6 Six.docx

Six This book course would be incomplete and remiss in its responsibilities to you if it did not discuss the monumental importance of how your credit scores, credit rating, and credit history impact every aspect of your present and future financial life. No matter what your present age, your credit...

Six This book course would be incomplete and remiss in its responsibilities to you if it did not discuss the monumental importance of how your credit scores, credit rating, and credit history impact every aspect of your present and future financial life. No matter what your present age, your credit is the single most important financial component you will need to manage to become financially successful now and in the future. You will all one day need to access credit and or borrow money from a third-party finance company for those larger purchases such as furniture, appliance, vehicles, and a house. It is never too late to start improving your credit score and credit report and there is no better time than the present. This book will explain the importance of maintaining a very good to excellent credit score over your lifetime. For those of you who have not yet begun developing a credit score or history, this is an opportunity for you to get started and get ahead by doing the right things to manage your credit the correct way. For those of you who are credit challenged or don’t understand how credit works and how it affects your lives, here’s your opportunity to start learning. If you have neglected to make your credit score your first financial priority, this information is an opportunity to start rebuilding to get your credit profile and credit history back on track moving toward a higher score. And for those of you who have not valued your credit history at all and have abused and ruined it, this is an opportunity for you to see how much it has cost you. Now, you will be able to review your past credit reckless behaviors and make a commitment to change in order to mitigate and reduce your future losses to high-interest payments. Learning the importance of credit history and how to increase your credit score can help move you toward a very good to excellent rating. This book will show you the ‘true’ high price of bad credit and why you cannot afford to have a low credit score. You do not want to blemish your credit history, because you will need to borrow money many times over your lifetime. Understanding the actual high cost of bad credit and how these high-interest rate APR payments impact your purchasing power will give you a better perspective and awareness of why so many people are financially struggling and why they can’t seem to save any money throughout their entire lives. Article: Financial illiteracy can result in poor saving, poor spending, excessive credit card use, and bad investment decisions. The stress of financial insecurity in families can lead to divorce, suicide, domestic violence, and other crimes. Council for Economic Education: Apr 29, 2014 Article: What Is a Credit Rating? A credit rating is a quantified assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation. A credit rating can be assigned to any entity that seeks to borrow money—an individual, corporation, state or provincial authority, or sovereign government. A credit rating is an evaluation of the credit risk of a prospective debtor, predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting. A credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of an individual. A credit score is primarily based on a credit report, information typically sourced from credit bureaus. A credit score tells lenders about your creditworthiness (how likely you are to pay back a loan based on your credit history). It is calculated using the information in your credit reports. FICO® Scores are the standard for credit scores—used by 90% of top lenders. A credit history is a record of a borrower's responsible repayment of debts. A credit report is a record of the borrower's credit history from a number of sources, including banks, credit card companies, collection agencies, and governments. What is a Credit Report? Source: Wikipedia Article: You may know what a credit report is – but do you really, really know? It’s very common for consumers to confuse credit reports with credit scores. Even though the two are related (and both are very important to tracking your credit health), they are two totally different things. Credit reports are compiled by the three major credit reporting agencies (CRAs) Equifax, Experian, and TransUnion. If you’ve had credit in the past, you probably have a credit report. (These reports are often called “credit files” or “credit histories” as well.) Your credit report is essentially your financial resume. It’s up to you to make sure it is accurate, and to maintain positive references. Your financial future may depend on it. January 23, 2018, by Gerri Detweiler, Source: Credit.com Article: As more businesses use your credit history to decide whether to do business with you, your positive credit history is becoming more important than ever. You need very good credit to get approved for a mortgage loan, rent an apartment, buy a car, qualify for a good insurance rate, and sometimes even to get a job. How a Positive Credit History is built. Every month or so, the credit card issuers and lenders you have accounts with send accounts updates to credit bureaus. They tell the credit bureaus your current balance, payment history, and other details about your accounts. This information is compiled into your credit report and used to generate your credit score