Often during the initial years of a firm, its bills are generally paid by credit sometimes to the extent of a card’s limits. When the company needs a loan to grow, traditional lenders will look at the business’ assets vs debt load and the major shareholders’ credit scores to consider its creditworthiness. At this point, too much debt, and scant profit to offset it, coupled with a FICO that is lower than 700 are major red flags. For many small businesses, the very strategy they used to get them ahead, seems to be coming back to haunt them in the form of financing rejections. Fiscal responsibility begins with a higher FICO. The following is a sound strategy for getting your numbers up and your business moving towards fulfilling its business objectives:

Increase Your Credit Limit

The Debt-to-Limit ratio is one metric that lenders consider during the loan approval process. It is also used to determine your credit score. This is news to many business owners who use their personal credit cards for business expenses. Asking your credit card company for a limit extension may not bear fruit at first. However, watch your inbox for follow-up emails that offer the very relief you were seeking. Funny how things sometimes ‘work’ that way.

Timing Is Everything

To raise your credit score, it is a given that your business’ and personal credit card bills must be paid on time. Just not at the time you think…sign up to monitor your credit report through the top credit reporting agencies such as Experian. Next, learn when your bank reports your balance to that credit agency. In other words, your card’s monthly bill may be due on the 20th of the month, and you try to pay it in full. But your bank reports to the credit agency on the 15th. So to show a negative balance you’d have to pay your card in full several days before the 15th of the month. It’s that pesky Debt-to-Limit ratio rearing its head again. Credit bureaus reward cardholders with less than 10% credit debt. This is the fast way to a higher FICO and can add up to 30 points in a single month following this very simple procedure.

Is That Right?

Once you are familiar with monitoring your credit report, it is less scary and very informative. You may also uncover mistakes including out-dated information and remediated debt that still presented as an open loan. Take charge of your credit and be sure to fix any errors to further boost your score. All you have to do is contact the agency with documentation that the loan was satisfied, or that you are not THAT John Smith.

Does Your Business Need It?

It is something of a mantra to this writer, but usually, it is not what you earn, it is what you keep. Do not waste business profits through needless spending. Be scrupulous about the purchases you make from paper clips to office furniture. Always ask yourself, does the firm need this? Is there somewhere it can be found more cheaply such as the secondary market? As for big-ticket items such as office furnishings, if one’s firm works with the public, there are scores of options. Rather than digging deep for an impressive designer workspace, hire remote workers, and ‘rent’ office and/or conference space in a furnished facility to give that great first impression. Another trick is to have one room in your facility that is impressively decorated and teleconference with prospects. Separate your business wants from what your firm really needs to operate and you’ll pare down company expenses from the get-go.

Keep Satisfied Loans ON Your Credit Report

Once they’ve paid off their loan, most businesses rush to rout any old loans from their report. In fact, keeping fully-executed loans in place will increase your overall score as it demonstrates responsible credit handling.

Good to Know:

BTW: in most cases, checking your credit report will not affect your credit score. Consumers’ reviewing their own FICO are called a “soft pull” with little or no impact. When a bank or lender performs a credit inquiry, however, that’s a “hard-pull” which drops points off your score. When you apply for a loan is not the time that any potential borrower wants to see their FICO drop. So the workaround is to find out what your lender will need from your credit reporting agency and pull the paperwork yourself. Present this documentation at the time you apply for a business loan and you’re home free.

Follow these simple steps and not only will your credit score increase but with it, your chances and ability to access additional capital to attain your business goals.

The post Top 5 Tips to a Higher FICO appeared first on Koshka.

We are all utterly dependent on the internet. If you do not think so, try to remember the last time you were impacted by a natural disaster. Hereabouts, that was Hurricane Sandy back in Fall 2012. This writer’s domicile was without power for two weeks. Imagine two weeks without internet access for banking and paying bills, finding information fast, communication, remote working, gaming, NetFlix, and so much more! Our lives are on the internet (and Cloud). Other than a power outage what is the internet’s Kryptonite? Hackers. So this long-winded preamble sets the stage for Apple Card, touted as the most secure credit card in history. And, since its launch, the biggest target for hackers on the internet ever. Here are its pros and cons:

Before we delve into the specifics of Apple’s revolutionary (well sorta) transaction process it is important to note that the card itself is a work of art. Conventional size, but not conventional in appearance, Apple card bears the incised brand logo, the cardholder’s name, and the smart chip. It is spare, simple, and secure, much as Apple’s process.

