New Year, New You? Part 2

In part one we talked about how change and planning are so important to getting your finances and life in order. We made a list of our goals, wrote down our monthly bills, made a  list and arranged what we knew we owed (before looking at our credit report), and made our first budget.

A couple important things to remember:

* Writing down our short, medium, and long term goals makes us think about the long term. Most times, we don't think about the future and how we are going to get there.

* Do you know what exactly you have to pay each month? That's what writing down when and what you owe monthly does for you. I have my bills written on a monthly calendar on my desk at work and in my office at home. I'm have a pretty bad memory, so I also have alerts set up on my phone to remind be a day before to pay the bill if I haven't done so already. Knowing is half the battle...

* The reason we write down what and who we owe, as far as debt, is to start to get a grasp of just how bad - or good - the situation is before you start tackling the debt. The good thing about you making the list is that YOU get to decide the order to place each debt in. Maybe you owe a family member and are behind on some monthly bills, what would you tackle first? Personally, I would jump on those monthly bills. Make sure you discuss with the person you owe and let them know your plan to pay them back also. Acknowledgment of the debt will go a long way with building good faith with that person.

* We made a budget. Not a final budget but a trial budget. This first budget is a trial budget because it takes a couple attempts at budgeting to make one that you are comfortable with. Trial and error. Don't get upset if this first budget doesn't work. There will be more.

So, now that we have the beginning stuff done, let's move on...

1. Go to Annualcreditreport.com and get ONE copy of your credit report. You are allowed one copy of each of the the 3 reporting agencies each year. Spread them out and get one copy every 4 months. The reports are not exactly the same so we get each one separately to make sure we are aware of ALL of the debts.  Make sure you answer all of the security questions as best as you can because if you get one wrong it can make getting that report a bit more difficult. Put each debt and contact information into the debt list we made last time, from most to least important.

2. Using that Mint account you set up, go over your monthly spending. Where do you spend too much? where can you cut back? Spending too much on lunch at work? Pack your lunch a couple days a week.

3. Adjust your budget. Using Mint, or however method you chose, to make your budget, adjust the budget to change what wasn't exactly realistic. Don't just change amounts because you want to go out more, but if you saw you didn't spend all of the budgeted money on wants, lower them. If you need more money for transportation to work, raise it a bit. Don't go over your monthly limit.

4. Now that we are starting to control what and where we spend money, it's time to start finding money. Do you have a hobby you can turn into extra income? Sell the clothes you don't wear? Tutor? Freelance? Get a part time job? Make a list of 5 things you can do to make extra money.

Smile. Your starting to get your financial life in order. We still have a ways to go but you will see all this effort start to pay off very soon. All of this is getting you organized for the real work. It seems like a lot now but you will be glad you took the time to get this in order later. That vacation you want to go on, the house you want to buy, those shoes...we are planning to get those things, without worrying about paying for it because we have planned our work and worked our plan...

Why is it Tracking YOUR Money Important?

One of the first steps on your road to Financial Independence is knowing where your money goes. Why is this so important?

Knowing Where Your Money Goes
* See WHERE you are spending too much
* See WHAT you are spending your money on
* See Why you have no money, even if you think you aren't spending a lot


Where does it go???

What Can You Do With This Information
* Make a budget you are comfortable with that meets all your needs..and wants
* Plan for the future
* Adjust your spending


Stop WASTING YOUR Money!

Ok, now that you know WHERE your money is going you can really get started. Knowing where your money goes let's you adjust your spending and set goals.

We think getting out of debt is sooooo much work, it is but if you have a plan that grows as you grow the work is a lot less. Finding a spending pattern that fits your goals and needs makes getting out of debt so much easier. Think about it..if the hardest part of getting out of debt is not having enough money, think how much easier it is once you know and can budget.

I promise you will find money you didn't even know you had....

Personal Finance 4 The People can help!

We specialize in finding where your money goes, budgeting, prioritizing, setting goals, teaching basic financial principles, saving, planning, and helping you to reach your own Financial Independence!

‎2012 is right around the corner, why not decide to get your finances in order for the new year? Start the year off right with a FREE FINANCIAL ANALYSIS????

