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Interview with Scott from Making Momentum

Hey everyone!

Today I have this week’s installment of our segment: Interviews with Money Experts. I talk with Scott from Making Momentum.

Before we get started with the interview, Scott graciously provided a brief snapshot of himself and his journey.

-Started waking up at 5am to side hustle through freelancing to expedite debt repayment and retirement saving (earned approx. $14,500 in the last 2 years from working those extra morning hours)

-Increased my salary as a marketing professional by 34% in the last 2 years by actively looking to do this (similar to what John at ESI Money talks about)

-Listen to 5-8 podcast episodes daily on finance, business, wellness, history, sports, comedy, fitness, etc. And have done so for 7 years, meaning I’ve probably listened to somewhere in the range of 7,000 – 11,000 podcast episodes total.

-Made a lot of mistakes with money in my early 20s and started to right the ship a bit later than I should have – consumerism mistakes, “I’ll start being better next year”, lack of knowledge and willingness to ask questions or for advice.

-Made $1,800 on eBay in about 45 minutes of total work after having my “personal finance aha moment” to kill off the last of my credit card debt. Helped me realize I’m the one in control of my finances and that I can right my wrongs and fix my mistakes.

-Purposely moved to a smaller apartment within walking distance to work to save on the potential car costs or public transportation fees. I’ve walked to work every single day for the last 4 years (estimate savings are $7,000-$11,000 and total distance just on that work walk in that time is 2,500 miles). I detail my experience walking to work, here.

-Lost 35 pounds in 18 months through a dedicated heavy weightlifting program and excessive diet management. Took it too far and became obsessed, helped me learn about moderation and balance.

-Backpacked around Europe for 3 months when I was 19-20 years old and visited 14 different countries. Greatest experience of my life and always recommend young people take advantage of the freedoms they have to travel, get outside their comfort zone, and immerse themselves in other cultures. It can set you back financially but there are major benefits to travel and you’ll never have that opportunity again as life progresses and responsibilities build.

With that great introduction of who Scott is, here’s our interview.

What podcasts do you listen to?

At times I might listen to 50+ podcast episodes a week so this list could look something like this post (http://makingmomentum.net/top-75-podcasts-to-help-improve-your-life/). However, below are the podcasts I listen to (almost) every new episode of and that cycle through my playlist queue most often:

Personal Finance

Side Hustles, Business & Blogging

Various Topics

…okay I’ll stop now!

What are the top 10 lessons you’ve learned from those podcasts?

  • The biggest lesson I’ve learned is that podcasts are a FREE source of endless knowledge, motivation, and entertainment. It’s like sitting in on a private conversation with industry leaders and experts on any topic you might desire. With a simple click or tap of the finger, you can listen in on some of the most engaging, successful and smart people this world has to offer.
  • You’re the master of your own destiny and in full control of whatever you want to do in life. (one of those classic Joe Rogan rants/manifestos)
  • The importance of diet and exercise for mindset, motivation, and general wellness. (The Joe Rogan Experience)
  • Starting small is better than not starting at all in your personal financial improvement journey. Even if you’re a little late to the game you have the opportunity to fix mistakes, right the ship and set yourself up for success. Whether that’s saving, investing, budgeting, side hustling, paying off debt, etc. (Financial Independence Podcast, Millennial Money Minutes & Masters Of Money)
  • The opportunities presented by waking up at 5AM. (Tim Ferriss)
  • The power of diversified income by monetizing your skills, passions, and interests outside your 9-5. (Side Hustle Show)
  • Lean in and take a chance on yourself. (Do You Even Blog)
  • Travel hacking and rewards churning. (Financial Independence Podcast)
  • Focusing on optimizing your career earning potential. (ESI Money on Do You Even Blog, Choose FI & Masters Of Money)  
  • The 10 pillars of financial independence. (Choose FI)

Any uncommon advice (outside of exercise and eat right) that you could give about weight loss and dieting?

Exercise and diet are definitely the pillars of success, especially the diet side of things. But another factor that I’ve found to be a major determinant of staying consistent and achieving whatever that healthy outcome you’re reaching for is creating accountability.

  • Goals & Continual Notifications: I put Post It Notes on my fridge, mirror, computer screen, front door, desk at work, daily planner, etc. These notes might be a reminder for that day, a quote or specific task to complete related to health and wellness. I also use my iPhone to do the same with Google Calendar and Todoist notifications. That constant reminder of the goals or mindset I am pursuing helps create personal accountability and ensures they’re always at the forefront of my mind.
  • Accountability Partner(s): An exercise partner can help cut through the dog days of working out when you’re feeling sluggish or perhaps looking to take shortcuts. It has to be someone who will be honest and blunt with you when needed but also provide that uplifting support when the time calls for it. Whether it’s your significant other, a friend, coworker, etc. you can form a mutually beneficial relationship to push for success together. Celebrate the wins along the way!

What are some things you learned by observing different cultures while backpacking?

One of the biggest takeaways I had from backpacking Europe for three months at the tender age of 19-20 (http://makingmomentum.net/3-month-backpacking-trip/) was that the world is full of happy, helpful and great people.

Whether I was in Scotland, the Czech Republic, Greece or one of the other 14 total countries I visited, both locals and tourists alike were kind-hearted and there for support whenever you needed it.

The importance of family and community was also very apparent, especially as I navigated the countries along the Mediterranean (Italy, Croatia, Greece, Spain & Portugal).

