Am I Entitled to a Severance Package?

No matter what the circumstances, leaving a job can be stressful. If you are laid off or fired, the prospect of seeking new employment without having a paying job can be frightening. When you retire, not knowing what your financial future holds may cause anxiety. And even if you’re leaving to take another job, there is usually a period of a few months before you can take advantage of that job’s benefits.

A severance package can help see you through such uncertain times. But not every employee is entitled to one. Here’s what you need to know about severance packages and how to make the most of them.

Am I Guaranteed a Severance Package?

There is no law mandating that companies have to provide severance packages to their employees. The only thing that is provided for by law is the opportunity to temporarily continue your health insurance at your own cost. But many companies do offer severance packages under certain circumstances.

The details of your company’s severance policy may be found in your employee manual, or in your employment contract. It is important to review these things before taking a job. If your severance package is detailed in your contract, you can negotiate for what you want before signing. The company doesn’t have to change anything, but if they are really interested in hiring you, they may be willing to make some concessions.

In most cases, companies only provide severance packages for employees who are laid off or retire. But firms may choose to offer severance benefits to employees who resign with notice, or in some cases even those who are fired. These situations are often considered on a case-by-case basis, and the employee may hire a lawyer to help negotiate benefits.

What’s Included in a Severance Package?

Severance packages vary significantly. But in most situations, the benefits provided are based on the benefits one received as an employee. These may include the following:

* A payment based on the length of service. This payment is often equal to 1 to 2 weeks of pay for each year of service for hourly and salaried employees, up to a maximum of 26 weeks. For executives, it may be 6 to 12 months pay.

* Payment for accrued vacation time. Some firms also offer payment for unused sick leave.

* Insurance benefits. These may include medical, dental and life insurance.

* Retirement benefits and stock options. These may be continued just as they were while the individual was still an employee.

* Help finding a new job. This is typically provided for employees who have been laid off.

Severance packages are a way of saying thanks for an employees service. But they can benefit the company as well. As a condition of accepting a severance package, employees must usually agree not to pursue legal action against the former employer or attempt to collect unemployment benefits. They may also have to agree not to go to work for a competing company.

A good severance package can help ease the transition from your old job. If you feel that you’re not getting a fair shake, and employment attorney may be able to help you get the pay and benefits you deserve.

Cool Frugal Summer Activities the Whole Family Will Love

With few exceptions, we all look forward to summer. Kids love it because they get a break from school. Adults love it because it’s a great time for a vacation. And almost everyone has a favorite summer activity that they can’t wait to get involved in.

Summer can also be a very expensive time of year. There’s so much to do, and we want to cram it all in before cold weather strikes again. But by the time we visit the beach, go to an amusement park, make weekend trips to the pool and do all of the other stuff we want to do, it can put a major strain on the budget.

But summer fun doesn’t have to break the bank. There are lots of things families can do for cheap, and some are even free. In this report, you’ll find lots of summer activity ideas that will fit into virtually any budget.

Swimming for Less

On a hot summer day, one of the most popular destinations is the local pool. Admission isn’t terribly expensive, but if you go as a family several times over the course of the season, it can really add up. By the time fall arrives, you might wonder why you just didn’t save up a little more money and go to the beach!

If you love to swim, there are alternatives to the community pool. Here are some to think about:

* The lake – If there’s a state park with a lake nearby, you may be able to swim for cheap or free there. Some have beach-type areas with sand, so the kids can have a blast building castles and burying one another. It’s kind of like taking a trip to the coast, only without so many expenses.

* A friend’s pool – If you have a friend with a pool, perhaps you could take the kids over to swim from time to time. In return, you could take refreshments for both families or invite the friend’s family over to your house for other activities.

* The gym – If you have a gym membership, you may be able to bring guests to the pool for free or at a reduced rate. Check with your gym for details.

* Quick-set pools – Those inexpensive quick-set pools have become quite popular among families with kids. All you do is blow up the inflatable ring, fill the inside with water, and you have an instant pool! They come in many sizes, and some are priced under $50. Larger ones are only a few hundred dollars, and by the time you figure in gas and pool admission, they can pay for themselves in just a couple of years.

If you’re fortunate enough to live near a river, there are all sorts of summer activities you can participate in. Canoeing is lots of fun for adults, teens and older children. Innertubing is especially popular among the younger set. Or you can just jump in and play in low water areas.

Of course, you don’t have to get in the water to have fun with water. Here are some other wet and wild activity ideas that are fun for all ages:

* Water guns – Having a water gun fight is a classic summer activity for kids. But there’s no reason that the grown-ups can’t get involved too! You can find inexpensive water guns at the dollar store for next to nothing, and if properly cared for, they will last for many summers to come.

* Water slides – You don’t have to visit a water park to go down a water slide! You can buy slides that hook up to your water hose for $20 or less and use them right in your own back yard.

* Sprinklers – It’s not necessary to buy any toys at all when the kids want to cool off on a hot day. You can simply hook up the sprinkler and let them run through it. If you don’t have one, just get out the water hose and start spraying. It’s guaranteed fun, and you won’t have to pay a dime for it.

Enjoying Nature

Summer is a wonderful time of year for getting out and enjoying all that nature has to offer. It doesn’t have to cost anything, either. Many nature areas have hiking trails that you can access for free, and some don’t even charge for parking.

Some state parks offer nature programs that the whole family can enjoy. These programs have various themes, including plant identification, bird watching and more. Check your local paper for dates, times and locations. You may have to register to participate, but there is rarely any cost.

