Bad Credit Goes A Long Way

If you have bad credit, you are probably quite aware that you have a problem. You know you need to do something about it in order to obtain reasonable financing, but do you know what else your bad credit is costing you? Take a look at some of the other ways that bad credit affects you.

Makes It Tougher To Get A Job

Getting a job can often be considerably harder if you have bad credit. Many emplyers will now run your credit as part of their pre-employment screening process. If you are employed in the finance industry, a credit pull is almost insured, but even other non financial industries are getting into the mix.

A bad credit profile could mean instability for an employer. To them, it might signal that your life is in disorder or that you are irresponsible. Neither of these things are something that an employer would want to deal with.

So, believe it or not, bad credit could keep you from getting a job.

Costs You More Money On Insurance

What, credit is a factor with auto insurance? Yep.

Like it or not, one of the factor that auto insurers often use is credit rating. Insurers like to use facts and statistics to figure out risk. Somewhere along the line, they started to figure out that those with worse credit got into more accidents.

What this means for you is that you might just have to pay more money for auto insurance. You might be one of the safest drivers around, but with bad credit, you will be lumped into the bad driver category.

Causes You To Pay Higher Deposits

Planning on moving anytime soon? If so, that bad credit is going to cost you. Expect to pay more for all those little pesky deposits.

Utilities like water, gas and electric will charge you hundreds of dollars because of your bad credit. If you are renting, which you likely are with bad credit, you should also expect to pay a much larger housing deposit.

Overall, when moving with bad credit, you can expect to pay hundreds of dollars more in the form of deposits.

Can Cost You A Home

Looking to rent a house? With bad credit, they might flat out refuse to lease to you. Most apartments will generally rent to those with bad credit, although with higher deposits. Landlords are a different breed however.

Landlords for house do not have to come up with as many tenants. That means that they can be much more choosy. If you have bad credit, getting a rental house could be a major ordeal.

Time To Fix That Bad Credit

This just scratches the surface of what bad credit can do to you and your financial life. So, how can you fix it? It is not that complicated, but it takes some financial discipline. Here is what you need to restore your credit.

Pay Bills On Time

This is the main factor that affects your credit. You need to show that you can pay your bills on time. What does a creditor want ,they want to get paid.

From this point on, pay all of your bills. If you have defaulted on some accounts, get a secured credit card and use it to ay for your gas. When you get your bill, pay it promptly.

With just 6 months of on time payments, you can start seeing some improvement.

Use Less Of Your Credit

The next biggest factor is credit utilization. This is how much of your credit you are using. If you have 1000 dollars in available credit and you are using 800 dollars, you are at 80 percent. This is not good.

Your credit utilization is considered good when it is below 30 percent. It is considered great when it is below 10 percent.

Work on paying down that debt by focusing on one credit card at a time. Pay the minimum on all but the one with the highest interest rate. Pay as much as you can on that one until it is paid and then move on to the next highest interest rate. By going this, you maximize your money and pay less interest.

Have Patience

It takes time to restore a credit rating. You can sink it overnight, but it could take years to repair the damage. You can, however, start seeing some results in about 6 months if you are patient and stick to a plan.

Keep the faith, pay your bills on time and stop adding to your credit card debt. That is the best thing that you ca be doing at this time.

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Nickle & Dime Your Way To Retirement

Want to retire early? Everyone dreams of it but few people are willing to make the sacrifices that it takes to reach this goal. Well, what if I told you that you can literally nickle and dime your way into an early retirement? You can.

Take a look at just a few of the small changes that you can make now that can add up to big money in the bank later for retirement.

Make Your Own Coffee

If you love coffee, that is great, but you should be making it yourself. Store bought coffee is a big “No No” if you want to retire early. It can cost nearly $5 a cup for a premium coffee chain store drink. Even if you only get one a day, during the work week, that adds up fast.

A cup a day Monday through Friday means that you could be spending $25 a week on coffee. That is $1300 a year or $39,000 over the course of 30 years. A big chunk of change and this does not even take into effect compound interest.

$1300 a year is $108 a month. Take that $108 a month and put it into an investment account for 30 years. At a nominal growth of 5%, you would have just over $90,000 in 30 years.

That is not a bad return for just making your own coffee. Add to that all the time you save by not standing in line all those years and you have quite the deal.

Take Your Lunch To Work

Do you get fast food every day? Well, if you do, you are hurting more than just your waistline. You are also hurting your chances to retire early.

The average fast food meal is around $8 and you can take your lunch to work for around $2. This is a savings of $6 a day or $30 a week. Multiply that over a 50 week work year and you have $1500 a year or $45,000 over the course of 30 years. A lot of money, for sure, but with the power of compound interest, it is far more.

Take that $1500 a year and divide it out to get $125 a month. Put that in the same investment account earning 5% and you would have over $104, 000 in 30 years.

Obviously, taking your lunch to work has a huge financial benefit. Consider the fringe benefits as well though. Obviously it would be healthier, but you would also be able to eat in just 15 minutes without the need to drive to a restaurant. That gives you an extra 45 minutes every work day. What could you accomplish with nearly 4 hours of extra time each week.

Drive An S Instead Of An SL

Do you really need all those bells and whistles on your car? Probably not, but you are paying a small fortune for them and getting little in return. You could be saving an easy $100 a month on your auto payment by going with a lower trim level.

$100 a month is $36,000 over the course of 30 years and in an investment account, it could easily exceed $80,000. Are heated seats worth $80,000? Nope.

Besides, all those little extras are going to be the first thing that depreciates. Just go to a used car appraisal website like NADA and enter look at the model you drive. Compare the price for a base model and a deluxe and just see how quickly those expensive extras lose value.

Get A Side Gig

Chances are good that you probably have more time on your hands than you know what to do with. This is very likely true if you are in your 20’s and fresh out of college.

Even if you are doing okay, now is the time to sock extra money away and let the interest accrue. Make it a point to take on some extra work for just 10 years and then let the money ride. Take a look at the numbers.

Pick up a part time job and work just one 8 hour shift a week. That will likely earn you $100 a week or $5200 a year. That is $52,000 over the course of just 10 years. With compound interest, it is oh so much more.

$5200 a year is $433 a month. Take that money and invest it and, at 5%, you will have over $67,000 in 10 years. Now, quit that job and just let that money accrue interest over the next 20 years. In 20 more years, you will have over $180,000. Doing just a little part time work for 10 years can get you over $180,000 at the end of 30. Not a bad deal.

Summing It All Up

These are just a few of the small changes that you can make now that can add up big in the future. The power of compound interest is very evident and the earlier that you start taking advantage of it, the better.

With a little discipline, there is no reason that a person in their 20s can not retire by the time they enter their 50’s. Just with the four changes above, you could accumulate over $450,000 in savings for retirement.

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