Spring Clean Your Finances With 5 Easy Steps

Spring has been pretty much absent here in Michigan.  Last weekend we had an ice storm.  Temperatures have been about eight degrees below average for the month.  Snow showers and accumulations are still a regular occurrence.  Still, spring has to come sometime, right?   We’re still hoping.  But, even if the weather isn’t cooperating, spring is still on the calendar.  Now’s a perfect time to spring clean your finances.  Here are a few easy tips to get started.

Calculate Your Net Worth

We calculate our net worth every month, so this is easy.  But if you don’t do this regularly, now’s the perfect time.  Net worth is an easy calculation.  Simply add up all of your assets.  Then add up all of your debts.  Subtract debts from assets and that is your net worth!

Compare Net Worth To Last Year If Possible

Hopefully you know your net worth from last year, in which case you can do a comparison.  If you’re doing things right, the number is higher. If so, celebrate.  Keeping regular comparison points along the way will help show you how things are going.

If you don’t have last year’s number handy, don’t fret.  Simply mark down this year’s and do the comparison next year.  It’s never too late to get started!

Run A Credit Report

You get three free credit reports per year, one from each of the major bureaus.  Now is a perfect time to run one of your free reports.  Ideally, run one report every four months, rotating between the three.

When you get your report, look through it line by line.  Make sure you recognize every account and that the balances make sense.  This will summarize what you owe and what you can potentially borrow.  It also helps to make sure nobody has opened any credit in your name unknowingly.  Plus, you can make sure there’s nothing that’s been forgotten about.

Check On Goals And Revise Them (Or Make New Ones)

If you’re like me, you set some financial goals at the beginning of the year.  Now’s a great time to check on those and see how you’re doing.  If any revisions are necessary, make them now.  Or, if you didn’t set any goals back in January, why not set some now?  It’s never too late.  Plus, you have eight months to get things done!

Clean Up Your Tax Documents

Tax season is behind us, and unless you filed an extension, your taxes should now be filed.  Now’s the time to make sure your tax records are in order.  You need the last seven years of records in the event of an audit.  Make sure you have all of those in one place and that they’re safely locked away.  We keep ours in a fireproof safe.

If you still want to keep your records beyond seven years, I absolutely think that’s a great idea.  But, make sure that you have the last seven years worth at hand.

What Spring Cleaning Do You Do?

It’s your turn.  What spring cleaning activities do you do for your finances?  Let me know in the comments below.

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

How To Build Credit History And Why It’s Important

I remember a story from when I was kid about a great aunt of mine.  She and my late uncle had paid cash for everything in their lives.  When they needed a new car, they wrote a check for the full amount.  When it was time for a house, it was paid for.  This was very responsible, but there came a time when my aunt wanted to build credit and she couldn’t.  She was over 70 years old at the time and had no credit history!  Yikes.  Ever since then, I have understood that it’s important to build credit.  So how do you build credit history?  And why?  Here are a few simple answers.

The Importance of Credit

There are a few good reasons to make sure you have a credit history.

  1. Future Need.  My aunt had no real need for credit.  I’m not even sure what the circumstances where that led her to find out she had no credit history.  In truth, she probably didn’t need it.  But, you never know when you might.  It’s good to have a credit history for the times you might need one.  Even if you don’t foresee such circumstances, they very well could be out there.  So, be prepared.
  2. Opportunity.  At the time that this happened with my aunt, rewards cards really weren’t a thing. But now they are.  Nowadays having credit history might set you up for opportunities to save money.  Having these opportunities available is key for you never know when they’ll pop up.
  3. Owning Your History.  Identify theft is a huge thing nowadays.  What if my aunt had her credit stolen?  Without a credit history, she might never have known!  Take control of your own credit history and then it’s yours to build and track.

How To Build Credit History

Building credit history doesn’t have to be complicated.  It can be done in a few easy steps.

  1. Open a credit card.  This is pretty basic.  Open a card in your name.
  2. Set a small credit limit.  When you are starting off, make sure to get a small limit.  If you haven’t used credit cards before, don’t get overwhelmed.
  3. Use the card occasionally.  Having a card will start credit history, but using the card is even more important. That’s where you’ll start getting judged on how well you use your available credit.
  4. Pay immediately.  Use the card in place of cash.  Don’t make extra purchases with your card.  Instead, just make purchases you would have anyways.  All you need to change is how you pay for your purchase.  When you choose this method, pay the card immediately.  Using the card and paying it off will quickly build you to a great score.
  5. Track your credit.  Once you start building credit history, you’ll be able to track your credit.  Use one of the free annual checks.  Make sure that you are seeing only what you expect to see.

In the end, a solid credit history can only come after you take that first step toward building it.  A small step or two can go a long way toward building lifelong stability.

Readers, how did you start building credit?  What was your reason at the time to get started?  Any other tips?

