How Your Credit Score Affects Your Life + Credit Sesame Review

How Your Credit Score Affects Your Life + Credit Sesame ReviewThe finance world seems to be divided on the topic of credit scores and their importance.

Some are all about using their credit to their advantage, whereas others do not care about their credit history at all and think it’s unnecessary and evil.

I’m on the pro credit side. I think your credit history can be used to your advantage, so why not work to improve it?

As a background for why we care about our credit right now: We are in the very beginning stages of buying a new home. Since we are both self-employed, obtaining a mortgage is a little more difficult. Having a great credit score is one of the areas where we will be analyzed. We also care about our credit because we like to use credit cards with great rewards programs.

Related article: Steps To Qualify For a Mortgage When Self-Employed.

 

Why is your credit score important?

There are too many people out there who have no clue what their credit score is. Too many people also have never checked their credit report.

I think this is a MAJOR problem.

Your credit score and credit history are important. You can leverage them and use them to your advantage. Yes, it is possible to have the credit system on your side.

A credit score usually means you can keep more of your money because you will receive lower interest rates on your home or car loan. For example, if you have an excellent credit score, you may be able to qualify for a 0% car loan. However, if you had a bad credit score, you may receive a 24% interest rate on your car loan. Yes, that does exist…

Also, if your credit score isn’t high enough, you may even be completely denied a loan. You may have to pay higher rates or pay larger deposits because you are deemed more risky.

Overall, a good credit score can help you in life.

 

When will your credit score be checked?

How some go about with never needing their credit score or credit report is beyond me. Good for those of you who do not need it, but I think most people enjoy having a credit history.

There are many instances where your credit score and/or credit report may be looked at, and sometimes they have nothing to do with a loan.

Home and car insurance - If you have car or home insurance (read about how our home insurance just jumped 69%!), your rate may be calculated on one factor that you did not know about – your credit score. If your credit score isn’t good, then you may actually be paying more because companies may consider you to be more risky.

Employer - This might be shocking to hear, but there are some employers out there who will check your credit report (with your permission). Industries that often check your credit report include those that deal with financial services, chemical, and defense.

Renting a home – If you have decided that you don’t want to own a home, do not think that you have escaped having your credit history checked. Your landlord will most likely check your credit history. They will want to know if you pay your bills on time or if you have skipped bills entirely. This will say a lot about you as a renter, whether you want to believe it or not. If your credit history is not something they want to see, you may be denied the rental altogether, you may be asked to pay multiple months at once, or you may be asked to find a co-signer just in case you fail to pay your rent.

Credit cards - If you don’t care about credit, then you probably will not care about this one. However, if you want a credit card, especially one with a good rewards system in place (such as if you want to earn a free cruise or free $400 in travel), then you will want a higher credit score. The good reward credit card offers and acceptances are usually only available to though with good or excellent credit scores.

Loans (home, car, etc.) – If you apply for a loan, your credit score and credit history will definitely be checked. Before you are approved for a loan of any sort, the lending institution is going to thoroughly check your financial history so that they don’t end up losing money on your loan. There are a lot of expenses that go into owning a home, so getting the lowest interest rate possible is very important.

 

How Your Credit Score Affects Your Life + Credit Sesame Review

Credit Sesame Review

I once signed up for a “free” credit score company who used to have those catchy singing commercials. I thought it was free, and I remember being charged months later. I didn’t catch the charge the first time either, and I was actually charged a few times before I noticed.

Yes, yes, I know. I’m a personal finance blogger who made a huge mistake!

However, that was a long time ago and I have learned from my mistakes. And that’s why I want to do a review on Credit Sesame so that you can check your credit score for free.

If you are looking for a truly free credit monitoring service, then Credit Sesame is for you. Other companies say that they are free, but they usually charge you a fee later on when you probably won’t notice. Credit Sesame doesn’t ask for your credit card, so there is NO WAY that they can secretly charge you later.

Credit Sesame uses the Experian National Equivalency score, whereas most lenders will look at the FICO score. However, the scores are usually fairly similar.

Okay, so you’re probably wondering how everything is free. They must make money somehow right? Well, yes they do. Credit Sesame makes money by showing you different home loans and credit cards you may qualify for. If anyone clicks on these links, then they may make money that way.

Your next question may be “Will checking my credit score on Credit Sesame hurt my score?” Nope! It is just a soft pull so it will not affect your credit score.

If you are interested in checking your FREE credit score click here. It’s completely free. Ignore any offers where they ask you to pay for any side offers, because you do not have to.

 

How often do you check your credit score? 

Are you trying to increase your credit score? Why or why not?

 

Should I Ruin My Retirement By Helping My Child Through College?

Should I Ruin My Retirement By Helping My Child Through College?Today’s topic will probably be a touchy one. Ever since I paid off my $38,000 worth of student loans last year, I have received many e-mails from parents who are interested in seeking help for their children.

These e-mails are all related to whether or not parents should risk or sometimes even ruin their retirement by helping their child through college.

