What Should You Expect From Your Banker When Applying For A Loan?


personal loans loan problems debt consolidation banking The following post is by MPFJ staff writer Travis.  Travis is a customer blogger for CareOne Debt Relief Services, and also appears weekly at Enemy of Debt.  Travis candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband he provides a unique perspective on balancing debt, finances, and family.

I walked into our bank last November to discuss the possibility of getting a loan to consolidate our remaining unsecured debt.

We were just a few payments away from eliminating $109,000 of credit card debt through a debt relief program but had two accounts that we were unable to include in program.  I hadn’t ever applied for a consolidation loan before, and didn’t know what to expect with regard to what the process would entail, or how long it would take.

I didn’t know it at the time, but I was about to have a horrible experience.  When it was all said and done, we had been denied mainly because we still had accounts being managed by a debt relief plan.  We were told to try again after we had completed the program.

My wife and I agreed that when we made another run at it, we would go to a different branch of our same bank, and deal with someone new.  Last week we did exactly that, and had a completely different experience.

This is a tale of two loan applications; one fantastic, and one miserably sub-par. 

 

Tale #1: The Agonizingly Slow Path of Failure

My first meeting with the banker was setup at my request as an exploratory meeting.  I thought I should explain our situation with the debt relief program, what our goals were, and discuss our potential options.  The banker seemed optimistic that we would be approved and wanted to meet with both my wife and I to go over details.

We setup a meeting for a week later at his suggestion.

One week later, we both sat in the banker’s office as he asked us for some basic information, then sent us home with a list of documentation including W2s and tax forms that we needed to gather for him.  Since that meeting was on a Saturday afternoon, I wasn’t able to get him the paperwork until the following Monday.   He was to take the paperwork and submit a loan application.

The next few days were riddled with unreturned messages.  The banker was either not available, or out of the office.  Finally, on Thursday, I got the banker on the phone and found he was still working on the application.  He was to call us with an update by end of day on Friday.

Close of business came and went and no phone call was received.

We did, however, receive an email during the evening from him notifying us the loan application had been submitted, and we would likely hear back regarding the decision the next day.  The next day, of course, went by without any notification from the banker.

On Monday, I called several times leaving messages.  Towards the end of the day, I physically walked into the branch to find him in his office.  He quickly apologized for not returning my messages, and broke the news to me:  Our application had been denied.   But, he was going to attach a note to our application reminding the underwriters that we had been customers for a long time, that we were just a few months away from completing our debt management program, and ask for reconsideration.

A few more days went by.  Finally on Thursday, nearly three full weeks from our initial meeting, we were informed that our application had been denied again.  Tough luck, try back in a few months.

 


Tale #2:  The Fast Lane of Success

We met our new banker at 10am on a Saturday morning.  We quickly explained our situation, to which banker #2 nodded his head and tapped on his keyboard.

“I think we can help you now,” he said.

He asked us for our personal information, typing it directly into a loan application as we gave it to him.  He asked for the account names and numbers we wanted to consolidate, which we were able to give him since we had our smart phones handy.  He then asked for estimated income information, stating that if they needed specifics they would ask for them.  A message popped up after hitting the “Submit” button telling him that it may take up to 24 hours to turn around the application.

“Let’s see if we can do better than that,” he said as he picked up the phone.

He dialed an internal number and asked if they could expedite the loan application as the customers were sitting right in front of him and really wanted to know.  The underwriter  calmly explained that they were swamped and it would take 24 hours.

Kudos to the guy for trying.

We were in the bank for a total of 23 minutes, and in that time we were further along than in the first two weeks of our previous attempt.  When we got home I found a pleasant surprise from the bank in our email inbox.

We were able to check the status of our loan online.

On Sunday evening we were notified through their automated system that our application had been conditionally approved.  We needed to provide additional documentation such as W2s and pay stubs.  I quickly gathered them all and put them in a manila envelope.

On Monday, banker #2 called and reiterated what we already knew.  When I delivered the documentation to him, he made copies and was told to expect a phone call from him the next day.  True to his word, he called Tuesday morning telling us we could come in at any time to close on the loan.

