How to Make Better Financial Decisions

Woman learning how to make better financial decisions

A key financial decision people struggle to make is how to allocate savings for multiple financial goals. Do you save for several goals at the same time or fund them one-by-one in a series of steps? Basically, there are two ways to approach financial goal-setting:

Concurrently: Saving for two or more financial goals at the same time.

Sequentially: Saving for one financial goal at a time in a series of steps.

Each method has its pros and cons. Here’s how to decide which method is best for you.

Sequential goal-setting

Pros

You can focus intensely on one goal at a time and feel a sense of completion when each goal is achieved. It’s also simpler to set up and manage single-goal savings than plans for multiple goals. You only need to set up and manage one account.

Cons

Compound interest is not retroactive. If it takes up to a decade to get around to long-term savings goals (e.g., funding a retirement savings plan), that’s time that interest is not earned.

Concurrent goal-setting

Pros

Compound interest is not delayed on savings for goals that come later in life. The earlier money is set aside, the longer it can grow. Based on the Rule of 72, you can double a sum of money in nine years with an 8 percent average return. The earliest years of savings toward long-term goals are the most powerful ones.

Cons

Funding multiple financial goals is more complex than single-tasking. Income needs to be earmarked separately for each goal and often placed in different accounts. In addition, it will probably take longer to complete any one goal because savings is being placed in multiple locations.

Research findings

Working with Wise Bread to recruit respondents, I conducted a study of financial goal-setting decisions with four colleagues that was recently published in the Journal of Personal Finance. The target audience was young adults with 69 percent of the sample under age 45. Four key financial decisions were explored: financial goals, homeownership, retirement planning, and student loans.

Results indicated that many respondents were sequencing financial priorities, instead of funding them simultaneously, and delaying homeownership and retirement savings. Three-word phrases like “once I have…,", “after I [action],” and “as soon as…,” were noted frequently, indicating a hesitancy to fund certain financial goals until achieving others.

The top three financial goals reported by 1,538 respondents were saving for something, buying something, and reducing debt. About a third (32 percent) of the sample had outstanding student loan balances at the time of data collection and student loan debt had a major impact on respondents’ financial decisions. About three-quarters of the sample said loan debt affected both housing choices and retirement savings.

Actionable steps

Based on the findings from the study mentioned above, here are five ways to make better financial decisions.

1. Consider concurrent financial planning

Rethink the practice of completing financial goals one at a time. Concurrent goal-setting will maximize the awesome power of compound interest and prevent the frequently-reported survey result of having the completion date for one goal determine the start date to save for others.

2. Increase positive financial actions

Do more of anything positive that you’re already doing to better your personal finances. For example, if you’re saving 3 percent of your income in a SEP-IRA (if self-employed) or 401(k) or 403(b) employer retirement savings plan, decide to increase savings to 4 percent or 5 percent.

3. Decrease negative financial habits

Decide to stop (or at least reduce) costly actions that are counterproductive to building financial security. Everyone has their own culprits. Key criteria for consideration are potential cost savings, health impacts, and personal enjoyment.

4. Save something for retirement

Almost 40 percent of the respondents were saving nothing for retirement, which is sobering. The actions that people take (or do not take) today affect their future selves. Any savings is better than no savings and even modest amounts like $100 a month add up over time.

5. Run some financial calculations

Use an online calculator to set financial goals and make plans to achieve them. Planning increases people’s sense of control over their finances and motivation to save. Useful tools are available from FINRA and Practical Money Skills.

What’s the best way to save money for financial goals? It depends. In the end, the most important thing is that you’re taking positive action. Weigh the pros and cons of concurrent and sequential goal-setting strategies and personal preferences, and follow a regular savings strategy that works for you. Every small step matters!

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How Much Your Monthly Food Budget Should Be + Grocery Calculator

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Your grocery bill can add up fast. From dinner entrées to snacks, the amount you spend directly affects your other financial goals. Luckily, there are some guidelines to ensure you’re not overspending. 

