Chances are you or someone you know has owned a credit card. It seems that over years, credit cards have gotten a bad reputation. However, if used properly, a credit card can be a great financial tool. Here are few things you need to know should you decide to use one for yourself:
1. Secured vs unsecured- The difference? Secured cards require you to deposit money first, usually your limit is directly linked to the amount of deposit. This is a great opportunity CREATE credit! A good rule of thumb is to never use more then 30% of your limit ( if your a BOSS, then you know you use only 6-7% of your credit line). For example, if your credit card limit is $500 than your max usage should be $150 monthly. Also, 6 months of EARLY credit card payments, NOT on time payments, should bring you closer to the option of unsecured. Unsecured cards are credit driven, the better your FICO score better the odds of approval.
2. Pre-approval vs approved- If you’ve ever received a pre-approval letter in the mail please know that this credit card issuer has made a soft inquiry into your credit file and believes you may be a fit for one their cards. The question is, does this card fit me? What are the benefits? What is the interest rate? Are there reward programs? Do I care about what they are offering?
3. Be in the know- Having a lot of credit cards is not a sign of great credit. Rather it really just shows a lack of self control. How many cards does one need? Well, your lifestyle should determine the answer. If you frequent Walmart, then having a Walmart credit is justified versus having a credit card you never use. Remember, the issuer gets paid off of the USE of the card. If your account lacks activity, then they may simply cancel the card. After all, what is the point in having a credit card and showing a line of credit which translates into debt on your credit report if your not going to use it??
– Jay
As always…Time is only money when you know the value of your time.
Welcome back young world, I appreciate you taking time away from your busy schedule to so let’s jump right into this week’s topic “Assets vs. Liabilities: Income producing vs. Bill Pay”.
In case you haven’t noticed, it’s tax season – a time when you get to see a snapshot of your past year’s income. Are you surprised by how much or how little you earned? Were you not aware of how much taxes you paid? Or like most, are you simply asking “Where did it all go?”.
The simplest way to determine if something is an asset or liability is to realize anything that DOES NOT increase your income or eliminates an expense is a liability. This same rule should apply in your relationships – friends and family should have a healthy increase, provided you know the proper definition of increase. Let’s say you want to buy a house. I get it BUT it is a liability UNTIL the year ends and you’re able to write off part of the mortgage & insurance. Remember, 2018 tax rules have changed. Using our example of home ownership, here’s how to go about it:
1. Do your research – The price of the home should be lower then the value of the home. Why? INSTANT EQUITY. If the home appraised (valued) at $180k and you purchased it for $125k then you currently have equity in your home in the amount of $55k. Please hear me: BUYING A HOME IS ONLY A DEAL IF YOU GET IT FOR LESS THEN IT’S WORTH – PERIOD. I don’t care about how much you make or the “deal” they are offering if it’s over priced then you have left yourself open to being “underwater”. (Google the term, can’t give it to you for free)
2. Be financially honest with yourself – Can I afford this? What will it truly cost me? Overtime should NOT be a way of life, neither should constantly borrowing from others. These are 2 red flags that clearly show you can’t afford your current position & future position. Over the past few years I’ve had to be okay with others having opinions about my finances based on their point of view of money. The more I curbed my spending and redirected my money, the more I saw the misdirection of others’ finances.
3. It’s not about how much money you have, it’s how much you can afford to spend – Never become prideful of your finances. After all, it’s only money. I was joking with a friend of mine who is extremely wealthy. He asked about my income and I told him it was nowhere near his fortune. He leaned back in the chair in my office, laughed, and waved me off. “You only need 1 or 2 million. Anything more and people change”, he said. Now this individual’s net worth is that of an entire NBA team, yet he tells me I only need 1-2 million?!! I say again, NEVER become so prideful of your income, your money saved, or the cost of a thing. In your bragging, what you are truly sharing is how much you over spent.
Remember time is only money when you know the value of your time.
