A Simple Plan to Regain Financial Fitness

Most of us are not financially fit. We are not completely aware of how our money is being spent. We have too much debt and spend money on the wrong things. While it can be challenging to turn things around, it’s well within your reach.

There is no single, correct path to financial prosperity. Different solutions work for different people.

While there are multiple paths, there are some steps that are critical, regardless of the path followed:

1. Know where your money is being spent. Many people only have a vague idea about how much money they make and where it goes. The first step to financial fitness is know exactly how much you’re taking home and where it’s being spent.

·       Websites such as Mint.com make it easy to track how every penny is being spent each month. There are other similar services as well.

2. Set short-term and long-term goals. Set a few goals that will cover the next month, year, and five years. How are you going to make these goals come to fruition?

3. Allocate your spending wisely. A few simple guidelines will help you to regain your financial fitness. If you’re already in a good place financially, these guidelines will help you to stay there:

·       Keep your fixed expenses to 50% or less of your take-home pay. This includes things like rent or mortgage payments, utilities, car payments, gas, and food. Basically, the things you must spend money on each month.

·       Use 20% of your take-home pay to build an emergency fund, pay off your debt, and to save for your retirement. It is recommended that your emergency fund be able to cover your fixed expenses for 6-9 months. How the money is split between your retirement, debt, and emergency fund will depend on your situation.

·       The remaining 30% can be used as you see fit. This is the money you can spend on vacations, eating out, or hiring a landscaper. This money can also be put towards the previous category, but be sure to enjoy your life along the way.

4. Eliminate your debt. Debt is the most insidious obstacle to your financial fitness.

·       Be aware of your credit score. There’s no need to ever pay to get your credit score. There are many free options available, like CreditKarma.com. Lenders are obsessed with your credit score. You should be even more obsessed.

·       Be careful with your credit cards. It’s always best to be cautious about whipping out the credit card. If you don’t have the money in your bank account, it’s important to think about how critical this purchase really is.

5. Get adequate insurance. What could be worse than finally getting back into good financial shape, only to have it all wiped out by an illness or house fire? Protect your assets and limit your liability.

Reaching a point of financial fitness is a worthy objective. Not only does it give you the opportunity to relax and enjoy your life, it also makes your future much more secure. Allocating your funds properly helps to ensure that you have enough.

Have financial goals and protect your assets. While insurance feels like a painful expense, it really is necessary. A single disaster could be financially ruinous. Get started today and become financially fit.

7 Things That Will Destroy Your Credit Score

Your credit score not only determines whether or not you can get a credit card, mortgage, or auto loan, it’s also a critical factor in determining the interest rate you have attached to those items. A low credit score can cost a lot of money over your lifetime.

Not everyone is aware of the many factors that determine a credit score. It’s easy to make assumptions that seem logical, but are actually false. Acting on incorrect beliefs is a sure way to make a critical mistake.

Save money and make your financial life easier by avoiding these seven credit destroyers:

1. Carrying a big balance on your credit cards. While having a lot of debt is never a good idea, using more than 30% of the available credit on your credit cards hurts your credit score.

·       For example, if your credit limit is $10,000, your score drops if your balance is over $3,000. This is commonly referred to as the “utilization ratio.” Keep yours under 30%.

2. Paying late is a huge factor in your credit score. Experts estimate that 35% of your credit score is determined by your payment history. Any late payments will lower your score.

3. Closing credit cards is a credit score killer. This is related to your utilization ratio. By closing a credit card, you lower the amount of credit that’s available to you. Your credit score is also sensitive to the length of your credit history.

4. Defaulting is an obvious credit score mistake. When you fail to pay back a loan you owe to a lender, you can lose as much as 100 points from your credit score. Make every effort to pay back your loans.

·       If you’re struggling, contact the lender and attempt to make other arrangements. They can be very flexible if failing to do so means not getting their payments.

5. Applying for too much credit. Everyone needs to have some credit, but applying for too much has a negative effect on your score.

·       Each time you apply for more credit, your potential lender makes an inquiry of your credit history.

·       Each of those inquiries lowers your credit score.

·       Avoid sending in every credit card offer that shows up in your mailbox.

6. Not having a credit card at all. Many people are getting rid of their credit cards in an effort to avoid debt. Unfortunately, this does nothing to help your credit score.

·       Experts believe that the ideal credit score includes 2-3 credit cards. Credit diversity can account for as much as 10% of your credit score.

·       Credit cards help to keep your credit history current.

7. Co-signing for someone else can be a mistake. Putting your credit on the line by co-signing for someone else is a huge risk. Their failure to stay current with the payments can destroy your credit score.

·       You’re equally responsible for that debt, so any late payments or defaults will show up on your own credit report.

·       You can even be subject to collections and lawsuits. If a lender won’t do business with them, you might want to reconsider before co-signing.

By simply avoiding these common mistakes, you can’t help but have a great score that will guarantee you the lowest interest rates, even if your credit score is poor now. It may take time to boost your credit score, but it’s definitely possible.

Give your credit score the amount of attention it deserves. It makes life a lot easier!

Good Credit Is Important -Try These Credit Repair Tips

When you don’t have good credit, it can seem like the world is against you. You can’t make purchases like everyone else, and when you do, you are hit with high interest rates. Even though that doesn’t seem fair, you can build your credit up again with these effective tips.

To keep your credit in good standing and to protect your credit score, you need to be in control of your credit report. Check periodically for discrepancies and mistakes. It can even happen that your credit information gets mixed up with someone else’s or that someone has targeted you for identity theft.

Build Credit To Repair Credit!

To show you are a good credit risk, begin building a better credit history, by applying for a low-limit credit card. You can request a lower limit than the creditor offers you – to keep it at a manageable level! Next, be vigilant about making payments on time. Don’t fall into the old trap of putting off payments! This will improve your credit scores.

Something most people don’t know is that when you pay off a collection debt, they list it as paid in their books, but they do not contact the credit bureaus and get the debt removed from your credit history. When paying off a debt, negotiate with the creditor that you will pay off the debt if they will promise to have it deleted from your credit history. This will increase your credit scores each time a debt is deleted.

These days it is increasingly important to keep your credit intact. Years ago, credit reports were used primarily when a borrower wanted to buy a home, car, or other large purchase. These days your credit gets pulled when you apply to rent a home or sign up for cable TV or even cell phone service. Keep credit scores up to avoid credit refusals.

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It Is Important To Pay Your Bills On Time.

It is important to pay your bills on time, since an important part of your credit score is your payment history. You should set up automatic payments for everything that you can because this will ensure you never miss a payment and help you improve your score over time. It is a free service and easy to set up, and will save you problems in the long run.

In some cases you can negotiate with your creditors on some of your debt, they may be willing to accept a lower amount just to get the debt off their books. This generally works best with older unsecured debt that has been turned over to collection companies. Just contact the company and try to negotiate some terms. You may be amazed by the results.

Generally, it is not a good idea to wipe old accounts off your credit report. The reason is if you are applying for an auto loan or a mortgage, or another type of loan, you will need to show that you have had credit in the past, so the old accounts will come in handy. About 15% of your credit score reflects the length of your credit history.

Try to get negative items removed from your credit report. Not everyone knows this, but you can actually do this. You will have to call your creditor and ask them if they will work with you so you can get this debt taken care of. Ask them if they can remove the negative items from your report once it is paid.

Building your credit again is the best way to start feeling good about your finances again. Use these tips to get you started and even though you might not see results right away, they will come. Your credit will get better and better until one day you won’t think about it at all because your financial picture will be rosy.

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