Most of us, when we buy homes, use mortgages to make the purchase. However, it’s easy to lose track of how your mortgage payment breaks down, and what you’re really paying unless you look at your mortgage statement.
Here are some things you can learn from your mortgage statement:
1. How Much of Your Payment Goes Toward Interest
You might be surprised at how much of your payment is going toward interest, especially at the beginning of your loan. A look at your mortgage statement can help you see how much the principal has been reduced by, and how much of your payment is being spent just to finance your mortgage. Somehow it seems more real when you see how little equity you are building in the initial years of your home loan.
2. When You Can Stop Paying PMI
In a more indirect way, you can learn when you can stop paying PMI. When your loan-to-value ratio drops to 80%, you can stop paying PMI. Pay attention to your loan balance. While your lender should take the PMI off automatically, sometimes you need to be on top of things to make sure that you are saving the money you should be.
3. How Much is Being Held in Escrow
Part of many mortgages is an escrow account. Money that you pay each month is held in a special account that is used to pay property taxes and insurance. If part of your payment goes to escrow each month, you know that your lender is taking care of making property tax payments and insurance premiums when they come due.
At the end of the year, the account is often “settled up.” If you owe more, due to insurance premium increases or property tax hikes, you are sent a bill for the difference, and your monthly payment might go up. If your costs have decreased, you are sent a check for the difference.
4. Your Interest Rate
Don’t forget that you can learn your mortgage interest rate by looking at your mortgage statement. You can compare your rate to the national average, and decide whether or not you need to refinance. The general advice is to refinance if you can do so at a rate that is at least 1% lower than your current rate. Keep an eye on the situation so that you know how to proceed.
What’s Not on Your Mortgage Statement: Mortgage Pay Off Amount
You might think that the loan balance you see on your mortgage statement is the amount you pay off, but it’s not. In fact, most mortgage statements explicitly state that the amount shown is not the pay off amount. If you want to know your pay off amount, you need to ask for it.
Mortgage interest is paid in arrears, meaning that this month’s mortgage payment covers last month’s interest. When giving you a pay off amount, interest is often expressed on a per-day basis. So, you can see how much interest you owe each day if your pay off isn’t made by a certain date.
When requesting a mortgage pay off amount, make sure you look at the date in question. Most lenders will tell you the date through which the pay off is good for. Once you get beyond that date, interest is added to your total.
What have you learned from looking at your mortgage statement? Leave a comment!
Reward card users are typically concerned with earning airline tickets. And while the prospect of a free flight is very alluring, travelers to major cities might find that their hotel bill actually approaches or exceeds their transportation costs. Therefore, using a hotel rewards card can be a great way to reduce the cost of your vacation. Chase offers its Hyatt Visa that earns points in their Gold Passport program while American Express offers its Starwood Preferred Guest card.
Lets see how these two cards match up!
Chase Hyatt Visa
Chase is one of the largest issuers of reward cards, and it has several that are co-branded with hotel chains such as Marriott and Intercontinental Hotels Group (IHG).
Yet their Hyatt card stands out for several reasons. First, it offers two free nights at any Hyatt worldwide after spending $1,000 within the first three months of opening an account. Considering that some Hyatt properties at resorts and in major cities can cost over $1,000 a night, this can be an extremely generous sign up bonus.
Next, it offers three points per dollar spent at Hyatt properties, two points per dollar spent on dining, airline, and car rental purchases, and a single point per dollar spent on all other purchases. It also features an EMV smart chip that comes in extremely handy when visiting unattended kiosks in Europe and other parts of the world since many Americans find their credit cards unusable at locations where this feature is required.
But the Hyatt card is also a great product due to the strength of the Hyatt Gold Passport program. Free rooms start at 5,000 points per night and top out at 22,000 points per night at their most expensive hotels. That means that a $1,000 hotel room at the Park Hyatt in Paris or Milan is only 22,000 points per night, a value of over 4.5 cents per point. In contrast, many other hotel chains offer award nights at premium properties for two or three times the number of points.
Finally, the holders of the Hyatt card are immediately upgraded to Platinum status in the Gold Passport program so long as they hold the card. This entitles them to enjoy preferred room types, late checkouts, and complimentary in-room Internet access.
There is a $75 annual fee for this card, which is just a small fraction of what two free hotel nights can be worth. Upon renewal, cardholders also receive a free night at a mid-priced property, which is still worth more than the annual fee. Finally, there are no foreign transaction fees for this card.
Insider tip: If you are already a Diamond member of Hyatt’s program when you apply for the card, you will receive your two free nights in a suite, regardless of whether you retain your Diamond status.
Starwood Preferred Guest Card from American Express
The Starwood Hotel’s Preferred Guest credit card holds a special place in the hearts of reward travel enthusiasts due to its unmatched value and flexibility. Cardholders earn 10,000 bonus points after their first purchase, and an additional 15,000 points when they spend $5,000 on their card within six months of becoming a cardmember. Cardholders earn one point per dollar spent on most charges, and up to five points per dollar spent at Starwood properties. Unfortunately, there are no other bonus categories of spending.