Use the grocery calculator below to estimate your monthly and weekly food budget based on guidelines from the USDA’s monthly food plan. Input your family size and details below to calculate how much a nutritious grocery budget should cost you. Of course, every family is different. Some love coupons and leftovers, while others prefer fresh fish and aged cheese. Once you’ve established your budget, use the slider to adjust your estimate to your spending habits. 

Getting your food budget on point takes practice. With this grocery calculator and the right spending habits, you’ll have enough for your living expenses and exciting financial goals like paying off loans or buying a house.

Grocery Budget Calculator

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A moderate grocery budget will run you:

Weekly Grocery Cost Food costs per individual are based on USDA research regarding Dietary Reference Intakes and Dietary Guidelines for Americans, and follow MyPyramid nutrition guidelines.

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Monthly Grocery Cost Food costs per individual are based on USDA research regarding Dietary Reference Intakes and Dietary Guidelines for Americans, and follow MyPyramid nutrition guidelines.

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What kind of spender are you?

Does your estimate look right? If your spending habits don’t add up, explore these other budget options and choose what’s best for your lifestyle.

Thrifty This is the USDA’s estimated food budget for families that receive food assistance like WIC or SNAP.

Cost-Conscious This is an ideal budget for nutritious meals if you’re looking to save a little extra cash with leftovers and coupons.

Moderate This is the standard for affordable, nutritious, and balanced portions for most families.

Generous This budget gives you some spending wiggle room for finer foods or extra portions.

See where the rest of your budget is going Sign up for Mint

Monthly Grocery Budget

Ever wonder how much you should spend on groceries? The average cost of food per month for one person ranges from $150 to $300, depending on age. However, these national averages vary based on where you live and the quality of your food purchases.

Here’s a monthly grocery budget for the average family. This is based on the national average and likely varies by location and shop. For instance, New York City grocers are going to be far more expensive than Kansas City shops. Additionally, organic grocery stores like Whole Foods are pricier than places like Walmart or Aldi.

You’ll also want to consider dietary choices, like gluten-free or vegan diets. These can significantly affect your budget, so consider planning your grocery list online to compare prices and find your preferred alternatives.

FAMILY SIZE SUGGESTED
MONTHLY BUDGET
1 person $251
2 people $553
3 people $722
4 people $892
5 people $1,060
6 people $1,230

Finding a reasonable monthly grocery budget ensures you and your family have what you need, while not overspending. Look back at previous months using a budgeting app or credit card statements to see what you’ve spent at the grocery store. Decide if you want to maintain your current budget or cut back.

Purchasing Groceries vs. Dining Out

Mockup of grocery list and food inventory printables with fresh produce

 

Download grocery list and inventory printables button.

Don’t forget what you spend at restaurants when you consider your food budget. According to the U.S. Department of Agriculture, Americans spend 11 percent of their take-home income on food. It doesn’t all go towards groceries, though. Approximately six percent is spent on groceries, while five percent is spent dining out — including dates, lunches with coworkers, and Sunday brunch.

With this framework in mind, you can calculate your total food budget based on your take-home income. For example, Rita makes $3,500 per month after taxes. She would budget six percent for groceries ($210) and five percent for restaurants ($175). So she’ll need a total of $385 for food each month. With a little practice, she’ll better learn her habits and be able to accurately adjust her budget.

Tips for Reducing Your Budget

Illustration of grocery coupons and meal planner.

There are several ways to cut back on what you spend without sacrificing the quality and taste of your food. Trimming your food budget can help you stow away more for your financial goals, such as building an emergency fund or saving for a dream vacation.

Cut Coupons

Coupons are easy to find in the mail, in store, in your inbox, and even in a Google search. Many popular grocery stores are rolling out apps that track your coupons and savings. Be sure to download and register your email for new updates and sales. These usually work in person or online, so you can shop when and how you like. 

While a single coupon might not give you a large discount, you can save a lot with multiple coupons. It’s also important you make sure you actually need the item you’re purchasing instead of buying it for the sale. This can quickly get out of hand and push you over budget. 

Freeze Your Food

Freezing your fresh food before it goes bad helps your wallet and the environment. You can plan ahead and freeze prepared produce to save time on weekday cooking, or chop and freeze last week’s produce before shopping for more. Frozen vegetables are great in soups and stews, and you can use frozen fruits for healthy breakfast smoothies. 

