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Budgeting

6 Easy Ways to Build Your Emergency Fund

By | Budgeting

It’s smart to have an emergency fund set aside for those expenditures that come out of nowhere. For many people, this is one of the reasons why they have credit cards, but if credit cards are your financial backups, you may just be creating another headache for yourself further down the road. Using credit cards in a time of need may provide temporary relief, but if you can’t pay it off in a reasonable amount of time (or even make the monthly payments), your credit score is going to suffer.

The one surefire way to avoid going into credit repair mode is to have a financial war-chest that you can turn to in your times of need. How much you put aside is up to you. Some financial experts suggest a $500 emergency fund while others insist you have at least six months’ worth of expenses saved up. There’s no right answer, but obviously you should put away as much as possible while still also saving for future goals and expenses.

If you don’t have anything set aside, and are also suffering from bad credit, here are six ways you can quickly build up your emergency fund.

1. Start With What You Have

Add up how much you spend on your mortgage, car payments, student loan payments, travel expenses, insurance, phone, internet, groceries, and utilities. These are things you can’t change. What you have left over should go toward your savings. This is what you have to work with and should be considered your “bare minimum” monthly savings goal.

The first step toward improving your credit begins with what you already have.

2. Don’t Spend Your Tax Refund

A lot of people are able to get by without their tax refund for a majority of the year; however, when they get it, it’s quickly spent. If you’re lucky enough to get a refund, try not to throw all of it at credit card debt or car repairs, and certainly don’t use it to upgrade your TV. Instead, put as much as you can into a savings account. Even if it’s just 25%, every little bit helps.

Before you start the process of improving your credit, you have to have a little bit saved up. A tax refund that’s set aside can get you there fast.

3. Cut Out Redundant Monthly Expenses

What do you consider worth your money? Do your monthly expenses reflect only needs, or do they also reflect wants and impulses? If you have nothing set aside, you’re going to have to cut down on spending until you have an emergency fund in place. Only you know what you can cut back on. Common examples of redundant spending habits include: having a landline and a cell phone; buying coffee on the way to work when you have a full bag at home; paying for Netflix and cable TV; or eating out when you have a refrigerator full of food.

Basically, it comes down to conveniences. Cut out all conveniences until you have a better financial footing.

Of course, you may not have redundant spending. If this is the case, analyze your grocery bill. Are you spending a lot of money on frozen dinners and prepared foods? Could you save money by making more of your family’s meals yourself? Could you go from a $300 weekly grocery bill to a $150 one? If it’s hard, start off small. Do every other week until you and your family adapt.

4. Limit Credit Card Usage While Improving Credit

Come up with a monthly allowance for yourself and set aside that amount in cash. Leave your debit card at home, and keep only one credit card on you for emergencies (until you have your war-chest established, that is). This is all the money you are allowed to spend each month on groceries, gas, and other needs you may have. Doing this trick has helped a lot of people cut down on spontaneous, impulse spending and can also help your credit score.

5. Save Your Change

If you go an all-cash route, you’re going to have change left over. Put it in a jar. Don’t consider it surplus for next month. Instead, deposit it straight into your savings account—every little bit helps.

6. Find Supplemental Income

Work as a tutor, find some online freelance work, or even drive an evening or two as an Uber driver. If you want it, there is work out there to accommodate your schedule and expertise. It will take away the time you would normally spend with family or friends, but remember it is only temporary until you have enough money saved up.

You’re Not Alone

Here at Ovation Credit, we’ve helped over 150,000 credit profiles resolve credit disputes and fix credit errors. Visit our site for a free consultation so you can start repairing your credit.

Sources:

Emergency Fund: What It Is and Why It Matters

https://www.daveramsey.com/blog/4-quick-ways-to-build-your-emergency-fund

Summer Budget Travel

Summer Travel on a Budget

By | Budgeting

The air is getting warmer and the mosquitoes are coming out but you might get bitten by something else this summer: the travel bug. What should you do if you’re itching to hit the road, but can’t afford your dream vacation? Follow these tips to have an amazing summer travel on a budget you can afford.

