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Are you relying on Social Security for your retirement? Don’t! You need to read these 25 Facts about Social Security!
Are you relying on Social Security for your retirement? Don’t! You need to read these 25 Facts about Social Security:
On August 14, 1935, President Franklin Delano Roosevelt signed the Social Security Act that made the Social Security program law. At that time, the program was founded because so many Americans had just lost all of their assets and savings in the Great Depression, leaving them nothing for retirement.
More than 80 years later, 165 million American workers are currently covered under Social Security, including 46.6 million seniors age 65 or older. In fact, Social Security has been one of the single most significant, ambitious, and helpful government programs in the history of the world.
However, that program may not withstand a seismic shift in demographics in this country, due to a swell of Baby Boomers leaving the workforce as they retire, drawing their Social Security benefits out of the program instead of contributing.
Will Social Security be around in its present form when you retire? Are you counting on SS benefits for a significant portion of your retirement? Or, does the modern American need to more carefully manage their own financial house – including keeping a great credit score, paying off debt, and saving and investing, to ensure their future?
Here are 25 facts about Social Security so you can be the judge:
1. About 60 million Americans currently receive Social Security benefits, adding up to $863 billion of payouts. To put it in perspective, that amount is the largest item on our federal budget and accounts for about a quarter of all spending.
2. Within the next two decades, the number of SS beneficiaries should grow to 90 million.
3. Compare the huge number of Social Security retirees today to the program’s first year of benefit payouts, 1940, when only 220,000 Americans were signed up.
4. In fact, Social Security’s first beneficiary was a woman named Ida May Fuller from Ludlow, Vermont, who received monthly payments of $22.54 a month for 35 years.
5. FDR’s original Social Security program only paid benefits to retired workers. But later on, the program was expanded to offer disability benefits and payments for a beneficiary’s spouse and children for widows and widowers.
6. The average monthly payment for SS benefits now is $1,221, or $14,700 a year.
7. Since Social Security first collected tax contributions in 1937, it’s collected more than $13 trillion in income and paid our $10.6 trillion, as of 2007.
8. That amount of money that flows in and out of Social Security is so enormous that each year, it manages more money than the economies of all but the 16 richest countries in the world!
9. Each day, 182,000 people visit Social Security offices, and 445,000 people call the Social Security Administration. Just last year, there were also 17 million applications to replace lost, damaged, or stolen original Social Security cards!
10. 2010 was the first year that Social Security disbursements outpaced its income, if you don’t count interest on trust-fund assets. Even factoring in that interest, disbursements should outpace income by 2021, and that interest is expected to be completely exhausted by 2033.
11. Only 8% of American workers are very confident and only 24% somewhat confident that Social Security will continue to provide benefits of at least equal value to today’s retirees and recipients.
12. 33% of today’s workers say that Social Security will be a major source of income when they retire, compared to 46% who say it will only be a minor source of income and 20% who say they won’t count on it for income at all.
13. Today, the average retiree gets 12 more years of Social Security benefits than a person did in 1940 due to the fact that we’re living longer AND retiring earlier (an average age of 64 instead of 68 in 1950.)
14. And while Social Security is still the largest source of income for Americans over 65, only one in three people depend on it to cover 90 percent.
15. Thanks to the increase in elder Americans (Baby Boomers), the Recession’s impact on stagnating wages, and a larger population receiving benefits, there are less than three workers paying into Social Security for every one retiree eligible for a payout.
16. That’s a sharp drop from 2009, when there were three workers per retiree, and 1960, when five workers were paying into the system for every one person collecting a check.
17. In fact, 75 million Americans are on the cusp of retirement and being eligible for Social Security payouts, as each day, 10,000 more people turn 65 and the oldest of the Baby Boomers generation turn 68 this year.
18. Each American citizen is assigned a Social Security number, shortly after birth since 1989. But many people don’t realize that those 9-digit combinations are not random. In fact, the first three digits are based on the geographic region you were born in, with lower numbers in the Northeast and higher numbers in the West. The middle two numbers are called the group number, and issued in nonconsecutive order between 01 and 99. Meanwhile, the last four digits are issued sequentially. So far, there have been 420 million unique Social Security numbers that aren’t being reused after the person’s death.
19. To save money, Social Security is phasing out paper checks. It actually costs them $1 to mail out each paper check, while electronic deposits and transfers only cost 1/10th of that. Does it sound like small change? In fact, going paperless is expected to save taxpayers $300 million over the next five years!
