I've been avoiding credit cards during the past year in an effort to eliminate most of my cards and bring the balances on my two remaining cards to 0. However, back around the middle of August, I got the idea to use my cash back credit card like a debit card. All the little things I purchase during the month go on the card, I carry very little cash. On my paydays, twice monthly, I go online and pay the balance on my card so I have nothing that carries over and charges interest to my account. So far I've earned about $13 and paid $0 in interest/fees. While this is not much in earnings, I wasn't earning anything from my debit card purchases, so I'm thinking it's a big improvement.
I wouldn't recommend this strategy to everyone. In my case, I have a low enough credit limit and enough money to pay off the balance even if I max out the card. So there is not much risk as far as running up debt and paying outrageous interest rates on charges carried from month to month. It definitely makes sense for me to use the card in this way. It's convenient, it's easy, it earns extra cash for me and as long as I pay the balance in full, it costs me nothing.
Showing posts with label credit cards. Show all posts
Showing posts with label credit cards. Show all posts
Saturday, November 19, 2011
Tuesday, March 8, 2011
INCOME TAX REFUND AND PAYING OFF DEBT
Unlike the title of this post may imply, I'm not using my tax refund to pay off old debt. Normally any tax refunds I'm lucky enough to get go directly to my investment accounts. This year, however, I'll be using at least part of my refund to build up my cash reserves and a small amount for new glasses. I'll still be investing at least 20% of my refund in dividend paying stock. Still working on rebuilding my regular investment account after paying off my medical bills.
As far as the old debt goes, I've been taking advantage of transfer checks from my two remaining credit cards to retire higher interest debt. Instead of paying 17.99% or 14.99% on the credit cards I've cancelled, I'm paying them off with transfer checks with 0% interest for the first 12 months. Twelve months is more than enough time for me to pay them completely off, so I'll be saving a great deal in interest. This has also allowed me to make larger payments on my remaining credit cards and reduce my outstanding credit at a faster pace, since I'm making payments on 2 bills instead of 4. Normally I don't advocate balance transfers, but if the offer saves you money, then it makes sense to take advantage of it.
As far as the old debt goes, I've been taking advantage of transfer checks from my two remaining credit cards to retire higher interest debt. Instead of paying 17.99% or 14.99% on the credit cards I've cancelled, I'm paying them off with transfer checks with 0% interest for the first 12 months. Twelve months is more than enough time for me to pay them completely off, so I'll be saving a great deal in interest. This has also allowed me to make larger payments on my remaining credit cards and reduce my outstanding credit at a faster pace, since I'm making payments on 2 bills instead of 4. Normally I don't advocate balance transfers, but if the offer saves you money, then it makes sense to take advantage of it.
Tuesday, January 5, 2010
Savings For the New Year
Just started my new job around the middle of October. Wasn't sure about it at first, but I've decided I really like working there. Guess they're happy with my work since they've already given me a raise. Still well below what I'm used to making, but I'm doing O.K.. With the raise in pay and rearranging some of my debt, I should be able to direct more cash towards my investment accounts. Still working on my goals for the year.
For the beginning of this year, it will help out that I've transferred some high interest debt from my old Chase credit card to a much lower interest rate card. I plan to make the same amount of payments each month, but since the interest rate is now 14% lower, I should have the debt paid off much sooner with a substantial savings on interest. I should be completely debt free by the end of 2010. Once my debt is paid off, I will divert the cash I now use for credit card payments towards building up my IRA account and my regular stock account.
Currently my stock accounts are performing well and the dividends increase month after month. Eventually my dividend income should outpace my earned income from work, but even now I'm feeling more financially free because I don't have to rely entirely on my paychecks anymore. Whether I work or not, I get paid every month of the year. Now it's just a matter of building those payments up by continuing my investment program. Although I do add to my accounts every month, it's also nice to know that even if I never invested another dollar, my accounts would continue to increase every month. My additional contributions accelerate the process and I find it's getting much easier to make more money with the stock market as I increase my knowledge about investing. My biggest regret is that I didn't start earlier in my working career.
