Less than $2,500 More than $2,500
Always Never Sometimes

As most consumers have experienced at one time or another, an unexpected declined credit card can quickly side-line an enjoyable occasion and create an awkward or annoying situation. When a credit card is declined, at the very least, it will cause embarrassment and take up excessive time by having to run an alternative form of payment. As the universe would have it, a declined credit card transaction usually occurs during the most inconvenient time, and when it is needed most. With increasing credit card fraud, many card issuers continue to implement and improve internal policies that can unfortunately result in a declined transaction. Managing a credit card with personal diligence and caution is no longer sufficient for guaranteeing credit reliability.

Reasons Credit Transactions are Declined

While it is encouraging that anyone experiencing a declined credit card is in good company (even the President has encountered this experience) there are primary reasons credit card transactions are declined, and some that are surprisingly educational:

  • Intermittent, infrequent card use
  • Failing to activate an account or update personal information required for card use
  • Using a card with enhanced security features or a “flagged account”
  • Excessive charges or annoying account authorization holds
  • Non-routine charges
  • Using an account away from home
  • Insufficient funds
  • Multiple online transactions
  • Missed payments
  • Incorrect information (such as zip code) entered after swiping the card; and
  • Expired card or recent card issuer credit line decrease

How to Avoid Getting Your Credit Card Declined

Not all credit card declined transactions are due to a problem with the account holder, nor the card itself. In fact, common rejection reasons can be altogether avoided by letting the credit card company know pre-purchase what to expect.

Infrequent Card Use

Like the President’s situation, when a credit card is presented for payment when normally used infrequently, the transaction may be out of character for the card holder and generate a declined credit card. Both banks and credit card companies use sophisticated fraud alert systems that work by recognizing non-routine transactions that would potentially indicate a fraudulent situation. Declining a credit transaction of this nature safely halts the payment process in order to bide time and obtain further appropriate verification and authorization from the customer.

Account Activation and Valid Personal Details

Sometimes credit cards require activation, sometimes not. Navigating the process of proper activation and ensuring that up-to-date personal information has been recorded correctly in crucial, but numerous electronic databases, is both daunting and can become burdensome quickly. Fortunately, consumers can sync devices like personal computers and smartphones and create a blanket log-in username and password system so that when one update is performed, the information effectively arrives where it needs to go quickly in order to prevent a declined credit card for the sake of ill-matching account data.

Enhanced Security Features and Alerts

Credit conscientious consumers are intelligently, and all too unfortunately, aware that identity theft is a reality. In order to prevent being the victim of credit card fraud or in the misfortunate case that a credit card customer has already experienced a fraudulent situation, card holders may be thrilled to take advantage of the enhanced security features and alerts card companies currently offer. The not so convenient part of increased fraud protection however, will result in thorough presentation of identification and even require a high-level password in order for a credit transaction to go through successfully.

Limits and Authorization Holds

Account holders know their maximum line of credit, and do their part at keeping transactions within the available credit parameters. The most common situation that arises around excessive charges pertains to annoying account authorization holds when traveling. Three excellent examples of authorization holds include:

  • Rental Cars
  • Hotel Stays; and
  • Restaurant Charges

The best approach to avoid a declined credit card transaction is to use more than one credit card on a regular basis, even for small, every-day purchases. Asking for an amount before handing over a credit card is another good strategy for negotiating with merchants (hotel check-in staff) about how much is going to actually be held on a card. By keeping buying habits consistent and understanding the necessity of advising the credit card company about non-routine transactions such as large purchases, travel, and intent to use the card out-of-town, card holders can reduce the chance of their card being declined. Keeping in contact with the card issuer, by conveniently managing an account online, allows the cardholder to review data, keep information updated, and ensures that transactions will be successful by keeping the credit card active and available for use.

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The decision between using cash or credit is not always an easy one, and there are definitely instances where cash is the better choice. Those small, day-to-day charges, for example, should be paid for with cash because constantly relying on plastic for these seemingly small purchases can lead to a large bill at the end of the month. Those who have trouble spending within their means may also want to use cash almost exclusively as this is the best way to stay out of debt. For those capable of responsible use of credit, however, there are multiple situations in which people should use credit rather than cash.

Beating Store Return Policies

One area in which credit cards are useful is defeating the sometimes short return policy length of many popular stores. Since 90-day return is often a credit card policy, shoppers may want to use credit to purchase products from stores that they might want to return outside of that one-month window. Shipping the item to the credit card company may be required, so this should only be done with merchandise that is easy to ship.

This strategy may also be effective with purchasing clearance items since stores often will not take back items sold via clearance. Many credit cards, however, offer 90-day return for clearance items, meaning that “all sales final” does not necessarily refer to the person who used plastic to buy one clearance item too many or a clearance item that turns out to be defective.

Getting a Better Warranty

As with return policies, credit card companies also often offer better warranties than manufacturers or stores. People who are looking to buy appliances especially may want to consider using credit to buy appliances or other similar items in order to take advantage of the extended warranty often offered by the credit card company. If a store offers a warranty of up to a year on a new range, for example, then using credit rather than cash to buy the range could result in a warranty that would cover a breakage after, say, a year and a half.

Buyer protection is a similar concept in that it, as the name implies, protects the buyer from breakage, loss, or theft of a particular item for up to several months after purchase. Expensive items, things likely to be stolen, highly fragile items, etc. may be good options for credit card purchase in order to take advantage of buyer protection. This may also be useful for items that do not come with a warranty but still might easily break or get stolen.

