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Debra Avara

Money Talk Monday: Investing is no simple task

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Can you explain investing and the stock market like I'm five? Or at least like I'm a new college student? Wow - that is a loaded question. And the simple answer is no. Investing in the stock market is not something to be done lightly. You must start by learning. Read more [...]

Money Talk Monday: Smart debt pays off

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Is there such a thing as "smart debt"? Is it really better to buy the big stuff on credit than to pay cash? If not, how do you build your credit without getting into massive debt? Yes, there is such a thing as smart debt. Most financial advisors say that smart debt is anything that can help you financially. Read more [...]

Money Talk Monday: Only take what you need

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money
If I've already taken out student loans, what can I do now to help me get ahead of the debt once I graduate? Very good question. The thing about student loans is that many students are taking them simply because they were told they qualify for them. Read more [...]

Money Talk Monday: New law gives dependents access to credit

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By Debra Avara

 

Released in the Sunday morning paper, an adjustment to an old law went into effect Nov. 4.

Passed in 2009, the Credit Card Accountability Responsibility and Disclosure Act, aimed in part of keeping young adults out of credit card debt, also required credit applicants to have an income to qualify.

This adjustment now requires credit card issuers to consider household income, not just individual income. This will allow dependents, including college students still on their parents taxes as dependents, and stay-at-home spouses (and those with similar arrangements), access to credit cards, as long as their parents/spouses are credit-worthy.

Coming just in time for the holiday shopping season, they suspect credit card companies, stores and card holders will make good use of this change.

Please do not go overboard and charge, charge, charge. Suze Ormans’ rule of thumb – if you can’t pay if off in two months time, you shouldn’t be putting it on a charge card. Check your budget and see what you can afford. You don’t need to impress anyone. Stay true to your budget.

Money Talk Monday: What you need to know about payday loans

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By Debra Avara   Payday loans are small loans, usually a few hundred dollars or less and are short term (two weeks or so). Basically, you are borrowing against your next paycheck. To get a payday loan, you typically write a check for the amount you are borrowing – plus a fee. You usually leave the check with the lender, and they cash it once you are ready to repay. If you can’t repay your payday loan when it comes due, you can “roll it over” so that the loan is extended. If you can’t repay it and don't roll it over, then the lender will cash your check and you may be facing bounced check fees now. And the lender may also sue you or send your account to collections, which will ding your credit. These loans usually carry a high price tag. Finance charges are from 15 to 30 percent of the amount being borrowed. Since it’s 15 to 30 percent on just a few weeks, it’s comparable to getting a loan with an annual percentage rate of nearly 800 percent. This means if you borrow $200, and you are paying 20 percent interest, you are paying $40.00 for the loan for the 2 weeks. Companies often prey on lower income neighborhoods. The down side to this is most of these people are already experiencing financial problems and borrowing money with such a high interest rate just makes matters worse. In addition, many of these people find themselves unable to repay the loan when it comes due. This situation leads to additional bank charges for bounced checks and the cost of the loan, or they have to extend the loan causing even more fees, ending up trapped in a vicious cycle. They pay the loan off on the next payday, but discover they do not have the funds needed to cover their expenses. They then find themselves going back for another payday loan. This cycle can continue indefinitely since there is no limit on how many times a person can get this type of loan. Best strategy, make a budget and stick to it. Get rid of expenses you can’t afford. Do your Read more [...]

Money Talk Monday: Get to the core of credit scores

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By Debra Avara   At what age should young adults start concerning themselves with a credit score? What is the wisest way to go about building a good credit score? Young adults need to be concerned with good credit from the get go, as teenagers. Many young adults actually start late (age 21, 22) in building good credit, where others by that age have already destroyed their credit. As soon as a person starts to do anything at all with credit, they need to be concerned in building good credit. It takes years to build good credit, and only a few months to destroy it. Once it is destroyed, it can take 7 to 11 years to rebuild again. The legal age in Texas for a credit card is 18. You may get one younger, but it would probably come with a lot of restrictions. However, in 2010, Congress passed a bunch of new laws regarding credit cards. The biggest change was that people under 21 years of age now had to have a parent/guardian/adult co-sign for them. Their thinking is that the adults would know better and wouldn’t LET the ‘kids’ get out of control in their credit card debt. My thinking is once you understand credit cards, you will handle the card properly, regardless a co-signature or not! Two relatively easy ways to get a credit card: 1. Your parents can actually put you on their card as an authorized user. Of course, if your parents don’t have good credit, you don’t want to do that. But if they have good credit, this is a good way to start. Their credit becomes yours. Even if you never use the card, it can help you get another card. You and your parents should discuss and be in agreement as to how and when you can use this card, and obviously, you shouldn’t abuse it! 2. You can get a ‘secured’ credit card. If you have a savings account at your credit union or bank, you can ask them for a ‘secured’ card. This means that if you have $1000 in savings, ask them for a card with a $500 limit. You will not be able to use $500 of your Read more [...]
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