Is your car sloppy? What about your home? Your office? Your yard? I’m a little embarrassed to admit my answers were, “yes, yes, yes, and yes.” Embarrassed because I realized sloppiness impacted every area of my life, including my finances.
Now, I am happy to say that was the old me. But before I acknowledged my sloppiness, I justified it by telling myself I was hyper and needed to stay busy. Although my space appeared untidy, there was “order” in my sloppiness. I had a general idea of where things were. If they weren’t there, I kept looking until I found what I was looking for.
But then I noticed something…
My thinking changed when I intentionally made the decision to give every physical thing a purpose. When I made better decisions about my personal space, I started making better decisions about my time and my finances. Sloppiness no longer reigned in my life or my finances.
Making a decision to give every physical thing a purpose is not quite right. What really happened is I had to re-train my mind to give a purpose to things. When I assigned a purpose to things, sloppiness decreased in my life and finances.
The floor of my car is not a trashcan. That’s not its purpose. Its purpose is to stabilize the car, keep me from falling through, hold the seats in place, etc. No longer do I put garbage on the floor of my car. If I must store garbage in my car, I place it in a bag whose purpose is to hold garbage.
You might think that organization and cleanliness are irrelevant to credit or financial problems. I disagree.
If your physical space is sloppy, your life will most likely be sloppy. This sloppiness will extend into your finances also. Re-training your mind to give everything its purpose and place allows you to make better financial and spending decisions.
If your mind is not trained to examine everything, decide its purpose, and then put it in the right place, you will make purchases that do not honor your long-term goals. This leads to impulsive buying—not buying with a purpose to further your goals.
Giving things a purpose, and then placing them where they belong, gives you control over your life. It allows you to eliminate dead weight and garbage.It also gives you the opportunity to accept things that will improve your life.
Imagine the impact of training your brain to put things in its place. You can immediately eliminate expenses unrelated to your goals. Ideas to help you become more frugal will appeal to you. Frugality will eliminate sloppiness in your finances.
When making purchases with a purpose, sloppiness loses its hold on your life and your finances.
What do you think? Am I crazy? Spot on? Let me know your thoughts below!
Category: Credit Score
Steps to Take After Bankruptcy to Rebuild Credit
After a bankruptcy, rebuilding your credit may be the last thing you want to do. Avoid the urge to walk away from the loans and credit cards that precipitated the bankruptcy. Instead, focus on rebuilding your credit after bankruptcy. Whatever you do, don’t wipe your hands clean of credit.
Contrary to popular belief, using credit appropriately in the wake of a bankruptcy is the best way to rebuild your credit. If you follow a smart plan to re-establish your credit, it is possible to rebuild your credit score to 720 within a couple of years. This is the most important action you can take after bankruptcy.
This twofold plan begins with opening new lines of credit and concludes with paying your bills on time and in full. Therefore, keep small balances on your credit cards to ensure you are able to pay what you owe each month.
Rebuilding Your Credit after Bankruptcy Rule #1: Open new lines of credit!
Have you heard claims that you can have a bankruptcy wiped from your credit report? Do not believe these claims because they are not true. There is no legal way to wipe a bankruptcy from your credit report. However, time does reduce the impact of a bankruptcy on your credit report. All three credit-scoring bureaus—Equifax, TransUnion, and Experian—are more concerned with your recent credit behavior rather than your past credit behavior. The trick is to persuade credit bureaus to pay more attention to your recent good behavior than to your past behavior. By establishing new credit and using it responsibly, you can prove to the bureaus that you are a new person. Demonstrate to them that the bankruptcy forced you to get rid of negative credit habits and replace them with smarter financial strategies.
After declaring bankruptcy, open three new credit cards (Visa, MasterCard, or American Express) and one installment loan as part of your plan to rebuild credit after bankruptcy. Keep the credit cards active by using them at least every other month. Make only small charges, preferably less than 10 percent of the limit, and pay the balances in full.
