When your credit score runs a little too low to get you the things you want and need in life at an attractive interest rate, it’s time to consider making changes. One of the changes many consider is credit repair services. But, is the investment in these types of services worth the cost?

What Is a Credit Repair Service?

Credit repair services help to remove inaccurate or incorrect information from your credit report. That is something that can bring your credit score down. Companies that offer these services provide advice on how you can improve your credit score. They will also file disputes with credit reporting agencies on your behalf. What they cannot do, though, is remove accurately reported information, even if it harms your credit score. The types of inaccuracies credit repair services can address include the following: Many of these services charge monthly fees and may take several months, or even years, to completely clean up your credit report. You should note that you can clear up many of these on your own. However, it is a time-consuming process. Mostly, you are paying for the convenience of having someone else act on your behalf.

What Is a Credit Report Dispute?

When you find inaccurate information on your credit report, you must dispute it to have it removed. The process does take time, energy, and some degree of persistence. That is one reason why it can take so long for credit reports to improve — even when using credit repair services. When you file a dispute with one or all the major credit reporting agencies: They will notify the reporting creditor of the dispute and allow them 45 days to prove their claims. Once the 45 days pass, it will be up to the credit reporting agency to remove the negative report or leave it in place. If they deny your dispute, there is a process by which you can escalate your claims. You will generally need to offer proof of your own for this to occur, such as a canceled check reporting that you have paid your bill. The great thing about a credit repair service is that they can do these things and save you the time and the hassle involved. On the other hand, these are all things you can do for yourself.

Are They Worth It?

In some cases, they are well worth the money. That is especially true if you have inaccurate, false, or outdated information on your credit report keeping your credit score artificially low. Some people view time as precious of a commodity as money. If you are among that group, you will likely feel that credit repair services are well worth every penny you have saved because it saves you time. However, credit repair services cannot help everyone. After all, they can only help with the removal of false information from your credit report. In most cases, waiting seven years will allow all the negative information on your credit report to disappear.

Credit Repair Service Company Caveats

We should also note that some credit report repair scams are lurking out there. Look out for and steer clear of companies that hold lofty promises and demand upfront payments. It is also a big red flag if a credit repair service company says they can remove all negative information from your credit report. That is not true, as no one can remove accurate information from your credit report.

Takeaway

Are Credit Repair Services Worth It?

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No one wants to think about ending a marriage before it even begins. However, the American Psychological Association reports that about 40 to 50 percent of married couples in the United States will eventually divorce. Unfortunately, that means that it might be a good idea to expect the best and plan for the worst. Getting a prenuptial agreement is like getting marriage insurance – of a sort.

What Is a Prenup and Do I Need One?

A prenuptial agreement is a written, legal contract you sign before you are married, determining how to divide assets and liabilities in the event of a divorce. It lists all the accounts, property, and debts owned by each person before the marriage takes place and what each person’s rights will be to these if the union gets terminated. Additionally, prenups can shield one party from the other party’s debts. That means if one party has enormous student loan debts, those debts would be exempt from any divorce settlement, and the other party would not have to pay them. Do you need one? If you have assets going into a marriage you wish to protect or shield your partner from your debt, then yes, a prenup is recommended. Prenups do not, however, protect assets or debts acquired during the marriage from divorce proceedings.

How Does a Prenup Work?

Laws vary from state to state about what can and cannot be in each state’s prenuptial agreement. For this reason, it is best to work with an attorney familiar with your state’s legal framework for prenuptial agreements. Some prenups can even restrain couples from speaking ill of one another after a divorce. Essentially, couples can agree to any of the following in their prenup: Remember that every prenup is unique, and you and your partner may have differing interests in the prenuptial agreement. Putting together a deal can be an important test for your relationship. There will be challenges as you determine who gets what if your marriage should end in a divorce. Also, remember that just like in a divorce, you each need to have individual representation to protect your interests. A prenup is not about hamstringing either party. It’s about creating an equitable dissolution of the marriage based on the assets and liabilities you brought into the marriage with you.

