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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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4 Basic College Money Skills: How To Master Them

College always walks up and says: “Gimme money”. It’s the worst bully since Billy who always took your quarters during recess in 2nd grade!

Here are some amazing articles I’ve read about college kid money skills.
1) Getting Scholarships for school
2) avoiding Debt in College
3) how to deal with CC’s during College
4) how to start a savings account, and basics on opening an investing account

Basically, this is a really good reference and resource of some other writers work about the subjects. Feel free to comment extra resources you’ve found that are good too! I’ll make sure to update your research into this list also!

The Basics of College:

http://wellkeptwallet.com/2012/05/how-to-graduate-college-without-any-debt/

This article gives 5 basics: 1) Consider the Cost, 2) Work During School, 3) Apply for Scholarships, 4) Work for the University, 5) Be Radical – Try Crowdfunding! Thank you Deacon Hayes for this article!

https://wallethacks.com/money-tips-college-students/
Jim Wang gives one of the best and most concise run downs on 40 basic money tips in college.

Financial Advice To Start Your Military Career

I honor Doug, whom started the Military Guide. If you want to or do serve in the military, Doug knows the finances behind it.

Get The Scholarship

Jocelyn from TheScholarshipSystem shared her site, and I highly recommend it. The Best article she has, which is a freebie if you join her email list, is “The 3-Steps I Used To Write Reusable Scholarship Essays QUICKLY and That Won Me Over $125k”
http://thescholarshipsystem.com/ – her article The 10 basic steps to getting scholarships
http://thescholarshipsystem.com/ – 5 things to update on your FAFSA (Right NOW!)

 

KristinaEllis.com hosts Kristina’s books about how she paid for college “Confessions of a Scholarship Winner” and “How To Graduate Debt Free”. I met Kristina in person and FinCon16 in San Diego and would recommend her books to anyone who is serious about getting scholarships in college.

I can’t rant enough about Brynn Conroy and the wonderful FemmeFrugality site. These tools are great to understanding the mindset of applying for scholarships.

http://femmefrugality.com/how-to-write-a-successful-scholarship-essay/

http://femmefrugality.com/playing-the-odds-on-scholarship-opportunities/

http://femmefrugality.com/why-a-scholarship-resume-is-an-important-part-of-your-college-arsenal/

Hear the Ginger

Can you handle the Ginger? Be the first to get my newsletter by signing up here! :3

Avoid The Debt

Robert Farrington, a friend of mine, gave me some articles he wrote about avoiding debt and investing during college. This article is about 6 people in different situations, and how they avoided student loan debt. http://thecollegeinvestor.com/15182/6-college-graduates-share-avoided-student-loan-debt/

Jason Butler gives you the run-down on TextBooks and cutting costs here. http://thebutlerjournal.com/2013/08/09/saving-money-on-college-textbooks/

And how about the cost of an apartment? LaTisha Styles from StylesTV shares how to deal with an apartment here, https://www.youtube.com/watch?v=7UEn_k0DNb8

Credit Cards in College

http://investingdollarsandcents.com/1/post/2015/09/12-things-to-consider-if-you-want-to-start-investing.html

This article is technically about investing, but I really like that it gives you a good mindset about how to think about debt, and weigh the options in investing, saving, or paying off debt.

Where to Start Saving/Investing

The College Student’s Guide to Investing

There is no where safer to start than a website DEDICATED to college investing.

http://www.invest-safely.com/personal-finance-goals.html

The writer for Invest Safely is on point, every time. These 8 points are sure to get anyone started on the right track investing and saving.

How to Win the Stock Market Game [4 Rules]

If you want basics on how to invest in stocks, this is the place to start. It shows statistics and gives basic explanations for types of stocks, mutual funds, and other places to start with your money.

http://www.moneysmartguides.com/become-stock-market-millionaire

This is a very good basic guide explaining how to split your investing money, how to fund an account, and ways to keep your money safe. It talks about Bonds and Stocks, and good general rules for picking investments, and ways to diversify in multiple types of securities.

How to Fund a Brokerage Account and Start Investing Online

Lastly, this is a beautiful article that gives explicit details on HOW to open an account, and basic processes for utilizing it (as well as other useful information).


What are your resources you’ve liked in these areas? What do you use for credit cards? What are your beliefs? Share them with me in the comments, and I’ll be sure to put a few quotes on Instagram.

Jacob Johnson

The Financial Ginger

 

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Homeownership: Still the American Dream?

Is Home Ownership Still the American Dream?

