Credit reports

Do unexpected car repairs, quarterly insurance payments or those darned property taxes find you hard pressed to squeeze o­ne more dollar out of an already stretched monthly budget? Or do you usually end up reaching for the plastic in your wallet to make up the difference? Those inevitable expenses can put less stress o­n your bank balance — and your mind — if you learn to expect them and save in advance.

Do unexpected car repairs, quarterly insurance payments or those darned property taxes find you hard pressed to squeeze o­ne more dollar out of an already stretched monthly budget? Or do you usually end up reaching for the plastic in your wallet to make up the difference? Those inevitable expenses can put less stress o­n your bank balance — and your mind — if you learn to expect them and save in advance.

Too often, irregular occurring expenses get left out of our financial equation. Our income stretches to cover the regular monthly expenses and the remainder trickles away toward little things like the morning espresso or lunches out or a dozen other daily splurges. We choose not to think about the brakes that are getting spongy or the plumbing that’s beginning to make strange noises. And we end up riding a financial roller coaster, never knowing when the next crisis will throw us for a loop.

Planning and saving for those events can help prevent an ordinary life from turning into a crisis and can also cut down dependence o­n credit cards. Not having savings is a major reason people get into debt — event when they don’t have problems controlling their spending.

An Anti-Emergency Fund™ is the way to anticipate and save for those irregular events that are anything but unexpected. The Anti-Emergency Fund™ is the foundation of the three-part savings plan we’ll be discussing in this and coming issues of Financial Fitness. With a little advanced planning, a broken water heater, a high winter heating bill or the family vacation don’t have to result in financial emergencies. An Anti- Emergency account helps in saving for those variable expenses, both expected and unexpected, that inevitably occur.

Some people call this their “emergency fund,” but it’s really a savings fund that helps you prevent financial disasters. No, you can’t predict when your car is going to break down, but you can predict that it will occasionally need maintenance and repairs and set aside a little money in advance for those events.

Here are some steps to help you get started o­n your Anti-Emergency Fund™:

Identify your irregular expenses. Take an inventory of those variable expenses that occur throughout the year. Looking back at checking account registers and credit card statements can help you do this. Some examples of these include property taxes, insurance premiums, vacations, car tune-ups, holidays and birthdays. List as many of your non-monthly expenses as you can remember.

Write the anticipated amounts o­n the calendar. In many cases, you will know when the expenses are due to occur. In others, you won’t. But you know that sooner or later a car will have problems or an appliance will break down. Try to anticipate these expenses and list them somewhat earlier than you actually expect them to come up. Be sure to update your calendar as you discover more expenses.

Include money in your monthly spending plan for non-monthly expenses. If your car insurance, for example, is due in May, set aside a small portion each month starting in February. That way, when May rolls around you can transfer the expense to your spending plan and have money available to pay it. Setting aside even a few dollars each month for foreseeable expenses can make it easier to manage your money throughout the year.

You may think you don’t have any “extra” money during the month to set aside, but repairing your car or paying your insurance are not optional expenses. By setting aside small amounts ahead of time, you’re avoiding larger money woes ahead. So you may need to find ways to reduce your regular monthly spending. By tracking your expenses, you may discover areas where you can trim your monthly spending with o­nly small sacrifices. Costs of twice-weekly trips to the drive through or a professional manicure can add up quickly over a month. The important thing is to start today. It may be discouraging at first if you find that you don’t have enough money to fully fund your Anti- Emergency Fund™, but you’ll begin to succeed the minute you start the process. Small amounts of savings add up quickly and start compounding immediately!

One of the mistakes people make when trying to get their finances under control is not having a savings account. They may reason that it’s better to put money toward reducing credit card debt at 18 percent interest than to toss it into a low-interest regular savings account. The problem is that if you don’t have money set aside for those unavoidable bills, you inevitably end up adding to your credit card balance to cover the difference.

Stabilizing your debt means agreeing not to incur new charges and to begin paying down what you owe. A savings account is a key element in making that happen — and in improving your financial fitness!

Most of the time this “convenience fee” is applied to something that is actually saving the business or organization thousands, tens of thousands, even millions of dollars a year.

It sounds appropriate, the business or organization goes out of it’s way to provide you a new or extended service that saves you time and money and you pay a small fee for this added service.

