Nat Craven

Nat Craven

Natalie “Nat” Craven is a financial blogger, mom, and wife. She loves budgeting, eating cheesecake, and exploring Utah with her handsome husband and four active kids. 

Nat studied Family Finance at Utah State University. She earned her Bachelor’s and Master’s Degrees in Accounting from Weber State University where she was awarded a scholarship to research taxation. She became a Certified Public Account (CPA). Nat is no longer intimidated by the tax code—even though it is a complicated foreign language. After working in public accounting for a couple of years, she left the industry to raise money-smart children, but kept up her license and education by doing online coursework. 

She volunteered and worked for Cornerstone Financial Education, becoming a Certified Personal Financial Counselor (CPFC). There she helped teach personal finance classes and started a financial fitness blog.

Through the years, she found her passion for budgeting as she realized that no one needs a CPA license or a Master’s degree in finance to manage their money well. Budgeting is a super simple principle to understand, but is challenging to apply. Her blog posts focus on the how we can “USE” our budget to reach our goals. Almost everyone has made a budget, but using it is powerful. Follow Nat on Twitter at @cravennat.

Last week I went to the Nature Center with my son for his class field trip. In our first activity, we walked along a path while using a field guide to identify birds. Because the birds were fake and wooden, we could clearly see them, and we could take our time to identify them.

Later on, the first grade students were given a pair of binoculars with these instructions: “Keep the binoculars hung around your neck. Don’t walk while looking through the binoculars. Look at the object first, then try to find that object in your binoculars.” My son Tommy broke most of those rules as we walked again looking for birds. The birds we tried to spot this time weren’t wooden birds, they fluttered wildly and moved constantly. Because Tommy was focused on his binoculars, instead of seeing all of the birds, he saw his binoculars.

Having binoculars, and knowing how to use them could help us find our goal of seeing and identifying birds. When youth save for your first big goal, it can be like trying to see and identify those wild birds.

Over the past few decades, I’ve learned a lot about saving. It’s NOT easy, but you can achieve challenging goals, and I’m cheering you on! I hope these tips will help you achieve challenging goals:

Identify your savings goal.

On our field trip, the guide helped us to set a goal to see and identify birds. Just like there are so many things in nature, there are so many things in life.

What is important to you? You can achieve any goal, but you can’t achieve every goal. Write it down! ”I want to save for a _____ (car, senior trip to Europe, mountain bike, etc.).” Then, I suggest you hang it up where you’ll see it. When we were saving for a car, everyone who came to my house saw our car savings chart on our whiteboard.

You will also need to decide why you want to reach that goal. Is it because that goal will give you more freedom? Will it help you achieve other goals? What other reasons do you have?

Focus on that one savings goal that you defined.

I learned this with the first graders. If they focused on too many things, they missed the birds. The guide first had them focus on the birds. Then, the guide had them focus on finding turtles.

Focusing on one goal will help that goal appear closer and bigger, which will help you achieve it. It will also help tune out the distractions. You can limit all other spending as much as possible in order to concentrate on the goal that has the highest priority. Use any unexpected income towards your goal. Most adults I talk to think it’s impossible to save for expensive items, especially cars. I’ve done it though, and I know it’s not impossible. I saved for a car as an adult, but now I realize I could have saved for it as a youth if I had defined that goal and focused on it.

Adjust the goal if needed.

When we started saving for a car I wanted an SUV, but as we worked towards the goal, we realized that a van would be better for our family at that time. It wasn’t a brand new car - far from it, but it was had low mileage and was a practical vehicle for my family. When the first graders had to focus on the bird that they wanted to see, they realized that as the bird moved, they had to move. Our goal may need to move and change as life does.

Pick the tool that is best for you, and don’t focus on the tool but on the goal.

My son was so excited about his binoculars that it distracted him from focusing on his goal. There isn’t a magical app, spreadsheet, or savings tool that will achieve your goal for you. Binoculars can help us to focus if we use them to zoom in on one object.

In finances, we can use tools to help us focus. Adults in your life can really help you to focus in on that goal. Our family printed a picture of the car we wanted and had a chart showing how close we were to the goal. Although the amount I spent on the car changed, and the type of car changed, the goal didn’t change.

Depending on your personality, use the tool that will help you. If you love details, use a spreadsheet. If you don’t love details, use a picture chart. Youth are so good with technology, that using an app would work great for them. As long as it helps you focus and track your progress, it will be best for you.

Focusing on one thing is a challenge for me, but I’m learning to do it because it’s essential!