What stands out with this card is the incredible value of the points earned. Starwood’s points, or Starpoints, can be redeemed for award nights at Starwood properties such as Westins, Sheratons, and other brands. Awards start at 3,000 points per night , and the fifth night in a row is always free. On the high end, luxury properties can require as much as 35,000 points, far more than the Hyatt program.
But the real strength of this program is actually in the points to mileage transfer option. Starpoints can be transferred to miles with the programs of over 30 different airlines. Additionally, those programs allow members to redeem awards on their partners, creating hundreds of possible awards on nearly every airline in the world. Better yet, transferring 20,000 points results in a bonus of 5,000 additional Starpoints.
There is a $65 annual fee for this card that is typically waived the first year. Sadly, American Express continues to impose its 2.7% foreign transaction fee on all charges processed outside of the United States. This unnecessary charge results in a net loss when you use your card outside of the country anywhere but at a Starwood hotel.
Insider tip: Travel rewards experts love to keep a stash of Starpoints in their account for times when they need to quickly “top off” another account. If you are short 10,000 or 20,000 miles for an award flight in another frequent flier program, the likelihood is that you can transfer your Starpoints to that program and get the award you need.
By featuring double points on most travel expenses, an EMV smart chip, and no foreign transaction fees, the Hyatt credit card is clearly aimed at people who travel often. I also love that I can get a free night any Hyatt in the world for a mere 22,000 points. On the other hand, the Starwood card is the true jack of all trades with its ability to earn points that can be used for hotels or transferred to miles virtually anywhere. Technically, Hyatt points can be transferred to a few airlines, but the conversion rates are so poor they are hardly worth mentioning.
So the Hyatt card would be my choice for those who actually use their card all over the world, but the Starwood card remains the best way to earn free nights and airline miles simply from staying at home and using it for everyday purchases.
Which credit card is your favorite? Leave a comment and let us know!
Until about a decade or so ago, employees were heavily concerned with job security. It’s not that that’s no longer a concern – it’s just that it’s so much harder to come by now. For this reason, income security has become the new job security. If it’s impossible to be guaranteed a job, then the next best thing is working to make sure you at least have a steady income.
Even “Permanent Jobs” Aren’t So Permanent Anymore
It used to be pretty clear-cut; there were permanent jobs and temporary jobs, and everyone knew the difference between the two. Today, it’s hard to tell the two apart.
Temporary jobs can last for months or even years – they’ve become the new normal in the job market. On the other hand, permanent jobs can last no more than two or three years, and sometimes not even that long. You’re often on a job for only as long as a single project lasts, or until a bad quarterly earnings report comes along.
Whether you are officially classified as permanent or temporary is no longer that important – all jobs are now temporary. And either classification can very easily take on the appearance of the other.
There’s no way to guarantee that your permanent job will remain permanent, so the next best thing is to concentrate on income security.
What is Income Security?
Income security centers on the ability to maintain a fairly consistent income in the face of an inherently unstable job market. It removes the focus from retaining a specific job, to being prepared to move to other jobs or income sources as needed. Think of it as a change in your working lifestyle.
How to Achieve Income Security
Achieving income security is more complicated than having job security. You have to prepare your life for change on an ongoing basis. The effort has to be approached in several different ways.
1. Develop transferable job skills.
Probably the single best way to achieve income security is to have job skills that are in demand by many employers, and even across industry lines. You have to identify what those skills are and then become proficient to the point of being an expert. Even if your current employer doesn’t need you anymore, you will have the repertoire of skills that dozens or even hundreds of other employers are looking for, and that will enable you to replace your lost paycheck pretty quickly.
2. Maintain a perpetual job hunt.
This doesn’t mean you can never settle into a good job, but that you should always have your radar up to survey the job market and the opportunities that are available. Keep your resume fresh and updated, network in different industries, and maintain a ready list of contacts so that you will be able to find a new job quickly.
3. Be prepared to change work styles as needed.
The entire nature of employment is changing rapidly, and we have to be prepared to roll with the punches. This might mean that there will be times when you’ll need to take temporary jobs or even contract work, that not only will provide no permanence, but they probably won’t offer any benefits either. Recognizing the reality of the job market as it is, you have to be emotionally and financially prepared to take these arrangements at least on a short-term basis.
4. Developing multiple income streams.
If income security needs to be the focus today, then one of the best ways to achieve this is by having multiple income streams (perhaps a few passive income streams included). This could mean having your own business in addition to your regular job, owning income-producing rental property, or even having a high income investment portfolio. Outside income streams could give you the level of security that your job no longer can.
5. It might even mean keeping your own benefits.
Next to the loss of a paycheck, the biggest fear most people have about a job loss is the disappearance benefits. You can offset this by maintaining these benefits privately. This includes, first and foremost, health insurance. If you at least have a plan of your own, then leaving a job won’t be as disruptive as it would be if you were counting on the job for both income and health coverage.
