Category: CREDIT BLOG

My wife, Lily Tirone, and I just welcomed Baby #4 into the world (read about it here: “Thank You, Mrs. Lily Tirone”).
Little Emma is about six weeks old.
Suffice it to say, we aren’t getting a ton of sleep in my household.
The other morning, I was mulling over the fact that sleep-deprivation is used as a torture device when Lily reminded me of something …
I’m not really going to remember this.
So much life has happened between now and when my other kids were born, that those first few months are a fog. I look at my older kids, and I just remember the good stuff.
This reminder helps me make it through the tough times. Some much life is going to happen between now and six months from now. I can do it. I can wake up for all those midnight feedings.
… and 2:30 a.m. feedings.
… and 5:00 a.m. feedings.
In fact, not only can I do it, but it won’t even be important in six months. I’ll barely remember what it was like. So I can do it.
And so can you. If you are in a financial mess, it might seem unbearable—at times even torturous.
But if you do what you are supposed to do—take the tough steps now—you will work your way out of the mess. And so much living will happen that eventually … it won’t seem to bad.
You know what you have to do: Start rebuilding your credit. Cut wayyyy back on your expenses—downsize if you have to. And if it’s really, really bad, maybe you even need to declare bankruptcy and give yourself a fresh start.
Whatever it is, take that step now. You can do it!
That Lily Tirone is a smart cookie, isn’t she? If you want to comment on her wisdom, leave a message below.
Philip Tirone

A few weeks ago, I wrote a blog about the importance of family meetings in building a strong family unit.
One of my readers posted a blog about how her family used the family meetings to resolve problems.
It’s a wonderful idea, and I wanted to pass it along because I think a family can use this to resolve internal conflicts (like a fight between siblings), as well as external problems (like a bill that needs to be paid).
A lot of siblings never develop close bonds with each other, so even as adults, they aren’t very close. Some even carry their rivalry into adulthood.
It seems to me that if a family member presents a problem, and then the rest of the family works together to come up with a solution that works for everyone, each member of the family will feel honored, respected, and a valuable member of the family.
And then, the family will work together to execute a solution as a team, making the family grow closer together.
My kids are still young, so I am ironing out the kinks, but here are some of my thoughts on how families can solve problems together and build an atmosphere where family members work together:

• When a family member presents a problem, make sure that each person in the family has a chance to add to the context.

Explain that the family meeting isn’t a time for fighting, but rather to state the problem as everyone sees it.

• Then, explain that because you are a family, it is important that you find a solution together. Explain that the family is not going to focus on the problem; instead, it is going to come up with a way to make the problem go away.

Tell your kids that you all love each other and want to get along, and that resolving conflict by looking for solutions together is an important part of this.

• Then let everyone brainstorm for solutions.

Write everything down, and don’t criticize people’s ideas, even if they are absurd. After all, your children need to know that you respect their opinions.

• Then, ask the family members to discuss the solutions that seem the most fair.

• Then talk it out, and try to come up with a solution that works for everyone.

Like I said, I think this works for internal conflicts as well as external problems. If Suzy is mad at her brother because he didn’t help with the chores, this can be resolved during family meetings.
And if Suzy really want to go to soccer camp but she doesn’t have the money, this is a great time to problem-solve and teach your children about goals, savings, and “opportunity costs.”
Suzy might say, “I want to go to soccer camp, but I need $500 and I don’t have it.”
Then the family can throw out solutions.
“You can start saving your allowance. That will get you a little bit of money.”
“You could sell your bike.”
“How about a part-time job?”
“Could we look for a cheaper soccer camp? If so, maybe Mom and Dad could pay for your soccer camp as an early birthday present.”
I love this idea because it reinforces the idea that a family is a unit—a team that supports each other, cheers each other on, and looks for solutions together. (Thanks to my reader, Andy, for the idea!)
What do you think? Let me know if you have any other ideas, particularly if they have to do with solving financial problems.
Philip Tirone