But most of the time this “convenience fee” is applied to something that is actually saving the business or organization thousands, tens of thousands, even millions of dollars a year. Not o­nly are they cutting costs but they are increasing revenue by socking you with another fee for a service you already pay for through your regular payments or fees.

This tirade was sparked by my having to pay a $2 “convenience” fee to pay some state sales taxes. While $2 isn’t much and it was more convenient to be able to pay o­n-line rather than having to write a check, find a stamp and remember to mail it, I am annoyed that it was charged in the first place.

Since the transaction was done entirely o­n-line, the state saved o­n payroll costs for a state employee that would have to open my letter, extract the information, figure out what the payment was for, lookup my account o­n their computer system, enter the payment information, and prepare the check for submission to the bank.

This may o­nly take a state employee a grand total of 10 minutes, but if that is all the person does all day long and they get paid $10 an hour (though most likely it is much more when you add in all those great state benefits), then it would cost the state $80 for that day’s work.

But if I do the work myself through my o­n-line payment as do another 48 people, not o­nly does this poor employee have nothing to do that day, but the state saves $80+ in payroll costs. But also the state charges each of these 48 people a “convenience fee” of $2. So the state also increased revenue by $96. For a total net gain to the state of $176+ per day.

What is interesting is that the $80+ dollars that was saved is less than the total of the convenience fees.

But I can see a reason for the convenience fee. If I owe $100 taxes and I want to use my AmEx card to pay it, AmEx charges for the transaction. So the state is right in charging me extra for the “convenience” of using my credit card.

But if I just saved the state by doing the transaction and recording the information myself o­n-line, didn’t I just save the state some money. If AmEx charges the state a high 3% fee o­n tranactions, my $100 trasaction would cost the state $3. If the total cost for the 10 minutes the state employee to open and process my payment is more than $3 then the state saved money.

If the state pays the employee a measley $10/hour plus benefits and we estimate the total payroll costs at $14/hour and add in half again for the costs of the building, utlitiles and equipment that employee uses we get a total of $21/hour cost.

So the 10 minutes it would have taken the state employee to process my payment would cost the state about $3.50. If the state saves $3.50 by giving me the convenience of paying my bill o­n-line and it costs the state $3.00 for the credit card processing fee, didn’t the state just save an additional $0.50 o­n my o­ne transaction alone.

$0.50 is not much but add that up over the state population and over several years and it is significant savings. Also, it these times of tax increases and government budget woes you would think that any savings or reduction in expenses would be a welcomed thing.

So why is the state being stingy and additionally charging me a “convenience fee” when I am helping them to save money? Should they give me a discount to encourage me to try their new system.

Once I have used the system (if it is a well designed system) I will probably use it in the future, thus saving them additional money for years to come. People should be encouraged and rewarded for going out of their comfort zone to try something new, especially if it saves the business or organization money.

And don’t even get me started o­n bank ATM fees. This same argument can be used o­n banks and their ATM “convenience fees”. Everyone knows that they saved billions of dollars over the last 20 years with ATMs.

In the meantime, I will use and even appreciate the convenience of paying my tax bill o­n-line, but I will cringe each time I am charged a “convenience fee” for helping my state save money. Tax breaks anyone?

New changes in the FCRA (Fair Credit Reporting Act) regarding identity theft are presented here.

New changes in the FCRA (Fair Credit Reporting Act) regarding identity theft are presented here.  Further detailed information can be found at the Federal Trade Commission site, http://www.ftc.gov/, under “Fair Credit Reporting Act”. This is just a general step-by-step guide to start the process.

File Police Report:

It is very important to establish time of discovery and action.
Submit relevant copies of documents relating to the case.
Itemize all creditors affected and properly identify them by their name, your account number and amount involved.
Obtain copies of the police report.  At the very least get the file number.
Be persistent.  Local authorities may tell you they can’t take a report.  If that is the case then try going to the county or state police.  If you’re told that identity theft is not a crime under your state law, then ask to file a “Miscellaneous Incident Report”.

It is okay if you don’t have everything needed at the time you are filling out the report.  You can follow up later with additional information.  Just be sure to obtain an updated police report.

Contact Credit Reporting Agencies (CRA):

Experian
888-397-3742
PO Box 9532
Allen TX, 75013

Equifax
800-525-6285
PO Box 740241
Atlanta GA, 30374-0241

TransUnion
800-680-7289
Fraud Victim Assistance Department
PO Box 6790
Fullerton CA, 92634-6790

Call to activate a fraud alert.  You o­nly need to call o­ne agency, as they will notify the other two agencies for you.

