How Monthly Liabilities Apply

Using the example from two days ago, let’s say you’re trying to decide how much house payment you can afford coupled with other monthly obligations: A vehicle payment for $300 per month & $80 per month in credit card payments. Assuming our example income of $5,638 per month, in order to purchase that same house for $350,000, the monthly income would have to be $6482 per month adjusting for total monthly liabilities (determined house payment + other debts) ÷ monthly income. The other choice is to reduce the purchase price to $300,000, with effectively $380 per month in other debts, which influences borrowing power by $50,000.

*Mortgage Tip: take 45% of your monthly income less monthly liabilities. This is the maximum house payment you can qualify for, then simply equate what the monthly payment is relative to how much you can borrow based upon using $725 per month for every $100,000.

12 DAYS OF MASTERING CREDIT - DAY 11

If you're Bill Gates or Warren Buffett then you probably don't need to read this article. This means that you are probably too rich or too smart or perhaps both, so you have this one financial trick under control.

However for the rest of us, making, and especially adhering to a budget is essential to ensure that our money gets used the way we need it to. Perhaps you are in the best situation possible financially, you have great income you pay all your bills on time each month. Nevertheless you may find that you are spending more than you wish on items that may seem like necessities but are really luxuries.

The one mistake I've seen beginning budgeters make is becoming financial party poopers. You have to keep in mind that you do not want to cut out ALL the fun, you have to make room for entertainment and splurges or your plan is doomed to fail.

Remember its like a financial diet, moderation is the key. If you like to eat out everyday of the week, it doesn't have to stop. You can still eat out but perhaps just not every day of the week. Here are 10 steps to budgeting.

1. Budgets are a like flies

Nobody likes them around and we all find ways to get rid of them when they show up. Unfortunately they are essential to our financial ecosystem.

2. The budgeting two step

You can dance around this issue for months or even years you are going to need a budget. The key is to identify how you're spending money now.

- Evaluate your current spending and set goals that take into account your long-term financial objectives.

- Track your spending to make sure it stays within those guidelines.

3. Don't try to be a whiz kid

If you use a personal-finance program such as Quicken or Microsoft Money, the built-in budget-making tools can create your budget for you.

4. Driving Mrs. Crazy

Some people find that once all the info is on their computer they become money control freaks. Once you determine which categories of spending can and should be cut (or expanded), concentrate on those categories and worry less about other aspects of your spending.

5. Don't call the plumber

If money leaks from the ATM machine without apparent explanation, it's time to keep better records. In general, if you find yourself returning to the ATM more than once a week or so, you need to examine where that cash is going.

6. Watch the spending limits

Spending limits should be observed just like speed limits.When they are not adhered to then it can be dangerous. Surveys show that many households with total income of $50,000 or less are spending more than they bring in. This doesn't make you shoe-in for bankruptcy, but it's definitely a sign you need to make some serious spending cuts.

7. Beware of luxuries dressed up as necessities.

If your income doesn't cover your costs, then some of your spending is probably for luxuries - even if you've been considering them to be filling a real need.

8. Tithe yourself.

Most people tithe to churches or other charitable organizations. In addition the only way you are ever going to see a significant amount of money saved up is to tithe to yourself. That means taking 10% off the front end of your income and placing it in a savings account. Also I suggest that you have an account that doesn't have an ATM or debit card attached to it.

9. Don't count your chickens before they hatch.

When projecting the amount of money you can live on, don't include dollars that you can't be sure you'll receive, such as year-end bonuses, tax refunds or investment gains.

10. Save until you can't save anymore

As your annual income climbs from raises, promotions and smart investing, don't start spending for luxuries until you're sure that you're staying ahead of inflation. It's better to use those income increases as an excuse to save more.

12 DAYS OF MASTERING CREDIT - DAY 8

DAY 8

AUTO LOANS

When you walk into a car lot or a car dealership you must realize that the final decision rests in your hands. If the terms, price and rates do not meet your predetermined criteria then you must know that you have the option to walk away from the deal. However it helps that if you do all that you can before you go to the dealership to position yourself in a place of power. This includes knowing what your FICO^® Score is, knowing the value of the car, also possibly securing your own financing through a credit union or your own bank.

Eye candy is bad for your health

All of our dentists warned us when we were younger not eat too much candy because it is bad for our teeth. Shopping for a car is the same way, we have to be mature and not necessarily purchase the first thing that looks good to our eyes. Don’t fall to the susceptible tactics that a lot of dealerships use and that is to get you to focus on the monthly payment rather than the total amount financed. Any loan can have an affordable monthly payment if you extend the term long enough, but that can add significantly to the total cost of the car. Focus on the total amount financed rather than on the monthly payment alone.