Advantages and Disadvantages

Before you decide a prenup is right for you, make sure you consider the potential advantages and disadvantages that go along with it. Advantages: Disadvantages: Takeaway

Should You Get a Prenup?

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Electric cars sound like an excellent investment — especially if you have been at the gas pump lately. Not only do they cost less to operate, but they also produce fewer emissions, which is terrific for the planet (and all the creatures that call it home). In the past, electric vehicles have had a few problems to overcome, including the availability of different vehicle types. Today, more electric cars are available than ever before. There are even several highly stylish options to consider. Now is the perfect time to give electric vehicles a second look if you have been sitting on the fence.

What to Consider

Before you dive in, there are a few important considerations you will need to keep in mind. Electric vehicles are not the right choice for everyone. As you explore your options and try to decide whether electric cars are the best choice for you, take into account the following: As you can see, there are quite a few considerations to mull over when deciding if an electric vehicle is an appropriate choice for your driving needs.

Costs

With the broader proliferation of electric vehicles in the marketplace, many ownership costs have decreased. While many states are imposing higher taxes on electric car drivers, the fact remains that the broader competition is keeping prices in check. Plus, there are ways you can bring down the costs even further, including the following:

Buying Used vs New

One of the significant drawbacks of purchasing used vehicles for many is the lack of warranty protection, especially for batteries. The average EV covers the battery replacement for up to 100,000 miles, making it a non-issue. Buying used can save money, but some people simply like that “new car smell.”

Takeaway

Buying Your First Electric Car

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The real estate market offers many different housing options. Depending on your life stage, financial resources, and where you are on your financial journey, one type might work better than others. When choosing between houses, townhomes, or condos, how do you know the right choice for you? The better you understand each type of home, the wiser choices you can make when buying your first, second, or even final home. Here’s what you need to know.

Where to Start

One of the most crucial details to understand when choosing between a condo, townhome, and a house is that upfront costs are not the only costs involved. For instance, condos often have the lowest initial costs. However, they also tend to have much higher HOA fees to cover maintenance costs of exterior spaces and common areas. Townhomes often cost less than houses, but you still have many homeownership expenses, such as maintenance, repairs, upkeep, and property taxes, plus HOA fees. These fees can easily exceed those of homes that do not require HOA fees. Houses tend to require higher upfront costs than most townhomes and condos, and owners are fully responsible for maintenance, repairs, and upkeep. On the flip side, a traditional house offers more privacy than any other options on this list.

Comparing Types of Homes

Condos Condos are excellent choices for first-time owners as well as those who are mature or elderly and looking to downsize their space and maintenance commitments. They offer lower price points for entry, and maintenance and upkeep of the buildings, lawn, and public areas occur on your behalf. That no-maintenance lifestyle, though, has a price of its own. Don’t overlook the costs of the condo association and other fees that go along with your condo lifestyle. Condos can also have complex amenities, such as a pool and tennis court. Townhomes Townhomes are typically multi-level structures. They can be a good option for small families and couples who want a little more privacy than condos provide. They also require a deeper personal commitment to things like maintenance, repairs, taxes, and other fees than condos may. Many townhomes have small front and backyards to be maintained during the summer. They may require snow removal or other services in the winter. Like condos, townhome communities may offer amenities like a clubhouse, pool, fitness center, and tennis courts. Houses Houses are a proper choice for people who are most concerned about the room to spread out and the privacy from the prying eyes and ears of neighbors. You do not have to worry about neighbors below your floor, above your ceiling, or on the other side of your walls. Instead, you do need to worry about maintenance and upkeep for your home and lawn, driveway, and sidewalks for all weather conditions that come your way. If you are looking to the future, though, a house of all these options maintains its value best. Keep that in mind and choose the option that works best with your short and long-term financial goals.

Making a Decision

It may feel like the weight of the world is on your shoulders when you make your home buying decision. It is, after all, usually a long-term commitment with a 15-year or 30-year mortgage attached. However, it is not the end of the world. You have the option of upgrading (or downsizing) into a different home as your needs change and the situation warrants. Weigh the dollars and cents against your needs and select the option that offers the most opportunities for growth, future sales, and low-maintenance living (if that is what you’re looking for).

