Category Archives: Life

The Ways Having a Bad Credit Score Can Effect Your Life

There are many ways that having a bad credit score can effect you. In day to day life, a credit score is not something you may think about. As a young 20-something, you may not know how to establish a credit score or how your credit score will effect you in the future.

Here are some reasons that having a good credit score is important:

  1. Bad credit can cost you your dream job.

Many employers run your credit. Having a low credit score can disqualify you from jobs in banks, human resources, government agencies, among others. Employers who dig deeper into your credit history are looking for individuals who show a history of responsible and ethical behavior. 

2. Bad credit can increase the interest you pay on a loan.

A low credit score can and will affect the rates you receive on consumer debt. Should you need a car loan for ‘x’ amount of money, your credit score will affect the amount of interest you pay on this loan (the one for ‘x’ amount of money). Interest is something we would like to avoid. Therein, keep your credit score high to minimize interest on consumer debt.

3. Bad credit can cause higher insurance rates.

One study shows that bad credit can increase your car insurance rate more than a DWI.

4. Bad credit can cause you to miss out on getting approved for the best Rewards Credit Cards.

From IWillTeachYouToBeRich.com (a great resource), there are many benefits to rewards credit cards. Bad credit can cause you to lose out on being approved for the best Rewards Credit Cards, including their associated benefits, perks, and hidden benefits.

5. Bad credit can increase your required down payment on apartments, cars, or houses.

Someone with bad credit constitutes an increased risk to landlords renting an apartment, an increased risk to an institution selling or leasing a car, and an increased risk to lenders, associated people, and anyone interacting with you in an area involving money. 

Are you stuck? Here are some ways to improve or fix your credit score.

Steps to Improve Your Credit Score

  1. Make an effort to contact lenders and pay as much as you can towards past debts. If you have no missed payments, continue as you were, and pay every bill on time. EVERY BILL, this is very important. Pay ALL your bills on time.

2. Request your Credit Report from AnnualCreditReport.com. Check for any mistakes, misreports, or errors on your report. This is a free service, and you may contest any errors.

3. Keep your old credit cards open. The age of your credit history constitutes 15% of your credit score.

4. Keep your credit card utilization below 30%. Your credit  utilization constitutes 30% of your credit score. A credit utilization of less than 30% is essential to having a good credit score. More information on that here.

5. Do not take out any loans without a repayment plan.

Here is a great resource I’ve found for how to rebuild your credit score if you’ve made a past mistake. It happens to the best of us, but nothing is unfixable.

Check out WiseBread.com:

This resource goes more into depth about fixing your credit score if that is something you are searching for.

Comment below with your experiences or advice!

When Automating Your Finances Helps

I don’t know about many of you, but sometimes life just gets away from me. If I hadn’t made the decision to automate my finances early in my financial life (when I got my first credit card for example), I know for a fact that I would have forgotten to pay my bills.

I am a 100% advocate for automating your finances. Automatic bill pay is a godsend.

This week, I was tired. I had work every day, and I came home and did 3 hours a night of CFP (Certified Financial Planner) coursework. Even the thought of writing a blog post made me tired. I’m sure many of you can relate to the feeling.

This is why automating your finances is crucial; at least for me. The important thing is to know your personality type.

For me, thinking about remembering to pay my bills takes up mental energy. I have a certain amount of mental energy that I can use to get through my day, my week, even the next hour. And once that mental energy is used, it takes more than a monumental effort to do even one single other thing.

Due to automating my bill pay, here are the things I did not have to think about this week:

  1. I did not think about paying $125 on Dec 1st for car insurance – automatic
  2. I did not think about the $50 contribution to my Roth IRA on Dec 1st until I got the email confirmation – automatic
  3. I’m not thinking about my credit card payment due on Dec 9th – that will be automatic

Same thing for my car payment ($187) and my student loan payment ($164) on the 23th of each month – automatic.

Bottom line is I save my mental energy and I know myself in this respect at least.

Automatic payments have saved my butt 100 times already.

Happy Friday.

What I Did This Week to Increase My Long Term Earning Potential

There are only two ways to get rich in my estimation.

  1. The one-two: Spend less than you earn and invest the rest
  2. Win the lottery

For most of us the the second option will never be but a pipe dream, but for all of us the first option is feasible. I’ve been thinking about ways lately to increase my income, from starting this blog to scouting  job opportunities at other companies. But honestly, I like where I work. I don’t hate it!

I work with MONEY in the financial sector under a Financial Advisor who I respect and who I can see myself working for for a long time. Within a year of being hired as the receptionist at a New York branch, I passed both the Series 7 and the Series 66 tests. I was promoted to the position of Registered Client Services Associate and negotiated a 21% salary increase at my first 6-month review.  In addition, I’m currently enrolled in a Certified Financial Planner program at an online university and am slated to take the July of 2016 test. These are all things to be proud of, but I want to think bigger.

If you let your mind wander to your greatest dream, where does it fall? What kind of life do you want to live?

