Simple Steps To Safeguard Your Financial Life

How to Safeguard Your Financial Life

Most financial planners would agree that the most important steps to take to protect your financial stability are to set aside funds as an emergency reserve. The concept that you have the fund for emergency and unexpected events is to prevent you from using your credit card and drowning yourself in debt.

How to Get Started

Everyone must save a little extra cash in case of emergencies. However, how much money should you keep? Although the topic of how much money is needed for your emergency fund is open to debate, the minimum amount should be enough to cover your expenses for daily living for at least three months. It is also a great idea to save at least six months of your monthly expenses.

Your personal circumstances and what it takes to provide you with a peace of mind are the elements to help you determine just how cautious you want to be. If for instance, you have well-off parents who have always been supportive and willing to help you in a financial crisis, an emergency fund for three months will be sufficient.

Start by setting aside a monthly amount, for example, 5% of your paycheck. It is advisable to make this automatic. You can set up automatic weekly or monthly transfers from your checking account to your savings accounts.

Furthermore, monitor your spending habit each month and always look for ways to minimize your expenses. If by chance you receive a promotion, bonuses, or other unexpected windfalls, make sure to add them to your emergency fund.

Where to Keep the Cash

Keep your emergency fund somewhere that is both easily accessible and safe. I have heard of people putting their cash in the freezer or placing under their mattresses. Don't be one of these people. :)

The best option you have is to open a savings account or money market account. However, always examine their offer with regards to the minimum balance, interest rate, and other terms.

If you are looking for a great place to place your money, check out M1 Finance.

How To Manage Debt Responsibly

Tips to Manage Debt Responsibly

It is very surprising how many people do not know what their total debt expenses are each month.

The first thing to do is to account for all your expenses when making your budget.

When setting up your budget, you must account for the following,  mortgage/rent, food, utilities, transportation, clothing, entertainment, gifts, credit card payments, auto loans, personal lines of credit, and other debt obligations.

Next, you must pay your bills on time. This will ensure that you protect your credit history and also avoid paying costly fees and late charges.

If you are in the habit of using your debit cards, you must track all your debit transactions so that you do not overdraw on your account and thus incur fees.


Another strategy used to manage debt is by reducing your credit card interest rates. By shopping around, you can find a card with a lower interest rate or a 0% promotional rate for balance transfers. Also, you can get a lower interest loan to pay off your high-interest debt, by lowering your monthly payments, you free up some extra cash flow for yourself.

If you have racked up a large amount of debt, you must determine what percentage of your income you can allocate to pay off your debt and refrain from charging more.




Finally, you must have a system in place to protect your credit information. Identity theft is on the rise and you must be very vigilant with protecting your personal information. With so many data breaches every year, it's important that you have some form of identity theft protection. Another effective strategy is to have a credit freeze on all three major credit bureaus. This ensures that in the event someone tries to use your information to apply for credit, they will be declined.

There you have it, debt is a powerful tool and as such must be used and managed responsibly. Wealthy individuals understand the power of debt and how to leverage good debt to create wealth and so should you.

The 4 C's Of Credit

Applying for a loan can be nerve-racking and challenging if you do not understand how credit works and what bankers use to determine if you are a good credit risk or not.

In this post, I will share with you the 4 C's that bankers look at before making decisions on whether to lend you money or not.

The 4 C's are Character, Collateral, Capacity, and Credit.

Let's address each.

Character 

Lenders look for signs of stability and reliability, such as your employment history and proof of regular mortgage or rent payments.

Collateral

A lender may require that the loan be backed by the value of your property, such as a house or vehicle.

Capacity

As a borrower, you will be required to prove that you have the means to repay the loan. Having a steady job that provides dependable income is highly important.

Credit

Your credit and payment history will be reviewed by the lender.

So there you have it, these are the 4 areas every reputable lender will consider before extending you credit.

The True Cost Of Credit

Credit has become a vital part of society and, at some point in our lives, we will need some form of credit in order to achieve our goals. 

Why is credit so important?

Well, if you are planning to purchase a house unless you have a large bank account, you will require credit to be able to acquire your house. Even the wealthy would rather use credit to make large purchases than spend their cash reserves.

The sad part is that there is no financial education being taught and as such, we have a segment of society that struggles with financial literacy.

The wealthy understand how to leverage credit to grow their wealth and increase their net-worth while the rest of society struggles. We are told that credit is bad and we should never use credit cards, etc. Unfortunately, if you plan on participating in the economy and also improve your lifestyle, you must be financially savvy when it comes to credit.

Now, there is a cost of credit and if you abuse credit, there will be a price to pay. In addition, not all credit is the same. Let's take the example of an individual who due to personal financial difficulties, takes out a payday loan.

These payday loans are designed to be emergency loans until your next paycheck, unfortunately, these payday loan lenders are not federally monitored or regulated and as such charge clients exorbitant interest rates. Because of the borrower's credit rating, these loans are very risky and expensive.

A $300 payday loan repaid in a month could cost the borrower $13.99 which is an APR of 57%.

There have been cases of borrowers paying over 300% in interest to these payday loan lenders, don't be a victim.

 

Here Are Alternatives To Payday Loans:

1. Get a line of credit from your local bank or credit union.
2. Ask your employer for a paycheck advance.
3. Ask your family or friends to lend you money (be careful about this one) :)
4. Apply for a regular small loan.
5. Negotiate with your creditor for more time to pay your bill.
6. Use a cash advance on your credit card.

Why A Credit Report is Your Financial Resume

It is common knowledge that most companies today check your credit report before doing business with you or even hire you if you are seeking employment. This is why your credit report is your financial resume.

