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Organize Expenses in Your Budget in 3 Easy Steps


With the right budget categories, it’s easy to cut back and stay on track. ...

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Organizing your budget effectively to maintain stability. A good budget categorizes expenses, keeping them organized.

The base level of your budget houses fixed expenses. These expenses come first because they’re things you need to survive. This includes rent or mortgage payments, HOA fees, insurance, student loans and car payments. The cost for each fixed expense generally stays the same. However, changes may occur annually. But beyond these annual changes, fixed expenses are usually easy to plan around.

The next level of your budget houses all of your flexible expenses. Flexible expenses are also things you may need to survive, but they have no set cost. As a result, they can get too big to fit into your budget unless you monitor them closely to avoid overspending. This can make flexible expenses trickier to manage because they fluctuate. And some months certain flexible expenses may not show up at all. While it can be harder to control these expenses, they’re also easier to trim down if you need to cut back.

Finally, the top level of your budget is where all the nice-to-haves live. This is your discretionary expenses. This level includes everything from entertainment and subscriptions to tithes and trips to the gym or salon. As tough as it can be to kick these out, you can live without them, if necessary.

As you take stock of discretionary expenses take note of every incidental that may be hiding out. This includes things like your “cappuccino” factor – that’s the $3.50 you spend on specialty coffee each morning. That expense may not seem like much, but it adds up to nearly $1,300 a year! So take note of these small incidentals to make sure they fit in your budget and if they don’t, they have to go.

How to Analyze and Adjust Your Budget


By analyzing and adjusting your budget, you create flexible and stable financial outlook. ...

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Analyzing and adjusting your budget to foster financial stability.

A budget is a basic blueprint of your finances. It helps you organize and categorize expenses for a stable financial house. But you can’t just draw it up and toss it aside. You have to check in often and make adjustments as needed.

Fixed expenses only adjust if there’s a change, for example annual property tax adjustments on your mortgage. This consistency makes it easy to house fixed expenses.

On the other hand, flexible and discretionary expenses have no set cost. So you have to take steps to ensure they fit in your budget structure. To do this, you set target spending limits for each expense. Look back at what you spent in the last three months. Then take an average of those three months to determine a target spending limit.

Once your budget is set, compare your actual spending to the targets you set. If actual spending is consistently higher, you must cut back or adjust the target limit. Just make sure total expenses always fit the structure based on your income. If one expense grows, something else may need to be reduced or cut.

Come back to review your budget at least once per quarter or every three months. And also remember to make seasonal adjustments. Utility bills and fuel costs typically change from summer to winter. And you can also use your budget to plan ahead for key events like back to school and holiday shopping. By revisiting your budget often, you can always have a financial house that adjusts as needed to fit your life and goals.

How to Save Money on Air Travel for Your Next Vacation


Air travel tips for calculating out the value of frequent flier miles and other smart ways to save. ...

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[On-screen text] Be Penny Wise, Not Pound Foolish: Saving Money When You Travel

[Narrator] When you’re a Penny Wise you know a debt-free vacation, is a stress-free vacation. Smart vacation planning starts with wise air travel.

[On-screen text] Tips for Saving on Air Travel

[Narrator] When you’re a Pound Foolish, you use frequent flier miles without considering the actual cost. But Penny Wise does the math – frequent flier miles have a value of 1-2 cents and most programs require 25,000 miles as a minimum to purchase a basic ticket. So, you’d have to be Pound Foolish to use flier miles for a $100 ticket. Penny Wise only uses miles when the ticket value is more than $250, so it’s worth it.

[On-screen text] Tickets over $250-$500 are worth the miles!

[Narrator] Penny Wise also shops smart for travel credit cards and uses one with few restrictions and limitations. Pound Foolish has cards with so many restrictions that they HAVE to use their miles, even when it’s not worth the cost.

[Narrator] Pound Foolish also books the first flight they find because it’s the EXACT date and time that they want. But Penny Wise knows a flexible schedule can lead to big savings. They shop online, using aggregate sites to save money and avoid booking fees. They also check departure airport website to find airlines with discounts that need be booked directly with them. And they use consolidator websites that sell last-minute seats, too.

[On-screen text] airtech.com / airhitch.com

[Narrator] Pound Foolish misses these big discounts because they don’t like to leave at an odd date or time. Pound Foolish only flies out of the biggest, best airports like Chicago’s O’Hare or DFW in Dallas. Penny Wise uses smaller airports, like Midway and Love Field. And if they’re not familiar with an area, they search for alternate airports.

Penny Wise Holiday Shopping Tips


How to shop smart for the holidays to avoid a holiday debt hangover. ...

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Be Penny Wise, not Pound Foolish about holiday shopping.

Penny Wise shoppers plan ahead so they can enjoy the holidays, while Pound Foolish shoppers overspend and overstress. Because they fail to budget, costs go up and debt grows before the end of the year. They shop with friends, which increases the chances of impulse buys and shop tired or hungry, which leads to rash purchasing decisions.

Penny Wise makes a list before heading out to shop. And they take time to look for sales and comparison shop to get the best prices.

And while both Penny Wise and Pound Foolish may be out early on Thanksgiving and Black Friday, Penny Wise only hits the stores when it really counts to maximize shopping. Meanwhile Pound Foolish is out fighting over fad gifts that won’t stand the test of time. Penny Wise buys gifts that are meant to last, like clothes, appliances and electronics you need for school or work, and even practical gifts like tires.

Only Pound Foolish shoppers start shopping at the end of November or into December. Penny Wise shops year-round, buying one big item per month to spread out the cost. And they buy universal gifts like digital picture frames whenever they go on sale. This way they have inexpensive last-minute holiday gifts to give out as needed.

The Pound Foolish just buy, buy, buy and don’t even bother to track their receipts. Penny Wise uses receipts to track spending, in case retailers offer a cost difference after the holidays. They also ask for gift receipts to include with gifts for easy returns.