Working in the financial sector I see people with all sorts of money; money they’ve inherited, money they’ve earned, money they spend or save to varying measures of extremes. I see people with the type of fuck you money that I dream of making. But what strikes me every day is how much earning potential is within each of us. Every minute of every day we have the potential to make money, whether by making our money work for us in the stock market, or through creating a side hustle, or through taking steps to climb the ladder and advance our careers.

It’s that last step that I am particularly

Pleased! to! Announce!

I took this week.

Let me set the stage.

One month ago my boss forwarded me an email about an opportunity he thought I might like. It was an application to serve on a National Board of Client Associates. We would get to preview upcoming service, process, or technology projects from various Home Office groups and be among the only in the country to provide feedback in the beta testing stages.

The email read, “This is a great opportunity for licensees to recognize their top Client Associates and reward these talented individuals.”

He wanted me to apply, he wanted me to apply.

Me?

I have under one year of experience in the industry, I thought, they will never take me. Why would I apply if I will just get rejected? This and other various form of negative self-talk looped in my head until they had already rejected me. Boom, it was over before it began. No skin off my back, right?

Wrong.

It wasn’t until this Friday that I realized what I had done to myself. And the deadline was now fast approaching.

So I stepped into the vulnerability and I said fuck you to the fear of rejection, and I sat my ass down and wrote until I had completed the full application to the National Board. But it was hard. It was hard to change the narrative to “Why NOT me?”

I handed my rough draft to my boss with all sorts of disclaimers.

“It’s just a rough draft you can write all over it”

“It might be awful just tell me if it is”

I honestly expected him to make corrections or say it wasn’t good in certain sections. Do you all see the pattern with my thinking? I do. When he came back, and I’m not kidding you, with not one mark or correction on that page, he said, “This is  perfect, I love how it reads. They’re going to want you Catherine, I will definitely be getting a call about you. And they’re going to love that you’re 22, they need a millennial’s perspective. You are exactly what they are looking for.

After two more proofreaders had the same reaction, I was floored and I was proud. And now I goddamn want it.

But whether or not I get accepted to the position, at least I took the shot, and that’s what I want readers to take away from this article. The cliche is a cliche for a reason. You miss 100% of the shots you don’t take.

This will have an effect on your finances in life, whether it be from letting fear stop you from investing in the stock market, or from not taking to opportunity to pursue leadership positions in your company even in the face of failure.

Now I’ve gotta stop before I start throwing cliches at you.

So, what is one thing you can do in the next week to increase your earning potential?

On Buying a Used Car at the Age of 21

As most personal finance blogs recommend across the board, buying used is the way to go.

My very first car was a 2008 Hyundai Sonata that my parents bought me when I was 17. I don’t remember how many miles it had on it, but I do remember I almost crashed it on my very first drive home from the dealership -entrance ramps are short in New York for those of you who don’t know-. Regardless, despite my questionable driving skills that car lasted me 4 years, and I in it. I loved that car.

Enter 4 years later. I got my first full-time job. It came with a salary! Hours! Business cards! I was a real live person you guys!

I guiltily admit that during down time at work I started perusing, just window shopping, new car websites. I would a configure a Jeep like this, another one like that. What would it cost me to lease, what would it cost me to buy?

A $40,000 car *cough expensive taste* stretched out into lease payments over 36 or 48 months with 10% down, I reasoned, would only cost me $400 to $500 a month. That could be done, right?

Look at how pretty it is. And safe? I’m all about those safety features. Plus, that 4 wheel drive will come in handy during the winter. In fact, it will help me get to work! That is me being ~~~responsible~~~, I said in my head as I configured like a mad woman, holding onto my mouse and my dreams and ignoring the angel on my shoulder saying this is a bad, bad idea.

Like I said before, I am an expert at justifying spending money to myself.

However, as time went by, I crawled out of the maze of insanity and decided that I would not buy a New Car.  The prior winter was incredibly difficult with my 2 wheel drive Hyundai Sonata. Getting to work was a slippery and slidey mess. One day, I couldn’t get the car out of the driveway (yay snow!), but I used my mom’s 4 wheel drive Infinity to get to work that day. So while I decided that it would not be a smart money move to buy a new car, I still had my eyes and ears open for the possibility of buying a car.

The precepts I decided I wanted were:

1. A Jeep

I have wanted a Jeep since I got my driver’s license. I know that brand loyalty can ultimately cause unnecessary expenses, but I had my heart set on a Jeep. The downsides of Jeeps are poor gas mileage. But a 4 wheel drive car with low maintenance costs could work with my needs.

2. 4 Wheel Drive

New York winters and a job that is 16 miles from my place of residence made getting to work in a 2 wheel drive car a bit dangerous. 

I could picture myself with any color, most configurations, and any year Jeep.

On one faithful day, I was looking at a used car website at Jeeps. And like out of god’s dream made for me I saw a 10 year old Jeep Grand Cherokee with 36,000 miles on it. It was located at a dealership only 1 mile away from me. Sticker price: $15,000. I was on the phone that instant, they put the car on hold for me, and I was at the dealership the next day.

