Review Your Finances

Doing your income taxes?  If so, there is no better time to review your finances so that you have a better overall understanding of where you are, where you want to be, and how to get there.

The best place to start is with your credit score.  Do you know what your credit score is?  With all three credit bureaus?  Do you know what your FICO score is?  Chances are that your score changed during the month of January, especially if you used credit cards to help pay for part of Christmas.  Typically, the use of credit cards for Christmas can negatively impact your credit score.  So, the first thing to do is check your score, then make plans to get those balances paid off as soon as possible!

Next, review your current credit card interest rates. Compare them to the current credit card offers for your credit range. Then, make a change if there are credit cards available to you that offer better interest rates, better rewards, or introductory interest rates.

Finally, work on your budget!  Look at what you’ve spent over the past twelve months for food, shelter, and other necessities.  Then, take a look at your discretionary spending.  Are there places where you can cut back?  Maybe you want to grow your savings account?  Pay off a bill sooner?  Perhaps you want to buy a house?  A new car?  All of these things affect your budget, so make sure that you have room for additional expenses before you take them on!  And if you don’t?  Then your budget is where you need to start to FIND the money for those things!

Trust me, once you take the time to sit down and review your finances, you will feel so much more optimistic about your financial future!  Not only will the review give you peace of mind, but you might just find yourself a lot more determined to make 2022 your best year yet!

Online Security

laptop How do you protect yourself against hackers, scammers, and phishing?

Recently, we’ve been pondering exactly how hard it is to trust literally any site when it comes to sharing your personal of financial information.  And, even though there is a very concise statement on every page of this site stating that we do not collect your personal, financial information when you apply for credit cards, loans, etc., on this site, we decided that maybe we needed to reiterate that with this post.

When you click on ANY link to ANY offer on this site, you are taken directly to the verified vendors site to enter your information in a safe, secure format.  We do not see your information nor do we have access to that information.  Once you leave this site, you communicate directly to the credit card company, loan originator, etc.  So, unlike a lot of questionable sites out there, is as safe and secure as we can possibly make it.  And even better, we only share information from companies that we have fully vetted.

So, if you see something that you’re interested in on this site, don’t hesitate to click through to the credit card, loan, or other offer.

Investing in Crypto

Coffee MugInvesting money is an important part of your overall financial picture.  Investing helps you to plan and save for the future, and if you’re like me, investing here and there is an excellent learning experience.  Now, most of us have some sort of retirement and/or 401 K that is through an employer, and that’s great.  But, you should NOT touch that.  Leave that with your investment advisors and/or whoever handles that for you.

The kind of investing that I am talking about in this post is on a much smaller scale (to start).   That investment amount can be as small as you want it to be.  In fact, I started one of my small investment accounts with literally ZERO invested cash of my own.

How did I do that?

Well, to be honest, I’ve been wanting to learn about cryptocurrency for quite some time.  We’ve all seen the bitcoin advertisements on Facebook, Twitter, and so forth.  And, if you pay attention to business and finance online, you’ve had to have seen how quickly some cryptocurrencies gain value.  Still, I didn’t feel like I knew enough to invest my money in it until I learned more.

And that’s when I stumbled across Coinbase.

Coinbase actually gave me the opportunity to learn about cryptocurrency AND gave me a certain amount every time I completed a lesson online.  So, as I learned, I earned.  And the best part of it is – you can too!

Join Coinbase today and get started learning about Crypto!

Credit Recovery After the Pandemic

With the pandemic winding down, unemployment subsidies ending, and so many people headed back into the workforce, millions of people are beginning to see a return to a normal life.  Others among us have never not had a normal life.  And yet others have lost nearly everything and find themselves having to start over completely.  If you’re one of the ones who lost your job, your home, your car, or your business, you’re probably starting the process of picking up the pieces, and unfortunately, that is not going to be an easy task.  Even now, as we write this post, the economy continues to suffer – joblessness is still a huge problem, inflation is soaring, and many people find themselves owing back rent in the thousands of dollars.  Where do you even start to recover?

First off, one of the most important things that you can do is simply to figure out where you are in all of this.  Do you have a job?  A place to live?  A car?  How much money do you have in the bank?  How much debt do you have that you need to get under control? If you’re not sure, the best thing to do is to sit down and make a detailed list of what you have, where you are, and where you need to be.  Write down every source of income.  Every bill that you owe.  And make a plan to tackle them, one at a time, over time.