20. The Social Security Administration is in dire straights, both financially and operationally. In fact, over the past three years, the SSA has lost 11,000 employees, about 12% of its workforce, and by 2022, about 60% of its supervisors will be able to retire. Additional budget cuts have forced 44 field offices to consolidate, 503 mobile contact stations to close, and eight new hearing offices to be suspended. Even call centers are under siege, with average wait times when someone calls in now over 10 minutes, when it used to be only 5 minutes as recently as 2012.
21. The struggles of Social Security have been so well documented that we could easily write another book about its impending financial hardship. Basically, by 2016, the trust fund that supports Social Security’s disability payments is expected to be empty. If (when) that happens, the 11 million people who now receive Social Security disability payments will see an automatic 19 percent cut in benefits.
22. The math gets even scarier when you consider that over the next 75 years, Social Security is projected to pay out $159 trillion MORE in benefits than it collects in taxes.
23. If we adjusted that number for future inflation, that means our Social Security program will be underfunded by about $35.3 trillion in 2015 dollars. Just how big of a gap is that? $35.3 trillion is TWICE the entire national debt!
24. It’s not a complete doom and gloom scenario, as Congress is already floating some ideas to remedy this shortfall and get Social Security back on track. However, solutions include increasing SS taxes, cutting benefits, and pushing back the retirement age – none of which are very popular with the American people.
25. But even with a payroll tax increase of 1.3 percent, benefits cut of 16.2 percent, or any combination thereof, would right the projected Social Security deficit and allow the program to remain solvent for about another 80 years – in time for another birthday celebration.
What we make. Examining incomes for a wide range of average Americans.
What we make. Examining incomes for a wide range of average Americans.
What does the average person earn at his or her job every year?
That question is easy to answer, as the Bureau of Labor Statistics reports the average wage for working adults in America as of (Q4 2017) is $857 per week or $44,564 annually.
However, while that is just an average (mean), our paychecks vary widely on a whole lot of factors—aside from our occupation. For instance, men make $49,192 on average, which women earn only $39.888, or just 81.3% of their male counterparts.
It’s common sense that age factors into what we earn, too, and the data proves that, with men 55 to 64 achieving the highest annual earnings ($58,760), while women topped out $43,420 from ages 45 to 54. It also makes sense that there’s a huge correlation between education levels and income. College graduates with at least a Bachelor’s Degree earn an average of $66,456 annually (it literally pays to stay in school!), while those with a Master’s Degree or higher earn a lofty $77,324 on average.
As could be expected, people working white collar jobs make more, as professional, management, and related occupations bring home $64,200 annually, compared to an average of just $28,028 for service occupations.
Now, let’s run down the best, the worst, and some other notable occupations based on their corresponding salaries.
According to the Bureau of Labor Statistics, these are the 25 highest paying jobs in America:
1. Anesthesiologist
Median salary: $269,600
2. Surgeon
Median salary: $252,910
3. Obstetrician and Gynecologist
Median salary: $234,310
4. Oral and Maxillofacial Surgeon
Median salary: $232,870
5. Orthodontist
Median salary: $228,780
6. Physician
Median salary: $201,840
7. Psychiatrist
Median salary: $200,220
8. Pediatrician
Median salary: $184,240
9. Dentist
Median salary: $173,860
10. Prosthodontist
Median salary: $168,140
11. Nurse Anesthetist
Median salary: $164,030
12. Petroleum Engineer
Median salary: $147,030
13. IT Manager
Median salary: $145,740
14. Marketing Manager
Median salary: $144,140
15. Podiatrist
Median salary: $144,110
16. Lawyer
Median salary: $139,880
17. Financial Manager
Median salary: $139,720
18. Sales Manager
Median salary: $135,090
19. Financial Advisor
Mean salary: $123,100
20. Business Operations Manager
Median salary: $122,090
21. Pharmacist
Median salary: $120,270
22. Optometrist
Median salary: $117,580
23. Actuary
Median salary: $114,120
24. Political Scientist
Median salary: $112,250
25. Medical and Health Services Manager
Median salary: $109,370
Now, here are some notoriously low-paying jobs in the United States:
- Gaming Dealers $21,990
- Animal Caretakers $31,240
- Cooks $16,000 – $24,000
- Hotel clerks $21,500
- Bank teller $24,940
- Janitor $24,850
- Restaurant host, hostess, waiter or waitress $24,410
- Farmworkers and laborers $10.52 per hour and an average yearly salary as low as $25,570
- Retail cashiers $25,827 to $32,732.
- Personal and home care aides $22,272 to $26,921.