For the beginning of this year, it will help out that I've transferred some high interest debt from my old Chase credit card to a much lower interest rate card. I plan to make the same amount of payments each month, but since the interest rate is now 14% lower, I should have the debt paid off much sooner with a substantial savings on interest. I should be completely debt free by the end of 2010. Once my debt is paid off, I will divert the cash I now use for credit card payments towards building up my IRA account and my regular stock account.
Currently my stock accounts are performing well and the dividends increase month after month. Eventually my dividend income should outpace my earned income from work, but even now I'm feeling more financially free because I don't have to rely entirely on my paychecks anymore. Whether I work or not, I get paid every month of the year. Now it's just a matter of building those payments up by continuing my investment program. Although I do add to my accounts every month, it's also nice to know that even if I never invested another dollar, my accounts would continue to increase every month. My additional contributions accelerate the process and I find it's getting much easier to make more money with the stock market as I increase my knowledge about investing. My biggest regret is that I didn't start earlier in my working career.
Tuesday, November 24, 2009
Happy Thanksgiving!
It's hard to believe it's Thanksgiving already and before we know it Christmas and New Years Day will be here. So I'll take this opportunity to wish everyone a Happy Thanksgiving! I guess I'm most thankful for being back at work. While my new job leaves a lot to be desired, I'm thankful for having a job at all, when so many people are unemployed.
Looking ahead to the new year, I'm working on my investment plan. I've decided to take advantage of the capital gains on some of my stocks and retire the remaining debt on my credit cards. At the same time I plan to sell some of the underperforming stocks in my personal portfolio and divert the cash to more shares in master limited partnerships. This should reduce my tax liability in the coming years, while increasing average monthly cash flow from dividends. The increased cash flow and reduction in taxes, should more than make up for the loss of dividends from the stocks I'm selling to pay off old credit card debt. I'm only keeping 2 credit cards and using them very sparingly. Maybe one of these days the credit card companies will come to their senses and if not I'll simply avoid doing business with them.
Back in August I wrote about some of my investments in Master Limited Partnerships (see: http://thebluecollarinvestor.blogspot.com/2009/08/mlps-start-paying-off.html) and how they were beginning to pay off. I've been very pleased with their performance and look forward to earning even more going forward. I really love the idea of tax advantaged income outside of my IRA account.
For the new year, I'm also looking in to starting a new business or possibly purchasing a business in partnership with some of my family members or friends. I am aware of the risks involved in starting a business, but I'm also well aware of the potential rewards if the business is successful. No concrete plans yet, but I'm definitely interested in starting a business of my own.
Looking ahead to the new year, I'm working on my investment plan. I've decided to take advantage of the capital gains on some of my stocks and retire the remaining debt on my credit cards. At the same time I plan to sell some of the underperforming stocks in my personal portfolio and divert the cash to more shares in master limited partnerships. This should reduce my tax liability in the coming years, while increasing average monthly cash flow from dividends. The increased cash flow and reduction in taxes, should more than make up for the loss of dividends from the stocks I'm selling to pay off old credit card debt. I'm only keeping 2 credit cards and using them very sparingly. Maybe one of these days the credit card companies will come to their senses and if not I'll simply avoid doing business with them.
Back in August I wrote about some of my investments in Master Limited Partnerships (see: http://thebluecollarinvestor.blogspot.com/2009/08/mlps-start-paying-off.html) and how they were beginning to pay off. I've been very pleased with their performance and look forward to earning even more going forward. I really love the idea of tax advantaged income outside of my IRA account.
For the new year, I'm also looking in to starting a new business or possibly purchasing a business in partnership with some of my family members or friends. I am aware of the risks involved in starting a business, but I'm also well aware of the potential rewards if the business is successful. No concrete plans yet, but I'm definitely interested in starting a business of my own.
Wednesday, October 14, 2009
Why I Think JPMorgan Chase is a Bad Investment
JPMorgan Chase, the first major bank to report third-quarter earnings, stoked the market's optimism as it handily beat Wall Street's expectations, reporting a profit of $3.59 billion for the July-September period. The bank also achieved record year-to-date revenue.
