Your Credit Affects More Than Just Your Finances

Isn’t this recession supposed to be over?

Millions of Americans continue to have their credit trashed as this unofficial recession drags on. According to FICO, a quarter of Americans now have a credit score below 600. Late payments, foreclosures and even mistakes on our credit reports have taken their toll.

Use this as an excuse to check your credit report and dispute any errors.

If you’re not buying a house or applying for a credit card anytime soon, you may think you’re in the clear. The truth is, your credit affects more than just your ability to get a loan or credit card.

Here are six areas of your life that are affected by bad credit:

1. Relationships First, and perhaps most surprising, having bad credit might affect your relationship with your spouse. To all you guys out there listening to your wives complain about how dingy your apartment is and how much she wants a house, you need to get your (financial) lives together. Do it for your marriage, your sanity, whatever. Your credit needs to be in good shape so you can get her that house someday.

Maybe those who need to worry most are the ones who aren’t married yet. I’ve heard stories about one person calling off the engagement after finding out the other’s debt level.

Whether you like it or not, debt attaches to you like a parasite. It is part of who you are. If you owe big bucks, you have a greater chance of falling behind on payments. And when that happens, your credit is trashed. That may make you look unattractive to your future mate. Don’t say I didn’t warn you.

2. Career It’s now common knowledge that having bad credit affects your ability to get a job. The most recent report I saw said that 47% of employers use credit checks to screen potential employees.

Personally I think this is a terrible idea. Credit reports are not good indicators of character or ability to do the job. The only reason employers should be checking your credit is when the job specifically deals with money.

3. Renting an Apartment Every apartment complex I’ve ever applied to live at has checked my credit. For good reason – you’re signing up to pay them over $10,000 a year in many cases. Your landlord wants an idea of how you’ve handled bills in the past.

An extra perk: I once had a landlord waive the security deposit because I had good credit. So make sure to negotiate when signing the lease.

4. Getting Insurance Car insurance companies think that those with bad credit are more likely to cause an accident. Baloney. In some cases they may outright deny you coverage, but it’s more likely that good credit will earn you the best rates. I’m not sure why, that’s just the way they play.

Homeowner’s and renter’s insurance works the same way. These companies believe that you’re more likely to set your house on fire if you have bad credit. You need good credit to play their game and get the best rates.

5. Setting up Utilities If you think about it, utility companies (water, electric, gas, etc.) extend you credit every month. They provide you service then bill you after the fact. If you have bad credit you may be required to pay them a larger deposit to open your account.

6. Cell Phone Service In today’s world it’s difficult to function without a cell phone. Similar to utility companies, cell phone providers bill you for service you’ve already used. Before they let you sign up for an account, they pull your credit. They just want to know if they’ll get their money each month.

Photo by about.com/careers

Finding Legitimate Work-At-Home Opportunities

Work-at-home opportunities have grown substantially since the Great Recession began as people are looking to get back on their feet financially. These side gigs offer the flexibility of choosing your own hours and can be a great way to earn a little extra cash in your free time. What they will not do, however, is make you rich quickly.

Scamsters have also taken advantage of the increased popularity of work-at-home offers. So you have to be careful to avoid people trying to take your money. Among the most common scams:

• People asking for sensitive personal information such as your Social Security number, date of birth or checking account number
• Instructions to deposit a check then wire a portion of it back to someone
• Claims that someone has access to hidden jobs or government grants that nobody else knows about
• Anyone requiring large amounts of money up front
• Promises of earning hundreds or thousands of dollars a month in your spare time

Never, ever give out personal information or bank account numbers to anybody without a good reason.  Because most work-at-home offers are scams, you have to be vigilant in weeding out the bad ones.

So what should you do if you’re searching for legitimate opportunities to earn some extra dough? That depends on your interests and abilities. There are several types of work-at-home outfits on the internet, but I’ll talk about three of the most common ones.

Virtual call centers and help desks

Companies often outsource their customer support, so you might be able to find an opportunity helping customers solve issues on the phone or over the internet. Arise.com and LiveOps.com are two of the bigger sites for these types of opportunities.

Legal assistance to attorneys

Attorneys sometimes need help preparing for a trial. For example, you could be part of a mock jury or focus group helping to determine case value, find which facts to emphasize, and analyze public opinion of a particular topic. If you’re interested in providing this type of service, check out OnlineVerdict.com or eJury.com.

Freelancing

Do you know a foreign language? Are you a math whiz? There are people willing to pay for private tutors for all sorts of subjects. Take a look at what skills you can offer the world, and visit Fiverr.com or Elance.com to find people looking for your expertise. Even if you don’t think you have any skills, you’d be surprised what people are willing to do for a few bucks.

On Fiverr.com, people post what they are willing to do for five dollars. One entry I just saw is from a guy who is willing to put on a hot dog costume and dance for two minutes to a song of your choice!

Work-at-home opportunities won’t make you rich, but they can be a good way to earn a few bucks in your spare time. A good way to get a feel for the reputation of a company is to search online for what other people say about it. If you see a lot of negative comments, you know to steer clear.

A final word of caution: Be skeptical if something seems too good to be true. You don’t want to get taken by the scamsters!

Photo by classifiedwars.com

Saving Money During Your First Job

Humble Savers lists 5 ways to save a portion of your income during your first job:

1. Start saving
2. Avoid getting into debt for purchases that fall in value
3. Challenge yourself – set some ambitious saving and investment goals
4. Education – don’t stop learning
5. Protect your most important asset

These are some great recommendations for those just entering the workforce. When I started my first real job after college, I wasn’t used to receiving a steady paycheck every two weeks that was larger than any paycheck I’d received before. I didn’t know anything about investing for retirement, putting aside money for emergencies, or strategies for paying off debt. It was very tempting to “reward” myself by getting some new clothes, furniture, or gadgets.

Luckily, my dad taught me a little about saving as a child and encouraged me to stay out of debt, so I didn’t enter the workforce with crushing levels of debt. I started reading everything I could about personal finance and learned everything I could about how to handle finances.

One of the most important things a new grad can do is to set up an automatic savings plan. Have a portion of your income taken out each month and put into a 401(k) or IRA. If you set this up to happen automatically, you won’t even see the money and thus won’t be tempted to spend it. Because of the power of compound interest, it’s so important to start saving right away. You can think of retirement savings as “paying yourself first”, before the bills and everything else gets paid.

Some types of debt may be necessary because you’re just starting out. A low-interest car loan or mortgage fall into this category. On the other hand, going into debt to acquire the latest gadget or fashion is a bad idea. For this type of purchase, it’s best to save up beforehand to avoid paying a 20% or higher interest rate on your credit card.

Many new grads are burnt out on reading or learning after graduation. But it’s a good idea to educate yourself on the basics such as investing, how loans and interest rates work, and other personal finance topics that are relevant to your situation. A little work now will benefit you tremendously in the long run.

Consider your future needs and wants. Where do you want to be 5 or 10 years down the road? Make a plan to get there, and put it into action.

Your career is your most important asset. Without it, you won’t bring in money to make your future wants and dreams a reality. For this reason, you need to have some level of short- and long-term disability insurance in case you’re unable to work for a period of time. You also need life insurance if you have anyone who depends on your income for survival.

You don’t have to start big. Take just one of these ideas and go from there. Your future self will thank you!

Photo by michaelcrane123