I’m generally a healthy guy, but I gotta confess…
I love ice cream.
I can clean out a pint in less than 25 minutes.
And… I’m a busy guy, so I let fitness slip through the cracks here and again.
Then ten months ago, I made a commitment to get into the best shape of my life. I’ve been taking pictures in regular intervals documenting my transformation.
If you look at the pictures*, there isn’t much difference from one picture to the next. But if you hold up Month One against Month Ten, it’s like you are looking at two different people.
Here’s another related thought…
My oldest daughter, Ava, is five. And I swear that from day-to-day, she looks exactly the same as she did the day before. But even though the growth from day-to-day is undetectable, she’s been growing like a weed.
In fact, when I look at Ava next to my newest baby (Emma will be two weeks old tomorrow), Ava looks more like an adult than a baby!
My Coach Tim Wood has said to me, “People always over estimate what they can accomplish in a year, and GROSSLY underestimate what they can accomplish in five years.”
Here’s my point: Transforming your credit score or your finances is possible—it’s even easy once your behaviors become second nature.
But don’t measure your progress daily—you’ll only get frustrated. Give it some time, and then look back in a month or six months. Just keep piling on small changes, and see what happens!
–Philip Tirone
* I was going to post the pictures, but one of my staff members said, “No thanks, Phil. We don’t need to see you with your shirt off.”
So I’m not going to post the before and after pictures, but please leave a comment on my blog if you have any thoughts!

On September 3, at 10:17 a.m., Lily Tirone made me a dad… for the fourth time.
The birth of all of my children has been unique and beautiful.
Ava was our first. From her, two parents were born.
Dominic was the fastest. Lily labored a long time with Ava, so she expected the same with Dom. We stopped by Mass on the way to the hospital, but when Lily went into active labor in a church pew, we decided it might be time for a trip to the hospital.
And Lucas surprised us and came six weeks early. He was tiny, but healthy and perfect in every way. For the past three years, he’s been our baby. Now he has the privilege of being a big brother.
Little Emma Therese Tirone was born in our home.
We planned it that way. Lily awoke from a contraction in our bed around 7:00, and 3 ½ hours later, she was a mom for the fourth time, and she was taking a nap in our bed.
It all felt so … familiar. The familiar feeling of family.
At my 40th birthday party, Lily gave a toast. She told everyone how amazing it was to bear witness to another person’s life. She was talking about me, and how she had the privilege of watching me succeed, fail, pray, laugh, grow, and struggle.
But the privilege is mine.
Being a spouse is hard work—and Lily and I both sometimes joke that the celibate, lonely lifestyle of our priest is probably a lot easier than ours. We have to keep a solid, vigilant commitment to keeping our relationship on track.
I know for certain that I’m the one who is harder to get along with.
So today, there’s no post about credit or your finances. Instead, I want to thank my bride for letting me bear witness to her life, and all the miracles that have unfolded over the years.
Thank you, Mrs. Lily Tirone, for giving me our growing family.
Phil

Since it’s back-to-school time, I want to share this great story I heard on NPR …
You can listen to the whole thing here, but the gist of it is this:
A mother of three (who is also an astrophysics graduate) wants to promote a cultural-makeover when it comes to math.
“You hear educated adults say, ‘I’m just not that good at math’ or ‘I’m kind of afraid of math.’ And that’s a totally acceptable thing for a well-educated person to say,” said Laura Overdeck in the interview.
“But you never hear them way, ‘Well, you know, I’m just not that good at reading.’”
She also said that the more parents talk about numbers, the better students perform in math.
This got me thinking about MONEY!
If parents talked more at home about money, the cost of things, their savings’ goals, and their investments, would kids be more money-savvy?
Probably. After all, you are your child’s first teacher. The culture you establish at home (or the culture you fail to establish at home) will have the largest impact on your child’s habits as an adult.
So why not start telling bedtime money stories? Or, if you are worried this will keep your kids up, how about giving them snack-time money stories?
Let me know what you think below!
Be sure to listen to the whole interview and subscribe to Laura’s blog.
Philip Tirone

