Browsing Tag:

finances

In Budgeting on
September 27, 2017

How to build, raise, and maintain your credit score

We have always been told to build and keep good credit. But what does that really mean? The problem is that the “financial experts” never explain how to build or raise your credit, or the meaning behind their advice. It gets frustrating.

Well, good news is that I have done the research for you. I have searched the Internet and flipped through numerous financial books to dig up this secret information (well not really- but it sure feels like it).

A good credit reputation begins with paying your monthly bills on time, and in full. I know that this task may be hard for some, but it is so important. Establishing good credit can be done through many different ways- including keeping credit charges within your credit limits, maintaining a steady job, keeping debt low and allowing time to accrue a credit history. 

Your FICO score, better known as your credit score, is another measure of how financially responsible you are. Do you know what your magical number is? The FICO score is a measure that banks use to determine if you quality for credit. It is a three-digit number that reflects your credit report. Your credit report is a detailed report containing your personal history with handling and borrowing money. 

FICO scores range from 300-850. The higher the score, the better your chance at qualifying for loans, credit, or lower interest rates. On average, scores are graded as follows:

Excellent = 750+

Good = 700-749

Fair = 650-699

Poor = 600-649

Bad = Less than 600

Now that you know what these scores actually mean, you may be wondering- where can I check my score? Well, to be honest, I have always been skeptical about websites that may ask for a payment or end up costing me money, however the site (is reputable and free!) Creditkarma.com allows you to check your score within minutes, after entering in some key personal information. You can also obtain your full credit report, which allows you to access an overview of your personal financial information. 

Let me ask you a question. Do you know what actually goes into determining your score? There are a few things that are taken into account when calculating your FICO score. 

1. Payment history 

Do you pay your bills on time?

2. Credit utilization rate

How much available credit do you have out and how much are you using?

*It is recommended to not exceed 30% of your credit line at a time. 

Example: If your credit line for one card is $1,000- you should not exceed more than $300 a month. If you do, it will count against you on your credit score.

3. Length of history

How long have you had each card and how actively do you use it?

4. Amount of new credit

What % of accounts  have been opened and how many inquires were made on your account recently.

5. How many types of credit

Credit should be varied. Example: student loan debt, car loans, as well as credit cards. You don’t want to have all of one kind.

 

I am sorry if your head is now spinning with numbers and all sorts of information, but I want to congratulate you for getting through this post in its entirety. By doing so, you are helping to get your finances in order and become even more financially responsible than you were before you read this! Now I already know that my readers are very wise and intelligent, but the more information we know, the better off we will be! Right?

 

I am going to conclude this post by sharing some helpful tips with you all so you will be able to build and maintain a great credit score.

Tip #1: Minimize debt; Only charge what you can afford and pay off balances monthly and in full.

Tip #2: Be aware that closing your accounts can hurt you; Do not close more than one account per year or cancel multiple cards at once. Also avoid closing your longest account, which holds your longest credit history.

Tip #3: Choose credit cards carefully; Make sure you know all the facts before applying for a credit card and most importantly, know what the interest rates are.

Tip #4: Only apply for credit when necessary; Have one or two major credit cards and a few store credit cards, but I do not recommend having over five cards at a time. Do not apply to every credit card that comes in the mail. I know it can be tempting but just throw them out!

Tip #5: Take some time to look through your credit report. It will allow you to see how much credit that you have out at the moment and check if there are any “flags” that Credit Karma suggests you can improve. 

 

I hope that you found all of this information to be helpful and a great resource for you to look back on. Remember: Your credit score matters. Take your score seriously, and work on ways to improve it. Aim high!

 

This post was written by Jess but first found on Society Letters here.

In Budgeting on
August 30, 2017

Practical ways to cut back on overspending

prevent overspending

Do you ever think to yourself, “where did all the money go this month?” …I’m with ya sister. It seems like every day something new is popping up, a baby shower, wedding, birthdays and it feels like you can never seem to get ahead! Well, I am here to tell you that you can! It will take time, persistence and some patience but if you follow these simple rules you will certainly be prepared for the ‘next big announcement’ that is going to drain your wallet even more…(or maybe not!)

In a previous post, found here, I talked about setting up a budget system where you can track your monthly expenses. Creating a budget is so important because it allows you to see, first hand, where your money is being spent. I also challenged you ladies to keep a running list of your ‘miscellaneous spending’ for the month. Did anyone try this? If so, pull out your list and let’s compare. Having a list or document with your ‘misc.’ spending will become a helpful tool, so that you can look back and visualize where your money was spent each month. My husband and I have a column in our excel budget where we write down this type of spending. The only items on our budget that actually fluctuate from month to month are our food budget and miscellaneous, so it is important to us to see which month(s) we spent more or less, and find out why so we can make adjustments to make things better. This is an example of what your list might look like.

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Once you have your list handy, take a look back and see if there was anything that you spent in the month that you didn’t need or something that you could have passed up on. When I started keeping track of my spending, my first few lists were so long (no, you are not the only one!) They were full of things we didn’t need and I realized how much I was spending on things that I should have said ‘no’ to. I also found myself spending almost all of our money in the beginning of the month (when we had it) and then realizing, “Oh crap, its August 15 and I have only $15 left for the month.” 

