What’s a Credit Score?

I’ll be honest. Until a few years ago, I didn’t really know what a credit score was, why it was important, or how it impacted finances.

Here are the basic essentials about credit scores.

What is a credit score?

A credit score is a 3-digit number that reflects how you utilize credit, like credit cards, car loans, mortgages, and just regular bills.

This number is generated by information on your credit report. Think of your credit report as like a report card that goes into detail about various ways you could improve. Your credit score is the number to show whether you earned an “A” or an “F.”

Why credit scores are important

It’s important to have good credit. With a bad credit score, you could be denied an apartment, get a much higher interest rate on a mortgage, and even be denied the chance to get cable or car loans.

When you commit to a service or borrow money, companies want to know that you’ll be able to promptly pay them back. A low credit score shows you as a risk, and many lenders are unwilling to work with you.

What goes into factoring your credit score?

5 different factors go into determining your credit score, which are as follows:

  • Payment history
  • Amount of debt owed
  • Types of credit used
  • Amount of new credit
  • Length of credit history

Payment history accounts for around 35% of your credit score, so therefore is the most important thing to focus on. So in short, pay your bills!

If paying your bills is an issue, you need to focus on lowering your expenses and raising your income. Starting a blog is one great way to create income. Learn how to start your own blog here.

Using credit cards wisely, having a low credit utilization score, and having long-term lines of credit open all impact your credit score, however, they don’t impact it nearly as much as payment history. So if you’re just starting to focus on raising your credit score, figure out how you can pay your bills on time.

What your credit score means to lenders

  • <500: Very bad
  • 500-549: Bad
  • 550-599: Poor
  • 600-649: Average
  • 650-699: Good
  • 700-749: Very good
  • >750: Excellent

How to find your credit score

The law mandates that you have a right to a free credit report every year, but unfortunately, that doesn’t include a free credit score.

Luckily, most credit cards allow you to see your credit score on your monthly statements. You can also use creditkarma.com to find a free score.

Do you have any other questions about credit scores? I’d love to hear them. Drop a note below.

10 Expenses You Should Consider Cutting Out if You’re Broke

Broke? Here are 10 expenses you could consider cutting out to save money.Most of us have had periods of time where money is tight. But going through a tight period is different than being completely broke.

If you’re flat out broke, you have to know that you can improve your financial situation. The only way to do that is to either increase your income (like by starting a blog), cut your spending, or ideally both. So now we are going to be talking about cutting your spending.

I want to put on my person finance serious face for a second and say that, though we laugh about being broke, being broke is a serious thing. Being broke all of the time means you will never become debt free, you’ll never retire, and you’ll never have the means to live the life you want right now. You absolutely have to make some sacrifices to improve your future.

Trust me, making a few cuts now will allow you to live the life you really want to live. If you’re constantly living from paycheck to paycheck, you’ll never get the life you want. No one should accept living under that much financial stress.

Luckily, there are a few simple expenses you can cut out while you get your financial situation in order. If you started cutting out all 10 of these tips, you could save hundreds, or even thousands of dollars a month, depending on your current spending.

Though that would be incredible to cut out all 10 things, it’s not to say you are bad with money if you still choose to do some of these. Personal finance is personal and everyone has different priorities. But here are some ideas to get you started 🙂

1) Cable

Cable is pricey! And in all honesty, it’s a high price to pay for a bad habit. If you’re a serious television watcher, there are many cheaper options, like Amazon Video (included in the price of an Amazon Prime account!) or Netflix.

Missing out on a few of your favorite shows is worth the savings of $60-200 a month. And nowadays, you can usually steam shows online after a few months.

2) ATM Fees

Though an occasional ATM fee might not seem like a big deal, all of those little expenses add up. And have you ever thought about how silly it is to pay that much to access a few dollars of your own cash?

You can easily avoid this fee by making sure you always have a bit of cash on you, or by driving through or stopping in your bank before you go somewhere where you need cash. And you can keep tabs on what ATMs are free for you depending on where you bank.

3) Entertainment and Alcohol

FOMO is real and no one wants to miss out on anything his or her friends are doing, but you gotta be honest about your financial situation. If you can’t afford a $50 bar tab and an Uber every Saturday night, you can’t afford it.

Fortunately, you can still go out and be the DD, or you can host parties at your place. Having a social life is important, but there are so many cheaper (and healthier) ways to do so.