Keeping a Record of Transactions

Another benefit of using credit is that it provides a record of transactions. Disputes often arise over whether a person has paid this bill or bought that item, especially when the person uses cash for the transaction. Credit, however, leaves a paper trail—or at least a digital trail—which can greatly assist with such disputes or with record-keeping for tax purposes. Medical expenses, for example, are often hefty expenses that may be tax-deductible. Paying for such things with credit leaves a digital/paper record that is, if not legally binding to the IRS, at least helpful to the citizen for figuring out tax expenses.

Donations to charity should also be paid for with credit if possible since doing so would also leave an easily traceable trail. Taxes become that much easier to do when the person has easy access to credit records with the donations clearly labeled. Using credit here could help users get the most out of their tax deductions by having a clearly-labeled donation total.

Getting the Most out of Regular Purchases

Routine expenses are a fact of life, and paying for them with credit can make life much easier. If a service provider disputes a claim of payment, the record of payment via credit will be easily provable for the customer. Automatic withdrawal disputed claims are difficult and time-consuming, while credit card companies may honor a request for resolution of such a case more quickly. Also, the credit card company makes a more formidable opponent than the average customer, and businesses do not generally want to go to battle with credit card companies.

Those who routinely purchase items from popular stores that offer credit cards may want to consider using store cards instead of regular cards for purchases. Those who have trouble paying off credit balances on time may not want to go this route as in-store credit cards often have significantly higher interest rates than regular cards, but responsible credit card users may be able to get fairly significant savings via discount offers and points rewards for cardholders.

Buying a House

Not many people have to worry about being able to buy a house with cash due to the sheer expensiveness of even a relatively cheap house, but credit is the vastly superior option anyway. Paying on a mortgage is good for credit history and mortgage rates are fairly low, meaning that any cash put towards a house would be better off invested wisely than put towards a house. Mortgage interest is also tax deductible, which goes back to the notion of keeping a record of certain types of transactions.

Traveling Well

Credit card companies often offer a wide variety of services and protections in regard to travel options, so paying with credit over cash often makes the traveling experience better. Renting a car with a credit card may grant the customer special discounts and offers; insurance offered by the credit card company may be cheaper than and superior to that offered by the rental company itself. Paying by credit can also leave another records trail, assisting the customer with any necessary claims.

Purchasing airline tickets via credit can offer even more perks such as baggage protection and packing, free baggage checking and lounge access, and emergency situation assistance. Many of these services will not likely be needed, but people who end up needing these services often did not expect to need them beforehand. Besides, purchasing peace of mind can enhance a traveler’s enjoyment of a vacation.

All credit cards are different, so credit card users should read the fine print on their contracts and find out what benefits the credit card company offers them. Many of these savings will only actually be savings if people pay their bills off by the due date and avoid late fees; otherwise, the fees charged may override any potential savings. A little bit of research and diligence can increase a credit card user’s savings and provide more benefits than cash.

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Many consumers in today’s world are surprised to learn that there is a big difference between a credit score and credit report. A credit score merely provides an output of a specific credit agency’s FICO score. This number ranges between 300 and 850. It represents the lender’s opinion on an individual’s ability to make timely payments and avoid default. In contrast, a credit report provides an explanation of the basis that was used to determine an individual’s credit score. A credit report provides detailed information about outstanding accounts, previous payments, and loan terms. Below is a full explanation of what individuals need to know about the difference between a credit score and a credit report.

Credit Score

A credit score is simply a number that a credit agency provides to a creditor or individual. It does not give any detailed information about what factors were used to decide on the score. For basic lending applications, this score is often used to qualify individuals without much additional consideration. Credit scores are often used by themselves when individuals attempt to take out a credit card. In contrast, a bank attempting to qualify a potential home buyer might need to obtain more detailed information. In this case, the bank may choose to use a credit report. However, the vast majority of borrowing situations merely use a credit score.

Credit scores are also useful because they make it easy for consumers to keep track of the implications of their borrowing behavior. Many of the most popular credit cards are now offering free credit scores with each monthly bill. Simply keeping track of this information can make it much easier for consumers to understand how their credit is doing. If this number drops, consumers can then run a full credit report to get more detailed information. Instead of gambling on whether an individual has good credit, this can be a much more effective alternative.

Another advantage of checking an individual’s credit score is that all United States citizens have the right to receive a free credit score each year. Using a government-sponsored website, individuals can sign up to immediately view their credit score from all of the major credit agencies. If requested, these credit scores can also be viewed through the mail or over the phone. All consumers are entitled to this, but few people realize it. It is important for anyone looking to maintain a good credit score to take advantage of this offering.

Credit Report

A credit report provides very detailed information about factors that account for an individual’s credit score. After running a credit report, it is possible to see detailed information about outstanding accounts, balances owed, previous payments, and loan terms. There is also contact information that can be viewed about each creditor. Credit reports are designed to benefit both borrowers and lenders. Lenders benefit because they can see very detailed information about an individual’s credit history. Borrowers also benefit because they can see the factors that account for their ability to borrow funds.

