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How This Former Landscaper Raised His Low Credit Score From 550 To 800

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Sam Price, now 44, can trace his credit problems back to college.

On one hand, he said, he lacked basic personal finance knowledge. “I didn’t know how to balance a checkbook. I didn’t know the proper use of credit,” Price said. On the other hand, he didn’t want to confront his money management issues. “I was very careless with my money.”

Price said that when he got his hands on his first credit card, the limit was only about $500 ― hardly enough to get in any real trouble. But once he established good credit with that card, the offers started rolling in. “That really started the problem for me. I began to juggle credit … there was something that I’d want and I’d go ahead and buy it and worry about it later.”

Stuck In A Cycle Of Debt

A few years after college, Price dug himself into about $15,000 in credit card debt. “Back in those days, there were always new offers in the mail where you could just roll over debt for an introductory 0 percent APR. I just played the game for so long and rolled debt over,” he said.

But then Price lost his job and was unemployed for several months. With no emergency fund in the bank, he began losing at that game. “I didn’t have any savings to fall back on, so I started spending more just to live,” Price said. It got to the point where he couldn’t afford to make his monthly minimum payments.

“When I could no longer apply for new credit, I missed the first month,” Price said. Soon after, he missed the second. And then the third.

“The right thing to have done would have been to call the credit card companies and try to work out some kind of deal,” he said. But unfortunately he took the opposite approach. “I ran from the problem. When the credit card companies would call, I just wouldn’t pick up and let it go to voicemail. I would never call them back.”

Eventually, those credit card bills became charge-offs, and soon it was debt collectors calling instead. But if you had asked him at the time, Price would have told you he had it under control. “There was not a point early on when I just faced up and dealt with my problems. That would take me looking in the mirror and saying, ‘Look, you’re messing up,’ so I just kept avoiding the problem.”

The Turning Point

Eventually, Price decided he had to turn things around. Why? Like many great stories, Price said, there was a girl.

“I had no business dating her because I didn’t have any money,” he said of his now-wife. “My credit at that point was destroyed, I was $15,000 in debt.”

But despite his financial troubles, things got serious. Soon Price knew he would propose ― except there was one problem. “It was a realization that I’ve met the person that I’d like to spend my life with, and I can’t do it because I’ve destroyed my finances.”

His future wife had no idea about the financial situation he was in.

“It’s a joke now,” he explained, “but I didn’t let her know the depths of my problem. She just thought I paid cash for everything.” The reality was that Price always paid in cash because if he put money in a bank, creditors would levy his account. At his lowest point, Price’s credit score fell to 550.

Price knew that if he wanted to have a wedding and start a life with the woman he loved, he needed to get his finances under control.

His first move: As soon as his lease was up, Price, at 28, moved back in with his parents. “Back then, that wasn’t something that was commonly done.” But since he was going to school and only had part-time work in landscaping to rely on, there wasn’t really any other option.

To increase his income, Price began taking online courses that would help him gain full-time work with overtime. “I started working as much as I could possibly work,” he said.

Finally, Price followed the debt snowball method of paying off debt, a strategy popularized by personal finance guru Dave Ramsey. “Over the course of one year, I didn’t spend anything,” Price said. “I was eating pork and beans for a year. And every nickel that I got, I put towards my debt.”

One year later, not only was the debt was gone, but Price had also saved enough for a ring and the honeymoon.

“It Was Transformational For Me”

In addition to aggressively paying off his credit card debt, Price started making more informed decisions when it came to spending.

“I started shopping for better auto insurance. I started cutting coupons. You realize there are a lot of ways you can save money if you’re just willing to take a little bit of time.”

Price also had the good sense to come clean with his fiancée about how bad his credit was during premarital counseling. Fortunately, “she was gracious enough to love me with my bad credit.”

In fact, according to Price, marrying his wife was one of the best financial decisions he’s ever made. “I went into the marriage penniless. She already had her IRA started, had a savings account. She actually brought in money to the marriage, but she also brought a good head for managing money.”

Once Price was able to build up savings, begin investing and watch his money grow in the market, “it was transformational for me,” he said. “For so many years, I saw how compounding interest led me to a very bad place. When I started seeing my money actually grow, it was just the opposite.”

