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How to Set Financial Goals for 2016

by Patrice Washington

The first step is goal setting!

Look at the goals you set for your finances this year. On January 1st of this year what did you say you wanted to create?

I hear lots of people say:

I want to improve my credit OR save money OR get out of debt.

I know those seem like great goals, but I’d hate to tell you that they’re not. They’re empty words that just sound good, but they don’t help you actually make progress in your finances.

As you get ready for 2016, here’s how I want you to create your financial goals:

  1. Be specific.I consider undefined goals to be nothing more than dream killers which is why most people fail at New Years Resolutions. To achieve financial goals you must be deliberate about your intentions by using concrete numbers, dollar amounts, percentages, dates for accomplishment, etc.

So, Instead of saying I want to save more, make your goal to save $1000 by March 31, 2016.

  1. Next, Be deliberate. Once you have great specific goals, you have to get a plan in place to reach them. Divide big goals into smaller steps so you don’t become overwhelmed.

So, now your goal to save $1000 becomes, saving $333 per month or even $85 per week. Doing it this way allows you to look at your spending and see what you can cut down or cut out to make that happen. Even if you have to get radical and sell things to hit your goal, at least now you know what you’re aiming for.

  1. Last, I want you to be accountable. After you’ve got your big goals all worked out and even have action steps to keep you moving along, don’t make it OK to not hit your goal.

Get an accountability partner who can support and encourage you to achieve your goal. You need a friend or family member you trust who won’t let you off the hook.

Best of luck to you and yours! I’m hoping 2016 is truly your best year yet financially.

Am I Making Money A Priority Over My Faith?

by Patrice Washington

During a recent Steve Harvey Morning Show radio segment, a caller brought up the issue of reconciling her Christianity with her increasingly profitable business:

“You can’t serve two masters and I only want to serve God, but how can I grow my business with guilt-free financial comfort?”

So many people – believers and non-believers alike – struggle with guilt around earning and keeping money.

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What Should I Consider When Buying A Car?

by Patrice Washington

Too many people fall in love with cars, sign up for a car note and then try to figure out how they’re going to make the payment work.

Well, that’s backwards. First, you should consider these tips:

  1. You should consult your budget to determine what makes sense for your budget once you not only factor in the car note, but also the car insurance, gas and annual estimated maintenance for the car you’ve got your eye on. A good rule of thumb is that your total car expenses should not be more than 15-20% of your monthly net income.
  1. Don’t start looking for financing for the first time once you get to the dealership. Financing at the dealership may be easy, but it’s not necessarily the best deal. Dealers are essentially acting as middlemen to offer you a car loan. They get paid for every loan they write, whether the loan is through the automaker or a local lender.

It is possible to get the best car-loan interest rate at the dealer, but you’re likely to find that it pays to shop around first. Know your credit score. Be especially wary if a dealer offers you a car loan at a rate that is far better than other lenders. Sometimes, dealers entice prospective customers with rates to get them to sign a contract to buy a car. Read all contracts carefully to make sure that the interest rate is not contingent upon approval.

I’ve always been a fan of getting prequalified with my credit union or local bank first. I’ve typically gotten better interest rates and it makes it easier to not be persuaded by some salesman that may not have my best interest at heart.

  1. Be prepared to negotiate. Since buying a car is such a pricey purchase, be prepared to negotiate to get the best deal. Before you visit a dealer, gather all your research materials so you are prepared. Know the cars bottom line price and find all possible discounts for the cars that interest you.

Automakers often advertise rebates and cash-back incentives on new cars to attract customers to their lots. Some dealers also will offer incentives on certified pre-owned cars or noncertified used cars. In addition, automakers often have discounts that apply directly to the buyer, such as for members of the military, current students or recent graduates or even members of certain local credit unions.

Research all of these incentives online at the manufacturer and dealer websites before you visit the lot so you know what you qualify for to save the most money.

How Does Co-Signing a Loan for Someone Affect Me?

by Patrice Washington

Before helping out a friend or family member by co-signing a loan, it’s important to understand what it means for your own financial health. When you co-sign for a loan, you basically tell the lender that you accept equal responsibility for the loan’s repayment. You’re guaranteeing that if the borrower fails to pay, you’ll make the payment! Studies have shown that as many as three out of four co-signers (75%) ultimately end up making payments on the loan.