Monday, 17 April 2017 15:30

3 Keys for Teen Budgeting

Last week I gave ideas for youth to earn money. Once teens learn how to earn money, they need to learn how to spend it. When I was a teenager I earned money, saved money, and avoided debt, but I wish that I would have understood how to spend money an intentional and focused way. I hope this post helps at least one teen avoid my mistake.

Twenty years ago, we didn’t have social media, but I often got distracted by items “on sale." I really loved the feeling of getting a good deal. One time, we were an outlet store that had jeans on sale for $5. There was no dressing room to try the pants on, but I bought 4 pair because they were cheap. The pants did not look good. I didn’t like how they fit, so I didn’t wear them. It wasn’t a good deal. I would have been better off to buy one $20 pair of pants which fit me and which I loved. I needed a plan to help me stay focused on what I wanted.

There are 3 keys to budgeting:

A Budget Is a Plan

Budgeting is really simple to understand. You decide where to spend your money rather than letting your friends, social media, or advertising decide. Through budgeting, teens decide where their money will go and then they make it go there.

Youth use plans every day: recipes, school schedules, and game plans. For example, every teenagers has an education plan. Their counselors and their parents help them to make this plan and evaluate it regularly. Then, they take classes based on the plan. They consider the different classes and decide which classes that they will take: some are required and some are optional. It would be very chaotic if they just showed up to school and decided what class they would attend that day based on what was going on.

“Oh, there is a field trip in the choir class: I think I’ll join them.”

“There’s a party in Spanish. I’ll make that one of my classes.”

But, this is what often happens with our money and our eating habits. What if parents, leaders, and teachers sat down with the youth and helped them decide to spend money in the same way they help them decide which classes to take? There would be some required classes. We also have required expenses called needs: gas for the car, supplies, clothes, etc. There are some elective classes, and there are elective “variable expenses" (vacation, entertainment, and eating out).

Budgeting Is Flexible

Let’s say you have a plan for your vacation. What if the weather is bad, or what if you get sick? What if you hear about a neat activity that you hadn’t planned on? You can adjust the plan. You don’t abandon the plan. There are unknowns. What if an opportunity comes up which you weren’t expecting?

A couple of weeks ago, my niece invited my daughter Jackie to come up to Alaska with their grandparents. Jackie hadn’t budgeted for that, and she didn’t have much time - only three weeks. She had been saving her money and once she heard about Alaska, she focused on that trip. I heard her tell someone that she didn’t want to spend her money because she was saving it for Alaska.

Sometimes unexpected opportunities come up that you want to do. That isn’t the same as buying anything that’s a good deal or letting others talk you into it. If we hadn’t had the money, it would have been fine to say that we couldn’t afford it and that we will travel to Alaska when we can afford it. But, our family had a vacation fund. We decided we had enough in there to pay for half of her ticket. It took most of her savings to pay for the other half of the ticket.

Not everything is predictable. You can predict a lot of things, but without flexibility, budgets will fail. Back to the school schedule analogy, if a class isn’t working, it can be evaluated and changed. The schedule isn’t permanent but it is set.

Budgeting Requires a Gauge

Although budgeting does have flexibility, it is important to still follow the budget. Teenage drivers learn pretty quickly that they can only drive until the car runs out of gas. At that point, they have to refill. So, they have to watch the fuel gauge or they get stranded.

Budgeting also requires a gauge in order to follow our budget. Money is finite, so it’s important to know how much is left. It can be a very simple system. Teens start out with few expenses compared to adults, so it is relatively simple.

One example of a gauge is the envelope system. They have an envelope for entertainment, and they can see how much is in there and plan their entertainment. If they have a phone, there are a lot of apps that allow teens to do electronic envelopes. Without a gauge, budgeting doesn’t work, and we run out of fuel/money.

Life isn’t about money - money is a tool for life. Parents, grandparents, and other leaders of youth, we can teach them that they can budget their money to help them to live their life and be their best selves. They can stick to their financial plan, schedule, and budget. They can say "no" to expenses that aren’t right for them.

I get to serve with teenagers in my neighborhood. When I talked with them about budgeting money, they all said, “We don’t have any money to budget!” That is an issue. Besides the occasional gift, they didn’t have steady income. They need to earn money in order to budget that money.

Here are some ways for teens to earn money:

Hourly Work

My first hourly job was working as a cashier at a drycleaners. My neighbor worked there. She told me they were hiring and asked if I was interested. It was a nice job for a high schooler because they would let me do my homework when business was slow.