4) Eating Out

Sit-down restaurants can be very expensive, but yet, they seem to be a common social place to gather.

If you can’t sacrifice eating out in its entirety, you can commit to eating a quick bite at home before you get to the restaurant and only order an appetizer. And skip the drinks!

And fast food is another must-go. Though you might not think it’s expensive, it does add up. If you’re even just spending $6 a day on fast food, that’s $180.00 a month. And that’s just for one meal a day!

5) Clothes Shopping

I’ll admit, this is my biggest pitfall. I love shopping and clothes. And sometimes it’s hard to pass up a really great deal.

But when times are tight, or we have big savings or debt repayment goals in place, I don’t allow myself to shop, unless I desperately need a new pair of something I wear frequently (like tennis shoes or heels for work that I wear all the time) Other than that, it’s really amazing what you can come up with when you shop your own closet!

6) Subscriptions

Glam bags, magazines, gym memberships, and any other type of subscription service can save you a lot of money now and in the long-run if you cancel them.

A lot of these items are fun, but not necessary in daily life. You can exercise at home or outside instead of going to the gym, or buy makeup as you need it instead of getting a glam bag of items you don’t even know if you’ll like.

7) Rent

This is #1 the best thing you can do if you’re broke. If you live in a city with a family member, moving back in with them can save you a ton of money.

I know, I know, few people want to do this. But this can save so much money. You can use your would-have-been rent money to save or pay off debt instead. If your rent is $500 a month, that’s $6,000 a year!

8) Travel

Obviously, this includes big trips, but I’m also talking about small travel too! Even a day-trip to a nearby town can get expensive when you factor in gas and food.

9) Trips to the Salon

I know this is unpopular, but you really can forgo trips to the salon.

I know girls who spend $200 every 2 months on their hair. That’s $1,200 a year for just hair.

If salon trips are a must for you, try spreading out time in between visits, or stop coloring your hair entirely. You can probably trim your own ends between visits and not botch it up, or have someone help you for free. Remember, these are sacrifices!

10) Gifts for Others

If you’re like me and love giving gifts, this can be hard. I love to mail gifts for birthdays or celebrations, but it does get expensive.

Luckily, friends and families should be the most understanding when it comes to gifts. If you feel like you have to give them something, you can always lower your budget or just send a card.

Remember, you need to take care of your own finances first before you can be responsible in giving gifts.

Have you cut any of these expenses out? Is there anything else you’ve cut out to save money? Comment below!

Rounding Up: March 2017

March was probably one of the craziest months of my life. But it was so good!

First off, I got married at the beginning of the month. Then we took a week off for our honeymoon in Sonoma, which was so relaxing. This was my first real vacation in 4 years, and I forgot how nice vacations are! We were excited though to get back into a routine.

Health:

  • I have no regrets in how much I splurged with eating on the honeymoon. Wine, cheese, and chocolate were a staple of every meal, and it was heavenly! But with that, I did come back feeling pretty sluggish. I’ve been hitting the gym most mornings before work. It’s becoming more habitual and enjoyable to me, so I’d like to keep it up! I’ll admit, the first few days were ROUGH. But now I feel more energized when I get up to workout.
  • I’m also continuing on my quest to *try* to eat more vegetables, even though I hate them. My husband does all of the cooking and we’ve had fun trying to make lighter versions of our favorite foods, like pad thai, curry, arepas, etc. He is an amazing cook.
  • I’ve rediscovered my love for avocados, which you can see on my Instagram 🙂

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Why You Need an Emergency Fund

Did you know most Americans do not have enough cash to cover a $500 unexpected expense or emergency?

Emergencies can and will happen. No, they will never be convenient. They will rarely be anticipated. And the last thing you should be worried about in case of emergency is money.

That’s why you need an emergency fund today.

What are emergency funds?

Emergency funds are savings account set aside for a rainy day. They are only to be used for true emergencies, such as job loss, medical expenses, or a major car repair.

Think of all the times you had a large surprise expense. How did you pay for it? Did it ruin your budget? Did you have to get by “living” on credit for awhile? Or ask someone for money?

Emergency funds are so important because you cannot get your financial life in order without one. If you’re in the middle of paying off credit card debt, you still need an emergency fund. Why? Because otherwise, more often than not, that emergency will be put on a credit card if you don’t have an emergency fund, thus undoing all the debt repayment progress you have made so far.

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