Do you want to live debt free? In America's consumer culture, that may seem to be a quaint idea to some. But as we see the number of foreclosures and bankruptcies rising, suddenly people are asking how to live debt free.
There is something wonderful about having no bills other than the ones you accrued that month. This article explores five ways to live debt free.
1. Distinguish between what you need and what you want. You need food, shelter, clothing, and depending on where you live, transportation. You want a video game system, a high end stove, etc. Even within the "needs category" there are differentations between products. For instance, you need food, but there is a difference between been soup with a little bit of ham for flavoring and a filet mignon. Figure out what the minimum you need to live is and put all other items in the want category. Then, after you have paid for all of your necessities, you can purchase the things you want most.
2. Pay off your debts quickly. When the objective is to live debt free, you have to get out of debt. So, that means accelerating your debt repayment schedule. If you are supposed to pay $150 a month on your credit card, cut into your wants budget and pay $250. Even paying an extra $100 a month on your house payment can shave years off the amount of time you need to pay.
3. Learn strategies to live frugally. Make it a game. If you are used to spending $150 on family groceries, budget $125. You'll learn to buy generic, buy cheaper cuts of meat, and learn to do without expensive pre-packaged food. You will also find that you are looking for creative ways to prepare food which could lead to tasty new recipes gracing your menu. Learning to live frugally can actually bring a lot of fun into your life. That's one of the advantages of learning how to live debt free.
4. Put away money for emergencies. One of the reasons that people get into debt is because of an emergency. For instance, an unexpected surgery can put you back $500 to $1000, even if you have health insurance. If your car engine blows, you could end up needing to put a couple of thousand dollars into the vehicle. So, having money for a rainy day is an important step on the live debt free lifestyle.
5. Teach your children good money habits. One of the advantages of a debt free lifestyle is that it teaches your children good money habits that they will take into adulthood. Don't teach them deprivation. Instead, show them the benefits of being debt free. Because you are not paying costly interest payments, you actually live better than you would if you bought everything on credit. Make sure that your children see the benefits of your live debt free lifestyle.
So, those are five tips on how to live debt free.
Recommended Resources: Bad Credit Loans: Bad Credit Loan Sources Flipping Foreclosures Buying Foreclosed Property Credit Repair: Credit Repair Magic
The answer to "what is my credit score?" can be answered by getting a copy of your credit score report.
You are entitled to a free credit report from each of the scoring companies (Equifax, Experion, and TransUnion) each year. However, securing this will not answer the question of what is my credit score. That is because the reports only list the positive and negative credit marks.
Unfortunately, the only way to find out your actual score is to generate a score report. There are a couple of ways to do this.
If you have your credit report generated by a lender such as a mortgage agency or car dealership, they will often tell you the score that they are working with.
But, you don't want to apply for a loan just to find out what is my credit score. That is because every loan you apply for will count as a "ping" on your report which will actually lower your score.
You do however have the right to check your score without affecting the report. The problem is that this will cost you money. You can get a "free" credit score report from some sources, but it almost always involves signing up for a monthly credit monitoring service.
Fair Isaac is the company that compiles the data on which your credit report is generated. You can get a copy of your TransUnion and Equifax scores by singing up for their Score Watch service. They give you a free 30 day trial. But you have to give them your credit card information. Then, after your 30 day trial is up, you will be charged $89.95 indefinitely for credit score updates every quarter.
Other services like Credit Karma will offer you a free credit score contingent on your purchase of other products. You may or may not want these offers. If you buy the products just to get the credit score, you may end up paying more than you have to.
If you are willing to pay a one time fee for your credit score, QScore offers the scores from all three reporting agencies for $34.95 with no additional fees, though there are upsells. You can also get your score from just one agency for $14.95. In general, your scores for each agency will be similar but not identical.
It is important to find the answer to what is my credit score because this can mean the difference in what kinds of loans and credit offers you qualify for. If you have been the victim of identity theft, it can seriously lower your score.
Today, the credit score you have can also affect other areas of your life in addition to your loan worthiness. For instance, if you are trying to qualify for a rental car, rental home or apartment, or car insurance, the company may pull your credit score. Employers are also increasingly looking at credit scores before making employment offers.
While the answer to what is my credit score may take some digging and you will probably have to pay a fee to answer it, it is worth knowing.
Do you want to know "What is considered a good credit score?" Consider that your score can affect many aspects of your life. For instance: Mortgage lenders use the number to determine whether you get a home loan and at what rate. Knowing what is considered a good credit score can shave hundreds of dollars off your home payment each month. If you are renting, not buying, your credit score is still important because landlords run your credit report before deciding whether to lease to you. There is an unexplained correlation between good credit scores and low claims on insurance policies. So, insurance companies are increasingly pulling credit reports to decide who to insure. If you want to get a cell phone, you need to know what is considered a good credit score before you talk to the people at that kiosk in the mall. Finally, if you are considering changing jobs, you should know that many employers are now pulling credit records before making a new hire. They assume that someone who is responsible with their money will be responsible on the job.
Given all of the reasons to have a high number, what is considered a good credit score?
That number is actually kind of tricky. The credit score is ranked on a chart between 300 and 850. Very few people have credit scores in the 800s because there are so many factors that most people can't control. On the other end of the spectrum, very few people have credit scores below 500. So the real range for what is considered a good credit score is 500 to 800.
Scores in the high 700s are considered excellent. But any score over 720 will likely qualify you for the best interest rates and the premium credit offers including platinum credit cards.
The median credit score in the United States is 723. That means 50 percent have higher scores and 50 percent have lower.
If your credit score is lower than the median, you will start having trouble accessing credit at good rates. The difference between a 700 and a 750 can mean $200 to $300 extra in monthly payments on a $200,000 loan.
A score of 620 is generally seen as the cut off point for a "high risk" borrower. In this case, if you are trying to buy a home, you will likely only qualify for a subprime mortgage. Because of the banking crisis, subprime mortgages have dried up. So people in this category may not qualify for a home at any interest rate.
Some of the things that can push you under 620 include two or more 30 day delinquencies in the past 12 months, one or more 60 day delinquencies in the past 24 months, a collection related judgment, repossession, or account charge off in the past 24 months, or a bankruptcy in the past 5 years.
I hope this article helped clarify what is considered a good credit score.
