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Why Having Savings Is Essential To Having Good Credit

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The other day, I read a couple of frightening statistics. In an article in CNNMoney, the statistics quoted that nearly 75% of Americans were living paycheck to paycheck and that more than 25% of Americans had no savings to fall back on in the event of an emergency. These statistics are frightening because having savings available is essential to maintaining a good credit score, which is important because your credit score affects many different areas of your life. Here are some of the reasons why having savings available is so important.

Paying Bills On Time

Having savings available increases the chances that you will be able to pay all of your bills on time and in full. In the event that there is a temporary hiccup in your finances, the savings can be used to cover the gap between the amount of money you have and the amount of money you need to pay all of your bills. Your bill payment history is a significant part of your credit score calculation and every late or missed payment has the ability to decrease your credit score by a considerable amount. It is recommended to have a savings amount available in an emergency savings account equal to three months of regular monthly expenses in case of a job loss or an illness that leaves you unable to work for a period of time.

Paying For Unexpected Expenses

Life is uncertain and unexpected expenses can arise at any time, so it is best to be as prepared for them as you can be. People that do not have savings available often have to rely on credit cards and short-term loans with excessive interest rates when these unexpected expenses arise. If they are unable to pay off this use of credit with their next paycheck, there is a good chance that they will carry the balance for a while, paying interest month after month until the amount is paid off.

The Benefits Of A Higher Credit Score

In additional to the increased chances of approval for credit products and the lower interest rates charged for those products, there are many other benefits of having a higher credit score that can also be realized. People that have credit scores on the higher end of the spectrum find it easier to be accepted for new jobs and promotions for jobs with more authority or higher security needs. They also are approved for rental homes and apartments more often because the property owner can see that they have a good track record of paying their bills on time. They may also have lower costs for insurance products and have their security deposits for utilities and cell phone service waived, saving them hundreds of dollars that those with lower credit scores must pay.


Changing Your Mindset Can Help You Save More Money

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Benjamin Franklin U.S. 100 bill 292x300 Changing Your Mindset Can Help You Save More Money

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One of the biggest barriers to improving our finances is our mindset about money and how to spend it. If you grew up in a household where money and finances were not regularly discussed amongst the entire family, your mindset about money may not be the same as someone that has had some type of financial education throughout their life. Do not despair, as it can be easy to change your mindset about money and become more financially savvy. It is simply a matter of changing the way that you think about money. Here are some tips that can help you on your journey to a better financial future.

Keep Your Spending In Perspective

A good way to change your mindset about your spending is to keep what you are spending in perspective relative to your income. Many people that regularly overspend do not take the time to think about how much of their income that purchase is actually taking up. Before making a purchase, think about how much of your time you are actually sacrificing for that item instead of how the purchase will affect your bank account. If you make $15 per hour at your job, 6 hours of your time goes towards buying a $90 pair of shoes and 8 hours of your time goes towards purchasing a $120 coat. Think about whether the purchase is actually worth the time you have invested to make enough money to pay for it.

Avoid Paying Interest For Your Purchases

Paying interest means that you are paying extra to borrow money that you do not have. Credit cards and small short-term loans have the highest interest rates of all of the financial products, earning the companies issuing them billions of dollars per year. Those billions of dollars would be better used improving the lives of the people that are paying them. If you know that you will be making a big purchase in the future, start saving up for it so you can pay cash instead of using a credit card. Establish an emergency fund for unexpected expenses and resist putting vacations and other leisure activities on a credit card unless you can pay off the entire amount at the end of the month. Over the course of a year, you can reduce the amount of interest you are paying from hundreds of dollars to barely anything at all.


Full-Scale Home Remodeling Ideas & Home Renovation Loans to Help You Afford Them

share save 120 16 Full Scale Home Remodeling Ideas & Home Renovation Loans to Help You Afford Them

If you’re frustrated with the lack of space or amenities in your home, you may be considering a home renovation. When it comes to renovating your home, there are unlimited possibilities ranging from fresh touches to a full-scale home remodel. To determine which home remodeling ideas are right for you, decide how long you plan to stay in your home, what you can afford and what your neighborhood property values look like.

Is a full-scale remodel right for you?

