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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.

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.

 

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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

SFSJacob (1)

 

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Financial AutoPilot: Why to Just Do It

When you have talked yourself into what you want, stop talking and begin saying it with your actions.

-Napoleon Hill

 

Ever heard of money scripts? Money scripts are the core beliefs and things that set off your “money button.” How does money make you feel? What role does it have in your life? Do you pursue money and think you can’t have enough? Do you wish money didn’t exist but accept that you need some? Psychologist Bradly Klontz made 4 general groups of people and how we respond to money.

  • Money Status: When you believe your net-worth equals your self-worth
  • Money Worship: Happiness is contingent upon having enough money
  • Money Avoidance: Money is bad, and it causes you anxiety
  • Money Vigilance: When you see yourself as your money’s Lord and carefully handle and direct its flow

Understanding your money script will help you see where some of your struggles lie. Everyone is weak, and everyone is human, but we also have some amazing strengths. We can recognize our weaknesses and find ways to avoid them, improve them, and sometimes overcome them and make them strengths. Key is: there is a struggle; people struggle to do things when they take a lot of mental effort and consistency. So, here’s the secret.

Put yourself on autopilot.

Let me say that one more time.

Put Yourself On Auto-Pilot

What do you think of when you think of an autopilot? If you saw something that was automated, perhaps driving or flying, without the need for constant human supervision, then you are on to something great.

As soon as your idea is strong enough to have a goal and a beginning action, don’t delay, put it into autopilot. Why do you struggle to wake up in the morning? Why can’t you stick to going to the gym? Why are you worried you can’t buy a house or go to college? It’s because you either didn’t start, or you didn’t follow through.

Here is how to put yourself on Autopilot, Financially:

1) Prioritize

First: Set your priorities. Where does your money belong? In 2-3 short sentences, or 5-6 individual words, summarize the most important things to allocate your precious hard earned Washingtons.

2) Where do you stand?

Second: List all of your obligations monthly. Figure out your debt, income, savings, and lastly, estimate how much you spend on different areas. Add it up. Does more money go out than in? Does more money get spent on areas you don’t want them to be?

According to Success.com‘s author Tom Corley, here is a standard budget draft you can think about to where you money goes and it looks something like this.

  • 25% maximum on rent/mortgage
  • 15% max on food
  • Limit entertainment (you know what that is) to 10% , Vacations should top out at 5%
  • No more than 5% on auto loans

In addition to these Guidlines here are a few more from my notebooks and practice

  • save 12-15% of your money for retirement (If you’re saving 10% and your company matches 3-5% then you’re good!)
  • Donate 10% of your income to charities that you love.
  • Get an accountability partner for your spending that you can share goals, numbers, and facts with

3) Auto Pay

Third: Auto Pay. Here is how many people try making their money work.
This is called “Mental Accounting.” It is a horrible thing.

The Real Slim Shady
Normal Person Mental Accounting

The problem with managing our money like this is all of your money is in the same place! We are normally poor at mentally accounting for our money. I won’t attempt an explanation of how, but the book, Why Smart People Make Big Money Mistakes by Gary Belsky & Thomas Gilovich will give you great insight to the many pitfalls of mental accounting, in addition to many other common money mistakes.

Alternative: This is called budgeting, and planning, and auto-piloting. It’s amazing! With mental accounting, if you have $500 (for simplicity sake) in your Selfish Money account for the month, then you know, I have that much money and it’s for whatever I want. When it’s gone, it is GONE. But I recommend going one step further, and this is called AutoPilot mode.

Establish separate accounts to be used. With your money in a different location it can’t be spent on what it isn’t budgeted for. Here’s how you can harness the power of Voluntary Automation (doesn’t that sound blissful?):

After Shady been slimmed
Each is it’s own account?

What if, when you got your paycheck, you set the money to AutoPay certain quantities to other accounts: 10% to retirement, $1400 for the mortgage, $500 a month for student debt, $200 selfish money, etc etc etc. The credit card in your pocket is only linked to the “Selfish Money” account, and the card you keep in your dash for fuel is linked to your car payment and gas money account. None are linked to the mortgage account, because the bank takes the money out of that account each month. I’m making this happen with several bank accounts and auto transfers set up.

Basically, the money is out of sight, out of mind (and you now have a license to be at peace. *Poof* Peaceful dust descends upon you).

There are many apps that can conglomerate multiple accounts so you can have a snapshot of how much money you have at any given point in all the accounts, or help you refine how much money you allocate to different accounts over time.

