No point trying to implement an aggressive credit repair when the first step of self-improvement doesn’t exist. Before diving into highly effective debt management solutions, ask again, what went wrong during the process of a credit fix or clean up. There is a high chance of you not managing your personal finance to an ideal standard.
Good practices are demanded in today’s sophisticated credit world. Several financial crises had disabled bank’s easy lending policies, tightening of global financial regulations (mainly Basel III standards), and data transmission across borders. Your lenders may be bounded by domestic jurisdictions albeit wanting to issue out more loans for higher profits.
Pros of managing personal finance
Looking to rebuild your credit history in an organic manner, this is where management of personal finance steps in. It does incur a small amount of money but lesser than what many credit repair companies or debt consolidation agencies charged. Currently, your lenders perform timely credit reviews and inquiries to check on your updated credit report hence the need to pace up your growth in payment history & debt management techniques.
1. Organize monthly budgeting & analysis.
One distinctive advantage of indulging in personal finance is monthly budgeting. Forecasting is an important aspect of fixing your current & savings accounts. Although there is no right or wrong way in handling a monthly expenditure budget, having a fixated framework does elevate financial stress levels in the long run (best if done for the entire year instead of one month).
A spreadsheet, likely an excel file or a mobile budget app, aids you in breaking down the necessary expenses while separating out the wants from the needs. In fact, you’re already taking control over unwanted personal expenses that might be eating into your credit lines and resulting to a decrease in credit score.
Here are some of the items separated for good to your personal finance portfolio:
Hopefully, your existing personal finance portfolio is in good shape. The above table titled “My Personal Finance Portfolio” seems to be off-mark for a good borrower. Financial institutions like banks want to take upon consumers with lower risk profiles as well as having the ability to make debt repayments on time. A bad credit report is not what any lenders are looking out for, be it some credit dispute errors or long-term liabilities.
2. Proactive identify financial constraints.
After performing a detailed credit check on your personal finance portfolio, focusing on the needs and wants of your lifestyle, it’s imperative to adopt a proactive attitude in identifying high probability financial constraints. This is a form of financial planning & forecasting in advance of financial problems arising near future.
Some high probability financing problems that might arise near future are:
- Insufficient personal savings – you might be busy sending money all over the place except your savings accounts.
- Payday loans – getting a payday loan is not difficult, financing the interest of payday loans is.
- Overpaying in interests – be it credit cards, auto loans, or mortgage loans, you’ve to take initiatives in negotiating for better financing interests.
- Bad credit report & credit score – no one will provide better rate of interests if your credit score report is bad or filled with negative info and objects listed.
- High installment plans – costly items such as furniture or an auto have to be planned in advance before rendering a purchase agreement.
What these potential financing debt problems are consolidated to make you have an assurance on repairing credit in advance of them. It’s not a guaranteed way of avoiding financial risks but definitely reducing the exposure to such inherent risks. A good attitude towards handling your personal finance mix will lead to a long way of improving your credit score.
3. Induce creative thinking in boosting income.
Another advantage of listing out your monthly expenditure is innovation. The table above revealed many expenses and few income earnings. It should be the other way around if you’re looking for ways to be financially free before the recommended retirement age (approximately 65 years of old age). Do not think of this mission being impossible as bolstering financial productivity curvature begins from you!
Here are some creative ideas for you to boost your personal income earnings:
- Invest in a real estate – duplex, triplex, or any super-plex does generate a stable monthly rental yield for you.
- Sell a product or service – freelancing is a new “thing” in today’s contemporary setting to earn a quick buck.
- Work part-time – remember to contact your HR department and inform them on your ongoing work outside of current job scope.
- Ask for a pay raise – another good way of boosting income earnings without much efforts at your end.
- Set up a small business – if your relatives or family members can help, it be good to set up a small business or outlet store to sell goods (apparels, accessories, massages etc.)
There are many ways of increasing your monthly incomes. No, the difficult part is on the behavioral aspects known as laziness. Overcome laziness by reviewing your financial portfolio and debt portfolio on a daily basis. This will provide some guidance and strength in handling those bad debts deal at the end of next month – don’t forget interests being compounded on a daily basis too!
