- Exposing the false beliefs of the financial world
Myth: You have to have a good credit score to survive life as an adult.Truth: Credit scores are based on debt and you can live without one.
A good credit report is important, but a credit score is basically only needed if you borrow money. In fact, you can't have a credit score unless you borrow money. Let's take a look at what determines your FICO score.
As many of you know, I recently launched a weekly podcast on my website. I am learning a ton about recording, editing and web publishing, and I know I still have a ton to learn. I realized my experience over the last few weeks was much like personal finance. I waited for a long time to start because I wanted to have all the pieces in place. I finally realized that no matter how long I waited I was going to make mistakes anyway. So I jumped in and started producing a show, knowing that as I learned I could improve the show. The bottom line was I needed to provide good content that's of use to my audience (you) and the longer I waited, the longer I was withholding information from listeners.
There is a sad phenomenon in America today. Even when life is good and blessings are handed to you, you still have to be smart about how you manage those blessings. And sometimes the blessings can cause more harm than good. Check out this video about the dark side of Extreme Makeover Home Edition.
While the show is intended to bring joy and blessings to people's lives, there is a dark and sad side to some of the recipients involved. When you take someone who doesn't have sound financial management skills or habits and you give them a windfall, you are not blessing them.
I know, it's confusing. As of April 1st, the government is requiring FREE credit reports to be, well, FREE. Why do they have to do that?
Actually it's quite simple. For several years you've been bombarded by commercials promoting "free" credit reports that were really just trial versions of a credit monitoring system. Websites like freecreditreport.com would lure you in with catchy advertising and a free credit report but you had to sign up for a trial period of their other services. It's now illegal for these sites to do this, which is the government's way to protect you from harming yourself.
I'm often asked how it's possible for me to live debt free. The answer is simple, but the process is difficult. You have to start with the will and determination to never borrow money again. Once you've drawn that proverbial line in the sand,
[caption id="attachment_1888" align="alignleft" width="150"] Choose Your Path[/caption]
I was sick and tired of owing someone else. I was tired of making payments to the bank that should have been going into my retirement account. I wanted to be wealthy and in control of my money, and I finally realized that as long as I was sending money to someone else I would never reach my goal. I always knew debt wasn't smart but I had always accepted debt as a way of life. It wasn't until I was in my thirties before I finally realized that only normal people accept debt.
There are a lot of different theories and systems out there for reducing debt. Some say pay off your highest interest rate first. Some say pay extra on all debts. Some say pay the lowest balance first. Some say invest first, then pay extra on debts. Some say the opposite. Which one is best? I prefer the debt snowball technique.