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When a business owner applies for a credit card, he or she will have the option to apply for a consumer card or a business account. While there are many similarities between the two, there are also a few key differences. The credit card that is selected by the business owner will impact everything from convenience and usage abilities to financial record keeping, bonuses and perks and more. Each card has different features, costs, and benefits. However, when all options are carefully analyzed, the small business owner may discover that there are clear benefits associated with applying for a business card rather than a consumer card if the credit card will be used only for business purposes.

Benefit From Business-Related Perks

Some credit cards do not have perks, but most cards today do. The majority of the perks that a business owner can benefit from relates to points earned with each purchase. Bonuses points on credit cards generally can be redeemed for everything from cash to airline miles or gift cards from retailers. Consumer cards generally have a rewards system that is designed for consumers, so the business owner may see more gift cards for restaurants, movie theaters and consumer-based retailers, such as home and bath stores. Business owners, on the other hand, can find cash-back rewards as well as rewards for office supplies stores, technology stores and other similar venues that businesses may use regularly. Some also have airlines miles programs. Keep in mind that many credit cards have a limit on the number of points that can be earned, and this will limit the power of the rewards program for the account holder. When selecting a business card based on the reward program, it is important to read the fine print and to learn more about the requirements, rules and limitations for the business card’s rewards program.

Maintain Separate Financial Records for Business and Personal Expenses

One of the main reasons why small business owners apply for a separate business card relates to record keeping and accounting. It is possible to charge all business-related expenses onto a consumer card. A business owner may even open a separate consumer card that is used solely for this purpose. This is one way to keep the records for personal and business expenses separated. However, when a personal credit card is used, all of the debt will be linked to the account holder’s personal name. This means that when applying for a personal loan, such as a home mortgage or a car loan, the outstanding balance, payment history and minimum monthly payment will be listed as a personal expense. When the business owner is the primary account holder on a business card, he or she will be personally liable for the debt on the business card. However, it will not be reported on a personal credit report or listed as a personal debt.

Access to Financial Tools and Analytical Features

Most credit card accounts today give the business owner access to at least a few financial tools online. For example, the owner may be able to log into all types of accounts online, view payment and usage history and make a payment. Redeeming points online and monitoring rewards program usage online is also possible. However, this is typically where the financial tools associated with a consumer credit card end. Business credit cards may have advanced features like the ability to itemize expenses for the year, to categorize them for easier accounting management and to view images of receipts so that the account holder can see exactly what was purchased and by which employee. In addition, many of these accounts can be linked with accounting and financial management software programs, such as Quicken or others. This can save a considerable amount of time and energy with financial record keeping efforts and can make it easier to manage funds. When there are different authorized users on the account, the account holder can also log in to simplify the management of the authorized users.

Enjoy Better Control Over Authorized Users

With both consumer and business credit cards, the account holder can typically add an authorized user to the account. Because consumer cards are designed to be used by individuals, the number of authorized users may be limited to one or two individuals in most cases. This is because an individual may need to authorize a spouse or perhaps a teenager or adult child to have access to the card. In a business setting, the number of authorized users may need to be higher. Most business card accounts enable the account holder to have many more authorized uses. Bear in mind that there typically still is a limit on the number of authorized users, so compare the limitations of different cards up-front before deciding which business card to apply for. In addition to having access to more authorized users on the account, most business cards provide improved control over those users’ usage. For example, the business owner may log into the account online to monitor spending on each individual account in real-time. It may also be possible to establish individual spending limits and even to turn access to the account on and off as desired. These are powerful and convenient functions that many business owners who will have authorized users on the account may prefer to have.

Access to Better Sign-Up Bonuses

Many credit cards for both business and consumer use have a sign-up bonus. For example, it is common to see a sign-up bonus for a consumer credit card that offers free balances transfers or a low introductory rate on new purchases for a period of time. The sign-up bonuses for a business card may be more lucrative in many cases, and they may also be more advantageous from a business standpoint. For example, some business card accounts will give new account holders tens of thousands of rewards points that can be redeemed immediately. Others offer special perks or incentives for a period of time, such as complimentary access to a VIP lounge in different airports around the world or discounts on air travel and rental cars. These can save businesses a small fortune, and they generally may be far more advantageous for a small business owner to use rather than the moderate perks and bonuses associated with a consumer card.

Each business owner many have unique needs and goals when opening a credit card account for the business. While applying for a personal credit card that is used solely for business expenses is one option, it is generally not the best option for most small business owners. Each of these benefits can be truly advantageous to a small business owner in different ways. With this in mind, many small business owners who are shopping for a credit card today may consider comparing the different types of business cards available.

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One of the most important elements of keeping up with your finances is self-awareness. The ability to evaluate your progress and make money adjustments if necessary is crucial if you want to keep yourself on track and stable. There’s a lot of ways for you to adjust your plans after you make them, so you have to get into the mindset of thinking of your financial planning as a constant activity, not a one-off planning session you do once a year. In this post, we will list some of our favorite tips for making changes to your financial plans after you make them in ways that will benefit you or let you adapt to circumstances in a more flexible way.

