What Watching Gilligan's Island Taught Me About Credit Management

Do you still watch Gilligan's Island reruns?  I DO (Don't judge)

I just saw this episode and got the BEST advice about Credit & Money Management in 90 seconds.  I just wish I listened to the advice in this episode before I started establishing credit.

Check it out! I promise you'll feel the same way.  And make sure you share this valuable advice with your children, family and friends. It's priceless!

PS. For those of you that know Hamlet or are Gilligan's Island fans, like me, go ahead and sing along.




Making Money Matters Manageable,

Tarra Jackson

Why You Need a "Plan B" Income Stream?

What would happen if you were furloughed, terminated or if your job shut down? Do you have a back up income stream?  

In this video I share why it is important to have a Plan B Income Stream and a viable option.

Making Money Matters Manageable,

Tarra Jackson

Click here for savings on a smartphone!

Madam Money's Q & A: Is Race Considered in the Credit Score?

Have you (or someone you know) ever wondered if a person's race for financial situation affects or is considered in the calculation of their Credit Score?

Great Question!  Here the answer ...

Do you have a personal finance or credit questions?  Ask me and get answers!

Just email your question to Tarra@TarraJackson.com.

Making Money Matters Manageable,

Tarra Jackson

5 Quick Tips to Divorce Finances Through A Divorce

Do you (or someone you know) know someone who is going through a divorce that needs a few financial preservation tips?  I do!

Even though I have never had the unfortunate experience of a divorce, I have helped several of my clients through the financial transition from joint to individual finances.  When couples go through a divorce, they are not only divorcing each other; they are also divorcing their finances as well.  Financial Divorce can be just as, if not more, emotionally draining and frustrating.  Depending on how amicable the separation is, may determine the ease or complexity of the separation of finances.

Regardless of where a person is in the separation, here are 5 quick tips about How to Divorce Finances through a Divorce.

  

Get Organized!

Gather as many financial documents as possible. Financial statements and documents will be requested and may be required during the separation process.  Here is a Divorce Financial Checklist of documents that may need to be gathered. Consult with a divorce attorney for all of the documents that will be asked for and required to remit to the court.

  

Separate Bank Accounts

Make sure to open separate individual savings and checking accounts.  Don’t just open an account in desperation … rather; make sure to open up an account at a financial institution that is conducive to the financial needs and usage. Open an account with great customer service because they may be needed for assistance through the financial transition.  Avoid accounts or financial institutions with excessive fees.

  

Update Direct Deposit

Don’t forget to update direct deposit or payroll deductions through the employer from the joint account to the new individual bank account(s) established.  If the joint account is responsible for paying bills that may affect the credit reports, continue to make deposits just enough to pay those bills OR stop the bill payment or payroll deduction from that joint account and set it up in the individual account to maintain a positive credit history.

  

Do a “Clean Break” with Loans

Having joint debt is like having a child together.  Regardless of the status of the relationship, both borrowers are equally responsible to pay the debt until it is paid in full despite what the judge or divorce decree says.  So, first things first … get copies of all three credit reports from Equifax, Experian, and Trans Union from www.annualcreditreport.com.  The best way to preserve credit history during a divorce is to do a “Clean Break.” Identify all credit accounts, and then try to negotiate who will take on what debt. Once that is agreed upon, each should try to get an individual loan to pay of the joint loan.  If either person does not qualify for an individual loan to do a “Clean Break,” try to agree that the other person will make timely payments on the joint loan. This is important because if the one person pays late or not at all, it will negatively affect the other person’s credit and ability to obtain the credit that may be needed after the divorce.  This is especially critical with credit cards.  Make sure to block the credit card lost/stolen and request a new card number to avoid future usage from the other part.

  

Update Beneficiaries

Don’t forget to update all financial documents! Update the beneficiary on your retirement savings account, insurance policies, bank accounts, etc.  Also, don’t forget to update the W-4 once the separation is final. During the divorce, many people forget to update this important information.