Know who and how much you owe!
Know where your money goes!

... If you choose, I can show you how to get where you want to be!
Email or call for information...

personalfinance4thepeople@gmail.com
202-431-8008

...But I have Bad Credit (or No Credit)

Ok, so you have been working YOUR plan and planning YOUR work and are ready to tackle this pesky bad credit issue. Now what?

You have made a list of all your debts (from your credit report and the ones you know about); you have made your short, medium, and long term goals; you have started your Emergency Fund; you have made a budget that fits your needs; and you have paid off a huge chunk of your debts...

Most people are in debt because of credit cards because they don't know how to use them. Now you want to find and/or learn to use a credit card....to your advantage. There are some rules (some standard and some of my own) to follow to get the most out of your credit card experience.

Before I talk about finding the right card for you, let's talk about how to make your credit cards work for you....

Rule #1 - Credit cards are NOT for wants! Remember back when I wrote about Wants, Needs, and Needs to Wants? Well, CREDIT CARDS ARE NOT FOR WANTS OR NEEDS TO WANTS.

Rule #2 - Credit Cards should only be used as an Emergency Fund IF one doesn't exist. See Rule #1!

Rule #3 - Pay off the balance IN FULL every month. For brand new cards with no balance the BEST way to make the card work for you is to only use it once a month for a SMALL purchase, then pay off the balance immediately. This helps to build your history of making payments on revolving debt and builds your credit history. If you have a balance, STOP using the card! Pay the card according to the plan you developed. If you are using the snowball method and this card is at the top of your pay down list - throw as much money at it as possible, while paying the minimums on everything else.

Rule #4 - See Rule #1!

Now that you know the rules of credit card use, what types of cards are avaliable to you and what do you want them to do?

There are many different credit cards, that do many different things. Here is a quick run-down from http://www.creditcards.com/:

• Low Interest Credit Cards
  Credit cards with 0% intro APRs & low fixed rate offers
• Balance Transfer Cards
  Transfer a high interest balance onto a low APR credit card
• Rewards Credit Cards
  Credit cards that "reward" you for your purchases
• Cash Back Credit Cards
  Credit cards that allow you to earn cash back on purchases
• Airline Credit Cards
  Earn frequent flyer miles with an airline credit card
• Instant Approval Cards
  Get approved instantly on select credit cards from specific banks
• Prepaid & Debit Cards
  Control your spending with debit cards, prepaid debit cards, & prepaid credit cards
• Credit Cards for Bad Credit
  Cards for people with bad credit or less than perfect credit
• Student Credit Cards
  Credit cards for high school & college students
• Business Credit Cards
  Cards for corporate & small-business owners
• 0% APR Credit Cards
  Credit cards with 0% APR for 6 - 12 months on purchases or balance transfers

Let's focus on the Credit Cards for Bad Credit and the Prepaid & Debit Cards because we are trying to establish a good history of credit use and to do that we need the right card.

Credit Cards for Bad Credit (or No Credit):

The following Credit Cards and Prepaid Debit Cards, some of which are fee based, are for People with Bad Credit or less than perfect credit. Simply getting a credit card will not help you build, re-build or re-establish your credit history. Making on-time minimum payments with all of your creditors and maintaining your account balances below the credit limits is the key to changing your financial future. Choose from both secured and unsecured credit card.

What is the difference between Secured and Unsecured credit cards?

Secured

A secured credit card is a guaranteed VISA or MasterCard that has been secured by a deposit to the issuer's bank. Generally, you must deposit an amount, ranging from $300 to $5000, in a low-interest saving account or CD to secure the credit card. You then receive a credit line for up to 100 percent of your account balance. Each creditor has its own requirements for how much you can deposit for your credit line. The creditor issues you a credit card by using your deposit as security.

Unsecured

An unsecured credit cards offer just that -credit. When you make a purchase or withdraw cash (usually called a cash advance), funds are drawn from your "line of credit." You pay back the amount you borrowed or "charged" each month, or carry over to the next month (revolve) a certain amount that was borrowed and you are assessed an interest charge. You are then responsible to pay the interest charge as well. Credit cards carry a brand logo (e.g., Visa, MasterCard, American Express, etc.) and are accepted by participating merchants. When you use your credit card, the transaction requires a signature.


