Fixing your Credit Score

Do you have a Costanza wallet?

Most people don't realize how easy it is to raise your bad credit score by 100 points. Most assume that once your score has been damaged, that it takes years to fix. This is not the case. In my youth (younger youth), I was reckless. I made decent money, which allowed me (so I thought) to be careless with my finances. I lived paycheck to paycheck, overdraft fees were common, and I needlessly missed payments. I hit bottom in 2008 when I needed to buy a new Guitar (I wasn't any good because of the Guitar I had). Denied. I checked my scores, and found them in the low 500s. There had to be a way to fix this, so I did some research online. Here is what I found, and the steps I followed to fix my scores.

Phase 1 - Dispute everything

This is the easiest, as well as the most effective step. As you know, there are 3 credit bureaus. Experian, Transunion, and Equifax. They each have their own websites, and they each should give you one free report every year. Get your reports for each bureau, and find all your late payments and collections. Now, dispute every one of them. You can do this right on each bureau's website. It matters not if you were at fault. I know what you're thinking. It's lying, yes (don't judge me). Try not to think of it as lying, but as a way to fight back against the big bad banks without skipping showers and sleeping in a sleeping bag on Wall Street.

You see, these lenders have only 30 days to respond to your dispute, or else it gets removed from your report. Most lenders don't care enough to respond to every dispute, so there's a good chance you can get at least half of your credit dings removed. I did this, and within 2-3 months, my score was up 130 points.

Phase 2 - Pay down your balances

Now things get more difficult. You must pay down your balances. Any revolving credit account with a balance over 30% of your credit limit is hurting you. Use the Debt-Snowball Method and pay off the smallest balances first. This will free up more money to pay off the larger balances faster. Call the credit card companies and ask for better rates (once again, you'll be surprised what asking can get you). Obviously, paying down your debt isn't just good for your credit score, but also a fiscally sound practice in general.

Phase 3 - Need, not want

Lastly, once you have your balances paid down, you can close out a few unnecessary accounts. Don't go overboard and close out every account, since this can work against you. Don't open new accounts unless you absolutely need to, and not because you want a new Guitar. Keep your credit clean and simple. Take the cards out of your wallets or purses. You don't need the Constanza Wallet. In my wallet, I have one credit card, one debit, health insurance card, and my company credit card. That's it. Keep it simple.

No relapses

Keep your credit clean is a lot like an Alcoholic keeping their liver clean. It's tough to stay clean, and embarrassing when you can't. It will be tempting to relapse once you have fixed your credit, because the justification fairy will visit and make you feel like you have “earned” a little credit mischief. This is why I recommend removing the cards from your wallets and purses, and taking the impulse factor out of the equation. Using these methods I was able to raise my score almost 200 points in about a year.  Keeping a good credit score can save you thousands of dollars over a lifetime, so don't procrastinate, start now!

Good luck savers, we're all counting on you.

Traveling Simply and Cheaply

It blows me away how many people still check bags when they travel. This may be the way your parents did it, and how you always have traveled.  This is the type of mindset i'm hoping to change with this blog.  The fees that domestic airlines are charging are already ridiculous, and they are getting worse.  Expedia does a nice job listing the fees here.  It's not just bag fees, but drinks and meals as well.  I know the Southwest claims that bags fly free (or maybe you haven't seen one of their increasingly annoying commercials), but the cost is just built into their ticket prices.  Here are a few ideas I suggest when traveling.

Keep it simple

Travel light.  Don't take more than you need.  Whether traveling for business or pleasure, you should have an idea of what you will need before you leave.  Pack accordingly.  Make your decisions on what to wear before you leave.  There is no reason that you can't fit a weeks worth of travel items in one carry-on, women included.  Get creative, challenge yourself.  Here's a great guide on how to pack a carry-on.

You'll save yourself the hassle of carrying extra bags, save time not waiting for baggage claim, and not risk losing your luggage.