Unfortunately, the debt is likely going to be your biggest hurdle – personal bankruptcies are expected to soar over the next few months to years.  Why?  Because so many of us will simply not be able to recover from the losses incurred during the months of layoffs, lockdowns, and, of course, illnesses.  For those people, bankruptcy will likely be the best option.

But what if you’re able to get a job paying close to what you were making?  What if you are able to catch up over time?  How do you recover from the damage that’s been done to your finances?  To the damage that has been done to your credit score?  To your credit report?

Once you’ve figured out where you are, then you can figure out what you can do.

For example, should you get a personal loan to pay off credit cards?  And if so, which ones offer the best options?  Keep in mind that inflation is soaring, and that means interest rates are going to go up, as well.  So, if you need a personal loan – don’t put off getting this done!

Maybe you need to replace your car but there’s a ding or two on your credit report?  Or maybe you just want to refinance it so you have a little breathing room financially?  If so, investigate those options quickly.  The interest rate on car loans is going up, too!


What about your credit cards?  Are they maxed out?  Could you save money on interest if you changed credit cards?

Maybe you don’t have a credit card?  Or you lost yours to bankruptcy?  If so, you can start rebuilding your credit score today with a secured credit card or even a credit card company that works with people who have damaged credit.

The most important thing that you can do right now is to simply GET STARTED on your finances.  Make the calls, fill out the applications, and get yourself back on track to thrive!

Subprime Credit?

What is a “Subprime” credit level?  Subprime credit means that lenders might consider you a credit risk.  Not only will they be more likely to reject your credit application, but if and when they do issue you credit, you’ll pay a much higher rate to offset the “risk.”  But did you know that not all subprime credit is treated exactly the same way?

Here’s a little more information on the various credit levels and how each one can affect your interest rates on any type of credit card or loan that you take out.

Basically, there are five credit score levels, as outlined by the Consumer Financial Protection Bureau:

  • Super-prime (720 and above)
  • Prime (660 – 720)
  • Near-prime (580 – 619)
  • Subprime (580 – 619)
  • Deep subprime (580 and below)

These credit ratings comprise an important part of each borrower’s risk profile, which is what lenders use when they’re deciding whether to approve your application, and if so, where to set your interest rates.

It’s worth noting lenders may use slightly different scales whether they work off the FICO scoring system, the VantageScore model, or a proprietary set of ranges. The VantageScore typically classifies borrowers in these ranges:

  • Super-prime (781 – 850)
  • Prime (661 – 780)
  • Near prime (601 – 660)
  • Subprime (300 – 600)

How common is it for a borrower to have a risky profile based on their credit standing?  About one in five Americans has a subprime rating to some degree, with six percent of U.S. adults falling within the “subprime” category and 13 percent of American adults having “deep subprime” credit.

What are the consequences of having Subprime credit?  Your credit standing is one major factor lenders consider when evaluating your application, whether you’re trying to get a credit card, finance a car, take out a personal loan or finance a home.

Here’s a sample break down of auto loan interest rates per category based on Experian data for early 2020 and the VantageScore scale:

  • Super-prime (781 – 850): 3.65 percent
  • Prime (661 – 780): 4.68 percent
  • Non-prime (601 – 660): 7.65 percent
  • Subprime (501 – 600): 11.92 percent
  • Deep subprime (501 – 600): 14.39 percent

As you can see, borrowers with deep subprime credit can expect to pay an interest rate nearly three times higher than those considered prime. Even a few percentage points of difference can add up to hundreds or thousands of extra dollars over the lifetime of a loan or credit card.

Finally, subprime mortgages can carry interest rates as high as eight to 10 percent, and furthermore may require the borrower to put down a higher down payment between 25 and 35 percent to secure funding. Over the course of a 15- or 30-year housing loan, owning a home can become significantly more expensive for borrowers with poor credit.

As you can see, deep subprime and subprime credit makes it harder to get credit and much more costly when you do get credit.  So, do anything you can do to strengthen your credit history before applying.  This can help to smooth out the process and keep a little more money in your pocket.

Doing Your Taxes? Review Your Finances!

Every year about this time, lots and lots of people start on their taxes.  Gathering the proper forms, W-2’s, 1099’s, etc., going through the appropriate receipts, and then actually starting to prepare their annual income tax returns (or taking them to a tax professional to prepare for them.  It’s a lot of work for some people and not so much for others.  But, you know what truly makes sense to do when you do your taxes?

Review your overall financial picture, too!  That’s right, you’ve already dug up your earnings, you’ve already reviewed your expenses, and you’re getting closer to knowing exactly how much you will have to pay or be refunded on your 2020 tax return.  So, why not go one small step further?