Home ownership is at the lowest level in decades in the United States[i], and many industry pundits lay the blame squarely on millennials.  But is that fair?  Or even true?  Let’s examine this.

How did home ownership become equated with the American Dream?

The term “American Dream” was first coined by James Truslow Adams, an American writer, in his book The Epic of America published in 1931.  At the time, America was caught in the grip of the Great Depression.  Millions of families had lost their homes and found themselves homeless and starving.  The American Dream describes an ethos that folks desperately wanted to believe at the time that hard, honest work would result in financial security, the ultimate symbol of which was owning one’s own home.

We have found, however, that not all folks who work hard ever achieve financial security, or for that matter own their own home.  As faith in the traditional ethos fades, fewer Americans own homes, and the trend toward not owning is still growing.

Will it come back?

Traditionally families bought their first homes in their late 20s or early 30s, so we are looking to millennials to begin buying homes; but they are not – at least not in the numbers necessary to stabilize homeownership rates.  While many pundits posit that the reason is that millennials only want to rent in urban areas, Uber to work and walk to a coffee shop, there is really something else at work here.

Millennials are getting married and starting families later in life than their parents did, so they have less reason to buy a home early.[ii]  Add to this a decline in the belief that real e state is always a good investment, since many millennials watched their parents struggle to keep their homes during the Great Recession, or lose them altogether.  Moreover, because of low starting salaries, massive student debt[iii] and the lack of dual incomes, they have less ability to pay for a home early in life.

If we recall Econ 101 in college, we remember that the demand curve in the supply-and-demand model is driven by two factors: the desire of consumers for the widget and the ability to pay for the widget.  Homes are no different than any other commodity that way.  With less desire than their parents to own a home for multiple reasons, and less financial ability to jump into the market, it isn’t surprising that millennials aren’t buying at the same rate as previous generations.

But is this a wise move on their part?  If you can’t buy a home, then of course the decision is made for you.  But if you can buy a home, should you?

While watching their parents lose everything in a severe recession understandably made folks question the traditional wisdom (that homeownership is always a good investment), new regulations and lending safeguards make the financial crisis very unlikely to happen again, at least to the same scale.

Some folks have noted that it is much more expensive to own a home than to rent, and that it true – at first.  But tax deductions make up some of that difference for most folks.

Further, rent goes up, while mortgage payments do not – at least if you have a fixed-rate mortgage.  Property taxes and insurance go up over time, but usually at a much slower pace than rent, and they are only a small part of your monthly housing cost.  And with homeownership, eventually your mortgage is paid off and your payment disappear. *

Finally, there is the principle of leverage.  When you home appreciates, you are not only making money on the money you have invested in your home, but on the money your lender invested as well.  This simple principle will double or triple your return on investment.  You cannot leverage your savings accounts, and most folks can’t leverage their investment accounts, either.

Mortgaged real estate is the only real leveraged investment available to the average Joe.  The sooner you buy the sooner your monthly payments begin paying down your mortgage rather than paying someone else’s, and the sooner you eventually pay off your mortgage.

Still, owning a home is really not for everyone.

  • If you have to stretch to the very limit to buy a home, it may not be wise, because the first emergency could bury you financially.
  • It costs about 10% of the purchase price of a home to get in and out, in real estate commissions, title fees, etc. If you don’t plan to stay at least three years (or more, depending on the appreciation rate in your area) it may not be wise.
  • If you are likely to move for any reason within the next three years you should probably not buy a home. (Although I have clients who buy a home in their destination area a few years before they move.)
  • If you love to travel and want to spend your money there, the responsibilities of home ownership may not be for you.

However, if you want the stability of knowing you can never be forced to move, want the satisfaction of creating your own home exactly the way you want it, and want to build wealth over time with the greatest certainty, consider re-thinking your negative thoughts about the American Dream.

Casey Fleming, Author The Loan Guide: How to Get the Best Possible Mortgage (On Amazon)

Mortgage Advisor, C2 FINANCIAL CORPORATION

My Blog: www.loanguide.com

Facebook: C2 Financial Corp.

Facebook: The Loan Guide Book

Follow me on Twitter for interest rate updates: @TheLoanGuide

[email protected] NMLS 344375 / BRE 00889527

[i] Tuttle, B (2015 July 28) U.S. Homeownership Level Drops to its Lowest Level Since 1967, retrieved from http://time.com/money/3975212/homeownership-rate-record-low/

[ii] Davidson, J. (2014, November 12) What Everyone Gets Wrong About Millennials and Home Buying, retrieved from http://time.com/money/3551773/millennials-home-buying-marriage/

[iii] Notte, J. (2014 December 11) Why Millennials Aren’t Rushing to Buy Homes, retrieved from http://www.cbsnews.com/news/how-will-millennials-buy-homes-if-they-dont-know-their-credit-scores/

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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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Visions Part 3: Brain to Paper – 3 Places to Start

“How about… idea streaming? Like when you have this massive goal in mind but no idea how to get there. How to break it down into achievable components.” – Athena M.