Plan a Weekly Menu Ahead of Time

Plan your meals ahead of time to determine the food items and quantities you need before you head to the grocery store. This way you’re more likely to buy the exact items you need and can plan for breakfast, lunch, and dinner. Try to plan for recipes that use the same ingredients so there’s less to purchase. You can also make larger meals and plan leftovers for lunch so you have less to plan and purchase.

Download meal planning printable button.

Bring Lunches to Work 

A $13 lunch out might not seem like much, but it can blow your food budget fast if it becomes a habit. Push your monthly food budget further with delicious lunches from home. Salads, sandwiches, and leftovers are all easy, inexpensive, and nutritious. 

Buy Store Brands 

Many packaged products have a huge price disparity between brand name and generic items, and store brand items tend to be cheaper without sacrificing much quality. You can easily save 10 cents to a dollar per item, which adds up quickly over many trips. 

Shop at a More Affordable Store

Your local farmers market, chain grocery, and organic store will all offer different specialties and sales. Check out the different shops in your area to find the best combination of quality and price. Some stores might even offer bulk items — great for your favorite products and those with a long shelf-life. Choosing cheaper staple items like milk and yogurt can also make a huge difference over time. 

An accurate food budget that works for you helps you feel more confident and in control of your finances. Build a budget, learn your spending habits, and keep a grocery list to keep you on track and responsible so you can reach bigger goals, like a new vehicle or a down payment on a house. 

Sources: USA Today | EurekAlert | Persistent Economic Burden of the Gluten-Free Diet

The post How Much Your Monthly Food Budget Should Be + Grocery Calculator appeared first on MintLife Blog.

Source: mint.intuit.com

Late Payments, Credit Scores and Credit Reports

A missed credit card or loan payment can have a seriously detrimental effect on your credit report. The golden rule of using a credit card is to make your payments on time every time, building a respectable payment history, avoiding debt, and keeping your creditor happy.

But what happens when you fall behind with your monthly payments; what happens when you miss a single loan or credit card payment as a result of a mistake, an oversight or a lack of funds? How will your creditor react, how quickly will the credit reporting agencies find out, and what options do you have for getting back on your feet?

How Late Payments Affect Your Credit Score

A late payment can reduce your credit score significantly and remain on your report for 7 years. It won’t impact your score throughout that time and the longer you leave it, the less of an impact it will have. However, the impact could be significant for individuals with good credit and bad credit.

As an example, if you have a credit score of 750 to 800, which is towards the upper end, a late payment could knock up to 710 points from your score. More importantly, it will remain on your payment history for years to come and reduce your chances of getting everything from a student loan to a credit card and mortgage.

How Soon do Late Payments Show on Credit Reports

You won’t be hit with a derogatory mark as soon as you miss a credit card payment. The credit card issuer may charge you a fee, but by law, they are not allowed to market it as a missed payment until it is 30 days due. And this doesn’t just apply to credit card debt, it’s true for loans as well.

Providing you cover the payment within 30-days, you can avoid a missed payment mark appearing on your credit report. But as soon as that period passes, your lender will inform the major credit bureaus and your score will take a hit.

Some lenders wait even longer before reporting, so you may have as long as 60 days to make that payment. Check with your creditor to see when they start reporting missed payments.

What About Partial Payments?

Many lenders treat a partial payment the same as a missed payment, especially where credit cards are concerned. If you’re struggling to meet your payment obligations, contact your creditor in advance, tell them how desperate your situation is and inform them that you can meet part of the payment.

They may offer you some reprieve, they may not, but you won’t know if you don’t ask. However, it’s worth noting that this will only impact your score if you don’t cover the remaining credit card payment before the 30-day period is up.

To avoid confusion, we should also mention that this only applies to the minimum payment. Some credit card users get confused with the difference between a balance and a minimum payment.

Simply put, the balance is what you clear at the end of the month to avoid accumulating debt and paying interest. If you fail to pay that balance on time, your debt will simply roll over to the next month, after which you will be required to meet a minimum payment on your debt. If, however, you miss that minimum payment, then you’re at risk of your credit report taking a hit.