Consider your options

New, used or certified pre-owned? Coupe or sedan? SUV or minivan? Figure out what vehicle types and models fit your price range and needs. The more you're willing to consider, the wider the range of prices you'll get and the better bargaining position you'll be in when it comes time to buy.

Brace yourself to deal with Dr. Evil

Dr. Evil is the fictional character from the Austin Powers movies. He always hatches a plan to take over the world but fails miserably in the end. A lot of people believe that all car salesmen are evil and have ulterior motives. We have to be honest if the car salesman does not sale any cars then he cannot provide for himself and will probably be out of a job soon for not meeting sales quotas. Conversely that does not mean that we do not do all we can to thwart their evil schemes of loading us up with unnecessary upgrades and payments we cannot afford.

Find the right car for you

You should now be confident and prepared to find all the best vehicles for sale in your area and to arrange test drives of the most promising ones. The internet has made it a lot easier to get in touch with dealers or private-party sellers. There are a lot of dealerships that specialize in providing vehicles to out-of-state buyers. Now that you have found the right car, how are you going to pay for it?

Cash, Lease or Finance

Cash Payment

Cash is king right? Paying cash for your car means no car payments, which is a welcomed stress-reliever. When you pay cash you eliminate the haggle and the hassle of trying to get the right monthly payment and the right rates. Also you instantly get the title which is almost worth it all by itself.

However you must ask yourself, how this will deplete my savings and what else could I do with this cash. Particularly how could I invest it and create a profit.

Leasing

Leasing is like renting an apartment: Your monthly payments give you rights to drive the car, just as rent gets you a place to live. Vehicle leasing is available through banks, credit unions, finance companies and automakers.

If you are the type of person that like to get a new car every couple of years then perhaps leasing is the best option for you. Leasing a car almost always ensures you a warranty for the duration of the time the vehicle is in your possession.

In addition, lease payments can be deducted from your taxes if you use your car for business more than 50 percent of the time, according to Allstate Leasing. According to credit agency Experian, people who lease typically drive away without making a down payment, whereas financing typically requires a 10 percent to 15 percent down payment.

Another bonus is that you do not have to worry about trying to sell your car, you just pull up to dealership and drop it off. On the other hand the downside to this is once you turn it in, what do you have to show for all the money, time and gas that you have invested into the vehicle.

Yearly mileage on a leased vehicle is typically limited to a range of 10,000-15,000 miles a year, so make sure you know your driving habits before committing to lease terms. Exceeding the limit typically results in stiff fines, so if you drive more than 15,000 miles a year leasing doesn't make much economic sense.

Make sure to read the entire leasing contract to consider all the details of the dos and don’ts of the vehicle agreement, as you may find some of the terms unreasonable. One more thing to note, if your credit score is not up to par you may find it harder to qualify for lease terms.

Financing

Most Americans choose to pay for their car through financing. Like leasing, financing is available through credit unions, automakers, banks and financial companies. The best thing about financing is that you are using other people’s money to pay for something that you will one day own. Unlike a lease, once your loan agreement matures, you own the car for good.

If your credit score is below 600 you'll probably be offered a shorter loan term at a higher interest rate — if you get approved at all.

There are also tax deductions for financing a business vehicle, but they're not as great as lease deductions, especially for more expensive vehicles. That's because you can deduct a certain percentage of your lease payments no matter how high those payments are, according to Allstate Leasing. Financing deductions have set limits.

Once you've been approved for financing, you should realize that you won't actually own the car until you're done making your payments. If you decide to sell your car while someone else still holds the title, the process can be difficult and usually requires your creditor's involvement.

Unlike lease deals, where it's common to make no down payment, financing deals often require a substantial down payment. If you can't qualify for a no-money-down deal, creditors often ask for 15 percent down.

Financing a vehicle is not like financing your bedroom suite; most times it is a considerably larger chunk of change that you are financing. That being said, you can look at the fact of paying those monthly payments for a longer duration of time.

The Rubik’s Window Sticker

All the different colors, shapes and sizes can be truly enticing. Growing up my friends and I wanted a Rubik’s Cube so bad but honestly not many of us could crack the code to solve this puzzle. The window sticker is a similar enigma. Of course we look for the price of the vehicle and perhaps the amenities that are included versus optional amenities but how many other things are displayed on the window sticker. Let’s look at what is all detailed on this seemingly harmless piece of paper

When a car or truck is built, it's issued a window sticker. Information on this sticker verifies its make, model and year and provides its suggested retail price — thus, its "sticker price" — and a comprehensive list of its standard and optional equipment. Each vehicle also has a vehicle identification number on its sticker; all of these statistics officially identify the car or truck for shoppers on a dealer's showroom floor.