When the Penny Wise shop online, they only shop secure sites to avoid identity theft, because you’d have to be Pound Foolish to add to your holiday stress with credit fraud.

Penny Wise also knows how to save big on holiday meals. They plan meals carefully based on the number of attendees and how much everyone can eat. They also buy nonperishables in bulk because they can save up to 20 percent. Pound Foolish makes enough food to feed an army instead of a dinner party. And they don’t use leftovers, so much of what they cook gets tossed in the trash.

Finally, Pound Foolish puts everything on credit because it’s easy and they might earn rewards. But Penny Wise uses cash and debit when possible and they plan ahead to pay off high interest rate credit card debt in the first billing cycle. Purchases that take more than one billing cycle to pay off go on a card with a low APR. So when Penny Wise uses credit cards, they use two AT MOST for holiday purchases, while Pound Foolish ends up with a holiday debt hangover.

The Secret to Managing Debt within Your Budget


As we explain in the video, most debts don’t require extra effort to manage. ...

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Using your budget to strategically manage debt.

A solid budget structure makes it easy to control debt. Most debts are housed with your other fixed expenses – like your mortgage or auto loan are installment debts with fixed payments.

But credit card debt can be a little tricky to house. Credit cards are revolving debt. This means your bill grows as your balances go up. But if you have zero balance, then that bill disappears completely.

If you pay off your debts in-full each month, then credit card debt gets counted as a flexible expense. But if you carry balances over each month, then you may be better off making credit card debt payments as a fixed expense. This means you have to consider your budget as a whole to see how much you can afford to pay.

First, see how much you can afford to pay each month. You evaluate your free cash flow, to maximize the amount of money you have for debt repayment. Then you set this amount as a fixed expense in your budget. The funds are used to pay off one credit card debt at a time, starting with the card that has the highest APR.

So, if you have five credit cards to pay off, you make minimum payments on all four. Then use the rest of your funds to make the biggest payment possible on the debt with the highest APR. Once that debt is gone, you move on to the next. And you continue to pay each debt down one at a time.

If you don’t have much free cash to start with, knock out your debts starting with the lowest balance. Each debt you knock out frees up more cash to focus on the next. In normal circumstances, credit card debt payments should take up to no more than ten percent of your income.

Vacation Budgeting Guide: How to Avoid Vacation Debt


Tips for using credit cards for your vacation without incurring debt. ...

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Narrator: Don’t let vacation plans turn into vacation debt. Learn to be Penny Wise with your next vacation budget

[On-screen text] Be Penny Wise Not Pound Foolish: Vacation Budgeting

Narrator: If the biggest memento you bring home from vacation is a pile of bills, it’s hardly going to be a relaxing escape that you wanted. But Penny Wise vacationers plan ahead, so they end every vacation with good memories instead of debt. Here’s how Penny Wise avoid the debt that Pound Foolish vacationers usually bring home.

[On-screen text] Plan for the Trip You Want

Narrator: A debt free vacation starts with a solid vacation plan. When you’re Pound Foolish you don’t plan ahead to decide what kind trip you want. So, you end up paying for a ton of activities in a package when all you want to do is relax. OR you pay a-la-carte when a package would’ve been cheaper. Penny Wise talks about the trip in advance with everyone who’s going, so everyone gets at least a little bit of what they want.

[On-screen text] Establish Spending Expectations

Narrator: And because Penny Wise vacationers plan ahead for the perfect trip, they also have time to plan out how much they’ll spend. They research the destination and set target goals for daily spending. So, they can balance more expensive activities with cheaper or free events to keep the cost down daily and overall.

[On-screen text] Save Up, Even If You Will Use Credit.

Narrator: Vacation expenses often end up on credit cards, which makes it easy for these costs to turn into debt. If you’re Pound Foolish, you don’t bother saving for a vacation, because it’s just easier to use credit cards. As a result, you charge everything from reservations to incidentals on high interest rate credit cards. Penny Wise saves in advance. Even if they use plastic for reservations on the trip, they pay off vacation debts as soon as possible. So, they don’t come home to bills.

[On-screen text] Create a Vacation Fund

Narrator: That means Penny Wise creates a vacation fund. They set aside a little money out of every paycheck to cover expenses.

[On-screen text] Pound Foolish Travels at Peak Times.

Narrator: Pound Foolish vacationers take vacations at the same time as everyone else every year. So, they end up traveling at peak times, even when everything from air travel to accommodations and activities is much more expensive. And, they have to fight crowds and don’t get the best service, because the staff is usually overworked. Penny Wise travels at off-peak times, because they’re not only cheaper, but they’re less crowded and you get better service.

When it comes to accommodations, you have to be Pound Foolish to take the first offer you find online. When Penny Wise finds a hotel they like on a comparison website, they take the extra step of calling the hotel directly to ask about additional discounts or deals. And, while they may search high and low for the best deal, they know only to enter credit card information on a secure website to prevent identity theft.

Pound Foolish vacationers only pick full-service resorts or expensive hotel chains, unlike Penny Wise who’s willing to get creative in order to save big on accommodations. They consider all the options, from hostels to campsites at National Parks, to suites and condos with kitchenettes that help you cut your vacation food budget.

And, they even consider options like home swaps, where you stay in someone else’s home in exchange for opening up yours. Sites like homeexchange.org and intervac.com have established reputations as exchange networks. And while home swaps aren’t for everyone, only Pound Foolish rules it out before looking into it or looking at other options that can help them vacation for less.

Penny Wise even looks into things like volunteer vacations, where you get a trip of a lifetime opportunity, like a rainforest expedition to Costa Rica or elephant sanctuaries in Namibia.  You’ll have to work and you may stay in less luxurious accommodations, but you’ll travel for less and you can make a difference.