Their earnings report helped boost the stock market and I'm sure their shareholders are pleased, but it didn't come as any surprise to me. In fact, I'd have been surprised if they hadn't had a good earnings report. You see I was one of the unfortunate people who became a credit card customer of Chase when they bought out Washington Mutual. I had two cards with Washington Mutual and had been a happy customer of theirs for years. Then Chase took over. Almost as soon as they took over, I received letters regarding both of my accounts, telling me my interest rates were being increased. So I got on the phone and talked to their customer service. I pointed out that I had never been late with a payment, always paid more than the minimum and questioned why my rates were being increased. It turns out that the rate increases had nothing to do with my credit rating, the reason they increased the interest rates was to increase the profitability on my accounts. O.K. Not something I wanted to hear, but I figured I would just pay the accounts off and wait until they came to their senses and offered me a reasonable interest rate, before I would use the cards again.
A few weeks later I get another notice in the mail telling me my rates are being increased to nearly 30%. That's when I decided to decline their offer and cancelled both of my cards. So, why do I think JPMorgan Chase is a bad investment.
First: Their customer service, in my opinion, is atrocious. They did not care that I had been a good customer with a proven payment record. They made no effort to keep me as a customer. They only cared about making more money off me. When you're running a business that relies on customer satisfaction and you carelessly disregard dissatisfied customers, your business is doomed to dwindle, if not fail altogether.
Secondly: While their profits are up now, I believe that it is largely a result of extreme rate increases to credit card customers like myself, who will eventually do like I've done and stop doing business with Chase bank entirely. I will NEVER do ANY business with this bank again! And I know a lot of other Chase customers who have had the same experience and feel the same way. So they are bound to see a dramatic drop in credit card business, which they may never be able to recover. With that in mind, it's my opinion that JPMorgan Chase would make a very poor long term investment.
Their earnings report helped boost the stock market and I'm sure their shareholders are pleased, but it didn't come as any surprise to me. In fact, I'd have been surprised if they hadn't had a good earnings report. You see I was one of the unfortunate people who became a credit card customer of Chase when they bought out Washington Mutual. I had two cards with Washington Mutual and had been a happy customer of theirs for years. Then Chase took over. Almost as soon as they took over, I received letters regarding both of my accounts, telling me my interest rates were being increased. So I got on the phone and talked to their customer service. I pointed out that I had never been late with a payment, always paid more than the minimum and questioned why my rates were being increased. It turns out that the rate increases had nothing to do with my credit rating, the reason they increased the interest rates was to increase the profitability on my accounts. O.K. Not something I wanted to hear, but I figured I would just pay the accounts off and wait until they came to their senses and offered me a reasonable interest rate, before I would use the cards again.
A few weeks later I get another notice in the mail telling me my rates are being increased to nearly 30%. That's when I decided to decline their offer and cancelled both of my cards. So, why do I think JPMorgan Chase is a bad investment.
First: Their customer service, in my opinion, is atrocious. They did not care that I had been a good customer with a proven payment record. They made no effort to keep me as a customer. They only cared about making more money off me. When you're running a business that relies on customer satisfaction and you carelessly disregard dissatisfied customers, your business is doomed to dwindle, if not fail altogether.
Secondly: While their profits are up now, I believe that it is largely a result of extreme rate increases to credit card customers like myself, who will eventually do like I've done and stop doing business with Chase bank entirely. I will NEVER do ANY business with this bank again! And I know a lot of other Chase customers who have had the same experience and feel the same way. So they are bound to see a dramatic drop in credit card business, which they may never be able to recover. With that in mind, it's my opinion that JPMorgan Chase would make a very poor long term investment.
Friday, September 25, 2009
Week In Review
At this point, it looks like both my stock portfolios will end down for the week. Although I'm still up quite a bit for the year on my IRA, I haven't quite regained all I lost on my taxable stock portfolio. Even though the total dollar value is 40% higher than last year, the increased value represents profits from stock trades since the first of this year, and extra cash added to my stock account.
The biggest change I've made in the past 30 days would be to add a shares of a Canadian Energy trust and a Real Estate investment trust, both of which pay dividends on a monthly instead of quarterly basis. Both appear to be solid companies and I think they'll work well towards reaching my goal of boosting monthly cash flows from dividends. I've noticed a lot of getting ahead in investing is all about cash flow. How quickly you turn over your money. When you pay out your cash to purchase shares of an investment, the quicker you get your money back, the better. That's why I love dividend stocks, because as long as the company is solid, you can look forward to a steady stream of dividend income for years and years to come. I could be perfectly satisfied with holding my stocks till the day I die, as long as the dividends keep rolling in.
