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Personal Finance

Millennials Hit Record-Low Average Credit Score — But We Can Help

By | Personal Finance

Building a healthy credit profile and solid financial footing is hard enough for any young adult. For millennials, that reality may be starting to hit home. According to new data released from credit giant Experian, millennials — people between 23 and 38 years old — recently hit a record-low credit score of 665, the lowest of any generation. An average score of 665, according to Experian, qualifies as a “fair” credit rating — which might make it tougher to qualify for credit, obtain loans at favorable interest rates, or even snag your dream apartment or job.

As daunting as improving your credit score may seem, your goals are well within reach. We zeroed in on the key areas to help millennials improve this record-low credit score and take charge of their financial futures.

Lower Credit Utilization

Experian’s recent study revealed that millennials carry an average credit card balance of $5,231, up 7% year over year from $4,869 in 2017. Carrying a high balance from month to month increases your credit utilization — also known as the amount of credit you’re using in proportion to your total available credit. That’s also a weighty factor in your credit score.

What you can do: Commit to paying down as much of your balances as you can — without charging any additional amounts to your account. If you prefer to focus on one credit card balance at a time, choose the one with either the highest balance or the highest interest rate. Set a goal not to use more than 30% of your card’s total credit limit at any given time.

Automate Everything

One of the top reasons millennials hit a record-low credit score? Missed payments. Payment history is one area on your credit report that you simply can’t afford to neglect.

What you can do: As a tech-savvy millennial, you’re in tune with the latest technological advances. Put that power to work and automate your bill payments as much as possible. Download your credit card company’s app and sign up for alerts via email or text. Add additional reminders to your own personal Google Calendar for good measure.

Build Positive History

A lengthy, positive credit history can elevate your credit score — it just takes a while to get there. With consistent, focused efforts, your credit score will gradually climb.

What you can do: Use credit to make one or two small purchases each month, and make sure to pay the balance in full. Your responsible credit usage and repayment will be reported to credit bureaus, infusing your credit report with positive payment history.

Check Your Credit Report

Many people are shocked to learn that their credit reports don’t necessarily contain the most accurate and up-to-date information. Many millennials, saddled with student loan and medical debt, could be unaware that these debts have been wreaking havoc with their credit scores.

What you can do: Read through your report carefully and dispute any items that are incorrect or older than seven years. For even more assistance, you may want to consider partnering with a credit repair firm, which can work with credit bureaus to remove certain negative items on your behalf.

Prioritize Credit Card Debt

Overdue credit card payments will be reported to the credit bureaus more quickly than other bills — such as loan payments. So when you’re aiming to improve your credit score, your credit card bills need to come first.

What you can do: Try to pay as much of your credit card balance as you can on time every month. Even the minimum payment is better than a missed payment. If you’re struggling with student loans or other types of debt, ask lenders if they can modify your monthly payments or apply for a grace period.

Open New Accounts Gradually

Adding different types of credit to your credit report broadens your credit mix and increases your total available credit. However, you don’t want to apply for several different credit cards or loans all at once, which could signal to potential lenders that you’re financially struggling.

What you can do: If you want to open a new credit card, look for one from your local bank or credit union, places that will typically offer lower interest rates. If you decide to apply for a personal loan instead, try to keep the loan amount as small as possible to keep your monthly payment amount within your budget.

A Helping Hand

You’ve faced more than your fair share of hurdles to a better credit life. It’s time to take charge and pave the way to your own fresh start. Reach out for a free consultation with Ovation Credit.

Reference

https://www.experian.com/blogs/ask-experian/taking-a-look-at-millennial-credit-scores/

Your mom and dad were there for you and now it's time for you to be there for them. Learn the top tips for managing elderly’s finances.

7 Must-Dos When Managing an Elderly Parent’s Finances

By | Personal Finance

As your elderly parents’ health begins to decline, you may face the difficult decision of whether to start playing a more active role in their financial affairs. No matter how solid your relationship is, taking over your elderly parents’ finances is a delicate situation.

