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  • Archive for the ‘Credit Report’ Category

    Get Back to the Basics: 8 Financial Questions You Should Know How to Answer

    Wednesday, April 30th, 2014

    Smart Piggy BankAs Financial Literacy Month comes to a close, we came up with 8 questions we think you should know how to answer. They range from personal questions to straight definitions. Try answering them first, and then take a look at our answers and explanations for more information!

     

    Questions

    1)      What is your monthly budget?

    2)      What is your net worth?

    3)      What is your “full retirement age” to receive Social Security benefits?

    4)      Every year, each U.S. citizen is entitled to one free credit report from each of the credit bureaus. Do you know the names of these three credit agencies and how to access your credit report?

    5)      Do you know how compound interest works?

    6)      What is the difference between immediate and deferred annuities?

    7)      How much do experts recommend keeping in your savings account for “rainy days?”

    8)      When trying to figure out how much to save for retirement, you must consider how long you expect to live (keeping in mind that women live longer than men). What is a good rule of thumb to follow to figure how much savings you will need to cover your lifespan?

    Answers

    Question 1: Monthly Budget

    The first step to saving is to know how much money you spend, where you spend it, and what you can cut. Obviously everyone’s budget is different, but we have some tips to help you figure it out. Start by adding up your total annual income (after taxes) including salary and money regularly received from any other sources. Divide this number by 12. This gives you an idea of how much you have to work with each month. Next, keep track of your expenses for a month and organize them into categories. Make sure to include all of your bills! If you’re having trouble thinking of everything you spend money on, take a look at our budget worksheet to see common categories and expenses. These two steps will help you understand your monthly budget by showing how much money you have and how much you’re spending. If you are spending more than you are earning, you will have to cut expenses or find ways to supplement your income.

    Question 2: Net worth

    Net worth is your total amount of assets, minus your liabilities. In other words, it is how much you own, minus how much you owe to others. Again, your net worth will depend on your own finances. It is important to know where you stand financially when considering all of your assets.  We have a worksheet to help you with this question!

    Question 3:

    “Full retirement age” is the age at which you can receive the full benefits of Social Security. If you were born in 1960 or after, your full retirement age is 67. If you were born earlier than 1960, your full retirement age varies slightly depending on the year you were born. Our chart can help you figure out when you are entitled to full Social Security.

    Question 4: Credit Reports

    The federally- recognized credit bureaus are Equifax, Experian, Transunion. If you plan on making a large purchase soon, you can choose to get all three at once. If you are not, consider receiving a report from only one bureau at a time and spacing them out so you can track your credit over the year. If you are paying off debt, you may want to view your credit report over time to see where you are improving and where you may need some assistance. The Federal Trade Commission has great information about how to order your credit report and imposter websites to look out for.

    Question 5: Compound Interest

    Compounding is a principle in which the interest you earn on your original investment can ALSO earn interest. So, for example, if you had $2000 in your account, with a compounded interest rate of 10%, at the end of the first year you would have $2200, which is your original amount plus interest. With compounding, at the end of your second year you would have $2420.  Your $200 worth of interest also earned interest. If your interest is not compounded, you would only have $2400.

    Compounding is great when it comes to saving because that extra interest adds up quickly! But be careful when loans or credit cards have compound interest. You will end up paying more each year.

    Question 6: Annuities

    Immediate annuities are ones that pay a fixed amount for as long as you live, or for a certain number of years as defined by your agreement. Deferred annuities are investments that delay payments until a future date. There are some great reasons to consider buying an annuity upon retirement, including having a fixed, certain income. But as with any financial product, you need to do your homework to make sure it is right for you.  We have more information and facts on our website.

    Question 7: Savings Accounts

    Experts recommend having about six months’ worth of living expenses saved in a savings account. This amount will help cover unexpected periods of unemployment or other emergencies. Even if you can’t easily save 6 months’ worth of income, any amount in an emergency fund is better than nothing.  Check out our tips on saving to help you reach this goal!

    Question 8: Live Long

    Start by estimating your expected lifespan. On average, people who reach 65 will live into their 80s. However, since 25% could live much longer, experts suggest saving for an additional 10 years. While this rule of thumb is not perfect, you are less likely to run out of money if you plan to live that much longer. For more tips and information on living to 100 and beyond, see our latest newsletter.

