order your credit reports so you can analyze your credit history. If you spot mistakes, take the necessary steps to have them corrected
2. Get your credit scores. If you opt to get the free credit reports that you’re entitled to each year, they will not include your credit scores. For a complete picture, you should get your credit scores too
3. Start your research by selecting banks and financial institutions that offer home improvement loans among their financial products
4. Consult with those financial institutions, give them an estimate of your credit score, and hear what they have to say. If you’re told that your credit score is too low to secure a good home improvement loan rate, ask for advice on how to improve your credit score
5. Make visits to the lenders’ offices and ask to to talk to a loan officer. Ask about how to get pre-qualified for a home improvement loan
6. Don’t make any commitments to any particular lender until you’ve gotten at least half a dozen separate quotes, just state that you’re comparison-shopping so you can get the best home improvement loan interest rate and terms that you’re currently eligible for.
7. Do an Internet search to see what the competition has to offer, you’ll find that plenty of additional options are only a few clicks away. Compare to what you get through in-person visits
8. Study the different interest rates and other repayment terms offered by all the competitors
9. Work your budget and thoroughly review it to make sure that you’ll be able to meet the monthly payments from each offer
10. Once you’ve decided on one that suits you best, pay another visit to that loan officer and see if you can sweeten the deal

As a general rule, if you’re able to offer a collateral, your interest rate will be lower. That collateral can be your house or any other asset you own. The reduced interest rate reflects the fact that the lender’s risk is lessened by the fact that he has something to fall back on should you default on your loan. In those cases, the lender will be more likely to be more flexible in setting up your loan, especially if you have good credit. By the way, if you have good credit, you have even more options, as you can opt for an unsecured home improvement loan. In this case though, keep in mind that your interest rate will certainly be higher.

The best home improvement loan rate (as in, the lowest one) in not necessarily the best deal though. It won’t do you a lot of good to get the best interest rate if you’re expected to pay sky-high fees for late payments, or if your repayment terms are unrealistic, or if you have to pay a hefty penalty for paying off the loan in a shorter amount of time. What you’re loking for is the most flexible terms, along with low interest and low fees, with as little penalties as possible.

That’s the loan you want to apply for.

How To Get The Best Home Improvement Loan Rate

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Creating your own personal or family budget is an important step towards putting together a system to take control of your finances. Yet for many, creating a budget can turn out to be a difficult task. As it turns out, it’s a fairly simple process. And like most people who have successfully gone through it know, setting up the budget is the easy part; the real challenge lies in striking the balance between sticking to the budget and making it flexible enough to accommodate unforeseen events as well as personal changes. There is free home budget software out there to assist you in getting your financial house in order. Here are some of the most popular free home budget software available to you:

Quicken Online

This online tool used to cost $3 a month but is now totally free. It’s a decent offering and its feature list, although not as complete as the standalone version of Quicken, is nevertheless very good. Automatic nightly updates from your bank accounts and credit cards, bill payment reminders via text message or email, and customization options make it a solid choice, although it doesn’t offer advanced features like, for example, investment tracking.

Mint

This site got a fair amount of hype before launch and seems to now have matured into a very good money management option. It’s easy to use and offers very nice features. In minutes you can open an account, enter your bank and credit card info, and Mint will pull all of your balance and transaction information and provide great graphic detail of your financial life. Not only does Mint break down your spending behavior, it will alert you when your balance is low, when a bill is due or when you have overspent your budget. Mint.com also give you personalized money savings tips based on what you’re currently buying.

Geezeo

Geezeo allows you to manage all your accounts, offers mobile access, makes budgeting a breeze, allows you to create and track goals, and to join groups and learn from others. So it does a lot of the things the other financial software options do, with the benefit of active forums and groups to give the site more of a social network feel.

Buxfer

Buxfer lets it users set up budgets, know where and with whom they spent the money, who they owe how much, split bills, assign tags to transactions, settle accounts online, synchronize with different banks and credit card companies and access the service while on move via their iPhones, Twitter or a simple SMS. This software is specifically recommended to the younger crowd. It makes splitting, managing, tracking money easier and lot more fun for its young users. However, the service restricts itself to somewhat simpler tasks. High- end financial planning and advice are not the focus.

Wesabe

Wesabe is a community-based personal finance site which allows users to track their bank accounts while sharing money tips and goals. Wesabe’s strong suit is its tagging system. Everything on the site can be tagged, be it a transaction, a tip, or a goal. The tags are visible to the community and make it that much easier to see what’s “normal” for a spending category, or to get tips and set goals.

