One Punk Number You CAN Control

Brace yourself: unfortunately, there is no quick fix for repairing credit. When you’re trying to lose weight, you know it took some time to put those extra pounds on in the first place; it’s going to take some time and energy to get them back off again. Improving your credit standing is a similar process. And just like  improving your physical health, a healthy financial lifestyle will prove to be well worth the effort.

Credit is a vast topic. One little newsletter couldn’t begin to delve into the depths of it, but here are some pithy dos and don’ts to consider, as you begin to tackle the task of improving your credit score.

• Pay your bills on time. Ok, this one sounds obvious. But this is the biggest component of your score, and nothing will help you more than consistently paying every bill on time, every month. If you’ve been late in the past, make every effort to get current and stay current. The more time you put between you and a late payment, the less it is affecting your score.

• Pay down balances. This is easier said than done, but if you carry high balances on, say, your credit cards, it can be hurting your score. You certainly don’t want to be maxed out, so keeping your balances at about 30% of your available credit limit will be optimal for your score. 

• Check your credit report. People underestimate the value of this one. The stats differ on this, but suffice it to say that the credit bureaus make plenty of mistakes in calculating your score—sometimes big enough mistakes that you get denied credit. So pull your free report one time per year from each of the 3 bureaus (that’s 3 times a year total) from annualcreditreport.com, and check it for accuracy. If there is a mistake, you should dispute it with the bureau. 

• Don’t close old accounts. Say you’ve had this American Express card for years, you’ve always paid it on time, but you don’t use it any more. It might be tempting to close it—but freeze. One of the components that make up the credit score is the length of time you’ve had credit. By closing that old account, you’d actually be hurting your score. Friends don’t let friends close good-standing, old accounts.

• Don’t apply for a lot of new credit. We mentioned checking your own free credit history each year—and note: doing this does not hurt your credit score. What will ding your score is when you
  apply for new credit, allowing the lender to pull your report. So when you went and applied for an
  Old Navy charge card, a Home Depot card, an AmEx card, a car loan from your credit union, and a
  mortgage from a broker, all in one week—you really weren’t doing your score any favors. Lenders
  see massive increases in credit availability as a risk, and each time you apply for credit, your
  score takes a little dive.

• Have different types of credit. It will help your score if you have both revolving credit (such as a credit card, where the balance can fluctuate each month), and installment credit (such as a car loan, where the balance is paid off over time). Don’t go apply for credit willy-nilly just because you think it will help your score, though—be wise and calculating in the credit you take on. 

While this list is by no means exhaustive, it will certainly get you going in the right direction. Much of improving and maintaining good credit is patience and consistency. You are capable of taking the reigns over your finances—don’t let your life be run by some punk 3-digit number!

If you find you need assistance with any of these items, the Family Life Center is here to help you, as always!

Yet Another Way to Lose Your Money...

So, you’ve given it much thought and have come to the conclusion that yes, you want to invest your
money. You figure, “Hey, that little pile of cash has been sitting under my mattress, lazing about for far too
long. It’s about time I put it to work for me.”

And it’s true, investing your money gives you the potential to earn even more money—potential being the key word. And, of course, you know this. You know that a down market could mean a painful separation between you and your money (although, if you hold on to the investment, that separation doesn’t have to be permanent). But you also know that the market is fickle. One day could mean hundreds of dollars in either direction. The volatility (aka: capriciousness) of the market is just a part of investing. Some of us sleep at night, some of us don’t.

But (with apologies to the insomniacs), there is another, even more unpleasant way to lose your money. It’s called investment fraud, and it affects more people than you’d think. Yes, even you. Bigwig executives, financial advisers, bankers—a lot of smart people have been duped. See, when the market drops and your portfolio loses money, you know that as  long as this isn’t the end of the world, the market is likely to eventually rebound and you’ll get some money back. When you lose your money to investment fraud, you’re about as likely to get a penny back as you are to win the full $10,000 at Plinko.

