5 Savvy Money Moves to Make This Year

A young couple sits in bed on a laptop discussing savvy money moves.

The following is a guest post from The Savvy Couple.

As much as we don’t like to admit it, money is a very important tool that can be used to better our lives.

So why don’t we take better care of managing it?

Luckily, there are some savvy money moves that you can make this year to improve your finances and feel more financial peace. This year can be a great one, and you can use your money to help make it happen.

We have narrowed down our top five money moves that you can make this year that will have a huge impact on your overall finance. The best part is they are not complicated and they won’t take a lot of time to implement. In fact, you can start to put them in place right after reading to the end of this article.

1. Create a Money Plan and Stick to it

It’s really important to create a plan, or budget, for your money. If you don’t, then you could find your money just escaping and not having a clue where it’s gone.

A lot of people think that a budget is strict, and something that you use for just your bills. But a good budget will be a plan for your money for the month and how it is going to be spent. Your budget should reflect the direction that you want your life to take.

It should enable you to spend more money on the things you love and cut wasteful spending on the things you don’t.

It doesn’t have to be super strict either—we advise “paying yourself first.” Meaning put your money where it’s most important first (investing, savings, fun money), and then using the rest of the money to pay your bills.

Think about what your goals are for your life and base your budget around that. You have a set amount of income, and you can decide where you want that money to go.

2. Cut Your Monthly Expenses

One step toward creating the money plan that you want can be cutting your monthly expenses. This doesn’t mean that you need to be drastic with the expenses that you are cutting out.

When it comes to creating your money plan, it’s important to look at what you are currently spending money on.

If you have never tracked your expenses before, you will likely be surprised to see where your money is going. We like to think that we have a good idea of what we are spending, but if you are not tracking your spending then you are most likely vastly underestimating your spending.

Go back through your spending and highlight any problem areas. The important thing here is to not beat yourself up for anything that you’ve spent.

When you have created the plan for your money, you may find that you have been spending on things that don’t fit in with that plan. These could be the ones that you choose to cut down on.

Cut down on your expenses slowly. Otherwise, you could find that it’s too much of a change and you want to go back to how you were spending before. Try picking one thing to cut down on, and do a bit of trial and error.

3. Stay Away from Debt

We’ve been talking about creating a money plan for your life, but there are some things that can throw your plan off track—debt being one of them.

Sometimes, debt is unavoidable. There are situations that we find ourselves in such as medical emergencies, car repairs, or any kind of emergency really!

The best thing to do is to prepare for these kinds of situations. We can’t fully plan, of course, but we can set aside some money to prepare. These are usually referred to as emergency funds. We recommend saving a $1,000 emergency fund as soon as possible, then slowing building that up to 3–6 months of living expenses after your debt is paid off.

Debt is so normalized in society, but debt doesn’t have to be! Making savvy money moves and trying to prepare for future emergencies will help tremendously in the long run.

4. Understand How Your Credit Score Works

Let’s be honest—a lot of us don’t pay much attention to our credit score. It’s one of those boring things that we don’t think about until we need it.

The last thing that you want to happen is to find that you need to take out credit but you can’t because of your credit score. Therefore, it’s a savvy money move to understand how your credit score works.

Credit scores are generally used by lenders when you want to take out a line of credit with them—for example, when you are getting a mortgage or car loan. If you have a high credit score then you will have access to better rates and terms for your loans.

Your credit score is largely determined by whether you pay your bills on time, as any missed payments will go against you. Your score is also determined by how much credit you have used compared to the amount that you have been lent.

It’s essential that you check your credit report as there can be errors on there which you can rectify—the sooner the better. The longer you wait to repair your credit, the harder it can become.

You can get your Experian VantageScore 3.0 for free from Credit.com when you sign up for the free Credit Report Card. And if you want more details on your credit score, sign up for ExtraCredit. You’ll get 28 FICO® scores and your credit reports from all three major credit bureaus.

Try ExtraCredit Today

5. Start an Online Side Hustle

We are huge fans of starting side hustles because at the end of the day you can only cut your expenses so much. But your income has unlimited potential.

Side hustles are great because you can create an income stream for your goals, or even use it to leave your day job.

The benefit of starting an online side hustle is that there are so many possibilities, you pretty much only need to have access to the internet.

It’s worth brainstorming some side hustle ideas that you have an interest in doing. It’s also worth thinking about ideas that will be free or have a very low cost to start up. The last thing that you want to do is spend a lot of money on something that’s not going to take off.

