Four Tricks to Boost Your Credit Score Quickly

First thing’s first: there is no magic solution to raising your credit score overnight.

If you have a low score due to, say, bankruptcy (which can affect your credit for up to seven years), boosting it requires a long-term plan of consistent on-time payments, and other responsible credit practices.

However, a low score due to a lack of credit can jump much more quickly. Check it out:

Fix Errors on Your Credit Reports

According to the Federal Trade Commission, one in four credit reports contains small errors, which can affect your score. Errors might include false information attributed to you because of identity theft or just a simple mix up, accounts that don’t belong to you, and more.

If the mistake negatively affected your score, you can expect it to improve in approximately 60 days after correction, reportedly.

Pay Off Credit Cards Every Month

If you pay off your debts, you’ll see your score go up. That doesn’t mean you should run out and buy things you don’t need, however. Instead, charge expenses like bills and gas (things you already pay for in cash) on your credit cards, and pay them off every month.

If you’re struggling to cover your existing debt, create a debt management plan to free up extra cash.

Stay Away from Your Credit Limits

Paying down the debt will improve your creditworthiness, and help your “credit utilization” (the amount of debt you have relative to your credit card limits). When you get closer to your limits, you reduce your available credit, which is bad for your score.

So bring down your debt to an acceptable amount as defined by the credit bureaus, and your score will improve.

Set Up Automatic Payments

Your credit score takes a hit with every late payment. That’s because payment history comprises 35% of your score. If you struggle to remember when money is due, set up automatic payments with your credit cards. It’s an easy way to stay punctual and—barring other major marks against your credit—turn your score around in a relatively short amount of time.

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How to Make the Most of a Reduced Paycheck

Bubbles burst, the economy falters, companies downsize, and personal disasters happen which can result in a reduced paycheck. Perpetual salary growth or even maintenance is simply not guaranteed. However, by adopting the right tools and attitude, you can make the most of a reduced paycheck and not just survive, but thrive.

Determine whether your situation is temporary or permanent
If you fully expect to be back to your full salary soon, you may only have to adjust to lessened cash flow for a limited time. But before you tap into your reserves (and retirement savings, home equity, cash value life insurance, etc.) it would be wise to behave as if the salary reduction is long-term. Cut down on spending now. Securing your old income may take longer than you think.

If you do not expect to make as much money as you once did, you may be experiencing anxiety, which is normal. You may be panicking about the practical matters to contend with as well, such as how you will pay your bills. Adopting a systematic approach and devising a plan will help you manage the anxiety.

Recognize That Your Salary Is Not You

This is a deceptively obvious statement. Of course your salary is not you. But many people’s self esteem directly corresponds with how much money they make—the higher the income, the more important they feel. If your mood declines when your income drops, make every effort to dispel the attitude that financial wealth equals worth. It does not, nor does having an abundance of money guarantee happiness. Think back to when you were making more money then you do now. Were you genuinely happier, or did you just have the ability to buy more?

Seize The Day

Hardship can hone skills and challenge entrenched ideas. Perhaps you worked in the high-tech field because the money was good, but that is not where your passion (or even perhaps talent) truly is. Consider this your opportunity to discover what you really want out of life. After all, if you are going to dedicate forty or more hours a week to your job, it should be something you love. Or at least like.

If you are currently unemployed or are working fewer hours, use this “extra” time wisely. Your options are as varied and abundant as your desires. Consider taking a class—one that will boost future earning potential or for pure pleasure. Write that book, paint the kitchen, start an exercise routine. Or just relax.

Analyze Your Expenses

When cash is copious, it is easy to spend arbitrarily. However, when the salary that sustained such a lifestyle is gone or drastically reduced, its time to take a good look at what you need to spend your money on, not what you can. Prioritize expenses now, and identify which bills take precedence. Mortgage versus car payment? Credit cards versus utilities? Analyze the ramifications of missing or not paying each. If you need help deciding, contact a financial counselor for help.

Develop a spending plan. It will help you to discern between those expenses you can and cannot live without. If you find there is simply not enough money to support your necessities, much less your desires, at the very least you now know how much you will require from your next job. If expensive dinners are now a thing of the past, relish in the delights of a cheap pizza, or making cold cuts stretch with lots of lettuce. Enjoy and appreciate the things you may have begun to take for granted.

Remember: Credit Is Not Supplementary Income

When money is tight, credit cards can take on an unusually seductive glow. However, a $40,000 line of credit is not a bonus in disguise, no matter how much you wish it was. If you use credit to maintain the lifestyle you’ve grown accustomed to, it won’t be long before you “hit the wall”. Without an income to support repaying the balance in full every month, you’ll be paying in installments. Interest rates on unsecured credit is not cheap, and if you fall behind by 60 days, the rates will likely skyrocket. Late and over limit fees will add to an increasingly daunting balance. And soon you’ll be wishing you could return all the merchandise you bought and the meals you ate just so you don’t have to open another statement and look at those big, scary numbers. Credit cards are not designed to be emergency savings accounts.

Develop A Plan

To thwart procrastination, write down what you want to achieve during this time. Be specific: include names of people you need to speak to and proposed accomplishment dates for each task. Update and refer to it regularly. Apathy’s enemy is a detailed and well-thought-out plan.