1.      A credit report will be sent to you along with a credit score.

2.      You will be opted out from creditors receiving your name for solicitation purposes for a period of 5 years.

3.      Follow up the dispute with the credit-reporting agency.

4.      Put your request in writing.  Mail it “Return Receipt Requested” and “Certified”.

5.      Keep original copy for your records.

When corresponding with the CRA include the following:

Full name
Address
Copy of Social Security Card
Copy of government-issued identification card
Date of birth
Copy of police report or file number
Notarized copy of the FTC ID theft affidavit
Name and account number for each account disputed
Copies of any relevant documentation involved with the ID theft case
A statement that the information is not relating to any transaction by you, the consumer

For extended fraud alerts the CRA needs:

A copy of a telephone bill showing both your home address and the telephone number you want added to the credit report.
A request for a victim statement to be added to your credit file.  The statement will say something like “Please verify identity before extending credit.  Victim of ID Theft.  Phone number is _______”

This will remain o­n your credit report for 7 years or until you write back requesting it to be canceled.  In addition, you are entitled to receive two free copies of your credit report and score within the first 12 months.

The following is an excerpt from the Fair Credit Reporting Act o­n the FTC web site.

“A CRA shall block the reporting of any information in the file of a consumer that the consumer identifies as information that resulted from an alleged identity theft.

A CRA may decline to block, or may rescind any block, of information relating to a consumer, if the CRA determines that:

The information was blocked in error or a block was requested by the consumer in error.
The information was blocked, based o­n a material misrepresentation of fact by the consumer relevant to the request to block.
The consumer obtained possession of goods, services, or money because of the blocked transaction or transmission.”

If a block of information is declined, the credit-reporting agency will be obligated to notify you within 5 business days that the blocked information has been added back to the credit report.

Regardless of the block in place, Federal, State, or local law enforcement agencies will still have access to this information to complete their investigations.

Disclosures to consumers

A consumer can request that the first 5 digits of the social security number not be included in the credit report. The Fair Credit Reporting Act states that if “the CRA has received appropriate proof of the identity of the requester, the CRA shall so truncate such number in such disclosure.”

Additional items of importance to do:

Call the Federal Trade Commission at (877) 438-4338 or visit their web site, http://www.ftc.gov/, to report your fraud case.
Request their booklet titled “When Bad Things Happen To Your Good Name”.
This book contains the needed ID Theft Affidavit.
Be sure to read this book, there may be other relevant organizations you will need to contact in connection to your identity theft case.

Contacting Creditors and Collection Agencies:

Inform creditors immediately to close accounts connected with the identity theft.
On existing accounts, request for a new account number, change pin number, and password protect.
Inform the creditor that you wish to opt out from receiving solicitation by telephone or mail from them or their affiliates unless it is law enforcement.
Ask for their specific address for disputing fraud.

Will need to send in writing, “Return Receipt Requested” and “Certified” mail the following:

Full name.
Address.
Copy of Government-issued Identification Card.
Copy of Police Report or file number.
Notarized copy of the FTC ID Theft Affidavit.
Copies of any relevant information proving that such accounts appearing o­n credit report do not belong to you.
A statement that the information is not information relating to any transaction by you the consumer.

Note: Additional information may be requested, and various lenders may require additional forms.

A consumer has a right to request and receive documentation in connection to the fraudulent account or transaction from the creditor at no charge.

It is important to keep original documentation received in connection with the ID Theft.

If you correspond by telephone then also keep notes of the following:

Time of the call.
Phone number called.
Name of customer service representative who helped you.
Outline of what you talked about with them and what follow ups you will need in connection to the call.

Policies that will be changed o­n the creditors end to further protect consumers as stated in The Fair Credit Reporting Act:

“If a card issuer receives notification of a change of address for an existing account, and within a short period of time (during at least the first 30 days after such notification is received) receives a request for an additional or replacement card for the same account, the card issue may not issue the additional or replacement card, unless the card issuer:

Notifies the cardholder of the request at the former address of the cardholder and provides to the cardholder a means of promptly reporting incorrect address changes.
Notifies the cardholder of the request by such other means of communication as the cardholder and the card issuer previously agreed to.”

Prohibition o­n Sale or Transfer of Debt Caused by Identity Theft as stated in the Fair Credit Reporting Act.

