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The Chase Expert Answers Your Questions About Preparing For The Year's Major Expenses

Posted by on Feb. 9, 2012 at 12:31 PM
  • 10 Replies

As some of you know, The Family Piggy Bank is a great place to discuss personal finance issues with other like-minded moms.

The Family Piggy Bank will again be hosting Caryn, a mom who actually works for Chase Blueprint.

This time, she's answered your questions about preparing for the year's major expenses.  Read on for Caryn's answers below!

^ The CafeMom Team

by on Feb. 9, 2012 at 12:31 PM
Replies (1-10):
CafeMom Team
by Group Owner on Feb. 9, 2012 at 1:18 PM

AzariahsMother

What’s the best way to pay off debt?


Paying off debt sounds hard, right? One way to make it easier is to have a plan. As you develop a financial plan for your family, you must think about your needs versus your wants. Make a list of the most logistically difficult things to cut back on if you had to, things like car payments, utilities, rent and food. Put those in the necessary expenses category. And then, before you consider making unnecessary purchases, like going out to dinner or treating yourself to a manicure, allocate at least a portion of the leftover towards your debt.

If you have a credit card balance, you will want to make sure to set aside funds to pay it down. While savings is important, having a plan to pay down any debt is just as vital. The more proactive you are at paying this off, the more money you will be able to save on interest charges and put towards savings. Chase Blueprint, available on Chase credit cards, is a free and simple way to get started on setting a customized plan to pay down your debt. Visit chaseblueprint.com for more information.


CafeMom Team
by Group Owner on Feb. 9, 2012 at 1:23 PM

AzariahsMother

How important is your credit score?


Your individual credit score is an important number you should both be aware of and understand how it is determined. First, your credit score is a numerical representation of your credit worthiness. It measures the relative degree of risk or delinquency that you represent to a company that is lending you money. You’ll often hear people discuss one credit score, a FICO score.   Generally, scores are part of a scoring system used by credit bureaus. It is based on your payment history, the amount you owe across all aspects of credit and how often you use the credit,  the length of your credit history and the types of credit you currently use and have applied for.  I cannot reinforce how important it is to maintain a good credit score because it is necessary for so many things in life.  Did you know that employers sometimes factor in your credit score when making decisions on whether to hire an individual?

It's important that you regularly review your credit report so you can understand why it is the way it is. The Fair Credit Reporting Act (FCRA), a federal regulation, allows you to get a free copy of your credit report once a year. For further information please contact any of the three major credit reporting agencies:

Equifax, Inc.
1-800-997-2493
www.equifax.com

Experian
1-888-397-3742
www.experian.com/consumer/index.html

TransUnion
1-800-888-4213
www.transunion.com

Take the time to really look at it and make sure everything is correct. If you find an error, contact the credit bureau.

CafeMom Team
by Group Owner on Feb. 9, 2012 at 1:25 PM

Hudson_Heights

Thanks for being here, Caryn!  When you're already living paycheck to paycheck, how do you set aside a little each month?  My husband and I would really like to be prepared this year for our 2 major expenses - family vacation in July and Christmas presents at the end of the year instead of scrambling and worrying like we usually do. How can we put that money aside without missing it (and without being tempted to touch it too early!)?


Thank you for having me, Hudson_Heights! As a mother, I know how it is to want to give your kids fun things in life like gifts and vacations. We all know that everyday expenses add up quickly and in order to save money, you must have a budget. To develop a budget that really works, start with this common equation: what you earn minus what you spend equals what you save. In broad strokes, budgeting is basically about figuring out your money flow. To help prepare yourself for those major expenses, you have to think about what you need versus what you want, and how you are going to pay for these things as they come up. Calculate your monthly essentials to understand the maximum amount you are able to put in your savings account and how much you can spend on discretionary items. And in terms of temptation to touch your savings, we recommend talking to your husband and agreeing that you’ll each consult with each other before using that hard earned and saved money. If you each agree, then purchase. Otherwise, keep that amount in savings.

CafeMom Team
by Group Owner on Feb. 9, 2012 at 1:27 PM

babyboxfish

What are some good ways to build up from bad credit?


That’s a great question. Handling your money responsibly is about making thoughtful choices. Bad – and good – financial choices will follow you throughout your life. If you have an imperfect financial history, it isn’t too late to make a change.   Generally, you can build up good credit by consistently making payments on time and managing your debt responsibly. And remember, if you've had credit problems in the past, it may take several years to repair.

Certain information may cycle off of your report in approximately seven years. So, a closed account – a loan that you paid off – will disappear eventually. Bankruptcies remain on your credit report for 10 years.  But, you can take steps that may help to raise your credit score over time by following these tips:

•    Always make payments for credit cards, loans, utilities or other bills on time.
•    If you procrastinate or have trouble paying your bills on time, consider using an automatic bill pay service online.
•    Always try to pay more than the required minimum payment.
•    Avoid keeping your credit card balance at or near the credit limit and don't exceed it!
•    Don’t apply for numerous accounts. Excessive credit inquiries by lenders can lower your score.

CafeMom Team
by Group Owner on Feb. 9, 2012 at 1:30 PM

lalasmama2007

What is the best way to save for unexpected expenses that may occur during the year?