I continually witnessed large groups of local families all enjoying each other’s company in a jovial mood. Big meals, wine, laughing and dancing. From newborns to 90-year-old great-grandparents, it was evident they took time to share meals, experiences, and life together.

An appreciation for history and respect for those that have come before us is also a consistent theme throughout Europe. With such a diverse, wide-ranging history across the entire continent, it would be a shame to forget that rich (and troubled) past. From the museums, libraries, statues, architecture, stories, artwork and so forth, a reverence for that history is clear.

I’m Canadian and there is quite the contrast in terms of the regard we place on our much shorter, limited history as a country in comparison to those of Europe. The locals in each country always told us about the heroics of their country, and share both the good and bad moments of their nation’s past.

Any lessons you were taught growing up that you appreciate now?

My parents raised their kids to be open-minded, welcoming and understanding of people from all walks of life. I’ve met so many amazing people and experienced so much this wild world has to offer from having that openness ingrained in me from a young age.

They also instilled a desire for knowledge and learning which in turn has led to my enjoyment of reading, documentaries, podcasts, and traveling.

I was also taught to take risks and believe in yourself. If you want something, just go for it and give it your best. This mindset was reinforced in school and sports from a young age, then continued as I reached the post-secondary and career planning phases of life.

When I was in Europe at Humboldt University in Berlin, I read this Albert Einstein quote: “Learn from yesterday, live for today, hope for tomorrow. The important thing is to never stop questioning.” That stuck with me and is a mindset I’ve tried to carry forward.

What do you hope to pass onto the next generation?

The world has changed so much over the years since I was a kid, so I can only imagine how different it will be for the next generation and generation the after that. My guess though is that these three foundational pillars of everyday life will still be prevalent: relationships, money and personal development.

  • Relationships – Life is too short. Mitigate negative relationships and interactions as best possible, and focus on those that deliver value and happiness to your life. Be a giver and getter, deliver value to others and you’ll find that it comes back tenfold.
  • Money – Understand the basics of money from a young age and the opportunities for you in life will be boundless.
  • Personal Development – Your mind and body are the most valuable assets you’ll ever own in life. Invest in yourself, and keep your mental and physical health at the forefront of your priorities.

If the next generation can master those areas, perhaps it can deliver benefits to the greater collective.

What’s an app, book, and blog that you would recommend to someone that wants to improve their financial situation?

App

  • Mint: I believe one of the most essential first steps to improving your financial situation is understanding where your money is currently going. Mint allows you to sync and automate all of your accounts, track your spending, organize and categorize, and build budgets. It helps identify those areas of overspending and opportunities for improvement while ensuring you have visuals of your full financial landscape. (I am Canadian so we don’t have access to Personal Capital).

Book

  • The Simple Path To Wealth: Your Road Map To Financial Independence And A Rich Life by JL Collins: The man, the myth, the legend: JL Collins. This is the #1 book I recommend to those looking to better understand money and improve their financial situation. While it might not get as tactical as other books on managing a budget or lifestyle optimization, this book focuses more so on saving, investing and financial freedom. The “simple” description in the title holds true as the book is straightforward, easy to understand and rooted in building a foundation for success.

Blog

  • Get Rich Slowly (JD Roth): There are so many amazing personal finance blogs out there in the community so it’s hard to nail it down to just one. However, given the volume and quality of work that JD Roth has produced on Get Rich Slowly and the breadth of the topics discussed, I would have to lean there. From tips and strategies for beginners to high-level more complex content, JD has covered it all. He’s a great writer and focuses on providing actionable advice in a digestible manner for his readers to improve their own financial lives. Use the “Search” function on his website and deep dive into any particular topic you’re looking for.

What would you like to add that would benefit the reader?

With the amount of information overload we can consume on any given day (advice, success stories or moments of struggle), I think one thing we can all keep in mind is the “personal” aspect of personal finance.

This is about your life or your family’s life. You need to find what works for you, what fits your beliefs and delivers value to you. Everyone comes from a different situation and set of circumstances, so what works for someone else may not work for you. But we can all learn from each other to build our own system to reach our goals, financial or otherwise.

Use others as motivation and a tool for best practices or a community to learn from, not as a disheartening comparison metric. Never forget personal finance is indeed, personal.

If people want to learn more about you, where should they go?

The best place to reach me is at Making Momentum or on Twitter. I love to chat about finances, side hustling, travel, productivity, health, and wellness, or whatever comes to mind!

Wrap-up

That concludes my interview with Scott. I hope you gained some new insights into how to improve your Financial Health and grow your Wealth.

Come back next week for my interview with Marc from Vital Dollar.

So readers, what was your favorite point made here? Any questions for Scott?

Changes to Financial Health and Wealth

I first would like to apologize for not posting on schedule last Thursday. Things have been a little hectic and I, unfortunately, haven’t had time to write as usual.

With that said, there is going to be a change in posts and post frequency starting next week.

My money expert interview posts will continue to post every Tuesday at 11 am. My Thursday posts, where I write original, informative content for you readers will cease.

There have been a few changes in my professional life where it makes more sense for me to be a contributor rather than post here every Thursday. I will be referring readers of those contributor posts to a different site as well.

The new sites I will contribute to, on a pretty regular basis, are as follows:

The Free Financial Advisor

Live your Life on Purpose

Data Driven Investor

As I said, interview posts will continue because I love providing that value to you readers and I love talking with people who have different perspectives and differing knowledge.