Save your money

Obviously, you can save at least $25 each way by not checking a bag, but there are other ways to save as well.  Not only is it expensive to eat and drink on the plane, prices inside the terminal are high as well.  Eating meals before you leave for the airport will keep you from giving in and paying the inflated prices at the  airport.  Bring snacks to eat on the flight, as the same snacks can cost $5-$8 in the air.  If you really want to go the extra mile, you can bring an extra water bottle to fill after you get through security, or just avoid buying water until you get the free water on board.  Most flight attendants will give you as much free water as you want, so you don't need to pay $3-$5 a bottle in the terminal. If you know you want an alcoholic drink or two while on the flight, bring your own mini bottles and mix your own drinks. On a round trip flight, you can save yourself over $100 with a little planning ahead.

Pack according to security lines

Most of you already know what to expect in security lines.  Shoes and belts come off, pockets emptied, liquids removed, etc.  Knowing what to expect, you can dress and pack accordingly.  Wear slip-off shoes and pants that don't need a belt.  Put your wallet, keys and other metal items in your bag so that you don't need to take them out and back in your pockets in line.  Make your toiletry bag easily accessible so you aren't digging for them while in line. A little planning ahead can help make the security line a breeze.

Enjoy traveling again

Traveling doesn't need to be such a hassle, or as expensive as it is.  When you aren't worried about bags, fees, or security lines, flights can actually be very relaxing.  It's one of the few places left where you can't be reached on your phone (I wish there were more places).  It's a great time to catch up on reading, watch a movie, get some work done, all without the stress, expenses, and buyer's guilt that usually comes with airline travel.

Cutting Expenses: Part 2 - Save on everything you buy

HDMI cables keep me up at night

HDMI cables are one the great enigmas of modern society.  Never has there been a product with so much misinformation and price variance.  Example:  I had just finished setting up my brand new HD TV and surround sound system, and ventured out to buy HDMI cables.   First I stopped at Best Buy, where they were $80 for a 6 foot cable.  The clerk says "yeah, you need the high speed cables for HD 120hz signal".  "Oh", I said "these magical cables are able to transfer information faster than the speed of light?  That's incredible".  I tried other stores and fared no better.  Then I tried online, where I found many options for under $5 dollars.  It didn't seem possible, so I did more research.  Sure enough, reading all the reviews, these $5 cables worked great.  I bought them, and have been using them for 3 years with no issues.  This is when I realized that I had been lazy and outdated, and brick and mortar stores have been taking advantage of it.

The greatness of user reviews

We live in an incredible age, and I'm certain that the majority of people don't take advantage of it.  People are still shopping the old fashioned way.  Going into a store, looking at all the choices, maybe asking an employee, and making their purchase.  You might get a good product, you might not.  You might get a good price, you might not.    The better option is to go online, search for a product, sort them by customer ratings and price, and make an informed decision.  95% of the time you will get the best product, for the cheapest price possible.  Back in the day you would have to rely on employee knowledge, or friend's recommendations.  Now you have hundreds of actual user reviews at your fingertips.  It's a crime not to take advantage of that.

The enormity of technology


If you do still go into stores, many still don't take advantage of the technology on their smart phones.  There are apps that scan bar codes, and give you the price of that product at all the surrounding stores, and online.  A few good examples of these apps are Redlaser, Shopsavvy, and Barcode Scanner.  So if you want to actually see and touch the product before you buy it, you can still do so intelligently.

Be patient, and don't be lazy


I still struggle with this at times.  I'm in a store, I see something I want, and I just want to buy it.  This is a slippery slope, my friend.  Fight the urge.  Fight the impulse gremlin within.  You probably don't need what you want to buy anyway (that's a whole other article), but if you are going to buy it, make sure you get it for the best price.  There also times I don't feel like waiting for something to ship.  2-3 days seems like an eternity when you have a brand new TV in your living room.  Again, fight the impulse gremlin.

Combining the Free Market with the Information Age

I love all this technology.  If used properly, you can almost eliminate buyer's remorse completely, because you can ensure you got the best product for the best price.  The Internet combines the Free Market World with the Information Age, and with this, prices tend to end up exactly where they should be.  You need to break from the habit of going to the store.  Many of us just stick to doing things the way you always have.  Change your mindset.  Once you start saving money, or continually get the best product on the market, you will be hooked.