Finally, when Pound Foolish gets to a destination, they just check in and head straight for their room. But Penny Wise spends a few extra minutes at the desk to ask some additional questions, like if it’s possible to earn frequent flier miles or travel rewards for the stay since most hotel chains and independent establishments participate in at least one rewards program.

And speaking of rewards, Penny Wise is smart about getting it right and getting the right travel credit cards, since some allow you to use miles or points to stay places free.

The Secret to Maintaining a Balanced Budget


Using your income-to-expense ratio to ensure you have a stable financial house. ...

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Balancing your budget so you can stop living paycheck to paycheck

A balanced budget ensures that all of your various expenses can fit the foundation of your income, so you can maintain a stable house through any challenge. But what’s the right balance for your budget structure?

When you live paycheck to paycheck your income barely fits all of your expenses. In order to create balance, you’ll need to check your income-to-expense ratio.

Divide your total monthly income by your total monthly expenses. If the ratio is less than 1, it means you spend more than you make and your financial house may fall behind because it’s too big for its foundation. In most cases, you want to achieve a ratio of 1.25 or greater. This means you spend less than 75% of your income, which leaves 25% of your income as free cash flow in your budget.

Some of your cash flow can be converted into savings. This helps you increase the amount you dedicate to save, so you can have a robust, solid saving strategy that supports your goals. Ideally, savings should be treated like a regular reocurring expense in your budget. This means savings gets housed with the rest of your fixed expenses. Aim to save at least five to ten percent of your income each month.

This is beneficial because unexpected expenses always seem to show up. When a large expense arrives unannounced, it has the potential to throw your financial house out of balance. But free cash flow and savings help you accommodate unexpected expenses easily. That way, you don’t have to invite credit card debt in for unexpected costs, because credit card debt shouldn’t be a welcome solution to address budget challenges.

Penny Wise Holiday Survival Guide


Helping you get through the holiday shopping season without debt. ...

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A Penny Wise, Pound Foolish guide to surviving the holidays.

Penny Wise knows the best time of year can also be the worst for you budget. You have to plan carefully to avoid holiday debt. Only the Pound Foolish think it’s pointless to plan.

Follow these 7 tips to survive the holidays with less stress and debt.

First, make a budget and stick to it. Pound Foolish shops without a budget and ends up spending way too much. But Penny Wise budgets for everything from gifts to family meals. And once the budget is set, don’t deviate.

Penny Wise also knows you shouldn’t buy gifts for everyone. Pound Foolish buys individual gifts for everyone and way too many gifts for family members. Coaches, teachers, neighbors, bosses, coworkers… it never ends.

Penny Wise makes a list of everyone they need to buy for and then prioritizes it. They set spending limits for family gifts and do things like gift swaps for adults. Then they make what they can for everyone else.

Penny Wise also gets the whole family involved, making gift baskets or baked goods. Or they grow potted plants and let the little ones decorate the pots. Just don’t be Pound Foolish and start too late or you won’t have time for mistakes. And Penny Wise makes sure to have extras on hand for last minute gifts.

Penny Wise also likes to play Secret Santa. So they shovel snow or rake leaves for a neighbor without them knowing and they do family member’s chores when they’re out of the house. They can also leave gifts on doorsteps. Because only Pound Foolish thinks the value of a gift is measured by the price tag.

Penny Wise also creates personal gift certificates, offering good deeds that celebrate the spirit of the season. You can offer freebies like car washes or babysitting services, or coupons for fun outings that can be redeemed later. So while Pound Foolish is still paying off the debt from last holiday season, Penny Wise is cashing in and enjoying more great times with the family.

You should also focus on experiences. While Pound Foolish is stressing out on a mad-dash shopping binge, Penny Wise is making new traditions with the family, like skating trips and bonfires, and volunteering together to help those in need.

Finally, Penny Wise never forgets what’s really important. Pound Foolish gets pulled in by ads that say you need diamonds and cars to express your love. While Penny Wise creates a blessing jar that the family fills with things they are thankful for. Then together they read the notes and celebrate the joys of the past year.

Penny Wise How to Save Money Everyday


Be penny wise when it comes to saving and avoid pound foolish actions that lead to debt. ...

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Be penny wise when it comes to saving and avoid pound foolish actions that lead to debt.

We get it – saving money is usually easier said than done. When you compare the money you have available to save now versus how much you need to accomplish major financial goals in your life, the task can seem so daunting that you’re unmotivated to even try.

On the other hand, you’d be surprised just how fast savings can add up when you’re dedicated about saving money everyday in your budget. A few dollars here and there can become big money when its set aside effectively and put into the proper savings accounts. So even though it may seem like an uphill battle, the hardest part of developing an effective saving strategy is really taking the first steps to reduce costs in your budget so you can set aside as much money as possible each month.

Making sure savings are used effectively

The video above – and other upcoming videos in the Penny Wise, Pound Foolish series – lay the groundwork for how to find extra cash in your budget and avoid overspending so you can save as much as possible. However, setting the money aside is really just first step in developing an effective saving strategy.

In other words, if you’re just diverting all the money you set aside into a standard savings account with an interest rate of less than .05% then you’re really not saving effectively.  Instead, you need to organize your savings and allocate it for specific purposes. And at least some of that money should be diverted into savings and investment tools that grow at a faster rate so you can actually save effectively to achieve your long-term goals.

So let’s say you make $3,000 per month after taxes. In an ideal financial world, you want to set aside 10% of that income every month, so you save $300 every month. With a strategic saving strategy you might divide that money thusly:

  • $100 is transferred to a Roth IRA to support your retirement goals
  • $50 is put into your regular savings account to get pooled in with your financial safety net or rainy day fund for emergencies and unexpected expenses
  • $50 is put into a holiday savings account so you can have a cash-only Christmas without credit card debt
  • $100 is put into a Money Market Account, which has a higher interest rate than your standard savings account

Money Market Accounts (MMAs) are like savings accounts, except they have higher minimum balance requirements – usually at least $5,000. However, that higher requirement means you get better growth because the interest rate is higher. So you have to maintain a high minimum threshold, but this can be a better option for mid-term savings.