I apologize the Thursday posts won’t continue, but this is the best move for myself and my family going forward.

Please, let me know if you have any question, comments, or concerns!

As always, thanks for reading.

– Jake S.

Interview with Laura

Hey guys!

Today I have the this week’s installment of our segment: Interviews with money experts. I talked with Laura from Everyday by the Lake.

Without further ado, here’s the interview.

Could you give an introduction of who you are and how you came to start your blog?

I’m Laura Gariepy, a 33-year-old MA native living in Central FL.  I live with my fiance, his mom, and my cat.

I have my MBA and am currently pursuing my DBA.  I have been in human resources for the last 9 years or so in a variety of capacities and industries. 

I recently decided to quit my full-time job as an HR Generalist so that I could spend more time with loved ones, finish my doctorate degree, cultivate other income sources, and just live a less hurried and harried lifestyle.

As it stands now, I can maintain my part-time work schedule (15 hours per week from home with flex scheduling) conservatively for the next 12 months.  I likely can maintain it for 18 months — if there are no major unanticipated cash outlays.

I decided that my current semi-retirement arrangement would be interesting to chronicle and could add something to the FIRE community. My blog also has a lifestyle component to it– showing my travel adventures and the joys of living on a lake.

The blog is part passion project, part avenue to make new connections and friends and (hopefully) part income stream down the line.

Do you and your fiance have similar money philosophies?

Initially, we did not.

He has been very frugal the entire time I’ve known him. My previous laissez-faire attitude towards money drove him nuts. I can’t blame him for being upset.

At my worst, I had to rely on him financially because my spending got in the way of meeting my real obligations (aka paying the rent). I’m fortunate he stuck around long enough for me to smarten up.

We are now in sync money-wise and it’s much less stressful. We’re both focused on using dollars to attain maximum utility and joy.

Any tips on money and relationships?

My biggest money/relationship tips would be:

  1. Be transparent. Don’t lie to your significant other about money. It can make a bad situation worse. A long time ago, I would hide purchases from my fiance. Now I tell him how much I have in the bank when certain bills are going to be paid, how my investments are doing etc. I don’t tell him because I messed up before and I’m now obligated. I tell him because sharing this information keeps him informed and makes our relationship closer. He tells me how he is doing with his finances as well. It enables us to plan together. 
  2. Have separate and shared financial goals/accounts. We pool resources to fund everyday life and the adventures we go on together, but we also have funds that are ours alone. For example, he uses his funds to upgrade his car into its ideal state. I use my funds to build my website as a creative outlet and future income stream.We are careful to ensure that our individual pursuits do not compromise our main goal of having a nice life together, but the separate goals/activities help us retain our identities and independence.

How have you learned about finance and what’ve you learned?

I learned finance by royally messing up my finances! I abused credit cards, overspent constantly and failed to pursue scholarships. I have a post that details my fiscal shame.

I’m now much more frugal, know what I have going out in relation to what I have coming in, and hardly use credit cards (and pay them in full each month).

After you learned your lesson, what were some things you did to get yourself back on track?

Once I realized how my poor money habits were ruining my future, I got honest about my financial position.  I started tracking my income and expenses.  I made sure I paid my bills on time and rebuilt my credit.  I started saving a ton of money– at times over 25% of my post-tax income. I also started spending in alignment with my values.  I splurged on things that made me happy and I cut spending on literal stuff that didn’t matter. I have a blog post that discusses the best money changes that I’ve made:

https://www.everydaybythelake.com/my-top-5-money-moves/

What are some lessons you hope to pass onto the next generation?

Two very big takeaways:

  1. Unless it’s basic food, clothing, and shelter, you really don’t need it now. Giving in to impulse purchases can really put you in money trouble. Sleep on the purchase. Consider– will it even add value to my life? Do I want it– or is it just trendy to have? Is it worth it? If you’re working– how many hours of labor will it take to pay for it?
    When you consider that you are literally trading your life energy for some item, your perspective changes. Having consideration for your future self is hard when you’re really young– it’s why most kids have to fail to really get it. I know — it happened to me. But if I can get just one kid to buy into what I’m saying, I’ll be happy.

  2. Get scholarships and grants. Work to put yourself through school. Please, I beg of you. I owe more in student loans than I do on my house and my plans to actually retire are severely hindered by this debt burden. I will still get to the finish line and likely still ahead of some of my peers, but when I think of how much faster I could get there if I had managed to finance my education better, it’s painful. Trust me. Finance your education with dollars that you don’t have to repay.

What are some things you’ve learned in completing your MBA? What about things you’ve learned from your doctorate program?

What I remember most from my MBA program was really learning about the connections between business functions. I started looking at businesses more holistically.

This sounds really simple, really obvious but my educational background before starting this degree was in Psychology and my work experience in childcare and retail. I had major gaps in my business knowledge prior to these studies. It was an a-ha moment for me that has enabled better critical thinking about anything business related.

From my doctorate program, I’m really learning a lot about research. Types of research. How to design a research study. How to carry it out.

I am currently working on my dissertation so I’m attempting to put together all of those pieces into a meaningful contribution to the business body of literature.

Did you attain scholarships for your MBA and DBA? If so, any tips on getting scholarships?

Unfortunately, my degrees were financed via student loans. I was fortunate to have tuition reimbursement available to me via my employers for part of the time I was pursuing these degrees. That helped me quite a bit.

