Nickeled and Dimed

This weeks Open Mic question comes from Jim LeRitz in Pittsburgh, Pennsylvania.

With interest rates at historic lows, my wife and I have explored the idea of refinancing our home.  After doing our homework we able to lock in a rate of 5.05 percent.  We are currently at 6.85 percent.  The difference would save us almost $300 a month on our mortgage payment, on top of the overall interest it would save us.  The problem is the closing costs would be about $2,800, and since this is something we weren’t saving for, it would have to come out of our emergency fund.  Is tapping into our emergency fund to take advantage of this great rate a good idea, or should we save for the closing costs and cross our fingers the interest rates will still be this low when we save enough?

Great question, Jim.  Normally I would advise to never touch your emergency fund for something that is not a necessary expense, but let’s look into this one a little deeper.

The first question I would ask is how long you plan on living in your house?  If you plan to be gone in five years or less, I would probably pass on the refinance.  The largest gain you will get out of refinancing into a lower rate is the interest you will pay on the loan.  The shorter time you will spend in the house, the less these savings will be.

On the other hand, if you plan to live in this house for the life of the loan, it is almost certainly a good idea to take the lower rate.  Depending on the balance of your mortgage, a 1.85 percent cut in your interest rate could add up to a huge savings in total interest paid.

You can use an online calculator to figure out how much money you would save over the life of your loan, including the costs to refinance, by clicking here.  All you need is the balance of your mortgage, your current interest rate, how many months remain on your current mortgage, your new interest rate, the number of months in your new mortgage and the closing costs.  Enter these and it will calculate how much you would pay monthly and how much you would pay total.

As for tapping your emergency fund to pay the closing costs, my opinion is that this is an acceptable use of it, as long as you use the monthly savings in your new mortgage payment to re-fund it. 

Think about how long you will be in your home, use the calculator to estimate your savings, and if the refinanced loan will save you money, I say go for it!  Make sure to let us know what your decision is and how it turns out.

What advice would you give Jim?  Should have tap his emergency fund for some long-term savings?

If you would like to be featured in “Open Mic”, send your personal finance related questions to centsabilitytowealth@gmail.com.

One of the first steps to turning around your finances is slashing your expenses.  In the beginning, this can be very easy.  By simply getting rid of, or cutting down on your unnecessary expenses (such as dining out), you can take a large chunk out of your monthly spending.  But what happens when you have chopped these expenses down as  far as you possibly can (or want to)?  Then it’s time to go to work on your necessary or fixed expenses.  And this part may not be as simple.

Luckily there are websites and technology that can help us with this.  One website is Mint, which we talked about last week.  Today we will talk about another website that can help you cut expenses, BillShrink.

BillShrink is a site devoted entirely to helping you save money on your cell phone and credit card bills.  By entering your current cell phone or credit card information, it will scan the entire market to try to find a deal that both fits your needs better and saves you money.  Here’s a quote from BillShrink on how they do this:

Do you know there are over 10 million cell phone plan and add-on combinations? Or that every credit card has over 100 meaningful variables? We’re obsessed with monitoring all those details - so you don’t have to!

When I first read about BillShrink, I was skeptical.  Then I tried it.  It is fantastic.  By simply uploading my current cell phone bill, it found me three plans that would both fit my needs and save me money (one would save me as much as $35 a month!).  After entering what I use a credit card for and my credit score, it found me 16 credit card offers that offer better rewards and lower interest rates than the card I am currently using.

Let’s look at how BillShrink works for both cell phone bills and credit cards.

Using BillShrink to Save on Cell Phone Bills

When using BillShrink to look for better cell phone plans, you have two choices. 

- One way to look for better plans is by estimating your usage, which requires you to tell them how much you currently spend a month, how many minutes you use a month, how many lines you need, how many texts you send/receive a month, and your home and work zip code. 

- The other (easier) way to find better plans is to simply upload your current cell phone bill.  To do this all you need to enter is the phone number of the primary phone on the plan and your wireless account password.  By entering those two things it will automatically pull your monthly cell phone bill and see what you use every month.

After entering this information, regardless of which option you choose, it will show you a list of cell phone plans that fit your needs while saving you money on your monthly bill.  It also automatically takes into account the fee it would cost your for canceling your current plan early.

Using BillShrink to Optimize Your Credit Card

Whether you still carry a balance on your credit card, or use it to earn rewards and then pay off the balance each month, BillShrink can help you find a better deal.