Most consumers make the mistake of only checking their credit report when they need to borrow money. Unfortunately, building good credit is a long-term endeavor that cannot be done overnight. This means that individuals who run their credit just before taking out a loan are less likely to be in a position to do anything about the results. Although recent credit disputes might be forgivable, this may not be possible with older accounts. Since most items on an individual’s credit history remain for at least seven years, this could have very long-term consequences. For this reason, it is strongly recommended that consumers regularly check their credit report to understand potential problems.

Credit reports are one of the most powerful tools that consumers have at their disposal to increase their standard of living. For just about any activity in life, it is necessary to have good credit. Therefore, consumers should make sure that they take advantage of credit reports in addition to credit scores. In some cases, consumers may not even be aware that they can check their credit report. All credit agencies are required to provide this information upon request, and consumers should take advantage of it.

Credit Score vs. Credit Report

In the vast majority of situations, credit scores can be an effective metric to ensure that consumers are on track for improving their creditworthiness. However, there are certain situations where consumers will still need a detailed credit report. Each year, consumers should run a credit report to understand the reasons for why their credit is the way that it is. This can also make it easy to understand outstanding debts and develop a future plan for success. Most importantly, consumers can utilize this as an opportunity to find potential errors. It is not uncommon for consumers to find payments that were never credited for installment payments or that there are new accounts that they were previously unaware of.

Consumers should also run a credit report if they see their credit score drop significantly. Unless something goes wrong, consumers should not see their credit scores going down. A credit score that drops a few points could indicate that a payment might be considered as being late. In many cases, consumers did nothing wrong and an error was simply made. However, it is important to take action immediately to prevent this from permanently staining an individual’s credit. It may also be possible that a former creditor has turned accounts over to collections without notifying the consumer.

The good news is that these problems can often be resolved relatively easily. Consumers can get in touch with the creditor, the collections agency, or the credit agency itself. If consumers can provide receipts for their transactions, they can expect to have negative transactions removed from their credit history. If accounts in collections are still outstanding, consumers can usually negotiate to have these charges removed from their records. Most collections agencies are willing to reclassify accounts as current after consumers pay their outstanding balances. However, it is important to negotiate this ahead of time to ensure that these problems will be resolved favorably.

By utilizing credit scores and credit reports correctly, consumers can expect their creditworthiness to increase every year. As credit improves, consumers will find it easier to take out important loans and live a good life. Since bad credit can also impact an individual’s ability to find a job, these activities can have a big impact on individual’s income. In fact, studies have even shown that good credit can make it easier for couples to stay together. Therefore, individuals should take steps immediately to monitor their credit in the years ahead.

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A husband and wife can live fairly comfortably in a one-room apartment sharing basic food and transportation costs. But all of this changes when a baby is added to the family.

Suddenly, certain things like renting an apartment or taking the bus do not seem to be as palatable. The mentality of “Keeping up with the Joneses” arises with a family. The two-seater sports car is replaced with a mini-van. Parents must plan ahead to care for their new family members from 0 to 18 years old.

Immediate Expenses with Birth

A new baby will force a family to buy a whole new class of items: diapers, wet naps, formula, cradle and stroller. Parents must purchase outfits and blankets to bring to the hospital after the birth. Unfortunately, many clothes are only good for a few years or even months as the newborn grows rapidly.

Weekly recurring expenses with a new baby may include food, baby oil, diapers and wet naps. Depending upon the lifestyle of the parents, this could add about $50 to $100 easily to the weekly grocery bill. Babies cannot eat all of the same foods or handle the same products as adults. This leads to more expensive, safe and baby-friendly products and services.

Do you want a foldable stroller with plenty of pockets and cup holders? A stroller can range from $50 to $1,000 easily. A crib will run from $300 to $1500 depending on how fancy you want it to be. Add a baby cam for monitoring and it will be $300 more.

And don’t forget the hospital bill. Mother might not be able to work for months thereafter. The family must pay for the recovery of mom and the basic needs of your newborn. Depending on the severity of the delivery, hospital bills could easily range from $4,000 to $10,000.

Toddler Years

So, the first week, you have your newborn, you may have spent some $20,000 already. Baby showers are great because mothers realize how much it costs to raise a child – offering good advice and merchandise to facilitate the baby’s development.

We have not even mentioned toys yet. Books, building blocks, dolls and how about those bouncy baby chairs. The bouncy baby chairs can easily cost $300 if you have one with all the cool sounds and hanging accoutrements. As your baby grows, he or she will quickly outgrow the old set of toys. You might spend $500 on toys ever year.

Babies need their own eating furniture and utensils too. Buying a new baby bottle, cleaning basin, bowls, spoons and dishes will create a whole set of items just for your child. Add a high chair, which can cost from $50 to $400 easily, and your baby is ready to eat with the rest of the family.

School Days and Puberty

As your child stays at home, he or she can run around in diapers or wear a limited set of clothes. Once school starts, expectations will be higher. How much will brand new school clothes run you every year – $200 to $300 maybe? How about backpacks, lunch boxes, pencils, notebooks and you know kids need their own smart phones, right? Smart phones might run you about $500 before you add in the contracts.

Did you add your child to your family insurance plan? How much do dental and doctor bills cost? A new set of braces might cost you $3,000, if you are lucky. And you probably moved to a new house with a room just for your child. You also may need to pay for babysitting and child care services.

Once puberty arrives, your child will be getting more independent. And more independence means more money. Soon, you’ll have to pay for mobile phone bills, transportation costs, and teenage entertainment, food, and drink.