I definitely encourage the pursuit of scholarships. I truly wish I had put more effort into that. I also encourage folks to pursue employment with companies who offer a tuition reimbursement benefit.

Do you have any tips on student loans?

In terms of applying for student loans, if you’re going to be eligible for grants, file your FAFSA as early as you can. The grant funds are limited and late filers may not receive the benefits.

In terms of paying them off, check with your loan service to see if you can control how your payments are allocated. Often, the debt is broken into sub-loans with different amounts due and interest rates for each.

If you can determine how your payment is applied, you can attack either the smallest sub-loans first or make your initial focus paying off the sub-loans with higher interest rates. This will help you feel in control and give you a sense of accomplishment as your sub-loans are paid off.

What is an app, a book, and a blog?

  • I’m pretty boring when it comes to apps. My favorite finance app(s) are those that link me to my accounts. I like being able to see my balances and transactions any time. I like having that instant and constant knowledge of my financial position.
  • As far as a book goes, I have to go with a classic. Your Money or Your Life really struck a chord with me. Admittedly, I am not following all of the steps that were outlined. I more take the philosophical nuggets and try to live by them. I really try to consider the utility of each purchase.  I consciously ensure that my spending in alignment with my values and I am acutely aware that what I buy is actually trading my life energy for what I’m acquiring. Powerful stuff.
  • I started reading FIRE blogs about a year before I quit my job. They really made me take the time to consider different possibilities. I saw that people were blazing different paths for themselves and were really living life. It was very inspiring.While I read many, many blogs, and still do, one that stands out is Our Next Life. I find Tanja’s writing very relatable and I admire how prolific she is.

Is there anything else you would like to add that would benefit the reader?

Be conscious of what your dollars are actually getting you. You are trading over 2000 hours of your life per year to get those dollars. You owe it to yourself to make sure you’re not wasting your hard earned cash– because if you are, you’re wasting your life, too.

Where can people go to learn more about you and your work?

My website is https://www.everydaybythelake.com

I’m on the major social platforms:

Wrap-up

That concludes my interview with Laura. I hope you gained some new insights into how to improve your Financial Health and grow your Wealth. Come back next week for my interview with Scott from Making Momentum.

So readers, what was your favorite point made here? Anything you want me to follow up with Laura about?

Interview with Katie

Hey guys!

Today I have the this week’s installment of our segment: Interviews with money experts. I talked with Katie from Chain of Wealth.

Without further ado, here’s the interview.

Could you give a summary of your career from graduation to where you are now?

Since I graduated college from Florida Atlantic University with an elementary education degree in 2010, my career has changed quite a bit.

When I first graduated, I decided that I didn’t want to be a teacher anymore and decided to go back to school to become a nurse. After one anatomy class and having to skin a piglet, I decided that teaching wasn’t so bad after all.

I did a majority of my teaching in one school in a small town outside of Tampa, Florida. It was a small school in a rural neighborhood. As with any school, the day to day duties were intense and the work was hard, but I loved seeing how much my students progressed over the school year.

As the saying goes, nothing stays the same forever and at the end of my fifth year teaching, I was asked to move to Northern Virginia by my boyfriend who had been transferred for work. After some thought, I decided to go. After all, it seemed like the perfect time for something new. I only had myself to take care of and in the worst case scenario, I could always come home.

As it turns out, Virginia was a great decision and I love it. I decided not to get a teaching position when I moved for two reasons:

  • I was feeling a bit burned out and needed a break and
  • All my teaching stuff wouldn’t fit in my car.

took it as a sign that it was time to try something else even though the thought of not teaching was strange and a bit stressful for me. Once I arrived in Virginia, my boyfriend had the idea that I should document my debt payoff journey with a podcast. It would be fun and something we could do together.

With the podcast, the blog naturally followed along and that is where the blog and podcast Chain of Wealth was created. Now, I am working full time on the blog and podcast. I love it and I get to learn new skills that I never thought I would need to know. I don’t know if my teaching career is finished or if it’s on hold for a bit.

How’s the podcast going?

The podcast is going great! We are really enjoying the opportunity to talk to so many people.

Are there things you’ve learned from people you’ve interviewed?

I have learned two huge things from the people we’ve spoken to:

  1. Just get out there and try. It will never be the right time and starting is the hardest part. Just start and do whatever your dream is.
  2. Stay positive and set mini goals for yourself. How you speak to yourself is so important to your future and your dreams.

What are some life lessons you learned from teaching?

I guess the best life lesson I learned from being a teacher is learning that everyone learns differently. I always knew this, but in school, I always tried hard and got decent grades but it took a lot more effort on my part than some of my classmates.

This often left me feeling slightly ashamed and I would hide the fact that I made extra efforts (not telling teachers about struggling, hiring tutors, homework taking all night) because I didn’t want to inconvenience the teacher or the class.

As a teacher, I saw it from the other side. I knew who struggled and didn’t ask for help and honestly, the kids that worked hard and were polite even if they struggled were my favorites.

It would be no inconvenience at all to give them some extra attention, even if it meant lunch tutoring sessions or an extra one-on-one when I had a free couple of minutes. These students gave me a reason to teach and it was so rewarding to see them finally learn whatever strategy we were studying.

In life, this has taught me to be more flexible and to allow myself a little extra slack when learning something new. That everyone has different strengths and not to worry about my question asking if I need to.