  

  

The best way to get through this tough situation is to try to think of the financial side as a business matter.  However, if the separation is not amicable, it may be best to have the divorce attorneys to discuss and negotiate these and other matters.

It is also a good idea to work with a financial professional or counselor for guidance during the financial divorce. Best wishes and contact us for further assistance.

  

  

Making Money Matters Manageable,

Tarra Jackson    

Get It Together! 5 Steps to Organizing Your Financial Life

Let's talk about organization. In today's society,the importance of keeping things organized has diminished because it takes time and dedication to make it happen effectively. If you are willing to take the steps, however, you will find that getting your financial house in order isn't quite as bad as it sounds. 
  
Here are five steps to help you on your path to financial organization, and ultimately, freedom from debt. 

• Collect all necessary documentation in a single location. 
• Take a day off each quarter from work, known as a "personal finance day," to gather your account information and place it in organized files. Ideally, there will be files for banking information, credit cards, investments, mortgages, and insurance. 
• If you are not utilizing your bank's online resources, sign up for an account. Many banks provide an array of tools that can also aid in organizing expenses and income. 

  

• Create a written budget, and review it monthly. 
• Once you have gathered all your account information in a safe, central location, create an accurate budget that includes a savings trigger and properly notates your money needs. Adjust spending in key areas such as food and entertainment, and allocate those funds to debt elimination and savings. 
• At the beginning of each month, review your budget. Holidays and special events will give your budget a different look than in other months, and your spending plan should reflect those changes to give you the best idea of where your spending should be for that time.

  

• Set a schedule for paying bills. 
• When creating your monthly budget, write down specific dates to pay various bills. As a rule of thumb, it is best to pay bills in bulk on key days of the month. For example, if Sam & Diane's mortgage is due on the 1st, their phone bill on the 5th, and electric bill on the 7th, it would be ideal to pay all three bills on the 1st. This ensures these bills are satisfied, and eliminates any chance of incurring late fees from the creditor, or overdraft fees from their bank. 

• Write down all one-time expenses for the year
• One stumbling block many face when embarking on budgeting is the occurrence of one-time expenses that pop up throughout the year. These may include license plate renewals, professional dues, or insurance premiums. Divide these costs by 12, so that you can include them in your monthly budgets. By employing this method, you can save towards those costs as they come, rather than losing large amounts of your monthly income in one fell swoop. 

• Shred, shred, shred!!
• If possible, invest in a shredder. In the age of rampant identify theft, it is imperative that you take every available precaution to protect your personal information. Not only will shredding documents keep you safe from possible theft, it also frees your home of tons of unnecessary paper. 

By taking these steps, you are, in a way, deputizing yourself to free yourself from the prison of indebtedness. It all begins with a willingness to say, "Yes, I'll do it." We'll be here to help you along the way. 

With you on the journey, 

Daniel Sims

 
Daniel Sims is the newest member of the Madam Money team. He is the creator & host of Financial Rebirth Live!, a personal finance podcast on BlogTalkRadio.com, and managing partner of RDSF Consulting in Little Rock, Arkansas. We look forward to his insights in the coming months. 

5 Signs You're Ready for Financial Coaching

Have you (or someone you know) ever thought about hiring a Financial Coach to help you create and accomplish your financial goals? Check this out ... 

The sense of frustration has become epidemic with today's economy, challenges are becoming more prevalent with personal financial matters. Building financial stability and wealth can be a confusing and complex huge pill to swallow. So, where is a person supposed to find the time to become a financial expert and learn what is necessary to build the financial stability desired?
  

Are You Ready for ...

  

Hiring a financial coach provides a competitive advantage by leveraging the person's time with specialized financial expertise that cuts through the clutter, confusion and contradictory information by teaching them what is relevant - efficiently and with minimal hassle.
  
Here are 5 Signs that You may be Ready Financial Coaching.

