Plain Advice

I am a big fan of instant gratification. But then, who isn’t?

Even though we all like it, the term instant gratification usually comes with a negative connotation. Often, we view the desire for immediate pleasure as something that gets us in trouble, or keeps us from reaching our long term goals. It is true that living only for pleasure right this moment probably won’t work in the long run. However, instant gratification can be used as a valuable tool toward reaching your goals.

Take weight loss as an example. Typically, failure to shed pounds boils down to an individual consistently going for instant rather than delayed gratification. Choosing brownies over brocolli. TV over the gym. French fries over apple dippers. You get the picture. By making these choices repeatedly, you step further and further away from your goal (in this example, to lose weight).

Now that we have touched on the bad, bad, bad side of instant gratification, let’s explore how the pursuit of instant pleasure might actually help you reach your goals. It’s simple. The key here is to look for sources of instant gratification that directly result from the actions you must take to reach your goal . They are there, I guarantee it.

I made a list as I was trying to motivate myself to get back on track with my weight loss. The list includes:

• The instant energy and adrenaline that comes after a good workout.
• Sore muscles that I know I worked hard to achieve (and that are working hard for me as they repair and rebuild).
• Runners high
• Hearing and moving to the upbeat music in weight lifting class
• Knowing that if I keep going with what I am doing, more of my clothes will soon be fitting and looking better on me.
• Seeing myself differently, even on day one of following my plan.
• Enjoying food more.
• Never feeling uncomfortably full.
• Knowing that the way I am living is something I will be happy I did in the future
• Knowing that I am setting a good example for my kids
• Being really tired at bedtime because I got up early to exercise
• Sleeping well

The things on my list may not strike you as sources of instant gratification at first, but to me, they genuinely are. They all feel good (some physically, some mentally) and they all happen immediately as I follow specific steps on my weight loss plan. Keep in mind, this technique can be applied to any long term goal you may be working toward.

So,

Instead of focusing on the deprivation and sacrifice required to reach a goal, try focusing on the things that feel good along the way. Maximize your pleasure and enjoy the journey. It will be a lot easier to stick to something if you are actually enjoying it as you go.

Note:  If you liked this article, you may want to check out Delayed Gratification and the Feel Good Factor.

Your comments are valuable! Please share your experiences with us…

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Today I was notified that this blog has been added to a list of “Outstanding Personal Development Blogs”. The list was started by personal development blogger Priscilla Palmer. I am going to add a few of my current favorites to the list:

Maria Gajewski at Never the Same River Twice

Chief Family Officer

Made to Be Great

Millionaire Mommy Next Door

Click here to view the entire list. Enjoy!

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For those of you who have been following the series on Rebuilding Your Credit, I ran across a great resource at Millionaire Mommy Next Door. It is titled“14 Ways to Improve Your Credit”. Several of the items listed have been discussed in my series, but there are also a few valuable tips that I have not talked about. My personal favorite is number 13:

If you must, make it difficult to use your credit cards. Put them in a water-filled container and freeze until your score is back on track.

I wish I would have thought of that!

Not only is the list a great resource, but so is Millionaire Mommy’s entire site. Go check it out, and let me know what you think!

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Are you an impulse buyer? Do you often leave the store after making a purchase with an unsettled feeling that you can’t quite put a finger on? Do you ever buy (blank) because you want it, need it, gotta have it, or simply because it’s on sale, only to feel uncomfortable as you walk out of the store? Does any of this sound familiar to you?

Well, it is certainly familiar to me. Fortunately, I learned a while back that this uncomfortable feeling was, and is, pretty important to listen to. If I pay attention, and heed the nagging feelings not to buy, I have never regretted my decision. On the other hand, the times I ignored and went ahead with the purchase, it has not been in my best interests (or good for my financial goals).

Intuition is not only important for the big things, like figuring out the meaning of life. Your inner voice is an important guide through day to day decisions big and small. Following that guide will bring you the best possible outcome in any area of your life, if you follow it.

