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5 Ways to Take Dividends From Your Life Insurance Policy

Everyone at some point gets a Life Insurance policy. Why? Because if you die and you’re a parent, what is going to take care of your kids? If you have a spouse, what will keep your spouse running?

But I’m not here to argue whether you should or shouldn’t have life insurance.

I’m also not hear to deep dive insurance or explain the process of buying insurance.

This is about what you do when they ask you “How would you like to take your dividends?” My what? Aren’t dividends a stock thing? (Some maybe even asked, “What’s a dividend”?) To be brief: Dividends are the little extra bits a company pays to you for owning their stock. Some companies don’t give dividends because they reinvest earnings. Many life insurance policies pay dividends in some form, any policy that either invests in the market directly, or allows you to control the investments in the market will yield dividends.

There are 5 ways you can receive dividend payments. Here’s the simple way to remember: CRAPO

Cash

Reduces your basis and is not taxable. Basis is how much money you’ve put into the investment. If you’ve invested $2000 in a stock, and then sell it for $3000 later. You made $1000 dollars. Your basis is that $2000 you put in. With this option you’re reducing your basis by the amount paid out. This also has no tax consequences immediately.

Reduction of Premiums

This is just reducing your premiums. Premiums are how much you pay for your insurance contract. So, you can use the dividend money to make your expense a little less.

Accumulate Interest

With this option you basically keep the dividends invested. The insurance company keeps this money in the same account, but tracks its earning separately. The reason for this is that it’s taxable in the future. The rest of your invested money is still in that tax advantaged insurance.

Paid-Up Additions

Think of Paid-Up as “Paid-In-Full”. You utilize the dividends to add a tiny little bit of permanent insurance to your policy that you no longer pay premiums for. A lot of life insurances have options where you can convert your entire policy over to a permanent paid-up insurance. Of course, this reduces the amount of coverage, or money you get at death, due to the fact that you’re no longer paying into it.

One Year Term

Term insurance is a lot cheaper than Paid-Up insurance. This is when you use the dividends to buy term insurance that lasts one year then expires. The reason someone may do this is because they decide Paid-Up doesn’t add very much. If you look into the cost of permanent insurance compared to term insurance, you’ll see really quickly that term insurance pay-outs can be huge compared permanent insurance. The other real difference though, is term insurance expires. So, if you don’t pass away during the time, then it expires.

Most people usually go with Paid-Up additions, but depending on your situation you may choose another.

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Concepts of Investments and Risk

Merry Christmas! Everyone!

I want to share a gift of knowledge with you. In relation to your Christmas futures. It is vital to learn how to invest in our future. Everyone has heard, as I’m guilty of saying as well, to save money for your future retirement. But the problem is, how do I invest it? How does it grow? What do I invest it in?

I would like to answer some of those questions here.

What’s the basics to investing?

First, knowing the Time Value of Money is valuable. The idea is, if you’re investing a certain amount of money every year for retirement, and you can assume it’s growing at an average rate, then how much money will you have to retire?

We utilize the Time Value of Money to calculate how much we need to save to reach our goals.

Vital to our tool belt is what Inflation is: The rate at which our currency is becoming less valuable. My Grandpa was telling me the other day about how at the store you could get a king-sized candy bar for a nickel. Nowadays the larger candybars are usually a dollar, or at a gas store a buck fifty. That’s inflation. If Inflation is growing faster than your money, then your investments aren’t doing to great.

What do people mean when they say an investment is riskier or safer?

Investment Risk, is the likelihood your investment will give a loss or less return than expected.

Many will say that a Bond is a “safer” investment than a Stock. An individual bond has a ‘guaranteed’ rate of return. This is because a Bond is debt, with required payments from the company who’s bond you own. A stock is in the market of that company, and will rise and fall as the companies valuations change.

If you’re only invested in one stock, you are in a risky investment. It isn’t necessarily true that bonds are safer. With some bonds, you have Inflation Risk, which is the risk that inflation will be greater than your return.