Takeaway

House, Townhome, or Condo?

View Resource House, Townhome, or Condo?
Data breaches occur all the time these days. They hardly make the news headlines anymore. One of the outcomes of these widespread breaches is that some credit card companies have started to provide digital or virtual credit card numbers to their customers. But, is it the best solution for you? Let’s explore what these cards do, the benefits they offer, how to get them, and what you need to know. What Are Digital Credit Cards? A virtual credit card allows you to mask your main credit card number and use a unique card number for each transaction. You can create as many of these virtual card numbers for your actual credit card without jeopardizing your credit score or your standing with the credit card company. Depending on your credit card issuer, you will receive unique numbers for each transaction or a single virtual card to use with all merchants. Many allow you to request a new number for the card as often as you like. While these cards can make online transactions safer for you, they do not make you impervious to fraud. It would be best if you continued to manage your account and monitor transactions for suspicious activities.

Getting a Digital Credit Card

Most credit card providers offer this service free of charge to their customers. You must first have a credit card. Then, you must log into your account with the credit card company and take the following or similar steps:
  1. Go to account settings and look for the “virtual card numbers” or “digital credit card” option and select it. If your credit card company does not offer one of these options in the account settings, they may not yet provide this service.

  2. Download the app that allows you to access the digital card if required. That will make the process of using your credit card easier.

  3. Accept the assigned digital credit card number.

  4. Choose how long you would like that card to be valid. You may have the option of one-time use or the ability to establish specific expiration dates. Suppose you have the type of digital credit card that is different for each merchant. In that case, your expiration date may be pre-selected.

  5. Get the security code for your digital credit card. That allows you to use the digital card just as you would a physical card, except for online purchases.
There may be variations from one credit card provider to the next. However, most will offer something very similar to this. The goal is to make it easier to protect yourself, not more difficult.

What to Be Aware Of?

Digital credit cards are different from payment apps, like Google Pay or Apple Pay. Those services are for use at brick-and-mortar locations. On the other hand, digital credit cards are designed specifically for use with online transactions. Other things to be aware of concerning digital credit cards include the following: The primary benefit is that if a data breach exposes a virtual credit card number, you don’t have to cancel your credit card. You only have to cancel that specific digital credit card number and seek a new one of those. You can continue to use your physical credit card for essential shopping.

Takeaway

Digital (or Virtual) Credit Cards

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Some people have one password strategy: a bad one. It is not a good idea to use the same default password for all your accounts. If you have not put much thought into your password strategy, now is an excellent time to give it a try. Creating strong passwords can help prevent casual hacking of your accounts and prevent identity theft and other significant problems. How bad is the problem of stolen account information, including passwords? According to We Live Security, more than 15 billion account credentials for sale on cybercrime forums. You need to make sure these criminals do not have a direct entrance into all your accounts.

Creating Strong Passwords

Creating strong passwords is part art, part science, and part strategy. Despite widespread education about the dangers of using “password” as your password, it remains one of the most commonly used (or some variation thereof, such as “Password123” or “Password1!”) passwords today, according to Consumer Reports. These strategies will help you create more effective, stronger passwords. Think about all the accounts you have: social media, email, banking, utilities, streaming, and likely many more. It is conceivable that you have 50 or more accounts that all need strong passwords. Password managers can help you manage across all your devices without risking repeats or making it easy for hackers to compromise.

Are Your Passwords Compromised?

Suppose you have received a letter in the mail informing you of a data breach that includes your information. In that case, the odds are good that your password is compromised. What does that mean? It means every account associated with your email address that uses the same password is also compromised. What if you have not received a notification? There are programs out there that look out for you, like Firefox Monitor from Mozilla and Password Checkup from Google. You can use these tools to see if your email address has been part of a data breach. These services will notify you via email if a known data breach has compromised your accounts. Of course, there is more you can do to keep your information safe and secure. One of those options is to use multi-factor or two-factor authentication to add a layer of security to your important accounts.