You start off by answering a simple question, “do you pay off your credit card each month”.  The next series of questions will depend on what your answer to this one is.

Answer yes, and your next step is to tell it how much you spend each month, what your credit score is, the three categories you use your card for most often, what your current card is and how long you have had it for.  After answering these questions, it will produce a list of cards that offer better rewards and fits your spending habits and credit score.  Using a credit card responsibly to earn rewards and build credit can be a fantastic financial move.  Using BillShrink can help you maximize this strategy by finding the best deals out there.

Answer no, that you don’t pay off your balance each month, and you will then be asked how much you spend each month, what your credit rating is, what your existing balance is, how much you pay off each month, and what your current card is.  By answering these it will search for credit card offers for people in your credit range that offer lower interest rates and annual fees than your current card.  Finding a credit card that lowers your interest rate from 19 percent to 12 percent could offer a savings of hundreds of dollars a year or more, depending on how much of a balance you carry.

Whether you are looking to save money on your cell phone bill or pay a lower interest rate on your credit card, BillShrink can be an excellent tool to help lower your monthly expenses.  Head over to www.billshrink.com, give it a try and let us know how much you saved.

Please continue sending any personal finance questions, suggestions and tips to centsabilitytowealth@gmail.com

Centsability to Wealth was featured on two different blog carnivals today.

Penelope Pince at Pecuniarities hosted the Carnival of Personal Finance no. 188 and featured Centsability to Wealths article on insurance.  Penelope is also holding a 2009 Financial Resolutions Contest which offers a chance to win a subscription to the Wallstreet Journal, so check it out.

The  Carnival of Debt Reduction no. 175 was held at No Debt Plan and featured Centsability to Wealths article on strategies for paying off debt.

On top of articles from this site, these carnivals feature excellent articles from several other personal finance blogs, so check it out and mention any that your particularly like here.

Grocery shopping is one of my largest monthly expenses.  In a typical month, my Fiance and I will spend right around $300 on groceries and food.  On top of the money, I absolutely despise the shopping itself.  I hate searching for a parking spot.  I hate fighting the other shoppers for positioning.  And I hate waiting in the check out line.

Suffice it to say, I’m open to anything that will make grocery shopping less expensive, and equally important (to me), less time consuming.  Since in the past shopping had always been a last minute decision for us (when we were absolutely forced to go due to being completely out of food), we rarely went prepared with a list of what we actually needed.  As a result, we came home with more “impulse” items that we didn’t actually need.

I decided to run a little experiment comparing how much time and money it cost us to go shopping first without a list, then with a list.  Both shopping trips were done with our cabinets and refrigerators virtually empty, meaning we needed the same amount of food both times.  Here are the results of both trips:

Grocery Shopping Without a List

Total amount of money spent- $114.47

Total time spent from moment entering store to moment arriving in checkout line- 49 minutes

Number of days until next shopping trip- 12 days

Grocery Shopping With a List

Total amount of money spent- $108.08

Total time spent from moment entering store to moment arriving in checkout line-  27 minutes

Number of days until next shopping trip- 16 days

Verdict

Making a list wins this competition in a landslide victory.  Overall, making a list saved us $6.39, 22 minutes and the food lasted four days longer.

On top of that, the food we purchased with a list led to more actual meals (as opposed to living off Ramen Noodles and mac and cheese for the last few days between trips) and less junk food purchased.

I know making a list before going grocery shopping isn’t a novel idea.  I’d guess it is one most people already use to some extent.  But this little experiment was proof to me they do save you money and especially time.  If you don’t already make a list before shopping, try it out.  The results will amaze you.

Our next step in decreasing our grocery costs is to start clipping coupons, something else I have never done.  I suspect that will save us significant money, but also increase the time spent shopping slightly.  I will let you know how it ends up.

Do you use a list when grocery shopping or have any other tips for reducing costs and time while doing it?

Please continue sending any personal finance related questions, suggestions and story tips to centsabilitytowealth@gmail.com

Here are some of my favorite articles from other personal finance bloggers over the past week:

At Get Rich Slowly, JD had several interesting reads this week.  His Tuesday article on Hustle and Patience talked about Gary Vaynerchuk’s  speech on doing what you love and how people get too caught up in wanting immediate results instead of being willing to workfor the results.  Wednesday featured an excellent guest post from Leo Babauta of Zen Habits titled which talked about replacing your bad financial habits with good financial habits.  And on Saturday he had a nice post highlighting what would be Benjamin Franklins 303rd birthday.  Ben Franklin is the original personal finance guru with nearly everything he said back then still holding true today, including this timeless masterpiece, “He that goes a-borrowing goes a-sorrowing”.