“No company shall sell, transfer for consideration, or place for collection a debt that they have been notified resulted from identity theft.

Note: Nothing in this subsection shall be construed to prohibit:

1.      The repurchase of a debt in any case in which the assignee of the debt requires such repurchase because the debt has resulted from identity theft.

2.      The securitization of a debt or the pledging of a portfolio of debt as collateral in connection with a borrowing.

3.      The transfer of debt because of a merger, acquisition, purchase and assumption transaction, or transfer of substantially all of the assets of an entity.”

Notice of Discrepancy in Address
If a company has requested a consumer report relating to a consumer from a CRA, the Fair Credit Reporting Act states if “the request includes an address for the consumer that substantially differs from the addresses in the file of the consumer, and the agency provides a consumer report in response to the request, the CRA shall notify the requester of the existence of the discrepancy.”

Pammila Phillis is a staff writer for CardRatings.com. She is also a frequent contributor to the CardRatings.com message board and to the Star Credit Repair forum, a forum that she administers.

You probably know something about the problem of identity theft—situations in which a con artist uses someone else’s name, Social Security number or other personal details to make purchases, take out loans or commit fraud in the name of an innocent victim.

You probably know something about the problem of identity theft—situations in which a con artist uses someone else’s name, Social Security number or other personal details to make purchases, take out loans or commit fraud in the name of an innocent victim. But do you know how you, with the help of credit reports and credit bureaus, can help spot or stop the theft of your identity?

First, here’s why you should care about fighting ID theft. It is, by far, the most common fraud complaint that consumers bring to law enforcement authorities and consumer protection groups. According to the latest data compiled by the Federal Trade Commission (FTC), identity theft in 2002 topped the list of consumer fraud complaints for the third year in a row, accounting for 43 percent of the total. And while federal laws and industry practices can limit your liability if you become a victim of identity theft, it can take you a very long time (even years) to repair the damage. That includes notifying creditors and law enforcement that you’ve been victimized, closing tainted accounts and opening new o­nes, and correcting your credit report.

You also may be denied loans, jobs, housing, insurance or other opportunities if an ID theft shatters your reputation and credit rating. “A thief can secretly run up thousands of dollars in bills using your name and a different or fictitious address, and you may not be aware of this until you are turned down o­n an application because the delinquent debt was recorded o­n your credit report,” says Michael L. Jackson, Associate Director of the FDIC’s electronic banking branch.

Another good reason to guard against ID theft is that “you protect yourself and other consumers from higher interest rates and fees that lenders charge to recoup losses from fraudulent credit cards and loans,” explains Cora Lee Page, a Consumer Affairs Specialist with the FDIC.

So, how can you use credit bureaus and your credit report to protect against identity theft?

Monitor your credit report for warning signs, including loans or leases that have been wrongfully taken out in your name. Also, pay close attention to the “inquiries” section of the report that shows who has requested a copy of your credit history. That’s because thieves sometimes impersonate business people with a legitimate right to obtain credit reports. “Once crooks have the information in your credit report, they can either attempt a financial scam in your name or at least determine your vulnerability as a target of identity theft,” says Jackson.

In general, you should consider obtaining copies of your credit report from the three major credit bureaus about o­nce a year to verify that the information is correct. But be aware that there are services that will frequently (even daily) monitor your credit report for possible signs of fraud or theft. “These services don’t necessarily prevent identity theft from happening, but they can alert you to changes in your credit file that may indicate identity theft,” says Jackson. He adds that the fees for these services (often $70 or $80 for a yearly subscription) can be more costly than obtaining periodic credit reports o­n your own, but the added level of convenience may be worth the cost.

If you find suspicious transactions o­n your credit report, take the following steps:

• Contact creditors to discuss questionable items and close accounts that you believe are fraudulent or have unauthorized transactions.
• Call the fraud department at each of the major credit bureaus to ask that a “fraud alert” be placed in your file, so that lenders will be alerted to the fact that you may be a fraud victim. Ask that the fraud alert state that you do not want new credit extended without contacting you first.
• Contact the local police to file a report. Keep a copy in case you need it later as proof of the crime.
• Consider filing a complaint with the FTC, which will store the information in its database so that it can be accessed by law enforcement agencies worldwide. The FTC also can provide information o­n what steps victims should take and sometimes will refer cases to other government agencies or private organizations for further action.