Three days after our initial meeting, we signed the paperwork for our approved loan.

 

Lessons Learned

These were obviously two very different experiences from the same bank no less, even if you disregard the decision on the loan. Having gone through these two experiences, I learned several lessons that could benefit anyone who may be looking to apply for an unsecured personal or consolidation loan:

  1. Filling out a loan application takes minutes.  Banker #2 did it while we sat in his office and watched!
  2. Gather the account number and balance of any accounts you want to pay off with the loan
  3. Collect W2 forms from the last two tax years for all income streams and make copies of them
  4. Collect the last pay stub from all income streams and make copies
  5. Bring the information from 2,3 and 4 with you to your meeting with the banker
  6. Ask your banker how long the decision will take, and if they have a way for you to check  he application status online.
  7. Get a business card from your banker, and ask for his schedule so you know when he will and will not be in the office.

Knowing and executing these pieces of advice will help speed up the process of applying for an unsecured loan, not to mention reduce your own stress level while you go through the process.

How about you, readers? Have you ever applied for a personal or consolidation loan?  What was your experience like?

***Image courtesy of Stuart Miles / FreeDigitalPhotos.net

How to Avoid Taxes at Retirement


retirement The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

Don’t you just love paying taxes?

Of course you don’t. Nobody does. Sure, some of the taxes we pay are for the good of the community, but it seems that much of the funds are spent for products and functions that we could care less about. Often times, I figure it would be best if I could just avoid as many taxes as possible, which is how this article came about. If you are interested in keeping your money, rather than gifting it to the government, you may want to keep reading.

 

1) A Low Income During Retirement

Just like when you’re working, your tax bracket is dependent on how much you earn each year. If you can live off of very little, then you will land yourself into a very low tax bracket and only owe the government a miniscule amount.

I know this might not sound like a great solution (since you might be assuming that you have to live an unhappy life just to avoid paying taxes), but if you have absolutely no debt then how much do you really have to spend to survive? You’ll need some money for food, clothing, insurance, and gas. That’s pretty much it. A happy life can be had for less than $1,000 a month (believe me, I’ve done it, and that was with a mortgage payment!).

If you plan to retire before the age of 59 ½, don’t sweat it, this plan will still work for you. According to Section 72(t) of the tax code you may withdraw a set amount each month from your 401k and receive no penalty. So, if you have no debts and are able to live off of very little, then this tax avoidance method should work fantastically for you.

 

2) Contribute to a Roth IRA

If you are worried about paying taxes during your retirement, then why not just get them out of the way now while you have a consistent income? By investing in a Roth IRA, you will be putting money away for your retirement and paying tax on it, but when you withdraw it in your retirement years you will not need to pay any tax whatsoever!

 

3) Contribute to Your Health Savings Account

If you currently have the high-deductible insurance plan through your work, then you most likely have the option of contributing to a Health Savings Account (HSA). This is an excellent option and I would strongly recommend it as a way to both grow your money and to avoid paying taxes.


Your dollars are put into the HSA pre-tax and as long as you spend the money on medical products or services (this includes vision and dental as well), then you will never pay taxes on this money. Better still, if you have over $2,000 in your HSA account, then you can invest your money and grow it exponentially for your retirement years. And, if by the age of 65, you have not used the money on medical expenses, you can start withdrawing the funds for non-medically related purchases as well without penalty (although, you will pay tax at this point).

 

4) Invest in Your Home

As home prices are rising again, the strategy of buying a home, living in it for a while, and selling it for a profit is making more and more sense. If you are handy and have a knack for picking out properties that will increase in value, then this might be a great option for you.

All you have to do is find a foreclosure in an excellent neighborhood, move in, put your hands to work and restore the house to appeal to the masses. After two years you can sell the house for thousands of dollars in profits and pay absolutely no taxes on your earnings (up to $250,000). As long as home values steadily rise, this is an amazing opportunity for anyone to earn some tax-free money, not just retirees.