Know that you will pay high interest rates with the credit cards and installment loan. This is one of the results of your bankruptcy. Another is that you will not qualify for the best interest rates with a low credit score. That’s why it is important to pay credit card and loan balances in full as quickly as possible.
Open credit cards and an installment loan as soon as possible after your bankruptcy. The credit-scoring bureaus respond best to accounts that have been open for a long time. Your future credit score is dependent upon opening all accounts now and paying them in full monthly.
By opening new lines of credit, you begin to rebuild your credit after bankruptcy. This allows the credit bureaus to re-evaluate your credit based on the new information it receives from your creditors. Experian, Equifax, and TransUnion are now able to judge your credit worthiness based on your current credit information. Use this as an opportunity to show them you have changed your patterns of behavior.
Don’t delay. Immediately begin proving to the credit bureaus that your bankruptcy allowed you to turn over a new leaf and change your payment behavior.
Rebuilding Credit after Bankruptcy Rule #2: Never, never, never make a late payment!
After a bankruptcy, the credit-scoring bureaus will have an eye on you, even as your score begins to climb. If you make a payment that is even one day late, the bureaus will assume you are back to your old ways, and your progress will be for naught.
The best strategy to rebuild your credit after bankruptcy is to pay your bills on or before the due date every month. This means that you must live within your means.
For more information on rebuilding your credit after bankruptcy, read this article on how to create a budget, find money, and establish habits that best afford you to bounce back after a bankruptcy.
Your Bank’s #1 Lie: Your Credit Score Doesn’t Affect You
Do banks lie to their customers? Has your bank ever said your credit score will not affect you?
If your bank has ever said your credit score will not affect their financial relationship with you, do not believe them! Your credit score affects your all of your major financial purchases.
After conducting a private class on “How Credit Scores Affect You,” one of the participants, Lori P., sent me an email showing how banks lie to their customers.
“I am involved in an entrepreneurial program that helps people become business and home-loan ready, as well as get them ready for business start-up. Four of us in the program had attended a meeting with a founder of a bank here in Los Angeles that explained to us how to become loan-ready for his bank. He mentioned that all we needed was a 630 credit score along with other criteria.
I thought, ‘Wow, only 630? That seems easy.’
Then when I listened to your program, it made sense why we only needed a 630 – It would be money in the bank’s pocket.
-Lori P.”
After reading Lori’s email, I was livid! Her attempts to help people in her community take control of their financial future were hindered by a banker more interested in his financial bottom line than the customers he serves. That banker was thrilled to deal with customers with less than a 720 credit score because he could charge them higher fees. In my opinion, that is outrageous. How can hardworking Americans get back on their feet financially if banks are not disclosing how a customer’s credit score affects the fees they pay?
Do you believe your bank deliberately withholds information concerning your credit score and bank fees? This happens more often than you may think. If your bank does not tell you the relationship between your credit score and bank fees, you are paying higher fees than a person with a 720 or higher credit score.
There is an easy solution to eliminate all doubts of banks lying to you about the relationship between your credit score and bank fees. They can educate customers on the easy steps people can take to fix a bad credit score.
In most cases, instead of telling the truth about how credit scores affect you, banks across the country are letting their customers pay an arm and a leg in interest rates.
The banker Lori met with didn’t tell her that the difference between a 630 credit score and a 720 credit score was $63,720 over the course of a 30-year loan on a $216,000 mortgage. His bank would earn $63,720 in fees of Lori’s hard-earned money if she was approved for a home loan with a 630 credit.
That bank was deceiving customers with a 630 credit score to the tune of $63,720 over 30 years!
I wrote 7 Steps to a 720 Credit Score because I wanted to help my mortgage clients learn how to build credit and lower their interest payments. Then I decided to spread the word about how credit scores affect you. I went to bank after bank, telling them I would give them access to my book so their clients could learn how to raise their credit scores and negotiate lower interest rates.
