When you stop borrowing money and don’t have any open accounts, your credit score will slowly disappear.
By the way, did you know that you can still qualify for a mortgage,
even with no credit score? There are still mortgage companies out there
that will do manual underwriting. It takes a little extra effort, but in
my mind that’s a small price to pay.
I’ve never met a millionaire who prospered thanks to credit cards and their gimmicks.
Wednesday, July 29, 2015
Monday, July 27, 2015
Budget to wipe out debt
Dear Dave,
My husband broke a few ribs and his collarbone a couple of years ago when he flipped our ATV. He’s fine now, but we still have about $20,000 in medical bills because we were both between jobs and didn’t have medical coverage when the accident occurred. We also have two credit cards, one with a $1,000 balance and the other a $7,000 balance. We only have $200 a month we can put toward debt, so where should we start?
Dear Sandy,
Not having health insurance at any time of your life is not smart, regardless of being between jobs or not. Ouch, what a mess! You didn’t tell me what you guys make, but I can tell you a few things.
Number one, you’re probably going to have to get your income up. You may have to take on a couple of part-time jobs or work some overtime. My grandmother used to say, “There’s a great place to go when you’re broke — to work!” If you only have $200 a month to put toward your debt, you’ve got to create some margin, and that may be on the income side of things.
The other thing I’ve found is this: Most people seem to be able to magically find money when they feel it’s a life or death situation. “Magically” means that you do a budget. You make a written game plan where every dollar has a name before the month begins. When you write down every dollar, and you and your husband sit down and agree on where every dollar is going to go, you’re going to have an ah-ha moment that feels like you got a raise. If you’re normal, you waste a bunch of money because you don’t budget and have a written plan. And normal pretty much sucks!
So here’s the drill. Start living on a written budget, extra work, start working the debt snowball and pay off those debts from smallest to largest and don’t even think about a vacation or anything else that’s not necessity based until you clean up this mess. When you start living with a scorched-earth idea — beans and rice, rice and beans — I’ll bet you’re going to find a lot more than $200 in your budget to put toward killing off this debt!
— Dave
My husband broke a few ribs and his collarbone a couple of years ago when he flipped our ATV. He’s fine now, but we still have about $20,000 in medical bills because we were both between jobs and didn’t have medical coverage when the accident occurred. We also have two credit cards, one with a $1,000 balance and the other a $7,000 balance. We only have $200 a month we can put toward debt, so where should we start?
Dear Sandy,
Not having health insurance at any time of your life is not smart, regardless of being between jobs or not. Ouch, what a mess! You didn’t tell me what you guys make, but I can tell you a few things.
Number one, you’re probably going to have to get your income up. You may have to take on a couple of part-time jobs or work some overtime. My grandmother used to say, “There’s a great place to go when you’re broke — to work!” If you only have $200 a month to put toward your debt, you’ve got to create some margin, and that may be on the income side of things.
The other thing I’ve found is this: Most people seem to be able to magically find money when they feel it’s a life or death situation. “Magically” means that you do a budget. You make a written game plan where every dollar has a name before the month begins. When you write down every dollar, and you and your husband sit down and agree on where every dollar is going to go, you’re going to have an ah-ha moment that feels like you got a raise. If you’re normal, you waste a bunch of money because you don’t budget and have a written plan. And normal pretty much sucks!
So here’s the drill. Start living on a written budget, extra work, start working the debt snowball and pay off those debts from smallest to largest and don’t even think about a vacation or anything else that’s not necessity based until you clean up this mess. When you start living with a scorched-earth idea — beans and rice, rice and beans — I’ll bet you’re going to find a lot more than $200 in your budget to put toward killing off this debt!
— Dave
Monday, July 20, 2015
How to help homeless on food stamps
Reader: Recently, I met a young man who was put out on the street when he turned 18. He lives on food stamps and $10 a week. My wife and I are on Baby Step 7 of your plan and have a great income, and our whole family feels called to help this kid — maybe even taking him into our home. Do you have any advice?
Dave: You guys obviously have loving hearts and are doing great financially. But let’s take a look at few important factors in a decision like this.