 

5) Draw From Social Security

If you earned an average wage throughout your working years, then your Social Security checks will not be taxed. As long as this program continues, this is a great way to earn a non-taxable income in your retirement years.

 

6) Earn Capital Gains, Not Income

If you have a large income and often pay many taxes because of your high tax bracket, then you might want to earn more of your money through capital gains where the standard tax is just 15%. Capital gains are paid on the money earned through the buying and selling of assets. This phrase is often used in reference to stock earnings, but could be used for any asset that is bought and sold for more than the purchase price. If you have the ability to buy low and sell high, then the cap on your tax payment is 15%. Not a bad deal.

How about you all? How are you going to avoid paying taxes in your retirement years?

Share your experiences by commenting below! 

***Image courtesy of https://c2.staticflickr.com/8/7251/13291209304_81478cdc9d_z.jpg

Technology Is Not Always the Answer


technology financial planning The following post is by MPFJ staff writer, Grayson Bell. Grayson, who runs the finance blog Debt Roundup, is a fan of personal finance, brewing beer, and working on cars.

There is no doubt we are a technically advanced society.

Almost everything we do revolves around technology. Some of our biggest advancements have spawned from the evolution of technology.

Just look at what the smartphone has done to our society. We are now instantly connected with people from anywhere. Not only that, but we can surf the web with a flick of our finger. The smartphone has almost killed the pay and home phone. They also allow us to get information quickly and easily. The same goes with email. Look at what it has done to our communication. The need for letters and mail has been reduced dramatically as we no longer have to write and send communications through “snail” mail. We can instantly shoot a reply right to your computer with a few clicks of a mouse.

By all standards, technology has allowed us to do some amazing things. We have been able to advance our healthcare, build better products and services, and the list goes on. While we all might think technology is the best thing since sliced bread, I do believe there is an evil side to technology. I think it is not always the answer.

 

Where Technology Goes Wrong

Don’t get me wrong, I love technology. My main job is revolved around it. I wouldn’t be able to blog like I do everyday without it. I do think it is an important aspect of our everyday lives, but it is not every part. At least not in mine. Over time, I feel we have lost some of our ability to comprehend what we learn around us.

Before technology was in mass, we had to absorb the lessons all around us. We would learn from other people right next to us. We would learn most of our skills from our parents, friends, teachers, and family members. We would think for ourselves and come to our own conclusions. I think technology has dumbed that down quite a bit. Have you ever been in a conversation with people who couldn’t answer any questions without looking them up in Google? Well, I have and it is utterly frustrating. I have met people where they couldn’t come to a conclusion to something without checking what people on Twitter said.

I am all for being connected, but it has been pushed to a point where we have lost our ability to think and comprehend for ourselves. Now we have to throw stuff out to the social world and see if they can help. Technology has slowly become the downfall of our basic communication skills.

 


How Technology Inhibits Us Financially

I have written before about how managing money is all about basic math. There is nothing fancy about it. This number plus this number minus this number. We all think we understand math, but I have seen otherwise.

With the influx of great financial technology like Mint.com or YNAB, we do not have to handle reconciling our money anymore. We can create a budget in software and have it hook to our bank accounts. We set up spending limits and then call it a day. The software takes care of the rest and notifies us when we are going wrong. I loved these services and still use Mint.com today. The difference between now and when I was first in debt is how I manage my money before I even look at Mint.

Now, I go back to basic math. I have brought the skill back where I can calculate how much items will be with tax before I even check out. I was never good at math in school. It didn’t interest me and I didn’t care. After I got into debt, numbers started to jump out at me. I looked everywhere to find numbers and found them in the strangest places. After a few years of getting back on my feet, I realized I had taught myself how to do complex math problems in my head on the fly. The better part is I could do basic math problems really quickly without the need of technology or calculators.