Guess how many banks signed up? Not one.
Why would they do the right thing when they could pocket $63,720 or more?
This is so typical of what happens every day. While the “little guy” struggles to get his head above water, the government is busy bailing out big business because they are “too big to fail.” These very same businesses turn around and lie to their customers. This is flat-out unfair and wrong.
Learn how your credit score affects you, and stop the banks from stealing more of your hard-earned money. Download The 35 Things Your Bank Doesn’t Want You to Know About Credit
Step One to Raising Your Credit Score – Get Rid of Your Debt.
If you ever attend my Question and Answer sessions, (about how to raise your credit score), you know there is a common theme – debt, debt, and more debt.
How can someone with a lot of credit card debt raise their credit score? It’s the chicken and the egg conversation over and over.
Here’s the bottom line: Sometimes the best first step for you to take is either bankruptcy or debt negotiation.
So many of my clients are SO worried about their credit score that they don’t make a logical decision about the debt they have. When this happens, they end up paying the minimum payments on their credit cards, and never get what they ultimately want – Debt free OR a high credit score.
As I say over and over, the key to raising your credit score if you have debt is to learn your options.
Since I get so many requests for introductions, I’ve done the research on great referral partners for my clients.
If you have debt you cannot pay-off, click here and I’ll give you and introduction to a bankruptcy attorney and a debt negotiator.
If you have back taxes of $10,000, click here and I’ll introduce you to a tax resolution specialist.
If your credit is bad and you simply want to raise your credit score, click here and I’ll introduce you to a partner of ours that offers our credit improvement program.
If you have student loans, and you cannot keep up with the payments, click here and I’ll introduce you to a partner of ours.
Bottom line is this… if you are having a hard time with your debt, you need to take a look at all your options.
Once you gather all of this information, talk to me on one of my Question and Answer Sessions and together, we can figure out the next best steps to raise your credit score.
A favor, please…
If my credit program has impacted your life, you could please tell me how?
I have a dream of having 1,000 success stories on my web page, and I have a long way to go! So regardless of whether your story is one line long or ten paragraphs long, please let me know.
And if you feel uncomfortable giving your name, no need to!
Click here to be transferred to the page. Then click on “Leave Your Success Story.”
If you have had financial problems, you know how scary it is to have a low credit score. Sharing your success is going to inspire others to have hope in a bigger future. Thank you for sharing your story.
Thank you.
Preventing holiday hangovers
Just a quick reminder…
Don’t get carried away with your credit cards when shopping for holiday presents. Before the holidays are over, many consumers will charge an extra $600, $1,000, or $2,000 to their credit cards. Most shoppers don’t plan for this—it just happens. But by the time January rolls around, they have giant credit-card hangovers that leave them wondering how they can preserve their finances when they have migraine-size debt looming over them.
And remember: one of the keys to a high credit score is to keep a balance that is no higher than 30 percent of the limit. So not only will extra credit-card debt hurt your pocketbook, it will also hurt your credit score.
Keeping the right credit card balance is one of the most important things you can do this holiday season to protect your credit score. Here is my time-tested tip for avoiding the holiday credit hangover.
1. First, create a holiday spending budget.
I know a lot of parents who want to create lasting memories for their children, so they go overboard, buying tons of presents for their kids.
But think back to your own childhood. How many gifts are etched into your memory?
Probably not many. Your children will remember the time they spend with you more than the gifts they will receive.
And if you are racking up your credit card bills, you probably feel stress and anxiety, which will detract from the time you spend with your children.
So create a reasonable budget and determine how much you can afford to spend on each person on your list.
2. Leave the credit cards and debit cards at home.
I’m totally serious about this. If you don’t take credit cards or debit cards, you cannot overspend. It’s that simple. If you do take credit cards and debit cards, you can overspend and induce that hangover. So just leave them at home.
