It Seems Cliche, but Always Pay Yourself First

One of the biggest challenges to the average consumer in the United States is building wealth, especially with so many people living “paycheck to paycheck”. The problem is that very few consumers today have specific financial goals and objectives and many, by the time the end of the month rolls around, find themselves broke yet again.

If you identify with those statements, and you’re looking for a solution, one of the first rules that you must follow in order to build wealth is to always pay yourself first.

Many people are confused by this term so it’s easier to simply take a look at a few examples. First, if you are the type of person that sits down once a month to pay your bills, the first check that you write out should simply be to yourself.

It’s simply a matter of determining how much money you can afford to set aside and then commit to take that money and deposit it into either a brokerage account, an IRA, a 401(k) or some type of mutual fund. Even if you don’t think you can “afford it”, still take that money and pay yourself first by putting it into one of the aforementioned accounts.

If you find that you can’t cover other expenses, make a note of how much  money you lack and make an effort to raise it somehow, either by working a part-time job, cutting back on other expenses and so forth.

If that means that you have to stop buying your Starbucks latte every day, cut back on going to the spa once a month, purchase off brand food products or cancel your premium television subscription, suck it up and just do it.

Many people go into debt to upgrade their lifestyle, purchasing cars that they can afford, clothing that they don’t need and luxurious vacations that only last for a few days. If that’s you, your financial problems are only going to get worse over time, unfortunately.

A lot of people reading this blog right now are probably cringing from the thought of having to cut back on some of their luxuries and, if that’s you, ask yourself this question; would you rather give up some luxuries now in order to have financial freedom later?

If you said no you can stop reading right now but, if you said “hell yes!”, you’re on the right track.

The fact is that if you decide to take control of your financial situation, the sense of empowerment that you will receive will affect every part of your life. Making the decision to become financially independent is a big step, no doubt, and if you can get past having to impress your neighbors with material goods we guarantee that it will change your life for the better.

One last word is simply this; once you decide to pay yourself first, stick to your guns and keep it up. If you want to be successful financially, and not be a slave to debt for your entire life, paying yourself first is the best way to do it.

Considering retiring overseas? You’d better answer these 4 questions first

The pull of retiring overseas can be a big one. Living costs can be much cheaper and the beaches much more beautiful, among other things. There are 4 questions however that you definitely need to ask, and answer, before taking the plunge and leaving the good old US of A for good. Lucky for you we’ve put together a blog on those exact 4 questions. Enjoy.

First, what exactly is your motivation? The fact is, many overseas countries lure retirees with discounts, tax breaks and lower costs of living. Dan Prescher, one of the senior editors at International Living magazine, advises that, if you’re keen on leaving the United States, saving money shouldn’t be your only motivation.

He should know, considering that he’s been living in Ecuador for quite some time. What he warns is that people should follow their heart, not their wallet, and expect to have to adjust to different way of life than they’re used to in the United States. He says that “It’s not like your hometown at half the cost,” adding that “and if you’re not ready for that, you’re going to be disappointed

Second, have you saved enough to give yourself a solid financial cushion? The fact is, most countries require that you have some type of guaranteed monthly income in order to give you a retiree visa. Even if they don’t, moving out of the country without a rather large cushion of savings to protect you is probably not a good idea.

You also need to consider that, if you want to go back and visit family and friends in the states, it’s going to cost you a bit more than if you live a few towns, or even a few states, away.

Third on our list is the question of whether the country you wish to retire in has excellent and affordable healthcare? When you consider that Medicare doesn’t cover your healthcare if you live outside the United States, the country you choose to retire in had better have a health care system that is affordable and high quality.

That being said, the cost of healthcare in some foreign countries is so low that you can actually forego healthcare insurance completely, although it is recommended that you continue paying annual premiums to Medicare to maintain your coverage, should you decide to return to the United States to have any type of major medical issue taken care of.

Our fourth and final question is, how will the fluctuating currencies affect your finances? People often don’t consider the impact of a strengthening and weakening dollar on their spending ability. Odds are you have spent a lifetime saving money in your local currency, then all of a sudden you retire abroad. Obviously there are countries where your money will go much further, and others that will eat away at your savings quicker than you imagined.

So there you have it. If you can answer these 4 questions without any doubts, and you’ve found a country that you absolutely love, you’re ready to book your flight and make your moving arrangements. Best of luck, and don’t forget to write.

Be careful with these pastimes as they might damage your credit

There’s no doubt that having a hobby or past time in this crazy, hectic world is a good idea. Hobbies are very relaxing (in most cases) and can give the hobbyist a lot of joy and pleasure.

That being said, the wrong hobby can definitely do damage to your credit and credit score if you’re not careful. In fact, the 4 popular hobbies below could damage it quite easily. Luckily we’ve put together some tips to help you avoid that and keep your credit looking good, no matter how you enjoy spending your time off. Enjoy.

Hobby 1: Borrowing books, movies and music from your local library.

Most people would never believe that borrowing books, CDs and DVDs from their local library could affect their credit, especially considering that it’s a free service. The problem is that, these days, libraries are commonly turning large, unpaid overdue book fees over to collection agencies in order to recoup that money. If this happens, the chance that the debt collector will report it to your credit bureaus is high, putting a mark on your credit report that could damage your credit for at least 7 years, if not longer.