Looking ahead, for the next couple of months, I'll be adding to my AT&T and BP stakes in my IRA account and will probably purchase more shares of PGH for my taxable portfolio. Nothing new on the job front, but I have been getting more responses to applications, so that's encouraging. Still working on eliminating my remaining credit card debt. Because of increased interest rates, I have canceled all but 2 of my credit cards and don't intend to take out any new ones. I think the credit card companies have all lost their minds recently and until I see some better offers, I'm avoiding using them all together.
I'm beginning to believe things are picking up with the economy, more in spite of, rather than because of recent government efforts. In the end, I believe legislation passed since the first of this year will ultimately lead to higher taxes than we've ever seen and create a tremendous drag on the economy. Just have to wait and see how it all plays out.
The biggest change I've made in the past 30 days would be to add a shares of a Canadian Energy trust and a Real Estate investment trust, both of which pay dividends on a monthly instead of quarterly basis. Both appear to be solid companies and I think they'll work well towards reaching my goal of boosting monthly cash flows from dividends. I've noticed a lot of getting ahead in investing is all about cash flow. How quickly you turn over your money. When you pay out your cash to purchase shares of an investment, the quicker you get your money back, the better. That's why I love dividend stocks, because as long as the company is solid, you can look forward to a steady stream of dividend income for years and years to come. I could be perfectly satisfied with holding my stocks till the day I die, as long as the dividends keep rolling in.
Looking ahead, for the next couple of months, I'll be adding to my AT&T and BP stakes in my IRA account and will probably purchase more shares of PGH for my taxable portfolio. Nothing new on the job front, but I have been getting more responses to applications, so that's encouraging. Still working on eliminating my remaining credit card debt. Because of increased interest rates, I have canceled all but 2 of my credit cards and don't intend to take out any new ones. I think the credit card companies have all lost their minds recently and until I see some better offers, I'm avoiding using them all together.
I'm beginning to believe things are picking up with the economy, more in spite of, rather than because of recent government efforts. In the end, I believe legislation passed since the first of this year will ultimately lead to higher taxes than we've ever seen and create a tremendous drag on the economy. Just have to wait and see how it all plays out.
Tuesday, September 1, 2009
Watch Those Credit Cards!
My sister called yesterday to tell me about her latest experience with the credit card companies. She got a letter from one card company Saturday, saying that her introductory rate ended on July 31st and her new rate zoomed to over 21%. Here's the kicker though, she got the letter August 29th and it stated in the letter that her new interest rate was effective July 31st. She is reporting them to the Better Business Bureau. I told her she should collect her cash back, transfer the balance to a lower interest card and cancel the card!
I cancelled all my accounts with the card companies who've decided that they don't care about my business any more. If they are raising rates to usurious levels, then it's time to let them go. It is possible some of these banks could make good investments, since their profits will most likely shoot up from this type of unscrupulous banking, but in the end it will most likely lead to a consumer backlash, so I won't be putting any money in bank stocks. I do still own stock in two banks, New York Bank Corp and Merchants Bank of Vermont. They are both long time holdings in my regular stock portfolio.
In the news, stock futures are down, Madoff's beach house is up for sale and the Chinese are on a spending spree for luxury items in London. I liked the comment from one Chinese tourist when she said they were, "looking for branded high quality merchandise." Apparently they don't want the cheap stuff made in China.
I cancelled all my accounts with the card companies who've decided that they don't care about my business any more. If they are raising rates to usurious levels, then it's time to let them go. It is possible some of these banks could make good investments, since their profits will most likely shoot up from this type of unscrupulous banking, but in the end it will most likely lead to a consumer backlash, so I won't be putting any money in bank stocks. I do still own stock in two banks, New York Bank Corp and Merchants Bank of Vermont. They are both long time holdings in my regular stock portfolio.
In the news, stock futures are down, Madoff's beach house is up for sale and the Chinese are on a spending spree for luxury items in London. I liked the comment from one Chinese tourist when she said they were, "looking for branded high quality merchandise." Apparently they don't want the cheap stuff made in China.
