A Financial Education Event
 

Credit Card Choices — Big Benefits With Right Choices

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Southwest Airlines is running a credit card offer for qualifying applicants where they will get a companion pass for the rest of this year and all of 2018, plus 40,000 points. My daughter uses credit cards sparingly and her score is in the 800s (on a FICO scale up to 850). She decided to get the card and is thrilled to add her husband a companion to her recent round

trip purchase from Burbank to San Francisco for only $59. Pretty good deal for her. Since I already have a companion pass on a #SWA card, it wouldn’t be a good deal for me.

But not all deals are that good. How do you know which choice is best for your needs?

On my recent trip to #USAA, I learned a lot about the latest offerings in credit cards.

In fact, Yasmin Ghahremani, a writer with USAA, contributes the following information on how to navigate your first rewards card in three easy steps.

Credit cards that offer rewards like airline miles or a percent of cash back on everyday purchases can be a pretty great deal. But with so many different rewards credit cards available, choosing one that’s right for your lifestyle can feel overwhelming. Not only that, are you sure a rewards credit card is a smart financial move?

First off:  rewards credit cards aren’t for everyone. If you’ve never owned a credit card before or have a not-so-great credit score, you may not even qualify for a rewards card in the first place. And because interest rates for rewards cards tend to be higher than most credit cards, if you are the type to miss payments, make minimum payments only, or carry a hefty balance, your best bet is to look for a credit card with a low interest rate.

Once your cash flow and spending habits are more favorable, you can give rewards cards another look–otherwise, the interest you’ll pay on a carried balance will easily outstrip the value of any rewards you’ll receive. “Rewards cards are really best for transactors: those who pay off their balance every month,” says Mikel Van Cleve, Advice Director and CERTIFIED FINANCIAL PLANNER™ with USAA

That said, if your credit card hygiene is superb and you make a habit of paying off the balance in full each month, then you’re probably ready for your first rewards card!

1. First, consider the kind of rewards you’d like to earn. If you’re a jet-setter and love to take frequent vacations, travel rewards cards that can earn airline miles, waive luggage fees, grant access to posh airline lounges and more might be right up your alley.

Not the globe-trotting type? Then a cash-back rewards card might be more your style. These essentially give you a small percentage discount (anywhere from 1–5%) on the stuff you’re already buying with your credit card, like groceries, gas, online purchases and more.

Once you’ve identified the type of rewards you’d like to earn…

2. Match your spending habits to your overall rewards card management. Take a look at how much you actually spend in certain categories on an annual basis to pinpoint where you could earn the most rewards. If you’re single and eat out a lot, a card that offers extra cash back for grocery spending might not be the best fit.

Plus, not all rewards cards work the same way: some offer more complex variations, like extra cash-back percentage points for spending in certain categories, such as 3% at supermarkets and 1% on all other kinds of purchases.

Other kinds of rewards cards offer additional percentage points on a rotating calendar for certain types of purchases, with bonus categories changing every quarter. For example: you might earn 5% on groceries one quarter, 5% on gas the next quarter, 5% at restaurants for another quarter, etc.

Complex earning structures may ultimately earn you more, but only if you’re really familiar with your own spending habits and the amount of time you care to spend tracking expenses and managing rewards redemption. Depending on the card you choose, you’ll need to keep up with rotating categories that may require an opt-in action (like visiting a website or filling out a form) every quarter, or you miss out on the perks.

If you don’t want to hassle with that, consider choosing a card with a flat base earning rate. Many credit cards now offer 1.5% or even 2% on every purchase you make. For instance, if the card offers 1% cash back for every dollar you spend on the card and you’ve spent a total of $2,500, you can earn $25 cash back. Even better, you often have a choice on how to spend those rewards, usually via a check, a credit to your statement, or points good towards purchases with other retailers. (Beware the latter as it may encourage you to spend needlessly!) 

3. Examine the fine print of any offers you see. Does the card charge an annual fee that costs as much or more than you will likely earn back via rewards? If you feel pressured to spend more just to get enough rewards to justify the annual fee, that card might be causing you to spend more than you normally might.

Does the card place limits, or “cap” how many rewards you can earn in bonus categories? Some cards allow you to earn 3% on only the first $3,000 a year you spend on groceries, and after that rewards may diminish or disappear entirely. You’ll want to factor those considerations into your decision.

“Make sure you know how the cards you’re considering work, and figure out which one works best for your habits,” advises Van Cleve. “If you do that the rewards can really help you save some money and work toward other goals that you have.”

Holiday Travel Planning Guide – Hint: Buy Early

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One of my favorite things to do when I have my adult children home is to go to church. We always went as a family when they were growing up and having them join in when they are home brings back great memories. The last time they came home, I stood in our row with Jonathan and Joshua sitting next to me and fought back tears of gratitude. At the end of the service, the music swelled loudly, our cue to leave the sanctuary and make room for the next service in our large church.

Bob and I got separated from the boys in the exiting crowd and when I looked back to see where they were, I was stunned to see the two boys wrestling in the aisles. Jonathan had Joshua in a headlock and Joshua was trying to punch him in the kidneys to break the lock.

Oy vey. Some things never change. “We were just having some fun!” they declared as I grabbed them by the ears and they straightened up.

