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50 Traits to help you achieve success, wealth, and financial independence. (Part 1)
What separates the most successful and wealthy people from the average person isn’t natural talent. They don’t have some secret the rest of us don’t have access to, nor are they luckier than we are. In fact, there are specific fundamental core concepts that just about every ultra-successful or wealthy person has in common. (Yes, maintaining an excellent credit score is definitely one of them!)
It turns out, if you want to be well-off, it doesn’t matter where you came from, how much money your parents had, or what your present circumstances are. Maybe your credit score is 500 and you’re saddled with debt, but you set your mind to becoming debt free? Or, you’re a renter but want to buy a home because you’re tired of overpaying to make your landlord rich. It’s possible that your finances are well under control, but you’d like to build a better financial future for your family.
No matter what your version of “success” or “wealth” is, we all have to walk the same path to get there – which means incorporating these 50 habits to achieve success, wealth, and financial independence:
1. Pay off bad debt.
Successful people understand that paying interest is a great way to make someone else rich – and keep struggling, yourself. In fact, financially comfortable people always pay off credit cards, car loans, small installment loans as fast as they can, and don’t carry personal debt on a month-to-month basis. While they often pay off their mortgages as well, they distinguish between “good debt” and “bad debt.”
2. Plan for rainy days.
Financially aware people may take risks, but they definitely are pragmatic as well, planning and preparing for the unforeseen. They keep a good amount of savings, make sure they are well insured and protected, and generally minimize liability in every aspect of their lives.
3. Automate savings.
Whatever they earn, successful people break off a tiny piece and stash it, deducting it directly from each paycheck. This is what they mean by “pay yourself first,” as it gives them a solid foundation to invest and grow before they ever touch the rest of the funds for basics or play.
4. Invest young.
Even in their 20’s or sometimes their teens, these folks understand the compound principle of money. By putting money into 401k’s, Roth IRA’s and the like early, they benefit from returns and a windfall as they get closer to retirement.
5. Go the extra mile.
People who achieve big things in life invest extra effort, thought, and creativity into everything they do, no matter how big or small.
When you look at those who achieve excellence at anything from art to sports to neuroscience, the typical pattern is that that didn’t spend a ton of time partying or playing video games. Any classically trained musician will tell you that they didn’t attend a lot of social functions so that they could practice.
7. Log long hours.
Successful people got the hard work out of the way early, not looking for shortcuts or get-rich-quick schemes. By doing, they learned to refine their work, the way a swimmer refines their stroke to maximize the outcome and minimize the effort.
Instead of getting hung up on the minutiae of the process, they’re constantly focused on the target, asking questions like: how can I improve? What is lacking or holding me back? There is a built-in evaluation of every project they undertake.
People who accomplish great things in life are confident but not cocky, have a good sense of their own strengths and weaknesses, and have a high self-worth, while remaining humble.
Some of the most unlikely experiences give rise to the best ideas. Great thinkers get outside their bubble and open themselves up with a relentless curiosity about the world.
They have specific training, knowledge, skills, and talents. Instead of just being generalists, high achievers invest in the education or training to become the best at one single thing, while adding on to their core skill. For example, professional athletes train constantly, but they also educate themselves on nutrition, concentration, and responsiveness.
There is no substitute for reading and ultra-achievers read non-stop. Studies show that 88% of wealthy read 30 minutes or more every day (for education or career reasons – not romance novels!). Reading is part of that core skill set, no matter the discipline.
13. Organization and goal setting.
81% of wealthy and successful people scratch things off a daily To Do list compared to only 19% of working class people. Just the act of writing down goals is very powerful, allowing the mind to prioritize and receive a jolt of satisfaction from completing even simple tasks.
14. Wise use of time.
Successful people use their downtime to inspire their projects and explore other ways of thinking. Since time is our greatest asset, successful people don’t spend theirs on empty entertainment. In fact, 67% of wealthy people watch one hour or less of TV every day, while 23% of poor people do, and only 6% of wealthy watch reality TV shows vs. 78% of poor.
Setting tangible goals with concrete timetables and planning the action steps to achieve them is crucial to success. Being able to break down big goals into small digestible steps is key, along with a consistent reevaluation of their plan based on changing circumstances. If we don’t, then we aren’t experiencing progress and our projects quickly lose momentum.
16. Risk and a relationship to failure.
Failure is not the enemy of successful people – it’s a necessary instrument of growth. In fact, if they don’t go through enough failure in their lives, they understand they’re not taking enough risks.
17. Optimism bias.
Successful people don’t wait around for luck to bless them –create their own opportunities with hard work, smart planning, and confidence in their efforts. In fact, 84% of wealthy believe good habits create opportunity instead of luck, while only 4% of poor believe the same. Furthermore, 76% of affluent people attribute negative outcomes to bad “luck” vs. only 9% of the poor.
People who own their actions good and bad, and exhibit accountability for their actions tend to draw quality people around them. They never try to pass the buck or dodge blame – this goes back to that self-awareness piece.
19. Flexible thinking.
Agility takes practice, but it’s a necessary skill. Successful people have firm values but flexible thinking, adjusting their sails depending on how the wind blows.
20. Create vs. consume.
Instead of just amassing and worshipping material things, successful people are marked by their contributions, whether it’s a new business, building a house, or forming a non-profit. Creation is one of the processes held in highest esteem by high achievers.
21. Presence of mind.
The key to success (and happiness) is to always be fully present in the moment. That goes for work as well as play.
Mega high achievers dare to dream about the unattainable…then they attain it! In fact, 80% of wealthy and successful people are focused on a singular goal – and never take their eye off the ball.
“Fall seven times, get up eight,” as the old saying goes. You hear great minds talk about setbacks and disappointments, but they understand that their success is earned by bouncing back.