Sign Up for Deal Alerts

First and foremost, sign up for deal alerts that let you know of huge travel savings for your ideal vacation spots. They’re also a great way to get ideas of where to go if you don’t have a specific place in mind. Look for budget-centric airlines to get cheap tickets or last-minute hotel and car rental deals. You can even get alerts specific to your destination in order to find more savings on food, attractions, and entertainment.

Use Credit Card Travel Rewards

Many credit card companies offer rewards-programs specific to traveling. Purchases made with the card earn you points, and usually accumulate faster if you have travel-related expenses. Not only that, but you can also often find deals if the card provider has a travel platform, and your points go even further when you book through the website. Search for travel credit cards with no annual fee and large signup bonuses. You could easily fund a large chunk of your summer vacation budget with those points alone.

The one catch with a travel credit card is that you usually need good credit to qualify. If you have any credit errors on your credit report or want to improve your credit score with a credit dispute, now is a good time to get started. Using a professional credit repair company can yield better, faster results to get you on the road sooner.

Travel by Bus

Skip the expensive plane tickets and get to your summer destination by booking a bus ticket. You don’t have to worry about arriving hours in advance at the airport or worry about your luggage getting lost. You won’t have to worry about paying for a cab or shuttle from the airport, because most buses usually drop you off right in the heart of the city.

To make sure you’re getting the best deal for your summer travel on a budget, you should be comparing multiple bus carries. There are plenty of reputable, large-scale companies running routes throughout the country. The best way to find the lowest fares amongst multiple bus carriers is to visit a comprehensive price comparison website like BusTickets.com. They do the work for you and you get the lowest price on your bus ticket.

Fix Your Own Meals

Once you’ve arrived at your destination, your budget can take a huge hit when it comes to dining out. Think about how much you’d spend if you ate out for all three meals, plus snacks and the occasional happy hour. Whether you’re traveling alone or with a large family, food can quickly become a budget buster. Instead, head to a local grocery store and stock up on granola bars or trail mix, so you have an easy snack on the go.

You can also prepare your own meals when you stay in a vacation rental like an Airbnb. While hotels certainly have their perks, you can save a lot by having a few meals at home throughout your stay. Plus, many Airbnb hosts include a fully stocked kitchen and you can have extra fun by shopping the city’s local farmers’ market for ingredients.

Find a New Hotel

If you do prefer staying at a hotel, try shopping for a new one. This may sound counterintuitive; after all, wouldn’t a brand new hotel be more expensive than an older one? Actually, many new places lower their prices during their launch period in order to fill rooms while still in the promotion process. So not only can you snag a great nightly rate on new construction, you can also take advantage of brand new facilities before it gains more popularity.

Explore Free Attractions

Our final summer travel on a budget tip is to explore your destination’s free or low-cost attractions. Many museums are open to the public free of charge, as are lovely parks with beautiful gardens. Most state and national parks also only charge a small fee for parking to take advantage of most amenities. You could even just stroll through an architecturally significant neighborhood on your own rather than paying for a guided tour.

No matter where you go, do a little research before you head out of town. You can easily cut your budget with some forethought and planning. After all, oftentimes we all just need a little change of scenery before we’re ready to head back home fully recharged.

6 Signs Your Budget Needs a Restart

By | Budgeting

Budget Restart

Your personal budget is like a relationship. It should be a source of comfort and strength. Like a significant other, it should grow with you and help you realize your goals.

Of course, like many relationships, some budgets just don’t work out. They become unreliable, and they lead to stress and heartache.

Here are some signals that it’s time to break up with your budget and start going with a new one.

1. Your Budget is Unorganized

To some people, a “budget” is simply a quick, jotted-down list of how they think they’ll be spending their money during the following week or month. Unfortunately, such lists can be hard to follow; they’re often incomplete and soon abandoned.

Instead, along with each member of your household, spend plenty of time thinking of and writing down ― or typing ― every single item that you regularly pay for. You could use old receipts, credit card bills and bank statements to refine your dollar amount estimates.

Next, divide those entries into broader categories like groceries, rent or mortgage, clothes and shoes, savings, automobile costs and social activities. Finally, organize those groupings from the most important to the least important.

That way, you’ll have a handy tool that you can easily read from top to bottom every week or month. You can also check off all of your expenses as you pay them, and you can make revisions as necessary.