Safe investments are made when in conjunction with a Risk Tolerance, Financial Timeline of the investment, and proper diversification.

What is Risk Tolerance and Why Would It Affect My Investing?

 

This is an extremely generalized table of risk tolerance.

 

 

Younger Aggressive (1)

When we are younger we can subject ourselves to a greater risk with our long term investments, why? Because we’re young and if the stock market dips 30% in a year we can just wait till the market rebounds because you’re not retiring for 30 more years.

The basic concept of stocks and bonds for investing is to slowly overtime convert more of our investments from Stocks to Bonds and Cash to protect what has already grown. It’ll keep growing in a Bond, but at a slower and more predictable rate. This also helps to create a base level of guaranteed type income, (which can be supplemented with Pensions, Social Security, and Annuities also)

The ratio of Stocks to Bonds is called Allocation.

If Stocks are more jumpy, why invest in them at all?

The average return in the stock market since 1900 has been roughly 10.4%. Bonds have averaged somewhere between 5-6%. That is the basic reason why. Bonds, due to being debt instead of part of the companies growth are more guaranteed.

Why not 100% stocks then?

If someone is going to say “I’ll give you 99% chance of getting 5% more when I pay you back next year” you’re likely to love that when the contrasting option is “I’ll give you a 60% chance of being worth 10% more, and a 40% chance of being worth 10% less next year”. That’s the fundamental difference.Younger%2F Aggressive (2).png

When you’re closer to retirement, if too many of those coin flips become the negative ones you can see your retirement savings drown, and not recover for 5 -10 years. Well, when you’re retired and you need to spend the money this year. You start spending the money at that 10% drop or 20% drop.

Its good to have some in both, it gives you many baskets. If one basket drops, or has a bad year, overall lots of your eggs get safely there.

How Do You Step Into That Risk In The Stock Market?

Diversification is what allows investing in stocks to not be as risky, and can create reasonable believe that money will grow consistently over a long time period at a rate higher than most bonds.

The Market has a Beta of 1. This means that The market itself is 100% connected to itself. If a certain Stock has a beta of 2, then it’s expected to usually go up two dollars for every 1 dollar The Market goes up. If another stock has a beta of .3, then it’s expected to go up thirty cents per dollar the market goes up. This also is good because when the market goes down, it only goes down thirty cents per dollar.
Now, beta’s of stocks aren’t facts, but general trends that change over time. Having stocks in many different areas of The Market, allow for diversification.

If you want to get deeper into Allocation, Read some of Dr. Craig Israelsen’s work, the 7-twelve portfolio. It discusses 7 Asset Classes, and Twelve types of Stock’s and bond’s to be invested in. (That’s a lot of baskets to put your eggs in)

Where Do I start? Should I Buy Apple and Google Stock?

As a general rule, It’s extremely simple to get diversified by investing in a cheap ETF.

ETF stands for Electronically Traded Fund. These funds take an asset class such as Real Estate, Small Growth Company, or the entire S&P 500 series of 500 stocks and automatically invests a certain percentage of the fund into the different stocks that are available within their parameters. If you invest in their ETF, for a very small fee, they automatically keep the fund in par with the Market that it’s tracing.

When your money is in multiple types of ETF’s and perhaps a few stocks of companies you like, you have made a simple diversified portfolio. Some ETF’s even trace Bond’s, so you can get a healthy helping of bonds in their also. Any ETF that has Vanguard running it should be the cheapest type of ETF available. Vanguard is all about low cost investments.

How much growth should I expect in my savings?

It’s safe to expect growth, but how much growth? Most planners will not argue with me to say that though many will use numbers from 6%-8% that 6% is a reasonable expectation to have, if invested properly. This also depends on your risk. If you’re more heavily in bonds, you can expect it to be lower, if you’re more aggressive in stocks you can expect it to be a little bit higher.

What Questions do you have about investments that I haven’t answered? Send them to me at [email protected]  Or leave them in the comments below and I swear I’ll answer them!

