Personal Finance

Mom help teen learn credit cards

Smart Credit Card Habits for Teens

By | Credit Cards, Personal Finance

If you’re like most parents, you’ve taken the time to instill healthy financial practices in your youngsters. That informal education does not always extend to the use of credit cards — but it should. Right on the heels of proms and college applications, teenagers will soon find themselves thrust into a plastic-saturated world — and having some basic knowledge about smart credit card habits can make a tremendous difference. Smart teen credit card habits will put your kids one step ahead of their peers, allowing for a smooth transition into adulthood and a nice jump start on building a healthy credit history.

Give them a Starter Card

Teens who understand responsible credit card usage in high school will be less likely to fall into the common college debt spiral. One option to teach smart teen credit card habits is with a prepaid debit card, which can be funded directly from the student’s savings. Or you could add your teen as an authorized user to your own account. If you consider your teen responsible enough to hold a credit card, make sure he or she is also capable of maintaining a bank account from which to make the payments. Show them how to set a monthly limit and keep a record of their purchases. Point out when the running tab is nearing too close to the monthly limit of what they can afford to repay.  Be sure to set guidelines on what your teen can and cannot buy with the card — and review the statement each month as it arrives.

Teach Them That Credit Isn’t Free Money

It doesn’t take long for the average consumer to understand that overuse of credit leads to debt. However, teens might be less likely to appreciate this risk. One idea is to ask your teen to hand over the amount of cash (plus a few dollars extra) that he or she spent, or plans to spend, on a credit card. Once your teen sees that amount disappear from a checking account or allowance, he or she might reconsider the purchase. This also helps them to understand that any credit card spending must, eventually, be repaid — and often ends up costing more in the long run, thanks to interest and other fees.

Use the Monthly Statement as a Learning Tool

Just as teens are starting to appreciate the convenience and glamour of credit card usage, it’s time to peel back the curtain and point out some of the stark realities. Dig up one of your latest credit card statements and show them the total amount of your purchases, as well as the amount of interest charged and your APR rate. Most statements will also provide a rundown of how long it will take you to pay the balance — and how much you’ll pay in interest — if you only make the minimum payment every month. That is another good teen credit card habit to learn — how paying your balance in full every month, or making more than the minimum payment, can save thousands of dollars in interest fees.

Resist the Urge to Bail Them Out

If your teenager spends excessively and ends up accruing a mountain of debt, don’t panic — or try to solve the problem alone. Together with your teen, come up with a plan for him or her to repay the outstanding amount — whether through an after-school job or a monthly payment plan. It may seem cruel at first, but in the long run, it can be a momentous lesson for your child. In the real world, parents don’t just sweep in and erase debt problems — and the sooner your child can understand the realities of managing financial responsibly, the better.

Talk About the Importance of Credit Scores

Credit scores will be extremely important in your teenager’s future — and now is an excellent time to explain how their impact penetrates far beyond qualifying for loans and credit card offers. In a few short years, they could be applying for a job or trying to rent an apartment. Explain that employers, landlords, and creditors all use credit checks to verify an applicant’s financial status and level of responsibility. If teens grow into adults who understand the importance of smart credit card habits, they will have no problem achieving a solid credit score.

Set a Good Example

It’s no easy feat to teach kids about smart teen credit card habits. While you’re spending this time educating your child, make sure you take this opportunity to check in with your own credit report. Give us a call today at Ovation Credit and we’ll be happy to offer our wisdom with a free consultation.

Shopping store centers and retail credit

Everything You Need to Know About Retail Store Credit Cards

By | Credit Cards, Personal Finance

Everything You Need to Know About Retail Store Credit Cards

When you shop at a certain store frequently, you might think opening a credit card account there makes solid financial sense. After all, many retail establishments tout incentives as a perk to their loyal credit card holders — such as, for example, Nordstrom’s offer of a $20 gift certificate once shoppers spend $1,000. Other cards dangle discounts to attract bargain-hunting shoppers — perhaps only credit card holders get access to special sales and promotions, or they might receive cash back for certain purchases. But is a retail store credit card really a benefit to your credit — or does it simply encourage you to spend money that you don’t necessarily have?

They can be a good credit-building tool — but proceed cautiously.