Monday, August 17, 2009
MY FAVORITE QUOTE OF THE DAY!
My favorite quote for the day comes from an article in USA Today's Money section. In an article entitled:
Review: Americans' appetite for debt did them in.
They quote Charles R. Geisst, a Manhattan College finance professor and former investment banker, when talking about "craven financial firms making euphamistic lures to consumers."
"A credit card offers $10,000 of credit, not debt. It has a friendlier ring," he writes.
If we all switched to thinking "debt cards" or "debt limits", instead of credit cards and credit limits, I believe we'd be a lot less likely to use them. It's easy to say, "I'll put it on my credit card." But wouldn't you think twice if you said to yourself, "I could add it to my debt?"
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Review: Americans' appetite for debt did them in.
They quote Charles R. Geisst, a Manhattan College finance professor and former investment banker, when talking about "craven financial firms making euphamistic lures to consumers."
"A credit card offers $10,000 of credit, not debt. It has a friendlier ring," he writes.
If we all switched to thinking "debt cards" or "debt limits", instead of credit cards and credit limits, I believe we'd be a lot less likely to use them. It's easy to say, "I'll put it on my credit card." But wouldn't you think twice if you said to yourself, "I could add it to my debt?"
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Friday, August 7, 2009
Check Those Credit Card Statements!
Paying bills is something that nobody likes to do. It's one of those things we just want to get out of the way. So we often look at how much is owed, write a check or pay online, and forget about it. But when it comes to credit card bills, that's not such a good strategy. Credit card statements detail each and every charge we've made since the last statement. If you don't carefully go over the charges on your bill, you could end up paying more than you actually owe.
Some things to look for on your statements:
Watch for charges that you didn't authorize. If your card is not with you at all times, someone could have used it without your permission. And even if you haven't lost your card, someone could have fraudulently obtained and used your card number. Compare your charges with your receipts. Mistakes happen, and you could have been charged an incorrect amount. Look for double charges. Equipment malfunctions or cashier errors can cause a charge to go through twice. Unscrupulous employees or companies may also make duplicate charges on purpose. Review charges imposed by the creditor, such as interest, fees and credit insurance. If you see anything suspicious, check the cardholder agreement to make sure the charge is legitimate.
If you find a mistake:
When you find an error on your credit card statement, it's important to report it quickly. If it's the result of fraud, notifying the creditor can prevent further misuse. And in any case, cardholders must act within a reasonable amount of time in order to be protected by law. The Fair Credit Billing Act (FCBA) states that cardholders must report billing errors in writing within 60 days from the date the first statement containing said error was mailed. If they do so, the creditor must either correct the mistake or prove that the charge is legitimate within two billing cycles. If the charges were not authorized by the cardholder, he may be held liable for no more than the first $50.
A phone call to your creditor can be helpful if you have questions about a particular charge. And in the case of unauthorized charges, a customer service representative can tell you if other charges have been made since the statement was prepared. But if there is an error, notifying the card issuer in writing is a must. Otherwise, you may have no legal recourse if they refuse to make a correction. Checking your credit card bill doesn't take long. If you keep your receipts organized, you can verify the charges in just a few minutes. And those few minutes could potentially save you a great deal of money.
Some things to look for on your statements:
Watch for charges that you didn't authorize. If your card is not with you at all times, someone could have used it without your permission. And even if you haven't lost your card, someone could have fraudulently obtained and used your card number. Compare your charges with your receipts. Mistakes happen, and you could have been charged an incorrect amount. Look for double charges. Equipment malfunctions or cashier errors can cause a charge to go through twice. Unscrupulous employees or companies may also make duplicate charges on purpose. Review charges imposed by the creditor, such as interest, fees and credit insurance. If you see anything suspicious, check the cardholder agreement to make sure the charge is legitimate.
If you find a mistake:
When you find an error on your credit card statement, it's important to report it quickly. If it's the result of fraud, notifying the creditor can prevent further misuse. And in any case, cardholders must act within a reasonable amount of time in order to be protected by law. The Fair Credit Billing Act (FCBA) states that cardholders must report billing errors in writing within 60 days from the date the first statement containing said error was mailed. If they do so, the creditor must either correct the mistake or prove that the charge is legitimate within two billing cycles. If the charges were not authorized by the cardholder, he may be held liable for no more than the first $50.