Idea Streaming: From Brain to Paper

Thanks Athena!

Some of you have emailed me telling you that you don’t even know where to start with getting your ideas from mind to paper. We need that vision statement! You have sent me so many wonderful visions. Here are 3 ideas that I’ve personally used to write my vision statement.

1) Personal Relationships!

A good place to start is with those who you know well, whom you trust, and family members. Try to ask them these types of questions:

“What are some things I’ve always been good at?”
“What careers do you see me working in?”
“How do I communicate with people?”
“What is my biggest strength?”
“What’s the dumbest thing you’ve ever seen me do?”
“Why can’t I become a professional Oreo eater?”

And why not ask yourself some questions, nothing is more personal than yourself.

Think of your Core being:
What is your purpose?
How will you find peace in life?
What are things that really amaze and inspire you?
What do you always enjoy, even when you’re tired?
What do you believe is possible for you?
What is your biggest limiting belief?
If you left tomorrow forever, what what you have wanted to do today?
Here are a few question lists to get you thinking:

Get To Know Yourself: 29 Questions to Discover the Real You

20 Questions to Know Yourself Better and Unlock the Immense Potential Within

http://psychcentral.com/blog/archives/2012/08/06/5-ways-to-get-to-know-yourself-better/

http://tinybuddha.com/blog/getting-to-know-yourself-what-you-like-and-what-you-want-in-life/

2) Think Categories and Goals

This is my favorite way to do things.
I organize things into 5 categories

1) Physical (Food/Exercise)
2) Emotional (Relationships/Feelings)
3) Spiritual
4) Educational (Learning/ Occupational)
5) Financial

If you consider these 5 categories and where you want to be with each one, or where you can improve, or skills you already have in that area, you can learn alot.

3) Tests!

Okay, So maybe I lied. This is my favorite. I’ve taken sooooo many personality tests. I loved the ones in 8th grade that would say, “You could be a great Accountant or Firefighter.”

Here are some of my FAVORITE personality tests:

Myers&Briggs Test: I’m an ENFP (Extrovert, Intuition, Feeling, Perceiving), But I score really close to a Thinker (instead of a Feeler). I’m basically 100% on Extrovert.

ColorCode Test: I’m a Yellow: I inject shots of enthusiasm and optimism. I’m charismatic, spontaneous, and sociable. (Pretty much everyone loves me. It’s a fact: look it up)

Strengths Finder 2.0: see your top skills: I’m an Includer (Involve EVERYONE), Maximizer (Make pieces better), “Woo” (I want people to like me), Ideation (breaking down ideas into pieces), Communication (I tell people things). You can see this influence my vision statement. This test also comes with 3 sections: 1) awareness, 2) Application: with 10 action items for each, 3) Achievement: Quotes and what success sounds like for each of your top skills.

HowToFascinate: This is a great test that gives you some adjectives that describe you along with  a primary and secondary “Advantage”. I’m a Trendsetter: Innovation and Prestige are my “Advantages”. Cutting edge, Elite, Progressive, Imaginative, Edgy. This test, for a price, can give you pages of data about power words, how to explain yourself, and ways to utilize that in a business sense.

Culture Index (INC): I don’t know where to find this test, but I took one when I applied for a job and was emailed a printout of it. It gave me an ABCD score, an EU score, and an LI score which I have no idea what is. This test talks about how you work with individuals and companies. “Self-Reliant, Initiator, Effective with Setting my own priorities, quick paced and likes to handle problems right when they arise even if it means multitasking…” and other valuable information.
My favorite gem is this: “Prefers to delegate the completion of tasks to others, but is capable of limited attention to detail.” This is true! I start 100 things and finish 12 of them… and get my little sister to finish 4 of them, my brother to do 3, and my roomate to do 6 more. The rest are forgotten and eventually dumped into the pit, like in the movie “Inside Out”.

DISC: I’m an Influencer- I like to collaborate and dislike being ignored in teams and groups. There are four types: Dominance, Influence, Steadiness, Conscientiousness. This provides insights in how you work with team.

These tests are vital in crafting out information about yourself. Did I miss any? Let me know if there are others you like, and I’ll update this list.

