Archive for May 2015

Sneak Peek: Credit Scores – Part 1

Well we have officially entered graduation season! Students are graduating from both high schools and colleges all over the country. This is an extremely exciting time in ones life, but it can also come with lots of questions. I’ve written a book that’s specifically for high school students, college students and twenty-somethings – What Everyone Should Know About Money Before They Enter The Real World. So many of us have experienced a time where we have learned a financial principle or tool and said, “I wish I had learned that before I entered the real world”. One of these questions is in regards to credit scores.

I wanted to share with you an excerpt from my book that addresses the subject of credit scores.

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Everyone Should Know About Money Before They Enter The Real World:

Your credit score will have an impact on your life.
Credit scores are a measure of one’s ability to manage debt. The dominant credit scoring system which is used by most lenders was created by Fair Isaac. This system provides a measure of an individual’s credit worthiness and is commonly known as a FICO Score.

A credit score impacts many things. It determines whether or not you can obtain a loan. If you qualify for a loan, the credit score dictates the interest rate charged.

Credit scores also impact insurability. When you obtain auto, renter’s or homeowner’s insurance, the credit score directly impacts the insurance cost. The lower your credit score, the higher the insurance premium will cost. I have seen insurance premiums doubled because of poor credit.

Credit scores also impact the ability to obtain a cell phone contract or an apartment lease. It can affect utility connections. Utility providers usually require much larger deposits from people who have low credit scores. If you have an excellent credit score, a deposit might be waived entirely.   Credit scores can even impact your ability to obtain a job.

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More about the subject of credit scores, in my next post! Stay tuned!

Learn more about the book and order your copy HERE.

What Everyone Should Know About Getting A Degree

I could never have attended Purdue University had it not been for student loans. I began dating Sallie Mae right away, and it took years for me to break up with her.

As we continue our discussion surrounding graduation, here are some points about getting a degree and student loans from my book – What Everyone Should Know About Money Before They Enter The Real World. This is a great resource for those currently graduating high school or college.

  1. Go to school for 4 years for a 4 year degree (or for 2 years for a 2 year degree). Not six years for a four year degree. This can have substantial financial consequences. For example, if you attend college for two years more than required for the degree, you will have to pay for two extra years of school PLUS you will forfeit the salary you could have earned during that two year period. For many people this is a $100,000 financial swing!
  2. Obtain a degree that will help you repay the loan. There are many people who go to prestigious private colleges to obtain a degree that is the equivalent to underwater basket-weaving. While I think that underwater basket-weaving would be amazingly cool, it probably won’t help repay the loans. My mechanical engineering degree from Purdue University and MBA from Clemson University certainly helped me repay my student loans.
  3. Tech or Community College for the first two years can really lower costs. Most states have established programs that allow all credits earned during the first two years of community college to transfer directly to the state schools. I have seen the costs for community college. They are much lower than state or private universities. The local community college where I live is literally one-third the cost of the state school.
  4. Obtain subsidized loans, if possible. Subsidized loans do not accrue interest while the student maintains at least half-time student status. They also do not accrue interest while the loans are in grace periods or deferment.
  5. The name of the college does not matter nearly as much as the effort you put into your studies. Many students fall in love with a particular college and feel that they just must attend only that institution. I have discovered that no one really cares about the fact that I went to Purdue and Clemson – all they want to know is if I can help them accomplish their stated objective.

Print this out and have a conversation about it with your student or future student. My bride and I have been talking about this with our daughter since she was six or seven. I know it might seem like boring conversation, but I promise you that it has had a positive impact on our daughter and the plans she has made for education.

I have written an entire chapter on this topic in my book for high school and college students – What Everyone Should Know About Money Before They Enter The Real World – I promise you it will help financially prepare your student for the real world. You can purchase that book HERE or for your e-reader HERE.

5 Essentials to Paying Off Debt – Step 5

In this series, I want to equip you to become debt free!! Jenn and I became debt free in just 14 months by following this process. I can tell you this – there is NOTING like living life without the weight of debt!

STEP 1 – Understand the WHY before the HOW

STEP 2 – Calculate your Debt Freedom Date

STEP 3 – Accelerate your debt elimination

STEP 4 – Use the Debt Snowball Technique 

STEP 5 – Establish Accountability
The strongest among us can still fall to temptation! You could be making fantastic progress toward debt freedom and then a new truck pulling a new boat passes you on the road. If you’re not careful, you’ll also be pulling a new truck and boat down the road!

There are two key ways to ensure you are held accountable to your goal of debt freedom!

  1. If married, work together with your spouse. If unmarried, have someone you trust (someone who has won with their money) hold you accountable!
    There is incredible power when you work together with your spouse towards debt freedom! It is a common goal that will unify your marriage and cement your commitment to managing your resources together.I have also found that when I have a bad case of the “I wants” and “I gotta-have”, Jenn does not. She shuts me down! Then, when Jenn gets a bad case of “I really want this”, I do not. I shut her down! Why? Because we are not doing debt! We are THROUGH with it!!
  2. Plan your spending every single month!  
    Planned money goes farther than unplanned money! Every single month, Jenn and I still down TOGETHER and spend every single dollar on paper before we are paid. Don’t miss this!! Every. Dollar. On. Paper. BEFORE. We. Are. Paid.I can tell you this. I HATED the idea of budgeting and now all I do is yell from the mountaintops about how important it is and how EZ it is to budget! There are FREE budget tools that are available HERE. Use one of them to start your journey to debt freedom! Your budget will hold you accountable. I wouldn’t be surprised if it helped you free up $200-$500 per month to attack your debt even harder.

Also, make sure to add some FUN into your liberation from debt! I know that money can make you so frustrated that you want to pull all your hair out, but add some fun into it! You could make your debt pay off visual. Check it out HERE.

To learn more about becoming debt free, check out my book, I Was Broke. Now I’m Not.