- House cleaners/maids $23,469.
- Motion picture projectionist $18,260.
- Manicurists and Pedicurists $26,400
- Childcare workers $28,090.
- Fast food workers (salaried or full-time) $20,257
- Dishwasher $9.10/hour or $18, 930
- Walmart worker $8.86/hour or $17,860
These jobs pay near the national average:
- Attorney $51,000
- Elementary school teacher $35,630 – $83,160. (Median $53,400)
- Event Planner $45,810
- Flight attendants $43,350
- Child, family, and school social workers $43,540
- Real estate agent $39,000
- Administrative assistant $24,000 to $50,000 (Median $32,502)
What trades pay:
- Heat, AC, and refrigeration mechanics and installers $43,670
- Construction worker $32,000
- Plumber or electrician $39,000
The highest-paying private sector jobs in America:
- Chief executives officers (CEO’s) $15.6 million (but their bonuses commonly reach millions or even tens of millions of dollars!) By the way, that’s 271 times more than the average American worker!
- Average NBA basketball player salary $7.15 million
- Average MLB baseball player salary $4.47 million
- Average NFL football salary $2.7 million
What government employees and civil servants earn:
- State worker $49,240
- Policeman $48,000
- Fireman $43,000
- Garbage collector $43,000
- Average U.S. Army private up to sergeant $17,892 to $27,814
- Governor $70,000-$187,256
- Senator $193,400
- Congressman $174,000
- United States President $400,000
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.
6. Sacrifice.
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.
8. Problem-solving.
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.
9. Self-awareness.
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.
10. Curiosity.
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.
11. Specialization.
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.
12. Literacy.
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.
15. Milestones.
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.
18. Responsibility.
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.
22. Motivation.
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.
23. Persistence.
“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.
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Look for part two coming soon with 25 more traits of wealth and success!
As our society grows older, the financial burden looms.
What’s the fastest growing societal problem in the United States, as well as around the world?
While there are plenty to choose from, unfortunately, the impact of an aging population may be the most significant challenge we face. From healthcare to retirement, social services to housing, as the average life expectancy grows and the roles and needs of our seniors change, this massive demographic shift is already causing cracks in the faultline of our economy.
But it was only a decade or two ago that the thought of seniors needing to carefully manage their credit scores, credit card debt, and student loans was virtually unheard of.
In this ongoing series, Nationwide Credit Clearing will dissect some of the facts, stats, and financial trends among seniors in the U.S. Aside from offering this education, we really want to help, so any senior can contact us for a completely free consultation and credit report.
10 Facts, stats, and trends in senior finances:
1. Between 2007 and 2016, the percentage of senior households (with members 75 and over) grew from 31.2% all the way to 49.8% – or nearly half.
2. The amount of debt is also skyrocketing in the average older households, from $30,288 in 2010 to $36,757 in 2016. In fact, among older households with debt, the median total has risen more than 2.5 times since 2001!
3. Likewise, in 1992, only 41.5% of senior households had any debt, but that number has now risen to 60%.
4. More than 40% of single adults also count on their monthly social security check for 90% of their living expenses and income. The amount of that check? Only $1,404, on average.
5. Medical debt is one of the fastest growing financial burdens. Consider that 84% of people 65 years or older face at least one chronic condition. But insurance is covering less and less of the cost for their care, so in the five years leading up to their death, the average senior racks up $38,00 in medical (or medical-related) debt, and 1 in 4 approach bankruptcy.
6. Even credit card debt is on the rise among seniors. In 2001, just less than a quarter (24.2%) of seniors had any credit card debt at all. Now, more than 1 in 3 (34.2%) carry balances on their credit cards that aren’t paid off monthly. In fact, seniors hold 50% ore credit card debt than members of Gen Y!
7. You may be shocked to hear that the fastest form debt among seniors is student loan debt! It’s true, as these days, 2.2 million Americans 60 or older are responsible for student loans. However, it’s not that these industrious seniors are going back to school. Instead, they’re cosigning for their children or grandchildren at rates that have tripled since 2005. And with minimum student loan payments averaging $700 a month and the younger generation having a harder time making ends meet or defaulting more and more, these seniors are assuming the financial burden.
8. The financial picture for more and more seniors is bleak. In fact, one-third of all senior households either is going into debt every month to pay basic living expenses, or just breaking even.
9. Even more distressing, 25 million Americans ages 60 and up are considered economically insecure – which is living at or below 250% of the federal poverty level (that comes to about $29,425 for a single person.)
