When it comes time to do your taxes, it is always beneficial to take as many tax deductions as you possibly can.  If you can legally make the deduction, it won’t be considered cheating on your taxes.  You just want to be sure that you are paying the least possible amount on your taxes.  Sometimes people miss deductions they have available and end up paying more taxes than they should.  That is never fun.

When figuring out your gross income, you have to include basically any money that comes in to you.  This includes your ordinary wages, extra income, interest, dividends, etc.  The only money coming in to you that is not included is cash that you get in the form of a loan.  If someone lends you ten thousand dollars, you don’t report that as income.  If someone owes you ten grand and pays you back in full without interest, you don’t have to include any of that income in your taxes.  However, if you have ten grand in your savings account and you accrue five hundred bucks worth of interest in the year, you do have to include that in your taxes.

Now what sort of interest payments can you deduct and use to offset your total tax bill?  Well the only sort of of interest a regular working individual may deduct is the interest on their home loan.  Your mortgage interest is deductible up to a million dollars worth of principle.  So for example, say that your mortgage is 500k and you end up paying 30k worth of interest in a given year.  You may deduct that 30k against your income.  However, if your mortgage balance is 2 Million and you end up paying 120k worth of interest that year, only half of it is deductible.  Also, it is only the interest portion of your payments that are deductible.  You are typically paying back some of the principle with each payment, and that part is not deductible.

So what other types of interest are deductible for an individual?  Well, pretty much none.  You can’t deduct the interest on your car loan, the interest on your credit cards or the interest you are paying on that loan for your new big screen TV.  However, if you owned a business and your business took out a loan to buy a car, your business could deduct the interest on that car loan against the profits for that year.

So what is the morale of the story?  Your home loan is probably the best debt you can have.  If you get the opportunity to roll your credit card debt, car loan, etc. into your home mortgage, do it!  Not only are you going to get a lower interest rate, but you are also going to be able to deduct the interest payments from your ordinary income!

It is a lot easier to buy things when there are very manageable monthly payments involved rather than one lump sum payment.  You can justify a few extra bucks a month a lot easier than you can justify dropping a few hundred or even a few thousand on something before you even take it home with you.  Unfortunately, a lot of people fall victim to this flawed thinking.

Racking up some debt is OK for some instances, mainly when the cost of not having something is greater than the cost of having that desired item.  For example, if you could get a much higher paying job by financing a new car, it would be considered a good investment.  Yes, you would have to me making the monthly payments on your new car, but at the same time, you will be making a lot more money at your new job.  In the end, you will benefit financially by taking on the additional responsibility of the additional monthly payments.

Also, it would make sense to take out a mortgage to buy a house.  You are going to have to make monthly rent payments anyway, so why not be paying down a mortgage on a property that is hopefully increasing in value while you live there?  Makes total sense to buy unless you absolutely cannot afford it.

However, does it make sense to buy that new big-screen plasma HDTV with the surround sound that you always wanted?  You would have to have two thousand in cash to buy it outright at the store today, or you can select the financing option and not pay a dime for 6 months!  After that six-month period ends, you will be paying double for the set through your monthly payments.  How is having the nice TV going to pay off financially?  Unless you were planning on charging people to watch it, this investment won’t be paying off financially.

This is what we call a luxury item.  It is not purchased as an investment in hopes of making extra money.  It is not an living essential that we will need to survive and stay healthy.  It is a toy; it is an unnecessary item that we could live without.  It is a want rather than a need.

So what happens if you rack up a little too much debt and you cannot make your monthly payments?  Well after you get a bunch of nasty letters in the mail, someone is going to come to your house and take your nice new TV away.  Even after they take your TV back, you will probably still owe a considerable amount on the loan.  Don’t think that just because they have the TV that you are off the hook.  They will still come after you for the bad debt.  They might even pass you off to a collection agency who will continue to pester you with letters and nasty phone calls.

If you still don’t make the monthly payments, they will report it on your credit and lower your credit score.  The next time you want to finance a TV, it might be a little more difficult.  Even if you want to use financing to make a good investment (a house), you are still going to look bad for that defaulted TV loan.  What a bummer!

If you are thinking of borrowing money, the first thing you want to do is have a look at your own credit.  This is a good idea because the lender will always run your credit before they hand you over a sum of money.  It helps to know your own credit score and history before appling for a loan so that there are no surprises.  But what happens if you have less-than-stellar credit or simply a terrible string of unfortunate events that led to a miserable credit report?

You do have some options available to you.  One option that a lot of people will opt for is signing up to some sort of credit repair service.  They claim that they can help you get your bad credit back on track by removing poor histories and adding on more positive events.  Unfortunally this is typically impossible to perform legally.  The best way you can help your credit is by doing it yourself.