Now that you have a pretty good roundup of the free home budget software that’s out there, please keep in mind that they’re just tools.As such, they’re only as good as how good you are at using them. Following are some useful tips to get the best out of them.

Creating a budget can be summarized as a 5-step process:

1. Setting your financial goals: they must be of the S.M.A.R.T variety (Specific, Measurable, Attainable, Realistic, and Time-Limited)
2. Calculating your monthly income: salary, and other sources
3. Calculating your monthly expenses: both fixed and variable expenses. Take ALL expenses into account and set an approximate amount for each
4. Comparing your income to your real expenses. You will have to do what it takes (increase your income and/or decrease your expenses) to AT LEAST balance them out.
5. Follow the evolution of your financial situation and make changes to your budget accordingly

Mistake to Avoid:

If you’re setting up a monthly budget, be careful not to assume that your yearly expenses will be 12 times your monthly expenses. Inevitably, some months you will spend more than others. Think about birthdays, anniversaries, school tuitions, and so on… Notably, in December, you will incur many expenses that you won’t have to face at other times of the year. A good home budget software will allow you to plan a year ahead and will then go from your yearly estimate to come up with a monthly amount. You can also customize them to make up a small savings fund for Christmas, for example, and the monthly contribution to that fund can be added to your expenses.

And now, here are some important tips to help you make the most out of your budget:

1. It’s crucial that you pay yourself first (save) when setting up your budget. Always include a contribution to your emergency savings fund in your fixed expenses
2. Do NOT completely eliminate entertainment spending (concerts, movies, eating out…) unless your situation is really critical. A good approach is to reduce them to a minimum until your financial situation gets better. It’s very important to include those in your budget, otherwise you probably won’t be able to stick to it.
3. Go through your budget line by line to determine the areas where you can eliminate superfluous spending.
4. If you have a surplus after having trimmed your expenses, use half of it to further pad your emergency savings fund; use the other half as extra payment on your debt. If you have no debt, take a stock market for beginners crash course and start investing.
5. Get into the habit of writing down all your expenses. Little expenses that you don’t even think about twice really add up and you might be surprised to see how much money you’re literally throwing away. This money could have been used as further payments toward your debt, or for investing purposes.
6. If your personal budget shows that you’re only getting further and further in debt as time goes by, even after trimming down your expenses to a minimum, maybe it’s time to take a deep breath and look into debt consolidation so you can get out of debt once and for all.
7. Once you’ve paid off one debt, use the available money as extra payment towards other debts. Once all your debt is paid, you can increase your emergency savings fund and/or increase the pace of your investing.

Ultimately, the time and effort you put into your budget should help you shape a much brighter financial future.

Mistake to avoid:

Do kid yourself and try to save what’s left over at the end of the month. It simply doesn’t work. Save first (no matter how small the savings), and spend what’s left.

Once again, it’s crucial that you write down all your expenses to avoid reverting to your old habit of spending more than you earn. And if you think you can get out of debt without a budget, think about this: how can you trim your unnecessary expenses if you have no idea where your money goes?

The positive thing, though, is that by deciding to make a budget, you’ve taken one step in the right direction. And luckily, there’s plenty of free home budget software programs that you can use to create the budget that’s perfect for you.

Free Home Budget Software: How To Get The Best Out Of Them

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Are you familiar with automobile insurance fraud? If not, read on because this is the kind of thing that can really happen to anyone.

Insurance fraud in and of itself is not new. As far back as in time as in Ancient Greece, people used to deliberately sink insured ships in order to cash fraudulent claims. With the advent of the automobile, the problem just shifted to car insurance fraud. Automobile insurance fraud has become a very thorny issue for insurers: it costs the insurance companies money, it costs consumers money (the insurance companies incorporate those fraudulent claims into their cost of doing business), and it makes it harder for insurers to determine whether a claim is legitimate or not, which in turn delays payouts for the legitimate claims.

Automobile Insurance Fraud Techniques

Scams are usually operated through a well-organized crime network that includes scam drivers, scam helpers, insurance brokers, doctors, technicians and lawyers. The most “popular” auto insurance fraud scams are staged automobile accidents. In an attempt to get a way with doing something illegal, the scammers have refined their techniques and as previously mentioned will involve several participants in the scheme.

