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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.

Avoid the Student Loan Abyss

By | Debt, Personal Finance

Learn How to Manage Your Loans Now

Perhaps the best piece of advice anyone could give to their former-self is to manage student debt better from the start. Student loans are hard to avoid all together, but there are plenty of ways to reduce the amount of debt you’ll eventually owe.

Whether you’re planning for yourself or your child, here are just a few ways to manage student debt better:

Before Debt

Before taking out a student loan try applying for any (and all) scholarships you qualify for. The application process isn’t easy, and often requires writing on your part, but they can help save you thousands in debt.

Get Organized

Multiple loans are often required to cover the cost of a four year university. It helps to get organized. To help reduce the time paying loans, create a “favorites” folder in your browser. By bookmarking your loan payment pages you can access them quickly and easily. Create an excel sheet to help keep track of usernames, login IDs, passwords and more. By keeping track of account numbers, logins and passwords you’ll never have to worry about forgetting your account details. Just make sure to password protect the excel sheet in case your device should end up in the hands of someone other than yourself.

Create a Budget

As a new member of the workforce you may not have the funds to pay your student loans. There are plenty of options for new graduates including forbearance and deferment of payments. The issue becomes mounting interest. It’s okay if you can’t make payments right away, but it’s important to figure out your finances and begin making payments as quickly as possible to reduce the amount you’ll pay overall. By creating a budget for yourself you can make timely payments, and reduce the amount you’ll owe and even rid yourself of debt sooner than the term of your loan.

Refinancing

Refinancing during the recession was near impossible, but start-up companies like SoFi now make it possible to refinance your student debt. By bundling multiple loans together you can reduce the amount you pay in interest, and even reduce what you owe each month. If you built up good credit in the years since graduating, refinancing could be a way to save on student debt.

Avoid Schemes

Don’t be swindled by would-be scammers. There are a number of fake websites dedicated to student loan “forgiveness” and student debt “settlement” that charge an upfront fee and monthly payments to help you rid yourself of student debt. Don’t fall for these scams. Do your research before taking any action against your student debt.

Automatic Payments

Many student loan lenders provide discounts to customers who set up auto-payments. You can decrease your interest rates by .25% by allowing the lender to remove funds on your due date automatically. It’s also an easy way to make sure your payments go out on time and you don’t acquire late fees. Just make sure you always have funds in your account so that you don’t overdraft.

Student debt isn’t abnormal, and it doesn’t mean the end of the world. If you manage your finances responsibly, and create a repayment plan for yourself you’ll be out of debt without financial burden.

Was this article helpful? How do you manage your student debt? Let us know in the comment section below.

Credit Cards: What You Need to Know Before Applying

By | Consumer Rights, Credit Cards, Credit Reports, Credit Scores

Think you know everything there is to know about your credit history and how it will impact your access to credit? In 2013 it was reported that 5% of consumers in the U.S. had an error on a credit report that led to them paying a higher interest rate on a loan.

Out of all the disputes credit card companies faced 16.5% of them were about billing. That’s more than double the amount of disputes regarding interest rates or fees.

That tells us that consumers don’t fully understand and utilize credit reporting. By habitually checking your credit report you can prevent errors and fraud and save money on fees and interest.

If you’re in the market for a new credit card, there are a few steps you should take first. By following these steps you can secure a good interest rate and possibly be approved for a higher line of credit.

Prioritize

Determine what your goals are before shopping for a credit card. If you need to pay down debt on a credit card with high interest, look for credit card promotions that offer 0% balance transfer fees. If you need to make a big purchase look for cards that offer 0% interest for 12 or more months to provide ample time to pay down your debt before interest kicks in.

Shop Around

According to a consumer satisfaction survey first reported in US News Money, consumers are most satisfied with American Express. Credit Card companies that fall short include Wells Fargo and Capital One. Shop various credit card offers before applying.

Compare Rewards

Credit card point programs can be rewarding if you choose the right card. If you travel often and are looking to earn additional travel points go with a card that offers additional rewards on purchases made at hotels and on flights. If you tend to make a lot of small purchases, look for a card that rewards every day purchases like trips to the gas station or market.

Check Your Credit Score

Use a site like CreditKarma.com to get your credit score and review your credit history. If your credit card utilization is high, you may want to pay down some of your debt before applying for a new credit card. If you’ve already paid down your debt, but your score hasn’t refreshed wait for this to process before applying for an additional line of credit. By waiting you could save yourself money paid in interest later.

Access to credit can be a great thing when used responsibly. Always make sure to practice financial responsibility before applying for additional credit. Review the terms of a credit card agreement before signing up. Be aware of interest rates and due dates to stay on top of your bills and avoid late fees.

ATM Fees are Soaring – But WHY?

By | Personal Finance

ATM Fees

There’s arguably nothing worse than paying an ATM fee. You might ask why anyone would go to an out-of-network ATM, but emergencies occur and your bank may not be nearby.