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“Safe” Investments: What You Need To Know

The 8th Wonder of The World.

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Albert knows his stuff

Money is pretty cool right? And knowing that compound interest is the 8th wonder of the world, (Thanks Einstein for that gem) we usually turn to dropping our money in the bank.

Problem is, that money makes next to zero doll-air-oes. Back in the 90’s when interest rates with in the 12-14% it was safe to put money in a CD at 10% interest. Today, interest on a 3-year CD is puny, 1.4%. Interest rates are down 90%, which is good for inflation and other things, but makes me think, “What do I do to grow my money?

Numbers

First: let’s talk numbers. I conducted a survey and found that most people struggle with knowing where their money can grow, and what’s riskier or not.

Problem: “What tends to have the highest growth over periods of time as long as 18 years”

A. Checking Account
B. U.S. government savings bonds
C. Stocks
D. Savings Account

What is your answer?

I’m glad to say that not a single person put Checking Account. I’ll still explain that for a moment, a Checking account is what I classify as “Cash & Cash equivalents”. It’s liquid, it’s being used day-to-day, and mine currently has a return of .02%. This isn’t where money goes to grow, it’s where a money goes to be spent.

B. U.S. government savings bonds. These investments are usually given a pretty small interest rate, and are guaranteed by the government. I was actually quite shocked by just how many people thought that this was the best place to grow money! These are given a guaranteed return, but usually is equal or less than what inflation is.

D. Savings account. A few people thought this was a good place to grow money. Savings accounts are similar to Checking Accounts, in the fact that they have very poor growth rates, usually higher than Checking, but still very low. In my mind, they are basically a way to keep your money in 2 seperate locations so you don’t spend it all. I think there are better ways to organize money, but that’s just my thoughts.

C. The Stock Market. This is where money goes to grow. Naturally there are risks, but there are many ways to mitigate the risk. Diversification, Allocation, and having a good time horizon for investments helps. With an 18 year time frame, and being diversified across many stock types, this is where money will grow.

Lets look at the data

I looked into typical rates for Savings Accounts, Checking Accounts, Government Bonds, Corporate Bonds, and the Average Stock Market Yield. Here is what $1000 dollars looks like over a 20 year investment.

growthof1k
Chart by TheFinancialGinger – 2016
www.nerdwallet.com/rates/checking-account – Zion’s Bank Checking Account
www.nerdwallet.com/rates/savings-account -Zions Bank Savings Account
www.treasury.gov/resource-center/ – Government Bonds
finance.yahoo.com/bonds/composite_bond_rates – 20 year AA corporate bonds
http://www.moneychimp.com/features/market_cagr.htm – Stocks average from 1995-2015

Looking at this, some people are probably shocked. Know that Stocks have the risk of going down, they will go down and up. Greater Risk often yields greater upside potential.

Fine, I’ll put it in stocks. How do I do that?

If you have $5000 or $10,000 to invest, put it into the stock market. There are some great places to open an account online.

TDAmeritrade has a pleasant platform that is excellent for beginners and isn’t too expensive to use at $10 per trade.

OptionsHouse is an online broker that has $5 trades and has no minimum balance.

TradeKing is another online broker that has $5 trades and no minimum balance.

My absolute personal favorite is Vanguard. The reason for that is they are all about the idea of buy-n-hold with stocks, and stock-packages called Mutual Funds or ETF’s. The idea behind that is simply buying a preset group, then waiting and letting it grow over time.

If not, you can probably talk with your Bank, Credit Union, or find a good local individual company such as EdwardJones to get you started. Make sure that if you use a broker/dealer company that you know the cost associated with it.

In Summary

Checking accounts are where money goes to be spent. Savings accounts are for emergency funds and money to be used within 6-12 months. Bonds are where money grows safe but small, and the stock market is where money belongs for long-term growth.

So, open an investment account and invest! Don’t let $5000 extra dollars be left sitting for no reason in the bank.

