Comprehensive evaluation
The new data provides consumers with a debt-to-credit ratio on each type of loan, as well as a combined debt ratio total. The (3) three major debt categories, include mortgage loans, installment loans (personal and car loans) and revolving loans (credit cards debt).

The debt-to-credit ratio calculation
The debt-to-credit ratio is calculated by dividing the account balance by the account credit limit. To keep this factor from negatively impacting your credit score, it is advisable to try to keep the debt-to-credit ratio below 50 percent on each separate account (loans, credit cards, etc).

Here is a simple debt-to-credit ratio calculation. You have a balance of $3,500 on a credit card with a $9,000 credit limit. The calculation is as follows:
$3,500   =  38.88%.
$9,000

Other calculations used to evaluate debt load
A debt-to-income ratio is another calculation used by creditors to determine if you are carrying too much debt. A high debt-to-income ratio lessens your ability to take on more debt; whereas, a low debt-to-income ratio makes you a safer candidate to extend additional credit.

The debt-to-income ratio calculation is as follows: Monthly Debt Payments (MDP) divided by Monthly Take-Home Income (MTHI) = Percentage Ratio, or MDP/MTHI = %.

Your Monthly Debt Payments (MDP) includes credit cards, student loans, car loans, medical and dental bills, etc. However, other monthly expenses, such as mortgage or rent, utilities, and taxes are not included in the monthly debt payments total. Your Monthly Take-Home Income (MTHI) includes all sources of take-home income.

Here is a simple example of a debt-to-income ratio calculation.
(MDP)  Monthly Debt Payments    = $  900 (credit cards, car loan, personal loan)
(MTHI) Monthly Take-Home Income = $3,000 (employment income)

MDP    =   $  900  =  30%
MTHI   =  $3,000

DEBT-TO-INCOME RATIO ANALYSIS
• If the ratio is less than 10%, the consumer is very good candidate to grant more credit.
• It the ratio is between 10% and 20%, the consumer is good candidate to grant future credit.
• If the ration is between 21% and 35%, the consumer is becoming a more risky candidate to grant future credit
• If the ratio is higher than 35%, the consumer is considered a high risk to grant future credit.

A revolving credit card is the type you’ll get most often when you apply for a credit card. It can also be called open credit card or an unsecured credit card. Simply put, revolving credit means that you’re allotted a credit limit and are allowed to make charges within that credit limit. Each month, you’ll have a minimum amount due on the credit card but you can pay more if you like.

A revolving credit card will charge interest on your existing balance. The interest charges are added to your balance and need to be paid off as well. This is where a lot of people can get into trouble. High interest rates mean that you’ll be paying more than you actually spend in the long run. The higher the interest rate, the more you’ll end up paying.

Prepaid credit cards are another popular type of credit cards, although they also go by the name secured credit cards. They differ from revolving credit cards in that you need to put up some money to back your purchases. Instead of the credit card company lending you money, you’ll be borrowing against money you’ve already paid. Prepaid cards are common in bad credit situations. It’s low risk for the credit card company. They are a helpful way for you to build your credit rating, since your activity on the card is reported to credit bureaus.

You’ll still need to make monthly payments on your credit card, as you would with a revolving credit card. With timely payments to your prepaid credit card, your credit card company may change the status of your card to a revolving credit card. In this case, they will increase your credit limit beyond the amount that you paid as collateral.

With prepaid cards, you’ll still be subject to the late fees, credit card interest and other features of regular credit cards. Make sure to pay on time and keep your spending low or you’ll end up making your credit score worse. (more…)

It’s important to know that most small businesses can benefit greatly from these types of offers if you know how to use them. This is especially true to those who have an adjustable small business merchant account. However, don’t take this as a license to open as many credit cards as possible. On the contrary, you should make your balance transfer decisions after a careful weighing out of what will be best for you.

There are three reasons that balance transfer offers make good financial sense. If you get an offer in the mail, and if offers you one of the following opportunities, then you should take it if all other signs point to it being a strong financial decision.

Lower Interest Rate - This is the most common reason that people transfer their balances. Most credit card companies offer 0% interest on all balance transfers. However, this rate is normally only for the first six months and then it climbs to a higher rate. If you’re seduced by the 0% and don’t take a look at the regular rate, you’ll be in for some sticker shock when the six months are done with and struggling to make that regular online payment from that point forward.