The sticker is a rich source of essential information about a new automobile. It lets you know exactly what's included with any particular vehicle, as well as helping to ensure that you're getting the exact options you're paying for.

Failure to display one can result in a fine of $10,000 per vehicle to the dealership.

The stiff penalty for their absence underscores the value of window stickers for car shoppers. Of particular value are several pieces of vital information: the manufacturer's suggested retail price; engine and transmission specifications; standard equipment, including warranty details; optional equipment; and fuel economy information.
If you are ready to get started working towards getting the car of your dreams then contact us today at 1-888-824-7622 or The Credit Genius.

12 DAYS OF MASTERING CREDIT - DAY 6

DAY 6

CONSUMER RIGHTS

Depending on your goals repairing your credit can be beneficial to almost anyone. Additionally you also have certain rights under federal law that the credit bureaus & your creditors MUST abide by. Credit repair is NOT illegal; as a matter of fact most high-profile positions use various forms of credit repair, including most newly elected government officials, corporate executives & professional athletes. The Federal Trade Commission (FTC) warns against using credit repair because unscrupulous companies are only interested in taking your money & not helping you achieve your goals.

We’ve listed below four of the main laws that govern and protect your credit as a consumer.

 

Fair Credit Reporting Act compels credit bureaus. The Fair Credit Reporting Act (FCRA), which in a nutshell informs the credit reporting agencies what they can and can't do. The FCRA guarantees access to credit reports. Regulates who has "permissible purpose" to acquire a consumer's report. Places statutory limits on how long information can be reported. Details how a CRA must handle disputes, including but not limited to those posed by consumers.

Fair Credit Billing Act compels original creditors. The Fair Credit Billing Act (FCBA), which undergirds the more detailed and exhaustive Truth in Lending Act, which was for all intents and purposes was created to “police” the original creditors. The FCBA requires creditors to bill correctly and completely, and it's the FTC's job to make sure that the statute is equally applied and complied to. The FTC condenses the statute's exclusions as follows: "unauthorized charges; charges that list the wrong date or amount; charges for goods and services you didn't accept or weren't delivered as agreed; math errors; failure to post payments and other credits, such as returns; failure to send bills to your current address provided the creditor receives your change of address, in writing, at least 20 days before the billing period ends; and charges for which you ask for an explanation or written proof of purchase along with a claimed error or request for clarification."
 
Fair Debt Collection Practices Act compels third party collectors. The Fair Debt Collections Practices Act (FDCPA), which regulates debt collectors. Provides behavioral standards for acceptable third-party collections behavior and specifies that Collection Agencies must always include several legal stipulations in their dealings with debtors. Allows the debtor to formally request that the CA "cease and desist" from communicating with the debtor further. Specifically details a consumer's right to request further information regarding an alleged debt. 

Quick Summary of FDCPA:

Collectors can't call after 9 pm or before 8 a.m. local time Section FDCPA 805 (a)(1)

Collectors can't telephone you at work if you tell them not to Section FDCPA 805 (a)(3)

Collectors should NOT give information about you to third-parties (friends, family, and coworkers)

HIPAA

Health Insurance Portability and Accountability Act of 1996 (HIPAA), which regulates health providers. Title 2.1 of The Privacy Rule took effect on April 14, 2003, with a one-year extension for certain "small plans". The HIPAA Privacy Rule regulates the use and disclosure of certain information held by "covered entities" (generally, health care clearinghouses, employer sponsored health plans, health insurers, and medical service providers that engage in certain transactions.) It establishes regulations for the use and disclosure of Protected Health Information (PHI). PHI is any information held by a covered entity which concerns health status, provision of health care, or payment for health care that can be linked to an individual. This is interpreted rather broadly and includes any part of an individual's medical record or payment history.

 

Remember these laws are in place to protect consumers against unfair credit practices like billing statement errors, debt collection, credit repair, and credit reporting. These laws do not guarantee that an individual will be granted credit by a potential creditor nor does it ensure that a consumer will have good credit. Finally these laws are in place to guarantee that the credit bureaus, creditors and debt collectors do not run amuck with your credit and your credit reports.

 

If you want to get started on your new future by rehabilitating your credit then contact us today at 1-888-824-7622 or The Credit Genius.

12 DAYS OF MASTERING CREDIT DAY 1

12 DAYS OF MASTERING CREDIT

Every Christmas each child anxiously counts down the days to when Santa Claus brings them joy, good cheer and every item at Toys R Us (right?). The same anticipation should be felt by us adults who decide to grab the bull by the horn and tackle the uncertainty of correcting their credit. A lack of credit knowledge can cause you to pay more than you have too, both in the future and now. Fortunately there is hope, over the next 12 days be on the lookout for a tip a day on general credit knowledge that will assist you in taking that first step to a new life, a new you for the new year.

