How smart wedding spending can lift your credit


How smart wedding spending can lift your credit

Published 5/8/14

How smart wedding spending can lift your credit By Justin Boyle

With a lot of my friends getting married over the last year or so, I've heard all sorts of nightmare stories about planning and paying for weddings. The sheer fiscal magnitude of it all has made some of them wonder whether it isn't too late to elope.

With a little credit savvy though, juggling the big numbers on your wedding balance sheet can leave you with a boost to your credit score that may come in handy with your next mortgage lender (among other future creditors). Here are some guidelines for making your wedding spending work for you.

Free up some space

Although exact cost figures can vary widely from city to city, the average outlay for a wedding in the U.S. in 2014 was more than $28,600, according to WeddingStats.org.

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So you've missed a payment: Now what?

Published 5/7/14  (Modified 5/8/14)

So you've missed a payment: Now what? By Georgie Miller

So, your finances are a little tight this month. You're probably worried and wondering what to do. Perhaps you've investigated all of your last-ditch solutions for cash emergencies, but you're still going to come up short on an obligation or two. What happens next?

What happens to your credit score when you miss a payment

Payment history comprises 35 percent of your credit score, according to myFICO.com. This is the biggest single factor in your FICO score! The next most heavily weighted category is amounts owed, at 30 percent of your score.

Since payment history is such a significant component of your FICO score, missing payments can cause quite a dip in your rating. Fortunately, if the rest of your credit history is positive, then one or two missed payments shouldn't spell disaster.

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Help! My teen is a money monster

Published 3/28/14

Help! My teen is a money monster By Peter Andrew

Short of bequeathing them so much money ($150 million each should do it) that they never have to worry about their finances, there are few gifts you can give your kids that could be more valuable than the skills and attitudes they need to be great money managers.

By the time they reach their mid-teens, you can pretty much see how their financial lives are going to pan out: Mary and Bob are forever borrowing against next week's allowance, while Tom and Jennifer have a thriving schoolyard loansharking business and robust balances in their savings accounts.

Often you don't have to wait for kids to hit puberty before you begin to spot the signs of competent or catastrophic attitudes to cash. One day you're changing their diaper, and the next, it feels, you're either lending them a couple of dollars or raiding their piggy banks. And, sometimes, siblings in the same family have very different money habits, even though they've all been brought up with the same financial norms, advice and education.

Genes, elephants and money

We're a long way from discovering the money gene, but last year Chase published an academic study that asked whether we all leave our mothers' wombs with our financial skills and attitudes pre-programmed. In "Born to Spend?," Professor Hersh Shefrin differentiated between two types of thought processes: "Fast thinking" tends to be instinctual, while "slow thinking" is more strategic.

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Growing your savings with a zero-sum budget

Published 3/14/14

Growing your savings with a zero-sum budget By Holly Johnson

People would probably laugh if they saw my checking account balance toward the end of the month. There have been times when I've had as little as $20 in it, and all I could do was count the days until the 1st of the month rolled back around.

However strange this may seem, rest assured that it's totally intentional. That's because I purposefully spend every dollar we come across in a monthly planning and savings scheme sometimes referred to as a "zero-sum" budget.

The purpose of a zero-sum budget is to "spend down" all of your monthly earnings until you completely run out of money each month. This accomplishes several things: First, using a zero-sum budget forces you to allocate all of your money to something, which cuts down on waste. Second, zero-sum budgeting requires that you pay money to savings and your investments as if they were bills, which helps you save more than you would have otherwise. And third, a zero-sum budget forces you to commit to spending thresholds in each category.

That all sounds great, right? If you're interested in creating a zero-sum budget of your own, the following steps can help.

Get a month ahead

One strategy for zero-sum budgeting is getting one month ahead of the game. To do this, I suggest using savings for your regular bills and spending while stashing away your monthly earnings at the same time. This strategy is especially advantageous for those with a fluctuating income since this month's bills will always be paid with last month's earnings.

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Novel ways to teach kids about saving money

Published 3/7/14

Novel ways to teach kids about saving money By Justin Boyle

I had just turned 8 years old when my mother took me to our neighborhood bank branch to open my first savings account. I had $20 in birthday money from my aunts and uncles and was about to learn valuable lessons about putting money away for the future.

But to hear my mother tell it, the only thing at the bank I wanted lessons about was the coffee machine. I walked out of there remembering my first taste of French roast much more vividly than my first taste of financial propriety.

Now, don't get me wrong. The old-fashioned "open a normal savings account with a friendly banker" approach might work for some kids. If you want to take a more creative direction though -- or if your kids are also at risk of becoming writers, who care more about coffee than practically anything -- here are a few tricks you can try.

Piggy banks 2.0

Maybe it's time we admitted to ourselves that the piggy bank has its drawbacks as a learning tool. The process of making even medium-sized deposits can be a chore, and there's no real way to check your balance without breaking and entering -- not to mention that it's possibly the worst option on the market as far as savings account interest rates are concerned.

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Lending money to loved ones: a realist's guide

Published 2/25/14

Lending money to loved ones: a realist's guide By Peter Andrew

A couple of years ago, some friends of ours had a problem. The vehicle they relied upon to earn a big chunk of their income had broken down in a terminal sort of way, and they didn't have quite enough savings for a replacement. So I called and offered to lend them the $1,000 or so they were short. The relief and happiness in their voices was easily worth a thousand bucks. I followed up with an email:

Glad we could help out. Just two conditions over the loan.

First, let's keep it between the four of us (the two of them and my partner and me); nobody else needs to know, though there's no problem if you've already told someone. And, secondly, we mustn't let it get in the way of our friendship. With luck, you'll be able to pay us back fairly easily, but we really don't care if it takes 10 years or longer. So don't ever avoid seeing us just because you're worried we'll be nagging you over it. We never will.

Make loan, think gift

In my head, the loan was a gift, though I couldn't tell them that because they'd never have taken it. If I eventually got the money back, that would be a fine surprise, but it wasn't an expectation. Had it been so, and I'd later been disappointed, it would have cost me two friendships that were worth way more than a grand. Shakespeare made a sound point in "Hamlet" when he wrote, "Neither a borrower, nor a lender be; For loan oft loses both itself and friend."

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