Re-Evaluate Your Budget Every Month

If you did your planning at the beginning of the year, then you are doing everything correctly- it’s a great idea to set goals in advance for the medium term, and the beginning of the year is a good time to do that. However, it’s also important to make sure that you go back and revisit your plans frequently. Each month, don’t just do your monthly budget- check on how you are doing for your yearly goals each month as well. That lets you see if you need to make an adjustment to, for example, how much money you save per month or what you can expect to spend on Christmas gifts. Don’t get sucked into the trap of only thinking a month ahead- stay on top of the longer-term considerations as well.

Check Your Expense Categories Often

Being on top of your finances is more than just making note of how close you are to your goals. You should also carefully track your expenses and see where your money goes. It’s highly valuable for you to understand which expense categories cost you the most money. Conduct a little audit to see how you spend your money on, say, a monthly basis. If the results surprise you, that could indicate you are prone to impulse buys in a certain category like meals out or clothing, or that you need to rethink the number of movie rentals you make. Then, armed with that information, you can try to reduce your spending on your biggest expense categories and free up more money for saving.

Buy Gifts Months In Advance

One of the biggest predictable expenses for most people is Christmas presents. Big sale days like Black Friday and Cyber Monday encourage you to delay thinking about buying presents until late November, but it is actually a good idea to start early in the year. If you put the time in to build a list of presents early on, then you can enjoy summer sales and early fall sales, which are often just as big, if not bigger than the traditional big sale days in late fall or early winter. Plus, depending on what presents you choose, the gifts might be on bigger discounts because they are out of season. Prices on winter gear are lower in the summer because few people think to buy winter items then, and you can take advantage of that. If you buy early, you can save a lot on presents and save that money, or put it towards holiday travel expenses.

Maintain An Emergency Fund

Your emergency fund is not just a static savings account that you fill up once and forget. First of all, keep in mind that your emergency fund should have enough money to cover six months of expenses. As your spending evolves, that amount will change as well- keep a running total of the past six months of expenses for you so you have an up-to-date figure for how much you need to have banked. Furthermore, keep in mind that your emergency fund is not for typical purchases. If you find yourself dipping into the fund frequently, then reevaluate how you spend money each month. It’s for emergencies only, so at the end of every month transfer money to make sure it is topped off and check the account activity to ensure that you did not spend it on anything that was not an emergency.

Check Your Credit Score

You are entitled to three free credit reports each year- one from Experian, one from TransUnion, and one from Equifax. There is an official US government website to let you access these reports. In addition, some credit cards include free credit score reports as a perk. You don’t need to use all of these sources at once, but you should have a good idea of the condition of your credit at all times. It’s up to you to decide if you need an update. If you haven’t missed any payments, paid off a big debt, or applied for a new card or loan in the past few months, then your score should not have changed much. On the other hand, if you have done any of those things or you haven’t seen a credit report in a year, then you should probably get one. It will tell you your credit score and whether you have any important problems with your credit like delinquent accounts. This is also a good way to check for identity theft- if you see credit cards or loans on your report that you don’t remember taking out, you might be the victim of fraud or identity theft.

Do A Progress Check

Finally, once you set out your annual goals, take an hour or so every quarter to see how you are doing. Check to see if you are on pace to save the amount you anticipated, whether that be for retirement, a down payment, a vacation, or anything else. Evaluate the obstacles to your goals. If they are one-off expenses or emergencies, then you might just have had some bad luck. On the other hand, if you have systematically failed to meet your benchmarks simply by spending too much, then you have a problem that you can address. Sit down and think about ways to trim spending so that you can reach your financial goals.

If you follow these tips, you will be able to step back and evaluate your goals in the short, medium, and long term and know how to adjust your spending and saving to meet them. This is a valuable skill that gives you the flexibility to change your habits for your financial well being.

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Most people know that they should have an emergency fund stored away in case of financial problems. Although there is some disagreement about how large this fund should be, many say that it should be enough to cover at least three to six months of living expenses. The truth is that the right amount can vary with the individual. While too much savings is certainly preferable to too little, an overly large emergency fund can actually cause some problems.

Planning for an Emergency

Emergency funds are generally created as safeguards against unemployment, which has been shown to last an average of eight months. Otherwise minor expenses, such as auto repairs or dental procedures, could be devastating without either an ongoing supply of income or enough savings in place. At the same time, long-term absence of income can be managed more effectively by developing a budget for such a situation.

To create an emergency budget, one should list out all routine expenses and decide which can be eliminated to save money when necessary. This can extend the useful life of an emergency fund until income returns to normal levels. Other strategies that can minimize savings expenditures include freelancing and taking temporary jobs.

Accounting for Surprise Expenses

Job loss is far from the only reason for having to dip into emergency funds. Costly medical care or critical repairs may arise, exceeding what your income covers. Having enough savings can prevent financial destitution or hardship in these cases. Unfortunately, fully accounting for possible emergencies borders on impossible.

Besides costs associated with medical care and vehicles, many people face emergency expenses involving their housing, children and other events. Some financial burdens, such as births and deaths, are inevitable but not always easy to plan for before they arrive. One way of addressing these events is to budget individually for them. For example, one can create budget categories for vehicles, home expenses and medical care and set money aside with each paycheck. This will greatly reduce the impact that unexpected costs can have on savings.