Debit Cards, Prepaid Debit Cards, & PrePaid Credit Cards

Prepaid debit cards and prepaid credit cards can help you control your spending. A reloadable debit card allows you to only spend up to the amount you have pre-deposited into the account. If you tend to overspend or would like to control your spending then a pre-paid debit card or prepaid credit card could be a good card for you.

When thinking about what type of card you need, think about your goals, priorities, and WILL POWER. Building or establishing credit is all about doing the right things and using the card in the right ways.

Remember to follow the rules and you will be fine....if you need help choosing the right card or learning how to use your card correctly, Personal Finance 4 The People is just an email away!

Personalfinance4thepeople@gmail.com

Improving Your Credit Score

Your Credit Score is probably the most important number associated with you. More important than your Social Security number, even. How can this be?

Your Credit Score tells things about you like if you are responsible, if you are a good person to loan money to, what your interest rate will be, if you will be hired for that big job. Your Credit Score is suppose to be gauge for risk factor for anyone who is going to be loaning you money, or even hiring you. Of course, there are circumstances when your score may be out of your control, but those moments are what we call life.

There are many reasons your score may not reflect you in a positive way. Medical bills and unpaid bills are 2 of the biggest reasons I have found to be an issue for most people. That, along with a lack of credit. Yup, not having "enough credit" is a bad thing too. To find that "perfect" balance, here are some tips:

- Pay your bills on time. Paying bills on time, for my clients, is often an issue because if they had the money to pay their bills on time they wouldn't need me. Paying your bills on time is important because it builds a history of being financially responsible. Even if you are only paying the minimum amount due, make sure it's on time. If you can't pay a bill on time, call and let the company know. They will probably work with you.




- Having a credit card is important in your Credit Score. Having a credit card does a couple things for you. Part of your credit score is HOW LONG you have had that card, your HISTORY of paying revolving debt, and your CREDIT-TO-DEBT RATIO. Your credit-to-debt ratio is how much avaliable credit you have compared to how much debt you have. Use your credit card for small purchases and try to pay the balance off every month. Most people carry a balance, so make sure you are paying, at least, the minimum payment due each month.





- Have an Emergency Fund. An emergency fund gives you room to live when life happens. An emergency fund stops the use of credit cards for emergencies. The emergency fund gives you room to breathe when something unexpected happens. A good rule is to start with a goal of $1,000 and work your way up to 6 months of BASIC expenses.





- Educate yourself. Learning the methods and tips of good financial habits is something most of us weren't taught growing up. There are too many personal finance blogs out there to use the excuse of not knowing better. There are too many people willing to help you learn the right things to do financially. You can only use the "I was never taught" excuse for so long before you have to teach yourself.





- Plan YOUR work! Work YOUR Plan! Sit down and develop a plan. Plan for things you want, for things you need, and for things you need to want. Have a plan A, B, C, even a plan Z if you need it.





- Check you credit report. You get one free report from each of the 3 companies once a year from the government at http://www.annualcreditreport.com/ . There are also other ways to keep an eye on your credit. Your bank might offer a service to monitor your credit, things like this usually come with a fee so keep that in mind.




These are small but important things you can do to make sure your credit is where you need it to be. You have a life to live, don't let your lack of financial knowledge keep you from living the life you want.

If you need assistance, contact us by email, Facebook, Twitter, Phone.

personalfinance4thepeople@gmail.com

http://www.facebook.com/#!/PF4TP

@peoplesfinance

202-431-8008



Errors on Your Credit Report?

One of the most important steps in starting your journey towards Financial Independence is to check your credit report. There are many places out there that claim to be free, but there is always a catch. The best and safest way to get a copy of your credit reports is to visit annualcreditreport.com. You can get a copy of your reports from the 3 agencies.



Once you have your reports, look them over for mistakes. Mistakes can be as damaging as negative marks on your credit. There are so many ways that incorrect information could be on your credit report such as identity theft, incorrect names and addresses, and debts incurred by others can sometimes show up on your reports. If you never check your report, you will never notice these mistakes and suffer the consequences.