Then, once a year when you check your accounts, you can clear out the extra money to savings, more retirement, or maybe a surprise Christmas present.

4) Lastly: Stop checking your accounts daily! Stop checking your investments, your stocks, your 401(k)’s, your Roth’s, your {InsertYourAccountNameHere}. Just STOP. Although many want to argue differently- your human fear is going to have you selling things when they are dropping in value, and buying things that are rising in value.
The reason why is because of the Stair Effect. Over time stocks are going up, but experience highs and lows throughout the incline. This is because as you step up a stair, one foot follows the other, rising and falling, rising and falling, over and over and over. Walking up stairs doesn’t scare you, because you know you’re going to go up.
Investing should be like Christmas, or your birthday; best thought about for about 1 month a year, (all you people that play Christmas music in November… I’ve got my eye on you). Try this: pick the month (fine, semi-annually is acceptable) when you allow yourself to look at your accounts and mark it on your calendars.

 

Now you can kick back, relax, and go back to your beautiful life with one less item of stress going on in your mind. What ideas have you used to put yourself on Auto Pilot? I’d love to add to this list of ways to put yourself on autopilot! If you have an ideas, or critiques please let me know in the comments or email me:  https://jacobbradjohnson.wordpress.com/contact/
If this is helpful let me know also!

— Jacob Johnson is a student of personal financial planning (PFP) at Utah Valley University. He enjoys Oreos and Bacon with the occasional bowl of muesli and wakes up to read Napoleon Hill as a start to his day. He is an adept listener of Behavior Gap radio by Carl Richards, loves the blog of WorkableWealth by Mary Beth Storjohann, and ponders Jeff Rose the Finance Warrior’s blogs also.

— Our guest editor is Rebekah! She is a phenomenal editor with a degree in creative writing. She is such a blessing and help in defining what the purpose of a writing is, and helping individuals to craft language to not be redundant (well, at least in my case). Thank you Rebekah!

 

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Saving, not owning, up to yourself

One of my friends who is now a “gym-rat” was telling me about how his brother tagged along with him to invigorate his body with some work outs.

My friend has been at it hard for several years now, and I’d say though he’s definitely not Arnold Schwarzenegger, his bod is mod. He was expounding how his brother was quite upset after a few weeks. I can imagine the conversation going like this.

“Ugh. Why do you lift so much more than me!” the newcomer said.

The response, from my practical and no-need-to-hide-truth friend to his brother: “I’ve been at this for two years. How can you expect to be as strong as me after two weeks?

How can you expect to have as much savings as your friend who dragged you along to visit their CFP® counsellor. How can I expect to have as much experience and knowledge as the man who hired me as an intern for the summer? He has 40 years of experience. The principles of finance are the same as weight lifting. Judge yourself based on where you are now. The best place to start, is where you are currently standing.

Resisting the impulse to compare yourself to others is a difficult one, and one that requires a ton of practice, patience, and of course failure from time to time. It’s like learning to ride a bike; you start with training wheels and, if you’re me, still end up falling off the monsterous thing and splitting your chin open on that random rock that’s in your driveway (I’m still bitter about that if you can’t tell).

Speaking of bitter, you can’t hold past mistakes against yourself either. You made a bad choice in taking out that auto-loan. Fine! You’ve never had credit in your life and can’t even pass a check to get an auto-loan. Fine! You’ve tried four fad diets and *shocker* none of them worked.  Fine!

Here is where you start: Stop comparing yourself to others! Start comparing you to yourself and others who are at the point where you are.
Example: In my financial counselling class, where am I compared to these other kids with similar experience?
Bad Example: Walking into a room of M.D’s, where am I compared to these professionals with 30 years of brain surgery under their belt about identifying which nerve may or may not completely paralyze the patient permanently?

Let’s compare this to our financial selves. You’ve heard a thousand times that you need to start saving for yourself… I wrote down 10 of them when writing and then deleted them; you don’t need to hear it again. Why? Because you don’t need to own up to anyone else except you for your actions.

Napoleon Hill said it best,

“The right sort of actions require no embellishment of words. One of the most common mistakes is making excuses to explain why we do not succeed. Unfortunately, the vast majority of people in the world —those who do not succeed — are excuse-makers. They try to explain their action, or inaction, with words. When you succeed, accept the congratulations of others with good grace; when you fail, take responsibility for your actions, learn from your mistakes, and move on to more constructive things. When your actions are appropriate in every circumstance, you will never feel the need to explain them with words. Your actions will say all that needs to be said.” -Napoleon Hill (NapHill.org)

If you are doing the best you can, no explanation is needed. But just like building a credit score, it is time to start building your financial experience. You choose how you are going to start saving, then start doing it!

