Category: Money Matters

Your credit report may look like a tangled mess of account information, but it is actually an orderly and efficient way of presenting information. It may be too efficient, since most people have no idea how to read a credit report.

What compounds the problem is that credit reports all look different. Not only are there three main consumer credit bureaus, but depending on which credit report product you order, your report may look different than others.

That being said, you may want to consider where you obtain your credit report so that you can actually understand what you are reading. If you happen to know someone who works for a company that can pull one for you, it might be tempting to ask them to pull one for you. However, doing so is ill-advised, since those hard credit pulls can lower your credit scores. The reports that lenders pull are also the least consumer friendly reports, as they are intended only for professionals used to dealing with those reports.

Instead, consider getting a consumer product that is meant for the average Joe. The reports available through the Annual Credit Report Service are reasonable enough and they are free. My particular favorite are the ones available through Fair Isaac Corporation. For me, it is worth it to pay a few bucks twice a year to obtain actual FICO credit scores based on the information held at each credit bureau. Additionally, the information is organized very well with simple analysis provided for the most important aspects of the reports.

It compares details from my credit reports to those of FICO High Achievers, those who are maximizing their scores based on characteristics of each category. It really is helpful to see how you compare to those with high scores so that you know what actions to take in the future.

There are some key items that you want to look for when reading your credit report. First, look for any negative information that you might want to contest. Negative information may show up as late payments, often reflecting a 30, 60, 90 etc that communicates a 30 day, 60 day or 90 day delinquency. Pay attention to charge-offs, since that can cause the debt to be listed again through a collection agency. Sometimes the collection agency record lists the referring creditor. Other times, you may need to compare the balances to match them up.

The date of last activity is important in terms of closed accounts. Most negative information drops off after 7 years. Positive accounts can remain for 10 years.

The information is organized in a cookie cutter approach, with information on each account listed in the same format. Harder to read credit reports show the order of information prior to the accounts listed, but there is no label within the account record. Therefore, you really have to focus to make sure you know what the amount in line 2 represents.

If you find that you are lost, consider contacting a credit counseling organization to request a credit report review. Most agencies charge less than $25, and many are able to provide the service for free.

720 is an excellent credit score. Excellent credit scores are what everyone would like to have, but may not know how to go about achieving that goal.

The first thing that you must do to improve your credit score is pay all bills when they are due or earlier. Even being only a day late can lower your score. Even if you have made mistakes in the past and do not have an excellent score now, paying everything on time from now on can help to raise your score.

A variety of credit is much better than too much of one and none of another. For example eight credit cards is a lot, and should be reduced to a more reasonable number, like two or three. A couple of credit cards, a car loan and a house mortgage looks much better in your credit file than just having the credit cards.

Keep your credit card balances low. It is not a good idea to charge all your credit cards up to the limit. Try to keep them low so you always show available credit on your reports. Having them high will lower your credit score. If you want to purchase something on credit that may hurt your score, it’s a good idea to rethink it and decide if you really need it.

The length of your credit history is an important part of your score as well. It may take time to have your score go from good to excellent, but keep paying your bills on time, keep your revolving credit line balances low and eventually you will see your score go from very good to excellent.

Having an excellent credit score will help you in the future, you will get much better interest rates when you go for a mortgage, it will be easier to get car loans. Life is a lot easier with an excellent credit score. You will be glad that you put in the effort to makes you excellent.

It’s hard being an annuity agent today. With the recent economic difficulties, almost everyone is struggling to become financially secured. Businessmen think of some innovative ways to improve their sales, whether changing management strategies or creating some new products. If you are a new agent, finding clients can be tough. It seems like most of them don’t want to be part from their money, they are afraid to start an investment because they are afraid of losing it and they even forget the word trust. So, as an agent, how are you going to address this issue? Are you familiar with annuity appointments? This might help you out.

There can be ways to help you make good sales despite of the situation. There are parties out there that would cater your need. They are asking a part of your money once you succeed in luring clients to buy settlements but not that big. One of the most popular answers to your problem is the use of annuity appointments.

Annuity appointments are one-on-one appointments by agents to their prospect clients, apparently to transact about selling an annuity. This sales strategy is very ideal for agents who desperately need clients and telemarketing companies really try their best to site prospects.

The annuity appointments process begins when a postcard is being sent to the prospect client. The prospect then sends back his reply and that is the time for the telemarketers to start planning for the appointment. The prospective “customers” will often turn out to be the aged or people who are still earning and they don’t need or desire to buy.

Annuity appointments are simple ways that enables annuity agents to do a lot of work, expecting for a little reward or no reward at all. Then, the agent will typically have to spend hundreds, if not thousands or dollars in the “marketing” companies just to complete the appointments. So in the end, the annuity agents will be losing both, money and time. Thus, annuity appointment is both helpful and harmful.