In order to get your finances back in shape, don’t be worried about stepping away from technology and relying on what your brain tells you. Remember, basic math will take you all the way you need to go with finances. If you need any complicated equations, then think about using a calculator or even put your finances in the trusty spreadsheet. Yes, it is technology, but you have to do all of the work and come up with how the math equations are run. I use spreadsheets for most of my numbers. Not only does it become a great budget spreadsheet, but it also is a fantastic math learning tool.

Technology is not always the answer to all of our problems. We have to remember technology was created by people who thought outside of the box and applied things they had stored in their brains. I do believe too much technology does make us a little dumbed down than we should be. Unfortunately, I have come across too many people that back up my statement. If we continue to over complicate how we manage our money, we might not ever understand the real reason we are having money troubles. Technology is going to be a part of our lives, but it doesn’t have to be every part.

How about you all? For your finances, are there certain areas where you prefer to do thing “the old fashion way?” 

What technological tools do you use in your finances?

Share your experiences by commenting below!

***Photo courtesy of https://www.flickr.com/photos/katerha/5520292679/sizes/l

Why It’s Easy To Save Money In The Summer

saving money hobbies frugal living financial planning This is a post by MPFJ staff writer, Jeff. Jeff writes about Sustainable living and finances at his website, Sustainable Life Blog and chronicles his (semi successful) journey to earn money online at onlinesideincome.com. Jeff enjoys spending time with his wife and dreaming about financial independence.

I am so glad it’s finally summer – it is my favorite time of year.

The weather where I live (Wyoming) is perfect – always sunny and not too hot. There is so much daylight to take advantage of, and I just cant help but feel energized every day when I wake up. Summer is a great time to have some fun and enjoy life, but summer is also a great time for one of my other favorite things – saving money.

The first thing that summer helps me save on is entertainment. Every Friday night in my town, there is a free concert, which typically lasts from 6-8 pm. My wife and I go down there, meet and chat with our friends, enjoy some live music and relax after a long week in the dwindling daylight and company of great people. Even though these acts are not big names, they do play enjoyable music, and both my wife and I like the time to catch up with friends that we don’t get to see much during the week. If we were to arrange something like this when the weather is not nice, there would no doubt be a cost associated with it (even a small one) due to travel, finding an activity, bringing food to a dinner, etc etc. These concerts are a great free way to hang out and enjoy all that the summer has to offer. You don’t need to go to an “organized” activity to enjoy the nice weather outside though. Consider taking a walk through your neighborhood at night or head over to a local park with your family and enjoy!

One of the next things that I love about summer is riding my bike. I am a pretty die-hard commuter and very against driving (I have not driven to work in 3+ years), but the summer time allows for me to ride my bike to more places than just work. I can ride it to the hardware store or to go pick up groceries, and I don’t have to worry because it’s almost always very nice out and riding my bike isn’t as much of a chore during the summer as it is when the weather is mediocre or downright poor. The best part about this is that I’m not the only one in town who feels this way, so I see a lot more bikers during the summer when the weather is nice than I do when the weather is not nearly as good – it makes biking much more fun!

My most favorite thing about the summer time though is that I can finally hang my laundry out to dry with out it freezing solid! I love to dry my clothes outside because they come in all dry and they smell so fresh! Hanging the clothes out saves us so much energy and so much money during the summer that we try and do it as long as we possibly can. The weather does not always cooperate for us, but we can usually knock 15-20 dollars per month off of our electricity bill (or more) when we hang our clothes out to dry.

We love the nice weather during the summer and all the opportunities it provides us to enjoy the outdoors and save some money.

How about you all? What do you like to do during the summer time that is cheap or free?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/shedboy/3627728169/in/

Can You Rent a Car Without a Credit Card?

rental cars rental car insurance The following is a post by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

Most people generally assume that you need a credit card if you plan to rent a car from a car rental company. While it’s typically easier to get a rental with a credit card, it turns out that it’s not an absolute requirement.

Since methods of payment have become more diverse in recent years, car rental companies have responded by being more flexible in the methods of payment they will accept.

 

Acceptable Forms of Payment – Apart From Credit Cards

In addition to credit cards, there are at least three other forms of payment that are accepted by car rental companies, some more common than others.