If you’ve had to use an out-of-network ATM recently you’re probably aware of the soaring fees. A recent study from Bankrate.com concluded that the national average ATM fee is now at $4.52.

Keep in mind that’s the national average in other areas it’s even higher. According to Bankrate’s data the fee for using an out-of-network ATM is over $5.

Why do bank’s charge out-of-network and ATM fees anyhow?

Your bank says it’s the cost of maintaining ATMs. What actually goes into maintaining an ATM? U.S. News & Money asked John Oxford, director of corporate communication and external affairs at Renesant Bank about the reasoning behind the increases and he put the blame on four things:

  1. Government compliance

  2. Fraud protection

  3. Maintenance and service

  4. EMV chip compliance

“Many laws dictate how banks must operate. ATMs had to be upgraded in recent years to be compliant with the American Disabilities Act,” said Oxford. “ATMs have had to add skimmer detection and other items such as higher-quality cameras and lighting to make sure clients are and feel safe,” he said.

In addition to having to refill ATMs with cash, banks also have to pay a lease on the property where ATMs are located and insurance on the ATM itself.

You’ve probably already received a new checking card from your bank with an EMV chip. These embedded microchips provide a safer and better way to store cardholder information. According to Oxford, ATMs have to be ready to handle this upgrade which costs the banks money.

Smaller banks also have to pay to lease ATM machines themselves, which places additional financial burden on the institution.

Still, it’s difficult to feel sorry for the big banks when paying $5 to retrieve your hard earned cash. Fortunately consumers now have even more opportunities to avoid a visit to the ATM. Credit card and banking apps make it easier for you to transfer funds between your banking accounts and to others even if they bank with another institution.

How to avoid the fees?

To avoid transfer fees from your bank try using apps like Venmo, Paypal and Square Cash to send money. You can even send money through Facebook. If you have an iPhone you can even make purchases with your phone. Just make sure you’re not connected to a public wifi when you make an app transfer.

How do you feel about ATM fee increases? Will it change the way you bank?

Banking Fails – Don’t Make These Banking Mistakes

By | Personal Finance

Let’s face it, there’s nothing sexy about banking. A trip to the mall is a fun outing, but shopping for a checking and/or savings account can seem tedious and boring. While it may not make for a fun afternoon, comparison shopping is key to securing great rates, returns and financial security.

When looking for ways to improve your personal finances, start by looking at the way you bank. Take a deep look at your banking statements, and look for fees and other charges you could be avoiding.

Here’s a list of banking mistakes to avoid in 2016:

Paying a monthly maintenance fee on a checking account

Some banks charge a fee each month for “maintaining” your checking account. This fee can be over $10, which will cost you $120 every year. Many banks offer ways to avoid this fee, including making sure your account balance meets the minimum requirement. For online checking accounts this can be as little as $25. That means by keeping as little as $25 in your account at all times you can avoid the maintenance fee. The most common way to avoid maintenance fees on your checking account is by setting up direct deposit. If you have your paycheck directly deposited into your personal checking account you could avoid the monthly fee. Many banks require an initial deposit when opening a checking account. This amount can be as little as $100 and as high as $1,500. If you have difficulty keeping your balance consistent, shop around for the bank with the lowest requirement on a core checking account.

Thinking you’ve opted out of overdraft protection

In simpler times you could only spend money you had, whether it was in the form of cash or via our debit card. Banks initiated overdraft protection, so that customers could spend up to a certain amount even if they’re short of funds. This provides the customer with the ability to pay a bill or make a purchase even if they have insufficient funds. It may be that your check arrives a day late or was postponed by a holiday, you could have forgotten to cash a check or move funds around. Whatever the reason overdraft protection can help you avoid an embarrassing encounter. It can also cost you heavily at the bank. One minor mistake can lead to hundreds of dollars in overdraft fees. You can be charged up to $38 for every purchase made over your balance. By opting out of overdraft protection, you prevent the bank from allowing you to make certain purchases when you have insufficient funds. You can opt out of overdraft protection on your debit or ATM card, but you can’t opt out of protection on checks, automatic debits or bill-payment transactions, according to Nick Clements contributor for Forbes magazine.

Using out-of-network ATMs

As we’ve previously told you about, ATM fees are on the rise and soaring. The good news is these fees are completely avoidable. By using an ATM from another bank you’ll be charged twice for removing funds, once by your bank and once by the owner of the ATM. To avoid these fees bank with a company that has a large ATM network. Do a little research and find out which bank has locations near your home and office, making it more convenient for you to bank.

Taking risks with your debit card

Debit cards don’t offer the same protection as credit cards do. According to the FTC, you have unlimited liability if you wait 60 days to report fraudulent activity. Waiting two business days to report fraud can mean your accountable for $500 of the spend. That’s unlike credit cards that will charge you a maximum of $50 of the fraudulent activity. Some credit cards like Visa promise zero liability, as reported in Forbes. To avoid fraudulent activity don’t use your debit card at the pump, and other areas where fraud is popular.