1. You're tired of procrastinating and ready to start building wealth and living your dreams.
2. You want to develop your own personalized action plan for building financial security based on principles that are custom designed to fit your specific situation - not a cookie-cutter or generic plan.
3. You want an accountability partner to help you maintain focus on your financial goals.
4. You're just "not interested" with traditional financial planning where all they want to do is sell you investment products. Instead, you want straightforward advice without all the sales pitches.
5. You realize that "true wealth" is not just about more money ... you want to balance your life while working toward financial freedom so that you don't make the mistake of sacrificing your family, health, or a fulfilling life in pursuit of money.

So, if you're ready to start working with a financial coach, feel free to contact me at Prosperity Now Financial Management Services.

  

Financially True,

  

Tarra Jackson, Making Money Sexy!

Exit Strategies: How to Leave Financially Abusive Relationships

Have you (or someone you know) ever been caught up in a financially abusive relationship and desperately needed an exit strategy? I have.

   

There are many consumers that are in financially abusive relationships with financial institutions that seem to be “not that into” them. They are dealing with ridiculously high loan interest rates, very low deposit rates, too many and extremely high fees, as well as poor customer service.

   

Being in a financially abusive relationship not only angered ME, but it made me feel weak and hopeless because I didn’t know how or if I could escape.  Then one day … I did!  So, here are a few effective Exit Strategies for getting out of a Financially Abusive Relationship.

   

Talk About It

There may be an opportunity of improving the situation by talking with the right person at the financial institution. So, before deciding to break up with the financial institution …

 

Be sure to

1. Share concerns with a Customer Service Representative,
2. Speak with a Branch or Department Manager about concerns for resolution, or
3. Write a letter to the Senior or Executive manager about concerns.

If efforts to resolve the matter are not addressed appropriately or ignored, move to the next strategy.

   

Start Financial Dating

Begin the process of financially dating other financial institutions to find one (or two) that can meet, at least, most of the required financial needs (deposit accounts, loans, internet banking, etc.). In my book Financial Fornication, I share the 5 phases of Financial Dating to avoid financially abusive relationships. These phases should not be skipped.  It is necessary and worth taking the time to get to know financial institutions to ensure they are right for a particular financial situation.

    

So, be sure to

1. Explore financial options (banks vs. credit unions).
2. Investigate the financial institution(s) selected via the internet or word of mouth (research).
3. Experience the Introduction by going to the branch(es) or calling customer service to ask questions.
4. Start slow Courting by using one or two of their financial services (open a savings or checking account), when ready!
5. After all 4 phases have been executed, Commit to the new primary financial institution (PFI) by using more of their products and services. 

   

Once a new financial “main squeeze” is found, it will make it easier to leave an existing financially abusive relationship.

  

Exit Slowly & Deliberately

Whether a new financial “main squeeze” is on standby or not, another Exit Strategy is to slowly stop using the financial institution’s products and services.

  

Be sure to

1. Review bank statements carefully to identify all direct deposit or automatic payments coming out of the accounts.
2. Stop or change automatic payments from the account(s) and update payment information with the new financial account information, if available.
3. Ensure that all accounts are in good standing or current. This will ensure a clean break. The last thing wanted is a reason for the abusive financial institution to remain in contact.
4. If possible or necessary, refinance loans to the new financial “main squeeze.” If this is not possible, keep this in mind … having loans with a financial institution is like having a child(ren) with an estranged spouse or mate.  Leaving the relationship does not diminish the responsibility of the child(ren). Therefore, leaving the financial institutions does not diminish the legal responsibility of the credit obligation.  If refinancing is not an option, continue to make loan payments to the financial institution on time until it is paid in full to avoid collection and credit report drama.
5. Lastly, stop or reduce direct deposit into the account.

 

Once these steps are executed, a clean break is relatively available.

  

Even though the financial relationship may seem extremely challenging right now, just know that all financial institutions are not alike. There are lots of really good financial institutions out there that value and appreciate their customers.  Once you find them, some of them even provide an easier method of transiting automatic payments and direct deposits to them through what is called Switch Kits.

  

So don’t give up. There is hope. And most importantly, you deserve better!

    

Financially True,

 

Tarra Jackson, Making Money Sexy!