Reporting agencies don’t record the difference between a rolling balance and a debt. If you spend $3,000 on your card every month but pay it off without fail and without delay, you won’t accumulate interest and technically, you won’t have debt. However, at the end of the month, the reporting agencies will show that you owe $3,000 on that card, just as they would show if you had accumulated a balance of $1,000 a month for three months and let it rollover.

How Long Does a Late Payment Stay?

A late payment will remain on your credit report for 7 years. But herein lies another confusion. Just because it reduces your score by 100 points and remains for 7 years doesn’t mean you will suffer a reduction of 100 points for those 7 years. 

It generally stops having a major impact on your score after a couple of years and while it will still have an impact in that 7-year period, it will be infinitesimal by the time you reach the end.

How Many Late Payments Can You Make Before it Reduces Your Score?

One late credit card payment is all it takes to reduce your score, providing that late payment was delayed by at least 30-days. However, that doesn’t mean you can forget about it once the 30-day period has passed and it definitely doesn’t mean that all the possible damage has been done.

It can and will get worse if you continue to avoid that payment. Your credit report will show how late the payment is in 30-day installments. When it reached 180 days, your account will enter default and may be charged-off, which will reduce your score and your chances of acquiring future credit even more.

Your creditor may sell your account to a collection agency. If this happens, the agency will chase you for repayment, seeking to establish a repayment plan or to request a settlement. Accounts are often in this stage when a consumer goes through debt settlement, as creditors and debt collectors are typically more susceptible to accepting reduced settlements because the debt has all but been written off.

How to Remove Late Payments from Your Credit Report

Although rare, it is possible to remove late payments from your credit report. There are also numerous ways you can reverse late payment fees, and we recommend trying these whenever you can as it will save you a few bucks.

Here are a few options to remove late payments and late payment fees:

Use Your Respectable History

The quickest way to get what you want is to ask for it. If you have a clean credit history and have made your payments on time in the past, you can request that the fee/mark be removed. 

Write them a letter requesting forgiveness, explain that it was an oversight or a temporary issue and point to your record as proof that this will likely not happen again. Creditors may seem like heartless corporations, but real humans make their decisions for them and, like all companies, they have to put their customers first.

Request Automatic Payments

Lenders have been known to remove late payment fees if the debtor signs up for automatic payments. It makes their job easier as it prevents issues in the future and ensures they get what they are owed, so it’s something they actively promote.

They may make this offer themselves, but if not, contact them and ask them if there is anything you can do to remove the late payment. They should bring this up; if they don’t, you can. It doesn’t hurt to ask and the worse they can do is say no.

Claim Difficulties

If you claim financial difficulties or hardships and make it clear that a late payment will make those difficulties much worse, the lender may be willing to help. Contrary to what you might think, their goal is not to make life difficult for you and to destroy you financially. 

It’s important to see things from their perspective. If you borrow $15,000 and your balance climbs to $20,000 with interest, their main goal is to get that $15,000 back, after which everything else is profit. If you pay $10,000 and start slipping-up, the risk of default will increase. The worse your financial situation becomes, the higher that risk will be. 

If they eventually sell the account to a debt collector, that remaining $10,000 could earn them just a couple of hundred dollars, which means they will lose a substantial sum of money. They are generally willing to help any way they can if doing so will increase their profits.

How to Avoid Late Payments

A late payment can do some serious damage to your payment history so the best thing to do is to prevent it from occurring in the first place. It’s a no-brainer, but this is a common issue and it’s one that countless consumers have every single year. So, keep your credit card and loan payments stable with these tips.

Set Automatic Payments

Occasionally, consumers forget to pay. Life is hectic, they have a lot of responsibilities to juggle, and it’s easy for them to overlook a single payment. If this happens, it should be caught and fixed before the 30-day period ends and the credit bureaus find out. But even then, fees can accumulate, and problems escalate.