Normally collection accounts that are less than $100 are ignored but, depending on how much reading, listening or watching a person does, they could easily exceed that amount. The point being, make sure your return those books and DVDs on time and, if you don’t, pay the fines quickly.

Hobby 2: Traveling the world.

For many people there’s nothing like the adventure of heading off to a new location in a different part of the country, or the world. Exploring a new and exotic locale is a wonderful way to expand your horizons, no doubt, but keep in mind that while you’re away things go on like normal back home. That includes credit card bills, mortgage payments and so forth.

The problem is that, since 35% of your FIFO credit score is made up of payment history, if you forget to pay any bills while you’re away your credit score will take a big hit once you get back and (late) pay them. One way to avoid this is to set up text and/or email reminders for yourself before you leave or, even better, set up automatic payments. If you don’t, and you forget to pay some bills, that relaxed feeling you have when you return will fade rather quickly.

Hobby 3: Working around your home and/or gardening.

Another wonderful way to relax is to work on your garden or putz around your home making improvements here and there. Of course this means frequent trips to your local home improvement warehouse store and possibly a retail credit card from your fave. One mistake that many consumers may however is to open several of these retail credit cards at the same time when they have a big project, because new credit applications account for 10% of a person’s FICO score.

When credit card bureaus see that a consumer has applied for several credit cards within a short period of time, they assume it’s because that consumer is having financial problems. Your best bet is to wait at least 6 months between applying for credit cards and, if your credit score is low already, waiting 12 months. This should keep that beautiful new garden from eating a hole in your credit score.

Hobby 4: Shopping till you drop.

For many people (ladies, you know who you are) shopping for new clothing and other items, and getting a “great deal” on them, is very satisfying. These days, with the advances in online shopping, engaging in this hobby is easier than ever before.

However, since about 30% of your FICO score is based on credit utilization, keeping a large outstanding balance on your credit card can damage your credit score. Financial experts recommend keeping this credit utilization at 20% or lower, something that might be difficult if you’re a “shopaholic”. Keep in mind that, even if you pay off those cards every month, every time that your credit utilization ratio rises above 30% your credit can suffer.

One tactic that you can use is to spread your spending between a number of different cards so that your credit utilization ratio on each one remains low, but then there’s the problem of paying off all of those cards in full every month as well. If you don’t, that “great deal” that you got on those new jeans might end up costing you more than if you had paid full retail.

At the end of the day, having a hobby or pastime that relaxes you is definitely not a bad thing. The point is to make sure that your hobby doesn’t damage your credit and create even more stress for you.

Being hounded by unsavory debt collectors? Here are the Top 10 Rules they MUST follow

When you’ve fallen behind on paying your bills and you’re strapped for cash, it’s hard to see a light at the end of the tunnel. Even worse is when debt collectors begin calling and hounding you relentlessly, something that can make a bad financial situation even worse.

The good news is that the Fair Debt Collection Practices Act enacted by the federal government gives you quite a few specific rights, as well as giving third-party debt collectors specific rules that they must follow whenever they contact someone about repayment of debt. Debts like auto loans, credit card bills and medical bills fall under these laws, among others and, if you’re feeling the heat from debt collectors, the Top 10 Rules that they must follow (below) will most likely help you a lot. Enjoy.

Rule 1: Once you tell them no, they can’t call you at work. If debt collectors are calling you at work and you tell them clearly that this is unacceptable, they must stop calling.

Rule 2: Debt collectors cannot verbally abuse you. Not only can they not use threatening or profane language when calling about a debt that you owe, debt collectors are not allowed to falsely imply that a crime has been committed because you didn’t pay your bill.

Rule 3: Debt collectors are not allowed to call you early in the morning or late at night. A debt collector is not allowed to call your home before 8 AM in the morning or after 9 PM in the evening, unless you give them specific permission to do so.

Rule 4: Debt collectors may not call you continuously or repeatedly.

Rule 5: Debt collectors are not allowed to talk to your friends, coworkers, neighbors or other family members about any debt that you owe. They are allowed to call and ask about phone numbers, addresses or where you work, but they aren’t allowed to tell anyone other than you and your attorney about any monies that you might owe.

Rule 6: Debt collectors may not threaten to have you arrested, and they can’t threaten to sue you unless they actually have plans to do so.

Rule 7: Debt collectors cannot demand that you pay more money than you actually owe them.

Rule 8: If you send a debt collector a written request that they stop contacting you, they must honor it. Keep in mind that if it’s a legitimate debt it won’t go away simply because you ask them to stop calling and they actually can still sue you for any amount that you owe.

Rule 9: A debt collector must send you a written notice of any debt that you owe within five days of their first contact. Any notice that they send must also explain the actions that you need to take if you don’t believe that the money they are asking for is actually owed by you.

Rule 10: All disputed debts must be verified before a debt collector can begin to start calling again.

Knowing these rules and write that you have can help you immensely, starting with the fact that if you tell a Collector you are aware of them you will most likely stop them from abusing your rights or their rules right from the start.

If you are being hounded by a debt collector and they are breaking any of these rules, the first thing you should do is contact your state attorney general’s office as well as the Consumer Financial Protection Bureau or the FTC. There are many state laws in effect as well to protect you from debt collectors who trample your rights.

You can also report any problems you have with a debt collector to the Federal Trade Commission by visiting ftc.gov or by calling 1-877-FTC-HELP / 1-877-382-4357.