My recent series of articles (Rebuilding Credit) is geared toward those who have made mistakes with money, with poor credit to show for it. If you want to rebuild your credit, be aware; it will be impossible to obtain and maintain a good standing without changing your spending habits. There are many good resources out there to help you with this issue. Spending plans, ways to trim expenses, budgeting, etc…

Sometimes, though, it can be overwhelming when you are trying to figure out how to change your ways. It can be confusing to know which approach to use, whose method to try.

My advice here is as simple as it gets. Listen to your inner voice. Get to know how your intuition sounds and feels to you, and follow. You will be amazed at the wisdom you will see com ing through if you will make this a practice and priority in your life. If you apply this principle while making even minor financial decisions, you will see that your spending will become more congruent with your long term financial goals. And you will feel good.

For a more in-depth discussion about intuition, you may want to refer to the previously posted article, “Your Inner Voice”.

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For those of you who regularly read this blog, you may have been wondering why I have not been posting my weekly weight loss updates as I was doing, and as I said I would. So here’s my explanation.

As you may remember, I have not been very consistent in my weight loss efforts. I have gone “on and off the wagon” (as my fellow weight watcher buddy and I like to put it) so many times over the past few months that I can’t even count (actually, this has been going on ever since I had my youngest child who is now 21 months old!) .

Honestly, I get tired of sounding like a broken record when I am giving updates. “This week, doing great” and then back to “not doing so good” the next week over and over is embarassing, and I don’t think it is helping you to read it, either.

It is not that I have given up on my weight loss goals. In fact, right now I am back on track and hopeful. But I have decided that before I include you readers on my journey, I need to get a little time under my belt, experience some success, and develop some confidence in this area of my life again. After all, you can’t help anybody else unless you can help yourself, right?

This doesn’t mean that weight loss is never going to be the topic of discussion. It only means that I am no longer committing myself to update you every week on my progress. Maybe someday I will start again, but right now just isn’t the time.

Thanks for your patience and understanding.

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In the article titled “Rebuilding Credit Part 2: Pay Down Debt”, we talked about decreasing the amount you owe as a first step toward improving your credit. As I stated in that post, it is not necessary to get rid of all your debt before you start working on improving your credit. The important thing is to get it down to a manageable level, a level where you can reasonably meet your obligations. Until you get to that point, no further steps can be successfully implemented. Lowering your debt will also help you improve your debt to income ratio, which has a postive effect on your credit score.

Make Payments On Time

The second step is simple, yet extremely important. I hesitate to even call it a step, because it is an ongoing process that you must continue to do on a regular basis. The step I am talking about is developing a habit of paying your bills on time. There are several things I have implemented to help me do this.

First of all, realize that it is crucial to your credit health that you pay, at the very least, your minimum payments on time. It is not ideal to make only a minimum payment, but neglecting to do at least this much reflects very poorly on your credit. Just do it. Over and over, month after month. Punctual payments made over time have a drastic positive impact on your credit.

Something that helps me make my payments on time is writing down in my planner (which I look at often for work) when they are due. I am terribly forgetful when it comes to due dates, so this helps to clue me in when a due date is coming up.

Continue Using A Credit Card

If you have paid down your debt so much that you no longer have balances on credit cards (CONGRATULATIONS!), don’t cut up all your cards just yet. Continuing to use one or two cards can help to build your credit. Use your card(s) knowing that you will be able to pay off the balance from month to month. Some financial experts may disagree here, as creditors like to see that you carry some type of balance. There may be some merit to this, however I generally choose to zero my balance out monthly for the following reasons. By paying off the entire balance (on time), my debt will never get out of control or beyond my means to pay off. It also means that I will not be paying interest on those purchases I make with the credit card.

Obtaining a Credit Card with Poor Credit

If you have already burned your bridges with your credit card company, you may need to apply for a new account. With a poor credit score, you will most likely have to settle for a less than ideal card for the time being. Don’t worry… as your credit improves, so will your options of credit card terms. When I was at this step, I started my search for a new card by applying for attractive credit terms (low interest rates, cash back incentives, high credit limits, no monthly fees). I quickly learned that these types of terms are not offered to the credit challenged. If you have extremely poor credit, you may only qualify for a secured card. This means that you give the company a certain amount of money which amount is your credit limit. If you do not meet your obligations, they simply keep the money you have already put down as a deposit.

