Stop Trying To Get The Highest Credit Score
Ever played a game where you have to level up and get more stuff and finally be the one with the highest rank, level or score? If you have, then you can understand how unnecessary such a feat can be. It seems as if everyone has been fretting over a few points on the credit scores they receive from different credit bureaus. Each credit bureau has different records of a person’s credit history and therefore, yields different credit scores. With credit taking control of our lives, this is a reminder not to go nuts over it.
- A Slight Difference of Scores Doesn’t Make A Difference
There is practically no difference between a FICO score of 750 and 800. Both scores are great scores and they both warrant low interest rates but going from a score of 750 to 800 takes quite a while. The prominent concern of most people is the drop in their credit score from closing a credit card account. It is conventional wisdom that says you shouldn’t cancel a credit card if it has a long credit history and a substantial line of credit. But, if this card was a reason for racking up a large amount of debt, it would be financially healthier to remove it.
- Credit Means Nothing If You Don’t Need It
Have you ever wondered what Bill Gates’ credit score was? It may be common to think that the wealthiest people in the U.S. also have the highest credit score. But, for a guy who has billions, he probably doesn’t need a line of credit. Therefore, his credit score is not necessarily the highest and it is possible to get a credit score higher than Bill Gates (but he most likely doesn’t even care what his credit score is).
- High Credit Score Isn’t Everything
While a high credit score will come in handy when applying for major loans, it is not a 100% guarantee that you will get the loan. A credit score is based on credit history but current financial situations have an effect too. So, if I had a FICO score of 800 from paying off my mortgage and student loans over a long time and I recently became unemployed, I am not the best candidate for a loan since I don’t have income to repay it.
Yes, 95+% of the nation will need credit at some point but it is futile to worry about a credit score when it won’t matter in the near future. This is to advise those who purchase credit scores on a regular basis even thought they don’t need to. If there is any concern of credit fraud, spread out the 3 free annual credit reports over a year and use them to check for it.
Photo credit: TheTruthAbout
Changing The Price From Dollars to Work Hours When Shopping
Time is the most precious and limited commodity in the world. The amount of time we have left is limited but the amount of money we can make is close to unlimited. When we get ourselves up every morning to head to work, we are trading our time, labor, and expertise for a salary. The money earned is spent mostly on living expenses but for some people, it is mostly spent on unnecessary luxuries.
After starting work in Midtown NYC, I found that a regular meal could cost an average of $10. I kept thinking to myself, “Wow, that’s almost equivalent of one hour of work”. That has been the reason for my frequent visits to fast food chains so that I get to keep more of what is left of my on hour’s work. My hourly wage is about $13 per hour and if I went to enjoy a tasty $25 lunch during my lunch break, my stomach was full at the cost of 2 hours of my time. The rule of thumb I like to follow is: the cost of your lunch shouldn’t surpass your one hour’s pay.
Time is money. Money is time. Now applying this mentality to everything else we buy, it could serve as a leash against impulse spending. It would be a good idea that shoppers ask, “How many work hours does this item cost me?” along with the famous “Do I really need this?”. Adding another weapon to your arsenal of smart spending tactics can only mean a happier wallet.
In the event that your salary became much like that of Bill Gates’, which is more than $460 per hour, your $200 lunch at a 5-star restaurant may be worth your time (although I don’t believe it is, no matter how good the food).
This is not to say you cannot spend on what you want. Each person has their own price for their time. With my recent purchases of an iPhone and PS3, I figure I spent about 53 hours at work to afford those two items. I admit I did have some hesitations before getting these guilty pleasures. My excuses would be that I had been saving for them all summer and that I also have money saved in the bank after spending some.
No one can tell another person that something isn’t worth their time. Thousands of people in the world devote their time to things with no direct rewards to themselves. Only you can determine whether the time spent at work was worth whatever you are paying for.
Photo credit: swanksalot
Do You Save Before You Spend or Spend Before You Save?
Without the intention of beating this question to death, I am asking through the perspective of a financially responsible individual. After landing a job and receiving my paycheck, it was “personal finance blogger” instinct to immediately move some money into the savings account and the Roth IRA.
Then, I thought:
I’m quite able to resist splurging. I know there are things coming up that I will need to spend money on (phone bill, school applications, transportation, and food). Sure, I can budget and estimate what I’ll need to spend but budgets have never been successful in doing what it is meant to do (for me). Why not pay for the necessities and save the leftovers?
Being liquid may be important to people at certain times of their lives and it certainly is for this time in my life. With dental school applications and college loan repayments, saving isn’t a top priority. Debt reduction and a future career take precedence over hording cash that could be better utilized to invest in myself.
Then, I rethought:
Saving a little now can make a big difference later. It’s never good to break sound habits that have led me to be financially responsible up to this point. If frugality and smart spending did so well for me, sticking to them while I have steady income could only benefit my financial situation. Why not saving first and force myself to spend the rest wisely?
Ease of access to money is a major reason behind why people spend it. Logic dictates that you can’t spend what you don’t have (though credit cards shatter this logic). If I move money into savings, I’d need time to take it back out. A delay in making a purchase can be a method of deterring myself from impulse spending. Maybe I’ll find that 2-3 days later I don’t really need whatever it is I was going to buy.