Having a zero percent interest rate can save you hundreds of dollars over the course of your credit card usage, but only if the higher rate is reasonable. If you’re moving $1,500 from a 17% interest credit card, to a card with six months of 0% and a regular rate of 20%, you’ll end up paying a lot more. The only time this would be a smart move is if you are planning on paying off that balance within those six months.

Rewards programs - If you currently have a large balance on a credit card that has none of the popular “perks,” it may be worth it to move your balance. Although you generally won’t get a whole lot unless you spend on the new card, you may be eligible for discounts and other rewards that your old credit card company wasn’t offering. Make sure to read the fine print on the new credit card so you know exactly what you can earn.

Debt to credit ratio - An important part of your credit score is your debt to credit ratio. This rate compares the amount of credit you have, versus the amount of debt you have racked up. If all of your cards are maxed out, your debt to credit ratio won’t look that great to potential lenders. When you get a balance transfer offer, take a look at the credit limit they are offering you. If you will be getting more credit and keeping your debt the same, you’ll have a better ratio. Just make sure to not spend on the extra credit available.

Balance transfer offers should be viewed carefully if you can get one of the previously mentioned benefits. It’s important to know exactly what you’re getting out of the transfer and if it, in any way, helps your credit rating and financial picture.

A simple definition of good debt is this: good debt is any form of debt that gives you money back. Don’t confuse this with credit cards with a cash back reward. Good debt is something completely different. This type of debt allows you to purchase assets which will put money in your account long after you make the purchase.

For example, purchasing a piece of equipment for your small business is a good debt investment. The rise of franchise opportunities nationally makes this probably the most common example when discussing what is involved in good debt investment. The equipment will help you do your business more quickly, which can lead to faster profits. Even though you are going into debt to purchase it, it will pay off in the long run.

Another example of good debt is investment in property. Buying a house is probably the most amount of debt that the average person will carry in their lifetime. But a mortgage loan can allow you to earn money in the future. If you purchase a house for $180,000 and it is worth $250,000 in five years, your debt has actually allowed you to make money. Good debt investments can also include stocks, shares, coffee franchises, restaurant franchises, art and even rare comic collectible items. (more…)

The following tips will help you reduce your gas usage and make the most out of the gas that you do buy so that you can save money for the more important Summer pursuits.

1. Reduce your fuel grade. If your car has been feasting on mid-grade to premium grade gas, it’s time to go back to regular if you can. There are some cars that do need premium grade gas because of their high-compression engines, but most can get by fine without it. Check your user’s manual and do some research on your make and model of car. You may be surprised to find out that you can downgrade to a cheaper gas.

2. Drive conservatively - This has nothing to do with your political views and everything to do with the way that you use your car. If you’re used to making long trips several times per week, or even a series of short trips during the day, it’s time to go on a driving diet. Compile all of your errands into one driving trip. If you frequently visit a metropolitan area a few times per week, make just one trip. Try to look for opportunities to car pool or even walk. Reduce your reliance on your car and you’ll save money on gas.

3. Obey the speed limit - If you’re the resident speed demon among your circle of friends, you’re probably the one that spends the most on gas. After 60 mph, your fuel efficiency takes a nose dive. Although it can be impractical to drive that speed on some major freeways, try to keep it as close to 60 as possible. You won’t arrive as fast as you used to, but you’ll also be saving yourself at least 20 cents per gallon of gas. (more…)

In the meantime, before you experience those benefits, you’ll have to deal with losing weight on a budget. Losing weight doesn’t actually cost that much if you are creative and willing to think outside of the box. A lot of the costs of weight loss have to do with the programs, potions and pills that weight loss companies push on people. Weight loss is a huge industry, but you don’t have to buy into it.

The following tips will help you trim down the waistline and your budget at the same time:

1. Exercise in your own space. The average gym membership costs hundreds of dollars per year, even more if you buy into the gym’s hyped up weight loss and nutrition products. Many people join a gym and never go because they are embarrassed or self-conscious. They join thinking that the gym will help them stick to a program. Really, it’s all about personal dedication and commitment.

You can achieve the same kind of results at home with your own DVD player and a few basic pieces of exercise equipment. Invest in some used exercise DVDs and look for a set of 10 to 15 lb free weights at the discount store. With these basic items, you’ll be able to exercise all of your major muscle groups without the expense of joining a gym.