2. It Only Deals with the Short Term

It’s great to have a weekly or a monthly budget. However, many people neglect to create an annual budget and a longer-term financial plan as well.

With a long-term budget in place, you might save more money to fund your major goals. Those objectives could include your children’s college educations or your living expenses when you’re retired.

Plus, a big-picture budget will give you a sense of your overall financial health. If you’re falling short of your goals, you could take action right away. Maybe you’d request a raise, find ways of reducing your spending or rearrange your investment portfolio.

3. You’re Unprepared for Emergencies

Sure, you might have enough cash to pay your expenses every month. But do you still get a sinking feeling when you think about money? It might be because you’re not quite saving enough.

You should save at least a fifth of your income each year. Moreover, at any given time, you should have several thousand dollars or more that you could access right away if you needed to.

It’s unpleasant to contemplate, but you ought to ask yourself: What if you suddenly had to pay a large medical bill? What if you totaled your car? In this situation, would you have to make some hard choices, such as not paying your utilities bills to avoid eviction or foreclosure?

4. You’re Overusing Your Credit Cards

Do you frequently rely on your credit cards to pay your bills because you don’t have enough cash on hand? If so, your budget is insufficient. Your expenses exceed your income.

This habit makes it surprisingly easy to build up massive credit card debts, which could put you in serious financial jeopardy in short order.

Remember that you shouldn’t use more than 30 percent of your credit card limit at any time. Otherwise, you could hurt your credit score. Fortunately, if you’ve had credit card problems in the past ― including a history of late payments ― you can improve your score by being diligent from now on. Further, obtaining the services of a dependable credit repair company can help a great deal.

5. You Keep Dipping into Your Savings

This problem is very similar to the credit card scenario above. Since you don’t have as much money at your disposal as your budget requires, you repeatedly make unplanned withdrawals from your savings accounts. You tell yourself that you’ll make up the difference sometime soon. As time passes, though, you find that you’ve significantly depleted your nest egg, making your financial dreams harder to reach.

6. You Haven’t Taken New Circumstances into Consideration

If someone in your home is laid off or you’ve recently lost a lot of money, it’s vital to rework your budget right away. Maybe you can move in with relatives or start sharing a car with your spouse for a while to bring your cost of living down. If you stick to the budget you had before, you may soon find yourself in a deep monetary hole.

On the other hand, maybe you’ve acquired a big sum of money, such as an inheritance or a prize. Without careful planning, it’s easy to overspend and lose it all. Thus, in consultation with an accountant, tax attorney or other expert, craft a new budget that raises your spending rate a little while still protecting your economic future.

Indeed, no matter what’s going on in your life, review and amend your budget every now and then, not just when your finances change. Remember to factor in new expenses, look for places where you could save money and adjust for rising or falling prices. A dependable budget is one that’s ever evolving.

Sources:

http://www.aol.com/article/2015/10/21/budget-tips-spend-more-than-you-make/21251524/

https://www.bustle.com/articles/170200-9-signs-you-may-be-spending-more-money-than-you-have-to-how-to-fix

http://www.csmonitor.com/Business/Christian-Personal-Finance/2010/0504/Developing-a-strong-monthly-household-budget

http://www.daveramsey.com/blog/7-signs-your-budget-needs-fresh-start

http://money.usnews.com/money/personal-finance/articles/2014/01/24/5-things-to-do-if-you-receive-a-windfall

http://time.com/money/4373517/break-the-paycheck-to-paycheck-cycle/

http://www.today.com/money/build-family-budget-actually-works-2D79417869

4 Ways Not to Crash Your Weekend Budget

By | Budgeting

weekend-budget-ovation-credit

You should never feel guilty about having fun on the weekends. When you see a movie, go to a ball game, dance or enjoy any fun activity, you reduce your negative stress levels. By doing so, you return to work or school on Monday feeling refreshed and rejuvenated. You’re then ready to focus throughout the week.

In addition, socializing is one of the things that make life worth living. It staves off depression and helps people form meaningful, satisfying connections with each other.

The only problem is that pleasure can really sap your savings after a while. The trick isn’t to avoid recreation but to select your diversions carefully, keeping their costs in the right proportion to your budget. The tips below will help you have more fun for less money – which is the best kind of fun.