There are points in life wherein we can experience severe financial problems and it seems like we can’t do anything to solve it. Although it is made known that there can be situations like this, but what if we are not prepared? This is the main rationale behind getting financial security insurance. Security in love is through marriage, security in homes using locks and alarms and financial security for life through guaranteed stream of income or in sell annuity.

We can do things to make our life financially secured through getting insurances and pensions but we can also secure more money at hand through properties selling and investments such as annuity. To sell annuity rights is a bit of a difficult process and it needs to be well planned and decided. If you think you are not ready yet to give up with your annuity, then don’t force yourself once transferred, it will never be yours again unless the buyer sells it back to you but this is barely possible.

If we desire to have a stable income for life, we humans also desire for a much more return investment. This is why, some take the risk to sell annuity for they expect a huge amount of lump sum money whenever successful. Thus, annuity cash out is done for a higher rate return and to solve financial problems.

However, there are also instances that to sell annuity wouldn’t work or wouldn’t help that big, particularly to urgent need of money. Why is that so? Well, annuity selling somehow takes some time before the process ends so if your liquidity problem is kind of urgent, then selling may not be the best thing you can do.

In addition, can you tell that it is the right time to sell your annuity in the market? If you gain more, then better but what if you lose a considerable amount? Sell annuity issues can be tough, so it is always advised to seek professional help first so you will be getting the most from your money’s worth.

If you don’t put your budget in its place, pretty soon, it will be looking down its pointy nose at you, reminding you how undeveloped your impulse control is, how you’ll never amount to anything, you’ll always be in debt . . .  If that’s not enough to make a person give up, I don’t know what is!

Do you find yourself spending time with the budget Nazi in your head?  Do you find yourself splurging and rebelling against its authoritarian austerity?  Maybe it’s time to leave the relationship!

I prefer to spend my time with a very different sort of budget. One that doesn’t make me feel like some kind of loser every time I consult it.  I’m not a financial guru at all–which is why I know that my budget strategy can work for anyone! If I can do it, so can you. Here’s how:

Make your budget at the END of the month! This way, your budget is just an honest friend here to tell you the truth about the way you spend your money. You’re making observations, not judgments.  Once you have all the information, you’ll be in a position to make decisions based on your preferences.

Take an honest look and DON’T beat yourself up! You’re just exploring here, learning something about yourself and your spending.  Think of it as an anthropology  or psychology project.  What can you learn about yourself?  Some fascinating things I learned about our spending habits by having an end of month budget:

• 3 years ago I noticed that DH and I spent about $100 a month or $1200 a year having coffee out.
• 2 years ago, I discovered that when DH and I went to the nearby grocery store for one item we’d forgotten in our monthly shop, it always cost us a minimum of $15, no matter how small and insignificant the forgotten item was!
• This fall, we discovered that we spent an average of 65-70 euros a month on wine.

Using information to recognize your options and make decisions: When we noticed that our coffee expenses were the equivalent to a plane ticket to Europe, we decided we preferred to drink our coffee at home or bring a thermos to a park bench.  We noted quickly that we felt equally satisfied–if not MORE satisfied–with our decision to move to cheaper coffee and more trips home for DH (when we lived in the States).

As for the grocery stops for forgotten items?  We realized that we preferred to save money by making a more careful list in advance.  Extra grocery trips and impulse buys were not making us happier people!

As for the wine budget–it may seem extravagant, but we decided to keep it.

Why? Because we don’t eat out at restaurants and hardly ever go out for drinks or coffee.  We enjoy wine-tasting on the weekends after a nice hike and having a glass of wine at home with diner.  And since we know exactly how much we spend each month, we know we can afford it!

See your budget as a guideline to make you happier: If you look at your budget and tell yourself, “Hey, next month, I bet I’d be just as happy with fewer trips to the grocery store or having coffee at home!” It’s a lot easier to follow than telling yourself, “OK, next month, grocery expenses under $200 or BUST!”

The later technique kind of reminds me of the whole dynamic of going on a strict and depriving diet–it usually results in misery, crankiness and binging later.  Doing something because you want to is much easier to maintain than doing something because you’ll be a no-good spending disaster with no self-control if you don’t.

What about your budget technique? Do you use a budget?  Do you have budget-related guilt?  Do you have budget goals?

Waking up, brushing your teeth, taking a shower – these are all things that you don’t even think about. They have become so ingrained in your head that they are now habits. You automatically do them regularly without consciously thinking about it. Psychologists have different opinions on how long it takes to form a habit, but there’s one thing everyone agrees upon: habits can be formed through repetition. After doing something for a long time, eventually it will become automatic.

So, why not turn your finances into a habit?

