Does Having “Good Credit” Really Matter?

Does Having “Good Credit” Really Matter?

During our parents and grandparents’ generation, the experience of buying a car, a house or even clothes and food was totally different from how we (our generation) makes a purchase. Why? Because they lived on the principle of “if we do not have it, we can’t get it” and “we’re not going to get it, until we have the money for it.” And for them “having the money for it” meant “having the cash for it”. They paid cash for everything. Loans and credit cards were relatively taboo in those days and most of them were steadfast on living within their means. Fast forward to 2015 and we have credit cards falling out of our wallets. We use it for everything—from buying the new “Red bottoms” as Saks Fifth Avenue to getting a Big Mac at McDonalds. We use it even when we have the cash to purchase it.

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Now, unlike many financial gurus, I do not believe in completely getting rid of ALL credit cards (read next week’s blog). I believe that if you are responsible and have self-control, you should have ONE credit card for travel (purchasing flights, renting cars, paying for hotels). The problem is, we get tons of credit cards, use it for EVERYTHING, get in all types of debt, cannot pay the debt (or any of the other expenses we have) and take a hit (or multiple hits) to our credit report; thereby, obtaining bad credit.

Being irresponsible with debt causes years of damage and have long lasting effects that could take years to remedy. And in 2015, having “good credit” matters because it affects our ability to have some of your basic needs met. In short, it impacts:

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7 Financial Books Everyone Must Read

7 Financial Books Everyone Must Read

I love reading and since our family is trying our best to get out of debt, I have become passionate about acquiring as much knowledge of personal finances as possible. Since I have been on this journey, certain books have stood out and completely changed our perspective of money.

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Here is a list of my Significant Seven financial books that I believe everyone must read to start their journey in obtaining financial freedom.

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The Quickest Way to get Out of Debt

The Quickest Way to get Out of Debt

Get Completely Out of Debt in 7 Years” was the tagline my former boss and co-worker read for a Continuing Education class at one of the local universities. It sounded absurd, but they were intrigued by the tagline and decided to spend the $20 to register for the workshop.  Needless to say, they enjoyed the class so much that my boss set-up a one-day departmental training so the entire department could use the tricks of eliminating debt.

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By the middle of our training, I, too, was convinced that my husband and I could become debt-free. What was the trick to eliminating debt so quickly? Well, I now know, it is what Dave Ramsey calls the “Debt Snowball” Method (I call it the “Trickle Down Effect”).

How does it work?

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Plan Your Way to Success

Plan Your Way to Success

The best way to succeed in anything is to first, believe. Believe you can do it, believe you will do it and believe in the plan to getting it done. Yes, planning your way to success is the recipe to actually acquiring the success you desire. This holds true in every area of our lives, be it relationships, careers, parenting and even in our finances.

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Successful people do not just fall into success. They are very intentional and goal oriented; they set high standards and do everything in their power to meet or exceed their goals.

If we can plan our weekends, family vacations, or even what we will wear to work for the week, then certainly, we can put that much time and effort in planning how successful we will be in our finances.

Someone once said, “show me a man who fails to plan, and I will show you a man who will never succeed in life” (Unknown).

If you are like me, I want to be successful in every aspect of my life–including my finances.  That is why my husband and I set annual financial goals (what we will pay off, how much we will save, etc…) and create our monthly budget to align with those goals.

Statistics say, “43% of Americans spend more than (they) earn (each month)” (Bureau of Economic Analysis). So to ensure we are not a part of the statistics, we plan and try our best to follow the plan. Why? Because when there is not a set goal, standard or objective, we all tend to spend our money frivolously. As long as there is money in the bank, we can spend (so we think). The problem is, without a “plan”, the following tends to happen:

U.S. household consumer debt profile:

  • Average credit card debt: $15,609
  • Average mortgage debt: $156,706
  • Average student loan debt: $32,956

                 (Source:  Nerdwallet.com)

DEBT

DEBT

AND MORE DEBT

So the best way to not overspend (or get into more debt) is to create monthly budgets at least one month prior to spending. Here’s how:

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