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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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20 Percent Of Americans In Relationships Are Committing Financial Infidelity

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Nearly 30 million Americans are hiding a checking, savings, or credit card account from their spouse or live in partner, according to a new survey from CreditCards.com. That’s roughly 1 in 5 that currently have a live in partner or a spouse.

Around 5 million people — or 3 percent — used to commit “financial infidelity,” but no longer do.

Of all the respondents, millennials were more likely than other age groups to hide financial information from their partner. While 15 percent of older generations hid accounts from their partner, 28 percent of millennials were financially dishonest.

Regionally, Americans living in the South and the West were more likely to financially “cheat” than those living in the Northeast and Midwest.

Insecurity about earning and spending could drive some of this infidelity, according to CreditCards.com industry analyst Ted Rossman.

When it comes to millennials, witnessing divorce could have caused those aged 18-37 to try and squirrel away from Rossman calls a “freedom fund”.

“They’ve got this safety net,” Rossman said. They’re asking: “What if this relationship doesn’t work out?”

As bad as physical infidelity

More than half (55 percent) of those surveyed believed that financial infidelity was just as bad as physically cheating. That’s including some 20 percent who believed that financially cheating was worse.

But despite this, most didn’t find this to be a deal breaker.

Over 80 percent surveyed said they would be upset, but wouldn’t end the relationship. Only 2 percent of those asked would end the relationship if they discovered their spouse or partner was hiding $5,000 or more in credit card debt. That number however is highest among those lower middle class households ($30,000-$49,999 income bracket): Nearly 10 percent would break things off as a result.

Roughly 15 percent said they wouldn’t care at all. Studies do show however that money troubles is the leading cause of stress in a relationship.

That’s why, Rossman says, it’s important to share that information with your partner.

“Talking about money with your spouse isn’t always easy, but it has to be done,” he said. “You can still maintain some privacy over your finances, and even keep separate accounts if you and your spouse agree, but you need to get on the same page regarding your general direction, otherwise your financial union is doomed to fail.”

With credit card rates hovering at an average of 19.24 percent APR, hiding financial information from a partner could be financially devastating.

But, Rossman adds, it’s not just about the economic impact but also the erosion of trust.

“More than the dollars and cents is that trust factor,” he said. “I think losing that trust is so hard to regain. That could be a long lasting wedge.”

Kristin Myers is a reporter at Yahoo Finance. Follow her on Twitter.

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7 Examples Of Terrible Financial Advice We’ve Heard

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Between television, radio, the internet and well-meaning but presumptuous friends and family, we’re inundated with unsolicited advice on a daily basis. And when it comes to money, there’s a ton of terrible advice out there. Even so-called experts can lead us astray sometimes.

Have you been duped? Here are a few examples of the worst money advice advisers, bloggers and other personal finance pros have heard.

1. Carry a balance to increase your credit score.

Ben Luthi, a money and travel writer, said that a friend once told him that his mortgage loan officer advised him to carry a balance on his credit card in order to improve his credit score. In fact, the loan officer recommended keeping the balance at around 50 percent of his credit limit.

“This is the absolute worst financial advice I’ve ever heard for several reasons,” Luthi said. For one, carrying a credit card balance doesn’t have any effect on your credit at all. “What it does do is ensure that you pay a high interest rate on your balance every month, neutralizing any other benefits you might get from the card,” Luthi explained. “Also, keeping a 50 percent credit utilization is a surefire way to hurt your credit score, not help it.”

Some credit experts recommend keeping your balance below 30 percent of the card limit, but even that’s not a hard-and-fast rule. Keeping your balance as low as possible and paying the bill on time each month is how you improve your score.

2. Avoid credit cards ― period.

Credit cards can be a slippery slope for some people; overspending can lead to a cycle of debt that’s tough to escape.

But avoiding credit cards on principle, something personal finance gurus like Dave Ramsey push hard, robs you of all their potential benefits.

“Credit cards are a good tool for building credit and earning rewards,” explained personal finance writer Kim Porter. “Plus, there are lots of ways to avoid debt, like using the card only for monthly bills, paying off the card every month and tracking your spending.”

