7 Steps To Improve Your Credit Score

Few things are worse than finding out that you have a bad credit score.  Many people know that they have this hanging over their head, where others are taken completely by surprise when they go to take a loan or just do a check.

If you have a bad credit score, then don’t wait to start fixing it.  Every step you take can count and help improve your score, and the faster you get started, the faster you can see your score move in the right direction.

Check your credit report for accuracy.

The first thing you should do is check your credit report to make sure that everything is accurate.  A bad score can come about with inaccurate information or if you’ve been the victim of identity theft and there are items that you don’t even know are there.

Work through any late payments.

If you’re late on any payments, you need to get this taken care of in order to gain any sort of traction at all.

Reduce your available debt.

If you have a lot of credit lines open, you can often improve your score by selectively closing credit cards or calling credit companies and asking for a lower credit limit.  Less available credit is often seen as less risk of default, which can improve your score.

Reduce the number of open balances.

If you are carrying a lot of different credit cards with balances, you want to start reducing this number as fast as possible. If you owe $5,000, it’s more favorable to have two cards splitting that balance than it is to have six or seven.  You can start by paying off cards that have the lowest balances.  You may also look for an existing card that will offer a good rate on balance transfers and bring some or all of your credit balances together into one spot.

Pay off your loans faster.

If you’re only making the minimum payments, you need to start bumping this number up.  Sell some stuff.  Take on a side gig.  Make lifestyle changes.  Whatever it takes, you want to start lowering your balances, which will improve your score.

Stop applying for credit.

Newer lines of credit are seen as riskier than older ones.  Every ‘new’ credit card you take can potentially damage your score.  As a general rule, don’t apply for any additional credit.

Stop charging.

If you pay off $500 on your balances but then add $400 in the month, you’re not going to get very far at all.  Make your purchases for what you need today via cash, check or a debit card.  This way, any activity on your cards is only serving to lower it.  Knowing that goes a long way.

The bottom line is that bad credit scores are awful, but they don’t last forever.  You may not be able to change it overnight.  However, you can certainly do so with an organized and disciplined approach.

Readers, have you ever actively taken measures to improve your credit score? How did it go?

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.

Why We All Might Be A Bit Like Bernie Madoff

Recently, ABC aired Madoff ,a two-part miniseries about the biggest ever (to date) ponzi scheme that bilked investors out of $65 billion dollars.  By now, many are likely familiar with the details of the scheme, so I won’t go into great detail except to recap that he started a hedge fund and always provided great returns, except that he was never investing a penny of money.  Instead, he was just putting the money into a giant savings account.  As long as there was more money coming in than going out, he could keep it going, but once the financial markets started crashing and investors started redeeming money faster than it was going out, the whole thing fell apart when the bank account (nearly) dried up.

The miniseries was pretty entertaining, and I always like Richard Dreyfuss, who was entertaining, but might not have been the best casting decision, as he usually makes his characters likable to a degree, so much that you often forgot to hate Bernie Madoff at various times.

After I got done watching the movie, I spent some time thinking about it, and I realized something and it was a little bit eye opening.

Why Did Bernie Madoff Start His Ponzi Scheme?

Why did he do it?  That’s one of the biggest questions that will always get asked when it comes to trying to figure out

US Dept. of Justice, CNN
Bernie Madoff – US Dept. of Justice Photo, CNN

and dissect the scandal.  Why?  To steal money?  Maybe become rich?  To gain fame?  So he could be the best at something? To make history?

These are all answers that I think probably fit to some degree or another, but there probably isn’t really one answer about why he started.

In fact, the movie didn’t spend a lot of time on that part of why.  Maybe the producers knew that there wasn’t one single a-ha moment or reason that provide a basis for why he would start the scheme.  It seemed, instead, that it just sort of started as a combination of reasons and grew into something that he himself didn’t know it was growing into.

See, they why of why he started wasn’t so important as the true question.

Why Did He Continue?

This is the true question and when you really look at the movie, it really spends most of the time telling the story hitting on this question of why.

Now, this question of why was answered pretty distinctly.  So why did Bernie Madoff continue once he got started?  The answer: Because he didn’t see a way to stop.

So How Does That Make Us Like Bernie Madoff?

Bernie Madoff’s story was hopefully one that we’ll never hear again.  So, when I say that I think a lot of us have a little Madoff in us, I don’t think there are people angling to start a ponzi scheme or rip people out of billions of dollars.