No matter where you live, there is some sort of natural wonder that’s not too far off. There are large rock formations, caverns, waterfalls and more throughout the country. Visiting these places is often free, and if there is any cost it’s usually quite affordable. If your are not familiar with the attractions in your area, pick up a travel guide from a nearby visitors center or search for information online.

Camping is the ultimate nature activity for families. RVs and pop-up campers offer all the amenities of home, but they aren’t necessary. All you need is a tent, some sleeping bags, food and drinks and a grill or camp stove. Most campgrounds offer tent space for a small fee, or you can simply set up camp in your back yard.

Fishing is another favorite activity for adults and children alike. You can find poles in all sizes at your favorite sporting goods or discount store. Fishing licenses are generally required for adults and teenagers, but not for kids under certain ages (which vary from state to state). If you only fish on occasion, you can save money by buying a short-term license in most states.

Gardening

Many adults enjoy gardening in the late spring and early summer. But did you know that it’s a great activity for kids, too? Even toddlers can get in on the act!

Planting a flower garden is a great starter project. You can buy trays of flowers at a discount store for next to nothing. Let the kids help pick out flowers in a variety of colors, and plant them together. They’ll be able to see the results right away, and they can be responsible for caring for them throughout the season.

Vegetable gardening is another great family activity. It provides an opportunity to teach children about good nutrition while having fun as a family. The results generally take longer to see than flower gardening, but the end result is well worth the wait. Even the pickiest eaters are usually eager to try foods that they have grown!

Festivals and Carnivals

Even the smallest of towns usually has some sort of festival during the summer months. These celebrations feature a wide variety of activities that adults and children of all ages can enjoy. It’s easy to spend a small fortune at such events, but if you watch your money you can have a good time without breaking the bank.

Many festivals offer free concerts as a means of drawing larger crowds. Street performers such as magicians, clowns and mimes are great free entertainment for the kids. Kiddie rides, face painting and other activities may be free or paid. If theyíre not free, set a budget and have your kids choose things to do that fit within that budget.

One of the most expensive aspects of festivals and carnivals is the food. To avoid overspending, pack a lunch or eat before you go to the event. Bring some snacks and drinks along if they are allowed on the premises, and if you must buy something during the festival, consider going to a nearby store instead of buying from overpriced food vendors.

The Zoo

One destination that kids of all ages tend to enjoy is the zoo. Wild animals aren’t something that most of us see every day, so watching them up close and personal can be a real treat. There are zoos to fit every budget. If traveling to a large zoo is out of your price range, there’s sure to be an alternative that’s within your budget.

A popular and inexpensive option among younger children is a petting zoo. These zoos may not feature large animals such as elephants and giraffes, but they make up for that by allowing physical contact with the animals. Kids enjoy petting and feeding the goats, pigs, ponies and ducks. Bring a camera along and capture some memories that are sure to be cherished for years to come!

Museums and Galleries

If you’re looking for a fun and educational activity for the entire family, you canít beat a trip to a museum or art gallery. You don’t have to live in a large city to visit one. Most smaller cities, and many small towns, have at least one museum or gallery of some sort.

Museums come in a wide variety of flavors. Art and historical museums are among the most common. But you can also find museums based on all sorts of interesting themes. Museums featuring oddities (such as Ripleyís Believe It or Not) are popular among children and adults alike. There are also museums geared toward children that make learning fun. If you’re not sure what types of museums can be found in your area, check with your local Chamber of Commerce.

Many museums offer free admission, so all you have to do is resist the urge to splurge in the gift shop. Some charge admission, but prices are usually reasonable. If you want the best possible deal, consider organizing a group trip. Call ahead to find out how large of a group you will need to qualify for a discount. You could invite members of your church or an organization to which you belong to meet the requirement.

Visiting Friends and Family

If you’re looking for a change of scenery on a budget, visiting friends and family who live out of town could be the answer. If you can stay with them instead of renting a hotel room, you could even make a vacation out of it with very little expense.

If you have family living in the Bahamas, that would make for a great summer vacation. But no matter where your friends or relatives live, there’s bound to be something fun to do together. A simple dinner out at a popular local restaurant and trip to the movies can be an adventure when you’re away from home. Or you could visit inexpensive local attractions such as nature areas, museums or petting zoos.

The Library

When it comes to summer activities, going to the library may not be on your kids list of favorites. But did you know that most libraries offer a variety of programs that appeal to children, teens and adults?

Most libraries sponsor a summer reading program for kids and teenagers. These programs usually feature prize drawings for children who read certain numbers of books while they’re out of school. This is a great way to keep your child’s reading skills up to par!

For young children, storytelling is a popular library activity. Some libraries also feature activities such as movie showings, craft classes and even concerts. Most of these activities are free, but they may require registration. Call your local library to find out the details.

Movies

Going to the movies is a wonderful family activity year-round. In the summer, it’s the perfect cure for boredom. And if you play your cards right, you can take the entire family without paying an arm and a leg.

Instead of going to the big chain theater, see if there is a dollar theater in your area. These theaters may not show the newest releases, but seats are cheap for every showing. Sometimes you can even go for as little as 50 cents per person!

If there’s no dollar theater in your hometown, check matinee prices at the regular theater. These daytime showings on the weekends are usually significantly cheaper than nightly shows. Some theaters also have cartoon showings for cheap on weekend mornings. And some offer special discount programs that could save you money if you go to the movies frequently.

Watching movies at home is even less expensive than going to the theater. Theresa no temptation to buy giant tubs of expensive popcorn, and everyone can watch a rented movie for one low price. If there’s a Redbox location near you, you can rent new releases there for $1 per night. Or you could join Netflix and borrow as many movies as you like each month with no late fees for one low price.