Online creative ideas or highly proven income-generating strategies can only motivate you that much. The remaining part of “fire” is based on your intrinsic motivations and what drives you to managing your personal expenses the right way. Being in KIG Hall, you’re already demanding an improvement in your lifestyle so why did you stop here?
4. Build a long-term strategy in asset-liability management.
In today’s world, there is no one-size-fits-all asset management and liability management strategy for you. No two individuals possessed the same credentials. It’s our uniqueness in credit consumption that made our debt management techniques different, not having the same set of unpaid liabilities, interests servicing, or any forms of repayments.
Here are some useful tactics & strategies in handling your personal assets and liabilities:
- Build a financial plan – this initiative has to be retirement driven, primarily to be able to survive without an active income.
- Reduce your liabilities – it’s difficult to acquire new assets to build up, but easy to terminate lines of credits and paid subscriptions.
- Increase your assets – an uphill task in asset management, but the rewards are bountiful in ensuring a smooth transition for retirement planning.
- Signup for an endowment plan – call your bankers for an endowment plan or endowment specialty companies for a customized one.
- Offset your interests with dividends – one of the best way in maintaining a consistent income without needing to pay for interest expense.
Understanding the importance of managing a long-term strategy in rebuilding your payment history is necessary. Yes, it does take time in generating an income over the span of several years but the endeavor to financial freedom is the key driver in making you do this. It’s not easy to manage some debt portfolios let alone some revenue-generating assets in this dynamic market.
Notably, a long-term financial planning gives you a quality control for your future family members in terms of financial security and economic prosperity. Passive incomes are the best option in producing a source of stable income for them, not requiring certain specialized roles in operating the business or needing to invest much time in building up their portfolios (just like you did). Never underestimate the power of compounded interests in passive income assets.
5. Natural way of improving credit score & fix credit report.
Lastly, the best advantage of dealing with personal finance habits is organic growth. What is so unique about organic growth in a credit portfolio mix? A natural way or remedy, starting from your financial spending patterns, essentially removes bad information and objects in a credit report while letting credit rating agencies score you higher in your credit score. This serves as a booster to your overall aggressive credit repair.
Have you realized that there is no expense incurred for an aggressive credit repair? Natural organic growth in maintaining a healthy gearing ratio automatically enrolls you into a spin of credit control measures – inducing your lenders to take a closer look at the shining debt management techniques used in handling unpaid debts.
A credit report requires time in removal of tax liens, writing off bad debts, and deleting obsolete info, all these do need time in extracting the credit report errors. An increase in credit score is based on several factors too. Again, time is needed so the best way is to remain patient and cover the ones you can control while leaving the rest to organic growth.
Good to know about personal finance in year 2018
If you’re ready for a change, be it for financial freedom or providing your family with the best solutions, your choice has to be in line with financial expectations. Global innovation does not need to happen but personal finance management is definitely the key to your motivation. Observe the following guidelines in actively managing your financing problems:
- Never push for temporary credit score boost
- Don’t try anything funny such as stealing other identities & credit card frauds
- Use a budget app calculator
- Repeat the process daily for financial discipline
- Sell away unused assets and pay for liabilities
The route to being financially healthy is long. One wrong move in getting into an expensive liability or costly mortgage loan can jeopardize the entire retirement planning goal. Do not attempt to invest in areas of unknowns as well as entrusting 100% of your personal finance portfolio to any financial planners. You’re in safe hands alone.
Cons of personal finance
Experiencing a rough ride in the pros, here are some of the worst cons you can expect in a personal finance. There are many risks associated in debt management techniques as far as undergoing many financial crises – top industry players went bust even with the best resources and asset diversification classes. You’re in the wrong direction once greed takes over your prudent attitude. Avoidance of risk is obligatory so review the five worst cons below.
1. Lack of experience in handling sophisticated finances.
One major disadvantage of personally handling sophisticated finances is the lack of experience in the market. The credit world is dynamic and financial regulations such as lending policies, debt repayment schemes, credit repair companies, credit scoring models, and reporting functions do change from time to time. The compression of debt and economic lifestyle is growing out of control.