In fact, the more radical this idea sounds to you, the more important it is that you implement it.
Taking credit cards with you is just too tempting, even to the most disciplined shopper. The allure of “buy now, pay later” will allow you to make impulse purchases.
If you take only cash, on the other hand, you will limit your spending to the cash in hand. Those impulse purchases will be impossible.
3. Create “wallets.”
This is where my “envelope system” comes into play …
Before jumping in your car and hitting the local mall, pull out some plain white envelopes and write the name of each person you are going to purchase a present for on individual envelopes. (If you have eight people to buy presents for, you should have eight envelopes.)
Within each envelope, place the appropriate amount of cash you have budgeted for this person—no more and no less.
Each of these envelopes represents the wallet you have for each person on your list.
You might want to bring a little extra money for lunch, but be sure to leave your credit and debit cards at home.
When you purchase a present, use the money from the appropriate “wallet.”
This method will create a psychological barrier to impulse shopping. If you are tempted to splurge on a gift, you will be dissuaded when you consider whose wallet you will withdraw money from in order to cover the impulse shopping.
What do you think? Does this help you avoid the “holiday credit card hangover”? Leave a comment below and let me know.
Cheers!
Philip Tirone
P.S. And don’t forget to ignore the retail-store credit card offers this holiday season (and always!).
“Cash Only” Is Dead Wrong, by 720 Credit Score
Many so-called experts say that you should adopt a cash-only policy and ignore credit cards. But here’s the truth…
They are dead wrong.
Avoiding credit won’t make life easier. In fact, it will make life a heck of a lot harder. It also won’t make your credit score improve. In fact, it will make your credit score drop like a lead balloon.
If you adopt a cash-only policy, you’ll end up with no credit. And no credit is just as bad as poor credit. You see, the credit-scoring bureaus want to see that you can responsibly handle many different types of credit before they award you a good credit score. If you don’t accumulate a proven track record, you won’t get a good score.
Now, a lot of people who have been through a financial meltdown decide that the only way to turn their lives around is to stop using credit. But think of it like this: Let’s say you took a math test in school, and you failed. Your grade was an F, so you decided to stop taking math tests—to just wipe your hands clean of math tests.
Would your grade improve? Heck no. And your credit score won’t improve if stop using credit cards either. I always say that having no credit score is just as bad as having a poor credit score. They credit-scoring bureaus won’t have any information on which to judge you, so they will think: Better safe than sorry. And they will give you a low credit score.
This means
- You’ll have a hard time getting great insurance premium rates.
- You might be unable to find a job.
- Landlords might not want to rent to you.
And if you ever need a loan (and you probably will!), you will get lousy terms and pay an arm-and-a-leg in interest.
So they next time someone tells you to wipe your hands clean of credit, ignore them!
This doesn’t mean that you should get yourself into debt with your credit cards. It means you should use your credit cards wisely. Keep a low balance (less than 30 percent of the limit), and pay your bills on time every month.
And if you have any questions, be sure to leave a comment below.
Don’t make this mistake on Friday, by 720 Credit Score
Every year on Black Friday, a ton of consumers make a huge mistake that ends up hurting their credit scores and their bank accounts…
They sign up for retail store credit cards.
Excited to get that one-time discount that is usually offered with a brand new retail store credit card, shoppers ignore all of the ramifications. My advice? Don’t ever agree to a retail store credit card. You won’t save money in the long run, and you might hurt your credit score.
Let me explain…
Imagine that you doing some Christmas shopping, and you approach the cashier with a few sweaters for your sisters, clothes for your kids, and a belt for your husband. The total is about $157. The cashier immediately makes you an offer:
“Do you want to apply for a retail store credit card? You’ll save 15 percent on today’s purchases.”
No matter how tempting it is to save that $24, don’t say yes.
Think about it: The banks and the retail stores that promote these store-specific credit cards offer these promotional savings because they know they are going to recoup the discount … and then some.