Pop quiz!
If you had to raise your FICO score quickly, and you had a choice—either pay off your charge cards or pay off your mortgage—which would you choose?
Most people say they would pay off their mortgage to increase their credit score the fastest.
But when it comes to FICO scores, eliminating charge card debt is far more powerful than eliminating mortgages or car loans.
And if you think about it, it makes sense. When assigning a credit score, the scoring bureaus assess risk by asking a question: How likely will this borrower default in the next two years?
Most people prioritize their mortgage payments; they would rather skip a few meals than lose their home. So having a balance on your mortgage isn’t really that risky.
But people aren’t quite as responsible with their Visas and MasterCards. In fact, even the most financially responsible people make a few bad decisions when it comes to the allure of credit card spending.
So keeping a low balance (or no balance at all) on your credit cards is a far better indicator of your financial situation, and your ability to pay upcoming bills.
The moral of the story: If you want to increase your FICO score, get your credit card balances under control!
Philip Tirone
P.S. If you want a few ideas on increasing your credit score by lowering your credit card balance, here are a few articles you should read:
The Dirty Little Secret
Do-it-Yourself Tricks
A Penny-Pinching Tip

I’ve been saying it for years, and I stand by it!
I think you should add your children as an authorized user to one of your credit card accounts.
I know you probably think I’m nuts, so let me back up …
A couple of weeks ago, I sent an email encouraging parents to use family meetings as an opportunity to teach children about certain values (like financial responsibility). Otherwise, they might be influenced by peers, credit card companies, or banks … and the results might be ugly.
After all, schools don’t teach this to our children, and banks prey on people who are financially vulnerable.
So if you have children, you would be wise to start teaching them now about credit, money, and financial responsibility.
Teaching children about credit, as well as how to manage credit, will help you raise financially responsible adults, and it will open doors for your children down the line.
Okay, so why do I think you should add your children as authorized users? Let me explain a four-part plan:
1. Add your child as an authorized user but do not give her/him a card! Here’s the important part: Add your child to a credit card that is in good standing. This will allow your child to “borrow” your good credit score, which means his or her credit score will begin to increase.
2. Use family meetings as an educational platform where your children learn about interest rates, budgeting, savings, and credit scoring.
3. Once your children begin demonstrating that they understand the value of money and are financially responsible, you might want to provide children with credit.
You can do this by establishing something that I call “Bank of Mom” or “Bank of Dad.” If your daughter wants to buy something for $30, lend her the money (assuming you can afford it), and create a weekly or monthly payment plan.
Then insist on timely payments, and tell your daughter that she will pay interest if she is unable to pay within a specified time frame. If your daughter is late making a payment, assess a late payment fee as part of your strategy for teaching children about credit.
The goal is to replicate the credit card companies as closely as possible.
4. Once your children prove themselves by continuously repaying debts, you might want to give them actual credit cards. Now, I know this sounds crazy, so let me explain …
I suggest that you allow your child access to the card only long enough to hand it to a cashier, and only if you are present. This way, your child will not be able to memorize the credit card number, nor will he or she have prolonged access to your account.
Then, make sure that your children pay their debt to the credit card company. I suggest that your children pay you instead of the company; this way, you can preserve your credit by making payments on the account regardless of whether your children are paying you.
Then, when the credit card statement arrives in the mail, sit down and go over it with your child. Explain the annual percentage rate, fees, late penalties, over-the-limit fines, and minimum payments. Then ask your children to verbalize their plans for paying their loans in a timely manner.
Expect your children to make mistakes, and help them create plans for correcting their mistakes. If they splurge and end up owing more than they can afford, perhaps they can do extra housework in exchange for an increased allowance. And, of course, teaching children about credit means that you call their cell phones—perhaps at 8 on a Saturday morning—to inquire about any late payments!
What do you think? Do you like this plan? If so, you can get more details by downloading my book Your Teen’s Credit right here.
Do you think I’m crazy? Do you love this plan? Leave me a comment below and let me know!
Philip Tirone