1. Have a Fun Fund

Each week, you probably have some money left over after you’ve paid your expenses. You should put most of that sum into your savings and emergency accounts, and you may need to use some of it to alleviate debts and help improve your credit report. However, you can keep a portion of that money for entertainment.

Throughout the weekend, keep careful track of how much money you’re spending. Ask for receipts wherever you go. Then, on Sunday afternoon, add up how much you’ve spent. If you’ve gone over your allotted amount, take it out of next weekend’s fun fund. On the other hand, if it turns out that you’ve spent less than you intended to, you might be able to splurge a little more next Friday and Saturday.

2. Always Pay with Cash

Before you leave home on a weekend evening, hit up an ATM machine and stick a wad of cash in your wallet or purse. That way, as you go along, you’ll actually be able to feel how much you’ve been spending. If that wad is starting to get thin, you’ll know to order fewer snacks and drinks or to buy cheaper items than you otherwise might.

On top of that, when you have to take out a bill and hand it to a cashier, it might make you more reluctant to go through with purchases that you know are unnecessary.

By contrast, when you pay with a credit card or, even worse, your phone, it becomes all too easy to lose track of how much money is gone. Whipping out that plastic and tapping a glowing screen can be seductive acts, and you can fool yourself into thinking that you’re staying within your budget when you’re freely overspending.

3. Find Free and Cheap Entertainment Options

If your budget allows, there’s no harm in spending lavishly once in a while to go to a ski resort, a golf course or a glamorous nightclub. But believe it or not, you can really enjoy yourself without blowing much money, and some exciting forms of leisure don’t cost anything at all. You just have to know where to look.

Here are a few ideas to get you started:

  • Free concerts and movies in the park
  • Night sledding and visits to public ice skating rinks
  • Board games on stormy nights
  • Picnics under the stars
  • Twilight hikes, bike rides, jogs and runs
  • Tailgating parties and games at local colleges
  • Museum excursions with passes from your local library

After a while, you’ll no doubt have a long list of your favorite frugal fun spots.

4. Eat Out for Less

Do you feel that the terms “weekend” and “fine dining” are synonymous? Well, you needn’t fight your urge to try new culinary delights when the workweek ends. There are plenty of ways to eat inexpensively yet still savor satisfying meals. Consider these tips:

  • Throughout the week, scour the internet for sweet restaurant discounts. You might be stunned by how much money regular coupon usage and deal-aggregating websites can save you.
  • Host a potluck dinner at home. If you really want to have a delicious experience, only invite those friends, neighbors and family members whom you know to be good cooks.
  • Visit local culinary schools on occasion. These institutions often serve student-made meals to the public in restaurant settings. It’s often very affordable to eat at such a place, but the variety and quality of the food can be outstanding. And who knows? Maybe you’ll meet the next Wolfgang Puck or Gordon Ramsay while you’re there.
  • When you go to an expensive establishment, try sharing your meal or eating just an appetizer and a dessert.

Finally, one of the most rewarding aspects of seeking cheap meals and recreation is that you’ll try out plenty of new foods and new pursuits. Some of them you could end up loving.

For instance, you and your friends might explore local caves one Saturday because it’s free to do so. Well, the beauty of those caverns could convince you to take up caving as a hobby. And the beauty of realizing that you’re not hurting, but actually helping your credit score can make all of your weekend activities more gratifying as well!
Sources:

The Lost Art of Cheap Recreation

http://www.daveramsey.com/blog/fun-money-in-budget

http://www.huffingtonpost.com/2015/02/05/budget-social-life_n_5696141.html

http://money.usnews.com/money/the-frugal-shopper/2014/05/12/how-to-keep-a-social-life-on-a-budget

http://www.msn.com/en-us/money/everydaymoney/more-fun-for-less-money-17-ways-to-save-on-entertainment/ss-BBpwr7K

http://www.oprah.com/money/weekend-budget-tips

5 Healthy Financial Habits to Teach Your Kids

By | Budgeting

Credit_FinancialHabits_Kids

When you teach your children about money, you teach them all sorts of valuable life lessons. You educate them about patience, thriftiness, long-term planning, generosity and more.

