Archive for May 2014

How to Improve Your Credit Score

Credit score

Credit scoreImproving your credit score is one of the most common goals that people have relating to their financial life. A good credit score can help you to qualify for a mortgage, get better terms on a loan, etc. If you want to be able to plan out a successful financial future, a good credit score is usually a part of that equation.

So what if you don?t have a good score currently and want to improve your credit score? Have no fear as hope is not lost. There are some fairly simple steps you can take to improve your score over time. It generally will not happen overnight, but you?can start to take steps to improve your credit score today.

Start Using Credit

I know it’s It is counter-intuitive to some people, but using a credit card?is one of the best ways to build credit. By using your credit card occasionally, you can start to build up and improve your credit score. Of course, you need to be paying off your credit card each month on time. 🙂

As the months go by and you make your payments on time, every time your score is likely to start going up as a result. That said, if spending is going to be a temptation for you then it’s best to take this cautiously as no debt is worth it.

Don?t Use Too Much

Using too high of a percentage of your credit limits can hurt your credit score, so try not to use any more than 30% of your available credit. By keeping a low balance, or better yet no balance at all, you will be doing your score a favor, and also saving money?in terms of interest charges that you are avoiding. If you do make a big purchase that eats up a lot of your credit limit, do yourself a favor and try and plan out the purchase as doing so will allow you to pay off the purchase when the bill comes due.

Dispute Any Errors on Your Report

You can request a copy of your credit report and review it for accuracy once every 12 months. As there are three major reporting agencies you can check your credit report once every four months. You might be surprised at how often errors are made, and those errors can cost you valuable points if left unchecked.

Instead of just letting it slide, report the errors and see if you can have them removed from your report. Even just correcting one or two mistakes can make a big difference when your score is calculated. Personally speaking, I have had to go through this numerous times as I am named after my Dad and several of his accounts have shown up on my credit report in the past. Thus, I get the joy of going through the fun process of requesting to have the accounts removed. That, along with several other reasons, is why I like to monitor my credit report and activity through Credit Karma. Credit Sesame?is another good option as well if you’re looking for that service. There are also a number of credit cards, such as the Discover it? card, that allow you access to your credit score each month for free. As the credit card industry tends to follow the leader, it’s likely this will become more widespread in the future.

Keep Old Accounts Open to Maintain a Good Credit Score

You might think it is a good idea to close down old accounts when you are not using the credit card anymore, but that actually isn?t a great idea in terms of your score. Instead, keep them open and use them once every few months to keep them active. Make sure to pay off the balance each month, of course. Using credit accounts that are older will have a positive effect on your score, as long as you do so responsibly.

In reality, improving your credit score has a lot to do with common sense. If you are able to pay your credit card bills on time each month, and keep your balances low, you should be able to improve your score over time.


What other ways can you think of to improve your credit score? How often do you check your credit report? Have you ever had to get anything removed due to an error?


Photo courtesy of: Lending Memo

When is the Best Time to Buy Life Insurance?

Life Insurance

Life InsuranceI don?t talk about it much on Frugal Rules, but I spent five years in the life insurance industry prior to becoming a stockbroker. My wife also spent nearly ten years in the industry. Due to that, we commonly get asked when is the best time to buy life insurance and our answer is always the same ? it?s going to be different for each individual.

We?re all going to die at some point, and need to do what we can to make sure family members are prepared in the event of our passing and life insurance is a major piece to that.

The best time to buy life insurance is a common debate and it?s clouded by the fact there is so much misinformation about it. You have sales representatives who sell policies to be things they?re not as well as the belief that you absolutely don?t need it if you don?t have a family.

With that in mind, I?m going to be running a series here on Wise Dollar that will not only go over when is the right time to buy life insurance but also things to look out for so you can keep more money in your pocket while also being wise in what you purchase.

Buy Life Insurance Sooner Rather than Later

The best time to buy life insurance, generally speaking, is sooner rather than later. Earth shattering I know, but very true. ?:-) The simple fact is that the earlier you buy your life insurance, the cheaper it?s going to be. We?d love to think that we?re better as we age, though the actuarial tables insurance companies use will tell you differently.

