Credit Worthy?

Happy New Year! It’s January 1^st, 2011 and you know what that means: “New Year’s resolutions”. Lots of people focus their resolutions around losing weight, getting healthy or getting more active in something they disregarded last year. Why not consider your financial health?

The economy is slowly bouncing back, and during this transition, it’s getting tougher and tougher to obtain credit to buy houses or other big ticket items. You may have been one of the thousands of people who received a letter from your credit card company in 2010 stating they were “lowering your credit limit” or “increasing your interest rate”. Just because you received one of those letters, doesn’t necessarily mean that your credit is bad.

Want to know if you’re in good shape or not? There are a couple things you can do.

  1.   Get your annual credit reports (for free) 

        2.      Get your credit score (for free)

You are eligible for one free credit report from each of the three major agencies:  TransUnion ®, Experian ® and Equifax ®. There are many websites that enable you to do obtain them. My preference is: https://www.annualcreditreport.com/cra/index.jsp . The site allows you to obtain all three reports at one time all from the same site. All reports are FREE. Keep in mind, you can only get each report free once per year. When you get your credit report, look it over with a fine tooth comb and identify any/all inaccuracies or discrepancies. If you’re lucky, there won’t be any, but there’s a chance (during this age of identity theft) that there are lines of credit on your report that you didn’t open or there may be a discrepancy about “late time” payments. If you find any, you must contact that creditor in writing to dispute the inaccuracy. This is how you clean up your credit. Also, most credit agencies will offer to provide your credit score for an “excellent price”, I suggest you pass up that offer and get your score the free way.

You are able to obtain your credit score for free whenever you choose. All you have to do is go to your place of banking (i.e. credit union or bank) and meet with a loan agent. Tell them you want to know your current credit score. Now keep in mind, they are “running your credit”, and it’s not good to have your credit ran often. Only get your credit score once per year (around the same time you obtain your credit reports). If you have your credit ran several times during a short time, it will cause your credit score to go down.

Now to the good stuff; How do you know if your credit score is good or bad? Well, I’m glad you asked. When you receive your credit score it will either be your “FICO” score or “Vantage” score. Here are the ranges and ratings. Compare your score to these charts to identify where you stand.

FICO Score	Credit Rating
760 – 850 700 – 759 660 – 699 620 – 659 580 – 619 Below 579	Excellent Very Good Good Below Average Poor Very Poor

               

Vantage Score	Credit Rating
901-990 801-900 701-800 601-700 501-600	A B C D F

Here’s what the credit scores are based on:

Vantage Score	FICO Score
– Payment History – Utilization – Balances – Depth of Credit – Recent Credit – Utilization	– Payment History – Length of Credit History – Amounts Owed – Type of Credit – New Credit

Once you have your credit report and credit score, you will have a better idea of where your credit stands. It’s important to know your circumstances because if there are some legitimate issues, you want to know about them so you can address them. Take charge of your credit situation and reap the benefits of having excellent credit. If you have questions regarding your personal credit situation, please seek expert advice. I hope you found the above information useful. Have a great 2011!

(The information in this article is intended for informational purposes only. It is published with the understanding that the author is not engaged in rendering legal, accounting, or other professional advice. If legal advice or other expert assistance is required, please seek the services of a professional person.)

Empty Printer Cartridges Pay Cash

Ever wonder what to do with those empty ink cartridges that build up near your computer printer? Turn in them into money. Office Max has a program which enables you to gain $3 per empty cartridge turned in. The payment is paid out as a store credit that can be used towards the purchase of any items from Office Max.

Office Max Ink Program

What’s interesting is that most people don’t even know programs such as this exist. As a result, many people end up throwing the cartridges away or letting them build up in a dusty corner. Know of any other payment recycling programs? If so, please add comments to this entry with those programs.

Black Friday Deals Aren't Real!

Black Friday Deals…Myth or Reality?

Well, both actually. There’s an old saying that comes to mind when wondering if Black Friday Sales are really good deals or just mumbo-jumbo fancy marketing to get you in the store. “If it’s too good to be true…then it probably isn’t”. Most people know the difference between a really good deal and a deal of a lifetime. A deal of a lifetime only comes once in a lifetime, not every year the day after Thanksgiving.

I’m not saying the super-duper discounts are fake prices where when you enter the store you’ll see a different price. What I’m saying is your chance of getting that product (it being available when you arrive at the store) is slim to none. Even if you are one of those people who will get up at 2am and stand in a long line for hours with hopes of being one of those people who get the product at the super low discount, it’s just not worth it. It’s very ironic that the stores seem to have small limited quantities of those products that are very low priced, but they have unlimited quantities of the products that aren’t offered at such discounts.

Now that Black Friday is over, there are still some good deals out there. The Black Friday gimmick is a great way to spark the holiday shopping momentum, but stores know they have to keep the deals coming in order to keep the momentum going for 4 weeks until Christmas day! It’s a lot easier to find deals in 2010 than it has been in past years. The internet is so easily accessible and a lot of people have smart phones now. You can find a website or a free app that will tell you where the good deals are, for the products you want. Most popular items: electronics, clothing, cologne and household products. Search and find online. And also, keep in mind: there are websites that sell most of the products you can buy in the store. Since these websites don’t have to pay for a “store-front” facilities, they can offer much better deals.

If you know of any stores or websites with great deals, please post comments below.

Thanks and Great Shopping!

Stating the Obvious and the Unclear

It’s obvious that if you don’t pay it off each month, every time you use your credit card, you’re going to spend more money for that item than the price you were charged. The additional amount you pay is interest. What’s not so clear is that…using cash wisely will actually save you money. I know you’re what you’re thinking, “you just said the same thing flip flopped”. Yes that is true, but let me ask you this: how many people actually look at it that way?