You can read articles about identity theft and financial frauds in past issues of FDIC Consumer News at www.fdic.gov/consumers/consumer/news, including a special feature o­n ID theft in the Summer 2000 edition called “When a Criminal’s Cover Is Your Identity.”

You may already be familiar with Check 21, a federal law that came into effect o­n October 28, 2004. If you’re like me, this may be something you hadn’t heard about until just yesterday. The Check Clearing for the 21st Century Act, otherwise known as Check 21, is the process of turning the checks your write into images and transmitting them by computer.

You may already be familiar with Check 21, a federal law that came into effect o­n October 28, 2004. If you’re like me, this may be something you hadn’t heard about until just yesterday. The
Check Clearing for the 21st Century Act, otherwise known as Check 21, is the process of turning the checks your write into images and transmitting them by computer.

What does this mean to you?

Expect the time your check clears to decrease drastically. If you live paycheck to paycheck and often count o­n a o­ne or two day “grace period” to get funds into your account after paying bills, you’ll need to re-organize your budgeting process. Checks will clear in a matter of hours now, not days.

You will no longer be getting your cancelled checks back with your bank statement. If you get anything at all, it will be a “substitute check” which is a certain kind of copy of your original check.

You may be charged extra fees. It’s possible that by using this method, your check will be paid twice: o­nce with the original and o­nce with the scanned image. Or there may be an error made in the amount a check was written for in the process of turning an paper check into an electronic
check.

What you should do:

Re-organize your budget. You have to make sure that you have the funds in your account to cover every check you write to avoid bouncing any checks.

Request substitute checks. You will not be entitled to a credit to your account if an error has been made unless you have a substitute check.

Balance your checkbook. If you are not in the habit of balancing your checkbook with your bank statement each month, you need to start. This will ensure that you’ll find any mistakes that may have been made.

Learn more. Consumer’s Union did not support Check 21. Find out why and learn more about Check 21.

Check 21 is sweeping new federal law that takes away your ability to get back your original paper checks. Under this law, consumers will be more likely to bounce checks and may find themselves paying higher bank fees.

• You won’t be able to get your original paper checks back, because your bank will no longer have them.
  
• Checks you write will clear sooner, increasing the risk that a check will bounce if funds are not in the account when you write the check. Don’t write a check unless the funds are already in the account to cover it.
  
• ” You may not get access to the funds from checks you deposit any sooner, because the new law does not shorten check hold times. After 30 months, there must be a study o­n whether banks are making funds available to consumers earlier than the allowable hold periods.
  
• Banks will save money o­n processing checks, but banks are not required to share these savings with consumers.
  
• Different kinds of copies of a check will have different rights attached. Check 21 creates a new kind of paper copy of an electronic image of a check. This special kind of copy is called a “substitute check.” o­nly a substitute check can be the legal equivalent of the original check, and o­nly a substitute check triggers your right to recredit of disputed funds. A regular copy of a check does not carry these same protections. If you ask for a copy of a check, your bank may send you an ordinary copy instead of this special kind of copy which triggers legal rights and protections unless you ask for a substitute check.
  
• “A bank other than your bank will have your original check, and will decide whether to destroy it. Neither Check 21 nor other law requires a bank to keep your original check for any period of time. Before Check 21, your own bank decided how long to keep your original checks, if you didn’t get them returned with your statement. Under Check 21, the bank of the person you wrote the check to may decide when to destroy your check.
  
• Consumers will get new rights for some electronically processed checks, but not for others. When a so-called “substitute check” is provided to a consumer, Check 21 gives the consumer a right to have funds of up to $2,500 recredited to the consumer’s account in 10 business days if the check is paid twice, paid for the wrong amount, or otherwise paid in error. The statute is ambiguous about whether this new right applies when a paper substitute check is used in the processing of the check but is not returned to the consumer. The regulations restrict the right of recredit o­nly to checks where the consumer was provided with a substitute check. If a check is processed electronically by all the banks it is routed through without the use of a substitute check and the consumer is not provided with a substitute check, then the check remains under state check law. In that case, the consumer does not receive a 10 day right of recredit even if the electronic image of the check is paid twice, paid for the wrong amount, or if both the electronic image and the paper check are paid.
  
• Consumers who want to maximize their consumer rights should ask for return of “substitute checks” with their checking account statements. Watch out for fees associated with a substitute check-returning account. Look for another bank if your bank charges a high fee to get copies of all your checks as substitute checks.
  
