Personal Finance Blog

Tips And Stories To Help You With Managing Money

Helping Small Businesses Go Cashless

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Small Business Cashless
“We’re declaring a war on cash”
There are advantages to small businesses, particularly restaurants and food sellers in going cashless. Visa has undertaken a project to help them in the process, providing $10,000 each of 50 American businesses that are willing to commit to converting to digital payment technology.

“We’re declaring war on cash,” said Visa spokesman Andy Gerit.

After assessing the results of the first year of the program, Visa representatives said the company expects to expand the program into other industries and countries.

Cash is still king in many industries around the world, despite the proliferation of credit and debit cards. To make the transition to cashless, it is necessary to upgrade their current point-of-sale systems, which hampers some small businesses that want to make the change.

That’s where Visa’s offer of assistance steps in. The businesses that are considering the shift to a cashless environment have to assess how they currently use cash, what effect a change would have on customers and how workers would be trained to make the transition.

Visa’ contribution could be used to upgrade point-of-sale equipment or toward marketing and other efforts to promote their small businesses.

Obviously, Visa stands to benefit over the long haul. The company already is the world’s largest processor of credit and debit cards. It charges a small fee from every payment it processes. The more companies that convert to cashless business practices, the more Visa stands to profit.

Visa’s promotion is based on information from a study conducted recently that calculated the effects if the businesses in100 American cities converted to cashless. The prediction was that the net benefit to those cities would total some $312 billion per year. The benefits would come through savings in labor costs. New York City alone could save more than 186 million hours in labor, the study suggested.

Later this year Visa says it will release a report titled “Cashless Cities: Realizing the Benefits of Digital Payments” to summarize the effects of the project.

Have Student Loans Forgiven

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Student Loan Forgiveness
Take care to remain cognizant of the eligibility rules if you want to stay in the running for loan forgiveness.
The U.S. government provides some opportunities for having student debt erased, but there are specific guidelines and some traps to avoid.

The Public Service Loan Forgiveness Program (PSLF) specifies that it is available only to those who have paid regularly for 10 years and who are working for a government agency or a nonprofit.

This fall marks the first time the program kicks in and there are only a few hundred used-to-be students who have signed up so far. Failure to understand the rules has led many graduates to make decisions that now make them ineligible.

Four of the most common mistakes include:

Having the wrong type of loans. The student must have borrowed from the federal Direct Loan Program to qualify. Some 19 million people – 44 percent of the borrowers got their loans in other federal programs, according to current Department of Education statistics. They can get around the provision by consolidating debt under the direct loan program. However, past payments won’t count toward PSLF until the consolidation takes place.

Misunderstanding of “qualifying payments.” Eligibility is based on making 120 payments. They must have begun after Oct. 1, 2007 through a qualifying repayment plan (generally an income-driven plan.) Payments must be in full and made within 15 days of the due date. The borrower must be a full-time employee of a qualifying federal employer. Making extra payments won’t help with eligibility as only one per payment period is eligible. At least some payments must have been made under an income-driven plan that caps payments at a certain percentage of income. Payments don’t count if the borrower was still in school, during a loan grace period or while the loan was in deferment or forbearance. (If a borrower has stayed with the standard 10-year plan, he or she will have paid off the loan before consideration of PSLF is considered.)

Working for the wrong employer. To avail oneself of PSLF, he or she must work for the government, a 501(c) (3) nonprofit or an organization providing a qualifying public service. A full-time public school janitor could qualify. Before accepting a job, an individual hoping to take advantage of PSLF should see that the prospective employer qualifies.

Falling for fraudulent promises of forgiveness. A NerdWallet investigation showed that many companies use false claims and promises to reduce or eliminate loans and they charge high fees to enroll people in the free federal program. An Obama “free loan forgiveness” program, for instance, is one such scam. The term receives more than 18,000 online searches per month, even though no such program exists. Be wary of companies that charge a high up-front fee or add monthly amounts. What they are offering is likely to be too good to be true.

The PSLF program is not set in concrete yet. The Department of Education is considering cutting funding, arguing that it is too expensive and that it tends to benefit graduate and professional school students, many of whom acquire debt in six figures before they are ready for careers. Keep posted for changes, but take care to remain cognizant of the eligibility rules if you want to stay in the running for loan forgiveness.

Five Questions To Ask About Debt

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Debt Questions
Failure to clarify questions can cause confusion and needless worry
Debt is a subject that many people find difficult to discuss. But the failure to clarify questions can cause confusion and needless worry.

A recent USA Today story listed these five questions that are common among debtors and the answers:

Will my debt ever get so old I don’t’ have to pay it? Many debt types, including credit card and medical bill balances, have a statute of limitations. The guidelines vary from state to state, but in general, these debts are dropped three to six years from the first missed payment or most recent payment. After seven years in most cases, the negative reports fall off your credit rating. But the debt is still collectible and you could be dunned by debt collectors. However, they are not able to sue you.

When family members die, might I be stuck with their debt? How the death of the debtor affects the debt varies, including how dependable the finances are of the person who might then become liable. The assets of the deceased may have to go toward paying off debt. The creditor has to absorb the loss if there is not enough to cover the debt. If you co-sign on a debt, chances are you will be liable if the major debt holder dies. Co-signing on mortgages and other loans may make you responsible. Don’t co-sign on credit accounts unless you have enough life insurance to cover the debt.