The card I ended up settling on was not secured, but it did require a $4 monthly fee whether I used the card or not. It also had a very low limit of $300. I accepted this based on the knowledge that it was only temporary, and that I was going to use it as a stepping stone.

How to Use Your Card

Using credit cards to rebuild credit requires a shift in thinking. Instead of mindlessly using the card, or using it for money you don’t have, you must now use it in a very calculated and planned way. It is simply a vehicle to get you where you want to go. However, if you revert to old habits, it will take you even further in the other direction.

Decide what you will use the credit card for. Something you already have room for in your budget. Something you would buy whether you had this card or not. Maybe you decide you will use it only for gasoline purchases. Set aside the money in your bank account that you would normally be using for gas. Use the credit card as planned. Mark in your calendar that due date for the payment and PAY IT. Its really that simple. Do this month after month, and you will see that this is a powerful tool for rebuilding your credit.

Tips for Those Living Paycheck to Paycheck

If you are living paycheck to paycheck, making your payments on time can be challenging simply because your paycheck may not coincide with when your payment is due. This problem plagued me for a long time. However, the solution again comes down to planning. I started writing on my calendar when I would get paid, and then I would scan the calendar for what was due before I was getting paid again. I would then write in the items that would need to be paid out of this paycheck. You should ideally make the payments as soon as you get paid, to ensure that you are using your money for the important things.

If, on a particular payday, my due dates on bills exceeded the money in my check, I would prioritize the payments. Keep in mind that in general, being 2 weeks late on a utility payment may cost you a few extra dollars , but paying even one hour late on a credit card will usually cost you a hefty late fee ($30 seems to be pretty typical). Those late fees can really start to add up, and before you know it your credit card becomes unmanageable again. Remember, once you incur a late fee, it is added to your principal balance and you start paying interest on it.

Also keep in mind that being a month late to a utility company will not usually hurt your credit, but passing that 30 day late mark with a credit card is highly significant to your report. I am not advising that you ignore your utilities and other similar bills; just pointing out that in general, they are much more flexible and workable than credit card or mortgage companies.

Conclusion

The importance of establishing a track record of paying your bills on time cannot be overstated here. It is the most important step to take toward rebuilding your credit. Although it takes discipline to plan and execute this plan, you will see that it is all worth it when your credit report starts reflecting that you are acting responsibly with regards to your financial obligations!

Your comments are valued. Please take a moment to leave one if you have any experience, tips, or questions on this topic.

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If you have poor credit, you probably know it. This knowledge may be based on a hunch (you know you haven’t honored your financial obligations). You may have applied for a loan, a credit card, an apartment, or a job, and been turned down based on your credit. If you are like me, there is a part of you that wants to hide under a rock and never face the credit challenges you have. However, if you choose to do this, I can guarantee that things will never get better… in fact, they will probably get much, much worse.

Avoiding vs Facing Credit Problems

Avoiding problems is something that I have spent a lot of time and energy doing, especially when it comes to finances. For example, there have been many times that I have avoided looking at my bank account, or balancing my checkbook, because I knew intuitively that something was wrong. The crazy thing is, the more I avoided, the more stressful the situation became to me internally. When I would finally face up to the situation, I felt better, no matter how bad things actually were. For example, knowing that my bank account was in the red, and how far it was in that direction, felt much better than just feeling like I probably spent too much money. I felt empowered to actually take steps to rectify the situation when I was willing to face it.

Knowledge is power. This is especially true when it comes to your credit. I want to tell you a few ways that you can gain solid knowledge about your credit status. It may be embarassing and painful to initially find out exactly where you stand. However, once you are armed with this information, you will be able to make goals and plans for where you want to go.

Over the years, I have checked my credit report and credit score many times, and I have never paid a dime to do it.