Family times are the best times.

They Kay family loves to get together for the holidays, but travel can be expensive. Knowing when to buy those airline tickets can mean the difference between paying cash for your holiday travel or going into further credit card debt.

Thanksgiving and Christmas are still weeks away, but October is the month you should look to book flights for both holidays.

In fact, travel app Hopper recently released its Holiday Travel Index which includes data on when to fly and buy for both holidays. Here’s a few findings I found from the study:

  • Although Thanksgiving travel is expensive (even more so this year than last — domestic flight prices are currently averaging about $325 round-trip compared to $288 last year), prices won’t vary much during the month of October. You can put it off for a bit, but make sure you book your Thanksgiving flights before Halloween.
  • If you wait to book your flight until after Halloween, it will cost you about $1 per day, every day that you wait. Prices will then begin spiking closer to $10 per day during the final two weeks leading up to Thanksgiving.
  • Unlike Thanksgiving prices, holiday flight prices tend to rise more steadily as Christmas approaches, and then spike heavily in the last two weeks.
  • The best time to book Christmas flights this year is the first weeks of October. If you have to wait to buy, make sure you watch prices closely, as they will fluctuate and then start spiking moderately 15-25 days prior to departure. They will spike dramatically (about $7 per day) in the final two weeksleading up to Christmas.
  • If your plans are flexible, you can save the most money by leaving on Tuesday, December 19 and returning Thursday, January 4

Keep in mind that it’s important to budget for holiday travel in conjunction with all the other expenses accrued during the holidays.

In our family, we value experiences over things. This means we will spend money to get kids home and spend less on their gifts once they get here. After all, it would be boring if we didn’t have Jonathan and Joshua fighting in the church aisles during the holidays.

Before You Say “I Do” – Premarital Financial Counseling

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“Bye, bye!”  I smiled and waved from the front porch, Bob by my side, “Nice to meet you!”

Speaking like a ventriloquist, I continued to wave at my son and his girlfriend,

“I give It less than one week” I told my husband, “two weeks tops.”

Bob smiled, giving his very poor ventriloquist rendition, “I don’t know, she was, ah, very conversational.”

“Yeah,” we turned to walk back in, “and her favorite topic was herself!”

We had just entertained one of our sons and a girl he brought home to meet us. In our family, we are predisposed to like the significant others that our children bring home because our kids have very good judgement. Contrary to popular belief, we aren’t sitting on “no” when it comes to these friendships that could blossom into something more.

One week later, we got a call from our son letting us know that he and the girl were not going to work out.

“Yeah,” our son reported, “I realized that the only thing we had in common was that we both thought she was pretty.”

The Kay whammy had struck again.

“What is the Kay whammy?” you ask.  It’s pretty simple, when our kids bring a special person home to meet our family, they either stay together for life and get married. Or, they break up within two weeks.

We are an intense family and we tend to drive away the faint of heart. But we are also a loving, loud and loquacious family and that attracts the brave hearts.

When it comes to a spouse, our kids look for certain qualities and when they get serious, we ask for a credit report.

I’m kidding.

Not really.

Knowing your future mate’s money habits is a significant part of deciding if they are a “forever” friend or not. Since “money matters” is cited as the #1 reason for divorce in America, it’s important to be on the same page regarding this topic. So far, all of our kids have opted for premarital counseling before the big day and this counseling should include the topic of money management.

Here’s a quick list of the financial topics that should be covered before you say I do.

8 Topics to Cover in Financial Premarital Counseling

Your Family of Origin’s Financial Situation

How did your parents manage money? What did they teach you about money? Chances are good you may manage your finances the way that your family did and this may be different from your significant other’s point of view. Did your parents save, believe in tithing, pay cash for everything or did they live paycheck to paycheck? Hashing out the differences, finding the similarities and developing a new plan for you and your spouse will be topics you cover under this heading.

Your Spend Plan

Do you currently have a budget? Go over both of your current budgets. If you don’t have one, then that is also a discussion point. Decide on what a new budget will look like for you as a couple when you are married. There’s a great app I use called Mint that can be accessed and updated by both parties at any time. This is especially good for military families who are apart but want to keep track of mutual spending.

 Holidays, Birthdays and Vacations

How do you spend money on vacations and holidays? Some families spend so much on Christmas, that it takes until the following May to pay off that debt. Others never take a family vacation. Our family had a low-key Christmas where each child got three modest gifts so the emphasis could stay on the Christ child. Then we went all out on their birthdays where the child was so celebrated that it became a highlight of the year for them. All these different approaches will impact your budget and your relationship.

 Born Spender or Saver?

What is your money personality? You could take the Money Harmony Quiz to see whether you are a born hoarder, spender, money monk, avoider or amasser.  Bob was a born spender, I was a born saver and we made it work nonetheless. But it took a lot of discussion and an action plan to learn to live in harmony with an opposite type of money personality.

 One Checkbook or Two?

Are you each going to keep your own checking account or are you going to combine them? Who will pay for which bill? What about savings accounts and credit cards? Will those be combined or remain separate? Now is a good time to download my free Sixty Minute Money Workout to help you learn how to discuss this topic and others within a time frame that minimizes conflict and maximizes the work you are doing in this area.