24. Dissatisfaction with the status quo’.
It’s really about developing a vision rather than accepting mediocrity. Achievement is about reaching higher.
25. Singular focus.
Multi-tasking is a myth that amounts to “do everything badly.” The human brain can only fully focus on one thing at a time. Successful people know this and don’t try to juggle – work in immersed short bursts of concerted effort.
Look for part two coming soon with 25 more traits of wealth and success!
What the wealthy OVERstand about money that the rest of us may not.
The average person now has more knowledge available to them than any time throughout history, including plentiful wisdom about money, finances, and wealth. However, the income gap keeps growing in the U.S., with the rich getting richer and the typical middle-class family struggling just to make ends meet.
So what do the wealthy OVERstand about money that the rest of us may not?
1. Debt is dangerous
The number one principle of money that wealthy people understand is to not misuse debt. In fact, every time you use your credit card to make everyday purchases, you not only spend more than you would with cash (on those impulse purchases). You’re also essentially spending 110, 120, or even 130 cents on the dollar if you factor in interest charges and other fees. Wealthy people pay cash for their purchases and resist the temptation to use debt as a way to afford things they otherwise could not or should not.
Likewise, wealthy people understand that there is good debt (like mortgages, business loans), etc. that helps them achieve assets and investments, and bad debt (credit cards, car loans, etc.) and know how to utilize the former.
2. Your credit score is everything
Let’s say that before you even reached in your pocket and spent a single dollar on groceries, credit card bills, your mortgage or rent, insurance, or any other expenses, there was a number that basically ranked how much or little you should pay for those things. You would probably concern yourself with knowing and improving your ranking so you’d spend less, right?
Well, that’s exactly what credit score does. Rich people understand that credit score dictates so much of what we pay and even opens up remarkable financial opportunities if we have great scores, and therefore, make sure their FICO is fantastic.
3. Compounding and the time value of money
Would you rather have a penny a day that doubles every day for a month, or $1,000,000? Believe it or not, you’d miss out if you chose the quick seven-figure payout, as the first option would yield you $5,368,709.12 in those same 30 days!
Welcome to your first lesson in the time value of money, as your money will grow exponentially over time thanks to the magic of compounding. For that reason, the wealthy aim first to eliminate debt, buy their own home, and obtain assets like stocks, bonds, and other investments that will grow for them over time (more on the ‘time’ part later).
4. Don’t forget about taxes
It’s not what you make but what you keep! What good is a job that pays you $50,000 a year if you give 30% of it away for taxes (for example) when you could have a $40,000 job but pay in a much lower tax bracket? Wealthy people are always aiming to maximize their returns (make more) and minimize their liabilities (spend less) and saving on taxes is a huge part of that.
And when it comes to that yearly tax return you may be getting back, do the right thing with it and pay off debt and put some in savings!
5. Buy a home!
Homeownership always has been (and always will be!) part of the American Dream. It’s not only nicer living in your own place, but the financial advantages are impossible to ignore.
When you ow your own home and pay a mortgage every month, you’re paying off what you owe on the home (over 30 years), so it’s sort of like a forced savings plan.
Likewise, homes have appreciated in value over any 10-year period throughout modern U.S. history, so purchasing a home early and paying it off allows you to retire without having to pay mortgage or rent (and then you can leave it to your children). Likewise, owning a home offers one of the biggest tax breaks you’ll ever get from Uncle Sam, too.
Meanwhile, the alternative is to keep paying rent to your landlord every month, which yields you no appreciation, you’re not paying anything down or building any equity, and you’re missing out on tax breaks. The wealthy aim to be landlords; not pay a landlord!
6. Save first
Sure, we know that when your paycheck arrives once or twice a month, it’s probably already spent and accounted for before you can even cash it. But wealthy people become that way by making sure they save first. In fact, most financially stable people utilize auto-withdrawals from their paychecks to put some money into savings, pay bills, and maximize their investments – before they even see any money from their paycheck. Doing so takes some discipline and sacrifice, but the results will pay off big-time!
7. Education never ends
We all have 24 hours in every day, but instead of gossiping, wasting time arguing on Facebook, and watching funny cat videos, wealthy people invest their time in learning and growing. That can be learning new job skills, going back to school for another degree, or just reading, listening, and watching inspirational and educational messages. Of course, many of those are about improving their finances, so pat yourself on the back for reading this blog!
If you’d like more information about credit, debt, and putting yourself in a better financial position, contact us for a free consultation and credit report.
How men and women differ when it comes to credit and debt.
There are some profound differences between men and women when it comes to men and women, from what we earn, to what we spend our money on, and even how we go about investing. When it comes to credit and debt, there are some interesting comparisons between males and females, too – although it might not always be what you think.
For instance, when it comes to credit score, would you guess that men or women are leading the way with better scores?
In fact, according to surveys by Experian, women have a higher average credit score (675) than men (674).
Men have more debt, with an average of $26,227 compared to $25,095 for women.
The average man owes $5,282 in credit card debt, compared to only $4,867 for women in credit card balances.
Women have 4.1 credit cards on average, while the average man only carries 3.7 cards.
But at least part of that debt total for men can be attributed to home loans. Of all people who are mortgage holders, men have an average of $187,245 in home loans compared to $178,140 for females.
In fact, the average U.S. man has $50,425 in mortgage debt versus only $35,116 for the average American woman.
Another check in the “Men” column is that 60% of men have more savings than credit card debt, while only 49% of women have more in their savings account than their credit card balances.
While both sexes sometimes exhibit less than stellar use of credit cards, women lead the way in a metric called “problematic behaviors” when it comes to cards.
In fact, only 33% of men display two or more problematic behaviors with credit card usage, compared to 38% of women.
But men carry a larger total of debt than women (+4.3%), and females also use only 30% of their available credit, while men use 31% or higher on average.