Better yet, you can borrow movies for free. If you have a friend with a large DVD collection, inquire about borrowing a movie to watch every now and then. Or go to your local library and borrow some movies. Pop some microwave popcorn and dim the lights for an authentic theater experience.

Picnics in the Park

The park is a wonderful destination for family fun in the summer. There’s something for everyone in the family to do. Youngsters can play on slides, swings and such. Older children, teens and adults can shoot hoops, play softball or go walking on trails. Or you could bring along a Frisbee, find an open space and toss it around.

With all of these fun things to do, why not pack a lunch and make a day out of it? For the price of some sandwiches, drinks and dessert, the whole family can have a blast and get some exercise. If you prefer a hot lunch, many parks have shelters with grills that you can use for free when they are not reserved.

Block Parties

If you want to have a good time and have the room, try having a block party! Kids love them because they get a chance to play with the other kids in the neighborhood, and adults love them because it gives them an opportunity to socialize.

If you bear all of the expense yourself, having a block party is very expensive. But if you make it a potluck, you won’t have to pay much at all. Just provide the main course, and ask each guest to bring a dish. You could even ask some to bring supplies such as paper plates, cups and napkins.

For cheap live entertainment, ask any neighbors that play an instrument to bring it along and have an impromptu jam session. Or have the kids that will attend prepare an act and have a talent show. You don’t have to shell out big bucks to hire a band.

Amusement Parks

Amusement parks aren’t known for being inexpensive. One ticket for one day can cost as much as a couple of weeks worth of other activities. But there are ways you can save on admission to your favorite park.

If you live fairly close to an amusement park, a season pass could be well worth the money spent. They usually cost about as much as 3 or 4 days admission. So if you think you’ll visit several times during the summer, a pass will pay for itself in no time.

Some employers offer discounts on admission to nearby amusement parks. They usually make announcements early in the summer. If you haven’t heard anything from your employer, ask if they offer any special deals. If they don’t, suggest that they check with the park in which you’re interested to see if they could.

You can often get discounts on amusement park admission from a variety of sources. Check packages of canned soda and other items from the grocery store. Some fast food restaurants also distribute coupons for a certain percentage or dollar amount off of admission to amusement parks, so be sure to look in the bag when you get takeout. The best discounts are usually found late in the season.

Other Frugal Summer Fun Ideas

The possibilities for frugal summer activities are endless. Here are some more ideas:

* Inquire about touring a local factory. Some offer interesting and educational programs, and you may even get some free samples afterward.
* Organize a family reunion. Rent a shelter at the park, and have a potluck dinner. You’ll get to see family members that you haven’t seen in ages, and the kids will have lots of fun playing together.
* Go on a family bike ride. Whether you load up and hit a bike trail or just ride around the neighborhood, everyone will get some exercise and an opportunity to bond.
* Volunteer. There are volunteer opportunities suitable for children as well as adults. Some organizations need lots of help, so the whole family may be able to get involved with the same project.
* Visit state, local or national government offices. Many offer tours that are very educational.
* Gaze at the stars. You can do this for free on a clear summer night, or you can visit the planetarium.
* Pick wild berries. They taste great right off the vine or bush, and you can also take them home to use in cobblers and other dishes that you can make with your kids.
* Get a jar and let the kids catch fireflies. You might even find yourself getting involved!
* Set up a scavenger hunt for the kids. Make a list of items found in nature, and let them loose in your back yard or at a nature park. Provide a special prize for the winner and consolation prizes for the runners up.
* Go to a minor league baseball game. Tickets are much cheaper than those for major league games, and the atmosphere is much more relaxed and family-friendly.
* Make a bird feeder by spreading peanut butter on a large pine cone and rolling it in birdseed. Hang it up in the front yard and watch as the birds flock to it.
* Create a family scrapbook. Have each child contribute a page or two, or assign each one a task such as creating page layouts, choosing photos and cropping.
* Check your local newspaper for event listings. You could find free concerts in the park, play groups and more.

Having fun in the summer isn’t only for the well-to-do. There are plenty of activities you can do in your own back yard that are free or very inexpensive. And with some research, you can find affordable activities in your hometown and neighboring areas. There’s no need to let summer boredom get the best of you and your family. Fun can be had on budgets of any size!

Tips to Create, Prioritize and Manage a Budget

Mention the word “budget”, and people’s eyes tend to glaze over. Budgeting isn’t the most exciting activity in the world, and on the surface it is extremely limiting. We don’t like it when other people try to tell us how to spend our money, and even setting parameters of our own may seem too much.

What many of us do not realize is that a budget is the ticket to financial freedom. It restricts what we spend each month, but in the long run it allows us to get more out of our money. Instead of frittering funds away on things we could comfortably do without, we can save up for emergencies as well as things we enjoy.

Here are ten tips for creating a budget, setting priorities and keeping tabs on spending.

1. Be realistic. All too often, we create the perfect budget on paper, only to completely blow it in practice. This is frequently because we are not realistic about our expenses. It may help to save all receipts for a month before you start on your budget. That way you can evaluate how much you’re really spending and avoid budgeting too little for any given item.

2. Remember the little things. Eating out every day instead of packing your lunch might not seem like a big deal, but it can really add up. The same is true for many of the habits we have. Cutting back where practical can save you more money than you might think.

3. Lower your bills when possible. A good place to start is with your cable bill. Do you really need all of those movie channels? What about your cell phone bill? Would a less expensive plan meet your needs? Knocking a few dollars a month off of your bills could leave you with hundreds of extra dollars each year.

