Steve Repak's Blog - Posts Tagged "credit"
How I Overcame My Obstacles and Paid Off My Credit Card Debt
I knew a person who came from extremely humble beginnings. Growing up, he didn’t have that much. Kids made fun of the clothes he wore, and when he got into high school he worked evenings and weekends just to have a little spending money. Neither of his parents had a college degree, so education wasn’t much of a priority. He graduated from high school and decided to join the Army.
This was the first time he saw real money. He took home about $700 every two weeks. His clothes, housing, and food were paid for by the military, but he had trouble saving money and would always find himself with nothing in the bank. After about a year in the Army, he got his first credit card. Before his signature on the back of the credit card was dry, he’d maxed it out.
Even though he lived paycheck to paycheck with a maxed out credit card and no money in savings, he was promoted to private first class. A higher rank meant a higher salary, which gave him the opportunity to get another credit card—and he soon maxed that out.
You might be thinking that he would eventually catch on, but the cycle continued to repeat. He would get promoted, make more money, get more credit, and max out his credit cards. As long as he could make the minimum payments, he thought had a handle on his debt. He would always tell himself that the next time he got promoted, he would have more money to pay off credit card debt.
I’m sorry to say that after 12 years in the Army, he left with $32,000 in credit card debt. I’m even sorrier to tell you that this person was me.
I know what it feels like to live paycheck to paycheck and have nothing in savings, a poor credit score, and a mountain of debt. I want to let you know that there is hope if you can follow these four steps:
1. Admit there is a problem. I thought that because my friends had debt, it was OK for me to have debt, too. I had to admit that I had a spending problem—I spent more than I earned. Nobody likes to admit that he or she has a problem, but you have to take responsibility in order for things to get better.
2. Start spending less. What helped me curb my spending was keeping a spending journal. In it, I wrote down exactly where, what, and how much I was spending each day. After doing that for a few weeks, I started keeping more money in my pocket.
3. Build your savings. It might not make a lot of sense, but the only way I was able to get out of debt was to build up my savings. When I first started saving, I would have to use my credit card when an emergency came up. After I built my savings and those emergencies reared their ugly head, I was able to take care of them without resorting to credit cards.
4. Make a plan and be flexible. That’s not a mistake. Don’t make a plan and then stick to it no matter what. There were times I felt I would never be able to pay off all of my debt because things would happen and throw me off track. I had to be flexible and adjust my plan.
What worked for me was making minimum payments on my debts with the lowest interest rates, and paying more towards the cards with the higher interest rates. You could also start by paying off the card with the lowest balance and working up from there. The only wrong way to approach paying off your debt is to not have a plan at all.
http://blog.equifax.com/credit/how-i-...
This was the first time he saw real money. He took home about $700 every two weeks. His clothes, housing, and food were paid for by the military, but he had trouble saving money and would always find himself with nothing in the bank. After about a year in the Army, he got his first credit card. Before his signature on the back of the credit card was dry, he’d maxed it out.
Even though he lived paycheck to paycheck with a maxed out credit card and no money in savings, he was promoted to private first class. A higher rank meant a higher salary, which gave him the opportunity to get another credit card—and he soon maxed that out.
You might be thinking that he would eventually catch on, but the cycle continued to repeat. He would get promoted, make more money, get more credit, and max out his credit cards. As long as he could make the minimum payments, he thought had a handle on his debt. He would always tell himself that the next time he got promoted, he would have more money to pay off credit card debt.
I’m sorry to say that after 12 years in the Army, he left with $32,000 in credit card debt. I’m even sorrier to tell you that this person was me.
I know what it feels like to live paycheck to paycheck and have nothing in savings, a poor credit score, and a mountain of debt. I want to let you know that there is hope if you can follow these four steps:
1. Admit there is a problem. I thought that because my friends had debt, it was OK for me to have debt, too. I had to admit that I had a spending problem—I spent more than I earned. Nobody likes to admit that he or she has a problem, but you have to take responsibility in order for things to get better.