Top Estimates for Child Costs

The United States Department of Agriculture (USDA) has estimated that in 2013, the cost for raising a child up to the age of 18 was $245,000 for the average American family. Of course, this depends on the cost of living in your area. Raising a child can be expensive.

While a child of 18 is officially an adult, many parents will help their children pay for school also. The United States government has certain student loans directly aimed at parents. A wise family plans ahead for these costs by maintaining a strong financial budget.

Good Credit Score Improves Debt Outlook

Financial experts suggest that a family should prepare for a new child by creating a number of financial funds. One is the rainy day emergency fund. Disasters can strike at any moment. Parents need to ensure that they always have money set aside for their children’s needs.

The college fund is also one of the most important financial investments that a parent can make. It pays to start early. Many banks will offer special rates for a child’s college fund. The average tuition for a private college is about $30,000 per year. Most children cannot find enough work to pay for books, tuition, room and board.

While balancing their budgets, parents must also keep their financial house in order. The credit score has become one of the primary ways to measure the creditworthiness of individuals. Find out what your credit score consists of to make sure you can maximize this valuable financial rating.

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Once an individual has discovered that his identity has been stolen, the individual may be confronted with a great deal of anger and disappointment. What’s even worse is all the frustration he may encounter as he attempts to clean up his credit. Since identity theft usually begins as a financial crime, the most significant part of clearing up the damage is repairing the mistakes due to unauthorized charges and accounts that were opened in the victim’s name.

The best technique for correcting fraudulent activity on a credit report is to start fixing the problem immediately and be patient. The quicker mistakes are discovered, the simpler it is to clean them up. It is important to remember that even when mistakes are found early, disputing charges on a credit report and the entire removal process will take some time. Here are some immediate steps that one can take to minimize the damages:

Request A Fraud Alert

The three credit bureaus maintain records of every individual’s credit history. In the event that someone has fraudulently use another individual’s financial or personal information, one of the credit reporting agencies can be contacted and a request for a fraud alert can be initiated. A fraud alert does not cost the victim anything. The victim will only have to provide proof of his identity. The credit reporting agency that was contacted is required to notify the other two agencies.

By placing a fraud alert on the credit report, it makes it difficult for an identity thief to open any new accounts in the victim’s name. Once the fraud alert has been placed on the credit report, any new accounts or transactions would require a telephone call to the victim for verification purposes. The initial alert will remain on your credit for 90 days. It can also be renewed for an additional 90 days. Victims of identity theft can order a free copy of their credit report from each of the three credit reporting agencies. It is important for victims to make sure that their contact information is always up to date in the event they have to be contacted.

Review The Credit Report

Once a fraud alert has been placed on a credit report, all victims of identity theft are entitled to a free credit report from each of the credit reporting agencies. The credit reporting agency that is contacted will brief the victim on his rights and how he would go about obtaining a free copy of his credit report. When ordering a credit report, it is beneficial to ask that full Social Security numbers not be visible.

Once it has been determined which accounts were tampered with or fraudulently opened, it is suggested that the individual speak with someone in the fraud department and follow-up with a letter. When following up with a letter, send it certified mail and request a return receipt. This will allow the individual to have a record of the communication.

Once the credit report has been received, it needs to be reviewed in detail, and the necessary steps must be taken to remove all fraudulent activity off the credit report. Errors must not only be disputed with the credit reporting agencies but also with the fraud department of every business. If there are errors listed on the credit report that are due to identity theft, ask each credit reporting agency to block the information that is being disputed. This prevents the fraudulent information from appearing on the credit report. The credit reporting agencies are required to block transactions due to identity theft.

Request an Identity Theft Report

To create an identity theft report, one must file a complaint with the Federal Trade Commission. An identity theft report is there to assist with debt collectors, credit reporting agencies, and businesses in which fraudulent accounts were opened in the victim’s name. The benefits of having an identity theft report are the victim can have fraudulent information deleted from his credit report, stop companies from contacting him about fraudulent accounts, and it allows him to add an extended fraud alert to his credit report.

Monitor Your Credit Reports

Unfortunately, resolving identity theft issues take time. It is important to document and keep track of all the telephone calls, mail, and documents that are associated with the incident. When speaking to the credit reporting agencies, it is wise to write down the date, time, and the name of the company representative that provided assistance. When mailing documents, it is best to send copies and keep all originals. Keep track of important dates and follow up with each credit reporting agency to ensure that all the negative information has been deleted.

Most state laws protect individuals who are victims of identity theft. Any fraudulent accounts that were opened without the victim’s permission, the victim is not responsible for the debt. The liability for unauthorized use of a credit card is usually limited to $50. However, if the matter was reported prior to any fraudulent financial activity taking place, then the victim is not responsible for any unauthorized accounts or purchases.

Reporting unauthorized transactions as quickly as possible can have a great impact on the victim’s financial losses. In some states, if a victim reports the loss after two days of being aware of the identity theft, then the victim may be responsible for paying fees up to $500. If fraudulent activity is not reported within 60 days, the victim could be responsible for all fraudulent activity.

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We take for granted that there are stages of our lives we each go through, such as childhood, youth, middle-aged and elderly. So it is with our financial life, which also has, or should have, at least four major stages. Not everyone completes all four, but each of us should be aware of what those stages are, what is required to reach them, and the financial goals we should be pursuing at each stage.