Pay Off Debt Now, Save Later

By | Debt

Admittedly, having a savings account feels pretty good. Despite debt or other financial trouble, it can be comforting to know that you have a cushion if you need it. But if we are being completely honest, that “cushion” creates a false sense of security. It may be unnerving not having that emergency cash fund, but if you’re paying a lot of interest to carry debt and earning very little on your savings account, you’re losing money.

Paying off high interest debt puts more money in your pocket in the long run than a savings account. The average interest rate on a credit card is around 18 percent; a savings account may have an interest rate of one – maybe two – percent if you are lucky. Unless you have an extraordinary amount of money in your savings account, the added interest is not going to make a difference. Of course, if you do have that kind of money, you probably aren’t struggling to pay off credit debt.

If you are placing money in a savings account rather than making credit card payments, you are actually losing money. Take this example: If you put $5,000 in a savings account earning two-percent interest, you’ll earn $100. If you have a $5,000 balance on a credit card with an interest rate of 12 percent that you only pay the minimum payment on, you would pay $459 in interest each year. Worse, it would take you 33 years to pay off the credit card.

If you absolutely must have some sort of emergency fund, paying off your debt is still the best way to go about achieving that goal. Rather than tucking cash into a savings account, you have the ability to pay off your credit cards. A credit card is a perfectly good source for emergency funds when it isn’t maxed out, and when you no longer have a credit card bill, the money you save can then be put into savings.

This is not an excuse to charge every possible item to credit cards for the sake of “saving” money. Everything should still be done in moderation, employing a strict budget and only purchasing items that you need. Your funds should be used, not as savings, but for your necessary expenses and for repaying your debts. Once you have established a debt-free lifestyle, you can begin accumulating a true cushion to help you stay debt-free. Financial strategies will help minimize credit debt, and several Ovation tools are available to aid you in accomplishing your goals.

Credit Repair: How Does Your Credit Impact Car Insurance Rates?

By | Budgeting, Credit Reports, Credit Scores, Insurance, Personal Finance, Save Money, Your Credit

Does your credit impact car insurance rates?  You bet it does.  A recent survey confirmed that more than 90% of insurance companies use credit report data as a factor when underwriting new policies.  Auto insurance companies use financial history along with other factors (such as years of driving experience, type of vehicle and primary locations) to attempt to assess the potential risk of a driver.  Apparently, several studies have shown a strong correlation between a consumer’s financial history and potential insurance claims.  Basically, insurance companies feel that if you are responsible with your money, then you are more than likely to be responsible on the road. 

Do insurance companies use your actual credit score?

No, they use what it called an “insurance score.”  An “insurance score” is not the same as traditional financial credit scores.  Theoretically, an “insurance score” is supposed to help determine the likelihood that a consumer will file an insurance claim in the future.  A financial credit score is based on the consumer’s likelihood of defaulting on credit terms.   There are many different financial scoring models in use today, with the most popular still being the FICO score.

While the insurance scoring models are generally deemed as proprietary,  it is generally believed that the models rely on some if not all of the following:  length of credit history, late payments, new applications for credit, types of credit used, payment patterns, available credit, public records, and past-due amounts.  Of course, most financial scoring models are based on similar if not the same criteria.  Regardless of how the scores are calculated, the same general data is being used to calculate both your insurance score and your financial credit scores.

So what is the problem?

According to insurance companies (and the bureaus that make money selling this data to the insurance industry), there is no problem.   The use of insurance scores helps assess the true risk of a consumer, and as a result, premiums are more accurate.  In short, drivers with better credit are rewarded with lower premiums.  Those drivers with lower credit scores pose a greater threat for filing claims, so they pay higher premiums.  How much higher? Some insurance companies charge customers with poor credit as much as three times the rate for customers with excellent credit. This is a great example of why credit repair is an absolute must for some.  Can you really afford to pay three hundred percent more for auto insurance because your credit report reflects incorrect or incomplete information?

While struggling to pay for basic necessities such as food, shelter and medical, some consumers may miss a few payments, which will have a negative impact on their credit scores.  And even worse, credit reports notoriously have errors.  Up to 80% of credit reports have errors, and these errors cause consumers billions of dollars of year in unnecessary expenses, such as increased insurance premiums.  If credit reporting has become more accurate as some recent studies infer, we have yet to see it.

There is a vicious cycle in our country where consumers are penalized with higher costs when they have less than perfect credit.  In turn, the higher costs make it more likely that a consumer that is already having credit issues will have difficulty making payments, and therefore have more credit issues.   Costs increase more, and the likelihood of default increases more.   This pattern is well documented in the credit card industry where some balances spiral out of control when interest rates increase and excessive penalties are applied after a missed payment.

For most, if it difficult if not impossible to maintain full time employment without access to transportation.  Not all places have sufficient public transportation as an option.  When services that can be argued as necessity join the vicious credit cycle, the likelihood that consumers that are falling behind will fall further behind increases significantly.

Help break the cycle – don’t overpay for auto insurance.

One thing you can do – repair your credit so you are not overpaying for necessities like auto insurance.

 

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