Financial Articles

When it comes to contracts with financial institutions, this includes banks and finance companies, remember it was written by them to insure their best interests were covered, not yours. The contracts are designed to extract every available penny from you. It really does come down to a case of ‘buyer beware.”

Just because you’re in debt or don’t have a lot of available cash on hand doesn’t mean are still in a position of power. After reading over the contract or what they prefer to call the ‘paperwork’ you have to have the feeling that you are getting the best deal possible. If not, you may have to go to another lender to get a good deal. There are a couple of things to watch out for. Lets start with your current lenders. If you got a “don’t pay till next spring” situation, beware you don’t hold off sending the payment just before the date. It won’t matter when you dated the check; it only matters when they received it. If it arrives even a day late you’ll be charged the entire interest. Trust me, they will have a clause in the contract saying it is not their fault if the mail is slow. Or they can also have a penalty for early payments, that is really dirty pool but some companies do it.

Some tricks the new lender might do is: a low interest rate for a few months then it goes up and can even lock you into payments for a period of time. They can charge a service fee to cut a check to all of your current lenders. They can have other service fees they don’t explain fully.

It is the old thing; do not sign it if you cannot understand it. They can always try to make you uncomfortable and just sign it and get it over with. Remember how uncomfortable you will feel when they kick you out of the house because you signed a bad deal. Take your time and understand what you are signing.

Ignorance isn’t bliss

Disciplined, rigorous, dogged, determined, diligent, precise, fastidious, systematic, methodical, demanding, consistent, focused, accountable and responsible. How many of those words would be used to describe you?

A world-class athlete named Dave Scott won the Hawaiian Ironman Triathlon six times. In training, Scott would ride his bike 75 miles, swim 20,000 meters, and run 17 miles – on average, every single day. Dave Scott did not have a weight problem! Yet he believed that a low-fat, high-carbohydrate diet would give him an extra edge. So, Dave Scott – a man who burned at least 5,000 calories a day in training – would literally rinse his cottage cheese to get the extra fat off. Now there is no proof that he needed to rinse his cottage cheese to win the Ironman; that is not the point to the story. The point is that rinsing his cottage cheese was simply one more, small step that he believed would make him just that much better. One small step added to the other small steps to create a consistent program for achievement and progress. He had a plan and he stuck to it.

Do you know anyone who is overweight, out of shape or what is called a ‘couch potato’? They got that way using a program completely opposite to Dave Scott’s. They consumed more calories than they burned off, they sat around rather than being active and they chose foods based on taste than on fueling their bodies. Did they sit down and choose this health and fitness program? Probably not but they did follow it. The evidence is very clear.

What has being in debt have to do with a triathlete rinsing his cottage cheese? Whether you’re getting yourself out of debt or amassing your fortune you need to have a plan and stick with it. If you take a look at anyone who is saddled with a great deal of debt you can see they had a plan and they’ve stuck with it. They’re plan was to satisfy their wants immediately, live beyond their means and hope that it will all work out somehow. They weren’t conscious of their plan or ever sat down and chose this plan but it was their plan nevertheless.

Improving your money situation requires doing a lot of small things on a consistent basis. Simply become aware of every purchase, expense or vehicle for parting your from your money. Be smart, be wealthy.

In debt? Lots? Did you know you are valuable to a lender? If you have a history of paying your debts, even if it is slowly, then to a lender you are valuable. That is because you pay interest on money they have lent. That interest is like their salaries and if you keep paying them, they keep getting paid.

In a way you are working for the lender, and as long as you pay regularly you do not cost them anything to have as an employee. Wow, what a great deal, for them. With this little knowledge your job is to go to 5-10 lenders and see what kind of deal you can negotiate. If you have some high interest credit cards it could be the most money you ever saved in your life. As likely your new lender will have a lot lower rates on the loan.

Gather up all your payments and write down; how much you owe each, the monthly payment, and the interest rate. Total up how much you owe and total monthly payment and the high and low interest rates. This is the info you need, to determine if you are getting a better deal from a new lender. Often one of your current lenders will cut you a much better deal if you tell them you will move to a new lender if they don’t.

Why would a lender do that? Well whatever the prime interest rate is federally is likely how much they pay for the money you have. As an example, lets say prime is 6% and your average interest rate you are paying on your loans is 20%. They are making a fortune off you. For them basically anything over 7% is still making them money. As they have very little work involved. It may be better than nothing, so they might cut you a better deal.

Remember, without borrowers there wouldn’t be any lenders. They need your business so make them earn it. Be smart, be wealthy.