Sometimes, despite our best efforts, our bills add up to more than we have. Although it’s tempting to ignore the problem, that will only cause more difficulty. Here are some tips on how to handle this short-term emergency.
1. Make a list of every payment owed, when it is due, how much is owed and any interest rate and any late fee charges.
It happens to everyone once in awhile. Your car needs a new tire today, your checking account is low and payday isn’t for another week. When that happens, people sometimes turn to payday loans as a way to bridge the gap or help out in an emergency.
How can I put this delicately? DON’T DO IT!
When you take out a payday loan, you write a check to the lender (a payday loan store, pawn shop, online lender, etc.) for the amount of your upcoming paycheck plus interest. The lender then gives you cash. When you get your paycheck, it is used to pay back the loan. And you still have to pay the interest amount.
Applying for your first credit card? Many credit card companies are happy to issue high school and college age students plastic, but before you sign up, it is essential that you know the good, the bad and the ugly of credit cards.
The quick answer is typically no, you can’t go into debt with a debit card.
But let me explain why. If you haven’t had a chance to read it yet, check out our recent post, “What’s the difference between credit and debit?“ The nutshell is that when you pay with a debit card, you are using money that you have. But when you make a purchase with a credit card, you are spending money you don’t have and are in fact borrowing.
On BrokePiggy, we’ve talked some about credit scores and how to check yours, but how exactly do they figure it? Before we discuss how your score is actually figured, let’s talk about who determines your score.
Your credit score is calculated based on information that comes from your credit report. These credit reports come from the big three agencies: Experian, Equifax, and TransUnion. Although there are different methods of figuring a credit score, it is most commonly calculated by the company, Fair Issac Corporation (you’ve probably heard them called by their acronym: FICO). As we’ve established, this three-digit number is used by various lending institutions to determine how risky it would be to give you a loan.
Before we provide our 2 cents to the question, let’s define what a co-signer is. As a teenager, it would be difficult to get a loan (car loan or certain school loans), because you have no credit history. A bank or other lending institution may not be completely confident in giving you a loan, because they’re not sure how reliable you will be to pay for it.
In that case, a bank might require a co-signer. This would be someone who would also sign for the loan (who has more credit history than you), and basically commits to the bank that if you don’t repay the loan, the bank can hold the co-signer liable.
Co-signing is a bad idea for many reasons. Here are a few…
Your credit score is really figured on one key ingredient: debt.
If you have debt (not too much and not too little for your situation) and are consistent with your payments, you’ll have a good credit score.
So once you pay off everything (and hopefully you’re not planning on acquiring any new debt), you are missing that key ingredient for a good credit score: debt. Initially, you won’t really see any changes in your credit score for paying off your last debt. But over time, your credit score will start to go down if you don’t add any new debt.
Yesterday, we talked about what happens during the first few months when you haven’t paid your credit card bills (Read Part 1 here). Today, we’ll pick up with what happens after 6 months.
Before we can really address how to get out of this mess, it’s important for you to take a step back and determine what caused all this in the first place. You have to address the problem and learn from it, so it never happens again.
If you get into a situation where you have credit card debt and can’t make the monthly payment, the first thing you should do is cut up the credit card and close the account. Regardless of if it is a temporary life circumstance that made it difficult to pay or whatever the situation may be, cut up the card. You don’t need it right now.
Let’s walk through the stages of what happens if you go into credit card debt and can’t pay…
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