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James Graham
James C. "Jim" Graham is president and owner of Graham Financial Consulting. A native Kansan and Wichita resident since 1954, Jim spent over 15 years in the Navy's technical training system as a technical instructor, curriculum writer, and technical school administrator. After retiring, Jim was an insurance agent and taught licensing courses in California. He returned to Wichita teaching advanced electronics and math at the W.A.T.C. Seeing a need, Jim began Graham Financial Consulting to provide personal money management education, as well as consulting on home-based business development, individual credit repair, and Life and Health insurance. Call Jim at (316)773-0831 or email jcg.debt@powwwer.net
Banking & Finance
2004-01-01 11:40:00
Strategies to control the ‘card’
ANSWER:  When tempted to reach for the plastic, installing control mechanisms to properly regulate card use becomes important. Some strategies, although they may seem simple, are valuable in keeping credit card spending under control.Don't use credit cards to pay for day-to-day expenses. Set sufficient cash aside for these expenditures. Place "needs" over "wants". Tracking spending and proper budgeting, will net the necessary cash.Identify good debt and bad debt. Good debt involves financing a purchase that will outlast the loan. And that purchase, such as a home, will continue to grow in value. The asset you finance by borrowing should provide a return that will offset the cost of interest. Another good debt is financing education, such as student loans. Debts such as these will enhance your life and allow you to grow. Good debt can turn to bad. Everyone wants to own a home and many will do anything to own one, including applying for a HVLM (High Value Loan Mortgage). This type of loan allows the homebuyer to borrow up to 150% of the value of the home at interest rates close to those of credit card companies. Paying interest on one of these loans for ten years won't make a dent in the principle. Credit can cost you considerable interest in "The Trap of Mortgage Refi-nances."  Refinance can be an effective tool in a families financial program, but can be bad for people who take out extra equity from their home to pay off credit card debt. For example, if you transferred $15,000 in credit card balances to a new mortgage of $93,000, you finance $108,020 plus $2,160 in closing costs. In a 30-year refinance loan, the total cost to refinance and pay off credit cards is $20,090 in interest. That's $5,000 more in interest than the amount of the credit cards. More simply put, a $19 pizza charged on a credit card will cost $19 if paid when the credit card bill is due. However, paying the minimum payment, (with an average balance of $5,000), a $19 pizza will cost $40.04. Understand the cost of credit.  Credit cards aren't as attractive as they once were. Consider a bank debit card, which withdraws directly from a checking account, as an alternative to credit cards. They allow the user the convenience of a credit card without the interest. Again, maintaining a budget, tracking spending and using a spending planner are important.The Federal Trade Commission Act, Title 15, Chapter 41, addresses consumer credit reporting and provides consumer guidelines on how to acquire credit reports, repair problems on your credit report and more. Every 90-120 days, use the Internet to receive a free credit report to make sure the information is correct. Nearly all lenders have come to rely heavily on computerized profiling to determine credit they are willing to expend.Keep credit card balances and any excessive house and car debt to a relatively modest 5-15% of your monthly income. To determine excess debt, examine financial records for the last 3-6 months. Tracking spending and recording it is valuable.  Bad debt between 15-25% of your income, calls for more systematic debt management. You may be tempted to fold these debts into a home equity loan or new mortgage to reduce monthly payments. This is a good idea, but use at least half of the savings for debt acceleration on the new mortgage loan. Carefully examine refinance fees and hidden charges. For debts of 25-50% of monthly income, consider consulting a professional for a free debt analysis.
 
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