• Only the special “substitute check” can be legally equivalent to the original check to prove payment. The copies that a bank sends to consumers under a so-called “voluntary truncation” agreement, where the consumer agrees not to get the checks back, do not prove that a payment has been made, and do not trigger your Check 21 recredit right.

You might think that if you win the lottery or get a huge raise, all your problems will be solved. Sounds logical, right? Well, it might sound logical, but it isn’t. Having a bigger bank account will not make all of your problems disappear. Why?

You might think that if you win the lottery or get a huge raise, all your problems will be solved. Sounds logical, right? Well, it might sound logical, but it isn’t. Having a bigger bank account will not make all of your problems disappear. Why? Because money is nothing more than a giant magnifying glass. Any problems you have with money o­nly get bigger when you have more of it. There are people who earn $150,000 a year who have huge money problems because they have never learned how money works.

So, if you are want to implement another top wealth creating habit in your life, learn how money works while your bank account is still modest. Deal with any out-of-control spending habits, plus any fear of loss, fear of risk and fear of money issues you might have. If you start small, you’ll be able to make a lot of mistakes without it costing a bundle.

You see, if your bank account is large, chances are that you will want to play big with your money—buy large things, invest large sums and take huge risks. If you’re not well-educated about money, though, or don’t have a lot of experience yet, huge risks can equal huge loss. But if your bank account is small, you’ll be more inclined to learn how to handle your money carefully and frugally, which minimizes your down-side. Sam Walton, founder of Wal-Mart and Sam’s Club stores, always proclaimed that if he controlled his expenses (i.e. kept it small), he could afford to make a lot of different mistakes.

So if you think that you have to wait until you win the lottery to start learning about money, think again. Now is the time to start, while it’s all very small. You can’t hurt yourself too badly when your bank account is small, and you can learn a whole lot. It’s never the size of your bank account that matters—it’s how you deal with money, no matter the size of your bank account. And in this case, the size does matter and smaller is better. Good luck o­n implementing this top wealth creating habit!

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Author: Stephanie Yeh and her partner have helped many other people achieve and experience prosperity with the help of a strong 15 year network marketing business. Her current project, the Journeyman Wealth Program, is aimed at helping 15 people a year fully achieve their dreams. Stephanie’s Prosperity Abounds website works o­n the basic principle that “You are the creator of your own reality!”. Get more details o­n her website at http://www.prosperity-abounds.com.

What is the difference between wealthy people and poor (even average) people? It is not all the money that wealthy people have and the average don’t, nor the luxury, nor the lifestyle. It is their mindset. A few lucky people have won a lot of money and become wealthy overnight but in short time many of them have returned to their prior financial condition too soon.

There is no trace of all the riches they have o­nce won. Very few of them can stay wealthy long enough to actually improve their quality of life.

Why? Because it is not the money and the luxurious lifestyle that make people wealthy. It is their mindset.

Real wealthy people act differently upon the big cash they can get their hands o­n and upon everything else pertaining money and possession. And this is because they think differently from most average people in the first place.

Let’s think this through and discuss the way average people think…

As soon as they can get their hands o­n a big fat check, average people would almost immediately go shopping. Buy the latest model car, luxurious home, or spend it o­n renovation, o­nce-in-a-lifetime luxurious vacation… blah blah blah.

They think that in order to really become wealthy, they have to possess all the stuff that wealthy people would have, travel to places wealthy people would go to, drive the cars wealthy people would drive or live in big mansions where wealthy people would live.

Real wealthy people can afford all the above simply because they have higher purchasing power. Most of us, o­n the other hand, would think that by having all those above we just might be considered as ‘wealthy’. We tend to think that to become wealthy we have to ‘act’ or ‘live’ like those who in reality are.

Ironically, the fact is to become wealthy we have to ‘think’ like real wealthy people.

Once again I must say that it’s the mindset that makes people wealthy. It’s neither their possessions nor what they spend their money o­n.

Most of us go shopping while holding o­n to this principle: Buy now, struggle later.

When wealthy people go shopping they think: Delay it now, invest the money, and have all you want later o­n! They embrace delayed gratification.

Generally, too soon, the average people would end up in debt due to their principles of immediate gratification. And in most cases their debt worsens. Car loans, furniture loans, education loans, home loans, credit cards… and who knows what else.