4. Get the whole family involved. A budget affects the entire household, so everyone should have a say. You may have to make changes that everyone doesn’t agree with, but they will be more likely to accept them if you listen to all input. Family members may also have ideas that you wouldn’t have thought of on your own.

5. Give everyone an allowance, not just the kids. Setting reasonable limits for discretionary spending will help prevent your budget from being derailed.

6. Make sure the necessities always come first. Budgeting for entertainment and other wants is important, but if push comes to shove, food, water, clothing and shelter are the most important things. Budget for these and the things that enable you to work (such as transportation) first.

7. Include savings in your budget. Saving up some money for emergencies is crucial for every individual and family. Try coming up with an amount to save each month and include it in the budget before any non-necessities.

8. Keep track of all expenditures. Save receipts or write down every expense so you can compare your actual spending to your budget. If you spend less money than budgeted, consider allocating more to savings. If you spend more money than you planned, you need to either watch your spending more closely or make adjustments to your budget.

9. Avoid using credit cards irresponsibly. Buying on credit will result in less spending of money in the short run, but you will have to pay it back with interest unless the balance is paid in full each month.

10. If you get extra money, use it wisely. Consider putting it directly into savings or using it to pay down debt. Spending it on something you want might feel good, but that doesn’t help your overall financial picture.

What Can a Licensed Insurance Agent Do For Me?

A licensed insurance agent can be a valuable resource. You would visit a travel agent to discuss destinations, rates, and obtain the latest updates only a travel agent could provide; a licensed insurance agent works in a similar way.

Let’s assume you need a specific type of insurance. An insurance agent can search for those policies that meet your needs. He can answer many questions you may have, can apprise you of discounts offered through his company, can help you with filing claims in an expeditious manner, and can review your existing policies to ensure you are fully covered.

On the other hand, before speaking to an insurance agent, it is recommended that you engage in some market research on your own. While it may take a little more time, you can certainly find the most affordable insurance rates on your own either by checking companies online or by calling them directly.

However, if you do not have the time or the inclination to do so, finding a really good licensed insurance agent can make all the difference. The only caveat is that some agents may try to talk you into purchasing insurance you neither need nor can afford.

Just like travel agents, most insurance agents work on commission. And just like travel agents, if the trip and/or the arrangements made are unsatisfactory, an agent will lose a valuable customer.

Ultimately, using the services of a licensed insurance agent can benefit you in a variety of ways, including:

* Finding the best deal
* Offering information not readily available to you
* Help you to make the right choices
* Explain the different types of insurance and if they are beneficial to you

Therefore, it’s a good idea to find an agent whom you feel comfortable with, who listens to your concerns, and doesn’t seem overly zealous when it comes to your insurance needs.

Getting the Best Out of Your Health Insurance

Resolving issues with health care companies are potentially trying experiences. You’ve possibly been underpaid, or are having issues pertaining to the company not authorizing necessary services. This experience doesn’t have to be a headache. The tips below can possibly avoid additional stress.

1)  Be prepared for problems. Keep all records in the same place

The first step is clear. Either your claim is accepted, or there is trouble ahead. In the United States there are several billion claims processed each year. Health insurance companies are no different than anyone else; they too make mistakes.

Keeping records of all contacts you have with insurers within easy access can help. Each contract, fee schedule, addendum to a contract and letter referring to a contract or other payment matters should be filed together, or at least have one folder for each of the individual insurers.

2)  Ask for clarification

If you are in the middle of disputing actions taken by the insurance company, you need to understand why this action is being taken. There are trends towards policies and positions. In some cases there really is no clear explanation for any action. For example, you may want them to give you a fee schedule, but they won’t tell you why you can’t have one. In these types of situations, don’t hesitate to put a little pressure on the company to at least get some answers.

3)  Relevant information

If the company cites an article in your contract, it’s time to review the section. If you don’t have your own copy of the contract, ask for one. It’s also important for you to consider any documentation you have which supports your personal position, and make each section or citation known to the person you are speaking to.

4)  Start cordially, and then escalate

Start the conversation or email as calmly as possible. If your polite and courteous approach doesn’t produce results, you can gradually become more assertive. Keeping your tone at a cordial level is even more appropriate if you have any type of established relationship with the company representative.

5)  Paper trails

Keep track of all conversations including time, date and who you spoke with. Write a short summary of each conversation, keeping this with your other files in case you need it later.

If your cordial measures don’t resolve the situation, it’s time to build on that paper trail. Start putting all communications in writing either via email or registered letter.

6)  Short and sweet

Insurance company employees normally have large volumes of calls and paperwork each day. They aren’t likely to have time to wade through page upon page of information on a problem or issue you are having. Keep your communications short and to the point so they can find what they need easily.

7)  Make yourself clear

Keep in mind that you aren’t just stating a complaint, you also need to be clear in what exactly it is you want the company to do for you. What’s the action you need from them? Do you need them to answer a question? Authorize required care or maybe pay a claim? Even though this is often overlooked, it’s a vital step in getting your issue resolved quickly.

8)  Climb the chain of command

It’s possible your initial contact isn’t very helpful to you. Don’t hesitate to ask for the name and number of the next in command. Ask for the information politely, and say they may have a better knowledge of how to deal with this particular type of situation, or have different authorities than a lower level employee may not have.

9)  Be persistent!

If at first you don’t succeed, keep trying. Just because you got a negative response the first time, doesn’t mean the case is closed. Being persistent shows the company you are not willing to let them sweep your case under the rug. Keeping on top of things means that you are also keeping the insurance company’s employees on their toes.