Go Forward

Get professional assistance, talk to friends, and find others who are in like circumstances. It is too easy to think you are alone in this—support is key. Vent to those who can empathize; ask for help from those who can assist. Shock, shame, and anger are normal and feeling these emotions is expected. But by adopting a positive attitude and taking pragmatic steps, you can adapt to a reduced income, and achieve a financially stable future.

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Cut These Costs ASAP When Facing Financial Hardship

Have you ever unexpectedly found out you’re going to have less income? It’s enough to throw you into a panic. But the best way to get through hard times is to take a few deep breaths and put a plan together. Check out these common targets for quick and effective expense cuts.

Food

You might find it obvious that evenings dining out at fancy restaurants probably aren’t the best idea when experiencing a budget crunch. But think about your groceries too. Consider avoiding the higher-priced stores and stocking up on the basics at the more reasonably priced spots. You might find that cooking at home and taking your lunch to work saves you lots of money and ends up being healthier too.

Cable/Movies/Rentals

If you’re like most people, your visual entertainment comes from multiple sources. You may watch movies on cable, in the theater, or via a streaming service. In crisis situations, it’s best to focus on watching movies at home and using one particular way to do it. In other words, if you have both Netflix and premium movie channels, it’s probably time to go with one or the other.

Phone Plans

It’s nice to use a smart phone to be able to look up information on the go, but you could probably make do without the data plan if you had to. Did you know that you could also be on a prepaid smart phone plan? Call your service provider to ask them to perform an analysis on which plan is best for you. You might be paying for more than you actually need. Also consider eliminating your house phone if you still have one.

Gym

It’s important to get some stress-relieving exercise during this trying time, but there’s no reason why you should have to spend money to do it. Brainstorm ways to be active without having to fork over a big chunk of your paycheck. The main thing is to just get moving!

Shopping As Entertainment

One activity that could put you in the trouble zone is shopping for fun or to ease tension. “I won’t buy anything, I’ll just browse” too often can lead you down the path of unnecessary spending. Eliminate leisure shopping or other activities that put you in temptation.

Gas

Is it an option to work from home more? Can you carpool or combine your errands into fewer trips? If your family has multiple vehicles, can you sell one and share the remaining?

Insurance

With the ease of using the Internet to compare rates, the insurance business is much more competitive than it used to be. Shop around for the best deals on any type of insurance you have—auto, home, life, etc. Check into bundling these with one company to save even more. How is your credit score? This might affect the cost of certain insurances. Also be sure to ask about discounts you might apply for, and the option of raising your deductible in exchange for a lower monthly payment.

Utilities

Think of ways to stay warm or cool more efficiently. Put on more layers in the colder months and spend more time outside during the warmer times. Be conscious of turning everything off and even unplugging electrical items when you leave a room.

Habitual Items

When you have a comfortable financial situation, it’s easy to buy coffee, cigarettes, alcohol and convenience store snacks without thinking too much about it. But in these tighter times, think about what you are really getting out of these purchases and if there are expenses that are more important.

Taxes

If you have more money taken out of each of your paychecks than is necessary in order to get a large income tax refund check in the spring, you are over-paying the government each month. Cut this expense by using the IRS withholding calculator to determine the appropriate amount to have withheld from each paycheck.

None of these cost-cutting measures alone is guaranteed to immediately solve all cash flow issues, but together they can potentially save you hundreds of dollars per month.

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Prioritize Your Bills: The Secret to Always Having What You Need

Many circumstances in life can derail even the best money-management plans, leaving us with less than we need to pay the bills. Increasing income and/or reducing expenses can help, but making changes often takes time. However, with a little strategic planning, you can minimize damage until you are back on your feet.

Strategic planning involves both determining which bills are most important, and trying to set-up payment agreements for any other bills you are struggling to pay. Monthly obligations may include:

Mortgage or Rent

Your mortgage or rent should be the first bill that you pay each month. You would not want to lose your house or be evicted because you were paying your credit cards! However, if making payments is impossible, let your lender or landlord know; they may be willing to work with you. Is your mortgage or rent affordable long-term? If not, you may want to look for a cheaper place to live. If you owe more on your mortgage than what you can sell your house for, your lender may be willing to accept a short sale. If you have a lease, your landlord may voluntarily release you from it if you explain your hardship or find a suitable replacement tenant.

Car Loan

If you have a car loan, making your payments on time is critical. In many states, a car can be repossessed after only one missed payment. Repossessed cars are typically sold at auctions for low amounts, and the lender may come after you for the remaining loan balance (the deficiency balance). If you cannot make your payments, call your lender. They may be willing to let you to skip a few payments or accept a repayment plan for delinquent payments. If an agreement cannot be worked out and you cannot resume payments, you may want to sell the car, especially if you have a spare one or can take public transportation.

Utilities

Delinquent utility payments can cause your service to be suspended or terminated, but some utilities are more important than others. You may not be able to, or want to, live without electricity or water. However, you could probably live without cable television. If a service is not needed and cannot be paid, you may want to cancel it before it is shut off. If the service is needed, call the utility company and ask about payment arrangements; you may not have to pay the full amount owed right away. You can also see if the company has any assistance programs for people facing economic hardship.

