Learning About Your Credit Score and Ways to Make it Better (Or Establish It!)

So today's post isn't really about saving or making money per se, but it is an important topic when talking about finances that I think many people have misconceptions about and that's your credit score.

What is your credit score?  Put simply, it shows how worthy you are of borrowing money.  Meaning, the higher your credit score, the more people are willing to lend you because you have a good history of paying back money you borrowed.

I think the biggest mistake made when concerning credit, is not establishing any.  Many people are afraid of credit cards or taking out loans because they are afraid they will go into debt.  It's smart not to try and buy things that you cannot afford, but it is not smart to be afraid of using credit as long as you use it wisely.  It's important to establish credit as soon as you can so you can build a long history of good credit.  Why is this important?  Because when the time comes in your life to be making a big purchase that you have to have a loan for, like a house, you have to have credit established to not only get a loan but to get a good one with better rates.

So how do you establish credit?  There are two big ways to establish credit: through credit cards and through loans.

Credit Cards
I have already talked about using credit cards to your advantage to make money, see Make Money With Credit Cards, and I briefly talked how to manage credit cards so they don't lower your credit score -- that is . . . . paying off your bill every month!  As I said in that blog, don't be afraid of credit cards.  As long as you spend with it just like you would a debit card, only buy what you actually have money to pay for, you shouldn't run into any problems paying your bill.  And paying your bill in full on time means paying no interest or fees.

Paying your bill also means helping your credit score.  As long as you keep paying your bill, your credit score will go up.  This also increases the amount of money you are able to "borrow" each day from the credit card company.  Like I said, the more you pay off, the more you can borrow on credit.

An important thing to note, if you have multiple credit cards open that's fine!  DON'T EVER CLOSE A CREDIT CARD ACCOUNT!  This affects your score negatively.  Many people after going into debt and then eventually paying it off, want to close their accounts so their not tempted to use it anymore.  DON'T.  Cut up your card and don't use it, but keep the account open.  Why?  Because an open account, even if the bill is $0, you pay $0, you are paying off your bill.  That helps your credit score.  Closing an account even if you always paid your bills on time will negatively affect your credit score because banks and such see that as a cry for help, that you do not have money to pay things off.  So even if you want to open a credit card account and not use it, it could still help your credit score, though very slightly.

Loans
The other way to establish credit is through loans.  I remember my economics teacher in high school saying, never get a loan to buy a car, you should have enough money to pay it off right away.  That always stuck with me but now I see that getting loans is important to establishing credit, though there is still truth in what he said.  It's important to understand when you should be getting a loan to help your credit and when you should be getting a loan just because it's a big purchase and you have to have a loan.

What do I mean by this?  Well take the car example he used.  The idea that you should have enough money to pay for the car is still true.  It does not make sense to purchase a car that you cannot afford even though you can get a loan which makes it easier to buy.  Why?  Well first of all, in the scheme of all things in life, purchasing a car is a relatively small purchase compared to other things like education, houses, property, etc.  Second of all (and something more people will take to heart), cars depreciate in value where as most other things you need loans for increase in value -- houses and property if well taken care of and improved over time increase in value and even investing in an education means that you will be able to make more money in the future.

So why do I believe now that you should possibly still get a loan?  Well, just like credit cards, you can get a loan just to establish credit even if you have all the money to pay it off (as you should).  You can pay off the loan in full and not have to deal with interest.  It's just like paying for it with cash or a check, but you help your credit score while you're at it.  This can also be done with smaller large purchases (that sounds strange) like an engagement ring or other vehicles.

Really the only types of loans that you shouldn't be able to pay off right away or shortly after are: education, housing, and property loans.  Obviously these are are in the tens and hundreds of thousands (or millions) of dollars and most people cannot afford to pay for that right away, and rightfully so!  But to be able to get a loan for these things, you need to already have credit!

Important tips about loans:
1. If you can pay more than your monthly payment, do it.  Just because you have a loan for 30 years doesn't mean you have to take that long to pay it off.  The sooner you pay it off, the less interest you have to pay!
2. Don't get behind on payments, not only does that hurt your credit score, but the interest and fees that accumulate become insanely hard to pay off.  That's how people go into extreme debt.  If your financial situation changes, talk to the bank or company that has your loan and discuss different options.  Especially with long-term loans, there is generally a solution that both parties can agree upon that doesn't hurt you as much.


If you feel there's anything I forgot or if there's still something you don't understand, feel free to comment below!