Ten Tips on How to Pay off a Balance

Credit can be a wonderful thing. But when it gets out of hand, it can wreak havoc on our finances. This is especially true when it comes to credit cards. Charging up a large balance is bad enough, and by the time you add in fees and high interest rates, the debt can be overwhelming.

In a perfect world, everyone would use credit wisely and pay off balances within a month or two. But in reality, cardholders often build up a mountain of debt and fail to realize it until it’s unmanageable. That’s when it’s time to put the plastic away and work on paying off the balance. Here are some tips to help you do that.

1. Rework your budget, eliminating unnecessary items. Even little things like that cup of coffee you buy on the way to work every morning can add up. Once you’ve decided what you can do without, add up how much you’ll save and add it to your monthly payment.

2. Volunteer for overtime, or get a second job. Put all the extra money you make toward your balance.

3. Reduce your overall interest rate. If you have a low interest card that allows balance transfers, transfer the balance of a higher interest card to it. Even if you can only transfer part of the balance, you will save some money and be able to pay everything off more quickly.

4. Put lump sums of money that you receive toward your credit cards. These may include tax refunds, bonuses or settlement proceeds. This can save you a lot of money in interest.

5. Put your raises toward paying down your debt. A raise is money that you were living without before, so you should be able to continue to live without it until you’ve paid off your credit cards.

6. Sell stuff. Get rid of that extra vehicle, or have a garage sale. We all have things sitting around that we could do without, and those things can make us money. Use the extra cash to help pay off your credit card debt.

7. Snowball your debt. This simply means paying the minimum payment on all but one card, and paying as much as possible toward that one until it’s paid off. Then you move on to another card, paying the minimum payment plus what you were paying toward the previous one. Repeat until all balances are paid in full.

8. Get help from friends and family. A loan from someone who is close to you can help you get out of debt, and repayment terms are usually much more favorable. But it’s still important to have a repayment agreement and follow it carefully.

9. Negotiate with your creditors. If you’re having a hard time paying off your balance, they might be willing to lower your interest rate. You may be required to stop using your card while the lower rate is in effect, but a moratorium on charging until your finances are in better shape is a good idea anyway.

10. Talk to a credit counselor. If you are several thousand dollars in debt and can’t afford your payments, credit counseling could save you from bankruptcy. A credit counselor will negotiate with creditors on your behalf, and can usually get you lower interest rates and reduced payments. Once it’s all set up, you make one monthly payment to the credit counseling agency, and they forward the appropriate amount to each creditor.

Paying Down Credit Cards versus Building Up Savings

If you’ve ever been hit with an unexpected expense, you know that you need some source of funding to fall back on at all times. A savings account makes the most sense, because it gains interest. But many consumers use their credit cards as a safety net, even though they know it will cost them more in the long run.

Those who are saddled with credit card debt, either because of using them for emergencies or simply overusing them, are painfully aware of how interest and fees accumulate. They swear that when they get out of debt, they will start saving money to avoid having their finances fall back into ruin. And if they’re serious about it, they might put every spare dollar toward paying down that balance.

Paying off high-interest debts has definite advantages. Most importantly, it can save you lots of money over paying just the minimum payment each month. It also frees up your credit line so that you can use it if you have to. But is paying down credit card debt more important than building up savings?

There is some disagreement among financial experts. All agree that your bottom line is positively affected by paying as little in interest as possible. And some find that to be reason enough to put money toward paying down your balance before you try to save up. But others feel that the importance of having an emergency fund trumps the money saved in interest charges.

One argument against paying off credit cards before starting to save is that it leaves no resources to use in case of emergency except for the credit card. If you’ve paid down your balance sufficiently, you may be able to use the card if something comes up. But you’ll also experience a setback in paying it off. That means you’ll pay more in interest, and it will be longer before you can start that savings account.

By the same token, using a credit card for emergencies is one of the habits that those with debt issues need to break. Putting yourself in a position in which you have no choice but to do so is a step in the wrong direction. By saving up an emergency fund, you can avoid using credit until you’ve eliminated the debt you already had.

Choosing between paying off credit card debt and building up a financial cushion can be difficult. But if unemployment or some other major financial problem is a possibility, building up your savings is usually the best option. Putting away at least a months salary before you start paying off your debt will allow you to breathe easier.

Be Aware of Credit Card Penalties

Credit cards offer a number of benefits. They give us easy access to credit in emergencies. They make it easy to pay for the things we need and want. And when used responsibly, they can build up our credit. But they can also be very expensive, especially when we have to pay penalties.

Credit card companies issue penalties in various forms. These include:

* Late fees : When we’re late paying our phone bills or electric bills, the company often tacks a late fee onto our next bill. The same holds true for credit card companies. The difference is that the fees from credit card companies are usually much, much higher. It’s not unusual for them to charge late fees of up to $39.

* Overlimit fees : Most credit card providers will not allow debtors to charge purchases in excess of their credit limits. But if your card is maxed out, interest charges could push your balance over the limit. For each month your balance is over the limit, the creditor can impose an over limit fee.

* Penalty interest : Most credit card contracts include a provision that allows the company to raise your interest rate if you are late with your payment. In most cases, interest will not be raised until you’re late twice in a 6- to 12-month period. But the default rates are often two to three times your normal interest rate.

* Universal default : A growing number of credit card companies are raising interest rates for customers who are late with payments not only to them, but to other creditors. This is called a universal default rate. Even if you pay your credit card bill on time every month, a misstep on another debt could result in a rate hike.

* NSF fees : If you make a payment and it doesn’t clear your bank, your credit card company can add a non-sufficient funds fee to your bill. This is in addition to late payment and over limit fees that may result from the denied payment.