Multi-Factor Authentications

Multi-factor authentication, or MFA, requires multiple forms of authentication to make your account information available to you. Some may send a code via email or text or even require a token in addition to your password. Some recommend against using text messaging for multi-factor authentication because spammers can intercept those codes and access your information regardless. Alternatively, you can use a service like Google Authenticator or Microsoft Authenticator to verify your identity on your behalf once you have registered a specific device with the service. The bottom line is that it is always in your best interest to strengthen your passwords as much as possible. Doing so reduces the risks of others accessing your accounts.

Takeaway

What’s Your Password Strategy?

View Resource What’s Your Password Strategy?
Understanding the cost of living in an area can help you determine the amount of money necessary to cover basic living expenses. It can also describe the amount of money you will require to maintain a specific lifestyle in a given location. Because the cost of goods and services differs from city to city, calculating the cost of living can identify the affordability to live in a specific town. Your cost of living will likely change should you move from one part of the country to another. Using a cost of living index can help you decide if changes in pay are sufficient to warrant your change of address. In other words, the cost of living index enables you to compare the prices of living in one city versus another.

What Is Cost of Living?

Cost of living refers to the costs of meeting basic expenses in one location. It determines how far your money will go in a particular locale. It can be done by cities, states, or even some neighborhoods to help people determine the benefits of relocating. Factors that affect the total cost of living in an area include things like: It is also a great indicator of how your shiny new salary stacks up against your new living expenses.

How Is Cost of Living Determined?

Most people consult the consumer price index (CPI) for information or calculations related to living costs. It is beneficial for comparing the costs of living between two or more areas. However, it certainly isn’t the only option available. There are many websites online that offer cost-of-living calculators. As you can imagine, large cities worldwide and throughout the U.S. have higher costs of living. That includes cities like Tokyo, Hong Kong, New York, Beijing, and Singapore. You cannot forget or overlook the importance of taxes when determining the cost of living. It is not just federal income taxes that should be of concern. There are also state and sometimes local income taxes to contend with: property taxes, vehicle taxes, and countless others, which are higher in some locations than others. Just remember that the basics are not everything. You have to be able to live a little as well. That means you need to consider costs above and beyond living essentials. You should make sure your salary will help you make ends meet while also setting aside funds for savings, investments, and more.

Applying Cost of Living

When you apply the cost of living changes to your new proposed salary, do not forget to factor the numbers with your disposable income for the area in mind. One thing you can do is use online cost-of-living calculators. These can help you determine how much you would need to earn in a new location to maintain your current standard of living. You may be surprised to learn that your new home has a lower cost of living, so even a slight pay raise will give you more discretionary income. Do not let everything hang on estimates, however. Take the time to look around at rental prices, fuel prices, and even supermarket ads online to see how the numbers stack up in real-world comparisons. The bottom line is that cost of living measurements can be valuable tools to determine if a job relocation is the right financial move.

Key Takeaways

Measuring the Cost of Living

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Disposable income is a consumer finance term used to describe your income after the deduction of taxes. It is a significant indicator of personal wealth and one of the tools we use to measure the state of the economy for consumers. There is a lot more to it than that, however. The better you understand the ins and outs of your disposable income, the better handle you will have on your financial situation.

What Is Disposable Income?

Once you take your income and subtract your taxes (federal, state, and local), your required paycheck deductions (Social Security, Medicare, unemployment insurance, back taxes, and court-ordered child support), and any other mandatory government payments (licenses, fees, and permits), what remains is your disposable income. Voluntary automatic contributions from your paycheck for retirement savings or 401(K) plans are not part of disposable income. They are not mandatory payroll deductions. Disposable income is money available for you to do the following with: It includes the amount you can do all the above without having to draw or liquidate assets. The basic formula to calculate disposable income is simple: Gross income — taxes, required payroll deductions, and mandatory government fees = disposable income However, disposable income includes all income received by an individual but not necessarily earned. Examples include unemployment compensations, social security benefits, food stamps, veteran benefits, and welfare payments. Disposable income includes all of these. Disposable income does not include realized or unrealized capital gains or losses from investments.

How Does it Work?

