7 Ways For New College Grads to Avoid Sabotaging Their Credit

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

Credit problems often start early in life, and it’s not just a coincidence. New college graduates can easily get involved in credit situations that can have very negative unintended consequences. Part of it is simply not knowing exactly how the credit world works. But another part is overconfidence – the assumption that you will be able to overcome any problems you can face.

But the best way to deal with problems, especially credit problems, is to not get into them in the first place. That’s because credit problems are much more easily avoided then they are repaired. Here are seven ways for new college grads to avoid sabotaging credit.


1. Learn the Fine Art of Delayed Gratification

Otherwise known as you don’t have to have it now! If you’ve struggled financially while you were in school, you may be tempted to “live a little” after graduation. After all, you worked so hard to get your degree, you deserve some of the finer things in life, right?

Wrong. You don’t deserve it until you can afford it. Commit that concept to memory. There’s nothing magical about landing your first job. Sure you now have a steady income, and hopefully a generous one at that. But you’ll also begin to watch your expenses rise in tandem.

It will be tough enough to pay for the necessities in life, let alone luxuries. Buy what you absolutely need to survive right now, and don’t begin living the life until you have the salary and bankroll to pay for it directly. A lot of young people go horribly wrong on this front when they begin paying for luxuries using plastic and various types of creative financing. It can end up being the beginning of credit hell. Don’t get into that trap.


2. Work Off the Debts You Already Have Before Racking Up New Ones

There’s a better-than-even chance that you already had debt when you graduated. There’s probably one or more student loans, perhaps a modest car loan, and maybe even a credit card balance or two.

Before you begin adding any more debt to the list, first concentrate on paying off the debt you already have. If you don’t, then you will end up stacking debt on top of debt. Even if you have a healthy income, debt has a way of outstripping income, at least in part because it’s so easy to get into it.

Once you clear the deck of existing debt – with perhaps the exception of your student loans – you can then begin to contemplate the conservative use of credit going forward.


3. Make Sure You Pay Your Non-Loan Obligations on Time

If you’ve read many articles on credit, you are aware of how important it is that your debts are paid on time. But debts aren’t the only obligations that need to be paid when due.

There are other expenses you are likely to incur that may not show up on your credit report if you make your payments on time. But if you leave a bill unpaid, the vendor might report it to the credit bureaus. It’s unfortunate but true.

This is not at all unusual when it comes to utilities and cell phone companies. It can also happen when it comes to rent. If you leave an unpaid balance on an account, perhaps after making a move, the account can go into collection, and that will show up on your credit report. If the balance is particularly large, it could even become a judgment.

Whether it is a collection or a judgment, it will hurt your credit score. Do your best to make sure this doesn’t happen by paying all bills.


4. You Know Those Credit Card Offers Flooding Your Mail? Ignore Them

Many credit card companies aggressively court new college graduates. They are willing to ignore the financial stresses that come with transitioning from student life to adult life, in attempts to get into the new graduate’s financial life on the ground floor. They assume that as your financial situation improves, their business relationship with you will expand.

That may be good for the lenders – and it might even make you feel good on an emotional level. But by accepting too many of these offers it can be a one-way ticket to bad credit. The temptation to run up the balances may be too great to resist.

You should be able to get by with just one or two credit lines early in life. If you already have those, throw all of the new offers in the trash.


5. Never Assume a Lender Will “Understand” Why You Can’t Make a Payment

As a student, you may have grown accustomed to begging off mercy with teachers and professors for late or insufficient assignments. But the credit world is not so forgiving. Never assume that a lender will understand, and agree to float you through a lean time or two. Yes, they may agree to it verbally, but they will almost certainly give a negative report on your credit report nonetheless, hurting your credit score.


6. Never Let Credit be a Substitute for Income

Speaking of lean times, should you fall into one you must resist the temptation to use credit to make up for the lost income. The problem is that when you rely on credit to replace income, your debts grow much more quickly than you can imagine. And once you do get back on your feet, your progress will be slowed by all of the new debt you acquired when your income was soft or nonexistent.