when it's requested by businesses and yourself. By: Latoya Irby Source: The Balance These credit scores, ratings, and reports are like snapshot photos of your creditworthiness. It shows the prospective lender your ability to repay a loan and your credit history is what lenders review to evaluate you. They evaluate you to see if they are willing to take the risk of lending you the money and at what interest rate, they are going to charge you based on your credit score. Credit scores can range on average from a high of 850 down to a low of 300. If you screw up your credit score, you have potentially sentenced yourself to a lifetime of higher APR (Annual Percentage Rate) interest rates on all borrowed money. This financial hardship will end up costing you boatloads of money in avoidable higher interest payments, making it that more difficult to make your monthly payments. It can put you in a very challenging financial position that may follow you for the best part of, if not your entire life. It may even cause you to consider filing for bankruptcy, something you never want on your credit history. Please, if you earned an ’excellent’ credit history portfolio truly value and treasure it. Because, you have just given yourself the ‘Keys’ to access easier loan approvals at the best available interest rates available on the market today. Remember, that it’s totally your choice how you plan, budget, and manage your credit portfolio. Respect your creditworthiness and it will repay you and save you tens of thousands of dollars, if not hundreds of thousands of dollars in lower interest finance charges over your lifetime. These savings from lower interest payments will be more than enough money to pay off your student loans and even from medical or law school. It can support you if you decide to change careers and or build your future financial security. One of the best ways to manage your money and credit is to always spend less money than you earn. You should always have more money coming in than you are spending monthly. This is accomplished by planning, budgeting, sacrificing, and making good financial decisions, and simply by living within your means. Your creditworthiness will follow you and affect every aspect of your financial future from now until your demise. Your great creditworthiness could make you financially successful by increasing your purchasing power through lower interest rates or poor creditworthiness will break you financially by becoming your financial ‘Grimm Reaper’ with much higher interest rates. Again, your credit score, credit rating, and credit report are the ‘Keys’ for you to have the ultimate ability to start the process of ‘Soaring Toward Financial Freedom’. Your credit report should be viewed as your wealthy tightwad, ‘Uncle Charlie and Aunt Ruth’, who are willing to lend you money anytime you need it as long as you pay them back on time as you agreed. He/she will judge you very harshly if you fail to meet your obligations to repay them back under the terms agreed in your contract. Your uncle/aunt may also be more forgiving if you default on the loan and still give you another loan. Unlike the Credit Bureau which never forgives and forgets how well or how badly you repaid your loans and credit cards in the past. If all goes well and your repayment schedule went as agreed, you will be rewarded with a higher credit score. If any payments were late or missed or you failed to repay the loan, your credit score could drop by sixty to a hundred points. Think of how this could negatively impact your credit score if you fail to repay three different loans and/or credit cards. Keep in mind higher interest rates equal higher monthly payments making it that much more difficult for you to repay the loans and keep a good credit score. Once you get caught up in this cycle it’s much harder to maintain a good credit rating if you don’t have a plan. Please keep in mind all your credit history information is sent to the three major credit reporting agencies. They are Experian, Trans Union, and Equifax. Once your credit score and history, a.k.a. FICO score, is ruined, your ability to borrow money in the future can become a costly nightmare. It’s very important that you order and review your credit report annually to review it for accuracy. Once you have the misfortune of a loan balance written off by a creditor, a vehicle repossession, or a loan sent to a collection agency, it takes up to seven years for this negative information to drop off your credit report. For those who have filed for bankruptcy, it takes seven up to ten years to be removed from your credit report. Again, these types of credit blunders could end up costing you tens of thousands of dollars if not hundreds of thousands of dollars in future higher interest rates payments and additional penalties. This is the money you missed out on saving. It will also affect your future employment opportunities, the cost of borrowing money, and your cost of auto insurance. Article: Should You Use Credit Repair Services? Credit repair services find and address errors that could be hurting your credit scores. You can also fix your credit for free. Credit repair removes information that shouldn’t be on your credit reports, so it will stop dragging down your credit scores. However, it can't remove negative marks if the information is accurate, timely and verifiable. You can hire credit repair services — for around $100 a month — to handle these tasks to help you rebuild credit. But everything a service does, you can also do on your own. By: Bev O’shea Source: nerdwallet If your entire working career