Assuming you’re following the above table titled “My Personal Finance Portfolio”, chances of you realizing certain sophisticated terms are high. Below are some examples of confusion:
- Mismatch of categories – there’s a chance of you not getting the right variations such as difference between Living and Home, Discretionary and Ancillary, Revenue and Income etc.
- Invalid info recorded – sometimes, you might be in a rush to pluck some figures while creating mild confusion at the end of month upon doing a budget planning.
- Missing credit consumptions – you might too miss out of certain important financial information due to tight schedule, failure to update causes budget discrepancies.
- Unsure of asset vs liability – a good problem is on not understanding the differences between an asset and a liability, differentiating them can significantly impact your credit report and month end balance sheet.
- Too many tabs – after a period of 12 months, your entire monthly tracker looks messy and filled with financial jargon, not knowing how to perform a breakdown analysis.
Evidently, most financial-savvy consumers reported difficulties in maintaining a comprehensive financial tracker on their expenses and earnings. It’s no surprise why budget apps & calculators are on high demand! But, the good news is that most apps and manual tracking do provide an accuracy of up to 75% so no worries on this problem.
What’s more concerning is on the use of personal finance applications. Some people diligently recorded much details within the month for 12 months but ended up not knowing how to decipher the mystery. It’s pittance on lack of understanding savings plans and other benefit plans, don’t forsake financial education and go for the bang-for-buck objects.
2. Time spent & resources incurred.
Another disadvantage deterring you from penning down every transactions is the sheer volume of time and resources required. It is a tedious task to write down your daily expenses in the report and many chose to forgo after implementing for some time (around 12 weeks or so). Do not be like them who opt for the easy path out.
Below are some ways to counter time consumption & resources used:
- Invest time to code or learn a budget app – tech-savvy consumers may develop an app to track daily spending & automatically uploading their credit reports at a push of a button.
- Make use of bank’s app – another way is to adopt a habit of inserting your current, savings and balance transfer accounts into the bank’s app.
- Check your credit card statements – an alternative solution is to keep all expenses within a series or a single credit card purchase, using the monthly generated billing as a comprehensive tracking expense tool.
- Ask your accountant to do the job – most consumers do need to file for taxes and the accountant can be put to good use – usually at a small cost can do the job swiftly.
- Lack of financial knowledge – no problem, seek your friend or relative to educate you based on their budgeting principles, then create a comfortable set of financial rules.
A financial distress may disrupt the entire workflow of personal finance. You’ve to be sure that the existing market conditions do not hinder your attitude towards managing debts such as sophisticated fixed-income liabilities, mortgages, credit cards, or autos. These longer term loans are meant to put stress into your mind, thereby lowering your financial productivity in handling them.
Financial instruments may seem complicated and challenging. If the fixed income problems do not resolve, you’ll be overwhelmed by the monthly bills & tracking down most issues turned into a chore. It is at best to outsource those financial problems to credit repair companies else listing them down automatically using budget applications.
3. Probability of doing credit repair wrongly.
One common mistake money builders made is to do a credit cleanup wrongly. Yes, even experienced financial-savvy personnel do make mistakes when it comes to handling of a credit report or a personal finance portfolio. The problem may come in the form of a credit report error, missed payment info, a mistake in disputes, data mismatched, or not enough details given to credit repair companies.
Below are some common mistakes being found in approximately 79% of American consumers:
- Invalid personal information written – most consumers had difficulties in accurately detailing down their personal info as a result not being able to apply for loans.
- Obsolete personal info – shifting homes is a common practice and many people don’t update their mailing addresses and particulars.
- Aged credit info problem – one bad information is the lack of frequent update in annual wage schemes (job increments & promotions being missed out).
- File for verified disputes – some credit repair agencies filed all cases and initiate many disputes including positive claims & verified judgements.
- Boosting of credit score temporarily – some consumers invested in aggressive credit repair services for an adrenaline credit score rush but failing to observe permanence.