Last Thoughts

An online place to organize your thoughts like Mindmeister or another website could be great for organizing or laying out your thoughts. It’s a difficult task, but is worth it. then, make that vision board, write that personal vision statement, and utilize them daily to accomplish you.

why?

Because knowing yourself and your goals is the first step in getting your money to work properly. It’s also they key to happiness. When your Money and your Dreams align, you will be happy.

Please feel free to share your thoughts, your vision board, your vision statement, or your test results for any of these tests! Maybe I’ll feature you on my website or in an article (with permission of course).

Happy Financing!

-Jacob Brad Johnson
The Financial Ginger

OnACouch
Drive a couch down the street! #GoalAccomplished
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Personal Vision: Part 2 – Vision Boards

Your Vision is in hand, but now what do you do with it? This is how to take your vision from paper, to action items.

Money is important. But your “why” behind your money is almost more important. Infact, It is more important.

I want money for a few reasons, I want to provide for a family I hope to have, I intend to use money to create a foundation to increase financial literacy in Utah, I want to be involved in Scouting and christian missionary work. There are reasons to the money. “Money for the Sake of Money” isn’t happiness. As I talked about in an earlier article, Experiences bring happiness, not “Plastic Crap”.

Many friends of mine have come to me asking, “How do you figure out what you want to do?”

Here is my answer.

How I Chose Financial Planning

I went to a small school, graduated from high school with an associate’s degree, then moved to Brigham Young University (BYU) studying Computer Science. I thought it was what I loved. My whole family works in computers, Dad, Brother, Little Brother. I’m different. During 2 years as a service missionary and proselyting minister for Jesus Christ to the wonderful people of New Zealand, I learned a thing or two about myself. This insight is a blessing. Jacob Johnson is a people man, he loves working with people, helping them, teaching them, breaking down their big ideas into pieces, which he then builds up into good points. Ideation, Maximzation, Includer, Communication, “Woo”-factor. When I jumped back into school, the answer wasn’t computer science. Quick talks with people sent me to try global supply chain management, marketing, and financial planning. Marketing people I interviewed all hated what they did, unless they were in charge of their work or ran their own firm. Supply chain was awesome except I don’t want to travel 6-10 months a year, not in the ropes for having a family. My old ballroom dance partner’s father was a financial guy. He loved his job. Dude from my girlfriends work did finances. Loved his job. Everyone I talked to that worked in financials loved what they did. Private firm, big company, RIA, Broker/Dealer, Insurance agents, 9 co-workers, 1 co-worker, 80 co-workers. They each loved it. They also did what I thought was great. They taught, they did technical work, they moved around, they left the office to visit and help, they weren’t stagnant, they were involved in the community, they were happy fun loving people; the people around them were happy.
The signs were enough. I knew where I belonged. So, I packed up from BYU and moved over to Utah Valley University (UVU) where tuition was $20 more expensive and the Financial Planning program has topped the charts since it’s been around with three times as many students as any other program in the U.S. only 400.

Gainz
This Should Be On Every Vision Board

How a Vision Board Got Me There

I’ll be honest, My vision was in pieces on my phone, in my wallet, papers on my desk, notes in other odd places, bits of my memory. AKA it was a disaster. I finally straightened out my vision board.

Purpose of a Vision Board

Vision boards connect actions with goals. Sometimes we are doing the right things, but it’s getting us no-where because it isn’t connected to our vision. Sometimes we have a vision, but no actions connected. The vision board is the intersection. It’s a logically and conveniently placed object that contains our current dreams and goals.

Daily as you consider the actions you will take, consider your board. Do they align with your goal? If not, 1) remove it from your to-do list, 2) add a new goal to your vision board, 3) do it anyways and wonder why you’re still where you’re at.

Nightly as you review what you’ve done. Consider your progress on your vision. Did your actions connect? Do you need to adjust any of your dreams?

Basically, the vision board removes waste, and focuses your efforts. Efficiency.

Creating A Vision board

Remember your vision statement you made in A Personal Vision? Whip that bad boy out, and read it. I’d recommend making reading your final vision statement daily as part of your confidence building routine. That should be a good base to start off. What is written on that that ties to things you want to achieve. Is a degree part of that? Is starting a company, changing industries, going to the gym, starting a blog, selling to 20 new clients, getting 3 computer monitors, etc on that?

Consider 5 areas:

  1. Financial – Where is my money going, how will I make it, how will I manage it.
  2. Physical – Fitness, eating, outdoor activities
  3. Social – Friendships, spouses, old friends, building a business network
  4. Emotional –
  5. Intellectual – reading books, developing your business skills, utilizing your brain, how do you waste time on your phone.