Additionally, once you save enough money in your MMA you can take a portion of that out while still maintaining the minimum balance to put into an investment with even more growth. So, for example, once you have $7,000 saved in the MMA, you can take out $1,000 and put it into a 1-year CD.

CDs (Certificates of Deposit) are investments that you open with a set dollar amount that you can’t touch for a specific period of time. At the end of that period, you get the money you invested back plus the interest earned. They can be a great way to set money aside for specific big goals. For instance, you know you want to buy a car next year, so you take out a 12-month CD and then use all of the money you receive next year to make the biggest down payment possible. This will give you a little extra for the down payment than you would have if you’d just left the money in a regular savings account until you were ready to buy.

Smart Vacation Tips for Affordable Car Rentals


Tips and tricks for renting cars without breaking your vacation bank. ...

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[On-screen text] Be Penny Wise, Not Pound Foolish: Saving Money When You Travel

[Narrator] Being Penny Wise when you travel ensures you don’t bring home debt. And Penny Wise knows car rentals offer good opportunities to save.

[On-screen text] Tips for Saving on Rental Cars

[Narrator] If you’re Pound Foolish, you automatically upgrade to bigger, better cars. It’s only a few dollars difference, right? Wrong. Penny Wise knows that a few dollars can really add up. Plus, high-end cars usually guzzle more gas. So, Penny Wise only rents as much car as they need.

[Narrator] They also ask about taxes and fees, since those add to the cost. But Penny Wise knows too-good-to-be-true deals are usually just that…  and they check companies before they rent from them. They also understand refund and cancellation policies in advance.

Explained in 60 seconds: Debt Management


From managing your debt in normal circumstances, to enrolling in a debt management program if you’re hav...

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debt management doesn’t have to be so
confusing here’s a quick and easy 60
second snapshot of how debt management
work in normal circumstances you manage
all of your debt on your own paying off
as much as possible each month to avoid
issues but when credit card debt gets
out of control the bills outstrip what
you can afford to pay a debt management
program helps you reign and run away
debt by combining all of your unsecured
debts into one payment you only have to
worry about one bill each month so
you’re not juggling multiple payments
plus with interest that’s reduced or
eliminated completely you can get out of
your debts faster even though you pay
less each month instead of the decades
it takes to pay off debt on a minimum
payment schedule most people are debt
free and 60 payments are left so if
you’re feeling overwhelmed and to rainy
days ahead we can help

A good budget provides a framework for financial stability and success. You build a stable money management structure that allows you to reach your financial goals. All of your monthly expenses should fit somewhere into that structure so you can avoid taking on high interest rate credit card debt for things that should be covered by cash.

Here’s a quick look at how a balanced budget works.

Building a budget starts by laying the foundation and adding up your total monthly income. Expenses should be separated between one of three levels – fixed, flexible and discretionary.

The first level is where all your needs with a fixed cost live. That’s any need with a cost that stays the same every month. The next level is where needs with no fixed cost live. In other words, things you can’t live without but the cost can vary from month to month. The final level is where your wants live. You know, the things that aren’t necessary but make life fun.

Credit card debt payments can live in one of two places in your budget, depending upon how much debt you have. If you have low balances and pay off what you charge at the end of every month then credit card payments live with those other flexible expenses. However, if you have large debts to pay off make big payments every month until you’ve paid it off in full.

Discretionary expenses are where all the fun and frills live in your budget. And this is where you should start if you need to make cuts to scale back. Savings often gets treated like a discretionary expense and shoved in with the rest of your wants, which means it can get lost in the mix or cut entirely. But really, savings should move in with your fixed expenses. Decide how much you can save each month and make that a set cost in your budget that you pay to yourself every month.

Once you’ve constructed a budget, you have to maintain it to make sure it stands up over time. Every few months compare your actual spending to what you planned to spend. This will make sure you’re keeping everything within the structure you set. This ensures that your financial house can hold all of your monthly expenses so credit cards don’t have to cover what’s been left out.

If you see you’re overspending consistently somewhere you may need to work on your budget again to make sure it’s not too bloated to fit the foundation. In some cases this may mean you have to cut something to make room. Eliminating debt or adding income will give you the ability to add these expenses back once you have room to fit them in.

When Do Credit Inquiries Decrease Your Credit Score?


Understanding who can check your credit report and when. ...

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Welcome, to the Game of Good Credit. Winning at the Game of Good Credit means taking the right actions to achieve a high score. So, let’s look at how credit inquiries can affect your score.

A credit inquiry happens when you authorize someone to run a credit check. Creditors and lenders run credit checks when you apply for financing. They look at your gameplay history to assess your creditworthiness.

In addition, employers, landlords and even insurance companies can run checks. They review your credit to evaluate risk. Even when you check your credit, it creates an inquiry on your report.

For the most part inquiries have a neutral impact on your credit game – they don’t move you forward or back. You can check your credit as often as you want and it won’t create a negative item or set you back. Employment and insurance related inquiries have a neutral impact, too. And even when a creditor checks your credit to extend a pre-approved offer the effect is neutral. So, while all these inquiries appear on the field, their effects are neutral. That’s why these are referred to as “soft inquiries.”

However, if you apply for a loan or credit card, that creates a “hard inquiry.” One or two hard inquiries within a certain time is fine – the effect on your game is still neutral. But if you have credit applications – one after another – within a six-month period, then it becomes an issue that can set you back from the high score you want.

If you apply for a mortgage or car loan and shop around, each lender runs a credit check when you request a quote. HOWEVER, in this case you don’t get penalized for comparison shopping. All the inquiries get grouped together so the effect is neutral. Just keep in mind that the same thing doesn’t happen with credit cards or other types of loans.

How to Repair Your Credit for Free


Great tips on how to fix your credit for free. ...