How Savings and Investments Play a Role
An absence of job security raises the importance of savings and investments. It will provide three very important benefits that will strengthen your income security.
1. An Additional Source of Income
We’ve already touched on the use of an investment portfolio as an additional income stream. This can be achieved by creating a portfolio that has a mix of growth and income type investments. It might mean investing money primarily in companies that pay above-average dividends, but also have solid future growth prospects. This will create a passive revenue stream, and the larger it becomes, the less dependent you will be on a job.
2. A Cushion Against Lost or Reduced Wages
Your savings and investments can be like a large emergency fund. You can use it as a way of evening out a not always stable income flow. Or you can rely on it even more heavily during times of complete income disruption.
3. Preparation for Early Retirement
Early retirement has been the new cool trend in the retirement planning universe. But in a world where job security no longer exists, early retirement planning may now be a necessity. Once you reach a certain age – certainly sometime in your 50s – the prospect of at least an early semi-retirement may become more of a necessity than a luxury. Build your investment portfolio with that possibility in mind.
How else can we increase income security in a less stable job market? Leave a comment with your ideas!
A lot of people are turned off by the very mention of catastrophic health insurance. It may be that some see it as inadequate coverage, while others see it as a mystery concept filled with unimagined traps. But is that the real truth? In most cases having catastrophic is better than having no health insurance at all.
The Usual Arguments Against Catastrophic Health Insurance
There’s actually nothing mysterious about catastrophic health insurance at all. It’s simply a regular health insurance plan with a fairly high deductible. There is no deductible level at which a policy becomes catastrophic, so it’s mostly a matter of personal interpretation.
Most people are accustomed having a deductible that is somewhere in the range of $1,000-$2,500, so anything much above that range could qualify as catastrophic. More realistically, catastrophic plans begin with deductibles that start around $5,000, and can go as high you like.
That’s the part that scares people. If you have a deductible of $5,000, $10,000, or $20,000, you as the policyholder will be on the hook for most medical expenses in most years. But let’s face it, typically we don’t incur medical costs that high in most years. It can seem is if you’re paying health insurance premiums but still having to pay out-of-pocket for all of your medical costs.
Some people will go so far as to go without health insurance rather than to pay for a catastrophic plan. That line of thinking misses the point. Catastrophic health insurance does provide very important coverage – coverage you should not be without.
Having the Really Big Medical Events Covered
The true purpose of health insurance isn’t to cover every little medical expense that you have, but rather to cover the really big medical events that you can’t afford to pay for yourself. Catastrophic health insurance will do that.
Let’s say that you have a $10,000 deductible on your health insurance – which certainly qualifies it as a catastrophic plan. While it is true you will have to pay the first $10,000 of expenses out of your own pocket, the plan would begin paying benefits once you reach that threshold. In today’s world, where a single, significant operation could cost well over $100,000, your catastrophic plan would provide welcome financial relief, paying most of the bill.
The real purpose of health insurance is to cover medical disasters, and catastrophic plans will do that for you. In addition, they can give you treatment options that you won’t be able to afford if you have no insurance at all.
Participating in the Healthcare Provider Network Discount
Every health insurance company uses a healthcare provider network as a way of simplifying the reimbursement process, and holding costs down. But there is a big advantage to the policyholder for using the network. Every medical provider within the network must provide their services at a discounted rate.
What this means for you, as the policyholder, is that all services will be discounted even if they are not reimbursed by the insurance plan because of the high deductible. The financial advantage to this is substantial. Medical providers typically discount their bills by anywhere from 40% to 80% of the full amount.
Even if you had a medical bill for $10,000 that your insurance company wouldn’t pay because it’s within the deductible, if the provider discounts the bill by 60%, you’ll only have to pay $4,000. If you had no insurance at all, you’d be responsible for the full $10,000.
A Pass into the Healthcare System
All health insurance companies provide a benefit card that you can use to gain admission to a hospital or nearly any covered medical facility in the country. Just having that card makes it easier and quicker for you to get medical treatment. It also avoids the unpleasant task of having to either pay a substantial amount of money upfront, or to provide a list of assets or income information proving your ability to pay.
It will also mean that a medical provider will be less reluctant to suggest additional treatment. Just having the benefit card is a tremendous advantage all by itself. A catastrophic health insurance plan – like all other health plans – will provide you with that card.
More Affordable Premiums!
Though it can seem unfair to have to pay thousands of dollars for medical treatment when you have a health insurance policy, the primary benefit of this is in the lower premiums.
As an example, for a family of four (parents both age 40, with two children) it costs $432 a month for a health insurance plan with a $2,000 deductible through Assurant. The same coverage with a $5,000 deductible however drops to $277 a month. If affordability is the issue, catastrophic health insurance may be the answer.
It’s not a perfect plan, but it’s way better than having no health insurance at all.
Have you ever had catastrophic health insurance? How did it (or does it) work for you? Leave a comment!
A lot of people have – or would like to have – a side business to make some extra money. The prospect of turning it into a full-time venture is always there, but not everyone wants to quit their day job to become a full-time entrepreneur. If that’s what you want to do, what can you do to make your side business a success?