10. If we look at the data on credit scores, we see that seniors have the highest credit scores of any generation. In fact, the average FICO for all consumers 70 and over is 747, while 60-69 year-olds have an average FICO of 722 (and it goes down to about 640 for those 18-29.)
However, that doesn’t tell the whole story, as seniors are now defaulting on their financial obligations and debts at an unprecedented rate. Facing massive healthcare costs and medical bills, rising credit card and student loan debt obligations, and a shortfall from social security and retirement planning, seniors are now in need of some credit score help like the rest of us.
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Look for part two in this series about the financial burden that comes with aging. And remember that we really do want to help, so any senior can contact us for a completely free consultation and credit report.
Millions of Americans get a credit score boost because of new scoring rules. Will your score go up?
While millions of Americans just filed their taxes in hopes of a big refund, consumers may be getting some good financial news in another arena: their credit scores. That’s because the three major credit reporting bureaus – Experian, Equifax, and Transunion, just reported that they’ll start excluding tax liens from their credit scoring algorithms.
In a concerted effort to improve the accuracy and fairness of their scoring models in respect to public records, a significant number of Americans will see their credit scores jump, virtually overnight (the changes took place April 16.)
The push for reformatting the way judgments and tax liens are factored into credit scoring comes after a study from the Consumer Financial Protection Bureau revealed that incorrect, outdated, or otherwise erroneous information too-often showed up in credit files, sinking that person’s score. So, starting last July, the credit bureaus started their clean sweep of civil judgment data from credit reports, including some tax lien reporting. This April 16, they finished that job.
To be clear, the vast majority of Americans won’t see any difference if they check their credit score again. According to the IRS and other reports, between 93% and 94% of Americans do not have any sort of tax liens reporting on their credit. However, that still leaves about 12 to 14 million Americans that may have tax liens or other judgments affecting their credit score.
The number of people who see a credit score benefit could be even higher. Based on research by LexisNexis Risk Solutions, about 11% of our population will have a judgment or tax lien removed from their credit file.
No matter how you add it up, since the credit bureaus are reshuffling their credit scoring model and excluding tax liens from consideration, these “lucky” millions of consumers will enjoy that sizable score increase.
So, just how high might their scores increase with the new scoring changes?
The answer is “It depends,” of course, because credit scoring is based on a host of factors and individual circumstances (like payment history, status of other existing loans, how seasoned accounts are, and credit mix). While many consumers may see their FICO score up by about 10 points after the April 16 change, a whole lot more could see their score ascend even higher.
For instance, according to a study of 30 million credit files by credit scorer FICO:
• The majority of consumers will see an increase of about 1 to 19 points.
• But between 1 and 2 million consumers may see their scores skyrocket by 20 to 39 points.
• In the case of about 300,000 consumers, their credit scores could go up by as much as 60 points when multiple liens are removed – or more.
But, it’s important to remember that the vast majority of people won’t see any credit score increase at all, as they don’t have tax liens or judgments. Others point to the fact that the 92-93% of consumers who don’t have a tax lien are somehow unduly being penalized because they won’t see their score go up.
Likewise, various financial watchdog groups have gone on record that the changes won’t make a big impact for consumers, at all. According to Eric Ellman, senior vice president of the Consumer Data Industry Association, “Analyses conducted by the credit reporting agencies and credit score developers FICO and VantageScore show only modest credit scoring impacts.”
But wait, is it possible that the credit scoring changes not only make a minimal impact but even harm consumers? “Lenders and servicers have to hedge for that risk,” says Nick Larson, business development manager for aforementioned LexisNexis Risk Solutions. “Overall, consumers actually get hurt,” he goes on, pointing to the fact that banks, lenders, and creditors will have to adjust their guidelines and regulations accordingly (therefore hurting those who didn’t see a credit score increase from erasing tax liens) just to provide the status quo risk-gauging model.
No matter what the temporary impact may be, remember that the best way to maintain a great credit score over the long term – and save thousands on your credit cards, mortgages, loans, and more – is to make your payments on time, keep your balances low, and keep a good mix of seasoned, responsible accounts.
For more help or if you’d like a great credit score increase of your own, contact Nationwide Credit Clearing for a free report and consultation.
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!
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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.
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).
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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!
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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!
The 15 most common credit score wrecking balls!
1. Paying late (or not at all)
Of course, one of the biggest wrecking balls that smash through your credit score and finances is paying your bills late. For accounts on your credit report, like mortgages, credit cards, auto and student loans, and many others, paying even just a day or two late can trigger a 30-day late, which will significantly ding your score.