As you can see, easily 5 variations on a credit repair error has been verified. There’s approximately 9-15 errors on consumer debt reports, let alone your personal finance portfolios. Do not be alarmed as most credit report mistakes are minor in nature but many mistakes caused a hindrance in the eyes of lenders – mainly during credit inquiries and financial rating updates.
Never be part of the high probability of doing a credit repair the wrong way. It’s imperative to be (very) sure of your existing good credit report and maintain high-quality standing. Your lenders often checked upon new & old applications to better understand credit consumption behaviors before issuing an approval to your applied bank mortgage loans.
4. Slow organic growth in credit repair.
Enrolling into organic growth for a credit repair is a slow process. Many people wanted an immediate credit fix and are willing to pay for deletion of bad information. In doing so, you’re effectively transferring the risk out to local credit repair companies but not appropriating relevant debt problems to the correct places.
Some argued that paying for deletion of bad information and removal of tax liens is not a bad move. False! By rendering an immediate credit repair cleanup, your creditors and local governments are alerted on the request for deletion and getting prepared to negotiate on the claims. Below are some common problems faced by both debtors and creditors:
- Grey area credit dispute errors – under exceptional circumstances such as delayed responses from third-party vendors, both debtors and creditors don’t know how to deal with such a situation.
- Final say by credit bureaus – in any of the credit dispute process, an assigned credit bureau officer has the authority to make a final decision instead of you or the creditor.
- Creditors issuing lawyer letters – if alarmed, your creditor like banks or credit card companies dished out legal lawyer letters to protect against negative claims.
- Time drag cost – cost of carrying debt burdens is not worth the duration, some debtors tend to be overwhelmed easily.
- Money spent on fixing credit – a credit repair does not guarantee success and money invested might not yield favorable responses from either end.
A natural credit repair has its disadvantages too. There’s no complete debt management solutions for you hence requiring your kind attention in recovering bad debts as well as fixing bad information the proper way. It’s not difficult to handle those unpaid dues so long as you’re equipped with the necessary knowledge while exercising patience during the credit fix.
Notably, the above table titled “My Personal Finance Portfolio” is a good example of various debt problems arising among the other topics mentioned earlier. It’s crucial for you to obtain a favorable change from your creditors instead of taking the initiatives to file for credit dispute errors without anyone knowing. This pretty much sums up the tremendous “force” behind a credit repair for growth in personal finance portfolio mix.
5. Unaware of “hidden” legal & financial implications.
Lastly, almost every debtor gets into the problem of hidden costs. For an initial start, incentives are given to you in order to attract you in rebuilding your financial planning via planners and agents. You might not feel the pinch of operating costs while the contractual agreement is being carried out.
Over time, when the incentives such as discounts, freebies, or cash rebates worn off, massive costs started pouring in like waterfall. You’ll be shocked to see many hidden charges and service taxes being imposed, finally enabling you to understand why the incentives were used up so quickly. The budgeted campaign might cost up to ten times of initial contract pricing!
Therefore, do not fall into a debt demise in the long run. You’ve the rights to request for a complete transparent credit repair service before the process begins. If you’re unclear of the requirements, call your local credit bureau agency to help facilitate the entire conversation and getting you to sign on the dotted lines of a contract for a comprehensive credit repair.
Good to know about personal finance in year 2018
Digesting an impeccable wall of personal finance information, you are proven to be ready in managing your individual retirement planning – in the short term and long run. Don’t think of financial planning or generational wealth transition as a one-time limited effort. It’s usually an ongoing process that requires a great deal of time & knowledge. Observe the following guidelines to remain assertive when dealing with your personal financial portfolio:
- Individual asset-liability management
- Family planning
- Retirement planning
- Generational wealth planning
- Insurance protection & coverage
- Local taxation policies
- Credit repair aggression
You’re in good hands upon acknowledging the pros & cons of a personal finance. No amount of money can resolved major conflicts while lack of cashflow often fetches financial disaster, you have to maintain a good balance between your personal expenses and incoming revenue from work and businesses.
Quote of the Day: “Get to know yourself better – KIG Hall [2013-2018]”
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This article was originally published on February 21, 2014. It has since been updated.