1. Be sure to treat it like a business, and not a hobby.
Since the business will be a side venture, it can be very easy to treat it like a hobby rather than as a serious moneymaking effort. By itself, this is probably the number one reason why so many side businesses are not successful.
In order to make the business work, you’ll have to put at least as much effort into it as you are doing on your primary job. On your regular job, you probably have coworkers and supervisors sharing the responsibilities with you. With your own business, you will most likely be the entire staff. That is to say, nothing in your business will happen without your effort.
Take those efforts very seriously, and especially when you’re first starting your business.
2. Get help when you need it.
Since most new business ventures start with the owner flying solo, it’s very easy to get snowed under early in the process. The way around that is to get help whenever you need it. Fortunately, there are various ways to do this, and which one you choose will depend on the circumstances you’re dealing with.
This is the process of linking yourself with similar and related businesses. The point of it is to create a web of contacts that you can fall back on for either advice or direct support when needed. Establish a network when you first start your business, and be prepared to rely on it as often as needed. Just remember that you will need to be ready to help when others in the network come calling on you.
There are two ways to do this. You can either bring in a partner who will share both responsibilities and profits with you, or you can find someone to partner with to handle just one aspect of the business.
There may be one or more functions in your business that you simply lack time or expertise to deal with. You probably can’t afford a hire full-time staff, but you can work with subcontractors to handle the problem area. You can, for example, use a subcontractor to manage your website.
Virtual Assistants (VAs)
VAs work best with simple, repetitive jobs. You might hire a VA to respond to emails, prepare and send correspondence, proofread, or even handle billing. These are people who you hire when the work is getting too heavy for you to handle, but you’re not in a financial position to hire an employee.
3. Keep it separate from your day job.
One of the challenges in having two income earning ventures operating at the same time is the possibility that one can interfere with the other. For example, if you have a high stress full-time job, that stress can spill over into your side business. You may find yourself with a shortage of time, an excess of stress, or combination of both.
Likewise, you never want to let your side business interfere with your primary job. If you spend time on your job handling emails or faxes that are related to your business, not only will you risk not completing the work on your job, but you could also face disciplinary action.
Be sure to set specific time parameters for your business. If you get home from work at 6 PM, give yourself an hour or so to decompress from the job, then work on your business from say, 7 PM to 10 or 11 PM. During this time you have to discipline yourself to focus completely on your business, and block out everything that happened at your day job.
4. Make sure your family is on board.
Since you will be juggling a full-time job and a part-time business, it’s vitally important that your family fully understand what you are doing and how it will benefit them. If not, they may rebel and sabotage your side business.
Be sure to be specific about the time and effort you’ll be needing to put into your business, allowing for the fact that there may be periods when you’re spending even more time. But also be careful to spell out how your family will benefit from what you are doing. For example, the benefit of your side business could be that your family will take a more exciting vacation this year, or it could mean that you will soon be buying a new car.
Your family will be making sacrifices in order to allow you to have your side business, so be sure that there is some sort of payoff in there for them too.
5. Always grow your business – don’t try to buy it.
There is sometimes a temptation by the newly self-employed to buy an existing business so as to avoid a lengthy ramp-up period. There are at least two problems with this idea. The first is the capital that will be required to purchase the business, and the second is the fact that it may immediately require a heavy schedule on your part.
Still another issue is that it’s one thing to buy a business, but quite another to grow it. And if you can’t grow it, the likelihood of failure is considerably higher.
It’s not just about the capital that you preserve when you start your own business rather than buying one. It’s also about the critical experience that you gain from starting and growing your own business from the ground up. If you can make that happen, then you will have acquired the most important business skill you could possibly have.
6. Use the Internet as much as possible.
The Internet may very well be the single best tool available to the self-employed. For that reason, you should plan on using it as much as you can. In fact, anytime you need to do something – especially something new – your first option be a search on the web.
You can get nearly any kind of information that you need to run your business on the web, and it’s also a very easy place to study other businesses. You can find out a lot about your competitors simply by doing detailed reviews of their websites.
You can also get access to any products, services or people that you need, and usually do so in a matter of minutes. Since you’ll be running your business on a part-time basis, you need to use this advantage for all it’s worth.
What other recommendations would you make to someone who’s trying to juggle a side business with full-time job? Leave a comment!
Historically, investors have spent incredible amounts of time doing research to diversify their equity portfolios. Figuring out just how much should be allocated to emerging markets and small cap can be a never-ending exhausting process. The problem is after all of the time devoted to equities, the standard practice for many investors is to just buy a Total Return bond fund for their fixed income.
Diversifying the fixed income side of a portfolio is just as important, if not more so, than the equities. What if you are using it to hedge against a down market and your bond fund tends to correlate to the stock market? That buoy you thought you put out there to keep you from sinking was filled with rocks and your portfolio is plummeting.