That’s not how we’re like Madoff.

Here’s how we might be:

See, often times once we start doing something, even if it’s not bad at first, it doesn’t seem like it’s a big deal.  We keep doing it and it’s still not a big deal. By now it’s a bit of a habit, but we keep doing it because we’re used to doing it.  At a certain point, we might start to get some bad feelings, but things are as we’re used to and we really don’t know how to stop.  Eventually, we might see just how fast the train is moving and how the tracks are ending soon, but do we really know how to stop?

Wow, that’s a lot for one paragraph…but that’s often how things happen.

What Kinds of Things?

So, what are some of the things that might fall under the same umbrella.

  • Debt – You’ve seen it before.  In fact, you might have lived it.  You open one credit card, and a couple of months of higher than normal expenses and you suddenly have a balance.  You have every intention of paying it off but the hits just don’t come.  Fast forward a few years and suddenly you’ve racked up more debt than you could have ever once imagined.
  • Smoking – Does anybody ever start smoking thinking that they want to get addicted to cigarettes?  Not likely.  Most people probably start with the occasional one and for reasons that are far different than having the desire to harm our bodies, yet isn’t it often how it ends up?
  • Drugs / Alcohol – Same deal as smoking.  What’s a little touch here and there?  That’s how it starts, but it’s often not how it turns out.

And that’s just the examples I thought of in the first 30 seconds of outlining this post.

So What Does It All Mean?

Unfortunately, I don’t think Madoff had unique behavioral characteristics that led him to do what he did.  I think that his ability to latch on and multiple the negativety far exceeds what most human beings are capable of, and his ability to impact people was far greater than the influence that most of us have on others.

So, that’s the good news, in that these habits when seen in most people, aren’t going to negatively impact thousands, if not millions of people.

However, they can impact at least one person.  You.

But, there’s hope.    You can be less like Bernie Madoff.

See, Madoff did his bad thing and had it carry on for years and years and years.  Decades.  Most of his life.  And he got way in over his head really fast.  We don’t have to.

Now, what to do?

  • Recognize – Do you have any things in your life that are out of control or might get there?  If you don’t, that’s awesome!  But be honest here.
  • Be Honest With Yourself – How far along are you?  Maybe you’re just on your first credit card.  If that’s the case, don’t be ashamed to the point where you go after that second one, because each one after that will only get easier.  Be honest now and get in front of it.
  • Ask for help – People in your life can help you.  You have to ask and talk and be honest.  If someone isn’t able to help you personally, there are professionals.  Believe me, there’s help for any and every situation these days.  But it won’t find you.
  • Assess your triggers – If you do get in front of any bad habits, then good for you.  Celebrate!  Treat yourself.  Spoil yourself, in fact!  But, make sure you don’t head down that same path a second time.  Know what got you there so you can go a different direction.

Conclusion

Bernie Madoff was a terrible man who did terrible things that led to terrible outcomes for himself, his family, and countless people who lost everything.  His name will forever be vilified.  He didn’t have to have his story end that way.  I know that a lot of what ABC put out there was likely modified for entertainment purposes, but it’s clear that one thing they likely didn’t have to embellish is that he knew he things were getting more and more out of control, and that he knew that one way or another, it wouldn’t end well.

While we all may have a little bit of something in our lives that can lead us down a wrong path and get us to where things are or seem out of control, the good news is that we can make it right.  For ourselves and those around us, we can make it right.

Readers, did you watch the Bernie Madoff inspired movie?  What do you think of my analogy?  Do you think that he could have stopped before he was a lot less in over his head?

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.

Build Wealth, Reduce Debt in 2016

We live in a world that differs from the ideal one we could imagine. While it’s simple enough to picture a utopia, most people would agree that this isn’t the world we live in. The same goes for our individual lives. It’s easy enough to imagine a set of goals (getting fit, learning a new language, getting your financial life in order), but it’s much harder to put those plans into motion, much less attain them. The New Year is a time when people set out to make these dreams a reality, and it’s time to do that for your personal finance goals, especially if you’ve never done this before. The best way to do this is through a two-pronged approach: building wealth and eliminating debt.

Building Wealth

Building wealth isn’t easy, but there are a bunch of ways to do it. For one, you could simply save money. This is a great wealth building tool. Start with an emergency fund, one which is big enough to cover your expenses for six months or more, just in case you were to lose your job or get injured or sick. Making a habit of saving is an important financial discipline. It’s how you’ll build a better future for yourself.