What are your top tips for students/graduates currently paying off their debts?

Get started right away. I wish I would have started paying off my loans years ago. Instead, I ignored them and so much interest has accrued. If I could go back, I would have paid much more attention to what I was doing with my loans.

Are there any more student loan tips you have for the readers?

Make sure that you refinance your loans to a lower rate is my best advice. Being able to get a lower interest rate will end up saving you thousands of dollars in interest, and pay back as much as you can each month.

How do you keep track of your student debt progression?

I know a lot of people keep track of things with Excel spreadsheets or charts and graphs, but that’s honestly too much for me. I keep track by logging into my loan provider account very regularly (like 4 times a week) to check my account.

I also have a network of people who I tell my payment amounts to. This helps to keep me motivated and that the extra random $100 or $200 payments are worth it.

What kinds of lessons were you taught growing up that you appreciate now?

I guess growing up I never thought of them as lessons but I grew up in a single parent household and my mom worked a lot. There were tough times but my mom would always tell me that nothing (good or bad) lasts forever.

Even with occasional money shortages, my house seemed to be the place that everyone would come to for gatherings and holidays. From this, I learned that everything works out and to share as much as you can. Being greedy doesn’t do anything except isolate yourself and what’s the point of having everything you want if you don’t have anyone to share it with.

She also taught me how to be very resourceful. My mom could cook and fix just about anything and as her right-hand man, it was either learn or die. As a kid, I would help cook Thanksgiving dinner while cleaning out the pipes to the air conditioner so it didn’t back up in the house before everybody came over. Growing up this way taught me that there isn’t very much that I can’t figure out on my own.

Any go-to budget-friendly meals you picked up from your mom?

So many! Basically anything potato driven. Growing up, I think we had potatoes in almost every meal. Later, I learned this was because they were filling and cheap. Also, meals like lasagna, Shepard’s Pie (again, potato based) or anything else that is a compilation of random foods are usually pretty tasty and cheap to make.

Read more about saving on groceries, here and here.

What are some lessons you’d like to pass onto the next generation?

I think I would like to pass along humility and kindness, and the ability to work hard and problem solve to the next generation.

I think these are important lessons because as an adult, there is no manual to tell you what to do. Everything has to be thought out and solved.

I think living would be a little easier if people were more humble and kind. and a little less greedy and self- centered.

What’s an app, a book, and a blog/podcast (either one or both, it’s up to you) that you’d recommend to someone who wants to improve their finances?

Well, the goal for Chain of Wealth is to help inspire people to pay back their debt. I regularly try to update listeners on my debt payoff journey as a way to keep myself accountable and so they can feel like they aren’t in it alone.

As for books, I know it’s cliché but I am in the middle of Think and Grow Rich, and it has been life-changing for me.

What are some lessons you’ve picked up from Think and Grow Rich thus far?

My favorite chapters were at the beginning of the book. I learned the most by hearing that most of the great people we always hear about (Henry Ford and Andrew Carnegie to name a few) also encountered huge setbacks and struggles and that didn’t stop them. That the difference between good and great is as simple as “just not giving up.”

Finishing up, is there anything else you can provide that would benefit the reader?

Make a list. Check in with it, tell your friends and family what you plan to do and keep your eye on the prize.

Writing it down and telling people your plans, makes you much more likely to reach your goal; whether it’s a financial goal or a life goal. Remember that it’s a bunch of little steps to get there- not one big one. So make a plan and celebrate and enjoy the small wins.

Where can people go to learn more about you and your work?

Wrap-up

That concludes my interview with Katie. I hope you gained some new insights into how to improve your Financial Health and grow your Wealth. Come back next week for my interview with Laura from Everyday by the Lake.

So readers, what was your favorite point made here? Anything you want me to follow up with Katie about?

How to fix your credit

The fact of the matter is your credit score has a dramatic influence on your life. It could affect where you live, what you drive, who you date, and even where you work.

That said, it’s very important to strive for and maintain a healthy credit score, but what if your credit score is already low? Are there ways to bring it back up?

Yes, and I’ll tell you how, but first, let’s take a quick look at the main credit score factors.

What impacts your credit score?

There are several things that impact your credit score. Here’s a breakdown:

  • Payment history – 35%
  • Credit usage – 30%
  • Age of credit – 15%
  • Type of credit – 10%
  • Credit inquiry – 10%

Payment history – How often do you make your payment on time. This should be 100%. Keep this number as high as possible. The credit agency wants to see on-time payments. This shows responsibility, and that they will get their money back.

Utilization – How much of your credit available is being used. Ideally, you want it as low as possible, but try your best to keep it under 30%. The credit agency needs to know that you don’t max out your credit limit. This, again, shows responsibility.

Age of credit – The older your credit is, the better. When you apply for new credit accounts, that lowers the age of your credit. Only apply for new accounts if it’s absolutely necessary.

Types of credit – The more diverse your credit is, the better. Having a couple different types of credit shows responsibility, as well as credit experience.

Credit inquiry – There are two types. A hard credit inquiry and a soft credit inquiry. A hard credit inquiry is bad for your score and can stay on your credit report for 2 years. A hard credit inquiry shows up when you apply for credit, like a loan or a credit card. A soft credit inquiry does not impact your score.

Dispute Errors

If you find errors on your credit report, call the agency and get those issues corrected. An error usually comes in the form of a derogatory mark.