If you are trying to establish a good credit record, retail credit cards are a relatively safe way to do so. Most retail credit cards have a low barrier to entry — meaning that even if your credit score is less than stellar, it is fairly easy to be approved for one. Using a store credit card judiciously — that is, keeping your spending habits in check and paying at least the minimum amount due every month — can serve as an excellent exercise in building your credit properly. But be careful. If you open up an account at every store, that will end up looking like too much open credit on your credit report. Also, having a store credit card can tempt you to spend money that you don’t have, or go hunting for items that you don’t really need.

You can easily hurt your credit.

Most credit cards offered in-store boast a low credit limit. How much trouble can you really get into with a credit limit that low? Well, you might be surprised. Low limits mean there’s little wiggle room if you happen to overspend one month. Also, if you continually carry a high balance from month to month — and you are close to hitting your max — it will start to negatively affect your credit score, as you will appear to be maxing out your credit limit. And each time you open a new retail store account, it registers as a hard inquiry on your credit report, also known as the store’s check into your creditworthiness, which can lower your credit score.

The interest rates tend to be higher.

Retail establishments certainly tout the benefits you’ll enjoy as a cardholder, but you’re less likely to hear about the interest rate or APR — that is, unless you dig into the fine print. A 2016 report from found that store credit cards charge an average of 23.84% interest, up from the average credit card interest rate of 15.22%. That means you actually end up spending more money than you’re saving when you don’t pay the full amount due every month.

Some retailers also waive interest for a certain period of time — such as six months or a year — if you promise to pay off the balance in full in that time period. That can be a good benefit if you want to finance a big-ticket item. But again, it can be a risky move if you are unable to pay the full amount within the promotional period. Many retailers will then begin charging you all of the interest that would have accrued from the date of purchase.

Weigh the risks versus rewards.

It helps to weigh the risks versus rewards when you’re deciding whether to open a store credit card. Do you already have a solid track record of paying your debts every month? Then a retail credit card might be a good idea for you, as long as the store is offering you considerable incentives to become a cardholder. However, store credit cards don’t necessarily provide better benefits and loyalty packages than, say, a major credit card that can be used at all establishments. So, you might be better off sticking with one credit card that offers cash-back rewards across a range of different retail stores, rather than just one.

Do your research.

The bottom line: Make sure you do your research before signing up for just any retailer’s offer. Read into the interest rates and compare the incentives and rewards to those offered by other establishments or major credit cards. And be honest with yourself about how responsible you’ll be with a store credit card, so you don’t end up digging a deeper financial hole.

Retail credit cards are just one way you can improve your credit and build a pathway to a smarter financial future. At Ovation Credit, we aim to guide clients through the process of rebuilding credit and becoming a more responsible credit card user. Contact us today for a free consultation to review your credit reports and answer any questions you may have.

Man receives tips on co signing a loan

Co-Signing a Loan? Read This First

By | Personal Finance

If someone asks you to co-sign a loan, it is typically because they do not possess the requisite credentials needed to qualify for a loan on their own. Your friend or family member might have another shot at getting their application approved if you are willing to co-sign the loan. As a co-signer, you will be contractually obligated to pay off the debt if and when the primary account holder defaults. Co-signers serve an important purpose, helping those with little or negative credit history overcome those limitations and qualify for loans. If all goes well, you may help that person cultivate positive credit history that will allow them to later qualify for a solo loan. However, if the arrangement were to sour — as it unfortunately does all too often — it could have a disastrous impact on your own credit. Before you dive into co-signing a loan, here’s what you need to know.

How It Works

A co-signer is just as critical to the loan as the actual borrower — so that means you will have to show up for the actual signing in person. If you are taking this step, it’s best to treat the situation as if you are applying for the loan yourself. Just as you would with your own applications for loans or credit, you need to evaluate your financial situation and whether you can afford the risk. Simply put, if you could not easily cover the payments if the primary account holder defaulted, co-signing would be the wrong choice.

What It Means for Your Credit Score

Even though you may not submit a single payment as a co-signer on a loan, all of the loan payments will be reported to the credit bureaus as if you had made them yourself. That means that if the primary borrower stops paying, all of the missed payments will show up on your credit report, too. Late and missed payments are the quickest ways to sink a credit score — even if yours was rock-solid when you initially agreed to co-sign the loan. Your score could plummet even more dramatically if the borrower defaults on the loan and it winds up in collections or litigation.