For Halloween Save Money: Make Your Own Costume

Since this is the first post in October, I thought I would do a special one about Halloween costumes.  I love dressing up for Halloween, and one of my favorite parts is coming up with a unique costume.  I NEVER buy pre-made Halloween costumes.  They are terrible.  Here's why.



Reasons to Not Buy Pre-made Halloween Costumes:
1. They are too expensive.  Not only is it ridiculous to spend $60+ on a costume for one day, they aren't even close to being worth that.  They are cheaply made and look cheaply made.  Continuing on that thought:
2. The fabric used is horrible.  As stated before, they are cheaply made.  Not only is the fabric they use horrible looking (often it's that shiny material like little girls' nightgowns) but it is so thin, it can easily rip.  It just looks bad.
3. You may have the same exact costume as somebody else.  Making your own costume means nobody else will have your costume.  You may be the same character as somebody else, but chances are, yours will be more unique because you made it.  People generally think it looks cooler too, even if it isn't the best looking.
4. For women, they are overtly sexualized which is not necessary.  If you want to dress up slutty on Halloween, fine that's your choice but at least look nicer doing it and still make your own costume.  And guess what?  Most guys thing it's cooler if you make a costume that looks like the actual character.  Cause most guys are nerds and appreciate that kind of thing.  Just saying.


Of course, there are exceptions.  Some REALLY expensive costumes are very nicely made.  This can be worth it if you plan to wear it multiple times.  Also, if you want to wear one of those joke costumes, I guess the quality of the look doesn't really matter but it still seems bad to pay so much for that.  I would suggest in that case to look online for cheaper options for whatever costume you want.


As I said, I really like making my own costumes.  If you don't think that they can look good, here are some examples of my own costumes in the past few years:

 

So how do you go about finding the pieces of your costume?  Well, I like to start at the thrift store.  You can find some great pieces for costumes, sometimes you can even find wonderful already made costumes.  Sometimes I go in knowing who I want to be and have specific things in mind, sometimes I go and see what there is and get inspiration from what I see.  And as big of an online shopper as I am, it can be hard to tell online exactly what you will be getting.

That being said, if there is a specific piece that I know will be difficult to find, I look online and I start looking early.  My biggest and best friend for these kinds of things is ebay.  You can find really unique items at great deals.

For example, this year I want to be Carmen Sandiego.  Funny right?  Cause my name is Carmen.  (I used to hear the theme song a lot as a kid when the show was really popular.  I hated it, but now it's a bit nostalgic).  I'm going to reuse the coat you see that I used for Cruella de Vil (Which I found at a thrift store for under $10.  I just tacked down the dalmatian fur so I could remove it later).  Most of the rest of the costume is really simple, but her standout piece is her hat.  That needs to be perfect and it's also hard to find, so I've been searching ebay regularly to find something.

What are you going to be for Halloween this year?

The Most Underrated Source for Free Entertainment: THE LIBRARY

Today I am going to talk about how to save money while keeping yourself entertained . . . . for free . . . the library.  People seem to have forgotten about this gem, they think a library only has books.  Wrong.  Libraries are stocked with all kinds of cool and fun things other than books: movies (yes, they are up to date and have current DVD's for you to rent), CD's, and many libraries have digital versions of books for you to download for those who like to read electronically.

Why more people don't take advantage of these free things, I'll never know.  Go and check your library out and see what they have.  And if you live in a well populated area, most libraries are linked in a certain area (by county, generally) and you can borrow items from any of these libraries, and even have them sent to a certain one for you to pick up.  Usually you can do all your searching online on their website, and then choose what library you want to pick it up at, and you will get an email when it is ready to be picked up.  Pretty cool huh?


Now I know most of you are thinking, CD's?  Why would I want CD's?  Now I'm not going to go and tell you to do anything specific, but let's just say I haven't purchased music in a long time but I have thousands of songs on my iTunes and even all the latest hits.  Cough cough.

Another plus to renting from the library (other than it being free): Usually you get to keep the item for longer than any other rental store (like those even exist anymore).

Really the only downside, sometimes you get pretty damaged discs, so damaged that they are unwatchable (or unlistenable).  It sucks, but let your librarian know when you return it.  Usually there's another copy you can get or they'll replace the bad one.

Coupons: Use Wisely

This week's post is about coupons.  Now this is NOT going to tell you how to save $30,000 a year with extreme couponing, I do not have the patience to do that though it can be done.  There are plenty of websites that will teach you how to do that if you are interested and have the time (Key phrase: If you have the time.  It's basically a full time job if you want to save thousands).  This is just a few pointers to remember when using coupons.

