Money Blue Book

Well gang, it’s time for another networth update. For those unfamiliar with these reports, I’ve been calculating my net worth and tracking my financial progress for a few years now. The personal balance sheet numbers I report on these updates are not meant to be boastful or intended to be wantonly exhibitionist (although unfortunately I understand how they might come off as such). The purpose of following my networth changes over time is actually to inspire and encourage readers to do the same for themselves. These periodic progress updates are not only great ways to help one track the successful self accumulation of monetary assets over time, but they help to ensure, encourage, and remind oneself of the importance of routine accountability of personal financial decisions. Coupled with free online budgeting tools and my NetworthIQ.com account, I use them all to chart my finances and keep myself consistently on the right track. The issue of money and income has always been a rather taboo subject among people, but it’s too important to not pay regular attention to.

Yes, I Am Still Upbeat For The Future: Things Will Get Better In Time

Wow, what a roller coaster ride of a month in terms of the stock market. One minute the Dow is breaking past the psychological 10,000 mark and soaring to new bullish heights – the next, the entire stock market is sinking like a rock. In terms of economic volatility as a function of gains and losses, the last few weeks have definitely not been ideal for the emotionally squeamish short term traders out there. But for those that truly call themselves long term investors, I really don’t think there is anything to fear in this market but fear itself. Back in Fall 2008 and Spring 2009, there were serious questions about the ability of the American financial system to survive the ongoing subprime mortgage meltdown. The economy, on the verge of total collapse and teetering on the brink of a major economic depression, was clamoring for immediate stimulus and decisive federal government intervention.

But what a difference a year makes. There are still lingering concerns about the economic health and ability of consumers to start spending money again to stimulate the economy, and there are still trepidations about the plight of the current housing market – but I think the absolute worst case scenario has passed. We are now in a gradual economic recovery phase. To repair the American economy and restore all of the lost jobs that vanished subsequent to the credit crisis fallout will take time, but the healing will come to fruition in due time. Meanwhile for stock market investors, there are bound to be periods of extreme volatility and shocking price swings. But as I’ve championed many times before in past personal finance blog posts, if you can take a certain amount of risk now and hold on for the long haul, you are bound to come out hugely ahead when we finally emerge from this recessionary nightmare – whether that be 12 months, 2 years, or even 5 years from now. Recessions are terrible things to behold, but the great thing about them – is that they don’t last forever. The federal government, and the American people with its never ending entrepreneurial spirit will find a way. Don’t invest recklessly and take un-calculated, un-thought out risks, but I do encourage readers to be bold if they can. Place your stock market and real estate bets today in this down economy and reap what you sow today in the not too distant future.

This month, despite the fact that the market viciously tanked and dealt out a pretty severe lashing of my stock investment portfolio, I intend to stay the course and fight against my instinctive nature urge to pull out. For now at least, any short term losses due to market price volatility remains mere paper losses – so long as I don’t sell. My small legal practice remains healthy and my persistent efforts to make money by blogging online continues to yield positive dividends. As my monthly income remains stable and I have sufficient cash savings and credit card options for emergency fund purposes, I thankfully have ample financial resources to ride out the market doldrums. I don’t see it as overly-risking or gambling my life savings away – but rather, I see it as a pure exercise of my faith and belief that in the long run, things will be okay.

My Current Net Worth and Financial Status Update Compared To Last Month

Being Greedy When Others Are Fearful: Investing For The Long Term

If you want to save money and invest wisely for the future, it’s important to learn from the best – one of them being renown Billionaire investor, Warren Buffett. The gist of my own current trading strategy and approach towards investing can be summed up in this famous 2001 Warren Buffett quote:

• “Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics is equally unpredictable, both as to duration and degree. Therefore we never try to anticipate the arrival or departure of either. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

My attempt to be sunny and optimistic at the present time despite the uncertainty and fear that still permeates the economy is not because I’m foolhardy or desire to get rich quickly – but rather I believe it’s during such periods of pervasive fear and pessimism that great wealth can be made. After sitting on the sidelines and hoarding my cash in high yield savings accounts and certificate of deposits for many months while the economy suffered its worse collapse in decades, I finally pulled the trigger recently and started investing again. If your gut sentiments are like mine and you also believe that the worse has passed but that the positive feelings have not yet been properly reflected in stock market prices, then now may be a good time to start investing again.

