Sometimes, people wonder whether I really read all the comments on my blog.
I do …
… even when I just got back from a nine-day vacation with my wife and kids.
You see, I just got back from the Bahamas. Technically, I’m “out of the office” until Monday, so my beautiful wife, Lily Tirone, is going to shoot me if I spend too much time writing this. But just to prove to you that I do read every single comment, I wanted to respond really quickly to one of them from last week’s email and blog…
One of my readers asked why I didn’t take a simpler vacation with all the kids instead of buying all those plane tickets and hauling my brood through security. True, we could have driven just 20 minutes and had a nice family vacation. I could have saved the money on airfare and taken my wife to the Bahamas another time.
But here’s the thing…
If I took the kids on a trip down the road, I would have ended up working a ton more than I worked. It wouldn’t have been enough of a change in scenery to cause me to make the psychological shift necessary to focus 100 percent on my family.
Because I was a very long way away from home, I felt separated from all the distractions. In fact, I didn’t checked in with my staff while I was in the Bahamas. Lily, the kids, and I enjoyed our time together, and I made sure that my time was protected so that I could spend it with the people who matter most.
I’ve found that in reaching a goal, it is critical to create an environment that allows a psychological shift to occur. This is true with the delicate balancing act of family and work. It’s also true when it comes to getting your finances in order.
If you are struggling with debt, credit, or other financial problems, ask yourself how you can change your physical environment so that you are more likely to create the psychological shift necessary to fulfill your financial goals.
Maybe that means logging your purchases and reviewing your budget monthly. Maybe it means dedicating 10 minutes a day to reading books about financial management. Maybe it means joining Debtors Anonymous.
And be sure to share your ideas below! I promise to read them all!
Category: CREDIT BLOG
The First Thing You Should Do to Correct an Error and Build Your Credit Score, by 720 Credit Score
If you want to learn how to build credit and raise your credit score, you simply must pull it.
I’m talking about your credit report.
I tell my clients that they must review their credit report at least once every six months, and, depending on how low their credit score is, perhaps even quarterly.
In Step Five of my book, 7 Steps to a 720 Credit Score, I explain that almost 80 percent of people have errors on their credit report, and 25 percent of these are severe enough to cause a person to lose a loan or a job opportunity.
So what do you do if you spot an error?
First and foremost, if you think you are a victim of identity theft, call the three credit bureaus right away to put a freeze on your credit account. This way, no one else can open credit in your name.
If the mistake doesn’t seem to indicate that you are a victim of identity theft, you can start by filing an online dispute at each of the three credit bureaus. Following are links:
As well, contact the credit card company or the bank in question. If they are reporting incorrect information, you can get the ball rolling by asking them to investigate the mistake.
One of the most common (and dangerous) mistakes you will find is an inaccurate credit limit.
So why does an inaccurate credit limit hurt your credit score?
The credit-scoring agencies give higher credit scores to people with lower utilization rates (your credit card balance as a percentage of your limit.) If your limit is, for instance, $2,000, and your balance is $600, you have a utilization rate of 30 percent.
This is a good utilization rate, and it should help your credit score.
But if your credit card company is reporting your limit as $1,000 instead of $2,000, your utilization rate will appear to be 60 percent (a $600 balance on a $1,000 limit). This is a bad utilization rate, and it will cause your score to drop.
So if you want to build your credit score, start by filing a dispute with all three credit bureaus. At the same time, place a call or send a letter to your credit card company demanding that they report your correct limit.
Then, be sure to pull your credit report again to make sure that the mistake has been corrected.
Oh, and one more credit repair tip: Your credit score will never be damaged if you pull your own credit report. Though inquiries into your credit score by lenders will cause a dent in your score, pulling your own credit report is considered responsible behavior. So do it freely!
Have any questions? Need a credit repair tip that will help you build a 720 credit score? Be sure to leave a comment below.