Problems Caused by a Too-Large Emergency Fund

Considering that an emergency fund can last significantly longer than expected if certain measures are taken, what problems might an overly large emergency fund cause? After all, nobody can deny the feeling of financial security that such savings can give. Problematic aspects of huge emergency funds basically boil down to issues of inflation and opportunity cost.

In the average year, inflation rises about 3 percent. This may not seem excessive at first glance, but it can have major effects as savings accounts grow larger. First, it is important to note that 3 percent inflation dwarfs the 1 percent rate of interest that even the top savings accounts offer. Each year such a savings account is maintained, about 2 percent of it is essentially being depleted by inflation. Of course, inflation also compounds, which means that a $15,000 savings account with the listed rates of inflation and interest would be reduced by one-third over 20 years.

While the potential for financial emergency demands preparation, one must also consider that many people will not be forced to use their savings in a normal 20-year period. Such a scenario would mean that significant money has been lost to inflation, highlighting a major loss of opportunity in that period. How might those savings have been better spent? One should recognize that investing that extra money would have been the better option in the long term.

Smart Moves for Emergency Fund Maintenance

Even with limitations related to long-term savings in the face of interest, a savings account is a crucial part of smart personal finance. Still, one must remain aware of the problems that can accompany an emergency fund once it grows too large and lasts too long. Prudent use of mutual funds is a great way of addressing this issue. So, how can one determine the point at which funds should be diverted to mutual funds?

This is a personal decision that individuals must make based on their comfort levels. For those who feel most secure with plenty of savings stashed away, an emergency fund on the larger side may be ideal. This is particularly true when funds have already been set up for retirement and other long-term investments. For those whose retirement accounts are currently lacking size, more diversion of emergency funds to long-term investments is probably preferable.

No matter which route is taken with an emergency fund, regular payments to savings are essential. Continual contributions to savings will pay off eventually whether or not an emergency occurs. By paying attention to the size of this account and making adjustments with regard to other investments when necessary, one will achieve the highest levels of financial security.

The potential downsides of excessive savings accounts are rarely mentioned. However, a majority of workers fail to maintain even the minimum levels of emergency funds and should work on developing a basic security net before starting to limit it. Once this fund is created, one can taken several steps to stay financially safe, including making emergency budgets and setting savings limits at which other investments should be sought. In the long term, these savings offer rewards not only in financial stability but also in peace of mind.

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There are certainly risks involved when traveling abroad, but the chance to collect new priceless experiences makes it all worth it. Nonetheless, you need to take extra caution to protect your money, especially when traveling overseas.

Nothing would ruin an otherwise well-planned vacation like suddenly losing access to money. Between the bank believing authorized purchases are by fraudulent thieves or otherwise charging hefty fees, as well as the chance that the exchange rate doesn’t work in one’s favor, it can be risky to travel without a monetary plan.

It’s always a priority to protect your money, but it’s even more important in this scenario. By taking a few precautions before embarking on your trip, anyone can ensure that a trip is smooth sailing all the way through. Here are some tips on keeping money safe while traveling:

Prior to the Trip

First and foremost, be smart when packing; keep the flashy valuables at home. The United States Department of State recommends avoiding showing off any affluence since it may make one a target for tourist scams.

Make sure to do some research on a travel destination to find out which parts may have more theft crimes. Avoid any parts that have high rates of crime or are known to have tourist scams. There are a few different ways to find out these areas:

  • The United States Department of State provides crime data for different countries. This section provides information on safety threats and details common crimes.
  • Check the newspapers of the destination. Look for news on Twitter or other sorts of updates from the area to get an idea of the situation there.
  • Seek reviews for the destination. There are several websites where one may check the opinions of past travelers — who better to explain a destination than a former visitor?

In the same vein, it’s worth asking friends and family if they’re familiar with anyone who has traveled to this destination. Lastly, one may try contacting travel bloggers who have previously written about the country; they may be more than willing to answer personal questions.

Protecting Money During Travel

Once on the road, take additional precautions.

1. Talk with the credit card company.

Before getting on the plane out, make sure to acquire the bank’s international contact number. The typical 1-800 number that is normally used may not work while abroad. That said, be sure to use a credit card for any major purchase. In most cases, a credit card will have a zero-liability policy, meaning it is not the cardholder’s responsibility if charges occur on a stolen credit card.

Under the Fair Credit Billing Act, the maximum liability a cardholder may have for an unauthorized credit card charge is just $50. In other words, that’s all that one will need to pay should a thief steal one’s credit card. Either way, the sooner the credit card company is informed of the theft, the better.

A backup credit card is also worth considering — perhaps even two. In this case, there is another means of purchases if the primary card gets stolen, and the vacation won’t be ruined. Unlike the primary card, backup cards should be left securely in the hotel.

2. Divide the money.

If only going to follow a single rule when it comes to protecting money, make it this one: Whenever humanly possible, divide traveling money and credit cards into more than one safe places. If everything is in one place, then a thief only needs to find one place to make life very bad.