The better route is to make sure that you have emergency savings to cover income disruptions. You should also have some sort of Plan B in regard to income. That isn’t to say that you need to be perpetually working a second job, but it will help to have one ready just in case.


7. Never – Ever(!) – Cosign a Loan for Anyone

When you cosign a loan for someone else you effectively concede your credit performance to that person. How so? If they have a late payment, you have a late payment. If the account goes into collection, you have a collection. To add insult to injury, if the lender comes after the primary borrower for the balance, and the primary borrower can’t pay it, they’ll come after you next. That’s the whole purpose of having a cosigner on a loan in the first place.

Cosigning a loan for another person is an outstanding way to get a bad credit rating through no fault of your own. Think deeply about that the next time you’re persuaded to be the nice guy/girl in someone else’s life.

I realize that all seven of these strategies kind of go against the natural flow of life. But understand that when you are young, the potential is great to do long-term damage to your credit. And if you do, it can haunt you for years. Do your best to stay out of these situations, and you can avoid the worst of it.

How about you all? What mistakes have you made regarding your credit score / credit history?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/83633410@N07/7658305438/in/

Apps For Investing in Precious Metals

The following is a guest post by Jessica Dale. Enjoy! 

Precious metals like gold and silver have been a popular choice for investors for thousands of years: the intrinsic value that metals have provides investors with a sense of comfort and security.

Precious metals can be very volatile, however. Even with the historic stability they have provided investors over the years, there are times when the prices can rise or fall just as quickly as any other stock on the market. Therefore, it’s important that investors have the ability to stay current on their stock of precious metals from anywhere they are. Fortunately, there are apps for both Android and iOS users that can help them follow the gold and silver prices right from their phone. Here are a few of them:

Gold Research

This application is a great beginners tool to help determine whether gold is right for your portfolio. Not only does it measure the price of gold in real time, it provides plenty of tools that can help make a savvy investor out of anyone.

Gold Research will provide insight into such important factors as supply and demand as well as offer strategic investment advice from experts, including the World Gold Council. The research focuses on the drivers of the gold market, like central bank policies, risk diversification and many others that professional investors use every day to make decisions. The app even includes jewelry technology in its analysis.

There are also helpful charts that can help you track your investments as well as current and historical trends. This is a great way to continue your research and to determine times to buy or sell. You can also visit a “frequently asked question” page that can answer some basic questions if you ever find yourself stuck.

Bullion Vault: Gold & Silver

This app takes everything you need to know about investing in precious metals and makes it easy to understand. It is the largest online investment service for silver and gold, which give millions of private investors the information they need to make wise decisions and stay on top of the current markets.

This app isn’t just a tracking and investment advice app: it also lets you buy and sell gold and silver directly. If you are a customer of BullionVault, you can not only track the prices, but can instantaneously purchase bullion that is housed in vault all over the world, from London to Singapore to New York City. If you are confident that you know what you are doing, this can help save the cost of going through a broker, putting more money in your pocket. All from your mobile device.

Bullion Vault is a full member of the London Bullion Market Association and is partly owned by the World Gold Council.

Gold Live!

This application from Kitco is one of the highest precious-metal tracking apps out there. It includes pricing and research on gold, silver and other precious metals that can help you stay current on pricing and trends.

You can set alerts in the app that will notify you when your precious metal of choice hits a certain price point so you know instantly whenever you need to buy or sell. This is fully customizable to your standards, so you can have control over your portfolio. While gold prices are live and up-to-the-minute, other metal prices are available in reports that are made every hour, which you can have emailed

Gold Live! Also features currency exchange rates with 13 currencies around the world, so you know what to expect when you buy or sell. There are also full-screen technical and historical charts that so you can keep up with your research wherever you go.

Gold Silver Price and News

For a one-stop app for all the information you need, it’s hard to beat this app. While you cannot buy any precious metals through this app, it does provide in-depth news and analysis that every savvy investor needs to be successful.