Men comparison shop for better rates and terms on their credit cards more than women (37% to 31%).
Women also carry a bigger balance from month to month on their cards (60% do so) compared to men (55%).
And 42% of women only make the minimum payment every month, compared to only 38% of men (a big no-no for your credit score).
Backing up that statistic, 45% of men pay their balance in full every month, compared to only 39% of women.
Women also pay late fees on their credit cards far more than men, at a rate of 29% (of women who have to pay late fees) versus only 23% of men.
Despite having lower credit scores (slightly), men also have better interest rates on their credit cards than women. In fact, the average rate for men is 14.3%, compared to 14.9% for women’s credit cards.
How about student loan debt? On a per-student basis, women have far more student loan debt than men. In fact, the average woman has $11,786 in student loans, compared to only $8,187 for men.
But men finance far more for their cars, with an average auto loan tally of $8,249, while women only owe $6,693 on their car loans on average.
While the one-point credit point advantage favors women by a small margin, the data reveals that women do have a better understanding of credit scores and credit reporting. The Experian study concluded that:
48% of men incorrectly believe that marital status factors into credit scores, compared to only 38% of women who mistakenly think the same thing.
46% of men mistakenly think marital status is a factor in scoring, versus only 34% of women who get that wrong.
74% of women understand that the credit bureaus collect the information that’s used for scoring, while only 68% of men realize that.
Women are more apt to know when scores are free (65%) than men do (60%), know when lenders are mandated to discloses scores (53% to 46% for men), and better understand the importance of regularly checking and monitoring their credit reports (77% to 72% for men).
So which gender wins the title of “Best with Credit and Debt?” It seems like women win out over men on average in certain important factors, but men are profoundly better in a few others. Overall, well call it a tie and just say that BOTH men and women need to work hard, educate themselves, and do better with credit and debt if they want to improve their finances and get ahead!
And you can start with a free credit report and consultation from Nationwide Credit Clearing! Contact us to get started.
10 More things you didn’t know about credit scores, credit reporting, and debt in America
Your credit score impacts so much in your life these days, from rent and homeownership to credit card approvals, interest rates on student and auto loans to even employment. But too often, we’re still in the dark when it comes to credit scores, credit reporting, and general financial knowledge about debt management.
As the nation’s leader in credit repair solutions, Nationwide Credit Clearing is committed to help educate you about these important topics. This is part two of our ongoing series, 50 things you didn’t know about credit score, credit reporting, and debt. Look for part one here, and contact us if you have any questions or credit issues at all!
1. Which company earns the title as the most popular credit card in the rest of the world? That honor belongs to both Mastercard, which has 551 million cards issued throughout the world as well as 180 million cards here in the United States. However, Visa wins top-dog honors on home soil, with 278 million cards floating around the U.S., as well as 522 in the rest of the world.
2. It’s no surprise that people often turn to their credit cards to pay bills and living expenses once they are unemployed, In fact, 86 percent of low and middle-income households who have a working member that is now unemployed turn to credit cards to fill the gaps monthly.
3. Likewise, almost 50 percent of low and middle-income households now are carrying credit card debt that comes from out of pocket payments they have to make on medical bills and expenses.
4. It’s interesting to look at a map and compute the average credit score for each state (OK, I don’t get out much!). In fact, the states with the lowest average credit scores are in the south and southwest, including New Mexico, Texas, Oklahoma, Arkansas, Louisiana, Mississippi, Tennessee, Georgia, Alabama, South Carolina, Nevada, and Florida. In those states, an alarming 40 percent of the population have subprime credit scores!
5. However, the states with the highest average credit scores are found in the north and midwest. Minnesota and North Dakota are the states with the highest average credit scores, with 707 and 700 average FICOs, respectively.
6. Aside from the state you live in, there are some other puzzling correlations between the heights of your credit score and your seemingly unrelated behaviors. For example, one study found a direct correlation between credit scores and which email provider the participants used! They found that Comcast email user (692 average) and Gmail, (682) have above average scores, but MSN (669), Aol (668) and Yahoo! (652) email users have below average scores.
7. But more common-sense correlations also apply. For instance, there are significant differences in credit scores based on age. Baby Boomers and the Silent Generation (68-85 years old) have average scores of 700 and up, while Gen Xers average a 655 score, Millennials average a 634 score, and Gen Z is lagging with a 631 average Vantage Score.
8. One correlation that we could have easily predicted is that between scores and homeownership, In fact, a Federal Reserve study found that the average credit score among homebuyers and homeowners is 728 – significantly higher than the national average. Additionally, they found that only 6.8% of homebuyers or homeowners had scores below 620 in the study.
9. We hear about our credit scores impacting home ownership, credit cards, interest rates on other loans, renting, and even employment. But did you know that your credit score can make a big difference on…your dating life? It’s true! According to a 2016 Bankrate survey, almost 4 in 10 U.S. adults say that they’d rather date someone with a good or excellent credit score, but they’d be wary of dating a sup-prime suitor. In fact, 43% of women and 32% of men said that a person’s credit would have an impact on if they dated them.
10. Americans are still pretty mixed up, confused, and turned around when it comes to basic knowledge of credit scores and credit reporting. In fact, studies have shown that of an average sample Americans, 47% didn’t know that credit scores are used by non-creditors like electric utilities and home insurers, 68% didn’t know that cell phone companies use credit scores, and 32% had no idea that landlords could check their credit!
Do you have questions about your credit or looking to improve your score? Contact Nationwide Credit Clearing for a FREE credit report and consultation at (773) 862-7700 or mynationwidecredit.com!
10 Ways to Start Saving Money TODAY!
Of course you do!
In this ongoing series, we’ll point out effective ways you can save a lot of money this year, next month, and even today!
Here are our first 10 ways to start saving money today:
- Cut down on beverage costs.