New investors and those who have been cautiously staying away from the action for some time may now want to open up an investment account with a reliable and affordable discount broker, and start evaluating potential investment opportunities. In case you’re not sure which brokerage firm to go with, here are a few recommendations. I’ve complied a list of online brokers that have consistently received accolades and praise from the financial experts and have enjoyed favorable reviews among new investors and advanced traders alike. In the list, I particularly like TradeKing, Etrade, and Scottrade.

Progress and Status Report Of My New Single Family Home Construction

As I’ve been reporting for months now, my new home is currently under construction. I visit the construction site every few days or so to walk around the lot and take photos to document the construction progress for my own personal photographic archives. After all, it’s not everyday that we get to see the construction of our own home and witness the transformation of a simple pile of dirt into a free standing structure that will one day be called home.

Currently, the concrete and rebar mixtures for the home foundation are in the process of being laid. Once the foundation has been properly poured and allowed to harden, the wooden housing structure usually goes up pretty quickly. Barring any unforeseen hindrances to construction activity by inclement weather, the house is expected to be built and delivered sometime in February 2010. For now, I’m in the active process of applying for a home mortgage loan. Because I’ve been tracking my free credit reports and my free credit score updates on a consistent basis for some time – not to mention I’ve also been taking concerted actions to keep my FICO score persistently high, I anticipate being able to ultimately qualify for a top mortgage interest rate of 4.75% APR or lower on a 30 year, 20% down home loan, give or take depending on interest rate conditions at the time of home delivery.

Continuing To Make Money Online As A Part Time Blogger

As should be pretty evident from the advertisement banners and occasional affiliate links that pepper this website, I blog to make money online and engage in Internet affiliate marketing as part of my home office business. I also earn some nice change on the side with online paid surveys and a couple of other online money making methods. While I do operate a small attorney practice as well and earn additional income through a small collection of other income sources, my blogging income is steadily becoming a larger and larger part of my total income stream. One of these days, perhaps I will transition into a full time problogger and run my collection of income producing websites as a full time job. But for now, I prefer to see it as merely an integral cog in my total overall income diversification plan. After all, in this sluggish economy and in this period of unpredictable layoffs and economic implosions, you never know when your primary breadwinner source of income will suddenly dry up. It’s best to diversify one’s financial life with a varied mixture of both active and passive income streams if possible.

Update: Finally Feeling Bullish and Hopeful For The Future Once Again

Despite the fact that historically, the month of September has traditionally been a down month for stock market investors – after months of sitting on the sidelines and hoarding online savings account cash, I’ve finally pulled the trigger and re-entered the market en masse. Rather than take the often advised path of investing in small bite size chunks through dollar cost averaging, I decided to plow all of my investment cash into long term equity positions simultaneously. I don’t plan to pull out of my newly invested positions anytime soon and am very determined to stay the course for the very long haul – in excess of 5 years or longer. Despite the recent run up in the market, stock market prices are still at historical once-in-a-lifetime lows – and I have every intention to double or triple my investments in the next 5 years. The irrational fear and gloom of pending economic depression that gripped the whole world back in spring 2009 has mercifully passed and it now appears the beaten down economy is finally back on the track towards recovery.