Coupons are great, it's free savings.  I always hated as a kid that my mom never looked through all the coupons that came with the Sunday paper just to see if there was one for something we use.  Why not right?  Many people just don't want to take the time, and I don't blame them.  Good news is, it's a little easier today with electronic versions of things.  You can search for coupons for specific goods or companies online or you can sign up for electronic coupons for specific stores that are loaded onto a card.  But again, I'm not going to go into detail on that.

THE NUMBER ONE MISTAKE PEOPLE MAKE WITH COUPONS IS . . . BUYING THINGS THEY DON'T NEED.  The PROBLEM with coupons are, when you see them, you feel like you have to take advantage of the sale.  You don't usually buy that item but you should get it because it's a $1.00 off.  Then it ends up sitting in your pantry unopened until you feel you HAVE to use it.

Similarly, people also sometimes just end up spending MORE than they would without the coupon.  You get a coupon in the mail from Macy's that say's you get $10 off (when you spend $50 or more).  That's great if you were needing some new clothes or something for the kitchen, but make sure you don't end up spending more than you normally would without the coupon, just to get a deal.  That just doesn't make sense.

Other things to watch out for:

• Expiration date
• Size limits
• Certain stores have different policies, they may not accept some coupons and that's their right
• Any other restrictions

Any tips you have?

Traveling Cheaply, Part 2: Hostels

In my second post about traveling cheaply, prompted by my trip to New York last weekend I'm going to give you a little hint about saving money in your lodging.  It's a hidden secret to many Americans . . . hostels.



Now don't turn up your nose and say, "Eww hostels" and leave this page.  That is part of the problem.  I'm going to debunk a lot of the myths involved with this touchy subject.  Hostels are a great way to save money in a big city where hotel prices can be out the roof!  (Obviously, this is only meant for large cities that have hostels, most smaller areas won't have the option.)

Yest hostels usually mean a much smaller room and sometimes a shared bathroom, but it's worth it with the money you save.  Besides, if you're visiting a big city, generally you are going to be sightseeing and not there for relaxation so you should really only be in your hotel to sleep and all you need for that is a bed!

Myths About Hostels Debunked

1. You have to sleep in a dorm with lots of other people you don't know.  This is probably the biggest myth about hostels.  At one point, they may have only come in dorm style rooms and they certainly still have the option for super cheap, but hostels now also understand that most people want some privacy and do offer private rooms and sometimes even private bathrooms as well.

2. Hostels are dirty.  Not true for all places.  Just like hotels and motels, there are going to be a few places that aren't up to par, but that's what doing your online research is for and reading reviews.  Let me tell you that there are a lot of hostels that are clean and not only that, but they have been fully modernized and look totally chic.  Here's a place that my mom and I have stayed at before in NY.










 3. Only foreigners stay in hostels.  While incredibly rude, also not true.  Lots of Americans stay in American hostels.  It's just for those looking for a cheaper alternative to hotels so they can spend their money on activities and such in the place they are visiting!

4. Hostels aren't safe.  Many hostels either you have to have a key to enter or they have private security.  Most are just as safe as any hotel.  Just make sure you do your research and look at reviews.


Perks About Hostels

1. You're right near the action!  Many hostels are downtown or near the hotspots of a particular city.  To find a cheaper option in a hotel, you generally have to look on the outskirts of cities.  Not only does this mean it takes longer to get to wherever you want to go, it may mean added costs like a rental car or taxi.  That's not necessary with most hostels.

2. Fun events.  Because of the community feel in hostels, a lot offer fun activities within their walls like games and movies but many also offer fun things to do in the city.  These can be anything from museum trips to pub crawls.  Going in a group like this makes it cheaper and easier since you don't have to do the planning!  I've really wanted to take a trip down to San Diego to stay at this one hostel, USA Hostels San Diego, just because they offer a trip to Tijuana.  For just $18 you get: dinner, a guided tour of all the shopping and action that has made Tijuana world famous, a tequila tasting and, of course, hit a few of the best bars on the Avenida de la Revolución.  While being an American and traveling between the U.S. and Mexico should be simple, this just eliminates any troubles crossing the border and being with a group makes it much safer.


Let me know what you think about this.  If you have any places you've stayed and want to recommend go ahead.  As with anything, the internet is your best friend.  Do your research.  Read reviews (but take them with a grain of salt because some people are way too picky).  Find the place that suits you best.