Stage One – Survival

Most of us have been in this simplest financial stage at some point in our lives. In fact, some people never leave it. For many this is often the beginning stage of financial life, when we are first starting out and trying to make it in the world of money. The focus of this first phase is to put together the financial means to be able to survive in the world without enduring major hardships. These are the key components of attaining Stage One financial security:

  • You should be carrying no credit debt from month to month.
  • You should have enough money in the bank to be able to pay all your household expenses for one month if you suddenly lost your job.
  • You should have a term life insurance policy equal to ten times your yearly income.
  • You should have an affordable household budget that you maintain on a monthly basis with consistency.

If you are having trouble attaining all of the goals of Stage One, it is probably because you need to spend less, earn more or both. With proper discipline, you should be able to reform your finances in order reach these goals and to move up to Stage Two.

Stage Two – Stability

At the end of Stage One you are doing okay, but your financial position would still be endangered by things like a sudden job loss or another unexpected cause of fiscal stress. Your goal in Stage Two is to enhance your financial position enough to give yourself some sense of security and financial stability that can be maintained in the face of the normal kinds of adversity that typically occur in most people’s lives. You still won’t be rich, or even really financially secure, but you will at least have some reasonable short-term financial security and have laid the foundation for building further success. To complete Stage Two, you should:

  • Increase your savings until you could pay all your household expenses for three months without any income if need be.
  • Your student loans have been paid off.
  • You have created a will or trust for your loved one’s financial security.
  • You have started a retirement account and are making contributions every payday.

The goals in Stage Two are more long term and may take more time to achieve than the goals in Stage One. Yet, attaining them will create the financial bedrock upon which the attainment of Stage Three of your financial journey will be built.

Stage Three – Upward Mobility

The first two stages required primarily discipline and hard work. Both of these traits are also required in Stage Three, but now you want to direct your fiscal energy specifically on removing the remaining barriers to your financial freedom. This means directing your focus on these three goals, which when achieved will leave you free of most of your remaining financial burdens:

  • Raising your retirement account contributions to whatever level is needed to ensure that you have whatever you need in order to continue to live your current lifestyle, assuming that you stop working in your early 60′s.
  • In addition to what you are putting into your retirement fund, you are saving between 20 and 25 percent of all the money you earn to use for investments in stocks, bonds and other income generating activities.
  • You own your car free and clear with no car payments.

Don’t focus too much at this stage on what the actual sums of money you are dealing with are. Your retirement goals can be quite limited, provided it covers a lifestyle you are comfortable with. Your savings rate can be restrained if your expenses are firmly under control and your car can be quite modest as long as it is paid off. The goal is to keep moving forward and upward, whether it be fast or slow.

Stage Four – Financial Freedom

The final financial stage to which we all aspire is one where financial issues are no longer a major concern. Ideally, at this stage you should not only be making money, but actually giving some of it away to the people and causes you find worthy of your charity. But before you can attain that level of financial freedom, you need to accomplish the following goals:

  • Get that mortgage off your back by paying off your home.
  • Your retirement plan is fully funded and available whenever you decide you need it.
  • Your money from investments is enough to survive on without holding a job. You now work as much or as little as you want to.
  • Begin to do serious research into what people, causes or organizations could potentially prove worthy of your generosity, then begin budgeting whatever portion of your income you are comfortable with towards a charitable giving plan.

We are all unique individuals, so one person’s vision of financial success is likely to be different from another person’s in some important details. But whatever your fiscal dreams may be, you must complete all four of the financial stages of life to fully attain them. How quickly and by what exact means you move through those stages will vary depending upon your specific circumstances. Yet, with discipline, determination and a focus on the specific goals required of each financial phase, you too can one day arrive in the wonderful realm of complete financial freedom.

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With the aggregate national student loan debt now at more than $1 trillion, many people are increasingly finding themselves in difficult financial situations. The question of reducing or forgiving student loans is therefore becoming increasingly common. The average student loan debt for the class of 2014 is approximately $33,000 – the highest amount ever for any graduating class. For those that cannot fully pay back the debt, the balance grows and becomes higher and higher over time.

For people in financial distress as a result of student loans, the possibility to reduce or even eliminate the debt may be the only viable option to avoid financial ruin. Yet there is a common misconception that student loans cannot be forgiven. Many people would be surprised to learn that it may, in fact, be possible to reduce or even eliminate this debt.

Credit is granted via two main types of student loans: government and private. Depending on the nature of the loan, the ability for loan forgiveness greatly differs. In general, government loans are much easier to reduce; private loans, on the other hand, are difficult, but not impossible, to eliminate.

Government Loans

Government loans can be reduced or forgiven in a variety of situations. It is important to keep in mind that there are several types of government loans and not all loans will qualify for every situation. The following is a summary of the most common situations under which a debtor may qualify for reduction or forgiveness.

Income-based Forgiveness

This option is best for those whose incomes are relatively low compared to their debts. The income-based repayment plan allows one to make monthly payments, which are a function of income and the federal poverty line. The amount paid each month is 15% of the difference between adjusted gross income and 150% of the federal poverty line. For example, if a borrower earns $40,000 per year and has $60,000 in debt, then using the 2014 national poverty level for $11,670 for a single-person household, his annual payment would be: 15% * (($40,000)-(150% * $11,670)) = $3,374.25; the monthly payment would therefore be $218.19.

After successful payments for 25 years, the remainder of the loan will be forgiven. Only federal student loans, such as Stafford, Direction and Consolidation, are eligible for this plan.