As the story continuous, I believe, it becomes more and more familiar to the vast majority: In order to pay off all the debts, they become slaves of their own jobs after they realised that they had been “slaves of their own debt” for some time.

To them, a job becomes a necessity as opposed to a choice. It is chosen based o­n how big the salary is to pay off their debt, instead of o­n the satisfaction the job provides.

Can these people retire early? No. In fact, they wouldn’t even dare to think about it! They are too deep in debt to quit and to just come and go almost at will.

On the other hand, not o­nly do the wealthy know the negatives of being in a debt, they also know precisely the advantages of being debt-free. By being debt-free, they have more money to save.

The more money wealthy people have, the more they can invest in their own businesses. Exactly these businesses are their assets that generate life-long passive income for them. True wealthy people have known for decades that having traditional jobs would NEVER make them rich. It would make their bosses rich for sure but there is no way acquiring real wealth merely by trading time for money.

Can business owners retire early? Yes. Having your own business means having passive income for life (more likely even longer than that). If you work consistently o­n growing your business, you will come to a point where your passive income exceeds your daily living cost.

If this happens, you can choose when to work, where to work or what. Your choice of jobs will not be limited by how much money they provide. Moreover, a job for you would be more of a choice than a necessity. Even if you chose not to work, you would still have money coming in from your business.

This is what real freedom is and this is exactly how wealthy people think!

Ironically, I have met some people who sneer at the idea of investing in a business. For some reason they think that people who are interested in investing must be so much in love with money, or even slaves of it.

Most average people think that business owners must have become wealthy by the drive of their greedy, selfish minds. They tend to think that business owners must be slaves to their money and riches that they could actually have riches so abundantly now.

The truth is their mindset is exactly the opposite.

Exactly because of UNSELFISH reasons, business owners set up their businesses in the first place.

By having their own businesses which generate passive income for them, they have quality time to spend with their loved o­nes.

They are not too busy to go to their daughter’s first dance recital or to show up at his son’s birthday party.

They are not too busy to spend a o­ne-week holiday with their spouse. They are not too busy (nor too broke) to be involved in voluntary social work.

The average traditional worker, o­n the other hand, would not be able to just go and have a holiday anytime he pleases. He has a too tight schedule to come to his daughter’s dance recital or his son’s 6th birthday party. And, hey, he’s too busy (and too broke) to do voluntary social work! He needs jobs that pay well and social works just won’t do.

Well, who is the selfish o­ne now?

Most importantly, because the businesses wealthy people own generate passive income not o­nly throughout their lives but also throughout the lives of their children and grandchildren, business owners prove themselves even more UNSELFISH than the average people do.

People with typical jobs will either retire broke or die poor, leaving their families with nothing (if not with their remaining debt).

By having the right mindset, you will not o­nly be able to have abundant riches, but also a great chance to live abundantly: do all the things that provide satisfaction, spend quality time with you family and friends, and have all the time and money to voluntarily help other people and make your part of the world a better place to live.

Above all, having the right mindset will give you a chance to care and provide for your family even after you leave this planet.

Are you ready to adopt the wealthy mindset?

There could not be a better time to mull over the changes needed in our life style than at the beginning of a New Year. This is also a good time to set yearly goals and make resolutions. Each year, according to statistics, almost a third of us make some kinds of New Year Resolutions. Interestingly, although financial future is our main cause of anxiety, our personal finance, according to surveys, gets only to the fifth place in the list of most common New Year resolutions.

For those of us who are still in the process of making New Year resolutions, my suggestion is to give high priority to financial aspects.

Here are some resolution ideas that may change your financial future over the course of time.

Saving

Lets make o­ne thing clear! What ever amount of money you make it’s probably never enough! The way our consumer psychology works is our demand increases along with our income. This makes saving really a problematic task! Some people do have inborn ability to save willingly, but most have to force themselves. If you are o­ne of these people, who find saving a difficult thing, you should consider the methods described below.

• Commit to yourself that each month you will set aside minimum ten percent of your income for investment purposes.
• Make a strict habit of depositing 10 percent of all your incomes directly to your saving account.
• No matter what happens, don’t give up.

You might argue that your income is not enough to make any kind of savings. Believe me, o­nce you try putting away 10 percent of your earnings, you will see that this really does not have any serious impact o­n your budget.

So your first resolution is to save ten percent of all your incomes month after month.

There is hardly any point to save if you don’t put your money to work for yourself! So, o­nce you resolved to save, you need to invest your money wisely.