  • Lifeguarding: This is a popular job for teens who like swimming and like to spend their summers in the sun. Lifeguards learn important life skills like first aid, swimming, and life saving. This job can be seasonal, so it doesn’t interfere with school. Three of my siblings were teenage lifeguards, and it worked well for them.
  • Grocery Store: Work at a grocery store as a cashier, bagger, stock clerks, deli, bakery. I’ve done this one too.
  • Fast Food: My sister and I were recently talking about our experiences working in fast food restaurants. This can be hard work, and it was good for me.
  • Waiter/Waitress: This is a combo of hourly plus tips. I’ve known several teens who have done this, and it can be a good job for teenagers.
  • Parents Business: If your parents own a business, this can be a great job. My husband started working for his dad at a young age. He learned construction skills. This was hard work, but it paid very well and it taught him a lot. I also worked for my dad. He worked as a realtor, so I did clerical work and ran errands for him in the summer time while I was home from college. Working for parents can be a great opportunity!

Small Business

This could be any product or service that others will buy. Here are a few ideas:

  • Pet Sitting: Although this may not be regular income, it could be a good side job. If you love animals, this might be a great fit for you. My kids recently got to try this. They really loved watching our neighbors cat. Then they watched my mom’s cat for a month, and they realized how much work it was to have a pet. There were some really unpleasant parts about taking care of cats like cleaning up poop. No one wanted to do that. They made that job so much worse than it actually was by taking so much time to do it.
  • Selling Pickles: My nieces made pickles with their grandma and sold them. I thought this was such a creative way to earn money. They learned how to make the pickles, then they took orders.
  • Babysitting: I started babysitting at age 9. If you love to babysit, let parents of young children know. It makes a difference! One of my neighbors loves to babysit. Every time I see her, she asks me when she can babysit. She plays with my kids too. I can tell that she loves to babysit, so I usually think of her first when I am looking for a babysitter. Let your parents know so they can tell their friends. One of my friends has been able to get her daughter babysitting jobs by letting her coworkers know that she babysits.
  • Yard Work: There are probably quite a few of your nieghbors that don't want to mow their own lawn, so having your teen charging for lawn mowing services is a win-win situation for both.

Online Businesses

This is an option I didn’t have as a teenager. Internet wasn’t available to the public until I was in college, and most connections were dial up, so they were slow. There are so many options now for online businesses! One teenager I heard about was interested in gems and he had an online gem store. How cool! The internet opens up a lot of options. Some teenagers blog. Online businesses can be started inexpensively.

What jobs did you have as a teenager? There are so many options, so if you have a teen or are a teen who doesn’t have money to budget, try some of these work ideas out and let us know how it goes!

In my blog last week, I talked about how life’s experiences provides opportunities to teach children. Almost every day we spend some time in the car. This week is our family’s spring break from school, and we have already spent 6 hours in the car. A lot happens in car rides. Some of it is good, some of it is not - there was plenty of poking and fighting on this ride. There was also some sleeping - I sleep through a lot of road trips.

Car rides are also time for storytelling and teaching. Our family loves to listen to stories on car rides. My kids really love fiction novels like Michael Vey. Right now we are listening to Treasure Island. Sometimes, I put in an audio CD about finances. We often listen to kid songs in the car, but sometimes we listen to the Dave Ramsey show on talk radio. This introduces them to financial topics. This exposure to financial topics allows them to ask questions and converse about finances. Car rides provide a lot of opportunities to talk and teach.

Introduction to Car Loans

I drive my kids to and from school everyday. On one of these rides, my minivan was making an annoying sound and we could not get it to stop. My daughter finally screamed, “I can’t take it anymore! We need a new car.”

That opened up discussion about loans. I taught her how much cars cost and honestly told her that we couldn’t afford to buy another car, so we would have to get a loan if we were to buy another car. We talked about interest rates. After that, she didn’t complain about our car. It was a good conversation that came out of that annoying noise that almost drove us crazy.

Introduction to Home Loans

On another ride, we discussed mortgages. Each child learns on their own timetable. One of our children understood mortgages at about age 7. Occasionally he asks us how much we owe on our mortgage loan. He also asks other people if their house is paid off. If it is not, he asks how much they owe on their house. We are working on teaching how to tactfully talking about finances.

My other son takes more time to learn financial concepts. There’s no need to worry that it takes him longer. Each contact with personal financial topics will help him learn financial principles.

Introduction to Student Loans

We went to a gymnastics meet and my daughter cheered for BYU. They all support different schools. My son likes whatever team is winning.