I know that those without families or who are younger will question why they need to purchase life insurance when they have no ?need? at the moment. I get that, I really do, and held it at one point, but it?s a shortsighted view in my opinion. It?s a simple fact that the younger you are when you buy life insurance, the cheaper it?s going to be for you.

Ultimately, it means that you will be saving money?over the long run. That?s also not to mention the fact that you?re likely going to be able to afford more life insurance coverage than you would if you wait years to get it. Take that with the fact that you never know what?s going to happen in life and it generally makes sense to buy life insurance sooner rather than later.

There is also a misconception that it?s not the right time to buy life insurance if you have 10-20 pounds to lose or are working on quitting smoking, or other things like that. That is an understandable belief, but you shouldn?t allow that to hold you back from purchasing coverage. Many don’t know that you can buy life insurance without the exam or you can simply get your rates re-evaluated once you lose that weight or stop smoking. Instead, buy insurance coverage now and use the hope of lowered premiums to motivate you to reach your goal.

Know Your Options

If determining when a good time to buy life insurance isn?t difficult enough, there are a myriad of options available, such as:

  • Term Life insurance
  • Whole Life insurance
  • Universal Life insurance
  • Group Life insurance

While variety is usually a good thing to have, the misinformation is big when it comes to the different types of insurance coverage available. With that in mind, below is a basic explanation of how each of the aforementioned life insurance products work:

Term Life: Term Life provides coverage for a specific period of time. The most common are 10, 20 and 30 year terms. These are generally the cheapest life insurance policies to buy and once the term is over your coverage expires.

Whole Life: Whole Life varies from Term in that it provides coverage for the entirety of your life, or until you surrender the coverage. As a result, Whole Life premiums are generally more expensive but they do allow you to build a small cash value in addition to the coverage. Whole Life insurance is commonly referred to as ?burial insurance? for older individuals who are looking for ways to cover the final expenses.

Universal Life: Universal Life is a step up from Whole Life and is generally viewed as permanent insurance as well. Universal Life allows you the possibility to build a larger cash value and is often sold as an investment product, although life insurance should truly not be considered an investment.

Group Life: Group Life is usually the cheapest and easiest to get as many employers offer Group Life coverage. Having Group Life is a great option, but only as a compliment or supplement to other coverage that more fully replaces your income. This is due to the fact that you?re generally not able to take it with you when you leave an employer. That said, at the very least, you should purchase this if it is available.

Now that we?ve covered the major types of life insurance, the great thing to know is that there are many avenues by which you can buy life insurance coverage today. You have the traditional insurance representatives you can buy from as well as online purchasing opportunities.

You can easily find life insurance rates and purchase policies through companies online. Personally speaking, I like to have a mix of different policies and amounts as it is cost advantageous for us. For example, we have $50,000 in coverage for my wife through USAA for $5 per month, which isn?t too bad in my opinion.

Life Insurance is not an Investment, But it?s Vital

By now, you should know when it?s a good time to buy life insurance and what to buy. You want to buy young and buy cheap. As I said earlier, there is a lot of misinformation when it comes to life insurance. One of the main areas that comes from is the belief that life insurance should be treated as an investment vehicle.

Listen, I understand why many insurance representatives sell it as such. It?s because they get nice fat commissions out of selling those types of products to you as a client! I saw it every day for five years and it?s a shame that it happens it much as it does. The situation is made worse when fear is used to sell such products to uninformed clients. It might be an effective sales strategy, but it?s not the best one in my opinion.

That being said, that is not at all to say that buying life insurance is not important. In fact, it?s an incredibly vital to proper retirement and estate planning. Think of life insurance coverage as a compliment to what you?re already doing in regards to saving for retirement. It may not be as important as saving and investing, but it still plays a vital role in planning for the future of your family. With that in mind, the answer to when is the best time to buy life insurance is?now! ?:-)


When do you believe is the best time to buy life insurance? When was the first time you bought life insurance coverage?


Photo courtesy of: David Amsler


This post was featured on Your PF Pro, Money Smart Guides, Finance With Reason?and Money Smart Guides.