2. Opt out of “fake” diet foods. Many weight loss programs are so expensive because they want you to buy their brand of diet shake or their snacks. You can reduce these costs by making the majority of the food yourself. No matter what kind of diet you are trying to follow - low-fat, low-carb or low-calorie - you can make the food yourself and save. Taking the time to learn how to prepare the food yourself instead of relying on packaged meals will also help make your changes permanent. If you learn how to cook healthier, you’ll definitely have an easier time eating healthier.

3. Search at thrift stores for “in between” clothing sizes. As you start to lose weight, you’ll reach a point where your old clothes are too big, but you’re not quite at your goal weight. Although it may be tempting to go out and get a new wardrobe for your “in between” size, the best thing to do is wait. Look at thrift stores or discount stores for some basic clothes that will get you through this interim period. Additionally, having clothes that aren’t new and exactly what you want may motivate you to keep going with your weight loss. If you know you have a shopping trip at the end of your journey, you’re likely to keep going.

With the price of oil topping $130 a barrel every little bit helps. Implement these below suggestions today and save enough money for 2-4 extra tanks of gas by Labor Day weekend!

1. Energy savings start with keeping your thermostat in check. If you don’t have a programmable thermostat, buying one would be a good investment. This way you can set your air conditioner for a specific temperature. When you leave the house, set the thermostat for several degrees higher than when you’re at home.
2. Keep your family in the dark, literally. Turning off unnecessary lights in your home can help cut your energy costs. Get your family to get into the habit of turning off lights when they are not in use. Keep rooms that you aren’t using completely dark and only turn on one light in a room if possible. In addition to saving money on your energy bills, keeping the house dark during hot summer days will make you feel cooler.
3. Make sure to use Compact Fluorescent Light bulbs (CFLs) in all of your lamps inside and outside. These use ¾ less energy than standard light bulbs. Don’t balk at the price of the CFLs. Although they are more expensive than standard bulbs, they last longer and will help you save on your energy bill.
4. Consider using motion detector switches in the bathroom, hallway and children’s room. They can be set for different time increments from 10 seconds all the way to 20 minutes. This is especially helpful if you have children who are forgetful about turning off the lights. (more…)
   ]]> http://blog.caprocessing.com/7-ways-to-save-money-on-your-summer-energy-bill/feed/ http://blog.caprocessing.com/5-budgeting-tips-to-save-for-emergencies/ http://blog.caprocessing.com/5-budgeting-tips-to-save-for-emergencies/#comments Tue, 13 May 2008 17:51:58 +0000 admin http://blog.caprocessing.com/5-budgeting-tips-to-save-for-emergencies/ No matter how much you try to budget and watch your spending, there are always unexpected emergencies that you have to pay for. Whether it’s a broken tail pipe or a emergency trip to the veterinarian, these financial obligations that come out of left field can wreak havoc on your spending plan. That is, of course, unless you follow the 5 budgeting tips in this article.

   Even though it seems counterintuitive, you can plan for emergencies. It’s all about saving in specific ways so that you’ll always have a money cushion to rely on. Your “in case of emergency” funds will be there to cover your expenses, no matter what form they come in.

   1. The first step to saving for emergencies is to track your expenses. You can’t develop a saving plan if you don’t know how much you have to save each month. Begin by writing down all of your expenses. Save your receipts and invest in a personal financial program that will help you track what you spend. Once you take a look at how much of your income is available each month you’ll be able to develop a spending plan.
   2. If your expenses are very close to, or exceed, your income, then you have some decisions to make. Are there any expenses that you can cut back on in order to make way for savings? Try evaluating your spending so you can cut back on the extras. For example, if you spend $5 at the coffee shop every morning you’ll have $150 by the end of the month for your savings account.
   3. The next step is to determine how much you’ll save each month. While it’s definitely beneficial to save as much as possible each month, it’s not always possible. Try to set a goal of saving at least 10% of your income to your general savings account. After a few months, you’ll have a nice cushion to rely on. It’s up to you to decide how much you’ll need to save in the long run. Most financial experts advise that you save up three to six months worth of income.
   4. Make sure that your monthly savings plan includes room for out of the ordinary, but somewhat regular expenses like oil changes and clothes shopping trips. If you can work these expenses into your savings plan in a regular way, they won’t impact your budget as much. For example, if you know that you’ll need to spend $300 every six months on a new work wardrobe, you’ll be able to save just $50 per month and be on track. Although clothes or regular car repairs aren’t technically emergencies, they are expenses that can get your budget off kilter.
   5. Finally, you need to make sure that your emergency savings is reserved for emergencies only. Avoid the temptation to dip into your savings for non-necessary expenses, like to take advantage of a sale. Saving your money only to blow it all on something you don’t really need is bad money management.