* Annual fees : An annual fee isn’t technically a penalty, but it is something to watch out for when you apply for a card. Some creditors charge annual fees of $50, $75 or $100 or more. There are plenty of cards out there without annual fees, so in most cases it’s best to just pass the ones that do charge them by.

Knowing the Penalties for Your Credit Cards

Credit card issuers are required to disclose all penalties and fees that are or could be charged on credit applications. They may also send a copy of this information to new cardholders. And this information should also be provided on each credit card statement. You will have to read the fine print, but creditors are required by law to provide this information.

If you incur a penalty, you may be able to get it reversed. If it’s the first time you’ve been late with a payment or a bank error has occurred, a call to the credit card company may resolve the issue. But if you habitually make late payments or exceed your credit limit, the creditor is unlikely to be helpful.

Penalties can cost you a great deal of money. Whether they’re one-time fees or interest rate increases, they can eventually add hundreds or thousands of dollars to your balance. Paying attention to these fees and making a conscious effort to avoid them will enable you to pay off your balance much sooner and allow you to keep more of your hard-earned money.

Be Aware of the Most Common Credit Traps

The sub-prime mortgage crisis that began in 2008 was the catalyst that left many homeowners in foreclosure.  It caused the stock market downturn, which decreased or wiped out retirees savings; led to the insolvency of banks; and caused the Treasury Department to institute emergency bailouts of banks, major corporations and one very large insurance company in particular which, if it had filed bankruptcy, would have caused a ripple effect that would have devastated the financial markets here and abroad.

Homeowners and individuals who have been caught in this credit trap have had to make major changes in their lives.  While recent legislation has allowed for the revamping of home mortgages for those who are in foreclosure, the recession has caused a major effect across the nation and the world.

With unemployment currently at 8.5%, small businesses as well as large corporations have had to make drastic changes in order to survive this recession.  As a result, every facet of our worsening economy has had a direct affect on individuals across the spectrum.

We now know that the sub-prime mortgage crisis was a credit trap.  It allowed future homeowners to purchase mortgages with no money down and eventually spiraled into a high-interest rate debt that could no longer be managed.

In addition, banks stopped lending and consumers with credit cards faced a sudden increase of higher interest rates even though they had good credit and paid their bills on time.  Moreover, student loans and car loans became more difficult to obtain.

Banks raised the standard of lending to consumers and unless an individual had a FICO score of 720 or higher, the chances of obtaining a loan were nil.

Today, this financial crisis has left many individuals struggling to meet their debt obligations.  It is no wonder, then, that many are turning to debt consolidation, credit counseling and repair and, in some cases, bankruptcy.

While the events that unfolded over the last year are unprecedented and were a direct result of the sub-prime mortgage crisis, this report will address one aspect of this crisis: credit traps.

We will explore and offer suggestions on how to avoid such traps as: credit cards, mortgages, and loans that affect everyone from homeowners to teens.  In addition, we will offer recommendations on how to pay off credit card debt; what to look for when applying for credit, mortgages, or loans; and the resources that are now available due to the government’s intervention.

The good news is that the recession will not last forever.  Economists assess that we may see some positive results by the end of this year.  In the mean time, we all need to begin the task of paying down the debt we have and avoid incurring new debt, with all its trappings.

Credit Cards

Universal Default Clause

One of the most insidious credit card traps has to do with banksí Universal Default clause.  This clause allows banks to increase interest rates on credit cards if you make late payments to other accounts unrelated to your credit card such as utility companies, for example. Currently, there is legislation that will prohibit these excessive fees incurred by banks.

0% APR

Perhaps you have received dozens of credit card offers in the mail that invite you to apply for a credit card with a 0% APR.  It is important that you read the fine print as this low rate usually expires within six months.

Interest Rate Increases

Many banks have been sending out notices to credit card holders stating that interest rates will be increased.  While you may be paying your bills on time, they have nonetheless changed the terms and you can either agree or close your account.  The rate increase, in some cases, has been as much as 13% and the bank has the ability to apply the increase to the entire balance, and not merely to the new charges

Late Fees, Annual Fees, and Payment Fees

Making a late payment on your credit card can increase the interest rate as much as 23%. Some banks charge an annual fee for their credit cards. They can cost up to $50.00 a year.  If you make credit card payments online, there may also be a fee of up to $10 per month.

Cash Advances on Credit Cards

Banks usually send out notices with blank checks to allow for the consolidation of other debts.  This is considered a cash advance and has a higher interest rate. Furthermore, since you now have the cash advance interest rate and the regular credit card interest rate, most banks will only apply payments to the cash advance or lower interest rate before it is applied to the remaining balance.  Thus, the remaining balance on your card will continue to multiply.

It is important, therefore, to read the terms and agreement section of the credit card before you apply.  While it has been said that the language can only be understood by lawyers, you can still ascertain what penalties, fees, and other charges will be incurred using this card.

Look for these particular sections:
* Annual Percentage Rate (APR) for Purchases
* Other APRs
* Variable Rate Information ñ See Important Notice Regarding Change in Terms
* Annual Fee
* Grace Period for Repayment of Purchases
* Minimum Finance Charge
* Transaction Fee for Purchases
* The Default Clause listed under Summary of Terms
* Late Payment Fees
* Cash Advance Fees
* Fees for Issuance or Availability
* Method of Computing the Balance for Purchases
* Non-Usage Fees
* Fees for Purchases Made Outside the US

It is widely agreed that most credit card terms are ambiguous at best.  But it is still important to learn as much as you can by reading the terms and agreement section so that you will be able to avoid any traps in the future.