2. Start spending less. What helped me curb my spending was keeping a spending journal. In it, I wrote down exactly where, what, and how much I was spending each day. After doing that for a few weeks, I started keeping more money in my pocket.
3. Build your savings. It might not make a lot of sense, but the only way I was able to get out of debt was to build up my savings. When I first started saving, I would have to use my credit card when an emergency came up. After I built my savings and those emergencies reared their ugly head, I was able to take care of them without resorting to credit cards.
4. Make a plan and be flexible. That’s not a mistake. Don’t make a plan and then stick to it no matter what. There were times I felt I would never be able to pay off all of my debt because things would happen and throw me off track. I had to be flexible and adjust my plan.
What worked for me was making minimum payments on my debts with the lowest interest rates, and paying more towards the cards with the higher interest rates. You could also start by paying off the card with the lowest balance and working up from there. The only wrong way to approach paying off your debt is to not have a plan at all.
http://blog.equifax.com/credit/how-i-...
Will My Future Spouse’s Bad Credit Affect Me?
In any relationship, each person brings his or her own baggage. I’m not just talking about emotional baggage—there is also financial baggage of which you should be aware. Before you say, “I do,” keep in mind that you’ll be making a promise to stand by your spouse for richer and for poorer because money is one of the top reasons many couples fight.
If your soon-to-be spouse isn’t as financially fit as you, it doesn’t mean you should call off the big day. However, you do need to have some discussions with him or her before you walk down the aisle.
Joint accounts vs. separate accounts
Before you get married, decide whether you will both deposit your earnings into a joint account or keep your finances separate. Joint accounts could potentially lead to a financial emergency, especially if one person is not tracking what he or she is spending or is spending more than what is in the account.
On the other hand, having separate accounts creates unique issues. For example, you might be unable to see what your spouse is spending or saving. This could lead to problems later because it could result in two people living off of one person’s savings and retirement.
There is no right or wrong answer, but you should have a plan before you tie the knot. In a healthy relationship, there has to be some give and take—an important concept when it comes to your money or any other important decision.
Your first house
The good news is that if you both are working and you apply for a loan jointly, the lender will look at your combined income. The bad news is that the lender will also look at each of your credit reports and your combined debt-to-income ratios. If one spouse has blemished credit or a lot of debt, that could mean a higher interest rate on the loan—or possibly a complete rejection of the application.
Does this mean that if your significant other has bad credit, you can’t get a house? Maybe, but it could also mean you can afford less house as you may face a higher interest rate that increases your monthly payment. You may simply have to apply for a loan in your name only, but this means you will only qualify for a home you could afford on your own instead of for a home you could afford on both salaries.
Credit cards
Bad credit can haunt you for years, so you should both be aware of your personal credit histories and debt situation before you get married. This may raise some red flags around which you will have to plan. Does your spouse have a lot of debt? You will need to make sure the accounts don’t become past due. Is your spouse a heavy spender? You may want him or her to start using a joint card to encourage wiser spending habits. Are you considering applying for a joint credit card with someone who might not have a stellar credit score? You might want to consider just adding him or her as an authorized user to get better terms.
If you are the one who doesn’t have stellar credit, you can be added as an authorized user, but be aware that not all companies report authorized users to the national credit reporting agencies (CRAs), so you might not get any credit for paying your part of the bill.
There are always pros and cons with each route you choose. The point here is that you need to have a plan before your wedding day. Love is blind, but lenders aren’t. They will look carefully at your credit history, so make sure you are making financial decisions with your head and not with your heart.
Article courtesy of http://blog.equifax.com/credit/will-m...
If your soon-to-be spouse isn’t as financially fit as you, it doesn’t mean you should call off the big day. However, you do need to have some discussions with him or her before you walk down the aisle.
Joint accounts vs. separate accounts
Before you get married, decide whether you will both deposit your earnings into a joint account or keep your finances separate. Joint accounts could potentially lead to a financial emergency, especially if one person is not tracking what he or she is spending or is spending more than what is in the account.
