5 Money Mistakes for Students to Avoid

Consumers 101 Personal Finance Series

College is stressful enough without having to worry about financial issues. Avoid these five common money mistakes to stay on track with your spending.   

Not Setting a Budget

There are a lot of expenses when you’re a student. Tuition and textbooks aside, you also need money for things like rent, utilities, and going out with friends. It’s easy to quickly burn through your money without realizing how much you’re spending. This is why it’s so important to set well defined budgets. 

Budgets for different spending categories will keep you on track and will help prevent you from spending above your means. Look at your recent transaction history to gauge how much you typically spend on expenses like utilities, groceries, and entertainment. Set a modest and reasonable goal for each category and work on not exceeding your budget.  

Paying Bills Late

Many students don’t realize that late bill payments can negatively affect their credit. You start to develop credit history right away, so financial irresponsibility during school could have an impact later in life. Credit history is a factor when you’re seeking new lines of credit, applying to rent an apartment, and sometimes even in a potential employment opportunity.

Always pay your bills on time. Include all bill payments in your budget and set reminders so that you don’t lose track during a busy semester. 

Spending Too Much on Credit Cards

Credit cards are convenient. It’s easy to spend hundreds of dollars without thinking about when you have to pay it back. But overspending on your credit card means you risk spending more than you can afford. 

If you only pay the minimum balance each month, you could end up paying excessive interest fees. Spending more than 30% of your available credit can also have a negative effect on your credit overall. For example, your credit score may take a hit if you spend more than $300 on a card that has a credit limit of $1,000. 

Keep your credit usage below 30% and always pay off your balance in full and on time every month. 

Not Paying Off Student Loan Interest During School

If you have student loans, you may be wondering why you should bother making payments while you’re still in school – you aren’t required to, and there’s even a grace period after you graduate for most loans. 

Unsubsidized loans start to accrue interest as soon as they’re disbursed. This means that your loan amounts are slowly creeping up even when you’re still in school. Eventually, you’ll have to pay interest on top of this interest.

Depending on your interest rates, it may be entirely manageable to keep up with these payments during school. Small payments each month now could mean thousands of dollars in savings later on. 

Spending Money on Things You Don’t Need

It’s easy to spend money on items you don’t really need – new clothes for a party, brand new furniture, new cookware. You should have some room in your budget for unexpected expenses and fun purchases, but don’t go overboard. 

Before you buy something new, decide if you really need it or if you can find it cheaper elsewhere. Not only will this help you stick to your budget, it will also mean you have fewer things to pack up and move when it comes time to graduate. 

 

Previous posts in this series:

Personal Finance Basics for College Students
 

How to Finance a Vehicle when you have Bad Credit

Purchasing a new vehicle is a major decision, especially when you need to secure a loan in order to do so. Not only are you shopping for a car, you’re also shopping for the best interest rate and loan agreement terms. This process can be even more difficult if you have poor credit.

Negative credit history can make it more difficult to find an agreement with reasonable interest rates and can also make it more challenging to get your application approved. It’s important to prepare and research ahead of time before you make a decision to ensure that you choose the best option for your situation.

A loan agreement that isn’t ideal for your financial situation increases the risk of vehicle repossession. In an auto loan agreement, the vehicle that you purchase is considered collateral. Collateral acts as protection for the lender. If a borrower fails to make payments under the loan agreement, the lender has the right to repossess the vehicle. A repossession will further harm your credit and negatively impact your history for up to seven and a half years.

When you need to secure a loan for the purchase of your new vehicle, take steps to make sure you get the loan that is right for you.  If you  enter a loan agreement with unfavorable terms, you may not be able to make loan payments in full and on time.  When the terms of the loan have been broken, the lender may take steps to repossess your vehicle.

Seek Legal Advice

Flitter Milz is knowledgeable about the laws governing repossession of cars, trucks, motorcycles, boats and RVs.  If your vehicle has been repossessed, Contact Us.  We will review the details of your case at no cost, and evaluate whether your consumer rights were violated.

Personal Finance Basics for College Students

Consumers 101 Personal Finance Series

The start of a new college semester is a busy and exciting time. As you prepare to begin new classes, it’s important to consider how you’ll manage your finances while you’re in school. Follow these tips to keep your finances in order and avoid any unnecessary additional stress. 