You know that it’s important to have your finances in order, but planning and budgeting can be quite hard. Many people think that sticking to a budget is too difficult for them, but the reality is that anyone can do it. Budgeting should be an important part of your life so that you are able to succeed financially. Create a budget based on your income and expenses. Your budget can always be modified down the line, but it is important to have some sort of plan for your finances. Start using your budget daily. If you make it a part of your everyday life, it will soon become a habit. You won’t even have to think about it, but you’ll never lose focus of your finances again!

Personal finance gurus love to argue about which debt you should pay off first. Browse the Internet for just a few minutes, and you’ll find volumes of painfully long articles rehashing the same old approaches to paying down debt.

If you haven’t found the time to read them all yet, there’s no need to worry. Here’s a summary of what they basically all say in one sentence.

Either pay off the smallest debt one account at at time, or get rid of the highest-interest debt first. Neither of these methods are new. Rather, they’ve just been given fancy new names.

Dave Ramsey‘s “Debt Snowball” Method (pay off small debts first) has garnered a significant amount of recognition due to the popularity of his book entitled “The Total Money Makeover“. The “Debt Avalanche” approach is simply another way of saying mathematical rules shouldn’t be ignored – paying off high-interest debt first is unarguably the economically smart path to take in any situation.

The truth is, like most things in personal finance, no single method will work for everyone. So, if you’re more interested in finding out what will work for you instead of spending hours reading detailed analyses of why one method trumps the other, simply try asking yourself the following three questions before determining what course of action to take:

1.) Do You Have an Emergency Fund?

If not, stop right here! You need some kind of an emergency fund in place before you should even contemplate how you will pay off your existing debt.

In a perfect world you would have at least six months’ worth of expenses stashed in a high-yield online savings account. However, if that seems financially impossible for you at the moment, take Dave Ramsey’s advice and save at least $1,000 cash before moving to question number two.

2.) What’s Your Motivation?

Do you need to experience small wins to stay motivated? If so, start your journey by paying off the smallest accounts first. Relish in the joy of watching your balances hit the big zero, and get yourself as pumped up as possible about each little victory. You’ll need it to make it through the long haul because this route probably won’t be the fastest way to get rid of your debt.

On the other hand, if saving money alone gets you motivated enough to stick to your plan, the Debt Avalanche is the way to go. You can still enjoy small wins along the way by performing periodic calculations to determine how much you’ve saved each month in interest. When you hit the $1,000 mark, reward yourself with something nice (and cheap).

3.) Why Not Mix the Two Methods?

For many individuals, the best method for paying off debt is often a mix of the two approaches discussed above. For couples, this is almost always the case. Compromises have to be made to keep both spouses engaged and motivated throughout the process.

So, if you have some small debts that have lingered for years, get rid of them first to build some momentum. Then you can tackle the larger debts according to their interest rates and terms.

Regardless of what course of action you decide to take, the important thing is sticking to your plan and watching the debt disappear. It will take time, self-control, and perseverance, but the reward is well worth the effort.

Now, go and make it happen!

Wondering how you can save money? It can be challenging in this economy. How, when and where can you save money? What should you do with it after you have saved it? Here’s a realistic approach with a set of goals to keep your spending in line with the “pay yourself first” philosophy. Try this 11 Step process to jumpstart your journey to healthy financial living.