 

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The Ultimate Cost Saver in College: 4 steps

My father during his last semester of college told my mom, “Wait… I don’t want to major in business. I want to be a chef”.

Needless to say, he didn’t go to chef school. Many of us spend years bouncing around in majors of college and end up with all this needless classwork.

This is the key to saving both Time and Money in college.

Get the Right Major the First Time

This is easier than it sounds. First, you need a vision. If you don’t have one, use this nifty little template. (Jokes, that’s a link to my article about writing a vision statement)

But seriously, the most important thing in deciding your major is knowing who you REALLY are. Who are you? What makes you tick? Figure that out.

Here’s the process:

  1. Lists about you
  2. Interviews
  3. Comparison Charts
  4. Have 1 “figure-it-out” semester

This is the process I used to break into my major quickly. The reason it’s so good in saving you money is because of the time you spend going to college. Sure, earning a couple scholarships for $400 or $500 a piece is great, but if you can go to school for 2 semesters less because you didn’t change a major, then you just saved 2 semesters of tuition which is average about $9-10,000 dollars.

Here is, The Ultimate Cost Saver in College.

Step 1: Lists

List out 20 majors you’re interested in.

List out 20 Jobs you could enjoy doing.

It’s important to get to a larger number, so you really consider things you actually enjoy. Everyone is able to find 3 or 4 things they like, but can you get 20? Narrow it down to a top 5. Maybe a trusted friend, or therapist, or coach, or school counselor could help you narrow the list down a bit.

My Step 1: I was deciding what I wanted to do with my life after finishing a 2 year service mission in New Zealand.  The starting list included skills with dancing (I was a 4th place Titleist in Youth-American-Smooth at BYU Nationals in Ballroom in 2013), a love for computers, good conversational skills (I hope), loving people, loving group interactions, breaking ideas into pieces, loving competition and other factors. It was easy to identify event planning, financial services, and global supply chain management as 3 possible majors, among others.

Step 2: Interviews

Find people in each industry that you know (or don’t!) and interview them. This is cake. Ask people on social media, google companies that work in that industry, it’s not too hard to find someone. Most respectable people will give you 15 minutes to interview them.

You need good questions: Here is a basic list:

What makes your job worth it?

How did you end up working in this industry?

How much do people get paid working in your industry?

How do you help people?

What are the best certifications or skills to learn success?

What personality types work well in this industry?

How do you get into the industry running fast?

Is this a 40 hour a week job? How much time do you need to invest to achieve excellence?

Interviewing  5 people in each industry will give you a good way to benchmark what they enjoy, pros and cons, income levels, what they hate, skills they utilize frequently, career path and progression, and other little details you want to know.

My Step 2: After calling up a few old friends, and posting on Facebook about wanting to talk to professionals in these areas (in separate posts on different days. Posting a list of things on Facebook gets zero responses. and you want more than zero), I was able to interview a few event planners, financial planners, and a few supply chain management experts. The leader of my service mission (over 200+ of us missionaries) was a supply chain expert for UPS during his working days, my old dance partners father is a financial planner, and a man from my church back home is a very successful event planner. This grew into more interviews. My Girlfriend sent me to the finance guy for her company at a local Edward Jones branch. My interviews grew and grew and I really learned the good, the bad, and the ugly of each industry.

Step 3: Compare

If you’ve read many of my articles, you’ve probably seen that I often say “Ask your friend, boss, etc to shorten down this list with you.” or “Ask your friend if that’s really you”.

Same here! Ask people what they think, and maybe make a weighted list or pros and cons for each, then weight how important that is to you. Then you can almost make a weighted average of how important it is.

My Step 3: I didn’t make a weighted list for this (Such a Hypocrite, ae?) but I’ve done this with many projects. Deciding where to spend money, choosing to live at home or live on my own during college, If I should paint my room blue on the top half or blue on the bottom half, and other ‘very important’ decisions, or less important decisions.