This idea also works while carrying on one’s person. For instance, keeping some money on one’s person and some in a carried bag. If the bag is stolen, there should still be enough money to at least return to the hotel or access a nearby police station.

3. Use a travel wallet.

A dummy wallet can be a good way to trick an inevitable thief, but it’s also worth looking for a wallet that is specially designed for travel use. After all, travelers who are used to using their wallet on a day to day basis, such as to use coffee gift cards, gym memberships, pocket change or loyalty member punch cards, it is easy to get stretched pockets.

With a travel-only wallet, credit cards won’t accidentally fall out of the pocket while fishing for something else in the pocket. Not only that, but it means you don’t need to repack the day to day wallet; just take whatever is needed on the road in the travel wallet.

4. Don’t use large amounts of cash.

Credit cards may not work for everything, and cash will sometimes be required, but it’s too risky to take large sums of it at once. Unlike credit cards, cash is gone forever once it’s stolen. Not only that, but using big bills to pay for something cheap just makes one a target for theft. Instead, keep the big cash on a debit card that can be withdrawn as needed, or keep it in a hotel safe or on a traveler’s check.

If it must be on your person, keep it tucked away in a pouch under your clothing while keeping the smaller bills handy to reach.

5. Monitor the debit card.

Always keep an eye on the debit card. They’re useful tools for taking out cash for small purchases while abroad, but it has direct ties to the checking account. If it gets stolen, it doesn’t take long to empty the account.

The Electronic Fund Transfer Act protects these transactions, but the cardholder must act quickly in order to limit his or her liability for unauthorized charges.

Aside from that, some countries have fraudulent ATMs that take information when using a debit card. The thieves put the false machines in high traffic areas. While using a credit card is the best bet, if withdrawing money is necessary, stick with an ATM that is in the hotel, in the airport or by a known bank.

Conclusion

Above all, it’s important to keep yourself safe while keeping your money safe. The same precautions that tourists use to protect themselves can help keep their money protected as well. For example:

  • Keep aware of surroundings
  • Keep away from unsafe areas or known high-theft areas
  • Keep away from unknown shortcuts through dangerous places
  • Stick with a partner
  • Be extra careful while traveling at night

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One of the best ways to keep yourself on track financially is to have financial milestones that you would like to meet by a certain date. When you have goals to start you on the right financial path early on, that helps you build up good habits for the future. The earlier you start making good financial choices, the better you will be in the long run. In this post, we will explain seven of the most important milestones in your early adulthood into middle age, explain a good age range for hitting them, and talk about why they are important.

1. Become Free of Debt

Rising tuition and increasing costs of living mean that more and more people are starting out their careers with debt. Student debt, car loans, credit card debt, mortgages- these are all possibilities. One goal to hit as soon as possible is to pay off all of your debt. The longer you keep debt, the more interest you need to pay. Aim to have your debt paid off as soon as you can. It is difficult to specify a good timeline for becoming debt free because everyone’s debt load and income are different, but it should always be a priority.

2. Learn Your Credit Score

The federal government hosts a website where you can obtain a free credit report per year at www.annualcreditreport.com. That includes your credit score and other things you should know, like whether you have a delinquent account, or if there is an error in your report, or if your identity has been stolen and someone is making charges in your name. It is good to get into the habit of regularly checking your credit report. Some credit cards provide you with your credit score for free, but for a full report you have to do it yourself. You can do this as soon as you start building credit history with a student loan, credit card, or similar financial instrument.

3. Build Your Emergency Fund

Emergency funds are important to have in case you suddenly need to spend money. There are many reasons this might occur- you might need to fly home, you might lose your job and need to live on savings, or you have an accident and need to pay medical costs. As soon as you get your first job, start setting aside money in an emergency fund. A good rule of thumb is to have a few months’ worth of pay sacked away. That obviously takes time to build up. You don’t need to starve yourself to get it done, but within a year or so of getting a job, aim to have a few thousand put away.

4. Save for Retirement

This one is critical. You need to begin putting money away for retirement as soon as you get your very first paycheck. Starting early makes an enormous difference, because you will be investing money for decades, and the earlier you get started, the more years of compound interest you get. If your employer offers any kind of matching for contributions to a 401(k) or IRA, take full advantage. Talk to a financial professional for specific advice if you need it, but the bottom line is that you need to start saving for retirement as soon as you get the opportunity.

5. Make a Budget

You can start making a budget as soon as you have income, even if it’s a work-study job at college or a part-time first job. It’s good to get in the habit of setting a budget every month so you understand where your money comes from and where it goes. That way, if you need to cut back, you know where you can afford to reduce your spending. The more you practice with it, the less time it will take. A basic budget can scale up so that the same techniques you use to categorize your spending and income can keep working for you for your whole life. Having some experience with this early on will put you a step ahead of everyone else.

6. Think About a Side Gig

There are many ways to scratch out a second source of income, and depending on your job and hours, it might not be a bad idea to spend some time on that. This isn’t a traditional second job. A side job is smaller than a full job, and should be flexible to fit your schedule. There are many ways to do this. Freelancing is popular, as is transcription work, ad rating, and Mechanical Turk. If you think creatively and look around for advice online, you will quickly see there are many sources of income that consist of small tasks you can do from home and on your own time.