Total Return funds are good core holdings the way Large Cap holdings tend to be cores for equity portfolios. You have to build around that core to create a solid strategy. Here are some different ideas for diversification purposes in fixed income:
1. Treasury Inflation Protected Securities (TIPS)
TIPS are securities that are indexed to inflation to protect investors from the negative effects of inflation. They are backed by the US government and considered a low-risk investment. They can be purchased individually, in a mutual fund form, or as an ETF.
2. High Yield Bonds
These bonds generally have a lower credit quality, which is the reason for the higher yield. They are based on the ratings of the two major rating agencies, S&P (BBB or lower) and Moody’s (Baa or lower). While this is a riskier investment than a regular bond fund, it is a widely held investment idea, and with the right vehicle, it can create wonderful results. You could expect 150-300 basis points higher in yield from investment grade bonds. Purchasing these investments in an actively managed mutual fund where there is a team of analysts to make sure they don’t buy any bonds in danger of defaulting is a good way to introduce yourself.
3. Floating Rate Bonds
While TIPS help protect you from inflation risk, floating rate bonds help protect against interest rate risk. The rate on these bonds change periodically based on either the Federal Funds rate or LIBOR. This adjustment allows these bonds to perform better in a riding interest rate environment, and who doesn’t think that rates will go up at some point? The downside to these bonds generally shows up in falling interest rate situations as they will under-perform. These can be purchased individually, in mutual funds or by ETF.
4. International Bonds
The same way one would buy international equity, the fixed income side can be used to diversify a bond portfolio. It is pure fact that much of the developed foreign markets have gotten slammed over the past few years. Places like Europe have taken a major beating, but are starting to work their way out of the mess they were in. If you look at their situation, they may be a year or two ahead of the US, and there is a possibility that there will be a great opportunity there.
5. Emerging Markets Debt
Again, with the same theme as above, emerging market debt isn’t the taboo it once was. There are many emerging market countries with solid financials and this is another way to diversify. It is completely non-correlated to the Barclays Aggregate Bond Index and can be a nice added piece to your portfolio.
These ideas are not all that are available. The bond market has become quite different over the last decade. As always, please be sure to do your own due diligence and make sure these investments are right for you. Good luck!
How do you plan on diversifying your fixed income portfolio? Leave a comment!
Debt consolidation has become a favorite way to deal with high levels of debt, and this is especially true for credit card debt. The basic concept is simple: roll several high interest credit card debts over into a single, low interest consolidation loan. Generally, the monthly payment on the consolidation loan is substantially lower than the combined payments on the credit card balances. And the lower interest rate of the consolidation loan enables faster payoff of the entire debt.
So far, so good.
But there are a few flaws in the process, most of them relating to personal behavior.
1. You first need to demonstrate control of your finances.
Before you take a debt consolidation loan, you first have to recognize the fact that you got into debt because your living expenses exceeded your income. Unless you are able to get control of your budget (perhaps try Mint), consolidation will do little more than make your debt situation more tolerable.
There is sometimes the thought that once you have a debt consolidation loan you’ll be able to get control of your finances. That line of reasoning is seriously flawed. You need to have control of your finances before you take the debt consolidation. We’ll get a little deeper into the reasons for this in a little bit.
Once you have a debt consolidation loan, it’s absolutely critical that you have a plan to pay it off ahead of schedule. You can only do that by finding extra money in your budget that will allow for higher principal payments. You have to do this with a combination of increased income and lower expenses. Since both objectives usually take longer to achieve than you expect, you must have this process well under way before taking the loan. If not, you could very well get stuck in the business-as-usual rut.
2. Debt consolidation can become just one more debt.
If you have been living with high debt levels for long time, it has become part of your lifestyle. You probably have found that you are able to go on with your life, albeit with some struggle. A debt consolidation loan will not change this arrangement! It is simply debt by another name.
Since the debt consolidation loan will lower your monthly payments, it can actually make room for more borrowing. Your debt consolidation loan may be Loan #1, but it may soon be followed by Loan #2, Loan #3, and so on. Remember, you already have a history of juggling several loans the same time. It’s much easier to revert to this pattern than you think.
This is why it is so important that you fix your underlying financial issues before taking a debt consolidation loan. The last thing you need to have happen is for your debt consolidation loan to be the first in a succession of loans. The only way to avoid this fate is by creating extra breathing room in your budget. At least some of that breathing room should be allocated to a faster pay off of your new loan.
3. One consolidation loan can turn into another . . . and yet another.
Another big problem with debt consolidation loans is the revolving debt consolidation loan cycle. This starts with the first consolidation, and once a couple more loans are added to the pile, a second debt consolidation loan is done. Only this one is bigger because it includes the original consolidation plus any new debt you’ve taken on since.
Eventually you end up doing the mother of all debt consolidation loans, by taking a home equity line or second mortgage on your home, or even a cash out refinance of your first mortgage. When you do this, you’ll be converting your short-term debt into long-term debt that you’ll be paying off for decades.
Complicating this once cozy arrangement is the fact that declining home equity and tighter lending standards have made home equity and cash out mortgages more difficult to get. It may not even be an option.