Traveling Cheaply, Part 1: Flights

As I sit in the airport, waiting to board my overnight flight to New York, I thought it only appropriate to do a post on traveling cheaply.  I love to travel and I wish I could do it all the time but it takes a lot of money!  Hopefully these few tips will possibly help you in going to that place you've always wanted to go to!

All About Buying Your Plane Tickets

So this first part about traveling cheaply is about finding the best deal on plane tickets.  After all, that is where the bulk of the amount needed for a trip is going to go.

1.  Search around.  Start looking early, if possible, but don't necessarily buy right away.  Pay attention to the fluctuations in prices.  Prices for plane tickets change daily, even hourly, and I'm not expert on that (you can find all kinds of websites that make predictions on when prices are at their lowest) but just try and be aware.  And make sure you compare different websites.

2. If flying round trip, try buying each flight separately.  This is what I did for this trip.  I got a much better deal by buying two separate one way flights because I had more flexibility in times and different companies.

3. If there are multiple airports in your destination, search for all of them.  This can be more difficult from the airport you are leaving from, depending on how you get there and if you are leaving a car, but it can be done at your arrival destination.  I'm going to New York, which obviously has many options for airports.  I fly into LGA and leave from JFK.

4. Take a red-eye.  This may be only for the younger and more sprightly travelers but it is a great way to save money.  First, it is just cheaper because less people like to fly at that time, they know it's miserable so they give you a discount.  The other way it helps cut costs is by saving you the price of another night at a hotel.  How, you ask?  Well take me for example.  I am leaving late Saturday night from SF to go to NY where I will arrive around 10:00 in the morning their time.  This is a perfect time to be able to spend the whole day in the city and not have time wasted from traveling and I didn't have to pay for a hotel stay for Saturday night because I was in the air!

5. Sign up for the free mileage rewards programs.  Why wouldn't you want to get rewarded for free for things you do?  I'm all about signing up for rewards programs that don't cost you anything, but make sure it stays that way -- IT SHOULDN'T COST YOU ANYTHING.  Meaning, the temptation is if you're signed up for one rewards program that you'll always want to fly from that company to build up the rewards.  But be smart about it.  If it cost you $100 extra to fly with that company sometime, skip it.  I don't think those miles are worth that much.  It's okay to be signed up with multiple companies.  You'll slowly build up the rewards but you should still take the best deal dollar-wise.  Usually you end up flying with the same one or two companies anyway depending on what's available in your area.

6. All the added fees.  Nowadays airline companies are looking for any way to make money off you.  You have to pay to check a bag, pay for extra leg room or exit row, pay a huge amount for a snack.  DON'T BE TEMPTED.  The only one I really understand paying for is the checked baggage.  Sometimes it's just too hard to put everything into a carry on size or the liquid thing is a problem.  But if you can, try and put everything in the carry-on size.  You'd be surprised how big it can be.  It's generally the medium sized bag in a suitcase set.  Plus, a little secret.  You can usually check your bag at the gate for free.  But with everything else, it can easily be foregone.  Try and get an aisle seat if you're worried about leg room.  Really any food at an airport is over-priced.  Pack your own food (just be careful of the liquid restrictions).

I think that's about it.  If anybody else has any other simple tips, feel free to leave a comment!

Stop Using Lotion Too Much. The Answer? Grapeseed Oil

This is going to be a short and simple post.  If you're like me, your skin gets pretty dry.  I used to put lotion on all over my body after I showered, as I'm sure many of you do.  Now that makes you go through lotion pretty quickly.  STOP!  Use grapeseed oil instead.


I'm not kidding.  Grapeseed oi is great for your skin, it does not leave it oily, and you only need a few drops to cover a good amount of area.  I saw this trick and went out and bought some (it can be found at your local grocery store) and I haven't even used half of the bottle yet and that was over 6 months ago!  It's actually been so long since I started using it that I have no idea how long it's been, it could be almost a year!

You will save so much by not having to constantly buy more lotion.  I still use lotion for my hands and feet, but that's not very much.

*A word of caution about using oil.  Though it does not leave your skin oily, it still is oil and can leave oil stains on your clothing.  Be careful when applying it near clothing, let your skin fully absorb it before putting clothing on that area, and if you accidentally put too much oil on and it is kind of oily then just take some toilet paper and wipe off the excess.


****UPDATE 11/9/15**** I have reached the halfway mark on my bottle of grapeseed oil.  Yes, my first bottle that I posted about in this article!  So by my calculations, if you use the oil on your legs about every other day (as I do), 1L should last you about 5 years!  I still love it and my skin feels great after putting it on!  Get some at the link right below: