Credit score

Credit Scores Matter More Than You Think

Credit scores are important when you want to borrow money or get a new credit card. They’re important when you want to rent an apartment or a house, since the landlord will usually run a credit and background check on you before they’ll hand over the keys. If you thought all those people checking their free FICO credit score were wasting their time, you might be surprised to hear that it affects more than loans.

If you thought the importance of your credit stopped there, unfortunately, you’re wrong. There are several places where your credit score and your credit history can have an affect, even though it has nothing to do with you borrowing money.

Don’t Let Money Ruin Your Marriage!

Written by Glen Craig 30 Comments

You found that perfect person who completes you that you want to spend the rest of your life with.

Now you are getting married! It’s a big step and will be one of the biggest days of your life. Sharing your life with someone is a wonderful, intimate experience.

But are you intimate enough? Have you sat down and had the money talk?

Money talk, you ask?

Yes, money talk. Have you sat with your spouse-to-be and have a serious talk about our finances? I mean intimate talk. Telling each other about your money history, your money experiences, your debts, your plans, your thoughts about money and debt…a real honest talk.

Do you know many couples don’t have this talk? Did you also know that many marriages end because of money?

Why don’t more couples disclose their money thoughts and history?

This is very similar to why more don’t have a budget. Some people are embarrassed about their past and are afraid of being judged. Others don’t want to have to answer for their spending habits and have to answer for what they spend. I wouldn’t be surprised if many just don’t think d talking about money. Whatever the reason you aren’t allowing yourself to have a complete relationship by keeping money secrets from your significant other.

Here’s what to discuss in your money talk:

Credit Card Debt

Let your partner know where you stand with your credit card debt. Don’t be embarrassed. You’re going to share your lives together and this includes your debt as well. It’s better to get this out in the open now.

What Credit Cards You Have

Discuss what credit accounts you both have open. You may find that you have way too much credit between the two of you. This also helps to improve trust in that you don’t have any secret credit cards the other doesn’t know about.

Student Loans

Your partner has a right now they are possibly marrying into tens of thousands of dollars in student loans debt.

Past Money Problems

Talk about past issues you’ve had with money. It’s ok that you’ve had bad money experiences. Talking about your past money issues will help your future spouse understand your emotions about money.

Bills You Currently Pay

Show each other a list of everything you currently pay. Again you should both get an idea of what bills are coming into the relationship. You may be able to eliminate a lot or combine some (like cell phone accounts).

How and Where You Save/Your Checking

Disclose your savings and checking accounts and your current savings plans. Discuss how you want to handle these once you are married. Put together a plan for both of you to save. Will you keep separate accounts? Will you combine them? Talk about it!

Retirement Saving

What type of accounts to you save for retirement in? Get the paperwork prepared to add each other as beneficiaries on each other’s accounts. Talk about how you both feel about retirement and how you will save for it.

How Will You Handle Spending

Do you want to come home one day and find a huge flat screen TV? Maybe you do but its got to be paid for doesn’t it? Discuss how you will handle purchases. Put together a plan for how you will go about purchases and what kind of purchases you’ll both discuss before making.

Who Pays What

Who will be responsible for what bills? Where will the money come from? If you have two checking accounts which account will pay what?

Credit Reports and Scores

Pull your credit report and credit scores and share them with your partner. This is full disclosure with your partner about what accounts you have and black marks you have on your report. It can also be a great surprise in finding out how great your credit has been!

In order for you to start off right in your marriage you need to be honest and share yourself. Keeping secrets about money and finances from your partner is dishonesty. I think you’ll find that when you talk to your partner you will build up your trust and this will lead to a greater, more intimate bond between you!

Are you going to let money ruin your marriage?

photo credit: makelessnoise

Never Mind A New Economic Stimulus Package – Save Yourself!

Written by Glen Craig 39 Comments

There’s been a lot of talk in the news about a new economic stimulus package. Some are talking about a new one being approved this year while others speculate that it won’t happen until President-Elect Obama takes office. There’s been talk that a new economic stimulus package would be more infrastructure and not checks as the last package was. And there definitely has been a lot of talk of whether we even need a new economic stimulus package; questioning if it even makes a difference. Here’s what I say:

Never mind a new economic stimulus package – Save yourself!

Don’t count on the government to come through with legislation to help you make ends meet. That attitude will never get you ahead. You need to take matters into your own hands. If you are in a bad financial situation you need take control and ownership of the problem and fix it yourself.

Here are 12 ways you can take matters in your own hands and save yourself:

Get your finances in order. If you haven’t done so get all of your monthly bills and expenses together and figure out what you are really spending. Put together a realistic budget that you will follow.

