# Credit score & savings, need advice



## Peter/ (Aug 27, 2017)

Won't bore you with the details of the latest escapade but I want to know the best way to boost my personal credit rating and how to save as much as possible?

I'm terrible with money and I spend what I want when I want and need to figure out a way to reign in my finances, please help.


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## brooklynAnn (Jun 29, 2015)

Use cash only and give yourself a certain amount only. When thats finished you have to wait until the next week. 

Do grocery once a week.
Have direct withdrawal for savings, retirement and emergency funds( for clothes, outings, repairs)
Spend less than what you earn.
I only shop for clothes once a season for myself and kids and hubby.

Any excess cash from one week gets put away as your secret funds. Keep building on this.

They are tons of books and systems online to help.


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## minimalME (Jan 3, 2012)

Three of my favorite financial bloggers:

Mr. Money Mustache

Mad Fientist

Afford Anything


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## Andy1001 (Jun 29, 2016)

To boost your credit rating you should use your credit card for everything,from buying a cup of coffee to buying a car.But you HAVE to pay it off completely every month,no outstanding debts is the name of the game.


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## chillymorn69 (Jun 27, 2016)

Better you debt to income ratio..

Pay off all unsecured debt first then secured debt.


Use a credit card sparingly. But pay it off at the end of ever month never carry a balance.

Only acceptable debt is a mortgage.. and if the bank says you can afford 200k only use 100k.


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## Thor (Oct 31, 2011)

Get Dave Ramsey's book. Do his plan to the letter.

In a nutshell: Create a budget. Use only cash for all purchases. Get rid of things you cannot afford, such as an expensive car or apartment. Live frugally. Pay off your debts from smallest to largest (ignore interest rates!). Make minimum required payments on all but the smallest debt. Pay that smallest one down aggressively. When it is paid off, roll what you've been paying into that one into the next smallest debt. You'll get momentum this way.

Work on saving 3 to 6 months of expenses. Stop all retirement savings during this initial time period. Stop going to restaurants or take-out meals. Cook at home!

The biggest single item is probably to only spend cash. You'll be painfully aware of how much you're actually spending. The next most important item would be to have a written budget. But do all the above and you'll be on your way to a solid financial future.


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## FieryHairedLady (Mar 24, 2011)

Start with a budget.

List all incoming income per month
Deduct taxes

Now look at your net income.

Get the total.

Then start deducting.

Tithes or charity?
Rent/mortgage
Medical insurance
Renters insurance
Water/trash
Electric bill 
Gas bill 
Cable and/or internet
Netflix/Hulu
Cell Bill
Car payment
Car insurance
Gas for vehicles
Maintenance/repair fund for cars
Savings
Retirement
Grocery/food
Out to eat/restaurants
Misc expenses (New towels, shoes, clothes, etc)
Misc fun stuff expenses (Bowling, movies, theatre, golfing, etc)
Household expenses (shampoo, soap, laundry det, q tips, napkins, etc,)
Gifts 
Min payments on credit cards
Extra money to pay down credit cards
Student loans

Anyhow you need to create a budget

WHat you also need to do is to write down how much you actually spend.

That is something I have done for several years. There are some months I get busy and it doesn't get finished. But most months I write all down. 

It is an eye opener. All those misc purchases add up, making too many trips to the groc store add up.

Make a budget and stick to it.

Save all your receipts.

Open a word pad on your laptop and each night write down expenses.


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## Livvie (Jan 20, 2014)

Ditto to Andy's post. Using credit and key: paying it off and on time, over time.


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## FieryHairedLady (Mar 24, 2011)

Credit score

Pay all your bills on time every month.

Even if it's just the minimum. 

Even one 30 day late really drags your scores down.

Have several revolving credit cards.

Keep the ratios low.

I have 1 credit card with a $9,000 limit. I usually buy groceries and eat out with it, sometimes a misc purchase. I spend $900 or so, let it hit my report, then pay off the next month before interest kicks in. 