Debit cards – Debit cards are in common use, and widely accepted by car rental companies. Typically, if you use a debit card to rent a car, the car rental company will run a credit check on you, as well as imposing a deposit requirement – generally $100 to $300 – which will be reserved on your debit card until you return the car and settle the bill. However, car rental companies are increasingly imposing the same restrictions for people who use traditional credit cards to rent their cars. The difference between renting a car with a credit card or a debit card is becoming increasingly small.

Cash – This payment method comes as a surprise to most consumers, not the least of which since car rental companies don’t advertise their willingness to accept cash. But several car rental companies actually do, though the terms under which they will vary widely from one company to another – or even from one rental office to another within the same company.

Prepaid debit or gift cards – Some companies will accept these as a form of payment at the end of your rental, but they cannot be used to reserve your rental, or as upfront payment at the time of actual rental. Typically, you’ll need a credit card or debit card for both credit verification and upfront rental authorization, but the rental company will accept your prepaid debit or gift card as final payment when you return the car.

The limitation on both prepaid debit and gift cards is that each is for a fixed amount. There is no room on these cards for a car rental company to pursue additional compensation in the event that you retain the car beyond the agreed upon rental period, or return it in less than perfect condition.

Now that we’ve established acceptable payment methods beyond credit cards, let’s take a look at three major car rental companies and their individual policies in regard to the acceptance of cash in particular (since all accept debit cards, but only very limited use of prepaid debit or gift cards).

 

Hertz

Hertz has the most accommodating policy in regard to acceptance of cash for a car rental. You can even use cash for the upfront rental, however you must first obtain a Hertz Cash Deposit ID Card. Since cash is problematic for a car rental company (no paper trail to identify you), they use the ID card to overcome that issue.

It order to be eligible to obtain the ID card, you must be at least 18 years old and pay a $15 nonrefundable processing fee.

IMPORTANT: The application for the Hertz Cash Deposit ID Card will take at least 30 days. For this reason, you will not be able to show up at one of their stores and rent a vehicle immediately. If you plan to pay for your rental with cash, you will need to complete your application and have it ready to go before you need to rent a car.

 

Enterprise

Enterprise has its own procedure for cash paying customers. They call it the Cash Qualification Process, and unlike the Hertz Cash Deposit ID Card – which is good for a specific length of time – the Enterprise version must be done each and every time you want to pay cash for your car rental.

In order to qualify, you must provide the following:

  • Two current utility bills
  • Most recent paycheck stub
  • Driver’s license issued from the rental state (you’d do well to presume that this provision prohibits paying cash if you are renting a car outside of your home state)
  • A minimum deposit plus the entire cost of the rental at the time of pickup (Deposit amounts vary by location from $100 to $300)
  • Proof of insurance
  • Personal reference (no specifics are given on the types of references that are acceptable)

If the amount of cash that you have paid exceeds the final cost of the rental, you will be credited back to your account within 15 business days.

IMPORTANT: The company website warns that not all locations will accept cash payments even if you qualify under the Cash Qualification Process. If you plan to pay cash for your car rental with Enterprise, you need to check with the specific location where the transaction will take place, to make sure that they are willing to accept cash.

 

Avis

Avis is the least cash-friendly car rental company. They will accept cash as full payment upon the return of your vehicle, however in order to reserve or rent a vehicle upfront, you must have either a credit card or a debit card.

The only place on the Avis website that clearly indicates the acceptance of cash – on this very limited basis – is the FAQs page, and you must enter “Requirements for renting”, then “Forms of payment” to find the policy at that.

At any car rental company, and especially if you intend to pay with cash, you should check the company’s website, or call their 800 number, to get the specifics. Not only does each company have its own requirements for the acceptance of cash (or any other payment method), but they may not accept that at all locations, and company policies do change from time to time.

A credit card is always the best way to rent a car, but it’s also nice to know that there other options if you need them.

How about you all? Have you ever used a form of payment other than a credit card to pay for a rental car? Why or why not?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/fanofretail/8615633564/sizes/n/