A derogatory mark is a bad mark on your credit report. These are the most common derogatory marks:

  • Late payment
  • Account in collections
  • Bankruptcy
  • Civil judgment
  • Debt settlement
  • Foreclosure
  • Tax lien

These derogatory marks stay on your credit report for 7 to 10 years. An unpaid tax lien will stay on your report until it is paid.

Take care of past due accounts

If you have an account(s) that is past due, has been charged off, or is in collections, get those accounts up to date. These types of derogatory marks could hurt you forever and even prevent you from getting approved for future applications.

Pay on time

Credit agencies assign good scores to people they feel are responsible. The best way to show you are responsible is to pay on time. If you have trouble remembering to pay on time, you can do two things.

  • Set your credit accounts to pay automatically. You can set it to pay the minimum, the statement balance, or the dollar amount of your choosing. Be careful here though, your minimum payment and statement balance will change when you make new purchases.
  • Set reminders for yourself. If you don’t trust the auto pay method, or your payment amounts change frequently, just set a reminder for yourself a week before the due date.

Age of credit

Keep your old credit accounts open, and don’t open new credit accounts, unless you have to. Agencies like seeing old credit.

Reduce your debt owed

This won’t increase your credit score as quickly as some other methods, but it will be satisfying to see the amount you owe decrease.

There are a handful of methods for decreasing your outstanding debt.

  • Snowball method – With this method, you pay down the debt with the lowest balance. You pay the minimum on your other debt and pay as much as you possibly can to your lowest balance. Once that balance is paid, you redirect your money to the next lowest balance. You build momentum by paying off debt “faster.”
  • Avalanche method – With this method, you pay down the debt with the highest interest rate. You pay the minimum on your other balances and pay as much as you can towards your debt with the highest interest rate. After you pay off your debt with the highest interest rate, redirect that money towards the debt with the next highest rate. This method saves you money on interest payments.

This method and the next one, contradict a point I made above about not opening new credit accounts, but they could drastically improve the rate at which you pay down debt.

  • Balance transfer – Open a credit card that has an introductory rate of 0% APR on incoming balance transfers. Look for one with a long intro period. Once that’s open, transfer a credit card balance with the highest interest rate. This method will save you so much money on interest payments, as long as you can pay off your balance before the 0% rate expires. The best rates and terms are available to those with good credit.
  • Personal loan – Like the balance transfer, the best rates and terms are offered to those with good credit, so if you have less-than-desirable credit, this might not be a good option. You get a personal loan from a bank or credit union. The size of the loan would be equal to the total of your outstanding, high-interest debt. The institution then cuts a check to each creditor, which leaves you with one debt to pay off. The only way this makes sense is if the interest rate on the loan is lower than the average rate on your other debts.

Increase credit limits

If your biggest problem with your credit score is your utilization rate is crazy high, request for higher limits from the credit companies. The credit agencies like to see utilization rates below 30%, so you need to do what you can to get to, or below, that number.

Cut up your cards

You need to stop charging purchases to your credit cards. If you can’t trust yourself, you need to eliminate the temptation by cutting up your credit cards. This won’t eliminate the debt, but it will eliminate the chances of you digging yourself a deeper hole.

Secured card

Open a secured card to reestablish faith from the credit agencies. You will put a deposit down to open the card and that will become your credit limit. Make small purchases every month and pay it off right away. Don’t carry a balance.

Monitor credit

To protect yourself against identity theft and further credit destruction, review your credit score and various credit accounts regularly.

Conclusion

Having bad credit can really hurt you, but your credit does not have to stay bad. There are several, effective ways to bring your score up. Pay attention, pay on time, and be responsible!

So readers, what are some things you’ve done to improve your credit?

Interview with Erik

Hey guys!

Today I have this week’s installment of our segment: Interviews with money experts. I talked with Erik from The Mastermind Within.

Without further ado, here’s the interview.

Could you give a summary of your career and how you came to start The Mastermind Within?

I graduated from undergrad in 2013 with a degree in Math and knew I didn’t have the skills necessary for a big boy job. At 20 years old, I still had a lot more learning to do and started a Master’s degree.

In January 2015, I started my first real job as a financial risk analyst where I was looking at market risk at a regional bank. A year later, I switched jobs to a statistician and programmer and have been in this role ever since.

At the end of 2016 though, I was getting a little antsy – I have an entrepreneurial mind, and I love creating things. I also have a goal of financial independence at a young age and was looking to start a business of some sort.

That’s when I started The Mastermind Within – a blog is a low-cost entrepreneurial endeavor and will allow me to work on my writing, web marketing skills, and maybe someday bring in some money through ads.

I’m 16 months into that experiment, and I’m loving it. I write about personal finance and my pursuit of financial freedom, self-improvement, and entrepreneurship. I also just started a podcast (which Jake was on at the end of April -> Jake’s Episode)

How’s podcasting going so far?

Podcasting has been interesting. I’m enjoying it, but at the same time, it’s quite a bit of work. For 1 episode, it’s about 3 hours of work. That being said, I’m able to reach many more people in a different way than through my writing!

I saw your girlfriend recently moved in. What’s it like having two personal finance enthusiasts in the same house?

It’s been fun, and while we both are motivated by wealth, we have different opinions about how to get there. She is trying her hand at entrepreneurship, and it will be interesting to see how that goes.