Build Credit: The Three Keys to Creating Good Debt
At first glance, the words “good” and “debt” don’t seem to be a symbiotic match, but there are indeed some instances where creating debt does generate a surplus of income or personal wealth. There are certain schools of thought that agree if a debt is going to increase your potential for income, it could be a good opportunity. However, many people don’t stop and think before they agree to take on a new financial responsibility. If you’re currently considering obtaining a debt to help get you through a specific situation you may want to keep these following advice in mind.
Always Question Your Motives
A good rule of thumb to follow when considering creating a debt is to ask yourself the following question.
“How is borrowing this money going to help me make money or get me out of debt?”
If you’re using credit to do your basic living, you’re not helping yourself pay down your debt, or even create new income. You may feel temporarily relieved, but in actuality you’re increasing your debt and just pushing off the inevitable need to pay until another day. If you approach debt from the perspective of using it help you create wealth, you’ll have a much healthier personal financial situation.
So, in short, if your motive is to create more debt, it’s not a good idea to keep digging yourself into a hole. However, if you are using the debt to increase your opportunities to generate more or new income, it may be the right move for you.
Determine What Is A Good Debt
An easy way to decide what a good debt for you would be is to determine to what degree that debt will increase your wellbeing or expand your potential financial growth. For some ideas, consider these five scenarios for creating good debt:
- Take out a loan to start a side business or to expand your current business. However, you’ll want to get the loan in your business’s name as soon as possible so that your liabilities are divided.
- Get a college education.
- Take a class or learn a skill that will help you be more employable. This can be anything from going to therapy to becoming a better communicator or even taking a sewing class so that you can sell your creations on Etsy.
- Consider getting a consolidation loan with lower interest rates.
- Buying a home or some other investment that is going to increase in value is also good debt, albeit with a bit of risk. Before you buy a home, you have to think worst-case-scenario: If this home never increases in value, can I always afford the payment?
Investing in Your Family
It isn’t a traditional approach to personal finance or debt to consider investing in your family, however, while it may not increase your revenue stream directly, it does increase the overall quality of your life and the future of your family. The main factor to consider before you agree to the debt is to honestly answer, “Can you afford to pay it back?”
If you don’t have solid proof that you can pay it back, it would not be financial prudent to consider it a good debt. The key here is establishing solid proof that you can pay it off. Many people have a feeling they can pay it back, but don’t run the numbers to determine whether that feeling is based on fact. To establish proof, you need to know exactly what you need to live on each month and exactly what income is coming in. If you have enough left over to cover the new debt comfortably, than it might be something of value to consider. Some examples of investing in your family include:
- Investing in your family’s future by sending your kids to college.
- Hiring a tutor for your children.
- Sending your overworked spouse on a vacation to relive their stress.
- Buying a home that your family is going to live in forever might be good debt even if it’s a seller’s market and the home is likely to lose value.
When it comes right down to do it, life is a balancing act. Some people preach that you should never use credit unless it can increase your income. All other debt is bad debt. That isn’t always the case, and you can’t live your life by absolutes. There are some times in life when you will need to use credit and pay interest for things that will increase you or your family’s well-being. The trick is in making educated financial decisions and balancing the risk of the debt versus the opportunities it will create.
How have you used debt to increase your wealth or help your family? Share your stories below!
Lily Tirone and I hauled 3 kids through security…
Would I rather be glad I bought the latest iPhone, or be glad I saved money for a vacation so that I can relax with my amazing wife Lily Tirone?
That’s the question I posed last week, when I suggested that you ask yourself a simple question before making a spending decision …
At the end of my life, would I rather have this or that? (If you missed this post, you can read it here.)
This is Part 2 … a follow up on last week’s post. I wrote it on Tuesday because a lot of people pointed something out …
This question can be applied more broadly and expanded beyond the topic of finances. It can be asked to guide the choices we make and determine whether these choices are in line with our life values.
This week, something came up that hit home for me …
My wife (Lily Tirone) and I are taking our kids to the Bahamas.
I want you to have a little taste of what my family looks like, so I’ve posted a picture below. My oldest, Ava, is five. Dominic is almost four, and Luke is about two and a half.