Kids talk about college as they watch sporting events. This opens up opportunity to talk about how they will pay for college and teach them about their options. We have told my daughter that if she chooses to attend BYU, she will need to pay for housing and food, along with tuition and books. It is important to be informed about loans so that you know what you are agreeing to pay.

How did you pay for college, cars, or mortgage? Please tell your children your story. Children love stories! We tell them that we worked our way through school. I didn’t prepare for the costs of college. My parents and grandparents helped pay for college expenses.

Through conversation, several key concepts can be taught to children:

  1. Interest Rates: We tell our kids that this is the amount you pay to be able to borrow money.
  2. Terms: How long is the loan?
  3. Lenders: We have all heard stories of high interest rates and bad lenders. We can teach them to support good companies. Local credit unions like Wasatch Peaks provide loans with good interest rates and for that time that a loan is needed. This is a valuable service.

While kids are strapped in their seat belts, you have the opportunity to talk finances. They experience an introduction to loans, and over time they can learn and understand what a loan is and what makes up the loan. How have car rides helped you talk to and teach children?

As parents, we often sign our kids up for soccer teams, swim, piano or dance lessons. But there aren’t any lessons for them to learn personal finance. My son is in first grade, and he is learning what money is and how much each coin is worth. However, it’s up to us as parents to teach him how to use money and to develop healthy financial habits. As parents, we want our children to be financially fit, and avoid some of our mistakes.

Here’s a few financial habits we can teach our children as part of daily life.

Earn money.

In our family, we give our kids a chance to earn money every week. My eleven-year-old daughter told me that her friends don’t have to earn money: they get allowances. She said that she has the worst life out of them. We value work and want them to understand that they earn money from working. They can earn as many dollars per week as their age. So my five year old can earn $5 per week - $275 per year! However, we struggle to consistently record and consistently have payday. We are going to work on that.

Our kids like to count their money. My younger kids still think every dollar is equal. I explained to my daughter that one $5 bill is worth five $1 bills.

Save money.

We teach our kids to save for specific goals. Last week we realized it can be nice to have general savings also. My daughter was invited to go to Alaska to attend her cousin’s baptism. Jackie had several hundred dollars saved, and we had a vacation fund. We agreed to match her savings. So, she paid half of the airline tickets, and we paid the other half. When unexpected opportunities arise, it is nice to have some flexibility with our savings. She is so excited because she hasn’t seen this cousin and her family for 9 months, although she says it feels like it's been years. I encouraged my other children to keep saving so that they can take advantage of similar opportunities that they will have.

Give.

I love to see my kids give, but I don’t force them to give. We give, and our kids notice. I always let whoever is helping me at the store keep the coin change. While I was busy loading the groceries, my 4-year-old daughter put her change into the donation container, which was sitting on the counter. As we walked away, she exclaimed, “I gave money to help the sick people in the hospital!” That warmed my heart.

Spending money.

Shopping gives me so many chances to teach my kids about money. I don’t always take kids shopping because it takes 3 times longer, and it is very tiring. For example, last Monday, we went shopping as a family activity. Our boys ran around the store fighting. But, shopping with kids is worth it because of the teaching opportunities it brings. As we shop and see a lot of cool things, my young kids usually ask to get them. I often reply, “It’s not on the list.” My four year old isn’t the only one that struggles with this. I often want to buy things that are not on the list. She happily tells me, “It’s not on the list.” This is teaching them, and me, to prioritize and to use self control.

At the end of the shopping trip, I let the kids pay for the groceries. I was with my five-year-old last week. The total was 19.56. He paid with a twenty dollar bill. The cashier asked if he would get some change. He said, “No.” That opened up a conversation afterwards. We discussed which one is greater: $20 or $19. I really appreciate that patient cashier who help teach my child. Through this, he is learning the value of money.

We went to Walgreens to pick up some pictures. I let Chloe (4) and her friend look at all the Easter toys. She wanted to buy a stuffed animal. I showed her how much it cost, and explained that she could bring her money back to get it. She asked, “Can we come back today?” I told her that we probably could. We completely forgot about the item that she wanted. I didn’t remember about it until I wrote this post! This experience taught patience and focus.

My oldest daughter has her own library card and checks out her books. She told me she had a $2 fine and she was bringing a five dollar bill. We rode our bikes to the library, and she paid her fine. She is learning responsibility.

All of these stories I mentioned happened in just one week’s time. What money teaching moments have you had in the past week?

Life gives so many chances to teach our kids about handling money and to help them develop good financial habits. As I teach them, I also learn from them and with them. It can be tiring. Being consistent is challenging, but we’re succeeding as long as we keep trying!