The primary reason for Apple’s bravado regarding the security of its credit card is this: Apple owns the entire transaction process so in their minds, there are no weak links to invite fraud. With Apple Card, commonplace credit card encryption is passe. Biometrics, now common with their other products, confirm that the Apple cardholder is indeed making a purchase. Your fingerprint, face, or wrist + passcode are required in order to perform a transaction. This of course means that Apple Card owners must also have one or several other Apple products. At this point in our story, Apple’s modus should be transparent.
Vendor Does Not Read Apple Card

But back to performing that transaction. For additional security, when your Apple Card is held over a retailer’s card reader, a one-use token is passed to it instead of the device reading your card’s entire 16-digit number. In other words, your credit card number is never captured by the vendor who could be far more vulnerable to hackers than your individual account.

In the event a conventional credit card is lost or stolen, one has to call the bank or issuer, recite the card’s 16-digit proprietary number as well as the CVV number on the back of the card. And wait. Then listen to a recital of all recent transactions and exclude valid purchases from those one did not make. Or, one is completely unaware that their account has been accessed and learns from an automated voicemail that questions recent transactions from across the globe.
Another inconvenience for conventional cardholders is when they are unaware that their account has been breached until they attempt to make a purchase and find their card has been blocked. If shopping online, no problem, when shopping in a retail store, embarrassing!

With Apple Card (and frankly with many other card issuers) every transaction triggers an email so that you’ll notice if you receive word that you just bought dinner in Tokyo yet you reside in Duluth. The disparity in location will prompt an ‘Unusual Activity Detected’ alert notification along with useful information including the amount of the purchase, the date, exact location in text and on a map. Cardholders are prompted to tap either ‘Transaction is OK’ or another option to report a potential problem or dismiss the action. What happens next is where Apple distinguishes itself: if there is an issue, from that point Apple takes complete charge on to resolve or remediate. To recap, two taps is all it takes for an account holder to verify a purchase or to instigate an investigation by Apple.

Additional pluses include ease of access by the account holder. Instead of going to your card issuer’s website, then using logins to access your account to view your dashboard, Apple’s status summary is easily accessible from your iPhone using biometrics. Superb design is an Apple hallmark. Accordingly, the graphics and layout are meant to be read from any device. This means each summary page is succinctly laid out by color-coded category. Even for mobile device users, the state of your account can be understood at a glance.

What still needs to be ironed out? Okay, ordering food delivery for one. If the vendor does not accept Apple Pay you are essentially SOL. That’s because there are no numbers printed on Apple card, they are encrypted. And while we are on the subject, the incentive for brand loyalists is 3% cash back on purchases of Apple products, and 2% for items bought using Apple Pay. That is not very competitive and will not likely lure consumers away from banks they have been doing business with for years. So promotions are tepid and with their credit card, Apple is marketing to its minions (I know without asking that there is a slot in Kel’s wallet reserved for Apple card), not the greater percentage of individuals in this market share. A lost opportunity?

While the goal for Apple Card is to reduce the expenses and interest for its cardholders, offering a credit card may just be another way to have its Apple Pay product more widely accepted. And since Apple is renowned for making improvements to just about every existing technology, there’s the surety that Apple holds patents on their innovations and that the financial transaction herd will soon follow.

It is easy to predict that Apple card is the future of credit cards, at least to the point where electronic transactions will be made more secure which will also facilitate the sales funnel. The win-win here is for consumers who just offer their iPhone to be scanned at the drive-through as well as for Apple’s profit margins. Increased security and ease of use for cardholders and untold ROI for Apple. Not hard to see who is the bigger winner now is it?

The post Is Apple Card for Real? appeared first on Koshka.

Spending less is not a new concept. The fervently religious Victorians extended their concept of ‘Godliness’ by exercising thrift and value. Religion aside, these are great themes to live by. Today we can apply these concepts to our personal expenses. First, a solid piece of advice from someone who has ‘been there’: target what is a need versus what is a want. Then try to locate a viable substitute. Now here’s that list. You may marvel at how you’ve been overspending all these years:

1. Drive Up and Deli Food and Beverages

Sure it is hard to get up in time to make a sandwich and pack a lunch. So do it the night before and before you go spending $$$ at the deli counter, see what you can rustle up from your own fridge. Leftovers make a great scramble, or just roll into a burrito or tortilla wrapper and reheat in the office microwave.