The most common type of scam is ‘the panic stop‘. This occurs when the car in front of you will slam on the brakes (usually for no apparent reason), causing you to crash into the rear of their car. The driver will then claim on your insurance for the damages to their car and any injuries-whether real or fake- that might have resulted from the accident. In order to pull this off swiftly, what they do is that they have some of the passengers in the car look out the back window for any sign of distraction that involves you taking your eyes off the road. That passenger signals them, and they brake hard. The victim will claim that the car in front of them stopped for no apparent reason but will likely not be able to prove anything since they were really not looking. Meanwhile they will have to pay for the damages and injuries reported by the criminals.

Another technique popularly used is ‘the helpful driver‘. that person will allow you the right of way when attempting to merge into busy traffic, and then purposely collide with you as you speed up. Later, when claiming off your insurance they will deny that they signaled to let you through. A variant of this is the “good Samaritan scam” where one criminal waves you on when you can’t see if traffic is coming. They actually wave you into the path of their partner who rams right into you. From the look of things, you drove out into traffic, and it’s your fault. When the cops arrive, the waver of course denies having waved anyone in.

You might have heard of the “swoop and squat” in Allstate commercials. This scam involves three vehicles. Two are driven by the criminals and the third is driven by the victim. The “squat” vehicle is in front of the victim. The “swoop” vehicle pulls ahead of the squat vehicle and intentionally cuts them off, causing the driver of the squat vehicle to slam on his brakes. Usually, the victim can’t react quickly enough and rams into the squat vehicle. The swoop vehicle that caused the accident has disappeared by then. The victim will report to the police how exactly the accident happened, but because that vehicle can’t be found the victim ends up having to foot the bill for the damage and any personal injury claims.

Then there is what is known as the side swipe. This type of accident usually happens at busy intersections with dual left hand turn lanes. The criminal positions his vehicle in the outer left turn lane. When the victim’s vehicle drifts into the outer turn lane the criminal side swipes him. To make sure the scheme works the criminal does preliminary surveillance to make sure that the intersection is busy enough where drifting will occur because of the amount of traffic.

The Exaggeration Scam – This is the scam in which the scammer has inflicted prior damage to their car to make it look like the damage occurred in their accident with you. They then stage the accident. Since their car was not appraised before the crash, all the damage inflicted on it can be blamed on the accident. The lack of proof make them get the benefit of the doubt and they receive payment for that damage from your insurance company. Sometimes, after an accident, either staged or not, the car insurance scam driver will go to another location and cause extensive damage to their vehicle and claim that the damage happened during the original accident.

Another way automobile insurance scammers get people is with fake helpers who try to scam you by offering to help an innocent driver find a auto repair shop, doctor, or lawyer. Here, everyone is in on the scam process. The body shop charges you enormous rates, the doctor and lawyer also lie to collect more from your car insurance company.

How To Avoid Falling Victim To Automobile Insurance Fraud

Anybody could fall victim to such scams such scams. However, these probability of these incidents happening to you can be reduced with a bit of awareness and by following basic precautionary measures. Some useful safety measures include careful observation of surroundings, abiding by the law while driving, ensuring ample distance in front of the vehicle, concentrating while driving, recording every minute detail at the site of accident and taking pictures using a disposable camera.

After a collision, make sure you pay attention to the driver and whether or not he/she looks injured; also check if there there are any other passengers in the car. There have been cases where the scammer will claim there was another person in the car that was injured, when in reality that person never existed. If someone is injured, make sure you call the police or emergency services, that way you can have a formal report of the extent of their injuries; that will stop them from having the chance to exaggerate their claims. Also, take photos of any damages made to their car. These photos might come in handy if the fraudster takes the car to a different location and damages it further in order to claim more money.

Drive safe and smart and your chances of being the victim of auto insurance fraud will be greatly diminished.

Automobile Insurance Fraud

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Start Safe, Invest Smart, And Sleep Well

When people are told that if they want to get ahead financially, they should invest in the stock market, their reaction comes up just short of panicking. To them, stock market investing invariably means losing money, especially when there is a recession and all they see on the news is how stock values have been going downhill. But it really doesn’t have to be that way. Even if you’re a beginner, you can be very successful in the stock market. This stock market for beginners guide will give you the basic principles you need to do so.