It is extremely important to note that while this is one of the most common loan forgiveness plans, it also usually falls under the category of taxable income. In other words, the amount of debt that is forgiven counts as income and requires the borrower to pay income tax on it. For example, someone who has had $30,000 of debt forgiven and is in the 35% income tax bracket would have to claim this amount as income and pay $10,500 of taxes.

Public Service Forgiveness

Borrowers may have their loans forgiven by working in certain eligible public service jobs. Only Direct loans are eligible. Not all jobs qualify but amongst the most common ones that do include public school teachers, police officers and firefighters. In general, employment with government agencies or non-for-profit organizations that are designated as tax-exempt by the IRS qualifies. To qualify for loan forgiveness, borrowers must work in a qualifying job for ten years and make 120 monthly on-time payments, after which the remainder of the loan will be forgiven.

Teacher Loan Forgiveness

Teachers who have been teaching full-time in low-income schools for at least five years may apply to have up to $17,500 of loan debt forgiven. PLUS loans are excluded from this option. To determine if a school qualifies as low-income, one can check the U.S. Department of Education database, which is published every year.

Stafford Loans

Borrowers of Stafford Loans may be eligible for attractive debt forgiveness programs if they work certain jobs in the public sector. The purpose such programs is to encourage people to work in jobs that benefit the public and pay salaries that are relatively low compared to the costs of education. There are various eligible occupations, including teachers at low-income schools, public lawyers, law enforcement, social workers and more.

Private Loans

While government loans offer various reduction or forgiveness options, the same cannot be said for private loans. Such private loans are amongst the hardest to eliminate and many times cannot be discharged even in bankruptcy. Nevertheless, there is a perception that private student loans will always be with the borrower for life no matter what. This is not true and although they can be difficult to reduce or eliminate, this is not impossible.

There have been many situations where at least part of a student loan has been eliminated in bankruptcy. It is impossible to provide a strict guideline for situations that may allow one to have these types of loans reduced. However, in general, those who are in bankruptcy and can prove the financial inability to repay at least part of their student loans may be able to have at least some of the debt discharged. In general, certain types of private loans are typically easier than others to discharge. They include:

  • Loans to attend a school that is not on the Department of Education’s list of “eligible educational institutions.”
  • Loans provided by large-scale lenders such as big banks or financial institutions.
  • Loans for education programs that are not offered at traditional four year colleges (generally this includes vocational and job-specific training such as truck driving or beauty schools).

The process of attempting to reduce or discharge any private student loan debt is usually not easy and does require a good lawyer, but good news is that it can be done. The assumption that such debt can never be reduced is not correct.

Although student debt is a huge problem in the United States right now, it does not have to be a lifetime financial burden for all borrowers. In many cases, such debt can be reduced, forgiven or discharged. Due to the various laws and available options, students should generally always attempt to take out government loans first and turn to private loans only when necessary. Public loans have set guidelines for the reduction or forgiveness of debt and private loans can only sometimes be reduced or discharged in bankruptcy. Of course, more than anything, prospective students should do their homework and determine their total future debt and realistic salary expectations so that they do not get stuck with unexpected debt that they cannot realistically pay off.

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There never seems to be enough money for parents of small children or college students looking to buy clothes and supplies for the upcoming school year. However, there are ways that those who need to get their kids or themselves ready for the upcoming school year to buy all needed items without breaking the budget. What are some ways to create a back to school budget and stick to that budget?

Part I- Create a Plan

Get a List of Supplies

The first step is to create a list of everything that is needed to prepare yourself or your children for the upcoming school year. Kids who are in elementary school or junior high may receive a supply list that spells out everything that they will need for the upcoming year. High school and college students may receive a general list of what they will need from their teachers on the first day of school or during the first week of the school year.

When parents know what their children will need or what they will need to buy for themselves for the upcoming school year, it may be worthwhile to identify what they can get from others or buy used. For example, it may be possible to borrow a calculator from an older friend or relative or buy textbooks online as opposed to in the school bookstore.

This could result in savings of hundreds of dollars each semester or per school year. Typically, retailers will have clearance specials on supplies such as pens, paper and notebooks during the last week of summer vacation or during the first week of school to clear out inventory. This could be a great time to buy supplies without paying much for them.

Decide Where to Buy School Clothes

Buying supplies for the classroom is only one part of getting ready for the school year. The other part is determining where to buy clothes, shoes and other accessories to help yourself or your child look good and feel confident heading into the new school year.

Fortunately, many retailers will offer back to school discounts that can help a shopper save 40 percent on a pair of pants or 50 percent on a pair of shoes. State and local governments may also waive sales taxes during the week leading up to the new school year to further help parents and older students buy what they need.

Part II-How to Pay for the Supplies

Create a Budget Ahead of Time

No matter how much a person may need to buy, it is important that he or she create a budget and stick to it. Aside from waiting for sales or borrowing goods from others, it may be possible to save money by shopping at thrift stores or going to outlet stores where designer goods may be heavily discounted. It may also be worthwhile to look for retailers that sell gently used brand name clothing at discount prices while also providing store credit in exchange for clothing that an individual may no longer want.

Cash or Credit?

The first thing that an individual needs to decide is whether he or she will pay for school supplies with cash or with credit. While spending with cash makes it easier to stick to a budget, buying goods on a credit card provides financial flexibility for those who may have multiple kids to buy supplies for or doesn’t have enough money in the bank to buy a new pair of glasses or $500 worth of textbooks.

