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Archive for February 2014

Lending money to loved ones: a realist's guide

Published 2/25/14

Lending money to loved ones: a realist's guide By Peter Andrew

A couple of years ago, some friends of ours had a problem. The vehicle they relied upon to earn a big chunk of their income had broken down in a terminal sort of way, and they didn't have quite enough savings for a replacement. So I called and offered to lend them the $1,000 or so they were short. The relief and happiness in their voices was easily worth a thousand bucks. I followed up with an email:

Glad we could help out. Just two conditions over the loan.

First, let's keep it between the four of us (the two of them and my partner and me); nobody else needs to know, though there's no problem if you've already told someone. And, secondly, we mustn't let it get in the way of our friendship. With luck, you'll be able to pay us back fairly easily, but we really don't care if it takes 10 years or longer. So don't ever avoid seeing us just because you're worried we'll be nagging you over it. We never will.

Make loan, think gift

In my head, the loan was a gift, though I couldn't tell them that because they'd never have taken it. If I eventually got the money back, that would be a fine surprise, but it wasn't an expectation. Had it been so, and I'd later been disappointed, it would have cost me two friendships that were worth way more than a grand. Shakespeare made a sound point in "Hamlet" when he wrote, "Neither a borrower, nor a lender be; For loan oft loses both itself and friend."

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5 essential steps to escaping your debt

Published 2/22/14

5 essential steps to escaping your debt By Holly Johnson

No matter where you live, chances are good that almost everyone you know owes money to someone. They owe money on their cars, their credit cards and their private loans. They've got satellite television and swimming pools, season tickets to football games and designer clothing. Judging only by appearances, the average family appears to have it made.

However, the numbers prove otherwise. According to Experian's latest State of Credit study, the average American is over $27,887 in debt, not including mortgage debt. And if you look around you, it's easy to see why.

If you're in debt and ready to change your ways, it's important to know that it's not too late. You can change your behaviors, change your spending habits, and learn to live within your means once and for all. It may not be easy, but it's the only way to escape from the debt you've created. Here are five essential steps to escaping your debt, once and for all:

Track your spending

Most people end up in debt because they spend more than they earn. The only way to solve this problem is to identify your spending weaknesses and address them.

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3 things to remember when your credit improves

Published 2/11/14  (Modified 2/13/14)

3 things to remember when your credit improves By Justin Boyle

I traveled back to my hometown for an extended holiday this winter, and it isn't a full trip home without the whole crowd of my aunts and uncles standing in coats and hats around the brick firepit outside, drinking whiskey by the glass and jawing loudly about one thing or another deep into the darkness of the early morning.

One of my uncles has long been the butt of jokes among his siblings for some hilariously bad mistakes he'd made with money in his 20s. This year, though, he put the fun on ice -- he'd been smarter than ever with his money over the last several years and things had really turned around.

Hang on, he said amid chuckles of disbelief, look at this. He then reached into an inside pocket of his jacket and pulled out a stack of envelopes.

"Look," he said, "they're trying to give me platinum cards!"

If you've been doing all the right things with your own credit cards -- keeping tabs on your credit score, paying your bills on time, staying well below your limit, and so on -- then sooner or later you'll also find yourself with better credit than you've ever had. Here are some tips to help you hang on to it once you get there.

1. Resist new credit opportunities

As you might expect, the best credit card reward programs and low interest credit cards are often reserved for customers with credit ratings that prove them to be an acceptable lending risk. So once your credit gets into shape, you're likely to start getting some tantalizing offers.

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