5 Things Asked on a Loan Application Used by Collectors

Have you (or someone you know) ever wonder why certain information is requested on a loan application that may not have anything to do with making the loan decision? I have.

  

When applying for credit, the loan application is not only a tool to acquire necessary information for the lender to make a judgmental credit decision. It is also a source of valuable data that is used to help collectors collect money that is owed to the lender if the borrower does not make their payments on time or at all.

 

Here are 5 Things Asked on a Loan Application Used by Collectors.

 

CURRENT & PREVIOUS ADDRESSES

The current address is not only used to request the applicant’s credit report, but it is also used to mail payment reminder or collections letters and, when necessary, for Skip Tracing.  Skip Tracing is a process of acquiring as much information about a person to find out where they are. Once the person is located, the collector can proceed with collection efforts or take further legal action.  Some skip tracing tools used are credit reports, white pages, a system called “Accurint,” social media, and especially Google.

  

EMPLOYER INFORMATION

The name and address of the applicant’s employer is sometimes used to have the borrower served if the lender chooses to sue the borrower by filing for a default judgment. However, this information is mainly used to file for wage garnishment.

 

PHONE NUMBERS

Home, work and cell phone numbers are used by collectors, of course, to call borrowers to discuss missed or past due loan payments and to acquire, what is called a “Promise To Pay.”  A Promise To Pay, is the borrower’s promise to make the agreed upon payment(s) to bring the loan account back to a current status.  Most collection calls may be friendly reminders. However, the more past due the loan becomes, the more “concerned” the collectors may be when calling.

  

EMAIL ADDRESSES

Most collectors are aware that many people may not answer unknown callers or callers that they do not want to speak to. They are also aware that many people may not read or ignore collection notices in the mail. This is why email addresses are very valuable.  In today’s electronic age, most people may respond faster to their emails than letters and voicemail messages.  This also gives the borrowers time to respond in a less intimidating manner.

  

REFERENCES

The names, addresses and phone numbers of the applicant’s family members and friends are usually requested in a loan application as references. This information is also used for Skip Tracing, when necessary.  Collectors may contact those references to obtain more information about the borrower and their whereabouts to continue collection efforts or further legal action.

  

  

Most first party collectors, which are usually employees of the lender, may be very open to assist borrowers that are dealing with financial hardships with payment plans. They are usually friendly and willing to assist as best as possible. So, please don’t ignore them.

 

Just make sure that you are aware of consumer rights regarding normal collection action, especially when dealing with third party collectors. No collector should verbally abuse or threaten you. That is against the law. The Fair Debt Collection Practices Act governs third party collectors, collection activity, as well as Consumer Rights.

 

Financially True,

   

Tarra Jackson, Making Money Sexy

  

What other application information is used by collectors?

5 Ways to Avoid Financial STDs (Substantially Tremendous Debt)

Have you or someone you know been infected with Financial STDs? I have…
   

In my book Financial Fornication, I talk about Financial STDs (Substantially Tremendous Debt).  This financial dis-ease is not only financially and emotional painful, but families and cosigners can get infected as well because it can be contagious.

   
Here are 5 ways to avoid Financial STDS.
   
Use Financial Contraception.
Financial Contraception is better known as a budget or spending plan. Create a budget or spending plan that works with your lifestyle. Using a budget is the best protection against acquiring Financial STDs.
    
Avoid being financially promiscuous with multiple credit cards.
Pick a credit card that has the lowest rate and provides bonus points if you must or choose to use a credit card for purchases. Using multiple credit cards may result in excessive spending, which result in Financial STDs.
    
Limit or Avoid Financial One Night Stands.
A financial one night stand is a financial transaction, usually less than $50-$100, that should be paid in cash or paid in full if purchased with credit. If you choose to use credit for these types of transactions, avoid turning those financial one night stands into a long term financial relationship by revolving the balance and not paying it off in full. Vernacularly speaking, “Hit it & Quit it!”
   