Of course, this is not to say that we are anywhere close to experiencing a traditional bull market anytime soon that’s punctuated by rising employment numbers and increased consumer spending, but at the very least, the specter of a crippled financial system kamikaz-ing into an irreversible death spiral has disappeared – and replaced by faint glimmers of hope. Who knows if President Barack Obama’s second economic stimulus package truly worked or whether any of the resuscitative measures implemented by Congress such as the increased FDIC insurance limits, the Cash For Clunkers Bill, the $8,000 Federal Housing Tax Credit for first time home buyers, or even the appointment of new Treasury Secretary Timothy Geithner really did much to jolt the economy back to life in a sustained way. But at the very least, these measures have at least reassured formerly scared to death and shell shocked investors like myself that the federal government is finally ready, willing, and able to do whatever it takes to get this economic ship steaming full speed once again. That seemingly firm commitment, as evidenced by the number of quick and decisive emergency measures the federal government has thus taken – is enough to assuage my once irrational fears, and encourage me to think about a more optimistic future once again.

While I do not know where we will all be economically 12 months from now, I’m starting to have more faith that things will be okay in the coming years. With the possibility of a disastrous economic Armageddon finally out of the way, I’m willing to finally start placing long term economic bets for the future, and allow the normal economic tensions of fear and greed to put the market back to normal equilibrium once again. True economic recovery may be months or even years away, but as savvy investors like Warren Buffett will agree – it’s during the worst of times that enormous amounts of wealth are created by those willing to take on a measure of calculated risk. For the next few weeks and months, I intend to take advantage of every dip in the market to invest more. As I continue to make money blogging and generate income through my small legal practice, I intend to plow all upcoming profits into this market while prices are still attractive. Price dips from here on are all potential buying opportunities in my investment opinion.

Do you agree or disagree that the economic recession is nearing the end? Remember, the stock market is a forward looking entity, and has historically attempted to project what economic reality is to come an average of 6 months in advance. Optimism in terms of increased consumer spending and job growth numbers won’t likely be experienced by ordinary American consumers until the second half of 2010. Personally, I think the very sign that mergers and acquisitions are finally creeping back into the marketplace again is an extremely and exceedingly bullish sign that overwhelmingly overrides any of the current negative lagging indicators like low employment rates or even struggling consumer sentiment statistics.

My Current Net Worth and Financial Status Update Compared To Last Month

Picking Out Final Options To My New Construction Single Family House

As I mentioned in previous networth updates, I’m in the process of finalizing the purchase of my very first home – a 2,300 square feet, 4 bedroom, 4.5 bath, single family new construction house. After weeks of persistent meetings with my real estate agent and the home builder, I’ve finally completed the process of choosing and pricing all of my optional upgrades. After much thought, I decided to ditch the cheaper carpet route and go with all hardwood floors – even in the bedrooms. Despite the fact that hardwood costs substantially more in the way of optional upgrades, I think the cleanliness and maintenance conveniences of hardwood floors greatly outweigh the dirt and dust accumulation headaches of carpet floors.

With all optional upgrades including finished basement costs, upgraded hardwood flooring, a hardwired security system, and stainless steel appliances tossed in, the total price of the home will be around $620,000. I’m sure some of you who live in the Midwest or the South will be shocked at how much a mere 2,300 sq ft (excluding finished basement) home costs, but remember, I live in the state of Maryland – deemed by CNN Money to be the current wealthiest state in the United States, with high state wide income rates and high home prices to match. Pricey real estate in the general Washington DC, Virgina, and Maryland region is just a way of life for us. The ever present availability of federal government jobs here and the presence of highly ranked schools in my state make this area pretty desirable for singles and families alike.

In terms of good news in the real estate networth department, I’m pleased to note that my future home has already gained in home equity value, even though the home foundation has yet to be laid. Most recently, due to surging demand for up scale single family homes in my future neighborhood, the home builder who will be constructing my future house has decided to increase the base selling price for my home model by $9,000. At least in my future neighborhood (a pretty upscale D.C. suburb area of Maryland), the home resellers and new home builders are feeling extremely bullish about future housing demand.

