Posts Tagged ‘Business’

FICO Score: Your I love debt score

August 26th, 2010
Visa Debit logo
Image via Wikipedia

Financial institutions and lenders are marketing debt. Why?  Because they make lots of money when you are in debt.

Don’t believe me that they are marketing debt?  Check out these three examples:

  1. Credit has become a media topic. Take for example this CNN Money article, 6 steps to improve your credit score and it’s accompanying graph about how to get the perfect credit score so that you can get the best rates on homes, autos and credit cards.
  2. Visa commercials telling you not to pay with cash because it slows life down.
  3. Look at your mailbox and how many pre-approved credit card offers are crammed in there every week.

So what can you do?

  1. Don’t believe that your “I Love Debt Score” (FICO Score) means anything about who you are as a person.
  2. Stop believing the lie that credit is better than cash.
  3. Stop the unsolicited credit card offers by calling 1-888-5-OPTOUT (567-8688) or visit www.optoutprescreen.com for more information.
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Posted in Credit Cards, Credit Reports, Debt, Financial Independence

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Is your rental property really debt?

August 25th, 2010
For Rent
Image by dougww via Flickr

Yes, rental real estate property is really debt.  If you doubt me just stop paying the mortgage and see what happens.

Many people bought rental property as an investment in the last run up of the housing market and today they are now the proud owners of an investment property that is worth less than they paid for it.

Don’t get me wrong, I love real estate as an investment…when you can afford to pay cash for it. Otherwise stay away from real estate.

I know too many people who bought a rental property knowing that they would not be able to cover the mortgage payment with the rental income.

Yes, there are some possible tax deduction opportunities, but in the end it’s just not worth the risk in my opinion.  There is just too many opportunities for financial stress; from gaps between tenants, to costly repairs or declining real estate values.

If you really want to own investment real estate consider forming a legal entity and investing with a group of people who can all invest together.

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Posted in Debt, Debt Free, Dreams, Rental Real Estate, mortgage

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You don’t need a better mortgage rate

August 16th, 2010
An image of an elephant that I doctored poorly...
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Headlines abound, “The wasted 4.44% mortgage rate” or “Super-low mortgage rates haven’t stimulated home buying market” and nobody is talking about the elephant in the room. The Elephant is truth that mortgage interest rates are not the problem.

You don’t need a better mortgage rate; you need to spend less and if you have an income problem you need to earn more.

Yes, it’s nice to be able to get a low rate on a mortgage loan and rates have been low for years.  A quick look at historic mortgage interest rates over the last 10 years show the average to be about 6% with the high being about 8.5% and the low about 4.44%.

The problem with refinancing a mortgage is that you start all over again at 30 years, 15 if you opt for a little higher payment. Thus you keep moving your self back to start every time you refinance.  So who is getting ahead; you or the mortgage broker who makes a commission on your mortgage?

What should you do to get ahead?

  1. Make a budget and live by it.
  2. Cut up your credit cards and use cash for discretionary purchases.
  3. Sell anything that has a loan that will take you more than 18 months to pay off – except for your house.
  4. Consider selling your home if it is costing you more than 25 – 35% of your take-home pay.

Need some help jump starting the process?  Here are 10 ways to raise $300, plus there are an additional bonus 8 ways. Apply 1 way each month and for the next 18 months you’ll be on your way towards being debt-free.

This may sound extreme, but remember that if you get debt free and find that you don’t like it you can always go back into debt.

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Posted in Budgeting, Debt, Debt Free, Dreams, Financial Independence, Financial Stress, mortgage, mortgage interest

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3 steps for getting unstuck from your job

August 15th, 2010
Cubicles in a now-defunct co-working space in ...
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Take This Job and Shove It became more than a song when JetBlue Flight Attendant Steven Slater made his grand exit and became a working-class hero.

So why did he become a working-class hero to some people?  Because those people feel stuck in jobs that are less than satisfactory.

There are 3 steps be getting out of a job you hate.

1. Get out of debt by paying off all non-mortgage debt.  It will take you about 12 – 18 months if you are really motivated.  A great way to get the help you’ll need is to take a class like Creating True Financial Independence or Financial Peace University.

2. Establish an emergency fund equal to 3 to 6 months of living expenses.  This will give you the freedom to try something new without having to worry about short-term income.

3. Find your passion. The is a wonderful book called The Passion Test and there is an online Passion Test.

These 3 steps will change your life.  Are you willing to do whatever it takes to get what you want?

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Posted in Budgeting, Debt Free, Dreams, Employment, Financial Independence, Financial Peace University, Passion Test, Personal Finance Class

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Overdraft Privilege is banking speak for Bank Fee

August 13th, 2010
OAKLAND, CA - JANUARY 28: A pedestrian walks ...
Image by Getty Images via @daylife

Starting August 15, 2010 banks will have to decline customers’ withdrawal requests at ATM’s and point-of-sale unless they give express permission to banks to let them overdraw their accounts for a fee. This change is a result of a change in the Federal Reserve’s Regulation E policy.

In Durango, CO this fee is running between $27 and $40

Bank of the San Juans – $27.00 fee

Bank of Colorado - $28.00 fee

First National Bank of Durango – $35.00 fee

Wells Fargo Bank – $35.00 fee

Alpine Bank – $40.00 fee

I understand that motivation of the banks; they want to make a profit.  They market this service as a privilege.  And it’s relatively risk-free for the banks.  Most overdrafts are small, on average about $17, and most customers make good on their bad checks while banks earn fees.

This new regulation is all about banks being able to allow your debit card and ATM transactions to overdraw your account; then they cover the transaction and charge you a fee for the “privilege”.

I recommend that you don’t opt-in for your bank’s overdraft “privilege” and instead you take control of your personal finances and stop paying unnecessary bank fees.

3 steps for avoiding overdraft fees are:

  1. Create a budget and follow it.
  2. Use cash for all discretionary purchases.
  3. Balance your checkbook each month.
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Posted in Budgeting, Financial Independence, Financial Stress, Overdraft Fee, Overdraft Privilege

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