Most of the investment masters (John Templeton, Peter Lynch, Warren Buffett) have laid out pretty simple “stock market for beginners” advice on how they did it. And if there’s one thing that they all agree on, it’s the basic investment principle of moving out your investment return expectations to a longer time horizon. In layman terms, invest in the stock market not to make money today, but to make money in the long run. The ones that are considered the masters aren’t the ones that made a killing ONE year, it’s the ones that boasted the 15 to 20 percent annual returns, year after year, for the last twenty years or so. Because they invest for the long haul, the odds of winning are on their side.

Unfortunately, their sound and simple advice mostly falls on deaf ears, as beginners in the stock market tend to want to invest in the “next Microsoft” or the “next Google”. The problem with this approach is that the odds of investing in the next company that’s going to catch fire are squarely against them. And since their investing horizon is so short, time (the successful investor’s strongest ally) is not on their side either. Most of them have no long-term strategy and no plans to reduce their risk. They fall for the first “get rich quick” scheme that is pitched to them, and of course somebody failed to tell them that the person who’d get rich would not be THEM. No matter what you may have read or heard, short-term investment strategies simply don’t work, and the old adage that if you fail to plan, you plan to fail translates very very well in the investment world.

In order to succeed in stock market investing, you need to know why you’re investing, and let that “why” will dictate your “how”.

Investment Purpose: Why Do You Want To Invest?

Be clear on why you want to invest and be successful at it. Maybe you’re tired of being told what to do by someone who’s not necessarily more qualified than you and dream of being able to call the shots in your very own business, say, 10-15 years down the line. Recently I was watching a report saying that in the next 20 years, college tuition costs will probably skyrocket to levels that will make a college education out of reach of most low- and middle-income families, so maybe you want to make sure you’ll be able to pay for your children’s college education. Maybe you’ve seen all those horror stories about nursing home abuse and want to retire comfortably. Just remember to tie your investment goals to an aspect of your lifestyle. If your goal is just a number, it will not inspire your best efforts. It’s the purpose behind the number that will drive you and make you withstand the ups and downs that the market will inevitably go through.

Investment Strategy: How Are You Going To Invest?

The same way you make an itinerary and monitor your progress on a road trip, you will need to devise an investing plan and a way to monitor your investing progress. The principles that all the great money masters have followed over time are basically the same, and countless books have been written about them. Violate these principles, and you’ll simply be setting yourself up for failure, period. Basing your investing goals on timeless, unchanging, and proven principles creates a sound paradigm for effective  and successful investing. Maybe the problem with these principles is that they are very simple, almost too simple to accept.

Investing Success Principle #1

Although it has been said time and again, it doesn’t seem to stick: when investing, time is on your side. In stock market history, there is no 25-year periods where an investment doesn’t yield a positive return. It’s simply mathematical. The longer you hold on to your investments, the higher your chances of coming out ahead. Over time, through ups and downs, bull markets and bear markets, the stock market has averaged roughly 10% annual returns. The longer an investment is held, the closer you get to that expected average. As an investor, if you understand this, day-to-day market fluctuations will not drive you crazy and you will be able to concentrate on the one variable that you can (literally) bank on: TIME.

Once you have a long term point of view you can choose investments that have the best chances for success, based on company fundamentals and you can afford to throw in a couple of picks based on your outlook on the future. You can quit the day trading, the trends analysis, and the short term trades in order to make a quick buck. It’s YOUR money, it should be making YOU rich instead of your broker. Speaking of brokers, remember that the one trading your stock account needs activity to keep his job; he will do his best for you not to fire him, but without active trading, he doesn’t get to make much money (which is why some people swear by fee-based brokers). Long-term investing and strategic thinking are discouraged by the system itself. The investment community has no interest in telling stock market beginner that his/her best bet is to “buy, hold, and monitor”.

Investing Success Principle #2

The ability to make money in your own profession does not automatically make you a good investor. It simply means that you’ve mastered the set of skills tied to your profession. Even if said profession is tied to the financial world, there’s a world of difference between handling other people’s money and handling your own.

Investing Success Principle #3

Start out small and build your confidence while taking small risks. Invest only $100 or $1,000 instead of your entire savings. Try achieving a 1% higher rate than you would on a savings account. It’s not that much but it’s a good start. There are a lot of things that you will never know unless you’re learning by doing.

Investing Success Principle #4

Imitate the investment masters and read about successful investors. Talk to successful people you may know and ask them how they accomplished their goals. You could be surprised how open truly successful people are. They really believe that there is enough wealth out there and will gladly discuss their hits as well as their misses. And maybe in a way they know that it will take quite a few misses before that eventual hit.