And after several years of diligently paying his bills on time, his credit score finally hit 800.

In fact, Price was so inspired by his newfound financial success that when he was ready to make a career change in the pursuit of higher income, he decided to enter a field where he could use everything he learned to help others: financial planning.

The Secrets To Success

Now, as a registered investment adviser, independent insurance broker and founder of Assurance Financial Solutions, Price shares a few tips with clients who are looking to work on their own credit and get in a better financial position.

1. Pay credit cards before the due date. Usually Price would make his payments the day before the due date. But one strategy for increasing his credit score that he learned from his wife was to pay the bills as they came in. “That’s when my credit score really started to improve.”

The reason? Creditors often report your balance to the credit bureaus on a different date than your payment due date. So if you run up a large balance during the billing cycle, your credit utilization ratio could be too high even if you pay down the balance to $0 on the due date. It’s best to keep your credit utilization under 30 percent to maintain a healthy credit score ― and one way to keep it as low as possible is by making payments throughout the billing cycle.

2. Make credit cards work for you. Even though Price had a rocky past with credit, he still uses credit cards to make purchases. But now he uses them as a tool rather than a crutch.

For example, Price and his wife opened a rewards credit card that offered a complimentary trip to Disney World if they spent $2,000 within the first four months. “We put a couple of mortgage payments on the credit card and then took the family of five down to Orlando for free,” he said. The key, of course, was charging only what they could afford to pay off right away.

3. Check your credit score regularly. “I’ve tracked my credit score every few months for the past several years now,” Price said. Not only does he check his score to measure his progress, but also to keep an eye out for fraud.

Price uses a free credit score service from WalletHub, which provides users their VantageScore from TransUnion. It’s a similar service to that offered by sites such as Credit Karma and Credit Sesame, which also offer free VantageScores. If you want to check your FICO score ― the most popular credit scoring model used by lenders ― check with your credit card company, as most major banks offer the option free to cardholders.

4. Stick to a budget. The term “budget” might sound restrictive or off-putting, but really, it’s simply about having a plan for your money. And devising and sticking to a budget is how Price and his family stay on track.

“Since we’ve been married, we’ve always lived off a budget. That doesn’t mean we’re rigid… but each month, we determine what we’re going to spend our money on.” This, Price said, allows them to save money, put more toward their retirement and generally be able to afford the things that are most important to their family.



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Like To Shop From Your Phone? These 5 Apps Will Help You Save Big.

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From cashback sites to coupon aggregators, there’s no shortage of money-saving opportunities for savvy shoppers. But while many of these apps are great for people who shop from their laptops or even venture into physical stores, few work as well when shopping directly from a phone.

Even so, there are a few apps that make earning deep discounts on purchases easy for mobile shoppers. And I should know ― I’ve used them all. Often, you can stack the discounts from a few of these apps on a single purchase to multiply the savings. And if you use a rewards credit card to make the purchase? Now you’re cooking with gas.

But first, a word of warning: These apps only save you money if you use them on purchases you were going to make anyway. If you get carried away chasing that rewards dragon, you’re not really saving any money.

With that said, here are five tried-and-true apps that help you save money when shopping on your phone.

1. Wikibuy

Available on: iPhone, Android

Wikibuy is my favorite shopping tool thanks to several money-saving features. I started using the Wikibuy Chrome extension a few months ago to quickly see if any item I was considering purchasing could be found elsewhere for less. I use it alongside the Honey extension to run coupon codes before finalizing a purchase.

In addition to scouring the web for the best deals, Wikibuy also offers cash back on qualifying purchases and adds products I’ve viewed online to a “watchlist” that tracks price drops. It’s basically the Swiss army knife of shopping tools ― one that’s earned me an extra $8 and change on top of the savings I’ve scored so far.

Wikibuy

Activate discounts and cash back offers directly through the Wikibuy app.

