5 Ways to Destroy your Credit Rating

Loans (Photo credit: zingbot)

A credit rating is a tool used by banks to determine whether to loan money to you or not. Your credit rating is calculated based on your credit history, which is contained on your credit file. Your will have a credit file if you have applied for anything involving credit in the past such as: credit cards, mobile phone or internet plans, personal loans, mortgages or interest-free store loans. In order to keep your credit rating high, to increase the likelihood of loans you should avoid these five things.

Credit Defaults

Credit defaults occur when payments for loaned money are not payed back on time or at all. The most commonly credit defaults are: missed mobile phone bills, missed credit card payments, and missed personal loan payments. All missed payments are listed as defaults on your credit file and result in a lower credit rating.

Self-Employment

Unfortunately, people who are self-employed can have a hard time winning favour with banks and other money lending organisations. This is due to the fact self-employment is viewed by these organisations as unstable and risky. If you are self-employed it is important that you keep track of your tax returns and profit-and-loss statements, so when the time comes you can prove that you have sufficient income to make payments.

Discharged Bankruptcy

Discharged bankruptcy is the term used to describe an individual after they have paid off, otherwise settled, all previous debt. After settlement has been agreed upon, the bankrupt individual should then apply for a discharge certificate ordained by the court to prove their freedom from bankruptcy. Technically, a person who is classified as having a discharged bankruptcy, is allowed to take out loans again, very few institutions will take the risk for several years after the bankruptcy.

Being on a Debt Agreement

A debt agreement is legally binding agreement between a debtor (the loaner) and their creditors. In this agreement, creditors will accept a sum of money, which the debtor can afford in order to make up for an unmanageable debt. Proposing a debt agreement is considered an act of bankruptcy and will severely lower your credit rating.

Getting Declined by Banks and Other Creditors

Often an institutions willingness to give loans is influenced by past creditors opinions if the individual in question. If past creditors have deemed the individual to be reliable, then they are more likely to agree to a loan. Alternatively, if past creditors view you as a credit risk, then you are less likely to get a loan in the future, so it’s best to leave a good impression from the start.

Although it is important to avoid doing damage to your credit rating, sometimes it is inevitable. Getting a car loan while you are struggling with a bad credit rating can be difficult, but it’s not impossible. Nowadays there are many options for those searching for bad credit car loans.

Dealing with Debt as a Couple

If you’re currently in a relationship with someone it’s likely that you will have encountered some kind of conversation about money. Depending on how serious your relationship is you may have a joint account, or have agreed with each other about who pays what. If you live together, then conversations about money are a must, as rent/mortgage payments, bills and food costs will all have to be shared fairly. As obvious and as simple as it sounds, it’s not actually that easy to have conversations about money, even with the people you are closest to. It’s for this reason that many couples find themselves in debt, and in some cases one partner has no idea of the extent of it until something goes wrong.

Recent research has shown that women are the most ‘in control’ of the household finances, with 11% more females than males being able to answer correctly when asked the balance of their bank accounts and how much is owed on a credit card. Just 33% of men were able to answer correctly to both of the questions, which is worrying when you consider that 68% of men said that they are in control of the family finances. It seems that communication is not always clear either, as 63% of women said they were the ones controlling the cash.

Gender has no influence when it comes to racking up debt, however, as neither malesnor femalesare discriminated against when it comes to taking on credit. Some couples are struggling under the actions of one of them, whereas others may not yet understand the extent of their partner’s debts. If you’ve found yourself in money troubles, no matter how hard it may be on the other person, you must talk about it. This is especially important where there are joint finances involved, or if you would be at risk of affecting their stability due to owning a home or business together.

Talking through your money issues is not only a good way to hold yourself accountable, but it can also mean you could get some sound advice about how to tackle the problem. Two heads are better than one, and although your partner may feel upset at first, the fact that they know would hopefully prevent you from making it worse by burying your head in the sand. Struggling with problem debt in private can be extremely stressful and may put a strain on your relationship.

According to debt help charity Step Change, 45% of people wait a whole year before seeking help about their money problems. This is a long time to be having issues for, and the stress could take its toll as mental health problems if not kept in check. If you’re struggling with debts, the sooner you can reach out for help the better. This can simply be speaking to your partner or a friend or other family member about it – a problem shared is a problem halved.

6 Ways To Save For Your Retirement

Anyone already in the 60s will know exactly how important it can be to save for your retirement whilst you're still young. Those who’ve made adequate arrangements will be looking forward to finishing work and living the life of luxury, whilst people who’ve made bad choices will start to feel rather stressed about what their future may hold. 

Thanks to the new workplace pension schemes being rolled out across the UK at the moment, most young people should have a more substantial cushion when they reach their twilight years, but that doesn’t mean that keeping some cash aside for a rainy day isn’t a good idea. 