As the manager of your parents’ finances, you can relieve some of the immediate burdens and head off potential costly problems down the road. Here are seven tips for managing their finances so you can stay composed, organized, and in control.

1. Have the Money Talk

As long as your aging parents are in decent physical and mental health, they are able to participate in a conversation about the state of their finances — and how you envision your role in their financial future. Offer suggestions for a plan to manage the finances going forward, but keep yourself open to their ideas, as well. If they are still physically well, come up with a plan together to follow when they can no longer make decisions on their own. Avoid pointing out any signs of mental decline or financial strain, and instead, focus on the positives — such as the opportunity to ward off future problems.

2. Locate the Documents

Another crucial tip for managing an elderly person’s finances is to track down their financial information and documents — banks, credit card accounts, investment accounts, loan statements, Social Security statements, insurance policies, vehicle titles, and property deeds. If your parents are not comfortable handing over this sensitive information, ask them to write down the names of the institutions and accounts and store it in an easily accessible place. (If you’re still having trouble rounding up the information, see if you can track down your parents’ most recent tax return, which will likely disclose their financial institutions.)

3. Obtain a Power of Attorney

Before you can interact with your parents’ financial institutions on their behalf, you need to have a legal document authorizing you to do so. A general power of attorney grants you the ability to make decisions about your parents’ money and property if they become incapacitated. A durable power of attorney, on the other hand, allows you to act on the parents’ behalf even while they are still mentally and physically capable. Try to obtain one of these documents as soon as possible — ideally, while your parents are able to weigh in on how much financial authority they want you to have.

4. Collect Bills

If you’ve hunted down the necessary documents, you should have a handle on your parents’ assets and expenses. Set up a spreadsheet outlining monthly bills. Having access to your elderly parents’ checking account is obviously optimal in this situation — and will make the bill paying much smoother. Try to pay their bills on time as long as enough money is available. Set up automatic online bill payments wherever possible.

5. Look for Opportunities to Save

One of the easier tips for managing elderly parents’ finances: Ask for a copy of your parents’ monthly statements. Check for any unnecessary fees, charges, or subscriptions that your parents no longer use. What can they live without? When you’re reviewing the statements every month, take time to note any changes from month to month. This gives you a chance to spot problems early on.

6. Work out Payment Plans

Your elderly parents, like many others, may have fallen on some hard times and racked up some credit card debt. Fortunately, you may be able to reverse the spiral. Many lenders and credit card companies are open to negotiating a balance or creating a reasonable plan to pay off the debt. You might consider hiring a credit repair service to take some of the burdens off your shoulders.

7. Discuss Long-Term Care Plans

Unfortunately, regular health insurance and Medicaid will not cover the cost of senior living facilities. While you’re discussing the state of your parents’ finances, make sure to find out whether they purchased a long-term care insurance policy, which would cover the cost of long-term care. If they do not have a policy, you will need to calculate what they can afford in terms of future care and housing — and whether you need to make any adjustments to the budget to plan for that scenario.

We’re Here for You

As the manager of your elderly parents’ finances, your own financial and credit lifestyle may well be feeling the strain, too. We can help. Reach out to our helpful team at Ovation Credit for a free consultation today.

References

https://www.bankrate.com/personal-finance/smart-money/8-steps-for-managing-parents-finances/

https://www.agingcare.com/articles/taking-over-parents-finances-what-you-need-to-know-143865.htm

Sick of living paycheck to paycheck? Learn how to get back on track with finances.

6 Ways to Stop Living Paycheck to Paycheck

By | Personal Finance

When you’re barely earning enough to meet all your bills and other financial obligations each month, you might feel like you’re backed up against a wall with few options to make a change. However, there are quite a few things you can do to improve your money situation. Here are six tips to stop living paycheck to paycheck – for good.

1. Create a Budget

If you’re living paycheck to paycheck, the biggest thing you can do to break the cycle is to make a budget. Start out by assessing how much take-home pay you can expect in a typical month, then start deducting all your typical monthly expenses. As you get to things that aren’t as pressing, such as going out to eat or weekend entertainment, you can give yourself a set amount that you can spend each month without going over what you earn.