4. Debt consolidation could become the easy way out of debt, or so you think.
We can think of this as being the “moral hazard” of debt consolidation loans. You build up credit card debt, and then clean it all up with a debt consolidation loan.
Problem solved, right?
Not at all. You will have succeeded in rolling your various credit card debts into a single neat package, but you still owe the same amount of money. Nothing will really have been accomplished other than the fact that the monthly payment will be easier to handle.
Since most people who are deep in debt are all about monthly payment, there’ll be a temptation to declare victory. If so, no lesson will be learned. The moral of the story is that debt is bad, and a lot of it is even worse. If the debt consolidation loan causes you to miss that lesson, you could be setting yourself up for bigger debt problems later.
Debt consolidation loans can work, but not until you are able to live beneath your means. If the value of frugality is not learned, then a debt consolidation loan will simply be a matter of moving your debts from one loan type to another.
Have you ever been tempted to use a debt consolidation loan to get control of your finances?
With over 3,750 properties, Hilton is one of the largest hotel chains in the world, and Hilton hotels comprise no less than 10 different brands including DoubleTree, Hampton Inn, Embassy Suites, and the Waldorf-Astoria. Like most hotel chains, guests can use a co-branded credit card to earn points toward free night stays. In particular, Hilton offers several different credit cards co-branded with both Citi and American Express.
So which is the best card for you? Let’s compare them all and take a look:
The Hilton HHonors Card from American Express
This is the introductory level card from American Express, but it is still feature packed. New cardholders earn 40,000 bonus points after making $750 in charges within 90 days of opening an account. This is enough for a free night’s stay in a category 4 hotel (The HHonors program has seven different categories ranging from 1 -7, with the higher numbers representing their most expensive properties).
Six HHonors points are earned for each dollar spent at at supermarkets, at select major drugstores, on gasoline at U.S. stand-alone gas stations, wireless and home telephone services, and pay television services. You also earn six points per dollar spent at hotels within the Hilton brands. Three points per dollar are earned through all other spending.
Cardmembers are automatically granted Silver Elite status in the HHonors program, but those who use their card to spend $20,000 in a calendar year are granted Gold Elite status which offers much better benefits such as room upgrades and complimentary continental breakfasts.
And as an American Express card, you get side benefits such as lost luggage insurance and a purchase protection policy that extends your warranty and covers you if your item breaks or the store won’t accept a return.
But the key feature of this card is that there is no annual fee, which is rare among reward cards, especially from American Express. Sadly, American Express imposes a 2.7% foreign transaction fee on all charges processed outside the United States, which is unwelcome on a card aimed at frequent travelers.
The Hilton HHonors Surpass Card from American Express
The Surpass version of the Hilton HHonors card from American Express contains all the same features as the standard version, plus a few additional perks. Stays at Hilton hotels earn 12 points per dollar rather than just six, but all other bonus categories are the same.
New applicants earn 40,000 HHonors Bonus Points with their first purchase and 20,000 points when they spend $3,000 or more within the first 90 days after opening an account.
Cardholders can also reach Gold Elite status by using their card to spend $20,000 within a calendar year, but they can also achieve Diamond Elite status if their spending reaches $40,000 per year. But even though Diamond Elite is the top tier of Hilton’s program, it doesn’t offer significantly better benefits. Diamonds get a 50% elite status bonus on paid stays and access to the executive club lounge, but not much else.
There is $75 annual fee for this card and the same, onerous 2.7% foreign transaction fee.
Citi® Hilton HHonors™ Visa Signature® Card
Like American Express, Citi offers two versions of their Hilton HHonors credit cards. This entry level version is similar to its American Express counterpart. Here’s what you need to know about the Citi® Hilton HHonors™ Visa Signature® Card:
New cardholders earn 40,000 HHonors points after using their card to make $1,000 in purchases within four months of opening an account. Cardmembers still earn six points per dollar spent at Hilton properties, yet cardholders only earn three HHonors points per dollar spent on purchases at supermarkets, drugstores and gas stations, and two points per dollar spent on all other purchases.
Worse, Silver Elite status is not granted automatically, it is only earned after four stays within the first 90 days of card membership. Ouch.
At the very least, there is no annual fee for this card, but there is a 3% foreign transaction fee on all charges processed outside of the United States.
Citi® Hilton HHonors™ Reserve Card
Moving up, Citi also offers a more feature filled Hilton card. The Citi® Hilton HHonors™ Reserve Card allows cardholders to earn 10 HHonors points per dollar spent at Hilton hotels, five HHonors points per dollar spent on airline and car rental purchases, and three HHonors points per dollar spent on all other purchases.
New cardholders automatically receive Gold Elite status and can earn Diamond status after using their card to spend $40,000 in a calendar year. In addition, cardholders who spend $10,000 in a cardholder year earn a free weekend night certificate.
There are no foreign transaction fees with this card, and it is equipped with an EMV smart chip that makes it compatible with unattended kiosks in Europe and elsewhere. That said, there is a $95 annual fee for this card.