Disposable personal income is a crucial indicator of wealth for the national economy. So much so that the U.S. Bureau of Economic Analysis (BEA) releases information on the changes in disposable personal income from month to month. Ultimately, your disposable income is the money you are supposed to live on from month to month. It is the amount of money upon which you base your budget for each month and annual spending. You can use your disposable income to determine how much you can afford to spend on necessities. That includes rent or mortgage payments, rainy day savings, what you can invest, and what you have leftover for discretionary spending each month. The U.S. Government uses disposable income numbers and other economic statistics to determine the health of the U.S. economy, especially as it relates to personal savings rates. For instance, during recessionary times, the personal savings rate dips into negative territory, indicating that Americans have to dip into their savings to cover essential living expenses.

Disposable vs. Discretionary

It’s important to understand that disposable income and discretionary income are not the same, although people often confuse them. Disposable income is the total amount of money you have to work with for the month. Discretionary income includes money you use to pay for the essentials, which include things like: Discretionary income also includes income you have available for expenses that aren’t necessary for living, such as: As you can see, discretionary funds, while derived from disposable income, are not the same. When working out payment plans and calculating available funds for these instances, some organizations use discretionary income. Others use disposable income to determine how much you can afford to pay each month.

Takeaway

There are critical differences between discretionary income and disposable income. Understanding what disposable income is and how it is different from discretionary income can help you budget more effectively. Calculating disposable income can help you determine how much money you can reasonably apply to certain expenses in your life before you commit to them.

Calculating Your Disposable Income

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There’s a $400 charge on your credit card for a hotel at which you’ve never stayed. Alternatively, maybe there’s a smaller mistake, the $18 charge for an online newspaper subscription that you canceled a month earlier. You do not have to accept these charges. You can dispute them with your credit card company. Moreover, the best news is the issuer of your card is far more likely to side with you than with the merchants whose charges you are disputing. The odds are high that you will one day have to dispute a questionable charge on your credit card statement. Many of us rarely carry cash today. We pay for drinks and meals on airplanes with our credit cards. We check into hotels online, using our credit card number to complete the transaction. We use our credit cards to pay for restaurant meals, groceries and a night out at the movies. Also, how many of us buy clothing, video games, books and shoes directly from online retailers, paying for each transaction by punching in our credit card numbers. The potential for your credit card information to fall into the wrong hands, then, is higher than it has ever been. The good news is that the Fair Credit Billing Act, which went into effect in 1975, gives you the right to dispute suspicious charges on your credit card. When you dispute charges, your credit card provider will force merchants to prove that the disputed charge was not a mistake. This means that the burden of proof is on merchants, not you. This is a benefit for you, but a problem for many merchants. After all, there are plenty of unscrupulous consumers willing to dispute legitimate charges as a way to “purchase” items for free. Avoid this temptation. Only challenge legitimate mistakes. If you call your credit card company each month with complaints, the odds are that your card issuer will get suspicious. Instead of siding with you, it might flag you for suspicious behavior. To win a credit card dispute, you need to follow just a few simple rules. First, if you notice a strange charge from a merchant, don’t call the merchant. The Fair Credit Billing Act says that you can resolve disputes directly with your credit card provider. This is often the simplest way to a resolution. Credit card companies are required by law to conduct a reasonable investigation of your claims within two months. They are also required to send you a letter notifying you of their decision once their investigation ends. Most card issuers will, as they conduct this inquiry, take the disputed charge off your bill. If they resolve the dispute in your favor, then, you’ll never have to shell out any money because of the disputed charge. Don’t forget, though, that there are exceptions to the Fair Credit Billing Act. The act only applies to purchases that are more than $50. Also, the purchase must take place in the same state as the one on your billing address or take place within 100 miles of your address. Don’t let this stop you from disputing a $20 charge, however. Most credit card companies will take on disputes even if the complaints do not meet the stricter requirements of the law. Credit card companies, after all, want to keep their customers happy. Addressing their billing disputes is one way to do this. The third key to a successful dispute? You need to be aware of the charges made on your card. This means that you must study your credit card bill carefully each month. We are all busy people. However, taking a few minutes to study your monthly credit card bill could uncover some suspicious charges. Don’t ignore them. Dispute them.