Protecting Yourself

If you decide to proceed with co-signing a loan despite the risks, make sure you let the primary borrower know that you will be keeping tabs on their payments. Find out what day the payment is due and give them a heads-up a few days before. It’s in your best interest to ensure the payments are made on time every month — even if it means you have to nag the primary borrower.

Loan Approvals Will Get Trickier

Adding another loan to your financial load — even if you aren’t technically making any payments on it — will make it tougher for you to qualify for loans or credit. Creditors or loan officers will observe that your amount of debt has risen but your income, most likely, has not.

Contracts Are Rock Solid

You may think that you can easily request a release from the loan if circumstances change. Unfortunately, loan terms and conditions are ironclad for that very reason — so that if the primary borrower shirks their commitments, the loan officer can seek you out for payment. You’ll be on the hook for as long as the debt is unpaid. Don’t rely on a verbal agreement with the primary borrower. You may be better off asking the loan officer directly if the contract includes a provision for release.

Worst-Case Scenario

Unfortunately, the doom-and-gloom scenario may very well play out in reality. If a loan officer is hesitant to take a risk on a borrower, they have a very good reason. Your friend or family member may likely default, leaving you fully responsible for repaying the debt — plus any interest and collection costs that have accrued when the original account holder’s payments lapsed. Even though that is exactly why you co-signed in the first place, it can still be hugely unsettling to begin receiving collection notices and even warnings of legal judgments. Beyond the financial repercussions, your relationship with the borrower may not recover.

Although co-signing a loan is a generous gesture, you may decide it is ultimately not worth the risk. Consider alternatives, such as offering financial assistance in another way — one that doesn’t put your credit score on the line.

We offer a wealth of educational content to help you navigate credit and financial concerns here at Ovation Credit, but that’s not all we do. Head here for a free consultation to find out more about how we can give your credit reports an instant boost.

improve your finances stress free and breath

3 Stress-Free Ways to Improve Your Finances

By | Personal Finance

Committing to bettering your finances doesn’t just have to be a new year’s resolution; it’s a worthy goal you can tackle any time of the year. But if just thinking about giving your budget a second thought is enough to make you break out in a cold sweat, don’t worry. We’ve compiled three easy steps you can take today that will help you improve your finances completely stress-free.

Ready to get started?

1. Automate Your Savings

Between mobile apps and extra services offered by banks, it’s easy to automate your savings so you can build your nest egg without worrying about over-spending. One easy way to do this is to split up your direct deposit paycheck between checking and savings. Because the money automatically goes into your savings account, you’re not tempted to spend it on non-necessities throughout the month.

Another tactic is to sign up for a mobile app that helps you save when you perform certain behaviors. There are countless options, such as rounding up each purchase to the next dollar and depositing the change into savings. Pick one that makes sense for you and you’ll see your savings grow without even trying.

2. Weed Out Extraneous Expenses

While you eventually want to give your monthly budget an in-depth review to see what you can cut back on, there’s no time like the present to make a few small changes that can quickly add up. Here are three suggested expenses you can reduce or eliminate today to improve your finances stress-free.

Cancel One Subscription Service

The first place to consider cutting back on is your monthly subscription services. It’s easy to accumulate these automatic fees that may only seem like a few dollars a month. From streaming music and movies to receiving regular subscription boxes, it’s very possible that you could be shelling out a large chunk of change without even realizing it.

For a totally stress-free tactic, challenge yourself to cancel just one subscription. If you’re trying to build your savings account or pay down debt, make sure that extra money is going toward your financial goal. Otherwise, you can put it toward any other savings goal you have, like an upcoming vacation. Even saving an extra $12 can add up to $144 a year, and if you can cancel one additional subscription each month, you’ll really start to see your financial situation improve.

Opt Out of Overdraft Protection

While overdraft protection might seem like a wonderful convenience, it’s also an expensive one. Overdraft fees can cost as much as $35 per incident and if you come up short just once a month each year, that adds up to a whopping $420 you’ll spend annually. To avoid this costly service and get motivated to stay on top of how much cash you have in your bank account, opt out of overdraft protection completely.

