Filing An Auto Accident Claim With An Insurance Company

Filing an auto accident claim can seem overwhelming, but knowing what to do in advance can help prevent unnecessary complications.

After an Accident Has Taken Place: The first thing you should do after an auto accident is move your car off road to a safe place (if possible), turn on your caution lights and call the police. Do not talk with the other drivers involved in the accident until the police have arrived. This will prevent confrontations and help you to avoid making any statements that may jeopardize your case later on. While waiting on the police to arrive, you will want to write down the details of the accident: including the time, weather conditions, road names, license plate numbers, and any other details that might be helpful.

After the Police Have Arrived: You will be asked to give a statement. Give an honest account of the accident, but do not directly admit fault. Avoid using phrases such as "it was all my fault."

After the police have arrived, you will want to exchange insurance and personal information with the other drivers. Also, try and obtain the names, addresses, and phone numbers of any witnesses.

Always: Keep your insurance information in your glove compartment - this is not only required by the police, but is convenient for you. Stay at the scene of the accident until the police leave.

Never: Give or accept any money on the scene of the accident or sign anything presented to you by another driver on the scene of an accident.

When filing an insurance claim, following the steps below will reduce complications and help you receive prompt and accurate coverage.

1. Contact Your Insurance Agent or Company Immediately

Call your agent or company. The number should be located on the papers or card kept in your glove compartment.

Even if the accident is minor or less than your deductible, you should report it- do not take chances. Even if your premiums go up, it’s better than the trouble that not reporting the accident could cause later on. If you do not report a minor accident and the other driver does, you may be held liable. Most states have laws to protect consumers from insurance companies unfairly raising rates.

1. Read Policies Closely

There are three parts to an insurance policy: conditions, declaration, and insuring agreement.

The Conditions-

Conditions are instructions on how to go about reporting an accident. Follow these directions closely to avoid complications and miscommunication.

The Declaration-

The declaration provides basic information such as the automobile owner’s name, how many drivers are in the household, the legal address of where the car is kept, and the description of the car. The declaration includes the dollar limits to which you are entitled and the type of coverage you have.

This is where you can find your lender’s name if you are still paying off a loan for the automobile. If your car is a total loss and you have a loan that is not paid off, contact the lender because the insurance company may pay the money directly to the lender. If the money does not cover the full amount you owe the lender, you must make arrangement to pay the balance.

The Insuring Agreement

The insuring agreement explains your coverage plan and lays out your basic insuring agreement. It also lists specific events in which the company will not cover you.

Keep a Paper Trail
Keep all of the paper work pertaining to the accident including the police report, medical bills, auto repair bills, and any other documents. Hold on to everything, even if it doesn't seem important at the time, it may be vital later on.

Some companies will communicate directly through the police, hospital, or auto shop, yet others will require you to collect information and then send it to them.

Some insurance companies will pay for hospitals visits, auto repairs and other expenses directly. Others will require you to pay and then reimburse you, but you must have all of the paper work. This is something you will want to ask your agent about.

Complete and Return Paperwork Quickly

You will most likely receive forms in the mail from your insurance company. Complete these and send them back quickly. The faster the company receives the completed information, the faster you will receive the benefits of your coverage.

Ask Questions and Communicate with the Insurance Company as Well as the Auto Shops, Hospital, Police and Others

Be sure and call your agent every time you have a question. You will also want to call periodically to find out the status of your claim. The company deals with many cases and mistakes are possible. It is your responsibility to remain up to date on your claim. Make sure to call the police stations, hospitals, and auto shops to see that the proper paper work has been sent, and check with the insurance company to see that it has been received.

Do not forget that you are ultimately in charge of how the repairs turn out. Do not accept a repair job that does not meet your standards.

If you are without transportation, ask your agent if the company will pay for a rental car. Many companies will pay for one, but you must ask.

Remember: If there is anything you do not understand, call your agent. Don't forget to read fine print!