You should also consider your options for building wealth in some of the most basic ways that humans organize their lives. Start with the place you live. Renting is expensive, and you almost always end up paying more every month than you’d pay if you owned the house. You can get a mortgage loan to start building equity in your home, and in some cases can provide the liquidity for furniture and amenities or to make necessary improvements.

Eliminating Debt

On the flip side of the coin, there are a number of ways to eliminate debt, which can make your wealth building strategies much more lucrative. Start by focusing on your most expensive debt, typically stemming from spending you’ve done through credit cards and other credit accounts.  Look around for companies that can help you consolidate this debt into more affordable monthly payments, which can be organized in such a way that your debt can be gone in as little as 24 months.

Once your most expensive debt is eliminated, you should focus on your less expensive debt. This may also come from credit card spending, but may be the result of other sources of debt. Whatever it is, don’t worry about it. Just focus on paying it off. As you make a habit of killing off debt, your financial life will get stronger and stronger until you don’t have nearly as much to worry about as when you started.

By focusing on both of these strategies simultaneously, you’ll be building your wealth far faster than if you haphazardly considered only one or the other. But that’s just the strategy that most people adopt. The unconsidered financial life is one built for failure, so make sure that you understand the plan that will bring you success and that you are committed to carrying it out.

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.

Budgetary Demands Should Conquer Other Considerations

Everyone enjoys spending money. Unfortunately not many are particularly good at following a budget to keep their finances in good order. The level of credit card debt in the USA suggests that there are plenty of people spending on a regular basis without actually paying off the bill in full. Once a balance is established it incurs a high level of interest. Interest is added at the end of each month so something that might be a bargain purchase bought on credit might ultimately end up being very costly indeed.

The recession resulted in an increase in consumer debt. The wise have paid off their debts as a matter of priority. Now it’s your turn. If you write down your regular income and expenditure it will put your financial position down in front of you.  Your credit card debt and any debt on store cards will be costing you a significant amount of interest each month.

Credit Card Discipline

Before anything else you should make a decision to stop using your credit card; you are obviously living beyond your means. If at a later date when you have reduced the balance to zero you should only use your card again for convenience and if you can pay the full bill when requested. In an absolute emergency you can use the card but you must understand the consequences of doing that.  Don’t even carry it with you perhaps?

The figures in front of you tell your story. The expensive debt should be cleared as a priority. There are online lenders who will look sympathetically at applicants who can prove they have a regular income and can afford the instalment payments each month until the borrowings are paid off completely. Certainly the interest applied to such realistic loans is at a much lower rate than that used by credit card companies.

The Cost of Debt

You need to understand your debt and what it is costing you. Some people psychologically address the smaller amounts first; instead of 6 creditors they are happy to reduce it to 5 and 4, in other words numerically rather than by interest rate. There is some validity in that approach if it increases satisfaction but also determination. If the consolidation loan described above can clear all debts other than mortgage which is in an altogether different category then all well and good.

There are occasions when you can negotiate rates. If a creditors feels you are liable to default he or she make accept some form of negotiation. If that is a means of reducing your core debt then that is certainly worth the approach.

Sacrifice

You may be thinking this has all the signs of major sacrifice. No one is claiming that there is np pain in clearing your debts but you must ask yourself a question. If you are earning a regular monthly income why is it that you are facing mb-2015-03-checkbookfinancial stress every day? The answer may be a combination of things ranging from misfortune to complacency and simple extravagance, living beyond your means. The reality is that unless you address the problem things will only get worse. Debt simply does not vanish and the day will come when you will be completely out of your depth with little or no escape route.

You show investigate whether you can spend less by getting more competitive insurance quotes and utility providers. It is easy just to continue with existing contracts but often there are cheaper options available. It seems a fairly common practice to produce special offers to attract new business without offering those deals to existing clients. If you are financial trouble you should not dismiss trying to get yourself better deals. The only cost is your time.

Perhaps you will need to make some economies in your day to day life; reducing your social budget may be a necessity? If your debts are growing there will be little choice. The days when you might recall how you enjoyed spending money can recede very quickly when the reality of your finances hit home. Discipline must replace any form of complacency. If you have a regular job, you can repair your financial situation but the longer you leave it the more difficult it will be.

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.