7. Figure Our Your Net Worth

Your net worth is a good measure of the overall state of your finances. To obtain it, add up the value of any assets you own, like a car, house, bank accounts, and your personal possessions, and then subtract your total debt. Include all kinds of debt- credit cards, student loans, car loans, mortgages, and anything else you might have. The result is your net worth. If you thought that you were in good financial shape, but your net worth is actually negative, then that should be a wakeup call for you. It is a good idea to check on your net worth every now and then. If you want to learn more about the debt, try making a graph where you divide your total debt into the different sources of debt you have.

Financial literacy and stability is much easier to achieve with a good foundation of healthy habits. That comes from starting early. These milestones are within the grasp of just about anyone with a job, and starting out with them early on means that you will maintain these habits later in life. The key to financial success is discipline, and these habits build the right kind of discipline.

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Traveling to foreign countries requires cash when you are on the ground. You bring along money that will help you have fun on your trip, but you cannot take cash indiscriminately. Search for the best exchange rate you can find for your cash, and ensure you are using the steps listed in this article. Each step explains how you can use cash in a foreign country without losing money when you exchange from country to country.

#1: Use Your Bank

Your personal bank is the best place to get good exchange rates when you are traveling abroad. There is no guarantee that your bank will have branches in the countries you visit, but you may ask your bank for assistance finding better exchange rates. Partnering banks will help you get better exchange rates, and your account status will help you receive the rates you require.

Your bank will take note of your trip when you go abroad, and the bank will convert your money at the best exchange rate available. You may shop with your credit or debit card when you are abroad, and the bank will give you favorable rates that allow you to save money while shopping.

#2: Use Local Visitor’s Centers

The tourism and visitor’s centers you visit have exchange rate information and cash to trade. You will get the exchange rate listed on the window when you enter the facility, and you may exchange cash at any time when visiting the center. Every large city around the world has these visitor’s centers, and you may exchange currency in every location you visit. Going to the visitor’s center is the fastest way to exchange cash, and you can walk to many centers from train stations of airport in foreign cities.

#3: Use Traveler’s Checks

Traveler’s checks are still the best form of cash you can carry when you travel. The checks may be replaced at any time, and the checks can be used like cash in most locations. The bank you purchase your checks from will help with exchange rates, and you must learn the rates when you travel to new countries. The bank will send out more information on exchange rates when you travel to new countries, and you may exchange your money at the best possible times.

#4: Working With Local Vendors

The exchange rates in places around the world are not a concern to local vendors. Working with local vendors helps you save money because prices are fluid. You may barter and trade with local vendors around the world who are not concerned with the exchange rates you get for your cash. The American dollar is so valuable in many countries around the world that a few dollars will buy many things. Do not attempt to overanalyze how much money something costs in a foreign country when you can part with a few dollars easily.

#5: Exchange Cash Before You Leave

You may take out cash from your account before you leave for your trip. Budgeting for your trip is simple, and you can exchange for foreign currency at the bank branch before you leave. File all your cash in envelopes that you will use in each location, and ensure that you have enough money for each stop on your trip. You will receive excellent exchange rates at your local bank, and you need not make extra trips for cash when you visit foreign destinations.

#6: Exchange In Large Cities

The largest cities in the world have banks that can handle your currency exchanges. You may find a branch of your bank in a large city, and you may complete the transactions in each major city before you move on to new places on your journey. The largest banks in the biggest cities are going to help you find new cash that you need for the trip.

#7: Exchange Foreign Currency

Exchange your foreign currency when you come to a new country in a local bank. You may receive better exchange rates when you come to a bank in a new country, and you should not use American dollars in certain countries. You can call your bank for help with the exchange rates on certain currencies, and the bank will be prepared to offer you good rates when you visit certain locations.

#8: Visit Foreign Powers

You may visit foreign powers that have the strongest currencies, and the exchange rates will be much more favorable than what you would receive in your local bank. Do some research on the exchange rates in foreign countries before you leave for your trip. You may make a profit on some of the exchanges you make, and it is possible that your trip will pay for itself in certain locations. Do not take the first exchange rate you see unless you have done some research on the places you will visit.

#9: Use Credit Cards

Credit cards in foreign countries will give you good exchange rates that were derived for your account. Credit card providers will help you get better exchange rates on your purchases, and you need not use the credit cards at specific times or on specific days. Your trips will be much more exciting if you are not concerned with the exchange rates you are getting in each new location. Your vacations and business trips become cheaper when the credit card company offers you better exchange rates.

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A person’s credit score is a bit of a snapshot of their financial history. With a multitude of factors influencing the overall rating, called a FICO score, credit reports can be a bit of a mystery as to how they are calculated. The general premise is simple, however, and should be well known for the fiscally conscious. To know the ins and outs of keeping a healthy credit score is the key to receiving access to better interest rates and more credit availability.

What is a Credit Score?

