Your credit rating should not be taken lightly, it is serious business.   Your credit rating will determine the services you qualify for and what  you will pay for those services.  Lenders, landlords and employers use credit scores to evaluate you as a potential customer or employee.    If you have a credit score that is 750 or higher, you may qualify for lower interest rates on loans, pay lower insurance premiums and maybe have employment opportunities that you otherwise would not qualify for.     Tips or suggestions are always helpful when you are trying to repair or improve your credit score and get a better credit rating.   Credit restoration can be an intense process but it does not have to be;  follow these 14 tips and your credit improvement process will go a lot smoother.

Tip #1:  Paying your credit card balances in full every month will help improve your credit rating.

• You are establishing your track record and spending patterns.
• Payment history makes up the largest percentage of your credit scores.

Why: By paying your credit card balance in full every month instead of paying the “minimum amount due” creditors grade you as a good risk.   As a good risk you will enjoy the benefits of lower interest rates on loans,  lower down payment requirements, paying lower rates on utilities and online banking advantages.   Paying your credit card in full every month shows creditors that you are financially responsible because you spend within your means and can manage money.  It also shows that you can handle debt.

Tip #2:  Keeping your credit card balances low will assist in credit improvement.

• Your credit card balance compared to the amount of credit available to you is called your credit utilization ratio.
• If your total outstanding debt is $3000 and you have $30,000 of credit available to you; you have a credit utilization rate of 10%.
• The financial industry considers 10% a good benchmark for a credit utilization ratio.

Why: A low ratio is good because it raises your credit score.   A low ratio shows that you use a smaller amount of credit than is made available to you; which shows that you are financially responsible.   The benefit is that when you apply for credit or loans, you will not be turned down and you will get the better rates.    One good way to keep this credit utilization ratio low is by keeping your credit card balances low.

Tip #3: To help restore your credit scores: limit how often you use your credit cards.

• Keep credit card use to a minimum.
• Limited use of your credit cards will help to keep your credit utilization ratio low.

Why: If you are trying to restore your credit, the over use of credit cards is bad business because you just dig yourself deeper into debt.   To improve credit you need to work on getting out of debt not increasing your debt.

Tip #4: To help build up your credit reports: limit the number of credit cards you have.

• Your credit score drops when you have too many outstanding credit cards.
• You are considered a high risk when you have too many credit cards.

Why: When you have too many credit cards your credit score drops because creditors think you are more likely to pay late or not at all.   If creditors predict that you are more likely to stiff them vs pay them, you are branded as a high risk.   Once you get the black mark of high risk you will pay higher interest rates on loans; you may be forced to have a co-signer on your loans and even have to make larger down payments.   Having too many credit cards is bad news.

Tip #5:  To save money and work on building your credit: avoid spending up to your credit card limits.

• The amount of credit available to you compared to the amount of credit you actually use makes up the second largest portion of your credit score.
• The interest rate a credit card company is allowed to charge you for maxing out your limits can be as high as 30%.

Why: When a credit card is issued it comes with credit limits.   Your credit score drops when you use the entire credit limit of your credit card because creditors predict that you will be a risky customer.    So if you are working on building a good credit rating, maxing out your credit limit works against you.   Keep your credit card balance below 10% of your credit card limit, this is the industry bench mark.

Tip #6:  The best way to rebuild your credit: pay your credit cards on time every month.

• Credit scores range from 300 to 850.
• 300 is considered a very poor credit score.  750 is a good credit score.   850 is a perfect credit score.
• Late payments can lower your credit score by as much as 100 points.

Why: Your payment history makes up the largest percentage of your credit score.   When you consistently make your payments late, you lower your score.   Just one 30 or 60 day late pay only damages your credit temporarily.   But if you become a repeat offender and continually make your payments over 30-60 days late, you permanently damage your credit.   Just one late payment over 90 days late damages your credit score for 7 years.   The black mark on your credit from one payment made over 180 days late stays on your credit report for 7 years because creditors charge it off and send it to a collection agency.

In addition to lowering your credit score from repeatedly making late payments, you will be:   charged late fees ranging from $35 - $40 each month you are late; your minimum payment may be increased or even doubled; and you could be charged the default interest rates ranging from 30% – 35%.

Tip #7: Order a credit report once a year to monitor your credit rating.

• Under federal law you have the right to a free copy of your credit report once a year.
• You can get your free copy by going to the websites of the 3 national credit bureaus.