Make sure you excel at your job. Unemployment is the highest it’s been in quite a while and I’m sure there will be many more layoffs to come. Don’t be the robot at work that does just enough to get by. Get yourself interested and make yourself valuable to your company. Don’t just get your job done – get it done well! If layoffs are coming you may be able to save yourself from the chopping block. Hey, maybe you could even get a promotion?

Build networking relationships with friends and co-workers. Sometimes, as unfair as it seems, it’s not what you know but who you know. Keep up with co-workers when they move to other jobs. They can be your foot in the door if you leave your current job. Stay in contact with friends as well. Even if they don’t work in your industry they could prove to be a valuable contact. Network!

Pay your bills on time. Lenders are getting shy about giving out their money these days. If you pay late you may find your interest skyrocketing. Universal default allows one credit company to raise your interest rate if you’re late on a different company’s card. A late payment can make all of your credit cards have high rates. If you aren’t paying off your balances every month you can find yourself sinking faster into debt.

Put money away for emergency savings. Really you don’t know what the future holds and as the saying goes: “when it rains it pours!” What happens if you find yourself out of a job? Then the car breaks? Then you need a doctor’s appointment? Hopefully you don’t need your savings but put yourself in good shape by having savings in place.

Make sure your credit report is clean. Errors on your credit report can be costing you in higher interest rates on your credit cards and loans. Make sure your credit report is accurate.

Check you credit score. Your credit score is like your code of honor among credit agencies. A low score means higher interest rates and could also mean you won’t get a needed loan or credit. Credit scores are also used in housing and in job hunting. Get that score up!

Cut costs. Remember that emergency savings? A way to help build that up is to cut costs. Cut a few corners here and there and you can find yourself with significant savings!

Analyze your tax withholding. Are you paying too much? Pay what you need to and no more. Many like to get a big tax refund but you’re better off having that money in each of your paychecks instead. You don’t earn any interest when the government is holding your money! Adjust your tax withholding so you maximize your paycheck.

Re-evaluate your holiday spending. The holiday spending frenzy is starting. Don’t get caught up in the current! You don’t need to spend exorbitant amounts on every person you know this holiday season (here’s a challenge: see if you can keep a $100 holiday). What really the point in spending so much if it puts you in a bad financial situation? Budget what you can spend on gifts and don’t go over. Make sure your budget is within reason of your financial situation (don’t spend more than you have!).

Go to school. Yes, school is an expense. But taking some extra courses or pursuing/finishing up a degree can help make yourself more marketable to employers. This can be as simple as taking an advanced Excel course to working on a higher degree.

Work on building alternate sources of income. Try your hand at blogging. Work on developing a hobby that could earn money such as photography. Other streams of income are a good thing, especially when money is tight. And you never know, what you start could develop into something bigger.

It always sounds nice when the government offers to give us money back but we have to remember there’s a price to this. It could mean less services somewhere else or more taxes down the line. Remember the money has to come from somewhere!

Don’t hope the government will do something to ease your situation. Get a hold of your finances and take care of it yourself!

What other ways could we take financial matters in our own hands?

We Did It, We Bought A New Car

Written by Glen Craig 7 Comments

We did it! We broke down and decided it was time for a new car. We bought a brand new 2008 Honda Odyssey EX. We picked it up last week and we love it so far! I feel a little guilty saying that since hey, a new car costs money, but I think we did it as cost-saving as we could.

See, we could have stuck with our 2004 Toyota Corolla, which was a great car. It had a relatively good number of miles on it and it ran well. Thing is, it was getting too small for our family. We’ve been getting by finding ways to fit everything into the trunk of the car on various outings. Shopping at BJ’s was always fun since we had to get things like diaper and wipes boxes into the trunk as well as the stroller (remember, we have two kids one of which is a toddler). On some days we got real close to not fitting everything. The other things was we really couldn’t fit any more people than the four of us. Maybe we could squeeze a friend of my daughter’s in but that was it. We wanted to be able to transport more people if we wanted (and hey, there’s always the possibility of more little ones too).

Let me show you what we did to keep costs down:

We traded in our Corolla. We considered keeping it but we didn’t need two cars. We were better off putting the car toward the cost of the Odyssey.

We researched and then researched some more and then shopped around. We checked Consumer Reports, Edmunds.com, the official Honda site, the Official Toyota site…We looked everywhere we could to make sure we understood what the dealer costs were and what prices we could expect to get for both the new car and our old car. With this information we shopped around until we found the best price from a dealer. In the end, after an odyssey of our own, we received a price that we were happy with (much less than MSRP and lower than dealer invoice).

