Money Plan SOS Personal Finance
Helping you Pay Attention, Not Interest
Want to understand investing and saving for retirement? Coach Scott Maderer joined me for a long discussion about saving money, investing for retirement, and ways to save on taxes.
Enjoy!
Thanks for watching.
Leave any comments or your question below.
Can you really get by without debt? Would you want to?
This was the question posed to me by the Money Mastermind Roundtable on July 10, 2014. I absolutely believe you can get by without credit – and it doesn’t really matter if you want to or not.
See the bottom of this post for a replay of the show and my thoughts on this topic.
In preparation for the Money Mastermind Show discussion about I pulled my credit score.
Yes, really.
I don’t focus energy on my score. Instead, I focus my time an energy on:
For you, the viewer, I post this video of me buying my credit score through MyFICO.com.
I also walk you through the FICO Score Simulator, a nifty little tool that helps forecast how certain financial products and events affect your score.
Hint: Most actions don’t improve your score very much – but missing a payment drops your number like a rock! The lesson to be learned? Pay your bills and debts on time and you will have a good credit score.
I checked my credit score about 2 years ago. It was 769. According to FICO’s algorithm the more debts you have (and pay on time) the better your score. However, my credit report only shows six items – all of them closed since 2007 except our mortgage.
For me to start borrowing money, even on a credit card that I pay off every month, would not be worth all the trouble – especially since we don’t plan to borrow money.
If we did need to borrow money, it would likely be for another home. We have a long history of being able to pay our bills on time so we should be bankable for a loan. I am willing to go through manual underwriting or use a service like eCredable to prove our credit worthiness for a house.
So, the moral of this story? Focus on your personal finances, pay your bills on time, and pay attention – not interest.
Replay of the Money Mastermind Show from July 9, 2014:
In this video I show you how to get a free credit report in under 4 minutes. I also show you how to get a free credit report every 4 months for free.
We need to check our credit reports once every year. AnnualCreditReport.com is the only website authorized by Federal Law to get you a free credit report. Many of the other sites use free credit reports as a way to entice you to purchase their monthly credit monitoring plan or purchase your credit score. By checking your credit report for free every 4 months you don’t need to purchase your score or sign up for a monthly monitoring fee, you just need to check to see that everything on your report is accurate.
Go to AnnualCreditReport.com, click on Request your free credit reports (you will also do this on the next page)
Fill out the information requested on the next page including
If you are sight-impaired or have problems with Captcha codes like I do then click on the “use audio CAPTCHA Security” link and follow the instructions
There are three major credit reporting agencies. These are privately owned, for-profit entities selling their services to lenders and consumers. They comply with the Federal Law by allowing consumers (us) to get a copy of our credit report for free by going through AnnualCreditReport.com.
Select which (or as many) of the companies you want
I recommend you select one in April, another in August, and the last in December. This allows you to get a copy of your credit report 3 times a year.
You will be asked to enter the last 4 digits of your social security number before reviewing your “order”.
The next page will ask you to verify your identity by answering multiple choice questions. This ensures you are the only person who can access your report.
You are now able to review your report. Look for anything out of the ordinary like old accounts that are not showing as closed, accounts that you have never opened, or negative payment history that is showing as late or defaulted.
I suggest you print a copy and/or save it as a PDF.
If you find inaccuracies then it’s time to take action.
As you can see in the video, Experian has a blue button to Start a Dispute. Follow the directions to have any questionable items verified or taken off your report completely.
This is the only time I recommend spending any time and/or effort to improve your credit.
It is my opinion that simply paying your bills and debts on time is all it takes to have a good credit score.
Your credit score is entirely based on the items found on your credit report, so spending time researching the best credit card offers and taking out loans (debt) to increase your score is not beneficial to your net worth. Your time and effort is best used creating an income, spending time with family, or even walking the dog!
Pay attention to your credit history but please don’t pay interest to improve it! Now go and clean up your credit report (for free).
Instant Access to:
When you join as a VIP Member, you’ll also get these exclusive VIP Only Bonuses, which are super time-sensitive (only available through midnight January 27, 2014):
This free webinar will be held on January 23rd at 8pm EST / 7pm CST / 5pm PST.
You only need a computer with an internet connection to attend.
