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Even Gen Y Techies Are Poor In Financial Literacy

Nov 6

Posted by admin in Personal Finance

Its rather shocking to know that a superpower, like America, which is the most developed nation of the world, has about half of its youth financially illiterate or very poorly financially literate! A nationwide survey conducted by the National Foundation of Credit Counseling reveals that young adults between the age group of 18-34 are hopelessly lacking in money management skills. The survey conducted on 1000 young adults including fresh professionals shows 47 % of them grading themselves Cs, Ds and Fs. They fared poorly in basic money management skills like budgeting amoney management skillsnd saving. What is more disappointingly surprising is that even well-educated tech-savvy youth also fall in the bracket of the financially uneducated. No wonder these young working professionals don?t have any idea of saving for retirement. This is an issue of concern to financial experts who feel that the hardships of retirement will catch these youth unawares later. Read the SunSentinel report.

I?m amazed to know that about 2/3?s of American youth don?t know that currency depreciation takes place during inflation; non-business people can also buy stocks of companies; and what budget deficit and national debt mean and imply.

Reasons for Financial Illiteracy In Youth

- Parental Illiteracy and/or negligence and other factors- Studies reveal that a majority of school and college students rely on their parents for financial education, but many parents have not given or stopped giving them any advise. It?s become rather common for a parent to give in to the financial demands of their children with quoted amount, rather than ask for a justification of the amount demanded. Firstly, because both parents work or are paid handsome salaries they don?t find it necessary to teach frugality to their children. Second, their busy lifestyles simply don?t seem to be allowing them to focus upon the skills development of their children. Third, the child will not listen to the parents and pester them till the allowance is granted.

Only 25-27 % parents are confident of their money management skills. As a majority of parents themselves were not sound with their financial education, they could not teach their children effective strategies of handling money. More than half parents don?t put any restrictions on their children?s expenditure. Many parents think that children are given sound financial education in school which was not quite true till a few years ago. Only organizations like Jump$tart Coalition and National Council of Economic Education have started this.

- Learning the skills on their own- Quite a number of children say that they?ve learnt their money management Financial Illiteracyskills on their own while doing part-time jobs. Now, this might teach them how to just save up a buck or two, but it will not definitely teach them the most effective ways of saving their money and multiplying it., unless they are gifted with the talent, which is a very rare thing to see.

Why Is Financial Literacy So Very Important For Today?s Youth?

Financial literacy is not only about commonsense, as many of us figure it out to be. True, by exercising your grey cells, you don?t take foolish decisions. But to utilize your finances in the best way possible and multiply it, you need much more than commonsense. You should know, at least, the basic concepts of personal finance so that you utilize the resources, laws and tools available to you to the best advantage. You might be accumulating your salary in your savings account every month, but if you don?t know how to channelize it to high-interest earning pockets you?re not making the best use of your money. If you want to make a major purchase like a house or a property you should know about the conditions on which you can take a loan from banks, the best interest policies that you can avail and insurance options. At the time of economic recession, every responsible citizen should know well why it had happened and take steps to rectify it. We can?t afford to have a novice Gen Y taking over the reigns of the economy of the country without sufficient knowledge and exposure.

More than half the college crowd feels that they cannot control excess expenditure. A rendezvous with an online budgeting websites like Quicken Online, Wesabe, and Thrive?? can solve this problem to a great extent. A 2003 US Senate research reports that fresh college students are given more than 8 credit cards when they join college. What else do you expect of such a facility? Excessive bank debt and bankruptcy! No wonder about 45 % of students in that year had a credit debt with an average debt of $3066! First they should be educated about the efficient and honest usage of a credit card and the risks of inappropriate usage and then they should be given the liberty to use them. Can you believe that colleges are losing students more out of credit debt than academic failure?

money managementWhat Should Be Done To Improve Financial Literacy Of Youth?

It?s amazing to note that only about 21 percent of youth between 16 and 22 years have taken a course in financial literacy. A course in financial literacy is mandatory in only 4 states of the country. Every college should conduct financial literacy courses. In fact, the education should start from the primary levels, in schools. Teachers should extensively avail resources and impart financial education in an interesting and interactive manner. College students can join online self-learning courses or attend courses in college. If teachers don?t have enough expertise, they should hand over the responsibility of educating students to bank professionals and financial institutions.