Did you know that the average American spends about $650 a year just on soda and soft drinks! For a family of four, that adds up to $2,600 – enough to pay off a credit card or put aside for savings, perhaps. Add in bottled waters (when you could just bring your own reusable bottle and fill up at water coolers), energy drinks, and expensive coffee drinks (more on that later), and you may be able to save $300 or $400 every month just by watching what you drink!
- Compare homeowners or renters insurance policies.
Most families purchase a homeowners insurance policy, pay the high premium, and forget about it. But it’s a good idea to contact your agent every six months or so, just to check in if there are new programs, specials, or lower rates available. It’s also prudent (and free!) to shop around a little and see if you could save significant money with another company or agent. Something as simple as installing new smoke detectors, adding an alarm system, or other health and safety upgrades may qualify you for a discount.
- Shop around for a better auto insurance plan.
While you’re at it, contact your insurance agent and ask him or her if there are better deals available for your auto insurance. You may get a discount for signing up with a company that holds your other insurance policies, too. Or, if your driving record has improved (or just stayed uneventful), you live or work in a different zip code, or your credit score has gone up, there may be a price break you’re not currently taking advantage of.
- Hit the OFF switch on electronics and appliances.
Sure, we know to turn lights off when we leave a room and shut off the TV before we leave the house. But even when you’re gone and things are supposedly off, certain appliances still drain a lot of electricity – and run up your energy bills. In fact, toaster ovens, coffee makers, mixers, kitchen radios, some microwaves, cable boxes, video game consoles, and other entertainment systems and appliances STILL draw electricity even if they’re off. As a general rule, if an appliance has. LED light or digital display, unplug it – don’t just turn it off – and you’ll start saving.
- Install a new SMART thermostat.
Heating and cooling costs add up big for most homeowners, whether you live in a place with the coldest arctic-like winters (hello, Chicago!) or sweltering, humid summers (hi again, Chicago!). But most home heating or cooling systems are outdated – and their thermostats are wildly inefficient, too. You don’t have to replace your whole HVAC system to save money, but switch out your old thermostat for an energy-efficient smart model.
In fact, a new Energy Star thermostat allows you to program specific temperatures for different times of the day. You can even program it higher or lower based on different zones of the house or adjust for when you’re not home. How much money will that save you? The U.S. Department of Energy estimates that you can cut back on energy costs by up to 15% per year just by getting a smart thermostat!
- Bundle your cable, internet, and phone services.
It’s ridiculous home much the average person pays for cable TV, Wi-Fi at home, home phone, and cell phone service every month. While you may not think you can live without all of those, you may be able to save a pretty penny just by bundling your services. In fact, most telecom companies are so motivated to get your business (and keep it), that they’ll give big discounts and special pricing for consumers that sign up for all of these services with them. Just by calling around and comparing bundled packages and offers, you may save $100 a month or more!
- Take a close look at your memberships and subscriptions.
From monthly magazine subscriptions to membership clubs, internet sites that require a monthly fee and smartphone apps with recurring monthly payment. In fact, the average household pays $129 in memberships and subscriptions like this every month! That’s well and good if you use them and like them, but most of us don’t even realize all of the things we’re paying for! Take a careful look at all of your memberships, subscriptions, and online recurring payments, cutting the fat where necessary
- Cut out those ATM fees.
The average American spends at least $290 in ATM fees every year. That’s not banking fees, but just the cost to access their own money at ATM machines. In fact, the average out-of-network ATM fee is now $4.52. There are even ATM operator fees of $2.50 to $3 for non-members, and steep international fees. Some opportunistic banks even charge ridiculous ATM fees based on location, such as many Las Vegas money machines that charge $10! In total, you may be wasting $30 or $40 every month in your household just by using the wrong ATM and the wrong bank.
- Pack your lunch most days of the week.
Of course, everyone loves to eat out when they’re at work. But the cost really adds up. Let’s do the math – if the average brown bag lunch costs about $4, but going out to a restaurant, sandwich shop (or even fast food) comes to about $9 a meal, you’ll be saving $5 a day by not eating out. Add that up over 20 working days, and you’re at $100 savings a month, or $1,200 a year. However, realistically, you probably spend more on nicer sit-down restaurants, tips, beverage costs, snacks, etc. So make it a policy to brown bag it Monday through Thursday and then splurge on Friday. You’ll save a lot of money and not feel you’re missing out!
- Request that your credit card companies lower their APRs.
Credit cards will often reward good customers with lower APRs, reduced interest rates, or by fixing a low interest rate if you’re currently paying a variable rate. It doesn’t hurt to call them and ask for some sort of better terms, rate, or savings. The worst they can say is “no!” But if you’ve paid on time and they value your business, they’ll often do something to keep you. Do this for all of your credit cards, and you may start saving significant money every year!
- Know your credit score.
About one-third of Americans have no idea what their credit score is right now, and nearly 45% of us haven’t checked our score or report in the last twelve months. That lack of attention can cost us big money. In fact, errors, inaccuracies, duplicates, and even ID theft cost American consumers countless millions of dollars each year.
To make sure you save as much money as possible, pull your credit report at least three times a year.
Contact Nationwide Credit Clearing for a free credit report and consultation to make sure you aren’t overpaying!
Are Americans illiterate when it comes to credit, credit scoring, and finances?
And if so, how much is it costing us?
Let’s start with that second question, which is easy to answer.
According to Marketwatch, the lack of financial literacy by the average American has cost us a collective $200 billion over the last 20 years! That’s the estimated cost of paying higher interest rates, late fees, not saving for retirement, and the impact of bad decisions caused by living paycheck-to-paycheck.
That comes to $20 billion each year from our lack of financial knowledge – including illiteracy when it comes to credit!