   When you follow these five simple steps, you won’t have to worry if you have an emergency. You’ll be able to develop a savings plan from a workable budget and build the cushion that you need when you need it.

   ]]> http://blog.caprocessing.com/5-budgeting-tips-to-save-for-emergencies/feed/ http://blog.caprocessing.com/7-cheap-family-escapes-for-summer-2008/ http://blog.caprocessing.com/7-cheap-family-escapes-for-summer-2008/#comments Mon, 05 May 2008 17:27:48 +0000 admin http://blog.caprocessing.com/7-cheap-family-escapes-for-summer-2008/ This time of year brings out the traveler in us all. After being cooped up for the winter, it’s nice to get out with the family and explore. This year, many families are facing the struggle of trying to plan family vacations for summer on a budget. Even with the recent economic stimulus checks, most people have tight budgets due to rising food and gas prices. If you’re feeling the pinch, there are many things that you can do with your family this summer without having to take out a second mortgage.

   1. Visit a National Park - If you’re lucky enough to live within driving distance of one of the nation’s 58 National Parks, it can be a great way to explore the great outdoors with your family. Pack a picnic lunch and head out early before it gets too hot. Most parks have a small entrance fee but it is normally charged per car and not per person.

   2. Local Museums - How long has it been since you visited the local art or history museum? Although the kids might complain at first, this can be a wonderful and relatively inexpensive family outing. Check with your local museum for their list of special exhibits. You may be able to see something new each month.

   3. Train Trips - If gas prices have got you down, consider taking the train to a nearby destination. Train travel is not only economical but is a great experience for the kids. Call Amtrak or look up their schedule of trains online. If you travel to an area where there is a lot of public transit, like San Francisco for example, you won’t even have to worry about renting a car. Taking a few day trips by train over the summer will allow you to vacation without spending too much.

   4. Vacation at Home - For some families, traveling anywhere at all just isn’t in the budget. In this case, making vacation special at home can be the solution. Pick a new theme each weekend, like Water Play or Movie Weekend and plan at home activities around the house. Ban housework for an entire day and just enjoy spending time together. Do something out of the ordinary, like picnicing on the living room floor or sleeping outside under the stars to make staying at home fun. (more…)

   ]]> http://blog.caprocessing.com/7-cheap-family-escapes-for-summer-2008/feed/ http://blog.caprocessing.com/find-hidden-sources-of-money-to-pay-off-debt/ http://blog.caprocessing.com/find-hidden-sources-of-money-to-pay-off-debt/#comments Tue, 29 Apr 2008 15:28:45 +0000 admin http://blog.caprocessing.com/find-hidden-sources-of-money-to-pay-off-debt/ You’ve probably heard a lot of good advice over the years on how to pay off your debts, including the tip that you should pay more than the minimum payment due each month. However, this may not always be easy when you are on a tight budget. Even if you want to pay more than the minimum balance, you may not be able to afford it.

   Fortunately, there are several ways that you can pay more on your credit cards by using “hidden” sources of money. The sources are hidden in plain sight, and once you re- purpose them to be used to pay off your debt, you’ll find yourself better off financially in the long run.

   One of the best ways to reduce your debt is to use your tax return each year in debt repayment. If you typically get a large tax return payment each year, it means that you are giving the government a no-interest loan! Use that money wisely to reduce your personal debt, and consider increasing your exemptions on your paycheck if you can. The more exemptions you can claim, the more of your paycheck you get to keep. You’ll get a smaller tax return back in the coming year, but you’ll get more of your money each month that you can use to pay off your debts further.

   If you have a savings account built up and a large amount of debt, you should sacrifice your savings in order to be debt free. Although you may take a lot of pride in building up your savings, it doesn’t make sense to hold on to it while you are paying 18% interest on your credit cards. Most savings accounts only pay 4%, so you’re better off using that money to pay off your debt.

   You can pay off debts painlessly by squirreling away any bonuses, overtime or raises that you get at your job. Use the difference between your old paycheck and your new paycheck to make extra payments on your accounts. Since you didn’t have this money before, you won’t miss it at all. (more…)

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