Category: Finance

5-Step Recipe for Financial Success

Financial Success

Everyone has different definitions of financial success. For some, it may mean fancy cars and a three-car garage. For others, it could simply mean lowering their debt, paying their bills on time, and improving their credit score. Across the board, it generally means a sense of security and peace of mind.

But the question is, how do you get there? Whatever your specific financial goals, the best way to achieve them is with a plan. So if your goal is financial success, try this simple “recipe” to reach it:

1.   Create a budget

You can’t improve your finances without knowing where you currently stand. From there, you can start setting realistic goals and create a roadmap on how to reach them.

Start your budget by taking a hard look at the numbers, including your income, your debt, and your other expenses. Figure out where you can start cutting down.

Then, determine your goals; what do you hope to achieve and by when? Map out the specific steps you’ll take to get there.

The end result of any budget should be living within your means—not spending more than you’re earning. But a good longer-term goal would be to save up to 20 percent of your income each month.

2.   Stay on top of your bills

Falling behind on your bills is the fast track to credit disaster. If you’re making late payments on any of your bills—credit cards, utilities, your mortgage and so on—you could be penalized with high late fees. Worse, you could be dramatically harming your credit score. If you have a 680 credit score, even a single late payment could drop your score up to 80 points. If your score is 780, that could be as many as 110 points. That’s not anyone’s definition of financial success.

3.   Lower your debt

If you’re only paying the minimum each month on your credit card debt, you’re throwing away money on high interest rates that could otherwise be put towards your financial goals. If your credit utilization rate consistently exceeds 30%, you’re doing harm to your credit. Paying down your debt is one of the simplest ways to lower your credit utilization. Additionally, paying down your debt looks good to lenders, so if your version of financial success looks like owning a home or a car, you’re more likely to be approved for those loans.

4.   Start saving

According to a 2016 GoBankingRates survey, 69 percent of Americans have less than $1,000 saved in case of an emergency. A 2015 brief from Pew Charitable Trusts found that 60 percent of U.S. households dealt with a “financial shock” (median cost: $2,000) over the course of a year. Half of families struggled to “make ends meet” following these crises.

Take all of that into consideration and you get a good sense of why an emergency fund is so important to financial success. Make your emergency fund a priority and start saving today.

5.   Make plans for “Future You”

Plans for today are important, but so are plans for tomorrow. If you’re not planning for your retirement, you’re not setting yourself up for success. If you have the option, you should contribute to your employer-sponsored 401(k). But even if you work for yourself, or your company doesn’t offer that benefit, consider starting an IRA. Financial success is about the long game. Your future self will thank you.

Whatever financial success means to you, it’s important to have a plan to get there. If you’re not sure where to start, a credit repair company can help. Contact Lexington Law today to find out how we can assist you in reaching your financial goals.

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How to Get Debt Collectors Off Your Back

debt collectors

Guest Article by Neal Frankle CFP® from

If you are behind on your payments and bill collectors are hounding you they may try to make you feel like you’ve broken the law. Chances are high that you aren’t a criminal – but the bill collectors just may be.

That’s because there are laws and regulations which protect consumers from unfair practices many collection agencies engage in.

They know better than to carry out some of the nastier ploys but they cross the line anyway. That’s because they think most debtors will fall for it.

The purpose of this post is to make sure you do understand what is and what is not allowed so you can protect yourself should some unscrupulous debt collector come knocking.

The way collections work:

In most cases, the company you owe money to doesn’t do the actual collections. They assign your debt to a separate third-party collection agency.

At that point, the original creditor steps out of the story and the collections company takes over. The only way this agency gets paid is if you settle (at least some portion of the debt).

If that happens the agency gets a percentage (from 30% to 50%) of what you ultimately cough up.

As a result, some will take extreme measures and many will do whatever they can get away with in an effort to get you to comply with their demands.