Investing Success Principle #5

Don’t panic and sell if things go down. Actually you should even expect them to. If you buy good companies with sound fundamentals, drops in the market value of the stock will only be temporary and might even be good times for you to buy the stock when it’s “on sale”. It boggles my mind to see people crowd department stores and supermarkets whenever there’s a sale but fail to show up on the stock market when there’s a bear market (which is the stock market equivalent of a sale).

I would love to sit here and explain to you how the stock market works, or give you a primer on fundamental analysis and technical analysis, but you’ll find plenty of that with just a Google search. Just remember that as a stock market beginner, you need to stay away from active trading. Your best bet is to learn how to pick winners and ride them for years.

Stock Market For Beginners | Stock Market For Dummies | Stock Market Success

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Fighting the instinct to run away from a bear market might be one of the soundest financial decisions you can make. Actually increasing your investment can turn out to be an even better decision. Of course, whenever the words “bear market” are used, people cringe and picture plummeting stock values, and panicking investors. While this is certainly true, there’s also another side to bear markets, and if you pay attention to the history of the stock market and to economic theory (which shows that cycles of bull markets and bear markets occur with regularity and persistence), you might very well realize that bear markets can bring about tremendous opportunities to make money – IF you can get to grips with the fact that it’s going to take you a couple of years to realize those gains.

Bear Market Definition

A bear market is a prolonged period in which investment prices fall, accompanied by widespread pessimism. According to The Vanguard Group, “While there’s no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period.” If the period of falling stock prices is short and immediately follows a period of rising stock prices, it is instead called a stock market correction. Bear markets usually occur when the economy is in a recession and unemployment is high, or when inflation is rising quickly. The most famous bear market in U.S. history was the Great Depression of the 1930s.

Effects Of A Bear Market

Truth is, nobody likes a bear market. The Dow Jones Industrial Average dips more than 30% on average, the downward trend usually lasts over a year, and it often takes the market at least another year to recover. But like I said earlier, despite all the pessimistic financial news that they often bring about, bear markets can be tremendous buying opportunities.

According to a study by Ibbotson Associates for the Wall Street Journal of the bear market of 1973 and 1974 (the worst we had experienced since the Great Depression before experiencing the current bear market), the Standard & Poor’s 500 stock index had lost 43%, even accounting for reinvesting dividends, and the index didn’t reach its 1972 level for a good four years, in 1976.

Making Money In A Bear Market

Despite those figures, people who had steadily invested in stocks would have achieved interesting returns. Let’s suppose that, out of fear, you had invested your money in super-safe Treasury Bills over the same period. Well by January 1976, someone who had invested in stocks at the same clip you had would have come out ahead by January 1976, which is not negligible considering that T-Bills were, at the time, paying a quite decent 6-7% a year.

The aforementioned analysis assumed a monthly $100 investment in stocks beginning in January 1973. When the market hit bottom in September 1974, the investor would have invested a total of $2,100 and held stocks worth less than $1,500. But seven months later, the investor would have been about even with the $2,800 that he or she had invested in total over the period. And by the first quarter of 1976, as the stock market was just returning to its previous high, the investor would have had more money than if he or she had invested $100 a month in T-bills.

Despite the brief 1979 dip, the long-term prospects remained favorable. By the end of 1992, the investor’s $24,000 total investment would have been worth $124,000, which is more than twice  the $54,000 it would have earned in Treasury Bills.

Now you may say that these are numbers from 30 years ago, and you’re be (partially) right. But the fact of the matter is, if history is any indication, sooner or later the market will bounce back and you might be kicking yourself then for not having taken advantage of the current stock market trend that’s producing low stock prices.

Understanding The Stock Market: How To Make Money Even In A Bear Market

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Ask many people what the best approach for getting rid of debt is, and you’ll hear something to the tune of: “Pay for everything in cash and don’t incur any debt.” Although this sounds like common sense (and actually is), the truth is that it’s an impractical answer because it’s hard to implement for us mere mortals who don’t have the luxury of a $75,000+ yearly income with no kids. Actually, from a personal point of view, I don’t think that the best way to handle your finances is to pay for everything with cash, even if you have a high enough income to have that luxury.