This app allows you to quickly check the spot prices of many precious metals so you always know what the metals are currently trading for. You can also call up 24-hour to 10-year charts to help spot trends and review historical data. The app also has breaking news stories and general financial news to keep you updated on the daily markets.

In a constantly-connected mobile world, it’s important that you stay on top of your finances. Try some of these apps and see which one is right for your portfolio.

How to Start a Profitable Home-Based Business From Scratch

home-office-my-personal-finance-journeyThe following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy! 

Working from home is still a big craze on the internet these days. What some people may not realize is that it take a lot of hard work to work from home regardless if it’s a side hustle or a full-time business.

Yet and still, the results can be very rewarding. As someone who just quit my job to run my home-based freelance business, it was important for me to understand what to do in order to set up a profitable online business that could allow me to meet all my needs and financial goals.

Since I’m the breadwinner in my household and my family still has some debt, it was crucial that I set up my online business up for success. If you are in a similar boat and you want to work from home, one of the best ways to earn a good income is to set up a small home-based business.

Benefits of Starting a Home-Based Business

There are numerous benefits to setting up a home-based business and they include:

  • Having the flexibility to work from home and cut out tedious tasks like dealing with commuter traffic.
  • The ability to set your own hours (if you are completely location independent, you can work from anywhere)
  • An unlimited earning potential. Since you control how little or how often you work along with other aspects of the business like sales and marketing, the sky can literally be the limit in terms of how much you can earn. If you don’t like waiting around for an employer to give you a small raise once a year, this can be a huge perk that allows you to have more control over your future.

If all of those benefits sounds good to you and you’ve been playing around with the idea of working from home or starting a full online business, here are a few things you need to do in order to set yourself up for success.

Brainstorm Business Ideas

First you need to determine what type of business you’d like to have. This initial step may take a while because it’s very important. You need to choose something that you are good at and something you can see yourself doing in the long run. In other words, it should be enjoyable and a passion.

It’s also important to focus on earning potential because going into business for something you’re passionate about and not earning money will just turn it into a hobby and won’t put bread on the table. Who will you serve and what type of demand exists in that industry.

For example, if you plan on running a travel agent business because you love helping friends and family plan their trips, decide who your target market will be to gain clarity.

You can look at the industry as a whole and see if there is potential for growth and what competitors are doing to bring in income. If you can see longevity in the idea in terms of income and your happiness, it may be worth looking into further.

Some top home-based business ideas include:

  • Private Tutor
  • Childcare
  • Business Coaching
  • Consulting
  • Transcription
  • Freelance Writing
  • Virtual Assistant
  • Accounting
  • Web Design
  • Photography
  • Bakery
  • Wedding Planner

Develop a Business Plan

After you’ve determined what you will be doing and who you will be serving, it’s time to write out a business plan. Your business plan doesn’t have to be super extensive, but it should be thorough, clear, and summarize the mission of your business and how you plan to grow it.

This will help you stay organized when making certain decisions regarding your services, clients you work with, partnerships you develop, etc.

You should also include some financial information in your business plan since you might need to show it to potential investors. Determine what your start-up costs will be, if you will be providing specific services or resources to the community, and how much funding you may need to meet certain business goals.

Find Funding

Depending on what type of business you establish, you may need funding from outside sources.

If you have low startup costs and can invest your own money into your business, that’s fine, but it’s best to avoid taking out a business loan if you can.

You can start by pitching family and friends to invest in your business, but don’t stop there. You can also reach out to private investors or ask if they can sponsor a project, event, or campaign you’re having.

One business owner I know who started a remote business in order to travel around the country with his wife pitched a well-known job board to assist him and they ended up sponsoring a documentary he was working on.

Depending on the type of business you have, you may be able to qualify for some government grants. The Small Business Administration offers different types of loans and grants to businesses but the requirements vary. You can learn more about SBA grants here and search for various different grants at Grants.gov.