equals 45 years plus years, say from age 20 to 65, that bankruptcy will be with you for 16% of your working years. What makes it more harmful because most people are make major purchases between the ages of 30 to 55. That bankruptcy will be with you 28% plus of the years you may be considering the purchase of a house. The consequences of having a negative credit history will be a life without the ability to easily buy large appliances or furniture, a new vehicle, and purchase a house and get the lowest interest rates. Article: Using credit marketing programs in the auto industry, for vehicle purchases many times they offer special 0% financing for up to 36, 48, 60 72, and 84 months for “Well Qualified Buyers”. The definition of a Well Qualified Buyers, the designation often generally refers to an individual with a Tier 1 credit score. As you can probably deduce, a Tier 1 credit score is a very good credit score. It typically refers to a score of 720 or higher. However, every bank has their own definition of what a Tier 1 credit level is, qualifications vary. Offers aimed at well-qualified buyers are usually offered by a vehicle manufacturer’s bank. As such, these stipulations apply to special rates or money factor offers. Just one important note, we generally don’t recommend long-term loans. In most cases, if you need a seven or eight - year loan to buy a car, you probably are looking at a car you really can’t afford. By: John M. Vincent and Scott Williams, Source: US News You have all seen those TV commercials advertising new vehicle leases and purchases. If you could read the fine print at the bottom advertisement where they display the Terms & Conditions those promotions are for “Well Qualified Buyers” only. These promotions actually state 0% Interest APR financing for 60, 72, and 84 months for those with credit scores of 800 and above. As great as these promotions are, they are designed to get the consumer to come into the showrooms because so many consumers won’t qualify for 0% financing at all. Only about 20% or 1 out of 5 of all Americans have credit scores of 800 or above. This means that 80% of the consumers won’t qualify for 0% APR the interest rate and end up financing their vehicles through the manufacturers’ finance partners loans at a 4% or higher APR interest rates. Your goal is to be in the top 20%. Here’s how your credit score and history will affect your overall purchasing power on a $25,000 auto loan financed. The ‘Well Qualified Buyers’ with credit scores of 800 or better would receive the 0% APR interest rate score. Those who have lower credit scores will qualify for appropriate higher interest rates and pay more interest on the same loan principal. How Interest Rates Affect Your Monthly Loan Payments on A $25,000 Loan Interest Rate 0% 2% 4% 8% 10% 12% 15% Loan Term 36 Months 694 716 738 783 807 830 867 Interest Pd 0 778 1,572 3,202 4,040 4,893 6,199 48 Months 521 542 564 610 634 658 696 Interest Pd 0 1,034 2,095 4,296 5,435 6,601 8,397 60 Months 417 438 460 507 531 556 595 Interest Pd 0 1,292 2,625 5,415 6,871 8,367 10,685 72 Months 347 369 391 438 463 489 529 Interest Pd 0 1,551 3,161 6,560 8,346 10,190 13,061 84 Months 298 319 342 390 415 441 482 Interest Pd 0 1,812 3,705 7,731 9,862 12,070 15,523 From the above chart you can see that at every interest rate, the longer the term of the loan the more interest you will end up paying. Yes, a longer loan term does mean the longer your payments will be, but this exercise was designed to allow you to see how much this vehicle will truly cost over different time intervals. It also permits you to best see what payment amounts work best for the budget you’ve worked so hard to plan. But more importantly, please note how much your credit score impacts the interest rates you will end up paying for the vehicle purchases you will need to finance over your lifetime. Spend time reviewing the chart and see the huge differences in how much one consumer pays in total interest between the zero interest rates and the highest interest rates. Also, analyze the loan terms with respect to the total interest payments. Please note that ‘Well Qualified Buyers’ have the luxury of taking the vehicle loan out for the longest period of 84 months, still without incurring any interest at all. They were able to keep their money in the bank earning interest while using the auto manufacturer’s money over the term of the loan. So please take away from each chapter the importance of planning and developing a budget based on your monthly income, and monthly overhead expenses guiding you to live within your means. By planning and budgeting your finances it rewards and empowers you with the knowledge of how your credit scores impact your financial future. Knowing the true cost of a vehicle purchase gives you more financing choices and can take away the stresses and anxieties of larger purchases before you make the purchase. Why guess? When you could, actually know the impact of what your credit score is costing you? This provides you with access to information regarding what expenditures you can now comfortably afford without straining yourself financially. This knowledge gives you the mathematical truth, justification, and permission to make the purchases. It also confirms the actual affordability within your budget without any surprises down the line. It’s very important that you have this knowledge well before you are months into a loan before you realize the payments are too high for your income. Before it’s too late for you to make a budget changes you may need to without any additional cost such as early termination