There is usually one common theme in these e-mails – the parents are usually not on track for retirement, they have debt, or they cannot afford to help their child in college.

Here are some of the stories I have heard in these emails:

  • The parents have over $100,000 in student loans that they took out in THEIR name so their child could go to school. These parents are not on track for retirement and they have a lot of other debt besides student loans.
  • Their child is in medical school and the parents are paying for all of their college expenses plus food, car, rent, etc. These parents are not on track for retirement and they have debt.
  • Their child is in law school and the child said that if his/her parents don’t continue paying for their expenses, that they would hate their parents. This child was even more mad when the parents printed out every single blog post of mine and gave it to them (I did not tell their parents to do that, it was entirely their idea). The child said I was ruining his/her life (yup, that actually happened). These parents are not on track for retirement and they are afraid of losing their child now as well.

I know I’m not a parent.

I’m not a parenting or child expert either.

I know I don’t know what it is like to have a child and the feelings that go along with that. However, I do know that I raised my younger sister after my father passed away and her attending college did make me want to help her so that she wouldn’t have to worry about money as much.

The other day I was talking to my sister and she was bringing up different ways she could possibly side hustle so that she could make extra money. It sort of made me feel bad, and for a moment I thought about helping her financially. Luckily, she snapped me out of it and told “You’ve helped me enough already. Do not worry.”

Her saying that really made me happy. I actually had tears in my eyes!

Instead of just giving her money, I helped her with her budget, I have supported her, I helped her find side hustles so that she could make extra money, I helped her make a plan, and more.

I know all of these other things I am doing have shaped her into an awesome young lady. Yes, she has to learn things the hard way but in the end she will be just fine.

[Read more...]

Budgetary Goals to Motivate Variable Income

Budgetary Goals to Motivate Variable IncomeHello everyone! Enjoy this post by my blog friend Emily.

I am in my first month of my official funemployment!

I finished my PhD last month and am waiting on my husband, who also just finished his PhD, to decide on his next job so I can start applying for full-time jobs in our new city (wherever that is).  In the meantime, I’m working on lots of online projects and volunteer work, and I also have a contract job.

While I would like to do nothing more than play on the internet and write blog posts all day, I need to set goals to keep myself on track in terms of accomplishing everything I want to this fall.

One of my goals is to bring in a bit of income on the side through my contract job and also whatever may come from my websites.  Because we were living below our means while we had two incomes, between my husband’s income (he recently got a raise) and our cash savings, I don’t have to bring in any money for us to make it.

However, I would like to keep from dipping into savings as much as possible each month and even put away some additional money.

I have decided on a new way to motivate myself to take on as much contract work as I can and to find ways to bring in more money from our online projects. It’s something that anyone with variable income can do (and might do already).

As my earnings for each month accumulate, I’m going to calculate which component of our budget I would be able to fund with my variable earnings alone.  For instance, if I earn $X that means I have earned enough to pay our internet bill, or if I earn $Y we could reinstate our eating-out budget next month (one of the few cuts we made to our budget with my change in employment status).

It’s not as simple as saying “I earned $80 this month, that means we can spend $80 on eating out!”  I have to account for taxes and our percentage-based budget.

1) Taxes:  Taxes will take a total of 36.1% of my pay because I am self-employed.  That’s 15.3% for self-employment tax plus our marginal federal tax rate of 15% (it’s unlikely that I’ll earn enough to bump us up to the next bracket) plus our state’s new flat tax rate of 5.8%.

2) Percentage-based budgeting:  My husband and I have agreed on what to do with a certain percentage of all income we bring in.  We give 10% of our income to our church and put 15% into our Roth IRAs, so another 25% of my variable income is committed to these purposes.

Together, that means that for every $100 I bring in, $36.10 will go to taxes and $25 will go to our percentage-based budget, leaving $38.90 available for my budget-based goals.

The table below shows a few of our budget categories with what we have allocated to spend on them and also the amount of money I would have to earn on the side to fund that category.

Budgetary Goals to Motivate Variable Income

As you can see, it will take quite a bit of side income for me to be able to knock out our grocery or rent budget categories!  I’ll definitely be working on the water bill at first this month.  But it’s better to be realistic than to be caught unaware by taxes, and I also enjoy that at the same time I’m giving and saving for the long-term with every bit of income.

I’m going to expand this table to include every component of our budget, ordered from smallest to largest.

Each month as I complete my contract assignments or have website income come in, I’ll tally up what I’ve earned and cross off the next-highest budget category that amount of income represents.

Maybe I’ll set an additional goal to get to the next category up in each subsequent month!

Author Bio: Emily runs the blog Evolving Personal Finance, which has a new funemployment theme running through this fall.  She also frequently writes about living well on a low income, managing money in marriage, and finances for graduate students.

 

How do you motivate yourself to bring in additional side income?

What do you do for side income?

Do you connect your side earnings to your budget?

 

Image via Flickr by Steven Depolo