Holy cow. I just read an article that reminded me to be terrified …
If you have a 780 credit score, and you make one late payment, your score could plummet as much as 110 points.
That’s right—your score could drop from 780 to 670 in just a month. That could cause your interest rates to shoot through the roof.
Worse, it could cause you to pay a ton in interest payments.
So this week, I want to focus on the nitty-gritty…
I know that administrative housecleaning isn’t fun for anyone, but you cannot afford to put it off.
Take an hour this weekend to get your bill-paying mechanisms in order. Sign up for auto pay, make sure you know when your credit cards are due, and just make sure that you have a system that protects your credit score.
It might sound simple, but forgetting to pay one bill could be devastating.
Of course, even if you have the best systems in place, money might be tight one month. If you do need to pay a bill late, here are a few things to keep in mind:

1. Your utility payments are not included in your credit score unless your account is sent to collections. If you have to make a choice between paying a credit card late or a phone bill late, pay the credit card on time and pay the phone bill late. This will keep your credit score intact.
2. Most credit card companies do not report a bill as “late” unless it is past due by more than one billing cycle, which is usually about 30 days. So if your credit card is due August 5, it probably will not be reported as late if you pay it before September 4. Of course, you’ll still have to pay a late fee, but at least your credit score won’t be hurt!
3. And finally, if you cannot pay a bill on time, don’t hide from the creditor. Just call them up and say, “I’m having a tough month. Could you give me a 60-day grace period to make some adjustments to my finances?” They might say no, but if you have been a great customer, they will probably say yes!

That’s it for this week’s blog. It’s short and sweet, but you have some homework …
Buckle down and spend an hour on the “nitty-gritty” by making sure you have a system in place so you pay your bills on time each month.
And if you have an innovate system for keeping your finances organized, I’d love to hear it. Leave a comment below.
Philip Tirone
P.S. I’m serious. I really want you to share your ideas below. I’m committed to building a financially savvy community, and we need your help in spreading ideas!
Here’s what I do to keep my finances organized:

1. First, I make use of technology to pay all my bills. This means that I have “auto pays” set up for every bill, which includes utilities, credit cards, rent, car payments, and the like.
2. Then, I have automatic reminders to review my statements on the 1^st and the 15^th of every month.
3. I put all my “bills to pay” mail into a folder, and I review them every other week. I know this might seem simple, but before I implemented this easy step, I had envelopes scattered everywhere—my car, the kitchen table, and my desk. It made it tough to stay on top of the administrative stuff.

Wow! I got tons of responses from last week’s email and blog about how Lily and I created Tirone Family Meetings!
I want to spend a few more weeks responding to some of the comments, and sharing with you some other ideas I have about creating a family with great financial sense.
Here’s one of the comments from Mary:
“… I go out of my way to have impeccable manners with my son – everything from holding a car door open for him (now he opens mine) to phrases like, “May I please have the juice,” followed by “thank you.” While I’ve had friends ask why I “do that” they are also the first to tell me what a joy my son is to have in their homes; that he helps, includes younger siblings in play and is ‘very polite.’”

Okay, so here’s the thing she wrote that really hit me: “Modeling at home is critical to molding a good citizen.”
Right on, Mary! I couldn’t agree more. When it comes to being a good model for your children, this applies to everything, including your financial habits!
So if you have children, now is the time to replace your bad financial habits with great financial habits so that you set a good model.
Here are a few resources for teaching your children to be frugal about money, and also adopt a healthy paradigm about money.

• Secrets of the Millionaire Mind by T. Harv Eker. What I like about this book is that it explains the financial blueprint that parents leave to their children.