Become Financial Abstinent.
When your finances feel like they’re getting out of control, sometimes it’s best to just STOP using credit to get a handle on your finances. Being financially abstinent stops the leaks in finances so a budget can be created to build up immunity against Financial STDs.

 

Get out of Financially AbusiveRelationships.

If you are getting your butt kicked with ridiculously high loan rates, low deposit rates, lots of fees and poor customer service, they’re probably really not that into you, which means that it’s time to plan your exit strategy from that financially abusive relationship.  You don’t have to stay. Date financial institutions to find the best one for you.

 

For more tips, check out my book “Financial Fornication.”

 

Financially True,

 

Tarra Jackson, Making Money Sexy

Pay Day Loan Confession: I've fallen and I can't get up!

…have you (or someone you know) "fallen" into the Pay Day Loan bottomless pit of debt and feel like you can't "get up" out of it? I have.

When you’re in a bind and you need a few hundred bucks to bridge you over a few days until your next pay day, a pay day loan may look very appealing. In my opinion ... Pay Day Loans are like an addictive drug. The first experience may seem helpful and pleasurable but it eventually becomes something that you believe you can’t live without.  And just like a drug addiction, getting out of Pay Day Loan debt can be scary, daunting and financially painful. But … there is a cure for this Financial Dis-Ease. 

   

Let’s first discuss how Pay Day Loans causes Financial STDs (Substantially Tremendous Debt).  Ok … (true story) … a family member of mine needed $200 to pay the electric company to keep the lights on. A so-called friend referred them to a local pay day lender. The pay day lender charged $20 per $100 borrowed. The process was so pleasant and easy that they decided to borrow an extra $100 for a total of $300.  They paid their past due electric bill for $200 and had $100 for food and gas until their next pay day. On their next pay day, they made the fateful decision to renew the pay day loan. So, this time the loan was for $360 (to pay off the original loan amount of $300 loan and the $60 fee). The new fee was another $72, which totaled $432 for the new loan. My family member renewed this pay day loan at least 5 or more times and quickly began to sink into debt.

   

Getting “up” out of pay day loan debt is not as easy as falling “down” into it, but it is possible. Here are 3 tips to get out of Pay Day Loan Debt.

   

COLD TURKEY

   

If at all possible, the best method is to stop taking out pay day loans immediately and sacrifice for the pay period. This will reset your financial situation and give you your full pay check during your next pay check.  It is important to plan for this pay check deficiency. To help you through this financial deficiency,

• Ask your family members if they some money to spare or borrow,

• Contact your bank or credit union to see if you qualify for a payment deferment on your loan payment due to financial hardship,

• Cut out eating out during this pay period to save a few bucks, or

• Carpool with a co-worker or take public transportation to save on gas.

DEBT TREATMENT

   

Another option is to apply for a loan with a reasonable interest rate and short period of time (term) to pay off the pay day loan. So instead of having a pay a lump sum every month, you can pay the new loan off in more reasonable and smaller weekly, biweekly or monthly payments.  If you go this route, make sure you keep the term at 12 months or less and make sure that the interest rate does not exceed 18%. Some credit unions may offer loan programs designed to help people get out of pay day loan debt.  One of the advantages of getting a loan from credit unions is that they must comply with a “usury law,” which means that they cannot exceed a specific interest rate, usually 18%.  If you have a great relationship with your bank, ask them if they have a loan consolidation program that can assist you with refinancing your pay day loan.

   

  

TERMINATION

  

A last resort to get out of pay day loan debt may be bankruptcy. The two chapters available to file under for bankruptcy are Chapter 13 or Chapter 7.

   

Chapter 13 bankruptcy is considered “reorganization” and is appropriate if you have significant collateral that you want to keep like a home or vehicle. Chapter 13 establishes a payment plan up to 5 years to pay on your debt based on your financial capacity.  Once you have completed all of the payments ordered in the bankruptcy plan, the debt is considered “discharged” and the remaining debt is not collectible by the creditor.