 Step 4: It’s okay to have a “Figure-it-out” semester

Maybe it’d be good to take one semester and take 1 or 2 classes in each major you’ve picked. It’s also a great time to talk to counselors and teachers and continue working on clarifying step 3 (compare) and spend more time on step 2 (interviews).

Realize that rushing through college isn’t fun. There are scholarships you can get while in school, there are lots of governmental aid that you can get, and there is college life. Do you really want to be out of school in the big world at 21? Consider studying abroad, finding side hustle opportunities, start a business, do something epic during school time. Summer is the opportunity to work at a hotel in Alaska, work on a fishing boat on the sea, working in hospitality in Australia, or building up certifications, skills, and hobbies that can contribute to your overall balance in life.

Remember,

Lists, Interviews, Comparison tables, and Take a semester to figure it out.

Jacob Johnson

The Financial Ginger

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Get The Job. 3 Sure-Fire Ways to Impress (Before You Ask For The Job)

Before you can make smart financial decisions, you need to have money. Why not explain how to get the job?

My Friend, Larry, asked me the other day if I knew anything about resumes. I told him SURE! Let me get you a good template and some other fun things. I helped him and reviewed his resume. He got a job interview. He got the job. Here are 3 tips to getting that job.

Three Things: Resume, Elevator Speech, Good Knowledge

Resume

First, you need your resume to look desirable. A Good Resume has the following information
1) Your contact information
2) Your Purpose Statement
3) A Skills/Qualifications list
4) Your Work Experience
5) Your Education Experience

They need to each be relevant and overall your Resume should never ever ever ever eeevveeerr be longer than 1 page. This is why.

“When I hired at JCPennys and Home Depot, I’d receive hundreds of applications for a single job opening. Anything over 1 page I threw away.” -Dana Johnson, Store Manager

Employers have no time for your lack of brevity and concision. Heck, If this was more than 800 words long, you probably wouldn’t read this article! You probably thought “It’s 3 things to get hired. I can do three things”. Click-Bait at its finest. (You can join my click-bait mailing list here. #ShamelessAdvertising)

Elevator Speech

The elevator speech: “Hello, My name is Jacob Johnson and I’m a student of Personal Financial Planning at Utah Valley University. I get excited about connecting people to their finances. I study tax planning, insurance risk, and retirement planning so that I can help others to see their big financial picture. As a Counselor and President at the Money Management Resource Center, a free services for students, I help individuals and couples with student loans, debt management, budgeting, and general financial questions.

Would you stop by our office in the Woodbury Business building to see how we can help you feel more at peace with your finances?”

The good elevator speech has 3 important factors:

The Introduction– Which is why I’m here
“I get excited about connecting people to their finances. I study tax planning, insurance risk, and retirement planning so that I can help others to see their big financial picture.”
The Explanation– What you’re doing about your dream
“As a Counselor and President at the Money Management Resource Center, a free services for students, I help individuals and couples with student loans, debt management, budgeting, and general financial questions.”
The Invitation– Tell them what you want them to do (Often times, this is in the form of a question or request)
“Would you stop by our office in the Woodbury Business building to see how we can help you feel more at peace with your finances”

Now your invitation could be different: it could be a request for an interview, requirements about the internship, or consideration to hire you or give you an internship.

Research Them

Last, you need to know the company! You should know some history about them, where they started, their mission statement, and maybe a little bit about where you want to be in their company.

I’d recommend also getting some good questions to ask. How do you get business, How do people climb the ladder, What are the requirements to move up, How frequently do you hire… Just make sure that you’re asking good questions that demonstrate your excitement and knowledge about working in that industry. This will make it easy and natural to talk to them regardless of path; email, phone call, in person, etc.

“You sound a thousand times more intelligent when you have prepared intelligent and meaningful (but not overly complicated) questions… when I was assistant manager…I got to sit in and help interview people. And let me tell you, you seem significantly more prepared, intelligent and eager for the job when you prepare a few questions.” – Flia

What are some of your best moves to make sure you get the job? Share it below!

Join the Facebook group to tag along with the community!