  • Take a look at your credit report!
  • Review your credit card balances!
  • Review your interest rates!

Where can you improve your credit score?  How can you improve it?  Are your credit card balances too high?  Are you paying too much interest?  Perhaps your overall credit situation has changed and you now qualify for better credit cards with better interest rates?  Maybe a personal loan makes sense?  And maybe, just maybe, you’re doing pretty well this year!

The simple fact of the matter is, you will never know unless you take the time to go over your finances.  And there is no better time than right now, when you already have the information in front of you.  So, what are you waiting for?  Get to work on your finances, too.

Building Credit from Scratch

money growthHow do I build credit from scratch?

Building your credit for the first time can feel a little like the chicken and the egg. You’re going to need to take out a loan or get a credit card, but you can’t qualify for a loan or get a credit card without some credit history.  So what do you do?

First, you’ll want to start with a bank account.  You don’t need a long credit history to open a checking account at your local bank. In fact, you may have one already.  Although though a checking account won’t necessarily help you build a credit history with the credit bureaus, that account may help you get your first credit card or loan from the same provider.  You see, if you already have a history of doing good business with the bank, they know you and value your business.  That existing relationship may carry some weight when it comes time to get your first line of credit.  That is a good first step, but if that’s still not enough, here are a few other things to consider.

Some banks offer credit cards for folks who want to establish, strengthen or even rebuild their credit.  These credit cards are called secured credit cards because you secure the amount you borrow with a security deposit.  In other words, you provide collateral by depositing money in an account with the bank, something the lender gets to apply a portion of, or all should you default on the loan.  Then, your credit line is equal to the amount you deposited.  You won’t be able to touch that money or use it to pay off your balance, and you will still have to prove to the bank that you have sufficient income to pay the credit card.  But, the good news is that the bank will be more confident that you’ll pay them back even without great credit, thereby allowing you to build or rebuild your credit.

Of course, you want to make sure that your lender will report all those on-time payments to the credit bureaus before you apply.  Most banks and credit unions do this, but some retail store cards, for example, don’t, so make sure to check ahead of time.  And if your payment history won’t be reported by the card issuer, you may want to keep shopping for a card that does.

Don’t apply for a bunch of different cards, though, because if you keep striking out, all those hard inquiries and declines aren’t going to help you build a score. In fact, they may make your nonexistent credit score worse!

Then, there are prepaid cards.  A prepaid card allows you to load the card with a cash amount ahead of time to spend later.  Prepaid cards are great for people who need a Visa or MasterCard to make a purchase and can be a terrific gift idea, but they won’t help establish credit.

Another way to build credit is to see if there’s, someone who might be willing to co-sign a loan with you.  This can be any adult who is credit worthy, including your parents or spouse. When someone cosines a loan, you get the benefit of their good credit history, and this may help you get approved. You can then build your own credit with a good history of payment on the co-signed account.  However, keep in mind that whoever co-signs the loan for you is taking on a really big financial responsibility.  In the event that you don’t pay, they will be responsible for paying back the debt. Therefore, it’s not something you should ask for lightly.

When you do get credit extended to you, it’s very important to keep managing it carefully.  Even after you’ve built a solid credit history, make sure that you keep the good habits you learn for the rest of your credit life. This will help you build a long, positive credit history that will eventually result in a really good credit score.


Set Your First Budget

When it comes to your money, setting a budget is probably one of the most important steps to keeping more of your money each and every month.  So, it’s time to sit back and get comfortable with your first budget!

Now, there are tons of different strategies out there for how to budget and how to make the most of your money.  Some of them are more hands-on than others, but the most important thing here is that you do not wait to have a lot of money in order to start budgeting.  If you only have ten dollars a month, then you need to account for every one of those ten dollars.  Where they’re coming from and where they’re going.  Then, what you want to do with them.  But first, let’s do a quick basic definition of a budget.  A budget is simply an estimate of your income (the amount of money you’re bringing in and have available to spend, save, or invest) and your expenses (all the things that you need to spend money on ).  It can be as simple as a piece of paper split into two columns where you jot down all of your paychecks gifts and so on in one column and all of your bills purchases grocery costs and so on in the other.  Or it can be  more complicated than that.  It can also automated through various apps and programs that help sort your budget for you.