If you’re considering co-signing a loan for a friend or a relative, please remember these tips:

  1. Know the person you’re attempting to help. Before agreeing to sign on the dotted line, study the person’s financial habits and make sure you’re comfortable with his or her money management skills.
  1. Verify that person’s employment and take home pay by reviewing paycheck stubs and bank statements. If the borrower doesn’t want to share that type of personal information, he shouldn’t be asking you to put your credit-worthiness in jeopardy.
  1. Understand your own capability. Make sure you have enough income left over each month to pay the minimum payment on this account should something occur unexpectedly.

So what do you do if you have co-signed on a loan and the borrower defaults?

  1. If the lender decides to sue and wins, your wages can be garnished or liens and judgments can be placed against your personal property until the debt is satisfied.
  1. Your credit report can be severely tarnished from several months of late payments, as well as a judgment against you.
  1. You may eventually have to pay the full amount of the debt in addition to late fees or other collerca3Dction costs.

Listen, your credit is vital to your own long-term financial success. Think about the reason this person can’t qualify for a loan on his or her own before you move forward. There’s good cause for why the bank isn’t willing to take on that risk. And maybe you shouldn’t either.

If you feel uncertain about one or more of the above points, seriously reconsider co-signing and focus on rebuilding or even maintaining your own credit using my 7-step process in Real Credit Answers. It’s a step-by-step guide that’ll help you reach your credit score goals and regain control of your own financial life.

 

 

Does It Affect Your FICO Score Differently If You Settle a Debt Versus Paying It In Full?

by Patrice Washington

Your credit report is definitely impacted differently if you choose to settle a debt rather than pay in full. When you settle a debt, you repay less than agreed under the original contract, which still shows you didn’t meet the terms of the contract. Therefore, a settled account is less positive than a paid account, which shows you repaid the total amount in full.

If you can do it, payment in full is always the best way to eliminate a debt. It means you have completed your obligation; you borrowed $2,000, agreed to pay it back and you did. This wipes the debt from your credit report and improves your score two ways: by reducing total debt and indicating good payment history. Those elements make up 65 percent of the score.

Consider these 3 points:

  1. When compared to settlements, your credit report and score will suffer less if you pay in full.
  1. You’ll reduce the chance of this bill reappearing in a year or two with a new collector, which is a vicious game that happens quite often in the credit world.
  1. You won’t owe the IRS money on the settled debt, which is a biggie people forget about. You probably didn’t know this, but you also can wind up with a tax bill if you settle for less than you owe. The IRS considers any difference between what you owed and what you settled as income. If you had a $5,000 credit card debt and settled it for $3,000, the IRS counts the other $2,000 as income. You and the IRS will both get a 1099-C showing that as income.

Now, with all that being said let me speak as someone who literally went from a seven figure business to scraping up change and having to make decisions on more than one occasion on whether I should settle or pay off a debt in full.

If you just cannot pay in full in one lump sum or even using a payment plan and you feel that your only option is to settle the debt, then do that. It’s much better than doing nothing at all and in the future, you can write a hardship letter explaining your previous circumstances and showing that you did the best you could with what you had.

rca3DOther “experts” may disagree, but I’ve lost everything before and ruined my credit in the process. When you’re trying to rebuild like I did, I
still believe in doing the best you can with what you’ve got. In my online course, Real Credit Answers, I walk you through the exact steps to use to rebuild your credit and regain control of your financiallife. Check it out! It might be just the start you’re looking for.

 

How Can I Develop My Personal Brand?

by Patrice Washington

When your starting your own business or trying to advance in your career, it’s important to understand you represent a brand. Companies like Apple, Chick-fil-a, BMW, or Wal-Mart automatically bring specific images to mind. Also, consider the way you like—or can’t stand—a certain celebrity based on how you perceive them as a person; brands don’t only pertain to businesses, but people as well. Whether you want to accept it or not, there’s absolutely no way to separate your personal and professional brands.

