What Destroy Credit Score

Your credit score not only determines whether or not you can get a credit card, mortgage, or auto loan, it’s also a critical factor in determining the interest rate you have attached to those items. A low credit score can cost a lot of money over your lifetime.

Not everyone is aware of the many factors that determine a credit score. It’s easy to make assumptions that seem logical, but are actually false. Acting on incorrect beliefs is a sure way to make a critical mistake.

Save money and make your financial life easier by avoiding these seven credit destroyers:

1. Carrying a big balance on your credit cards. While having a lot of debt is never a good idea, using more than 30% of the available credit on your credit cards hurts your credit score.

* For example, if your credit limit is $10,000, your score drops if your balance is over $3,000. This is commonly referred to as the “utilization ratio.” Keep yours under 30%.

2. Paying late is a huge factor in your credit score. Experts estimate that 35% of your credit score is determined by your payment history. Any late payments will lower your score.

3. Closing credit cards is a credit score killer. This is related to your utilization ratio. By closing a credit card, you lower the amount of credit that’s available to you. Your credit score is also sensitive to the length of your credit history.

4. Defaulting is an obvious credit score mistake. When you fail to pay back a loan you owe to a lender, you can lose as much as 100 points from your credit score. Make every effort to pay back your loans.

* If you’re struggling, contact the lender and attempt to make other arrangements. They can be very flexible if failing to do so means not getting their payments.

5. Applying for too much credit. Everyone needs to have some credit, but applying for too much has a negative effect on your score.

* Each time you apply for more credit, your potential lender makes an inquiry of your credit history.

* Each of those inquiries lowers your credit score.

* Avoid sending in every credit card offer that shows up in your mailbox.

6. Not having a credit card at all. Many people are getting rid of their credit cards in an effort to avoid debt. Unfortunately, this does nothing to help your credit score.

* Experts believe that the ideal credit score includes 2-3 credit cards. Credit diversity can account for as much as 10% of your credit score.

* Credit cards help to keep your credit history current.

7. Co-signing for someone else can be a mistake. Putting your credit on the line by co-signing for someone else is a huge risk. Their failure to stay current with the payments can destroy your credit score.

* You’re equally responsible for that debt, so any late payments or defaults will show up on your own credit report.

* You can even be subject to collections and lawsuits. If a lender won’t do business with them, you might want to reconsider before co-signing.

By simply avoiding these common mistakes, you can’t help but have a great score that will guarantee you the lowest interest rates, even if your credit score is poor now. It may take time to boost your credit score, but it’s definitely possible.

Give your credit score the amount of attention it deserves. It makes life a lot easier!

What Deal or No Deal Can Teach You About Financial Risk Management

Who would have thought that you could learn about financial risk management from watching a television game show? That’s right! Watching Deal or No Deal can actually help you make better investment decisions.

If you’ve ever watched the show, you’ll know that it’s about attempting to analyze the results of risk taking. There are numbered briefcases, each with a hidden dollar value. Each case you pick earns you the dollar value hidden inside.

In its simplest form, it’s a random system. But you’ve probably thought that you could figure out a pattern, right? Well, while you may have had some luck before, here are some key lessons that you can take away from the game.

1. Random systems aren’t predictable. Simply put, avoid using past activities in a random system to predict future movement. When you’re trying to decide which stock to buy, it’s almost useless looking at its past performance.

* An investment opportunity yielding a particular result in the past doesn’t make it predisposed to produce in the same way again.

* Avoid being deluded into thinking that you can see patterns of growth from past performance.

2. Panic clouds judgment. Have you made an investment that’s now giving you negative results? Have you played the stock market only to realize that it’s now on the decline? If you answered yes to either question, you’ve likely panicked at one point or another.

* The first lesson to learn is panic almost always clouds judgment. The minute you realize your investment is going sour, you lose your composure. Try to avoid this.

* With pending stock market declines, you may feel like you’re at a crossroads. You may want to get out because you don’t want to regret staying in. But allow yourself time to think it through. Determine which action can produce a result you can live with.

3. Fear of loss drives decision-making. The reality is that fear of loss is what pushes you to make a hasty decision. At least that’s usually the case with questionable investments.

* Because you fear what you might end up losing, you may end up opting out of your investment too soon. That may not be the best move. This is often the case with contestants on Deal or No Deal.

* Giving thought to what you’ve lost up to this point can make you feel you took too long to sell. But be fair to yourself. Risky investments are largely based on probability.

4. Dwindling options promote risk-taking. What the game show also shows is that as options dwindle, contestants become more risk-prone. Similarly, you could also be dwelling on past “losses” and that could affect rational assessment.

* Try to leave former investment experiences in the past. The same goes for past performance of current investments. Look at the current investment at face value.

* Determine if you’ll really be better off remaining in the game or pulling out with what you currently have.

So is Deal or No Deal just a game, or is it something that provides you with real lessons in financial risk-taking? It’s definitely a little bit of both. You learn a little from every experience!