I have a Target credit card. Limit was $200. If you run it close to your limit you never get an increase and it don't help your score. let $25 or so hit the account, until you start getting increases. Over the years we got increased to $3,000 by spending on it every month and paying off every month. Highest month was $1,100 last Xmas. Usually it's $300 or lower. 

Periodically once every 6 months to a year you can ask for a credit limit increase without them hard pulling your credit.


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## FieryHairedLady (Mar 24, 2011)

If you have credit cards, this is a calculator I like to look at. It shows how much interest you will pay over a period of time if you make only the min payment. Or if you make higher payments.

https://www.bankrate.com/calculators/managing-debt/minimum-payment-calculator.aspx


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## uhtred (Jun 22, 2016)

Don't borrow money for anything except a house or a car - and if you have to borrow for a car, buy something practical. 

Don't get into the game of buying things in a sort of "competition" with others - there will always be someone with more money than you who can afford better stuff.

When you spend money, think in terms of yearly costs. If you get a cappuccino at starbucks every day, that is about $800/year. Do you get that enjoyment out of it - if so, then great, but if not, then get a cheap coffee pot and make instant. Same for all sorts of expenditures. 

I often think in terms of $/hour I'm spending on entertainment / fun. If I drink my $2 cup of coffee in 5 minutes, that is $24/hour for entertainment.


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## Persephone (May 17, 2011)

I agree with much that has been said but I have a little bit different take on credit score and savings. 
1. set up Credit Karma. It will keep track of your length of credit history and your balances. It tells you when things hit your score.
2. Do not apply for new credit. Do not have lots of store cards. If you already have them open, leave them be. Pay them off and put those cards in a drawer or freezer. Length of credit history is a factor as is new credit application pulls. NEVER charge more than 40% of the limit of any card. Credit used to credit available is a factor.
3. Use 1 credit card with a zero balance, charge only about $25 and pay off $20. Do not charge any more. Next month pay off the remaining $5 +interest. Do not use it again for another 6-9 months. Repeat. Shows you use credit and make responsible payments. Strictly paying off the balance each month doesn't necessarily show this.
4. Use the snowball tactic for paying off debt. And then keep it paid off.
5. be frugal. Pack a lunch, make your own coffee, etc... weigh the wants vs the needs.
6. if you are employed in a place that offers a retirement plan. Take advantage of it. Be sure you receive the company match. Do not back off from saving for retirement. You won't feel 1-3% of your income being put away now, it will grow to a nice amount when you are retirement age. You won't regret starting and sticking with it.
7. save for emergencies. Use the 52 week challenge or some variation. Dump all change in a container and cash in at bank when it is full. A coffee can holds about $250 in change. Make it fun and addicting to save.
8. live within your earnings. if you absolutely can't do that then take steps to earn more. Get a second job, sell items on ebay or fb garage sale sites, move to cheaper housing, take in a renter of an extra bedroom that you have..... 
9. get caught up on debt, stay caught up on debt.


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## wilson (Nov 5, 2012)

Peter/ said:


> I'm terrible with money and I spend what I want when I want and need to figure out a way to reign in my finances, please help.


It sounds like you have a problem with financial discipline. You'll have to find a way to tell yourself "no" for non-essential purchases.

Does your work offer direct deposit? If so, setup a separate savings account and have a part of your paycheck sent there. There are also many ways to have money automatically sent from checking to savings on an automatic basis. It's a psychological trick, but if your checking account has a lower balance, you may be more likely to be more frugal.

Also check if your work has a 401k and start contributing to that. If you're not aware, a 401k is a retirement account which you (and your employer) can contribute money and then you can take out when you're at retirement age. And if they don't offer a 401k, setup an IRA (individual retirement account) and automatically contribute to that. Many online brokerages (like Vanguard.com) can automatically transfer money from your bank to your IRA on a scheduled basis. But you may want to pay off any high-interest credit card balances before starting to contribute to a 401k.