Take Advantage of an Incredible Teaching Moment for Kids

One way to engage children and teach them how to be fiscally responsible is to let them have some say over what they buy for the upcoming school year. Parents can give their children $100 for clothes that can be spent on anything that they want. However, that is all the money that they have. Once the money is gone, the kids are stuck with what they have in their closet or what is bought for them.

Ultimately, this will help teach kids how to make their own style decisions as well as learn how to stick within a budget. When children are exposed to the financial realities that their parents face, they may be less likely to protest when they don’t get the designer clothes that they want and appreciate what they have already. An arrangement such as this one may also be beneficial if kids are at an age when they don’t want to go clothes shopping with their parents anymore.

Part III-Learn From Your Experiences

Keep Detailed Lists Each Year

It is a good idea to keep a list of all the purchases that have been made in years past. This can help shoppers remember when and where they did their shopping so they know where to go to get a great deal this year and where not to go if they spent too much. As time goes by, it becomes easier to instinctively know where and when to shop based on what a family’s needs are.

Try to Keep Spending Consistent Each Year

Another way to teach kids about budgeting and keeping costs to a reasonable amount may be to show them how much was spent last year on school supplies. A game can then be created where the challenge is to keep spending within 3 percent or some other predetermined increase from the year before. Children can learn while having fun at the same time, and parents can encourage frugality by offering to spend any remaining funds on a future trip to the mall where their son or daughter can buy whatever he or she wants.

Back to school shopping does not need to be a time of high drama or stress. With experience and a little bit of research ahead of time, it will get easier to create a shopping list, create a budget and get everything needed while staying within that budget. Over time, parents and older students will be able to complete their shopping quickly and on their own schedule.

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Good financial practices and money management skills are necessary for virtually everyone, regardless of how much they earn or the amount of disposable income that they have access to. Proper planning for the future is also an essential part of successful money management. For instance, discovering where each dollar goes and budget development are two wise activities for anyone who wishes to avoid financial crisis. However, sometimes a person may need help with designing an appropriate budget. Here are some essential tips on successful budgeting and other money management skills:

Developing a Realistic Budget

Most experts agree that the key to financial success at any income level is by developing a realistic budget. Setting goals, being able to live comfortably within one’s income and being aware of where each dollar is spent are all aspects that factor into proper budgeting. However, this task can be a bit overwhelming for those who have little or no experience managing money. As a result, some people seek the help of a financial planner when designing a household budget.

Assessing Debt to Income Ratio

The first step someone should take when attempting to take control of his or her finances is to complete a realistic income to debt ratio assessment. Consumers should begin by creating a list of all their income sources. After this has been completed, a list should be made of their fixed expenses, the latter of which refers to those that do not fluctuate each month, such as a car payment or mortgage. Next, variable expenses should be listed, such as money spent on clothing, recreation and entertainment. Creating this list of expenses, even those that seem insignificant, is the best way to track spending patterns and identify necessary expenses. This way, the person can prioritize his or her expenses and eliminate unnecessary purchases. The objective of this task is to ensure that basic needs such as food, housing, education, insurance and healthcare are met.

Both bookstores and public libraries are good sources of essential information concerning money management techniques and budgeting. Additionally, computer software programs are also available to assist individuals to develop and maintain a budget, balance a checkbook and create a strategy for paying off debts and saving money.

Identifying Spending Leaks

Identifying spending leaks is absolutely essential. Spending leaks are defined as money that seems to disappear without one knowing exactly where it went or why. Almost everyone has experienced this phenomenon at some point in their life and it can be very frustrating. One exercise that a financial planner or online money management course may recommend is taking the time to write down where each dollar is spent for one full month. This log will typically include both large expenses, such as monthly utility bills or mortgage and car payments, and small expenses that may seem inconsequential at the time they are made. The latter often add up to a surprising amount of money. This is a very practical way to determine if unnecessary expenses are eating away at money that could be saved for a rainy day.

Avoiding and Eliminating Debt

Another factor that should be addressed by anyone interested in successful budgeting is debt. Outstanding debt can quickly spiral out of control if a person is not careful with things such as credit cards, personal loans and similar arrangements. It is essential that one understand that consumer credit is nothing more than the spending of future income. Therefore, most experts recommend avoiding the continuous use of credit unless one is expecting a windfall with which to pay off his or her various loans. Most individuals who are knowledgeable and experienced with regard to money management will also advise consumers to avoid arrangements such as payday loans or similar ventures at all costs. This is because such arrangements simply wreak havoc with one’s future income and can eventually make it impossible to structure a realistic budget.

Dangers of Impulse Spending

Frivolous spending is one of the most formidable enemies of those attempting to adhere to a budget. The ability to resist spending money on items that are truly unnecessary is key to a sound financial future. There is one simple tip for eliminating this type of spending, which is to implement a cooling-off period before making an unplanned purchase. In most cases, after thinking about the item for a day or two, the individual will find that future financial success will outweigh the desire for the unnecessary object.

Small Changes for Big Savings

Consistency is the key when saving money. Even small amounts eventually add up to a substantial figure, and it is often the simplest actions that result in the greatest savings. For instance, one might try adding a bit of water to a bottle of all purpose cleaner when it begins to run out. Anyone who has tried this with household cleaners or similar products can attest to the fact that the added water does nothing to lessen the product’s performance.