I’m pretty happy, and she respects my time with blogging and podcasting as well so it’s a good fit.

Where are you currently in your financial journey?

I’m a little over 3 years in my financial journey. When I got my first real job at the beginning of 2015, I hit the ground running.

Since then, I’ve paid off my $8,000 student loan, another $8,000 auto loan, about $30,000 in mortgage debt. In addition to this, I’ve bought a house and had 3 of my friends paying me the rent for 2 of the years, and also started to max out my retirement accounts.

I’m just getting started but I have a great base of assets: about $50,000 in home equity, $50,000 in retirement accounts, and $50,000 in taxable accounts.

What are your plans for the next 5 years to get closer to FI?

Over the past 3 years, I’ve been focused on creating multiple income streams, and this is still my focus for the next few years. When I was 23, I purchased a house and had 3 of my friends paying me rent. This extra income allowed me to pay off my student loans, an auto loan, and build up some decent equity in the house I still live in now.

I still have 1 roommate, so this is decent passive income, but I’m looking to still create other income streams. I have my blog and podcast, which I’m focused on growing to attract advertisers, and I have a subscription box business I’ve been working on the past year, that I’m trying to grow and make that into something worth my time and efforts.

In addition to these side hustles, I’m going to continue to sock away money in my retirement accounts. This year is going to be the first year I max out my 401(k), and I’ve maxed my Roth IRA the past 3 years. At the end of 2018, I’ll have roughly $45,000 in my 401(k) and $17,000 in my Roth, which at 26 is pretty good :

Outside of this, just keep consistent with saving money. Real estate is in the back of my head always, as well as alternative investments such as precious metals or cryptocurrencies (which I have a little of both as a hedge to the general stock market)

What is your end goal?

My end goal is financial freedom. What’s interesting is I don’t have “a number” right now. Some people say, oh, when I hit $1,000,000 in net worth, I’m done, or when I hit $50,000 in passive income, I’m done with work.

For me, wealth is my goal, and I’m more focused on the near term since I’m just starting out. If I focus on building wealth and establishing a solid base in my twenties, I will be in a great spot my thirties, forties, and fifties.

Were there any lessons you were taught growing up that you appreciate now?

Save early and often. Never stop saving.

Understand that debt is not your friend, and look to stay away from spending more than you earn.

Both sets of grandparents of mine have hammered this concept home. My mom’s parents travel to multiple countries a year and were able to retire in their early 60’s. My dad’s parents probably never made more than $40,000 in a year, but live comfortably in the Midwest and are still saving some of their Social Security checks to this day

Any lessons you hope to pass onto the next generation?

Right now, I’m trying to influence my teenage sisters and it’s not going so well… but it’s a work in progress.

I want to pass on to the next generation the mindset of critical thinking will get you incredibly far in this world. So many people just go through their lives never questioning the status quo. Months, years, decades pass and all of a sudden, you wake up and you realize you missed out on an opportunity or a few opportunities because these opportunities were outside of your worldview.

I’m trying to influence others to open up their thoughts and minds to think outside the box and live with an abundance mindset. There’s so much potential in the world to do what you want, live out your dreams, and be wealthy in all areas of your life.

What are some things you’re trying to teach your sisters?

I’m trying to influence my sisters to think outside the box and to also think critically about their future. My parents became adults in the 80s and the world has changed significantly since then. While yes, many of the same principles are in place in terms of career progression and work, there are SO many more ways to make a living and to get ahead.

My 16-year-old sister is looking at working at Target. She took a class about graphic design, so I asked her if she would want to try to be a graphic design freelancer and try her hand at that? My 24-year-old sister thought this was dumb though, because “graphic design” is crowded.

I live with an abundance mindset, and if you are good enough, a space will never be too crowded for you.

Could you explain what an abundance mindset is and how that translates to finances and other areas of life?

Here’s an example which I wrote on my site about having an abundance mindset: Give and you shall receive live abundance mindset

Imagine you and I are walking down the street, side by side.

You breathe in. You breathe out. I breathe in. I breathe out. We both need oxygen to survive. Would it cross your mind that there would not be enough oxygen for both of us? Of course not—air is abundant.

Now, imagine we are scuba diving and my scuba tank starts to malfunction. I signal that I need to share the oxygen in your tank. All of a sudden, the air becomes a precious commodity. Its scarcity makes us worry. What if there isn’t enough for both of us?

Many people live with a scarcity mindset – a mindset which is zero-sum.

You win, I lose.

I win, you lose.

People with this type of mindset have a hard time sharing success with other people and are jealous of others’ success.

How I take this mindset and apply it to my finances or other areas of life is I say, there’s always something out there for me in the world.

There are millions of billions of dollars in the world. I can become wealthy if I just get 0.0001% of that. There are millions of people needing to be helped. I just need to find the right product or service to help them. There are millions of women out there – I just need to meet the right one to start a family.

With a scarcity mindset, I might say, I could never come up with a product that will help people, or every woman I meet doesn’t like me, so I’m not going to try.

What’s an app, a book, and a blog that you’d recommend to somebody who wants to improve their finances?

I use Mint and my spreadsheet for tracking my income and expenses, and I have this spreadsheet for download on my site.

For books, I love The Automatic Millionaire and The Richest Man in Babylon.

Finally, for blogs, I got started with Financial Samurai, but I also like Gen Y Finance Guy, Fiery Millennials, Guy on FIRE, Wealth Well Done, and Mustard Seed Money.

