Ask @TheBudgetnista:

Hi. I worked w/ an adviser til Dec2013. To make room for savings, she had me pay less than the min on 3 of my CC's. 2 companies set up pmt arrangements w/ me. But 1 wouldn't unless I paid for their credit counseling.Now they've sent me to collections.Should I make arrangements?I've read their shady.

It seems odd that certified financial advisor would suggest that you pay less that the minimum on your credit cards.
1) The minimum is the smallest amount they will accept without sending you to collections
2) Doing so is like not making a payment at all and will be reflected badly on your credit report & lower your score
1st I would look into getting another advisor.
2nd There's nothing wrong with making arrangements once you know the best way to do so. Here's help: How to Settle Your Credit Card Debt (in 6 Steps): http://thebudgetnistablog.com/2014/settle-credit-card-debt/
Live richer,
The Budgetnista
www.livericherchallenge.com <--my new, free, financial resource for women.

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Hi Tiffany !Once you pay off a credit card or a loan. Would you reward your self any leisure money or just place more of your money on another card you want to pay off as well?

Heeeeey! Great question.
Rewarding yourself is essential to maintaining your financial discipline. BUT, I challenge you to build your "reward" money into your budget. (more about that later)
This is how I would handle my debt: Roll over the money you were paying to the 'paid-off loan', onto the payment you're paying a current loan.
Let's say you were paying $300 to a car that's now paid off. I would add that $300 to the next debt on your list. If the next debt is a credit card that you usually pay $100/month, now give it the old car payment too ($300). You're use to paying it, so you won't miss it. Now your credit card will get $400 ($300 car payment + $100 credit card payment)
Once the credit card is paid off, roll over the $400 to the next debt. Keep doing this until your debt free.
Back to rewarding yourself....
Include reward money into your budget like a bill. I set aside a percentage of my income for travel (that's my reward). You may want to set aside a specific amount each pay period to a savings account as a reward. When you collect enough money for what you want, splurge without guilt.
Live richer,
The Budgetnista
www.livericherchallenge.com <--my new, free, financial resource for women.

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Hi Tiffany, I'm currently self employed "hairstylist" and I'm finding to very hard to set a bugdet. Each each my income is different. What do you suggest?

Hello "Self Empoyed"!
Thank you for being patient. You asked such a great question that I wrote a post to answer it for you and others in your position.
You can find the answer here:
How To Budget When You Don’t Have a Regular Paycheck : http://thebudgetnistablog.com/2014/dont-have-a-regular-paycheck/
Live richer,
Tiffany
www.livericherchallenge.com << my new, free, financial resource for women

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Which bank is BETTER for my son to open his account with? He is between jobs and every penny he could save counts. I always remember the story about the bike (You are Wonderful!!!) Wishing you the best adventures for this wonderful season.

Hi "A Better Bank"!
Which bank is beter? It depends. What does your son need the bank to do for him?
1) Checking
2) Savings
3) Investing
If this is his first account, I would look for a bank convenient to where he lives. I would also look for a bank where he can avoid fees.
Here's a great site where you can input your zip code and find the best bank for you:
http://www.findabetterbank.com/New_York/New_York/checking-accounts.html.
Also, I just launched a free resource to help women gain control of their money in 36 days. You can sign-up here: http://www.livericherchallenge.com/
Live richer,
The Budgetnista

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Good Morning Now that I have the loan Mod I want to be done with the house but I owe more than it's worth. I heard about Equity Optimization. It doesn't sound bad. What are your thoughts? I think I can hang in there for another 6 or 7 yrs if the equity opt really works. Thx in advance