A couple of years ago, we received a lot of money as a Christmas gift from our parents. That gift shocked us because we weren’t expecting that extra income. Adrenaline started running through my body as I thought of what we could do with this money. We were saving for a car, so that’s where we used it. Having a goal helped me calm down. It was great to know where to spend the money so we didn’t regret how we spent it. Even though the timing of bonuses, gifts, or inheritances is often unexpected, you can plan how to spend the extra income when you receive it.

I think all of us would like extra income, but do you know how you would spent it? Would you save it for retirement? Would you spend it on a vacation or a purchase? Would you pay down debt? It’s good to think about this ahead of time so that you know how you would spend extra income.

When Ty changed jobs in November, all of his accrued vacation pay was paid out to him from his previous employer. We didn’t expect that he would change jobs and receive all that money at once. We hadn’t been able to save for Christmas throughout the year, and we were considering using some of our emergency fund for Christmas. When he received that extra income, we paid for Christmas. I was glad that we didn’t have to use emergency fund money because I don’t consider Christmas an emergency, but we weren’t sure how we were going to pay for it.

I have noticed that unexpected income is often followed by an expense. Have you noticed this? Maybe you received a gift and then the washer broke. I have seen this happen enough times in my life and in the lives of others to see a correlation. A few years ago, my friend and I discussed this and how it can feel discouraging. She had learned to appreciate that money comes when you need it. I decided that I wouldn’t let myself be discouraged anymore when this happened. She helped me to learn to be grateful for extra income even if it needs to be used for bills.

After my family had saved an emergency fund, the unexpected repair expenses didn’t use the extra income anymore. I really don’t like to spend our emergency fund - just ask my husband. He teases me about having an emergency fund that I "won’t use even for an emergency.” I reply, “If I spend it, I won’t have it for an emergency!” Anyway, I might still choose to use extra income for an unexpected expense, but having an emergency fund gives me options to pick which money to use.

The purpose of this blog is to help you reach your financial peak. Each week I’ll give you a financial exercise to do. This week’s exercise was fun for me. I hope you will do it! And, I hope you enjoy it. I want you to make a wish list. Prioritize from the most important or most urgent financial goal down to the least urgent goal.

Here is my Extra Income Wish-List:

  1. Fund Roth IRAs. We are allowed a yearly limit of $5,500 to contribute to our IRAs, and when the deadline passes, our chance to contribute for that year passes too.
  2. Pay off our mortgage. If you are thinking that these first two items are pretty boring goals, you are right, but a financial planner once told me that paying off debt and saving for the future will open up options later on. Since these boring goals will free up and create money, I keep these boring wishes as my #1 and #2 priorities.
  3. Alaska vacation. My sister’s family moved there last summer. She posts amazing pictures from their outings. We would love to see these places in person, and we also miss her family a lot and want to be with them. If you ask my kids what the favorite part of any vacation was, they will say, “playing with cousins.” They even said this about Hawaii!
  4. California vacation. My kids love LEGOs. We dream about going to LEGOLAND, Disneyland, and the beach near San Diego. We went to Disneyland six years ago and had a great time - even my reluctant husband loved it! The two youngest children haven’t been and would like to go.
  5. Spain vacation - Viva España! I miss Spain and really want to go back with my family. We have a goal to take my kids when they finish their Spanish Immersion program. We have kept our vacations frugal and have really enjoyed camping and visiting sites in Utah, but are hoping to do more national and international travel as our kids grow.
  6. Car for my husband. His 1997 Jeep is a champion! It doesn’t owe us anything, but the interior is falling apart, and he doesn’t plan on restoring it. We are saving for a new vehicle but if a lump sum of extra income came in, it would be nice to put here.
  7. Braces. We will need these for our children in the future. Our dentist recently suggested that my oldest get a consultation for braces.
  8. Furnace. Another boring goal that will rob my emergency fund eventually.

I often say that we can’t buy everything that we want, but we can do anything. Staying focused is challenging for me. This exercise helped me define what I would do with extra income. Now, I’m ready for unexpected and extra income. It’s welcome anytime!

Monday, 13 March 2017 16:30

Don't Leave Your Finances up to Luck!

My 4-year-old has been warning me, “If you don’t wear green, you’re going to get pinched on St. Patrick’s Day.” Similarly, if we don’t pay attention to our finances, we can experience stress and pain. I hope that we can all be successful financially. Very few people have a chance at winning a fortune, but we can all build one. Succeeding financially doesn’t depend on luck.