Now that you understand what you up against, let’s take a closer look at the 5 things you need to know in order to protect yourself from overzealous collections agents:

  1. Understand The Laws That Protect You

The most powerful Federal regulation that protects you as a consumer is the Fair Debt Collection Practices Act (FDCPA).   This statute spells out what debt collectors are and are not able to do.

For example, they can’t harass you or threaten you with imprisonment or violence.

They can’t claim they are connected to the government and they must correctly identify themselves when they contact you. That means they can’t lie about being attorneys if they are not.

They can only call you during reasonable times (after 8 am and before 9 pm) and they can’t call your employer or other third party.

If you have a law firm that represents you, they have to call them rather than you.

They can’t call you non-stop and they can’t call you at work if your employer has a policy against it.

They can’t embarrass you publicly and they can’t try to collect more than is owed. That means they can’t tack on interest and penalties.

And that’s not all.   Collectors can’t publish a list of debtors and they can’t send you a demand letter on a postcard.

They can’t threaten to take away your property unless done legally.

Over and above these safeguards, the Fair Debt Collection Practices Act gives you the right to demand “debt validation”.

Validation is simply a written request you make to the debt collector to supply you with proof that you owe the amount in question.   Unless and until they do that, they have to leave you alone.

  1. Know How to Protect Yourself

Make sure to invoke your rights and demand “validation” in writing within 30 days of the first time you are given notice to pay the debt by the collector.   If you fail to do so, you can still fight the charges but the collector won’t have to stay away.

Remember, the validation proof they supply spells out exactly what you owe and to whom.

If you feel you don’t really owe that amount or that you’ve already made arrangements with the creditor to pay the debt back, let the credit know and tell them to steer clear of you.

Even if you haven’t come to terms with the creditor, write to the collector and tell them not to contact you any further.

If you do that, they have to either stay clear of you or they have to inform you (in writing) that they are pursuing other remedies – such as a lawsuit against you.

3. Recognize When Credit Collectors Go Over the Line

If you are forced to deal with a bad actor, contact the Federal Trade Commission and file a complaint.   You can also file a lawsuit against the offending party.

You can also contact the Consumer Financial Protection Bureau and register a complaint. This agency overseas the Fair Debt Collection Practices Act.

You should also consider bringing in an attorney or legal representative who is an expert in credit repair and one who has experience dealing with collections creeps.

4. Understand the Remedies Available to You When the Amount the Collector Seeks is Bogus

Remember that the Fair Debt Collection Practices Act demands that the collectors make true statements.

That means they can’t falsely present the amount you owe. And as I said, that includes fees and interest.   They can’t tack on “penalties” to the amount you owe the original creditor.

If a creditor engages in any of these activities, exert your rights and contact the FTC, the Consumer Financial Protection Bureau and possibly an attorney.

5. Realize that Stopping the Credit Collector Isn’t Always Enough

Even if you are able to put a leash on a wayward debt collector, you still have to deal with the underlying problem – the amount owed.

Don’t sweep this under the carpet and don’t waste time.   Work out a plan and get that debt cleared up in a way that is least detrimental to your credit history.

This is very important because even once you come to terms with the creditor and collections agency, you still might have some rough spots on your credit report.

In other words, even after you work things out, you still could have a damaged credit report.

The bottom line here is to not be complacent.   Stand your ground when it comes to debt collectors.

Once you are done with them and the underlying debt, get to work cleaning up your credit history.

If you don’t take that last step, the aggravation that a bad credit score causes could be far worse than the discomfort of a brutish debt collector.

Having said all this, please always remain calm and respectful.   Getting into an argument, however well deserved, isn’t going to help you at all.

In fact, it can make your situation worse. Of course some collectors will try to egg you on but don’t take the bait. Chill and always be professional and courteous.

I also suggest that you keep a log of all communications the collection agency has with you. That goes for calls, emails and letters. Write down the name of the person you spoke with and their direct number (but don’t record the calls unless your recording complies with State law).

By keeping records of all the interactions between you and the company, you might just put a lid on their behavior. It might also help support any claims you have against the company.