Remember, the best time for change is when things change for you.

New college student: I’m going to build my credit score by dropping $50 on a secured credit card so I can have revolving credit go on my record.

Go out of state for a summer internship: Start working on them biceps and fat legs with that special Planet Fitness $1 down $10 a month deal you saw. (This isn’t much to do with finance, but it’s so true for me right now)

New job after graduation: I’m going to open a second bank account and put 10% of my wages into that so I’m saving.

Job change: I’m going to do better by maxing out my company 401(k) contributions  that they match.

Moved across the country with your three children: We are going to start putting aside that $400 a month we’re saving on rent and save it for our children’s tuition in a 529 Savings Plan.

Shia LaBeouf proclaimed it best,

Don’t let your dreams be dreams
Yesterday you said tomorrow
So just do it
Make your dreams come true
Just do it

Some people dream of success
While you’re gonna wake up and work hard at it
Nothing is impossible

You should get to the point
Where anyone else would quit
And you’re not going to stop there
No, what are you waiting for?

Just Do It

Start saving, Just Do It. Start dancing, Just Do It. Step toward your goal and feel alive, Just Do It.

When you make a choice, don’t explain it to anyone. Don’t own up to anyone.

Own up to yourself.

 

 

-Jacob Johnson

Student of Financial Planning at Utah Valley University
Member of UVU’s student chapter of the FPA Association
Intern with Searcy Financial Services

  • Guest editing and creative writing advice from my good friend Rebekah White! Look forward to more of her powerful skills in making writing legible! Maybe next time I’ll even put some of her contact information in here.

 

 

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So, I started a Website Today (Welcome to my site!)

Today was a typical Saturday. Slept in, tried to cook something but ended up eating nutter butter’s instead. Complained to my girlfriend about how fat I am. Tried to read that book for the fifth time but haven’t actually cracked the cover.

But, Here I go.

Blog Opening -

The purpose of this website is so people can see what I can offer for them. You need to think, what is this guy all about? He is alive and knows things, but what things does he know?

I’m going to show you a bunch of knowledge that stays in my head that can move to your head! Hopefully we’ll both be the better for it.

Catch my Resume page to see some things about me, where School is, home is, certifications, goals, aspirations, that weird business I started as a kid, and maybe I’ll even get descriptive about that weird mostly faded birth mark on my upper left thigh, who knows.

Hopefully this will become a growing resource of financial tools and thoughts you can use to navigate your personal journey. Perhaps this is for an employer scoping out to see if that tall red head could produce value. This website is the tool for you.

If you don’t find what you need, please. email me at [email protected] give me a text at my personal number (801) 500-8710.

I want to create the tools and resources you need to be financially successful, so if you want to know something. I will find the answers for you, or I will die trying

Sincerely,

 

Jacob Brad Johnson

-Student of Personal Financial Planning, Utah Valley University
-Expected class of December 2017,
-Planned to sit for CFP Certification March 2018
-Committee of UVU Financial Planning Association (FPA) Student Chapter
-Lover of Ballroom Dance and West Coast Swing

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Seriously, No Credit Score

You’re that one college student. Your parents have the car in your name, you were a part of credit union so you still have joint-access on your bank account, you’ve worked jobs and they all have auto-paid to that account you have. To make matters worse, the background check your college apartment runs turned out with nothing on you, even though you’re twenty-two! You know the manager though and he’s going to be making money off of your and the 4 friends you have coming in to rent this larger apartment out so he lets that slide.

Fact of the matter is: you have zero credit history, and a FICO of Pointer={Null}.

Awkward story. This is Me, and I’m supposedly a student learning about Financial Planning. I can tell you about “Yield” and “Earnings Per Share” in stock markets, I can monologue about knowing when to refinance your home and fun software available to consumers to track your expenses and get on top of your budget. Determining when to file bankruptcy may be out of my league now, but I can certainly help you understand the major considerations to make before filing bankruptcy such as identifying secured debt and reminding you that student loan debt doesn’t leave you if you file bankruptcy.

But. I. Don’t. Even. Have. A. Credit. Score.

What do I do? Well, I’m a man with a plan, and I intend fully to get myself that credit score, dream of 800’s.

Where do I even begin? I know the basics and book learning: Never have more than 15% of your limit on credit cards, don’t pay your bills late,  Have accounts that are older than 10 years, have cycle credit and fixed credit that you pay regularly and on time (I.E. spending on your credit card for bills and paying it off, and having a mortgage or car payment).