Which card is best for you?
Those who are looking to earn travel rewards, but don’t actually travel frequently, would do well to use one of the two entry level products. Of the two, the American Express card is clearly superior to the Citi. It offers six points per dollar for many purchases while the Citi® Hilton HHonors™ Visa Signature® Card only goes as high as three points per dollar at even fewer merchants. And if you use the basic American Express card to spend $20,000 in a calendar year, you will earn Gold Status and get treated to free breakfast on your vacation.
Frequent guests of the Hilton brands should consider one of the more expensive offerings. Here, I would have to give the upper hand to the Citi® Hilton HHonors™ Reserve Card. I love cards with no foreign transaction fees and EMV chips that keep me from getting my card rejected all over Europe. I also like being immediately bestowed Gold status and earning a free night every year. These perks are easily worth the additional $20 in annual fees beyond the HHonors Surpass card from American Express.
By examining the benefits and costs of all of these Hilton cards, you can chose the best product to earn the most perks and free nights when you stay at Hilton hotels.
Which card wins in your book? Leave a comment and let us know your thoughts!
There are some people who look for credit cards with the best rewards or the lowest interest rates. But then there are those who just want the card with the lowest fee and the most simple terms and conditions. In fact, President Obama actually met with credit card executives back in 2009 and asked if they could each offer a “plain vanilla” credit card.
Personally, I have a hunch that Mr. Obama might have experienced his own frustration with credit cards as a young adult. If so, then he is one of millions of Americans who are fed up with complicated credit card agreements and punitive fee structures.
Thankfully, some of the banks have responded to their customers and have begun to offer simplified versions of their credit cards. To this end, Citi offers its Citi Simplicity® Card while American Express offers its Clear card.
Lets see how they match up:
Citi Simplicity® Card
Citi Simplicity® Card catches the attention of those with credit card debt by offering new applicants 0% APR financing for 18 months on both new purchases and balance transfers. After the promotional period expires, cardholders will incur interest at a rate of 12.99%-21.99%, depending on their credit worthiness. Note that like most cards, these are variable rates that can change with the Prime Rate. Fortunately, the Prime has been stable for years and is not expected to change any time soon.
As for the simple part, this card features no late fees and no penalty interest rate. In contrast, most other cards will hit customers with a $35 late fee and a massive interest rate hike when a late payment is made.
Other features include:
- An extended warranty program: “Extends the terms of the original manufacturers’ U.S. warranties (three year or less) may be extended up to one additional year on most items purchased on your card.”
- Retail purchase protection: “Protects many purchases made on your Citi card against theft or damage, up to $1,000, for up to 90 days from the date of purchase.”
- Citi Price Rewind: “Register your covered purchases at citi.com/pricerewind and Citi® Price Rewind will search hundreds of retailers’ sites for 30 calendar days from the date of purchase to help find a lower price. If one is found that’s lower by at least $25, you can get the price difference back.” (source)
There is no annual fee for this card, but there is a 3% balance transfer fee. There is also a 3% foreign transaction fee on all charges processed outside of the United States.
Insider tip: Just because Citi generously allows late payments without applying late fees and penalty interest rates doesn’t mean you should ever plan on missing a payment due date. Balances will continue to accrue interest, and late payments can still hurt your credit. And if that isn’t bad enough, I am sure Citi will close the accounts of customers who consistently fail to make payments.
Clear from American Express
The American Express Clear Card seems to be several products in one. First, it is a card that offers 0% APR promotional financing for 12 months on new purchases. Next, it is a basic rewards card that features a modest 1% return on most purchases in the form of American Express shopping cards. Finally, this product is a simplified card with a minimum of fees.
How simple is it? It features no annual fee, no late fees, no balance transfer fees, no over-limit fees, and no cash advance fees.
But how good is this? No annual fee is nice, but there are plenty of other cards with no annual fee. The lack of late fees is comparable to the Citi Simplicity® Card, but in this case a penalty interest rate of 27.24% will apply for at least six months after a late payment. No balance transfer fees would be notable, but only if this card features a 0% APR balance transfer offer, which it does not.
Having no over-the-limit fee is also fairly common these days. And finally, no cash advance fee is somewhat rare, but these transactions will still be costly as a 25.24% APR currently applies to cash advances.
Speaking of interest rates, the standard APR on this card is either 17.24, 20.24 or 22.24%, depending on the cardholder’s credit worthiness. It should also be noted that this card does have a foreign transaction fee of 2.7%.
Other features include extended warranty coverage and a purchases protections policy.
Insider tip: About the worst thing you can do with a credit card is to use it at an ATM. Even with a card like Clear that has no cash advance fee, cardholders will still face a massive interest rate. And unlike purchases that can be paid in full within a grace period to avoid interest, the interest on cash advances starts accumulating on the date of the transaction.
And the worst thing is, that most of these transactions occur in foreign countries when cardholders are in their greatest need of local currency. There, customers can also expect to pay ATM fees and foreign transaction fees. If you end up making a small withdrawal, you could end up spending nearly as much in interest and fees as you received. When traveling, your best bet is often to use your ATM card, which lacks most of these charges.