In a nutshell, a credit score is a numerical rating as to how trustworthy the score holder is in terms of lending. A higher rating will show that the score holder is a person with a strong background of borrowing and repaying, and in general knows how to deal with loans. Conversely, a lower credit score shows that the individual either does not have much experience with lending and repayment practices, or has proven to not be capable of repayment in the past. Having a lower score will block individuals from acquiring loans with lower interests rates and of larger amounts. This can affect purchasing a home, a car, a general purpose loan, or any other countless financial activities.

What Affects a Credit Score?

There are only a few major factors that are taken into account when a FICO score is generated. These different statistics give an accurate snapshot of how willing a borrower is to repay loans responsibly and effectively. The biggest factors are:

-Payment History

Responsible for roughly 1/3 of a person’s FICO rating is payment history. This mainly involves paying borrowed money back on time and in sufficient amount. Borrowed money can include credit cards, home loans, and vehicle loans to name but a few. For a borrower, showing lenders that they are going to receive the previously specified payments in a timely manner will have an enormous impact on credit ratings.

Negatively impacting factors in terms of payment history include bankruptcy, foreclosures, and liens on a borrower’s property. All of these show that the borrower was not willing or able to repay previous debts and had to be forced to comply with the loan agreements. For financial institutions looking to lend money to a person who has declared bankruptcy in the past, the institutions will be significantly less confident that they will receive their money back in a reliable manner.

-Total Debt

Accounting for approximately 30% of a credit score is the amount of total debt owed. The amount a person owes to lenders of all types versus how much credit they have access to can be a major implication of whether or not a person can manage their debt effectively. For example, if a borrower has a credit limit of $5,000 on a card but only $500 in debt, they will show that they are able to responsibly use their card. If that same person decides to pay all of their bills and maxes out their credit card, however, it has a good chance of lowering their FICO score. This all has to do with how a lender can perceive the responsibility of a borrower.

-Length of Credit History

Younger generations will typically have more difficulty securing loans, but not because of their age directly. As previously mentioned, a FICO score is essentially a trust assessment, and young persons who have no history of paying debt will not have an accurate indicator as to whether or not they will follow through with loan agreements. Length of credit history is not as major as the previously mentioned factors, as it only accounts for roughly 15% of a FICO score. While 15% is not an insignificant amount, length of credit history is something that can only be increased slowly over time by responsibly borrowing and paying off debt.

-New Lines of Credit

A very common variable in terms of credit scoring is new credit. When calculating a FICO score, credit institutions typically view borrowers who rapidly open multiple lines of credit as people who are either struggling financially or are expecting to take on a large amount of debt. This can range from either applying for multiple credit cards within a short time period or having credit checks performed while applying for mortgage or vehicular loans. When a mortgage lender is looking at a potential borrower to determine their viability in terms of interest rates and loan amounts, they will be more wary if multiple recent credit lines have been established.

-Multiple Lines of Credit

When a FICO score is being generated, only about 10% of the overall score is affected by having credit from multiple sources. When comparing a borrower who has one source of credit to a borrower who has multiple sources from different institutions, the latter will be considered more trustworthy. A person who manages to pay off a home loan and multiple auto loans will obviously be more well versed in lending practices than a person who has one unused credit card. Multiple lines of credit is not one of the factors that has the most impact, but is still something to consider for those looking to expand their credit report while thinking of future investments.

What Does Not Affect a Credit Score?

There are several factors that have nothing to do with a FICO rating that may not be obvious. A few of these factors include:

  • Monthly income – while lenders do look at monthly eligibility for payments, they are more focused on willingness to pay loans back rather than capacity.
  • Age – credit age is a factor, but a debtor’s age is not. This leaves young people at a natural disadvantage, but only a minor one.
  • Gender – the gender of a debtor is not able to be reliably determined by credit reports, and is not a factor.

Knowing how to manage a credit score is an enormous leg up for would be homeowners, car owners, and anybody seeking to afford major items without having to pay cash up front. To know how a FICO score is determined is to know how to better take advantage of it, which means better interest rates and lower monthly payments. Taking into account the major factors listed above and applying them on a month to month basis is a sure fire way for a borrower to live within their means while consistently increasing their credit rating.

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Living in an expensive city can help residents lead happier lives, but lives are not made purely from expenses. Residents must understand what an expensive city does for them when they live in the heart of it all. Anyone considering a move to a large city with a high cost of living must read further to learn what an expensive city offers. These cities may require more money to live a comfortable lifestyle, but these cities offer things smaller towns cannot.

#1: Connections

A large and expensive city always has people who share interests with other residents. Any resident with any hobby may find people with similar interests living in town, and there are likely groups meeting in the city over these interests.

Connections in the business world are more likely to happen in a large or expensive city. Employees who live in the heart of a large city will meet people in the same field every day. These meetings happen by chance, and connections are made that can last a lifetime. The luckiest of residents may find new jobs through these connections, and a network of friends will grow in a new city.

#2: Space

A large and expensive city has more space for everything. Residents have their choice of several different places to live, companies may move their offices to prime locations and there is commerce on every street corner. New residents in town may be overwhelmed by the choices they have, but these choices make the city a more fun place to live.

Residents may move to any part of the city they choose, and residents may shop in any part of the city they choose. The commerce on every street corner prevents residents from traveling too far from home to shop, and each community has an insular group of people that make their part of town interesting to live in.