If you find yourself to be the type of person who is overspending and you want to change this habit, I’ve come up with four simple rules to help you SAVE money!

 

S– “Say no!” At some point, if you are trying to save, you need to be strict with yourself. Skip the impulse buys and stick to things that, when you look back at your budget at the end of the month, were buys that you found to be budget-worthy. For example; A trip to the movies with your kids, or a day out at the beach building memories with friends. 

A– Avoid temptation. Avoid stores or places that make you want to spend money or entice you to want to buy. If you’re a shop-a-haulic, avoid the mall….simple as that! Again, refer back to rule #1, say “no!”

V– Very important. Only buy items that are necessary. Do NOT skip on mom’s birthday gift; these are the things you should be spending your money on!

E– Earn your reward. Allow yourself one “splurge” item a month. Give yourself a ‘salary’ that you are allowed to spend each month that fits comfortably within your budget. Also, make sure you (and your spouse) get paid every month. To make it easier, you can “cash out” your money on the first of every month, and that is yours to spend without any questioning. GUILT FREE spending is the way to be!

I hope some of you found this post to be helpful and can see what I am getting at with all of this. I want to help you! My hope is that by taking some of this advice that you will be start to see some extra money left over each month. Once this happens, we can discuss what to do with it and how to wisely invest and save for your future.

This post was first seen on Society Letters here.

In Budgeting, Motherhood on
August 16, 2017

How to financially prepare for your new baby

There’s so many questions when preparing to have your first baby, as my husband and I quickly found out. You can predict some extra (and unexpected) costs when it comes to adding a new addition to your family, some of which may end up being a burden on your finances. I’m here to help give you some practical advice on how to plan your finances as a new mom-to-be, as well as advise you on what to prepare ahead of time so you can save a few bucks during your pregnancy. 

One of our biggest money savers when having Landon has been shopping secondhand for nursery furniture. Have you ever looked at the prices of crib sets? A full nursery set can cost you anywhere from $1,500 to $2,000. The dresser alone costs more than an adult dresser! If you’re having your first baby, I understand your wanting to have everything new. That’s totally fine (I’m right there with ya), but I would recommend re-furnishing secondhand items if you are open to the idea. My husband and I purchased a used bar table and after some planning, my husband extended the top part to make it into a baby changing table. It was a $30 find and only took a little labor, some new paint and cheap sandpaper to give it that rustic look we all lust after. We also purchased a secondhand dresser, which we re-painted to match our nursery. There are so many apps, websites and FB groups to use when it comes to finding some cool second hand stuff. We like to use the app Close5, which is where we found our second-hand purchases!

Another great way to save on pregnancy costs, such as copays or blood work is by signing up for a health spending account through your job. If you are planning ahead or thinking of starting a family, be sure to look into this option. An HSA account is a pre-tax account used to pay for eligible medical care expenses that aren’t covered by your insurance plan. If you can stash some money away into an account like this, you should have enough money to cover anything that the insurance doesn’t end up paying. My job offers a similar service, called a Flex Spending Account, where my company actually gives me money to keep healthy by going for routine physicals, dental exams, joining a gym, etc. They basically give out around $500 of free money in incentives to keep myself and my family healthy! It ends up saving insurance money in the long run, so look into what your job offers such as this.

Another piece of practical and pretty obvious advice would be to get to know your personal insurance plan. Do your research and shop around for the right insurance option for you and your family. Check into how much your deductible is and what you will need to pay out of pocket. By knowing your deductible ahead of time, you can anticipate the cost of your delivery and hospital stay. Another great perk of having insurance is that most companies (if not all), cover the cost of a breast pump. When you are in your third trimester you can get a script from your doctor which you can then submit to your insurance and in return receive a free breast bump — often times they will even deliver it to your local Target store. Breastfeeding is another way to save tons of money on milk and is beneficial to your baby’s health.

Finally, be prepared to save. Understand that taking your three-month maternity leave that you will not be paid at 100 percent of your current salary. Most moms only make up to 60% of their normal salary during this time. The best case scenario would be preparing ahead of time and putting aside some money every month to account for this loss of income. I didn’t do my research before I became pregnant, so I was unaware that you weren’t paid your full salary during maternity leave. We always have our savings, but didn’t set aside any extra money for this time. If you could have a special account set up beforehand, you will be better prepared financially and not blindsided by your lessened salary. If you are returning to work full-time after your pregnancy, keep in mind the cost of childcare and set up a plan for aftercare once the baby is born. Compare prices of local day cares or see if a close family member could watch your little one on the days you have to work.

There are so many money saving tips out there, but it can still feel overwhelming as you try and prepare for your first baby. Don’t let your pregnancy get ahead of your bank and make sure your savings are set before your kiddo arrives. 

Feel free to leave me a comment below with your best kept money secrets!

 

This post was written by Jess but first seen on Society Letters here

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