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If you have ever wondered exactly what your FICO score means, or if you have wondered what you can do to improve your credit score, this infographic from myfico.com can help:
Some of the key factors to improve your FICO score include paying you bills on time, keeping your credit utilization low, keeping your revolving balances low, and only opening new credit accounts when necessary.
Paying your bills on time is a major factor in the algorithms that calculate your credit score, accounting for 35% of your total credit score. Only 5% of those with 650 credit scores pay all their bills on time while 96% of 800 credit scores pay all of their bills on time. Similarly, those with 800 credit scores only utilize 7% of their available credit limits.
While it may take time to implement these changes into your financial habits, shifting from Fair credit score to an Excellent credit score is possible for anyone. Of course, with a higher credit score, it is more likely that you will be approved for personal loans for good credit, and therefore be able to secure lower interest rates.
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With the national credit card debt average at $15,607 per household, it seems nearly impossible to put money away for saving. While many families are working on budgeting to reduce debt, the same effort can be used to increase your savings fund later!
Here are two infographics that do a great job of laying out ideas for how to save more money. The first infographic depicts the difference between desirability and affordability. What you can live without now, could greatly improve what you could have in the future.
QuickenLoans has created this realistic outline of how your everyday costs impact your spending over the year.
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Credit Karma is a free tool that helps you monitor your credit information, and they are now taking it to the next level by offering you your free and up to date full credit report at any time.
If you are working to establish your credit, improve your credit, or just want to actively monitor your credit, Credit Karma is a great tool. While it is a free tool, note that they do show you personalized offers based on your credit information. Some may find this invasive, but the overall benefit to actively monitoring your credit information is worth it for many.
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The CFPB recently released a new toolkit entitled, “Your Money, Your Goals”. We highly recommend downloading this toolkit and working through the information contained.
The toolkit gives consumers the tools they need to assess their financial situation, address their finances, get past emotions, set goals, and plan for the future.
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In order to have peace of mind, it’s important to have enough money to provide the essentials for ourselves and our families, reach our financial goals, and have money left over to do the things we enjoy in life. Creating a budget is a simple way to accomplish all of these things. Budgets are great because they allow us to avoid the anxiety that can follow when times get tight. The keys to building a budget have been outlined below. So, let’s get started!
Setting Up Your Budget
- Income: First determine how much income you receive each month. Using the worksheet at the bottom of this page, write a dollar amount next to each relevant income source. Make sure you include all sources of income such as salaries, living allowances, pension and any other income–including a spouse’s income if you’re married. If you get a salary, be sure to use your take-home pay rather than your gross pay. Taxes are usually taken out automatically, but if they’re not, remember to include them as another expense. If you receive money from somewhere not listed, enter the source along with the amount under “other income.” Remember that this is your personal budget! Adding and removing categories to match your financial situation will make your budget more accurate and easier to follow.
- Expenses: The best way to find out how much you spend each month is to keep track of where your money is going for one month. If some of your expenses for one or more categories change significantly each month, take a three-month average for your total. The worksheet below divides spending into fixed and flexible expenses. Fixed expenses are those that generally do not change from month to month, such as rent and insurance payments. Flexible expenses are those that do change from month to month, such as food or entertainment.
- What’s Left Over: Once you’ve totaled up your monthly income and your monthly expenses, subtract the expense total from the income total to get the difference. A positive number indicates that you’re spending less than you earn – Congratulations! A negative number indicates that your expenses are greater than your income. This means you will need to trim your expenses in order to begin living within your means.
Well done! – You’ve created a budget. The next step is to track your budget over time to make sure you’re sticking to it. If you find you aren’t able to only spend the money left over each month, it may mean that your plan isn’t flexible enough. It may take a couple of months to find the spending parameters that work for you.
Financial Freedom Blog
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