Cutting Expenses: Part 1 - Who actually pays list price?

You are paying list price for your subscriptions and utilities, and you don't even know it.  You know what I'm talking about when I say list price.  It's the suggested retail price set by the manufacturer.  With all the competition between vendors and distributors, list price is rarely used, except when vendors want to show how great their price is, by comparing it to list price.  Now think of all the monthly bills you pay.  You are most likely paying these companies directly, without going through vendors.  In effect, unless you negotiate, you are most likely paying list price for these services.  The good news is that these companies do have competition, and where there is competition, there is price negotiation.  Many of the services you pay for every month, can be reduced with a simple phone call.

You never know until you ask

Since I'm strange and obsessive, and oddly take pleasure in it, I often just start calling all my all services asking if I can get better rates. This started last year when I noticed that my annual SiriusXM charge had hit my account for $150 (last year it was $80).  I immediately called them up and asked why it was so much.  They told me I took advantage of a promotion last year, which explains the increase this year.  My exact words were "well $150 is too much, what can you do for me?".  The NEXT sentence out of their mouth was "how about we give you the $80 rate again?".  Just like that, I saved $80.  

I was feeling cocky now.  

Convinced I was negotiating genius, I called up DirectTV and told them they charge me too much for the MLB and NFL sports packages.  They immediately cut the charges by $30/month.  Next I called my security company and they immediately gave me 3 months free (worth $100 total).  Next was my gym membership, and they knocked $5 off my monthly bill (every bit counts).  

On and on this went, and after about a hour, I had knocked about $150 off my monthly expenses.  I don't consider myself the brightest light in the harbor, but I just saved $1,800/year with under a hour of work.  If you make $50,000 a year, you just got the equivalent of a 3.6% raise.  You didn't even have to laugh your boss's jokes to get it. 

Some of the places where you can save money:

• Internet provider
• Cable/Satellite provider
• Gym memberships
• Credit card interest rates
• Internet services (Pandora, Spotify, Netflix, credit monitoring)
• Insurance (Car, home, boat, etc)
• Cell phone bill

Start calling.  It may be uncomfortable at first, but remember, you are paying LIST PRICE.  These vendors are fighting for your business, and competing against each other.  Make them work for it.  Don't be that guy or gal that pays list price.

More expense cutting to come.  This is only part 1.

Welcome to RatRaceExodus

I blame your parents.  I also blame you, which is what you should get in the habit of as well, but I mostly blame your parents.  They didn't know any better, since their parents probably didn't know any better either.  From your parents, you sucked up all your habits, good or bad.  How/when/where you do laundry, cook, clean, drive, pay bills, make friends, wash your hands, run errands, etc.  You learn all these life skills from your parents growing up.  It was the world you were born into, and what you accepted as normal.  I remember watching my parents pay bills, use credit cards, buy a new car every 5 years, buy groceries, and how they lived paycheck to paycheck.  So if your parents weren't successful at managing money, why are you doing the same things?

Change your mindset.

As I grew up with this, it became what is normal to me, just the same way that living in Vermont made -20 degree weather seem normal.  I didn't know anything else, so I didn't know there was a better way.  When I was 21 I moved to Arizona, and experienced the wonder of having over 300 sunny days a year.  I was blown away.  I didn't have to scrape my windshield every morning.  I could play sports year round.  Rain doesn't ruin outdoor events.  I had no idea life could be so good!  It changed my outlook on where you live forever.  This happened again in my late 20s when I started learning about money.  I was forever changed.  I had no idea the difference that financial freedom, and a plan, could make in life.  Just as I know the bitterness of -20 degree weather, I know the stress of being bound by debt.  I know the difference in life it can make, and I want to teach others.

This is why I have created this blog.  I will post about things I have learned, as well as things I am still learning.      I want to change the way you think about money, and in effect, how you think about what life should be.  I want to help you exit the Rat Race.