Of course, it wouldn’t be a wise idea to use this game show as your guide to financial wellness! But there’s definitely no harm in using some of the examples to help in your decision-making. Learn these lessons, but seek the wisdom of the experts in your financial dealings as well.

Enjoy a Positive Cash Flow Even if You Lack Money Management Skills

Are you being confronted by financial challenges? You’re probably feeling discouraged because you haven’t been able to keep a positive cash flow. This is a common challenge faced by many, but it is especially difficult for those who lack good money management skills.

But by no means is the absence of money management skills a financial death sentence! In fact, there’s so much help out there today that you should be able to turn things around in no time.

The question is where to start!

First, it’s important to come to terms with where you are from a cash flow perspective and accept the situation for what it is.

Then, practice these strategies and your cash flow challenges will be a thing of the past:

1. Make a budget. Following a budget is the golden rule of maintaining a positive cash flow.

* At the end of each month, plan your spending. Other than the occasional unexpected expense, you’ll probably have a good idea of what you’ll be doing with your cash for the upcoming weeks.

* Be sensible with budgeting and focus on putting money aside for your essentials.

* Remember to account for even the little expenditures that are probably having more of an impact than you think!

2. Avoid impulse buying. Impulse purchases often keep you in a cash flow bind! They’re probably one of the main reasons you haven’t been able to manage your money in the past.

* Instead of just giving in to an impulsive purchase, give it some thought. Is this purchase life-changing? Can I survive without it? Is it something I can wait for until next month?

* Consider putting a line item in your budget for impulse purchases. Of course, it’s wise to make it a smaller, manageable amount, but at least you’ll know it’s there for that purpose.

* Discipline yourself to stay committed to the mission at hand. Do you want positive cash flow? Establish that desire as a priority in your life.

3. Set savings targets. Decide on a certain amount of money to save each month and stick to the plan. The key is to pay yourself first.

* The minute you collect your pay check, take out the savings portion. To help yourself out, put it somewhere that’s not easy to access.

* After a few months, challenge yourself by setting higher savings targets. If you’ve been successful with the first target, you can surely be successful with a slightly higher one!

4. Maintain a positive state of mind. It’s a great idea to affirm that you get from the universe exactly what you put in.

* Avoid allowing a financial slump to get you down. Look at it as a learning experience and move on.

* Surround yourself with positive people and experiences. They help train your mind to keep everything else positive.

It’s important to realize that a positive cash flow is a true and unequivocal reflection of your life! Rest assured that practicing healthy life practices can also put you on the path towards financial wellness.

Why not get started today?

6 Wise Money Moves for Busy Boomers Who Don’t Plan to Retire

Do you see yourself as someone who won’t ever retire? You probably know some people who have already retired, but you can’t imagine that you’d ever stop working.

As retirement age gets closer, do you identify your own thoughts about retirement in these statements?

1. “I’m never going to retire. I can’t afford it.” If you think this way, you likely haven’t saved much for retirement. Such thoughts could become a self-fulfilling prophecy and you might end up working until your health fails or you’re forced into retirement.

* Either way, you’re financially unprepared for the fact that you’ll eventually retire.

2. “I love my job and I want to work forever.” Although it’s wonderful that you enjoy your work, that love will not stop the aging process. As years pass, the way you think will eventually change, as could your health, work situation, and environment.

3. “My dad worked all his life and died on the job and so will I.” You believe you’re a helpless pawn of fate and won’t retire due to expecting an untimely death.

* However, if you live longer than your parents (and according to statistics, you will), you may find yourself in a position to retire someday. The real question is, “Will you be financially ready?”

4. “I don’t think about retiring. I guess things will turn out the way they’re supposed to.” This reaction is like sticking your head into the sand and ignoring one of life’s realities: if you’re lucky enough to live long enough, you’ll eventually retire.

What to Do Now to Prepare for Your Financial Future

By now, maybe you’re considering that you’ll actually retire. What can you do immediately to begin establishing a bright financial future during retirement?

Talk with your partner about the kind of life you’d want if you stopped working. Make some plans that make such a life possible for you.

Ponder these tips:

1. Accept reality. You’ll likely retire at some point. Think about your current finances and how you’d live if for some reason unknown to you today, you had to stop working tomorrow.

2. Start saving this week. Aim for putting back 15% of your salary. Look at it this way: it can only help you to have some extra money in the bank.

3. Establish a retirement account. Talk with your tax accountant about the best type of retirement account for your situation: Individual Retirement Account (IRA), Roth IRA, or a 401 (k), for example.

4. Develop passive income resources. How can you get started now to establish a new source of passive income and keep it going?

5. Focus on building assets. Maintain your home at the highest level. This way, if you decide to sell, your house will be in tip-top shape. Begin some short-term investments (five years or less) and regularly place some dollars there.

6. Reduce outgoing expenditures. Take a look at the amount of money you have going out in an average month. Look for ways to cut spending and follow through with instituting those cuts.

Regardless of your reasons for feeling you won’t ever retire, start planning for a time when due to health, age, or level of physical energy, you’ll at least slow down working. Put these strategies to work, even if you don’t plan to retire. You’ll be glad you did.