Why: Reviewing your credit report on an annual basis helps you stay in tune with your personal  credit accounts, your credit report, credit rating and credit score.    You want to stay current so that you can catch any mistakes within a 12 month time period vs a 24 month or 36 month time frame.   The longer you take to correct an error, the more damaging it will be to your credit rating over the long-term.

Tip #8: Check the credit report for errors.

• Errors can damage your credit score by 100-200 points so you need to fix the mistakes as quickly as you can.
• If you find errors in the data, notify the 3 national credit bureaus in writing with copies of statements, cancelled checks plus any other information that supports your dispute.
• Go to the credit bureaus’ websites for additional detailed information on the process for starting a dispute.
• The credit bureaus’ have 30 days to investigate.

Why: Almost one-third of credit reports have serious errors.   Credit bureaus do not verify the information they receive, they simply report it.   Information can get reported inaccurately; maybe an account got marked delinquent when it was not or there is a misstatement on the size of a credit line or outdated information is being reported.   Regardless of the type of error, it is your responsibility to dispute and correct any errors you may find on your credit report.

Tip #9: To improve your payment history: get current with past due bills.

• Getting out of debt helps to rebuild your credit scores and credit ratings.
• You want your accounts to say “current” or “paid”.
• You do not want the accounts to say “late” or “delinquent”.

Why: Since payment history makes up the largest portion of your credit score, decreasing your outstanding debt helps you to improve your credit rating.    If your report reads “current” or “paid” your credit score will not be damaged;   but if it reads “late” or “delinquent” your credit score will drop.   If a creditor has to write off your unpaid balance, your credit rating takes a big drop.   Paying 90 days late is considered a major delinquency and will damage your credit for 7 years.   Consistently paying 30 or 60 days late permanently damages your credit score.

Tip #10: Do not close out unused credit cards.

• Closing out credit cards can raise your credit utilization ratio.
• Closing credit card accounts does not raise your credit score.
• Outstanding balances do not disappear when you close a credit card.
• A delinquent mark on your credit card does not get erased if you close a credit card account.

Why: Part of your credit score is based on your credit utilization ratio and for that ratio to work to your advantage, you need high credit limits to off set your credit card balances.  If you close credit cards, the limits from those closed cards are not included in the equation used to calculate your utilization ratio so you have less of an off set.   Credit limits help to lower your utilization ratio.   Closing credit cards that you no longer use will drop your credit scores.

Tip #11: Credit repairs begin with: knowing your credit card limits and staying below those limits.

• Exceeding your credit limits will lower your credit score.
• Exceeding your credit limits can also get very expensive.
• When you spend above your credit limits you can be charged interest rates as high as 30%.
• When you spend over your credit limits a credit card company can charge you a fee for each billing cycle that you have a balance that is over your limit.   These fees can range from $30 – $40.

Why: When you exceed your credit card limits you send a signal to creditors that you have taken on too much debt, probably more than you can handle.   When you spend up to the credit card limit finance charges could push your account balance over the credit card limit pushing you into exceeding your credit limits.   This then allows the credit card company the opportunity to not only charge you higher interest rates but also a fee for each billing cycle that your balance is over the card limit.

Tip #12:  Report missing credit cards as fast as you can.

• If your credit card is lost or stolen reporting it immediately is critical.
• Report lost or stolen credit cards to the 3 national credit bureaus.
• Have a fraud alert placed on your credit cards.
• Call the credit card company of the missing credit card to cancel the card; and verify with them that you are not responsible for any fraudulent charges that may occur.

Why: Credit card fraud can be extremely damaging when you are rebuilding or repairing your credit.   Your credit report does not distinguish between charges made on your credit cards by yourself or by an imposter.   Activity on your credit cards gets reported to the credit bureaus regardless of whether it is accurate or not.   And your credit report is just a collection of data.   The credit bureaus do not review or analyze information, they just report information.   So the sooner you report a missing credit card, the quicker a fraud alert can be placed on your card and less bad information will be reported to the credit bureaus.

Tip #13: Pay ALL bills payments on time.

• Your auto loans, mortgage or rent, student loan, utilities, cell phone bill.
• Your credit score analyzes all payments not just credit card payments.

Why: The credit bureaus compile your payment history, assign it a numerical value (credit score), summarize it (credit report) and then lenders, landlords and employers use it to evaluate your financial discipline.   The payment history in that credit report  reflects your payment history for all of your credit accounts, your auto loans, mortgage, student loans and credit cards.     One of the best ways to maintain, develop or rebuild good credit is to have the discipline to make all payments on time.

