I LOVE Get Rich Slowly. I guess you could say...it's the blog that started it all. Most of my philosophies on finance come from this blog in some form.
JD, of GRS, came up with fourteen tenets of the Get Rich Slowly philosophy. Check them out:
Money is more about mind than it is about math. That is, financial success is more about mastering the mental game of money than about understanding the numbers. The math of personal finance is simple — spend less than you earn — it’s controlling your habits and emotions that’s difficult.
The road to wealth is paved with goals. Without financial goals, you have no direction. If you have no direction, it’s easy to spend money on things you’ll regret later. But if you’re saving for a house, your daughter’s college education, or a trip to Europe, your goal will keep you focused, making it easier to spend on what’s important and ignore the things that aren’t.
To build wealth, you must spend less than you earn. Basic math, yes, but it’s important. Successful personal finance is all about building positive cash flow. By decreasing your spending while increasing your income, you can get out of debt and build wealth.
Saving must be a priority. Before you pay your bills, before you buy groceries, before you do anything else, you should set aside some part of your income. If you have to start small, start small. Even $25 a month is good. As you earn more and develop better habits, save as much as possible. (My wife saves nearly a third of her paycheck!)
Small amounts matter. Your everyday habits have a huge impact on your financial success. Frugality and thrift help build good habits, and make a real difference over time. Plus, there are tons of opportunities to flex your frugal muscles.
Large amounts matter, too. It’s good to clip coupons and to save money on groceries, but it’s even better to save on the big stuff like buying a car or a house. By making smart choices on big-ticket items, you can save thousands of dollars at once.
Slow and steady wins the race. The most successful folks are those who work longest and hardest at things they love to do. So try to find ways to make frugality fun, and recognize that you’re in this for the long haul. You’re making a lifestyle change, not looking for a quick fix.
The perfect is the enemy of the good. Too many people never get started putting their finances in order because they don’t know that the “best” first step is. Don’t worry about getting things exactly right — just choose a good option and do something to get started.
Failure is okay. Everyone makes mistakes — even billionaires like Warren Buffett. Don’t let one slip-up drag you down. One key difference between those who succeed and those who don’t is the ability to recover from a setback and keep marching toward a goal. Use failures to learn what not to do next time.
Do what works for you. Each of us is different. We have different goals, personalities, and experiences. We each need to find the tools and techniques that are effective for our own situations. There’s no one right way to save, invest, pay off debt, or buy a house — and don’t believe anyone who tells you there is. Experiment until you find methods that are effective for you.
Financial balance lets you enjoy tomorrow and today. Being smart with money isn’t about giving up your plasma TV or your daily latte. It’s about setting priorities and managing expectations, about choosing to spend only on the things that matter to you, while cutting costs on the things that don’t.
Action beats inaction. It’s easy to put things off, but the sooner you start moving toward your goals, the easier they’ll be to reach. It’s better to start with small steps today than to wait for that someday when you’ll be able to make great strides. Get moving.
Nobody cares more about your money than you do. The advice that others give you is almost always in their best interest, which may or may not be the same as your best interest. Don’t do what others tell you just because they hold a position of authority or seem to have a persuasive argument. Do your own research, get advice from a variety of sources, and in the end, make your own decisions based on your own goals and values.
It’s more important to be happy than it is to be rich. Don’t be obsessed with money — it won’t buy you happiness. Sure, money will give you more options in life, but true wealth is about something more. True wealth is about relationships, good health, and ongoing self-improvement.
Seems simple right? Sure it is!
Showing posts with label Get Rich Slowly. Show all posts
Showing posts with label Get Rich Slowly. Show all posts
Tuesday, September 27, 2011
Friday, September 9, 2011
Anatomy of a Credit Score
From Get Rich Slowly
Your credit score plays an increasingly important role in your financial health. But what is it? And how does it affect what you pay for loans and credit cards?