 Your Credit History or Debt

You and your significant other need to bring your credit reports to a premarital financial counseling session. Depending on what is there, it may be a wee bit uncomfortable. I married into 40K of consumer debt I didn’t know about and it had a huge impact on our lives together. Your mate may not count student loan debt as debt and you may find out there is an 80K loan that will impact your marriage. You can get a copy of your credit report, once a year, for free at Annual Credit Report and get one for each of the three reporting bureaus at this site. You can also get a copy of your credit score (different from a report) at Credit.com where they will also tell you ways to improve your score. Be prepared to enter your social security number to get this information. Talk about these debts and discuss a repayment plan.

Long Term Financial Priorities

My adult daughter says that life is about investing in experiences, not things. Her priority is travel over a newer car or designer clothes. Her husband’s priorities are slightly different because he’s a born saver. They learned how to discuss these diverse perspectives by doing a Sixty Minute Money Workout so they can get on the same page.  Your mate may want to buy a house as soon as possible and would forgo vacations to make that happen. You may not care that much about home ownership but really want to go home for the holidays. It’s important to discuss topics like housing, retirement, vacation and other long term goals before you get married. I like to say that you can have it all, but not at the same time. Bob and I chose to put our kids in private schools rather than drive new cars. Today, our kids are done with school and we drive the newer cars. We just have to choose the timing on our purchases.

 

Who Does the Math?

Someone is going to need to balance the checkbook, pay the bills and set up the budget. Yes, you should set up your spend plan together, you can even pay the bills together, but that’s usually the exception rather than the norm. One of you may be predisposed to balancing the books better than the other. One of you may actually enjoy paying the bills. In our family, I’m the financial expert and my husband flies jets, so you would think I balance the checkbook. But I also know that my husband needs to be aware of the bottom line because he’s the born spender, so he keeps the books and I review the statements. There needs to be a check and balance. One person should not have absolute control over the couple’s money. Sometimes, he who controls the money controls the house. So it’s important that both partners have access so that there’s no abuse of power.

Which of these topics have you already discussed with your significant other? Which topics still need to be explored? Set a day, time and topic to talk about money with your mate and don’t forget to get the free Sixty Minute Money Workout download.

 

What I Luv About Southwest Airlines – part two

BGadmin

Before @SouthwestAir had boarding groups and numbers, people would show up an hour or more before the flights and sit on the floor in the boarding area to get in a first come first served line. It was chaotic, but it’s just the way it was. One day, I was on my way to New York City for a very important Satellite Media Tour featuring 35 TV shows in one day. I had a meeting when I landed and couldn’t afford a delay or missed flight. As we were lining up, people kept invading each other’s space in the cattle call also known as a line. There were two men in front of me, a tall one and a short one. All the sudden, the short man turned around,

“You’d better back off and stop bumping me or I’m going to kick your butt” he shouted.

The tall man looked down on him and blurted out, “Yeah? You and whose Army?”

This continued for a few rounds as everyone else in the gate area watched the incident escalate. When the guys started to fist up and it looked as if it would come to blows, I had an out of body experience. I found myself stepping in between them. I knew they had been through security and didn’t have guns or knives and with four tall sons, I’d stepped in between many a fight.

I looked at both, “Gentlemen, you need to stop this now! If you get into a flight, our plane will be delayed so they can pull off your luggage. I can’t afford a delay today and it’s not fair to all these other passengers either.”

The tall man instantly looked uncomfortable, as if he was wondering how he allowed himself to be pulled into such a confrontation. But the small man was not moved and remained in a pugnacious pose, fist ready and stared me down like he was ready to punch me to get to his nemesis.

I was taller than him and brought my face to within inches of his own. In my most authoritative mother of seven voice I sneered, “You, turn around, now!”

He stared at me.

“Now. I won’t ask you again.”

He slowly turned around, away from the potential fight and the gate area broke into applause at the mean mama who saved our flight from a delay.

Thankfully, I don’t have to fight for a spot in Southwest lines these days. Today, I’m continuing the blog I started last week with part two of a three-part series. I wanted to give my best hacks for ways to get the most out of flying with this popular discount airliner. Keep in mind that this is not a sponsored post, I just enjoy saving our Heroes at Home non-profit money when we travel around the world, helping military members with free financial education.

Rapid Rewards Shopping

By doing the shopping you were going to do anyway through the Southwest portal, you can earn anywhere from 1 point per dollar to 9 points per dollar. You’ll also get coupon codes at the portal. One caution, if you use outside coupon codes, then you could forfeit the points benefit on the SWA portal. So be sure you compare which coupon code would be the best option before you decide on your purchases. Some of my favorite sites are Thinkgeek & Harry & David (both are 3 points per dollar), plus I like Starbucks and the Disney Store (2 points/dollar). You can still combine a lot of savings by layering the savings on line. Today, I went through Rapid Rewards Dining and bought clearance items through Disney for the Heroes at Home Event as giveaways. I used their codes to get free shipping with the SHIP50 code they gave me and all my clearance items were 70% off. I spent $53 for $170 worth of merchandise and earned 106 points.