Tip #14:  Some mistakes damage your credit for years.

• Charge-offs stay on your credit report for 7 years.
• Collections damage your credit report for 7 years.
• Bankruptcies stay on your credit report for 10 – 15 years.
• Foreclosures stay on for 7 years.
• Tax liens stay on for 10 – 15 years.
• Lawsuits stay on for 7 years from the date of filing.

Why: Repairing, building and improving your credit score is hard enough, why add 7 – 15 additional years of stress and grief.  Charge-offs, collections, bankruptcies, foreclosures, tax liens and lawsuits have such a negative impact on your credit.   With those mistakes on your credit report you may have a difficult time renting an apartment or buying a house, taking out an auto or student loan and may be even your ability to get a job could be impaired.    Stay clear of those mistakes, they will change your life forever.

Related Posts:

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2. Your Habits Are Giving You Bad Credit
3. Tips On Credit Damage From Late Payments

How do you know if you need life insurance?  If you do not want your family to be burdened with your debts in the event that you tragically die unexpectedly, you need life insurance.   If you want your loved ones to be free from all financial burdens upon your death, you need life insurance.

Life insurance should actually be called love insurance.   If you love your family, you buy life insurance to protect them financially in the event of your untimely death.    If you love your family, you buy life insurance so that the money from the life insurance policy will cover those expenses that you planned for plus those expenses that you could not anticipate.

Do you know what expenses your family will be left to cover if you do not have life insurance?   If you don’t know, you should.  See the following detailed list of reasons why you personally need life insurance.

Reason #1 for Life Insurance – Funeral Expenses.

• Funeral expenses can start at $7000.  Most individuals do not have $7000 immediately available.   Life insurance is most often used to pay for funeral expenses because the life insurance policy is an immediate source of funds.
• There are many companies that your loved ones will have to work with in the event of your death (funeral home, flowers, etc). These companies can sometimes set up payment plans; but they generally need payment for their services as soon as those services are rendered.
• Do the right thing, buy enough life insurance to cover for funeral expenses, so your family is not left in a financial bind.

Reason # 2 – To Pay off your Mortgage.

• Anyone who has a mortgage is well advised to have enough life insurance to pay off the mortgage in case of an untimely death.
• Without life insurance coverage, your loved ones are burdened with the mortgage payment, which they may not be able to afford, in which case they lose the home to foreclosure.
• If you die, unfortunately,  the mortgage company doesn’t waive your mortgage payment, mortgage company’s still need their payments; if they don’t get the payment, they take the house.
• Do the right thing, buy enough life insurance to pay for your mortgage, so your loved ones do not lose their home.

Reason #3 – To Cover Domestic Tasks.

• Parents need life insurance to pay someone to perform their tasks if they die prematurely.
• Stay at home parents or working parents perform certain tasks for the family and have certain responsibilities and that value would have to be replaced.
• If there are children involved, someone would have to be hired to cook, clean, shop, usher the children around, plus other domestic tasks that are handled by parents of the household. These duties do not just disappear because one parent dies.

Reason #4 – To Raise Your Children.

• Parents need to raise the children even if one of the parents tragically dies unexpectedly.
• If the deceased parent was a bread-winner of the family, life insurance could replace the income lost on account of their death.   Life insurance to cover the lost income is especially critical if there are young children involved.

Reason #5 – To Pay off Outstanding Debts.

• If you are in debt  -  you need life insurance.   You know your own debts….it can be from student loans, auto loans or home equity loans.     The debt could also be from credit card balances.   If you do not provide your loved ones with the money to pay off these debts, they could be saddled with that debt.
• Unless your loved ones are co-owners or co-signers on your  loans or credit cards, they are not directly responsible for it.   But the creditors could then get their money by deducting it from your estate assets; so either way, your loved ones will pay for the debt.
• Do the right thing – buy enough life insurance to cover your debts.

Reason #6 – Current College Debt/Future College Costs.

• You may personally have some outstanding college debt.    Life insurance will pay off that debt if you should die while it is still outstanding.   Some college debt can be quite substantial; you need life insurance to spare your loved ones the financial burden of that debt.
• If you have growing children you need life insurance to pay for the child’s educational expenses through their college years.
• You can buy a “term” policy on yourself with a term long enough to last through their college years, maybe a 20 year term policy.
• Or you can buy a life insurance policy on your child when they are very young that will help pay for their college expenses; this would be the type of life insurance policy with cash value build up.