DAY 1

WHAT IS CREDIT?

We all know that we need good credit, or at least want to have it, but what exactly is credit? The majority of us does not find out what credit is, until we get to college or decide to make a major purchase sometime in our adult life. There are several ways to augment your credit but before you do that, you need to know what credit is, how it functions and how it can hopefully help you, instead of harm you. Let’s take a deeper look at what exactly credit is.

Credit is your reputation as a borrower. I often tell customers that it is equivalent to your interview at a job. A potential creditor has no idea who you are. They don’t know how much time you volunteer in the community, how you make sure the office is never without coffee or if you read to your child every night before they go to bed. They know none of this and quite frankly could care less. They want to know how much financial integrity you have. Your credit informs them what is likelihood and the chance that you are going to pay your bills on time, month after month. They want to get personal with you and check all into your financial past.

There are many misconceptions around the information that makes up your credit and all things that pertain to it. However, the best thing you can do initially is to make sure that the information you provide on all your applications are accurate.

In the beginning credit was primarily used for making lending decisions. However in recent times, especially since the financial fallout that started in 2007, they use credit scores and reports for other areas of your life. Most importantly of all the people that access your credit are potential employers.  Also they use your credit reports in determining insurance rates and premiums.

THREE COMMON MISCONCEPTIONS ABOUT CREDIT

1: Credit bureaus are officially recognized entities.

WRONG: Credit bureaus are companies which are in the business of making money at your expense. They gather together stories told by their “friends” and tell them to their other “friends”, without consulting you whether or not these things are true. That’s one of the main jobs of the Fair Credit Reporting Act that is to make sure not what they CAN do but what they CAN NOT do especially to your detriment. A credit report is not even an official legal document; I mean your driver’s license carries more weight with the government than your credit report, at least that’s the way it was meant to be. It at the beckoning of the “machine” which is corporate America it has caused many much grief, anguish and has even pushed some to suicide. It has more influence but not as much substance as a two-dollar bill.

2: Items on your credit report are required to remain for 7 years.

WRONG: This has been misconstrued due to the relation with Chapter 7 & Chapter 13 bankruptcy filings, nothing, I mean absolutely NOTHING is REQUIRED or should I say mandated to stay, other than that which can be ACCURATELY verified.

3: I have good credit because I pay my bills on time each month

WRONG: You have to understand there are a lot of factors that go into determining your credit score and one of them is your debt to credit ratio. You have to have this under control and understand what it is. Your debt to credit ratio is your debt that you have versus the total available credit that you have. Let’s say you have a credit card with a $10,000 limit & you owe $2500 then your debt to credit ratio is 25%.

In the days to come we will explore more of these topics in detail and others such as how your credit score is determined, your rights as a consumer and good debt versus bad debt. For more information on how to start your credit makeover visit our website. The Credit Genius

 

Black Friday Is Coming To Town

I was reading over the lyrics to Santa Claus is Coming to Town and decided to write a blog dedicated to creating a better shopping experience on Black Friday.

1. You better watch out

Be careful of your surroundings when out shopping. If you are making major purchases you may want to take those items home as opposed to leaving them in your vehicle all day. Make sure to hide all packages out of plain view of those with less than good intentions this holiday season. Finally at all costs avoid going alone.

2. You better not cry, You better not pout
Guess what?!?! Your favorite item may just be sold out. Keep a good attitude about it and move on to the next item.

3. Making a list, And check it twice

Before heading out to brave the elements, traffic and stand in line at Starbucks (you didn't know Caffeine was mandatory for Black Friday). Make a list of items & break them down into three categories that you plan to snag. From got to have, must haves and just want to have. Prioritize the items and try to map them by location as well. Don't forget to coordinate with your fellow shoppers to maximize time and avoid backtracking.

4. Who's naughty and nice

There is the old adage that says it pays to be nice. I can attest to this from personal experience. My wife and I have been shopping several times when other customers have offered us coupons or to skip ahead in line. Also there have been times where we have gotten free coffee or food while waiting. You never know who's watching so it's better to be nice instead of naughty.

5. He sees you when you're sleeping, He knows when you're awake

You have to ask yourself is it really worth it to wake up THAT early? The answer lies somewhere in how early THAT is. Take into account that most of the best deals come in limited quantities. Then calculate the sleep that will be lost plus gas used times elbows thrown (just kidding I hope) to see if that one deal is really worth it. If you deem that it is indeed worth it, then set your alarm clocks and get ready to participate in the melee, madness and methodology of America's biggest shopping day.

Remember Black Friday is coming to a town near you, so be smart for your savings account sake...