Here are the top 7 ways you could save for your retirement before it’s too late:

1. Get An ISA - The first thing you should all do right away is take a trip to see your banking provider and open an ISA account. These provide high rates of interest and depending on whom you use, could allow you to save anywhere between £3000 and £5000. With no tax to be paid on any of the money accumulated, this makes for a perfect rainy day fund.

2. Clear Your Debts - There’s hardly any point in saving if you’re just going to be forced to hand the money over to cover your debts, so you should work hard to clear these as soon as possible. Just paying a little more than the minimum amount off your credit card can make a significant difference.

3. Join A Private Pension Scheme - Although you should be automatically enrolled in a workplace pension scheme soon, there are no laws surrounding how many of these policies you can take out, so doing some research online and locating a reputable private solution could also be very beneficial.

4. Cut Down On Luxuries - We all want to have a good time whilst we’re of working age and earning the cash, but it’s even more important that you raise the quality of life you’ll experience during the twilight years, and this is why cutting back on luxuries you don’t really need like designer clothes and flash cars would make sense.

5. Make Sound Investments - If you have a lot of money lying around not doing very much, it could be wise to seek out fruitful investment opportunities to increase your pot. I realise that most people have no experience with this kind of this, which is why I’d like to point you in the direction of a blog called MoneyStreetSmart because they have some fantastic advice articles that deal with all elements of personal finance.

6. Stop Moving House - You know; thanks to my family and their lack of foresight, I’d moved house over 11 times by the age of 16, meaning neither my mother or my father have a great deal of money within their properties. Picking one home and sticking to it will provide you with the best opportunity to accumulate equity that can be released when you retire by simple selling your home.

Well, I hope now you understand the importance of making early preparations for your retirement and ensuring you don’t have to rely on the ever dwindling state pension of only £110 per week.

Good luck with everything!

Savings Plans for Those Hitting Half Century of Their Lives

retirement (Photo credit: 401(K) 2013)

If you will be reaching the age of 50 this year, it is assumed that your savings for the rest of your life is already halfway through. However, the chances are that you are lagging behind in the savings area and need to start collecting money for your future. The good news is that there are plans which give opportunity to you to work on your financial security for post-retirement life.

Making Contributions:

It is possible that you decide to make savings for post-retirement life at a later stage of your life. You are not an exception and there are many who like you, have just begun with their savings. The concept of ‘catch-up’ is applicable to such citizens who are 50 years or above in age so that they can make contributions above the limit decided for various savings plans.

You may have just reached 50 years of age but you still have a window of opportunity for adding to your savings by making contributions to any IRA or by making ‘salary deferral’ contributions to a 457 plan or 403(b) or a 401(k) plan.

IRA Contribution- To make IRA contribution you can either opt for 100 % compensation or lesser part of $5500. But for those who will reach 50 years you can make additional contribution of $1000 to the account.

Plans Sponsored by Employers- For plans that are employer-sponsored you are granted the permission to make more contributions that the limit that is set only if you are to reach 50 years with the end of the year- a privilege only to those that are of and above 50 years.

• In case of 401(k) and SIMPLE IRA plan where you are allowed to make deference of 100% of the compensation up to an amount of $12,000, you can make a payment of extra $2,500.
• In case of 457, 403(b) and 401(k) plans where the deference amount can reach up to $17,500 an additional amount of $5,500 is allowed for those that are 50 and above in age. 

Multiple Plan Limitations:

While participating in more than one plan that is employer-sponsored, contributions made through the ‘salary deferral’ features should not surpass the ‘dollar limit’ that is applicable for the particular year.

Miscellaneous Issues:

There are other issues too that have effect on all that you plan for your retirement like sponsoring your child’s college tuition fees or supporting your fully-grown child rather than adding to your savings for life after retirement. You might as well think of investing in ‘long-term care’ or LTC insurance for prevention of retirement savings usage to cover long-term illness expenses rather than using it to finance your retirement life.

Conclusion:

Hopefully the ideas mentioned in the above paragraphs will help you to make your life post-retirement a financially independent one. Those of you who fall in the range of mid-forties and mid-fifties, you still have the time to retrace your steps and make financially wise decisions. You should consider investing in insurance plans to cover unexpected expenses like accidents. This will help you to financially secure your post-retirement life.

Author’s Bio: Alisa Martin has been authoring articles on various subjects related to finance. She has knowledge on Second Citizenship for investors and other such topics for contributing articles.

Investing in Cars: 5 Money-Saving Tips for Buying a New Car

The mere thought of getting a brand new car causes some people to become filled with excitement. Although purchasing a new ride can be a wonderful experience, it will be much better if you strive to get the most value for your money. In some instances, you may have to make a few compromises when shopping for a new vehicle. Here are five money-saving tips for buying a new car.

Develop a budget

Before heading out to search for a new ride, you will first need to develop a reasonable budget. Being stuck with an expensive car that you can barely afford can be very frustrating. When establishing a budget, be sure to factor in the cost of insurance and the interest rate. Knowing your financial limits will give you more leverage when making a car deal.