Also, Consider your Big Rocks. What are your responsibilities and titles? Parent, CEO, Small Business Consultant, Teacher, Brother, Minister, Soccer Coach, Student, ETC. What are the big visions you have for them?

Where to put it

It goes wherever you will see it the absolute most. Mine is right by my bed. Blue tape boarder, with pictures taped inside it. Maybe it needs to be in the kitchen on the fridge, or by your front door (though it can be hard to make it personal there)

Vision Board - Draft #1
An Early Version of My vision boards – Painters Tape and Photos

Areas of My Board – Money Gets Everywhere!

Now you might say, Jacob. This isn’t financial. YES IT IS. If you don’t have mastery of your vision and actions, you will never have control of your finances. It doesn’t make a difference if you make $25,000, or $250,000. I know people in both who are millionaires, I know people in both who still live paycheck to paycheck.

Every single task I do that makes me money is somehow connected to my vision board. That’s how simple it is.

Control your actions, create your vision. Utilize it daily. Happiness will ensue.

Share with me a picture of your vision board, or a copy of your vision statement and I’ll feature it in an article! Email me on my contact page or Here

-Jacob Johnson

Jacob is a crazy Vision Board wielder who also dabbles with small business review software, and financial counseling at UVU. He is an avid supporter of financial education and loves to work with event groups to get finances incorporated. Want me to speak or teach a class? Ask me Here

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Money and Happiness: Experiences VS “Plastic Crap”

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Artist: Crystal Johnson

Have you ever had the thought, “I wish I had something to look forward to!”? When that thought occurs, what are you really wishing for? Are you hoping for a fun experience, or are you hoping for a new toy?

A Trait of Happy People

Happy people buy experiences, not objects. “[A] wandering mind is an unhappy mind.”[1] Throughout your life, people will say anything to get you to buy their product. They try to lure you in by telling you their product is the latest trend, or the item most worth your money. When these thoughts come, remember that your money is your tool to living the life that you want to live.

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Experiencing Dinosaurs: I’m the Kid in the Blue Soccer Jersey

Some Professional Opinions

“If you’re a materialistic individual and life suddenly takes a wrong turn you’re going to have a tougher time recovering from that setback.”[2] Materialistic people who turn to shopping or other types of spending are “likely to [experience] even greater stress and lower well-being.”[3]

Individuals who focus their life on financial success are more likely to have problems adjusting to life and also are likely to have lower well-being.

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Klondike: Bobsled Competition for Boy Scouting
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Experiencing Canoes

 

 

 

 

 

 

 

 

Most Importantly, it affects our satisfaction with life. Ed Diener, Happiness expert and psychology professor at the University of Illinois said that “[materialism] is open-ended and goes on forever—we can always want more, which is usually not true of other goals such as friendship”.[4]

Basically, Spend your money where it counts. Material things are a necessity, but moderation can help you to live a more fulfilling life.

Need, Want, Luxury.

There is a simple scale called: Need, Want, Luxury. You need transportation to and from work. You want to drive a car. A luxury  for me might be to drive a 2014 Mitsubishi Mirage (okay, weak sauce, but that’s the car I want to drive. That baby gets like 42 MPG!) (Okay, it may not be a luxury topping out at about $8,000).

You may be able to fulfill your need with public transportation to work, maybe you live close enough to school or work that a bicycle will do. The Important part is that your basic needs are fulfilled.

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My Needs Are Filled: Everything Extra is Icing. Don’t Let Icing Distract You From The Cake

After that, your money is Discretionary. Carl Richards, of Behaviour Gap, asks if we really do connect what is important to us and how we spend our money.[5] What is most important to you? Why do you spend the way you do? Do your spending habits come from your community, your parents, or others? That’s probably a strong source of where your money discontentment comes from. How will you change that?

Spend money on things you value, but also on experiences. Valuable experiences can often seem to be counter-intuitive when considering the cost. I recently got a gym membership. I have a free gym at my school, It’s just as nice or nicer than the gym my membership is at. Why would I pay when I have a free gym? It’s worth paying for that membership because of the experience it is with my two childhood friends. The three of us go and have a good laugh, some good lifting, and a friendship that pays me not in money, but in physical health and friendship.