So who needs life insurance? Practically everyone has a need for some type of life insurance.   Whether you are a mortgage holder, a debt holder, stay at home parents, working parents, college bound kids – you have some type of need for life insurance.

How much life insurance you need and what type of policy is on an individual basis. Call your personal life insurance agent for advice on which type of life insurance policy would best cover your personal needs. Ask the insurance agent to prepare a financial needs analysis for you to determine the amount of coverage you would need.   Also have the agent quote you on different policy types – term and cash value.  Do the right thing, buy love insurance to protect your loved ones.

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Having the best 401k plan doesn’t mean having an account that always increases in value.    Having the best 401k plan means coming out ahead by taking advantage of employer matches, making the best investment choices and making the right choices on fees.  Let’s explore in greater detail 4 sure ways to make your 401k plan is the best.

A Guide To Making Your 401k Plan The Best:

1st -  Employer Matching

• If your 401k plan does include an employer match – maximize your personal 401k contribution.
• An employer match really means FREE MONEY.
• If you contribute as much as you possible can (up to the limit)  you are getting as much free money from your employer as possible and who doesn’t like free money.
• By making larger 401k contribution you will also receive a larger tax deferral benefit.

2nd  – No Employer Matching

• If your employer does not match your contributions, continue to make your 401k contributions because you are still getting the tax deferral benefit on those contributions.
• If no match is offered you may also consider making IRA contributions after you have maximized the 401k account contribution.   The reason for this is to take advantage of the tax deferral benefits.

3rd – To Make Your 401k Plan The Best – Watch Your Investment Mix

• A larger variety of investment choices within your 401k plan is not always better; all you need is enough choices to build diversity.
• A well diversified portfolio distributes your investment money into different buckets; cash, money market, small cap, mid cap and large cap and international mutual funds. By spreading your money into the different buckets, you are in effect spreading the risk.   By spreading the risk you are trying to keep your investment losses to a minimum.

• Some retirement plans offer a self-directed brokerage option.
• This option allows you to invest outside the core investments offered within the plan.  Individuals who use the self-directed option are very confident in their own ability to select investments.    If you are a new investor or are unsure of your investment abilities, you would be better off not using the self-directed option but stick with the core investments of your retirement plan.

• Once you find an investment mix that you are comfortable with, rebalance it once a year.  Rebalancing will keep your portfolio diversified with the same mix that you originally selected.   Rebalancing is good, the purpose of rebalancing is to help keep the fluctuations of your portfolio to a minimum.

4th – Your Investment Fees

• You can control some of the fees you pay within your 401k retirement account by the type of mutual funds you select.
• There are a range of fees, the money market charges the lowest fees (usually zero) and the international funds usually charge the highest fees. This structure is based upon risk, the money market has no risk and international has a lot of risk.
• Each mutual fund within your 401k retirement plan has a prospectus, that prospectus will list the fees for each fund.   You can ask your 401k plan administrator for a prospectus or get it online.

Making your 401k retirement account the best just takes a little work on your part:  take advantage of any employer matching offered, make the right investment selections, rebalance once a year and watch the fee structures within your 401k plan.   If you follow those 4 steps you will stay diversified and the impact of market gyrations on your plan balances will be less.

By not paying attention and thinking everything will work out without any effort on your part will definitely be damaging to your 401k account.   Stay connected, it’s when you unplug and don’t pay attention that your 401k plan goes from being the best plan to being a bad plan.

Related Posts:

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Even though your income may be in effect “frozen” your expenses are not, they keep increasing.   Your rent, cost of groceries, your home and auto insurance premiums always seem to be increasing.   If you could better manage your spending and debt you could offset all of the increases.  Here are some suggestions on where you can cut back on your spending to help keep your debt down.

Your Guide To Cutting Back on Your Debt

Shop Wisely.

• Only go to the grocery store with a list.
• Don’t buy any groceries that are not on your list.
• Only buy something if it’s on sale.
• If blue berries are on sale this week,  you eat blue berries this week.   If chicken is on sale, chicken is for dinner this week.
• Don’t buy impulsively.   Make sure you need it vs just want it.
• Buy in bulk.
• Avoid using your credit card; if you can’t afford it don’t buy it.
• Buy term insurance instead of a cash value policy.

Cut Your Expenses.