And here is another nugget: I call it the ‘Goeszinta Factor’: that breakfast burrito and small coffee will cost you $4-5 a day. Stop spending that money at least 3 x a week and you’ll save about $800 a year. Don’t believe me, do the math!

Now let’s extrapolate this equation further (yes, I come from a financial background). Invest this $800 for 20-25 years at an average interest rate of 7% and, given unforeseen market fluctuations, you’ll reap about $35K in savings plus interest. And half the time that fast food burrito is stone cold, so chew on this concept instead. Not a bad trade off, no?!

2. Make Your Own Java, Dammit!

Invest in a good coffee maker and thermos and start brewing and bringing your own java. Not enough time in the morning? Buy a brewer that stores ground coffee and water and brews it automatically to the time you set. Not only will it taste better, but few aromas are nicer to wake up to than fresh coffee perking!

3. Buy Second Hand

Also not every occasion merits a new dress. If you must see and be seen, try any of the online thrift shops for current, well-curated outfits at a fraction of the original cost. And if you balk at pre-owned clothing- remember that in a retail store, others will have tried on, and rejected the same garment on the rack. So get over yourself! Recommended online secondary market retailers include: ThredUp, Ebay, Poshmark, The Real Real, Rue La La, and so many more! BTW: most have policies that cover issues such as the seller not sending the goods so there is no buyer risk involved.

4. Paper Goods

While we advocate buying the best toilet tissue on sale, forgo buying paper towels and napkins. Use cloth napkins instead, and recycle old natural fiber clothing as rags. No one is going to see them anyway. The environment and your wallet will thank you.

5. Female Versions of Products

Shaving cream and razors for women are a rip-off. Period. Learn to like blue, black, silver, and green disposable razors and unscented shaving cream. You’ll save about 40%. Seriously. Deodorant and soaps, too.

6. Convenience Foods at the Grocery

Everything you use from bags of shredded salad (which are almost always turning brown or soon do in your fridge), to cut up fruit, to juice boxes, to single servings of yogurt are costing you big time. Okay, it may be hard to part with all of them, but again, invest in decent quality, washable food storage containers and portion out these foods at home into individual servings for great savings. Manage your time and you’ll soon be thanking yourself when you pay your monthly bills!

7. Sell One Family Car

Whoa! We all love our freedom machines. And those of us who responsibly traded sports cars for SUV or vans to transport our families have been longing to buy their next ride and drive something we’d be proud to call our own. But stop and think about it. Have you or your spouse become remote workers, that is, not commuting to an office anymore? Then why are you paying for two cars? Two car loans? Maintenance for two vehicles? Two insurance policies? Filling two gas tanks? Etc. This is a tough decision as we are very possessive about our vehicles. Spouses and partners need to have a serious discussion because this is one change that can reap long-term savings as well as an immediate influx of cash.

8. Downsize Your Home

You might consider this a drastic move. (Figuratively and literally.) After all, both spouses are working. Shouldn’t you cut back on say, another big expense such as vacation trips instead? Look at it this way. Your kids are young only once and many family memories are made on vacation. So this is may not be a good line item to trim family fun your household budget. But do your need that 5-bedroom, 3.5 bathroom house when your children will be off to college in a few short years? Bunk beds, and a smaller, 2-bath house will pay dividends in cheaper upkeep and lower taxes. It is worth considering.

9. Know When Not to Cheap Out

There are just some things that you should not cheap out on. Seeing a doctor when you are sick rather than self-medicate with OTC items from the local chain drug store is one. Buying quality vitamins and supplements rather than whatever is on sale and near its expiration date is another. Putting off the roofing or chimney repair are two others. You can see where we are going with this. It is the old ‘ounce of prevention’ axiom and it is still valid. Besides, for the last two items, there is always Groupon!

Well there you have it. For those who were expecting a list that included, “cancel cable, cancel subscriptions, stop dining out…” we assume you’ve already gone down that road. The purpose of this article has been to point out other overlooked areas, some easy to make a new habit and others that might require some emotional surgery. Whatever you decide, remember to consider the long term.

Before you leap and put your house on the market, or sell one of your rides, however, consult a financial planner, a realtor, and anyone who can advise you about taking your next steps to financial freedom. These professionals can assist you to understand how to make your current economic situation more bearable, and your long-term financial outlook brighter. It might be that your earning power over the next five-10 years will increase. Or that, in lieu of drastic changes to your family life, that simply starting a part-time, at-home business will alleviate most of your money worries. We do not expect that you’ll employ all these suggestions, and only advise that the time to start thinking about your financial future is now.