Here are three areas you can focus on to manage and promote your brand:

  1. Your Appearance and Attire

What does your appearance say about you? Remember that getting up and getting dressed isn’t just reserved for the days you go into the office. In today’s society, any place in which you set foot has the potential to produce an ideal client, business partnership or new contract. Do you enter each day expecting opportunities to come your way? If so, there’s no such thing as just “running out.” You never know who you might run into. You may not always be aware of it, but there’s always someone watching you who has the potential to bless you.

  1. Your Social Media Profiles

What do your tweets, pictures, and status updates say about you? People who may want to do business with you are searching far beyond your LinkedIn profile. Yes, we see your crisp collared shirt and blazer on LinkedIn, and yes, you’ve managed to scrape together a pretty impressive paragraph or two about your experience, but consumers are smarter these days. Potential clients and employers will check out your social media activity. Be careful what you post or tweet. We know the truth about you exists in your late night tweets and the Facebook albums you refuse to restrict to friends and family. As far as we’re concerned, that’s the real you. At the end of the day, potential clients and employers alike want to do business with you, not your LinkedIn representative!

  1. Your Associates and Extracurricular Activities

What do your friends say about you? Again, accept it or not, your network determines your net worth. Period. When you’re out and about, who do people see you hanging out with? Whatever perception others have of your associates, they may begin to have of you. If you’re investing a lot of time in folks that aren’t going where you desire to go, then you’re wasting a lot of time and setting yourself back. Make sure you’re seen at networking events relevant to your industry. Invest your time in people and activities that support your dreams and goals and put you in front of and around people who have brands that can lend credibility to the brand you’re developing.

While checking your privacy settings and hiding your cousin’s kitten-themed birthday e-card from your timeline, don’t forget that social media is a great way to network and promote yourself. Join Facebook or LinkedIn groups that are industry-focused, or promote your brand or product by “liking” or following other professionals or businesses on social media. Who knows, they might return the favor! Building your personal and professional brand takes time and a little maintenance, but it ultimately sets you up for success.

How Do I Get My Finances On Track This Late in the Game?

by Patrice Washington

First off, it is never too late to get back on track with your finances. You’re here now, so don’t discourage yourself with any more excuses; start today! If you’ve spent years living paycheck to paycheck, or you haven’t taken the time to make a financial plan for your future, it can feel overwhelming wondering how or where to start. No matter where you are in life, these tips will help empower you to develop a sound financial plan whether you need to eliminate debt or save for the future.

  • Set Goals

The key to any good financial plan is to set clear, achievable goals. Simply saying that you want to save more money or have less debt won’t magically make it so. Follow these three strategies: Determine a specific goal with concrete numbers and dates of accomplishment; Break down your goals into manageable steps and action items; Share your goals with family and friends to keep you accountable for achieving them.

  • Create an Opportunity Fund

Based on your personal circumstances and goals, create an opportunity fund by reviewing your budget, income and expenses. I recommend basing your fund on several months’ income, but the important thing is that the amount you choose gives you a motivating vision for your future, like saving for a business venture or a down payment on a house, while also serving the dual purpose of providing you with a reserve of funds to cover any emergencies along the way.

  • Pay Off Debt

Once you’ve established an opportunity fund, you can start paying down high interest debts like credit cards or loans. Stop using credit cards, especially store cards, and use any extra money you have to pay down your accounts. Avoid costly late payment fees by making your payments on time, and pay more than the minimum when you can to pay off your debt quicker. The minimum payment recommended ensures that credit card companies continue to collect interest off your balance for as long as possible. Negotiate lower interest rates by calling your credit card companies; you’ll be surprised by how many are willing to work with you.

  • Contribute to Retirement

If you’re close to retirement, now is the time to make catch-up contributions to any 401K, 403B or IRA accounts you may have. The IRS allows individuals over age 50 to contribute more to their retirement plans so that you can get caught up before you’re ready to retire.

Remember, it is never too late to create wealthy habits. Maybe you have made excuses in the past about why you haven’t been able to plan for your future up to this point, but I’m telling you now that there will always be things coming up in your life and reasons you give yourself to delay, but if you don’t start making a plan now, you’ll find yourself asking this same question years down the road when you could have already been well on your way toward your goals.