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Welcome, contestants, to an exciting round of the Game of Good Credit. If you’ve ever lost big in the Game of Good Credit, it can feel like you’ll never be able to win again. But if you take the right moves you can get back to winning score faster than you think.

A winning game plan often starts by cleaning up your credit report. It helps you clear the board so you can move forward effectively. Negative items can linger longer than necessary. You may have actually made some bad moves, but some negative items that show up may not be real at all.

So, the first step in your game plan should be to order your credit reports through annualcreditreport.com. Answer a few security questions, pass through the portal and access your profile from each credit bureau.  After a bad credit loss, you’ll want to play through three rounds of review – one for each bureau.

As you work through each round, look for trouble spots that could set you back. Make sure those items are legitimate. But keep an eye out for errors, such as mistakes in your personal information. But take note if your report shows duplicate accounts or accounts that shouldn’t be there.

Detail any information that’s not correct: Look for late payments that you actually made on time and identify bad account statuses that might be outdated. See if there are any hard credit inquiries that you didn’t authorize.

Now you can dispute these errors to the credit bureau to have them verified or removed. They have 30 days to respond to a dispute. Once that clock expires, the item must be verified or, by law, it must be removed from your report.

This is how you clean up your credit so past issues don’t affect your current game. If you’re ever unsure of any credit rules, call the toll-free number for the bureau listed on the report. They’re required to explain any rules you don’t understand so you can play with confidence.

8 Credit Habits of Smart Spenders


How to use credit without abusing it and causing debt problems. ...

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Credit cards are a great financial tool when used correctly. But you have to be a Smart Spender when it comes to using credit the right way.

Smart Spenders aren’t going out to get credit just because they can. And they don’t treat credit like money that they don’t have to pay back. They understand that credit cards can be used for convenience, safety and tracking, but even credit cards used for the right reasons have to be used responsibly.

Smart Spenders aren’t constantly going out and signing up for new credit cards. Instead they only get new credit when they need it and shop around for the best cards for their needs. Instead of being lured in by advertising, they research credit cards carefully to ensure they’re not blindsided once the card is in use or that the rewards aren’t worth the interest and fees.

Smart Spenders aren’t using luck or crossing their fingers hoping that they get approved because they know exactly how creditors judge creditworthiness. They understand the three Cs – character, capital and capacity. They know they have to show they’re a responsible borrower who can and will repay what they borrow, with assets to back them up.

Once Smart Spenders find the right card for their needs, they take time to read through the contract carefully so they know what they’re really getting into. They know their credit limits, can strategically pay around the grace period, and know how to avoid penalties – and exactly what those penalties will be if the card is misused.

Even though credit card statements always come with a minimum payment requirement, Smart Spenders always pay more than the minimum – it’s a trap. They usually pay off everything in full on credit cards used that month. This way they always start the month with zero balances on their cards. When they can’t pay off a balance in full, they make a plan to pay it off as fast as possible, and know how to read statements to find balance payoff information.

A credit card grace period is the amount of time you have to pay off a balance before interest charges are applied. A Smart Spender knows when the grace period ends in relation to each billing cycle so they can pay off the debt accrued that month before the interest charges are applied to minimize the cost of using credit.

Smart Spenders understand that just because a credit card company gives you a high credit limit, it doesn’t mean you should run up that debt. Smart Spenders check two metrics often: how much they can afford to borrow and what they can comfortably pay to eliminate debt each month. They check how much they can borrow by setting a limit at 15% of their net annual income. And they also check how much they can afford to pay back each month by calculating 10% of their net monthly income. This helps ensure Smart Spenders have enough money for bills, expenses like groceries, and even savings.

One of the biggest downsides to using credit is it makes it really easy to give into impulse buys when you see something you want in a store. Smart Spenders resist the temptation and only buy things when they need them after taking time to shop around for the best price. They may even think about it a few days before deciding to buy something to make sure they really have to have it. They also avoid other bad habits, like using credit to cover budget gaps, leaving balances to accrue interest month after month and using one credit card to pay another.

Now you know these eight credit habits to make you a Smart Spender, too!

Smart Spender Credit Tips: Using Credit Responsibly


Using the right strategy for your credit cards helps you avoid hassle and stay on budget. Learn the eight ways...

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Smart Spenders know how to use credit responsibly. Here are eight ways to ensure you can use credit without abusing it… or letting it abuse you

Smart spenders don’t run up debt just because they have the credit available

They know how much debt they can afford and stick below that amount

Not sure what you can really afford? Watch the Smart Spender’s Guide to Keeping Credit Affordable

Smart Spenders take time to read each contract and loan agreement before they sign anything

They know how interest, fees, penalties and payments are applied so they don’t get hit by unexpected issues they should have seen coming

Smart Spenders don’t let debts linger, especially when they can be paid off quickly

So they aim to pay off credit card balances in full every month or in as few billing cycles as possible

And they even check terms to see if loans can be paid off early if there’s no penalty for early repayment

Smart Spenders know it’s better not to hide from creditors if there’s ever a challenge with debt repayment

They call lenders and creditors to make arrangements when issues arise, like forbearance or temporary adjustment to the payment schedule

Smart Spenders don’t take having a credit card as a license to spend

They always comparison shop before spending and then shop with a list

So that means no buying on impulse because of a flashy sales display

Smart Spenders are also prompt about reporting lost or stolen cards in order to minimize the damage that can be caused by fraud

And if there’s any potential for identity theft, they know to do things like place fraud alerts with the credit bureaus

Smart Spenders only give out credit card information over the phone if THEY initiated the call OR if they’re certain of a caller’s identity

Because giving out information to the wrong people can lead to the added cost and hassle of ID theft

Smart Spenders only enter credit card information on trusted, secure websites

And they never enter card info after clicking from an unsolicited email that just shows up in their inbox

Those are just a few ways Smart Spenders use credit so it doesn’t cause problems

Watch all of the Smart Spender Videos to get even more tips on how to master credit and debt effectively so you can achieve stability

Explained in 60 seconds: Credit Counseling


Not sure if you need credit counseling? We take a minute to tell you what it is and why you need it if you are...