Your credit score is a single number that indicates your creditworthiness. This number is derived from various pieces of information contained in your credit report. Your credit report is accumulated by various credit agencies — credit card companies and banks and other financial institutions, who pass along information about how much you owe, how well you pay, and how long you’ve been a customer. Your credit score determines the types of credit you can obtain, and how much you will be charged in interest.
In general, your credit score is based on the following:
According to Fair Isaac, the company behind credit scores, these factors are accurate predictors of future credit performance. That is, these are the things that best indicate how great a credit risk you are. (For some people — such as young adults who don’t have a lengthy credit history — the importance of each category may be somewhat different.)
For more detailed information about the components of your credit score, check out the following pages at myFICO:
What’s in your score?
What’s not in your score?
Improving your FICO score.
myFICO states that the median credit score in the United States is 723: half of the population has a score of 723 or above, and half of the population has a score of 723 or below. myFICO also provides the following table, which indicates how your credit score affects what you pay for a loan:
For a $216,000 30-year, fixed rate mortgage:
If your FICO®
score is: Your interest
rate is: …and your monthly
payment is:
National interest rates as of 02 June 2006
760 – 850 6.33% $1,341
700 – 759 6.55% $1,373
680 – 699 6.73% $1,398
660 – 679 6.95% $1,429
640 – 659 7.38% $1,492
620 – 639 7.92% $1,573
How much can you save if your credit score is 760 instead of 699? In the example provided above, you would save $57/month on interest payments. That’s $684/year.
A recent federal law gives consumers access to their credit reports, however it costs extra to obtain your credit score. Your credit score is not an actual component of your credit report.
The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months.
If you’d like, you can obtain reports from all three credit reporting agencies at once. Or, you can stagger your requests, possibly requesting one report every four months from a different agency. There are three ways to obtain your credit report:
Order it online at annualcreditreport.com.
Call 1-877-322-8228.
Complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Your credit score plays an increasingly important role in your financial health. But what is it? And how does it affect what you pay for loans and credit cards?
Your credit score is a single number that indicates your creditworthiness. This number is derived from various pieces of information contained in your credit report. Your credit report is accumulated by various credit agencies — credit card companies and banks and other financial institutions, who pass along information about how much you owe, how well you pay, and how long you’ve been a customer. Your credit score determines the types of credit you can obtain, and how much you will be charged in interest.
In general, your credit score is based on the following:
According to Fair Isaac, the company behind credit scores, these factors are accurate predictors of future credit performance. That is, these are the things that best indicate how great a credit risk you are. (For some people — such as young adults who don’t have a lengthy credit history — the importance of each category may be somewhat different.)
For more detailed information about the components of your credit score, check out the following pages at myFICO:
What’s in your score?
What’s not in your score?
Improving your FICO score.
myFICO states that the median credit score in the United States is 723: half of the population has a score of 723 or above, and half of the population has a score of 723 or below. myFICO also provides the following table, which indicates how your credit score affects what you pay for a loan:
For a $216,000 30-year, fixed rate mortgage:
If your FICO®
score is: Your interest
rate is: …and your monthly
payment is:
National interest rates as of 02 June 2006
760 – 850 6.33% $1,341
700 – 759 6.55% $1,373
680 – 699 6.73% $1,398
660 – 679 6.95% $1,429
640 – 659 7.38% $1,492
620 – 639 7.92% $1,573
How much can you save if your credit score is 760 instead of 699? In the example provided above, you would save $57/month on interest payments. That’s $684/year.
A recent federal law gives consumers access to their credit reports, however it costs extra to obtain your credit score. Your credit score is not an actual component of your credit report.
The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months.
If you’d like, you can obtain reports from all three credit reporting agencies at once. Or, you can stagger your requests, possibly requesting one report every four months from a different agency. There are three ways to obtain your credit report:
Order it online at annualcreditreport.com.
Call 1-877-322-8228.
Complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
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