What You May Not Know About Personal Finance

September 1st, 2008 — Banking, Budget, Financial Security, Goal, Long Term, Money, Personal Finance, Wealth 

budgetUnless you’ve taken some courses on handling finances, there is a chance that you may not be aware of a few of the key points about budgeting, managing your money and planning for the future. While a lot rests on common sense, there are a few techniques that everyone can use to correctly manage their finances and stay on top of their bills. Let’s look at some of the best tips that you can put to use right now.

1. You need to pay yourself a salary.

Sounds a little odd, doesn’t it? However, setting aside a portion of your income every month that will go into savings is one of the first steps on the road to financial security. The best amount to put aside is 10% of your gross earnings each month, but this may not always be possible. Try to get as close to that number as possible and watch your savings grow!

2. Always have money in case of an emergency.

The problem with emergencies is that you never know when they will happen. From losing your job, to a car accident, to an unexpected repair bill, there are financial disasters lurking around every corner. To protect yourself, you need to create an emergency fund that will not be touched unless you have an actual emergency. We recommend putting about four months of your salary aside for this fund if possible, however, anything you can put aside for a rainy day will be useful.

3. Always have a budget.

Even if you’re not restricted on your spending, you may need to be. Everyone can benefit from a budget and chances are, you’ll end up spending less every month. Take a hard look at your regular monthly expenditures and see where there is room for improvement. You should always have at least some money left at the end of the month, so aim for this goal when making your budget.

4. Paying your bills on time really does matter.

Even if your phone company doesn’t report late payments to the credit reporting agencies, this doesn’t mean that you should be late. Paying your bills on time forms a good habit and it will last throughout your life. Work your payment dates into your budget so that you always have enough put aside to handle all of your bills. If necessary, when you get paid, add up all of your set bills and then put that money aside immediately to be used when they are due.

5. Remember the key financial equation.

The key to getting ahead is to always make sure that you are spending less than you earn. It sounds very simple, but it’s not always easy to accomplish. The amount that you charge should be figured in to this equation for the best results. By keeping your spending under control, you’ll be able to start planning for the future right now, instead of when it may be too late.

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4 Easy Ways to Raise Your Credit Score

July 1st, 2008 — Debt, Money, Personal Finance, bad debt, credit cards, credit score, good debt 

butterflyFor many Americans, dealing with a low credit score can be incredibly frustrating. It’s tough to get any loans and in some cases, it may even affect your prospects for employment. If you’re sick of dealing with a low score, it’s time to starting putting into motion some techniques that will help your score go up. Some people have reported a bounce of more than 120 points after using these tips, but everyone’s credit is different. However, any jump up is a jump in the right direction.

1. Request a copy of your credit report and thoroughly examine it.

Errors are incredibly common on credit reports but the good news is that you can fix these. Go through each item on your report and make sure that they are accounts that belong to you. If not, start disputing them. The big three credit reporting agencies all offer online dispute services, so you can easily get these errors off of your report. It may take up to three months for the whole process, but this is the best way to quickly get your score back up.

2. Don’t close off your old credit cards.

Most of us have been trained that all debt is bad and we immediately close off our cards when we’re trying to get back on track. While it’s perfectly fine to pay off your cards, closing the account will definitely hurt your credit. It’s actually smarter to keep a small amount on those cards and make monthly payments. You’ll get the benefit of good reporting and the accounts won’t be marked as closed.

3. Get a small personal loan.

If you have the money to pay back a personal loan, go to your bank and request a very small loan. It’s the principle of the thing that matters here, not the actual loan. You’re going to use this to rebuild your credit. It’s best if you use this loan wisely and make an investment that will create another stream of income. That way, while you’re repairing your credit, you’ll be making money.

4. Open a secured credit card.

If your credit is so bad that most credit card companies won’t even charge you, open up a secured credit card. Use it sparingly and pay it off every month. You’ll get the benefits of glowing monthly reports and you really won’t be out much.

When it comes to fixing your credit score, it won’t happen overnight, but you can make a great deal of progress by following the above tips. You should see a change in your score in as little as three months, and it will just keep getting better as you keep making those payments. Creditors will see that although you may have made some past mistakes, you’re back on track and a much less risky prospect.

Remember, not all debt is bad. When you leverage your debt with your future in mind, this is the easiest way to make money and improve your credit.

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