Credit Cards for College Students

There has been and still is an on-going campaign by companies to aggressively market credit cards on college campuses.  The methods used to entice students to apply for credit cards may include free items and other coercive tactics.

Studies show that over 50% of 18-year-old college students obtain a credit card for the first time and that more than 70% actually own one credit card with a balance of more than $2000.

This is a credit card trap that requires a student to ask some very hard questions before signing on the dotted line.
* Do I need a credit card?
* Can I afford a credit card?
* How will I use the credit card?
* Will I be able to make the payments each month?

For most college students, the answers may determine whether or not they are willing and able to take on this added responsibility.

In order to avoid this trap, college students should investigate different credit card companies and consider the following:

* What is the APR rate?
* Does the card carry an annual fee?
* What is the default interest rate?
* What are the policies as it relates to Change in Terms?
* Does the card carry a Universal Default clause?

After they have researched the terms and conditions thoroughly, then and only then should they make the decision whether or not it is worth it to apply. Once the card is received, it is important to use the card wisely.  This requires that the student:

* Pay off the balance each month
* Do not exceed the credit card limit
* Avoid cash advances
* Keep track of purchases and payments

Credit Cards for Teens

Debt not only affects adults, but it has trickled down to teens as well.  For those teens that have not been taught how to handle money in a responsible way, they become trapped too early and incur debt too young.

From an early age, children have no concept of money or how much things cost.  Therefore, educating children is the first step in learning fiscal responsibility.  Beginning with the simple task of putting money in a piggy bank to opening up their first savings account to eventually having their own checking account is the basis of what will be their introduction to understanding the process.

One of the many recommendations offered to help teens become more financially responsible is to set up a prepaid credit card.  Since the amount on the card will be limited, the teen will be able to make reasonable purchases.  It will help them to assess the difference between what they want and what they can afford.

If they exhibit responsibility using the prepaid credit card, perhaps then they will be ready to apply for a regular credit card.  But in the interim they will fully be prepared for, and become more knowledgeable about, the utilization of a credit card and know how to use it in an effective and responsible manner.

Getting Out of Credit Card Debt

Before the recession, consumer credit card debt was the highest in the nation.  Today, it has become the bane of every consumer who owns a card.  With banks raising interest rates, late payments and defaults have become the norm rather than the exception.

If you have credit card debt, here are some suggestions to help you pay down the debt.

1.    Make a list of all credit card debt with the highest interest rate card at the top.
2.    If your budget allows, double up on payments towards the first card on the list.
3.    Once the top card has been paid off, use that same amount to pay off the next card.
4.    Follow the same method to pay off the remaining cards.

If you cannot afford to pay off the credit cards, call each credit card company and explain your situation.  They may either lower the interest rate or reduce the minimum payment.

Recent reports have suggested that seeking out debt consolidators is not a good idea.  They charge a fee and utilize the same process mentioned above.  Moreover, this practice will lower your FICO score which, in turn, can hurt your overall credit standing.

Bankruptcy should be the last resort.  If you need assistance, talk to family members to ascertain if they can loan you the money to pay off the debt.  If you own a home, you may wish to look into a refinance loan. Filing bankruptcy will be listed on your credit report and remain there for ten years.
Finally, under no circumstances should you withdraw money from any retirement fund such as a 401K or IRA.  Doing so would incur a hefty penalty.

For information on consumer debt, credit reports, and other resources, check out:
http://www.myfico.com/Default.aspx
https://www.annualcreditreport.com/cra/index.jsp
http://www.ftc.gov/bcp/consumer.shtm and   http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre19.shtm.

Mortgages

The sub-prime mortgage crisis is a perfect example of a mortgage trap.  Unscrupulous lenders would offer mortgages to clients with no money down.  While the initial interest rate was acceptable to the client, eventually the mortgage was sold to a third party and the interest rate skyrocketed, leaving the new homeowner facing foreclosure.

Here are some suggestions for new homebuyers.

1.    Choose a lender that is well-known, such as a bank or private institution.
2.    Acquire a list of the fees that will be incurred.
3.    Ask if there are any pre-payment penalties (these usually occur with ARMs)
4.    Obtain the lowest interest rate possible by comparing several banks and lendersí rates.
5.    Be prepared to place a minimum of 20% down.
6.    Compare the adjustable rate mortgage against a fixed rate mortgage.
7.    Watch out for mortgage discounts as they may include a hefty fee.
8.    Research a reverse mortgage thoroughly before you consider it.
9.    Inquire about insurance fees.
10.    Have the home appraised by a qualified and approved appraiser.

With so many homes in foreclosure, there is another scam that has become pervasive especially among homeowners that are close to losing their home.  It works like this:

Letís assume the bank has notified you that your home is being foreclosed upon.  An individual offers you a deal to keep your home.  He sells the home to another party and asks the owner to sign a paper which turns out to be a lease agreement for a specified period of time.  When the homeowner is in a position to buy the home back, the amount is so high the original owner cannot afford to purchase the home. Meanwhile, the scam artist has made a hefty sum.

The moral of this story is to make sure the lender you are dealing with is a well-known institution with a solid record, and avoid the pressures by real estate agents.

One can make the same analogy when purchasing an auto.  Dealerships have an in-house finance unit in which they pressure you into utilizing an insurance company of their choice.  You may already have a very good insurance company, but if faced with a choice of saving a few hundred dollars using another car insurance company, the trap may be unavoidable.