Yes, you may end up having your card declined at a cash register, but you also won’t be adding a $35 premium to that purchase. To help improve your finances stress-free with this tactic, sign up for balance text alerts with your bank. That way, you’ll know when your account is about to hit $0 and you can avoid the cash register altogether.

Downgrade Your Cell Phone Plan

You might be tempted to moan and groan at this suggestion; after all, most people use their phone for just about everything these days. But downgrading your cell phone plan is a simple way to cut back on expenses without having to adjust other areas of your spending. One easy way to do this is to limit your data usage.

You don’t need to totally cut back on your phone browsing. Instead, connect your phone to your home Wi-Fi network to avoid using up your data. You can do the same thing on public networks at school, the coffee shop, or the office. Just be cognizant of entering passwords or other sensitive information when on a public network. A simple step can help you gain control over your finances with just a simple Wi-Fi login.

3. Fix Your Credit

Another easy way to improve your finances while staying stress-free is to repair your credit. This can save you money on expensive interest rates on credit cards and loans. Once you see a boost in your credit score, you can negotiate for a better rate on your credit card and potentially refinance loans to lower your monthly payments.

For a free credit repair consultation, contact Ovation Credit today.

7 Smart Ways to Use Your Tax Refund This Year

By | Personal Finance

If you’re one of the millions of Americans receiving a tax refund this year, you might be tempted to take a vacation or go on a shopping spree. But before you do any of these things, consider thinking a bit more strategically. Here are seven ways to spend your tax refund that could set you up for a more financially secure future.

1. Pay Down High-Interest Debt

Owing a lot of debt can be costly, not to mention a major strain in keeping up with your payments each month. Do yourself a favor and use your tax refund to make a large payment on your existing debt. It can help reduce your monthly bills, plus save yourself a substantial amount of money in interest over time.

2. Boost Your Emergency Savings

Another smart refund strategy is to create an emergency savings fund or add to it if you already have one. This can help prevent you from accumulating new debt because you have a built-in buffer for unexpected financial emergencies. The next time your car breaks down or you have a medical issue, you won’t have to charge or borrow money to take care of it. Using your tax refund for your emergency fund can take a lot of stress out of your life.

3. Contribute to Your Retirement Savings

Most Americans are dangerously underprepared for retirement. Even if you already contribute to a retirement fund, it’s good to regularly reassess how your progress is coming along. You can use your tax refund to contribute to an employer fund if you don’t already max out your annual contributions. You may also qualify for opening up either a traditional or Roth IRA. Each type is taxed at a different time, so do some research to determine which one is the best option for your current situation.

4. Make a Tax-Deductible Donation

Donating to a non-profit organization with your refund could help you prepare for next year’s tax season. In most cases, this type of donation is tax deductible. If you want to decrease your tax burden even further, especially if you’re riding the line between two different tax brackets, a donation could help you while also making a difference to your chosen charity. Consider chatting with a tax advisor if you think this tactic could help you next year.

5. Tune Up Your Major Investments

While a tax refund could easily be used for a major purchase or upgrade, don’t forget about regular maintenance of your existing property. Maybe your home’s HVAC needs some maintenance. Or perhaps your car could use a tune-up or some new tires. Oftentimes, a bit of prevention early on can be much less expensive than addressing a larger issue later on. If you don’t include these things in your regular budget, think about using your tax refund for your usual deferred maintenance.

6. Make an Extra House Payment

Using your tax refund to make an extra house payment each year can put a huge dent in your mortgage over the years. Depending on your principal and interest, you could easily save tens of thousands of dollars in interest over the life of your loan. Not only that, you could shave off a few years from your mortgage if you start making extra payments early enough.

7. Invest in Professional Credit Repair

If you have less than perfect credit, you’re automatically setting yourself up for more limited access to credit, plus more expensive credit even if you do get approved. There are certainly ways you can fix or improve your credit on your own, but there are several benefits to investing in a professional credit repair service. First, a reputable company, like Ovation Credit, has an expert staff to create the most effective credit disputes. On top of that, you can save yourself countless hours over the course of several months spent on fixing your credit errors. To make sure you get your credit repaired in an efficient and effective manner, it may be worth spending some of that tax refund on a better credit score.