?Financial literacy is not an end in itself, but a step-by-step process. It begins in childhood and continues throughout a person?s life all the way to retirement. Instilling the financial-literacy message in children is especially important, because they will carry it for the rest of their lives. The results of the survey are very encouraging, and we want to do our part to make sure all children develop and strengthen their financial-literacy skills.

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Be Careful When Choosing A Credit Counselor

Nov 4

Posted by admin in Credit

When you find yourself in a bad credit situation it is easy to find hope in credit counseling agencies. You feel safe when someone says that they are a ?non-profit organization.?But often, those that are offering help are only helping themselves.
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When you find yourself in a bad credit situation it is easy to find hope in credit counseling agencies. You feel safe when someone says that they are a ?non-profit organization.?But often, those that are offering help are only helping themselves.

Federal and state regulators are warning consumers that some credit counseling agencies are not what they seem. They may actually be using a non-profit status to avoid consumer protection laws. This gives them the ability to advantage of you, the trusting consumer.

What makes the agency non-profit? All they have to do is provide free education and counseling services. But many agencies are using these as a way to hustle clients into debt-management plans, which pay off big time.

With most debt-management plans, the client pays the agency a certain amount of money each month. The agency then pays the client?s bills. The agency negotiates lower interest rates and the waiving of fees with the client?s credit cards and loan companies. The credit card companies will usually give the agency a kickback, a percentage of the amount repaid.

Many experts say that clients are often pressured into the plans, even if they don?t need them. Some agencies don?t pay the bills on time, and you are the one who suffers.

Even the IRS has stiffened its review of agencies seeking non-profit status.

There are legitimate credit counseling agencies out there that can help you with your financial problems. You just have to shop around and do your homework when choosing an agency.

Talk and visit several agencies before selecting one. Don?t let the non-profit label fool you into thinking that a certain agency is better than the others. Non-profit status doesn?t differentiate the good from the bad, you must do that yourself.

Watch out for agencies that want ?voluntary?contributions and high monthly service charges. If you are having financial problems, chances are that you can?t afford to pay high fees. Before you sign up for a debt management plan, request a written statement of all agency fees.

If an agency says that they can get you out of debt quickly or slash all of your interest rates, don?t believe it. First, getting out of debt takes time. You are simply looking for a plan that will get you there a little faster ?but it still takes time.

Secondly, interest rates are determined by your credit card companies, not the agency. Many creditors won?t lower your rates. Some will. The agency has no idea of knowing what the future holds.

Check with your creditors to make sure that they are willing to work with the agency you choose. Once you have started a payment plan, make sure that your creditors are receiving their payments on time. If they don?t, it?s your problem.

Ask around for a reputable agency. Check with the Better Business Bureau and your state?s attorney generals office to see if there are any complaints on file. Ask the agency if they are a member of the Association of Independent Credit Counseling Agencies or the National Foundation for Credit Counseling ?two well-known groups that have standards and fee limitations.

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The Components That Generates A High Or Low Credit Rating

Jul 6

Posted by admin in Loans

Every year, a credit report is generated with a corresponding rating at the end. This could range from 350 to 800 and it varies from individual to individual based on their consumer actions.

Your credit rating is based on a range of things. This includes your credit history, outstanding debts, credit time-span, quantity of inquiries made and the types of credit that you have.

The one that carries the largest emphasis is the credit background since this takes into account what has occurred over the past seven to ten years. For the duration of this time, you might have incurred derogatory payments or filed for chapter 7. If there aren’t any, then you get a wonderful score.

The following largest chunk comes from any unpaid debts that you may have. This could be a lender that you applied for to pay for a home or a vehicle. If this was compensated for before now, then that is good. A more recent loan could influence your credit rating.

A enormous percent of your credit score report is dependent on the length of credit history. If you have had a great credit score for 5 years or more, then you are better off than somebody who is merely establishing it.

The subsequent 10 percent comes from the number of times you have made requests when applying for financing or visa. If you did this constantly, it tells lenders that you were disapprove a ton of times previously.