Even worse, being 90 days late causes further damage to your credit report that. Remember that payment history (paying on time every month) is 30% of your score, so pay on time to dodge this wrecking ball!
2. Max out credit cards or accounts
Your credit ratio, or the amount of total debt you hold compared to your available credit, is also a major factor for your score, making up 30% of your FICO as well
So, when you max out your credit cards, even if they are paid on time, your score will get smashed.
3. Have an account charged off and go to collections
Once you are 90 days late with your credit card payment or bill, the next step is typically that your creditor soon charges off the debt, sending it to a third party for collections, causing even more damage to your credit score that can be hard to erase.
4. Cosign for someone who doesn’t pay
Maybe you have a friend or even family member that asks you to be a cosigner on their credit card, auto loan, or another account. I know that you’d like to help, but aware that if they don’t pay, YOU are fully responsible for their debt. In fact, those late payments will show up on your credit report just like you took out the debt, yourself.
5. Filing bankruptcy
If you want to talk about a big, heavy wrecking ball, filing a Chapter 7 or 13 Bankruptcy is one of the most damaging events to someone’s credit score. However, for some people, legal insolvency is still the best option if they are drowning in debt with no way out. The good news is that Nationwide Credit Clearing can work with you during and after the BK process to repair the damage!
6. Foreclosing on your home
Another major wrecking ball is foreclosure, which occurs when you miss enough house payments so the bank legally repossesses the home. Foreclosures cause serious damage to your credit score and will take seven years to fall off your credit report.
7. A judgment against you
This is a dangerous and scary wrecking ball for consumers. When you don’t pay your debt obligations, your lender or third-party collection agencies may take you to court, trying to secure a judgment for the amount you owe (plus late fees, penalties, and court costs). Also, there are state and federal judgments for unpaid child support, alimony, IRS tax liens, etc. that will never disappear from your credit file until they’re satisfied! Contact us immediately if you have judgments!
8. Applying for new credit recklessly
If you start filling out a lot of credit card and loan applications within a short period, it shows the credit bureaus that you’re financially desperate, or something is wrong. Since their main job is indicating risk for lenders, your credit score will take a hit, accordingly.
9. Close old credit cards in good standing
It may seem like good financial sense to cancel old or unused credit cards, but by shutting down a seasoned card or credit line in good standing, you’ve just effectively erased a positive track record of paying on time. Sorry, but your score will go down once that positive payment history is taken out of the equation.
10. Not pay student loans
Remember when we were talking about judgments? Unpaid federal student loans will level your credit very quickly, and they also won’t naturally disappear from your credit report until they’re paid. Unfortunately, unpaid student loans are the fastest growing form of credit score “wrecking ball” in the United States.
11. Utilize payday loans, cash advances, or financing through Rent-a-Centers
All credit is not created equal, and when you take out loans that are deemed risky, it will hurt your score. Payday lenders, check cashing services, certain retail credit cards, and financing purchases like furniture can shake the foundation of your score.
12. Try to outthink the credit card companies with balance transfers
Are you “jumping around” between credit card offers, taking out 0% interest or cash-back offers and moving balances around just to stay one step ahead? The chances are that questionable financial practice will catch up with you sometime, in the form of penalties, late fees, small print you miss, or higher interest rates. But even if it works, your credit score will be battered and bruised.
13. Not using your credit at all
About 30 million Americans are considered “Credit Invisible,” as they don’t have a sufficient – or any – credit history. If you don’t have any credit cards or other accounts, there’s no established payment history for the credit bureaus to judge you by, and your score will be rock-bottom. Luckily, you can contact Nationwide Credit Clearing, and we will guide you through how to establish credit and build a good score.
14. An imbalanced mix of credit
Do you have only credit cards on your credit report? Or, is have you taken out four installment loans but nothing else? An imbalance between credit cards, installment debt, auto or student loans, mortgages, etc. can also act like a demolition crew to your credit score.
15. Not checking your credit frequently
These days, credit and identity theft is the fastest growing form of crime around the world, and companies that collect your sensitive financial data – and even credit bureaus (like Equifax) are susceptible to hackers. Even if you pay all of your bills on time and do everything else correctly, the best way to protect your credit and finances is to regularly monitor your credit report.
Start by contacting Nationwide Credit Clearing for a free credit report and consultation at (773) 862-7700 or MyNationwideCredit.com.
10 Ways to Start Saving Money TODAY!
Do you want to save money?
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.
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Contact Nationwide Credit Clearing for a free credit report and consultation to make sure you aren’t overpaying!