Now, before you start biting your fingernails and locking your money down in a fire safe, you should know that there are ways to protect yourself. First of all, sleep easier knowing that there’s an agency looking out for you called the Utah Division of Securities. And guess what??? The Utah Division of Securities just happens to be coming to USU in October to teach a workshop series on basic investor education, and
have added a focus on avoiding investment fraud!! They are partnering with the USU Family Life Center Housing & Financial Counseling Services to bring you a 4-part series.

And it gets better. This workshop series is FREE to you and anyone else you want to bring. Everyone will receive free packets of information and take away information that could save your money from such a horrible demise.

Go ahead and call (435) 797-7224 to register, or email flchfc@usu.edu. You can check out the Utah Division of Securities website at: http://www.securities.utah.gov/. This is a topic everyone needs to hear, so pencil in October 5, 12, 19, and 26 from 7pm to 8:30pm, and meet us on the USU campus in the Eccles Science Learning Center, room 130 (that beige brick building to the south of the TSC--check out this link for a map: http://www.usu.edu/map/index.cfmid=15). See you there!

Crazy, Hair-Brained Ways to Save a Few Bucks

We frugal folks may always be mocked for our eccentric moneysaving techniques, but in the long-run, we’re the ones laughing. Oh true, flattening the toilet paper rolls to slow down excessive use may appear crazy, maybe even obsessive-compulsive, but labels of “cheap” and “insane” only fuel our fire to save. The point is: every penny really does count. When you add several “crazy” ways to save together, over time, you end up with much more than just pennies. Even if you’re one of the mockers, come on over to the winning team—we could all stand to shave off at least a bit of our expenses.

Below is a list of just a few ideas. Not all will work for you—you may widen your eyes and think, “Wow, now that’s truly crazy—who does that??” But pick a couple; give them a try. Even one buck saved could buy you a two Twix bars…and what lunatic would turn that down?

• Use less washer detergent. Your clothes will get just as clean with ¾ a cup, rather than a full cup.
• Buy generic brands. A lot of products are basically the exact same thing in a different wrapper. (Except for Macaroni and Cheese—go real or go home).
• Shop around for health and car insurance. Every once in a while, give your provider a call and see if there are any deals or adjustments that will save you money.
• Cut your spouse’s and children’s hair. You may want to practice this first…or they’ll never let you near them with a pair of scissors again...
• Turn down the heat in the winter and use more quilts and sweaters. Pretend it’s 1850, if that will make it more interesting for you.
• Check your car’s tire pressure and have the oil changed regularly. This saves gas and protects your car from other costly problems.
• Take shorter, cooler showers. 
• Pay more than the minimum on your credit cards. Paying off balances can save you hundreds in interest.
• Give your internet and cable provider a call and ask if they have any deals for you since you’ve been such an awesome customer. Be persistent. They can usually do something for you. While you’re at it, downgrade something like internet speed or cable packages. Do you really watch all 250 channels?
• If you watch a lot of movies, RedBox or Netflix may be a cheaper alternative to renting or going to the theatre. The public library also rents movies for free—popular ones! There are more than just documentaries.
• Use coupons. But only if you really need the item. If you found a coupon for pet rocks, you’re not actually saving money when you buy it… Check out pinchingyourpennies.com or gurusdeals.com for couponing ideas.
• As it’s no longer 1998, do you still need your landline? Can your family get by with just cellphones?
• Check out craigslist.org, ksl classifieds, or eBay instead of buying stuff brand new.
• Lose the gym membership. Run outside, or check out some of the websites that offer free workout videos.
• Keep your fridge stocked with (ideally healthy) food, so it won’t be as tempting to go out to eat.

The list of ways to save money is virtually endless. Go on and get creative. Give it a try—bargains can be exhilarating and satisfying not only for budget nerds. And remember, when it comes to saving money, there is no such thing as too crazy—a dollar is a dollar, after all.

So, You Think You're Ready to Buy a House?

While the joys of paying rent, living in less than 900 square feet, and hearing your neighbors argue with each other every night can be tantalizing, you may find yourself thinking it’s time to buy a house. But before you go and load up with a mountain of debt, here are just a few things to consider.