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credit counseling doesn’t have to be so
confusing here’s a super easy 60 second
explanation of how credit counseling
works if you’re facing financial
distress because of debt you have a few
options when it comes to finding relief
credit counseling helps you easier land
on the right option to use in your
situation that way
you can rest easy knowing your debt
solution is actually going to work you
start the process with a free debt
evaluation to see where you stand
a certified credit counselor looks at
your debts budget and credit score to
help you decide which solution will work
for you if a debt management program
ends up being your best option then your
credit counselor can also help you
enroll in the program they can tell you
how much you’ll pay on the program and
how long it should take person what it
would typically take on your own
so if you’re struggling to get ahead of
your debt we can help

Explained in 60 seconds: Credit Card Debt


We break down some key basics so you can understand how credit card debt works, how interest adds up, and what...

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the world of credit doesn’t have to be
so confusing here’s a simple 60 second
explanation of how credit card debt
works credit card debt is revolving this
means the more debt you put in by making
charges the higher your bills are coming
out on the other side so the amount you
owe each month changes based on how much
you charge each payment you make is
split into two parts paying off interest
and paying off actual debt if you only
make the minimum payments required the
bulk of each payment made goes to
interest as a result it takes a long
time to pay off your debt and credit
card purchases can end up costing double
or triple the purchase price with
interest added plus if you rely too much
on credit your payments can get so big
that you don’t have enough money to
cover all the expenses and your budget
if you want to be financially successful
you have to keep credit card debt

7 Credit Tips to Live By


The Professor offers seven essential tips for using credit wisely so you can get the most out of your credit c...

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Smart Spenders always that credit – any type of credit – is a loan. It’s real money that you’re expected to repay.

Smart Spenders start small with one card that has a low credit limit. They use that card responsibly and make sure they can manage the debt before they being to consider applying for more credit.

Smart Spenders study credit card agreements and closely read the fine print on inserts that are enclosed with monthly bills. This is important because card issuers can change terms with 15 days’ notice and these inserts may explain changing rates or fees.

Smart Spenders know that only meeting the minimum required payments is a trap! If you pay off a $1,000 debt at an 18% APR using only minimum payments it will take 8 years – yes, EIGHT YEARS – to repay. And the total interest charged will be nearly equal to the original amount, so it almost doubles the cost.

Smart Spenders know one slip up can create a negative mark on your credit report that can stick around for seven years. And if you make two of these mistakes your interest rate can escalate to the maximum until you make six consecutive payments on time.

Smart Spenders follow their budget diligently and keep track of exactly how much they’re paying towards their credit cards. They keep non-mortgage debt payments at less than 15% of their net monthly income. So if a Smart Spender takes home $4,000 per month they spend no more than $600 on debt payments, not including mortgages and auto payments.

Smart Spenders talk to their creditors and lenders whenever the need arises. Always notify issuers promptly when you move. And if you can’t make a payment you call them before you’re late, because Smart Spenders know creditors want your business for life. So they may be willing to make special arrangements that won’t leave a negative mark on your credit reports.

Smart Spenders take note of the first sign of debt trouble. So if they see they’re doing something like covering budget gaps with credit cards or using one credit card to pay another they take action. They find out how to get control of their finances and explore debt consolidation, low-interest lending options and credit counseling. They stop charging at the first sign of trouble. They put credit cards on lockdown until debt problems are taken care of and stability is achieved.

6 Credit Misconceptions: Secured vs. Unsecured Credit


In this video we debunk six common misconceptions about secured and unsecured types of credit so you can bette...

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misconception number one secured credit
is better because it’s protected the
truth that protection is for the lender
not the borrower secured credit is
credit that has collateral this
protection isn’t for the borrower it’s
for the financial institution in case
you default misconception number two
there is no difference in the risk
between secured and unsecured the truth
secured credit carries a slightly higher
risk because if you fail to pay your
collateral can be taken to recoup the
losses the company or financial
institution holding the debt limits the
risk of default with collateral
misconception number three property can
be repossessed to pay a debt even if
it’s unsecured the truth if a debt is
unsecured property can only be taken
with a court order sometimes borrowers
get nervous when they haven’t made
payments on an unsecured debt because
they think their possessions can be
taken away or that the police will be
called not true if a debt is unsecured
the only way property can be taken is if
a judge orders the liquidation in civil
so don’t let debt collectors scare you
they cannot come and take your property
they have to sue you first misconception
number four secured credit only refers
to special types of loans the truth
secured credit cards can be a good
stepping stone to unsecured as long as
you can manage the debt when you think
about secured credit your thoughts may
be about home and auto loans but it can
also refer to secured credit cards if
you don’t qualify for an unsecured
credit card because your credit score is
low secured credit cards can be a smart
way to build credit misconception number
five credit lines can only be secured
with tangible property the truth
tangible property doesn’t just refer to
a possession like a car or
it can also include cash that you put
down as a deposit cash is the most
common type of collateral used with
secured credit cards misconception
number six you’re 100% certain to lose
all collateral attached to secured debts
during bankruptcy the truth certain
property may be protected when you file
for bankruptcy and can even be kept
people often believe that you are
guaranteed to lose collateral during
bankruptcy but when you file for
bankruptcy an automatic stay is placed
on your repossessions or foreclosure
actions and with chapter 7 bankruptcy
where your assets are liquidated even a
home or car up to a certain value can be
saved as long as you’re current with
those payments

Debunking 6 Common Myths about Building Credit


Start building credit effectively while avoiding actions that could set you back. Learn how you can achieve th...