Early Bird

You can purchase Early Bird for $15 per leg, which is a service that will check you in 36 hours before the flight, so that you don’t have to try and get a better boarding group by clicking in exactly 24 hours before your flight. You can’t access your boarding number until 24 hours before the fight, event with early bird. Do not book Early Bird until you are certain you are not going to cancel your trip, because this is non-refundable. If SWA cancels the flight, then they will refund the Early Bird fees. Later in the year, when people begin to earn tier benefits such as A-List and A-List preferred, then it seems the Early Bird boarding positions get less and less beneficial. Last year, my husband got B36 with Early Bird because there were so many A-Listers. It might even be a better strategy to forgo Early Bird, and then just upgrade your boarding position for either $30 or $40, depending on the length of the leg. Yes, you’ll pay more than you would with Early Bird, but by upgrading your boarding position, you might qualify for more points and you should get a better seat.

A-List and A-List Preferred

If you earn 35,000 points in a year, then you can earn A-List for the rest of the current year and into the next calendar year. If you earn 70,000 points, you’ll be A-List Preferred. These tiers get you priority check-in and security lane access, an automatic A-List priority boarding (you don’t have to purchase Early Bird anymore) and 25% more earning bonus for flights. The highest level gives you a 100% earning bonus on points and free drinks and free inflight Wi-Fi. Keep in mind that you cannot use points you purchase to
qualify for these tiers. I currently have A-List and will earn A-List Preferred in a couple months.

Which of these hacks were you already aware of and which tips can you implement?

Next week is the third and final part of this money savings series on how to fly Southwest for business

and pleasure. We’ll learn about the Companion pass, whether you should use points or pay for fares, how to find a good seat and how to create forever memories with your points.

I’d Luv you to join us then!

What I Luv About Southwest Airlines – Favorite Hacks Part 1

BGadmin

If you’ve never flown Southwest Airlines before, then you may not be aware that they board by groups and by number. When you get on the airplane, it’s open seating—first come, first served. I was boarding with an A-18 number which lined up adjacent to the higher numbers. An outgoing Millennial lady came up to another a Boomer woman standing on my left and asked, “what number are you?” Because she wanted to line up in order.

The well dressed and friendly Boomer answered, “I’m 50.”

I leaned over and whispered, “You don’t look a day over 35.”

At first she was surprised, but then smiled, “Actually, I’m 55 years old.” She whispered, “And I like 55.”

Cool. Gotta Luv a woman comfortable in her own skin!

This is not a sponsored post for this airline. I’m writing about this simply because it’s a big part of my life and a lot of my followers use this discount airline. I fly Southwest in order to save our Heroes at Home organization money on travel when we provide free financial education for our military members.

Here are my favorite hacks to fly high with less stress and more money in your pocket:

Shop the Sales

If you know you are traveling in a few months, then don’t buy right away. Keep an eye on the sales in order to get the “Wanna Get Away” fares, which are the cheapest. Subscribe to Click N Save in order to get an alert when fares go on sale. Keep in mind that you can look for fares in either dollars or points and when fares go on sale in dollars, they also go on sale in points.

Shortcut to Savings

If you have any latitude in when you fly, then you may want to check out the Low Fare Calendar

This resource gives the lowest fare on the calendar date for the month. It will only list the lowest fare for the day, so you’ll have to pick and choose the schedule you want and it may not be the lowest of the day. Sometimes, I just use the calendar to avoid buyer’s remorse in realizing there wasn’t a cheaper fare on a different day.

Rapid Rewards

Sign up for the frequent flyer card at the Rapid Rewards center on Southwest.com. This isn’t the credit card, it’s a number you get when you enroll that you will also enter when you book travel. These points don’t expire as long as you show some kind of points generating activity once every 24 months with either flights or partners. See below for partner opportunities as well as part two in next week’s blog.


Southwest Credit Card

Be sure you check out the Chase Southwest Chase credit card if you really want to generate points to earn more flights. Right now, brand new cardholders can earn 40,000 points when you spend $1,000 in the first 3 months. I recommend that you pay off your card each month to avoid paying interest. The annual fee is $69 and if you have a friend who already has this card, then let them sign you up on a referral. That way, you can earn the same benefit of 40,000 points, but your friend can earn 10,000 points as well. These benefits change regularly, so be sure you know the current terms before you sign up. You earn 2 points per $1 spent on Southwest purchases and Rapid Rewards® Hotel and Car Rental Partner purchases, then you earn 1 point per $1 spent on all other purchases. If you have a business, then you can rack up even more points by using it early and often. Just make sure you pay attention to utilization and if you charge more than 30% of the available credit, then pay off the balance before the billing cycle ends. This will help you keep a good credit score.

Partner Points

If you book a rental car on the Southwest.com portal, then you can earn 2 points per $1 or more, depending on the provider. You can also book hotels for points and can earn as much as 10,000 per night (I’ve never found a provider that actually gives me that many for one night because they are for hotels in other cities that I’m not visiting.) They disclose how many Rapid Rewards points they will give you when you are booking.

Rapid Rewards Dining

celebrating our sweet points!