Likewise, The National Financial Educators Council just released a survey that found the average respondent lost $9,724 each year due to their credit and money illiteracy! That backs up the findings of another national study that found that with a mere 20-point increase to our average national credit score, each adult in the U.S. would save almost $5,000 each year!
Now, let’s try to answer the first question we posed, are we just as financial illiterate when it comes to credit scores – or credit illiterate?
On first glance, we might not think so. In fact, the average FICO score reached 700 for the first time ever in 2017, which is a very good score.
But there’s a lot more to the story.
Only 58 percent of Americans have a credit score above that golden 700 number.
And consider that 60 percent of American adults haven’t checked their credit report in the last 12 months, and 66 percent haven’t checked their credit score. That’s about 2/3 of all Americans that don’t even know what’s going on with their credit!
Only 32 percent have received a copy of their free credit report over the last year, and nearly one-in-five Americans haven’t pulled their credit in the last three years!
What’s even scarier is that about 1/3 of all American adults surveyed said that they really didn’t see any reason to pull their credit report or check their score.
Additionally, 56 percent of respondents confessed that they had no idea their credit score was the most important factor when applying for new debt like a mortgage, car loan, or credit card.
And while our national average may be healthy, there’s a wide discrepancy between credit score haves and have-nots.
According to Experian, almost 1/3 of all Americans (30%) have a credit score lower than 601 – which is considered sub-prime. VantageScore also estimates that of the 220 million U.S. adults, 68 million of them have poor or bad scores.
But this isn’t just a snapshot of the good and bad when it comes to credit because we have to factor in those who are credit invisible, too.
Studies have found that about 26 million U.S. adults are credit invisible. While this means that they don’t even have enough of a credit history to garner a score, it’s effectively the same thing as having terrible credit.
Many people are also denied credit even though they want more of it. A reported 67 percent of people who applied for new credit cards in 2015 were denied, and one out of three were approved but for a lower available balance than they’d requested!
Younger adults are really scoring an F when it comes to credit score literacy.
An alarming 68 percent of Americans make at least one significant and costly financial mistake before they even hit the age of 30! These mistakes often cost them dearly as they’re trying to start down the right financial path, and credit score blemishes make take seven to ten years to fall of their reports.
But that doesn’t stop young people from getting credit, as 50 percent of respondents said that they received their first credit score by the age of 21, even though 72 percent had no financial education at all before going to college!
Millennials and Gen Xers are also taking out more debt than ever thanks to student loans, not credit cards. In fact, student loan balances are at an all-time high, with the average student loan balance at $23,186. Our national student loan balance is now $875 billion – higher even than credit cards – and increasing at a rate of $2,853.88 every second!
But it’s not just younger people that are fumbling when it comes to debt, especially credit cards. Seventy-seven percent of us have a credit card, and the average U.S. adult with credit card debt owes $16,048. With a sizable average interest rate of 13.66%, that means $183 is accumulated in interest every month.
One in three carry a balance month-to-month without paying it off, often paying just the minimum payment.
Even worse, nearly 16 percent of people with a credit card balance don’t even know their card’s APR, or true interest rate, and that’s even more prevalent (21 percent) among lower-income households.
So if we’re so credit illiterate, what’s the solution?
It seems the simple fix is just to start teaching financial education in schools. In fact, 99% of adults surveyed thought it would be a good idea to teach about credit, debt, interest rates, personal finance, and credit in high schools or even earlier.
However, the plan runs into a snag when you consider that only 1 in 5 teachers feels qualified to teach a class on financial or credit education!
Until they start making the grade, the better solution is to contact Nationwide Credit Clearing for a free copy of your credit report, a complimentary consultation, and the #1 credit repair firm in the country!
15 Things to STOP doing that are still making you broke! (Part 2)
Most of us have high hopes for a better financial situation this year. For some, that may mean saving more; for others, landing a better-paying job; and homeownership is still the American Dream for most families.
But before we can tackle this financial Bucket List and move forward, it’s important that we identify the money mistakes that we’re making that are continuously setting us back. We’ve identified 15 things that are common among the average American consumer, causing them to always be short on cash!
So, if you want this year to be your best yet for your finances and finally turn around your money mistakes, stop doing these 15 things!
In part one of this blog we covered the first seven things to stop doing if you don’t want to be broke, and here are the next eight:
- Not improving your credit score
Your credit score dictates so much about your financial picture, from credit card interest rates to mortgage payments, student loans to auto financing. But it also influences your insurance premiums, utility bills, and can even prevent you from getting a new job!
In fact, it’s estimated that for every 20 points you improve your credit score above sub-prime, you’ll save an average of $10,000 in interest and payments over the course of your life as a consumer!
The first step to improving your finances is always to take account of your present situation, so contact us for a free credit report and consultation!
- Not educating yourself about finances
Should you lease a car or buy it? What’s the best home loan for you? Should you be investing your money first or paying off your existing debt? From saving for retirement to healthcare options, choosing the right credit card to filing your taxes correctly, we can all stand to learn a lot about money.
However, too many people neglect to educate themselves when it comes to financial matters. Even worse, they often make critical financial decisions based on rumors, advice from their “expert” neighbor, or water cooler talk from coworkers. In fact, the average person spends much more time planning their vacation every year than they do planning for retirement!
Instead, empower yourself and make sure you have the best information to build a strong financial future by reading articles, credible blogs, books, and watching personal finance videos. You’ll be amazed what you learn in a very short time!
- Renting instead of buying a home
Home ownership is still the American Dream, and for good reason. In fact, there are a wide range of benefits to owning your own home instead of renting, from social, community involvement, family and, of course, financial advantages.
When you have a fixed rate mortgage, your monthly payment will never go up, but you’ll actually being paying it down to $0 over the years, owning your home free and clear. But when you rent, the monthly price can and will go up periodically, and you’re amassing no equity, no appreciation when the value goes up, and don’t even get tax advantages.