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myth number one if you can’t qualify for
traditional credit go for no credit
check some people think that if they
can’t get approved for traditional loans
and credit cards that they should take
any credit available offer set don’t
require a credit check but prepaid cards
don’t help build credit and other no
approval needed credit like high
interest rate short-term payday loans
can be really risky and they don’t count
as a good type of credit debts like car
loans and mortgages look good to
creditors because they show you’re
responsible but if you can’t qualify for
traditional loans and credit cards you
don’t have to turn to no credit check
types of credit instead get a secured
credit card you can open a small credit
line with the cash deposit and you can
use that to build credit by showing a
positive payment history myth number two
opening more credit lines the bills
credit because you have more borrowing
power don’t think that opening more
accounts will help you build credit
faster in fact opening too much credit
in a six month period can hurt your
credit score only open new credit lines
because you need them for a strategic
purpose and you know you can afford to
pay the debt back myth number three zero
balances are bad for your credit because
it looks like you’re not an active
credit user another myth is that if you
have credit cards with zero balances
banks won’t think you’re an active
credit user
using a card and paying it off each
month in full is the best way to handle
credit in fact maintaining a credit
utilization ratio of 30% or less is the
best to maximize your credit score myth
number four close those old accounts
that you don’t use people often stop
using old accounts in favor of cards
with better rates or rewards you may
think you should close those accounts
but the length of your credit history is
keep your oldest accounts active with
small transactions that you pay off
every month and you’ll keep your credit
history looking long and strong myth
number five late payments aren’t that
big of a deal as long as the account
isn’t charged off payment history is the
number one factor in your credit it
accounts for 35% of your credit score
calculation every payment that’s more
than 30 days late becomes a negative
remark on your report that sticks around
for seven years the best thing you can
do to build credit is to make timely
payments on all of your debts and if
you’re facing bad credit because of past
mistakes be sure to make timely payments
starting today and bring delinquent
accounts current myth number six good
credit takes a long time and high income
good credit is achievable regardless of
your income or net worth with on-time
monthly payments and keeping your debt
to a minimum you can achieve better
credit in about six to twelve months

Debunking 3 Common Myths about Types of Consumer Credit


This video teaches you how to be more strategic about managing your debt, which helps you avoid late payments ...

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Think you know everything there is to
know about credit maybe not here are a
few misconceptions that you might have
wrong misconception number one credit is
always paid back over a series of
payments the truth single payment credit
is paid back with one payment made
within a certain period of time people
often think credit refers to a debt that
gets paid back over time but single
payment credit is only paid back with
one payment made by a certain date the
upside it’s the only type of credit that
usually doesn’t have interest charges
the sources utility companies medical
services some retail businesses it
includes things like utilities that you
use throughout the month and then pay
for or a medical bill that insurance
doesn’t cover the way to handle it pay
promptly as long as you pay promptly
these debts usually aren’t a problem
misconception number two installment
credit always has better interest
charges the truth’ installment credit
isn’t just traditional loans with low
fixed rates the upside the benefit of
installment credit is that it usually
has fixed payments so you make set
payments over a set period of time this
includes mortgages auto loans student
loans payday loans and even store credit
lines for furniture and electronics the
way to handle it go for fixed avoid
short term installment is the easiest to
manage when it’s simple but many
subprime lending tools like variable
interest rates and short term
installment loans with rollover plans
can be tough to manage and sustain
better ways to handle it beware anything
that subprime monitor your debt to
income ratio closely maintain good
credit so you can qualify but even with
lending tools that aren’t subprime
be careful keep your debt-to-income
ratio below 36% and maintain a high
credit score so you qualify for fixed
loans at the lowest rates possible
misconception number three there’s no
way to get around high interest charges
with revolving credit the truth if you
pay off balances in full every billing
cycle interest charges don’t get applied
with revolving credit you pay off the
debt at regular intervals usually with
higher interest but those interest
charges are only applied on the balance
that remains after each billing cycle
the upside purchasing power the sources
credit card companies gas stations with
gas cards retail stores with in-store
credit cards in fact issuers offer
plenty of incentives to keep you using
the accounts like cashback gas discounts
and even things like credit score
tracking and fraud protection the way to
handle it painful or go from low APR
just try to pay your debts off in full
every billing cycle if you can’t pay off
for purchase or a balance incurred from
something like holiday shopping in one
cycle make sure to put it on a card with
low interest better ways to handle it
never let revolving debt payments take
up more than 10% of your income and talk
to your card issuers often especially to
negotiate rate

Comparing Credit Unions vs. Corporate Banks

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Choose the right institution for each specific need. ...

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In a world where credit unions and banks both work tirelessly to help citizens, does one do more good than the other? These two powerhouses face off head to head to see who wins when they’re pitted against each other.

Banks offer the business savvy and polish of corporate enterprises – selecting services that profit shareholders while serving the populace at large. Credit unions are the grassroots, hometown hero – supporting and serving members in Smallville without focusing on profit margins.

Corporate banks use every utility available to help citizens – so you have widespread national ATM access and the latest in online and mobile banking. Credit unions help whenever someone in the community calls out – as a result, ATM access, online and mobile banking service the community and expands as needed.

Corporate banks can be tougher too – minimum balance requirements and stricter lending standards mean banks expect citizens to step up a bit. Whereas credit unions try to help even the weakest in the community and lift them up – they have low balance requirements and more flexible loan standards.

But the battle for supremacy really heats up when it comes to rates. While banks may triumph with the number of utilities in their belt, credit unions help where help is needed most. Credit unions lift up the people, granting lower interest rates to citizens so they pay less to borrow.

Rates on credit cards and loans are lower – so people can escape dark times to enjoy better, brighter metropolis for all. Just a 0.02 percent different on a 30-year mortgage lowers monthly payments and total interest paid, and better serves everyday workers.

In a time where so many are falling victim, credit unions offer more safety and protection even as citizens get into situations with higher risk. And if the sky darkens once more with an economic storm, credit unions answer the call.