This point can’t be underestimated. If a collection agency breaks federal law it could even lead to having your entire debt dismissed.


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7 Ways to Save on Holiday Traveling

Holiday Travel

The holiday season is one of the busiest travel periods of the year. Unfortunately, it is also one of the most expensive. The good news is that holiday travel does not have to break the bank, if you plan in advance. Whether traveling by plane, train, or automobile this holiday season, consider some of these useful tips for keeping your travel plans on budget.

1.   Find the best times to travel (and book)

Not all travel days are created equal. For instance, the Wednesday before Thanksgiving is notoriously one of the worst days to travel. Flying almost any other day that week can cost 20% less. December 22 and 23 are also notoriously expensive travel days. If you have a little bit of flexibility in your schedule, traveling on the actual holidays may score you the best travel prices.

As for booking your trip, airfare tracker Hopper found that the best time to book holiday travel is about 80 days in advance. Ticket prices start to skyrocket about three to four weeks before the holidays.

2.   Look for packages

If you know you will need a hotel and/or a rental car in addition to your flight, consider looking for package deals. Grouping travel accommodations together can result in overall savings, especially after all the cheap seats have been booked.

3.   Shop around

Compare prices among airlines, non-stop versus layover flights, and different departure times. Check out the difference in costs between nearby airports. Do not feel obligated to book round-trip, either. Sometimes you may find that one airline offers a cheaper departure flight while another offers a better return price.

Signing up for travel deal alerts, such as those offered through Airfarewatchdog or Google Flights, can also keep you informed about the best travel options. Instead of spending time on multiple websites, a bot can search for savings on your behalf. Travel deal alerts may be able to help you find the deal of the year on a site you might be unfamiliar with.

4.   Consider ground transportation

Driving is usually cheaper than flying, but it depends on the distance to your destination. Try to map out the trip and calculate the cost of gas and any necessary overnight hotel stays. You could also look into thriftier transit options, like a train or bus, for even more affordable trips.

5.   Skip unnecessary travel expenses

You can save money if you take care to plan your trip wisely. If you can get away with packing light, stick with a carry-on bag or personal item to avoid airline baggage fees. Rather than parking at the airport, use a rideshare service to get to and from the airport. Lyft and Uber are popular alternatives to airport parking. Finally, pack your own snacks or meals instead of paying exorbitant prices for similar items at the airport vendors.

6.   Ship gifts

Rather than hauling presents to your destination and paying to check them on the flight, consider buying gifts online and shipping them directly to your destination before the holidays. Many sites offer free shipping. Regardless of how you give your gifts, the shipping costs could be substantially lower than paying extra baggage fees to bring them on the plane. When returning home, you may consider shipping the presents you received back as well. Compare shipping costs with potential baggage fees to see if this option makes sense for you.

7.   Consider your financial situation

Remember that the holidays are only a small portion of the year. If you simply cannot afford holiday travel this year, do not overextend your finances or take on additional debt to make it work. The holidays will be here again next year.

There is no miracle fix for financial hardship. If traveling is beyond your means this year, now is the time to start addressing fundamental financial issues. Consider partnering with a professional credit repair service. Credit repair analysts are able to investigate your credit report, challenge inaccurate information, and potentially improve your FICO score —ultimately boosting your overall financial well-being.

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How Does Refinancing a Home Affect My Credit?

refinancing home and credit

Many people refinance their home mortgage to get a lower interest rate and reduce their monthly payments. You can also refinance your home or switch from an adjustable-rate mortgage to a fixed-rate loan. No matter what your goals are for refinancing, it’s important to think about how your credit could be impacted along the way.

When you applied for your original mortgage, your credit score likely dropped. That’s because any hard inquiry —a credit check — will knock a few points off of your score. If you’re accustomed to building credit, you know the loss of a few points goes hand in hand with getting a loan, and you’re probably not concerned by it. However, it’s not just a hard inquiry that affects your credit score—what happens after you refinance can have an impact, too.