With fingers crossed, I hope this is a portent of greater things to come in terms of future home appreciation. As I noted many times in past blog posts, I’m forever thankful that I was not unwittingly snagged by the housing craze of the last few years. By purchasing a home in 2009 after national home prices have collapsed by more than a third or even a half in certain regions, I’m in a much better position than many to experience the upside of home value appreciation. My prediction is that home prices will steadily rise from here on – certainly not at the crazy and outrageous pace that we all flabbergastically witnessed following the 2000 dot com crash, but I think home prices overall will very slowly but steadily trend upwards from here on as trepidatious home buyers return. The demand for housing never really abated, but the drastic plunge in home prices in recent years did scare away many prospective buyers, and force wannabe home buyers like myself to hold off until now. Remember, when prices are falling, consumers frequently ask themselves, “why buy now when I can buy later for less” as I myself did until very recently. But when buyers finally realize that there is indeed light at the end of the tunnel and that overall home pricing declines have significantly decelerated and are on the verge of  stabilizing, they will invariably return.

Paying Estimated Taxes For Self Employment, and Factoring In My New Home Deposit Into Real Estate Net Worth

This month, as I do every 3 months, I paid out a large chunk of my business profits in the way of quarterly assessed tax payments that likely deflated this month’s improvement in financial networth. Because my monthly revenue from my blogging business, legal practice, and other small business ventures are fairly significant, I pay out a tremendous amount of money every three months in the way of mandatory federal and state income taxes. Obviously, I’m hoping President Obama will be keen on keeping universal federal tax brackets low as he ought to, but with his apparent crusade to crack down on high income earners and push through his health care social agenda, I’m bracing for the worst in terms of future tax rate increases.

In terms of real estate networth, because I also paid out a $25,000 new home construction lot deposit this month that will be payable towards my future mortgage down payment, I intend to treat this $25,000 figure as home equity for now (as reflected in the table above). Eventually when my mortgage loan application goes through and I get a more finalized home valuation number, I’ll include the home value and mortgage numbers into my net worth calculations.

Back In the Stock Market Again As A Bull Market Investor After A Year Long Hiatus

After being away from the market due to excessive fear of the unknown, I’m finally back. This month, I plunged the vast bulk of my cash savings into aggressive stock market positions, primarily investing my money into popular exchange traded funds (ETF) with great future upside like the Financial Select Sector SPDR (XLF) and the iShares MSCI Emerging Markets Index (EEM) among others. Both are admittedly rather risky and considered to be more volatile positions, but like I mentioned earlier, I’m now in it for the long haul. Even if the market drops or dips 5-10% lower, I intend to hold on for the ride down and hold my breath for the swing back up again. I never feared normal stock market price fluctuations. It’s always been the catastrophic 30-75% price drops that scared the bejesus out of me -  the type of market plunges we witnessed from September 2008 of last year to March 2009. But with financial markets back on the mend and with irrational panic and economic hyperventilation among the masses finally in check, the risk of future major bank failures or collapses of major financial institutions to trigger another massive and prolonged sell off seem less likely now. Of course, anything can always happen from hereon, but the probability of such a return to the brink of disaster has drastically diminished.

Those on the sidelines may want to now consider opening up an online broker account for cheap stock trades and start investing again, or for the first time. If you haven’t opened a Roth IRA brokerage account, now may be the best time to do so. I know it seems like a cliche thing to say, but prices really are quite low at the present time, particularly for long term investors willing to buy and hold for 12 months or longer.

The month of August 2009 is going to go down as a particularly momentous period in my life. It’s going to be the month that I finally pulled the trigger and made the decision to purchase my very first home. While the actual date of my contractual signing will likely be dragged out until the first or second week of September as things currently stand – it was during the last few weeks of August when most of my major home purchasing decisions were rapidly set in motion.