At I Will Teach You To Be Rich, Ramit got a good discussion going by posting a readers question on how to handle his $30,000 worth of debtafter his recent divorce.  The main discussion hinged on whether he should tap the $8,500 in his retirement account to use in attacking the debt, with nearly all commenters advising him to leave it alone.

Blueprine for Financial Prosperityhad an article similar to JD’s about finding success through hard work, talent and passion.

Check out these articles and continue sending Centsability to Wealth any questions, suggestions and story tips to centsabilitytowealth@gmail.com

Here in Ohio, the past week has not been pretty weather wise.  On top of the arcticly cold temperatures, we also got piles of snow dumped on us.  A drive that usually takes me under five minutes took over an hour getting from work to the freeway.  The result of the mix of bad weather and crowded traffic was an increase in the number of auto accidents.

A car accident can be a major hit to your finances.  On top of the costs to repair or replace your car, you could have medical bills as a result of the crash.  Even if you are properly insured, the deductibles alone can put a large dent in your emergency fund.

So with that in mind, here are five mistakes to avoid while driving in winter weather from an article at www.forbes.com by Hannah Elliott:

Driving too fast. Learn to accelerate and decelerate slowly during inclement weather. “I can’t tell you how many crashes, strandings and just bad things in general happen when people are traveling faster than they should be,” New York state police officer David Salmon says. “Not only from the standpoint of losing control of your vehicle on slippery roads, but also the magnitude of a crash when and if you do hit something else.” Take extra care on hills and around corners; accelerating up hills causes wheels to spin.

Following others too closely. During the summer, following other drivers at a count of two or three seconds might be enough, but in bad conditions, allow at least five or six seconds of distance. And don’t stop at all if you can avoid it: The power required to move forward from a stop far outweighs the power required to keep a car rolling, and you’ll need all the help you can get if you’re on ice. And never use cruise control on wet conditions.

Overcorrecting on ice. Learn how to control a skid. If you’re traveling in a straight line, stay calm, take your foot off the gas and brake gently. Turn the steering wheel in the direction you want to go. If you slip on a corner, smoothly accelerate to transfer the weight to the rear wheels, which allows you to steer into the direction of the skid and regain control. If the car uses rear-wheel drive, don’t over-accelerate, or the tires may over-spin completely out of the turn.

Driving while fatigued. Failure to get adequate sleep before attempting a long trip on cold, short winter days greatly increases driving risks. Be realistic in driving estimates so that it’s not difficult to meet planned arrival times. If you start to feel tired, switch drivers or pull into a safe area for a nap.

Driving with poor visibility. Driving at night and driving in the rain or snow greatly reduce visibility, which leads to immense risks on the road. Poor weather is associated with 7,000 fatalities, 800,000 injuries and more than 1.5 million car crashes nationally each year, with an estimated economic toll of $42 billion. Adverse weather is involved in nearly 20% of highway fatalities.

Follow these tips and you will significantly lower your chances of an accident in bad weather.

Please continue send us any questions, suggestions and story tips to centsabilitytowealth@gmail.com

One of the most frequently used excuses I hear for people not getting their finances in order is that they “don’t know where to start”.  If only they knew what the first step was, they claim, they would get started right away.  If you fall under this category of people, allow me to give you your first step right now.  Assess your financial situation.

That’s it.  No magic debt formulas or savings goals.  Simply look at your finances and find out how much money you make every month and how much money you spend every month.  

Once you figure out how much you are spending, you can figure out where you are spending it.  There are a few different ways to do this.  You could go the old fashioned way, carrying a pen and notepad with you every where you go, writing down every purchase you make and how much it was for.  You could spend the $50 or so on computer software like Quicken.  Or you could try Mint, the free online software that allows you to enter your bank and credit card information and have your spending automatically tracked for you.

While I have been hearing about Mint for awhile, I never got around to trying it until this week.  I’ve been using Quicken the past few months, and while I like many of its features, I wasn’t fully satisfied with the spending tracking portion of it.  So this week I gave Mint a try. 