Consider all the ways the banks and the retail stores can make money off you:
1) First, you will pay interest on whatever you buy on the day you open the card. Most retail store credit cards have a high interest rate—usually in the range of 20 to 30 percent. So unless you pay your balance in full right away, you are going to pay more than you saved.
2) Have you ever bought something just to take advantage of a coupon? A lot of people have. By signing up for that retail store credit card, you will be put on the store’s mailing list, and you will receive coupons that are just for cardholders. They are intended to entice you to the store.
3) In the future, you will be more likely to engage in a little “retail therapy” if you have store-specific credit cards in your wallet. Using credit cards is always easier than using cash; it’s also an easy way to get into debt.
4) If you are given a one-time offer to save on today’s purchase, you just might pile a few more items into your shopping card.
Suddenly, that $24 savings doesn’t seem worth it, does it?
Keep in mind, your credit score could also suffer if you use retail store credit cards. Here are three reasons…
1) Keeping these cards active can be tough. Credit-scoring bureaus want to know that you can responsibly manage your credit cards. If you let your credit cards go inactive, the bureaus have no idea whether you are able to manage balances and debt. In other words, inactive credit cards do nothing for your credit score.
But keeping a retail store credit card active can be tough. Are you going to buy a dishwasher from Sears each and every month just to keep your Sears card active? Are you sure you need a new pair of jeans from the Gap twelve times a year? Most likely, you will either keep the card active by making unnecessary purchases (which costs you money), or the card will go inactive. Either way, it’s bad news.
2) Let’s talk about the second reason I’m opposed to retail store credit cards: You might end up with too many credit cards. The credit-scoring bureaus are the happiest if you have the right number of credit cards (between three and five). If you do not have at least three credit cards, they don’t have the information they need to make a judgment about whether you are responsible. If you have more than five credit cards, they know that you are in danger of getting in over your head.
Three to five is the sweet spot. So if you are limited to just three to five credit cards, why waste one on a card that will only be accepted by one merchant? You cannot reserve a car using your Banana Republic card, but you can purchase a suit from Banana Republic using a Visa.
Too often, people apply for retail cards each time they are offered a discount. These people must also carry American Express, MasterCard, and Visas for everyday expenses, traveling, and business needs. And they quickly find themselves carrying a lot more than five cards.
3) Finally, let’s talk about the third reason a retail card could hurt your credit score: You will definitely add a credit inquiry to your score. Ten percent of your credit score is based on the number of credit inquiries you have on your credit report in the past year. If you apply for a retail store credit card, your score could drop a few points, and this could cost you a lot of money in interest on future loans and credit cards.
So come Black Friday when the holiday-shopping-season officially starts, be a savvy shopper and just say no to retail store credit cards.
I want to know how many times you were offered a store-specific credit card on Black Friday, so please let me know below!
When It Comes to Student Loans and Credit Scores, Know 10 Things (Part 2), by 720 Credit Score
In my last post, I told you the first five things you should know about student loans and credit scores. Here are five more…
Student Loans and Credit, Fact #6:
About 30 percent of your credit score is determined by your outstanding debt: the ratio of how much you owe versus how much you have paid. The more you have paid and the less you owe, the better your score. If your payments are being deferred until you have graduated, or if you have deferred payments for another reason, the ratio will not be in your favor, and your score might drop. However, it will start to increase after about six months of timely payments.
Student Loans and Credit, Fact #7
Once you begin repaying your loan, never miss a payment without first asking the lender for a forbearance or deferment. Here’s something you might not know about student loans and credit: 35 percent of your total credit score will be drawn from your payment history on credit cards and loans.
Student Loans and Credit, Fact #8:
Keep in touch with your lender. If you are struggling with your payments, never wait until the lender approaches you or until a delinquency notice is logged on your record. Instead, initiate communication with your lender. Talk about forbearance or student loan consolidation.