Even saying something like, “No, you can’t have a new bike because we can’t afford it” can give your children a negative financial blueprint. It teaches a children that life is something that happens, not something that they create.

True, you might be unable to afford a bike, but imagine how motivated your child will be if you say things like …

“Yes! Let’s figure out how much bikes cost, and then let’s come up with a plan so that you can earn some money and buy a new bike. Here, I’ll help you. In fact, if you want me to put aside $5 each week out of your allowance, that can go into the pot too.”

This teaches children that money is a vehicle for achieving goals. It encourages your children to have goals, and it encourages them to be proactive about finding solutions.

And perhaps most of all, it teaches them to go out and earn money, to save money, and to decide when and how to allocate money to a resource.

• Read at least one book from David Bach’s Finish Rich series. This includes Smart Couples Finish Rich, The Finish Rich Workbook, and Smart Women Finish Rich.

• And be proactive about looking for any other financial management books or classes that seem interesting to you. The key is to break whatever bad cycle now so that you can transfer better values to the next generation by setting a great example.

In fact, in next week’s email, I’ll give you a great resource (for free) for teaching children about money, and for setting a good example.

Have you found other great resources for teaching kids about money, or for replacing your own bad habits with great financial management habits? Let us know by leaving a comment here!
Also, if you have questions about breaking bad financial habits, be sure to post them below.
Philip Tirone

I talk a good game about being a family man, but a few months back, my wife (Lily Tirone) and I were put to the test …
I was attending a conference, and a presenter (Warren Rustland) said that if a person’s family culture is weaker than all the other cultures surrounding the family (school, neighborhood, church, etc.), then the kids could learn more from other cultures than from the family’s culture.
It makes a lot of sense… If your family’s culture isn’t strong, your children will be pressured by their peers, coaches, and teachers—and they might end up adopting the wrong values.
A second presenter (Greg Baer) then said that the amount of time parents devote to molding their kids will be in direct proportion to their happiness and success.
A lightening bolt struck.
See, I realized I was spending more time trying to build my company’s culture than I was trying to build the Tirone family culture.
So nine weeks ago, Lily and I implemented daily “family meetings,” which we will continue as long as the kids are in the house.
Lily and I want to create an extraordinary bond with our children, and we want them to have great relationships with their siblings.
So when we considered the structure for our Tirone Family Meetings, Lily and I discussed the answer to this question: What do we want to instill in our family?
1) We start with a prayer.
2) Everyone tells the rest of the family what they are excited about. (My three-year-old son is excited about his water balloons—every day!)
3) Then we review the day and what will happen over the course of the day—Daddy is coming home for lunch; Grandma is taking the kids to the zoo… that sort of thing.
4) Next, we talk about the Tirone Family Value of the Day.
It’s important to note that Lily and I let the kids choose which value they want to discuss. We want our kids to feel important and respected, so we give them choices, and then we follow their lead.
We cover everything—from sharing to being kind to finances.
Our kids are young (the oldest is five), so the lessons are geared to their age.
For instance, we bought the “Savvy Pig,” a piggy bank that has four chambers and four coin slots instead of one. These four chambers represent the four things we want our kids to do with their money—save, tithe, invest, and spend.
As they grow older, we will build on these lessons by discussing credit, investment tools, and vehicles for savings.
Regardless, Lily and I are spending each day building a culture that will allow our kids to thrive.
What do you think? How do you teach your children important values and skills? I’d love to learn what you are doing. Also, share how you are teaching your kids about their finances so that they can learn from their parents’ mistakes and experiences. Share your thoughts here…
P.S. For the first four or five weeks, we struggled to stay committed to having daily Tirone Family Meetings. In fact, one day I started to leave the house without having a meeting when my youngest, Luke, came running to the door to stop me.
“Daddy, Daddy!” he said. “Family meeting?”
At that moment, Lily and I realized that these meetings are a game-changer. Be sure to let me know if you have any ideas for making family meetings stronger!
Philip Tirone