Not many.




Using a credit card is like throwing money out the window!

So, let’s ask the obvious question. Why do people use credit cards? Well that’s easy…because they don’t have the cash on hand. Here’s something not so obvious. If you don’t have the cash on hand and you’re tempted to use your credit card, have you ever thought…do I really need this? I mean really need it? Not “do I want it” or “is there a strong temptation”, the question is do I need it? Most of the time, the answer is NO!

So what’s my point? Establish a cash-based budget that is very disciplined and specific. In your plan specify how much will go towards required monthly expenses (bills, mortgage, groceries, gasoline for vehicles) and how much will go to discretionary spending (clothes, entertainment, snacks). For anything outside of that budget, or if you end up in a situation where you feel you must use your card. Think really hard about if you can live without it. (Please re-read that last sentence- it’s a doozy). If you can live without it, then DON’T buy it.

Spend Spends tip: The more purchases you pass up, the more money you save. In the end, you’ll end up with less junk and more cash.

Impulse Buying

Ever heard the term? Maybe. Have you ever done it before? Probably. Here’s an example scenario: you’ve just finished grocery shopping. You have all the food and home supplies you need and you get in line at the cash register. There are a few people in front of you and you have to wait. You look to your right and you see your favorite magazine, so you pick it up. Then you move closer as one person has finished and the next shopper proceeds to ring up their stuff. What do you see next, and ice cold pop (or soda if you’re in the south). Hmm looks good. So you get one. You move a little closer to the front of the line, and what do you see? Your favorite candy bar or snack, and you grab a few for the road.

The items in check-out line are what grocers call, “Impulse products”. They are low-cost, high margin products that they can sell at a relatively cheap price. They’re compact and easy to grab. Which means, they’re great for tempting people to grab them “last-minute” and “on-the-go”? Just think about it, when’s the last time you saw a single Twix candy bar on sale in the grocery aisles. Most times you won’t…Why? Because, it’s during that time, most shoppers are taking their time. You’re more likely to see a bulk pack of Twix in the grocery aisle and a single Twix in the check-out line.

The best is when they sell candy “2 for $1”, you really feel like you’re getting a deal then. But the catch is, you really don’t need it. When’s the last time you drove on the way to grocery with “candy bar” on your grocery list? You probably never have. You go in, with the intentions of buying groceries and get suckered into buying snacks while waiting in the check-out line because they’re cheap, fast and easy.

FIGHT THE URGE AND DON’T SUCCUMB TO IMPULSE PRODUCTS!

Budgeting Basics

Has anyone ever told you how much of your monthly paycheck should go to bills or mortgage? Do you have a firm understanding of how you should budget your money so that you stay on top financially rather than going under into deep debt?

Well, today I'm going to provide you the bare bones basics of budgeting. I encourage you to use this information as a guideline to measure your spending habits and establish a monthly budget for yourself if you don't already have one. This guidance is shared by many, but is only to be used as a reference. Please review your own financial situation and decide if this is a model you can transition to. If you have any questions or concerns, please seek expert advice. I disclaim any liability for any damages or loss which is incurred as a result of implementing these basics.

Now that the legal stuff is out of the way...Let's get on with it. Here's a standard suggestion of how you should balance your monthly income:

1. Housing - Mortgage, rent, utilities, insurance, taxes and home maintenance.

2. Transportation - Car payments, public transportation, auto insurance, maintenance, gas, parking, & license and registration fees.

3. Debt - Loans, credit cards, taxes and medical bills

4. Other - Everything else (incl food, clothing, childcare, etc.)

Here's the big question: How much are you saving each month? You should aim to save at least 10%.

On to the next one....Buying a house. Do you know how much is "affordable"? I don't mean how much the bank says you can borrow. While the half million dollar house may be beautiful and tempting, you don't want to find yourself in a foreclosure because you can keep up with the payments. Use this guideline: 28% of your gross monthly income (before taxes). So if your monthly income before taxes is $4000. Then you should only consider purchasing a house if your payments are 4000 * 0.28 or $1120/mth. So you're probably thinking, how much is that in regards to a house price. Well, I'm glad you asked:

At $1120/mth with a 6% fixed interest rate on a 30 year mortgage, total house cost equal $186,500. That means if you make $4000/mth gross income before taxes, you should only look at houses that are $186,500 and under.

Walmart Shopping

Walmart seems more like a bill collector than a grocery store: $300, $400, and sometimes even $800 a month contributed to Walmart or otherwise known as "Wally World".

I went to Walmart to buy toliet paper. By the time I left, I had $150 worth of stuff. Some stuff I needed like milk and eggs, and mostly stuff I didn't need like: Little Debbie snacks, a case of coke, a bottle of wine, Nacho Cheese Doritos and a 10lb bag of potatoes.

Then what happens? I gained weight from the junk food, the whole bag of potatoes went bad, and I realized I already had milk and eggs at home.

Sound Like You?

This is just one example of the many situations we find ourselves in that cause us to reduce our wealth and waste our money. The reasons we purchase impulsively is not by coincidence, wer're tricked by strategic marketing tactics.

1. One reason this blog was created was to teach you those tactics so you can beat the system, stop wasting money, and not be taken advantage of anymore.

2. The second reason this blog was created was to inform you of the "REAL" sales and discounts. For example, twice a year, Dillards has a GRREAT sale: 75% off the already 50% discounted price. Another is Macy's has a sale where most all women's clothes are $4. I will tell you about these sales, so you can gain the MAXIMUM benefit from the REAL DEALS.