Guest Post by Paula Drum
Often, the cheer of the holiday season can be all consuming and shoppers forget that unlike Santa, their budgets are real. The exhilarating high of making a memorable December is quickly forgotten when the next year’s financial hangover settles into our banking accounts.
So what can you do to rebound from the holidays and start anew this year?
This post will provide suggestions to those relying on credit to create a budgeting plan. We’ll begin by taking a look at one potential cause for a financial hangover, and then discuss how to start a credit budgeting plan to alleviate and prevent future financial hangovers.
One catalyst for a financial hangover takes the form of credit purchases. Evaluating the total price paid for credit purchases is an area that people often neglect when using plastic. If you don’t pay off your credit card bills in full every month, then you are financing your purchases and need to add in the interest costs to your budget. Budgeting credit purchases based solely on the price paid during checkout can put you in a difficult financial position.
If you are a person that relies on credit, you should plan a 2010 credit budget. To create a successful plan, it is imperative that you take the time to research total purchase cost, which includes the retail price plus interest accrued over time. To avoid creating “perma-debt” this credit budget must outline both the total cost of your purchases and how long it will take you to pay off the debt. Before you decide to make a credit purchase, follow these steps:
Of course your total credit card payment will depend on your particular card and the balance you currently have on your card. But you can estimate your real purchase price with interest to make an informed decision. Try a loan calculator at a site like Bankrate.com. After all a credit card line is a form of a loan. Note that many calculators list the length of time in years. If you plan on paying off the loan in less than 12 months you’ll need to convert it to a fraction of a year (4 months divided by 12 months =.33)
Using the Bankrate.com loan calculator, the total cost to pay for this purchase over four months with a 14.9% interest rate is $226.81 broken into four monthly payments of $57.27.
Making good spending decisions depends on having the right information. By creating a credit budgeting plan, you’ll have complete transparency regarding the total cost of using credit and know exactly when you’ll have a zero balance.
Unfortunately, being able to calculate your total cost plus interest may not always be convenient when shopping. One avenue where you may find a better deal is by researching retailers with alternative payment plans, such as Gettington.com, that provide a choice of payment plans along with a clear breakdown of a total purchase cost and interest paid before you make a purchase. Transparency in understanding your total cost before you make your purchase enables you to make better budget decisions.
Remember: if you’re hungover, you take aspirin, have a greasy breakfast, get hydrated and sometimes swear that you’ll never do that again! Treat a financial hangover the same way. By creating a credit budget and researching the Web, you’ll be on the road to recovery and well-equipped to avoid future credit headaches.
How do you plan to budget credit purchases in 2010?
Paula Drum is General Manager of Gettington.com, an e-commerce retailer that provides three payment options to help customers budget purchases that fit their individual financial needs.
This is an interesting story about the latest financial crisis, aka Mortgage Meltdown, Credit Crisis, the Day the Music Died…
Just last week, the House Committee on Oversight and Government Reform held a hearing on the U.S. Federal Reserve’s decision to directly pay billions of dollars to banks as part of its scheme to bail out insurance giant American International Group Inc. (NYSE: AIG).
According to committee Chairman Dennis Kucinich, D-Ohio, the testimony that congressmen heard just didn’t “pass the smell test.”
What really stinks about the whole mess is not only the cover-up of what really happened and why, but the inability of anybody in Congress to actually do their homework and be able to frame pointed questions and get to the truth.
It’s not complicated, but it is convoluted. Here are the facts and some questions that Congress needs to ask – and that the American people deserve straight answers to.
America’s Founding Fathers were afraid of any concentration of power in the republic. They were particularly afraid that banking interests could hijack our fledgling democracy.
And yet today, 234 years later, our Founding Fathers’ worst fears have come true. Wall Street’s stranglehold on the economy threatens our very prosperity, and the future of a truly democratic republic.
It’s high time we address the truth about Wall Street’s tyranny and set a course for a more secure economic future – one that’s anchored by a safe banking system, not a system rigged by banks.
This is a good article that delves into the banking and financial system crisis a little deeper than most I’ve seen. It’s a bitingly sarcastic look at what has happened over the past decade (or so).
This one hits close to home. I was a WaMu employee for a total of 5 years, finally losing my job as fallout from the WaMu "bank failure" that occurred in late 2008.
This video points out that, quite possibly, WaMu could have survived on its own and implies that perhaps the FDIC wanted JPMorgan Chase to take over WaMu.
I've had similar suspicions myself, thinking that there was some sort of grudge between Sheila C. Bair of the FDIC and somebody at WaMu. Was it Killinger? Rotella? Who? Anybody?
Who knows? When will the tell-all book come out? After all, this was the biggest bank failure in US history. Somebody smart should have something to say about it.
Seven Resolutions to Begin in 2010