I’ve been thinking about being lucky. On Saturday, my daughter went with her grandma to see a friend’s new house. She came home and told me how lucky those kids were, “They had their own room, tablets, a movie theater, and a playroom.” I agreed that they were lucky and then asked my daughter, "Are you also lucky?" After thinking, she said, “Maybe.”

That same day I had walked through my friend’s beautiful brand new house, but I know it wasn’t due to luck. My friend and her husband have worked and continue to work very hard.

Define success.

How do you define financial success? If we never define it, then we’ll never know when we’ve achieved it, and we can chase other people’s definitions of success. I think this is very important because financial success is individual. You don’t have to be a billionaire to be financially successful. What do you need? What’s your purpose? Money is a tool that helps you fulfill your purpose. It’s not the purpose.

Irecently watched Letters, which is a movie about Mother Teresa. In one of the scenes, she was offered a room that more than she needed. She asked the landlord to just leave the bed & desk and take out the rest of the furniture. She knew her purpose and was successful in my opinion. She didn’t need a million dollars to fulfill her purpose. In fact, money seemed to detract from her purpose.

Depending on your purpose, you might need a million dollars and that’s okay too, but it is individual.

Live financial principles over time.

It is super cool to me that you don’t have to make a lot of money in order to accumulate a lot of money and to obtain financial freedom. My grandparents told me a story about their neighbor. He was a mechanic who lived financial principles. He ended up saving a lot of money. He didn’t look like he had money - financially, some people look better than they are and others are better than they look. He went into a car dealership and wasn’t treated well because the salesman assumed that this man didn’t have much money. He left and went to a competing car dealership and paid cash for a new car. I have known people like this man who have inspired me to live financial principles.

What financial principles did they live?

  1. Gave. They helped others by giving some of their money and time away. They have generous personalities.
  2. Saved. They consistently saved. Day in and day out over decades they saved and were amazed at how much the savings became.
  3. Made more than they spent!
  4. Drove cars that they could afford. For awhile, they drove older cars, but then eventually they drove new cars.
  5. Taught others by their example. They taught me, and I’m grateful to them for this.

Consistency will bring financial success but it will also keep financial success.

The character that you build is part of the success. While swimming this weekend, I thought about dedicated Olympians. As I jumped into the pool at 5 am on Saturday morning, I admired the dedication that they show to practice every day. They work so hard and sacrifice so much to be able to achieve swimming success as an Olympian.

How many people do you know became successful by chance? I can’t think of one Olympian that did. How about financially speaking? I don’t know anyone that succeeded financially without working at it.

My husband has been swimming for the past few months and is feeling frustrated about not progressing faster. He told me that he has to rest so often. I suggested that he keep swimming. I haven’t seen daily progress in my swimming ability, but over the years I have become a much better swimmer than I was 8 years ago when I started. Finances are like swimming. It takes time and practice to see progress.

When it comes to finances, there are some factors that we can’t control, but there are also so many that we can. We don’t have to leave our finances up to luck!

Monday, 06 March 2017 14:41

Understanding Your Credit Score

Countless blog posts have been written about credit scores and credit reports. Not one post has been written about my personal experience with credit reports. So, I’m going to share my credit story. I would love to hear your experience with credit reports & scores too!

Here are my tips for healthy credit scores:

Understand Your Credit Score

Credit scores determine your ability to borrow money from many lenders. In my early 20’s, I applied for a car loan from a credit union. Then, I shopped for my dream car. The lender told me that I qualified to borrow $10k. That wasn’t enough to buy my dream car. I felt surprised that I didn’t qualify for more. I had heard stories of others who made less than me and qualified for so much more. I didn’t understand how credit was used to grant loans.

Years later I worked for a nonprofit and taught financial education. As I taught about credit, I understood why I hadn’t qualified for more money years before - I even felt surprised that I had qualified for $10k. Since I had no credit at the time, I had no credit score. The credit union was looking at my credit score and my income.

If you are wondering about the end of the story, here it is: Well, that experience helped me realize the value of money. I realized that ten thousand dollars was a lot of money! I actually decided not to buy car at that time. Instead, I used a free bus pass offered through my college until I graduated.

Check Your Credit Reports Regularly

Nine years ago, we refinanced our home. The refinancing process included a credit check. The loan officer noticed that another social security number was being reported on one of my credit reports. It was an easy fix. She sent a letter stating that the social security number reported was not mine, and it was corrected.

Checking your credit report is one way to catch identity theft as early as possible. Also, mistakes on your credit report can negatively affect your credit score. Millions of Americans have mistakes on their credit report at some point in their lives. If you notice the mistake and notify the Credit Reporting Bureau of that mistake, they are required to investigate it. If you need more information on how to do this, check here. Disputes can be done online.

