Since Earth Day is this Sunday, April 22, 2012 it seemed like a perfect time to write about the ways we can help Mother Earth while saving money in the process. When people thinking about going green they often think about how it is too inconvenient and how it will drastically change their lifestyle. This doesn’t have to be the case. There are many ways you can help the environment without making any major changes and you may even save a buck or two.
- Bottle your own water – In 2009, Americans spent $9 billion dollars on bottled water. If you spent $15 a week on water that adds up to $780 a year for something you can get for free. There are many different types of containers, even ones with built-in filters, which can reflect your own personal style.
- Brew your own coffee – Coffee can be a huge budget buster for most people. If you only drink 1 cup per day 7 days a week at a cost of $3 a cup that’s $1092/year. Realistically the fancy coffee drinks at Starbucks cost a whole lot more. By brewing it at home or in the office you can save money, reduce the amount of coffee cups you use and sport some fancy travel mug.
- Borrow a book or go electronic –If you spend a lot of money on books each week you may want to consider going to the library instead. You not only save money, you reduce waste and you don’t have all those books hanging around. E-books will save you a little money compared to their paper counterparts plus they reduce paper and don’t take up space. Many magazines have electronic editions. If you need to buy books, try used. It’s better for the environment and it gives the book a new life. Also sharing magazines and books with friends is another money saving idea.
- Buy antique or vintage –Instead of furnishing your home with disposable furniture made from particle board that will eventually fall apart, buy used. Many antique or vintage items are back in style, are better quality and will last longer.
- Reuse, repurpose and recycle –By repurposing items, donating them or selling them you give the items a new life and protect the environment. Plus you save/make money in the process. One example, repurposing an old spice rack with jars to store screws, hooks, nuts or bolts you save money on buying an organizer plus you can easily find the items. Try sites like thredup, eBay and Craigslist for used clothing, toys, furniture, books and more.
- Use grocery bags as trash liners –Reduce your environmental footprint, save money and keep your trash can clean.
- Regular vehicle maintenance –It extends the life of your car, extends the tires and improves your gas mileage when you keep your vehicle in tip-top shape. So it saves you money and your carbon footprint.
- Avoid vending machines –A huge budget/gut buster is vending machines. Instead buy your favorite snacks in bulk and store them in an airtight reusable container. You save money and waste.
- Dine in–Eating out can be costly. Instead get out your favorite dishes and eat with family or friends. Talk, laugh, play games and have fun without spending money or wasting resources.
- Go paperless –Online bill pay is convenient as well as easy. You can even send yourself reminders or have payments taking out automatically. It also helps you save money by avoiding late fees and stamp. Plus it reduces the amount of paper being used.
Some other ways people go green are by using recycled building materials for their home improvement projects as well as buying energy efficient appliances. Some people will buy a more environmentally friendly mode of transportation, upgrade their HVAC systems or move closer to work. If you're looking for ways to finance some of your green endeavors, your future payments might be the answer. To get a free market evaluation, please call Rescue Capital 866.688.3532.
With the end of the year approaching many people are starting to make resolutions. Some of which include getting out of debt. Instead of making a resolution, I would make improving your finances a priority for 2012. To help you get started here is a list of our favorite financial blogs.
- Rescue Capital – Our blog contains a little bit of everything from budgeting to selling your future payments.
- Get Rich Slowly – This blog provides practical advice on saving money, getting out of debt and investing.
- Kiplinger – Gives advice on personal finance and how to secure your future.
- MSN Money – Saving, investing, retiring and getting out of debt advice.
- Smart Money – Advice on how to save, spend, borrow, plan and more.
- Learn Vest – How to live frugally.
- Savvy Sugar – Advice on money, careers and travel from a woman’s point of view.
- The Consumerist – Gives independent advice on scams, deals, issues, recalls and more allowing to readers to make informed buying decisions.
- Daily Finance – Money and finance tips galore.
- Bankrate – Bankrate publishes personal finance tips as well as rates on mortgages, credit cards, savings accounts and more.
Payday loans, sometimes called paycheck or cash advances, are short-term loans of $100-$500 that are used to cover one’s expenses until the borrower’s next payday. Not legal in all states, these loans have caught the attention of consumer protection agencies due to their interest rates and business practices of late. Is all of the flack warranted and if so, what alternatives do consumers have to these small, short-term loans?
How do payday loans work?
According to Consumers Union, the non-profit publisher of Consumer Reports, borrowers typically write a personal check for $100-$300, plus a fee, payable to the pay day lender. The lender holds the check until the borrower's next payday, around one to 4 weeks later. The check is then deposited. The borrower gets cash immediately but not cheaply. Internet based lenders require your bank account number and the money is withdrawn from your account. Sometimes, much to the borrower's dismay, the amount taken far exceeds the amount they anticipated, according to the Better Business Bureau.