Sort Out the Legal Matters

You may not have to legitimize your business by forming an LLC or S-Corp, but it could help you out around tax time. Entrepreneurs need to set aside a rather large amount of their earnings aside for taxes because they don’t have an employer to supplement it for them.

Depending on your needs, you may want to just be a sole proprietorship, or become a limited liability company (LLC) or an S-Corp. You can learn more about your federal tax responsibilities here.

Trusted sites like LegalZoom.com can help you legitimize your business and if you choose this route, you’ll also need to make sure you register your business name with your state and get a tax identification number.

It’s Best to Start On the Side

While all of these steps may sound overwhelming, it’s important to realize that you can go at your own pace when setting up your business. One of the best things I did to ensure that my business was profitable was starting it on the side of my full-time job more than two years ago.

I started out slow and paced myself. I made use of the extra time I had to get organized, gain clients, and execute my business strategy and slowly it started to pay off and I was able to replace the income I was earning at my full-time job.

It was a lot of trial and error though but it wasn’t as risky because I knew that if my side business’ income didn’t meet the goals I had for the month I could always fall back on my full-time job.

Starting your business off on the side is a great way to play it safe so you can reach success when you make the leap and leave a traditional job with steady income.

How about you all? Have you ever thought about starting a home-based business? Do you have any side hustles?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/duskblackwolf/4286862314/

What the ‘Hes’ Do Is More Valuable Than What the ‘Shes’ Do – Really??

pay-gap-my-personal-finance-journeyThe following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

Ladies, work hard, study STEM, get a high paying job and close the gender pay gap – right?  Your efforts are an important and valued part of society, right?

Apparently not.

Three researchers analyzed Census data from 1950 to 2000 trying to figure out if women get paid less than men because they don’t go after the high paying jobs or if the high paying jobs lose their luster when dominated by women (the study’s ‘devaluation view’).

Guess what.  According to site Payscale :

“Ultimately, the evidence came down on the side of the devaluation view, meaning that occupations with more women pay less because they’re female-dominated.”

Women’s work.  Worth less.  Wrong and Wrong.

Computer science is a field that has changed from being female dominated to male dominated.

Computer programming used to be ‘women’s work’ way back in the 60’s and 70’s.  Grace Hopper (who most programmers will recognize as the woman who wrote the compiler that was a precursor to the  COBOL language and coined the term ‘computer bug’ due to a moth in her hardware) and the girls who programmed the University of Pennsylvania’s ENIAC computer in the 1940’s started it.

For decades after (until the early 1990’s), women tended to dominate the field.  I myself started programming in 1983 and there were a number of women right there with me.

Men weren’t being altruistic or favoring the woman’s movement back then.  They thought that programming was a low level skill that was akin to typing – not one of those ‘manly’ jobs.

In Stanford News article Researcher reveals how “Computer Geeks” replaced “Computer Girls” author Brenda D. Frink  explains how that changed into primarily a male dominated field today.

Two trends helped.  First, according to Frink:

“Male computer programmers sought to increase the prestige of their field, through creating professional associations, through erecting educational requirements for programming careers, and through discouraging the hiring of women. Increasingly, computer industry ad campaigns linked women staffers to human error and inefficiency.”

Secondly, sets of hiring tests were devised to help steer folks into jobs related to programming.  These tests were highly slanted to select male type traits.

Additionally, during the early 1990s, after the advent of personal home computing, geeking out on a home computer became a guy thing – like working on a car or playing football.  Families tended to give their boys access to the PCs, leaving the girls behind.  When it came time to attend computer classes then, girls were immediately at a disadvantage.

Oh, and did I mention that computer science fields are among the highest paying fields today in the 21st century?

I pursued a career in software development.  It paid more than any other job I could have found back in the 1980’s. Through the years, women continued to disappear from my companies. Most of my coworkers (both managers and staffers) were male.