On the other hand, having separate accounts creates unique issues. For example, you might be unable to see what your spouse is spending or saving. This could lead to problems later because it could result in two people living off of one person’s savings and retirement.
There is no right or wrong answer, but you should have a plan before you tie the knot. In a healthy relationship, there has to be some give and take—an important concept when it comes to your money or any other important decision.
Your first house
The good news is that if you both are working and you apply for a loan jointly, the lender will look at your combined income. The bad news is that the lender will also look at each of your credit reports and your combined debt-to-income ratios. If one spouse has blemished credit or a lot of debt, that could mean a higher interest rate on the loan—or possibly a complete rejection of the application.
Does this mean that if your significant other has bad credit, you can’t get a house? Maybe, but it could also mean you can afford less house as you may face a higher interest rate that increases your monthly payment. You may simply have to apply for a loan in your name only, but this means you will only qualify for a home you could afford on your own instead of for a home you could afford on both salaries.
Credit cards
Bad credit can haunt you for years, so you should both be aware of your personal credit histories and debt situation before you get married. This may raise some red flags around which you will have to plan. Does your spouse have a lot of debt? You will need to make sure the accounts don’t become past due. Is your spouse a heavy spender? You may want him or her to start using a joint card to encourage wiser spending habits. Are you considering applying for a joint credit card with someone who might not have a stellar credit score? You might want to consider just adding him or her as an authorized user to get better terms.
If you are the one who doesn’t have stellar credit, you can be added as an authorized user, but be aware that not all companies report authorized users to the national credit reporting agencies (CRAs), so you might not get any credit for paying your part of the bill.
There are always pros and cons with each route you choose. The point here is that you need to have a plan before your wedding day. Love is blind, but lenders aren’t. They will look carefully at your credit history, so make sure you are making financial decisions with your head and not with your heart.
Article courtesy of http://blog.equifax.com/credit/will-m...
Stop Living Paycheck to Paycheck
A 2015 study by SunTrust Bank found that it’s not just those in a lower-income tax bracket that are living paycheck to paycheck. According to the online study, which was conducted by Harris Poll, nearly one-third of households earning $75,000 annually found themselves with more month than money. Perhaps even more worrisome, according to the study, a whopping 71 percent of millennials making $75,000 also had difficulties with their monthly spending.
One of the biggest factors to which these survey respondents attributed their spending problems wasn’t related to transportation or housing—or even medical expenses. More than two-thirds of retiree households earning $75,000 or more blamed their issues on dining out, and the same went for 70 percent of millennials making more than $75,000. Money spent on clothing, entertainment, and hobbies also made up a large portion of the drain on monthly cash flow.
If you’re finding that you don’t have as much left at the end of the month as you want, here are a few ideas to consider that may stretch your paycheck dollars further:
Stop dining out as much
You don’t have to be a financial expert to figure out that this approach can help put your spending on a diet, but the key phrase here is “as much.” You can still dine out, but instead of eating out every night, consider cutting back to once or twice a week. The same goes for weekends. Don’t go out on both Saturday and Sunday; instead, pick one day. The key is to go out less than you are now because a restaurant meal usually costs significantly more when compared to going to the grocery store and then fixing a meal at home.
Spend less when eating out
If you enjoy adult beverages consider switching to water. Not only will you leave the restaurant with more money in your wallet but also your body will likely appreciate it because you will be ingesting fewer calories. You can also consider ordering lower-cost lunch or appetizer portions instead of the larger dinner portions or splitting a meal with your friend or significant other. Finally, consider order desserts for special occasions only.
Be smarter when clothes shopping
Even though you may have been out of school for many years, you can still take advantage of a tax-free weekend in the dog days of summer. Depending on your state, sales tax is usually not collected on selected items, such as clothing, typically the weekend or a few days just before school starts. You may also want to consider other clothing options such as consignment stores, which often offer budget-friendly options.