Just as there are many different ways to track the nuts and bolts of a budget, there are also many different philosophical approaches to budgeting.  Some people approach budgeting with a straightforward pay yourself first strategy, where they set aside money first thing every month to be saved before sorting out all of the other money into different categories.  Others practice zero based budgeting, where every single dollar is assigned a category, with nothing left over at the end of the month.  These strategies are a bit more involved but they can easily be mastered once you’ve gotten used to the basics of understanding your budget.

If you aren’t sure of where to start with budgeting try keeping a money diary by writing down every purchase that you make for a given period of time.  This will help you start to understand your spending patterns so you can get an idea of how much money you want to dedicate to each category, as well as some of the things that you probably want to cut out  completely.  Regardless of your individual strategy, the most basic thing to keep in mind about a budget is that your expenses should not exceed your income.  You literally want to finish every month in the black, meaning that you have money left over to save or invest.

Now, if you’re spending more than you’re bringing in, that means you’re in the red for the month.  You’ve spent more than you’ve earned and you may still owe that money on a credit card or to someone you might have borrowed it from.   The most traditional budget there is is a simple list of the money coming in compared with a list of the money going out.  You record your income and assign it and your expenses in a category things like housing, utilities, student loans, paychecks, gifts, etc.

There are many ways to budget your income depending on how hands-on or hands off you want to be.  Some people swear by the old-school Google sheets method, of which there are plenty of examples, such as the financial diet.  But others prefer various apps which will help you to automate the categorization and analysis of all of your different spending and income.  Others still prefer to use a literal pen and paper because they find that actually writing these things out and doing the calculations themselves helps keep them accountable and very aware of every single line in their budget.  Again, no matter which method you picked you’ll generally have some basic categories of expenses that you’ll need to track, such as rent, internet or cell service, food, etc.  From there, you can drill it down even further if you’re trying to see exactly where your money goes.  These categories are then assigned an amount per month.  Your spending may vary month to month, but the idea is to never exceed the amount in any given category.  This helps keep you under budget overall.

Another strategy is called the envelope method, where you literally take a stack of envelopes labeled with your expense categories and put the money for each category in the envelope.  Then, whatever money you put in each of those envelopes is the only money you can use for that category that month.  The envelope method is obviously rather labor-intensive, but many people do find it very helpful to totally realign how they think about money and start fresh on a very accountable budget.  (Keep in mind that for big recurring expenses,  such as your rent or utilities, you may not want to keep them in envelopes.  You may want to just simply automate those bills, so the money comes out of your checking account and you don’t have as much cash on hand all the time.

Another popular budgeting method is the 50 30 20 rule.  The bare bones of this method is that 50% of your income should go to necessities, 30% goes to things that you want, and 20% goes to savings or paying off debt.  Some people do prefer to swap those last two so 20% is going to your wants and 30% to savings or debt payoff.  This is a very effective way for many people to budget because it’s a zero-sum budget, meaning that every single dollar is allocated.  It can be a bit inflexible because, for example, you may live in a place where it’s not realistic for your total necessary purchases each month to fall under 50% of your take-home pay.  In New York, for instance, you’d have to be earning quite a lot in order for that to be the case.

Perhaps the most difficult part of budgeting, especially if you’re someone who has a tendency to slip into that treat yourself mentality or confuse things that are nice to have with things that are necessary to have, is understanding the difference between necessary and unnecessary expenses.  The main thing is that you have to be super honest with yourself.  What are the basics that you need to get by each month?  There should be a basic minimum grocery bill, things like your rent or mortgage, basic utilities, internet, cell phone, etc.  Once you have identified in a very honest and clear way what your absolute necessary expenses are, those need to be taken out of your budget first and foremost by subtracting this amount from your monthly income.  This gives you a clear number of what you have left over for everything else and that everything else has to represent both your unnecessary expenses and your savings / debt repayment / investing.  Now, don’t get me wrong, unnecessary expenses doesn’t mean you will never buy or pay for these things.  It simply means that when push comes to shove, they do not absolutely need to be included in your monthly budget.  Things like going out to dinner with your friends, subscriptions and gym memberships, fitness classes, hobbies, coffees, and that kind of stuff can be categorized as unnecessary even if most months you end up paying for them anyway.

Again remember that whatever is left over in your budget after subtracting your absolute necessary expenses are going to be competing for space.  The more of those unnecessary expenses that you’re paying for each month, the less that you’ll have to go to savings, investments, or paying off bills, so make each dollar count.