Credit cards and other consumer loans

According to New York Times through out the last decade use of credit cards has increased dramatically. The number of the people having credit cards raised about 75 percent from 82 million in 1990 to 144 million in 2003. However, the debt burden that they carry had grown 350 percent from US$338 billion to an astounding US$1.5 trillion. In 2003, according to the same>report, average household carried a debt of US$ 7,520 in comparison to US$2,550 in 1990.

This means that credit card loans are becoming serious problems for average Joe. That’s why the first step of your investment strategy should be to get rid of your consumer debts- especially your credit card loans. Most credit cards have horrendously expensive interest rates – normally, 18 percent and over. If you are o­ne of those people, who pay o­nly minimum payment amount each month to their credit cards’ debt, you are making a great mistake. Check out the calculator at http://www.bankrate.com/brm/calc/MinPayment.asp to see how much you are loosing by not eliminating your credit card debt burden.

If you are looking for financially sound future, take a hard look at your credit cards and resolve to do the followings:

• From the savings you started to make, pay off maximum amount of your credit cards’ debts until you completely eliminate them.
• If you are unable to pay off the whole amount at o­nce, don’t just pay the minimum amount required; pay out as much as you can over that limit.
• Shop for credit cards with minimum interest rates – which should not be more than 12 percent – and switch to them.
• Use credit cards strictly for convenience o­nly. Don’t charge to your credit cards unless you know for sure that you will be able to pay it off right away.
• Minimize the quantity of credit cards you are holding. There is no reason to have more than three credit cards.

Same goes for your other consumer loans like student, car, etc.

Mortgage

The second step of your investment strategy should be to evaluate your mortgage payments. There are several very simple ways of reducing your payment time dramatically. Used scrupulously these methods can lower a 30-year mortgage to 10-15 years.

• Instead of making o­ne single payment each month, every two weeks pay out half the monthly payment. The idea behind this is, since you are making 26 payments in a year – each o­ne of them carrying 50 percent of your monthly payment – this is equivalent to 13 monthly payments. You are generating an extra month’s payment each year, which in turn will reduce your mortgage term substantially.
• Whenever possible, each month try paying ten percent more than you are supposed to.
• Whenever you manage to make some extra earnings, use a portion of that to pay down your mortgage.

The mortgage calculator located at http://www.mortgages-loans-calculators.com/Calculator-Mortgage-Payoff.asp will help you to see your progress.

Keep track of your expenses

If you don’t do it yet, resolve yourself to keep an expense ledger of all spending. Just the mere act of jotting down all your expenditure will reduce your expenses up to 20 percent. The reason is when you start keeping track of the money you spend, you become more careful and discerning in your buying decisions, which in turn help you cutting back and saving hard earned money.

You may think that if you are late on one bill, only your relationship with that one creditor will be affected. Unfortunately that might not be the case. Some of the largest credit card companies have begun penalizing creditors who are late with payments, even if they have not been late paying their credit card.

Creditors routinely use information found in their customers’ credit reports, and they use that information to penalize customers who have been late o­n other payments as well as their own. While this may not seem fair, it is perfectly legal, and the practice is becoming more commonplace. So beware, that late or missed payment can affect more than you think.

If you miss or are late with a payment to o­ne credit card, you could find the interest rates o­n all your credit cards taking a significant jump. In some cases, the interest rate can immediately leap to the highest level allowed by law, even after o­nly o­ne missed payment.

Lenders justify these practices because a missed payment can mean that a consumer is now a higher risk than he or she was when the card was issued. The higher interest rate simply reflects the higher level of risk inherent in the unsecured loan.

Unfortunately, many credit card customers are unfamiliar with these rules, and they find themselves blindsided by these decisions. The rules that allow these credit card hikes are often buried deep in the fine print of credit card inserts, where few people will read them.

It is also important for consumers to remember that all credit card issues conduct periodic credit checks o­n their cardholders. Any negative information o­n a credit report could trigger a rate increase. Therefore, it is important to keep your credit record clean, and to report any errors to the credit-reporting agency immediately. Financial experts recommend that every consumer check their own credit report at least o­nce a year.

It is also a good idea to keep a list of all your recurring bills and the days they are due. Keep this information o­n a calendar or in a conspicuous place. Keeping this list will help you remember to pay the bills o­n time and prevent any late payments. Many consumers use this simple strategy to make sure no payment is ever overlooked.