The post Ways to Downsize Household Spending and Save Money appeared first on Koshka.

By definition, a credit card is a wafer thin slice of plastic designed to fit in your wallet. It serves to identify the owner’s creditworthiness and authorizes that person to charge items and services to an account. The holder is billed monthly and the debt may accrue interest if not paid in full by a stated date. While today just about anything can be purchased ‘on the card’, this was not the case when credit cards originated about a century ago in the roaring ‘20s. Back then credit cards were created primarily for the ease and security of business travelers who did not want to carry large amounts of cash or their checkbook to cover meals and lodging expenses. So their issuers were oil companies (gas stations), restaurants, and hotels/motels.

Purchasers were billed directly by the individual companies. As you can imagine, reconciling a business trip was an exercise in frustration. While being mugged or robbed was no longer a concern for business travelers, in exchange they had to wait for as many as 20 bills or more to arrive in their mailbox before they could tally and submit their expense accounts to their employer. It was a waiting game and chore that got old fast. By the 1970s, credit card processing received a welcome update. Banks got into the act. It was now the banks who issued the credit cards to their depositors and received all the merchant invoices. These were compiled into one monthly bill sent to the user. One bill, one invoice, one check or (by the 1990s) one funds transfer (per credit card) into the issuer’s account.

Every year about ten million new consumers enter the credit market place by applying for their a credit card. Also, according to Gallup, the average American over age 21 has 3-5 credit cards although about a third of us do not have any. While many carry this fact as a badge of honor and a sign of being credit savvy, the number of credit cards an individual has does not compromise their credit score. In fact, Experian and other credit rating services view more available credit as a sign of creditworthiness. However, outstanding debt that exceeds a third of your available credit will lower your score.

Use Credit Wisely

As with many innovations, there are few fail safes and personal discipline and fiscal responsibility are not inherent in most consumers. In other words, there is a temptation for those with large amounts of available credit to buy more than we can afford (the internet makes it all too easy to shop online) and swiftly run up debt. That’s great for banks which survive by extending credit to those deemed worthy (i.e. able to repay over a given period of time). Not so much for those of us who live too far beyond our means.

As we wait on the grocery line we’ve all caught a glimpse of another shopper’s open wallet full of slots containing ten credit cards or more. And we’ve thought: either they are rich and very credit worthy (in which case why are they buying their own groceries), or each card offers a different premium such as a low APR, no annual fee, cash back, travel miles, or the user has run up considerable debt and just pays the minimum amount required each month.

In the ideal world of the 1950s, it was projected that as we progress in life our annual salaries would increase by a percentage comparable to the prime rate, or at least higher than the rate of inflation. In recent decades however, that has not been the case due to economic downturns and other unforeseen issues and expenses. These include buying a house, starting a family, supporting elderly parents, a catastrophic health event, accident, etc.

At those times many of us turn to our credit cards to offset expenses. Which is acceptable provided that the interest rate is sufficiently low or it is a card that does not charge interest for a stated term. Too much debt has produced trust issues among spouses and partners (or should we say, ‘mistrust issues’?). This can lead to monitoring the other’s spending habits which, if discovered, can damage relationships. All the more reason to curb out-of-control spending habits and credit card misuse.
Benefits to a High FICO

According to the Federal Reserve Bank of New York, one very positive statistic concerning credit card use is the fact that fiscally solvent consumers (those with a high FICO) represent almost 80% of our Nation’s credit card users. This means that for most of us, having a credit card is a modern life necessity, whose ownership is not taken lightly. For the rest, it is important to live whenever possible within one’s means and learn to separate needs from wants to avoid mismanaging credit and accruing a debt load that makes the important aspects of life, travel, family, vacations, a home, a car, difficult to obtain or manage.

It is especially easy for couples to overspend if they do not consult with each other before making a major purchase. For those in over their head with out of control spending habits, there are credit management organizations, and even 12-step programs to assist in reining in their spending and reestablishing control. Primarily these organization assist to lower interest payments, offer advice on how to create a household budget and tips to stick with it.

