Finances, Football, and Failures
Money is a funny subject. Everyone wants it, but nobody ever wants to talk about it unless they’re in
excellent shape in the finance department. Sure, I get it. No one wants to tell people that they a.) Don’t
make a lot of money, or b.) Are crazy spenders and waste all of their money (hopefully the answer isn’t)
c.) all of the above.
Recently, I watched a commencement speech that was given by Russell Wilson at the University of
Wisconsin-Madison. I’m not even sure what enticed me to watch this speech. Perhaps I was bored or
just missed football season (probably both). Anyway, as I’m listening to him talk about overcoming
obstacles in life and what to do when life tells you no, I started realizing that those sentiments can be
applied to anything. I am no more an inspirational writer than I am a quarterback for the NFL, but I can
tell you that setting yourself goals and persevering through troubles can actually make you better in the
end. Here’s what I’ve decided: When it comes to money, life is going to mess up every plan you have.
Whether it’s messed up beyond repair is up to you.
No matter what your money goals are, there are going to be road blocks in the way that make you feel
like you want to quit trying. Saving for retirement can be frustrating when your rate of return is barely
keeping up with inflation (or losing money). Saving for an emergency fund can seem impossible if every
time you get close to reaching your goal there’s an emergency. Getting out of debt may feel like a neverending nightmare when bills keep piling up. No matter what your financial obstacle is, the first step to
overcoming it is to decide that you want to. The second step is to set yourself a goal.
A S.M.A.R.T. goal is more than just your ordinary goal. It allows you to figure out if you CAN reach a goal
before you start toward it. Here’s a breakdown of creating a S.M.A.R.T. goal:
S.
Your goal should be specific. If I were to say, “My goal is to lose weight”, and the next time I weighed
myself I weighed .25 pounds less, I “technically” achieved my goal, but I would be lying to myself if I
actually thought that was worth celebrating. Instead I should say “I want to lose 20 pounds by
December.” Yes, .25 pounds is a good start, but I need to do that every week in order to get where I
want to be. Setting a very specific goal will allow you to stay on track and feel more accomplished when
you achieve it.
R.
(I actually make S.R.A.T.M. goals, but I suppose S.M.A.R.T. does sound better.) Decide if your goal is
relevant or important to your situation. Does it matter? If not, it’s probably not worth your time to move
forward.
A.
A and T pretty much go hand-in-hand. First, look at how you can achieve your goal. If you’re trying to
save money or pay off debt, you can achieve your goal by saving or paying off debt. Pretty simple.
If your goal is achievable, ask yourself what you have to change to get there. If your goal is to save 20%
of your income, but you’re locked into a car loan with a high monthly payment, you may need to focus
on paying off or refinancing that vehicle first.
T.
I could say that my goal is to save $1,000 for an emergency fund, but that wouldn’t be very beneficial for
me if I never set an end date. I could save $1.50 a month for this emergency fund and finally get there
when I’m 75, or I could say I want my emergency fund complete six months from today. From there it is
easy to calculate how much I need to put in each month. Keep in mind that sometimes obstacles may
make you have to extend your timeline, but an extension is better than giving up the goal altogether.
M.
When it comes to money, measuring is easy. The numbers add up as you get closer to your goal. You can
use goal setting apps or tools as well to help keep you motivated!
Whether you’re an Average Joe or a Super Bowl champion, your goals are always important. No matter
the goal you’re trying to reach, keep at it. Don’t give up on what you really want just because it may be
hard. If you fall, get back up. If you throw an interception on the 1-yard line in the final seconds of a
Super Bowl, sign an $87 million contract extension and try again next season.
Until next time…
13 Things You Need to Know About Credit
I get asked a lot of questions about credit. The truth is that it’s a complicated subject and it doesn’t
always make sense. It may show just how much of a finance nerd I am, but credit is my favorite subject
to talk about and one that I can discuss for hours on end. I decided to compile a list of 13 things that I
feel everyone should know about credit. Whether you’re a veteran credit user or just getting started,
each of these tips will help you build or maintain your credit history.