Disputing a Credit Card Transaction

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If you lost your job tomorrow, would you have enough money to pay your bills without running up credit card debt? What if your car broke down and you needed $3,000 to get back on the road? Could you come up with the cash? If you answered “no,” then you need to create a rainy day fund, dollars that you can tap in case of a financial emergency. The benefit of such a resource is obvious: If you have one, you will not need to go into debt to handle the economic crises that so frequently pop up. U.S. Consumers Not Ready For Emergencies If you do not have a rainy day fund, you are far from unusual. According to a Bankrate.com August 2020 survey, 4 in 10 adults have the ability to cover an emergency expense that would cost $1,000. Those that are saving have probably not saved enough. The Bankrate.com survey reports that 27 percent of respondents have less than three months’ expenses saved, and 1 in 5 respondents with three to five months. Surprisingly, 21 percent of Americans have no emergency savings at all. No doubt the economic impact of a global pandemic that left millions out of work plays a substantial role in those numbers and when the economy starts to recover they’ll rebound significantly. How will consumers without a rainy day fund cover emergency expenses? Many would borrow from family members or friends while others say they would neglect a different financial obligation. Others would, of course, put the debt on their credit cards. None of these are reliable options. The best bet is to have an emergency fund available. The good news? Starting an emergency fund is not overly complicated. How Much Do You Need? First, you have to determine how much money you need in your rainy day fund. Most experts recommend that you have at least enough money in your emergency fund to cover three to six months of expenses. However, depending on the state of the economy or stability of employing within your profession, you might need more or less. Of course, the more money you have, the better. That is especially true in today’s economy when it is still easy to lose your job and often challenging to find a replacement that pays the same. To determine how much money you need, take a long look at your monthly expenses, including everything from your recurring bills — such as your mortgage payment, car bill, and student loan payment. Then include those costs that vary from month to month — everything from your grocery bills to your utilities and minimum monthly credit card payments. Add these and then multiply them by the number of months you want to cover. If your monthly living expenses come out to $4,000, then you would need $12,000 for three months of emergency funds or $24,000 for six. That is just the start of your rainy day fund. You will also need to budget savings for emergency situations. What if your kitchen sink suddenly springs a leak and destroys the cabinet underneath it? What if your car needs a new transmission? What if you need medical care and your insurance only covers part of the procedure? These are all financial situations that could throw you deep into debt without an emergency fund. It is hard to estimate how much you will need for these emergencies. According to American Family Insurance, you should look to save 1% of your home’s total price for maintenance. So if your home cost $200,000, then you should be looking to save $2,000 to cover costs. It could cost about $900 a year on average to maintain and repair a car that is five years or older. To be on the safe side, then, you might need to boost that $24,000 emergency fund to at least $27,000. That amount might seem like an overwhelming sum of money to save. However, it is not. No one expects you to save your money immediately. You will have to build your emergency fund over time. Start putting away whatever you can each month. That might mean cutting down on unnecessary expenses such as eating out, going to the movies or buying that high-cost coffee on your morning commute. It also helps to set up a direct deposit from your regular paycheck into the account that is holding your rainy day funds. Saving money is easier when you do not think about the money you are stowing away. With direct deposit, you never miss the money you are saving. Where To Save It Experts recommend that you save your emergency fund dollars in an interest-bearing bank savings account. There is a reason for that: You want to have easy access to the dollars in case of an emergency. With a savings account, you will be able to tap your savings quickly. Moreover, if you have your dollars in an interest-bearing account, you will at least earn a bit of money. You will not get rich by having those dollars in a traditional savings account. However, you might make a bit of extra cash. Many financial experts recommend that you start you rainy day fund before you take on other significant financial tasks such as paying off high-interest rate debt. That is because a fiscal emergency if you do not have the cushion of an emergency fund, could throw your financials into chaos. If that occurs, a crisis could send your high-interest-rate debt soaring to new heights. If you want to get financially healthy, the message is clear: It is time for you to commit to a rainy day fund of your own.

Building a Rainy Day Savings Fund

View Resource Building a Rainy Day Savings Fund