Do You Need A Disability Insurance Policy?

Injuries and illnesses that once resulted in death are increasingly treatable and result in longer life spans. However, these injuries and diseases often result in periods of inability to engage in meaningful employment. You are far more likely to suffer a long-term disability before you turn 65 than to die before you turn 65.

CAUSES FOR DISABILITY

Disability occurs for many reasons. Some relate to the hazards of specific employment, which only apply to a limited number of people. The most common causes of disability, however, are medical conditions such as heart disease and back problems, ailments which can hit anyone. Other common causes of disability are automobile accidents, cancer, and head injury.

ODDS OF SUFFERING A DISABILITY

Disability occurs far more often than other events that are commonly insured. It occurs more often than premature death. It occurs more often than fires in the home. It even occurs more often than serious automobile accidents. Roughly half of the disabilities that keep someone out of work for six months or more still have them disabled after five years. One employee out of seven will suffer a five-year disability before age 65.

UNDERSTANDING YOUR NEED FOR COVERAGE

The need for disability insurance is based on several factors.

• Fixed expenses
• Available assets and non-employment income
• Income of your spouse
• Age of your children
• Existing entitlement to disability benefits
• Potential for increased living expenses due to the need for medical care, household help, or child-care

The most complex of these factors to grasp is your entitlement to disability benefits. While you may qualify for Social Security benefits, you should understand that the definitions used by the Social Security Administration for qualifying are very restrictive.

You should also understand whether your group coverage is short-term or long-term and what percentage of your income would be paid in benefits. A comprehensible analysis is necessary to determine the exposure you should cover with a private disability policy.

MAXIMUM COVERAGE AVAILABLE

Insurance companies will not write policies for 100% of your income. The maximum varies from company to company, but typically ranges from 50% to 70% of earnings.

What If I Do Not Name a Beneficiary?

If no beneficiaries are declared in a life insurance policy, the benefits are paid to the estate of the deceased for distribution to survivors. Survivors may include a spouse, child, parent, brother, or sister.

If no beneficiary is living at the death of the insured member, the benefits are again paid to the estate for handling by the duly qualified executors or administrators of the estate.

If there are no survivors and the will of the deceased does not specific how assets are to be distributed, then the probate court will handle disposition in accordance with state law.

Naming a beneficiary is important for your wishes to be carried out exactly.

• Language to determine beneficiaries is extremely important. The exact terminology is important. If the situation involves blended families, your desires can be confused with terminology such as "my children" or "my wife." Be specific.
• As your circumstances change with time, periodically check to make sure the beneficiaries are correct.

IRREVOCABLE TRUST AS BENEFICIARY

When a large estate is involved, the goal may be to reduce estate taxes. One way to reduce the taxable estate is to establish an irrevocable trust. Specific instructions are given to how your assets are used after your death.

The trust becomes both the owner and the beneficiary of a life insurance policy. It is common to make annual gifts to the trust to fund the payment of premiums each year.

The tax savings can be considerable. The negative is that once the trust is formed, changes are not possible.

Making Medical Decisions Before You Are Incapable

Laying the groundwork for medical decisions before you become incapable will take the pressure of making your decisions off others and will assure that your wishes are realized.

Family members often suffer great anguish debating appropriate medial care after a person is incapacitated. To avoid a traumatic time for family members, give explicit instructions before the mental capacity to do so is gone. Common means of legally communicating your wishes are Living Wills and Durable Medical Power of Attorney.

Living Wills

A Living Will is a declaration stating your wishes if you become unable to do so. The document contains information stating the types of treatment you want performed and under what conditions you want the treatment stopped. It also appoints a specific person to have the authority to make the decision to stop treatment for you.

The Living Will can assist in determining many solutions once a patient can no longer make decisions. The Government believes that possessing the ability to make medical decisions is so important that it has mandated hospitals and HMO's to offer information about patient's rights to make medical decisions. This includes making Living Wills in case of incapacity. A patient is not required to make a Living Will, but a patient must be informed of his right to do so.