fees (ETF) and penalties. By prioritizing all the purchases that are not deemed as absolutely necessary and better credit card management keeps your budget in check, this way you don’t negatively impact your credit score and credit reports. Your goals should be to reduce as many of your unnecessary ‘want’ expenditures and eat as many meals as possible at home. For example, as stated before, home-prepared meals can cost an average of 75% less than meals eaten out at restaurants. Focus on keeping well within your budget and try setting saving goals for a portion of your income before you spend what you think is discretionary income. You’ve all heard the term, “hide sight is 20/20”, which means you can predict an outcome correctly 100% of the time after it has happened. It’s like asking a sports fan the score of the Super Bowl the day after the game. These types of planning exercises give you a ‘peak into the future’ so you don’t have to make purchasing choices totally blind. You have the necessary tools to increase the odds of success and decrease the probability of your failure significantly. So why not use them? Make sure your credit score, credit rating, and credit history stay at the highest positive ratings possible. The highest credit score you can achieve depending if it’s a FICO and VantageScore model is 850 or if it’s a FICO Auto Score and Bankcard Score is 900. The follow charts shows you how the difference of four percentage points for a $250,000 home with a $50,000 down payment borrowing $200,000 over 30 years amounts to the following at different interest rates. Also, when the Federal Reserve Bank raises interest rates in an inflationary economy to slow down inflation it raises mortgage interest rates. Even though you can’t control this, it has the exact same effect on interest rates as having a lower credit score and causes you to pay a higher interest rate. This makes it even more important that you maintain the highest credit score you possibly can at all times because you can control this. It will ensure you always receive the best interest rates available when you have to finance anything. When you end up paying a higher interest rates because of your lower credit score, it’s a missed opportunities to save the difference you could have saved on interest. See the chart below for an explanation of how the different interest rates impact the total cost of your mortgage. MORTGAGE PAYMENT BY RATE $200,00 Loan over 30 years 360 Months Interest Rate % 2 2.5 3 3.5 4 Payment 739 790 843 898 954 Total Payments 266158 284517 305586 323320 344016 Total Interest 66158 84523 103592 123325 144016 MORTGAGE PAYMENT BY RATE $200,00 Loan over 30 years 360 Months Interest Rate % 2 4.5 5 5.5 6 Payment 739 1013 1073 1135 1199 Total Payments 266158 364962 386788 409128 431705 Total Interest 66158 164961 186794 209178 231711 Please note, at an interest rate of 2% APR, the monthly mortgage payments are $739, over 30 years. The total mortgage payments would be $266,158 and the total interest paid is $66,158 in interest payments. Again, the total cost of the loan is $266,158 with total interest payments representing 24.86% of the total payments. At an interest rate of 6% APR, the monthly mortgage payments are $1,199 over 30 years. The total mortgage payments would be $431,705 and the total interest paid is $231,711 in interest payments. Again, the total cost of the loan is $431,705. The interest payments on the loan represent 53.67% of the total payments. The interest of 4.5% APR is calculated in the same manner as above. At an interest rate of 2% versus an interest rate of 6% the monthly payments are $739 and $1,199 respectively. The monthly mortgage payments difference equal $1,199 - $739 or $460 per month. This additional mortgage payment amount is all due to a less-than-excellent credit score. The difference in interest rates in the total cost of the loan over 30 years equals $431,705 minus $266,158 or a whopping $165,547 in additional interest. This $165,547 is your penalty for having less than an excellent credit score. This mortgage loan at 6% will cost you two and a half times more than the number of interest charges for the mortgage loan at a 2% interest rate. This represents the money you are giving away for less than excellent credit. As you can see a 4% difference in the interest rate is $460 per month more and have a total cost of $165,547 over 30 years. This $460 per month difference in the mortgage payments could pay for two new vehicle leases at $230 per month each. As the chart indicates you will pay a whooping additional $165,547 more in interest payments for your mortgage over the 30-year loan term. What else could you do with that extra $165,547 you could have avoided paying if only you had sacrificed, and better managed your finances and credit score? Many of you previously did not have the knowledge of the importance of how your credit score would impact your future. Perhaps, the previously mentioned rewards would be enough incentive for you to maintain a very good plus credit score by planning and budgeting. Could you use the extra money to send two of your children to college or pay back student loans? Catch up or increase your Church Tithing? Follow your dreams to create a bucket list and start fulfilling them now. Plan and budget for the purchase of a sports car and or nice jewelry. To take a cruise, etc.? How would you like to plan and budget to take a family trip to one or both of the major theme parks in Florida or California? Provide your children with gymnastics, ballet, horse riding, skiing, or flight school lessons. Did you ever