Shopping for homes can be fun, but be careful not to fall in love with the “big dream house” just yet. Once your mind is set, it will be tempting to find any way possible to buy it, despite it being “just a hair” out of your price range—(it has vaulted ceilings, for heaven’s sake!). People tend to push the boundaries of what they can afford when it comes to houses, and often miss the first step, which is to evaluate your budget. It’s of utmost importance that a mortgage payment fit within your household budget. Consider worst-case scenarios. Be conservative in your estimates. YOU know much better than any lender or real estate agent how much you can actually afford. Just because the bank says they’ll lend you $200,000 doesn’t mean you should take them up on the whole amount. You want your finances to be comfortable and secure—not stretched to breaking point. You might even want to try “practicing” a mortgage payment for a few months, and putting any extra savings in your down payment fund.

Speaking of your down payment fund, you have one, correct? It exists? And it’s not the money you’ve designated as your emergency savings? Because, even when you’re in a home--particularly when you’re in a home--emergencies still happen. When it comes to down payments, the more the better—but shoot for at least 5 percent of the purchase price.

Now, let’s say you’re ready to talk to some lenders. What are they going to care about when deciding to lend you money? They’ll most likely be focusing on your income, your down payment, and your credit score. Credit scoring is an entire topic unto itself, but for starters, find out where you’re at. Make sure you regularly check your free report at annualcreditreport.com (NOT freecreditreport.com). If your score is
over 760, you’re in great shape to get some of the best interest rates. If it’s lower, expect to pay more money in interest to the bank, or possibly even get turned down for a loan. Lenders will charge you more to borrow their money if you have a lower credit rating. Just think, you wouldn’t want to lend money to that shady cousin who doesn’t have a job and hasn’t ever paid you back in the past, right?

Another thing to keep in mind: don’t forget closing costs. Ah, closing costs. Those nasty fees we always forget about in our budget calculations that will cost you around 3% of the loan value. If you’re buying an existing home, the seller will sometimes pay these costs, but when you’re adding everything up, don’t forget those extra few thousand dollars. Every lender will charge closing costs, but they don’t all charge the same, so shop around. When researching lenders, try to compare at least three—not all lenders are created equal. When you’re going to fork over this kind of money, it makes sense to look for the best deal.

Lastly, don’t expect all your troubles to evaporate once you’re in the home. Your old landlord probably won’t be up for fixing your broken toilet anymore. Do you own a lawn mower? Are you used to paying for your lawn to be watered? How do you feel about shoveling your own driveway? Do you have money in reserve to fix the broken water heater? There are a ton of benefits to owning a home, but it’s well worth it to consider every aspect of such an important purchase.

Want to learn more essentials on this topic? You’re in luck. The USU Family Life Center is a HUD-approved, non-profit agency that offers a free homeownership workshop every month, as well as one-on-one counseling to go over your specific situation. Purchasing a home can be complicated and stressful, but it doesn’t have to be. Just call (435) 797-7224 to get moving!

Some Essentials on Raking in Oodles of Cash



So you’d like to make a killing in the stock market, would you? If you read April’s post, you’re probably feeling all kinds of confident about the basics of stocks and market indexes, but how do you actually rake in oodles of cash? As fun as get-rich-quick schemes can be, it’s actually the get-rich-slowly folks who come out on top.

Hold back your groans of impatience. "I need money now" is a mentality that will only get you into trouble—ask any bank robber. When it comes to money, time is the most valuable thing you’ve got, so it would be prudent to learn the art of waiting. It’s true; largely due to the micro-wave oven, our society is finding it harder to be patient. Why would you slave over family recipes when you could enjoy the instant gratification of microwaved break-fast, lunch, and dinner burritos? But in terms of saving up a gargantuan nest egg, slow and steady wins the race.