-Jacob Johnson
The Financial Ginger

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The Financial BlabberMouth
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Guest Writer: The Envelope Budget And Running Away

From guest writer: Flia

Running away taught me a lot. It taught me a lot about trust. It taught me a lot about making my own decisions. It taught me a lot about budgeting my money. It taught me that what might seem like a terrible decision could be the best thing that I’ve ever done for myself.

WAIT! WHAT?

Back up a little bit!

It taught me about budgeting? Believe it or not, yes it did.

And that’s just what I’m here to explain.

I realize that most of you reading this do not know me and so a little background is necessary. Shortly after my 19th birthday, I ran away from home. I am not going to go into details as to why, because that’s not what I’m writing about.

Three days beforehand, I bought a train ticket from Indiana to Utah. That same day, I started cashing out my bank account. My specific bank would only let me withdraw $300 a day. Although you could get around this rule by also using an ATM that was not associated with a bank (such as an ATM at a Wal-Mart).

By the time I got on the train and left Indiana, I had about $1,500 in cash, my backpack, and my duffel bag. And I had a 48 hour train ride to figure out what to do next.

IMG_7481
Forty-Eight hours on a train

About six hours into the trip I was really bored and hanging out in the snack cart where I knew I would be left alone. Because of how bored I was, I was starting to become delusional. That was the point that I decided to budget my money.

It’s not that I’d never done any budgeting before, but all of my previous budgeting had been done on electronic day planners and such. I didn’t have any of that with me so I had to do a little creative thinking.

The first thing I did was brainstorm and write down a list of everything that I would need money for. My list ended up something like this:

  • Travel & Gas (for whoever would be picking me up at the train station)
  • Food (on the train)
  • Food (elsewhere)
  • Lodging (hotel or staying with a friend)
  • Non-Food Necessities (toiletries/clothes/medication)
  • Emergency/Extra

After I had categorized everything, I began to determine about how much (or what percentage) of my money needed to go towards what. Things such as gas money for the friend that picked me up at the station was relatively easy. I looked up the number of miles between his place and the station and back. Then I determined the average miles per gallon on the specific type of truck that he had, and figured in the average price of gas in the area. After I knew how much gas the trip would have taken him, I could effectively reimburse him. All of that math was probably not necessary, but like I said, I was delusional.

Every other category followed similarly.  Food on the train is ridiculously expensive, even the prepackaged snacks. I found the cheapest food with the most nutrients (which was kind of a joke by the way-it is a snack cart-it’s all garbage) and rationed that extremely carefully. Also, because I had spent a majority of my time in the snack cart, I ended up befriending the guy that ran it. He’s a pretty neat guy. And I ended up getting some free snacks out of it too. That was a bonus!

After I had figured out each of the categories and how much money I would allot to each one, I had to figure out how to separate the money physically. It would be much easier to spend responsibly when I could actually have a visual.

NOTE CARDS!

budget20-20istock_000041295790_largeI had a package of note cards in my purse! I never leave home without them. Each budget got one note card. I folded it in half, lined side inward, and on the outside wrote which category it was. The lined inside would serve as a ledger. Every time I spent money from that card, I would subtract the amount that I spent and write in the new total.

And I am not quite sure why I just explained that because you really should already know how to use a ledger.

Any leftover money that did not get spent would go into my Emergency/Extra fund. This money was kept in an entirely separate compartment of my wallet.

flat550x550075f-u1
Out of Sight, Out of Mind

Out of sight, out of mind. It would be used in case of emergency, depleted funds, of on something necessary that I would inevitably forget about. For instance, I had no cell phone. I ended up shelling out a little less than $25 for a burn phone and some minutes.

Although I was not out in Utah very long before continuing on to my next place, I still use this method of budgeting. I get paid through a paycard (a bank less debit card) and cash out 85% of my earnings every payday. Savings go into a tin under my bed (out of sight, out of mind) and everything else is separated into neat little note cards in my wallet.

So yeah, I guess you could say that running away taught me about budgeting.