Ever since that time, I’ve checked our reports regularly. How often is regularly? Well, it’s not as often as I should be exercising or eating, but it is as often as I should be getting a physical check up (which I haven’t done for a while). An annual credit checkup has worked well for me. I suggest you find a time that you can remember to check it. If you aren’t preparing to get a loan, it’s easy to forget about checking your credit - just like it has been easy for me to forget about getting a physical checkup because I’ve been healthy.

By checking your credit score once a year, you can ensure accuracy so that when you do need credit, your reports will be accurate and you will be prepared. One friend told me that she checks her credit reports on her birthday so that she can remember to do it. I check my reports when I do my taxes, because they are both financially related. You can check your credit report once a year from three credit reporting companies for free through this website. (It does cost to get your FICO (Fair Isaac Corporation) score.) Each company reports different information in different ways. You don’t have to get all three reports at the same time. If you want to check one report every four months, you could do that. Decide what works best for you.

Understand Credit Reports

Credit Reports are not the easiest documents to read and understand. I almost needed a magnifying glass to read Transunion’s small wording on its report. I remember feeling confused and overwhelmed the first time that I read my credit reports. The reports seemed too long for someone with such little credit history, but it listed every address where I had lived. It also listed everything I had done financially.

Credit history can be long. Our mortgage loan was sold several times, and we have refinanced twice. So, all of that information is listed. Be prepared to sift through a lot of information. Check to make sure that the information is accurate. There are three different agencies that report credit information: Equifax, Experian, and Transunion. Each report is different.

There are five basic components of a credit score. If you want more information about those five components of the credit score, read this blog post from Wasatch Peaks. I promise that checking your credit reports isn’t as painful as it may sound and is vital to keeping your credit score accurate and healthy.

To further understand your Credit Report, feel free to use the financial counseling services that Wasatch Peaks offers. The counselors are certified credit report reviewers and are there to give you guidance and support, whatever your financial situation.

Monday, 27 February 2017 16:44

The Key to Financial Fitness!

Last week I went to yoga, and the instructor told our class to “embrace the warming feeling in your muscles.” Embrace that burn? I didn’t want to embrace it because it felt so uncomfortable. I don’t naturally enjoy exercising. In fact, I almost didn’t graduate high school because I didn’t have enough gym credits.

So, why do I exercise regularly? Those burning yoga stretches take my mind off the worries of life. As I fight for each pose, I become stronger. Going to the gym gets me out of the house and around inspiring people. The music playing in the gym inspires me. I exercise so that I can feel good afterwards.

My dad was in his mid-40’s when he started breathing heavily going up and down stairs. This was strange because he had been active and healthy. Doctors found that his heart’s mitral valve wasn’t closing correctly. He went through open heart surgery. Although it wasn’t his fault, his health gradually declined from that point, and he died a little over a decade later. That experience really impacted me. I decided that I would do all I could to be healthy. This is a strong enough reason to motivate me to leave the house in the wee hours of the morning to dive into a cool pool and swim.

Consistently doing anything is challenging. I have to have a strong enough reason for doing it, so I can overcome the challenge. It’s uncomfortable and even painful to do financial exercises like living within your means, using a budget, and saving an emergency fund. But, it feels so good to be financially strong. Find and define your reason! During the recession, I saw the stress of finances on my dad. When my dad died, I understood firsthand the importance of having life insurance and being financially prepared. This is my reason for living financial principles and having financial health. That keeps me motivated to budget and save especially when I make mistakes. I want my family to have financial freedom and avoid pain that financial stress causes.

Consistent effort doesn’t mean that you are perfect. It means that you keep trying. We have a framed poster on our wall of our turtle that says, “Slow and steady wins the race.” I’ve read the story of the Turtle and the Hare over and over to my kids, and we talk about it a lot. I’m not sure that they are convinced yet. Recently my daughter told me that she could beat that turtle. They don’t understand how a turtle who travels at walking speed could win. A couple of friends and I did a mini triathlon this month, and I was the fastest of the three of us. This shocked me because they both run better than I do. One is a better swimmer and is more experienced. I expected them both to be faster than me. Afterwards, my friend told me that I had been the most consistent at training. Her comment really impacted me and made me realize the importance of being consistent in whatever you are doing.