What are some good tips you picked up from The Richest Man in Babylon?

Save at least 10% of your income, make sure you have proper insurance, and invest only in things which you understand are a few keys from that book.

Is there anything else you could add that would add value to the readers?

Consistent efforts over time result in big successes:

What you do today matters. What you do every day matters. Successful people are those who understand that the little choices they make matter and because of that they choose to do things that seem to make no difference at all in the act of doing them, and they do them over and over and over until the compound effect kicks in.

Where can people go to learn more about you and your work?

Our readers can go to The Mastermind Within.

On The Mastermind Within, I talk mainly about personal finance. financial freedom, and self-improvement, but I also talk about tips for business, career, and entrepreneurship.

I post Monday, Wednesday, and Friday, with a podcast episode that goes live Tuesdays.

Jake and I recorded an episode about personal finance that went live April 24th! You won’t want to miss it!

Wrap up

That concludes my interview with Erik. I hope you gained some new insights into how to improve your Financial Health and grow your Wealth. Come back next week for my interview with Katie from Chain of Wealth.

So readers, what was your favorite point made here? Anything you want me to follow up with Erik about?

Ultimate guide to interest rates

Interest rates play a big role in the personal finance world.

Interest rates can help you when you are saving and investing, and interest rates can hurt you when you borrow money.

But what do you know about interest rates? Are there different kinds? What financial instruments use them?

When you receive interest

There are a few financial products that will pay you interest.

  • Savings account – Generally where most money goes if it’s not being used for paying bills or other types of regular expenses. The interest rate on a savings account is generally pretty low. Sometimes as low as .01%.
  • Money market account – This type of account is pretty similar to a savings account. The only difference is this type of account generally pays a much higher rate of interest. Sometimes it can be as high as 1.75%.
  • Certificates of Deposit (CD) – A certificate of deposit is another savings vehicle, but is a little more constricting. You deposit money into the account and it stays there for a set period of time while collecting interest. You are not allowed to withdraw that money, if you do, you will pay a penalty. After that period of time is over, you get your money back. The longer you have the money “tied up” for, the higher the interest rate you will receive.
  • Bonds – A bond is debt issued by a company. They issue bonds to raise funds for a variety of reasons. If you are a bondholder, the company will pay interest every six months until the bond matures, at which time, you will receive your initial investment back in the amount of $1,000 per bond. The interest rate paid by the company will vary by how likely that company is to fulfill those promised interest payments. The larger more established companies usually pay less than the smaller, up and coming companies.

What charges you interest

There are really only two instruments that charge you interest. Loans and credit cards.

A loan is something you apply for when you need money. In most cases, you will apply for a loan when you want to buy a house or when you want to buy a car.

There are other, less common, instances when you will apply for a loan to assist your other debts. This comes in the form of a personal loan. You get a personal loan to escape the crazy high-interest rates of credit cards.

Learn more about personal loans here and here.

Credit cards are the other instrument that charges you interest. If you use your credit card to make a purchase and fail to pay that balance before the end of the month, you will still owe the remainder of your balance, plus interest.

Credit card interest rates can get as high as 36%. (Source)

Types of interest rates

There are many different types of interest rates:

  • Simple interest – The interest rate times the principal amount. For example, you have $1,000 in a hypothetical bank account and the interest rate is 5%. The interest you would receive would be $50 annually.
  • Compound interest – This is interest upon interest. Let’s stick with the first example. You have $1,000 and a 5% interest rate. Now you will leave that money banked for 5 years. After the first year, you have $1,050. Now the 5% interest rate will be applied to $1,050 so you end year 2 with $1,102.50. By the end of year 5, you have $1,276.29.
  • Amortized – The most common example of an amortized loan is a mortgage. At the beginning of your mortgage, most of your payment is going towards interest, with each passing month and year, however, more of your money will go towards the principal and less to interest. We will use an auto loan as an example. You have an auto loan of $20,000 with a 6% interest rate and a 5-year term. The first payment you make breaks down to $286.66 to the principal and $100 to interest. The last payment you make is $384.73 to principal and $1.93 to interest.
  • Fixed – When you apply for your loan and get quoted an interest rate. That’s the rate you will pay for the entirety of the loan.
  • Variable – A variable rate is the exact opposite of a fixed rate because it can change. Your credit card’s APR is a good example of a variable rate. There is another interest rate, called the discount rate, that is set and by the Federal Reserve. As that rate changes, the variable rates also change.
  • Prime rate – This type of rate is used by banks and is used when banks lend money to it’s best customers; usually customers with good credit.
  • Discount rate – This rate is set, as mentioned above, by the Federal Reserve. We are currently, and have been for the last two years, in a rising rate environment. The Federal Reserve has raised the discount rate by a quarter of a percent 7 times in the last 2 1/2 years. This rate is what the FED uses when lending to other institutions, and when this rate changes, all other rates are affected (except for fixed rates).
  • APR – This is the rate used for credit cards. APR stands for Annual Percentage Rate. The APR, as mentioned above, is a variable rate, so when the discount rate changes, this rate also changes.
  • APY – The rate of interest earned, at a bank or credit union, from a savings account money market account or CD.

Conclusion

There are several different types of interest rates. Some interest-bearing accounts can hurt you and some can help you. It’s important to know which is which because interest rates will play a part in your financial life, forever.

So readers, what questions do you have about interest rates?