So let’s first debunk something you may be tempted to do. There’s no doubt that at some point in your life, you’ll cross the path of a friend or neighbor who will brag about some hot stock he just bought, and yada, yada, yada, how analysts only expect its value to skyrocket. And sure, the thought of making some quick quid peaks your interest. You’re only human after all. BUT, this is a risky way to use the stock market. There’s a small chance you may hit it big, but most likely, you’ll end up sad, alone, and without money. Some people do get their kicks and giggles trading individual stocks throughout the day, but if your end-goal is a big ol’ wad of cash for, say, retirement, then picking individual stocks generally isn’t the way to go.

Last month you learned that you could buy ownership in a little slice of a company, i.e., purchase a company’s stock. By doing that, you might get a bit of their profits, and you’re hoping that you can sell them to someone who’s willing to pay more than you did originally. Let’s say that 10 years ago, you used all of your money to buy shares of Enron stock. Well, today you wouldn’t be a very happy camper. When companies go out of business, shareholders lose their money. You never know when a company has been built on sand, and could lose its value in a landslide. You’d hate to have your life savings go down the toilet with it.

Let’s say, instead, that you put all of your money into 10 companies. One of them pulls an Enron and loses all of its value. Bummer, sure; but guess what? You also own stock in 9 other companies that happen to be doing extremely well. All in all, you might not have lost very much money. (Keep in mind this is all on paper until you actually sell your shares).

So what if this principle were magnified, and instead of owning stock in 10 companies, you owned stock in 500 of the largest U.S. corpo-rations? Well, then if one of them went under, there would be no need to flip out—499 of them are doing just fine. The trouble with owning just a few companies is that there is no way to tell which of them will end up on top, and which ones will end up like Enron. The solution: own as wide a variety as you can, take the whole lot, diversify your portfolio, or as this guy John Bogle once said, "Don’t look for the needle in the haystack, buy the entire haystack."

Now, you may be thinking, "I’m not Oprah. I can’t afford to buy all this hay." And it’s true—if you were to go directly to those 500 companies to purchase their stock, they’ll probably make you buy at least 100 shares, you’ll have to pay fees for them, and it gets more and more unpleasant for your checking account the more you buy. BUT, here comes the magical solution: MUTUAL FUNDS! *Cue the Hallelujah Chorus*

Let’s say that you and a million other people pool your money together and give it to a professional money manager (a mutual fund company). The manager of this company (hopefully) knows a lot more than you do about investing in stocks, bonds, real estate, and other investments. And depending on which mutual fund you pick and what objective that fund has, the manager will use that big pool of money to buy various types and combinations of stocks and other assets. You may be interested in only growth stocks, or in only one sector of the economy, or perhaps you’d like to purchase every stock in the U.S. market. With over 8,000 to choose from, picking a mutual fund that matches your investment goals is easier than microwaving a breakfast burrito.

In the end, you may hand over $1,000 to this mutual fund com-pany, and instantly have access to hundreds or even thousands of different companies’ stocks. Of course, this manager isn’t a charity worker, so you will have to pay something for his/her services, but there are many, many funds out there that charge very little for expenses and fees.

Now, unfortunately again, there is simply not enough room in one newsletter to cover all the ins and outs of mutual funds, but suffice it to say that mutual funds can be an easier, safer, cheaper way to invest for the long haul. The earlier you start, the better. This is how people make millions in the stock market. It’s not some hot stock that you flip in a couple of days. It’s buying and holding on to the entire haystack!

The Bare Minimum on Stocks

Let’s say that you enter a conversation that’s entirely above your head. Coworkers are having a lively discussion about investing strategies, and you’re suddenly asked, "So, the Dow is down 100 points. How’s your stock portfolio doing in this turbulent economy?" Your eyes widen and slowly shift out of focus. You consider fabricating an answer, but the chance of follow-up questions seems likely. You mumble something along the lines of, "I have…stuff to do… elsewhere," and awkwardly exit the conversation.
If this sounds familiar, no need to hang your head in shame—it’s your lucky month! April has been declared National Financial Literacy Month, so what better time to brush up on investing basics? Read on, and at minimum, you’ll be able to hold your own in ego-centered investment conversations. But more importantly, you’ll be laying the foundation for a sturdy portfolio of your own.