There are some factors of our finances that we can’t control. I am a recovering control-aholic. I’ve realized that I can’t control the weather, the economy, or others, and I'm okay with that. I can’t prevent a financial storm, but I can commit to living financial principles. The storms still hit my family, but we’ve had financial umbrellas that have protected us. That feels so good. One of my friends has been really consistent at saving and investing. She is only forty and her dad told her that she didn’t need to be worrying about retirement, but should enjoy life more. I felt shocked that he was trying to discourage her from living her financial habits. Slowly and steadily living financial principles isn’t popular, so the only way I can do it is to have a strong enough reason for doing it. When you feel the pain that comes from financial exercise, remember how good it is going to feel later and remember your motivation for doing it.

Tuesday, 21 February 2017 16:08

Tips for a Great Tax Season

I hope you enjoyed the President’s Day holiday. Our kids were out of school on Friday & Monday, so we had a long weekend full of fun times. President’s Day reminds me of tax season. Although IRS technically started accepting tax returns on January 23rd, most of us have not filed because we were waiting for information. Also, some returns weren’t being processed at that time. For example, if you are claiming the refundable portion of the Child Tax Credit or if you are claiming the Earned Income Tax Credit and were receiving a refund, it wouldn’t be paid before February 15th. Now, tax season is definitely here. Unless you are waiting on some K-1s or 1099s, you probably have the forms that you need in order to file your taxes.

I recently attended an 8 hour seminar highlighting the updates for taxes - by the way, that was the short class. The long one was 2 days. Some things in life never change, but tax law isn’t one of those unchangeable things. For this post I’ll mention some of the tax topics that I think the readers here will appreciate. Apply each topic to your situation.

Filing Deadlines

Partnership returns are due on March 15th now, which falls on a Wednesday this year. By the way, whenever a tax filing deadline falls on a weekend, taxes are due on the following Monday. Because April 15th falls on a Saturday and Emancipation day is observed on Monday, April 17th, the tax filing deadline is April 18th this year for individual filers and businesses filing an 1120. (See IRS for more information.)

Tip: If you have some investment accounts, you will want to wait until the final 1099s are sent out. Last year I worked on several tax returns that we thought had the final 1099s, but a few weeks after they were filed, another 1099 was received. Some of these 1099s were not received until mid-March. It is easier, cheaper, and better to wait to file than to amend a return, but returns can be amended. Regardless of when you file, I recommend you prepare the information you’ll need for your return now!

Retirement

You have until your tax return filing deadline to contribute to your IRA accounts! For most of us, that is April 18th. Each year my husband and I try to reach our $5,500 limit for IRA contributions. Some years we do and some years we don’t even get close, but we aim for it. Having a few extra months helps me. If you haven’t started contributing to an IRA, I recommend you start with a small amount. That’s how we started. How much do you want to contribute before the tax deadline? You need to know this in order to file your taxes. For specifics, check here.

Tip: Always be aware of phase-out amounts. This means that if you earn over certain amounts, the credit or deduction “phases” out until you aren’t allowed any of that benefit. You can look up the specific phase-out amounts for the deduction or credit you may be wondering about. Just because a deduction is generally allowed, doesn’t mean it will be allowed for you. For example, if you are married, the phase-out range for the American Opportunity Tax credit is $160,000-$180,000. This means that as your income reaches $160,000, the credit will ratably be reduced, and if you make over $180,000, it will be gone. I often hear someone say “that is tax deductible” in conversation. I think to myself that it depends on the taxpayer’s income. Student loan interest is tax deductible unless you earn over the phase-out amount. I won’t list all of them here, but you can easily check them on IRS’s website for any deduction or credit that you are considering.

Tax Withholdings

Will you be receiving a huge refund? Emotionally, it feels great to get a large refund. I understand this! I know I’m swimming upstream to suggest that you adjust your withholding, but a large refund means that you are letting the government hold your money. I try to withhold just enough to get a small refund.

Some people tell me that they don’t have the self discipline to save throughout the year so at least that forces them to save. I get that. However, USING your budget will solve this problem, and you can get off that wagon. I’ll get off my budgeting “soapbox” now.

Watch out for Tax Fraud

IRS is trying to protect against this. If you want to read more information about possible fraud, click here.

Identity theft is a big problem right now. I personally have a friend who wasn’t able to file her taxes electronically because someone had fraudulently used her social security to file taxes.

PATH Act

This was an important law passed at the end of 2015. Some tax provisions were made permanentsuch as Child Tax Credit, AOTC - American Opportunity Tax Credit, & Tax Free transfer from IRA to charity.

Other tax provisions were extended. For example, the deduction of mortgage insurance premiums was extended through 2016. This is a nice deduction if it applies to you.

The IRS website is a great resource for tax topics. I hope your tax season goes well!

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