Find alternatives for entertainment and travel
Instead of paying the big bucks watching professional sports at an overpriced stadium, consider visiting a local minor league, college, or high school football or basketball game. Tickets can be substantially cheaper or even free, as are the items at the concession stand. If you like traveling and consider yourself a little adventurous, take a train trip. Trains can be comfortable, you can see the sights, and the trips usually won’t be too hard on your pocketbook. If you like reading or watching movies, check out your local library. Find your nearest beauty school for a discounted haircut, manicure, or perhaps even a massage.
Make hobbies pay
If you’re retired and you have more time than money, consider turning a hobby into a fun side job. For example, if you enjoy home renovations, woodworking, painting, or do-it-yourself activities, you might be able to turn those hobbies into some extra money from your friends and neighbors. If you have a talent in stained glass, jewelry making, sewing, or knitting, you may be able to sell your unique goods to local craft stores or online using marketplaces like Etsy.
If you enjoy an expensive hobby like golf, you might consider exploring a cheaper alternative, such as biking, swimming, or tennis. You could take up chess or cards and join a local group, or you may want to try bird watching and nature walks, which usually don’t cost a thing. Whether you are retired or are just starting out your career, living on a budget doesn’t mean you can’t have fun!
article courtesy of: https://blog.equifax.com/credit/stop-...
One of the biggest factors to which these survey respondents attributed their spending problems wasn’t related to transportation or housing—or even medical expenses. More than two-thirds of retiree households earning $75,000 or more blamed their issues on dining out, and the same went for 70 percent of millennials making more than $75,000. Money spent on clothing, entertainment, and hobbies also made up a large portion of the drain on monthly cash flow.
If you’re finding that you don’t have as much left at the end of the month as you want, here are a few ideas to consider that may stretch your paycheck dollars further:
Stop dining out as much
You don’t have to be a financial expert to figure out that this approach can help put your spending on a diet, but the key phrase here is “as much.” You can still dine out, but instead of eating out every night, consider cutting back to once or twice a week. The same goes for weekends. Don’t go out on both Saturday and Sunday; instead, pick one day. The key is to go out less than you are now because a restaurant meal usually costs significantly more when compared to going to the grocery store and then fixing a meal at home.
Spend less when eating out
If you enjoy adult beverages consider switching to water. Not only will you leave the restaurant with more money in your wallet but also your body will likely appreciate it because you will be ingesting fewer calories. You can also consider ordering lower-cost lunch or appetizer portions instead of the larger dinner portions or splitting a meal with your friend or significant other. Finally, consider order desserts for special occasions only.
Be smarter when clothes shopping
Even though you may have been out of school for many years, you can still take advantage of a tax-free weekend in the dog days of summer. Depending on your state, sales tax is usually not collected on selected items, such as clothing, typically the weekend or a few days just before school starts. You may also want to consider other clothing options such as consignment stores, which often offer budget-friendly options.
Find alternatives for entertainment and travel
Instead of paying the big bucks watching professional sports at an overpriced stadium, consider visiting a local minor league, college, or high school football or basketball game. Tickets can be substantially cheaper or even free, as are the items at the concession stand. If you like traveling and consider yourself a little adventurous, take a train trip. Trains can be comfortable, you can see the sights, and the trips usually won’t be too hard on your pocketbook. If you like reading or watching movies, check out your local library. Find your nearest beauty school for a discounted haircut, manicure, or perhaps even a massage.
Make hobbies pay
If you’re retired and you have more time than money, consider turning a hobby into a fun side job. For example, if you enjoy home renovations, woodworking, painting, or do-it-yourself activities, you might be able to turn those hobbies into some extra money from your friends and neighbors. If you have a talent in stained glass, jewelry making, sewing, or knitting, you may be able to sell your unique goods to local craft stores or online using marketplaces like Etsy.
If you enjoy an expensive hobby like golf, you might consider exploring a cheaper alternative, such as biking, swimming, or tennis. You could take up chess or cards and join a local group, or you may want to try bird watching and nature walks, which usually don’t cost a thing. Whether you are retired or are just starting out your career, living on a budget doesn’t mean you can’t have fun!
article courtesy of: https://blog.equifax.com/credit/stop-...