If you struggle with debt, a credit card is probably not for you. At least not right now. But if you are on top of your finances and want to leverage debt in a strategic way, a credit card can help you do just that.

3. The mortgage you’re approved for is what you can afford.

“The worst financial advice I hear is to buy as much house as you can afford,” said R.J. Weiss, a certified financial planner who founded the blog The Ways to Wealth. He explained that most lenders use the 28/36 rule to determine how much you can afford to borrow: Up to 28 percent of your monthly gross income can go toward your home, as long as the payments don’t exceed 36 percent of your total monthly debt payments. For example, if you had a credit card, student loan and car loan payment that together totaled $640 a month, your mortgage payment should be no more than $360 (36 percent of $1,000 in total debt payments).

“What homeowners don’t realize is this rule was invented by banks to maximize their bottom line ― not the homeowner’s financial well-being,” Weiss said. “Banks have figured out that this is the largest amount of debt one can take on with a reasonable chance of paying it back, even if that means you have to forego saving for retirement, college or short-term goals.”

4. An expensive house is worth it because of the tax write-off.

Scott Vance, owner of taxvanta.com, said a real estate agent told him when he was younger that it made sense to buy a more expensive house because he had the advantage of writing off the mortgage interest on his taxes.

But let’s stop and think about that for a moment. A deduction simply decreases your taxable income ― it’s not a dollar-for-dollar reduction of your tax bill. So committing to a larger mortgage payment to take a bigger tax deduction still means paying more in the long run. And if that high mortgage payment compromises your ability to keep up on other bills or save money, it’s definitely not worth it.

“Now, as a financial planner focusing on taxes, I see the folly in such advice,” he said, noting that he always advises his client to consider the source of advice before following it. ”Taking tax advice from a Realtor is … like taking medical procedure advice from your hairdresser.”

5. You need a six-month emergency fund.

One thing is true: You need an emergency fund. But when it comes to how much you should save in that fund, it’s different for each person. There’s no cookie-cutter answer that applies to everyone. And yet many experts claim that six months’ worth of expenses is exactly how much you should have socked away in a savings account.

“I work with a lot of Hollywood actors, and six months won’t cut it for these folks,” said Eric D. Matthews, CEO and wealth adviser at EDM Capital. “I also work with executives in the same industry where six months is overkill. You need to strike a balance for your work, industry and craft.”

If you have too little saved, a major financial blow can leave you in debt regardless. And if you set aside too much, you lose returns by leaving the money in a liquid, low-interest savings account. “The generic six months is a nice catch-all, but nowhere near the specific need of the individual’s unique situation… and aren’t we all unique?”

6. You should accept your entire student loan package.

Aside from a house, a college education is often one of the biggest purchases people make in their lifetimes. Often loans are needed to bridge the gap between college savings and that final tuition bill. But just because you’re offered a certain amount doesn’t mean you need to take it all.

“The worst financial advice I received was that I had to accept my entire student loan package and that I had no other options,” said Gina Zakaria, founder of The Frugal Convert. “It cost me a lot in student loan debt. Now I tell everyone that you never have to accept any part of a college financial package that you don’t want to accept.” There are always other options, she said.

7. Only invest in what you know.

Even the great Warren Buffett, considered by many to be the best investor of all time, gets it wrong sometimes. One of his most famous pieces of advice is to only invest in what you know, but that might not be the right guidance for the average investor.

In theory, it makes sense. After all, you don’t want to tie up your money in overly complicated investments you don’t understand. The problem is, most of us are not business experts, and it’s nearly impossible to have deep knowledge of hundreds of securities. “Diversification is key to a good portfolio, and investing in what you know leads to a very un-diversified portfolio,” said Britton Gregory, a certified financial planner and principal of Seaborn Financial. “Instead, invest in a well-diversified portfolio that includes many companies, even ones you’ve never heard of.”

That might mean enlisting the help of a professional, so make sure it’s one who has your best interests at heart.

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How To See What Facebook, Google, And Twitter Know About You

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Facebook CEO Mark Zuckerberg wants you to know that your data is important to his company. In a Wall Street Journal op-ed published Thursday evening, Zuckerberg laid out why Facebook collects data to use for advertisements, and how it lets you control that information.