If you sign up for rapid rewards dining, then you can earn points in partner restaurants by registering every card you may use in a restaurant (not just your Chase SWA card). I’ve registered all of my own cards and my husband’s debit and credit cards, too. I keep it simple by just going to the restaurants we want to eat at and if I end up getting a bonus, it’s icing on the cake. If you want to be more proactive, you can look at the list of partner restaurants and visit one of those for more points. Be sure you read the rules associated with the dining points, so you know what to expect.

These hacks are too good for just one post, so join us next week to see how you can earn even more points by shopping in order to earn tier benefits and whether you should invest in Early Bird or not.

What’s your favorite @SouthwestAir city to visit?

MilCents Helps Build Your Financial Foundation

BGadmin

Are you ready to understand, manage, plan, and protect your money? I know I’m ready and helping others do the same!

I love creative ways to learn about money that are easy and interactive. That’s why I work in Washington DC on the advisory panel of the Military Family Advisory Network (MFAN).  I am writing to share an exciting update about MilCents — MFAN’s financial education social learning program.

Over the last few months, MFAN has worked with financial education experts to develop five customized program tracks that correspond with stages within the military life cycle.

While our Heroes at Home Financial Event helps families learn in a live show, MilCents goes further online and at your own pace. Stages include: ROTC/Service Academies, actively serving, transitioning military, veteran, and retiree. The customized tracks allow users to get the tailored information they need, when they need it. In addition, they’ve enhanced their monitored social community, added gaming elements, and refreshed all MilCents content — especially the content focused on military retirement. 

Are you confused about the changes to military retirement? Don’t worry — MilCents breaks it down so it’s easy to understand in the retirement section.

BONUS: The first 150 participants to complete MilCents and earn all the program badges will receive a $20 Amazon gift card.

Click here to get started. And make sure to tell your friends and family — learning’s more fun when you’re doing it with others.

There’s also a better way to budget. Take control of your money by joining the @Military Family Advisory Network’s customized online #MilCents financial education program and get help with your spend plan.

To the partners who helped make MilCents possible — thank you. We know this program will continue to help families within our broad military community.

Ellie Kay

Advisory Board Member

Military Family Advisory Network

 

Do You Believe in Good Credit?

BGadmin

I love a good hero.

When I was a little girl, I saw “Peter Pan.” I fell in love with Tinkerbell for all her spunk and fairy dust, she became my hero. I believed in fairies. I was convinced that if I wished hard enough and focused on happy thoughts, I could fly like Peter and Tink!

My BFF, Nanette Woffard, and I made fairy wings out of panty hose, wire hangers and glitter. We began to exercise our belief by jumping off her circular second story stairway, climbing a step higher each time. We were (five-year-old) girls interrupted when, about step number 8, her mom walked through the room with a load of laundry and discovered our exploits.

Mrs. Woffard encouraged our creativity, but grounded us from flight school. We wallowed our disppointment in homemade chocolate chip cookies and milk.

But I never forgot about my hero and how she could fly.

As a young adult, I met a hero who could fly—for reals (that’s millennial-speak for really and truly).

He flew jets and his wings were hard earned through Air Force pilot training.

We’ve had a fairy tale life so far and raised a passel of Kay kids who also learned to dream, believe and soar to greater opportunities than they thought possible. One of those kids even earned his own set of pilot wings last month. Flying, in life and in dreams, is something we’ve always encouraged.

But there’s nothing that will bring a dream crashing down faster than financial difficulties. That’s why we taught our millennial children how to manage credit and earn great credit scores.

When each of the Kay kids graduates from college, they have a good-to-excellent credit score at the age of only 22. It can be done, but the first step is to understand how credit and credit scores work.

Credit scores impact interest rates, insurance premiums, security deposits, employment and even security clearances. In our Heroes at Home Financial Events, we have various segments. I teach on spend plans and car buying. USAA sends JJ Montanero to speak on saving and investing. But we also have an entire segment on how to develop and maintain good credit in order to keep their security clearances so they can do their jobs.

Gerri Detweiller has been writing in the consumer credit space for years and as one of our speakers, she can attest that credit and debt are themes that bleed into all financial areas. A lot of what I’ve recently learned comes from Rod Griffen a financial educator from Experian, who teaches me the latest nuances in this sometimes complicated space.

What do you believe about credit and are those beliefs fact or fantasy? Here’s a quick quiz for you to gauge how much you know about today’s world of credit.

Answer the following as either FACT or FANTASY:

  1. If I have never had a credit card or debt, then I won’t have a good credit score.
  2. Carrying over a balance on my credit card helps me build good credit scores.
  3. My credit history is the area that has the greatest impact on my score.
  4. If I pay off my balances each month, then I don’t have to worry about Debt Usage or Utilization (the amount of debt to credit available).
  5. If I co-sign a loan for someone else, it will still be their debt and not mine.
  6. I have three credit scores.
  7. I can get a free copy of my credit report at Annual Credit Report for each of the three main credit reporting bureaus.
  8. My credit report and my credit score are both free and they are basically the same.
  9. It’s a smart credit move to repeatedly take advantage of introductory APR rates by opening new credit cards and transferring these balances to the lower APR. Then cancel the cards and you will still have a good score while taking advantage of the lower rates.
  10. If I only have credit cards and student loan debt, then it’s important for me to get a car or motorcycle loan for the expressed purpose of building diversification to help my credit score.