Studies show that the average homeowner has a 3.5x higher net worth than the average renter, as well as more savings, more funds for retirement, and pay less in total taxes. Their children are also more likely to do better in school, more likely to graduate from college and enjoy a much more stable and happier home life.
These days, with mortgage loans that are geared towards first-time buyers that require low down payments, there’s really no reason NOT to buy!
- Not planning for the future
Do you enjoy going to work every day, working long hours, coming home exhausted, and still only bringing home enough to live on until the next paycheck?
Well, get used to it, because many of us will be working way past traditional retirement age, or even well into their senior years. There’s no denying that Americans aren’t putting enough away to retirement comfortable any 65 (or anywhere close!). In fact, 40% of the workforce have nothing saved for retirement, and 60% aren’t on track.
But here’s the good news – you still have time to save, and the time-value of money dictates that the earlier you start investing, the faster your money will grow. So make sure you deduct the maximum retirement savings form your check, definitely take advantage of any employer matching, and focus on savings and acquiring assets that produce cash flow – not racking up debt and liabilities. You’ll thank me once you can retire on schedule!
- Straight up wasting money
New polls show that we have learned our lesson from the past recession. In fact, 55% of households are still spending more than they take in every month (the difference made up in debt), and our personal savings rates are at a rock-bottom 2.2% annually.
Of course, many of our costs – from rent to health care to food – have increased sharply over the last few years, so it always feels hard to get ahead. But we’re still spending – or wasting – money on a ridiculous list of things that show that we’re living well above our means.
Sure, the average person has a closet full of new clothes they hardly wear, but we’re even talking about things more substantial. For instance, it’s estimated that Americans spend $443 billion every year in wasted energy bills, with most people overpaying by a whole one-third!
And we’re all eating out at restaurants and on the go WAY too much, which is costing us.
The average American household now spends $6,759 on food every year but $2,787 of that total is for meals in restaurants or outside of the home. We also spend an average of $1,200 on fast food every year – or $117 billion!
We also spend $65 billion on soft drinks and $11 billion on bottled water every year, we dump countless billions gambling, and this one will blow you away: the average cigarette smoker puffs away 14% of their total income on cigs every year, which adds up to about $80 billion, or 1/7 of our total discretionary income budget!
Stop wasting your money on things you don’t need – and won’t even miss!
- Paying too much for your car loan (not your car)
Of course, we all need transportation to get to and from work, school, and home. And transportation costs actually remain reasonable, with low gas prices and car buying easier than ever. In fact, it’s not the cost of cars that’s eating up our budget, but the high price of the financing we’re using to purchase them.
In fact, the average monthly payment for a new car is now almost $500, as the typical car shopper is financing $28,524 at 16-28% interest rates over terms of 73 to 84 months! Ouch!
So before you go shopping for a car, talk to Nationwide Credit Clearing about improving your credit score so you’ll qualify for a better auto loan. Then, you’ll be free to purchase that fantastic new car – on your terms!
- Paying late
It’s hard enough to manage our finances and get ahead without choosing to spend more, but that’s exactly what we do when we pay our bills late.
In fact, about 1 in 4 U.S. adults don’t pay their bills on time, and only half of 18 to 34-year-olds do so. When we pay late, whether it’s a credit card, a phone bill, or our rent or mortgage, we get hit with unnecessary late fees.
The typical American pays $250 each year in late fees just to their bank! So always pay on time if you don’t want to be broke!
- Getting whacked with unnecessary fees and charges
Likewise, overdraft fees, ATM fees, and other extraneous fees from financial institutions are really putting a dent in our wallets. Banks charge their own consumers an average of $412 in overdraft fees every year, adding up to about $33 billion annually!
We also pay about $329 per year in ATM fees, and they’re often tacking on charges just for doing business with them on many checking and savings accounts! Make sure to read the fine print and pay attention to how much you’re wasting in fees!
Improve your finances this year starting with a free credit report and consultation from Nationwide Credit Clearing!
50 things you didn’t know about credit scores, credit reporting, and debt. (Part 1)
2. People often talk about their “credit score” as if they had just one. In fact, there are more than 100 credit scoring models used by banks, lenders, and financial institutions.
3. But FICO is the biggest and most recognizable credit scoring model. FICO is an acronym for the “Fair Isaac Corporation” and is based on the risk-predicting algorithms developed by mathematician Earl Isaac and engineer Bill Fair in 1956, and then rolled out in the 1980s as a credit scoring system.
4. Did you know that these days, credit scores are even influencing people’s dating decisions? It’s true, as surveys show that the majority of people would consider someone’s credit score before dating them or getting in a relationship. There’s even an online dating site called CreditScoreDating.com with the motto, “Credit Scores are Sexy!”
5. Millennials – and especially college kids – are really missing the boat when it comes to keeping good credit scores. In fact, Millennials have the lowest Vantage credit scores of any generation, including Gen X (ages 30-46), Baby Boomers (47-65), and the Greatest Generation (66+).
6. Speaking to that point, surveys show that 85% of U.S. college students don’t even know their own credit score!
7. These days, your credit score impacts far more than just buying a house or getting a good rate on your credit card, as many employers now check the credit reports of their potential applicants. In fact, 1 in 4 Americans looking for a job have been subjected to a credit check, and 1 in 10 has been disqualified from getting hired because of something on their credit report!
8. According to reports by the Department of Labor, occupations that routinely check a job applicant’a credit include: 1) parking booth operator, 2) the military, 3) accounting, 4) mortgage loan originator, 5) Transportation Security Administrator (TSA), 6) law enforcement and 7) temporary service positions and many more.
9. FICO scores are based on a complex (and secretive_ algorithm that factors every nuance of credit behavior from tens of millions of consumers. Their programs then look for patterns that will help them predict future defaults (or on-time payments) for borrowers, which they then translate as a numeric spectrum of risk for lenders, or your credit score.