The op-ed is meant to explain how and why Facebook collects information about its users: It lets the company sell ads and keeps the service free to consumers.

Zuckerberg’s op-ed comes at an important moment. In a recent Pew Research Center survey, 74 percent of Facebook users said they had no idea that the company categorizes their interests based on their actions on the social network.

Facebook isn’t the only company that creates these kinds categorizations. Google and Twitter follow the same formula. Thankfully, the three companies also offer you a means to see how these services view you, and let you opt out of having your data used at all.

How Facebook follows you

If you’re a Facebook user and want to see what the company thinks it knows about you, follow these instructions:

From your desktop, navigate to Facebook.com and click the arrow in the top right corner of the screen. Select “Settings” from the dropdown menu and click “Ads” toward the bottom left of the screen.

From there you’ll be taken to the “Your Ad Preferences” page where you can see interests and advertisers associated with your account. Click on the “Your Information” tab and then select “Your Categories.”

These are the categories Facebook believes best match you. It can include your marital status, whether you use Gmail, if you travel frequently, the type of devices you use to access Facebook, and more. Using my profile and habits, Facebook was able to determine I’m a technology early adopter, that I am a commuter, that I recently changed my smartphone, and that I’m a gamer.

None of that is exactly top-secret information. I assumed Facebook knew at least that much about me if not more.

If you’re so inclined, you can delete these categories by clicking the “X” icon in the top right corner of each category box. You can also turn off custom ads by clicking the “Ad Settings” tab and changing “Allowed” to “Not Allowed” under the “Ads based on data from providers” and “Ads based on your activity on Facebook Company Products that you see elsewhere.”

You can also ensure that Facebook doesn’t use your social actions in any ads. For example, if you like a page for a movie, your friends may see ads for the movie indicating that you liked it. To turn that feature off, click “Ads that include your social actions” and change the dialogue to “No one.”

Checking your Google account

Like Facebook, Google assigns you with specific categories it believes align with your interests. But Google’s list is far more comprehensive than Facebook’s, ensuring it shows the most pertinent ads. Google also has the ability to scoop up information from you from a whole host of services ranging from your search history to the YouTube videos you watch and locations you look for in Google Maps.

To see how Google categorizes you, navigate to Gmail in your browser, click on your account image in the upper right corner of the screen and select “Google Account.” Choose “Data and personalization” on the left rail, scroll down to “Ad Personalization” and click “Go to ad settings.”

From here you’ll be able to see every category Google believes interests you and how it reached that conclusion, whether that was through web searches or YouTube videos.

You can turn off ad personalization from the top of the screen to ensure Google doesn’t use your information for ads, but that doesn’t mean it won’t still track what you do. To turn that off, you’ll need to go back to your Google account homepage and select “Data and personalization” from the left rail.

Scroll down to “Activity controls” and choose “Manage your activity controls.” This is where you can see the kind of detailed information Google has saved about you, including where you’ve been around the world, what Google Docs you’ve accessed, and which voice searches you’ve performed.

It gets to be a little creepy when you realize how far back all of this information goes. I haven’t been to Germany in almost six years, but Google still has that data.

If you don’t want Google to collect this kind of information, you can turn off each setting by adjusting the slider next to each category.

Twitter’s data tracking

As with any other free social network, Twitter collects on its users. To see what Twitter has on you, log into your account on your desktop, click your profile icon in the top right corner of the screen, select “Settings and privacy,” and then click “Your Twitter data.”

Scroll down to “Interest and ads data” and choose “See all.” You’ll then see a list of the inferred interests Twitter has matched to your account.

If you want to ensure Twitter doesn’t collect such data, you can disable the app’s controls by clicking on your profile icon, selecting “Settings and privacy” and clicking “Privacy and safety.”

Scroll to “Personalization and Data” and click “Edit.” From here you can choose to individually disable how Twitter uses your data, or simply turn the features off completely.

Email Daniel Howley at dhowley@oath.com; follow him on Twitter at @DanielHowley. Follow Yahoo Finance on Facebook, Twitter, Instagram, and LinkedIn.finance.yahoo.com/

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