Getting a tax refund is an exciting time, especially if you weren’t expecting such a large lump sum payment. Don’t rush yourself into making any spending decisions until you’ve fully thought out your short- and long-term financial goals. Think about what you need to do to help you achieve those dreams. Then think about using some of these strategies to help you get there.


how divorce affects your credit

Finances After a Divorce: 6 Things to Know

By | Personal Finance, Your Credit

Divorce can be a trying period in your life, but you’ll feel like life is a little closer to normal if you can regain your financial footing as quickly as possible. Read these tips to understand the impact on different areas of your finances after a divorce. In some cases, you may even discover a few perks depending on your situation or final divorce settlement.

1. You Can Access Retirement Funds Penalty-Free

If you receive a qualified relations domestic order as part of your divorce proceedings, you can take out an early withdrawal from your retirement account without being assessed for a penalty. Typically, you’d be charged a 10% fee on any distribution before the age of 59 ½. You will, however, be responsible for paying income taxes on anything you withdraw as part of your divorce. You can avoid taxes if you choose to roll your retirement funds into an IRA. Just be cautious not to jeopardize your financial future. Accessing retirement funds penalty-free can help improve credit if you’re trying to avoid debt or collections while going through a divorce.

2. Alimony Tax Laws Have Changed

If your divorce settlement is finalized post-2018, you’ll see some drastic changes in how alimony and child support are treated in terms of taxation. Pre-2019 agreements allow for alimony to be used as a tax deduction for the payer and counts as taxable income for the recipient. Under the new tax law, however, these rules are completely eliminated. There is no allowance for using alimony payments as a tax deduction and recipients do not have to include these payments as part of their taxable income. In short, this is a win if you’re on the receiving end, but could be a minor financial blow if you’re hoping to get a tax deduction for your upcoming divorce settlement.

3. College Financial Aid Goes Through the Custodial Parent

If your children are approaching college age, it’s important to understand how financial aid works when the parents are divorced. Rather than having to count both parents’ income on the Free Application for Federal Student Aid (FAFSA), only the custodial parent’s income must be included, which can potentially increase your child’s chance of receiving federal aid. Note, however, that child-support and alimony payments received from the non-custodial parents also have to be included as part of the FAFSA paperwork. If parents have a 50% custody agreement, the custodial parent is considered the one with whom the child stayed the most number of days in the preceding 12 months. With a bit of planning with your ex-spouse, you may be able to minimize your family’s financial responsibility by making the person with less income the custodial parent.

4. Joint Debt Can Be Assigned to One Person

You may feel happy that the judge assigns joint debt like a car loan or personal loan to your ex-spouse, but the situation has the potential to seriously damage your credit score. If your ex-spouse fails to make payments on the loan, whether on purpose or out of financial hardship, those missed payments will be reflected on your credit report. It can take up to seven years for a single late payment to naturally drop off your report unless you’re able to successfully initiate a credit dispute and get it removed before then.

5. Set Yourself Up for Credit Protection

In order to protect your credit score and financial future after divorce, check your credit report for any errors. You may want to sign up for credit monitoring services to track payments for accounts that still have your name on them. Additionally, remove your ex as an authorized user on all of your credit cards and any other lines of credit you may have. Look into refinancing joint loans so you can eventually separate your credit from your ex’s for good.

6. Hire a Pro to Expedite Credit Repair

If you’ve already experienced credit damage as a result of your divorce, consider hiring a professional credit repair firm to help get it back on track. Whether you’re feeling overwhelmed or simply want to move on to the next stage of your life, fixing your credit is a great first step to a clean slate. You can even sign up for a free consultation with Ovation to find out if you’re a good candidate for credit repair.

A divorce usually isn’t a walk in the park. But with a bit of background knowledge and some advance planning, you can minimize its financial impact and move on to brighter days.


leasing or buying a car is better for your credit

Is Leasing or Buying a Car Better for Your Credit?

By | Personal Finance

You need a new car, but you either don’t have the cash or need something better than a clunker. At the same time, you might also be working on your credit repair. With competitive leasing options available these days, you may be wondering if you’re better off going that route or financing your car with a traditional auto loan.

Keep reading to find out how to finance your next vehicle while simultaneously fixing your credit.

Both Monthly Payments Count as Debt

If you’re looking to lower your credit utilization, it doesn’t make a difference if you choose to lease or buy your next car. They’ll both count as debt on your credit report, with either balance showing up. If you ever need other types of loans, lease and loan payments also count toward your monthly debt-to-income ratio, which can result in higher interest payments or even not getting approved.