Fortunately, many of these great features translate well to the mobile app. You can search for a particular item and see which retailer is offering the lowest price, or search by store to find out what sales and cash back offers currently exist. In the example above, I searched for Macy’s and found that Wikibuy was offering 6 percent cash back on purchases there at the moment. All I had to do was click “activate” to be taken directly to the Macy’s site with my cash back reward waiting to be automatically applied.

2. RetailMeNot

Available on: iPhone, Android

RetailMeNot has been around for a long time, and though there are many competitors out there, I still find their app to be one of the most mobile shopping-friendly.

RetailMeNot

Before going through with a mobile purchase, use the RetailMeNot app to check for coupon codes and deals available through that retailer. You can filter by in-store coupons, online codes and official store sales. The coupons are crowdsourced, so they won’t always work. However, the app will note whether codes have been verified by users and allows them to leave comments for others. Some purchases also qualify for cash back.

RetailMeNot’s coupon codes are an easy way to stack savings. For instance, you might use Wikibuy to find the best deal on a particular item and activate a cash back deal. Then before you check out, you can check RetailMeNot for coupon codes. Make the purchase on a rewards credit card to earn extra points, and after the transaction goes through, your Wikibuy account will also be credited.

3. Paribus

Available on: iPhone, desktop

To continue saving money after you’ve made a purchase, sign up for Paribus. The free tool tracks online purchases you’ve made by scanning your email for receipts and automatically submits claims for refunds when the price drops within the price protection window or is delivered late.

Paribus is a great tool because all the magic happens behind the scenes. I actually forgot I had signed up for it until I began receiving emails notifying me of claims Paribus had submitted. At first, I was a little freaked out that some app was contacting companies on my behalf and demanding money. But then I started receiving that money.

Paribus

Email from Paribus notifying me of a price drop.

For example, I received an email from Paribus regarding an entertainment center I recently purchased from Walmart online (side note: don’t ever buy an entertainment center online). The price had dropped within Walmart’s price protection period, so Paribus automatically contacted the retailer to request a refund for the difference. Even though I ended up returning that piece of junk item, it was nice to know Paribus had my back. I’ve also received small refunds when Amazon Prime purchases arrived past the guaranteed two-day delivery window.

4. Dosh

Available on: iPhone, Android

Dosh (which is U.K. slang for “money”) is a fairly new cash back app that’s set itself apart from the competition. Rather than researching offers ahead of time and dealing with coupons or codes, Dosh’s cash back system is more set-it-and-forget-it.

Simply link one or more credit cards to the app; when you make a qualifying purchase with that card, Dosh automatically applies your earnings ― up to 10 percent of the purchase price ― to your Dosh wallet. You can also browse the app for deals and click through to activate cash back.

Dosh

The Dosh app awards cash back for purchases at thousands of retailers, restaurants, hotels and more.

I recently signed up for Dosh and connected my rewards credit card to double up on earnings. I have yet to make a purchase, but I already earned a $5 bonus for linking my first card. Once I rack up at least $25, I can cash out via PayPal or direct deposit.

5. Drop

Available on: iPhone, Android

Drop is another fairly new cash back app that works similarly to Dosh, though it has a few limitations.

By linking your debit or credit card to your Drop account, you automatically earn points on qualifying purchases. Those points can then be redeemed for cash back in the form of gift cards to major retailers such as Amazon and Whole Foods. The downside is that you’re forced to choose only five merchants from Drop’s list that will qualify for points. Choose carefully, because you won’t be able to change your selections. However, Drop also recommends one-time offers from other retailers that you can take advantage of.

Drop

Dosh lets you earn points on one-time offers as well as from your chosen retailers.

Cash is earned at a rate of $0.001 per Drop point (1,000 Drop points = $1). Dosh also recently implemented an earning cap of 5,000 Drop points per week ($5). Clearly, this is no get-rich-quick scheme. But considering you don’t actually have to do anything to earn the points once your account is set up, you might as well add this app to your mobile shopping arsenal.

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4 Signs Another Recession Is Coming ― And What It Means For You

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What a wild ride the last couple of months have been.

On Dec. 4 the Dow Jones Industrial Average tumbled by almost 800 points, only to rally nearly 800 points three days later. That following Monday, it fell again by close to 500 points, but then recovered to end positively for the day.