   

Chapter 7 bankruptcy is considered “liquidation” and is appropriate if you have significant unsecured debt and minimum or no collateralize debt.  Chapter 7 liquidates or “terminates” qualified unsecured debt. Should you have collateralized debt, you can “reaffirm” with the bank and continue to make payments according to your credit agreement or you can “surrender” the collateral to the bank or trustee so it can be sold to pay on the debt to liquidate.

   

This option again should be a last resort consideration but can assist you in resetting your financial situation with a fresh start.  There are pros and cons to filing for bankruptcy so make sure that you consult with a knowledgeable and consumer focused bankruptcy attorney.  Click here to listen to my interview with Bankruptcy Trustee & Attorney, Angelyn Wright, Esq., as she talks about the “Truth About Bankruptcy.”

   

   

Sinking in Pay Day Loan debt can feel helpless and hopeless, but there is financial resurrection. The great thing is that you hold the power in stopping this type of financial abuse by making the decision to stop using pay day loans.  Make the decision today.

   

Of course, the best way to avoid "falling" into this bottomless pit of debt is to avoid using it at all costs. Seek alternative short term loans through your bank or credit union.

  

  

Financially True,

  

Tarra Jackson ... Making Money Sexy

   

  

P.S.  The 3 tips above is a start to help you get up from falling down into this type of debt, but there are other ways as well.  What are some other tips to "get up" from falling into pay day loan debt bottomless pit?

Owing Taxes SUCKS!

… Have you (or someone you know) filed your taxes and ended up owing taxes back? I have.
  

Yes, owing taxes SUCKS, especially when it is an absolute surprise.  Some of us have owed taxes for several years. Owing the IRS is sometimes an unexpected bill that can’t fit in our already tight budget. Despite how we may “feel” about it, owing taxes is essentially another "Loan" that is owed.  Here’s how it is like a “loan," how it can affect your Credit Score and 3 Tips of things to do to avoid having to pay back taxes next year.

 

TOO MUCH, TOO LITTLE, TOO LATE

  

When “not enough” taxes is OR “too much” taxes are being taken out during the course of the year, it means that the exemptions on your W-4 or your tax deductions may be incorrect. But, here is how taxes are like a "loan.”

  

If “too much” taxes are being taken out of your check throughout the year, the government is essentially “borrowing” that money from you.  They pay the amount they “borrowed” in a lump sum called a “Tax Refund.”

 

Conversely, if “not enough” taxes are being taken out of your check throughout the year, you are essentially “borrowing” the money from the government.  The amount you owe in taxes is the “borrowed” money you must pay back.  The great thing is that if you are not able to pay it back in a lump sum, payment plans over a period of time are available to avoid additional fees and penalties.

  

HOW TAXES CAN AFFECT YOUR CREDIT SCORE

 

If the Taxes Owed is not paid within a timely manner, the IRS may report the delinquent taxes as a “Tax Lien” on your credit report under the Public Records section on your credit report. This will negatively affect the Payment History category of your credit score, which is 35% of the calculation. Also, the amount doesn’t matter. Whether you owe $500 or $5,000, the negative affect to the credit score will be the same.

  

If it is reporting on your credit report and you have paid the taxes due in full, make sure you get a copy of the Satisfied Tax Lien notice from the IRS. Also, dispute the information on your credit report, if necessary to have it updated as “Satisfied.”

As promised, here are 3 Tips of things to do to ensure that you don’t owe taxes next year.

 
 

TRUST BUT VERIFY

  

Some people love to DIY (Do It Yourself) everything, including their taxes. And there are great Tax softwares available to help you do your own taxes. You can even do your taxes online. If you choose to do your own taxes, just remember President Ronald Reagan’s quote, “Trust but Verify.”  This is important, especially if you owed taxes for last year.  Simply take your completed taxes to a tax accountant or tax professional so they can make sure that you didn’t leave out any new deductions or, better yet, you didn’t write off something that didn’t qualify.