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Volunteering with Hot Air Balloons

 

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   Competitive Ballroom Dance

Science and Money-Happiness

You will be happier if you spend money on things you can experience, but people “still choose to spend their money on material items because they think they’re of greater value.”[6]

Experiences have the power to make us happier. According to researcher Mr. Killingsworth,

“Minds tend to wander to dark, not whimsical, places. Unless that mind has something exciting to anticipate or sweet to remember.” Doctoral Candidate Amit Kumar’s research showed “when you can’t live in a moment, they say, it’s best to live in anticipation of an experience. Experiential purchases like trips, concerts, movies, et cetera, tend to trump material purchases because the utility of buying anything really starts accruing before you buy it.”[7]

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Boat! (Or Getting Stuck)
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 Touring New York
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Pyramid On Top of a Mountain
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Visiting an Indian Reservation
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Removing 400 Cubic Yards of a Forest at a Women’s Shelter in Gore, New Zealand

My Story

I remember being on the beach in New Zealand, standing with my Samoan friend as we watched an airplane fly directly over our head, yet again. Old bricks from houses built during the Great War scattered the seashore. This was the happiest moment of my life. My time, my effort, and my money were devoted to the experiences I wanted to create. I had decided to participate in a ministry for two years. I was a volunteer, 24 hours a day, 7 days a week. I met with other ministers to try to grow religious involvement in communities, taught lessons and scripture classes with groups and in the homes of families, and actively participated in service projects – vandalism clean up, fence and trail repair, service in soup kitchens, and horseback riding lessons for the disabled were among the many service projects I participated in.

Aside from a green-stone necklace from a dear friend, a few lavalavas, and some Weetabix All Blacks collector cards, I’m not sure I have any tangible souvenirs from that experience; my memories of sitting on a beach with my Samoan friend and watching countless airplanes fly directly overhead offer me some of the greatest and happiest memories of my life.

If you’re going to devote your time, effort and money toward something, wouldn’t you rather it be an experience that may bring anticipation, excitement, and prolonged joyful remembrance? Consider that next time you’re about to buy what I call “plastic crap” or non-essential material things.

Next week I’ll talk about some techniques for crafting your own personal vision so you can start aligning your values and money and avoid the “plastic crap” mind-set.

Jacob Johnson
-Jacob is a fidget-er who is always changing things, He spends his time making vision boards, experiencing things, and perusing business cards from years ago. If you want to add to his business card collection, send him one!

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Articles:

Experiences Vs Crap Design by Crystal Johnson.

[1] Hamblin, James. “Buy Experiences, Not Things.” The Atlantic, 7 Oct. 2014, www.theatlantic.com/business/archive/2014/10/buy-experiences/381132/

[2] Ruvio, A., Somer, E. & Rindfleisch, A. J. of the Acad. Mark. Sci. (2014) 42: 90. doi:10.1007/s11747-013-0345-6,
http://www.huffingtonpost.com/2013/12/02/materialism-health-effects_n_4344056.html

[3] Ruvio, A., Somer, E. & Rindfleisch, A. J. of the Acad. Mark. Sci. (2014) 42: 90. doi:10.1007/s11747-013-0345-6
http://www.huffingtonpost.com/2013/12/02/materialism-health-effects_n_4344056.html

[4] Diener, Ed. “6 Reasons Why People – Not Things – Will Make You Happier.” The Huffington Post, 2 December 2013, http://www.huffingtonpost.com/2013/12/02/materialism-health-effects_n_4344056.html

[5] Richards, Carl. “Do Your Values Align with Your Money & Time?” Behavior Gap, 22 April, 2015, www.behaviorgap.com/do-your-values-align-with-your-money-time/

[6] “Proof That Life Experiences — Not Things — Make You Happier.” The Huffington Post, 3 April 2014, www.huffingtonpost.com/2014/04/03/life-experiences-happier-material-things_n_5072591.html

[7] Hamblin, James. “Buy Experiences, Not Things.” The Atlantic, 7 Oct. 2014, www.theatlantic.com/business/archive/2014/10/buy-experiences/381132/

 

Here are A Bunch of other Experiences!

 

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Parenting: Whats A Good Allowance? How to teach your children REAL money lessons.

When I was a kid, we didn’t get an allowance. Sure, we could earn some things from doing extra chores, or get a little bit of an allowance on vacation to buy a souvenir or something extra, but weekly or monthly just for doing things? Nope.

I want to give you parents some idea of what the typical American gives their children, what the typical American pays their children, and some ways to build an entrepreneurial and financially sound mind in your children.

My Dad is a business man. He has managed for JC Penny’s, Home Depot, Toys ‘R’ Us, and some other similar businesses. He’s also worked in sales, selling software and hardware solutions to governments and schools. Needless to say, he worked hard.