There are a few things you can do that will help skyrocket your credit score, but it always takes some time and never happens over night.  The first thing you are going to want to do is start paying off any overdue payments or bills.  Save up some money to get all your finances back to a stable place.  Once your personal finances have stabled off, take some time to look at what credit you currently have.  If you don’t have much that is building credit, consider applying for some credit cards.  Just be sure that you can control yourself when you get the extra spending power.  Be sure to keep your balances low and aim to pay your cards off each month.

Sorting out your current situation and starting to build positive credit history is going to help you raise your credit score over time, but what about removing negative events from the past?  I’m no credit expert, but take the time to look at all the bad items on your credit history.  Make sure that they are all legitamite claims.  Sometimes something that is not supposed to be there will be on there.  Assuming everything on there is your fault, check to see how long items like that are to be left on your credit report.  A foreclosure from 15 years ago shouldn’t be on there.  Odds are that you can’t do much but wait around for negative things to come off your report, while trying to build positive history.

Eventually, your credit will be back to where it was, saving you thousands in interest for car loans, mortgages, etc.  Just make sure to maintain a quality credit report and not slip back to old habits.

If you are looking for a personal, no credit check, loan, you are probably in the market for some sort of payday loan or cash advance.  Unless you want the banker to go through your credit profile and take a look at your credit report, you are going to want to stick to some sort of cash advance.  The only problem with a cash advance is that they are usually very short term.  You are expected to pay the entire balance plus fees back by the time you get your next paycheck.  Of course, you can pay it back in full by taking out another paycheck advance if you want - you just have to pay the fees out of your own pocket.

So, if you are in the market for a personal loan that requires no credit check, you are probably not going to get exactly what you want.  Here are a few options if you need some sort of loan but you don’t have the best credit, or you have flat out bad credit:

1. Start getting your finances straight and find the root of your problem.  If you need to borrow money to pay the bills, buy groceries, make the rent, etc. then there is something not right with your finances.  Spend the 10 or 15 bucks that it takes to buy Personal Finance for Dummies and invest the few hours to read it.  People often make excuses about their financial troubles (my boss is a jerk and won’t give me a raise, my wife spends too much, the landlord keeps raising rent, etc.) but only you have the power to fix your financial issues.
2. Your poor credit is preventing you from borrowing money, or it is making you borrow money at an interest rate that is more than you can afford.  Try contacting a few different credit repair companies and seeing what ideas they have about getting your credit back on track.
3. If you have available credit card balances, see if you can get some credit card checks to hold you over until you have your finances back on track.  If you don’t have any available credit on your credit cards, consider signing up for another card to get at some more credit.  I only recommend doing this as a temporary means to get out of a tight situation.  Once you get through this financial crisis, you should be taking steps to eliminate some of the debt that has accumulated.
4. Use peer-to-peer lending to secure a personal loan.  If you have poor credit, you still run the risk of having an inflated interest rate or not having your loan funded at all.  At least spend the time to check out some different sources online.  It is worth a shot and can get you out of a stick situation.
5. Sell stuff.  If you have items that are of high value, such as baseball cards, a car, nice TV or stereo, you might consider liquidating some of your nicer stuff to pay off immediate expenses.  Who knows, these expensive items might be the things that got you into your financial mess in the first place.

No money down, 0% APR, no payments until next year.  These are all phrases that we hear a whole lot these days.  Consumer financing has become available almost anywhere for nearly anything.  It used to be that you could get financing for your house and car, but now you can even get financing for a vacuum, couch or even clothes!

The need for immediate satisfaction is really the driver behind the availability in financing options.  You see that flat screen TV advertised in the newspaper with the “No Money Down” and “No Payments for Two Years”.  After that, it is only a hundred bucks a month for a couple of years.  No problem, I can afford that!  Well… can you?  By financing your TV, you are overpaying by a huge margin because of the cost of interest.  Once you have everything paid off, you ended up paying way more than the sticker price for something that has already lost a ton of value.

Just because you are making installments on something, doesn’t make it any less expensive.  $900 seems like a lot of money, but $30/month for three years sounds like a lot less, even though it ends up being a lot more.  Also, you might not have $900 just lying around to spend on a TV, but can easily commit to $30 a month for the next three years.

Financing something that you can’t afford and can easily live without may make sense in the short run, but it will really end up hurting you in the long run.

Financing an investment is called “leverage” and is usually considered a good thing.  It helps you make more money.  Financing a consumer good is called “consumer debt” and is usually considered a bad thing.  It helps you spend more money.

Just make sure you really need something before you buy it.  One trick I use is the 21 day rule.  If you see something that you want, promise yourself that you won’t buy it for 21 days.  If, at the end of those three weeks, you are still just as excited about it, go ahead and buy it.  If you aren’t, it might mean that you were only caught up in the moment and you really don’t need that item.