To avoid this, set up automatic payments so your minimum payment is paid in full every month. You can do this for all debt, including student loan payments. Just make sure you have the money in your account to meet this minimum charge, otherwise, you could be paying for debt on one account by accumulating it on another.

Set a Budget

A credit card is designed to encourage you to spend money you don’t have. You’re buying things you can’t afford now in the hope or expectation that you will cover them later, only to realize that you’re struggling so much you can’t even cover the minimum payment.

If you ever find yourself in a situation like this, it’s time to analyze your finances and create a sensible budget. You may feel like you have a good idea of what you’re spending each month and how this compares to your gross income, but the vast majority of consumers seriously underestimate their expenses.

Improve Your Credit by Fixing Your Debt-to-Income Ratio

Calculate your debt to income ratio by comparing your total debt (credit card payments, student loans) to your gross income. The higher this is, the harder you need to work, and the less you need to spend on your credit card. 

Your debt to income ratio should be your central focus when seeking to improve your credit score, because while it’s not considered for loan and credit card applications, it does play a role in mortgage applications and is important for calculating affordability.

Conclusion: It’s Not the End of the World

A late payment can strike a disastrous blow to your credit report, but it’s not the end of the world and you do have a few options at your disposal. Not only do you have up to 30 (and sometimes 60) days to make the payment and prevent a derogatory market, but you can file a claim to have it removed in the event that it does appear.

And if none of that works, a little credit repair can get you back on track. Just keep making those payments every month, talk with your lender when you find yourself in trouble, and remember that nothing is unfixable where credit is concerned.

Late Payments, Credit Scores and Credit Reports is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

How To Build Business Credit Fast The Right Way

Building business credit isn’t the same as your personal credit. Here’s what you need to know to do it so your business can start financing purchases.Building business credit isn’t the same as your personal credit. Here’s what you need to know to do it so your business can start financing purchases.

The post How To Build Business Credit Fast The Right Way appeared first on Money Under 30.

Source: moneyunder30.com

Why It’s Harder to Get Credit When You’re Self-Employed

Around 6.1% of employed Americans worked for themselves in 2019, yet the ranks of the self-employed might increase among certain professions more than others. By 2026, the U.S. Bureau of Labor Statistics projects that self-employment will rise by nearly 8%. 

Some self-employed professionals experience high pay in addition to increased flexibility. Dentists, for example, are commonly self-employed, yet they earned a median annual wage of $159,200 in 2019. Conversely, appraisers and assessors of real estate, another career where self-employment is common, earned a median annual wage of $57,010 in 2019.

Despite high pay and job security in some industries, there’s one area where self-employed workers can struggle — qualifying for credit. When you work for yourself, you might have to jump through additional hoops and provide a longer work history to get approved for a mortgage, take out a car loan, or qualify for another line of credit you need.

Why Being Self-Employed Matters to Creditors

Here’s the good news: Being self-employed doesn’t directly affect your credit score. Some lenders, however, might be leery about extending credit to self-employed applicants, particularly if you’ve been self-employed for a short time. 

When applying for a mortgage or another type of loan, lenders consider the following criteria:

  • Your income
  • Debt-to-income ratio
  • Credit score
  • Assets
  • Employment status

Generally speaking, lenders will confirm your income by looking at pay stubs and tax returns you submit. They can check your credit score with the credit bureaus by placing a hard inquiry on your credit report, and can confirm your debt-to-income ratio by comparing your income to the debt you currently owe. Lenders can also check to see what assets you have, either by receiving copies of your bank statements or other proof of assets. 

The final factor — your employment status — can be more difficult for lenders to gauge if you’re self-employed, and managing multiple clients or jobs. After all, bringing in unpredictable streams of income from multiple sources is considerably different than earning a single paycheck from one employer who pays you a salary or a set hourly rate. If your income fluctuates or your self-employment income is seasonal, this might be considered less stable and slightly risky for lenders.

That said, being honest about your employment and other information when you apply for a loan will work out better for you overall. Most lenders will ask the status of your employment in your loan application; however, your self-employed status could already be listed with the credit bureaus. Either way, being dishonest on a credit application is a surefire way to make sure you’re denied.