10. These days, an estimated 33% (one out of every three) of all American adults do not pay their bills on time every month!
11. How much bad credit card debt do the big banks take a loss on every year? Last year, the top 100 banks in the U.S. had an average charge-off rate of 3.87%, which means that nearly 4 out of every 100 people don’t pay,
12. Last year, the average Annual Percentage Rate (APR) for all U.S. credit cards was 13.14% – another great reason to build up your credit score and get out of debt this year!
13. About 19 countries around the world use some form of FICO scores, and many more have their own credit scoring system.
14. Nearly two-thirds of U.S. adults – or 144 million people – haven’t even looked at their credit report within the last 365 days.
15. And one-third of working-age Americans don’t even have a clue what their credit score is!
16. Visa is by far the biggest credit card in the U.S., with 278 million cards at home (that’s about one for every adult in our population!). Mastercard is next with 180 million cards
But while Visa has 522 million cards across the globe, MasterCard just beats them out with 551 million cards abroad.
17. Visa is also the largest credit card in the U.S. by sales volume, with $981 billion in annual charges. MasterCard is second with about $534 billion in yearly debt from cardmembers.
18. The average U.S. consumer has 13 credit accounts listed on their credit report, which includes 9 credit cards and 4 installment loans. (But remember, that doesn’t mean they’re all open and active, just reporting.)
19. In the 1990s, America saw an explosion of personal debt levels that was unprecedented. One of the main causes was the fact that banks, lenders, and financial institutions starting using credit scores en masse to help them gauge risk and make faster, more accurate decisions.
20. In fact, in 1995, the nation’s two largest mortgage financing agencies, Fannie Mae and Freddie Mac, started advising lenders to use FICO scores for their borrowers, allowing the floodgates on lending to tens of millions of Americans.
21. But at first, FICO didn’t want to reveal how they calculated a consumers credit score, opting to keep it a secret. But under intense pressure from financial advocates and governmental influence, in 2003 they released a list of 22 factors that go into their credit scoring model. That same year, the U.S. Congress passed a new law that granted consumers the right to access their credit score.
22. Remember that credit scoring systems weren’t designed to help consumers and the general public, but lenders and companies. Therefore, credit scoring models, reports, and computations weren’t supposed to be easy for the average person to understand!
23. Insurance companies are using credit scores and reporting like never before. In fact, insurance actuarials prove that the lower a customer’s credit score, the more likely they are to file an insurance claim – costing their insurer money.
24. These days, 90% of homeowners and auto insurance companies use credit score as a factor when assigning and rating premiums! Therefore, insurance companies reward customers with good credit scores, and your premiums will be much lower than for those with a low credit score.
25. If you want to improve your credit score (and keep it high), then try to only keep credit cards from well-respected, major banks, like VISA, Mastercard, American Express, etc.). They’ll show that you’re a better steward of your finances and a more responsible debt holder than if you open accounts with lesser known finance companies, retail cards, etc., and your credit score will reflect that.
Look for part 2 of this blog, with 25 more things you didn’t know about credit scores, credit reporting, and debt!
What do couples fight about? Money, finances, and even credit lead the list – but it doesn’t have to be that way.
Likewise, people in longterm relationships or even just dating often have ups and downs, bumps in the road, and even fights.
But did you know that the number one cause of arguments and disagreements among couples?
You might be surprised that it has more to do with spending, savings, and even use of credit than more romantic concerns.
According to research, here are the top 5 things couples fight about:
2. Division of domestic responsibilities
5. Power dynamics
It turns out that the number one cause of relationship disagreements, squabbles, and wars of the roses is money.
What specific money issues count as a relationship red flag?
Here are the most common financial issues or topics we couples fight about:
• The cost of raising children
• Taking care of aging parents or family
• One person makes more than the other
• Risk tolerance
• Financial objectives
• Personalities and values
• Power dynamics in the relationship
• Previous debt or debt accrued during the relationship
So why is money such a hot button issue, to the point that it breaks up so many seemingly happy relationships?
For most people, money is one of the most stressful and emotional problems. In fact, data from the American Psychological Association reveals that money is the leading cause of stress for Americans today.
Our attitudes, background, and values about work, money, security, and retirement are passed down from our parents starting at an early age, and so they are deeply ingrained, right or wrong.
In fact, many people won’t jump into marriage – or even start dating someone – if they don’t feel they are financially compatible. A recent national survey found that 57% of men and 75% of women say that the other person’s credit score factors into their decision to date them or not. And about 30% of women and 20% of men say they won’t marry a person with a low credit score!
The truth is that arguments over money compound, more than any other reason, except perhaps infidelity, and this type of fight is the most likely signal that the relationship is ending. In fact, studies have shown that fighting over money is a leading indicator of rocky relationship roads in the future. In fact, only substance abuse problems and cheating are bigger predictors of divorce than money issues!
These days, the average couple getting married has a 40-50% chance of getting divorced at some point. But couples with no significant assets at the time of their marriage are 70% more likely to get divorced than couples that are solid financially. In fact, if your income is at least the U.S. median (about $50,000), your risk of divorce is decreased by 30% (compared to those who make $25,000 or less).
It’s no wonder why money plays such a critical role in our relationships, as “financial infidelity” is also on the rise, a form of dishonesty when partners hide their financial dealings from their better half – or even lie about them.
However, if you feel that your spouse spends money irresponsibly, your likelihood of divorce is increased by 45%. Researchers also found that newly married couples who took on a lot of credit card debt became less happy over time. But newlyweds who cut back, saved, and paid off or stayed out of debt measured higher levels of happiness over their marriages.
But before you start second guessing your current relationship because you have disagreements about money from time to time, note that relationship experts and marriage counselors say almost all couples have these heated exchanges over dollars and cents.