After you view your reports and notice a mistake, there are steps you can take to dispute the information…



-- Put your dispute in writing and send it via snail mail to all the credit bureaus reporting the error (make sure to send COPIES; not originals of anything you send). Keep the original letters for your personal records and issue copies to the bureaus.

Here is a sample dispute letter from the Federal Trade Commission:

Sample Dispute Letter

Date
Your Name
Your Address, City, State, Zip Code
Complaint Department
Name of Company
Address
City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. I have circled the items I dispute on the attached copy of the report I received.
This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be removed (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records and court documents) supporting my position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,

Your name
Enclosures: (List what you are enclosing.)

-- The credit bureaus won't necessarily inform your creditor that you're disputing something it reported, like a claim that you didn't pay your bill. Send a return-receipt-requested letter to the company that reported the error to the credit bureaus.

-- You're entitled to the results of the investigation in writing and a free copy of your report if changes have been made, and it won't count toward your total of free annual reports. Know your rights: you can ask the credit bureau to send correction notices to anyone who received your report in the last six months, and the corrected copy can be sent to an employer who received a copy of your report over the past two years.

-- Make sure to request and keep a copy of a letter from the collection agencies incase record of your debt payments have been satisfied. Sometimes debts get sold and resold and without this proof, you will have problems proving you satisfied the debt.

It’s a good idea to either check all 3 bureaus once a year, or to spread them out and view one every 4 months.



When is the last time you checked your credit report?

Plan YOUR work! Work YOUR plan!

My personal and professional motto is Plan YOUR work! Work YOUR plan!

My dad tells me this all the time...and he got it from his mother. Everything I do in life, I try to have some sort of plan for every situation. I'm a Capricorn, It's in my nature to be a planner.

Planning is a great way to get out of debt and stay that way. You develop a plan to attack your debt, your budget, and your savings goals. You plan as best you can for emergencies. You plan for vacations. You plan for new clothes. You plan...

The plan always changes, so you can't take it personal. Keep planning until you find a plan that works best for you.



From the blog Cash The Checks, here are some ideas for your planning:

- Write down all of your debts. use your credit report as well as your statements to see what you owe. Write down who you owe, what kind of debt it is and the amount.

- Create a budget. In order to tackle your debt, you need to set money aside to pay it down. But first, you’ll need to see where your money is going to see how much you can contribute towards your debt.

- Be patient. While it may have taken 1 year to accumulate this debt, it can take you many more years to completely wipe it out. Don’t be discouraged. This plan you’re creating just proves that there is light at the end of the tunnel.

-Decide what to pay first. You’ll want to tackle your worst debts first. Try paying off those with the highest interest rate first. If you have some smaller debts, get rid of those as soon as you can too. This can have a psychological benefit and, if listed on your credit report, will have its status changed to paid which will raise your credit score.

- Savings. While the goal is to pay off your debt, you should not ignore your savings account. In fact, the lack of having any savings is likely the reason you’re in debt. Unless you keep your savings account funded you’ll just continue to rely on credit.

- Sell your stuff. We all have a lot of extra junk we don’t need. Now is the time to get rid of it. Have a yard sale. You can sell gold, sell diamonds and other jewelry. Put up your old electronics on eBay. You will declutter your home and make some money in the process.

Do you have a plan for your financial and personal lives?

Wednesday's Lunch Time Financial Time: How to Save Money in 20 Minutes

Each Wednesday, PF4TP brings you a financial tip to help you on your journey towards Financial Independence! Enjoy!

From Yahoo! Personal Finance - Organize Your Finances and Save Money in 20 Minutes

Five Financial Moves... to Make RIGHT NOW

There is never a better time to do anything, than RIGHT NOW...this goes for anything you have on your TO DO LIST. One area that you should really look at RIGHT NOW is your finances. Why wait to check in on your finances? All you are doing is delaying, and possibly worsening, the enviable.