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At any rate, this is a really special vacation because it is probably the last time the Tirone family will take a vacation together … just the five of us.
See, Lily is about three months pregnant, so in six months, Baby #4 will be here, and the Tirones will be a family of six!
Now, if you are a parent, you can probably imagine what it’s like getting the Tirone family through the airport. Lily and I have three car seats, a triple stroller, bags of baby gear, books for the kids to read, toys … the list goes on and on.
Lily and I basically look like pack mules, and no one ever wants to be behind us in the security line. Frankly, it’s kind of a nightmare.
It’s really tough traveling with three young kids, and both Lily and I have had thoughts of not going … it would be a lot more convenient to just stay home.
But if we stayed home, I’d inevitably end up working. I know I would. In the Bahamas, I’ll turn off my cell phone. I won’t check my email. I’ll tell my staff to call the hotel room only if someone is bleeding.
The Tirone family of five will be able to spend some really special quality together-time.
And at the end of my life, I’m going to say, “I’m sure glad I spent that time with my kids and with Lily. I’m glad Lily and I hauled my unruly young kids through security line and suffered the headaches.”
If we decided to skip the vacation, I’m positive that I would never look back and say, “Boy, I sure wish I hadn’t gone on vacation with my family and had stayed home and worked instead.”
Every single time we take a vacation together, our family grows closer and closer.
In fact, when I come back, I’ll tell you what I learned on this trip!
For now, I just want to encourage you to remember to make choices — financial or otherwise — that reflect what you want long-term. These choices might be inconvenient in the short-term, but if they honor your life values, you won’t look back and regret them!
If you have any thoughts about this, or if you want to share your stories, be sure to post a comment below!
– Philip Tirone
Marriage and Credit: Join Lives, not Accounts!
Most people approach marriage and credit with a one-for-all, all-for-one attitude. They open joint credit cards, apply for car loans as a couple, and stop building separate credit histories. After all, they have joined their lives together; why not marry their credit histories?
Though the sentiment is appealing, keeping some credit accounts separate has big advantages. Holding credit jointly puts a couple at even greater risk during times of financial crisis. Here are two common credit pitfalls of marriage.
Pitfall #1: Joint Credit Cards and Automobile Loans
Let’s imagine what would happen in a typical household by considering Jack and Jill, a married couple with joint credit cards and joint automobile loans.
Jack lost his job, so the couple is trying to make ends meet. After a couple of months, they start realizing that they cannot afford all of their bills. So they stop making payments on several credit cards and on one of the two car loans. The credit card bills are sent to collections and the car is repossessed.
And both Jack and Jills’ credit scores are in the trash.
Now let’s see how the same situation would play out with Peter and Paula, a married couple with separate credit cards and automobile loans.
When Peter loses his job, the couple creates a strategic plan about their forthcoming financial problems.
Peter and Paula know they can only afford to pay all their bills for three months; the money will run out after that. Peter searches high and low for a job, but is unsuccessful. After three months have passed, the couple decides to stop paying credit cards and car loans in Peter’s name. They stay current only on bills in Paula’s name.
Of course, Peter’s credit score suffers. But Paula’s remains pristine. This means that Paula is able to apply for loans in her name, while Peter learns how to rebuild credit.
Opening all loans jointly is among the biggest credit-scoring mistakes a married person can make. Let’s take a look at another one.
Pitfall #2: Holding All Credit in One Spouse’s Name
Opening all credit cards and loans in one spouse’s name is another big no-no for married couples.
This usually happens when one spouse works a nine-to-five job and the other stays home with the kids. The spouse with the paycheck opens all credit in his or her name.
But what happens if something happens to the working spouse? A bankruptcy, death, loss of income, or divorce would make the other spouse vulnerable. Because no credit is the same as bad credit, the stay-at-home spouse would have no ability to secure a loan.
There’s another problem with this strategy. Let’s switch this scenario up a bit and imagine that both spouses work. The wife has a part-time job with a small salary, so all of the credit is in the husband’s name. The couple decides to buy a home. To qualify for a loan, they need both spouses’ income.