There are many ways to try and stick to your budget. You can use mobile apps that track your spending, old-fashioned pen and paper, or even the cash system. Simply take out enough cash to cover those negotiable expenses, and don’t let yourself access more money if you run out before your budget resets.

2. Automate Your Savings

Creating a savings account buffer is one of our best tips to stop living paycheck to paycheck. That way, when you have an unexpected expense pop up, you’re not thrown completely for a loop. Even better, you won’t have to search for alternative ways to pay for those emergencies, like a credit card or payday loan.

The easiest way to start saving is to automate the process. Set up an automatic transfer each payday with your chosen amount. Your bank will automatically transfer funds from your checking account to your savings account. Even starting with $10 a paycheck can help. Then slowly increase the amount as you adjust your spending to match your new savings habit.

3. Start a Side Hustle

Depending on your job and financial responsibilities, you may need to earn more money. While you can always ask for a raise or extra hours at your job, you can also diversify your income with a side hustle. Explore your hidden talents and think of ways to earn some extra cash outside of your typical work hours. You can drive for a ridesharing service, deliver food, shop thrift stores to resell items on eBay, or tutor after school.

There are countless ways to create a side hustle that helps you make more. It also gives you a greater sense of financial security as you get away from living paycheck to paycheck.

4. Live on Less

As you analyze your money and spending habits, look for ways you can cut back on expenses. Start with the fluffiest expenses, like recurring subscriptions. If you’re a member of multiple streaming services, for example, you can pick just one (and get rid of cable while you’re at it). You may be surprised at how much you can cut out of your budget with multiple small-dollar items, rather than just a few big-ticket items.

5. Plan Ahead

It’s important to use these tips to stop living paycheck to paycheck today, but it’s equally important to help get your financial footing in check for the future as well. As you start to reconcile your spending versus your saving, remember to put money away for long-term goals such as retirement. Even if you don’t earn a lot today, you can still save for retirement on the smallest of budgets. If you begin now, you’ll accumulate quite the nest egg even if you start small.

6. Improve Your Credit

The better credit you have, the better credit terms you’ll receive if you ever do need to borrow money. Ideally, you’ll save enough to help during a financial crunch, but if you do need to take out a loan or credit card, having good credit can save you a lot in interest. It can even open the door to better options so you don’t get stuck using a predatory lender with excessive rates and fees.

You can repair your credit on your own by reviewing your credit report and disputing any inaccuracies. However, you can also hire a professional for faster, and typically better, results.

Sign up for a free consultation with Ovation Credit to see how you could potentially benefit from professional credit repair help. You can quickly stop living paycheck to paycheck with the right team behind you.

In order to boost your financial IQ, you have to set realistic and measurable goals.

5 Ways to Boost Your Financial IQ

By | Personal Finance

When you’re ready to take control of your money and really focus on creating financial security so you can achieve your goals, a little bit of knowledge can go a long way. You don’t need a college degree in finance to gain a better understanding of your money situation. If you’re wondering how to boost your financial IQ, simply follow these five steps to get yourself headed in the right direction.

1. Find Financial Resources You Enjoy

There is no shortage of personal finance content available at your fingertips on the web these days. The great news is that you can easily find engaging resources that help you get a better grasp on topics you’re not comfortable with. There are plenty of blogs (we happen to know of a good one), YouTube videos, books, and even podcasts. You can browse general personal finance content if you’re not sure where to start or look for more niche resources if you want to learn more about a specific topic.

Not sure how to boost your financial IQ in regards to retirement planning? A quick search can give you plenty of results. Then dedicate an hour or two to finding the blogs or podcasts that really resonate with you. This will give you an ongoing resource to check in on frequently for new information that matters to you.

2. Look at Your Bank Statements Daily

As you start building your bank of general financial knowledge, you also need to get a good grasp of what’s going on with your own money. The best way to start doing this is by looking at your bank account each and every day. It may sound like overkill, but this habit serves as a strong eye-opener to figure out how much you’re actually spending day in and day out.