Sell your current ride

Although you generally have the option of trading in your old ride, it is usually not as beneficial as selling it. The vast majority of car dealerships are unlikely to give you nearly the cash for your current vehicle on trade in that you could get for it otherwise. Selling your car on the open market is often a far better option if you want to get the most money from it. That money can then be used toward making a down payment on a new car.

Obtain the necessary funds beforehand

Waiting until you visit the dealership to seek a loan puts you in a very compromising position. Acquiring a pre-approved loan will eliminate the need to obtain a loan through the car dealership. Do not hesitate to get several quotes from a variety of lenders. This will help you to get the lowest interest rate available.

Purchase aftermarket upgrades

Often times, optional car features will add thousands of dollars to the total cost of a vehicle. If you desire to save some money, you can opt to purchase your own aftermarket upgrades. For example, you may be seeking a high-performance set of tires. Instead of paying the expensive premium demanded by the car dealership, you can save money by shopping at discounted online vendors such as http://simpletire.com or others.

Have patience

When searching for a new vehicle, it is critical that you exude patience. Do not settle for a vehicle that you really do not even like. Veteran car salesmen can smell a desperate car buyer from a mile away. Always be prepared to walk away from a deal that seems too expensive.

Buying a new car does not have to be a financial burden. You can find an amazing deal by taking the proper steps.

This article was written by Rianne Hunter with assistance from Rhett Stone. Rianne is a mother of three and an avid finance, auto, and family blogger.

7 Steps to Wealth

The bills are piling up. You keep trying to save money, but every time you get a little nest egg going, something happens (a car repair, a broken appliance, etc.) to wipe it out. And to top it off, your employer has hinted at layoffs.

When times are tough financially, it can be difficult to even think about amassing wealth. You’re so busy trying to keep your head above water and pay off your debts that a life with a seven-figure bank balance may seem like nothing more than a pipe dream.

While almost no one becomes a millionaire overnight — and no, playing the lottery is not a legitimate wealth strategy — it is possible to rise above your circumstances and attain considerable wealth. All you need is a strong commitment to achieving your goals and some knowledge of the proper steps involved. 

1. Develop a Written Financial Plan

The first step to achieving any goal is to develop a plan. You wouldn’t try to drive to a destination in an unfamiliar city without a map or GPS, so why would you try to make it to a major “life destination” like considerable wealth without similar navigational tools? Regardless of whether you’re at the beginning of your career and earning an entry-level salary or already have some experience and the paychecks to prove it, you can change course and get on track to wealth. Meet with an experienced financial adviser and get professional advice and feedback on how you can meet your goals — and then act on those plans.

2. Eliminate Debt

As long as you are paying a significant portion of your income to someone else, you will struggle on the path to wealth. Live below your means, and never charge anything you can’t pay off in a month or two; some advisers suggest never charging anything you consume, including clothing, as you’ll be paying interest on it long after it’s outlived its usefulness. If you must finance a home or car (which most people do), don’t max out your budget. Choose the loan terms that allow you to eliminate the debt as soon as possible.

3. Make Your Money Work for You

One reason the wealthiest people are so well-off is they make their money work for them. Even if you invest a modest amount of money in the stock market, you can expect to earn a rate of return of around eight percent annually. As your investments grow, so will the amount of money you make. 

4. Start a Business

According to one study, almost three-quarters of all American millionaires are entrepreneurs. While it is possible to build wealth working for someone else, you are far likelier to have success when you are your boss.

5. Change Your Mindset

Many Americans, even those with steady incomes, operate under a “poverty mindset” in which they fear they could lose everything at any moment, so they must hold on to every penny they get. Or, they feel they will never attain the highest levels of financial wealth, so why even bother? They become complacent, and while they may be comfortable, they are never going to be wealthy. If you want to be wealthy, you have to think wealthy, and emulate the thoughts and actions of those people who have reached the upper echelons of wealth. 

6. Create Multiple Income Streams

Few millionaires have made all of their money from one income source. Most have income from multiple streams. When you’re earning money from multiple sources, you don’t have to panic when one dries up and you can better leverage your resources to keep the money coming. 

7. Save Money

The best way to amass wealth is to save money. An emergency fund is a must, should things go awry, but you should also find ways to save money wherever you can. The wealthiest people are not generally spendthrifts; while it’s easy to imagine them dropping thousands of dollars on shopping sprees and parties, most are far more careful with their money. As money comes in, make saving a priority. As your income increases, so should the amount that you are saving.

Becoming a millionaire takes hard work, perseverance and a focus on the goal at hand: a healthy bank balance. By changing your approach to money and taking cues from those who have already achieved that level of wealth, you can write your ticket into the “millionaires’ club.”

About the Author: Isabelle Fontaine holds a marketing degree and has started several successful businesses in the course of her career.