You might consider the habits below as you’re deciding what to tell your kids about money. By internalizing these behaviors, a child can grow into a financially responsible adult who never has to worry too much about his or her credit score.

1. Expecting to Earn, Not Receive, Money

Young children should first understand the basic tenet of capitalism: People get money in exchange for work. Cash doesn’t just magically appear (except maybe when Grandma and Grandpa visit).

To reinforce this idea, occasionally ask your children when they’re in elementary school to complete certain tasks. For example, you could vacuum the house together, or they could put the leaves that you rake into garbage bags. Afterward, you could give each of them a dollar to keep in a safe spot in their bedrooms.

2. Saving, Saving, Saving

Bring your children to a bank to show them how you deposit cash and checks. They might be fascinated to watch the mechanics of the process. If no one’s in line behind you, you might even hold up one of your kids so that he or she can swipe your card.

As you leave, explain how the bank is holding onto your money in much the same way that they’re storing their dollar bills in their rooms. That way, if you ever need money for something expensive like a new car, you’ll have access to it. If an emergency like a sudden sickness arises, you’ll have the funds that you’ll need to cover your medical bills and other expenses that come up.

You might even talk about how the bank gives you a little extra money now and then as a reward for saving with them — an amount that’s called interest. To really drive home the point, emphasize how saving gives you a happy feeling inside, sort of like eating an ice cream cone.

3. Only Buying What You Need or Really Want

Start working with your kids on their impulse control when they’re young, and keep reminding them of its importance until they’ve left home for good. Indeed, many adults struggle with delaying their gratification.

When you’re at a supermarket or a mall, wait for your child to point to a toy and ask for it. At that point, you can discuss how people shouldn’t buy something as soon as they see it. Instead, they should go home and think about it.

You can continue by saying that, every once in awhile, people should pick one item that they saw during the previous month or so and purchase it. That way, they won’t spend more money than they can spare, and they won’t hoard stuff that they’re never actually going to use. And by waiting, they can appreciate the things that they get even more.

You can also teach this lesson by example. For instance, you could point to an easy chair or a painting in a store and tell your kids that you’d like to buy that object but won’t. Rather, you’ll wait to make sure that you can afford it.

You might have to endure plenty of whining at first, but soon enough, delayed gratification will become a way of life for your little ones. They’ll eventually be proud of their ability to walk away from toys and other appealing items.

4. Creating Budgets

As soon as one of your children has money coming in regularly ― whether it’s from a job or an allowance ― it’s time to discuss budgets. Sit down with your son or daughter on the first day of the month. Together, make a list of all of his or her projected expenses that month, being as thorough as you can.

Deduct those expenses from your child’s total monthly income. The two of you should then negotiate how much of the remainder will go into a savings account. The rest can be used for social activities.

Until you’re confident that your child can handle budgeting, keep track of how much money he or she has on hand, and have a storage container for all receipts ― a place where you can look at them whenever you’d like.

By imparting the importance of budgets, you’ll help ensure that your son or daughter will someday have a strong credit report, even if he or she needs credit repair services once in awhile.

5. Ignoring Advertising

In your home and car, you might turn the volume way down when TV and radio commercials come on. Likewise, encourage your kids not to pay much attention to billboards and internet ads.

In our society, advertising is everywhere, and it can be loud and intense. Worse, much of it targets children in sneaky ways. Thus, tell your kids that commercials often make foods look tastier and toys more exciting than they really are. Also try to emphasize how commercials sometimes sell things that people don’t need at all. Resisting ads can save consumers of any age lots of cash.

Teaching your kids about money can be fun. You’ll bond with them as you put coins in piggy banks, use toy bills to explain savings accounts and decide which snacks to buy at the supermarket. Your children will probably remember these times together with great fondness.