You can determine how much time and effort you want to put into your side hustle—it doesn’t have to be a brand-new business, but can be getting an extra job or something small.

Some of our favorite side hustle ideas include:

  • Starting a blog
  • Proofreading
  • Facebook advertising for businesses
  • Teaching English online
  • Freelance writing

Savvy Money Moves throughout the Year

If you want to make some good money moves this year, this is a good place to start. These are some simple things that anyone can do to improve their finances greatly.

What are your best savvy money moves? Let us know in the comments!


Kelan and Brittany Kline are the creators and co-founders of The Savvy Couple. They write about personal finance, budgeting, making money online, entrepreneurship, and more.

The post 5 Savvy Money Moves to Make This Year appeared first on Credit.com.

Source: credit.com

How Unemployment Can Affect Your Plans To Buy a Home—Now and Later

unemploymentthianchai sitthikongsak / Getty Images

The coronavirus pandemic has led to record-high unemployment rates not seen since the Great Depression. And this is particularly worrisome for would-be home buyers.

If you were among the 23.1 million Americans who were laid off or furloughed, you might be worried about your financial future. And if you were hoping to buy a house—either now or in the next few years—you might also wonder how your current jobless status might affect those plans.

While the situation might seem dire, unemployment does not mean that home-buying plans have to be put on hold for long. Here’s how to navigate a period of unemployment so that it doesn’t derail your hopes to buy a home.

Can you buy a home if you’re unemployed?

For starters: If you lose your job while in the midst of home shopping or after you’ve even made an offer, you might have to put the purchase on hold.

The reason: Given your reduced income, the odds of lenders loaning you money for a property purchase are slim, unless your spouse or partner has a sizable income that can carry the mortgage alone.

And even if you’re getting unemployment checks every week, that money is considered temporary income, so it can’t be used to qualify for a mortgage, says Jackie Boies, senior director of housing and bankruptcy services at Money Management International, a nonprofit providing financial education and counseling.

In short, “unemployment could have an effect on your ability to purchase a home in the short term,” Boies says.

But the good news is that once you find a new job, you can likely resume home shopping without trouble, Boies adds. “Unemployment shouldn’t have a long-term effect on being able to buy a home.”

How long after unemployment can you buy a home?

But even once you do find a new job, that doesn’t mean you can easily buy a house just yet. That’s because lenders like to see a steady history of employment before loaning someone money.

“Regular employment must be reestablished as stable, reliable, and dependable,” says Karma Herzfeld, mortgage loan originator at Motto Mortgage Alliance in Little Rock, AR.

So how long is enough? Lenders typically require borrowers to have six months of employment at their current job, and two years of continuous employment. Breaks in employment older than two years shouldn’t affect getting a mortgage.

How unemployment affects your credit score

While unemployment doesn’t jeopardize future home-buying hopes per se, financial experts warn that what can put those plans at risk is how you handle your finances while jobless. Unemployment, after all, can stress your budget in ways that can damage your credit history and credit score.

Lenders check your credit score to assess how well you’ve managed past debts. Scores between 650 and 700 range from fair to good; scores below 650 are considered subpar, which could limit which lenders are willing to loan you money for a house. (You can check your score for free on sites like Credit Karma.)

Credit scores can be damaged in a variety of ways during unemployment. For one, if you get behind on paying bills, this will put some blemishes on your credit history and drag your score down.

Unemployment can also lower your credit score by negatively affecting your debt-to-income ratio, a calculation used by mortgage lenders to compare how much you make against how much you owe.

If you’re unemployed, you may face a double whammy as your income is lower and you’re charging more to your credit cards, thus increasing your debt. Both moves can negatively affect your debt-to-income ratio, which may make lenders leery of loaning you money.

“Any factor that affects income or debt may affect the debt-to-income ratio,” Herzfeld explains.

In sum, hopeful home buyers should be careful not to take on too much debt, even while unemployed. You need to preserve cash as best you can.

“I recommend, if on unemployment, [you] cut back on all discretionary spending and make every effort to keep bills current so that the credit score may not get negatively impacted,” Herzfeld says.

Debt-to-income ratio will likely rebalance once you return to work, as long as you haven’t racked up too much debt during the period of unemployment, Boies says.

How to handle your finances while unemployed

“My recommendation is to always try as best as you can to pay at least the minimum required payment on all monthly debt obligations, otherwise credit may be negatively affected,” Herzfeld says.