We added some luxury but not the works. I wanted power side doors which put us up higher than the base model. After that we didn’t go for any other options. As much as we would have liked them we didn’t get the navigation system, the DVD player, the leather seats, etc… We looked at what we knew we needed and wanted and stuck with that.

We got a great financing deal. I know, buying a 2-3 year old car and paying for it in cash is what a lot of experts say is the best thing to do. We’ve had bad experiences with older cars already and we know we are going to use this car for as long as we are able (many, many years we hope!). We considered a used car but in the end we wanted new. One thing that helped decide was the fact that Honda is offering 0.9% financing right now (Toyota was offering 0% but we preferred the Honda overall). Financing for 0.9% is real close to free money (a great reason to make sure your credit score is good). So you know, we have enough put away that we could have paid the car off entirely but since the rate is so low we can keep the money in our ING Direct account and let it earn interest while we pay the fianancing. I did some quick calculations and our financing is costing us less than $300 while we could earn around $1800 keeping the money in our savings. For a used car the fianncing would have been much higher.

Our insurance will be lower. As an added bonus I found out that our insurance premiums will be lower since the Odyssey is considered a safer car.

Our vacation will be more local. We were undecided on what to do for vacation this year. We were strongly considering flying off somewhere that has Caribbean water. But now that we have a new car with more storage space we’re going to do a driving vacation and travel within a day or two’s distance and check out the sites. Yes gas is expensive now, but we’ll still be saving more than if we flew somewhere.

We have a little bit of buyer’s remorse knowing that we have a debt to pay off but we’re really happy to have gotten the car! We’ve already taken a couple of small trips and we plan to do some more (there’s a frugal list of things to do somewhere out there isn’t there?).

A car is a great big expense. But I think we purchased ours in a way that’s financially responsible.

Buying A Car – Know Your Credit Score And Get Financing Before Hand

Written by Glen Craig 7 Comments

A few years ago I set out to buy my first car.

This was a big deal for me, it was to be my most expensive purchase as well as my greatest debt. Thankfully I was able to get a lot of advice from the site The Motley Fool (check out their steps to buying a car). Even if you don’t follow each of their steps I think you will find their information useful.

I don’t want to go into what my whole car-buying process was like. That might be too long a post (there was much drama but that’s for another time).

What I want to discuss is knowing your credit score and getting financing before-hand.

I knew I needed to check my credit report and score before making a big purchase.

I purchased all three reports and my score online. I was surprised at what I saw! I expected to have a mediocre score due to past late fees and debt but what I found was that my score was actually very good. I guess my efforts at reducing my debt and transferring balances to 0% cards helped.

With my credit score in hand my next step was to secure financing.

Included in my credit score was a description of how the score was determined as well as what kind of credit I could expect. I applied for financing through an online bank and received a check to fill out when the purchase was made. Due to my credit score my interest rate on the financing was favorable and below the average for a car loan.

I don’t know how many of you have purchased a car but you may not know that you aren’t done negotiating after you have figured out the price of your car-to-be.

Oh no!

You spend your time and effort haggling over the car price with the sales person and maybe the sales manager and you finally come to an agreeable price and you let out a sigh of relief. Finally, all I have to do is pay for the car and it’s mine!

Well at this point the sales person brings you into the office of the finance manager! Sitting in the manager’s office, he looks over my forms and tells me I can get financing for X percent and goes into what I need to sign (it’s in his interest to give me a loan with as high a rate as possible). “Whoa,” I say. “I know my credit score can get me better financing” I tell the manager (keep in mind I already have financing in place). The manager looks at my credit report and tells me I do have a good score and offers me a lower interest rate. This rate is still higher than my outside financing! It’s then I tell him that I already have financing so I don’t need to finance through the dealership. Wanting to have my debt through his dealership he then offers me a rate about half a point below what my outside loan was. I accepted the new rate and was finally able to buy my new car.

If I didn’t have a loan already and didn’t know my credit score before hand I would have paid significantly more for my car!

It would have been very difficult to negotiate at this point without those two pieces in place. Having my credit score and a loan in place allowed me this:

I knew what kind to interest rate to expect.
I was able to get a rate lower than the financing I already had set up.
I saved money.

Finally

Remember, the price you negotiate with the sales person is not what you are paying for the car (unless you’re paying in full of course). You have to add in the cost of your loan. When you go into a major purchase you need to have as many tools and as much information as possible because you can be taken advantage of and you might not even know it.

Make sure to check your credit score and know your financing options before-hand!