The most important factor when considering full-scale remodels is how long you intend to stay in your home. If you think you’ll move within the next five years, building an addition or gutting the kitchen may not be a wise financial move. However, that doesn’t mean you can’t spruce up the aesthetics with small-scale upgrades to improve resale value. If you’re planning to stay in your home for the next 10 years however, a more customized, full-scale remodel may be in order. Don’t be afraid to refinish the basement or create a master suite. Finally, with whatever remodel you choose, consider your available budget and choose designs that aren’t too over-the-top for your neighborhood as it could hurt your resale value.

Three home remodeling ideas for a full-scale remodel

So you’ve decided you’re going to stay a while, what can you do to make your home suit your needs? Use a home equity loan to finance your larger home renovation projects. Plan out the design you want, think about what utilities and appliances will be affected and obtain quotes from several different contractors to draw up a budget. Once you have a budget, you can obtain a home renovation loan, which uses your home’s equity as collateral and will give you a lump sum to pay for your upgrades.

  • Remodel your kitchen: In older homes, redesigning the kitchen can be a challenge as you may be dealing with pests, mold and outdated décor like linoleum or wallpaper. Some ways to give the room an updated look may be laying stone or tile, updating the appliances with more energy efficient versions, and expanding your counter space. You might even knock out a wall to create a breakfast nook. If you do choose to go that route, make sure you or your contractor know where the load-bearing walls are.
  • Build an addition: An addition can provide the space you need for a new nursery, home office, in-law apartment or extra family room. Since this project is a larger undertaking, make sure you follow local building code restrictions and find a contractor who understands your dreams for the space.
  • Remodel your master bedroom: Whether you’re just starting to think about having children or already have children and want a private space, a master suite may be the perfect option. Customize the suite with a master bath complete with heated floors, a Jacuzzi tub, romantic lighting, and his and her sinks. You may also consider expanding the bedroom space and adding walk-in closets.

Choosing the right financing option

If you’re doing a few improvements before putting your house on the market, you may want a home equity line of credit instead of a home remodel loan. With a home equity line, you have easy access to funds whenever you need them, making it a flexible option perfect for smaller projects. It’s also helpful when you don’t have all the costs of a project finalized and want to have the ability to adjust what you borrow more easily. If you choose a more involved plan, a home renovation loan using your home equity could be the perfect choice. Talk to a trusted lender to help you find the best option to finance your home remodeling ideas.

Sponsored content was created and provided by RBS Citizens Financial Group.


How To Deal With A Charged Off Debt

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If you have a debt that has been charged off, there is a good chance that your finances have been in turmoil for a while. Once you have gotten your financial house back in order, you may think that you no longer have to pay the charged off debt because it has been removed from the balance sheet of the creditor you owe. You may not even be receiving statements on the account from that particular creditor anymore. Unfortunately, putting that charged off debt in the back of your mind is a big mistake because technically, you are still responsible for paying off the amount owed.

What Happens When A Debt Is Charged Off?

When a debt is charged off, it is removed from the balance sheet of the company that is owed because it is typically more than 180 days past due and it is unlikely that it will be paid anytime in the near future. This allows the company to take the amount off of its books as a current asset for accounting purposes. This has nothing to do with you repaying the debt according to the agreement you signed for the account. In order to limit the amount of damage to your credit score and credit history, you should try to make an agreement with the creditor that allows you to repay the debt as quickly as possible at a payment that you can afford.

Is There A Statute Of Limitations On Legal Actions Against Me?

You are responsible for repaying the debt that you owe for as long as the amount is owed. However, there is a statute of limitations for forcibly collecting on the debt through legal action. If the account is an open-ended account like a credit card account, state law generally dictates that the creditor cannot sue the account holder for the debt after six years have passed. A few states cap the length of time at three years, while Rhode Island allows for legal action ten years after the account has become delinquent.

Will Debt Collection Companies Still Try To Collect?

Even if enough time has passed that the legal action is no longer on the table, debt collectors can still try to contact you and get you to pay off the debt that you owe. These debt collection companies buy delinquent debts from companies for pennies on the dollar and they get to keep whatever they can get you to pay, so they can be quite aggressive in their attempts. Any charged off accounts are removed from your credit history after seven years, so it may take that long for you to stop feeling the negative credit effects of having an account that was charged off.