• Living Wills are available online, but professional guidance is suggested.
• Living Wills vary from state to state.
• Living Wills do not cover all possible medical situations.

Durable Medical Power Of Attorney

Another device for voicing your intent for medical care is through a Durable Medical Power of Attorney, a specific person who would consider and chose actions during a medical situation. Having a Durable Medical Power of Attorney means that you have a spokesperson with influence over a broad multitude of possible situations - situations which might not be covered in a Living Will. The empowered person will be authorized to make the difficult decisions concerning medical care and resuscitation. The choices will be made after evaluating the incapacitated person's stated wishes, religious beliefs, and viewpoints on life. A person acting as a Durable Medical Power of Attorney does not have free reign regarding decisions. Restrictions require all actions to be in the best interest of the incapacitated person.

Another possible jurisdiction of a Durable Medical Power of Attorney is to carry out wishes of the deceased. This could include decisions such as whether or not the deceased is an organ donor and a method of dealing with the remains (burial, cremation, or cryogenics).

Without a Durable Medical Power of Attorney, the need for a Conservatorship may arise. This involves a legal proceeding that can become complicated as well as expensive.

• Durable Medical Power of Attorney forms (as are Living Wills) are available online.
• An appointed Durable Medical Power of Attorney has restrictions which dictate actions be in the best interest of the incapacitated person.
• Act now- this alleviates the necessity for family members to come to a consensus about difficult decisions in the future.

New Car Financing - Buy vs. Lease

The advantage of leasing a car over buying a car is being able to drive "more car" for lower monthly payments and a minimal down payment, possibly no down payment at all.At the end of the lease, you may choose to walk away and not go through a resale or trade-in process.

Leasing is a matter of personal tastes and priorities. The primary advantage of leasing is a new car every three/ four years without worrying about resale. Leasing, however, is typically more expensive - absent special incentives from the dealer.

RISKS

• The primary risk when leasing a car is that the residual value of the car will not meet the agreed expectations at the end of the lease. Depending of the exact language in the lease agreement, you may be held accountable for the difference.
• A lease agreement allows a certain number of miles to be driven per year. The number of miles allowed per year is typically between 12,000 and 15,000. If more miles are driven than allowed, a charge of 15 to 20 cents per mile will be added.
• An open ended lease places you at risk if the vehicle’s value at the end of the leasing period is less than the predicted value. You pay the difference. This is the reason most people choose a closed end lease.
• You are held responsible for any damages above the "normal wear and tear."
• If your driving circumstances change and you no longer desire to lease a car, you will not be able to terminate that lease without having to pay fees.

The lists below summarize the pros and cons of leasing versus buying:

Advantages of Leasing

• Lower monthly payments
• A lower down payment
• You can drive a better car for less money each month
• Lower repair costs (with a 3-year lease, the factory warranty covers most repairs)
• You can drive a new car every 2 or 3 years
• No trade-in hassles at the end of the lease
• You pay sales tax only on the portion of the car you finance

Disadvantages of Leasing

• Since you do not own the car, you do not build equity in the vehicle.
• You don't own the car at the end of the lease
• The mileage you can travel is limited, typically 10,000 to15,000 miles a year
• Lease contracts are confusing, so it makes it difficult to ensure you're getting a fair deal
• Leasing is more expensive in the long run
• Wear-and-tear charges can add up
• It's hard to terminate a lease early if your driving needs change
• There are restrictions on moving a leased car to a different state or abroad. This is especially important to military personnel.