want to go to the Super Bowl? Have a grand birthday or anniversary party for yourself or a family member? Put money in the bank in CDs or create or add to your investment portfolios? Put aside more money for your retirement? The bottom line is you would find something to do with this ‘new-found earned’ amount of money rather than just give it to your mortgage company in extra interest payments. The only reason you don’t have the benefit of this money is because of your failure to maintain a very good plus credit score. Your lower credit score did not warrant you receiving the lowest interest rate APR available. There is one thing that is definitely considered a No-No, that you should never do with all of your fortunes. As a rule, you should never co-sign a loan for anyone who cannot get a loan on their own. Let’s look at this realistically; they are not able to get a loan on their own because they probably have bad credit. This means they are a high credit risk for lenders because they have defaulted on loans in the past. If they have a history of defaulting on loans, why would you think their behavior has changed just because you cosigned a loan for them? If they choose not to pay the loan back, you would be required to repay their loan in order to keep the loan from defaulting and ruining your credit rating. This is probably the one mistake most people make trying to help a family member, friend, or dating partner that ends up ruining their own credit. The person whom you decide to cosign for has no incentive to repay the loan. They have already ruined their credit and it probably could not get any worse. Another no-no would be lending money to a family member or good friend without having them sign a promissory note stipulating the amount, terms, length, and repayment agreement of the loan. This is a legal document that will stand up in Small Claims Court if the person doesn’t repay you as the agreement indicates. You should never lend any amount of money to anyone you can’t afford to permanently lose if they choose not to repay you. Lastly, you should never take a cash advance on your credit card to lend anyone money. This isn’t even advisable for you to do for yourself unless you are in an extreme emergency. Those things such as if you are facing an eviction, are about to have your vehicle repossessed, and need a short-term ‘bridge’ loan to help you through these situations. A better strategy would be to pay your bill with a credit card to eliminate the usual 3% cash advanced fee of the amount you need or a minimum of ten dollars whichever is greater. If any of these types of favors are asked of you from family or friends, you may want to revisit and rethink your relationship with any person who would ask this of you. If it’s not your child asking for you to cosign a student loan to enroll in a post-high school education or training course trying to acquire skills to improve themselves, then please just say no or use your best judgment and fewer emotions. Another important piece of advice for maintaining a high credit score is that you should never give your Social Security number or Date of Birth (DOB) to anyone, ‘protect and guard them with your life’. Sophisticated computer algorithms can figure out your Social Security number with the last four digits and your Date Of Birth. Please don’t put your DOB on websites for contests. It isn’t wise to give and entrust your driver’s license and social security number to Casinos, Online Gambling & Betting Apps, and State Lottery Apps. Many retailers are requesting to collect your driver’s license or State IDs information for returns and vehicle tire purchases installation at their service centers. This is totally unacceptable, and you should challenge this policy and take your business elsewhere. Keep track of your receipts so you don’t have to show your State ID for product returns. Once these Third-Party companies have your personal information there are no laws or guidelines as to what they can do with it. They can sell it to other businesses and if their computer systems are ‘Hacked’ it’s very likely you will eventually become a victim of ‘Identity Theft’. Identity theft is impossible without having your Social Security number and your Date of Birth. One cannot express or over stress the importance of maintaining the highest credit score, credit rating possible, and a credit score of 750 and above. An excellent credit score will reward and pay you back in tens of thousands if not hundreds of thousands of dollars in lower interest payments. Guard your credit as though your life depends on it because your financial life does depend on it. Your financial success and freedom do depend heavily on your credit history. You will be shown numerous examples of the power and the monetary value of ‘Excellent Credit’ as you continue reading through ‘Soaring Toward Financial Freedom’. FYI – For Your Information Statistics CREDIT SCORE PERCENTAGE OF AMERICAN'S 800-850 20% 740-799 25% 670-739 21% 580-669 18% 300-579 16% Data Source: The Ascent report: Average Credit Score in America. Data current as of 2019. Published March 2020. A recent report shows that more than one-fifth of Americans don't have a FICO® credit score. That’s approximately 44 million Americans. A recent report by the Consumer Financial Protection Bureau (CFPB) revealed that 11% of Americans have a "thin or stale" score file, and therefore it's impossible to generate a current, valid FICO credit score for them. Another 11% are considered to be "credit invisible," meaning that they don't have a credit file with any of the three major credit bureaus.  