A credit report file lists all your personal information, all your trade accounts, and your past payment behavior or history.

It is vital that you maintain a healthy credit profile as this comes to play when you are applying for a credit card, a car loan, mortgage, insurance, mortgage, and in most cases when you are applying for a new job.

It is important that you establish and maintain good credit because it is a record of where you work, live, also how you pay your bills, and if you have any public records on you, such as arrest, foreclosures, bankruptcy, liens, etc.

Employers do have the legal right to look at your credit provided you give them permission to do so during your job application process. They use these data to assess your credit usage, your personal integrity, and financial responsibility.

Furthermore, all financial institutions, lenders, insurance companies, utility companies, and landlords look at your credit for the same reasons.

So you can see why your credit report represents your financial resume.

You might be wondering, how do you establish a great credit history?

Well, the process is quite simple but requires discipline and patience on your part.

Here are the basic steps anyone can take to accomplish this, please note that this assumes that you are new to the credit game or maybe you want to get back in the credit game.

Steps To Establishing A Great Credit History

1. Open a checking and savings account at a bank.
2. Apply for a credit card such as a bank credit card, retail store card, gasoline or oil company card, etc.
3. If you have no credit or bad credit, you can apply for a secured credit card whereby, you pledge collateral such as savings accounts in return for a credit card with limits equal to the amount of the savings deposited.
4. Another way is to be an added signer on someone's credit card account. This requires you to ask a friend or family member with a great credit history to help you out by adding you to their account. The advantage to you is that you get to benefit from their well-established credit profile as well.
5. Apply for a co-signed loan if you can't qualify by yourself. A relative with an established credit rating can be a co-signer on your loan and share the responsibility.

To get you started with your new account, you can check out an offer from M1 Finance.

How To Repair Your Credit

The key to having a great credit score is monitoring your credit on a consistent basis, getting rid of errors, and using credit responsibly.

So what happens if you have bad credit and don't know what to do or how to fix your credit? 

Well, all is not lost and there is a way to get your credit repaired so that you can take advantage of all the opportunities available to a select few who know how to leverage their great credit.

                                                 Click here Now to Learn More

How Does Credit Repair Work?

You have the right to dispute anything on your credit report that appears to be inaccurate, outdated, erroneous or unverifiable…that’s the law. All creditors are obligated to prove the information on your credit report is accurate and correct any and all violations of the law.

If a creditor is unable to perform under the strict guidelines of the law, they must remove the account from your credit report.

All Credit Reports Contain Violations, Including Yours

The United States government began writing laws to protect you from creditors and the credit bureaus beginning in the 1960s. Today there are dozens of state and federal laws creditors and credit bureaus have a difficult time following.

An account such as a collection, charge off, tax lien, short sale, foreclosure, auto repossession, even bankruptcy can contain dozens of violations making it inaccurate, outdated, erroneous, or unverifiable. In other words…illegal

If you are challenged with bad credit and need help fixing your credit, then you want to check out Fortress Credit Pro. 

Fortress Credit Pro has been able to get some of their clients from bad credit to homeowners in less than 180 days. 

They will show you:

• How to build a great credit
• How to efficiently raise your credit score
• How to responsibly use and maintain credit

Bad credit can be fixed, Fortress Credit Pro can get you from bad credit to good credit faster.
Visit Fortress Credit Pro now to get your credit fixed.

Why Credit Matters

Credit is the lifeblood of the economy and without credit, it will be close to impossible for individuals, families, and businesses to survive.

Credit affects all aspects of our lives and without credit, you will not be able to purchase a home, purchase a car, purchase a business, etc.

Credit is the engine that drives all financial aspects of our lives and that is why credit matters.

In order to qualify for the best rate on loans and other financial products, you must have great credit.

Having great credit guarantees that you will be able to play the game of life and have a great lifestyle.

On the other hand, not having great credit will surely guarantee a miserable existence and very limited opportunities available to you.

The key to having great credit is making sure that you understand how to use credit responsibly and thus maintain a great credit profile.

There are three credit bureaus that collect, store, and share your credit behavior with financial institutions, and these financial institutions pay these three major data-collecting behemoths large sums of money for your credit profile.

The three main credit bureaus are Transunion, Equifax, and Experian.

These three get your personal data from the financial institutions that you have relationships with and in turn, share your information with other financial institutions when you try to apply for credit.

In order to make credit decisions, these financial institutions turn to the three bureaus to obtain your credit behavior to see if you are worthy of getting a loan, etc. Your financial behavior comes down to a three-digit number called your credit score or most typically referred to as your FICO Score.

FICO refers to "The Fair Isaac Company"





The Fair Isaac Company developed the first algorithm for computing your credit score to enable lenders and financial institutions to make quick and impartial lending decisions using your three-digit credit score to determine your creditworthiness.

There are other platforms that provide you with free credit scores, however, the only scores that 90% of lenders use is the FICO Score.

There are basically 5 factors used in the computation of your credit score, and these are:

1. Payment History -  35% impact on FICO Score.
2. Credit Utilization - 30% impact on FICO Score.
3. Length of Credit History - 15% impact on FICO Score.
4. Amount of New Credit - 10% impact on FICO Score.
5. Credit Mix - 10% impact on FICO Score.

These are the main factors that impact your credit score and these scores range from 300 to 850 and the higher your score, the better.

The key to maintaining a high credit score is to monitor your credit consistently making sure that there are no mistakes or incorrect data on your profile and ensure that you are not a victim of identity theft.

Click here to Monitor Your Credit and FICO Scores

This post is meant to give you a quick snapshot of why credit matters. In my next post, I will go over how to fix errors on your credit report and also how to repair your credit in order to be able to get qualified for better rates on loans.