I don’t have the statistics, but I think it’s safe to say that very few people buy their home with cash. There are also other situations that may arise and totally wipe out your life savings should you decide to pay for them with cash (medical and family emergencies, unexpected car failure…). Carrying SOME debt doesn’t necessarily imply that you’ve mismanaged your entire financial life. It might actually mean you’ve made sound financial decisions, such as increasing your earning power by going to school or using the power of leverage to purchase an asset that (usually) appreciates, such as a house. The tricky part is realizing when you have too much debt, and usually people don’t realize it until it’s too late: when they can no longer meet their payments. Once you suspect that your debt is starting to spiral out of control, you should consider a quick diet for debt reduction.

Step 1: Stop Getting Deeper In Debt

The only exception should be a case of emergency, like the ones mentioned earlier. And no, getting a new home theater system or updating your wardrobe do not qualify as emergencies, in case you were wondering. The purpose of this article is not to tell you how to spend your money. Instead, it’s about being smarter about handling your debt by identifying the best lending deals. Unfortunately, freezing your debt usually goes hand in hand with freezing your superfluous spending, especially if you don’t have the income to support that debt. Stick to the indispensable. Real simple, but easier said than done.

Step 2: Evaluate Your Financial Condition And Start Planning

You know the saying: “If you fail to plan, you plan to fail.” It never fails (pun intended). Creating a plan to get out of debt involves several steps. One of the most important of these steps is taking a close look at each and every one of your creditors. You need to clearly understand exactly how much it’s costing you to have each particular debt, keeping a watchful eye on interest rates, late fees, and other penalties. You will also have to review your payment history with all your creditors, namely did you pay on time. This can prove critical.

Your financial plan must be a roadmap that takes you from debt to debt-free. To do that, you need to know how much your total debt is and how long it will take to pay it off, given your current rate of payments. Of course, like all plans, it must offer some degree of flexibility, but without it, you likely will just keep spinning your wheels without getting anywhere.

Step 3: Look For Money Saving Opportunities

There are plenty of options out there to save money on your debt payments, you just need to keep an eye out for them. It’s often pointed out that whenever we get interested in something, we instantly start to run into that thing more often in our daily lives. It’s not that those things surged in popularity the minute we started wanting them, it’s just that our awareness of them grew, and they had actually been there all along. The same is true when you start looking for debt-reduction options. As you start to dig into debt management, educate yourself, and closely examine your debt situation, many opportunities to save money on your payments will start popping up, the first of which will probably be all those low-rate credit card offers that flood your mailbox on a daily basis.

Last year alone, banks mailed about 2.5 billion of these offers. Many of them will save you money, but you need to read the fine print, evaluate the offer against your current offers and consider your particular financial situation so you can determine whether or not their offer is truly something you can use to your advantage.

Step 4: Take Action To Reduce Your Debt

Decision without action is nothing more than wishful thinking. All the daydreaming in the world won’t help you pay off that debt! Formulate your debt reducing plan today and, most importantly, see it through! Simply knowing the route from your home to your destination won’t get you there until you actually get on the road.

Step 5: Track Credit Card Offers And Loan Offers

Remember those low rate offers I mentioned earlier? One of the best moves you can make is to track them and save them in a box or file. They can pay immediate dividends. You can use them to call up your current bank or credit card company and state the offer that you just got from such and such. More often than not, you’ll get positive results. Not only do you already have a history with them, but also acquiring new clients is very expensive for these companies.

Another reason for tracking offers you receive is that should you need to turn to another financial institution for cheaper financing, you’ll already have done your research and know which banks to contact, many of which may have already pre-approved your application. You will then be negotiating from a much better position, assuming that your payment history is relatively satisfactory.

Step 6: Don’t Rush Out And Close Credit Card Accounts

After paying off a credit card, do not cancel it. When you cancel your credit cards, you hurt yourself in several ways. The first problem with closing your accounts is that, should an emergency arise, you will be at the mercy of whatever bank(s) you decide to keep. If, for whatever reason, they decline your request, you’re left out in the cold with few options. The second problem with canceling your credit cards is that when you do, you also delete the credit history that’s attached to that card. So the older the canceled card is, the more your credit score is likely to suffer, since a part of the calculation takes into account the length of your credit history.

As long as your current credit card accounts (and lines of credit) aren’t charging you any fees for inactivity, then it’s in your best interest to hang on to that account. Just make sure you don’t turn right back and start charging them. In short, don’t give any financial institution a monopoly on your business. Keep your options open.