Set a Budget

Whether you receive a stipend from financial aid, are working part-time, or get financial help from your parents, it’s important to set a monthly budget to stay on track with your finances. You should budget for mandatory expenses like room and board or rent, utilities, and groceries, but you should also consider how much you can afford to spend on dining out and entertainment. Sticking to a budget will help you stay organized and help ensure that you don’t spend above your means. 

Start a Savings Account 

If you work during school, make it a goal to save ten percent or more of your income and put it into a savings account. Even if it seems like a small amount, savings will help when it comes time to graduate and find an apartment or begin to pay off student loans. It’s also helpful to have some money saved up in case of an emergency. 

Pay Off Loan Interest During School

Many students take out both federal and private loans in order to fund their education. If you have student loans, you likely already know that you’re not required to pay them off until after you graduate, and there is typically a six month grace period following your graduation as well. 

However, it’s a good idea to pay off the interest that accrues on your loans while you’re still in school if you have the means to do so. Some of your loans may be subsidized, meaning they won’t accrue interest while you’re still in school, but unsubsidized loans begin to accrue interest from the date that they are issued. Not paying this interest means you’ll eventually have to pay interest on the interest that you didn’t pay previously. 

Build Your Credit

It’s important to keep in mind that your credit history will begin to develop right away. Certain bills are included on your credit report, so it’s critical to pay them in full and on time to avoid negative marks on your credit. Student loans will also appear on your credit report and will help you establish positive history as you make payments on time. 

In order to secure new lines of credit in the future, a lender will pull your report to determine your creditworthiness. It is possible to get denied for credit if you lack sufficient credit history, so it’s helpful to try to build credit while you’re still in school. 

The Credit Card Act of 2009 placed restrictions on individuals under the age of 21 getting a credit card without a cosigner, but secure credit cards are still a good option. A secure credit card requires an initial deposit. This deposit then acts as your available amount of credit. You can also build credit as an authorized user on a parent’s credit card. 

Check Your Credit Report Regularly

You can get a free credit report from each of the three credit bureaus – TransUnion, Experian, and Equifax – every twelve months. Checking your own credit report does not reflect negatively on your credit. You may choose to request a copy from one bureau at a time so that you can check your report several times throughout the year. 

Always review your report for errors and inaccurate information. Incorrect listings can have a negative impact on your credit if they aren’t addressed. Dispute any incorrect information with the bureau and with the creditor and provide any documentation that supports your claim. 

Successfully managing your finances and building healthy credit requires consistency and time. With these tips you’ll be well on your way to good credit.
 

Fall Series for College Students & Young Adults

Consumers 101 Personal Finance Series: Fall 2017

The Personal Finance series will cover a variety of topics to help young adults navigate the challenges of our financial world. Whether it’s applying for a car or student loan, obtaining a credit card, or signing an apartment lease, you’re taking on the responsibility to abide by the terms of a contract.

Payments must be made in full and on time. There are consequences when a consumer defaults on the terms of a contract, such as vehicle repossession, negative credit report entries, loan denials, or collection contact, that can then impact various aspects of your life.

We’ll post ideas on how to avoid pitfalls like these on our blog and offer tips on how to build and maintain a good credit history and credit score.

Just as it’s important to develop good study habits while in school, young adults must establish good habits to manage their personal finances.   

Consumers 101 will post on Thursdays in September and October. 

Mark your calendars with the dates below. Contact us with any questions. There is no cost for an evaluation of your concern.

 

6 Credit Definitions You Need Know

Poor credit and unsteady financial standing can make many aspects of your life much more difficult than they need to be. Your credit follows you wherever you go, and it can affect your ability to get a job, rent an apartment, or secure new lines of credit. For this reason, it’s important to prioritize your credit health and always make sure your finances are in the best order that they can be. 

As a consumer, it’s important to educate yourself on all of the financial aspects that affect your credit. Make sure that you’re aware of how your open accounts will increase or decrease your credit score and how certain financial mishaps are reflected on your credit report. Certain occurrences like a vehicle repossession, late payments, or a defaulted account will result in negative marks on your credit report. These types of negative marks can remain on your report for many years. 

Check your credit report regularly to ensure that all information is accurate and up to date, and to determine some benchmarks to improve your credit standing over time. All consumers are entitled to one free credit report each year from all three of the credit reporting bureaus. 