The couple now has a big problem: The wife has no credit history, so her score is low. Putting her name on the home loan would endanger the loan. And the husband cannot qualify for the loan on his own—he needs his wife’s income for that extra boost.
Most likely, the couple would not qualify for the loan. At a minimum, the couple would pay a higher interest rate.
This pitfall can be avoided if both spouses build their own credit scores.
Build Credit: The Truth About Living Debt Free
For a lot of people, living with credit card debt is simply a way of life. We have all heard of the credit crunch where banks lent more to people than they could afford to pay back. When people fell behind on their repayments, the banks were in trouble and drastically cut back on the amount of money they were lending. This then led to a collapse in the housing market as a glut of foreclosures suddenly came up for sale. A lot of people, during this depression, decided that credit was actually a bad thing and they started to live a debt free lifestyle. While this is a great idea in principle, it is not a good idea to close your credit card accounts and attempt to live life on a cash only basis.
The problem is that your credit score affects many areas of your life. For example, car insurance companies now use credit scoring as a way to determine how responsible you are behind the wheel of a car. More and more companies are now using credit scoring to decide how responsible you will be as an employee. Also, if you ever need cash in an emergency, it is essential to have a good credit score to ensure you get the money you need quickly and at the best rate.
What most people do not understand is that not having credit is just as bad as having bad credit. We no longer live in a society where you can be good friends with your bank manager and he, knowing who you are and how you live, can decide whether to lend you the money you need. Most bank managers know little more than sales department managers.
At US Bank, for example, the local branch no longer has control over whether a check that overdrafts your account will be paid or bounced. If you call the branch and ask them to pay it, they will tell you that they have no control over it. They will tell you, however, that you should apply for overdraft protection so that it does not happen again, and they will happily help you fill out an application. Of course, whether or not they grant you overdraft protection depends on your credit score.
The problem with not having credit is that the credit bureaus will no longer be able to assess your credit worthiness. Rather than assume you are a good person to lend to and risk being wrong, they will err on the side of caution and assign you a poor credit score. This could lead to higher rates on your car insurance, mortgage or even stop you from getting a job or promotion.
Unfortunately, it is not a good idea to simply put the credit cards into a drawer and never use them either. A lot of companies will declare unused cards as inactive and therefore they will not count towards building your credit score. However, there is a solution that will not cost you extra money in interest and will still build your credit score.
The solution is to have between three and five credit cards and set them up to automatically pay one monthly bill each. For example, your cable bill could be paid out of one card, your car insurance could be paid out of another and your gym membership could be paid out of a third card. In order to avoid interest charges, you could then set up an automatic payment to these cards from your bank.
In essence, using this method, your money leaves your bank and arrives at the place it needs to get to; it just passes through your credit card accounts on the way. This allows you to essentially live debt free, but give you the benefits of a healthy credit score so you have access to the cash you need in case of an emergency.
Getting Unstuck
Over the last months we’ve asked you to share your stories of credit and personal finance.
Well, I now have to confess that I’m a little embarrassed…
You see, I am about to share shocking stories I have never shared with anyone before. After all, you’ve shared your stories with me, so now it’s my turn…
www.NeverBeStuck.com
The purpose of sharing stories is to learn from another person’s life choices. I’ve had bruises up and down my arms, and I’ve been practically illiterate. I’ve spent $50,000 more than I earned. I’ve been in financial wreckage…
But I got unstuck.
And now I’m going to tell you the exact process I used to get unstuck financially each and every time I found myself in a jam. Because you so generously shared your personal story with me, I’ve created a series of FREE videos that teach you the exact formula for getting instant results, instant income, and instant change.
Here we go…
Philip Tirone
P.S. Once, I actually led a secret life. Watch the video now.
Two days of crying…
I want to ask you a question that could solve your financial, credit, and debt problems …
But first, a quick story …
One of my friends, Jocelyn, told me that she was in tears for two days.