If you’re surprised by how much is flowing out of your bank account, consider implementing a spending freeze. This is a great way to break major spending habits cold turkey. At the very least, try it for a week or see how long you can go without paying anything besides your regular bills.

3. Perform a Review of Debts vs. Assets

Another way to boost your financial IQ is to determine your net worth. Do this by reviewing your current debts versus your assets. When you actually write down these figures and compare them, you can figure out what your financial goals should actually be. Do you have a lot of high-interest credit card debt? You may consider focusing on paying that down. Are you debt-free but don’t have cash saved up for an emergency? Work on building a strong savings account next.

Then you can determine how much you have left to put toward discretionary goals like saving for a vacation or a down payment on a house.

4. Check Your Credit Score

You also need to know your credit score to get a true understanding of your financial picture. Check your credit score so you get an idea of what kind of borrower you’d be if you need to apply for a loan or credit card in the near future.

Be sure to take a look at your credit report as well to make sure all your financial information is reported accurately. You can quickly determine if there’s been any fraudulent activity under your name, such as a stolen credit card number or new accounts opened with your social security number.

5. Reassess Your Goals Regularly

Once you’ve gathered your collective financial information, it’s important to regularly evaluate all of these contributing factors to see if any of your plans need to be tweaked. Maybe your car insurance went up or your employer started offering a larger 401(k) match. Or perhaps you had a financial emergency and used some of your savings — you need to rebuild those funds for the next emergency that pops up.

Allowing yourself the flexibility to make changes in your finances is one of the biggest components of boosting your financial IQ. Learn that lesson and you’ll be on track to handle whatever life throws at you, whether it’s a good event or a challenging one. A little financial know-how can go a long way in being prepared.

Need Credit Help?

If you need to know how to improve your credit, get professional help. Having the right legal team behind you gives a huge boost to your financial IQ.

Schedule a free consultation with Ovation Credit today.

Who needs a will and why? Prepare yourself for the unexpected.

Who Needs a Will and Why

By | Personal Finance

Once you reach adulthood, your responsibilities grow exponentially, as does the complexity of your financial life. From buying a home to owning a car or even saving for retirement, you undoubtedly have assets and liabilities of some sort. To steward those in an efficient way in the event of your untimely and unexpected passing, a will can take care of everything you leave behind in a fulfilling way.

No matter how old you are or what your financial situation may be, creating a formal will ensures you leave behind a legacy for your family or friends, rather than a bureaucratic headache. Find out what could happen if you don’t make a will and what you can accomplish when you do opt to create one.

What Happens Without a Will

If you pass away without a will, the state takes over the disbursement of your assets, including your bank accounts and personal property. Each state varies on how this process unfolds. The details also depend on your surviving heirs. If you’re single, your assets would likely go to your parents or siblings.

If you’re married, your spouse (or domestic partner) will receive ownership of your assets. If you’re not married but living together, things can get tricky without a will. In this situation, it would be unlikely for your surviving partner to inherit anything. This can lead to a sticky scenario if you informally shared finances.

3 Things Included in a Will

Creating a will can be as basic or complicated as you’d like. At a minimum, here are the most common things you’ll likely need to include to cover all your bases in a legal situation.

1. Appointment of an Executor

The first part involves appointing an executor. Choosing the right person is important because they’ll be executing your wishes rather than someone appointed from the state. Depending on where you live, this role may also be called a personal representative.

Pick someone you trust because they’ll see all the details of your finances while simultaneously managing family relationships during the distribution process. Also note that your executor should be in close proximity to where you live because they’ll need to carry out many of their responsibilities in person, like filing paperwork at the courthouse of your jurisdiction. They’re also responsible for filing any owed taxes.

2. Distribution of Property and Assets

This is the part where you designate the beneficiaries of your property and assets. It’s important to be as detailed as possible. If you’re not, you leave too much room for interpretation that could potentially cause disagreements among your surviving heirs.