Free Credit Reports

First of all, Americans have the legal right to receive a free copy of their report from each of the 3 major credit reporting agencies (Transunion, Experian and Equifax) one time per calendar year. The process is simple and can all be done online at AnnualCreditReport.com . In my opinion, the best way to take advantage of this service is to request only one report at a time (ie from one agency), quarterly. This way, you will be able to get a free report every 4 months to keep tabs on what is on your report. Some might feel they need or want to compare the reports from agency to agency. I however have not found a huge amount of variance between the Transunion, Experian, and Equifax, so I do not feel a need to get all my reports at once.

Be aware that if you are turned down for anything based on your credit, you have a right as a consumer to get a free copy of your credit report. When you are denied access to the service you have applied for (whether it be a loan, credit card, apartment, job), the entity that has denied you is required to send you a letter stating that you are entitled to view your credit report. Follow the instructions on this letter to access your information. On the letters I have received, there was always a way to either access my report immediately online, or send a request through the mail.

Obtaining Your Credit Score

Note that obtaining a credit (or FICO) score is not the same as obtaining a credit report. The report is often provided free of charge (as explained above). Usually, when you look at your free report, you will be given the option to purchase your credit score. Usually the price range is anywhere from $5-10. I personally have never purchased my credit score, but I have checked it many times.

I frequently receive e-mail ads offering me a 30 day trial on various credit monitoring services. Often, they offer to provide me with a free credit score and 30 days of free credit monitoring. To do this, I am required to give my credit card information, although nothing is actually charged until the 30 day trial ends. In the past I have signed up for the trial, obtained my credit score, and cancelled within the same hour. I have also gone the route of using the monitoring service for the trial period and then cancelling the service. Either way is free, but with the latter, it is important that you remember to cancel if you don’t want to pay for the monitoring services.

If you don’t receive direct offers from the credit monitoring companies, they are easy enough to find if you do a google search for “credit monitoring”,etc. One site that has offers along these lines is Free Credit Report.

Interpreting Your Credit Score

Once you obtain your credit score, it is important to have an idea of what the number means. A very generalized description of scores is:

• Above 650 People with these scores will usually find obtaining credit quick and easy, and will have a good chance to get it on favorable terms.
• 620-650 Indicates basically good credit, but also suggest to lenders that they should look at the potential borrower to assess any particular credit risks before extending a large loan or high credit limit. People with scores in this range have a good chance at obtaining credit at a good rate, but may have to provide additional documentation and explanations to the lender before a large loan is approved.
• Below 620 May prevent a borrower from getting the best interest rates, as they may be considered a greater credit risk (obtained from ConsumerInfo.com).

Make Sure Your Report is Accurate

The way you can most quickly affect your credit score is to make sure your credit report is correct. As you review your report, look for the following:

• Be sure all the accounts listed on the report are actually your own.
• Dispute negative information if it is wrong.
• If positive information is missing, insist that your creditors to report it.

You will find instructions on the credit reporting bureau websites regarding how you can dispute information on your report. Once you make a dispute, the credit bureau must open an investigation on all non-frivolous claims within 30 days. They send your challenge to the creditor that gave them the disputed information. Within a specified amount of time, you will receive information as to whether the disputed information has been confirmed and changed on your report or not.

I have challenged some of the items on my reports in the past, and as a result, the credit agency has corrected the items in most instances.

Conclusion

The first step toward better credit is knowing where you stand right now. Take my advice and do your homework. Armed with the knowledge of your current strengths and deficiencies, you will be able to make informed decisions and set concrete goals for the future!

Keep checking back for more advice on rebuilding your credit!

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My article titled “What Is Your Credit Saying About You?” is currently featured in the Carnival of Credit Report Stories at How I Save Money.net. For those of you who are following my series on rebuilding credit, there are some excellent resources included in this publication about various aspects of credit and debt.

Click on the link, and go check it out!

Thanks for stopping by…

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Do you have a hard time sticking to your goals? Do you start out super motivated, only to find yourself back to square one a few days or weeks later? I know I struggle with this pattern. Yesterday I ran across an idea that Paul Piotrowski at Self Help Wisdom came up with. I really like his idea, and wanted to share it with you. Instead of reading my regurgitation of Paul’s thoughts, why not just head over there yourself and read his article titled “Microaction as a Success Tool“.

Let me know what you think!