However, when you purchase a car, your entire financed amount shows up on your credit report. If your loan is for $25,000, that is the amount of debt reported to the credit bureaus. With a leased car, on the other hand, the residual value of the vehicle after your lease term doesn’t show up. Say that same $25,000 vehicle will be worth $15,000 after your three-year lease. In that instance, only $10,000 shows up as your borrowed amount on your credit report. In that sense, it could help you with your credit repair journey.

Leasing May Result in Fewer Inquiries and Improved Credit

Another factor to consider is how inquiries are handled during the leasing and car loan application process. Lease financing generally goes directly through the dealer, so only one inquiry shows up on your credit report. If you apply for an auto loan through a car dealership, on the other hand, your loan request may be sent to multiple lenders.

If you’re doing all of your car shopping within a couple of weeks, all of those inquiries may just be counted as one, since you’re clearly just rate shopping. However, if you need to take longer with your car shopping, you could end up unraveling some of your credit repair success with multiple inquiries spread out over time. Even after you’ve applied for a car loan, it’s smart to check your report for any potential credit errors from the application process.

Your Lease May Show Up as Completed Contract

Depending on how long you plan on spreading out your car loan, a shorter lease may help boost your credit score significantly when you’ve successfully completed payments. A finished contract on your report is a strong asset to have, and leases generally come with shorter repayment periods. If you’re comparing a 36-month lease to a 60-month car loan, for example, you’ll reach that stage of completion a full two years before your car payments are finished.

Lease Maintenance May Be Covered

With a lease, you may be able to spend less on maintenance and covered repairs. Check your contract to see what’s included in your coverage. How does this help fix your credit? The less you spend on these unexpected expenses, the more you can put toward debt or emergency savings. You can also use that extra cash to avoid having to borrow money or charge up credit cards in the future.

Both of these things help protect your credit in the future. While you definitely want to proactively work on your credit repair, you should also have a plan to create a safety net to avoid future financial pitfalls as much as possible.

Buying vs. Leasing: Bottom Line

While many of these credit-related issues tend to favor a lease over a car loan, there are lots of other factors to consider. These include things like affordability, whether or not you need a down payment and costs at the end of your lease contract. A lease may be more expensive on a monthly basis if you choose a shorter term. You can lower that amount by making a down payment, but that’s not always the best choice, especially if you don’t plan on buying the car at the end of your lease. If you drive a lot, you may also have to pay extra if you go over your allotted mileage during your lease.

Consider your options holistically to get the best deal both from a financial and a credit perspective. Also, think about both choices from both a short-term and long-term point of view.

Looking for other ways to improve your credit? Sign up for a free consultation with Ovation Credit. We can help you efficiently navigate credit disputes to improve your credit report.

6 Ways to Teach Your Kids Financial Literacy

By | Personal Finance

Now that the kids are back in school mode, it’s an excellent time to introduce some real-world lessons about money management. Financial literacy is a topic that isn’t covered much in the classroom, and many adults find it difficult to explain money issues in a way that youngsters can understand. However, kids can generally pick up the basic concepts. Planning these exercises for after school or weekend activities keeps their critical thinking skills sharp. Especially now, when most financial transactions take place through a screen, it’s more important than ever that kids understand the value of a dollar. Here are six fun ways to teach your kids financial literacy.

1. Set Up a Lemonade Stand

Lemonade stands have stood the test of time for a reason—they’re an invaluable tool for kids to practice their entrepreneurial skills and learn about the value of money. Before they set up shop, dole out a few dollars to spend on supplies and advertising/marketing. Suggest ways to keep expenses down (such as visiting the dollar store for supplies like chalk and signs, and making a homemade recipe) and explain that the lower the expense, the more cash their enterprise will earn. Let them handle the money, which also offers a great real-life example of math skills. Running a lemonade stand requires patience and hard work—but kids will learn that if they practice those values, they will be able to earn money.

2. Use Physical Tools for Savings

Handing out an allowance is a major first step to teach yours kids financial literacy. Since most parents tie allowance to completed chores, take the chore routine outside and show kids how they can earn money for tasks such as watering the garden, cleaning up outdoor toys, and washing the car. When you distribute their earnings, provide them with two clear jars—with instructions to use one jar for spending money and one for saving. This introduces them to the basics of budgeting.