A mom with Baby #2 on the way, Jocelyn had decided to let go of her nanny …
She told me she felt a little silly crying about it … compared to some people’s problems, letting go of the nanny is hardly a big problem.
But it was a big lifestyle-decision for Jocelyn and her family. You see, the nanny has cared for their daughter since she was four months old. And with Baby #2 on the way, Jocelyn’s family is going to need a nanny again in about four months.
But her daughter just started preschool, and her son isn’t due for about two more months. Once her son is born, Jocelyn won’t be working much during the first few months.
She figured she could save a boatload of money by letting go of the nanny…
But the decision made Jocelyn sob. She was going to have to hire another nanny once she went back to work.
Jocelyn couldn’t image leaving her new child alone with a stranger. The thought made her sick to her stomach.
Then Jocelyn’s sister said something smart:
“I don’t think this is an area where you should be frugal. If you want to save money, sell one of your cars. Think about it … at the end of your life, would you rather look back and say: I’m sure glad we had two cars? Or would you rather say: I’m sure glad we made sacrifices so that we could surround our children with people who love them?”
Jocelyn thought about it and realized she could make a ton of sacrifices elsewhere. She and her husband could plan their meals a little better and save about $200 a month in groceries. They figured a way to lower the amount they paid for car insurance. And they made a deal with the nanny that made financial sense for everyone involved.
They made it work.
So what does this have to do with credit?
A lot of credit problems are actually spending problems. People make rash, spur-of-the-moment choices that don’t reflect their truest desires. They buy the latest iPhone instead of paying a credit card bill. They buy a new pair of shoes instead of saving money for a vacation.
If you think you are someone who makes bad decisions when it comes to spending money, ask yourself the same question Jocelyn asked: “At the end of my life, would I rather have this or that?”
Ask this question before making any purchase or budgetary decision:
At the end of your life, would you rather look back and say: I’m sure glad I had the latest iPhone? Or would you rather say: I’m sure glad I pinched pennies and saved money so that I could take care of my debt problems, invest in my child’s future, and take relaxing vacations with my family?
Spending money is almost always a choice between one opportunity and another. Just make sure you are taking advantage of the right opportunity and putting your money where it matters!
Please share your thoughts with me below!!
– Philip Tirone
10 Tips for Being Dollar Store Savvy
The dollar store can feel like a frugal shopper’s dream come true. Everything is one set price, so there’s no need to comparison shop. They’re usually not very busy, so you have plenty of space to browse for deals. Even better, the stock is always changing, so there’s always something new to see. However, like most things, if you’re not careful even the dollar store can be a retail trap of overspending. To help keep you dollar store savvy, keep these tips in mind before heading out the door:
THINGS TO CONSIDER
1. Set a budget.
Just because everything is a dollar doesn’t mean you won’t overspend. In fact, the lower price point can lure you into putting more things into your cart than a shopping trip at a regular store. Bring only the cash you plan to spend or set a budget and firmly stick to it.
2. Check for quantity.
One way dollar stores make money is by selling you individual items you’d typically get bundled together such as socks, hair accessories and housewares. So while it’s only a $1 per item, you may have only been spending 75 cents per item in a bundled package at another retail store.
3. Check for quality.
Cheaper isn’t always better. If the item ends up breaking or you have to replace it sooner than expected, then you’re actually losing money. Always check the overall quality of the item and determine whether the cheaper version will hold up as well as the regular priced item.
4. Avoid certain consumables.
Products such paper towels, toilet paper and even food are not good dollar store buys. The reason for this is the quantities are usually off from regular store products. For instance, paper towels have bigger sheets so you use the roll faster. Food is usually in smaller quantities than you’d get at other stores. Light bulbs may be cheaper, but they are not energy-efficient which means you’ll be replacing them move often. Keep in mind the usages and quantity when buying consumables.
5. Avoid food products.
If you’re already a savvy shopper than you know that you can get better food deals with coupons at your regular grocery stores. You’ll also avoid getting inferior products or products with smaller quantities.