Advantages of Buying

• Pride of ownership - you can do with your car as you please
• Car buying is more economical in the long run
• No mileage penalty
• Increased flexibility - you can sell the car whenever you want

Disadvantages of Buying:

• Higher down payment
• Higher monthly payments
• Responsibility for maintenance costs once the factory or dealer warranty expires (you can expand coverage by buying an extended warranty)
• Trade-in or selling hassles
• Your money is tied up in a car, which depreciates in value, rather than another investment which could appreciate

SUMMARY

Buying a car is the most economical option. At the end of the financing period, you will have equity in the vehicle. Closed-end leasing is an option for a low-mileage driver who can effectively maintain a car and does not mind "leasing" payments for an ongoing period. Personal tastes and priorities will most influence a person’s decision about obtaining a vehicle.

Understanding A Car Lease

THE BASICS OF LEASING A VEHICLE

Remember that you are driving a vehicle that will be returned. At the end of the lease, the car has a residual value. Lease payments make up the difference between what the car was worth before you drove it and its residual value, as well as including the cost of financing (interest factor).

STEPS IN LEASING A CAR

1. Determine the type of car you desire and the options on the car
2. Negotiate the price of the car as if you were paying cash
3. Select the length of the lease and the frequency of payments
4. The financier buys the vehicle from the supplier You pay rental on the vehicle

PROCESS TO OBTAIN THE BEST DEAL

Call a dealership and get a leasing offer over the phone. State that you want to pay $1,000 down on a three year lease. Once you get a quote, call another dealership to get second estimate. This procedure is similar to buying a new car. Make sure the offer includes any fees or taxes.

CLOSED END LEASE vs. OPEN ENDED LEASE

A Closed End Lease, often called a walk away lease, is the most popular type lease for non-commercial transactions. In a closed end lease, a purchase price at the end of the lease is agreed upon up front. You have the option to pay this price and buy the car (plus administration fees). If you choose not to purchase the car, the car becomes the property of the financier.

An Open Ended Lease differs in that the value of the vehicle is assessed at the end of the lease. You are responsible for the difference between the car’s actual value and the amount estimated at the start of the lease.

• Although the Open Ended Lease is seldom used in non-commercial leasing, be certain that your contract is a Closed End Lease. This places more financial risk on the financier.

DURATION OF A LEASE

A lease typically covers a period from two to six years.A four year lease is the most common and offers the best economical terms.A three year lease insures that the car will remain under factory or dealer warranty.

The law requires the following information be provided to you:

• The amount of any advance payment, such as a security deposit
• The details of your regular payments- number, amount, dates payment is due
• Penalties for default or late payment
• The amount you must pay for license, registration and taxes
• Maintenance fees and responsibilities for maintenance/ repairs
• Insurance you need
• Warranties regarding the vehicle
• Standards for "normal wear and tear"
• Procedures for canceling the lease and charges applied to do so
• The possibility of purchasing the car and terms involved to do so

AT THE END OF THE LEASE

You return the vehicle to the financier.You will be held responsible for any failures to meet the lease agreements.These include any unexpected damages and exceeding the allotted mileage.

TERMINOLOGY OF A LEASE

• The term money factor is another way of saying interest rate.
• The residual value of a vehicle is important in leasing a vehicle. Some vehicles depreciate faster than others. Be wary of a low monthly payment based on you later paying for the difference in the original value of the vehicle and its residual value at the end of the lease.
• In subsidized leases, the interest rates are very low and residual values are high.
• In advertising low lease payments, the dealers may not have yet added taxes and fees and a down payment is often required. It doesn't take a rocket scientist to understand that the dealer can easily quote a low lease payment if the fine print specifies a large initial deposit.
• A subsidized lease is generally the best lease economically.
• Gap insurance insures that at the end of the leasing period, you will not be held responsible for damage done to the vehicle. This may cost $3,000 to $4,000 over the life of a lease.

Shopping for an Automobile

Buying a car and a house are typically the two largest purchases an individual makes in a lifetime. Due to the major financial commitment, caution must be used.