When appropriate, discuss things ahead of time if you have multiple people to whom you’d like to leave an inheritance. While it’s easy to evenly divide financial assets, it’s harder to do so with physical property, especially for sentimental or heirloom pieces. You can designate who receives what, or that property should be liquidated, with the proceeds being split among certain beneficiaries.

Whether you write a will using software or an experienced lawyer, you’ll leave a much more peaceful situation for everyone if you clearly spell out your intentions.

3. Guardianship for Minor Children

If you still have minor children from home, it’s important to name a guardian for them. While you don’t have to notify your chosen person (or people) in advance, doing so can be helpful to make sure it’s something they can handle both personally and financially.

Since everyone’s situation can change, from illness to divorce or anything else, you can even name several options for the guardianship role in the order of your preference. You’ll name your children (or other dependents) in your will, and you can also include language that ensures your decisions apply to any future children as well, so you don’t have to remember to update your will with every future birth.

In the event you don’t name a guardian for your child, the court will be tasked with choosing one for you. This will usually go to a close friend or relative, but it’s best to give yourself the final say in what happens to your children if you’re suddenly gone.

Get Your Financial Footing Solid Now

Another important piece of preparing for the unexpected is leaving your finances intact. This makes it easier for your heirs to sort through things and hopefully have something to help them in the future.

The first step of financial success is making sure your credit is as strong as possible. For professional help, reach out to Ovation Credit for a free consultation.

How can you save money on college expenses? Read on.

8 Ways to Save Money on These Top College Costs

By | Personal Finance

It’s no secret that the cost of college rises exponentially every year. If you are gearing up to attend college this fall, you’re likely all too aware of your school’s price tag — and the financial aid, including grants, loans, and scholarships, that will pave the way to that coveted degree. ValuePenguin estimated the average cost in 2017–2018 at $20,770 for in-state public schools and $46,950 for private institutions. As lofty as those figures may be, they don’t account for the thousands of additional “hidden” expenses a college student might encounter every year. Before you set foot on campus this fall, read up on top ways to save money during college.

1. Plan Meals Strategically

A college meal plan is more cost-effective than dining out every night. Try to focus your eating choices around your college’s approved dining establishments. When you need to eat outside the meal plan, look for free events on campus offering food, or search for discounted food specials from local restaurants. A restaurant that extends student discounts is likely your best bet. Even better? Teach yourself to cook, which will stretch your food budget much further. Stock up on snacks in bulk and carry a few in your backpack to stave off those post-class cravings.

2. Limit Unnecessary Spending

Coffee can fuel your way through an all-nighter and help you ace your exams — but if you’re stopping by the local coffeehouse every day, your caffeine habit will eventually drain your budget. An at-home coffeemaker is an excellent investment that can save you hundreds of dollars. While you’re at it, try to avoid excessive spending on alcohol, which is one of the best ways to save money during college.

3. Socialize on Campus

Your college probably hosts a number of social activities, sporting events, and other free events each day. In addition, your tuition covers the cost of your college’s gym, pool, library, and access to a host of academic and career resources. Take advantage of the free amenities as much as you can. Your student discount can also nab you lower-priced admission to local stores, museums, and movie theaters.

4. Don’t Go “All Out” on Back-to-School Shopping

Avoid buying a whole year’s worth of living necessities and school supplies all at once. Instead, focus on the first few weeks, then take stock of what you still need and what you can afford to do without. Restrict your school supply shopping to online retailers or discount big-box stores, and steer clear of the higher-priced options on campus.

5. Buy Used Textbooks, or Rent Them

You can save hundreds on one of the top college expenses by either buying used textbooks or renting at one of the various textbook rental websites, such as Chegg.com or ECampus.com. If you choose to buy used, you can recoup your investment by selling the textbooks after your semester ends. Take note: Avoid the college bookstore — you can find much cheaper rates when you search for the required class materials online.

6. Scope out Secondhand Options

Whenever possible, shop secondhand for larger expenses such as beds, vacuum cleaners, toasters, and couches (that is, if you aren’t already planning to bring those items from home). You can probably score much better deals by scouring Craigslist and Facebook Marketplace than by purchasing any of these items brand new.