Frankly, to me, money that is out of sight is out of mind. My checking account is the one that I actually check on most often. As for savings and retirement accounts, they get a little attention maybe once a month. So, if my checking account balance is running low, I tend to curb my spending regardless of how much I have saved up.
The Decision
I took the preventative approach and saved first and spend later. Ever since I’ve gotten a steady income, I admit that I’ve been spending a little more than I normally do. With less spending power, there will be a constant voice in my head alerting me of my financial situation which would therefore convince me to stop spending or at least spend less.
The “spend first and save later” is not a bad option but it is definitely not suited for those who cannot control their finances. Many people have funds liquid enough so that they can buy what they need to buy. Whatever is left is saved, which would encourage one to spend less so that they can save more.
Photo credit: tsmall
Pinecone Research Signup Link – September 2009
The PineCone Research panel has just opened up again and they are looking for new members! I’ve been with them for over a year already and they are by far the best paid survey group out there.
From the referring links that I check through SiteMeter, I see that many of them arrive at my blog in search of this highly rare chance to be a part of such a great research panel. PineCone Research typically has ads on certain websites and clicking these ads are the only way one can apply to become a member. It is a highly selective and exclusive panel with swift payouts of $3 USD per completed survey. I know many people are looking to be accepted into this panel. PineCone Research is certainly at the top of my list of online money making opportunities.
They sent me an email asking me to reach to other would be interested in joining. So, if you’d like to join, click this link:
http://www.pineconeresearch.com/signup/ds552Referral1.asp
They do pick individuals of certain demographics. If you are selected to join, you should receive an email within a few days that you’ve been chosen.
Note: Only one member per household.
Sign up before it expires and good luck!
The Art of Having a Family Phone Plan With Your Friends
Before I finalized my decision to add an iPhone to my mom’s family plan, I did a little research to find out how I could afford this luxurious gadget without having to sell blood. After surveying my friends with iPhones, I found that one friend started a family plan with his other friends just so they could all have what they wanted while saving a good amount of money. Although I didn’t end up starting a family phone with my friends, I did give it serious consideration.
The whole purpose of a family plan with friends is to save money. Great perks about it is that:
- You can get the hottest new phone you’ve been wanting for a while. Your parents have a family plan already but you want that trendy iPhone or sexy Blackberry Storm that their phone carrier does not have. So, find a couple of friends who want the same thing and get it.
- Minutes won’t be wasted on calling these friends who you talk to the most since they are now in your phone plan (assuming this is a feature of your carrier). Many of us use our cell phone minutes on our friends more than our family. With a family plan where the members are your friends, you will free up the minutes to use on other people.
Using the highly popular iPhone plans with AT&T, let’s see how you and your friends can stay connected in style and save money doing it:
An individual plan: 450 Minutes + iPhone data plan + 200 text messages + taxes and fees = around $83
A family plan (4 people): 1400 Minutes + (4) iPhone data plans + Unlimited text messages + taxes and fees = about $280 = around $70 per personAnnual savings with family plan: $150+ per person / $600+ for the group
The Perfect ‘Friends’ Family Phone Plan
The success of a family plan with friends can be achieved following these steps:
- Find a couple of honest and trustworthy friends. This is the key to making this work. If you do not know a friend’s personality and character well enough to make the right judgment, then this friend is not a good candidate. The best friends to do this with are those who you have known for many years, have a stable source of income, and you know their address, workplace, and parents.
- Pick the most honest, trustworthy, and responsible friend to be the primary account holder. This person will be collecting payments from the group and paying the cell phone bill. If you picked the right friends to do this with, you should be having trouble deciding who takes this role (because all of you are equally trustworthy and responsible).
- Put everything down in writing. Things will come up and nothing is guaranteed to run smoothly. Have the terms of the agreement between the group down on paper and sign off on it. Exact numbers need not be included since they can vary. This step serves as the last resort should things not work out and legal action is taken.
- All members pay, to the primary account holder, an amount equivalent to their share of three or six months of phone service (repeated over the duration of the plan’s contract). This amount will, of course, be an estimate. The primary account holder should refund any extra funds or request addition funds as needed. Once again, this is not a problem with a close group of friends.
- Review monthly bills to monitor minutes usage. There are hefty charges for the minutes that are used past those in your plan. Make sure everyone knows how many minutes they are allowed
With great benefits come great risks. There are many complications with these types of arrangements with your friends. If it isn’t taken care of carefully, there will be financial problems and friendships could be in jeopardy. You must know what would happen and what to do if:
- Someone decides to terminate their line. Typical phone contracts would charge an early termination fee for each line that is canceled prior to the expiration of the contract. Calculate whether or not it is worth it for that person to pay the fee or just stick it out. One other option is to transfer the extra line to another person.
- Someone doesn’t pay their share. Prepayment was meant to lessen the effects of this unwanted, yet common, situation. Call the person, his/her home, workplace, and family. Try to resolve this issue without bringing in legal action into the picture. If all else fails, save the monthly bills, bring the group’s agreement, and suit up for court.
Photo credit: D Sharon Pruitt