A few weeks later, we entered into what is now the longest-running government shutdown in history, with no end in sight.

These events and others have many people wondering if the next recession is looming. The short answer: maybe. Here’s what you need to know about a possible recession and how to prepare for one.

Are We Headed For A Recession Soon?

Here’s the thing: There’s essentially always a recession on the horizon. That’s because recessions, which are often defined as periods of significant economic decline that last at least two consecutive quarters, are a natural part of the economic cycle, according to Zhi Li, owner and financial planner at Twelve Two Capital. “It is reasonable to anticipate that a recession will happen sometime in the future and reasonable to think one might happen soon given the long expansionary period that we are in,” he said.

But as far as predicting when, exactly, a recession will happen, you might as well consult your magic eight ball. Although there are a few data points we can look to when predicting an approaching recession, nailing down a specific time frame isn’t possible. Even so, plenty try.

According to Li, most economists don’t predict a recession will happen this year, but they do think one is likely to happen within the next two. Here’s why.

Signs A Recession Is Coming

Whether or not a recession will occur soon depends on who you ask.

Take the Conference Board’s Leading Economic Index, for instance. It examines 10 leading economic indicators to arrive at a growth or decline rate for the economy, and it helps predict recessions in the months leading up to the downturn. In November, the LEI grew by 0.2, which signals that our economy is still humming along though growth has slowed a bit.

Advisor Perspectives / dshort.com

“The LEI has historically dropped below its six-month moving average anywhere between 2 to 15 months before a recession,” according to Advisor Perspectives.

Then again, other common economic measures say otherwise. Here are a few reasons why we might actually experience a recession soon.

Stock market performance is often considered a strong indicator of overall economic health. And historically, stock market peaks have preceded economic downturns by an average of seven to eight months (the actual range is a lot wider). On Oct. 3, the Dow Jones hit its highest closing record for the 15th time in 2018 at 26,828.39, following the record-setting day prior.

Less than three months later, the stock market experienced the worst December since the height of the Great Depression.

Even so, you should take these “signs” with a grain of salt. As the late Nobel Prize-winning economist Paul Samuelson joked decades ago, “the stock market has predicted nine of the last five recessions.” Certain stock market behavior can signify a recession is coming, but by no means heralds one.

A somewhat more reliable indicator is the yield curve on U.S. Treasury securities. “Historically, when the yield curve inverts ― the interest rate on shorter-term treasury bonds is higher than the interest rate on longer-term Treasury bonds ― a recession can sometimes follow,” said Rockie Zeigler III, a certified financial planner and owner of RP Zeigler Investment Services.

How closely are the two correlated? Let’s just say the curve was inverted prior to the past seven recessions. In early December, the front-end of the yield curve inverted for the first time in more than a decade, meaning the yield on 5-year Treasury notes dropped below the 2- and 3-year notes.

Another major number that could point to an imminent recession is unemployment. And counterintuitively, it’s a low rate of unemployment that often signals a slowdown.

Recently, unemployment dropped to 3.7 percent ― a nearly 50-year low. Wages are also growing at the fastest rate since 2009. According to Forbes, strong job market statistics like these indicate that we’re reaching the end of the latest economic cycle rather than the beginning. In fact, an unemployment rate below 4 percent ― which is quite rare ― has often immediately proceeded past recessions.

Finally, as mentioned above, recessions are a normal part of the economic cycle. “While it’s not a very technical indicator, a long run of economic expansion can tell us something, too,” Zeigler said. “We haven’t had a recession or bear market since 2008-2009. The economy has been expanding (albeit slowly) since then. So have the stock markets.”

For these reasons, Zeigler said, we might actually be overdue for slowing economic growth, if not a recession.

What Does This Mean For You?

Zeigler added recessions impact the average person in two major ways. The first is unemployment: “When a recession hits, generally it’s accompanied by rising unemployment,” he said.

The second is spending. “If a person is able to keep their job, they probably won’t be completely confident in spending their money on things like TVs, cars, homes and services because of all the negativity that accompanies a recession,” Zeigler said. “Our economy is very dependent on consumer consumption of goods and services and folks tend to ‘hunker down’ during recessions because they fear losing their job.”