How to Pay Off Debt Quickly

Pay off Debt

Pay off DebtNobody likes being in debt, HUGE understatement I know. 🙂 If given the choice, we would all prefer to be able to pay for our purchases and never have to deal with the issue of owing other people money. Unfortunately that’s not always the case given the number of people who have had to pay off debt in their lifetimes, myself included.

There may be times, like when buying a house or purchasing a car, that taking on debt is unavoidable. However, once you have taken on debt, there should be one thing on your mind ? paying it off as quickly as possible. Paying off debt isn’t usually easy, and can possibly take several years to accomplish, but can be accelerated by a certain attitude.

Pay off Debt by Making a Commitment

You aren?t going to pay off debt quickly unless you make it a goal and stay committed to that goal until the debt is gone. If you would rather take your extra money and spend it on dinners out and weekends away, you are not going to be able to kill your debt very fast at all. There is generally going to be a good bit of sacrifice involved in paying off debt, but it’s well worth it in the long run.

To start with, decide on what your goal is each month to pay toward the debt. Ideally, this amount will be significantly higher than the minimum payment so you can make headway toward paying off the debt early. In the case of a credit card?that is charging you interest, the extra payment over the minimum is crucial because it chips away at the amount of interest that you will be charged each month. Not only will that extra payment help you pay off debt quicker, but it will also help you save money in the long run.

Sticking with It

Once you get into a habit of paying a specific amount toward your debt each month, don?t fall off track and lose focus on your goal. It is easy to just get comfortable with having that debt over your head and you might be tempted to stop paying extra each month. Resist those thoughts and keep your eyes focused on getting rid of the debt quickly so you can move on without having to worry about those payments.

This attitude you will develop while paying off debt is also not one that you will want to give up on once the debt is gone. Once your debt is paid off you’ll still want to keep that same attitude that got you out of it so you can hit the ground running and continue to grow your wealth.


If you are needing motivation to keep dedicating extra funds to paying off debt, just remember that getting rid of the debt is likely to help improve your credit score, help you get better terms on a future mortgage, and simply improve your overall financial life. When you put it in those terms, it doesn?t seem so bad to sacrifice unnecessary crap in order to save money?for the monthly payment you are trying to make.

There is no way around it ? your debt is not going to get paid off quickly unless you make it a priority to do so. By putting the debt at the top of your list and pushing the extra money you have available that direction, you can start to eliminate it faster than you might think. It might not be a lot of fun in the short-term, but you will feel quite accomplished and satisfied at the end of the process once the debt has been completed repaid.


What things have you done to pay off debt quickly? How do you keep yourself motivated if you’re paying off debt?


Photo courtesy of: Lending Memo

Three Reasons Why You Need an Emergency Fund

Emergency Fund

Emergency FundOf course, we all hope that we would never have a need to use an emergency fund. In a perfect world, we would be able to plan our expenses well in advance, and make sure that we have the resources available to take care of our obligations.

Unfortunately, that isn?t how the world works at times. Large financial expenses come up from time to time, and you might not have much warning when they do. If you are unprepared for such circumstances, you may be left scrambling to make accommodations to deal with the expense and keep paying your other bills as usual.

For this reason, it is important to have an emergency fund available that you can tap into if something should come up. The size of your emergency fund is going to vary?based off your personal circumstances. My wife and I have an emergency fund that covers over six months of expenses as we’re self-employed, one of that size may be too large for you, but something closer to one or two months might be better. Regardless of the size of your emergency fund, it can provide?peace of mind, and can help you get out of a tough spot if something should come up.

Let?s look at three specific reasons why it is a good idea to have an emergency fund

An Emergency Fund Can Help You Stay Out of Credit Card Trouble

If you don?t have an emergency fund to use, a likely alternative for many people is going to be using their credit card. This generally is not going to be a reasonable solution, as it can cause trouble down the line if you’re unable to pay off the credit card on time. By holding onto some emergency money and being able to pay cash for unexpected expenses, you can keep your credit cards clear and avoid having to go into debt.

Sudden Unemployment

It isn?t a fun topic to think about, but unemployment is something that happens to many people at least once in their lives. If you should suddenly find yourself unemployed for a period of time, having an emergency fund available is a great relief while you try to find a new job.

