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How to Better Manage your Monthly Bill Payments

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From car insurance to cell phone bills and mortgage repayments to utility bills, the average homeowner probably has more monthly outgoings than they’d like. Since many of the creditors, we make recurring monthly payments to share our payment information with Equifax, Experian, and TransUnion, meaning that failing to meet your monthly bill payments can negatively affect your credit score. Therefore, it’s more crucial than ever to meet your monthly bill payments and take control of your financial life.

Knowing when your bills are scheduled and getting into a habit of paying them before the day their due can offer you many other benefits besides financial freedom, such as saving money, reducing stress levels, improving your credit score, and helping you secure lower interest credit when you come to apply. But how do you get into a routine of paying off your monthly bills on time? From using a monthly bill tracker to adding your payments to a calendar, we’ve listed some of our top tips for managing your monthly bill payments – keep reading to find out more.

Use A Monthly Bill Tracker

Another way to better manage your monthly bill payments is using a monthly bill tracker. Fortunately, in our technology-driven world, there are a variety of monthly bill trackers for individuals to choose from. Some trackers are manual, whereas others are technology-based and include digital tools or import data to calculate upcoming bills automatically.

Some of the most popular monthly bill trackers are electronic/physical calendars, budget worksheets, spreadsheets, bill-tracking apps, or simple means like a pen and paper. Regardless of which option you choose, using a monthly bill tracker is helpful for tracking which of your bills are due, how much they are, and the dates they are expected to come out.

Using these means can help ensure that you never incur a penalty for a missed bill payment, and since there are so many bill tracking options, we’re sure that you’ll be able to find a method that works for you. If you consider yourself the type of person who finds bill tracking challenging, consider using mobile applications like Tally, which can help manage your monthly credit card bills.

As well as helping you manage your finances in one place, Tally’s application will even automate your payments so that they are paid before their due date. Consider visiting their website for more information, or follow their blog to discover a monthly bill tracker that works for you.

Make A List Of All Your Bills

Let’s face it; we can all attest that we have more monthly outgoings than we’d prefer. We’d wager that some homeowners have so many outgoings that it’s almost impossible to commit them all to memory. Not knowing your financial obligations can make it challenging to pay your bills on time – so start managing them by making a list of all your outgoings.

When you have several bills to pay each month, it can be easy for some of them to disappear under the radar. To prevent this, put some time aside to review your credit reports and your credit/debit card statements to compile all your creditors, recurring payments, and service providers into one list.

As you make your list, include the name of the creditor or service provider, the amount, and the date the payment is due to be completed. Once satisfied with your list, you could separate them into two columns: those that can be automated and those that cannot. Doing so will make it much more straightforward to manage your finances and see which payments are approaching.

Businessman is using workflow automation solution for running his service business

Automate Monthly Payments

Once you’ve made a list of all your monthly outgoings and found a monthly bill tracker that works for you, we recommend automating all your bills that can be automated. Depending on the creditor’s terms and conditions, when you set up automated payments, you should be able to decide whether you want to make the payment in full, the minimum, or a specified amount.

As well as making it easier to remember which bills are coming out on which date, automating accounts can also save you the money you would have spent ordering paper checks or money orders from your bank. They can also help prevent you from incurring any penalties if you forget to pay a bill or don’t have enough funds in your account to pay in full.

Determine How Much You Want To Pay

Depending on your lender, creditor, or service provider, you may have to pay a fixed monthly amount. Others – like credit cards – enable you to spend as much or as little as you want after you make the minimum payment.

In a perfect world, you’d be able to pay the total amount on all your accounts, even the ones that allow you to decide how much you want to pay per month. Even if you consistently pay your bills in full, this may not be possible every time, so if you are going to set your own amount, ensure that you make a note of the difference.

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Personal Finance

Can You Refinance a Car Loan More Than Once?

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You can refinance your car as often as you can find a lender willing to approve a new loan, but finding a lender to refinance again and again could be difficult.

When you refinance, you’re replacing your current car loan with a new one — almost always with a different lender. Since most lenders won’t refinance their own loans, you’d likely need to get approval from a new lender each time.

Also, the most common reasons for refinancing a car loan are to save money, lower the monthly payment or pay off the loan sooner. Once you’ve refinanced to meet one or more of these goals, it may not be easy finding another loan that provides any additional benefit.