Those unexpected expenses can be tough. One of the easiest steps to saving money is to find places where you can plan to spend less, which includes having a plan to pay off debt in a timely way. Eliminating debt and reducing interest wherever you can – even if just by a small amount each month – are two of the fastest ways to free up additional funds, which can easily be transferred to savings. And when you have those unexpected purchases, develop an immediate plan for financing and paying them off. This is one of the reasons we designed Chase Blueprint for Chase Credit cards. Blueprint makes it easier to handle those unexpected purchases and develop a proactive plan to pay them off. Being proactive can help reduce the interest you pay and put more money back in your pocket.

CafeMom Team
by Group Owner on Feb. 9, 2012 at 1:32 PM

mjimaging

Are credit cards absolutely necessary to build credit? I have a good score now but want to buy a house in a couple years and want the best possible scenario.


Another great question! First, it can be hard to qualify for credit if you have no credit history. Without some type of road map, lenders can't measure the level of risk involved with extending credit. That’s why credit cards are a good way to help you establish and maintain a good credit score for future requests for credit. Today, credit is part of our daily lives. It can be a useful financial tool. It allows you to borrow money for things like a car or new refrigerator – even start a new business. Once you establish credit, use it wisely. If you’re thinking about buying a house in a few years, remember that credit is also used as a measure of your character – how a person has paid their bills and debts in the past. Paying your credit card bills on time is a good way to show banks and other businesses that you are responsible borrower.  

CafeMom Team
by Group Owner on Feb. 9, 2012 at 1:34 PM

Samanthamommy

How much over the minimum due should you pay on cc's?


Avoid “minimum-payment mentality” and create your own payment plan to pay down credit card balances. I like to tell people about Chase Blueprint when they’re trying to pay off credit card debt. Blueprint allows you to choose a monthly payment amount or payoff date that fits your schedule or budget to make paying off debt a reality. You can see your progress month after month until your debt is gone. In the research we have done with customers, it turns out that those who make a Blueprint plan for paying down their balance tend to pay it down two times faster than customers who don’t make a simple plan.


CafeMom Team
by Group Owner on Feb. 9, 2012 at 1:35 PM

funhappymom

What are the best ways to save for vacations? Our credit union offers a vacation club acct-similar to a Christmas club acct but it earns so little interest. Is it better to save money for vacation and then use a credit card to pay for all vacation expenses and then pay off the credit card when you get back?


The key to saving for your vacation is planning ahead. First, set a budget by estimating the cost of all aspects of the trip – travel and lodging costs, food, museum tickets or souvenirs. Having savings is an ideal way to prepare, but if it’s unfeasible for you and your family to cover all the expenses at once, financing a portion of these trips may come into play. If so, and you choose to finance any portion of the vacation with a credit card, be proactive about setting up a specific plan to pay your balance back. With Chase Blueprint (www.chaseblueprint.com), you can set a payoff date for your balance and track your progress as you pay it down faster and save on interest. And always remember, fun doesn’t have to cost a lot.

CafeMom Team
by Group Owner on Feb. 9, 2012 at 1:36 PM

yvonne37

We have been living on one income (my husband's) for over 6 years, now that our daughter is in school I have gotten a part time job (mainly from home) and I was planning with my husband about what to do with the extra income. I told him we should keep living on his income and put mine to work on paying off everything we owe. I have two questions: 1- Would this be a good idea? 2- I think we should start by paying the highest interest rate card first. I'm I right? Or should we pay the lowest debt first?


You are definitely on the right track with your thinking, yvonne37. Paying off debt is almost always a smart idea. How you pay it off, though, depends on your personal financial situation and your habits. It would probably be wise to try to pay down balances with higher rates first since the higher the rate, the more you will pay in interest. And the more you can save on interest, the more you can put in your savings account! However, paying off smaller balances first also has its benefits. If you are the type of person who would rather make one or a few larger payments per month than many payments per month, you may consider limiting the risk of added costs from missing a due date and incurring fees as you work to stay on top of multiple bills. Balancing these variables will help you make the choice that is right for your situation! 


CafeMom Team
by Group Owner on Feb. 9, 2012 at 1:40 PM

elijahsmama09

What is the best way to save for building projects? We want to add a deck, a storage shed on the edge of the property and build an addition to the house for an extra 2 bedrooms.


I know I sound like a broken record, but you need to have a plan in order to save for large purchases like remodels or additions. To stay on track and feel confident with your spending for this project, your plan needs a budget. Even if you haven’t set a budget for such a renovation, it isn’t too late. Calculate the monthly essentials to understand the maximum amount you are able to put in your savings account and how much you can spend on the renovation. Having savings is a great way to prepare, but if it’s unfeasible for you and your family, financing a portion of these projects may be your best option. If you choose to finance with a credit card, be proactive about setting up a specific plan to pay your balance back. Chase Blueprint provides a way to pay off a large purchase faster, like a home improvement project or a new appliance. You can select the number of payments or monthly payment amount that fits your schedule or budget. Blueprint sets up your customized payment plan, and you will see your plan — and progress — on every statement until it is paid off.

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