But, I’m not starting from 0. I’m not even starting from 300! I’m starting from Value = Null!

Here are some Ideas I’ve heard and read about starting to build a credit score.

  • Get a secured Credit Card
  • Get a Credit-Builder Loan
  • Co-sign for a Credit Card or Loan
  • Become an authorized user on another credit card

I want to know what YOU did. I can do a google search or a www.ninja.com search (ninja’s don’t know anything about building Credit! Trust me, I’ve asked a ninja)

Ask a Ninja.PNG

Now, these ideas are ideas. I want action items. How does one actually accomplish this? Here are my honest thoughts, but to shake it up I’m going backwards, from dumb to least dumb

1.Co-Sign for a Credit Card or Loan –

Unless your parent is highly trusting of you, or intentionally wants to make themselves get in a rough place credit wise themselves if you ever mess up, this sounds like a bad idea. If you are late on a payment or lose your job and can’t pay or a variety of other issues, guess who has to pay? The person who cosigned with you. Maybe not financially and you can pay them back next month with the late fees on top. But it will damage their credit too.

Steps:    a) Go in with the Co-Signer to a credit institution
b) Fill out the application with them and sign their blood to your blood
c) pay on time every time or ruin the relationship with whomever co-signer is

Score on the Can-To-Should-Do scale is Probably-Not : 1/7

2. Get a Secured- Credit Card –

I’ll be honest. I wouldn’t know what this was if I hadn’t asked 3 Certified Financial Planner® (CFP®) Designee’s and a couple of college professors about how to build a credit score and they shared this concept. Secured Cards are designed to build credit, break your way into the system and get that score. However, you have to give them the money equal to the amount you have “On Credit” and it isn’t given back until you’ve paid that amount. The benefits are that your money you are almost loaning from yourself is reported to Credit Bereaus! Really, it just seems like a cheap way, yes there is a fee, to get in on your own. #Independent

Steps:    a) find a secured credit card company, your bank probably has one or NerdWallet.com has reviews on secured credit cards
b) bring in a wad of cash and fill out the application
c) use it: pay tuition, buy noodles and ramen, or deliver your girl some cute flowers.
d) Make sure you set a billion reminders and auto pay to pay that on time! Don’t mess this up, its fool proof. You’re the fool, and the proof is in that you’re paying to use your own money.
e) close the account at the end and you should have credit now.

Score on the Can-To-Should-Do scale is Probably-Should : 6/7

3. Credit-Builder Loan

This is like a normal loan, but you don’t get any of the money from the loan. This forces you to save your money, and the payments get reported, so save on time. Not a bad way to force yourself to start saving! Then at the end, you get your own money back in the new account plus that credit score. Note that these do have fees. It may be good to consider Credit Builder Loans and Secured card loans to see what’s better, though I’d guess secured is better rates because you have to have the money in hand.

Steps:    a) Find your company: credit unions, and online lenders like selflender.com are options
b) link up that auto pay so you don’t hurt yourself, and set reminders!
c) wait a time frame, usually 1 year while making payments
c) get your money and credit score.

Score on the Can-To-Should-Do scale is Probably-Should : 5.5/7

4. Become an authorized user on another person’s card

I bet your parent, or sibling could work for this. If you can pull this off you get all the perks of their spending habits to build your history, but you aren’t legally required to pay for anything they do.  Check with the bank they use and make sure they will report it on your name if you become authorized.

Steps:    a) check that the agency you want to use will report on your record
b) Ensure that the person you want to use is reliable!
c) get your name on that card
d) wait a time frame, probably about a year and check in with them periodically
e) do nothing. You should have a credit score

Score on the Can-To-Should-Do scale is DO-IT-NOW: 8.4/7

 

Now, that you have all these ideas from my mouth. What has worked for YOU! Let’s move from theory to practice. I’m going to open some accounts and get my score moving and I’ll promise you some updates on how it’s working out next week!

Shouldn’t you be getting your score started now? Share your actions with me and join in the Credit Creating Revolution with me.

 

-Jacob Brad Johnson is 22 years old and a student at Utah Valley University (UVU). He is actively pursuing a degree in Personal Financial Planning and intends to prepare for and become a Certified Financial Planner® (CFP®) Designee. He is involved in the Financial Planning Association at UVU and has been an intern at Searcy Financial Services. He’s competed ballroom dance at a national level and yes, he doesn’t have a credit score. Yet!