• Develop a budget and stick to it.
• If it’s not in the budget, it’s not purchased.
• Eat at home more, go out to dinner less.
• Take your lunch to work.
• Rent a movie instead of going to the movie theaters.
• Shop your insurance policies.
• Increase your auto and home insurance deductibles.
• Cut insurance coverages that may no longer be necessary due to the age of the auto or home.
• If you drive a car older than 10 years old, you may be able to drop collision and comprehensive coverages and just carry liability coverage.
• Ask your insurance agent for  a complete review of your insurance coverages.

Debt negotiation.

• Contact your creditors.
• Work out a modified payment schedule; most lenders will work with you on a payment schedule.
• If you just stop making payments, your creditors could reposes your car or foreclose on your house.

There is always help available; you just need to seek it out.    Asking your boss for a raise is not the right answer, the right answer is to call your insurance agent, call your creditors, shop wisely, cut your expenses where you can and negotiate with your creditors.

Effective debt management should be done slowly.   To cut down on your debt you don’t have to go cold turkey, ease into it.  Make a few slight changes, little by little.   Remember it’s not what you make but what you keep.  Work on reducing your expenses to offset financial struggles.

Related Posts:

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2. Debt Management in Your 20′s
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How Credit Scoring Is Used

Financially Responsible.

• Lenders, insurance companies, landlords, employers and utility company’s all use your credit score number to evaluate how financially responsible you are.  They use your score to determine if they even want to do business with you.
• Your credit score is used to determine how much to charge you for their services.  High credit scores win because high credit scores show that you are responsible so you get charged less for the same services as someone with a low credit score.

FICO.

• What is FICO and why should you care?
• FICO is one of the most widely used credit scoring models.  The FICO credit scoring model breaks down the impact on your credit score in order of importance:  35% of your score is payment history, 30% debt ratio, 15% length of credit history, 10% types of credit and 10% number of credit inquiries.
• The largest chunk of your credit score is your payment history (35%).   If you always pay late, you chip away at your score, so always, always pay on time!!!   If you always pay late, you lower your credit score.
• The second largest portion of your credit score (30%)  is based on how much you owe compared to your total available credit; this is called your debt ratio.  Teaching moment – do not put a lot on your credit cards, do not carry large credit card balances; this will lower your credit score.
• Another factor that impacts your credit score number is the length of your credit history (15%).  Do not close your older credit cards, they can help your history. In addition, if you have taken on new credit and what types of credit (10%) you have (car loan, mortgage, adjustable loans) impacts your credit score number.

Your Credit Score

• We all have a credit score; unless you never had a job, never took out a loan, never had a credit card, never had a mortgage or paid rent and always paid cash for everything.      And in today’s culture, that’s almost impossible.
• Do you know your credit score?   You should.    You can find out your credit score through the 3 credit bureaus.   And you can get these free credit reports once a year.
• Credit scores range from 300 – 850.   If your credit score is between 300 and 750, you are considered risky.   A score above 750 is good and a score of 850 is considered by creditors as perfect.    Your financial actions determine where you fall within the credit score ranges.
• Your financial actions include:  do you pay your bills on time, do you carry credit card balances, do

Mistakes do happen, and that’s okay as long as you catch them and get them corrected. For example, an account could have been marked delinquent and it actually was not delinquent at all. That is why you should order your credit report once a year to check for errors. There is no reason not to order your credit report once a year from www.freecreditreport.com It’s easy so do it today.

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Unless you plan on working throughout your retirement years, you will run out of money if you start your retirement with anything less than 80% of your pre-retirement income saved up. Your 80% of savings and investments will need to carry you through your entire retirement years. This 80% you should include any social security benefits you may receive plus all your retirement accounts (401k accounts, IRA accounts, Simple IRA accounts, pensions)   If you go into full retirement with no part-time work, and investments that equal less than 80% you will be in for a lot of surprises.

Why 80% is your magic retirement number:

Full Retirement is a long time: you will need 80% of your pre-retirement income.

• Most people retire in their mid 60′s; on average, males live to about age 83; females to about age 92.
• On average, most of us will be  in our retirement years for almost 20 – 30 years.
• Your retirement years will almost be as long as your working years.
• Unless you plan on working during your retirement years, you will need to have enough money saved up to carry you through your full retirement of 20 – 30 years.

You will be older: you will cost more - you will need your magic retirement number

• Higher health care costs.
• Increased health insurance costs – insurance companies will charge more because you will be older.
• You will not get health insurance through work – you may have to pick up some of the premiums.