For more background on credit and how it works, read this article from Forbes to familiarize yourself with the terms credit report, credit bureau, credit score, hard inquiry, soft inquiry, and debt-to-income ratio.
 

Consumers No Longer Bound by Mandatory Arbitration

The Consumer Protection Financial Bureau (CFPB) unveiled a new rule on Monday, July 10, 2017, to give consumers the option to pursue a class action lawsuit and not be bound by mandatory arbitration. This victory provides a tool for consumers to stop questionable business practices and force a company’s accountability.

Arbitration clauses have been written into many consumer financial product and service agreements, ranging from bank loans, to credit cards, to cell phone contracts. The arbitration clause prevents consumers from joining together to sue the bank or financial company, and requires disputes to be resolved by privately appointed individuals called arbitrators.

Class action lawsuits are ideal for representing consumer interests against lenders, debt collectors, credit bureaus, and other businesses. For example, if a debt collector overcharges hundreds of consumers, or a vehicle lender engages in unlawful repossession tactics, a class action may stop the company from profiting from illegal fees or committing other crimes against their customers.

Critics of the new rule are lobbying lawmakers to nullify it. Although Congress has already banned mandatory arbitration for mortgages and contracts involving the military, many powerful lobby groups seek to reverse the rule and block the consumer from filing class action lawsuits against banks and credit card companies. They want to streamline resolution of legal issues through arbitration, rather than pursing lawsuits through the judicial system.

Consumers Must Take Action

Write to your United States senators and representatives.

  • State your support for the ban of mandatory arbitration.
  • Explain the importance of the CFPB for all Americans.
  • Emphasize that you do not want the vote to weaken or destroy the CFPB, nor change the law that created it.

Seek Legal Help from a Consumer Protection Law Firm

Flitter Milz is a consumer protection law firm that has represented victims of consumer fraud against banks and credit card companies business practices.  Contact Us if you believe you have become victim to over-reaching business practices by a bank or credit card company.

How to Secure an Auto Loan

When you’re in the market to purchase a new vehicle and need to secure an auto loan to do so, it’s always best not only to shop around for the car, but also to shop for the best interest rate and loan that works best for you.

Often times, consumers will secure a loan to purchase their dream car, but will then fall behind on payments and become delinquent. This tarnishes your credit score and may even result in vehicle repossession.

Here are some steps to take prior to securing a loan, and how to ensure that you find the best loan agreement that fits your budget.

Check Your Credit

There are a number of factors that will affect your auto loan agreement, but the most important is your credit history. Before you start shopping for interest rates, check your credit report and credit score. You can get a free credit report from each of the credit reporting bureaus, TransUnion, Experian, and Equifax, every 12 months.

Review each credit report for accuracy. Dispute any credit report errors by writing directly to the reporting agency. Negative listings that are more than seven and a half years old, like prior vehicle repossessions, should no longer appear on your report.

You should also review your credit score. This gives lenders an idea of your creditworthiness and will help determine what kind of interest rates you’ll be eligible for.

Assess Your Finances

Take the time to consider your current financial situation. Create a budget if you don’t already have one. This will help you determine how much you can afford to spend on monthly auto loan payments and will help you avoid signing an agreement that you can’t afford.

Choose a Lender

Once you know your budget, you can begin shopping around for lenders and interest rates. A higher credit score and healthy credit report will make you eligible for loans with lower interest rates. You should also consider whether you want to sign an agreement with a bank, finance company or credit union.

Credit unions may be able to offer lower interest rates than banks and finance companies, but they may only lend to members and may have more stringent credit requirements than a bank. Do your homework!

Review Documents Carefully Before Signing

Always secure your auto loan agreement in writing, and be sure to review all of the details of the agreement very carefully before signing. This agreement should provide details related to default and steps the lender can take if terms of the loan are broken.

Seek Legal Advice

Flitter Milz is a consumer protection law firm that represents borrowers that have defaulted on their auto loan.  Whether payments have been missed or not, the lender must follow the law.   Contact Us for a FREE legal evaluation.

How Increasing Interest Rates Will Affect You

The Federal Reserve recently met to discuss interest rates and, as anticipated, approved a quarter-point increase in rates. What does this mean for you, and how will it affect your overall financial well-being?
 
Unfortunately, if you carry a balance on a credit card, you’ll most likely see your monthly payments increase. Now is a good time to evaluate your finances and pay off your balances in full if you can. Paying off your balances will not only help you avoid an increase in monthly payment amounts, it will also help to improve your overall credit. 
 