1. A higher credit score usually saves you money. Credit scores are tiered, sort of like grades in school.
Someone who gets an A+ on their credit report is going to have a significantly lower rate than someone
with E credit (no, there’s no F credit score). That lower interest rate can turn into thousands of dollars in
savings over the life of the loan. If you don’t have a great credit score now, you may want to work on
building it before you apply for any long-term loans.
2. Credit mistakes get you seven years bad luck. Negative information typically stays on your credit
report for seven years after the last date of activity. A bankruptcy will be there for at least ten years. If
you have negative information on your credit report, know that it won’t be there forever. However, if
you can avoid missing payments or defaulting on a loan, try your best to do so.
3. You can’t discharge student loans in bankruptcy. Maybe can’t is a strong word, but it is highly
difficult to do so. Student loans don’t require any form of credit history or income qualifications, yet
they can seriously harm your credit for years to come if you don’t pay them. If student loans are the
reason that bankruptcy may be a possibility, contact your loan servicer to see if there may be other
options for repayment.
4. You should pull your credit report at least once a year. It’s always a good idea to know where your
credit is at, and studying your credit report is a great way to do so. Also, if there is any fraud or
inaccurate information, you should report it to the credit bureaus and get it fixed ASAP.
5. Pulling your own credit score doesn’t hurt you. You can pull your own credit score as much as you’d
like without it affecting your credit score, but it’s probably unnecessary to pull it any more often than
once a month.
6. Payment history is the largest factor of a credit score. When you borrow anything, people want to
know if you will return what you borrow. If you borrowed my leaf blower last October and didn’t return
it, I’m probably not going to let you borrow my power saw now. (Note: I own neither a leaf blower nor a
power saw, but you get my point.) It’s important to make your payments on time, every time. If not, you
may see a major drop in your credit score.
7. There’s a huge difference between secured and unsecured debt. Secured debt is anything that has a
tangible asset backing it, like car loans, mortgages, and home equity loans. Unsecured debt is debt that
has nothing to back it up, like credit cards and student loans. As such, secured loans typically have a
lower interest rate and have a better impact on your credit score.
8. Employers may look at your credit history. Around 47% of employers will pull a credit report on a job
applicant. This is a controversial topic, but just remember that their focus isn’t to make sure you have an
800 FICO score, it’s to check for any major financial issues or troubles.
9. A lot of companies don’t report to the credit bureau – unless you don’t pay them. Most cell phone
companies, landlords, and utility companies will only report negative information.
10. It’s not good to open up a lot of accounts in a short period of time. Multiple new credit accounts at
once can drop your credit score and could be a red flag to lenders. It is best to stagger these out to be
no less than six months apart.
11. You don’t have to have a perfect 850 FICO score. Each tier of credit score has a range and is
interpreted somewhat differently according to each lender’s policy. If you have above a 720, you are
probably in good shape.
12. Closing old accounts isn’t always a good idea. It can actually drop your credit score to close old
accounts, depending on your credit utilization and length of credit history. Credit utilization is the
percentage of credit that you’ve used versus the amount you have been given. The lower your credit
utilization, the better it looks to lenders. If you have 3 credit cards with a total limit of $3000 and have a
credit card balance of $1000 then your credit card utilization ratio is 33%. If you were to close one card
with a $1000 limit, it would drop your total limit to $2000 and your balance would still be $1000, but
your credit utilization would now be 50%.
If you don’t carry a balance on any credit cards (go you!), then you may still want to think about what
closing accounts will do to your average account age, which is 15% of your credit score. If you have a
long credit history then you probably don’t have to worry about it, but if you have only been building
credit for a few years you may want to consider keeping the account open. Unless there’s a hefty annual
fee for that credit card, then the slight drop in your credit score may be worth it.
13. Not all lenders are equal. Different lenders use different methods of interest calculations and some
may charge random fees like a “card security fee.” Make sure you understand the full terms of the loan
before you agree to anything.
There’s a lot more to know about credit, loans, and debt than what I wrote about here, but learning the
basics is a good start.
Until next time…