And we worked hard…

 

We weeded gardens, helped plant trees, I learned how to make straight rows, and we cleaned our entire house each week. The six of us children had the house organized into six ‘zones’ we would rotate cleaning. We had a rotating list of household chores too; sweeping floors, dust fans, take out garbage, wash dishes, set table for meals, mow lawn, etc.

This isn’t about cleaning though, this is about money, and how parents think about and use it. My friends at COUNTRY Financial whipped up this lovely little chart for me.

Chore U.S. Average
Mowing the Lawn $6.28
Cleaning the Garage $5.20
Doing Laundry $2.82
Cleaning a Common Area $2.72
(i.e. living room, dining room, kitchen, etc.)
Be Responsible for a Pet $2.66
(i.e. feeding, walking, cleaning up after it)
Vacuuming / Cleaning Floors $2.55
Cleaning Surfaces $2.20
(i.e. dusting or washing countertops)
Cleaning the Bedroom $2.07
Doing the Dishes $2.03
Taking Out the Garbage $1.90
Setting the Table $1.31
Making the Bed $1.18

Americans are pretty good about wanting to teach their children about finance, but they want to teach it for the wrong reasons.

68 percent of Americans believe children should receive an allowance for completing chores. Furthermore, of the people who are currently providing kids with an allowance, more than half (54 percent) did so to teach their children money needs to be earned. A further 22 percent wanted to teach their kids the value of money, while only 12 percent said it was to teach them financial independence.

A Proper Allowance

$0. That’s just a fact. I’m being honest! Don’t give your kids money just for the sake of money.

The best reason to create and utilize a chore / payment type system is to teach your children that money is earned and that they can be financially independent. I’m not saying you should or shouldn’t pay your kids to do their chores, but at least having them do chores will help you teach them.

Independence

Independence is a skill that is taught, much like optimism, cooking breakfast, or welding. It takes time, patience, and a good teacher.

I recently was listening to Radical Personal Finance and his podcast about what he’s planning to teach his children when they turn 8 years old. His ideas were great! Here are a few of my own ideas too.

Teaching Skills

Spend time teaching your kids employable skills. They can learn to pull weeds, paint fences, sew dresses, clean toilets, cut wood, rake leaves, mow lawns, trim trees, keep pets, and more. Realize that each skill is something a child can do to make a dollar too! My father from a very young age would point out to me things I did that others would pay me to do.

I loved computers, and learned data systems pretty quick. Dad paid me to use his client database online: updating his contacts, notes, follow up appointments, leads, and referrals. He’d email them to me in a big spreadsheet as frequently as needed. He taught me that I could make money with my skills.

My dad at the age of 13 took me to the Flying Wrench class on fixing small engines. The next several summers I brought several lawnmowers back from the dead, replaced blades, fixed carburettors, shear pins, broken oil tanks, and a million other small repairs. Dad’s $75 investment was worth it.

Teaching Entrepreneurship

You can cultivate the idea of entrepreneurship and business in a child. Who hasn’t done a lemonade stand? Let’s think bigger though. I read an article about a child who negotiated with his neighbours to talk their garbage out every trash day for a quarter. Talk about a business! If a 10 year old kid has 50 garbage cans, that’s $12.50 every time he takes out the trash! My dad taught me some valuable lessons about entrepreneurship.

When I was about 15, a fellow home-schooling family, which produced educational materials, had a shortage in little wooden catapults. After a short debate and a set on price per kit produced, a delivery of two-by-fours and wooden sheets arrived.

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The Ultimate Catapult

I hired my siblings and got to work. I learned to keep a time sheet, to negotiate work schedules (okay, I’m dreaming a little bit), to build positive relationships, to use saws, drills, and sanders, and how to mass produce for time efficiency. Thanks, Dad. I ended up making about $25 an hour based on how much we were paid vs how much we worked on our time sheet.

There are so many ways to make money! Joshua Sheats from Radical Personal Finance says to build the entrepreneurial spirit, why not pay your neighbour to pay your kid to clean their bathroom? Why not see if your kid will take all those extra apricots from your tree and sell them to neighbours? They can learn to negotiate, they can learn about selling. They can learn about commissions. Tell them that you get a cut because it’s your tree. Or you get a piece of it because you bought the lawnmower. My friend Flia from the guest post told me that her brother outright bought his own lawnmower. That’s an entrepreneur.

Cultivating a successful atmosphere

How do you create that success in your child? It takes some commitment as a parent. It takes genuine desire for your child to become great and independent. You have to give them a vision and work at it every day. You also have to be an example.