The largest and most expensive cities to live in also make space for parks within their borders. A quaint park just around the block from the apartment gives residents a place to relax or get some fresh air. The parks are wonderful places to take children, hold meetings, or go on a date. The parks bring color to the city that is not provided by the buildings, and the local fauna will congregate in the city parks.

#3: Music

Large cities have a host of arts events going on every week. There may be a full-time symphony orchestra in town, and it is possible that orchestra supports an opera house. Large cities have museums that help to enrich the mind, and there are bars or clubs where bands play every night of the week.

Someone who loves the arts can find something to do in the city, and a large city provides opportunities for musicians to work. A musician who prefers to take gigs with local groups can find jobs within a few days of arriving in town. The arts community trickles down to theater and art performance groups that make the city interesting every day. There will always be an event in a large city that has the resources to host such events.

#4: Sporting Events

The most expensive cities in the world play host to national and international sporting events all the time. The greatest cities in the world have hosted the Olympics. There are cases in which a city has hosted the Olympics more than once, and major sporting events follow the Olympics to town. Any city could host the Super Bowl, Final Four, World Series, World Cup soccer games, international soccer friendlies or major golf tournaments.

The local sports teams in a large city have financial backing that makes their games good fun for the family, and local sports teams that play well have a following in the city residents can get behind. Someone who is passionate about sports will never run out of sporting events to see.

#5: International Events

Residents in large cities can make connections easily, and large cities attract international conferences. People from all over the world will flock to the local convention center for a conference that is of interest to many residents. Residents may take a half day off work to go to the conference, and these conferences may be fit for the whole family to attend.

#6: Media Consumption

A large city that is expensive to live in brings about more media attention than a smaller city. Movies are filmed in nice cities, and TV shows call nice cities home. Residents may see famous movie stars working on the set, or a television show could be based in the city. Residents get the magical experience of feeling like they are part of the entertainment they see, and the movies reflect the city back to its residents.

#7: Will You Be Happier?

No one is guaranteed to live a happier life by living in an expensive city, but an expensive city offers all the necessary tools for a happy life. Arts, culture, commerce, business and leisure come to large cities every year. Residents get to partake in the culture of a city that feeds off its own size to create more opportunities for its residents. There is something to do nearly every night of the week, and there is the prospect of even greater things happening in the future. The expensive city is a breeding ground for a fulfilling life.

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Money is a necessary tool for living in today’s society. However, all too often we let the tool control us. If we forget that money is a tool and think only about its necessity, money quickly takes control of our lives.

How do you know if you are a slave to money? The answer has nothing to do with wealth or class. The poor, middle class, and rich of all professions can be trapped by money. It has nothing to do with personality. People can be kind, cold, or sweet, but have financial problems. It doesn’t even have anything to do with their outward management of money. Spendthrifts and coupon-clippers may both be slaves to their paychecks. The only gauge is your direct relationship with your money.

Do you work for money or does it work for you?

Money has energy and force, which is why it can accomplish so much. You need to know if your money is using its energy to work for you? Is it helping you accomplish your goals? Is it creating more money? Or is it applying all of its pressure on you, making you work harder?

Are you stuck in the debt cycle?

The most obvious slaves are those trapped in the debt cycle. If you buy first and pay later you immediately become a slave. You must now earn money for your creditors instead of yourself. This creates large amounts of stress and you lose the freedom to dictate where your money goes. Before you even receive your paycheck, it is divided between government taxes, bills and creditors. Those who continue the debt cycle spend their entire lives making money for other people. However, debt is just one indication of slavery.

Where is your money directed?

Money can use its force to help you, if you give it direction. It can generate more assets and lessen liabilities. Money can work and generate assets through investing. It is smart to always have some amount kept safe, but the rest should be out working. This creates financial freedom.

Are your dreams controlled by the amount of money you earn?

Money is a necessary tool for most dreams and aspirations. It should not dictate whether the dream is possible. People who are a slave to money say things like, “I can’t afford to travel to Europe” or “It isn’t possible to start my own business in this market.” People who know that money is a tool say, “This is what I want to do. Now how do I use my money to accomplish it?” Since the first type of person is controlled by money, they rarely achieve any of their ambitions. The second type of person almost always succeeds because they see money as a problem to be fixed instead of as a locked cage.

Do you manage finances reactively or proactively?

We have looked at money’s side of the slave equation; now let’s look at your side. The path to slavery or freedom begins in the mind. It comes down to whether you manage your finances reactively or proactively. The reactive manager acts before thinking of the financial implications. He is then stuck working to make up for that action. The proactive manager is deliberate. She considers all of the implications, arranges her finances to help her and then acts. After the process is complete she is free to start something else. The reactive manager is never free because he impulsively begins another process before the first is complete.

Do you know what your money is doing at all times?

The free man knows at all times whether or not his money is working for him and how much it is earning. He knows exactly what he should and should not do with his money at the moment. The slave is impulsive. She usually doesn’t know where her finances stand. She fulfills a want then goes home to see what damage has been done. Each purchase becomes a slave driver and it loses its charm. This is why, for many people, money can never bring happiness. It instead brings slavery. If managed proactively, however, money can bring freedom, which certainly brings greater joy.