That means regardless of when the next recession hits, it pays to be prepared.

Build up your emergency fund. According to Bradley Nelson, president of Lyon Park Advisors, your top concern during a recession should be staying on top of your bills and ensuring you have a reliable source of income.

“Everyone should have an emergency fund of three to nine months of mandatory expenses, depending upon their circumstances,” Nelson said. “A money market account is a good place to have this stashed.” He also suggested thinking about what skills and resources you have at your disposal in case that fund isn’t enough, including spouse employment, side hustles and part-time jobs.

Know your risk tolerance. Though it can be difficult to predict your own behavior during certain situations, you should ask yourself what you’d do if the market were to drop by 10, 20 or even 50 percent. “If the answer sounds like ‘I’d sell everything to preserve what’s left,’ alarm bells should go off,” Nelson said. “It’s a sign your portfolio doesn’t match [your] risk tolerance.”

If that’s the case, you should reexamine your asset allocation. “Better to come up with an allocation you can live with through thick and thin now, rather than wait for markets to drop and sell your assets at fire sale prices,” Nelson said.

Take advantage of rock-bottom prices. Even though continuing to invest during a major market downturn might feel like lighting money on fire, it’s actually the smart thing to do in most cases. “Investors should have a shopper’s mentality. This means… having a shopping list of quality products to buy at bargain prices,” Nelson said.

In other words, you should aim to sell high and buy low. And though it’s probably hard to think of a recession as an opportunity, for the savvy investor, that’s exactly what it is.

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Pay Off Your Student Loans Faster With These 7 Tips

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Student loans aren’t just a nuisance plaguing today’s young college grads. More than 44 million Americans collectively owe $1.5 trillion in student loan debt. There’s a good chance that includes you.

Wouldn’t it be nice to finally get rid of that debt and be able to spend money on things you actually care about? The good news: There are a few strategies you can use to pay down those loans faster. Here are seven you can try.

1. Turn windfalls into extra payments.

One of the best ways to pay down your student loan debt fast is by making more than the minimum payments. Of course, “just pay more” isn’t realistic advice for most people. But hear me out on this one: Even a few one-off extra payments can have a significant impact on your student loan balance.

For example, you could apply part of your yearly bonus from work or a tax refund to your debt, said Brian Walsh, a certified financial planner and financial planning manager at SoFi. Or you could participate in a challenge like dry January or a no-spend month to come up with the extra cash. It might feel painful to put something fun like a cash windfall toward your student loan debt, but the results can be dramatic.

Don’t believe it? Say you have a $20,000 loan at 6 percent interest and 10 years left to pay it off. If you made just one extra payment of $100 each year, you’d pay off your loan five months sooner and save $315 in interest.

2. Split your payments in two.

Another trick you can use to pay off your loan faster is dividing your monthly payment into two. For example, if you have $300 due at the end of every month, make one payment of $150 on the 15th and a second payment of $150 on the 30th.

“This little trick could knock off an entire year of payments.”

– Sean Moore, certified financial planner

Not only can this make payments a little easier to manage, since most people get their paychecks every other week, but “paying half every two weeks equals one extra payment made each year without even noticing the difference,” said Sean Moore, a certified financial planner and founder of SMART College Funding.

That’s because, on a monthly schedule, you’d make 12 payments per year. However, splitting payments among 26 weeks (52 weeks in the year, divided by two), you end up with 13 months’ worth of payments over the same time period.

“On a typical 10-year repayment schedule, this little trick could knock off an entire year of payments (and interest)!”

3. Sign up for auto-pay.

Though it won’t have the most dramatic impact on your student loan debt, signing up for automatic payments can knock off a bit of interest and help you put more cash toward the principal balance.

This tactic allows your student loan servicer to automatically deduct your payment from your bank account each month. Besides ensuring that you pay on time and never miss a payment, some lenders may also give you a discount just for enrolling,” said Janet Alvarez, a personal finance expert at Wise Bread. Usually, that discount is 0.25 percent.