Extra Steps to Get Approved for Self-Employed Workers

When you apply for a mortgage and you’re self-employed, you typically have to provide more proof of a reliable income source than the average person. Lenders are looking for proof of income stability, the location and nature of your work, the strength of your business, and the long-term viability of your business. 

To prove your self-employed status won’t hurt your ability to repay your loan, you’ll have to supply the following additional information: 

  • Two years of personal tax returns
  • Two years of business tax returns
  • Documentation of your self-employed status, including a client list if asked
  • Documentation of your business status, including business insurance or a business license

Applying for another line of credit, like a credit card or a car loan, is considerably less intensive than applying for a mortgage — this is true whether you’re self-employed or not. 

Most other types of credit require you to fill out a loan application that includes your personal information, your Social Security number, information on other debt you have like a housing payment, and details on your employment status. If your credit score and income is high enough, you might get approved for other types of credit without jumping through any additional hoops.

10 Ways the Self-Employed Can Get Credit

If you work for yourself and want to make sure you qualify for the credit you need, there are plenty of steps you can take to set yourself up for success. Consider making the following moves right away.

1. Know Where Your Credit Stands

You can’t work on your credit if you don’t even know where you stand. To start the process, you should absolutely check your credit score to see whether it needs work. Fortunately, there are a few ways to check your FICO credit score online and for free

2. Apply With a Cosigner

If your credit score or income are insufficient to qualify for credit on your own, you can also apply for a loan with a cosigner. With a cosigner, you get the benefit of relying on their strong credit score and positive credit history to boost your chances of approval. If you choose this option, however, keep in mind that your cosigner is jointly responsible for repaying the loan, if you default. 

3. Go Straight to Your Local Bank or Credit Union

If you have a long-standing relationship with a credit union or a local bank, it already has a general understanding of how you manage money. With this trust established, it might be willing to extend you a line of credit when other lenders won’t. 

This is especially true if you’ve had a deposit account relationship with the institution for several years at minimum. Either way, it’s always a good idea to check with your existing bank or credit union when applying for a mortgage, a car loan, or another line of credit. 

4. Lower Your Debt-to-Income Ratio

Debt-to-income (DTI) ratio is an important factor lenders consider when you apply for a mortgage or another type of loan. This factor represents the amount of debt you have compared to your income, and it’s represented as a percentage.

If you have a gross income of $6,000 per month and you have fixed expenses of $3,000 per month, for example, then your DTI ratio is 50%.

A DTI ratio that’s too high might make it difficult to qualify for a mortgage or another line of credit when you’re self-employed. For mortgage qualifications, most lenders prefer to loan money to consumers with a DTI ratio of 43% or lower. 

5. Check Your Credit Report for Errors

To keep your credit in the best shape possible, check your credit reports, regularly. You can request your credit reports from all three credit bureaus once every 12 months, for free, at AnnualCreditReport.com

If you find errors on your credit report, take steps to dispute them right away. Correcting errors on your report can give your score the noticeable boost it needs. 

6. Wait Until You’ve Built Self-Employed Income

You typically need two years of tax returns as a self-employed person to qualify for a mortgage, and you might not be able to qualify at all until you reach this threshold. For other types of credit, it can definitely help to wait until you’ve earned self-employment income for at least six months before you apply. 

7. Separate Business and Personal Funds

Keeping personal and business funds separate is helpful when filing your taxes, but it can also help you lessen your liability for certain debt. 

For example, let’s say that you have a large amount of personal debt. If your business is structured as a corporation or LLC and you need a business loan, separating your business funds from your personal funds might make your loan application look more favorable to lenders.

As a separate issue, start building your business credit score, which is separate from your personal credit score, early on. Setting up business bank accounts and signing up for a business credit card can help you manage both buckets of your money, separately. 

8. Grow Your Savings Fund

Having more liquid assets is a good sign from a lender’s perspective, so strive to build up your savings account and your investments. For example, open a high-yield savings account and save three to six months of expenses as an emergency fund. 

You can also open a brokerage account and start investing on a regular basis. Either strategy will help you build up your assets, which shows lenders you have a better chance of repaying your loan despite an irregular income. 