Do you pay yourself first?

Those who understand how to use money know the importance of paying themselves first. If money is a tool, then it is imperative to use it to progress. Money slaves pay everyone else first and rarely have anything left over. Paying yourself first means immediately putting some money into savings or investments. It does not mean splurging at the mall. That is just another way of paying others first.

Are you generous?

This final test may seem unusual, but it is just as important as the others. Those who fear generosity are slaves to their money, whether they have a lot of it or a little. For the slave, money is the illusion of freedom. They believe that if they start earning enough they will finally be financially free. They don’t realize it is their habits that keep them in bondage, not their money. They hold tight to the illusion. They say things such as, “I worked hard for this money and I need it” or “When I have more, then I will give.” Those who see money as a tool are much more willing to share. They recognize that the tool can always be used to create more money.

Most people in today’s society are slaves. Odds are, if you fit in perfectly with the crowd you are a slave. The first step to freedom is recognition. If you recognize the ways in which money is controlling your life, then you know what to change to finally make money work for you.

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If you cannot save money, it may actually be a personality trait that is causing you trouble. Although you cannot use this as an excuse, it is definitely good to identify problems like this so that they can be targeted and eliminated. Here are some of the reasons that your personality may make it harder to save.

Are you insecure?

Most of the first world lives in a consumer economy. Advertisers have all of the power, and they use it to make you believe that you do not have any balance in your own life. You are constantly barraged with messages of not being good enough, and the brands that you purchase do not only reflect the quality of service that you get, they reflect who you are.

Insecure people may have a much more difficult time separating the true performance of a product from the branding effort that is going on behind the scenes. In order to create a more balanced viewpoint and save more, it may be necessary to away from media as a whole.

You must learn not to let your ego make your purchases for you. Delve into the true nature of product quality, and you the biggest brands are not necessarily the best buys. You should also take a look at the financial life of secure and wealthy people. Many of them live a very understated lifestyle. However, the freedom that they have to do anything they want is more than a reward – it is a luxury.

Are you impulsive?

Just like advertisers have graphic designers to make their brands look incredibly good on television and on the Internet, they also have merchandisers negotiate placement deals with retail outlets. This is the reason that you have relatively cheap candy bars right by the cashier checkout desk in your grocery store. This is not the place to put a $10 health drink and no one would buy it there. Rest assured that you are being pulled in many directions on purpose by the professionals in the advertising industry.

One of the ways to get away from impulse buying is to have a schedule for yourself every time you go shopping. For instance, if you have a grocery list with just enough money to get the things on that list, you will be much less likely to make any impulse buys when you actually go to the grocery store.

You can also create a goal for yourself that will encourage you to save money. This goal should be out of reach of your current financial situation – you should have to actively change your spending habits in order to reach this goal. The goal should also be incredibly attractive to you. Perhaps it is a vacation that you have been looking to take for years. Maybe it is starting your own business or paying for a wedding. Maybe you are looking to have some assets to pass down to your children. Whatever the goal, be sure that it is high enough and attractive enough that you have to stretch in order to reach it. Only then will you be able to change your behavior and save over the long-term.

Are you impatient?

From games to vacations, advertisers have always been able to place a premium on being a first mover. If you make a pre-purchase before a product has actually hit retail or you are the first to try a new brand, you get some offer that is simply too good to be true. The companies that are behind these efforts understand that certain people have a need to be first. They simply want to show off for their friends, and they will do anything to be at the head of the line.

If you are trying to save money and still be on the cutting edge of your social circle, there are ways to do it without cutting your budget. You can become a focus group tester for corporations and receive free products that have not yet hit retail. This has the advantage of actually paying you to test products rather than you paying the company to do so. Many companies also have mail in coupons that they place in inconspicuous locations, knowing that no customer will actually take the time to use them. You need to use them.

Are you fearful?

It can be quite difficult to put off the pleasure of today for a promise of better living tomorrow. Advertisers definitely play off of this fear, uplifting the “you only live once” lifestyle even as every balanced financial advisor on the planet says to save more than you spend.

Some people are even afraid of money. This is a mindset that has come out of the cultures of many working-class and lower-class people. Many of them do not understand the notion of investing for the future. They may have never owned their own businesses, and they may have always relied on someone else to take all of the risk in return for a so-called secure paycheck. When these people get money, they actually want to spend it as fast as possible. They have never had it before, and they do not know what to do with it when they get it.

Learning about money is best way to get over the fear of money. There are more resources than ever for learning about money. If you do not have any ideas about what to do with your expendable income the next time you get some, a class about finances would solve both of your problems at the same time. You would then see how the opportunities for people with just a little bit of money can free you from a lifestyle of thinking in a fearful way.

If you have any of the personality traits above, you should definitely look into a master class about finances. Learning just how truly difficult it is to hold on to money may change your perspective on the way that you use in your daily life. Make sure that you do not do things with money just because your neighbor is doing them – he or she may not understand anything more than you do. Education is the key; positive changes in behavior are usually the result. Take the chance to free yourself financially, and the self-imposed limits on your life will soon disappear.

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