Sources:

http://www.forbes.com/sites/laurashin/2013/10/15/the-5-most-important-money-lessons-to-teach-your-kids/#3d7080af498c

http://www.foxbusiness.com/features/2016/01/22/4-key-lessons-to-teach-your-kids-about-money.html

http://money.usnews.com/money/blogs/my-money/articles/2016-08-01/teach-your-children-these-5-crucial-personal-finance-lessons

http://www.parents.com/kids/responsibility/money-management/lessons-teach-kids-about-money/

http://time.com/money/2913167/money-lesson-for-your-kids/

Freelancers – Follow These Tips & Better Your Finances in 2016

By | Budgeting, Personal Finance, Save Money, Your Credit

Get on Track this Year & On Top of Your Finances

Freelancing is both a blessing and a curse. As a freelancer you’re probably repeatedly told how lucky you are, how great it must be to be your own boss, and then there’s all that freedom. While freelancing does mean all those things it also means having to pay for your healthcare out of pocket, and often an uncertainty about where or when your next check will come from.

When it comes to personal finance, freelancers have to take extra care to stay on track. Still, more people are freelancing than ever before according to a recent survey from the Freelancers Union. They claim that 53 million Americans freelance, which is 34% of the population.

Whether you freelance full time or on the side, freelancing can be rewarding on a personal and financial level. Make the most of your freelancing efforts by staying on top of the following:

Report Your Income to the IRS

Paying your taxes is easy when you’re working for someone else. Taxes are automatically deducted from your pay, and you report your income at the end of the year when you file your taxes. When you freelance your expected to make estimated tax payments on a quarterly basis, which can get confusing especially if you have to pay both state and federal taxes.

Making estimated tax payments on time can be difficult when you freelance and paychecks don’t come in consistently. You might prioritize other expenses over these payments, but that may cause you to fall behind. Late payments can lead to back tax payments, penalties or an audit.

Making your payments on time is easier if you sign up for an online account. The IRS allows you to make federal tax payments on the EFTPS website.

Get Health Insurance

While health insurance may seem like an unnecessary expense when freelancing, especially if your young and healthy, out-of-pocket medical expenses can lead to significant debt. With the addition of Obamacare the federal government can now fine you $695 or 2.5% of your income for going without coverage.

Planning for Retirement

Many long-time freelancers have little if anything saved away for retirement. While corporations offer robust 401(k)s you might be finding it difficult to grow a retirement account. There are plenty of financial institutions and financial advisors who offer retirement advice and 401(k) management. It’s never too late to start saving for retirement.

Saving for Emergencies

While contract work is great it may not be consistent. Having an emergency fun or savings account is always a great idea, but it’s even more vital for freelancers. Short term loans and credit cards come with high interest rates and fees. By putting a small percentage of each paycheck away in a savings account can help you get through lean times.

It’s never too late to start managing your money better. Make the most out of your freelancing this year and master your personal finances.

How do you manage your freelance wages? Did you find this article helpful? Let us know in the comment section below.

5 Ways Men Manage Money Better & How You Can Improve

By | Budgeting, Personal Finance, Your Credit

Sounds chauvinistic, but unfortunately studies prove it’s true, men manage money better than women. If you’ve resolved to be more fiscally responsible this year you’re not alone. Thousands of people resolve to be better with their money each year, only to quit a month later.

Make 2016 the year you conquer personal finance and get financially healthy. Here are five ways men manage their money successfully, and how you can to:

  1. Having a plan

When you don’t have a plan or set of financial goals it’s easy to burn through your paycheck. Don’t waste your hard heard funds, establish a plan and put that cash to work. Establish and prioritize financial goals. If you have debt – a mortgage, car payments, student loans, credit cards etc. – it’s a good idea to prioritize paying it off. Credit cards are often the easiest to pay off and have the highest interest. Pay them off first then tackle that student loan or mortgage which should take longer to pay down.

  1. Get automated

Setting up auto bill payments is one way to make managing your finances easier, but there’s even more you can do to get on track. Use your employer’s direct deposit service to automatically deposit funds into savings accounts. It’s harder to spend money you don’t see or have easy access to.

  1. Let go of that baggage

Don’t let your emotions rule your financial decisions. You may have grown up in a home or in a relationship where you were unable to buy what you wanted. That may cause you to overspend once you gain financial freedom. Don’t let the past govern your future. Whether you made bad money decisions in the past is irrelevant, you can correct your finances now and build a strong financial future.