Know the value of the automobile. Know the price of a used car and do not overestimate the value of a new car. Once a new car is driven off the lot, it becomes a used car and the value decreases dramatically. To obtain an estimated value of a used car or a potential purchase, you can use the services of Kelley Blue Book (http://www.kelleybluebook.com/). Kelly Blue Book and other websites give insight into the pricing of the automobile you are considering as well as any rebates, discounts, or special financing. A dealer is not responsible for sharing this information. Comparing prices with various dealers can save thousands of dollars. Know which dealerships will negotiate and which dealerships have set prices.

Whenever considering financing, explore the options. Two such options are bank financing and credit unions. To be an intelligent consumer, it is your responsibility to know the fees associated with all types of loans and terms of the financial plans. Between credit unions and bank financing, credit unions usually have more favorable terms for loans.

Another financing option would be dealer financing. If you are considering this, be aware the dealer will shop around various loan companies the same way you can. For best success in choosing a financing plan, do some research before hand. Loan rates vary according to the buyer's financial history, job status, and dealer's connections. Remember that because of the connections, an established dealer may provide better financing and may be more likely to provide car guarantees than smaller dealerships.

Caution:

1. Be aware that dealers may encourage you to sign off on the purchase before final loan approval, then come back with less favorable terms. Wait for final approval before taking delivery of the vehicle.
2. Be aware that when a dealer requests your ID, they will be making an inquiry on your credit report. That's fine if you are serious about buying and financing through the dealership, but don't let the dealer run unnecessary inquiries.

If you have a history of credit problems, you may want to obtain a copy of your credit report. Three primary sources for this information are Equifax, Experian, and Trans Union. If you have been denied credit, you may request a free report within 30 days.

Find the monthly rates for your car loan. These monthly rates are calculated using various interest rates and the number of years for the loan. Websites provide auto loan calculators to figure the monthly payments. Loans generally last for two, three, four, or five years. The more time it takes to repay the loan, the more interest you will have to pay. A longer life for a loan may double the interest you have to pay on a loan.

Remember to consider down payments when purchasing a vehicle. Down payments typically range from 10 to 20 percent of the value of the automobile.

An often overlooked expense when purchasing an automobile is insurance premiums. Insurance premiums are especially important for young people who will be carrying collision insurance. This extra expense of owning a vehicle may dictate the type of automobile can reasonably afford.

When purchasing a new or used car, the operational reliability needs to be examined. Check the history of the automobile online by using the VIN (vehicle identification number) to access its records. If the vehicle has been involved in an accident, flood, hailstorm, or recall, this information should be available. Have the vehicle examined by a reliable mechanic. Neutral dealerships will perform a 21 point inspection check. Know the safety ratings and performance ratings to be sure the automobile will serve you well.

When considering leasing a vehicle, be aware of all the terms. Lack of equity, limited mileage over the period of leasing, and being locked into a vehicle for an extended period of time are factors to consider. Also be aware of the different leasing plans and do the math before signing the lease to know which plan is most appropriate. A lease to buy plan may be the best deal, but circumstances sometimes change.

Always read all forms you sign. Ask questions about any information that is unclear.

When Does Bankruptcy Make Sense?

Bankruptcy is a process to follow when everything else has failed.

Review the mathematical ability to pay expenses before declaring bankruptcy. Compare your income versus expenses and decide if you can reduce your expenses or increase your income. Refer to the article "Planning a Monthly Budget" and try to find a new fiscal situation that will work.

Examine your real property and other hard assets to determine what might be sold and what you might lose in a bankruptcy.

OPTIONS TO EXPLORE

• Examine your lifestyle to determine if expenses can be reduced.
• Seek credit counseling. Free initial consultation is available from Bankruptcy Attorneys.
• Talk to creditors. Many businesses have in-house programs that deal with financial hardships. Such programs reduce a monthly payment in exchange for committing to a longer payback period. Creditors are more likely to work out a payment plan if they see you have exhibited good faith in trying to solve your problems.
• Debt Consolidation/Debt Settlement Programs exist which settle balances on credit card and non secured personal debt for 30 to 50 cents on the dollar. The enactment of this program is similar to bankruptcy.