Optimize the rate quote phase

Losing a few points from a hard inquiry is usually not a big deal. The inquiry will drop off your credit report over time and you can earn those points back.

But if you’re like most homeowners, you probably want to get the best rate possible for your new, refinanced mortgage. This usually means rate shopping with multiple lenders. This brings up an important question: will your credit score be impacted every time you get a rate quote from a lender?

The short answer is probably not. Many credit bureaus recognize when homeowners are comparing mortgage rates by the type of inquiry that shows up on a credit report. The bureaus are typically mindful of the fact that rate comparisons are necessary for a major loan like a mortgage. In fact, they ordinarily make the same allowances for car loans too.

So, as long as you do your rate shopping within a certain time period, all the inquiries are collectively recorded as one. The time period differs by scoring model, but it usually ranges from 14 to 45 days. If you’re worried about it, some experts recommend doing your rate shopping within the shorter, 14-day window.

Wait several months between loans

If you’re thinking about refinancing your home, but you just applied for a car loan a few months ago, think again.

Applying for too much new credit raises a red flag with the credit bureaus. To them, it looks like you could be reckless with your finances if you’ve borrowed significant amounts during a short time span. Granted, applying for new credit only accounts for 10 percent of your overall credit score, but small actions add up and you could inadvertently hurt your credit score as a result.

Instead, you’re better off waiting at least six months after your last loan application before you refinance your home. This gives that prior application time to settle into the background of your credit report. It also gives you time to earn back the points you lost from the inquiry.

Consider the age of your old mortgage

One thing that’s easy to forget about during a home refinance is the age of your old mortgage.

When you apply for and receive a new mortgage, your old one will close out. But if you had your old mortgage for several years, there were likely a couple of positive results for your credit:

  • Your old mortgage bumped up the average age of all your credit accounts.
  • You built up a lengthy payment history with it.

Closing the old loan means you’re starting over with a brand-new loan that has no payment history associated with it yet. Since both credit age and payment history are factored into your credit score, your score can drop when that old mortgage goes away. The average age of your credit decreases and that old payment history will no longer be working in your favor.

Of course, some of these negatives to your credit may be unavoidable. That’s why it’s important to carefully weigh how a refinance could affect you, especially if you’re hovering between a good and an average credit score.

Think about the big picture

There are lots of reasons to refinance your home. But it’s not a decision to make casually if you have any worries about your current credit or financial situation. Before you decide, factor in all the financial commitments and conditions of a refinance:

  • Make sure you understand what you’re getting into. Refinancing early in your mortgage might make more sense considering that you’re mainly paying interest at that point. Refinancing later is like starting over with another 30-year loan.
  • Use a mortgage calculator to compare your current mortgage’s interest rate and monthly payments with that of your new loan. Will the cost savings be significant enough that it makes sense to move forward?
  • Don’t forget to add in all your fees. Mortgage refinances come with closing costs including application, origination, and appraisal fees. That amounts to a large amount of cash you’ll need to have on hand.

On a positive note, time is your ally when it comes to credit. Over time, the negative effects of a loan process will lessen, and you can significantly raise your credit score if you make all your payments as expected. In fact, since payment history accounts for the largest percentage of your credit score, the most important thing you can do for your credit is to keep up with your mortgage payments.

Finally, check your credit report

Like going to the dentist, many people either avoid their credit report or forget to check it regularly. Your credit report gives you valuable insight into your overall credit health. It reveals errors and inaccuracies that you may not have known about, but which could be impacting your credit score. Knowing what’s in your report helps you when it’s time to refinance your home or apply for any other loan.

A credit repair company with legal expertise like Lexington Law can help you review your credit report and address any issues. Carry on the conversation on our social media platforms.

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5 Ways to Avoid Holiday Debt

holiday debt

Guest article by AAA Credit Guide

The holiday season is upon us and that means…spending tons of cash, right? After all, your Facebook feed is probably blowing up right now with friends and colleagues trying to figure out when to celebrate together, where to go out, and what to get everyone for Christmas.