So let’s address a basic question—what is a stock? If you’ve ever heard of the United States, you probably know that private companies play a big role in its wealth. Let’s say you would like a piece of that pie. Perhaps you’ve noticed that Microsoft seems to be doing rather well for itself. Sure, a lot of companies aren’t doing too hot right now, but all in all, Microsoft appears to be making lots of money. And you figure, "Hey, I like money. In fact, I’d like to have more money." So when you buy a share of Microsoft’s stock, you are basically buying a little sliver of Microsoft. That’s right; you own a little, itty, bitty chunk of Microsoft. Perhaps something equivalent to a secretary’s paper clip at headquarters. Now, because you are a shareholder in the corporation, you are entitled to a little, itty bit of its profits.

Let’s get technical for just a second. Assume that you bought 1000 shares and each share cost you twenty bucks, so you have $20,000 of your hard-earned money invested in Microsoft. When business is booming, you’re feeling pretty good. And because things are going so swimmingly, people are now willing to buy your shares at $25 per share—(the share price has increased). If you sell, you’ll get $25,000 for those shares, and can now go buy 5,000 things from the dollar store with your profits. This share price can change throughout the day. If a company is doing really well and people be-lieve it will continue to do well, then the price of that stock generally goes up.

But what if Microsoft doesn’t do well? What if Steve Jobs introduces the iPad 5000 that can surf the web and make you a sandwich, and people buy Apple products instead of Microsoft? You would still be able to sell your stock, but people may only be willing to pay $15 per share. That $20,000 you invested is now only worth $15,000. If you were to sell, you would lose money in the stock market. Ever heard of that happening? So if you’re wondering why people talk about the stock market almost as much as they talk about Lindsey Lohan, it’s because they are either losing their money or raking it in.

And what are people talking about when they mention the Dow, the NASDAQ, or the S&P 500? It’s likely that they are trying to sound impressive, but these are called indexes—or as some like to think of them: lists of companies. The Dow, a nickname for the Dow Jones Industrial Average, essentially tells you how well a list of certain companies is doing. Different indexes will tell you different things. For instance, the S&P 500 will estimate how well (or not well) 500 of the largest U.S. companies are doing at any given time. The Dow has 30 companies, while the NASDAQ Composite contains about 3,000 components. People use these indexes to estimate how certain areas of the economy are doing.

All right, so what does this have to do with you? Believe it or not, you can actually make a lot of money using the stock market if you go about it the right way. It’s not some get rich quick scheme; in fact, it’s more of a get rich slowly kind of deal. Unfortunately, one newsletter is not nearly enough room to scratch the surface of investing basics, but you’re heading in the right direction. Stay tuned for next month’s newsletter, and in the meantime, go ahead and hop into those coworker conversations with confidence.

More Exciting Than a New Transmission...

Do you get a rush of adrenaline when you purchase gasoline? Can you barely suppress giggles of joy when your mechanic hands you the bill for a new transmission? Do you think an oil change is more exciting than puppies, fireworks, and Christmas combined? If you answered no to any of these questions, applaud yourself for sanity, and sit tight—there are some simple ways you can make car ownership a far more enjoyable experience.

The first way is easy—walk whenever possible; or run, if you’re late. You’ll feel better about that doughnut you had for lunch, help the environment, and avoid mileage on your car all in one go! Another option is public transit. Cache Valley has an award-winning bus system that is free of charge. Anyone near USU’s campus also has access to the Aggie Shuttle. Let’s face it, parking is a nightmare and booters are lurking around every dark corner. Why not avoid the hassle?

Next up, make sure your tires are inflated properly. Many gas stations offer free air, and a tire inflated to the right PSI actually gets better gas mileage. Better mileage means less money at the pump.

Although it feels good to pass that truck, excessive acceleration guzzles your gas faster. If you’re fancy enough to have a car with cruise control, flip that puppy on and be content not to "win" the race to your destination. Each car has a different optimal speed, but generally, anything over 60 mph starts reducing your miles per gallon.