Boies suggests reaching out to landlords, credit card companies, utilities, auto lenders, and others to find out what options you have, such as payment plans, deferments, or forbearance. You might also be able to reduce some bills, such as insurance, by reviewing your policy.

“Don’t think that if you can’t pay that bill, you just can’t do anything about it,” Boies says. “You need to reach out to see what options they have available to you.”

How to bounce back from unemployment

If your credit score is negatively affected while you’re unemployed, it’s not the end of the world—but it will take time to repair.

Six months to a year or more of positive credit rebuilding could get you on track to buy a home, Herzfeld says.

“The sooner past-due debts can be remedied, the sooner the score may begin to improve,” she says.

The post How Unemployment Can Affect Your Plans To Buy a Home—Now and Later appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com

What’s the Fastest Way to Boost My Credit?

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Article originally published September 1st, 2016. Updated October 29th, 2018. 

It’s a common question around these parts: how do I fix my credit? And, while credit scores do have a lot of nuances, the answer is actually pretty straightforward: pay all your bills by their due dates, keep your debt levels low, add a mix of accounts as you can afford it and voila! — your credit score should rise steadily over time.

Still, for people plagued with bad credit or someone looking to get the absolute best rates on a new loan, waiting it out can seem like an unattractive option — and so the question gets a little more pointed: how do I fix my credit fast?

Truth be told, there are no guarantees when it comes to getting a quick credit boost. Exact point increases will vary depending on your full credit profile and, even if you’re teetering toward top-tier credit, your score’s beholden to a lender’s schedule when it comes to reporting new information to the major credit bureaus.

Most creditors provide updates to the big three bureaus every month — meaning, yes, you can boost your credit in 30 days, but any shorter timeframe is admittedly a long shot.

Still, there are few steps you can take to try to raise your credit score in the short-term. Here’s a breakdown of ten of your best options.

1. Pay Down Your Credit Card Balances

Credit utilization ratio— how much debt you’re carrying vs. your total available credit — is a huge part of credit scores, second only to payment history. But while you can’t just erase a missed payment from your credit file (most negative information takes seven years to age off of your credit reports), you can pretty readily boost your utilization rate by wiping out big credit card debts.

Experts generally recommend keeping the amount of debt you owe collectively and on individual cards below at least 30% and ideally 10% of your credit limit(s).

So, if you’re close to maxing out one card and/or you’re carrying big balances on all of them, paying those debts down can result in a fast boost. Just be sure to pay charges off by your statement’s billing date as opposed to their actual due date because that’s when most creditors will update account information with the credit bureaus.

And, of course, refrain from making any new purchases once the debt’s been eradicated.

2. Ask for a Credit Limit Increase

Essentially, a different solution to the same problem — you may be able to improve your utilization rate by getting an issuer to give you a higher limit on one of your existing cards. Just be sure not to use up that extra credit. Otherwise, this move can have the opposite effect.

And be prepared to see an initial ding to your score — creditors sometimes pull your credit when you ask for a limit increase, and that could generate a hard inquiry on your credit reports and cost you a few points.

You might easily make up those points and then some, however, if the credit limit increase is large enough.

3. Get an Error Removed

Errors on credit reports are more common than you may think, so it’s important not to simply take a bad score at face value — particularly because getting an error removed can be one of the faster ways to fix your credit.

The Fair Credit Reporting Act requires that the bureaus investigate and remove items deemed to be errors within 30 days of a dispute being filed.

That’s why it’s a good idea to pull your credit reports — you can do so for free each year at AnnualCreditReport.com — and routinely review them for any inaccuracies that may be unduly weighing your credit down.

4. Clean up and Polish Your Credit Report

Once you receive a copy of your credit reports from the three major credit bureaus- Experian, Equifax, and Transunion, you can take a closer look at each item that is on there.

You have already read about getting an error removed, and this is a good step to take, but don’t stop there. Look for accounts you have on your credit profile that show late or missing payments and verify the accuracy of each item. If you see something that is wrong, send your dispute so that the problem can be investigated.

5. Attempt to Pay Twice Monthly

Yes, you may be paying your balances each month, and you are paying them on time, but you need to keep in mind that your creditors are reporting your balances to the credit bureaus only once per month.

If you have a credit card, for example, that you are constantly maxing out and reaching your limit on throughout the month, the statement you receive will show the balance. You make the payment, but since it was reported only once that month, it is basically showing that you are using 100% of the available balance on that credit card.

If you send in payments twice a month, however, you are essentially breaking up your payments, and you are effectively keeping your overall credit card balances much lower than if you continue to only pay once per month.

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