3. Take Them Shopping With Their Own Money

Kids need to understand that everything costs money and that decisions must be made for wants versus needs. The key is to make the process as visual as possible. When they want to buy something, help them count out money from their spending jar. At the store, explain how much the desired item costs and whether or not they have enough funds available to afford it. If they don’t have enough money, they will have to consider whether to dip into their savings—which also forces them to prioritize what they really want.

4. Play Money Games

Introducing money into your children’s gameplay is another way to help them practice their financial savvy. One idea is to assemble a “store,” including toys or stuffed animals, and label each item with a price tag (under a dollar). Provide them with a bowl of coins in different denominations, and encourage them to count out the coins to the correct amount for their “purchases.” The younger the child, the smaller the price tag (and pennies are easiest to use). For older kids, you can play board games such as Life, Monopoly, and the Allowance Game.

5. Involve Them in Financial Decisions

The best way to raise kids to use money responsibly? Set a good example. If they question why you can’t afford to make a large purchase, peel back the curtain of how adulthood works—showing them your own budget, or a printout of your monthly expenses for mortgage or rent, car, food, insurance, and so on. If you do happen to splurge on an item, explain how other sacrifices were made in order to allow you to do so.

6. Make Saving a Team Effort

Introduce your kids to the reality of paying bills and economizing. Choose one of your monthly bills, such as electricity, water, or phone, and challenge your kids to come up with ways to reduce it. For example, encourage them to use less water or to turn off the lights each time they exit a room. Review some of the bills with them and explain how certain practices add up to higher charges. You can also turn the savings into a competition. If they manage to shave some dollars off the bill in the following month, let them come up with a reward to spend the savings on.

It takes time to teach your kids financial literacy, it won’t happen overnight. But by devoting a small part of your days with these fun exercises, you will be setting the groundwork for their futures as responsible adults.

Discuss Finances Before Marriage: 6 Things You Should Talk About

By | Personal Finance

You think you know everything about your fiancé? Think again. Before you get married, you and your future spouse need to discuss finances before marriage. It won’t affect whether or not you both say “I do,” but it might change whether you both agree to get a shared bank account.

In addition to maybe getting a shared account, here are six things you should talk about.

1. What kind of debt do you both have?

Did you both rack up a lot of debt going to college? What are your monthly car and student loan payments like? What is your debt-to-income ratio? If either of you has a lot, it’s best to say so before you tie the knot. Having the infamous “Where did all of our money go?” conversation is never fun and can lead to problems that extend beyond finances in a heartbeat. Know what kind of debt your future spouse has. It may suggest that you should either have separate bank accounts, or that one of you should be in charge of all finances so that credit repair can take place.

2. Know each other’s credit scores and histories.

A strong credit score is needed if you want to buy a house one day. If your spouse frequently misses payments because he or she doesn’t manage money well (and might need to fix his or her credit), it can put a big strain on your relationship. You should know what each other’s score is because it might change your respective responsibilities. Maybe one of you agrees to make all payments, or you add your spouse as an authorized user on an account to improve their credit score.

Looking over each other’s histories might also reveal credit errors. If you spot any, you’ll want to start a credit dispute as soon as possible. One reason is, if you plan on having kids, it’s a lot easier to fix a credit score when it’s just the two of you because you’ll have more cash every month to put toward payments. Another reason is that credit disputes and credit repair can take time. The sooner you begin the process, the better.

3. Will you need to work together to improve credit?

Do both of you suffer from low credit scores? If you need a loan, will either of you qualify? As stated, credit disputes and errors take time. To fix credit (or just improve credit), it may require a joint effort. To do so, you’ll both need to make a concerted effort. Not only will all bills need to be paid on time, but one or both of you might need to take out a secured loan or line of credit to begin the credit repair process. From there you’ll both need to diversify your lines of credit and begin paying down your debt.

Many experts suggest paying off debt from smallest to largest. This will remove some of your monthly obligations and free up more cash to throw at your larger debt.

4. What are your long-term goals?

Do you want to travel? Buy a house? Have kids? All of these are big financial commitments, and you need to know about them so you can start budgeting. Depending on the goals, one or both of you might need to make some spending changes. Impulse and fluff buys may need to be scaled back and a monthly budget put in place. If it’s a struggle to put away money each month, then you’ll need to establish a savings plan as soon as possible.