These two similarly marketed products are actually quite different. The American Express Clear card is a rewards card with a 1% return that drops a few common fees. But American Express more than makes up for these fees in other ways, such as higher interest rates.
The Citi Simplicity® Card does not have rewards, and it’s interest rate structure is certainly more forgiving of an occasional late payment. But when you consider the superior promotional financing offers, the Citi Simplicity® Card becomes the obvious choice for those who already have some credit card debt and are looking for a break on their interest payments.
That leaves the American Express Clear card to be the favorite for those who almost always pay their balance in full and on time. These cardholders can get a year’s worth of free financing on new purchases, earn some rewards, and pay no annual fee.
A simple card is a great idea, but the one you choose will have more to say about your credit card usage than the merits of either product.
What are your thoughts on these two credit cards? Leave a comment!
Are you looking for a way to make extra money in your spare time, without getting tied down to a part-time job? There are plenty of opportunities to earn some extra cash, and all you need to do is to tap into your personal talents. Here are some ideas . . . .
1. Find some micro-jobs.
There are dozens of online work sites that offer micro-jobs. These are usually single-purpose jobs that you do essentially on a contract basis from your own home. Companies such as Mechanical Turk, Mobileworks and Fiverr are among dozens of online sites that have such projects available.
There are all kinds of small jobs that you can sign up to do, including administrative tasks, local delivery and taking photos for out of area employers. The pay is small, but you can generally work on your own schedule and handle only those tasks that you are most familiar with.
2. Put your musical talents to work.
There are two ways you can do this one. The first is that you can teach your musical skill to adults or children. If you can play an instrument fairly well you’re likely qualified to teach at least at the novice level.
The second, if you are more accomplished, is to rent your services out as a session player. Bands and orchestras sometime need guitar players, drummers, and keyboard players, as well as wind and various horn players, and will pay on a per session basis. Your involvement could be either temporary or ongoing.
3. Do some easy repair work.
Even if you’re not a certified handyman you can probably pick up some extra money performing simple repairs for people who know next to nothing about home repair work. You could perform such tasks as changing doorknobs, fixing holes in the wall, or even doing some painting work.
4. Provide income tax preparation.
You can start this by working with H&R Block, or one of the other large tax-preparation services. You can take a tax preparation course that usually will last several weeks, and then work for them during the tax season. You’ll earn money while you’re doing this, but once you have worked for one or two tax seasons, you may be able to work for a small CPA firm at a higher rate of pay. If you become an Enrolled Agent, you can start your own tax-preparation service.
5. Serve as a call center for businesses.
Many small business people, particularly contractors, spend most of the workday out on the road or on jobs so they are not available to take phone calls – especially those from prospective new customers. You can offer your services to small businesses as a home-based call center. You’ll be available to handle calls that they are not able to. Even in this day and age of voicemail, customers still prefer speaking with a live person, and having someone to take these calls can improve business revenue.
By having your phone number listed as the primary contact for the business in their advertising and on their website, you can take incoming calls, screen them out, and send the important ones to the business owner. You can do this either for flat fee or on a per call basis.
6. Try landscaping.
It has become very common for households with two incomes to hire people to do all kinds of chores around the house. One of the big ones to get hired out is landscaping. You can probably find plenty of work right in your own neighborhood cutting lawns, trimming shrubbery and raking leaves.
7. Provide graphic design.
Are you a whiz at graphic design? A lot of people are not, and that creates a huge potential market. You can probably find plenty of work selling your services at below market rates to individuals and small businesses. Once you get a business flow going, complete with repeat customers, you can begin raising your fees to more standard rates.
8. Do auto repairs.
The last few years have taken a serious toll on the finances of millions of households. When money is tight, the first thing to go is maintenance, and that includes car maintenance. People often go weeks or months without having a car repaired as a way to save money.
Traditional mechanic shops are expensive, so you may find a niche performing basic repairs at less than shop prices. Sometimes all you need to be able to do is change oil, rotate tires, swap spark plugs and worn belts and hoses, and you will have built-in niche.
9. Become a computer application specialist.
Are there one or two computer applications that you are especially good at? It could be PowerPoint, Excel, Photoshop, or any number of other common computer applications. Just because you are good at these programs doesn’t mean everyone else is too. Start offering your services through free or very low-cost advertising, and see what you can do to fill the needs of individuals and small businesses. Sometimes all you have to do is get started and the business starts rolling in by word-of-mouth.
10. Try pet sitting or dog walking.
If you are an animal lover, and you live in a large neighborhood with a lot of pet owners, this could be a natural fit for you. People often need someone just looking in on their pets during the workday and to sometimes take them for a walk. You can often get gigs just by word-of-mouth in your own neighborhood. Once you become known, you may find yourself having to turn away the business.
For more tips on how to make money, check out these articles about you and your career.
Have you ever tried any of these? Can you think of other ideas that would be good for making extra money? Leave a comment!