A phone call to your creditor can be helpful if you have questions about a particular charge. And in the case of unauthorized charges, a customer service representative can tell you if other charges have been made since the statement was prepared. But if there is an error, notifying the card issuer in writing is a must. Otherwise, you may have no legal recourse if they refuse to make a correction. Checking your credit card bill doesn't take long. If you keep your receipts organized, you can verify the charges in just a few minutes. And those few minutes could potentially save you a great deal of money.
Thursday, August 6, 2009
Update on Personal Financial Situation
The stock market took a breather today, both of my accounts are down just a bit. Not really a bad thing as far as I'm concerned, since I'm still in the buying phase. I'd like to see the market level off or even drop back down a bit, so I could add to my holdings at the lower prices.
My IRA is set up for automatic investments each month. On the second Tuesday of every month I purchase more shares of stock for my retirement portfolio. This month I will be adding to my AT&T holdings. I own shares of AT&T in both of my accounts. I think their dividend is stable and I'm with them for the long haul.
Other investments in my IRA include British Petroleum (BP), Universal Insurance (UVE), AFLAC (AFL), Great Plains Energy (GXP), S&P 500 Index SPDR (SPY). Since opening the account in December of 2008, my holdings are up by 23.39%. Not a bad return! Just wish I could say the same for my taxable investment account. Still down some on that account, although the total dollar amount has increased. I've actually surpassed my investment goal for the year, so I've had to set the bar a little higher.
I've also been holding extra cash while continuing my job search, just in case I would need it for some reason. I've been able to accumulate the cash by cutting spending to the bare necessities. It's worked so well, I'm thinking that I may just keep it up when I return to work, just to build my investments more rapidly.
My total credit balances continue to decrease. I cancelled 2 of my credit cards to avoid extreme increases in the interest rates. Will probably cancel at least one more as soon as it's paid off. I've decided I really don't need more than 2 credit cards and plan on using them sparingly when the balances are paid. I really haven't been using my cards at all since being off work, just keep paying down the balances and paying cash for everything.
Given the crazy market and economic situation for the first half of 2009, I very happy with my finances right now. If the market continues to improve during the second half of the year, I should be in pretty good standing by the start of 2010.
My IRA is set up for automatic investments each month. On the second Tuesday of every month I purchase more shares of stock for my retirement portfolio. This month I will be adding to my AT&T holdings. I own shares of AT&T in both of my accounts. I think their dividend is stable and I'm with them for the long haul.
Other investments in my IRA include British Petroleum (BP), Universal Insurance (UVE), AFLAC (AFL), Great Plains Energy (GXP), S&P 500 Index SPDR (SPY). Since opening the account in December of 2008, my holdings are up by 23.39%. Not a bad return! Just wish I could say the same for my taxable investment account. Still down some on that account, although the total dollar amount has increased. I've actually surpassed my investment goal for the year, so I've had to set the bar a little higher.
I've also been holding extra cash while continuing my job search, just in case I would need it for some reason. I've been able to accumulate the cash by cutting spending to the bare necessities. It's worked so well, I'm thinking that I may just keep it up when I return to work, just to build my investments more rapidly.
My total credit balances continue to decrease. I cancelled 2 of my credit cards to avoid extreme increases in the interest rates. Will probably cancel at least one more as soon as it's paid off. I've decided I really don't need more than 2 credit cards and plan on using them sparingly when the balances are paid. I really haven't been using my cards at all since being off work, just keep paying down the balances and paying cash for everything.
Given the crazy market and economic situation for the first half of 2009, I very happy with my finances right now. If the market continues to improve during the second half of the year, I should be in pretty good standing by the start of 2010.
Friday, July 10, 2009
Fixing Your Credit Score
You don't need to hire anyone to fix your credit. It's one of those things that, if you want it done right, it's better to do it yourself. The best way to improve your credit score is to pay everything on time, every time and reduce your account balances as rapidly as possible. Then it's just a matter of time before your credit improves.