As people work to pull themselves into the light, credit unions help, support and carry them forward. Better rates on investments mean that anyone in the community can work to build a better tomorrow for themselves. Higher rates mean that instead of struggling in the gritty underworld day after day, it’s easier for everyday citizens to grow, flourish and find success even in an uncertain financial world.

Avoid Back to School Credit Card Debt

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Don’t let interest charges increase the cost of going back to school. ...

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Back to school shopping is the second largest consumer spending event for retailers. In fact, it’s even loosely used as a predictor for the holiday season.

Now more than ever kids feel pressured to keep up trends, including clothes, technology, school supplies, and whatever else is considered a “must-have” for the coming school year.

On average, parents spend a little over $300 for clothes, shoes and accessories for elementary school kids. And for middle and high schoolers that number jumps to $360. Electronics and computer needs for elementary school students cost about $178. For middle and high school students that number jumps to $230. School supplies for elementary, middle and high school students all come in at about $95-$100.

29% of households with kids age 6-17 plan on spending more than they did last year, and the same is true for college students and their families.

Here are some tips and tricks on how to save money going back to school this year, regardless of the grade:

  • Before you go clothes shopping inventory the kids’ closets first. See what works from last year and only buy the things they really need.
  • Also always check out the summer clearance sales first before you go to full price items.
  • Avoid buying trends. If your kids insist on buying a couple of trendy items have them work for it or use their own money.
  • Also, don’t shop all at once. Buy what you need to start the school year, and then slowly add pieces as the fall and winter clothes go on sale.

When it’s time to go shopping for electronics:

  • Make sure you buy what your child needs, not what they want, and consider getting warranties.
  • Make sure the warranty covers accidental damage and not just manufacturer defects.
  • And also, avoid buying the latest smartphones; they’re really not necessary for going back to school

Buying school supplies can be a lot of fun but it can get expensive:

  • So it’s important to check the published list of school supplies from your child’s school. The list will narrow what you really need to buy
  • And don’t forget to inventory leftover school supplies from last year
  • And remember to only buy in bulk items that the kids will use a lot of, like paper, pencils and pens.

8 Secrets to Successful Retirement

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How to make plans for the retirement you want, starting right now. ...

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Do you want to know a secret?

Have you heard those rumors that retirement is almost impossible to achieve? We have a few secrets to share straight from the lips of those who know, because they’re retiring now.

Retirement will come sooner than you think – 65 is the traditional age to retire but many people plan to work past age 65. But the truth is 61 is the average current age of retirement, so it’s closer than you might expect…

… Unless it doesn’t come at all, as many retirees are still working at least part-time. So just because you’re officially retired from a full-time career, you may still be doing some type of work.

Retirement may last longer than you expect. Most people spend about 20 years in retirement, but medical advances mean life expectancies are getting longer.

Seventy five percent of your income isn’t enough. That used to be common wisdom, but if you don’t earn a lot of money then you could need as much as ninety percent of what you earn annually in retirement.

Have you heard Florida isn’t the retirement mecca? Based on everything from healthcare quality and cost of living to taxes and crime, Wyoming is now the best place to live if you’re retired.

Almost three out of four retired Boomers don’t work at all, but those who are working aren’t always doing it for a paycheck. Some want to stay active, keep their minds sharp and have a purpose. Oh, and of those who aren’t working, half sight health reasons as to why they don’t. And speaking of that…

Healthcare should be your biggest concern. The average reoccurring cost for Medicare beneficiaries is almost $2,000 per year and at age 85 or older nursing home costs average more than $24,000; some pay over $66,000. Medicare premiums and deductibles are about $3,000 a year. Nursing homes cost between $24,000 to $60,000 per year. And in fact, a retired couple may need up to $220,000 for healthcare costs over the course of retirement.

And finally, perhaps the biggest secret of all – federal retirement benefits are still relevant. Although people use pensions, IRAs, 401k’s and investments, Social Security is STILL a top income source for retirees. In fact, the average retired worker receives over $1,200 every month!

The True Cost to Tie the Knot

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Interest charges are the real ball and chain. ...

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Marriage – such a blissful time planning a wedding. Until… AHHH! It costs how much?!?

How much more would it cost for a wedding if you charged everything on a credit card? Well, we’ve broken it down for you. The cost of an average wedding is over $30,000, and that’s not including the honeymoon.

The average wedding dress is about $1,300, but since you’ve used a credit card and it has a 15% interest rate, if you just make minimum payments it would take over 6 years to pay off and you’d end up spending about $750 above retail.

Guys get off easy and only have about $250 to spend on their outfits. But with a 15% interest rate, making minimum payments it would be paid off in 11 months for a total of $273.34. Not too bad.

Invitations run about $440, but if you were to make minimum monthly payments the cost would be closer to $500.

A wedding ceremony, including the location, officiant and accessories costs about $2,200, but if you use a credit card with a 15% interest rate it could take you 10 years to pay it off and an extra $1,600.

On average, wedding décor and flowers cost about $2,000 but if you charge that amount it could take up to 10 years to pay it off and you’d pay an extra $1,500 above the original price.

Catering costs take the cake or, I should say, a big chunk of your money. Feeding your guests, on average, is the most expensive component of a wedding, weighing in at a whopping $9,803. Charging this on a credit card could leave you paying DOUBLE the original price and take nearly 20 years.

The memories from this special day will last a lifetime, but so might the debt you take on from capturing these memories. The average cost of photography and video is $4,350. This means you could be spending nearly 14½ years and it could cost double the amount of the initial price.

Music for the ceremony and reception comes in at about $1,700 and it could take nearly 8½ years and cost you $2,900 if you use a credit card with a 15% interest rate.

The average price for wedding transportation is about $770, but if you put this on credit and only make minimum payments, it could take you over three years to pay off the transportation costs and cost over $200 just in interest.

If after all this, you’re ready to elope, we understand. But we hope you have the best wedding you can afford without using high-interest rate credit cards to finance it.