7. Hunt for Student-Focused Deals on Tech

Most students will require a new laptop or computer. Make sure you purchase any new technology through the company’s education section, which offers discounts especially geared toward students. If you need to install certain software, chances are an education edition is available as well. You can also hunt for used or refurbished models, which are often in like-new condition. Skip the printer and take your papers to the campus library to print for a few cents a page, which will also save you the cost of purchasing ink cartridges and paper.

8. Plan Travel Wisely

Travel can capsize even the most carefully planned college budget. Take this opportunity to cash in on any miles or rewards from your parents’ travel rewards credit card. As soon as you find out about when you need to travel, book your trip as far in advance of the desired dates as possible. When you’re headed off campus, try to walk or bike to your destination, or use public transportation. Leave your car at home to cut down on the gas, parking, and maintenance costs.

Build Your Foundation for Financial Success

Your healthy credit life starts now. Make sure your credit report stays intact as you broaden your educational, cultural, and financial horizons and learn ways to save money during college. Find out more about how the team at Ovation Credit can help you here.

References

https://thecollegeinvestor.com/22453/save-money-in-college/

https://www.valuepenguin.com/student-loans/average-cost-of-college

It's not the easiest of conversations but it is one you need to have. Speak up and ask you boss for a raise.

5 Tips for Asking for a Raise

By | Personal Finance

Excelling at your job often comes with extended responsibilities, but that doesn’t always mean an automatic pay increase. Instead, you may have to initiate the conversation with your manager to lay out why you should get a raise and how much you expect. You may not always get a yes, but there are a few things you can do to improve your odds. Here are our top five tips on how to ask for a raise no matter what industry you’re in.

1. Focus on What You Deserve, Not Need

When it comes time to make the case for a raise, don’t focus the conversation on your finances. The argument for a raise should be based on your merits, not the reasons why you need the extra money. Your boss won’t be impressed by talking about any financial downturn you’ve had recently, even if it wasn’t your fault.

Instead, talk about the value you add to the company and outline any new responsibilities you’ve taken on since your last raise. These are the types of things that can showcase you as an asset to the team and can help you get the pay increase you deserve.

2. Research Your Position’s Market Value

When wondering how to ask for a raise, be as strategic as possible. Instead of pulling a random number out of thin air, do some market research on what comparable positions in your area earn. There are a couple of different ways you can do this.

One way is to look at online review sites like Glassdoor, where people actually submit their salaries by job type. This gives you an idea of what other companies pay for the same job. Just make sure you don’t look at positions in larger cities since that can skew the numbers due to the cost of living. The second way is to look at job openings that are similar and see the current hiring range.

3. Practice in Advance

Get your spouse or close friend to help you prepare. It doesn’t matter that they won’t be able to replicate the conversation exactly as it will likely pan out. What matters is that you rehearse what you want to say to your boss beforehand. Go over each question and talking point and discuss what you could have said better or shouldn’t have said at all.

Don’t try to memorize exactly what you want to say. Instead, just remember key phrases. If you try to memorize a giant speech, you’re going to sound robotic and it will appear as if you are extremely stressed. You want the opposite of that. You want to seem calm, collected, and confident.

4. Time Your Request Strategically

You can’t ask for a raise any time you want and expect success. To better your odds, wait until after you’ve completed a big project (or whatever your job’s equivalent is). We’re not talking basic job description stuff. It has to be bigger than that. It should be a high-stress situation that required your extra effort to run smoothly. Wait for something like this to pass so that when you walk into your boss’s office, his or her first thought should be “key player” before you even utter a word.

Essentially, be as indispensable as possible when you walk into your boss’s office.

Another time to ask is when your company does performance reviews. Raises and promotions will already be on your boss’s mind, so it’s the perfect time to ask. Just don’t expect to receive a raise even if you deserve one. You should always ask and push the envelope. Many bosses won’t give raises unless pushed.