Thanks to Flia for the guest post! The envelope is a basic budget that really gets stuff done. What do you do to keep track of your money? What is your story?

I always love to hear your money ideas, so email me at [email protected]

Flia is a college student studying forensic biochemistry. She is an avid artist and is currently working on multiple commissioned pieces. Although she is now residing in Kansas, she has lived a little bit of everywhere and isn’t overly attached to one particular place. In her spare time, Flia likes to read, practice new art techniques, and baby-sit for family-friends.

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I Got A Credit Score!

Remember my article “Seriously, No Credit Score?” Well. Guess who got a credit score?

 

This guy did!
Despite all of the suggestions and thoughts I had, I discovered that the process was a little bit harder than expected.

The Process

First off, applying for credit isn’t as easy as you’d think, I got turned down on a credit card before I wisened up and realized I couldn’t get the best card ever because of my lack of a record. So, I applied for a secured credit card and put about $50 bucks as collateral. MasterCard gave me a $200 limit against my initial deposit, which I intend to utilize for a few things here and there, and then pay it off immediately. This will give me a revolving credit style that is beneficial.

Second, I applied for a line of credit at my credit union. They offered me $100, $200, $500, and $1000 limits, depending on how much I was willing to take on in APR. I chose the $500 option, because I know it isn’t smart to utilize more than 25% of your credit limit. I could make a significant purchase on this limit and auto-set it to pay from my checking and savings at the end of each month.

The third thing that I did was apply for a Credit Builder Loan through my credit union. I locked up $500 of my own money, and I am paying my credit union back that same $500 (it’s basically a forced savings) at the end of the year. I get my $500 back plus most of the $500 I payed them, and I’ll have an entire year of credit payments on my account.

 

Thoughts about each option:

Credit Card: This one is the most fearful for me. If I’m late on payments, or never use it, I easily lose a lot of money, $50 plus $35 (explain these amounts), and it goes on my record. I still have this card in the envelope because I accidentally delivered it to my home address while I was living in Kansas City. I recently returned home, so I intend to start using it now. Cards like this have a VERY high APR, and the first time you mess up they slap you with a fee and your APR goes even higher. If you’re gonna get a card like this, pay it off immediately and put 12 reminders on your phone, your girlfriend’s phone, and your dog’s phone (Yes these exist. http://www.dailymail.co.uk/sciencetech/article-2547788/Even-Fidos-got-dog-bone-Owners-stay-contact-pooch-using-video-phone-pets.html ), and put it on Autopay if you can. (Voluntary Automation :D)

Line of credit:. This is basically the same as the credit card, but because it’s with my credit union, it isn’t as expensive, and it’s linked to my account, meaning they have it on Autopay for the entire amount (or just a percentage if I so choose. Which I don’t.) I might act a little bit intense, but I’m big on not spending more money than I have.

The biggest pitfall with having a line of credit is feeling that you are able to live outside your means. If you do that, and only pay the minimum required payments, you are stuck paying huge interest on your credit cards. If you remember from previous articles, you should have an accountability partner who you can use to keep you from overspending.

Credit Builder Loan: This one is easily my favorite. It’s so simple that only took 15 minutes because it was through my bank . It’s super cheap,  you pay monthly and put it on auto-pay. I can pay early if I want or can pay off the entire balance at any time. The total cost to do this for an entire year is about $35 dollars.

zero-to-hero-graphic
My actions moved my score from zero to… almost hero

The Results:

Now on to the powerful part. I got myself that credit score. First credit scores are never amazing, and they have a lot of weak points. For example, my score shows that I only have 1  month of history reported. It shows that I have 5 or 6 inquiries onto my accounts. It’s also through Credit Karma, so it’s got some slight sway depending on what I want to use the credit for (http://www.goodfinancialcents.com/how-to-find-your-real-fico-credit-score-free/ Jeff Rose Has a good article about some issue with getting credit scores like this)

He explains in his article that he found his score in the 750’s, and went through a huge process to find a real credit score. After that, his intern figured out his score, and it was low 600’s, but he had no credit cards or credit history.