BEST THINGS TO PURCHASE
1. Paper Products
Keep in mind tip #4 and avoid paper towels and toilet paper. However, other paper products such as greeting cards, wrapping paper, books, office supplies and stationary can provide excellent savings at a dollar store.
2. Holiday & Seasonal Decorations
Seasonal items are fun and help capture the essence of the season or holiday you are celebrating. However, those extra items can add up. Dollar stores typically have a great array of inexpensive alternatives, especially if you’re the creative type. Before doing any holiday decor shopping always stop by your local dollar store to check out what they have.
3. Children’s Toys & Games
Given the fact that most toys don’t hold a child’s interest for more than a few months anyway, the dollar store can be a great resource for toy and game purchases. You’ll want to check quality on some of the products, but most items are fairly good substitutes. Puzzles and workbooks are great dollar store purchases.
4. Household Products
You can find an amazing assortment of household products at the dollar store from home decor to kitchen and tableware and even cleaning supplies. You’ll always want to check on the quality and if it’s worth the specific use you have for it. It may be cheaper to get a $1 baking dish if you know you’re using it for a potluck and don’t want to worry about getting it back. It’s also a good find for children’s dishes and bedding.
5. Storage Items
Storage items can be fairly expensive. Even at discount stores you’ll find yourself paying $5 or more for storage options. At the dollar store every piece is only a $1. They often have unique storage options as well. You’ll wan to visit at different times to check out new products that may make storing things in your home more effective.
How do you use your local dollar store?
Top 3 Cures for a Low Credit Score
A low credit score is bad news, particularly if you are trying to renegotiate the terms of a loan, applying for a home loan, trying to land a job, or searching for an apartment. In today’s environment, you need a high credit score for a slew of reasons. So if you need to build your credit score, don’t worry. Here are three strategies to boost your low credit score, and fast!
1. Correct your credit limits. Almost half of Americans have a credit card with a limit that is incorrectly reported to the credit bureaus. Credit card companies often omit or misreport credit card limits to the credit-scoring bureaus.
This causes your utilization rate (your balance expressed as a percentage of your limit) to appear higher than it actually is. Imagine that pay your Visa balance down to $300. Because your limit is $1,000, your utilization rate is 30 percent, which is the maximum utilization rate the credit-scoring bureaus want you to have.
So your score should increase, right? Not so fast. If the credit card company is only reporting a $500 limit, you will appear to be carrying a 60 percent utilization rate. And this hurts your credit score.
Are you one of the many Americans suffering from this mistake? Find out by pulling your credit report from www.720FicoScore.com. If the credit card companies are inaccurately reporting any credit limit of yours, immediately begin the process of correcting this mistake by using the forms and worksheets necessary to correct this mistake.
2. Become an authorized user on a credit card owned by a family member or spouse. If you have fewer than five credit cards, becoming an authorized user on a family member’s credit card is one of the quickest ways to improve a credit score, so long as you choose an account with a clean credit history. Becoming an authorized user allows you to borrow the account holder’s clean credit history, which will cause your low credit score to quickly increase.
3. Find creative ways to lower your utilization rates. Your utilization rate is the balance you have on each individual credit card expressed as a percentage of the limit. If your limit is $4,000 and your balance is $2,000, your utilization rate is 50 percent. If your balance decreases to $1,000, your utilization rate drops to 25 percent.
The credit-scoring bureaus respond best to people with utilization rates below 30 percent. If you have a high utilization rate, your low credit score can start to improve by getting your utilization rate below 30 percent.
Obviously, you can lower your utilization rate by paying down your balance. You can also lower your utilization rate by transferring a portion of your credit card balances to credit cards with higher limits, or asking your credit card companies to increase your limits.
If you have fewer than five credit cards (the maximum number you should have), you could also open a new credit card that holds some of your debt. Keep in mind that opening a new credit card will cause your score to drop initially, but so long as you keep the balance below 30 percent and make timely payments, your score will start to improve in about six months.
And if you are married, be sure to read my article about how to build credit fast by transferring balances to your spouse’s credit cards.
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