Student Loans

Borrowers experiencing financial difficulties can often get a temporary suspension of payments through a forbearance or, less frequently, a deferment. What if you can’t get one? The only immediate consequence of not paying a student loan is usually credit report damage, but if you make no payments for 180 days, you are considered in default, with possible consequences including tax refund interception and wage garnishment.

Credit Cards and Other Unsecured Debt

If you miss payments by 30-days or more, your credit score will likely drop. If you stop paying long enough, your accounts may be sold to collection agencies, and you could even be sued. Still, the consequences of not paying unsecured debt are less severe than not paying your mortgage or car loan, and most creditors do not take legal action right away. This does not mean that ignoring your creditors is a good idea, though. If making the required payments is difficult, contact your creditors about hardship programs (short-term arrangements that allow you to make smaller payments). When requesting a hardship program, explain why you are facing hardship, and let them know what changes you will make to be better able to afford payments in the future. If requesting a hardship program over the phone is not effective, try sending a letter.

When there is not enough money to pay for everything, it is easy to panic. Don’t. Instead, focus on what you can do. You may not be able to control everything that happens in your life, but you can choose what bills to pay first and how to deal with creditors.

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Four Tips That Will Kickstart Your College Savings Plan

Most parents want to set up a college fund for their kids. The challenge is knowing how and when to start. What’s the right age, how much should you save, and which savings plan is best?

The process can be overwhelming, but rest assured, BALANCE is ready to help. Check out these effective tips to get your college savings plan on track:

1. Start As Early As Possible

When it comes to choosing the best time to start saving for college, the answer is simple: as soon as possible. Even if you’re pregnant now or intend to start a family soon, it’s not too early.

College is very expensive, and like any long-term financial goal, it requires consistent saving over time. That said, don’t get discouraged if your kids are older and you haven’t started putting money aside.

Check out our simple College Savings Calculator to plug in your personal information and create a meaningful savings plan, no matter your child’s age.

So, just how high is the cost of college? Read on…

2. Set Expectations

According to The College Board’s annual report on college pricing, here’s the average cost of attendance (tuition plus fees) in 2017-2018:

Public 4-Year College (In-State): $20,770
Public 4-Year College (Out-of-State): $36,420
Private Non-Profit 4-Year College: $46,950

And of course, these numbers are only expected to grow with inflation. But remember, you don’t have to accumulate all of this cash on your own; you can let a smart savings plan help. For more on that, see tip number-four below.

3. Choose a Monthly Contribution You Can Handle

Every family’s college savings plan will look different. You want to do the most for your children and make a real contribution. However, don’t do it at your own peril.

Avoid borrowing money that you can’t pay back. A high-interest loan or second mortgage may seem like acceptable options to free up additional funds, but they may put you at great financial risk.

4. Select the Right Savings Option for You

529 Plans are a popular way for parents to save for their children’s college expenses. They offer several investment options that will help your contributions grow over time, and your withdrawals are tax-free.

Another popular investment option is a Coverdell Education Savings Account (ESA). Coverdell plans are similar to 529s with one key difference: they let you invest in any stock, bond, or mutual fund. However, they have an annual contribution limit that can cap your savings.

The bottom line is you should choose the savings option that’s right for you—soon. The faster you begin saving, the less expensive college will be for your family.

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Should You Pay to File Your Taxes?

As this year’s tax deadline approaches, you may be wondering about the best way to file. Should you save money by completing your returns yourself and possibly risk a mistake (and losing out on a bigger refund); or should you pay a professional tax preparer to ensure you get everything that’s owed to you?

The answer depends on your particular circumstances. Keep in mind that as your tax situation becomes more complex, the filing becomes more difficult and, if you go with a professional, more expensive.

To help you make up your mind, let’s look at your options:

DIY (aka, the Free Option)

For those who treasure the feeling of doing something yourself versus outsourcing the work, completing your own return may be for you. The benefits include a sense of accomplishment, control over your own situation, and privacy. The IRS website lets you file for free, but unlike other online tax preparation services, it offers minimal guidance.

Recommended for: people with few deductions who feel confident completing tax forms without help.

Online Services

Online tax preparation websites have become very popular. Resources like these guide filers through their return, offering clear instructions and help along the way. The cost is also cheaper than hiring a preparer. And, like free filing with the IRS, you can do it from your computer, pause your progress, and finish when it’s convenient.

Recommended for: people who are comfortable using filing software, and have a relatively simple tax situation.

A Traditional Tax Professional or Accountant

This is by far the most expensive option—for a good reason. Professionals do all of the work for you. All you have to do is provide the necessary paperwork and receipts. Plus, you get peace of mind knowing your taxes are handled properly, and you increase your chances of maximizing your refund.

How much can you expect to pay? Reportedly, tax preparers charge an average of $273 per return if you want to itemize deductions. It’s about a hundred dollars less if you take the standard deduction.

Recommended for: people who are short on time, need additional assistance, or have a complicated filing.

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