I love it.  I can’t believe I waited this long to use it.  It is incredibly easy to set up, the features are very user friendly and it is 100 percent free.  Here are some other features I like:

• Smart tracking- Once you change the category of an expense, it will automatically recognize that change in the future.  For example, after changing my payment to First Federal Bank to “Car Payment”, all future payments to that bank will automatically be placed in the car expense category.
• “Ways to save”-  I love this feature.  Or at least the idea of it.  Mint claims that “By analyzing your current spending, we can find you products and services that will save you money, most of the time a lot of money”.  It says that users often find $1,000 or more a year in potential savings.  They also look out for checking and savings accounts with higher interest rates and credit offers with lower interest rates.  It hasn’t had enough time to analyze my spending yet to give me any recommendations, but I’m pumped hear what they have to offer!
• Allows you to add your investment and loan accounts- On top of tracking your spending, Mint also allows you to enter any investment or loan accounts and will analyze those as well.  I already have my 401(k) on there for easier monitoring.
• Did I mention it’s free?- Seriously.  All this and you pay no money.  Talk about value!

What are the downsides?  It’s hard for me to list anything negative about a product this valuable offered for free, but here are a couple things that could make using it difficult for some:

• Not effective for people who use cash- Since it gets its information from your bank account, if you still use cash to pay for most things Mint may not be for you.  I strongly recommend using a debit card to pay for most or all of your purchases for tracking purposes, and will write a future article about automating your finances. But this isn’t for everyone, and if you are set on paying cash you may be stuck with the notebook method of tracking.
• You can’t change the amount of an expense (0r at least I can’t figure out how)- This is a problem for me because I pay the entire rent, cable and water bills myself and then my roommates pay me their share of the bills separately.  As a result, Mint figures the entire amount into my expenses.  This isn’t a huge deal as I can manually subtract the needed amount from the total paid, but it isn’t ideal.  It is no where near a deal breaker though.

In the week I’ve used it, those are the only problems I can find with Mint.  It seems to be a very good product in my brief experience.  Here’s how you can sign up for a Mint account:

1. Gather your user names and passwords for your online bank and credit card accounts (and investment and loan accounts as well, if you wish to add those).
2. Go to www.mint.com.
3. Click on “Sign up in under five minutes” button in the middle of the page.
4. Fill out the short information form.
5. Fill out your bank and credit card account information.
6. Go through your transactions and change the category of expenses if need be.

All told this should easily take you less than 30 minutes, and probably much less than that.

Tracking your spending and figuring out where your money goes is an absolutely vital part of turning around your finances.  When you know where your money is going, you can figure out areas you can save more of it.  If you are willing and able to make your purchases with a debit card (and/or credit card, as long as you pay the entire balance off each month), Mint is an excellent tool for helping you track every penny you spend.

Please continue to sending us any questions, suggestions and story tips to centsabilitytowealth@gmail.com

Ramit Sethi’s I Will Teach You To Be Rich is one of the top personal finance blogs on the internet.  He is notorious for telling people to forget about the little frugality tips and focus on the big things that save money.  For example, instead of worrying about the cost of your coffee addiction, which could save you ten or so dollars a week, focus on how to get the best interest rates on a mortgage, which could save you tens of thousands of dollars (these aren’t Ramit’s words, just an example of his style). 

Ramit is a very polarizing guy.  You either love him or hate him.  While few doubt his financial acunem, many seem to be put off by his confident–borderline cocky–attitude.  He knows his advice is legit, and he is not afraid to speak his mind.  Make a less than intelligent comment on one of his articles and he will let you have it.  Personally, I like Sethi very much.  His blog has been a big part of my financial turn around and an inspiration for starting this site.  But I do see how his style would turn some people off.

Recently, Ramit caused an even bigger stir than normal by introducing “Scrooge Strategy: Premium Savings Tips“.  Scrooge Strategy is a subscription program that, upon signing up, will send you weekly in-depth tips on ways to save money and/or earn more money.  These aren’t just small tips like “pack your lunch for work”.  Sethi promises super-tactical, highly in-depth tips that will help you save hundreds, in not thousands, of dollars per year.  And on top of his own tips, he also promises to include tips from other top personal finance bloggers, millionaires and Ivy League educated financial minds.

So what’s the catch?  This is a paid subscription.  Eight dollars a month to be exact.  And this has a lot of people up in arms over the whole thing.

On top of Ramit catching heat for daring to charge money for his services, another top personal finance blogger is being scolded for even mentioning the subscription.  Get Rich Slowly’s normally laid back commentors were quite vocal about their displeasure for not only the idea of charging money for personal finance tips, but the simple fact that JD mentioned it.