Here is a short list that will give you a full look at your financial situation:

Review Your Credit Reports

The Fair Credit Reporting Act gives you the right to review your credit report every 12 months at each of the three credit bureaus (TransUnion, Equifax, Experian). Take advantage of it. Go to AnnualCreditReport.com and request your credit report so that you can review it for errors and omissions. Making sure your credit report is correct has a huge impact on your credit score, which is what lenders and other businesses use to decide whether or not, and at what cost, to do business with you. If you do find an error, report it to each of the bureaus as soon as possible since resolving it can take some time.

Start an Emergency Fund

If you don’t have a rainy day emergency fund, start one today. An emergency fund acts as a buffer in the event you experience a financial emergency, from an unexpected medical bill to a car repair to losing your job. Experts recommend that you keep a minimum of six months of expenses in a savings account, preferably an online savings account offering higher interest rates, for this purpose. If you are feeling conservative, you can always put a year’s worth of expenses in your emergency fund. Once you have the fund set up, you might consider laddering CDs to boost the interest rates even more. Remember, the purpose of this fund is to protect you in case something happens, it’s not designed to generate a lot of income.

Restructure Your Debts

If you’re currently battling debt, look to restructure it to either consolidate that debt or lower the interest rate. If it’s a double digit credit card debt you’re struggling with, consider doing a credit card balance transfer to give you a year or more to catch up on the balance. Compare the post-promotional APR to your current APR, along with your ability to pay, to see if this is a good deal. If not, consider joining a credit union and turning the high interest credit card debt into a lower interest personal loan. If that still isn’t an option, research peer to peer lending as it might be a way for you to trim the interest rate without much hassle.

Shop Around Everything

As I said in the beginning of this article, shop around every service you pay for, not just car insurance. Whenever my cable and internet contract expires, I always go back to the provider with competitive offers and request a reduction in my rates. It’s so much cheaper for them to charge me less than it is to find a new customer, especially after you consider what goes into getting a new customer.

Clean Your Financial House

Spend a few minutes each week just cleaning house, whether it’s closing dormant accounts to shredding documents you no longer need, keeping a tidy financial life is crucial to reducing mistakes. The last thing you want to have to deal with is a CP2000 letter from the IRS because you omitted a 1099-INT from a bank you forgot you had an account in.

Anatomy of a Credit Score

From Get Rich Slowly

Your credit score plays an increasingly important role in your financial health. But what is it? And how does it affect what you pay for loans and credit cards?

Your credit score is a single number that indicates your creditworthiness. This number is derived from various pieces of information contained in your credit report. Your credit report is accumulated by various credit agencies — credit card companies and banks and other financial institutions, who pass along information about how much you owe, how well you pay, and how long you’ve been a customer. Your credit score determines the types of credit you can obtain, and how much you will be charged in interest.



In general, your credit score is based on the following:

According to Fair Isaac, the company behind credit scores, these factors are accurate predictors of future credit performance. That is, these are the things that best indicate how great a credit risk you are. (For some people — such as young adults who don’t have a lengthy credit history — the importance of each category may be somewhat different.)



For more detailed information about the components of your credit score, check out the following pages at myFICO:

What’s in your score?
What’s not in your score?
Improving your FICO score.
myFICO states that the median credit score in the United States is 723: half of the population has a score of 723 or above, and half of the population has a score of 723 or below. myFICO also provides the following table, which indicates how your credit score affects what you pay for a loan:

For a $216,000 30-year, fixed rate mortgage:
If your FICO®
score is: Your interest
rate is: …and your monthly
payment is:

National interest rates as of 02 June 2006
760 – 850 6.33% $1,341
700 – 759 6.55% $1,373
680 – 699 6.73% $1,398
660 – 679 6.95% $1,429
640 – 659 7.38% $1,492
620 – 639 7.92% $1,573

How much can you save if your credit score is 760 instead of 699? In the example provided above, you would save $57/month on interest payments. That’s $684/year.

A recent federal law gives consumers access to their credit reports, however it costs extra to obtain your credit score. Your credit score is not an actual component of your credit report.

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months.

If you’d like, you can obtain reports from all three credit reporting agencies at once. Or, you can stagger your requests, possibly requesting one report every four months from a different agency. There are three ways to obtain your credit report:

Order it online at annualcreditreport.com.
Call 1-877-322-8228.
Complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.