    Budgeting in a Spending Season

    Friday, November 28th, 2008

    Thanksgiving is over and the giving season has just begun. Today’s unofficial holiday, Black Friday, kicks off the holiday shopping season with a wide variety of retailers offering huge savings on high ticket items. Unlike the tamer Thanksgiving week traditions, such as the Macys Thanksgiving day parade or the traditional Thanksgiving feast, Black Friday is marked by epic lines at local stores and chaotic masses of shoppers, many of whom are willing to wake up before dawn for doorbuster deals and prime access to the soon to be out-of-stock sale items.

    It’s hard to remember anything when you’re rolling out of bed at 5am, still drowsy from last night’s turkey paired with a lack of shut-eye. But it’s especially hard to remember your budget. Maybe that budget amnesia accounts for these poll results: according to the Washington Post, half of the respondents to a poll early last year said they would carry their holiday credit card debt into spring. And this was before the current economic slump. So how do you stop yourself from overspending this holiday season? Why not give yourself a few gifts before you start shopping for everyone else:

    Gift 1: A Budget
    I know, it’s scary. When there are people to shop for, holidays parties to attend, even holiday parties to throw, you may not want to have your financial reality mapped out in front of you when you could have a piece of pie and a healthy slice of ignorance instead. But soon enough it will be January, the month of New Years resolutions and no more holiday splurge excuses. So why not get a head start and make a budget now? Include holiday gifts and get a better idea of how much you can spend this holiday season. You can use WISER’s budget worksheet to get you started. For help on keeping track of your spending, check out WISER’s “Keep Track of Your Spending” Fact Sheet.

    Gift 2: A Low-Interest Credit Card
    Look for low-rate and no annual fee credit cards. You can get a list of credit cards, interest rates and fees: send $5 to RAM Research’s CardTrak, P.O. Box 1916, Frederick, MD 21702, or for free on the Internet at http://www.ramresearch.com/. See also the http://www.cardtrack.com/ website .

    Gift 3:A Free Credit Report
    Get a better idea of your credit situation, for free! As of September 2005, all US Citizens are eligible for one free credit report from each credit agency per year. To receive your free annual credit report visit www.annualcreditreport.com or call 1-877-322-8228. This can help you improve your credit and set some long term financial goals.

    Gift Trapped? [Washington Post]
    Tips for Reining in Holiday Giving [Washington Post]


    Free Credit Reports: More Than a Catchy Jingle

    Monday, September 8th, 2008

    If you’ve turned on your television recently, you’ve probably encountered commercials featuring the musical stylings of a certain free credit report website’s spokesman. The songs pitch a seemingly great deal—free, personalized credit reports, just a click away! Though these dittys may be alarmingly infectious, their pitch raises some questions. Like what is a credit report? What do the numbers mean? What do they usually cost?

    What is in a Credit Report?
    A credit report includes the following:

    • All of the times you have borrowed money, the date, the credit limit and a history of how you have paid the money back
    • A list of late payments that were 30, 60, 90 or 120 plus days late
    • Any bankruptcies and tax liens,
    • Each time that a creditor or potential lender has made an inquiry about you when the lender was deciding whether to give you credit, and
    • Overdue payments that have been referred to a collection agency.

    Bankruptcy stays on your credit history for 10 years and other negative information remains on your credit history for seven years. Credit inquiries stay on your credit history for two years.

    What is a Credit Score?
    A credit score uses a number between 300 and 850 to inform creditors and lenders of how reliable you are when it comes to paying off your debts based on the information from your credit report.

    How can I get a free credit report?
    As of September 2005, all US Citizens are eligible for one free credit report from each credit agency per year. To receive your free annual credit report visit www.annualcreditreport.com or call 1-877-322-8228.

    You can also get a copy of your report for free anytime if:

    1. You have been denied credit for any reason and a credit report was used in making the decision. You have 60 days to mail proof of rejection to the reporting credit bureau;
    2. You are unemployed, actively seeking employment, or if an employer or potential employer has requested a credit report;
    3. You are receiving public welfare assistance; or
    4. You believe your credit report has been used to perpetrate a fraud.

    A poor credit record can affect your ability to borrow money to pay for a car or an education, rent an apartment, buy a house or even get a job. Check your credit report once a year for errors or problems and write to the credit agencies to fix the errors or to insert a statement of explanation.

    WISER

    About Us

    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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