If you’re thinking about actually taking him in under your roof, you need to remember that your first responsibility is to your family. You have to make sure they’re safe, and that would include finding out everything there is to know about this guy. Talk to his past teachers, coaches or even family members if you can find them. Spend some time just talking to him, too, and find out more about his background, attitude, habits and goals. Then, if you still feel led to open your home to him, make sure everyone involved signs an agreement with really clear rules and guidelines about what is expected, what will not be tolerated and the rewards and consequences of each.
Dave: You guys obviously have loving hearts and are doing great financially. But let’s take a look at few important factors in a decision like this.
If you’re thinking about actually taking him in under your roof, you need to remember that your first responsibility is to your family. You have to make sure they’re safe, and that would include finding out everything there is to know about this guy. Talk to his past teachers, coaches or even family members if you can find them. Spend some time just talking to him, too, and find out more about his background, attitude, habits and goals. Then, if you still feel led to open your home to him, make sure everyone involved signs an agreement with really clear rules and guidelines about what is expected, what will not be tolerated and the rewards and consequences of each.
Monday, July 13, 2015
Problem with cash back rebates is .....
Dear Dave,
How do cash-back rebates work on electronics and other items?
Dan
Dear Dan,
I like this question. Most consumers don’t think about how the process works. They only care that it’s benefiting them from a financial standpoint.
Let’s say you buy an item for $1,000, and you get a cash rebate for $100. Basically, you just paid $900 for that item, right? So, what the companies are trying to do is incentivize certain retailers to buy a particular product or amount of that product, yet sort of protect the sticker price in the minds of the consumers. To me, it’s really a little ridiculous. Why not simply take off the money and price it at $900?
That keeps retailers from jerking around with the margins. It purifies the process a little bit, but it adds to the hassle.
Good question, Dan!
— Dave
How do cash-back rebates work on electronics and other items?
Dan
Dear Dan,
I like this question. Most consumers don’t think about how the process works. They only care that it’s benefiting them from a financial standpoint.
Let’s say you buy an item for $1,000, and you get a cash rebate for $100. Basically, you just paid $900 for that item, right? So, what the companies are trying to do is incentivize certain retailers to buy a particular product or amount of that product, yet sort of protect the sticker price in the minds of the consumers. To me, it’s really a little ridiculous. Why not simply take off the money and price it at $900?
That keeps retailers from jerking around with the margins. It purifies the process a little bit, but it adds to the hassle.
Good question, Dan!
— Dave
Monday, July 6, 2015
Family living in RV wants to upgrade their home
Dear Dave: My husband and I work and live in an RV. The vehicle is paid for, and I’d like to upgrade to a larger one, but that would mean taking out a $30,000 loan. We have $30,000 in savings, including our emergency fund, and we make $55,000 a year. What are your thoughts? — Renee
Dear Renee: I think what you’re doing with your lives is kind of cool. But I can’t advise financing something that will go down in value as quickly as an RV. I wouldn’t even do it on the basis that it’s going to be your primary residence.
Let’s look at things from a different angle. First of all, I think your emergency fund is a little high. I recommend three to six months of expenses, and on a household income of $55,000, holding $20,000 in reserve would be a lot. If you kept $15,000 in the bank, that would leave you with $15,000. If you’re talking about a $30,000 upgrade, you’d only need to save up another $15,000.
See where I’m going with this? With a little patience and planning, you can have your upgrade in the not-too-distant future and still have the peace of mind that goes with knowing you have a reasonable emergency fund sitting in the bank!
VIA http://www.thespectrum.com/story/news/local/2015/06/20/ramsey-need-something-matters/29046079/
Dear Renee: I think what you’re doing with your lives is kind of cool. But I can’t advise financing something that will go down in value as quickly as an RV. I wouldn’t even do it on the basis that it’s going to be your primary residence.
Let’s look at things from a different angle. First of all, I think your emergency fund is a little high. I recommend three to six months of expenses, and on a household income of $55,000, holding $20,000 in reserve would be a lot. If you kept $15,000 in the bank, that would leave you with $15,000. If you’re talking about a $30,000 upgrade, you’d only need to save up another $15,000.
See where I’m going with this? With a little patience and planning, you can have your upgrade in the not-too-distant future and still have the peace of mind that goes with knowing you have a reasonable emergency fund sitting in the bank!
VIA http://www.thespectrum.com/story/news/local/2015/06/20/ramsey-need-something-matters/29046079/
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