DEBT CONSOLIDATION

Most people in debt owe unsecured debt such as credit card bills. A debt consolidation plan is basically a second mortgage. It uses your home as collateral, which puts your home at risk if financial problems continue.

REASONS NOT TO DECLARE BANKRUPTCY

• Laws vary from state to state. Some states require you lose the equity in your home and other assets. Some states allow you to keep property.
• A bankruptcy will be on your financial record for 10 years. If you can get credit, the interest rates can be as high as 18 to 20 percent or more.

CREDIT COUNSELING SERVICES

Be aware of potential costs. "Non-profit credit counseling services" does not mean the service is government sponsored. Many non-profit credit counseling services receive money from the creditors and use this money to pay the salaries of owners and directors. The primary goal is to arrange payment schedules, which are in the interest of the creditors. They are non-profit, but the goal of the service provider is to make money for salaries. Be wary of any agency requiring more than a $35 fee to start a debt management plan. Any monthly charges should be in the same range.

To find a reputable Credit Counseling ServiceGo to a search engine http://www.google.com/ or http://www.yahoo.com/ and type in key words in the search field, such as:

• The key words "state of Georgia credit counseling" takes you to a site that discusses a credit counseling service available in the Atlanta area. The service is a member of the Better Business Bureau, a part of the United Way, and is funded by grants as well as by creditors and client contributions.
• The key words "state of Texas credit counseling" takes you to a site of the Texas Attorney General. This site provides links to accredited community service agencies.

REMINDERS

• Creditors are more likely to work out a payment plan if they see you have exhibited good faith in trying to solve your problems.
• Do away with credit cards. Credit cards encourage impulse buying. Concentrate on purchasing the necessities.
• Check the Better Business Bureau, http://www.bbb.org/BBBcomplaints , to make sure that any company or service does not have complaints on file.

Trapped In Chexsystem and Cannot Open a Bank Account

ChexSystem, developed in the 1980’s, is a networked computer system that records a person’s poor credit history. 80 to 90% of banks subscribe to ChexSystem, use it to report someone who is a credit risk, and use its information to make decisions about customers.

Once a person is deemed a "credit risk" on ChexSystem, their name stays in the system for five years. It is estimated that anywhere from 7 to 19 million people are in the ChexSystem database.A similar system is maintained by Telechek, although it is not as widely used.

CRITERIA FOR A CUSTOMER BEING REFERRED TO CHEXSYSTEM

Overdrafts (bounced checks), abuse of bank services, or any fraudulent activity can result in being referred to ChexSystem. The time allotted for correcting an overdraft varies from bank to bank. Some banks report the problem after 30 days. The amount of the overdraft does not have to be substantial to be reported. Some banks report the problem for any overdraft over $35.

Suggestions:

• Take care of bank problems immediately, no matter how small.
• Avoid overdrafts - it costs you extra money and causes problems.
• Help avoid overdrafts by knowing your bank balance.

REMEDY

The initial step in correcting the problem is to settle the financial problem that caused you to be in the system. Your name will still be in ChexSystem for five years, but this is a start.

Banks have varying leniency policies for people in the ChexSystem. Unfortunately, a majority of banks will not take a financial risk with someone in ChexSystem. There are, however, some factors that may help bank personnel see you are worth the risk. If you can make such a demonstration of strength, you need to present your situation to the branch manager. Branch managers will be reluctant to go out too far on a limb, but they do have some discretion.

A strong display of financial stability for 1 to 3 years may convince some banks that your risk factors have been reduced. Signs of financial stability include steady employment and paying rent/ utilities on time. A demonstration of financial stability may help you to open a bank account.

As an American citizen, you have the right to a report about the information ChexSystem has recorded about you. If you have been denied a checking account within the past 60 days, the report is free. After 60 days, a charge of $8 is attached.