Answers

  1. Fact. No credit history means you haven’t started to positively build your credit score. This means you would have a low score on many of the scoring models.

FIX: Start out with a secured credit card where you can’t charge more than you have secured in the credit card account. You can review cards at Bankrate but read the fine print to know what you are getting. This will establish a history and help you start to develop good credit.

  1. Fantasy. Carrying over a balance only means you’re paying interest every month on the balance you carry—which isn’t a smart credit move. Maintaining a credit card balance doesn’t help to build your credit.

FIX: Pay your credit bills on time, carry lower balances and have credit cards for a longer period of time in order to build positive credit.

  1. Fact.  Credit history accounts for 35% of your score and Debt Usage (Utilization) accounts for 30% of your score.

FIX: Concentrating on these two areas (Credit History and Debt Usage) are the most effective means of helping you build good credit.

  1. Fantasy. Even if you pay off your balances every month, you could take a hit in the Debt Usage area if you charge more than 30% of the available credit at the time that the snapshot of your account is taken. So if you have 10K available on the credit card and you’ve charged 9K in order to get points, you’ll have a 90% utilization record if this account is recorded before you pay the balance when the bill is due.

FIX: If you charge items to get points and your utilization is high, then transfer a payment BEFORE the bill is due. You’ll still get your points, but you get ahead of the Debt Usage scenario.

  1. Fantasy. Once you co-sign, then you are responsible for the debt if the other person doesn’t pay. If they pay, it’s not problem, but if they don’t, you will.  You’ll have to pay off that motorcycle, the remainder of the lease or the credit card, should that person default.

FIX: Don’t co-sign on a loan. We’ve lost friendships and relationships with family members when they tried to take us hostage by trying to force us to co-sign. If the lender determines they won’t take a risk on them without a co-signer, then why would you take the risk?

  1. Fantasy. Rod Griffin from Experian, our Heroes at Home credit educator says he could probably pull 80+ scores on any of his audience members. There are three main credit reporting bureaus, but many credit scoring models.

FIX: To know if you have a good credit score, pay attention to the scoring model. On some scales 750 is a good score and on other scales, it could be average.

  1. Fact. You can and should get your free copy of your credit history from each of the three main reporting bureaus listed at Annual Credit Report. But be careful, you have to opt out of paying for scores, monitoring or other services.

FIX: When you order your free score at this site, don’t ever give your credit card info or you could inadvertently be signing up for a product or service you don’t want. However, you do need to be prepared to give your social security number at this secured site.

  1. Fantasy. A credit history is different from a credit score. The history gives a list of all the various credit accounts/debt you’ve have in your lifetime. The credit score is a number that determines your credit worthiness to lenders. The credit history is free at Annual Credit Report.

FIX: Free credit scores are available at Credit.com and CreditKarma.com. But make sure you are getting the free service and not accidentally signing up for a paid service. You can also check your credit card bill to see if your company provides a free copy of your score. If you are military, get a free score at your Family Readiness Center.

  1. Fantasy. This is a good way to deteriorate your credit score. Lenders can see you are transferring balances and taking advantage of a new card’s APR offer. It can even look like you are floating the note or trying to pay Peter by robbing Paul. When you open and close multiple accounts, you shorten the overall length of your credit history and can ruin your score.

FIX: Pay attention to your credit history and remember that every new card you open shortens the overall credit history length of all your accounts combined. Open new credit accounts sparingly and don’t credit card jump to try and save money.

  1. Fantasy. While it is true that different kinds of loans build diversification in your credit profile, diversification only accounts for 10% of your score. So the idea that you SHOULD go out and buy a car or motorcycle (and finance it) in order to get a better credit score is pretty ludicrous.

FIX: Buy a car or motorcycle because you need one and you can afford it. Make sure you budget to be able to pay the note, insurance and other vehicle ownership expenses.

 

Scoring

10 Correct

 Superstar – You know a lot about credit, so you are probably: 1) in the financial industry or 2) really well informed and good with money or 3) you cheated. If you didn’t cheat, you might even qualify to be one of our superstar speakers at Heroes At Home because you certainly know enough to teach this topic!

 

8-9 Correct 

Excellent – You may be kicking yourself or crying “trick question” because you got almost all the right answers. Nonetheless, even experts can learn a few things about the ever-changing world of credit. Be sure you are giving your mentees up to date advice and pay attention to the nuances of building excellent credit.

 

6-7 Correct

 Good – You have a good working knowledge of credit, but you’re no expert. You’ve believed a few fantasies instead of the facts in some of these areas. Pay attention to the questions you missed and make it a point to readjust your thinking so that you can build even better credit.

 

5 or less Correct

 MEH – You know just enough to be dangerous and you are at the greatest risk of crashing and burning when it comes to credit mistakes. Study the wrong answers and make sure you understand how credit works before you open new lines of credit, cosign a loan or try to get a loan for a new vehicle.