Reasons to refinance a car loan more than once

Throughout the life of your auto loan, you may experience different situations when refinancing makes sense — leading you to refinance more than once. Here are some examples:

  • To replace a dealer’s high interest rate. Maybe you financed your car at a dealership and realized the next day that you could qualify for a lower rate. If you have solid credit, you likely can find a lender to refinance your loan to a lower rate right away, or as soon as they can obtain the vehicle’s title.

  • To take advantage of your improved credit. If your car loan has a high interest rate because of previous credit problems or no credit history, and you’ve made on-time loan payments for six to 12 months, you might now be able to qualify for an auto refinance loan with a lower rate.

  • Because you need a lower monthly car payment. If your financial situation has worsened — for example, you changed jobs and took a cut in pay — you might need to refinance to a longer loan term for a lower payment that you can afford.

Why refinancing a car over and over can be a bad idea

Before you refinance your car multiple times, be aware of some potential disadvantages.

  • Paying more than you save. Refinancing is applying for a new loan, which can come with loan origination fees, lender processing fees and title transfer fees. Occasionally, you could have prepayment penalties for your current loan. And if you extend the loan term, you’ll likely increase the amount of interest you pay overall. So before you refinance, consider whether the benefits outweigh your total cost.

  • Lowering your credit score. Each time you get approved for a new auto refinance loan, the lender runs a hard inquiry on your credit report, which causes a slight, temporary drop in your credit score. In most cases, your score rebounds in a few months, but it’s still something to consider if you plan to apply for any other types of loans during that time.

  • Owing more than your car is worth. If you keep refinancing your car to a longer term, you can become upside down on your car loan. While you’re taking extra time to pay off your car, it’s most likely depreciating in value, and at some point, you may owe more than you could get for the car if you decide to sell it or if it’s totaled in an accident.

Also, most lenders have vehicle age and mileage limits for refinancing, so if you keep extending the loan on an older car, it could become ineligible for refinancing.

Finding a lender to refinance again

Many lenders are hesitant to refinance a car that has already been refinanced many times. They perceive repeated refinancing as a sign that a borrower may be struggling to repay the loan or having other financial issues — especially if they’ve used cash-back auto refinancing more than once. Even if a lender approves another loan for refinancing, the loan may be considered high risk and come with a much higher interest rate.

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Personal Finance

Whole Life Insurance Definition

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Whole life insurance is a popular type of permanent coverage. It can last your entire life, has a guaranteed death benefit and provides guaranteed cash value growth. Whole life is more expensive than term life insurance, which covers you for a fixed number of years only and doesn’t build cash value.

Definition of whole life insurance

Whole life is a type of permanent life insurance. It pays out regardless of when you die and includes cash value — an investment component. When the policy has built enough cash value, you can withdraw or borrow against the funds while you’re still alive. Unlike other types of permanent coverage, the cash value in a whole-life policy is guaranteed to grow at a set rate.

Whole life insurance premiums stay the same throughout the length of the policy and the death benefit is guaranteed. If there are no outstanding cash value loans or withdrawals when you die, your life insurance beneficiaries receive the full death benefit.

🤓Nerdy Tip

If you want permanent insurance without the bells and whistles, whole life may be a good fit. However, due to its guarantees, the cost of whole life insurance is typically higher than that of other permanent policies.

Whole-life policy features: Definitions

Guaranteed death benefit: The death benefit for whole life insurance is guaranteed; it won’t decrease or change over time as long as you pay your premium. Though whole-life policies are considered lifelong, many mature upon the insured person reaching a certain age, such as 100. When the policy matures, the death benefit is paid to the policyholder or coverage can be extended until the insured’s death. Therefore, even if you outlive the policy’s maturity date, the death benefit is guaranteed to pay out.

Guaranteed cash value: The cash value in a whole life insurance policy is guaranteed to grow at a fixed rate set by the insurance company. A portion of your insurance premium funds the policy’s cash value, which grows over time. You can withdraw or borrow against the funds while you’re still alive. But keep in mind that withdrawing or borrowing against the policy’s cash value without paying it back can reduce the death benefit — the amount your beneficiaries receive when you die.

Fixed premiums: Whole-life premiums are typically fixed, which means they remain level throughout the length of the policy. If you miss a premium payment, your coverage can lapse. In some cases, funds from the cash value can be used to cover the missed premium. But this perk may not apply to all policies.