But if your finances are tight or you simply don’t want to take on the extra monetary burden of extreme holiday spending, you do have some options that don’t involve taking on extra debt.

Here are our top tips for avoiding holiday debt this year.

#1: Get Creative with Your Gift Giving

It might be tempting to pull out all the stops around the holidays and treat everyone around you. But spending too much on gifts is one of the easiest and fastest ways to spiral out of control with your budget.

Instead of hitting up your local department store or filling up your Amazon cart, consider a new way of gift giving this year. If you have a large family or group of friends, consider doing a Secret Santa instead of gifts for every individual. If you’re a competitive bunch, try a white elephant swap. Everyone brings a gift and as each person unwraps a random one, they can keep it or trade with someone else. This one can add a lot of fun and commotion to any holiday party.

For some friends and family, think about giving them the gift of a personal service so that you’re essentially giving them your time instead of your money. Anyone with kids would love the gift of free babysitting and the same holds true for someone with pets who likes to travel — offer to keep their furry friend the next time they need a weekend getaway. Be creative, but more importantly, be thoughtful.

#2: Don’t Get Caught in the Black Friday Trap

If you do decide to do some holiday shopping, don’t get wrapped up in Black Friday deals, especially if it’s not something you were already planning on buying. The best thing to do is to look at ads ahead of time and be strategic with your purchases.

Refrain from making an event out of Black Friday morning, because that tends to legitimize spending for the sake of spending. If you can find some truly good deals that fulfill your needs, then go for it. Just be sure to limit yourself specifically to those purchases.

The same holds true for Small Business Saturday, Cyber Monday, and every other holiday savings ad you’re bound to be inundated with. Never get a deal for the sake of a deal — make sure it’s a legitimate purchase.

#3: Host a Potluck Dinner

Dinner invitations run amok around Christmas time and while it is a great time to celebrate and catch up with loved ones, you don’t have to charge up countless fancy dinners. Even hosting a holiday party at home can add up when you consider all the food and drinks you’d need to buy.

An easy way to solve this problem is to host a potluck dinner. It’s a fun way to really bring people together and celebrate your community. It can also result in diverse, tasty food that’s fun to experience with each other.

Make it even more altruistic by asking everyone to bring a donation for your favorite local charity, whether it’s non-perishable food items for your town’s food bank or a gift for a needy child. You’re certain to make some memorable moments while also helping other people in your broader community get through the holidays.

#4: DIY Your Cards and Decorations

It seems like just about every retail store sells some type of Christmas decorations, and they often start setting up displays well before Halloween even arrives. That gives us all way too much time to be tempted to purchase more decorations than we really need.

Don’t give into the temptation! First, check out to see what decorations you have leftover from last year. That could easily be enough to make your home feel extra festive for the season. Plus, the fewer decorations you put up, the less you’ll have to take down when the New Year hits.

If you still need some extra pizazz, spend and afternoon DIY-ing your own decorations. This is especially fun for kids, but can be entertaining for all ages. Classic ideas include popcorn garlands and paper chains, but you can get more sophisticated ideas from Pinterest and the blogosphere.

While you’re there, check out ideas for homemade gift ideas. These are great for teachers and other people you want to thank without spending a ton of cash.

#5: Start Your Financial Preparation Early

No matter what kind of holiday plans you have, the best way to prepare a debt-free season is by thinking ahead. If you know you’ll need to travel to visit friends or relatives, book your tickets and lodgings as soon as possible. No one ever heard of getting an amazing last-minute travel deal the week before Christmas.

Also consider creating a mini savings account throughout the year that is designed to fund your holiday expenses. By transferring just a bit of cash each month, you can actually save up quite a bit. Then you won’t have to worry about being tempted to charge anything because you’ll have a nicely cushioned savings account waiting right there for you.

After all, peace of mind is one of the best gifts you can give yourself.

If you’re still stuck with heavy debt and bad credit by the end of the year, consider getting Lexington Law to help repair your credit. It’s never too soon to start a New Year’s resolution!

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