Can I be arrested for debt? Federal law prohibits debt collectors from threatening you with arrest or jail. Some collectors may threaten you with an arrest warrant but it’s uncommon. But you can be sued. About 90 percent of those sued for debt fail to appear in court, leading to a default judgment ordering repayment. Ignoring a court summons is a mistake. The court may order that payments be made directly from your wages or bank account.

Is there a maximum amount of debt I can accrue? No. Lenders may offer more credit than you can reasonably repay. Debt may be necessary to purchase a home or to build a business, but be realistic about your ability to repay. Avoiding the issue is easier than dealing with it after the fact.

Will bankruptcy erase all my debt? Some debts, including alimony and child support, cannot be erased by bankruptcy. Student loans, tax debt and judgments also are difficult, though not impossible, depending on the circumstances. If you are buried in debt and struggling to stay afloat, consult a credit counselor (there are those who are available through non-profit agencies) to see if bankruptcy is the answer for you.

Financial Basics You Should Know As An Adult

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Financial Basics
Have a budget and stick with it, and include some savings in that budget
Graduation is a milestone in the understanding of personal finances, as well as the basic underpinnings of the education that will take you through the rest of your life.

Advice from the experts on the basics of personal finances includes these gems:

There is always something new that the advertisers will tell you you can’t do without. Ignore them. You don’t need the “best” phone, computer, etc. etc. Obsolescence is the name of the game today. Find something that satisfies your needs and stick with it. You can pay less for the “not best” and find yourself well provided for.

Don’t get into the mindset that debt is the way to have what you need (or want) unless it is really necessary. Debt is not kind. Consider carefully when you are thinking of getting something new. When you overuse your credit, you are giving up the ability to create a margin for your living. Save up and pay up front for the things you merely want and keep the credit capacity for things that really matter. Watch out for lifestyle creep. It can bury you.

Be reasonable about college costs. If you haven’t saved up enough for a full-blown university, try a community college for the first couple of years. To avoid having to make the choice, begin saving early and consistently for the type of higher education you want. And four years of college is not the answer for everyone. Lesser degrees, such as associate or certificate, can lead to good jobs at less cost. At the very least, a shorter-term education plan might provide the earning capacity to finance more extended college training. Working during the first couple of years so you can stay debt-free will be helpful when you get into the final stretch and borrowing seems inevitable.

Breaking away from home post-high school may be an objective, but it also is very expensive. You may accumulate the sheets and towels, etc., for living away from home, but cash quickly becomes a problem in most cases. If you are looking at rooming with friends or living independently, be sure you have the means to make it work. Have a budget and stick with it, and include some savings in that budget. Even college students have emergencies.

High school graduation is a hallmark, but it can lead to financial stress if you haven’t addressed issues beforehand. Think about it.

Basic Economics Guide Investment Decisions

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Investing is directly tied to the state of the economy
You invest money to earn a return. A basic understanding of how the overall economy of the country affects how well your investment will produce that return is helpful in making investment decisions.

“Investing 101,” a basic how-to book on putting your money to work, by Michele Cagan, is designed to help beginners. In the first chapter, she describes the elements of basic economics.

Investing is directly tied to the state of the economy. If consumers are spending money and the economy is growing, that’s a good time to invest. If money isn’t flowing into the basic economy, the returns are likely to be poor.

What makes the economy boom? Consumer spending and corporations prospering generally equal investments growing. Consumer spending, in fact, is the greatest contributor to the gross domestic product that keeps the economy flowing. And consumer spending, in turn, reflects other factors, such as the job market, inflation and others.

Investors who pay attention to the overall state of the economy will be more successful. Those most in the know can look ahead a little and create their investment strategy accordingly.

Today’s economy is enormously complicated and volatile. With 7.5 billion people sharing a world where information is instantaneous and interaction constant, making an educated guess about the economy at any given time is a challenge. Knowing the basics is one way to increase your chances.

Buying and selling are at the root. People buy things they value. Sellers base their prices on the perceived value of their products. Prices fluctuate based on demand. For instance, most Americans are currently paying less for gasoline than they did a few years ago. That’s partly due to complicated international factors that regulate gas production, but also because people are using less. The basic rules of supply and demand apply. If the supply increases, prices fall; if demand increases, prices rise.

Income is a major factor. You receive income from jobs, inheritances, investments, etc. Ideally, individuals learn to live within the income on which they can rely. Life changes can affect your income. For instance, retirement, which can reduce the sources on which you have traditionally relied. Wise saving and investments can help replace the lost work income.

Consumption, or how much of your resources you spend to live, makes a huge difference. If you consume more than you accrue in income, there is trouble ahead. Keeping a balance is the way to avoid debt and other issues.

Savings and investments are vital to meet emergencies and to provide for retirement. In the 1960s, Americans saved 6 to 10 percent of their income. The figure has seriously declined until few Americans have the same cushion. Many have zero resources to fall back on when they need it. Saving some money and, ideally, making it work by wise investing is the solution.