Dividends: When you buy a whole life insurance policy from a mutual company — one owned by its policyholders — you may receive dividends if the company performs well. Dividends typically aren’t taxed as income. Depending on the terms of your policy, you may be able to use the dividends to increase the death benefit or pay your premiums.

More about whole life insurance

Learn more about whole life insurance and find the best policy for you.

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Personal Finance

3 Reasons Not to Tap Your Home Equity Right Now

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Soaring real estate values mean many homeowners are awash in equity — the difference between what they owe and what their homes are worth. The average-priced home is up 42% since the start of the pandemic, and the average homeowner with a mortgage can now tap over $207,000 in equity, according to Black Knight Inc., a mortgage and real estate data analysis company.

Spending that wealth can be tempting. Proceeds from home equity loans or lines of credit can fund home improvements, college tuition, debt consolidation, new cars, vacations — whatever the borrower wants.

But just because something can be done, of course, doesn’t mean it should be done. One risk of such borrowing should be pretty obvious: You’re putting your home at risk. If you can’t make the payments, the lender could foreclose and force you out of your house.

Also, as we learned during the Great Recession of 2008-2009, housing prices can go down as well as up. Borrowers who tapped their home equity were more likely to be “underwater” — or owe more on their houses than they were worth — than those who didn’t have home equity loans or lines of credit, according to a 2011 report by CoreLogic, a real estate data company.

Other risks are less obvious but worth considering.

You may need your equity later

Many Americans aren’t saving enough for retirement and may need to use their home equity to avoid a sharp drop in their standard of living. Some will do that by selling their homes and downsizing, freeing up money to invest or supplement other retirement income.

Other retirees may turn to reverse mortgages. The most common type of reverse mortgage allows homeowners 62 and up to convert home equity into a lump of cash, a series of monthly payments or a line of credit they can use as needed. The borrower doesn’t have to pay the loan back as long as they live in the home, but the balance must be repaid when the borrower dies, sells or moves out.

Another potential use for home equity is to pay for a nursing home or other long-term care. A semi-private room in a nursing home cost a median $7,908 per month in 2021, according to Genworth, which provides long-term care insurance. Some people who don’t have long-term care insurance instead plan to borrow against their home equity to pay those bills.

Clearly, the more you owe on your home, the less equity you’ll have for other uses. In fact, a big mortgage could preclude you from getting a reverse mortgage at all. To qualify, you either need to own your home outright or have a substantial amount of equity — at least 50% and perhaps more.

You’re deeply in debt

Using your home equity to pay off much higher-rate debt, such as credit cards, can seem like a smart move. After all, home equity loans and lines of credit tend to have much lower interest rates.

If you end up filing for bankruptcy, though, your unsecured debts — such as credit cards, personal loans and medical bills — typically would be erased. Debt that’s secured by your home, such as mortgage and home equity borrowing, typically isn’t.

Before you use home equity to consolidate other debts, consider talking to a nonprofit credit counseling agency and to a bankruptcy attorney about your options.

What you’re buying won’t outlive the debt

It’s rarely, if ever, a good idea to borrow money for pure consumption, such as vacations or electronics. Ideally, we should only borrow money for purchases that will increase our wealth: a mortgage to buy a home that will appreciate, for example, or a student loan that results in higher lifetime earnings.

If you’re planning to borrow home equity to pay for something that won’t increase in value, at least ensure that you aren’t making payments long after its useful life is over. If you’re using home equity to buy a vehicle, consider limiting the loan term to five years so that you’re not facing big repair bills while still paying down the loan.

Home equity loans typically have fixed interest rates and a fixed repayment term of anywhere from five to 30 years. The typical home equity line of credit, meanwhile, has variable rates and a 30-year term: a 10-year “draw” period, where you can borrow money, followed by a 20-year payback period. You typically are required to pay only interest on your debt during the draw period, which means your payments could jump substantially at the 10-year mark when you start repaying the principal.

This leads to a final piece of advice: With interest rates on the rise, consider using a home equity loan or line of credit only if you can repay the balance fairly quickly. If you need a few years to pay back what you borrow, getting a fixed interest rate with a home equity loan may be the better way to tap equity now.

This article was written by NerdWallet and was originally published by The Associated Press. 

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