A couple more things to keep in mind, credit agencies like to see a variety of credit. They want to know that you're capable of handling all types of borrowing and that you are responsible with your money. So it's better to have a mix of revolving credit, secured debt like mortgages or car loans and student loans. Then too, the longer your credit history, the better. As you pay off your credit cards, don't cancel the cards, just stop using them. The available unused credit and the amount of time you've had your card, will help improve your credit score.
Last, but not least, you need to use credit to build credit. I had a friend who was turned down for a mortgage, even though she and her husband both had well paying jobs, thousands in savings and no debt. The problem was, they never used credit cards or took out loans for anything, so they had no credit history at all. You don't have to carry balances on your credit cards, but you do need to use them to build up your credit history.
One thing everyone should do is, review their credit reports annually. You can get a free copy of your credit report once a year from the three major credit reporting agencies by visiting:
http://www.annualcreditreport.com/
A couple more things to keep in mind, credit agencies like to see a variety of credit. They want to know that you're capable of handling all types of borrowing and that you are responsible with your money. So it's better to have a mix of revolving credit, secured debt like mortgages or car loans and student loans. Then too, the longer your credit history, the better. As you pay off your credit cards, don't cancel the cards, just stop using them. The available unused credit and the amount of time you've had your card, will help improve your credit score.
Last, but not least, you need to use credit to build credit. I had a friend who was turned down for a mortgage, even though she and her husband both had well paying jobs, thousands in savings and no debt. The problem was, they never used credit cards or took out loans for anything, so they had no credit history at all. You don't have to carry balances on your credit cards, but you do need to use them to build up your credit history.
One thing everyone should do is, review their credit reports annually. You can get a free copy of your credit report once a year from the three major credit reporting agencies by visiting:
http://www.annualcreditreport.com/
Sunday, May 31, 2009
An Easy Extra $39,000 For Retirement!!!
A few days ago I wrote about the credit card companies who seem to be on a spree to fleece Americans out of even more of their hard earned money. To give myself and some of my readers a little more incentive to pay off the charge card balances, I figured up how much extra money I would have for retirement if I pay off my cards and divert all the money I currently spend on credit card payments to a simple, no interest account.
For the past several months, I have paid an average of $250 per month in credit card payments. Depending on your current credit card debt, this may sound like a great deal, or not much. At any rate, when I finally have my balances paid in full, I plan to divert this money to my investment account. I also plan on working for at least another 13 years. So $250 per month times 12 months comes to $3,000 per year. Multiply $3,000 per year times 13 years and it comes out to a whopping $39,000. Since I'm currently paying this money out every month, I won't miss it if I continue paying it to myself after I pay off my credit cards. The $39,000 total is the amount I would have in 13 years if I simply put the money in a non-interest bearing account. How much will it be in an interest bearing account or if I invest it in stocks? I'm thinking it could add substantially to my retirement.
Now let's add in the money I'm saving by not smoking. (I quit 5 weeks ago) On average I spent $80 per month on cigarettes, was never really a heavy smoker. $80 times 12 months equals $960 per year. $960 times 13 years comes to $12,480. Add the $12, 480 to the $39,000 from above and it comes to an astounding $51,480!!!
Just a little thought and a few minor changes to our lifestyles now, can make a BIG BIG difference when it comes to retirement.
For the past several months, I have paid an average of $250 per month in credit card payments. Depending on your current credit card debt, this may sound like a great deal, or not much. At any rate, when I finally have my balances paid in full, I plan to divert this money to my investment account. I also plan on working for at least another 13 years. So $250 per month times 12 months comes to $3,000 per year. Multiply $3,000 per year times 13 years and it comes out to a whopping $39,000. Since I'm currently paying this money out every month, I won't miss it if I continue paying it to myself after I pay off my credit cards. The $39,000 total is the amount I would have in 13 years if I simply put the money in a non-interest bearing account. How much will it be in an interest bearing account or if I invest it in stocks? I'm thinking it could add substantially to my retirement.
Now let's add in the money I'm saving by not smoking. (I quit 5 weeks ago) On average I spent $80 per month on cigarettes, was never really a heavy smoker. $80 times 12 months equals $960 per year. $960 times 13 years comes to $12,480. Add the $12, 480 to the $39,000 from above and it comes to an astounding $51,480!!!
Just a little thought and a few minor changes to our lifestyles now, can make a BIG BIG difference when it comes to retirement.
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