The contact address for ChexSystems are the following:

Mail: ChexSystems Customer Service12005 Ford Road, Suite 600
Dallas, TX 75234-7253
Website:

Be sure to check out any bank for stipulations that are financially extreme. The Better Business Bureau is a good place to start,

http://www.bbb.org/BBBcomplaints/.

Learn more from the links below:-

The Important Of Planning a Monthly Budget

Planning a monthly budget allows you to live a comfortable lifestyle without accumulating debt. If you are already in debt, a simple monthly budget is the most important step to regaining financial security.

Calculate Your Monthly Income

The first step in developing a monthly budget is calculating your monthly income. Start with the money that you earn each month after taxes are deducted. Next, add any other sources of income you may have, such as alimony, child support, etc. Add these numbers together. The result is your monthly income.

Determine Monthly Expenses

The next step in planning a budget is to make a list of all your monthly expenses. You will not know the exact amount that you spend on each item. Don't worry, you have all month to calculate it.

The easiest way to list expenses is by breaking them into categories. Some examples of categories might be housing, food, transportation (if you drive a car include gas, car insurance and maintenance), utilities (electric, water, gas, etc.), credit card payments, clothing, entertainment (movies, eating out) and other (personal care products, books, insurance, health care, education). Feel free to break these into small categories. For example, you may want to list your car insurance separately from your other transportation expenses, since it is a fixed amount.

Make the categories as small or large as you like. You may consider any subcategory in the "other", as a category of its own. For example, insurance could be listed separately.

Now that you are aware of the items you are spending money on, you can begin to keep track of how much money you actually spend. Take one month to record the amount of all your expenses. Although expenses in many categories will vary month-to-month, recording your expenses for one month will give you a good idea of how much you spend in each category.

Remember, your expenses are not limited to bills you pay by check. Don't forget to take a pad and pencil with you to the restaurant. Also, remember to record trips to the ATM or the bank in your notebook. Records of all the cash you withdraw provides a safety net in case you forget to jot down a meal out or an extra beer. If you have a record of the cash you withdrew, you can estimate which category it was spent under.

Remember: If you pay a bill early (or late), record it as an expense for the month that the bill was due, not as an expense for the date that you paid the bill.

Create A Monthly Budget

After you have logged all your expenses for the month, you can begin calculating your monthly budget. A simple way of looking at your budget is to add up all your monthly expenses, and subtract this number from your monthly income. You should have enough money left to deal with an emergency. If you do not have enough extra money left over, find a way to cut corners. Start by cutting back on nonessentials, such as entertainment and clothes. Next, look for bargains at the grocery store, buy generic personal items, and start car-pooling to save on gas.

Remember: Even if you do not feel that you are overspending, everyone can afford to save extra money. Therefore, cutting corners is never a bad idea.

Interpreting a Budget

In order to understand exactly where you are overspending, you may want to figure the percent of your expenditures that fall into each category. If you make $1,000 a month, and spend $400 on rent, divide 400 by 1000. The resulting .40 is the percentage of income going to housing (40%). This formula can be used for each category. Just divide the amount that you spend for the category by your monthly income. After you find each percent, make a chart showing your entire budget. This will give you an idea of the areas where you are overspending, and where to cut corners.

A typical monthly budget may be similar to the following:

Housing 40% - $400

Food 15% -$150

Transportation 16% - $160

Bills 12% -$120

Clothing 4% -$40

Entertainment 5% -$50

Other 8% -$80

Percentages will vary according to households. There are no absolute right or wrong answers when it comes to your household budget, only what works best for you. At the end of the exercise, you need to have enough cash left over to provide an adequate safety net.

Caution: Beware of debt counselors. While in some situations they may be necessary or helpful, counselors may also overcharge and add to your already existing money problems. By paying attention to spending, using simple math, and cutting corners, you may be able to solve your debt problems without a counselor. This will save money in the long run.