The last few years have been quite the whirlwind for me. I know on this personal finance blog I may frequently portray a sense of stability and perhaps frequently offer up an air of someone who appears to know exactly where he wants to be in life and knows exactly how to get there – but the reality is quite far from it. I’ve been blessed with an incredible amount of luck, remarkable timing, and good fortune – with much of my financial success starting only a few years ago when I first started blogging online to make some extra cash on the side. My early attempts at trying to make money money blogging started rather surreptitiously without much fanfare and without the knowledge of most of my friends and family. Through the struggles and early process of starting my very first blog, I developed and honed a variety of entrepreneurial skills that I ultimately leveraged into the start of my own fledgling legal practice as a part time attorney. While I had saved a sum of money through my past jobs of working for other people shortly after graduating from law school, it wasn’t until after I had started working for myself and began to pursue my dream of starting my own small firm and online business that I began generating the type of income that I enjoy today. I guess it goes to show that even in a down economy, with some practical skills and a very healthy dose of chance, it is still possible to find a silver lining if one is willing to consider alternative possibilities and take a leap of faith on a dream.

My Current Net Worth and Financial Status Update Compared To Last Month

Closing In On The Purchase Of My Very First Home – A Long Time Coming

I started my home search in early May 2009, but didn’t start devoting serious time towards scouting out locations and visiting open houses until late June 2009. Because I work from my home office and much of my various self automated businesses are able to run themselves without active supervision for reasonably lengthy periods of time, I was able to pull myself away from work and spend a great deal of time in recent months searching for my future dream home in the Washington D.C./ Baltimore area.

As a single guy, who’s dating, with no family as of yet and not anticipating one anytime soon for at least the next 5 years – instead of focusing on school districts, I concentrated on finding an upscale semi-rural community located in very close proximity to stores and restaurants, that not only offered the sleepy feel of a farming town but also offered the transportation conveniences of a major suburban center. Because I work from home, work location was not an important consideration for me. However, proximity to major highways and multiple access points to both D.C. and Baltimore City were important factors to me as both areas are places I frequently visit for social and familial reasons. In terms of price, I made the decision early on that I would not be restricted to a certain price cap – as what I was looking for was fair value, with the potential for future upside. I decided at the start that I would be willing to pay a hefty premium for a high end location in an extremely safe neighborhood and that I would not be willing to pigeon hole my preferences into a less than desirable neighborhood for the sake of price savings alone.

After months of searching, I finally found my dream home in my dream location – a brand new, pre construction, perfectly sized (2500 square feet above grade) single family home with 4 bedrooms, 4 baths, located in an excellent upscale community close to all of the transportation conveniences I desired. While the house is close to powerlines (depending on whether you think 350 yards away is considered close), the home offers everything else I could ever want in a first time starter home situated in a strategically located D.C. / Baltimore area location. While I had considered the prospect of pursuing a lower priced new construction townhouse, ultimately, I felt a single family home offered better recoupment possibilities in terms of future resale upside.

With the assistance of my real estate agent, we are now imminently close to an official signing date. Unfortunately, negotiations don’t seem to be proceeding as well in my favor. While I had hoped to be able to negotiate the listing price down or secure better builder incentives towards option upgrades, the listing agent has thus far refused to budge. However, this refusal on the part of the builder to negotiate the price down can probably be attributed to the fact that the demand for upscale housing in my desired location is currently outstripping the available supply (rather opposite as to what’s happening in most other parts of the country). Despite this, I will probably still go through with the purchase in the next few days, barring any unforeseen hiccups.

Time For Me To Start Investing In The Stock Market Again Via ETF’s and Mutual Funds

For several months now, I’ve been holding the vast bulk of my discount brokerage account funds in cash form. As I liquidated the bulk of my stock market holdings early on (it really wasn’t a whole lot) to avoid the stock market crash of early 2009, I consequently missed out on the frantic rally of March 2009 that has since seemingly continued to soar. However, I don’t plan to miss the next major leg up – whenever that may happen.