Another example of a great way to save money on household products is choosing a box of powdered dishwasher detergent as opposed to dissolving tablets. This is because the trap of convenience is where many individuals end up spending far more than they should on certain items. Many times such products do not really save the consumer as much time as he or she may think. Most people would agree that pouring detergent from a box is just as easy as placing a dissolving tablet in the dishwasher, although the price difference between the two items can be as high as three dollars.

Those who must buy lunch during their work week can save almost $400 a year by simply ordering ice water with their meal rather than a soft drink. This is another great example of how little things add up.

Getting in Touch With Creditors When Money Problems Arise

Finally, anyone who is struggling financially should immediately get in touch with his or her creditors to explain the source of the difficulties and request a modified payment plan that will allow the consumer to manage the debt in a positive way. It is never wise to wait until delinquent accounts have been passed on to a collection agency. Once this has happened it is a sign that the creditors are no longer willing to work with the client to clear the credit card debt or other outstanding loans.

Although no one is perfect with regard to budgeting money, implementing the aforementioned tips will go a long way toward keeping control of one’s spending. Therefore, anyone whose goal is successful money management should not procrastinate, but he or she should follow the steps outlined above to create a realistic and practical household budget and make every effort to adhere to it throughout the year.

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The allure of a black charge card is undeniable. Anyone who is handed the card will usually immediately recognize a black card by its unusually heavy weight as it is made of pure titanium. Yet, aside from the vague notions of elite wealth that a black charge card implies, very few actually understand how black cards, or charge cards for that matter, even function. Charge cards operate very differently from a credit card as with a charge card the holder is required to pay the entire balance of the card every month or face an initial late fee comparable to a checking account’s overdraft fee. For many, the very point of having plastic is to accumulate a balance that one doesn’t have to pay down all at once so the idea of charge cards may seem unusual, and they do have various aspects that make them more or less desirable.

The Charge Card

As it stands, charge card services work very simply: qualified applicants pay a sign-up fee and a subsequent monthly fee for their card which has a total limit that reflects each customer’s individual debt to income ratio along with many other aspects of their credit history. As mentioned, these cards must be paid off in full every month and failure to do so repeatedly can have a very negative effect on one’s credit. The majority of people have a difficult time making one big lump payment every month and as a result, most charge card companies are extremely selective in who they approve and good credit is a must. Most charge cards come in varying levels of status, many beginning at a gold card and reserving the “black” designation for the elite class. Each card offers varying levels of benefits and demands an escalating scale of fees as the basic cards usually cost around $100 per year and the some black cards are known to require a $2500 initial start-up fee plus $7500 per year after that. For a little perspective on how lucrative the card is, a recent report has put the average black card holder at $16.3 million in total assets and $1.3 million in annual income.

Why a Charge Card?

Just as traveler’s checks were introduced as a way to circumvent the hassle of currency when traveling internationally, charge cards are meant to replace cash completely. While many balk at having to pay the entire card down every month, it allows a user to completely replace hard cash while earning numerous benefits for every dollar that they are charging to their account. Some of the biggest benefits offered by charge card providers to their customers are services that replace broken items purchased on their cards including phones and computers, as well as included car rental insurance, roadside assistance and free event tickets. As the level of the card increases, as do the perks reserved for black card holders which can include personal shoppers, first-class flight upgrades, free nights at exclusive hotels around the world and the oft-rumored non-existent credit limit. In theory, one could buy a house in full on their black card, as long as they have the means to pay their balance off at the end of the month.

Credit Considerations

Aside from the so-called “perks” of charge cards, up until recently they have presented holders with a significant advantage in terms of their credit score. Under the old methods of calculating credit, charge cards were viewed similarly to credit cards and its credit limit was determined to be the highest balance the card ever held. In that frame, charge cards looked like high-limit credit cards that were constantly paid down monthly and usually had a low balance, which is an absolutely terrific asset for one’s credit. More recently though, charge cards have been viewed more accurately and while they do not offer the same almost unfair advantage in the credit score world, having a charge card is still viewed more positively by credit agencies as one must have stable income and an already great credit rating to even be approved for a charge card in most cases.

Why a Credit Card?

The biggest positive of a credit card is the ability to charge now and pay off gradually. Credit-wise, the best thing one could do for their credit with a credit card is continually pay the card off every month as this inspires a rise in one’s credit score and a rise in their card’s credit limit. A high balance of “revolving credit accounts”, a.k.a. credit cards, can really damage one’s overall credit score and the interest rates of most credit cards makes them financially unwise for long-term debt. Nonetheless, credit cards are absolutely key in the financial world and the easiest way to build credit is with a credit card. High-end charge cards are usually not available to those with a short credit history or poor credit and are really not options in terms of building or rebuilding credit, but there are cards that work similar to charge cards called “secured credit cards” that function in a similar manner but are used specifically to rehabilitate bad credit. Also, many credit cards now offer benefits like a “cash back” program that refunds users a certain percentage charged every month and competitive frequent flier miles that make the allure of charge card benefits less glaring.


In the end, charge cards and credit cards are both great options and offer very similar benefits especially following recent changes in credit score calculation. For many, charge cards maintain their allure because of their position as a status symbol and the “black card” will most likely continue to be the ultimate accessory for the wealthy for some time to come.

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