Watch this video, then enter your email address to receive updates
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Credit cards, debit cards, gift cards, checks, and cash are a convenient way to purchase things. However, Credit cards are against my religion. Why? Credit cards aren’t evil and God didn’t forbid us to take from the credit card tree. How can this be a religious argument?
NOTE: This is in no way a condemnation of your credit card usage. This is my own personal belief. It is my hope and prayer that it will answer some of the questions you didn’t realize you had and will help you make an informed decision for yourself.
For more, watch the conversation with Dr. Jason Cabler and Jon White in the video at the bottom of this page.
Dr. Jason Cabler says that using credit cards “allows people to spend money they don’t have”. If you don’t have money but buy something on a credit card then then you are overspending. The end result is debt, and debt steals opportunities from our future! We could say “credit cards don’t cause overspending, people do” but credit cards take over-expending ourselves to a whole new level.
Money fights and money problems are the #1 cause of divorce. We all want control of our money and conflicts arise when our spouse spends more money on what they want than what we want. Credit cards allow all purchases to become anonymous until the bill shows up 30 days later – and then arguments begin!
What are the benefits of using a credit card? These are the top 5 reasons people want to use credit cards:
[pullquote position=”right”]Debunking the Top 5 Reasons To Use Credit Cards[/pullquote]
Need a credit card for travel: I’ve heard this excuse for years, haven’t you? However, I have not had an open credit account for the past 6 years. Not one rental car company, airline, or hotel chain has refused our money. We’ve traveled to Florida and even a horse ranch in Wyoming. Nobody cared that my plastic didn’t say “Credit”, why should you?
Possible discounts on purchases: Some credit cards offer discounts on purchases such as gas or offer one free checked bag on their airline. Jon White tells the story of how the promise of saving 3 cents per gallon of gas will save you a whopping $.45 a fill-up (15 gallons discounted by three cents a gallon). A checked bag might save you a $25 but restricts you to purchasing your airfare through that specific airline using their card. Could you have saved money shopping around instead?
Using OPM: Awwww, isn’t that nice? Credit cards allow us to use OPM – Other People’s Money. What’s the problem with that? Proverbs 22:7 says “The rich rules over the poor and the borrower is slave to the lender.” You are a slave to the credit card company until you pay the money back. You also risk paying interest and penalties. I don’t have that problem with I use SOM – Steve’s Own Money!
Zero Liability Protection: Visa and MasterCard credit cards offer “Zero Liability Protection”. If your credit card is stolen or compromised (someone uses the card number without your consent – even if the card is still in your purse or wallet) then you don’t have to pay for it. BTW: Debit cards have the exact same protection (link to Visa’s Zero Liability Policy for Debit Cards)
Reward points/miles: Who doesn’t like saving up for stuff? Instead of stashing money aside the old-fashioned way instead we build up points and miles with a preferred credit card. However, SOMEBODY HAS TO PAY FOR THE REWARDS! Credit card companies charge businesses a fee for each and every swipe and credit card purchase. Vendors pay higher rates for credit cards, even higher for those with big reward programs, than debit cards, checks, and cash combined! This requires the store to charge more for the things that you buy to make up for the loss.
[stextbox id=”warning”]Want to learn more about how credit cards are harming your neighborhood?[/stextbox]
Matthew 22: 36 – 40
A Pharasee asked Jesus, “Teacher, which is the greatest commandment in the Law?” Jesus replied: “‘Love the Lord your God with all your heart and with all your soul and with all your mind.’ This is the first and greatest commandment. And the second is like it: ‘Love your neighbor as yourself. All the Law and the Prophets hang on these two commandments.”
As a Christian trying to help others with their personal finances I certainly can’t promote credit cards for all the reasons above. My goal is to help you escape the trappings of debt and instead build wealth so you can be the person God designed you to be. Working a 2nd job to make the car payment was not what God had in mind for you. Beat debt, build wealth, and help others with the resources God has entrusted you with.
As I learned more about money and leaped into faith (and out of credit cards) I found that there are more ways to mess up using credit cards than not using them. It took a few years to understand why and my hope for this post is to help you answer those nagging questions you may have had. Feel free to leave your comments below. Also, there is a more in-depth discussion in the video below with Dr. Jason Cabler and Financial Coach Jon White.
