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Once everything started rolling I didn't have to worry and having only one payment was great.
- Betty Morris

Did you know?

91% of undergraduates have at least one credit card

Qualified Debt

  • Credit Cards
  • Collections
  • Unsecured Loans
  • Autos Repossessed
  • Unsecured Personal Loans
  • Unsecured Personal Lines of Credit
  • Medical Bills

Unqualified Debt

  • IRS Debt/Taxes
  • Utility Bills
  • Home Loans/Mortgages or Home Equity
  • Auto Loans
  • Student Loans
  • Government Loans
  • Secured Debts
  • Apartment Leases/Rent
  • Consumer Electronics & Furniture
  • Payday Loans

Goals for Credit and Money Planning

Before committing yourself to improving your credit standing, you should spend some time to find out what your long term money goals are. It takes time and work to build up great credit, but good credit can also be a trap. You can overextend yourself, and you can destroy or severely impair that good credit by not keeping your goals in mind.

Credit for credit’s sake is not what anyone should strive for. Everyone in your family who is old enough to understand should be involved with making decisions about how the money available to the family should be spent (and not spent.) Short range goals can be as simple as saving for next year’s vacation, or for buying that new sofa for the living room. Long-range goals are looking at 10, 20 or even 30 years in the future.

For many of you reading this, 30 years seems further away than you can even conceive. Your thoughts and energies are on raising your children and sending them to school. Even 10 years seems a long time away. But think, if you have a child in school, even kindergarten – where will that child be in 10 years? That child will be looking at graduating from high school and trying to decide on college. Did you think 10 years far enough ahead to have money to help that child with his/her dreams? Your long-range goal may include the purchase of a home.

It is always a good idea to put your ideas on paper so that you can refer to them from time to time.

In order to qualify for some of your larger goals, you will need good credit, but that doesn’t mean to open charge accounts at every store, or to obtain credit cards from every bank that offers you one. Good credit includes wise planning and spending. Good credit is established when you enter into an agreement with a lender, and pay that money back as you agreed to in the contract you signed- or even sooner.

One mistake many new homeowners make is to buy that new home, then run up a lot of debt to buy new furniture, drapes appliances, yard equipment, etc. The only way to successfully protect your good credit rating is to manage your finances well- CONTROL YOUR DEBT. If you have had credit problems in the past, you will fall into the same problems unless you learn to budget.

Even if you’re not experiencing financial difficulties at this time, or if you’ve had to file bankruptcy in the past and don’t want that to happen again, it’s always good to plan ahead, be prepared and be aware of the options you have.

This is a very personal and sensitive issue, but millions of people are having the same problems you presently have or have had. Being on a budget is a good thing. All companies, including the one you work for, have budgets and adhere to them. IF they don’t , they will not be in business long. You don’t have to be in business for a budget to make good sense.

Establish a budget for yourself and your family. Keep it simple and realistic. It will help you protect your good credit. Make yourself a promise! Follow some very simple steps, and learn to stick to them.

Facts about Debt: Bankruptcy filings topped 1.42 million in the previous twelve-month period which ended June 30, 1998. It was an all-time record for any one-year period. There was a 9.2% increase in personal bankruptcies according to a report released by federal court officials.

  • At the end of 1991 consumers owed more than $230 Billion in personal debt (up from $82 billion in 1980). These figures DO NOT include loans or mortgages against personal residences.
  • Fewer than 30% of credit card holders pay their balances in full each month. In 1985, this figure was 50%.
Types of Consumers- There are four types of consumers. Which category do you fall in?
  1. Out of control: Afraid to answer the phone or open the mail because of bill collectors
  2. 2. Skating on thin ice: has a lot of debt, but is able to make those monthly payments. Finds it hard to find enough “extra” money to go to the movie or out to dinner. Is living from paycheck to paycheck.
  3. Living Comfortably – Has some debt, but is not having undue stress about finances, and has a small savings account (maybe enough to cover expenses, for a couple of months). Could easily be in trouble if expenses medical bills arose or there was a loss of job.
  4. Living well – Has carefully budgeted, has savings and investments against any unforeseen problems Does not buy impulsively.

Steps to Help You Live Well To place yourself in Category Number Four – and Live Well - you should be aware of some pitfalls.

  • Stop impulsive buying. Learn to understand the difference between “needing” and “wanting”.
  • If you don’t need it don’t buy it.
  • Avoid sales. Companies spend millions of dollars each year advertising sales. These ads entice consumers to buy thinking that in the long run they will save money when in fact you’ve just bought something you don’t’ need. This item in question may be $20 less than the regular price, but if you don’t need it- you’ve just spent $50 plus sales tax that you could have saved.
  • Medical Insurance. In this day of extremely high medical costs, this is a necessity for everyone. If you are fortunate enough that your employer has a good plan as part of its benefit program, take advantage of it, even if the premiums seems a little high. However, if your employer does not offer this benefit, shop around. There are companies that will cover you- and you should choose one that will give you the coverage you need at a premium you can afford. It only takes one major illness to wipe out the entire assets (savings, home, car, etc.) of a family.
  • Credit cards. Learn to be careful using your credit cards,. They can be convenient and useful but learn to only charge what you can pay for when the bill arrives. Don’t count only making that minimum payment.
  • Don’t buy, or rent, a place to live that exceeds your means. A good rule of thumb is that your monthly housing costs (mortgage payment or rent and utilities) should not be more than 1/3 of your gross monthly income. You want to be able to enjoy your home – relax in it – and not worry about where next month’s payment is coming from.
  • Be very careful when you make a decision to co-sign or guarantee a loan for another person. Remember that if you do, you will be responsible to repay the debt if the other person does not, even if you get no benefit from it. A classic example of this is co-signing for a friend or relative’s car- they have the car, but if they don’t make the payment, the creditor will come to you for the money.
  • Look into any investment that pays a high rate of return (e.g. interest). This would include such things as savings accounts, trust deeds or mortgages, etc If the rate is high so is the risk. There have been people who have put their entire savings on deposit with a privately owned “thrift company” that is not adequately insured and have lost it all! Any investment should be made only after finding out all the details – who the person or company is –what their track record has been. Talk to other investors, your tax accountant or your attorney first. No one can help you later. Remember this rule of thumb- high rates mean high risk.
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