5. Ask for Feedback

No matter how well you position your ask, sometimes you’ll still receive a “no” response. If this is the case, don’t despair. The best thing you can do is to ask for feedback from your boss. Find out how you can improve in your current role and let him or her know that you’re interested in developing your career further.

This can set you up for a pay raise and even a promotion later on. Sometimes asking directly and letting people know your intentions (plus your commitment to the job) is the first step in asking for a raise.

Improve Your Finances with Ovation Credit

While earning more is a great way to improve your ideal situation, you can also set yourself up for financial success with the help of a professional credit repair service. Sign up for a free consultation with Ovation Credit today.

Living a minimalistic life can lead to more riches both personally and with your finances.

How to Marie Kondo Your Finances

By | Personal Finance

Whether you’ve picked up her book at your local bookstore or seen her hit show on Netflix, there’s no doubt that Marie Kondo is fueling an entire movement of minimalism and mindfulness. By truly taking stock of what you have and honing in on the things that truly spark joy in your life, Marie Kondo’s methods are a phenomenon in bringing more joy into your home, along with an extra dose of gratefulness.

In addition to tidying up your closets and drawers, you can Marie Kondo your finances as well. Check out these tips to declutter your bank accounts for a more fulfilling financial future.

Be Grateful

When Marie Kondo tackles any cluttered home, the first thing she advises her clients is to give thanks for what they have, before they begin the purge process. This simple act sets the tone for a stress-free session of decluttering and the same can be said when you Marie Kondo your finances.

No matter what your current financial outlook is, be grateful for where you are and what you have in this moment. Understand that knowledge is power and that the process you’re about to implement will ultimately open a clear path to action. You’ll be able to see what steps you need to take for credit repair, paying down debt, bolstering your savings, or whatever other goals you may have.

Start by taking a moment to pause and be grateful for the abundance and experience you have today, knowing you’re about to give yourself an even greater gift of financial security.

Spark Joy With Your Money

Marie Kondo’s main criteria for deciding whether or not to keep an item is determining if it sparks joy for you. She advises clients to hold each item and really think about how it makes them feel.

While you don’t need to physically hold every dollar you have, here are three steps you can take to make sure every aspect of your finances is working to providing you with joy, rather than stress.

1. Take Stock of What You Have

Just as you would pile all your clothes at once to see what you own, you can do the same thing in order to Marie Kondo your finances. Divide this process into at least four different sections: income, savings, credit, and debt.

Income: Look at your bank statements for the last three months and determine how much income you’ve actually brought in. If your earnings fluctuate, find an average of what you can reasonably expect each month. This number gives you a baseline for how to make your money work for your current stage in life.

Savings: Next, take stock of each savings account you have in your name. This should include both liquid accounts, like regular bank savings accounts, and long-term retirement accounts.

Credit: Another important step is to analyze your credit and see if it needs to be improved. Check your credit report for accuracy and dispute any credit errors you find.

Debt: Access each credit card and loan statement you have to truly understand the debt you currently carry. Many people don’t know the exact amount they owe, but it’s a crucial piece of information if you want to Marie Kondo your finances.

2. Organize Spending

Once you have all of those numbers compiled, it’s time to organize your spending. Look at your income and monthly expenditures to create a realistic budget. You can look at all of those bank statements you pulled to see where your money really goes.

Start by assigning budget lines to expenses you can’t change right away, like your housing payments, student loans, or car payments. Then challenge yourself to minimize discretionary expenses like food and other shopping.

In true KonMari fashion, also streamline all of your financial paperwork. Sign up for e-statements to minimize bulky statements in the mail, and create a simple filing system for the papers you do need to keep on hand. This keeps you on track and makes it easy to find the information you need.

3. Create a Long-Term Plan

Once you have a better handle on your day-to-day finances, consider your long-term goals. You may decide to focus on fixing your credit to improve your future financing opportunities. Alternatively, you might set up automated savings so that you prioritize those funds with each paycheck.

Keep the Momentum Going

Ready to make room for change in your financial life? Sign up for a free consultation with Ovation Credit to see if we can help.

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 CreditCards.com 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.

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