  1. Face the facts

If you’ve avoided looking at your finances for fear of what you might see, now is the time to face that fear. Avoiding your debt can only make it worse. The longer you let debt linger the more you’ll owe in late fees and interest. Face your debt head on, start making payments and clean up that mess while it’s still manageable.

  1. Seek therapy that doesn’t come with a price tag

Women and men can use shopping as a form of therapy. Stress can cause you to over-shop which leads to poor finances and more stress. If you’re feeling stressed get active, take a staycation, read a book or take part in other healthy activities that enrich your mind and spirit and not your closet.

You can get better at money management. Resolve to make this year the year you conquer your finances and then the world.

How do you stay on top of your personal finances? Who’s the better banker you or your spouse? Let us know your thoughts in the comment section below.

5 Great Places to Travel on a Budget in 2016

By | Budgeting, Personal Finance

Travel Budget 2016

While others are making New Year’s resolutions to lose weight, you’ve resolved to travel more and spend less. Let Ovation Credit help you get on top of your finances this year, and explore new places while doing it.

Here’s a list of 5 places to visit on a budget in 2016:

1. Barcelona, Spain

In Spain you can enjoy $2 beers and lunch for less than $15. There’s much to see and do in Barcelona including taking in the art that is modernista architecture by Antoni Gaudi. Enjoy tapas by the beach and let your worries melt away. Take a hike and take in the sights up Montjuic mountain. It’s the perfect place to view the city and you’ll find structures built for the 1992 Olympic games.

2. George Town, Malaysia

Known for its diverse cuisine, George Town is a great place to have a culinary journey. Dine on Malay, Chinese and Indian cuisine for just $2 to $3. Tourists and locals love the fresh fruit juices which you can enjoy for just $1. Part of the cost of travel is dining out, but at those prices you can eat for less than $10 a day.

3. Thrace, Turkey

According to Edna Zhou who writes for Expat Edna, the Thrace region of Turkey starts in Istanbul and runs north-west between the Aegean and Black seas and is a great place to take in Bulgarian and Greek cultures. According to Zhou, it’s a complete contrast from Eastern Turkey. Go wine tasting and explore the vineyard for a fraction of the cost.

4. Xi’an China

China as a travel destination has increased in popularity in recent years causing the cost of travel to increase in cities like Shanghai and Beijing. Xi’an is one Chinese destination that’s still affordable. Destinations in Xi’an include the Terra Cotta Warriors and the historic city walls.

5. Morocco

Always wanted to take a trip to Casablanca? Make 2016 the year you travel to Morocco. Stay in a seafront village outside the city for just $330 a month. In Morocco you can spend all day at the beach, swim in a waterfall, climb a mountain or take a journey through the desert. According to Zhou, a three hour journey can cost just $5.

With online tools you can travel to just about anywhere on a budget. Start with a flexible budget and use sites like Kayak to find the best travel times. Use travel sites, join email lists and comparison shop to secure the best rates on lodging. Establish a daily food allowance ahead of time and scout restaurant deals online to save on dining.

Where will you travel this year? Let us know in the comment section below.

6 Things to Know Before Investing in a 401(k)

By | Budgeting, Personal Finance

While retirement may seem eons away, it’s never too early to start funding a retirement account. Parting with part of your paycheck each payday may be hard to swallow, retirement accounts offer many benefits outside of funding your future retirement.

Retirement accounts offer many benefits, but there is a downside as well. Here are 8 things you need to know before investing in retirement accounts:

  1. Tax Breaks

Putting money towards retirement while young allows your investments time to mature and for you to earn returns. You can decide to put money away in a savings account, but other options provide tax shelters. Investing in a 401(k), IRA or other dedicated retirement account provides a tax shelter that boosts your annual return.

  1. Employer Match

Many companies offer 401(k) plans where the employer matches the contribution of the employee. Forbes reports that the majority of large companies will match an employee’s investment, while only two thirds of small companies do. Make sure to review and understand your 401(k) contribution vs what your employer will invest prior to signing.

  1. Early Withdrawal Penalties

Deciding what amount to invest in a retirement account can be challenging. Life offers many surprises that come with unexpected expenses. You may have chosen to allocate a certain amount of funds from your pay to retirement leading to a large sum of money that you may need for future expenses. If you do need to access your retirement savings before the age of 59.5 you’ll most likely be subject to a 10% penalty on previously untaxed funds, contributions and earnings.  There are exceptions to this. As Forbes reported, you can pay for college or grad school penalty free with funds from and IRA account but not from a 401(k).