More available time in retirement: you will spend more

• The luxury of having more available time will cost more.
• At retirement you will have a new life style.
• Increased visits to your family and friends, increased travel or spending more time on your hobbies.
• Additional activities mean additional costs.

Don’t be fooled, everyone assumes that when they retire, their expenses will decrease – they don’t.   The only expense that will decrease may be your work clothes and transportation costs. In retirement most people see an increase in their expenses; and the savings on work related costs that did decrease is not enough to offset that increase.

Market fluctuations: the market swings do not stop at your retirement.

• Drops in the market can impact your retirement nest egg.
• When you are no longer contributing, market fluctuations can cause your portfolio to dip so low that you may not rebound quick enough
• Market costs still exist when you retire.
• Investing and trading fees still exist.

When you retire, although you may wish it to be so, the market does not stop its upward and downward swings.    If you have 80% of your pre-retirement income saved up, your portfolio swings should not affect your lifestyle.

Withdrawals: things will change when you retire, but your need for money will not.

• The money you need to live on will lower your account balances; more will be going out of your account than coming into it.
• Your contributions stop when you retire.
• Your distributions start when you retire.
• Tax deferred benefits stop.

You should now have a better understanding of your magic retirement number.   You should now know why you will need to have at least 80% of your pre-retirement income accumulated before you even think about retiring?  You will need a lot of money at retirement;  make sure you have plenty of it before you retire. Do not retire if you are in debt. You will just be working during your retirement to pay off that debt.  If you can hold off until you are debt free, your retirement years will be a lot less stressful.

Related Posts:

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2. Who Else Wants To Be Ready For Retirement?
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Secrets To Improve Your Financial Health:

Spend Less:

• Take your lunch to work.

If you eat out at work every day, the average take-out lunch costs around $8 and you eat lunch out 5 days a week, that equals $40.    The average cost to take your lunch to work is probably around $3, multiplied by 5 days a week, and you only pay $15.   Voila for a weekly savings of $25.   A savings of twenty-five dollars a week comes out to approximately $100 a month, for an annual savings of $1200.    That is a lot of money you just saved by simply packing a lunch.

• Stop using bottled water.

Your office should have a water cooler and at home you can buy water filters for your faucet that gives the same quality water as well as bottled water and is less expensive.

• Cut back on your daily cafe’ lattes.

By making your coffee at home, you can save a lot of money.   You can make the same fancy coffee drinks at home that you buy at the coffee houses, for a lot less.   If you buy a cafe’ latte or other fancy coffee every day at $4 each that equals $20 a week, $80 a month and $960 a year.   One secret to getting financially healthy is to cut back on your daily cafe lattes.

Save Money:

• Downsize cable/satellite.

Customize your package to more closely meet your actual need; downsize the package if there are more channels than you will ever use.  Negotiate with your cable/satellite company at the time your contract renews for a better deal.   These companies want to keep your business so often have deals that they are willing to offer you if you just ask for them.

• Change your calling plan minutes.

Switch to a calling plan that offers the amount of minutes you actually use.   If you carry over your plan minutes every month than you are obviously paying for more minutes than you use.    Save money, change your package.   Rolling over your extra minutes every month is a waste of money.

Credit Cards:

• No Balances.

Don’t carry a balance on your credit cards, you are just wasting money on interest charges.    The secret to avoiding a balance is to avoid charging up more than you can pay off.   If you pay off the balance in full every month you not only save money on interest you also help to raise your credit score.

• Pay On Time.

By paying your credit cards on time you will save money on late fees and interest charges,   By paying on time, you help to raise your credit score.

• Credit Score Above 750.

By raising your credit score above 750 you will save money on insurance premiums, mortgage, credit card and loan interest rates, utility rates and much more.   Credit scores between 300 – 750 are considered by creditors to be low.   The biggest disadvantage of having a low credit score is that you pay much more for everything.

• Order Your Credit Report.

Order a credit report once a year from the 3 credit bureaus.  The credit bureaus do not verify the information they receive, they simply report it, so mistakes can be reported that may incorrectly lower your credit score.   By ordering your credit reports once a year, you can more closely monitor the errors and correct them.

Insurance:

• Shop It.

You should shop your insurances once a year.    If you find an insurance company that equal the strength and rating of your  current insurance company and they offer lower rates, it’s okay to switch carriers.

• Your Coverages.

You should review your auto and home insurance coverages once a year and make any appropriate changes.    For example, if your car is older you may not need the same coverages that you did when it was brand new.