A lot of people seem to be under the impression that both Ramit Sethi and JD Roth are being hypocritical in charging a fee (or mentioning the program) while at the same time telling people to be frugal.  Here are my thoughts on the situation.

• The idea that charging for financial tips is wrong is laughable at best.  If that is the case personal finance books, magazines and newspapers would be out of business.  There are many times in life where it makes sense to spend some money in order to make (or save) money.
• Ramit is not being “hypocritical”.  He preaches the idea of making money off your hobbies.  Coming up with ways to save money is a hobby of Ramits.  He’s found a way to make money off it.  That sounds to me like he is practicing what he preaches, the opposite of being a hypocrite.
• JD is doing what a personal finance blog should do, which is bring all major personal finance news to his readers attention.  The Scrooge Strategy is major personal finance news.

As for the subscription service itself, I’m leaning towards signing up.  Here’s why:

1. It offers a 60 day money back guarantee if you do not save more than it costs to join.  There is virtually no risk.
2. It had a six week trial period and offers testimonials from several of the original users.  They seem to be quite satisfied.
3. It gives me something to write about here.  I can let you guys know if it is working.

Do I recommend you sign up for “The Scrooge Strategy”?  No.  But I do recommned you check out www.iwillteachyoutoberich.com, see how you like Ramit’s style and decide for yourself whether or not you want to sign up.

I do not think the subscription is right for everyone, or even most people.  I do think it has an audience that it can be very useful to.  It is up to you to decide whether or not it is worth (or you can afford) the eight dollar a month charge.

Please continue sending us any questions, suggestions and story tips to centsabilitytowealth@gmail.com

Once a week I will run an “open mic” segment where I will post a question emailed by a reader of the site and attempt to answer it to the best of my ability.  I encourage everyone to also participate in the question by posting answers or additional questions in the comments.

Todays question comes from Anna Roberts in Salt Lake City, Utah.

I am a 66 year old wife, mother and grandmother of eight.  Now that my husband is retired, I want to be smart about our finances, but I also want to continue doing special things for my kids and grand kids.  My question is with the current financial crisis should we all be looking out for ourselves and putting as much money away as possible, or should we be doing our part to turn things around by spending money on ourselves and our loved ones to try and boost the economy.

This is a question I hear a lot lately, should you be doing your part to boost the economy by spending money, or should you be saving more than ever.  The answer, as always, depends on your own situation.

If you are in great economic shape, have your debt paid off, an emergency fund saved and your retirement accounts fully funded, right now is a great time to buy almost anything.  If you have been looking and saving to buy a house or car, there has rarely been a better time in US history to do it.  With interest rates at historic lows and prices falling at an alarming rate, right now is a phenomenal time to purchase a big ticket item.

If you are one of the few people lucky enough to be in financial shape, right now is the time to loosen the frugal belt a bit.  I’m not saying to abandon all the princepals that got you where you are, but if you find a good deal, don’t be afraid to take advantage of it.  Eventually this country will have to start spending again and the financially responsible will have to lead the way.

If, on the other hand, you are not in great financial shape, you should ignore the pundits on TV advocating you to spend and continue on your frugal path.  Before you can worry about the macro economy you have to get your own micro economy under control.  The economy will recover at some point.  By spending beyond your limits in an effort to help, your personal economy may not.

Your needs come before the economies needs.  Always look out for yourself first.  Be honest with yourself and assess your situation.  Are you in a position to start spending a little more money than normal, or do you still have work to do with your finances?

If you have the extra money, spend it.  Take advantage of the fantastic deals and get something you have always wanted.  If you don’t have the extra money, let this be further motivation to become financially free so that the next time an economic crisis hits (and there will be a next time) you are prepared to take advantage.

What advice do you have for Anna?  Are you changing your spending habits in this buyer friendly economy?

Please continue sending us any questions, suggestions and story tips to centsabilitytowealth@gmail.com

Ask any random guy what their favorite sports teams record is, and they will likely be able to tell you off the top of their head.  Ask the same guy what his FICO score is, and you are likely to be met with a blank stare.

There are few numbers in your life that are more important than your credit score.  Maintain a high one and countless financial doors will be open for you.  Allow your credit score to drop, however, and those doors will be slammed in your face.  There is not a single financial move you can make that will not somehow be linked to your credit score.

What is a credit score?

Your credit score (also known as FICO score) is basically a permanent record of your credit use.  It is based on your spending habits, your bill-payment history, and your overall debt load.  By looking at this information, the Fair Isaac Corporation (FICO) gives you a rating between 300 and 850.  This three digit number can effect everything from interest rates on loans (or if you can even get a loan) to whether or not you can get a cell phone or apartment without a co-signer.