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## VladDracul (Jun 17, 2016)

What normal works best for the financially undisciplined is to have the money deducted first and place in an account (fund) where its not readily available. Truth of the matter is many people will never accumulate a significant amount of money. Hence the reason half the people have zero in retirement accounts. If they cannot control credit cards, what do you think happens to a few thousand setting in a savings account. America is a country where wants are allowed to overload your azz.


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## dubsey (Feb 21, 2013)

Ok, there's generally a lot of not brilliant advice given out with regard to credit (not the budget - a separate deal) on the internet. My advice will only pertain to your credit score, and how to improve it.

So, my background, for reference:

owned operated my own tech company from 17 through 22, sold it for a sizable sum, bought it back for next to nothing to protect my friends/employees when it nearly got run under by the new people, sold it again at 25 to a ginormous tech company, and didn't need to work again if I didn't want to. not relevant to what I'm about to say, but it leads to:

I've spent the last 15 years working credit origination/acquisitions strategy for a big bank in risk management, not because I needed money (see above ), but because I was bored and need something to do, and as a result, have taken more than a casual interest into how credit works and whatnot. That said, I work primarily in the technology side for obvious reasons, and am probably one of the few people in the land that can parse a raw credit bureau from all three major reporting agencies without looking through the 500+ page manuals. In that time, you can get a pretty good idea how FICO comes up with their credit score, although you'll never get them to tell you.

So, 1. If you want your credit score to be good, the first thing you need is to actually use credit. The people that tell you just do your house, maybe a car, that's bull****. Your credit score is a probability of repayment indicator - nothing more. If you don't have credit, your score can't increase. The more credit you use responsibly (within reason, it can go too far), the higher your score will be.

2. ALWAYS keep your oldest revolving line of credit open (this is typically a credit card). The first debt most people assume are student loans, which will eventually be paid off, hopefully. The second is their first credit card. Always keep that guy, even if you rarely, if ever, use it. This is/will be the basis of your "oldest open tradeline" - the longer that history is, the better for your score.

3. Ok, so you have credit, you use credit, good. Now, you need to pay off credit. Remember, the score is a probability of repayment, so, you need to pay those debts, and do so on time.

4. Debt to income - it's something a bank will look at, but FICO can't assume your income. At any rate, you want to keep that ratio low if you can. What will affect your score is your utilization of open revolving trades - i.e., your amount of credit you're revolving month to month (not fully paying off) in relation to the total credit line you have. If that gets high, it looks very bad, so pay down your revolving debt.

So, to give you an example of practicing what I've preached. I bought a car a couple years ago. Took out a loan even though I could have paid outright for it. I paid the loan for a couple months, then paid the entire thing off. Now I've just established another tradeline opened, and ultimately paid as agreed for the entire time it was open. Keeps the score high - really high.


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## Ursula (Dec 2, 2016)

I keep a yearly Microsoft Excel worksheet that I have set to automatically calculate my income and expenses. I list ALL monies coming in, from my full-time job, side hustles, freelancing and I have a category for "other", which is for things like government rebates, checkout51.com rebates, etc. 

I also track ALL expenses from cost of living things (mortgage, utilities, taxes) to groceries, alarm monitoring, groceries, vehicle expenses, gifts, mad money, anything for my side hustles, everything for my dogs (vet, grooming, food, insurance), banking fees, etc. I track everything and save receipts to plug into my spreadsheet.

I also joined sites like: www.checkout51.com (for groceries), ebates (for gifts or things that may pop up. I might as well get a small rebate for something that I'm going to purchase anyways). I also shop within reason. I also came across the book "The Year of Less" by Cait Flanders, and was going to buy it, but requested it for my birthday instead (see what I did there?!).