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

2017 Can Be the Year You Earn Great Credit

If you don’t understand what personal credit is, you’re not alone. Your credit history is an important aspect of your life, but most people don’t fully comprehend what it is or what it does. That’s a shame, because you can learn what credit history is in about five minutes, and this information can guide you to a much better personal finance future. So don’t be scared of what you don’t know. Grab this bull by the horns and start taking control of your personal credit, even if for the very first time. This way you’ll know how to raise your credit scores & get the best interest rates in 2017.

Personal Credit History

First of all comes a basic definition.  Personal credit history is a record of all of the ways you’ve used borrowed money over the years. You may have borrowed more money than you think. Also, sometimes borrowed items can be represented in the form of money, as with a library book. Let’s say you borrowed a library book in 2005 but didn’t return it till 2007 when you found it under your sofa. It’s likely that the library kept a record of the lost book, and sent the account to collections after they couldn’t recover the book or the fees from you.

This un-returned library book would be recorded on your credit history as a number: the amount of money it would take to buy and process the book again for the library. That single item could bring down your credit score for as long as it remained on your credit history, which happens to be seven years.

The same thing could happen if you forgot to pay your utility bills for a month or two. Or if you charged as much money as possible on your credit cards (making it look like you have to borrow money to afford your life). Or if you requested multiple loans from multiple lenders during a single two month period last year. Each of these could be examples of irresponsible credit behavior.

Improve Your Credit

When you look at your credit history, you don’t have to guess about the items that give you bad personal credit; they’ll all be listed. If you want to improve your credit, you’ll have to get rid of them. You can do this by

  1.  Paying them.
  2. Disputing the negative items.  This causes the credit reporting agency to have to validate the item, which may work to your advantage
  3. Wait until the item disappears in seven years.

If you want to get better credit, and the benefits that come along with it, then you’ll have to do one or more of the above. Once the items disappear from your credit history, your credit score will go up.  You’ll then be able to get cheaper loans.  Plus you improve your chances of getting a better job or a more desirable place to live. Make 2017 the year you do these things, and you won’t regret it at all. It’s easier than you might think.

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Are Credit Companies Giving Out Too Much Credit?

We recently added another credit card to our household.  We’re heading down to Florida for a family Spring Break.  Since we’re flying Southwest Airlines for the first time, we get a big bonus by opening up a Southwest linked card operated by Chase.  When I opened up the envelope and saw the details, I had a bit of sticker shock.  How?  They had given me a credit limit of $26,000!  It made me wonder if companies are offering too much credit.

Card Limits Have Been Jumping

My wife and I have great credit scores, both well north of 800.  As such, we’re not surprised when we get approved for high limits.  Still, the $26,000 limit was way higher than I’d ever seen.  Still, I started thinking about how the limits have been steadily increasing each time we’ve opened a new card.  These are just in the past couple of years.

  • Costco American Express.  Our first AmEx card was the Costco branded card that came out a few years ago.  This was the first time we’d gone considerably over $10,000 for a limit.
  • Costco Visa + Blue Everyday American Express.  When Costco switched our card to their new Visa branded card, the limit stayed the same.  American Express also wanted to keep our business, and offered us a great deal on a Blue Everyday card.  They matched the credit limit on our old card, meaning we now had double the limit between the two cards.

Impact Of Credit Limits On Our Credit Score

When we got the Southwest card, I became uncomfortable.  There’s no way in the world we need that much TOTAL credit, let alone all on one card.  I started thinking about requesting lower limits.  Then I started to consider whether this would have implications on our credit score.  I thought of this in regards to two variables:

  • Available Credit.  When your credit is pulled, I’ve heard that one of the factors used is your available credit.  If you have $100,000 available, another lender might be reluctant to give you more.  This would mean you could get denied for a loan or be charged a higher rate due to the perceived risk.  Obviously this hasn’t been the case so far for us given the new limit, but still something to consider.
  • Used Credit.  One benefit of having a big pool is that, as long as your usage is consistent, you’re using less of a percentage of your available credit.  So, let’s say you max out at $5,000 on your cards.  If you have $20,000 in available credit, you’re using 25% of your credit. But if you have $50,000 in available credit, you’re using only 10%.  It’s my understanding that using a high percentage of your available credit is actually a flag.

We Requested Two Credit Line Decreases

I ended up reducing the Southwest card and our American Express card by a total of $30,000.  We’ll never use this amount of credit.  Even with the lower amount, we’re still using a very small percentage of our credit.  So, I think it was the right move.

Two of our credit cards allow us free access to our FICO scores.  I keep track of it about every month.  I’ll be interested to see what might happen when the dust settles, to see if my score goes up or down or stays in the upper range that we’re used to.

Readers, have you noticed credit limits offered by credit card companies to be on the rise?  Have you ever requested a credit line decrease?  Let me know what you think of our moves and such in the comments below.

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.