9. Provide a Larger Down Payment

Some lenders have tightened up mortgage qualification requirements, and some are even requiring a 20% down payment for home loans. You’ll also have a better chance to secure an auto loan with the best rates and terms with more money down, especially for new cars that depreciate rapidly.

Aim for 20% down on a home or a car that you’re buying. As a bonus, having a 20% down payment for your home purchase helps you avoid paying private mortgage insurance.

10. Get a Secured Loan or Credit Card

Don’t forget the steps you can take to build credit now, if your credit profile is thin or you’ve made mistakes in the past. One way to do this is applying for a secured credit card or a secured loan, both of which require collateral for you to get started.

The point of a secured credit card or loan is getting the chance to build your credit score and prove your creditworthiness as a self-employed worker, when you can’t get approved for unsecured credit. After making sufficient on-time payments toward the secured card or loan, your credit score will increase, you can upgrade to an unsecured alternative and get your deposit or collateral back.

The Bottom Line

If you’re self-employed and worried that your work status will hurt your chances at qualifying for credit, you shouldn’t be. Instead, focus your time and energy on creating a reliable self-employment income stream and building your credit score.

Once your business is established and you’ve been self-employed for several years, your work status won’t matter as heavily. Keep your income high, your DTI low, and a positive credit record, you’ll have a better chance of getting approved for credit. 

The post Why It’s Harder to Get Credit When You’re Self-Employed appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

How to Make Professional Resolutions for 2021 that You'll Actually Keep

New Year's resolutions. According to Inc. Magazine, 60% of us make them. But many of us know that when it comes to actually keeping New Year's resolutions, the odds aren't exactly in our favor. Research shows that, despite our best intentions, only 8% of us accomplish those annual goals we set for ourselves.

If you're anything like me, 2020 has left you hungrier than ever for fresh starts and clean slates.

What keeps us coming back every year? Well, as PsychCentral tells us, it’s partly tradition (we are creatures of habit!) and partly the allure of a fresh start, a clean slate. And let’s be honest, if you're anything like me, 2020 has left you hungrier than ever for fresh starts and clean slates.

That fresh start can apply to your professional life just as easily as it applies to dropping a few pounds, quitting your Starbucks habit, or taking up hot yoga. So, let's talk about some strategies to help you set career resolutions and, most importantly, actually keep them.

Goals versus resolutions

Every year I hear people say “My New Year’s resolution is to lose 20 pounds.” But technically speaking, that’s not a resolution, it’s a goal. It’s an outcome that you either do or don’t achieve.

A New Year's resolution is “a promise that you make to yourself to start doing something good or stop doing something bad on the first day of the year” according to the Cambridge English Dictionary.

Two things I love most about resolutions are that I have a chance to win every day, and I have complete control over my success.

A goal might be to achieve a revenue target, land an interview with someone you admire, or strike up a coveted partnership.

A resolution defines the experience you want to have. It’s about the how not the what. When I think of resolutions, I think of habits that will bring out the best version of myself—something like a promise to plan my day the night before so I'm ready to jump in fresh first thing in the morning.

The two things I love most about resolutions are that I have a chance to win every day, and I have complete control over my success.

4 strategies to help you set (and keep!) professional resolutions

1. Reflect on what you’d like to change

Resolutions begin with an honest look at the year closing behind you. For me, 2020 has had some highs, but on balance, it wasn’t my cutest. There’s a lot I’d love to change next year. And my resolutions focus on a few key areas that live within my locus of control.

There is no shame or blame here; there is only space for reflection.

So where am I choosing to focus? For me, there are three distinct experiences I had this year that I plan not to repeat in the one upcoming.

Overwhelm. That not-so-adorable feeling that the world is sitting on my shoulders—that my clients’ success and my kids’ education and my aging parents’ welfare are all relying on me. Can’t do it again next year.

Reacting from a place of fear. Holding my breath, taking on more work than I know I should because what if the economy doesn’t bounce back? Will not repeat this one in ’21.