Over the years, the pay differential between my salary and the salaries of my peer managers (mostly male) in my geographic region diverged by more than 11 %.  How do I know that?  My HR department did a study one year and gave me an 11% raise to bring my salary up to the norm so I wouldn’t leave.  The worst part of it was that my own boss was mad at HR because they didn’t consult him so he could adjust his part of my raise downward to compensate!!!

It’s not just a pay gap issue.

Aside from gender pay inequality, work that women have traditionally done and are starting to do now – gets undervalued.

My case in point.  I was the high wage earner in our family – as a computer software manager.  I made more than twice as much as hubby, even before bonus’s and stock options and retirement benefits.  I’m not sure anyone in my circle even recognized that.

Hubby retired 3 years before me and went to work landscaping our 6 acres.  He cuts grass, plants or removes trees, picks up trash and plants gardens.  After I retired, I started a revenue producing website, managed rentals for our condo resulting in tax cuts and profits, and established myself as an author (through writing a book as well as for sites such as this).  Guess whose work is valued more by our friends and family?

His ability to retire early, in part, relied on my success in my field.  Yet few of our circle realized that, my contributions were mainly invisible.

In Quartz article; At work as at home, men reap the benefits of women’s “invisible labor”,  the author included information on a study done on tenured men vs women and reported:

“In December of 2015, Heather Sarsons, an economist completing her PhD in economics at Harvard, released a working paper: “Gender Differences in Recognition for Group Work (pdf).” As part of her study, Sarsons analyzed 40 years’ worth of publications produced by economists at top US universities. She found that women who wrote on their own had the same chance of receiving tenure as men. However, women who collaborated with men had lower chances. The value of the women’s contributions were erased.

Meanwhile, men who collaborated with women didn’t suffer any penalty. In fact, they were four times more likely to succeed. Sarsons’ working conclusion? Women get almost no credit at all for collaborating and are tacitly perceived as subservient employees. Their gender, essentially, renders them assistants by default.”

Again, women doing the same (or more) work than men and being undervalued.

Will it ever end?

My advice?  In your next life, be born male.

How about you all?  What are your thoughts on the man vs woman pay gaps? What have you experienced compared to your colleagues of the other gender?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/nickefford/26642377714/

Reflections and Lessons Learned From Obtaining Term Life Insurance

lifeTen months ago, my wife and I went through the process of obtaining term life insurance policies. The major life event that gave us the final nudge to obtain policies was the soon-to-occur birth of our son, Alex.

In the end of the life insurance-obtaining journey, we had taken out two term life policies (one for each of us) with face values of 10x our current respective annual incomes from Protective Life Insurance Company from a local Colorado independent insurance agent. You can read the full details of the process we went through in a previous post I wrote. The monthly premium payments are $49 and $15.



Reflecting on now having our life insurance policies for 10 months (including those lovely dependable premium payments waiting for us to pay each month), I definitely feel like we made the decision to get term life insurance at the correct time in our lives and were also in the correct financial position to make the commitment.

It was the correct time in our lives because we were just about to give birth to our first child. In addition, being in our early 30’s, we were not too aged for life insurance to be affordable and not too young for life insurance to be relevant. The insurance premiums are taken out of our checking accounts each month, and I often don’t even notice that the premiums have been debited from our accounts.

Does having life insurance actually provide added peace of mind in real life? Truthfully, I hadn’t given this question a great deal of thought. It seems that since our son was born, we’ve been so busy that I don’t have as much time for reflections on financial planning decisions. However, two weeks ago while out on a group bike ride, several members of the group had a crash. All of the crash victims will make a full recovery, but one of them did have to head to the hospital. After examination, it was discovered that he had multiple broken ribs and a partially punctured lung. It was definitely a reminder that anything can happen at any time. Later that day while reviewing the incident in my mind, I did feel better knowing that if anything was to happen to me, that my son and wife would be taken care of financially, at least for a few years.


Lessons Learned

Going through the process obtaining life insurance was more involved than I was expecting based on previous experiences of obtaining renter’s/home, health, and auto insurance. Described below are several of the key lessons learned I picked up along the way.