No matter whom you deal with, research the company before you set up a meeting with them and take a few days to make your final decision.
Loans

Whether you are seeking a loan to buy a car, a college loan, or a home equity loan; there are just as many traps in this area as well.

To avoid these traps, you will need to begin research different banks and lenders to compare the following:

1.    What is the APR?
2.    Are there any fees if you pay off your loan early?
3.    What is the insurance rate on the loan?
4.    What is the interest rate and how is it derived?
5.    What is the default fee?

Just as with credit cards, applying for a loan can have its disadvantages and traps.  For example, a consolidation loans either through credit card companies or home equity loans prolongs long-term debt.

In addition, if you make a late payment or default, your credit rating suffers and your FICO score is reduced to the point that any future loan may be impossible.

Now that the Federal Government is taking over student and consolidation loans, go to: http://www.govloans.gov/govloans_en.portal?_nfpb=true&browseLoans_1_actionOverride=%2FBrowseAllLoansFlow%2Freport&_windowLabel=browseLoans_1&browseLoans_1currentSubType=5&browseLoans_1bid=602&_pageLabel=gbcc_page_browse_loans.

In addition, you will find information on all types of student and business loans at:
http://www.govloans.gov/govloans_en.portal?_nfpb=true&_pageLabel=gbcc_page_browse_loans&_nfls=false.

Let discuss consolidation loans for a second.  Assuming you need a loan to pay off your credit card bills or other debts, it is important that in doing so cut up all credit cards and keep one just for emergencies.

Keep in mind, however, that the interest rate of the loan may be higher even though you are reducing the amount you pay each month.

Furthermore, since most banks are hesitant towards lending, your FICO score will have to be in the high 700s for the bank to even consider giving you a loan.

How do you increase your FICO score?

1.    Obtain a copy of your credit report.  Clear up any errors on the report.  Then go the website address given in this report and obtain your FICO score. Once you have this information, you will be able to make adjustments to increase your score.

2.    Call the credit card companies and ask to have the interest rate lowered. Make more than the minimum payments on credit cards each month.

3.    Cut up all credit cards except one.  Pay for items with cash.  If you cannot afford the item, you can’t buy it.

4.    Save as much as you can by re-examining the family budget.  Make appropriate adjustments to it so that you can put away a specified amount each month.

5.    Begin to pay down credit card debt using the example given under credit cards.

6.    Avoid late payments.

7.    Don’t borrow from Peter to pay Paul.  In other words, don’t apply for a 0% APR credit card to pay off a high-interest rate credit card.

8.    Ensure the credit card debt is less than 20% of your take-home pay.

9.    Put aside at least three to seven monthís savings for emergencies.

10.    Read the terms and conditions for each of your credit cards so that you know exactly what charges can be incurred based on specific conditions.

Know your rights as a consumer.  Go to the Federal Trade Commissionís website at: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm.  Here you will find information on debt collection agencies and their practices.

Credit traps have become more prevalent during this recession.  Scammers and schemers have invaded the lives of many homeowners and seniors.  Even today, the predatory mortgage lenders are out in force once again.

As the Federal Government continues to devise new methods to counteract these problems with legislation and information made available to the consumer, there will always be a scam that falls through the cracks.

To help you in this endeavor, you can find a list of free publications from the FTC at:
http://www.ftc.gov/ftc/contact.shtm#publications.

Finally, it should also be noted that identity theft has increased significantly.  To this end:

* Ensure that you change your online passwords monthly;
* Never give out any personal information online or via telephone;
* Make copies of all credit cards (front and back), passports, social security cards,  and keep them safe at home;
* Keep telephone numbers of all credit card companies accessible in case of theft;
* Be mindful of people behind you when using an ATM machine;
* If you purchase items online, make sure the website has the gold lock in the lower right hand corner and has encryption services;
* Use the ìFraud Alertî service available for most credit cards;
* Use only those accredited online sites such as Pay Pal and others that have the URL beginning with ìhttps.î

Thus, becoming more aware of what is going on through internet news, government websites, and the latest scams also posted on websites will give you the knowledge you need to circumvent these credit traps before they occur.

Tips on How to Choose Life Insurance

There are several factors that will determine whether or not you need life insurance. Here are some tips on how to choose a policy that is right for you.

* Who should buy life insurance? Life insurance is recommended to those who have dependents, those who are self-employed or own a business, and those who want to ensure that their surviving spouse will have enough funds to cover funeral and burial expenses as well as any outstanding debts or taxes incurred.

* How much insurance do you need? This is also dependent on several factors. In addition to the expenses already mentioned, you may want to cover education costs for the children. You may also require a supplemental safety net in case a situation arises such as illness or if you need to borrow money.

While some experts agree that most people who buy life insurance do not buy enough, others will say that most people buy too much. How much is enough is determined by how much debt has been incurred including mortgage, credit cards debt, tuition and expenses, and the needs of the surviving spouse as well as the children. Once that calculation is made, one can then ascertain the amount of coverage needed.

* What type of insurance should you obtain? There are two types: term life and whole life. Term life is insurance that is only good for a specific period of time, whereas whole life insurance has no expiration and allows you to borrow from the policy or cash it in.

Term life insurance varies in cost. Depending upon your age, whether or not you smoke, your current health, and income may inflate the cost of this type of policy. But, in general terms, term life insurance is usually affordable.

* Understanding the types of life insurance available is critical. It is recommended, therefore, that you research each type as well as the insurance companies who provide the policies. Then set up an appointment with at least five agents to obtain proposals that you can compare and contrast.

Once you have decided on the type of insurance and the insurance company, think about it before signing on the dotted line. Ensure that this policy meets all your needs.