Step 7: Pay Your Debt On Time

Do it no matter what it takes. When it comes to debt repayment, the capital sin is paying late. You will feel the pain immediately with late fees (that’s money which would have been better used to reduce your debt). You will also feel that pain in the future as paying late hurts your leverage and bargaining power in future negotiations. But most importantly, paying late makes you a “risky” customer and makes it that much harder for you to secure the best rates and deals when you need them most, like on a mortgage. In the long run, that kind of negligence can cost you thousands of dollars. If you have the option to borrow (from family members or close friends), do so to make sure your payments are made on time and your interest rates are as low as possible. Debt management is a continuous process. Stay on top of your situation, and keep more of your money.

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The word is (finally) out: we’ve been in a recession for a year now. Although this is hardly news for most of us, it’s good that the “professionals” have finally agreed on it. So with the recession “news” and all the financial turmoil that we’ve witnessed all year, we’ve been tightening our belts and this attitude has carried over into the holiday season. Although I personally don’t push the “frugal” agenda, many other personal finance bloggers have been offering tips on how to save money on all kinds of things, including gifts for the holiday season.

I was reading this parenting magazine lately and I came across an article that suggests buying stocks for your children as gifts this holiday season. Of course I picked it up and I have to say that the advice that was offered was of the highest quality. I am a follower of Warren Buffett’s investing principles, and a strong believer in the power of dollar-cost averaging. It so happens that this article touches on both, in a way that’s very refreshing and is a welcome departure from the doom-and-gloom news of late.

I put up a post a while ago on my other personal finance blog, about Warren Buffett and how I think he’s behaving in this recession. It wasn’t even a wild guess, as I took it straight from one Berkshire Hathaway’s annual reports. Referring to bad economic times and the pessimism that they bring along with them, Buffett says:

“We want to do business in such an environment, not because we like pessimism but because we like the prices it produces”

He also has another saying that goes:

“Be fearful when others are greedy and greedy when others are fearful”

As we all know, the stock market has taken quite a beating this year, and this weekend the President-elect has warned us that things will get worse before they get better. But guess what? Now might be the best time to buy stocks for your kids! As a rule, if you’re looking for a short-term return on your money, stocks are not a good investment for you, as stock returns can vary greatly from one year to the next. But if you can afford to wait, they are your best friends. And who can better afford to wait than, say, your 3 year old daughter? Simply put, it’s a really good idea to buy stocks NOW for a child, who by definition has a long investing horizon. In five, ten, or twenty years, when all this is over, those companies that you scooped up for a song might very well be churning out solid profits.

The other added benefit of buying stocks for your children is that it’s a great opportunity to introduce them to the concept of investing, and to teach them about delayed gratification. Explain to them that what matters is what their stocks will be worth when they are 18, not the day-to-day fluctuations and all the noise that they will undoubtedly get from the media over the years. Getting them to understand the concept of compound interest is key, and later on, in their teens, they can fully grasp the related concept of dollar-cost averaging.

How And Where To Buy Stocks For Your Children

Even if you’ve never invested for yourself before (which is something that you should attend to ASAP), buying stocks for your children is not complicated at all. Here are a few available options:

Buying individual stocks. Websites such as Zecco, Sharebuilder, and E-Trade allow you to buy and trade stocks with low commission fees.

Buying shares in a mutual fund. Being that a mutual fund holds a diversified portfolio, it’s a better investing approach than trying to pick individual stocks. Also, a mutual fund allows you to invest smaller amounts of money (as low as $50 per month) as opposed to having to buy a fixed number of individual shares.

Investing into a 529 plan. A 529 Plan is a way to save money for your child’s college education that offers significant tax breaks. The biggest advantage of 529 plans is that once you put money in them, it’s never taxed again. Since it may be 15 or 20 years before that money is withdrawn, it’s that many years during which the money that is in this account is allowed to compound tax-free.

Finally, buying stocks for your kids can be a good time to teach them about socially responsible investing, as the concept is gaining both in exposure and popularity. The benefits are obvious, and if everyone gets their kids to buy into the concept, then they will get that much closer to actually having an enjoyable future.

Summary: Buy stocks for your children during this recession. Firstly, you will get good prices on your stock purchases. Secondly, as your child’s investing horizon is decidedly long-term, he/she will gain as the stock market trends upwards in the long run.

Buy Stocks For Your Children During This Recession

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