TheBlessedWest
Hey TheBlessesWest!
There are 3 things you need to make Equity Optimization work:
1) You have to have equity in your house. You can't be underwater.
2) You have to be able to qualify for a HELOC (home equity line of credit) 680+ credit score
3) You have to have positive cashflow. That means you have more money going in than going out during the month.
This is a great video further explaining how Equity Optimization works: https://www.youtube.com/watch?v=pZU5kPfiMeI <<MAKE SURE TO WATCH
AFTER watching the video, the following below will make more sense... I promise. :)
How Equity OptimizationREALLY works:
You dump your entire paycheck into the HELOC account (home equity line of credit), then pay all your bills using the HELOC.
As far as I can tell, the real trick is simply that you pay more than the scheduled payment. If you have $200 leftover after your expenses at the end of each month, then that $200 would normally set in your checking account.
After a year, you'd end up with $2400 more in your checking account when you started. By using a HELOC as your checking account, that $2400 ends up as extra payments on the HELOC rather than in your checking account. If you take that $2400 and spend it, though, you're at the exact same point you'd be if you were just paying the scheduled payment.
One flaw is that a HELOC usually only has a limited time "draw" period (the time you can take out your money whenever you want). Five years seems typical. After that, your balance is locked down and you can't take anything out.
So, the whole process breaks down at that point. If you dump your entire paycheck in you've just made a nice big payment. But you can't pay the rest of your bills and that's baaaaad news. :/
My suggestion? If you don't want the house, look into a short sale (when you sell it for less than it's worth), or a deed-in-lieu of foreclosure. That's basically when you sign the house back over to the lender.
I'm not a mortgage professional, but I have had my home go underwater and explored both options. Make sure to sit with a pro to discuss your options as well. These are merely my opinions and should not replace professional advice. :)
LIVE RICHER
The Budgetnista
www.thebudgetnista.com

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Hello! My credit score is currently 613. I am trying to raise it. I have $45,000 in student loan debt & $1100 in credit card debt that will be paid off by August. These are my only open accounts. Besides paying my card balance fully every month, how else can I dramatically increase my score?

Hi "613"!
There are a few things you can do to raise your score:
1) Pay down debt (30% of your score). So once you pay off your credit card debt, your score will jump.
2) Pay your bills on time (35% of your score). Continue to make your monthly payments on time
I know you think you can't do this one, but it's the FASTEST way to dramatically raise your credit score...
3) Auto-pay off a small debt aka bring it’s balance to $0 EVERY month. FYI: This is where the magic happens. Doing this will make your credit score jump like Jordan.
I would consider going to your bank as requesting a secured credit card. Go to your bank and apply for a secured credit card. A secured credit card is "secured" by your own money. You deposit money in an account and that money becomes your line of credit. It's much easier to get a secured card because it's no risk to the bank.
Make sure that:
- You’re cautious of anyone that asks you for outrageous start-up fees (some places try to charge up to $200) or for you to call a 1-900 number that will charge you money.
-You're sure to ask if your transactions will be reported to all three major credit bureaus. You want them to see that you're paying off your debts so your score can begin to improve.
- You get a secured card at a bank you want to continue to use for a while. You'll eventually want to ask if you can switch to an unsecured card with the same bank, so choose wisely.
- You automate the use of the card. Do this by placing a small automatic payment on the card each month (ie: magazine subscription, gym membership, phone bill). That bill should be the ONLY thing your secured card is used for. Then, sign-up for automatic, bill-pay at your bank (this is a free service), and instruct the bank to send the full payment of your bill, from your checking account to your secured card every month. This will create a payment loop effect that eliminates the flawed human element….you. I suggest you
leave your secured card at home and allow the loop to work for you without interference.
- Pay off your balance every month: Something magically happens when you pay a debt off in full each month. Your credit score does a happy-dance and jumps up. It doesn’t matter if the debt you paid off was $5000 or $5, same happy dance occurs. You can encourage your credit score to do a happy dance 12 times a year, by paying off your secured credit card in full every month.
4) Once you pay off your card, consistently keep your credit card balances below 30% of your credit limits, this will help to tremendously raise your score too. This means if your limit is $1000, keep your balance below $300.
5) Clean-up your credit report by asking that old negative items be removed.
Hope this helps!
LIVE RICHER
The Budgetnista
www.thebudgetnista.com

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Hi Tiffany, Now that my modification has been approved how can I increase my credit score. I have the mortgage and a student loan on my credit rpt only. I'm not able to pay either one in full. I'm current on my SL. My score is to low for a reg CC.