5. Should you have a prenup?

Unfortunately, approximately half of all marriages end in divorce. If either of you has worked hard to establish a strong financial portfolio, then a prenup may save you at least a little heartache if or when you two do decide to call it quits.

6. Establish a monthly budget and savings goal.

Come up with a list of non-negotiable monthly items—mortgage, car payments, credit card payments, utilities, etc. How much money must absolutely be set aside to cover everything? Look at how much is left over, and put a little aside for both of you to spend on fun items. The rest needs to go into savings. How much you spend on your fun (or unnecessary) purchases is up to you. If your partner considers something to be a must-have, but you don’t see it that way, consider not pushing it if it’s not too much every month. Everyone has their own quirks. However, if you are just scraping by every month and accumulating credit card debt in the process, it may be time to have a talk.

Discuss Finances Before Marriage & Get Expert Advice

Marriage is just the beginning, having a solid financial background and excellent credit profile will open many doors in your future.  Planning to discuss finances before marriage gives you the ability to see where you may need financial help. Luckily, it doesn’t just have to be the two of you working on it. At Ovation Credit, we’re here to help, too. We offer a free credit consultation and also a 20% discount for couples. Why not start off your marriage with a better credit life. We can help you improve your credit, fix any credit errors, and resolve any credit disputes.


College Students – Don’t Make These Common Financial Mistakes

By | Personal Finance, Uncategorized

College can be expensive, and some college students add to the price tag when they make financial mistakes such as using student loan money for a trip. Another mistake some make is going to a pricey college for four years when they could go elsewhere for two years and transfer. Here is an exploration of these mistakes.

College students financial mistakes

Using Student Loan Money for Unintended Purposes

Many times, students have money left over from their loans after tuition, room and board, and other direct expenses are taken care of. These loans are supposed to cover educational expenses and educational expenses only. Related expenses such as essentials for a dorm room could be okay. But a vacation during spring break or splurging on renting a high-end place — most likely not. Yet, quite a few college students see that leftover money as “free money,” not realizing that years of compounding interest rates could end up doubling the price tag of that spring break trip.

The solution is usually to anticipate your expenses well and to accept only that amount of student loan money. If you don’t have the money, you won’t spend it.

Not Taking Advantage of Financial Opportunities

Going to college inexpensively has become trickier, but there are still some ways, especially if you live in certain states. For example, community college students in Tennessee, Rhode Island, Oregon and New York will be able to attend for free by 2018 (or are already able to), provided that they meet residency requirements, GPA requirements, income requirements (sometimes) and a few other regulations.

Some other states also have similar programs. For example, tuition in Minnesota is free if you study a high-demand subject. California also gives one year of community college free, and low-income students have been able to attend with their per-credit fees waived since 1986. Virginia’s community college students get a $3,000 annual grant when they transfer from a state community college to a participating four-year college. In short, ways to save can be found in many places, cities and states.

What does all this mean? It means that some college students who aim for four-year degrees should seriously consider attending community college first and then transferring to a school offering a bachelor’s program. The difference could be many tens of thousands of dollars and paying off student loans much more quickly.

College Students Using Credit Cards Irresponsibly

Some students graduate owing as much as $7,000 on their credit cards; the average student graduates with $3,000 in the negative column and has four or more cards, according to Sallie Mae. College is the first taste of freedom for many students, and even those who charge only $20 here and there, or even just $500 a few times a year, could find themselves at risk of hurting their credit scores sooner rather than later.

After they graduate, they may be looking for work while juggling obligations in the way of rent, student loans and credit cards. It takes just one missed payment for a credit score to suffer.

Responsible credit card use in college often means:

  • Having a sound reason for getting a card
  • Using a card with low credit limits and interest rates, and no annual fee
  • Paying your balance fully every month
  • Having one card
  • Charging something only when you know you can afford it
  • Being the sole user of your card (not lending it out to friends)
  • Not getting cash advances

If you think you may be prone to abusing your credit card, go ahead and close the account. On the other hand, if you have already graduated, credit repair services could help you get back on track.

College should be a time of great freedom and learning. Making good decisions can set you up for life, but it can take only one financial misstep to hurt you.



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