Speaking of miles per gallon, another way to get more of them is to remove excess weight from your car. Kicking your passenger to the curb might be a bit harsh, but you may be lugging around all sorts of things you don’t need. Take out the fishing gear, the golf clubs, and the rock salt, and you’ll see your miles per gallon hike upward.

Have a car loan? Getting a tax return soon? By paying off your car loan early, you can save on the interest you would have paid to the bank. They’ll be just fine without your money. Just make sure there’s no prepayment penalty for early payments.

Lastly, just like you need regular doctor check-ups, so does your car. The poor thing spends every night out in the cold, takes you to work every day, and waits patiently while you grocery shop—the least you can do is give it some lovin’. Getting the oil changed regularly along with full-vehicle check-ups can catch problems before they explode in your face and save you money down the road.

So, as exhilarating as it may be to spend your bonus on a carbure-tor, there are plenty of ways to save on car expenses. Take a couple of these ideas and put that saved money toward something really exciting—like puppies, fireworks, and Christmas!

Jump Up and Down: You've Got Rights!

You’ve been there. A holiday, birthday, or anniversary is looming ever closer. You’ve been trudging around department stores all day in a haze, unable to find that perfect gift. Then you see the gift card rack like a desert mirage. Perfect. Not tacky like cash, and requiring only general knowledge about your giftee. You pick up a few and happily head home.

Undoubtedly others you know have gone through a similar process and you may find yourself heavy laden with gift cards. If any of these were purchased after August 22 of 2010, then there are some new rules you need to know about.

First of all, these new rules and protections (fashioned by the Federal Reserve) apply to store gift cards and gift cards with a MasterCard, Visa, American Express, or Discover brand logo. Unfortunately, the new rules only apply to gift cards. If you have a reloadable prepaid card that isn’t intended for gift giving purposes or cards that are given as a reward or part of a promotion, they are not covered. But it’s okay. Chin up.

So, how are you, the consumer, more protected now? For starters, any and all fees have to be clearly disclosed on the card itself or the packaging. And start jumping up and down, because many of these fees are now limited. Silly nonsense like dormancy fees for not using your card, or usage fees for actually using your card are now restricted. After all, it makes sense not to charge you for both using and not using your card. There are also restrictions on fees for adding money to your card as well as maintenance fees. You may still be charged fees if you haven’t used the card for at least a year, and you are only charged one fee per month. You can also still be charged a fee to purchase the card, as well as fees to replace a lost or stolen card. Now, you may not want to, but it can save you a lot of money to take the time to read through the card disclosure before buying it.

Here’s another useful tidbit. If your card has expired, you may still be able to use any unspent money by requesting a replacement card at no charge. Sometimes the money expires later than the card itself.

Lastly, any money on your gift card is good for at least five years from when it was purchased. Any added money is good five years from the date it was added.

So, now you can let that special someone know that not only do you care enough to provide them with prepaid money to their favorite store, you love them enough to let them know about their consumer rights!

S.M.A.R.T.E.R.

Happy New Year! It’s the time of setting goals for the coming year….and hopefully follow through with them. It’s a good time to set financial goals, such as setting up a budget, building savings, paying off debt, or improveing your credit score. When making a goal, put it through the S.M.A.R.T.E.R. Goals steps:

• Specific
• Measurable
• Attainable
• Relevant
• Timely
• Evaluated
• Revised

For example, if your 2011 financial goal is to pay off an auto loan, go through these steps:

• Be specific—How much is the car loan?
• Make it measureable—How much will you need to pay monthly?
• Is it attainable—Does your spending plan allow you to be able to pay that much each month towards your loan?
• Is it relevant—Is this a loan that you feel needs to be paid off this year? Can you afford to pay it off?
• Time—Are you giving yourself enough time to pay off the loan? Do you need more time?
• Continued Evaluation—Evaluate monthly how you are doing. Are you able to pay how much you need to monthly? Are you on track to pay it off this year?
• Make revisions—Did something change where you can’t pay as much or you could possibly pay more?

Now, after looking at this example, look at your 2011 financial goal. Put your goals through these steps to help keep you on track!