You should also check out your deductibles.    By raising your auto and home insurance deductibles you will lower your premiums.    Be careful though, if a higher deductible only saves you a few dollars, it may not be worth changing because at the time of a loss you will have to pay more out-of-pocket costs.

The secret to your financial health through your insurance is to annually review your insurance premiums, coverages and deductibles.

Miscellaneous Ways To Improve Your Financial Health:

• Car pool to work if possible – you will all save on gas money.
• Cut back on your dry cleaning.
• Make a grocery list when you go shopping – you will avoid impulsive buying.
• Clip coupons, they really, really can save you money.

You cannot cut back or stop everything; and that is not what is suggested. But having a list of ideas of where to cut back if you can never hurts. You do not have to make large changes to your spending habits to make a big impact; little changes can go along way. When the economic forecasts are gloomy you do not have to be.

It’s not what you make – but what you keep that counts.   Fine tune your spending habits and you will beat the gloomy economic forecasts.

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Are you financial healthy? How would you know? And if you are financially unhealthy can you take some medicine to make it all better? No of course not - but you can recognize bad symptoms and through your own efforts make improvements.  Follow these 4 principles to help you improve your financial health.

1st Principle – Debt – cutting down on your debt greatly improves financial health.

• Debt is like smoking –  you may feel good temporarily, but long-term they are both killers. This may be hard to digest but debt is usually the result of buying something you do not need, cannot afford but want anyway.   Just remember that it’s not what you make –  but what you keep that will make you financially healthy.
• Spending beyond your means is unhealthy. Cut back, don’t buy with emotions but rather forethought, don’t buy based on want but need.   If it’s too easy to use your credit cards when you’re shopping, leave them at home, only buy what you can afford with the cash that’s in your wallet.

2nd Principle – Savings - save first, spend second.

• Yes we have all been told over and over and over again to save.  But if you are spending more than you are making, you have no money left for saving. So why not save first and spend second.
• Find an amount that you can comfortably save, have that amount automatically taken out of your paycheck and deposited into a savings account or 401k retirement plan. In case you haven’t heard, you will need money when you retire too, so it does not hurt to start saving for that today.   Saving is more of a habit, develop that habit to become financially healthy.

3rd Principle - Shop – shop everything.

• Shop your insurances at least once a year. We all become complacent over certain things and insurance may be your thing. You do not necessarily have to change insurance carriers every year, but at least ask your insurance broker for an annual auto and home insurance comparison.
• By doing an annual insurance review you will know if you are in the proper premium ranges.   Shop your cell phone package, shop your cable/satellite package, shop any other services that you use on a regular basis – you may be surprised on how much you can save.

4th Principle – Fees – watch the fees you are paying to improve your financial health.

• At least once a year, analyze the fees you are paying. It seems like we pay fees for everything.
• If you invest in a 401k account of IRA you may be paying additional investment fees; mutual fund companies, 401k companies, banks and other financial institutions can charge for account services. Cut to the chase on this one and ask your financial advisor to prepare a fee analysis for you.
• If you are you paying late fees, pay on time.    Are you paying fees for services you don’t need or use anymore?

If you do not feel that you are financially healthy follow our 4 principles to get yourself to a healthy point.  If getting in financial shape is new to you, start slowly. With any new exercise program, if you start to fast, you risk injuries, the same is true with getting in financial shape. Take one step at a time, don’t go extreme and you will gradually see improvements in your financial health. The efforts you make today will be magnified over the long run so start today, you will be glad you did.

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The 7 Retirement Tips You Must Follow:

#1 – Plan, plan, plan.

The only money that will be there when you get there is what you sent ahead. Plan, invest and start early. You should start planning for your retirement the day you start your first job; unfortunately, most of us do not do that. But it is never too late to start; if you have not opened an IRA or made 401k plan contributions, do it today.

#2 – Don’t Be in Denial.

The market goes up and the market goes down; plan accordingly. Work with your financial advisor on preparing a properly diversified portfolio so if one segment of the market is down, the other is up and you don’t lose your shirt.  Work with your financial advisor on preserving your capital.

#3 – Take Off The Rose Colored Glasses.

When you retire, market conditions still do fluctuate; be prepared for that. Open your financial statements, do not leave them stacking up on the desk unopened.  Work with your financial advisor, review your investment strategies with the advisor.   If the strategies you have in place are not working ask questions, read financial books, take financial classes.