If you were to request what is thought of as to be a nice credit score that reflects on your report, professionals would say 700 or greater. Folks who are able to reach this figure will be able to obtain financing and pay this back at a lesser interest rate. People who are below this score will have to pay at a higher interest rate.

The good news about a credit report and rating is that you can be in command of your own fortune. If you didn’t score well this year, you have a chance to enhance on it next year. But you must first find out what is your credit score and view what moves to take to raise your score.

If there were outstanding debts, these should be settled. Should there be any errors, do not just accept it. You must report it so this can be investigated and corrected. The ability to curtail your spending is the only manner you can take to sustain a good credit rating.

For those who are having a difficult time, there are individuals who can assist. So don’t be afraid to acquire the assistance of economic advisers.

The credit score is your final grade in a report. Even though there is no passing or failing mark, there is a schedule that creditors employ to discover whether your loan must be approved or not and at what interest rate will be followed.

The credit file offered by crediting agencies varies. You will observe when you get a copy from the three to be precise Experian, Equifax and Transunion, they all reveal the exact thing and that is whether or not you are in fine standing. You can acquire all these concurrently or after every couple months. The greatest part is that you can obtain a copy for free.

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How To Reduce The Interest Rates Of Your Credit Cards

Mar 22

Posted by admin in Credit, Debt Consolidation, Debt Relief

The interest rate of the credit cards can depend on numerous things; your relationship with credit card organization, your credit history and even the type of card that you are applying for.

Some individuals might know this, credit card banks generally provide three tiers of interest rates that are available to their clients. The 1st tier is offered to clients with extremely little historical past or no history using the credit card company and is the highest sum of interest that is charged. Sometimes, this rate could be upwards of 20 %. This is the least desired interest rate and may be the standard for most cards until the consumer has developed a history with the card firm.

The next tier that’s offered may be the premium interest rate. The rate is offered to these with a higher credit score, because they come as less of a risk to the company. The Elite rate is for all those that have developed a positive history with the credit card or bank and for individuals with an excellent credit score. Understanding these tiers of interest rates could be an effective way to ensure that you’re able to take advantage of methods to reduce the interest rate.

What are some methods that you can use to reduce the interest rate on your card? Something as simple as asking for a lower rate if you have developed a history with the bank or organization. Keep this in mind, in order to achieve a higher chance of reducing the rate on your card, you will require to develop a great history with the bank for example no late payments. Having a good credit rating helps as well.

In the case that these banks are unable to offer you a lower rate, there are many alternative options which are available to you. It is possible to select to conduct your business with another company and take advantage of introductory offers that are open to new clients. The rates can last for as much as one full year into the term of the credit card and can permit you to decrease the amount of interest on the purchases which are made, but can also enable you to have a lowered rate, as low as zero interest, for transfers which are made towards the credit card.

Using these methods, it is possible to potentially reduce your interest rate therefore make big savings from the costs of accrued debt.

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Dealing with Debt ? There Are Solutions

Feb 4

Posted by admin in Debt Consolidation, Finance

Having trouble paying your bills? Getting dunning notices from creditors? Are your accounts being turned over to debt collectors? Are you worried about losing your home or your car?

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You’re not alone. Many people face financial crises at some time in their lives. Whether the crisis is caused by personal or family illness, the loss of a job, or simple overspending, it can seem overwhelming. But often, it can be overcome. The fact is that your financial situation doesn’t have to go from bad to worse.

If you or someone you know is in financial hot water, consider these options: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy. How do you know which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.

Self-Help

Developing a Budget
The first step toward taking control of your financial situation is to do a realistic assessment of how much money you take in and how much money you spend. Start by listing your income from all sources. Then, list your “fixed” expenses ?those that are the same each month ?like mortgage payments or rent, car payments, and insurance premiums. Next, list the expenses that vary ?like entertainment, recreation, and clothing. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses, and prioritize the rest. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.

Your public library and bookstores have information about budgeting and money management techniques. In addition, computer software programs can be useful tools for developing and maintaining a budget, balancing your checkbook, and creating plans to save money and pay down your debt.