Loneliness. Hi, I’m Rachel, and I’m an extrovert! (Here's where all you fellow extroverts respond with, "Hi, Rachel!") If travel and face-to-face meetings won’t be an option for a beat, then I’ve got to be intentional about finding ways to bring more connection into my life.

These three experiences put a damper on my 2020. Note there is no shame or blame here; there is only space for reflection.

Be thoughtful about what aspects of the year felt heavy for you and commit to changing your experience next year.

Maybe your experience of 2020 was grounded in anxiety, or you’ve felt job-insecurity, or maybe just boredom. There are no wrong answers, so be thoughtful about what aspects of the year felt heavy for you and commit to changing your experience next year.

2. Project what "better" would look and feel like

Ask yourself: If these are the experiences I don’t want to have again, what would it feel like to be on the other side?

Here’s what I came up with.

Shedding overwhelm would mean having a clear plan of attack each day. Rather than scrambling and juggling, I’d have a set of daily priorities ensuring clients, kids, mental health, and all significant constituents have what they need from me. The most critical things get done each day, and if nothing else gets done, I’ve still won.

Not feeling reactive and fearful? That will mean a shift in mindset from “What if the market doesn’t need what I offer?” to “How am I evolving my products and solutions to meet the changing needs of the market?”

And finally (sigh …) the loneliness. I talked about this in a quick video on my Modern Mentor page on LinkedIn. I miss the energy I take, the creativity I see triggered by moments of collaboration and brainstorming. It’s that very sense of ideas building on ideas that I want to recreate in 2021.

Now it’s your turn. What would your “better” look like in 2021?

If you’re job-insecure, maybe "better" means adding skills or certifications to your resume. If it’s anxiety you're wrestling with, maybe your “better” includes more self-care and relaxation.

The only wrong answers here are the ones that don’t resonate with you. You’re less likely to stick with a resolution that isn’t personally meaningful.

3.  Define sustainable practices that will move you there

The words “sustainable” and “practices” are key here.

“Lose 20 pounds” doesn’t qualify as a resolution because it’s an outcome you can’t fully control. What you can control are the habits designed to get you there, like eating better or exercising. And if exercising every day feels unsustainable, then shoot for twice a week to start. Make it an easy win for yourself!

I’ll take the three experiences I want to have and translate those into habits and practices I can control.

So how does this translate into the professional realm? I’ll take the three experiences I want to have and translate those into habits and practices I can control. Here’s my working list.

In 2021 I will:

Choose my One Thing

I'll begin each day by identifying the one thing I need to achieve in service of:

  • My kids (Example: Check my 6th grader’s math homework)
  • An existing client (Example: Develop slides for next week’s leadership workshop)
  • My health (Example: Yep, it's a workout!)
  • My business growth (Example: Pitch an article to a big publication)

Once I get all that done, whatever else I do that day is gravy.

Make weekly client connections

I will schedule one call per week with a past or current client for the sole purpose of listening. I won't be there to sell or help, but just to hear what’s on their minds, and what needs they've anticipated for the near future. This will allow me to be more planful and proactive in designing my offerings.

Set up virtual office hours

I will host bi-weekly office hours. I’ll share a Zoom link with a dozen of my friends and colleagues and invite people to pop in … or not. No agenda, no one in charge, just an open space for sharing ideas, challenges, and even some occasional gossip.

Pay attention to the fact that all of these resolutions are within my control. I’m not waiting for circumstances to change, and I’m not holding myself accountable to an outcome, I'm just committing to doing these things.

4. Track and celebrate

And finally, the fun part. Each resolution gets a page of its own in my Bullet Journal, which means lots of colorful checks and boxes! I keep track of how many days or weeks per month I stick with my resolutions. I set small goals for myself, and I give myself little rewards for hitting milestones. My reward might be an afternoon off, an extra hour of Netflix (do not tell the kids!), or an outdoor, socially distanced coffee with a friend. Celebration is so important. It motivates me to repeat the habit and have a better experience.

So there you have my secrets to setting and keeping my resolutions. I would be so grateful if you’d share yours with me on Twitter, Facebook, or LinkedIn. I’d be delighted to be your accountability buddy!

Source: quickanddirtytips.com