What does the future hold for credit cards? Over half of us believe that we will become a ‘cashless society’ within our lifetime dependent entirely on electronic payment systems including credit cards. Europe is already moving towards this end and here in the States just look around you. Many municipalities do not accept cash evidenced by toll plazas with overhead scanners that have recently replaced toll booths and toll collectors. In many suburban towns, coin-op parking meters have been replaced by those that only accept credit or debit card payments. Transit systems including the subway are moving to swiping plastic or scanning a cell-phone app.

In Washington, lawmakers have debated following in Canada’s footsteps and eliminating the penny. Transactions would just round up to a nickel thereafter. Payment innovations such as Apple Pay and BitCoin make payment as easy as waving your cell phone at a scanner and daily more and more consumers join this movement for the convenience it provides. Economists at Harvard and Citicorp concur that the move to a paperless society will be optimal for businesses and consumers alike. So it is a brave new economic world we are facing- one where toll collector jobs have become obsolete while the need for encryption and cybersecurity professionals grows exponentially. Judiciously monitored, the convenience that credit cards provide consumers enables an improved quality of life. And the options to improve our fiscal lives just seem to get better and better with time!

The post History of the Credit Card appeared first on Koshka.

By the time most Millennials graduate from college, they have heard the talk: “Save as much as you can, and if you can put 15% of your salary into a 401K you can easily build a $1 million retirement portfolio”. The caveat here being a proposed retirement age of 65 AND the reminder that by that time, a million dollars ain’t gonna buy as much as it does in 2018. Here’s what anyone at any age can do right now: live below your means. Many scrutinize their monthly bills to find ‘fat’ then excise it. Cancel cable, or reduce your plan to the lowest service they offer. Bundle services whenever for additional discounts. If you belong to a trade organization or hold any kind of membership, learn if there are extra perks or discounts available to their members at local businesses, national chain retailers, etc. Yes, the edict here is, “It isn’t what you make, it is what you keep.””

Other ways to live with less can be accomplished by diverting money from your paycheck just for savings into a direct deposit account. Still other ways to save include dining out less, and putting at least half of any pay increases, monetary gifts, and revenues towards savings. If you are starting to feel resentful and argue that you are missing out on experiences, etc. channel that energy into locating discount coupons, preseason ticket prices, and redefining what it means to ‘live large’.

What Does ‘Being Rich’ Mean to You?

That’s right: affluence means different things to different people. Having expensive items, a huge home, a luxury car, may be doable, just by utilizing a few selective buying techniques. A combination of exercising thrift by only buying what is needed, exploring second-hand options for larger financial expenses such as furniture, cars, and even housing will save money leaving more to save or to invest. Retaining as much of one’s paycheck as possible will also enable savers to see how easily they can ‘get by with less’. For those who must have luxury items, why not shop for these ‘holy grail’ items in outlet malls or on ebay and online thrift shops where they can be had for a fraction of their original cost, sometimes new with tags!

As for the stock market, the days of the quick killing in technology stocks have been over for decades but the fantasy of getting rich quick unfortunately has not. There will always those who think that they know a person who had an uncle who turned one-thousand dollars into a million in three months. The standard rule is not to risk more than you can afford to lose. The stock market is very volatile, and high risk stocks are for high-rollers only. Instead, invest for the long term with annuities and slow growth, lower risk, blue chip stocks. If you wish, you can put a small percentage of your savings in high risk stocks, but be prepared to watch your investment daily and pull out when the market trends downward rather than lose all.

Another way that boomers earn money for retirement is to have a second job. Rather than depend on schedules set by employers, these intrepid souls have started their own enterprises. Usually based on an existing skill set, these additional income sources range from giving piano lessons, to making jewelry, clothing, and crafts, to bookkeeping, and even auto repair. In lieu of dipping into savings, the more enterprising boomers turn to alternative lenders for additional financing for equipment and supplies. Like today’s Boomers, Millennials plan to continue these as often lucrative side hustles long after they ‘retire’ from their full-time, long-term employers.

Readers seeking a magic bullet will have left this article long before its conclusion. Those who have hung in to these final paragraphs realize that there is no shortcut to investing wisely for a secure financial future. For all of us, regardless of age-group, redefining our needs, what we consider ‘rich’ by changing our own mindsets, may be the most important step we take to secure a comfortable retirement. After all, freedom of any kind, including financial, is the ability to make personal life choices that make us content. Being frugal, saving, and investing prudently, will ensure that happy outcome.

The post Save and Invest Like a Millennial to Retire Early Like a Boomer- Here’s How appeared first on Koshka.