With economic indicators now indicating faint glimmers of distant hope with better than expected statistical improvements in employment numbers, corporate profitability, and new housing constructions, I think this may finally be the time to get back in. While the stock market can certainly go down further from here (a W shape recovery as many CNBC pundits are calling it), I personally am no longer gripped in utter fear of the same cataclysmic multi-decade economic depression and financial Armageddon scenario that many had been so fearful of back in the early part of 2009.

In the coming months, I will probably start watching out for investment opportunities as they arise – focusing my efforts on broadly traded exchange traded funds (ETF’s) like the financial ETF (XLF), the S&P500 ETF Index (SPY), and possibly even the China 25 Index (FXI). Yes, I am quite well aware that the funds I’m looking at are regarded as aggressive investments, but with at least 30+ more years until my planned retirement, at this point I am seeking earnings upside rather than safety or stability (particularly now that the worst case scenario has seemingly passed). Serious issues like inflationary pressures due to the ever ballooning governmental deficit, market correction risks, and future interest rate increases by the Fed will probably result in a great deal of stock market volatility down the road, but I see the possibility of spikes and dips as prospective speed humps rather than serious causes for concern. Thoughts?

It’s time for my monthly net worth report. As long time readers know, for months now, I’ve been calculating my networth changes and posting an analysis at the end of every month to chart the step by step progress I’ve been making in my lifelong financial journey. The purpose of such networth updates is not to necessarily boast about monetary successes or lament about the investment mistakes made during the preceding month – but rather, it’s to serve as a routine reminder that the daily decisions, actions, and inactions in one’s life truly have a ripple impact on one’s long term financial health. While I post my own financial net worth reports throughout the year for my own statistical benefit and to share with readers a little about about what I’ve been up to during the previous weeks, this habitual exercise is also to encourage others to do the same as well.

It’s About Time – I’m Finally Looking To Buy A Home For The Very First Time

This month has been a bit more hectic than usual. For one thing, I’m in the early stages of becoming a first time home buyer. Right now, my anticipated home purchase date is still likely months away, but I can already envision the prospect of finally moving out of my longtime apartment rental after all these years and into my very own single family home or town house for the very first time. If you’ve been following my previous networth reports, you probably already know that I’ve been mulling the advantages and drawbacks of buying a single family home or townhouse, versus a condominium. After much thought and back and forth debating, I’ve finally decided to focus exclusively on town homes and single family houses at this point. My goal is to find a nice home where I can reside for many years – at least 5-10 years or more. I think a condominium is well suited for single young professionals or busy working types who live in an urban setting and desire maintenance-free living with a kick-ass commute – but I don’t think it’s as appropriate in terms of investment upside or as a long term dwelling for individuals like myself who work from home and anticipate future family plans. I’m not presently married, but that stage in life is something I can see see and taste in the not too distant future. I think a house and particularly a single family residence, will better suit the future plans I have projected for myself.

In terms of housing location, I’ve yet to come to a definitive decision. As a long time resident of the Washington D.C. suburbs, I would very much like to stay in the same relative metropolitan area. However, due to the fact that I run my network of businesses from home, proximity to work and commuting time are not factors I have to really take into account. Thus, I am amicable to the prospect of moving out to the less crowded and less traffic jammed boonies of Maryland – areas like Ellicott City, Gaithersburg, and Germantown. For now at least, I’m passing on the resales, and focusing exclusively on new housing developments. There’s something sparkling refreshing about owning a brand new home that greatly appeals to me. Particularly in a down housing market as it is now, due to all of the amazing closing incentives and free options that new home builders are shelling out for prospective buyers, it makes a lot of sense to purchase a new home instead of buying an existing one. As I don’t have any immediate plans to move out of my current rental as of yet, I’m willing to be extraordinarily patient in my housing search – intending to move on to the next housing prospect if I can’t sufficiently price gouge the prospective home builder to my utter capitalist satisfaction. Sure, I’m being a rather greedy profiteer about this whole thing, but I’m just doing my part to ultimately and forcibly put the pricing equilibrium back into this housing market. I still think housing prices remain grossly overpriced in most areas.