Of course, the best way to get a really clear picture of what your actual necessary versus unnecessary expenses are is to get really good about tracking your own spending and getting a very clear picture of your lifestyle and what it costs to live it.  This is part of the reason why one of our first tips on this topic was to start with something like a money diary or writing down everything you spend on for a month or so.  Often when we’re setting out a budget for the first time, especially if we really want to cut back or save a lot, we have a tendency to wildly underestimate how much we realistically spend on certain categories each month.  It’s much better to make a realistic budget from which you can slowly start to chip away than to try to radically alter your spending in a way that doesn’t match up with your lifestyle.  If you do that, you’ll inevitably fail at the budget stop trying altogether.  Understanding how much you tend to spend at the grocery store every month, as well as doing a very clear inventory of which of your more regular bills you could probably cut back on versus the ones that need to remain the same, is extremely important for setting a realistic budget.  For example, you may be someone who uses your cell phone all the time for both work and personal use, so for you it’s much more important to just go ahead and pay for that more expensive unlimited monthly plan than to try and radically lower your monthly cell phone bill to a point where you constantly end up having to pay overages each month.

With a very clear record of your spending and analysis of your lifestyle, you will be able to paint a very clear portrait of unnecessary versus necessary and identify the places in which you can start to make meaningful changes without radically altering your lifestyle or setting yourself up for failure.  Remember, you don’t have to have an incredibly strict budget in order to get control over your money!  Sometimes you’re going to spend money on frivolous things or make mistakes or buy something that you might regret, but that’s okay.  What is important is having a very clear understanding of what is coming in and what is going out.

It’s also okay to experiment with different methods of budgeting so that you can get a feel for what works best for you and what’s more sustainable for you in the long run.  The power of a budget is in having control over your money and, at the very least, even if you’re currently spending more than you make, at least you have a very clear mental picture of what’s happening and what needs to happen in order for you to be in the black again.  Remember, no matter how little you may be taking in each month, it is never too early to start budgeting. Waiting until you’re rich to have a budget is like waiting until you’re married to start dating.

New Year / Fresh Start

There is perhaps no better time than the start of a new year to get a fresh start on your finances!  From your credit score to your credit cards to your retirement plan, now is the time to sit down, take stock of where you are, and make a plan to get to where you want to be by the end of 2021.
Not sure what your credit score is?  If you are not sure what your credit score is, then you know exactly where to start, don’t you?  You can get your credit score, and in most cases, your credit report for free online in any one of a dozen or more places.  From your bank to your credit cards, nearly every financial institution is offering free access these day.
Once you have that information in hand, sit down and review it completely.  Are all of the accounts listed on the report yours?  What is your credit score?  What can you do to improve your score?  Make a list. Then, move on to the next step.
Take a look at your credit cards.  Are the balances too high?  Experts recommend that you keep the balances on your credit cards below 33% in order to maintain your credit score.  If your credit card balances are above this threshold, paying them down should be a top priority.  Once you’ve looked at your balances, then it’s time to look at your interest rates.  Are you paying too much interest each month?  Perhaps your credit has improved over the past year, and you’ve gone from bad credit to fair credit, or fair to good.  If that’s the case, there may be better options than your current credit card providers, enabling you to save money on interest.  You may even qualify for a balance transfer card with a 0% introductory rate.  But you will never know unless you compare those credit cards to others that are out there.

Finally, take a look at your budget.  Where can you cut expenses?  Where can you save money?  How much more could you put into savings each week or month?  Even though 2020 was a really difficult year for all of us, getting a fresh start in 2021 may be easier than you think.  You just have to start somewhere.  Are you ready for a fresh start?

Should I Ask for a Credit Limit Increase on My Credit Card?

Asking for an increase to your credit limit on a credit card can sometimes help you through an emergency situation, provide you with a safety cushion of extra available credit, and even help improve your credit score, but should you ask for an increase?  That depends.  If you’ve only had the credit card for a short time, it’s far better to wait until you’ve established a pattern of responsible use, including maintaining a low credit limit and making your payments on time, every time.  Once you’ve proven that, you’re more likely to be approved for the increase to your credit limit.  However, if you have a pattern of missed payments, or you’ve maxed out your credit limit, it is unlikely that you will be approved  for a credit line increase.

Some lenders will automatically offer credit limit increases once you’ve proven that you’re a responsible customer.  Beware of the fine print, however, as some credit cards carry a fee of up to one third of the increase for this additional credit.  And, you’re not obligated to accept the increase, either.  The bottom line is, you know what you can afford, you know your spending habits, and you know the course of action you need to take to stay on the right financial track for you.