Hey "Modification Approved"!
One of the easiest and fastest ways to raise your credit score is with a credit card.
The trick is HOW you use your credit card.
Here's The Budgetnista's How to Quickly Raise Your Score with a Credit Card Plan.
1) Go to your bank as ask to apply for a secured credit card. A secured card is easier to be approved for because it's a credit card that is issued at no risk to the creditor because you leave a deposit with them, and that deposit is your credit limit. If you can't get a regular card, it's a great way to build credit.
You also want to make sure that the bank that issues your card:
b) reports to the credit bureaus (this way you raise your score while using the card)
c) gives you an opportunity to earn a non-secured card (a regular credit card) with your bank, after paying on time for 3-6 months.
2) Automate the use of the card. Do this by placing a small automatic payment on the card each month (ie: magazine subscription, gym membership, phone bill). That bill should be the ONLY thing your secured card is used for. Then, sign-up for automatic, bill-pay at your bank (this is a free service), and instruct the bank to send the full payment of your bill, from your checking account to your secured card every month. This will create a payment loop effect that eliminates the flawed human element….you. I suggest you leave your secured card at home and allow the loop to work for you without interference.
3) Pay off your balance every month: Something magically happens when you pay a debt off in full each month. Your credit score does a happy-dance and jumps up. It doesn’t matter if the debt you paid off was $5000 or $5, same happy dance occurs. You can encourage your credit score to do a happy dance 12 times a year, by paying off your secured credit card in full every month.
Your credit score will be happy-dancing like crazy in no time! :)
Please keep me updated about your progress.
LIVE RICHER
The Budgetnista

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Hi Tiffany, So my question is how do I increase my credit score now that my modification has been approved and the only thing on my Credit Report is that and my student loan. I pay the student loan on time but I'm not able to pay it off and I'm definitely not in position to pay off my mortgage.

Hey "New Modifier"!
One of the easiest and fastest ways to raise your credit score is with a credit card.
The trick is HOW you use your credit card. Here's The Budgetnista's Quickly Raise Your Score with a Credit Card Plan.
1) Get a new credit card. Use http://www.bankrate.com/ 's "compare credit card option", to help you choose the best credit card for you (low interest rate, great rewards etc.)
1a) If you're denied a credit card due to your credit history, go to your bank as ask to apply for a secured credit card. A secured card is a credit card that is issued at no risk to the creditor because you leave a deposit with them, and that deposit is your credit limit. If you can't get a regular card, it's a great way to build credit.
You also want to make sure that the bank that issues your card:
b) reports to the credit bureaus (this way you raise your score while using the card)
c) gives you an opportunity to earn a non-secured card (a regular credit card) with your bank, after paying on time for 3-6 months.
2) Automate the use of the card. Do this by placing a small automatic payment on the card each month (ie: magazine subscription, gym membership, phone bill). That bill should be the ONLY thing your secured card is used for. Then, sign-up for automatic, bill-pay at your bank (this is a free service), and instruct the bank to send the full payment of your bill, from your checking account to your secured card every month. This will create a payment loop effect that eliminates the flawed human element….you. I suggest you leave your secured card at home and allow the loop to work for you without interference.
3) Pay off your balance every month: Something magically happens when you pay a debt off in full each month. Your credit score does a happy-dance and jumps up. It doesn’t matter if the debt you paid off was $5000 or $5, same happy dance occurs. You can encourage your credit score to do a happy dance 12 times a year, by paying off your secured credit card in full every month.
You're credit score will be happy-dancing like crazy in no time! :)
Please keep me updated about your progress.
LIVE RICHER
The Budgetnista

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Hi, I have a question. I love the idea of taking one months income, and paying the next months bills. How do I convert to that though? I mean, if, for example, right now we are in April. I still have to pay April's bills, so how would I make that transition? Please help!