“People should expect to fight about finances,” says Laurie Puhn, a New York City-based couples mediator. “It’s a part of any marriage and any long-term relationship. You will fight about finances.”
What’s a “normal” amount of fighting over finances? About 31% of all couples — even the ones that say they are very happy – have at least one fight over finances and money once a month or more.
Look for part two of this blog where we cover tips and tactics to help ensure that money doesn’t ruin your relationship!
10 Credit and financial tips for the holidays
The holidays are here, and while it’s a golden time to enjoy family, friends, give back to others and the many blessings in our lives, it’s also a time of year that can be dangerous financially. In fact, most households see a huge spike in spending and debt over between Thanksgiving, Christmas or Hanukkah, New Years – so much so that many retailers make 15-20 percent of their total annual sales during that period. Add in Valentines Day, winter family vacations and possibly a couple of birthdays, and it’s a time of year that could break the budget and crash your credit score.
The good news is that the holidays don’t have to time to see your debt and spending spin out of control. Here are 12 tips to help you save money, plan responsibly, keep your debt level down, and protect your credit score.
1. Set a budget
Did you know that the average American plans on spending $812 on Christmas or holiday gifts? While that is a significant amount of money, the reality is that we often shoot far past what we intended to spend, especially if you add in extra holiday meals, entertainment, decorating, parties, etc. So this holiday season, set a realistic budget and stick to it, skipping those extra money wasters that are necessary.
2. Consider spending cash
Studies show that we spend far more when we pay for purchases with a credit or debit card compared to cash. So this holiday season, visit the bank and take out the cash you’ll need for each gift on your list. You’ll end up spending less overall and also won’t have a big credit card bill come January or February – or a potential hit to your credit score.
3. Set gift limits
Have you ever given someone three presents totaling $150, only to receive a $20 gift in return? Have a conversation with your friends and family to determine if you’ll exchange gifts, how many, and set a spending limit. You may be refreshed to hear that many of your friends would rather spend time with you or go out to dinner than receive a gift, which means you’ll have more money to spoil the kids!
4. Don’t open store cards
You’re at the cash register at your favorite store at the crowded mall, doing some late Christmas shopping, when the friendly cashier asks the inevitable question, “Would you like to open a store card and get an additional 20 percent off your purchase today?”
You look at the pile of your things and do the math – saving 20 percent on the bill would add up to enough to buy you a nice lunch AND a Starbucks for the ride home.
Wait! Stop! This scenario is played out millions of times during the holiday season and throughout the year, with virtually every big retailer offering store credit cards these days. But even though it seems like a hospitable offer for a generous discount, applying for additional credit may really hurt your credit score. Store retail credit accounts often have high interest rates, low balances, hidden fees, and aren’t looked at favorably by the credit bureaus. Instead, skip the store cards and keep a responsible, low-interest card that gives you cash back or rewards points.
5. Be wary of identity theft
Identity theft and crimes of financial and data theft are more prevalent than ever in the United States, especially with the recent Equifax hack. Each year, approximately 20 million people see their identities used fraudulently, with the bill on that theft upwards of $50 billion dollars. (That’s three times more than the combined $14 billion in losses from all other types of consumer theft – burglary, motor vehicle theft, property theft, etc.) combined.
It also takes a lot of time and often money to clear up the mess identity thieves leave behind, as a compromised credit report will set off a domino effect of raising interest rates and even insurance premiums. On average, each identity theft victim suffers direct losses of $9,650, up from just $3,500 a few years ago.
So review your credit report with the help of Nationwide Credit Clearing, don’t use credit cards on fishy sites, don’t ever make purchases or give your financial details on public or unprotected Wi-Fi networks, change passwords frequently, and generally stay vigilant and protected.
6. Don’t max out credit cards
It’s really easy to max out credit cards during the holidays, but that could cause serious harm to your credit score. In fact, consumers with a score over 760 have an average credit card utilization (aggregate credit card balances relative to credit limits) of only 7 percent, and keeping under 30 percent will keep your score healthy.
7. Have a plan to pay off debt
If you don’t do you your holiday shopping with credit cards, not cash, make sure you have a sound plan how and when you’ll pay them off. It’s best to pay it off in one lump sum before interest charges even kick in, but if that’s not possible, then set a schedule of extra payments you’ll make to get your card paid off at least within the first couple months of the next year.
8. Put some money aside for emergencies
Murphy’s Law dictates that the least convenient time something can go wrong, it will. So put a few hundred dollars aside in case of emergencies or special events over the holidays. That way, if the water heater explodes Christmas morning, the car breaks down on the way to the office holiday party, or you run up your cell phone bill wishing everyone a happy New Year, you’ll be covered. The best part is that if nothing happens that warrants spending your emergency fund money, you can use it to pay off debt, add it to savings, or invest the money.
9. Start saving for next year
Now that you’ve had a great holiday, it’s time to start thinking of next year! Open a separate savings account or out aside an envelope and deposit some money every month once you get paid, not to be used for anything else. Even $25 or $50 a month will add up to big bucks that can cover most of your holiday gift-giving budget come next winter!
10. Keep your resolution to improve your credit score
Our credit scores factor into just about every lending and financial decision we make these days, including even renting a home or getting a job with some employers. Furthermore, just be improving your score from the Fair or Poor range to Great (around 720 or 760 and up), you can save a LOT of money over time. In fact, over your lifetime as a consumer, you could potentially save tens or even hundreds of thousands of dollars in interest payments on mortgages, student loans, credit cards, and auto loans, just by keeping a great score.
Therefore, it’s more important to make a firm resolution to finally improve your credit score The good news is that it’s easy to analyze your credit report and see what needs fixing with the help of Nationwide Credit Clearing – and free!
Contact us at MyNationwideCredit.com for to set up your free credit report review and consultation, and make it a happy holiday!