If you can’t afford your monthly payments and your account goes into default, it may be sent to a third party debt collector. Debt collectors must follow specific guidelines when they contact you about your debt, as outlined by the Fair Debt Collection Practices Act. If you believe your rights have been violated, contact a debt collection attorney or consumer protection lawyer. 
 
You may also be able to negotiate a payment plan with the collector. The amount that the collector demands is often negotiable; charges like interest and late fees could be removed from the balance when negotiated. If the collector is willing to agree to a payment plan, be sure to get the agreement in writing. 
 
Credit.com also reports what the rate increase means for auto loans, mortgages, savings accounts, and refinancing.
 

Avoid These Credit Card Problems

Credit cards are useful for a number of reasons. They’re convenient when you don’t have cash on hand, and some cards carry perks like cash back or travel savings. However, you should avoid using credit for emergencies, and you should always be sure to make payments in full and on time. Carrying a balance from month to month can result in unruly interest charges that are more difficult to pay off, especially when trying to stick to a budget.

Credit Score Drop
Failing to make a payment on time just once could cause your credit score to fall as much as 110 points. Once lost, these points can be difficult to build back up and can make other aspects of your life more challenging. Your overall credit can affect your ability to secure new lines of credit, affect your interest rates, and even hurt your chances of renting an apartment or securing a new job.

Check your Credit Reports
Always be sure to stay on top of payments and check your credit report regularly. It’s not uncommon for credit reports to contain errors or inaccurate information, which could further harm your overall credit. You can request one FREE credit report every year from the three credit bureaus – TransUnion, Experian, and Equifax. Check for duplicate negative listings, someone else’s information, and any unfamiliar activity. Dispute any credit report errors immediately.

Get Legal Help from a Qualified Consumer Protection Law Firm
Flitter Milz is a consumer protection law firm that represents people in matters concerning credit reporting issues, contact from abusive debt collectors, or have had a vehicle repossession.  Contact us for a free evaluation of your consumer law concern —  whether you had fallen behind on payments or not.

Next Lawyer: Podcast Featuring Cary Flitter

Next Lawyer Up: Podcast featuring Cary Flitter

Cary Flitter was recently interviewed on Next Lawyer Up, a podcast that features discussions with consumer lawyers across the country. Led by Ron Sykstus, partner with the prominent Alabama bankruptcy firm Bond & Botes, P.C., Cary was asked to discuss his background as a born and bred Philadelphian and graduate of Central High School (231), what drove him to become an attorney, and how he chose to develop a practice in consumer protection law.  

Ron met Cary several years ago at a national consumer law conference where Cary spoke on consumer law issues. Ron found him to be a very engaging speaker. He liked Cary’s straightforward speaking style and ability to explain complex legal issues in a simple and understandable fashion. 

Cary is regarded as a well-respected consumer law attorney whose advice and counsel is sought nationwide. He has been advocating for consumer rights for over 30 years. Building a practice around litigating cases on behalf of consumers against debt collectors, banks and finance companies, insurance companies, car dealers and credit reporting agencies, Cary has been recognized for litigating cases that have broken new ground, helped to shape the law itself and set precedent for future legal decisions.

Cary’s firm, Flitter Milz, P.C., is based in the suburban Philadelphia town of Narberth, with offices in Northeastern Pennsylvania and New Jersey. He represents clients as individuals and class actions in consumer lending, unfair debt collection, vehicle financing and leasing overcharges, wrongful car repossessions, credit reporting, credit privacy, unwanted “robo” calls and other consumer cases.

Cary currently serves on the adjunct faculty at Temple University’s James E. Beasley School of Law and Delaware Law School of Widener University where he teaches Consumer Law & Litigation. He has accepted invitations to guest lecture on consumer law topics at Harvard Law School, University of Pennsylvania School of Law, and many other venues. 

Cary is a member of the National Association of Consumer Advocates and regularly presents at seminars around the country to train fellow lawyers and law students on developments and strategies in consumer law. As an author, Cary has contributed to Pennsylvania Consumer Law, the leading legal treatise in Pennsylvania on consumer law issues, and Consumer Class Actions published by the National Consumer Law Center in Boston.

 

“Next Lawyer Up: Cary Flitter” is available to listen to here.