Hopefully I can work the plunging home value and foreclosure supply pain felt by the major home builders to my advantage as I negotiate prices, option upgrades, and improved floor plan bump outs. As a prospective first time home buyer in the aftermath of the worst real estate market collapse in decades, I’m so thankful to have dodged the housing bubble bullet just a few years. I almost purchased a starter condominium home a few years ago at the height of the boom. I missed out big time on the housing surge, but thankfully also wasn’t locked in for the pricing collapse that ensued. My hope now is to snap up a great deal at the present time as housing prices are in the doldrums – and ride the price elevator up when the market recovers years from now. Those of you who are also prospective home buyers, don’t forget to take advantage of President Obama’s $8,000 tax credit incentive for new first time home buyers (assuming you qualify and aren’t phased out due to your income).

My Current Net Worth and Financial Status Update Compared To Last Month

Planning Ahead and Saving Up For A Home Mortgage Loan Down Payment

In anticipation of my upcoming home purchase (hopefully sometime in the next few months), I’ve been saving up cash for the 20% down payment I’ll inevitably need for a 30 year – 20% down – home mortgage loan within my approximate price range. If my dream of purchasing a brand new home at pre-construction comes to fruition, chances are I will probably only need to put down around 5% as a contractual security deposit for now. The rest of the money and even the mortgage application won’t be needed and processed until the home is actually entirely built 6 months from the date that I authorize the home construction to begin.

Usually, the vast bulk of my savings are duly invested in stocks, exchange traded indexes, and mutual funds. However, to ensure that I set aside the necessary amount of funds for a potential mortgage down payment sometime in the near future and to protect myself from unwittingly investing the funds away, I’ve transferred a sizable amount of funds from my discount broker accounts into various high yield savings accounts at a number of online banks for more liquid access should I need to call upon them at the desired time.

Boosting My FICO Credit Score To Qualify For The Best Home Loans and Mortgage Rates

In my earlier days, I used to take advantage of the availability of free credit report and free credit score trial offers to check my FICO score and credit report history (promptly canceling each individual trial offer after I had obtained the desired information for no money down). But now that I’m more financially established and can actually afford to purchase more advanced credit management applications, I’ve been using the MyFICO Score Watch tool to track my FICO credit score updates and changes on a regular basis. The MyFICO tool automatically monitors my triple credit reports and FICO credit score – emailing me instant alerts whenever my FICO score changes due to sudden updates to information on my credit reports (doubling as a useful identity theft prevention tool as well). The best part is that whenever the online credit score tool informs me of an increase or decrease to my credit score, it also informs me of the reason why my FICO score changed the way it did. For example, about a months ago, my FICO score suddenly and rather inexplicably dropped 15 points. The culprit (as was automatically reported to me by the online tool) was a sudden increase in my overall credit limit usage due to several large credit card purchases I had recently made.

Because I am now on the verge of purchasing a new home and anticipate the need to take out a home mortgage loan in the coming months, I’ve been taking appropriate actions to improve my credit report history and boost my FICO score to the highest it can reasonably be. Because one’s overall credit utilization ratio is such a major component piece of the FICO credit score pie, by making frequent extra payments towards my existing credit card balances and reducing balance transfer loads, I’ve been able to essentially reduce my credit usage ratio to nearly zero. As a result, my FICO credit score has recently enjoyed a very positive and significant spike. Due to aggressive and corrective actions I’ve been taking, my FICO score now stands at 813 – on a scale of 300-850. Generally 750-775 is sufficient to qualify for the lowest prime interest rates. My goal is to keep that number high – at least until I have completed the home mortgage loan process (whenever that may be). As home lenders rely heavily on an applicant’s credit scores and credit reports to gauge risk level and to assess interest rates, it’s in my own self interest to keep my credit rating as pristine as possible for the next few months.