In Cait's book, she outlines the rules that she followed in order to save a good chunk of money. I made a small poster to put on my fridge. Here's what my poster looks like:

Rules for the Yearlong Shopping Ban

What I’m allowed to shop for:
Groceries and basic kitchen supplies
Cosmetics and toiletries (only when I run out)
Cleaning products
Gifts for others
Dog necessities (food, medication, grooming, vet)
Items on the approved shopping list

What I’m NOT allowed to shop for:
Clothes, shoes, accessories
Expensive meals out
Books/magazines
Household items (unless it’s to repair something)
Electronics
Dog toys or accessories

Approved shopping list:
McDonalds Coffee (Fridays only)
Go to restaurants on occasion
Things that needs to be replaced (original items must be tossed/donated)

I find this helps as a visual, and when I'm out and about, remembering this helps me to keep spending to a dull roar.


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## Thor (Oct 31, 2011)

dubsey said:


> 3. Ok, so you have credit, you use credit, good. Now, you need to pay off credit. Remember, the score is a probability of repayment, so, you need to pay those debts, and do so on time.


Interesting post, dubsey. My credit rating is very high. I have a mortgage and one credit card. My credit card balance is paid off every month. I've had car loans in the distant past (more than 15 yrs ago since paid off), and a motorcycle loan paid off quickly about 2 yrs ago. I've just recently taken out a small new car loan. I don't doubt all your info on how the credit score is calculated, but my strategy is to have as little debt as possible and to pay things off as quickly as possible, and my credit score is top notch.

My concern is that so many people don't pay off credit cards. They take on a 5 yr car loan, then a couple years after it is paid off they're buying another new car with a 5 yr loan. They take out too big of a mortgage. And of course these days young people have college debt.

So while your advice and strategy is probably as accurate as possible, I would strongly advise someone to prioritize being debt free. This is because of human nature. I believe a big reason we have such a debt problem in this country is the _abuse_ of the idea that debt and the associated interest payments are beneficial. Someone who is debt free will have very little need to borrow money, and thus their credit rating is almost irrelevant even though it will probably be very good.

In my own case I offer up 2 examples. First, it is really easy to spend about $100. I go on Amazon or Revzilla or Musiciansfriend for something and then buy stuff I don't really need. $65 doesn't look like a lot of money when I check out, but a few of those purchases add up to real money fast. The other example is when I was killing it in the stock market and bought 2 new cars on loans. Why pull money out of the market when it is making big returns? Yeah, until those stocks went down! My net worth went down but I was still stuck with 2 car payments.

I guess I'm just offering up the warning that people really need to ruthlessly and completely follow your item 3 in the quote above. Pay off the credit card every month. Take out the car loan but pay it off in a year. Take out a mortgage but pay it off in less than 10 years. I put nothing on credit that I can't pay cash for, except my mortgage.


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## dubsey (Feb 21, 2013)

Thor said:


> Interesting post, dubsey. My credit rating is very high. I have a mortgage and one credit card. My credit card balance is paid off every month. I've had car loans in the distant past (more than 15 yrs ago since paid off), and a motorcycle loan paid off quickly about 2 yrs ago. I've just recently taken out a small new car loan. I don't doubt all your info on how the credit score is calculated, but my strategy is to have as little debt as possible and to pay things off as quickly as possible, and my credit score is top notch.
> 
> My concern is that so many people don't pay off credit cards. They take on a 5 yr car loan, then a couple years after it is paid off they're buying another new car with a 5 yr loan. They take out too big of a mortgage. And of course these days young people have college debt.
> 
> So while your advice and strategy is probably as accurate as possible, I would strongly advise someone to prioritize being debt free. This is because of human nature. I believe a big reason we have such a debt problem in this country is the _abuse_ of the idea that debt and the associated interest payments are beneficial. Someone who is debt free will have very little need to borrow money, and thus their credit rating is almost irrelevant even though it will probably be very good.


Ok, I should clarify. There's zero problem being debt free. None. At this point, I currently carry a mortgage, have 2 CCs that I pay off monthly, and that's all, myself. However, if you want your credit score to be good, you need to utilize credit, and using your example, you have. You've opened and closed loans, you use a credit card regularly.

I was simply pointing out the way to improve ones credit score - it's not to not have an use credit. You need to do so, and do so responsibly, and that, is an entirely different subject than living on a proper budget. Those two things can be related, but not necessarily so.


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