That's a total of 22% of the adult population of the United States that doesn't have a FICO credit score at all. Here's what this means, and what you can do if you don't meet the requirements. by Matt Frankel, CFP | Oct. 12, 2019. Here’s an example, even if you are making an hourly wage of $15 per hour, many of you are spending over 20% of your net income on interest payments. Let’s do the math to confirm this, $15 per hour times 2080 hours equal $31,200, at a 25% for all income tax deductions they end up with $23,400 annually. This annual net income of $23,400 divided by 12 months equals $1,950 monthly income. If you are carrying a total credit card balance of $8,000 at 18% APR interest, your total monthly interest charges are about $170. If half of this credit card debt is on store credit cards, the interest charges could be as high as 29.9% APR. Therefore, the interest on $4,000 of the balance would be at 29.9% APR or about $119 per month interest. If we add in the $4,000 at 18% interest of $170 plus this $119, you’ll see you are paying a total of $289 per month in interest charges. Remember, you are only bringing home $1,950 per month, which means you are spending $289 divided by $1,950 equal .1482 or 14.8% of the income in interest payments. Leaving you with only $1,661 for all your other monthly expenses plus the two monthly minimum credit card payments. This means the probability of you paying all your monthly bills on time is very unlikely. Thus, it’s important to maintain a very good credit score by planning and budgeting your income. The benefits of maintaining a very good credit score will be illustrated again in detail in the chapter on Vehicle Purchases and the chapter on House Purchases. They will show how your discipline, sacrifices to maintain your budget, and living within your means really rewards you for making the right financial choices. Your decision to make a few financial behavior changes will manifest themselves in huge dollar amounts of future savings in interest payment charges. You are able to actually see, count and measure your financial net worth as it continues to grow. Your net worth equals all your assets minus all your liabilities. Or what you own minus what you owe. The takeaway from this chapter is as previously stated, one of the greatest benefits of managing your credit score is that you will always pay the least amount of interest for loans and credit cards. You will end up saving tens of thousands if not hundreds of thousands of dollars in future higher interest payments over your lifetime. In essence, you will increase your purchasing power is like putting real dollars back into your pockets in the form of increased savings. This money you saved by qualifying for lower interest rates will make it much easier to pay all of your monthly overhead, your budgeted ‘need‘ expenses and can also be used to treat yourself to some of the nicer things in your life referred to as ‘wants’. It also provides you with income for investments, helps you maintain financial security, and grows your personal wealth. Yes, you can reward yourself with some of your ‘wants’ that we will refer to as upgraded needs. These ‘want’ choices are considered to need upgrades, within their product groups. They are things like gourmet coffees, fine wines & spirits, upgraded vehicle packages, four to five-star hotel accommodations, and other products that fit easily within your expanded budget. It is okay to treat yourself to upgrades as long as your budget indicates you are still ‘living within your means’. Please don’t lose track of how much your upgraded items are costing you to a point that you now have to debt finance these upgrades. Upgrades can be perceived as affordable ‘rewards’ you’ve earned for making the right financial decisions and managing your credit score. I’m not asking you to deprive yourself of those things you ‘want’ and can afford. However, I’m asking you to always be aware of how much you’re spending on all those items you ‘want’ and make sure you can afford these things you ‘want’ and to make sure it’s not depriving you of savings for your future. Simply, are you living within your means? Every dollar you spend today on something you ‘want’ is a dollar you may not have in the future for something you really need. So, spend wisely. One thing you can consider doing when you are planning a budget is to give yourself a fixed monthly allowance. Whatever amount you decide is necessary to stay within your budget limit keeping track of every dollar you spend. If you don’t spend it all that month, you can roll it over into the next month. This allows you to plan and save your monthly allowances for a few months if you want to purchase something which costs more than one month’s allowance. This is an example of how to make sacrifices for something you want without breaking your budget. If you set long-term goals like saving for a down payment on a house or in times of inflation when prices on everything rise unexpectedly, you will be just fine. It has been said, “there are only four things you can do with money, you can spend it, you can save it, you can give it away or you can burn it”. What will you do with all your newly ‘earned’ money ? You now understand that when you maintain and keep an excellent credit score you will be empowered to plan and reach all your life’s financial goals. It shows you how to financially plan and budget for just about everything you need and end up paying much less in finance charges, including repaying educational student loans. Your frame of mind and thought process should be ‘ABS’, Always Be Saving.