  1. Flexibility

If you’re looking for flexibility with your retirement account look into a Roth IRA. Legally you are able to contribute up to $5,500 a year in post taxed earnings to a Roth IRA. If you’re over the age of 50 your contribution maximum increases to $6,500. Your investment will grow tax free towards your retirement, and you can take back your initial contribution at any time for any reason without taxes or penalties. Forbes suggests investing enough in your 401(k) to receive a full employer match then fund a Roth IRA next.

  1. Bad 401(k)s

Not all 401(k)s are a good investment. Some 401(k)s have high administrative and investment expenses. According to an annual survey conducted by BrightScope, the most expensive 401(k)s – traditionally small plans – cost 1.53% or more of a worker’s contribution each year. Compare your 401(k) at BrightScope.com.

  1. Switching Jobs

It’s very common to switch jobs before retirement. When leaving a company make sure to role your 401(k) to an IRA on your new employer’s 401(k). This is called an institution to institution transfer. Withdrawing the funds from your existing 401(k) would be a mistake, since it would result in taxes and a 10% penalty fee. If you have a retirement account worth less than $5,000 your former employer could transfer your funds to an IRA with high fees and a negligible returns.

Investing in your retirement is an important and vital decision. Review all your options before investing. Was this article helpful? How do you plan to invest in your retirement? Let us know in the comment section below.

6 Social Security Pitfalls

By | Budgeting, Credit Repair

social-security-pitfallsAre you looking forward to retirement? If you plan to rely on social security to carry you through your retirement, you may be caught off guard to learn about many of the rules and stipulations surrounding this government program. Some of the rules can be frighteningly complex and given social security will likely represent a large portion of your retirement income, it’s important to fully understand the program’s rules and policies. Read below for six traps to avoid.

  1. Taxes – If your total income exceeds a certain level, up to 85 percent of social security benefits may be taxable. When computing social security, you must include income sources that are normally tax-exempt to determine tax on social security benefits.
  2. Minimum distributions – If you have other retirement accounts, such as a traditional IRA, you must accept a required minimum distribution after a certain age. Since this distribution is treated as ordinary income, it may require you to pay taxes on your social security benefits given your new income level.
  3. Unavailability – Many people assume that social security is available to all seniors, but unfortunately, not all employers pay into the system, which means not everyone can benefit from the program. However, if your employer does not participate in social security, then you should be covered under another program. It’s important to check with your employer to ensure where your retirement benefits will be coming from and that you understand them fully.
  4. Early bird – Many people choose to take their benefits as soon as they come available. However, this could be a huge mistake. For example, if you delay taking your benefits until age 70, you could increase your amount received as much as eight percent. In addition, the cost of living adjustment will be based on a higher number increasing your benefits. Delaying benefits is not for everyone; it’s important to talk with your family and decide what’s right for you. However, if you are able to delay, you should consider it.
  5. Elimination provision – Many people work for multiple employers throughout their career. If you work for an employer that does not withhold social security taxes, your final payout is based on the non-covered work and may reduce your total overall benefits if you are entitled to a pension from a non-covered employer.
  6. Limits – If you continue to work after reaching the age in which you can begin collecting benefits, then you will encounter restrictions on the amount you can earn without being penalized. If your wages exceed $15,480 in 2014, your Social Security benefits will be reduced by $1 for every $2 you earn above that level. During the year in which you reach full retirement age, you can can earn up to $41,400 before $1 of your Social Security benefits will be deducted for every $3 you earn above that limit. Once you reach full retirement age, no restrictions apply.

Social security can be confusing and difficult to navigate. Therefore, It’s important to be prepared so that you fully benefit from the funds you receive. The best way to prepare for retirement is to ensure that your finances are in order. Your current financial health is dictated most by your credit.  If you are experiencing difficulty with improving your credit and ensuring a secure financial future, you might consider credit repair solutions.  Let us at Ovation help you. We offer a wide range of credit repair solutions, customized to meet your unique needs.
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