1) Shop around online FIRST

Even if you think you will obtain life insurance through a local insurance agent, it is a valuable first step to obtain price quotes from the Internet first. This ensures that any premium quote you receive is competitive in the overall market.

One option for sourcing term life insurance quotes online is SelectQuote. SelectQuote has been in business for over 30 years and has expertise in finding the lowest cost life insurance option. To get started, you simply hop on over to their site, enter your zip code, gender/height/weight/birthdate, some information about your overall health, hobbies, and whether you use nicotine products. The last step is to enter your email, phone number, and address. Once you click “Finish,” a screen pops up indicating that one of their agents will be in touch with you soon to find you an appropriate policy fit. Also, SelectQuote is more than just life insurance, and can also be used to obtain quotes for auto, home, and senior care insurance plans.

2) Don’t fear insurance companies you’ve never heard of

On a daily basis, we as consumers are bombarded with advertisements from insurance carriers, most of which also offer term life insurance policies for sale. As a result of these ads, we have an inherent familiarity with them. You know – the Geico lizard, “We are Farmers, da, da-da, da-da, da da,” the Aflac duck, “Nationwide is on your side,” “Allstate – are you in good hands,” State Farm, Liberty, Northwestern Mutual, etc. And, most of these are great companies that have stellar track records.

However, there is a little known “secret” (actually not a secret at all) in this country. There are a number of life insurance companies that have been humming along for 80-100+ years in the USA, churning out consistent performance, never missing an insurance payout, never being over-leveraged/over-risk-exposed, and consistently being rated highly by credit agencies. But, guess what? You’ve probably never heard a single national commercial from them, and perhaps they’re not even listed on the national stock exchanges. For example, have you ever heard of companies like Ohio National Life, Lincoln National Life, American General Life, Banner Life, Savings Bank Life, TransAmerica, Protective Life, Massachusetts Mutual?

Anyhow, my point here is that you shouldn’t shy away from opening up a life insurance quote from a company you are unfamiliar with. Instead, investigate the company yourself. The key things I look for is a long historical record (i.e. company has been around for over 50 years, which is short in the life insurance industry) and a high credit rating by the rating agencies/bureaus (AM Best is the most common choice)

3) Automatic payments

After you have signed a life insurance policy, my next recommendation would be to set up an automatic payment plan to cover your premium each month. The purpose of this is two-fold. First, an automatic premium payment plan reduces the chance that you’ll miss a payment and your policy will be nullified/lapse. This is important with term life insurance because as you age, the pricing of a plan goes up dramatically. You don’t want to be put in a situation where you have to open up a new policy at a higher price, just because you weren’t paying attention during a job/family move or other life-changing event. Second, I find that when I have automatic payments in place, I “miss” the money much less than if I have to physically open my account and transfer the money manually. If it is automatic, I often forget that the money has already been transferred.

4) Obtain a policy with a mutual insurance company

Although there are many great insurance companies around today and ultimately, you should go with the company that provides the best deal/most value, my favorite type of insurance companies are mutual-type. With a mutual insurance company structure, the company is owned by the policy-holders, instead of by a private individual/group or stock shareholders.

5) Read all the fine print prior to signing and be careful with DocuSign

The last lesson I learned from obtaining life insurance policies was to be careful to read all of the fine print in an insurance policy prior to placing your final signature on the document. This is especially true in today’s online world with the use of electronic signature programs, such as DocuSign. With these programs, it is very easy to simply click “go to next signature” which can auto-scroll down multiple pages, causing you to miss important details in a document you could be bound by for tens of years.

How about you all? Do you have life insurance? Do you find it gives you added peace of mind on a daily basis? What do you find most important for life insurance?

Share your experiences by commenting below!

Disclaimer: This article was sponsored by SelectQuote, but all thoughts and opinions are my own.

***Photo courtesy of https://www.flickr.com/photos/chrigu/2635274509/in/