 

KNOW YOU’RE PLACE

 

One of the reasons why people end up owing taxes is because they have the wrong number of exemptions on their W-4 forms.  Make sure to review, and update if necessary, your W-4 form with your employer annually, preferably at the beginning of each year. Consult with a tax accountant or tax professional for guidance.

 
GIVE YOURSELF CREDIT
 

Many people have turned their hobbies into a business. However, some of those people don’t give themselves credit by not taking advantage of available business tax write offs.  Not taking advantage of every eligible business tax write off is like giving away extra money. So, whether it’s selling your homemade secret recipe cakes or providing consultation, make sure you keep your receipts for all of your business related expense in one place, like an envelope for next year’s tax return.  You never know, certain business meeting meals up to your cell phone bill used for your business may be business tax write offs. Consult with a tax accountant or tax professional to understand what business expenses are tax deductible. 

The moral of the story is that winning the Tax Game is to GET NOTHING and OWE NOTHING! #IJS

   
Financially True,

   
Tarra Jackson ... Making Money Sexy 

Financial Spring Cleaning Tips

... have you (or someone you know) ever thought about doing some Spring Cleaning with your Finances? I have.
  

It's SPRING!!! Yes! It's that time again.  Out with the old to make room for the new!  Spring is the season of newness!  Time to put away all of the winter clothes and blankets and bring out or make room for the Spring and Summer stuff. If you are planning to do some spring cleaning this year, are you planning to do some Financial Spring Cleaning?


Financial Spring Cleaning is just as, if not more, important as Spring Cleaning in your home and closet. Here are a few tips on Financial Spring Cleaning with your Paperwork, Wallet, Credit Report and Budget.


PAPERWORK - SPRING CLEANING

• FILE ESSENTIAL DOCUMENTS / SHRED NON ESSENTIAL DOCUMENTS. If you have a desk, filing cabinet, drawer or box full of old bank statements, checks, bills, or other financial documents, sort through them carefully and keep only the important documents that you know you will need to reference at a later date. Do NOT just throw the documents away in the trash. If you do, you are begging to be a victim of Identity Theft.  If you do not own a shredding machine at your home or do not have access to one at your job, take your shred box to a local Shredding Company.  They are awesome!  Just dump, watch it get shredded and drive away! Search for a local Shredding Company or ask your local financial institution if they do Shred Events.

• GO GREEN / PAPERLESS.  Most financial institutions encourage their customers to sign up for electronic statements. This is more cost effective for them because they save money on paper, ink, postage and mail service. This is beneficial to you because you don't have to worry about more paper coming in the mail.  Don't fret! If you need to have a hard copy of your statement to audit or review, you can simply print you statements via online banking.

WALLET - SPRING CLEANING

• REDUCE THE PLASTIC.  If you have more than one debit or credit card in your wallet, you may be setting yourself up for over spending. Or worse, you may give that thief who stole your wallet access to all of your money and credit. Save the planet and just PICK ONE already! Only having one debit or credit card in your wallet to use for a purpose is the best way to control spending.  

• USE CASH! A wallet is for cash!  Keep cash in your wallet to see exactly how much you are spending.  The may help you with a new financial reality check.

CREDIT REPORT - SPRING CLEANING

• GET IT FREE! Before you decide to apply for credit anywhere, you should know your credit status. Lenders should NOT know your financial reputation before or better than you! Being afraid of what is reporting is no excuse for not getting a copy of your credit report.  You should know what creditors are saying about you. You never know, the stuff they are saying and reporting about your could be false "rumors."  You will want to nip that in the bud sooner than later. You can get a FREE copy of your credit report at least once a year at www.AnnualCreditReport.com or by calling (877) 322-8228.

• SET THE RECORD STRAIGHT! If there is false information reporting on your credit report, it is your obligation to set the record straight and get it corrected.  Creditors are going to notify you that they are reporting information incorrectly!  This is YOUR financial reputation we're talking about.  It will suck when you are declined for credit because of information that is incorrect. Each credit reporting company (Equifax, Experian and TransUnion) has an online process to dispute incorrect information. They also provide detailed instructions on how to dispute information via mail as well.  Get started at www.AnnualCreditReport.com.