1. Set savings goals.
   Start off with short-term goals…they are the easiest. If you want to buy a new cell phone, find out how much it costs; if you want to buy a house, figure you’ll have to put at least a 20% down payment. For long-term goals, such as retirement, you’ll need to do more homework (figuring out how much money you’ll need to live comfortably for 20 or 30 years after you stop working), and you’ll also need to figure out how investments will help you achieve your goals.
   • Eliminate debt first. Eliminating debt is the fastest way to free up money. Just calculate how much you spend each month on your debts and pay accordingly. Once the money is freed from debt it can easily be switched back to savings.
2. Set a Timeframe.
   Set a timeframe goal. This means setting a particular date for accomplishing shorter-term goals. For example: If you want to buy a house in three years, make sure the goal is attainable within that time period. If it is not attainable, you’ll just get discouraged and fail.
3. Figure out how much you’ll have to save per week, per month, per year and per paycheck to attain each of your savings goals.
   List each thing you want to save for and figure out how much you need to start saving to attain it. For most savings goals, it’s best to save the same amount each period. For example, if you want to put a $20,000 down payment on a home in 48 months (four years), you’ll need to save about $417 every month. But if your paychecks amount to less then $1000, it might not be a realistic goal, so adjust your timeframe until you come up with an approachable amount.
4. Record of your expenses.
   Your savings will fall between two categories: how much you make and how much you spend. Since you have more control over how much you spend, it’s wise to take a look at your expenses. Write down everything you spend your money on for a couple weeks or a month. Be as detailed as possible, and try not to leave out small purchases. Assign each purchase or expenditure a category such as: rent, car insurance, car payments, phone bill, cable bill, utilities, gas, food, entertainment, etc.
   • Keep a small notebook with you at all times. Get in the habit of recording every expense and saving the receipts.
   • Sit down once a week with your small notebook and receipts. Record your expenses in a larger notebook or a spreadsheet program.
5. Trim your expenses.
   Take a good, hard look at your spending records after about a month or two. You will probably be surprised when you look back at your record of expenses — $300 on donuts, $200 on parking tickets? You will obviously see some cuts you can make. Depending on how much you need to save, you may need to make some difficult decisions. Remember your priorities, and make cuts you can live with. Calculate how much those cuts will save you per year, and you’ll be much more motivated to pinch pennies.
   • Can you move to a less expensive apartment or house? Can you refinance your mortgage?
   • Can you consolidate your debts so that you’re not paying as much interest?
   • Can you save money on gas, or give up a car altogether? If your family has multiple cars, can you bring it down to one?
   • Can you drop a land line and only use your cell phone?
   • Can you live without cable or satellite TV?
   • Can you cut down on your utility bills?
   • Can you restrict eating out? Buy food in bulk? Cook more at home? You might be able to save a lot of money on food.
6. Reassess your savings goals.
   Subtract your expenses (the ones you can’t live without) from your take home income (i.e. after taxes have been taken out). What is the difference? And does it match up with your savings goals? Let’s say you’ve decided you can definitely get by on $1,500 per month and your paychecks amount to $2,300 per month. That leaves you with $800 to save. If there’s absolutely no way you can fit all your savings goals into your budget, take a look at what you’re saving for and cut the less important things or adjust the timeframe. Maybe you need to put off buying a new car for another year, or maybe you don’t really need a big-screen TV that badly.
7. Create a budget.
   Once you have managed to balance your earnings with your savings goals and spending, write down a budget so you’ll know each month or each paycheck how much you can spend on any thing or category. This is very important for expenses which tend to fluctuate, or which you know you’re going to have a particularly hard time restricting. (E.g. “I will only spend $30 a month on movies/chocolate/coffee/etc.”)
8. Stop using credit cards.
   Pay for everything using cash or money orders. Don’t even use checks. It’s easier to overspend when you’re pulling from a bank or credit account because you don’t know exactly how much is in there. If you have cash, you can see your supply running low. You can even bundle up the predetermined amount of cash allocated for each expense with a label or keep separate jars for each expense (e.g. a bundle/jar for coffee, another for gas, another for miscellaneous). As you pull money from a jar for that particular expense, you’ll see how much remains and you’ll also be reminded of your limit.
   • If you need to have credit cards but you don’t want the temptation of having them available to use day-to-day, restrict that section of your wallet with a note or picture reminding you of your savings goals.
   • Credit cards are not inherently evil; it’s all about your self control. If you use them responsibly (i.e. completely pay them off every month), you can benefit from them. But the reason most credit card companies make money, however, is because people end up spending money that they don’t have. Unless you are one of the people who can religiously pay off the balance in full every month, you’re better off foregoing the promotions that credit card companies use to lure you in (cash back, introductory APR, airline miles, and so on).
9. Open an interest-bearing savings account.
   It’s a lot easier to keep track of your savings if you have them separate from your spending money. You can also usually get better interest on savings accounts than on checking accounts (if you get interest on your checking account at all). Consider higher-interest options such as CDs or money-market accounts for longer savings goals.
10. Know where your money is.
    And how much of it, too. If you accidentally overdraw your bank account, you will incur hefty bank fees; worse yet, the place you paid with that check may slap a bounced check fee on top of that, and send the check in again, resulting in a second overdraft fee from the bank! So just a few cents missing to cover that check could result in over $100 in fees. To avoid that, you should always know how much money you’ve got in your account(s), so you never cut a check for more than what you have.
11. Pay yourself first.
    Savings should be your priority, so don’t just say that you’ll save whatever’s left over at the end of the month. Deposit savings into an account (or your piggybank) as soon as you get paid. An easy, effective way to start saving is to simply deposit 10% of every check in a savings account. If you get a check or sum of cash, say $710.68, move the decimal point one place to the left and deposit that amount: $71.07. This works well and requires little thought; over several years, you’ve a tidy sum in savings. Over decades, you’ll be a millionaire.
    • You can set up an automatic transfer from your checking account to your savings account.
    • Many employers allow you to deduct savings from your paycheck. The money is directly deposited in your savings account so you never even see it on your paycheck.
    • You can also have investments for retirement taken directly out of your pay, and the taxes may be deferred with this option.