4. Refinance.

If you have a steady income and good credit, you might qualify to refinance your student loans. Refinancing involves taking out a new loan and using the funds to pay off the old loan. Usually, people refinance their loans to achieve a new term length, a lower interest rate or both.

For instance, you might refinance a 10-year student loan to a term of seven years. It would result in higher monthly payments, but you’d pay the loan off faster and save money on interest. And if you can refinance to a lower interest rate as well, more of your money will go toward paying down the balance as fast as possible.

Let’s take our $20,000 loan example from above. With 10 years left at 6 percent interest, your monthly payments would be $222.

Now let’s say you refinance to a slightly lower rate of 5 percent. Your bill would drop to $212. Not a huge difference, sure. But what if you kept paying $222 each month despite the new lower bill? You’d knock off six months and $335 in interest from your loan. Now imagine what would happen if the interest rate difference was even bigger.

Travis Hornsby, founder of Student Loan Planner, suggests creating a refinancing ladder to maximize your savings. “The way you do this is start with a payment you can afford pretty easily, say, a 10- or 15-year loan. Pay extra when you have extra, and you’ll cut down the amount that you owe rapidly,” Hornsby explained. “After a couple of years, you can refinance again to a seven-year loan, often with the same payment but with a lower interest rate. Finally, you could refinance one more time to a five-year loan before you finish paying off the entire amount.”

Keep in mind that you should work with a lender that doesn’t charge loan origination fees, which might cancel out interest savings. It’s also a good idea to weigh the risks of refinancing federal student loans, because doing so would change them to private loans and permanently forfeit federal protections such as income-driven repayment and forgiveness options.

5. Join a company that offers repayment assistance.

If you’re looking to change jobs, it’s worth looking into companies that help pay student loans as a benefit.

“These programs will give you money toward your student loans simply for working at the company.”

– Adrian Nazari, CEO and founder of Credit Sesame

“More and more employers are embracing an employee benefit called student loan repayment assistance,” said Adrian Nazari, CEO and founder of Credit Sesame. “Unlike tuition reimbursement, where you get paid for going to school, these programs will give you money toward your student loans simply for working at the company.

Only a small percentage of companies currently offer this perk, but those that do include Fidelity, Aetna and Staples. “The amounts vary from as little as $500 per year to $10,000 per year,” Nazari said.

6. Volunteer.

According to Nazari, there are organizations that offer student loan repayment assistance in exchange for working on nonprofit projects. For example, SponsorChange and similar organizations match volunteers who have sought-after skills with sponsors who fund student loan payments for each project completed.

“You do need to adhere to their guidelines and successfully complete the program according to their requirements in order to qualify for loan repayment assistance,” he said. “But it can be a great way to give back while making a dent in your student debt.”

7. Pay according to your personality.

Finally, if you have more than one loan to tackle, it helps to follow a repayment strategy that aligns with your personality. According to Willie Anderson, who advises clients and writes on various financial topics, there are two main methods for debt repayment: The debt snowball and debt avalanche.

The debt snowball method is ideal for people who need to experience wins right away. “With this strategy, you’ll begin paying the smallest balance off first,” Anderson said. “Continue to make the minimum payments on your other accounts and put as much money as you can towards the smallest balance.” Once the smallest balance is paid off, combine the amount you were paying on that balance with the minimum payment on your next-smallest balance, and so on. “This strategy can help keep you motivated and encouraged since you should start to see some results right away,” Anderson said.

If you’re more about saving as much money as possible, you might want to give the debt avalanche a shot. “With this method, you throw the largest payment you can at your highest-interest-rate debt every month, while paying the minimum payments on your other debts.” By focusing on interest rates rather than the balances, you save more money overall.

A final thought:

Keep in mind that as annoying as student loan debt is, it might not always be the most urgent financial matter to address.

“Before aggressively paying down your student loans, you should make sure you paid off high-interest debt such as credit cards or personal loans,” said Walsh. “You should also make sure you are saving enough for your long-term goals,” he said ― think retirement ― since, over time, the returns from investing have been higher than the interest rate most people pay on student loans.

So if you have most of your financial ducks in a row and your student loans are the last thing holding you back, by all means, pay them off as fast as you can.

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