The breakdown of my purchase came to this:

$3000 down payment (thanks to having money set aside, I was able to cut a check)

$4000 trade-in value of my 2008 Hyundai Sonata

$8000 car loan @ 5.75% interest rate 48 months

My monthly payment is $187, and over the term of the loan I will pay approximately $1000 in interest. Should I have waited until I had enough cash in the bank to buy a car outright?

Car insurance costs me an additional $125 a month, so my car payment for the time being is over $300 a month.

It is good to acknowledge and be aware of the true cost of taking out a loan. Was it stupid of me to get into debt for something classified as a want?

Live and learn.

The Consequences of Bad Money Habits

For years, years! I have had a bad habit. This habit is the opposite of money saving and financial planning. It hurts me to admit this, but every day, 7 days a week, my breakfast has been a medium iced coffee and 2 donuts from Dunkin Donuts.

For a minute, let’s disregard the health implication of this and let’s talk about the financial consequences. This habit costs me $4.81/day. That is $33.67 a week and $1750.84 a year. I feel nauseous coming clean about this in addition to thinking about all the other way more productive things I could have done with this money over the years. Almost $2000 a year spent on something that honestly stopped giving me pleasure a long time ago. So why did I keep going to Dunkin Donuts?

Running out the door, late to work and without eating breakfast I autopilot to the nearest Dunkin. The barista knows my order; I don’t have to say anything and my coffee is made, my credit card is handed over, and I’m back in my car heading to work. Sipping on my coffee I once again autopilot the drive to work. No thought has gone into this series of events and no matter how tired I am there is structure to my morning. I know exactly what I am going to do. This habit has become comfort food, and a calming ritual that is something I can control. However, I now realize I am not in control.

Some research on habits indicates that habits are the product of your subconscious mind. If something is pleasurable for a period of time in your life when things were hard, your subconscious mind will forever associate the action with pleasure. Our natural inclination to avoid pain and seek pleasure can cause a habit to form if we let it, as we (and me in particular) seek to stay in our comfort zones. Dunkin became a comfort zone for me, but I want to stress that for a while, I didn’t know why I was doing it.

As an avid reader of financial planning blogs, I knew in my logical mind that this $4.81 a day action had to stop, but every day I kept going and getting my coffee and two donuts. I consider myself a pretty logical person, but I felt out of control to stop.

I justified this action to myself and to others.

“This is the one thing I spend money on, it’s fine to do this one thing.”

“Coffee relaxes me.”

“I have the money to do this, I’m not going into debt.”

But this self justification is insidious to being productive in life and insidious to the financial planning process. I am an expert at justifying spending money to myself, in particular because I have been lucky enough never to go into credit card debt, never to not pay my balance in full at the end of the month, and to keep an emergency fund stocked at all times.

An excellent article on the insidious nature of self justification quotes a book called Mistakes Were Made (But Not by Me).

“The engine the drives self-justification, the energy that produces the need to justify our actions and decisions -especially wrong ones- is an unpleasant feeling that Festinger called ‘cognitive dissonance.’ Cognitive dissonance is a state of tension that occurs whenever a person holds two cognitions (ideas, attitudes, beliefs, opinions) that are psychologically inconsistent, such as ‘Smoking is a dumb thing to do because it could kill me’ and ‘I smoke two packs a day.’ Dissonance produces mental discomfort, ranging from minor pangs to deep anguish; people don’t rest easy until they find a way to reduce it.”

I can’t stress enough how much this relates to my habit of going to Dunkin. “I have the money to do this, it makes me happy” and “This makes no sense I should be saving this money.”

The action of spending $4.81/day at Dunkin began to cause me minor pangs of mental discomfort. As I read more and more financial planning blogs I then started to feel deeper anguish. My logical mind was fighting with my subconscious. But each time I tried to stop, I would last a few days and then fall back into my pattern. “Ahhh, relief”. I felt relief going back to my habit! The structure of my morning was back in place.

But in the back of my mind I was and am unhappy with myself.

They say that a habit takes 21 days to break, but a more recent study by the European Journal of Social Psychology  says this may not be true. Research shows that habits among individuals took a range of 18 to even 254 days to break, making the median time 66 days.

Today I will start and document my journey to STOP GOING TO DUNKIN. This needs to happen, both for my health and for my pockets.

Hello world!

Today is a very special day for two reasons. First, this is the start of a personal finance journey, well, at least the documentation of my experiences and advice as a 20 something who tries most of the time to manage her money effectively. Second, today is my 22nd birthday!

Now, what advice could a 20 something offer to you? Perhaps you are in a stage of life drastically different – kids? a house? Well in documenting my steps to get there and live a debt-free life I hope to share my mistakes and successes. This blog is for me, but also for you.

In this past year I have:

  1. Bought a used car
  2. Started a new job
  3. Negotiated a 21% salary increase at my first 6-month review
  4. Spent way too much money on skydiving; both my hobby and social life
  5. Contributed semi-consistently to a Roth IRA

It’s been a big year, with lots of changes. But the reality is that I have little in the way of savings. I have student loans, a car loan, and car insurance to pay each month.

I am extraordinarily lucky as well. I live at home with my mom rent-free right now, a luxury that 50% of millennials don’t have.

Here’s to the end of 2015 and start of a new chapter. I look forward to sharing.