ICFE
ICFE eNEWS #17-31 - August 29th 2017
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How To Establish Credit For The First Time?

By Jim Garnett, a/k/a Ask Mr.G, a member of the ICFE's Board of Educational Advisors

Establishing credit for the first time is not complicated, but it does require a bit of time. You see, to have "good credit," one must establish a "history" of using credit responsibly. Creating this "history" will require 9-12 months because it needs to be long enough to establish a pattern of usage.

Your history is reported as it happens to the three major credit bureaus and comprises the details of your credit report. Those in the credit industry will view your past performance (our history) as a predictor of your future performance.

Let me explain why such a plan as this works. Let's say your cousin John asks you to loan him $200. If you seriously considered making the loan, you could determine how "risky" it would be by investigating John's past loan history. In other words, did he pay back what he promised to pay back in a timely manner?

If you find that he did, you would be more comfortable loaning him the money, than if you find his history revealed he did not pay back what he promised. You would use his past performance to predict his future performance.

So, to show the credit industry that you are a responsible borrower, you must establish a record of how you have used credit wisely in the past. That record speaks louder than your words of promise could ever speak.

Here's a good plan to establish that pattern of payments, and thus, establish your good credit:

1. Get a personal credit card. The purpose of this card is for one reason alone - to build a record showing your responsible use of credit. If you have never had a credit card before, you may be required to get what is known as a "secured" card. This secured credit card will require a money deposit that will serve as a guarantee that you are going to pay what you borrow. If you do not, the money you deposited as security will be forfeited to pay your bill.

Lenders will use your credit report to determine if you have a track record of using credit wisely.

The interest rate and perks on the card are not relevant. You will use this card only to create a good track record, and you will not be paying interest or finance charges - ever.

2. Make one purchase on the card each month. It does not need to be a large purchase, just a purchase, and preferably for something you actually need. You make sure you have the money on hand to pay for whatever purchase you make.

3. Pay the bill in full each month. When you receive the monthly statement, send the total payment right away. Paying the entire balance each month will keep you from being charged any interest. This also will help you establish the habit of not allowing credit card balances to roll over to the next month.

Remember, it is not necessary to show unpaid balances on your credit report to establish your credit. You only need show that you pay your bills as you promised.

Making a "history" requires a bit of time, actually the longer time, the better. I would suggest a minimum period of 9-12 months will satisfy most lenders. After that time, you should be able to get a credit card with no security requirement if you wish.

Establishing credit for the first time is not difficult to do, but it does require a plan whereby your good payment history shows you to be responsible in repaying your debts.

It all boils down to this: "Your past predicts your future."


Ask Mr. G
© Jim Garnett, The Debt Doctor
AskMrG Consulting, LLC
2216 SW 35th Street
Ankeny, IA 50023
515-577-1799
askmrg@yahoo.com
AskMrG.com


ICFE eNEWS is available FREE upon request by visiting the ICFE's Web site and filling out the contact form, selecting "Yes" for "Add to Mailing List." Please pass this eNEWS on to your peers and interested others and invite them to subscribe for free. Also, visit the ICFE's new Web site: StudentDebtHelp.org

Sent by:
Paul Richard
President - Executive Director
Institute of Consumer Financial Education (ICFE) - ICFE.info - 619.239.1401

ICFE
ICFE eNEWS #17-28 - July 2017
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Putting The Brakes On Impulse Buying

By Jim Garnett, a/k/a Ask Mr.G, a member of the ICFE's Board of Educational Advisors

All of us do it. Some do it once in a while. Others do it way too much! Here's a way to "put the brakes on impulse buying!"

"Impulse buying" has become a contributing factor to why many people fail in their attempts to maintain a semblance of a budget. And what is impulse buying? It is "the buying of goods or services without planning to do so in advance, as a result of a sudden whim or impulse."

A recent study reveals:

90% of all shoppers make occasional impulse purchases that they didn't intend to buy initially.
40% of all consumer spending is prompted by impulse buying.
54% admitted to spending $100 or more on an impulse buy.
20% admitted to spending $1000 or more.
Although we say we believe "money can't buy happiness," the primary reason listed for impulse buying is, "it makes me feel better."
There is no known vaccine to immunize us from impulse buying, but there does seem to be a simple method we can use to help us "apply the brakes." This method utilizes memorization of one or two questions we ask ourselves prior to making a purchase.

Asking ourselves a question slows us down just long enough to catch our breath before we buy. Doing so has proven to be a great deterrent to blindly following our impulses. Choose only one or two questions from the list below, and practice asking yourself that question(s) the next time you go to buy something. You will quickly find that doing so will slow down the buying process and give you a chance to evaluate your financial choices better.

10 Questions To Slow Down Impulse Buying

1. Is this item on my list? Making a list before you shop is one of the greatest deterrents to impulse buying.
2. Am I buying this because of my mood (hungry, tired, angry, sad, guilty, bored, or excited)?
3. Am I buying because it is on sale?
4. How many hours must I work to pay for this?
5. How many times will I use this?
6. Am I buying this to impress some body?
7. Where will the money come from to pay for this?
8. Do I own already something similar to this already?
9. Could this item be out of style soon?
10. If I wait 24 hours, would I still buy this?

We are not advocating that every impulse buy is wrong. But since most of us work hard for our money, we owe it to ourselves to "stop and take a deep breath" before making quick purchases. If it is a good buy, no harm will be caused by "putting on the brakes." Afterward, we will be thankful we did.


Ask Mr. G
© Jim Garnett, The Debt Doctor
AskMrG Consulting, LLC
2216 SW 35th Street
Ankeny, IA 50023
515-577-1799
askmrg@yahoo.com
AskMrG.com


ICFE eNEWS is available FREE upon request by visiting the ICFE's Web site and filling out the contact form, selecting "Yes" for "Add to Mailing List." Please pass this eNEWS on to your peers and interested others and invite them to subscribe for free. Also, visit the ICFE's new Web site: StudentDebtHelp.org

Sent by:
Paul Richard
President - Executive Director
Institute of Consumer Financial Education (ICFE) - ICFE.info - 619.239.1401