 

 

 

 

 

The Heroes at Home Financial Event Tour Update

We’ve visited JBSA, San Antonio, Lackland AFB, Randolph AFB, Laughlin AFB and the last stop was Sheppard AFB. At every base there are things that are the same: 1) we have a lot of fun presenting financial education to our military audiences 2) everyone wants to win the iPad 3) they are surprised that they can learn and have a good time simultaneously and 4) we are always grateful to USAA for providing for so many aspects of this tour. But

Friends and family at every base!

at every base there are also challenges that our military members face that are unique to that base.

At JBSA there are 11 different units from all branches and consequently we have a “purple” audience with Airmen, soldiers, Marines and sailors in attendance. As a mom with sons in each of these branches, I can still relate to my audiences. At Lackland, which is “out in the middle of nowhere” they were so appreciative that we came “all the way out” to Del Rio, TX, (right by the border) to spend time with them. They were a welcoming audience and have a unique mission of training pilots who will go into all parts of the world, flying different kinds of airplanes. We called them “the little base with a big mission,” they also have big hearts.

This past week, we went to Sheppard AFB and saw yet another demographic of Airmen who are in freshly out of boot camp and in military training for their big world mission. Many are mechanics, but there are all kinds of technical professions trained there as well—60,000 per year. There’s also ENJPT (Euro NATO Jet Pilot Training) where future fighter pilots are trained (about 200 per year).

One of the unique challenges of Airmen at Sheppard is that they are vulnerable

A Full house at Sheppard AFB. Photobombing my fellow speakers Ingrid Bruns from USAA and Bethany Grace our high energy emcee!

financially in two areas: family and love. Some of these young military members are pressured by extended family members to send money back home. We stressed that when you are getting a flight briefing from the flight attendant on a commercial airline, she says, “If the cabin depressurizes, air masks will fall from the upper compartment. If you are traveling with someone who needs assistance, put on your own mask first, then assist them.” That’s the same premise we stressed with our young Airmen, “take care of your own finances first and get financially fit and healthy, then teach your family how to do the same.” From the platform, I stressed the old adage, “You can give a man a fish, and feet him for a day. But you can teach him how to fish and feed him for a lifetime.” Yep! We gave some fishing lessons.

The other thing that slips up Airmen is love. They spend money they don’t have trying to impress a significant other by going out to eat, to movies and even buying them jewelry. Some of the jewelry stores convince these young Airmen to sign on the bottom line and they end up paying for years at 30% interest for a necklace or a ring. At one point, I almost shouted from the stage, “If you don’t remember anything I said today, remember this: NEVER SIGN FOR A LOAN WITHOUT HAVING SOMEONE LOOK IT OVER!” I believe the 1300 trainees in the audience got that point. “There are folks at Airmen and Family Readiness who would be more than happy to review a loan before you sign it.” This tip alone could save them thousands of dollars on auto, jewelry, computer and personal loans.

     One of my favorite aspects of the Heroes at Home Financial Event is reconnecting with friends and family. In San Antonio, my BFF Brenda Taylor was there in the audience. A friend knows a lot about you, a BFF knows enough to blackmail you. Brenda can blackmail me many times over! At Laughlin AFB, my good friend Beth Runkle was not only instrumental in getting the spouses together the night before the financial event, but she also introduced me as well. I love the heroes in the Runkle family! At Sheppard, our longtime friends, BG Pat “Moon” Doherty and his wife Dee Dee were there to welcome us royally. I’d call him the World’s Greatest Fighter Pilot because he did fly me in an F15E Strike Eagle once, but Bob would beg to differ about that designation. These Heroes not only brought me out to Seymour Johnson AFB many “moons” ago, but they were instrumental in bringing this tour to the Air Force!

     But the one audience member on this tour whom I love more than life itself is my son Jonathan, who is a student at ENJPT and was a smiling face that I adore. I removed a slide or two that might prove embarrassing in front of 1300 Airmen and tried really hard to not highlight my son in my presentation or during the tour day. If you want to know if I was successful in this regard, you’ll have to ask Jonathan. Apparently, parents can embarrass their kids without even knowing they are doing that. There was just one time, when I ate a blue mint in the General’s office and then addressed his staff of 55 commanders that might have been a problem. I was told later, my teeth were Air Force Blue.

We may be coming to a base near you, this schedule is constantly changing and we are adding news dates regularly. Contact us at assistant @elliekay.com for more info and continue to Aim High!

Cyber Safety and Savings

Military families, especially those stationed overseas will order more items online this year than ever before. A recent report from the U.S. Census Bureau of the Department of Commerce estimated that 87.5 billion will be spend on retail e-commerce sales. Whether you are buying online or on your phone, it’s important to take extra steps to stay safe from cyber criminals while you shop.