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I have shared my story and some insights regarding my history of bad credit. Now I want to share with you some of the ways I have turned things around. I will share my strategies in sections over the next few posts.

Keep in mind that I am not a financial advisor, or anything of the sort. I am sharing things I have learned from personal experience.

No Quick Fixes

First and foremost, something you need to know up front is that the only real way to improve your credit is by establishing a good track record over TIME. I don’t think that can be emphasized enough. Sorry people, there are no quick fixes. Anyone who tries to sell you “instant credit repair” is selling you a load of crap. In some instances their methods may work as far as raising your credit score. However, the practices they employ to do this are often dishonest and unethical. Maybe even illegal. And here at Plain Advice, that is not what we are all about!

Paying Down Debt

Step number one in rebuilding your credit is knowing where your credit stands . Keeping that in mind, we are ready for step number two, which is paying down your debt .

This is not to say that you need to get completely out of debt to improve your credit. (In fact, some debt is good to establish a track record of you being reliable in your obligations). The point here is to get your debt to a level that you can reasonably manage. If you cannot manage your debt, you will never be able to raise your credit score no matter what else you try.

Liquidating Assets

About a year and a half ago, Jorge and I decided to sell our house because he was applying to graduate school out of state. It also so happened that we had debt that we were having a hard time managing (ie making only minimum payments, sometimes late because we were living paycheck to paycheck). We sold the house and received enough cash to pay everything off except our student loans. After all this, we still had money left for a downpayment on our next house.

I am not advocating that everybody sell their home to get out of debt (especially in the current real estate market!). For us, it was a very convenient side effect of something we were planning to do anyway.

What I am suggesting is that you look creatively at any assets you might be able to liquidate to put toward this step. Do you have an extra vehicle you can sell? What about a boat or RV? These types of items can make a big dent in decreasing your dent if you are willing to liquidate them. Even small things can add up when you sell them on e-bay.

Apply Windfalls Toward Debt

Another thing to consider is your yearly tax refund. Most people I know spend it before it even comes. Maybe next time, you could consider using it to pay back your creditors. It may not be as fun as a vacation, but the relief that comes with paying off what you owe is huge. Take this into consideration anytime you receive a windfall of money (ie bonuses, cash gifts, etc).

One of the biggest keys to success in managing finances is being able to afford your financial obligations . If you have credit problems right now, you are probably in over your head. It may be uncomfortable to think about liquidating assets, but doing this really will help you get to a much better position financially.

Credit Counseling Services

If you don’t have assets to liquidate, you might want to consider credit counseling services. These companies can help you lower your monthly payments and also decrease the interest you are paying. Sometimes they can even negotiate with the creditor so you pay less than you actually owe when all is said and done. Be very careful and make sure you thoroughly review the comany you are considering. There are lots of scams out there. About 5 years ago, I employed the services of a company of this type. I made payments to them for some time and thought they were paying my creditors. It turned out that my creditors were not receiving timely payments, and I ended up losing money because I didn’t do my homework before sending my money to this company. My credit was worse at the end of this episode than it was before I contacted the company for help.

Also be aware that if you are deeply in debt, but have maintained a decent credit score, debt management services can have a negative impact on your credit. If you already have poor credit, this isn’t so much a factor. The main thing in this situation is to just get out from under your debt, and then you can work on improving the credit.

Bankruptcy

In extreme circumstances, you may want to educate yourself about bankruptcy, and consult with an attorney who specializes in this. While it is true that declaring bankruptcy will negatively affect your credit for at least the next 7 years, for those who have heavy debt that there is no other way out of, it is truly a merciful alternative.

Paying Down Debt Gradually: Doable but Challenging

Of course, there are methods for paying down debt by applying as much as you can toward the principle in monthly payments. This is the most difficult way to get out of debt when you are in over your head, if not impossible. If you have a difficult time making minimum payments, how are you going to make more than the minimum over time to pay off the debt? It’s a vicious cycle, and exactly the reason I am encouraging you to look at other methods that can have a greater immediate impact on your financial profile.

If any of you have any other ideas on how to knock down debt, please leave a comment! Your insight and feedback is a valuable part of this site.

Check back soon for more tips on how to improve your credit.

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