Money & You – September 2013

As summer winds down and the routine of school and work get back to the semblance of a normal life in our home, I was thinking about this great tune from Porgy and Bess.  Is the living ever really easy, though?  I am sure that each of us have obstacle, trials, unforeseen issues that plague us constantly.   Maintenance is a constant watchword.  And it is not always easy!

The other day I inspected a home that was to be used as collateral on a loan.  It had been abandoned by the last owner and now was being sold at a considerable discount.  As a result, you can imagine it was not in the most pristine condition.  I had pulled up the address on Google Earth before I went to see it and thought it was going to be in excellent shape.  However, when I showed up, it was apparent that the photo was not a current one.  Weeds infested the area, a tree was half dead, no basic cleaning had been done in some time, the landscaping, paint, and flooring, etc. were all in need of attention.   It was just in disrepair – all because nobody was there to take care of it

We learn in high school science that entropy is a constant principle.  That means, to me, that things are always deteriorating unless some other force or energy is applied to improve it.  It was true of this house and it is true of our financial situations.  If we are not in a constant effort to improve, maintain or spruce up our financial conditions, we are liable to see a few weeds grow up.   Soon, if we are not careful, we will need remodeling, not simple maintenance

Credit score maintenance: The first maintenance program I can suggest is the credit score maintenance.  Work hard to keep your score strong with some basics.
1. Pay credit on time – this cannot be emphasized enough.  One thirty-day late payment will wreck years of good payments.  It sticks to our score for years to come, too.  Stay on time!
2. Keep credit balances low and do not rush up scores quickly.
3. Inquiries – each time you have your credit run by a lender, car dealer, etc., it can have an effect on the overall score.  Do not just let it be pulled for no reason.
4. Check all three agencies on an annual basis.  Credit agencies (Transunion, Equifax and Experian) are all required to give you your credit report free every year, if you request it.  I suggest staggering every 4 months so that you have an annual report from one of them through the year.  This will keep the information more current.

Savings: Have a rainy day fund that builds up slowly.  If you budget it out and keep the habit up, you will be surprised how much you can sock away.  I have to keep it in some place that is not easily accessible.  That way, the temptation to grab it is not so great and I can keep it in check.  This is like maintenance, too – have a plan and work the plan

Retirement: I have written about this as well.  If we do not plan for the later times in life, there will be no way to keep the lifestyle we wish.  I have never heard anyone complain about having too much money at retirement.  EVER

Budget: Have you brought it out lately to see if any weeds are growing?  Budget weeds include items that have crept in without thinking of it.  Have you signed up for a monthly service that you rarely use?  Have you seen an additional item that has crept in that you had not planned on earlier, e.g. school costs, recurring payments on a small loan, insurance rate went up, utilities not in control, etc.?

Budgets should be looked at regularly or they become worthless.  It is only a budget if we follow it, too.

Weeding out: After you have seen where maintenance is needed, the next step is to take the measures to clean it up.  Like all maintenance, the more regular it is, the less painful it is.  When I was a kid, we always had a garden.  We had to weed our assigned rows every day.  Even missing one day made it MORE than twice as hard the next day.  Also, when we caught things as small problems, the big problems never came.  There is a lesson in there somewhere, too.

So, I wish you good luck in your financial maintenance program.  It is not the most exciting thing you will read about in the Journey this month, but it could save a lot of future headaches!

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