My issue is the same. I have 1 credit card, 1 loan, and 1 line of credit. Because of that I have a low number of accounts, my average open length of an account is very low, and the amount of hard inquiries that I’ve had in the last few months shows to be 3 for my credit scores. These can be bad signs and reduce my score.

BUT I HAVE A SCORE!

There we go! 669 and 664. 2 of the 3 credit bureaus.

What’s your story about your credit history? Share in the comments below!

 

 

-Jacob Brad Johnson is a Personal Financial Planning student at Utah Valley University who enjoys board games, West Coast Swing dancing, and helping his friends to save money on taxes. He strives to become a Certified Financial Planner designee and help the world to live their dreams and retire with confidence.

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Shout out to Briana! Thanks for helping to edit and reformat this article!

-Briana Beers graduated from BYU with a degree in English and editing. She’s currently a stay-at-home mom who moonlights as an editor in her rare spare time. When she’s not chasing her kids or cleaning three week old food splatters off the light switches, she enjoys reading, baking, and spending time with loved ones.

 

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BehaviorGap: Internal Conversations to take care of ourselves.

Have you ever wondered how psychologists, and coaches keep themselves stable? They have stress like everyone else, they recognize their feelings, They take care of themselves like they take care of their clients, They don’t skip the boring daily steps, and they learn how to talk to themselves inside.

The principles in this video lecture series apply to everyone, but are specifically tailored to The Financial Planners of the world.

Carl’s ability to explain how Real Financial Planners are idea partners- individuals who help you create realistic expectations and act as a valve to release worry and calm fears- is a unique skill. In Carl’s four-part training on the internal dialogues Real Financial Planners need to have with themselves, you will learn ways to explain to yourself internally about the value of the service you provide. He demonstrates proper and powerful trust building with individuals in how to not be a defensive advocate of a plan you built, but rather to become a guide in a changing landscape of life.

Uncertainty Equals Reality
Don’t be a defensive Advocate of your plan. Be a Guide in a changing landscape.

What about the things advisers are never allowed to talk about? Carl, as vice president of unspeakable things, gives some powerful tools to planners to keep themselves mentally healthy, while constantly working to be a barrier between their clients and big mistakes.

Between you and the big mistake
Be a barrier between clients and big mistakes better by keeping your health in check.

The answers that are given aren’t “Fix-It-Instantly” or “Instant Results” methods, but long term plans for planners to create dramatic long term results. Doesn’t that sound like what we do as Real Financial Planners for our clients? His answers are unspeakable almost obvious things such as eating healthy breakfasts, having a person you can talk to about your stress, and getting up to move every few hours of the work day.

Ultimately in comes do practicing what we preach. Doing simple basic things that we would tell our clients to do. Its enjoyable and refreshing to see how Carl makes important distinctions like the concept of Simple VS Easy, Sticking to a long term plan vs instant results, and the promise that doing consistent ‘boring’ things brings much more long term value than can be seen in 1 week. Truly keeping ourselves well and strong isn’t like a fad diet guaranteeing a six-pack in a week, or lose 30 lbs in 2 months. Carl tells us how to succeed, gives real examples of succeeding and reminds us that the excitement in life is a result of compound interest of doing the little things that seem to have no impact.

Compound Interest
Success seems boring, but like money it takes time to become exciting

Who is your confidant? Will you test the power of eating healthy and getting exercise? Will you do what you tell your clients to do by creating a plan of little actions to have big results? Don’t wait until you have a breakdown, end up in a hospital, or endanger your relationships. Let Carl’s new free workshop teach you how to get a release valve and keep you strong for yourself, your family, your company, and your clients.

Watch the 4-minute a day for 4 days series here. http://www.behaviorgap.com Put in your email and name in and Carl will send his Internal Talk training to you immediately!

-Jacob B Johnson
UVU student of Personal Financial Planning

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