  
BUDGET - SPRING CLEANING

• GET ONE! If you do not have a written budget, this is the time to get it together.  Once you see where your money is going money, it will help you make better financial decisions. If you need help creating a budget or spending plan, click here for my FREE eBook on 5 Steps to Building a Budget that Works. 

 

• UPDATE IT! A budget or spending plan is a living and breathing document. There are some things that may have changed within a year, which may require changes to your budget. So, if you do have a budget established, now is the time to review it and update it as necessary. Who knows, you may have a few extra bucks to save or to pay off another debt. Better yet, treat yourself if you were able to stay on target with your budget! You deserve it.

  

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What Your Credit Score Actually Means

Tom Murphy owns and manages rental properties in one of the Top 25 markets in the United States. His rents range from $750 to $1200 a month, but every tenant must pass the same test before they get a key to the front door.

“They've got to have a good credit score,” Tom told Debt.org. “I want to know if they have demonstrated responsible financial behavior.

“It’s nice if everybody says he’s a good guy and takes his family to church every Sunday and all that … but what I really want to know is whether he has a history of paying on time.”

Bankers, insurance companies, car dealers, utilities and plenty of other businesses would say “Amen” to that!

Are You a Good Financial Risk?

What a credit score really indicates is whether you are deemed a good financial risk, based on your history of paying bills. If you’re trying to get a home loan, a car, insurance for that home or car or just get the electricity turned on, the most influential factor in making it happen, is probably going to be your credit score.

“If you’re irresponsible about paying your bills, the general feeling is you’re likely going to be irresponsible about how you drive or when you pay your mortgage,” said Dave Viola, an insurance broker in the same city. “You still might get some insurance with a bad credit score, but you’d be flabbergasted by the rates.”

Representatives from banks, insurance companies, car dealers and property owners confirmed that credit scores do affect the terms and conditions of any agreement they make with a consumer. In most cases, the higher the credit score, the lower the monthly payment. And if the consumer’s credit score is at the low end of the scale, some companies won’t do business with them at all.

Credit Score Range

The lines of demarcation in credit scores, also known as FICO scores, range from 300 at the low end to 850 at the high end. The median FICO score is 723, meaning half of people with credit scores are below 723 and half are above.

The FICO scores are compiled by three companies:  TransUnion, Experian and Equifax. Each one claims to use a different formula in arriving at their score, but generally speaking it’s computed like this: Payment history (35%); amount owed and credit available (30%); credit history (15%); new credit (10%); and type of credit used (10%).

It would be wise to note what doesn’t affect your credit score, namely how much money you make, age, sex, race, religion, marital status and where you live. 

The problem for most people is that they don’t know their credit score and haven’t reviewed their credit report. Consumers are entitled to a free credit report every 12 months, one each from TransUnion, Experian and Equifax. The free report is available at annualcreditreport.com, but credit scores are not included. The Consumer Financial Protection Bureau estimates that only 20 percent of consumers request their free credit report.

If you receive your credit report and aren’t satisfied with what you see, there are some steps you can take to improve your credit history:

• Check the accuracy of the report. Incorrect information is the leading cause of consumer complaints about their credit history. Remember, all three companies that issue reports use different data, so get a free one from each company and check all data.
• Pay your bills on time. This is especially significant with credit cards and bank loans. Set up a bill payment reminder system, if necessary.
• Pay down the balances on credit cards.
• Do not open a new credit card account unless absolutely necessary.
• Maintain a good mix of credit (mortgage, car loan and credit cards).

Having a good credit score can mean hundreds or even thousands of dollars’ worth of difference in what you pay for a loan or insurance coverage. You can go online to see examples of the relationship between your credit score and the interest rate charged on your loan. In today’s tight lending market, consumers need to be at the high end of the spectrum to receive favorable treatment for loans or insurance.

Bill Fay writes and blogs for Debt.org. He is an award-winning writer with more than two decades of experience in the areas of news, sports and public policy.