How much does it cost?
The fees for payday loans vary but tend to be extremely high. Consumers Union states that they are up to $17.50 for every $100 borrowed. The interest rates for such transactions are staggering: 911% for a one-week loan; 456% for a two-week loan, 212% for a one-month loan. Most lenders do not publish their rates on their websites but some consumers have complained to the Better Business Bureau about rates larger than 1000%.
Issues at hand
Besides the obvious cost, there are other issues with these types of loans. First, if you can’t pay the loan off you start a vicious cycle of debt with compounding high interest rates and additional fees. Also, if you don’t have the money in the account you get hit with additional fees from the lender as well as bounced check fees. While in some states there are some regulations or restrictions, these types of loans and the interest rates are unregulated for the most part. In addition, to avoid regulation several lenders have gone into business with Native American tribes because they are considered sovereign nations so the legislation does not apply to them.
Consumer advocates say payday loans are highly addictive and most people will continue to use them, digging themselves into a deeper whole. Many consumers are deceived by these loans and are often harassed or coerced by illegal threats as well as aggressive collection practices such as threatening the individuals with jail time. Advocates suggest that some lenders deliberately deposit the checks earlier in order to impose additional fees on the borrower.
What are the alternatives?
- Speak to your creditors – You may be able to negotiate a payment plan with them
- Credit cards/Secured credit cards – Try using a credit card. There are cards designed for people with poor credit or little credit history. But make sure to check them out on the Better Business Bureau website and read all your paperwork regarding fees.
- Peer-to-Peer Lending – There are two major peer-to-peer lenders (Prosper and Lending Club) that offer short-term loans. Their rates are considerably less than the rates payday loans charge even for people with poor credit.
- Credit Unions – Many credit unions offer short-term loans to their members and the interest rates a far more competitive.
- Get a Loan – Some lenders offer small lines of credit to consumers with less than perfect credit histories so it is worth checking into getting a loan.
- Credit Card Cash Advance – While the interest rates of these cash advances tend to be lower than pay day loans, they can still be costly.
- Sell your Stuff – Sell your unwanted items on eBay, Craig’s List or a pawn shop. This will allow you to get the cash you need without having to pay interest.
- Pawn It – Get a pawn loan using an unnecessary item as collateral.
- Get Counseling – Consult a not-for-profit, licensed credit counseling service to help you get out of debt.
- Sell your Future Payments – The rates for selling your future annuity payments are the lowest to date. These rates are less than the majority of the lending products mentioned. In addition, there’s no credit check or money to pay back. You can get yourself out of debt and start fresh.
Remember, no matter which options you choose do your homework. Research companies with the Better Business Bureau, read your paperwork and know who you are dealing with to ensure that your transaction is in your best interest.
With banks saying no to small businesses as well as other “high-risk” borrowers there is definite need for alternative financing. One fast growing market segment is the peer-to-peer loan which allows borrowers to sidestep banks to secure loans from peer lenders. Prosper and Lending Club, the two most popular services, managed to generate more than $500 million in loans during the past 5 years. The majority of which were used to pay off debt but many small business owners are using the sites as well.
The way the sites typically work is that borrowers pay a fee to connect with lenders who in return lend anywhere from $25-$1,000 per loan. The lenders are paid interest on the money based upon the degree of risk. In other words, the better the credit score, the lower the interest rate. Lenders pay a servicing fee to the services and receive their payments monthly through the site. Typically these loans are more affordable but there are some pitfalls.
So if you’re looking to pay off debt, which is a better option selling your future payments from your annuity, structured settlement or illiquid asset or obtaining a peer-to-peer loan.
Peer-to-Peer Loan Pros
- Apply in minutes
- Get funded in days
- Potential for lower interest rates
- No court approval process
- Borrowers build credit
Peer-to-Peer Loan Cons
- Not offered in every state
- Loan terms are inflexible
- Monthly payments
- Fees for missed/late payments
- Missed or late payments could hurt credit score
- People with low credit scores can pay as much as a 5% origination fee and as much as 34% interest depending upon the site.
- Credit checks (Not everyone is approved)
Selling Future Payments Pros:
- Get access to your money quicker than waiting for your periodic payments
- No monthly payments to make
- There is no defaulting or affect on your credit score
- You don’t have to sell all your payments
- The discount rate is usually less than what you would pay on the riskier loans or sub-prime credit cards
Selling Future Payments Cons:
- Since selling your future payments is not a loan it has no impact on your credit history
- When you sell some of your future payments, you will be decreasing the amount of money you will receive in the future. Therefore it is important to determine a budget
- When you sell your future payments from a structured settlement you need to go through the court approval process which takes a little bit longer than getting a peer-to-peer loan