Understanding your credit situation.
Credit is a funny discussion. People will put credit on a pedestal only to be a slave to the debt they’ve accumulated.
Credit, on its own, is a useless resource.
The irony is, even if you have excellent credit, it would be of no use without:
- An ability to pay off added debt.
- A game-plan on how to use that credit to further a project or idea.
Furthermore, people believe in repercussions to debt, particularly unsecured debt. In fact, in states like mine, California, creditors have only four years to pursue a debt from you legally. After seven years of that bad debt existing on your credit file, it simply disappears.
There are laws protecting consumers from creditors poaching debtors. The illegal methods in which creditors reach out make this especially needed. The biggest thing to fear about past due, unsecured debt is a lack of education surrounding your rights.
Paying down what you need to is important. Figuring out what that is, is essential. The rest, like small credit card balances, can always wait.
Open a brokerage account/start that 401(k) as early as possible.
Brokerage accounts are just fancy bank accounts. Most people are shocked to know that brokerage accounts offer checks and debit cards just like the bank you regularly transact with.
While this isn’t something that alleviates financial suffocation, it does set you up for getting into the comfort of understanding passive investment and general contributions to a personal account.
Even a small 401(k) goes a long way. My mom started her retail job at nearly minimum wage and has climbed tooth and nail over the last two decades up the retail ladder. She started her 401(k) through her employer when she was around 35 or so. She was an immigrant with a dream and an ability to work exceptionally hard. She’s 49 now, and those tiny contributions were matched and accumulated with the S&P 500 tracker she’s been vested in. The last 14 years have been good to her, and she is well on her way to having six figures invested before she’s retired.
Anything is possible, even on a low salary, raising two kids on your own. It’s difficult, but not impossible.
You are the average of what you do.
He says that you are the average of what you do.
Breeding excellence in anything is one part consistency and one part determination. You don’t need to be anything except to accept things as they are. In his overview, he talks about how the sower has no control over whether the seeds he lays out fall on the wayside, shallow soil, thorns, or anywhere else where they may not grow. The sower focuses on doing a good job, and figuring out how to maximize the seed that does inevitably grow.
Fighting the birds who steal your seed or figuring out how to grow the crop in shallow soil is a waste of time.
Find what works, and do it exceptionally well. My mom is a great example of someone who worked for minimum wage, and moved on up to a wage well above that with an additional commission today. She learned everything about her industry, how to speak to customers, and how to provide excellent customer service. She isn’t worried about other kinds of work or figuring out how to maneuver herself into a new job. She’s secured a spot and found her niche.
It is the law of averages that if you do something long enough, you will become good — or even excellent at it.
Chop the fat.
Many people sound shocked that they can actually cancel an auto insurance plan whenever they want. In fact, you can call them when your policy is over, whether that is six months or longer. You can ask them why your rate is what it is, or you can let them know that you are going to go through another insurance carrier.
Most insurance carriers don’t want you to know that you can continue shopping around for the same policy somewhere else. They’re constantly changing their prices and becoming more competitive. If you have a clean record with them, that’s only a bonus.
The same goes for cellphone service. A lot of times, if your phone is paid off, a third-party service exists that buys service from your very own cellphone provider, but charges you a third of the rate. These cell phone providers are identical, offer the exact same services, but they cost fractions of the original plan.
Make sure you’re taxed correctly.
I’ve lost count how many times I’ve had this conversation with friends and relatives alike. When you file your paperwork with an employer, you’re asked for an exemption/allowance count. This is both a federal and a state-by-state thing.
Another word for this is how much you believe you will be able to deduct or adjust from your gross income at the end of the year.
Many people are just waiting until the end of the tax year to receive a big check when they don’t need to.
If you are taking care of someone, you have children, business expenses, etc, the allowance section will be able to correct for that end of year refund so that you get the money back out of each paycheck’s withholdings.
In fact, most people are most surprised when I tell them that the money they get at the end of the year was theirs to begin with the entire year. The government was just holding it for them and waiting for them to file their taxes to give it back.
Don’t let them keep your money from you. You want to make your tax liability as close to zero as possible by the end of the year, without swaying too far one way or another.