Student Loans and Credit, Fact #9:
Making regular payments on your student loans is a great way for young adults to begin building their credit score, setting the foundation for better loan terms and lower interest rates on future loans, and saving bundles over the course of a lifetime. But this isn’t enough. As you move on after school, you should try to incorporate different types of credit into your finances while keeping current on your payments. The mix of credit you have makes up 10 percent of your score. The credit scoring bureaus want to see that you can handle a variety of types of loans—from credit cards to student loans to car loans.
Student Loans and Credit, Fact #10:
Student loans can almost never be discharged during bankruptcy. That said, if you are ever struggling to pay your student loan debt, you can and should meet with a student loan attorney because some people qualify for income-based payments, others qualify for total forgiveness, and many people working with an attorney can shave a couple hundred dollars a month off their payments. Watch this video for more information.
When It Comes to Student Loans and Credit Scores, Know 10 Things, by 720 Credit Score
When it comes to student loans and credit scores, there are ten facts you need to know…
But before we get to that, let’s talk a little bit about student loans. These loans are “unsecured loans,” meaning that there is no collateral backing them. Whereas your car can be repossessed if you do not pay your car loan on time, no one can take away your education!
That said, as with any other loan, your credit score will drop if you are late or skip a student loan payment; it will increase when you pay your student loans on time.
Making payments on student loans offer a great opportunity for young adults to begin building their credit score. If lenders see that you can make payments on time and in full, your credit score will go up and you will be more likely to get larger loans in the future.
This is important because you will need credit upon graduating from college. Your first employer might run a credit check, assuming that your credit score is a good indication of whether you are responsible or not. And a landlord will definitely run your credit before renting a home to you.
With all this in mind, here are the first five things you should know about student loans and credit. (And if you already have student loans, be sure to watch this video for more facts that will help you manage your payments.)
Student Loans and Credit, Fact #1:
In 2001, 31 percent of college graduates were living at home. That number grew to 45 percent by 2013.
Why?
Because it’s harder than ever to find a job, so before you take out an endless stream of student loan debts, remember that the economy might not allow for you to repay your student loan debt.
Student Loans and Credit, Fact #2:
Before you leave college, avail yourself of the opportunity to receive exit counseling, a service most schools offer to prepare their students to repay federal student loans. This counseling can provide you valuable information about your rights and responsibilities and the terms and conditions of your loans. You will learn about things like “income-based payments,” which allow you to base your student loan payments on your income.
Student Loans and Credit, Fact #3:
If you cannot make a payment, ask for forbearance, a short-term agreement that allows you to make smaller payments, or no payments at all. Otherwise, you will harm your credit score. Keep in mind that if you do not make payments, interest will continue to accrue and the amount due will grow larger.
Student Loans and Credit, Fact #4:
When you apply for a student loan, your credit might or might not be pulled. Some lenders do require a credit score, but others do not. If your credit score is pulled, a credit inquiry will be added to your credit report. This might cause your score to drop, but the impact will be minimal.
Student Loans and Credit, Fact #5:
With this in mind, consider that students who are positioned to pay back their loans before graduating will enjoy a faster ride to good credit. Even though a lot of student loans do not require repayment until you have graduated, your credit score might be higher if you start repaying the loans immediately. Keep in mind that some employers will run a credit check when you apply for your first post-college job, so having a high credit score could behoove you.
Some people have speculated that if borrowers pay back their student loans too fast, they will lose credit points (presumably because the maximum interest on the loan will not be accrued if the loan is paid off early). I think this is a bogus claim. Credit-scoring bureaus are not interested with your creditor’s ability to earn the most interest, but rather with your ability to repay your loan on time. The bureaus want to know that you will pay your debts on time. Paying your student loans sooner rather than later is a wise thing to do because your debt-to-principal ratio will drop and your score should increase.
Stay tuned. In my next post, I’ll share five more things…
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