Here are a few items to keep in mind when you shop, not only during this time of the year, but year-round:

  • Convenience Can be Costly – I know that when I shop at Bed, Bath and Beyond or Amazon, I like to save my credit card information so that I can use it more conveniently the next time I shop. However, allowing a retailer to keep your credit card information can be a security risk. So keep your info to yourself and enter every time you shop rather than saving it on the site.
  • Check Your Statements – In an effort to go green, many of you may have elected to have paperless delivery for credit card and bank statements. It’s important to review those statements each month to check that all the charges are accurate. Even a small discrepancy could indicate a larger problem.
  • Say “No” to Public and Free Wi-Fi – Criminals love to hack into your connection and steal your info. So while you can use free wi-fi to surf the web or check your email, don’t use it to purchase items where you have enter your credit card or bank information.
  • Be Diligent With Passwords – It’s a lot easier to repeat the same password over and over with different online accounts, but it also sets you up to be a victim of fraud if your information is compromised in a security breach. So create new passwords and emails to associate with different accounts.
  • Speaking of Passwords, Set One On your Phone – I was at a Starbucks recently, prepping my coffee at the creamer bar when I saw that someone left their phone. A couple had just left that area and walked out so I grabbed the phone and ran after them. When I caught up with them and gave them the phone, the man was so excited, he looked as if I had just given him the Publisher’s Clearinghouse prize. Even though our phones are usually in our hands or within arm’s reach, who of us hasn’t experienced the panic of thinking we lost it or left it somewhere. So set a password on your phone and change it every couple of months.
  • Don’t Click Through on Emails – I opted in to get certain notifications from retailers of deals, coupons and special offers. Cyber thieves know this and regularly send our pfshing emails for major retailer like Amazon, Wal-Mart, Sam’s and Walgreens. Never click through on an email’s special offer. Instead, capture any coupon code information, then go to your browser and enter the website address directly.

What ways do you use to stay safe online? Share your ideas with me and let me know how stay safe online and when shopping on your phone.

Financial Readiness and FICO Scores

On our “Heroes at Home Financial Event Tour” in FY15, one of our most loved segments was given by Gerri Detweiller, who wrote the original book on personal Credit. The Department of Defense realizes that financial readiness impacts military readiness. In fact, credit scores (or Fair Isaac Credit Score) follow you from assignment to assignment and don’t just determine if you qualify for an auto or mortgage loan. Your credit score also can also be an indicator of whether you are allowed to stay in the military or whether you are kindly asked to leave. It’s not so much the score itself, but what the score represents—your credit worthiness. If you have too much debt, then you cannot get the security clearances necessary to do your job and this can follow you into the civilian world as well. Even utility companies check these and decide whether you have to pay a deposit based on the score.

According to recent figures provided by FICO, 25.5% of consumers (nearly 43.4 million) now have a credit score of 599 or less, marking them as bad risks for lenders (see the chart). It makes it is unlikely that this group of people will get credit cards, auto loans or mortgages under the tighter lending standards that banks now use.

These credit ratings can also make the difference between whether you are accepted or rejected for a new insurance policy or as a renter and much more. That’s why it’s important to know your number. Furthermore, some employers check these scores, which could be the determining factor in whether you get that new job at the next assignment.

Summary: Why do I need a good FICO score?

A good credit score is invaluable to everyone. Here are the benefits of a good score in a nutshell:

  • Security Clearances — If you are having financial problems, as indicated by a FICO score, then you are a security risk and cannot be allowed to work in certain areas requiring a security clearance.
  • LoansA good credit score helps you qualify for loans and get faster loan approval.
  • Interest Rates Your FICO score oftentimes is the determining factor when it comes time to be assigned an interest rate. A better rating can help you get a better mortgage rate and could even make the difference between becoming a homeowner versus a continued renter.
  • 0% APR Have you ever been tempted by the advertisement on a new car, furniture or a new credit card that offers a special “0% APR”? No wonder so many people get in line for these special deals. Few people realize that these kinds of special offers only go to those who have the top levels in the national distribution of FICO scores. If a good credit score holder acquires too many of these kinds of loans, they’ll deteriorate their score. So reserve these for long term loans such as a new automobile.
  • So Close and Yet so Far Sometimes the difference between qualifying for a great deal and not qualifying for it can be as close as twenty points on your FICO score. You may say: “So what? I don’t qualify for it, I can still qualify for a fairly low interest rate.” But it adds up and matters a great deal. The difference on a $20K car loan at a 0% APR versus a 7% to 8% APR is around $1800 over the course of the loan.
  • Job Applications – There are jobs that require high security clearances and government positions that can be impacted by your score as well as employment in the financial sector.
  • Renting – Some people cannot rent a home or an apartment without a good credit score.
  • Utilities – You can often have your security deposit waived if you have a good FICO.
  • Insurance Rates It could also affect what kind of an insurance premium you will pay. Some auto insurers are using credit data to help determine insurance rates. In fact, ninety-two of the 100 largest personal auto insurance companies in the country use credit data in underwriting new business, according to a study by Conning & Co.

Improve FICO Scores in Three Easy Steps:

  • Pay credit bills a day early rather than a day late – Set this up online using automatic pay so that you’ll never be late again.
  • Pay attention to proportionality — Keep your charges at 50% or less of the available credit, even if you pay off the card at the end of each month. This means that if you have a $5,000 credit limit, you should never charge more than $2500.
  • Pay at least $5 more than the minimum each month – It will show up on your report as paying down your debt which will make your credit score go up!

 For a copy of your FICO score, go to Credit.com and for a free copy of your credit report go to Annual Credit Report and for more help go to your local Airman and Family Readiness Center (or the equivalent in your branch of the service). You can improve your FICO, pay down debt and get fiscally healthy so that you can find the financial freedom that is worth fighting for!

 

 

 

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