Additional Tips

• Plan to have enough money for an emergency
• Allow room for last minute extras, such as gifts or late charges on videos
• Put the money saved by using a budget into a savings account, money market, or stock.

Buying an Automobile with Shaky Credit

Getting a fair financial deal is a daunting task for those without a good credit rating. There are many potential traps. Let’s start by pointing out the number one trap:

Never accept delivery of an automobile before the financing is complete. Dealers are notorious for completing the sale while the finance company is still reviewing the transaction. If the finance company comes back and will only approve the consumer at a higher interest rate, guess who is stuck.

THE PROCESS IN APPLYING FOR FINANCING

When applying for a loan, you will complete an application, which will be processed through computer analysis. Once the analysis is complete, you will receive a credit rating that will influence the interest rate offered by the dealer. The finance company charges higher interest rates for deals they determine to be credit risks.

Be aware that you do not have to finance through the dealership. Dealer financing often has hidden costs. Consumers are more in control with financing arranged through their bank.

When applying for a loan, you will complete an application, which will be processed through computer analysis. Once the analysis is complete, you will receive a credit rating that will influence the interest rate offered by the dealer. The finance company charges higher interest rates for deals they determine to be credit risks.

Be aware that you do not have to finance through the dealership. Dealer financing often has hidden costs. Consumers are more in control with financing arranged through their bank.

SUB-PRIME RATES

Car dealerships tout "no money down, no payment until a certain date." This is a slogan to get you in the door. If your credit rating is deemed risky, your credit application is sent to a sub-prime rate financing company. The interest rate for these companies can go higher than 25%.

• Even major dealerships such as Ford and GMC have sub-prime lenders.
• The dealership refers "poor credit risks" to these lenders.
• Experts advise paying such exorbitant interest rates only when there is no reasonable alternative - and then do not overextend - stay with an inexpensive model.
• Having a financially stable cosigner reduces the interest rates.

BUY HERE / PAY HERE

Another situation to be aware of is a "Buy Here / Pay Here" car lot. The terms may appear attractive. A typical deal is "$100 down, $30 a week for 3 years." The car lot owners encourage the weekly payment and enforce penalties when the payment is late.

Many of the cars on such a lot are cars unloaded by reputable dealers because of the "lemon law." If a new car has multiple problems that are not resolved within specified time limits, lemon laws force dealers to retake possession of the automobile. Many of these cars end up on "Buy Here / Pay Here" lots.

A consumer may think that they can simply quit paying the $30 a week. However, these companies prosper by turning over the loan to a collection agency. Collection agencies are very forceful and use threats of further financial difficulties to achieve their goals.

• Experts discourage purchasing from these lots.
• These lots prey upon people who have difficulty with the English language and who are unaware of their rights under the law.

OPTIONS

• Utilize mass transit if your area is urbanized and this is available.
• When obtaining any loan, always check fees and charges associated with the loan.
• Shop around for the best interest rates. Do not forget to check credit unions.
• If the interest rate is high, hesitate to buy the car in the hope to receive a better deal.
• Always check with the Better Business Bureau to know the reputation of the company.

Consider purchasing a car from an individual. Check the newspaper listings to find an affordable used car. One benefit is not paying sales tax. Two negatives are: 1. there is no recourse if the car has mechanical problems and 2. you must arrange your own financing.

Know the value of a used car. A guide to knowing the value an automobile is the Kelley Blue Book (http://www.kelleybluebook.com/).

• Driving an older, reliable automobile is much preferable to paying high interest rates or purchasing a "problem" car.
• Go to a bank or credit union to know the amount of financing you can obtain to purchase a car. Be sure to carry two forms of identification and any documentation to indicate you are not a credit risk (steady employment as well as paying rent and utilities on time). Once again, a financially stronger cosigner may reduce interest rates and make a loan easier to close on favorable terms.
• Consider delaying the purchase of a car until your credit improves, if possible.

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