Even just a month or two of money in reserve can greatly lessen the stress and pressure you feel while unemployed. It still will not likely be a fun time in your life, but at least you can keep up with your bills and focus on looking for new opportunities.

Add to Your Savings

By making a habit of adding a little bit to your emergency fund each month, you might find it growing larger than it needs to be over time. That is a good problem to have ? simply transfer the excess money to your savings account and you will suddenly have a larger pile of cash in your savings to use later on down the line. Think of your emergency fund as a second savings account that you are ready to use if needed, but are planning to hang on to and be able to use at your own discretion when necessary.

You don?t have to have a huge sum of money stored away in an emergency fund, but it should be enough to at least partially cover expenses that may arise. A little as a few hundred dollars can come in handy, so dedicate one of your accounts to an emergency fund and add to it a little bit at a time, when possible.


Do you have an emergency fund and if so, when was the last time you had to use it? How big is your emergency fund?


Photo courtesy of: Tax Credits

Four Money Saving Tips for Your Vegetable Garden

Vegetable Garden

Vegetable GardenNow that the growing season is upon us, you might want to consider a vegetable garden as part of your money saving plan.? Even if you have minimal space to grow in, or have very little experience in gardening, there are ways that you can use vegetable planting to save your household a good bit of cash. Consider the money saving gardening tips?below:

Use Your Vegetable Garden to Plant What You Love

Are you a big salad eater?? Plant a different variety or two of lettuce (in some pots if you don’t have much garden space) and have lettuce at your fingertips anytime the craving for a great salad hits.? Lettuce is fast-growing and can handle colder weather, so it’s a great choice for a vegetable garden in nearly any climate.

Do you love tomatoes?? Plant enough to have them fresh through the growing season and to can and freeze for later.? Are you limited on space?? Buy a hanging tomato plant or a simple pot with Roma Tomatoes to have in your yard or on your deck.? Roma tomatoes produce in abundance too, so even one plant can give you enough to can or freeze a substantial amount of tomatoes.

Keep it Simple, Sweetie

If you’re in an apartment or condo that doesn’t have a yard, consider starting with herbs.? A nice little pot of your favorite herb, such as Basil or Sage will fit nicely on a small table or window sill and provide you with fresh herbs all year around if properly cared for, saving you cash as the herbs purchased in grocery stores are generally quite expensive.

If you’ve got a small yard or patio, pick your favorite, most-consumed 3-5 plants for your vegetable garden, keeping space to a minimum.? If you have the space for a big garden, make sure that you’re not wasting money by planting certain veggies “just because”.? Plant only what you know you’ll eat.

Grow Up

No, not you: your garden! 🙂 Have pea or green bean vines grow up lattice on the side of the house, or [easyazon_link asin=”B009W8Z6JQ” locale=”US” new_window=”default” nofollow=”default” tag=”wisedollar-20″ add_to_cart=”default” cloaking=”default” localization=”default” popups=”yes”]upside-down hanging tomato baskets[/easyazon_link]?to hang on your deck.? Not only will this save you space, it will save your garden from rabbits and other roaming creatures, thereby increasing your bounty and saving money in the process.

Think Long-Term

When planting your vegetable garden, think long-term.? You might not have a lot of freezer space for freezing beans or peas, but maybe you could can salsa instead.? A couple of healthy Roma Tomato plants and a nice Green Pepper or Jalapeno plant or two, along with some onion plants, will give you enough yield? for several jars of salsa or Bruschetta, both of which are fairly easy to can with a hot-water bath canner.

Pick the vegetables you love the most, and plant an abundance of them where you have space, making sure to can or freeze them when they’re ready to go.? Then, instead of buying salsa or pickles, you can grab some healthy and delicious homemade ones out of your pantry.? Your pocket book and your health with thank you.

Growing and preserving your own food from your vegetable garden can seem intimidating when you first start out, but by following the money saving tips above, you can cash in on some serious cash and grow your way to good health all at the same time.


What are your favorite money saving tips for your vegetable garden?? If you had to pick just one veggie to grow, which one would it be?


Photo courtesy of: Jay Bay