Contacting Your Creditors
Contact your creditors immediately if you’re having trouble making ends meet. Tell them why it’s difficult for you, and try to work out a modified payment plan that reduces your payments to a more manageable level. Don’t wait until your accounts have been turned over to a debt collector. At that point, your creditors have given up on you.

Dealing with Debt Collectors
The Fair Debt Collection Practices Act is the federal law that dictates how and when a debt collector may contact you. A debt collector may not call you before 8 a.m., after 9 p.m., or while you’re at work if the collector knows that your employer doesn’t approve of the calls. Collectors may not harass you, lie, or use unfair practices when they try to collect a debt. And they must honor a written request from you to stop further contact.

Credit Counseling
If you’re not disciplined enough to create a workable budget and stick to it, can’t work out a repayment plan with your creditors, or can’t keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But be aware that just because an organization says it’s “nonprofit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, which may be hidden, or pressure consumers to make large “voluntary” contributions that can cause more debt.

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Credit Counseling Explained

Jan 25

Posted by admin in Credit, Finance

Not only is credit counseling now a requirement when filing bankruptcy thanks to the new laws set forth in October of 2005, but it is also a good idea for those who find that they are swimming in a river of debt without the proverbial paddle. When you are in financial danger such as this credit counseling could be a great option and an alternative to filing for bankruptcy. With the many different kinds of credit counseling companies that are available to you, it may be hard to differentiate between the good, the bad, and the ugly. There are things you should be especially aware of and look for in any credit counseling company, there are some that are reputable, experienced, and only want the best for you. However, on the other end of that coin there are those that only exist to make life worse for you.

Credit counseling can help you eliminate the amount of calls you receive from various collection agencies, additionally they are specifically in place for those who have trouble in keeping up with their monthly payments. What a credit counselor will help you do is counsel you in creating a budget that will help you in keeping up with all your bills, household necessities, and living expenses. They will also work with you in arranging a type of payment plan that works well with your income and abilities to pay. It is important to note that in general credit counseling will only work with you on loans and credit cards that are unsecured. If you have trouble with your secured loans (such as your mortgage payments) credit counseling can provide you with advice on how you can deal with this situation.

Credit Counseling companies work closely with lenders that you have and negotiate acceptable payment arrangements for both the lender and the borrower. They will then help you create a budget that will allow you to afford the payments as well as other living expenses. It is important to strictly adhere to this budget in order to bring yourself out of your vast debt and avoid further collections, court proceedings, repossession, or bankruptcy. The budget may result in you giving up luxuries for the time being, however, eating a home instead of at a restaurant or giving up your shopping sprees, could prove to be far more beneficial in the long run than it would be finding yourself in such a financial situation that you cannot bring yourself out of.

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The IRS Cancels Status Of Many Credit Counseling Services

Jul 26

Posted by admin in Taxes

The IRS has canceled the tax-exempt status of some of the nation\’s largest educational credit counseling services after determining that they prey on debt-ridden customers.

\”These organizations have not been operating for the public good and don\’t deserve tax-exempt status,\” IRS Commissioner Mark Everson explained on Monday. \”They have poisoned an entire sector of the charitable community.\”

A two-year investigation has resulted in the revocation, possible revocation or other termination of the tax-exempt status of 41 credit counseling agencies, said Everson.

According to Everson, many of the services offered little in the way of counseling or education. Counseling agencies must provide education and counseling to have tax-exempt status.

The 41 counseling organizations represent over 40% of the revenue in the $1 billion industry.

The remaining tax-exempt credit couseling services will be required to report on their activities. The other 740 known tax-exempt services will receive compliance inquiries.

\”Depending on the responses received, additional audits may be undertaken,\” said the agency.

Everson explained that groups secure tax-exempt status and make cold phone calls to people in desperate financial situations. They use scare tactics to sell debt management plans that are not really geared towards reducing consumer debt. These plans are often very costly, charging consumers all types of administrative fees.

Everson recommends the 150 consumer credit counseling organizations that are approved by the Better Business Bureau. He warns that you could still find predatory agencies, no matter the endorsement.

Since 2003, the IRS has processed 100 applications by credit counseling firms for tax-exempt status. It has only approved three.

Martin Lukac(http://www.MartinLukac.com), represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!

Writen By : Martin Lukac

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