#4 – Be Debt Free.

Pay off your mortgage, do not have any car payments, have your credit cards paid in full. When you retire, your pay checks stop. If you are in debt when those pay checks stop, where will the money to pay for that debt come from. It will be difficult to pay down debt without a paycheck so do not stop working until your debt is zero.

#5 – Never Stop Analyzing.

Review your sources of income before you retire. You will need approximately 80% of your pre-retirement income at retirement. Expenses do not stop when you retire; you still need money for food, clothing, taxes, health insurance, entertainment – - about the only expenses you eliminate at retirement are work clothes and travel expenses.

#6 – Go In With Lots of Savings.

Do not go into retirement until you have enough savings to carry you through. If you are not ready, you are not ready, do not retire until you are ready; unless you plan on working during your retirement years. Many retirees do work in retirement, but if you will be one of those working, know that before you get there.

#7 – Do Not Fall in Love.

Never fall in love with a particular investment. The market is a moving target, never stagnant. Investment models change and you need to either be able to move with the change or get out of that investment.

Retirement can be your reward for a job well done. But if you enter your retirement years unprepared or too early, you may regret it instead of enjoying it.   Save enough, have a plan in place to preserve it, watch the markets, but not too closely, never fall in love with an investment.

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Financial Mistakes Others Have Avoided:

Drowning in Debt While Investing

• Drowning in debt  while struggling to invest is the financial mistake made most often.   You are told over and over again to invest at all costs.  Your employer preaches to you to invest in your 401k plan, your friends are all telling you to invest, ads on tv and in the newspapers tell you to invest to the death.     But, stop and think about it, if you earn less on your investments, than you pay out on interest charges on your debts, the math does not add up.
• For example, if you are earning 5% on your investments, but paying 21% in credit card interest – you are in the negative, you’re not moving forward, you are going backwards.    You may think about putting your investment contributions on hold until you pay off your debt.

Avoid The Expense of Paying Unnecessary Fees

• Over Draft Fees:   The way others have avoided the mistake of paying unnecessary fees from financial institutions is by keeping enough money in your accounts so as to not be over drawn.   And the way you do that is by living within your means.   Buy to meet your needs, not your wants.   Do not let your household expenses become greater than your household income.    Consider going on a budget.
• Credit Card Late Fees:  Credit card late fees can get so expensive.    Avoid them at all costs.   Do not charge up on your credit cards more than you can pay off each month.
• Although cutting back on your expenses may sound impossible,  it is not that difficult if you do it a little at a time.  Do not go cold turkey but ease into it.    By paying credit card late fees you simply increase the cost of everything you buy.

The Damage Caused by Paying Late

• Making your mortgage payments, car payments or credit card payments late stressful and  loaded with risk.  The stress is a result of the risk that you could lose your house or have your car repossessed.
• Due to your late pay habit your creditors may require you to make larger down payments and larger minimum balance payments.   Starting the bad habit of paying late leads to lots of inconveniences.

• Paying late is expensive because of all the extra fees that are tacked on; and the higher interest rates you pay by being a late payer.
• Work with your lenders to negotiate some type of adjusted payment plans. In today’s economic environment most lenders would rather work on adjusting your payments than not receive any payment at all.

Credit Score Abuse

• You abuse your credit score by not doing everything you possibly can to keep it above 750.   Not taking care of your credit score is a big mistake.
• Your credit score is invaluable because it affects your financial life in ways you cannot believe.   Employers, landlords, mortgage lenders, leasing companies are just a few of the financial entities that evaluate your credit score before working with you.  And if they do work with you, you will be charged more.   Credit scores above 750 are considered by the industry to be high, so strive to get your credit score above 750 and keep it there.

Avoiding Loans

• One very important financial mistake others try to avoid because of the long-term impact is taking loans against retirement accounts.   Borrowing from a 401k account or IRA account to pay for today’s expenses  is taboo and should be avoided at all costs.
• Remember why you started your retirement account and have made contributions to it – you have earmarked that money for your future; find other ways to pay for today’s expenses, do not tap into tomorrow’s savings.    You are better off to stop your 401k plan or IRA contributions than to take out a loan against those retirement accounts.

Financial mistakes do happen, but they can be avoided.   Changing your financial habits can help reduce or eliminate your financial mistakes.   Changing your habits is sometimes difficult, but in the long run, well worth your effort.   If you make some financial mistakes, that’s okay, just work on changing your habits to help avoid making the same mistakes

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