I’m not a parent yet, but I’m grateful for the example my mother is. My mother made her own way. She paid for school working three jobs and paid for piano, voice, guitar, and cheerleading on her own. What a REAL entrepreneur. She had a dream. When you have a dream, you can accomplish amazing things. She is an example to me by always teaching piano, guitar, voice, and volunteering her time to what she loves. Storytelling is her passion, and she started her own scary story contest, and her own Utah’s Biggest Liar’s CompetitionAnd she has 6 children.

Last Words

I’m calling for parents to look for ways to craft their children into financial freedom, independence, and the ability to find satisfying work that will give them optimism, control, and confidence.

Share with me how you’re doing that! Share with me what your parents taught you!
[email protected]

 

-Jacob Brad Johnson
Jacob is a student of Personal Financial Planning at Utah Valley University. He enjoys counselling fellow students at UVU’s MMRC, volunteering for the Timpanogas storytelling festival, and late night taco runs. He wears a pink tie to church every first sunday of the month, and loves to share his favorite financial tips, tricks and ideas weekly on his blog.

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Thanks Dad!

I love to collaborate on podcasts and projects!

-Thanks to many friends and family who weighed in on this post! I feel so supported by the amazing writers and bloggers I know!

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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.

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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.

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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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Publications from Searcy

While I was at Searcy Financial Services. I had the chance to publish several articles for Allos Investment Advisors. Here are some of the works!

I hope you can find people that could benefit from these to share them with! Please let me know if any of them catch your eye and your stories!

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Building a Credit Score, Things You Wish Your Parents Had Done

I’m currently being trained as a financial counselor at Utah Valley University’s Money Management Resource Center (MMRC). It’s a group designed to help students, teachers, and (soon) the rest of the community to understand and act on their financial situation. During tax season we volunteer to help with taxes. Outside of that we help educate on credit scores, surviving debt, student loans, budgeting, and prioritizing of debt/dealing with creditors.

They Key To Your Child’s Heart

In training, a friend of mine and I did a presentation about credit history. I was shocked when he shared during the practice demonstration that his credit score was over 800! That’s nearly a perfect score!

How had he done it? Simple. His parents had put a credit card in his name when he was a teen, and had paid for gas with it. They always paid it on time, and he used it for gas during high school. Eventually, of course, the son had a FANTASTIC credit score. He can buy a house at a lower interest rate, get an apartment easier, obtain lower auto loan interest rates, and, very importantly, receive cheaper auto insurance! Remember, building a credit history takes time.

The point is, you can help your child 10 years from now by putting a bill in their name and opening a bank account in their name. Just make sure the account is reported in their credit history.

Okay, so maybe it isn’t a key to their heart, but they sure will thank you later.

Parts of Your Credit Score

35% of your credit score is based on your payment history. Are you paying on time? If you aren’t, this is going to drop your score very quickly.

30% is the amount that you owe compared to your limit. Try to owe less than 25% of your maximum allotment. Basically this means that if your credit card max is $2000, then you should never have a balance greater than $500. But let’s be honest, you should just pay of ALL balances instantly when using credit cards. Use it, pay it off same day. This makes it a tool, and not a noose.

15% is the length of your history. This is where my friend had an advantage. Even though it;s only 15% of your score, it’s significant when I have 3 open accounts and each is 1-3 months old, as compared to my friend’s, who has 10+ years of history on one account, so they all seem longer. This has 2 parts, You want one account to be at least 10 years old, and the 2nd part is the average age of all credit accounts you have, which should stay above 3 years.

10% is new credit. Basically, don’t open a bunch of new accounts over a short time. Try to shop for cars or housing rates in a small time frame (about 45 days), because your credit score drops 5 points for every inquiry and stays there for 24 months.

The last 10% is the mix of credit you have. It’s good to have a mortgage, some sort of installment loan (personal, student, or auto loan), and then some credit cards (revolving credit). If most of your credit mix is in credit cards, that can be damaging to this part of your score. 

Now that you know a few basics, you can improve your credit score up to a perfect 850! or at least above 750 (which is the highest tier of credit scores) and help future generations to do so also.

What have your parents helped you to achieve financially? Share you story in the comment below!
-Jacob Johnson
Personal Financial Planning student at Utah Valley University
He enjoys ballroom dance, eating authentic mexican tacos, and  counseling fellow UVU students in the Money Management Resource Center on their student loans, and budgeting. He strives to become a Certified Financial Planner designee to help people capture and live their ideal life.

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Thanks for editing my writing and helping it to look great Briana! If you need an editor, this is the lady for the job.

-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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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.

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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.

SFSJacob (4)

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.