Hi "Pre-Pay Bills"!
There are a few ways to get yourself in the position to use this month's income, to pay next month's bills. No of them are magic, but they are worth it.
Here they are:
• Use your tax refund check. As tax season approaches, make up your mind to use your money wisely. You now know how much half a month’s worth of bills costs you. If you get a refund, pay those bills off! That way, you can stash your upcoming check to pay for the next half of the month’s bills. Voila!
Sidenote: If you are receiving a very large refund every year, you are giving the government an interest free loan. Ask your HR department about how you can receive a larger pay check now, verses a larger refund later.
• There is a little known perk for us folks who get paid bi-weekly. Twice a year, usually in the fall and summer, we get three checks in a month. I know you’re smiling while reading this, if this happens to you. I suggest that you use the extra check during those months to turbo boost your budget. Pay bills ahead of time and put yourself half a month ahead.
• Lastly, yet a little less glamorous and expedient. Save up some of your savings and pre-pay your bills that way.
Keep me updated with your progress!
LIVE RICHER,
The Budgetnista

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Hello Tiffany, I'm currently young and engaged, but my fiance's credit is in the low 500s I just wanted to know how will this effect my credit once we tie the knot?

Hi Young & Engaged!
First, congratulations on your pending nuptials. :)
This is a great question and one of the 3 main credit bureaus, Experian answered your question perfectly, so I swiped their answer because it's exactly what I would have said. :)

Getting married does not cause your credit history to be combined with your new husband’s. That doesn’t mean his bad credit history won’t impact your ability to get credit together, though.

Each of you always will have separate credit histories. But, when you apply for credit jointly, the lender will consider both of your credit histories when making its decision. While your history may be sparkling, his flawed history could cause you to be declined or to pay higher interest rates and fees.

This is particularly true in mortgage lending. Because a home purchase is such a large debt, both of your credit histories, as well as income and other financial obligations, will almost certainly be considered to determine if, as a couple, you qualify for the loan.
States with community property laws may consider any credit applications or debts incurred during your marriage as joint debt. That doesn’t mean your credit histories are combined, but it does mean your new husband’s bad history could influence every credit decision.

This doesn’t mean you shouldn’t marry your fiancé. Instead, have a serious conversation about your current financial lives. Share your credit histories and other financial details, both good and bad. Then, put together a plan to address any issues.

Money management, including credit, is the most common source of marriage difficulty. Going into the marriage with complete awareness of the financial baggage you both carry, and with a plan to resolve any issues, is a great way to increase your chances of living happily ever after.
Great response right?! I hope this helps. :)
LIVE RICHER,
The Budgetnista

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I have a Visa Credit Card, that is about 15 months old. The balance is at $0. However, I want to put your advice to work to increase my credit score by 100 points. But I want to close this account and switch to a card that allows me to earn points or rewards. Should I switch? Or stay put?

Hey Credit Stay or Go!
Great question. The length of your credit history accounts for 15% of your score. The credit reporting agencies take an average of how long you've had your credit and divide it by the number of creditors you have.
This means that closing a credit card and opening a new one will lower your average. Buuuuuuut if you can find an AWSOME card with great rewards it maybe worth it to switch since the Visa is only 15 months old.
An alternative: Keep both cards and charge a very small amount (automatically) to both each month and pay them off automatically via your bank's online bill-pay. You'll see your score jump up even faster than with one card. The key is to leave the cards at home and not to physically use them. Instead, let them be charged and paid off in an automatic cycle.
Reminder: Always keep your oldest credit card open and active. It will help to balance out your length of credit history.
LIVE RICHER
B

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My credit score is in the high 500's and I have no savings. I am $5,000 in debt. What steps do I need to take to get my credit score in a better position and save more money? Thank you!!!

Christina Walker
Ok Christina,
Here's my advice:
1) Most people need to start here: 1st and foremost you need to create a physical budget. You need to see what your money is doing. Get Day 1 of my book, The One Week Budget here for FREE. It will help you do step 1: http://thebudgetnista.com/free-stuff
A budget will help you find the money you need to get out of debt, so don't skip this step.
2) Once you have a budget, you'll need a plan to systematically pay off your debt. Luckily for you, I happen to have one right here. :)
Pay Off Debt in 7 Steps and Still Maintain Your Lifestyle. http://thebudgetnistablog.com/2013/pay-off-debt/
3) Once you begin paying off your debt, by default your credit score will raise. If you want to give it a turbo boost, use some of the tips I outline here:
How to Raise Your Credit Score 100 Points in 1-Year (a short video): http://thebudgetnistablog.com/2013/pay-off-debt/
Let me know how you make out.
LIVE RICHER
The Budgetnista

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