Your score will generally fall into one of six categories:

• 760-850- Highest
• 700-759
• 660-699
• 620-659
• 580-619
• 500-579- Lowest

Which category you fall into is usually more important than your actual score.  For example, there is really no difference between a score of 761 and a score of 850, both fall in the highest category.  The interest rate you pay on loans will also depend on which range you fall into.  The higher the range, the lower the interest rate you will pay.

With the current “credit crisis”, having a high score is more important than ever.  If your score doesn’t fall into the 700 range or higher, you could be in real jeopardy of even being approved for a loan.

What effects your credit score?

What effects your credit score can be broken down into five broad categories, each with a different degree of importance.

1. Record of paying your bills on time: Accounts for 35 percent of your FICO score- Looks at your payment history with each payment that is at least 30 days late having a negative effect on your score.
2. Total credit used vs. total credit available: Accounts for 30 percent of your FICO score- Looks at how much of your available credit you are using.  The higher the percentage the lower your score.  Maxed out credit cards are seen as irresponsible uses of credit.
3. Length of credit history: Accounts for 15 percent of your FICO score- The older your credit accounts the better for your score.
4. New accounts and recent applications for credit: Accounts for 10 percent of your FICO score- Each time you apply for a line of credit it puts a minor ding on your credit score.
5. Types of credit in use: Accounts for 10 percent of your FICO score- Credit companies like to see a mix of installment loans and credit cards.

How can you improve your credit score?

Now that we know what effects your credit score, what steps can you do to improve each of these categories?  Here are a few tips for achieving and keeping a high FICO score.

• PAY ALL BILLS ON TIME.  PERIOD.  Nothing will hurt your score more than being 30 or more days late on a payment.  If you have already been late on payments in the past, make sure it never happens again.  Just a few months of paying all your bills on time will start to make up for any late payments in the past.  If you are having trouble remembering to pay them, make all payments automated.
• Make an effort to pay off the balances on your credit cards.  This should be something you are doing without the incentive of improving your credit score, but if you aren’t, it’s time to start.  Lowering the amount of debt used while keeping the total debt available you can significantly raise your FICO score.
• Don’t cancel your credit cards after you pay them off.  On top of keeping your cards so that the available credit stays in play, it’s important to protect your accounts with the most history.  If you really feel the need to cancel one of your credit cards, make sure it is your most recent account.
• Don’t apply for too much credit in a short period of time.  You are penalized a few points each time a credit agency checks your report.  Limit the number of inquiries over short periods of time.  

  Monitoring your credit

Now that we know what effects our credit and how we can improve it, it’s important to check and monitor your FICO scores.

There are three different credit reporting bureaus; Equifax, TransUnion and Experian.  Unfortunately, all three agencies can and usually will have different numbers, so it is important to check all three.  Why do you need to check all three?  Because errors are not uncommon.  You need to scan each report and make sure all information is accurate.

What to do if you find an error?  If you find an error in your credit report at any of the three credit bureaus, you need to write them a letter disputing the item.  From there the credit bureau will forward the complaint to the company you are claiming the error came from, and they will have 30 days to respond.  If they do not respond within 30 days, you win the dispute.

Where do you check your credit reports?  By law, you are entitled to one free credit report per year.  You can redeem this free report at www.annualcreditreport.com.  On top of that, you can also get a free 30 day trial at www.myfico.com and view one of your credit reports for free.  After that, you will typically pay around 16 dollars for each credit report and score.  You should be checking all three reports at least twice a year.  It will be well worth the price you pay to check them.

What to do if you have no credit history?  If you are in the rare position of not having a credit score due to never using any form of credit, you need to create one.  The easiest way to do this is by opening up a credit card with a small line of credit, charging a small expense every month and paying it off each month.  This will slowly build up your credit score so you are in good shape when it’s time to secure a large loan for a car or house.

Summing up

Although just a simple number, your credit score can have an enormous effect on nearly every aspect of your life.  And in our current economy, this has never been more true.

Check your FICO scores.  If all three aren’t at least 700, you have work to do.  Put the strategies discussed here to use and you will make sure you never have to worry about securing a loan or getting a good rate again.  Over the course of a lifetime, a great credit score could save you tens of thousands of dollars or more.

You can contact Centsability to Wealth with any questions, suggestions and story tips by emailing centsabilitytowealth@gmail.com.