September Topic - "Personal Finance"

01.  Personal Finance
02.  Credit Scoring and Credit Reports
03.  Credit report dispute letters
04.  Day Trading
05.  Budgeting and ideas on how to save money everyday.

1. Personal Finance

When someone says personal finance what do you think of? You probably think of a lot of different things. I did a survey and was surprised to find out how the answers varied. Some people stated jobs, day trading, budgeting, while others said credit reports. There were many other answers however these were the most common. I have touched on most of these topics in previous newsletters. I am going to summarize each one this month and if there are any other questions please feel free to refer to that month's newsletter.

It is very important in your financial future to start early and save. Unfortunately, in life there is not any easy way to get rich quick. Unless you are lucky enough to be born into money then you will probably have to work hard just like everyone else. Truth is that is good and you will be proud of what you accomplish. At a young age we are told life is a journey not a destination. Part of that destination includes taking care of yourself and your family financially.

The first thing most of us think of when we say personal finance is probably your job. Considering your job will reflect a lot on how well you do in the financial world. I could spend the entire newsletter on jobs but I will just touch briefly on important general information in any job, or career. The first thing I will tell you is first impressions do count and you do not get a second chance to make a good first impression. You may not plan on staying at this job forever but good references from them will impact your next job.

2.Credit Scoring and Credit Reports

Some people do not realize exactly how important your credit score is in your financial future. Your credit score is how lenders, some potential employers and companies that you are applying for credit with look you upon. Your credit score is a number that will range between 300 and 900. The higher the number the better your credit history is. This number is like a snapshot of your finances. It will tell the lender if you are a credit risk in an instant. You may wonder why this method is used.

It has been used for many years as an easy way for lenders to make a decision based on facts. Your credit score is composed of different things including age of accounts, bill paying history, inquiries and more. Everything in your credit report is facts that prove to the lender if you a credit risk. Below is a diagram of exactly what makes up your credit score.



The average American credit score is 681. People do not realize that having bad credit or mediocre credit will cost them hundreds, thousands or even hundreds of thousands of dollars in their lifetime. You see someone with bad credit will usually not be denied the loan, however that person will pay much more in interest than someone with good credit.

I am sure we can all agree that interest payments add up to be a lot over time. It is never too late to fix your credit. There are many ways to go about doing this. You would want to speak with a certified financial advisor to see what is best for your specific situation. Regardless of what you choose to do the first step is pulling your credit report and finding any errors. On the next two pages of this newsletter you will find sample letters that can be used to receive your credit reports and dispute any false information.

3. Request for obtaining your credit report

Here's all the information you'll need to obtain your credit report : Request letter

MY NAME
MY ADDRESS
MY PHONE NUMBER

Send a copy to Each Credit Bureau: Experian, TransUnion and Equifax at the address provided above:

Today's Date Dear Sir/Madam,

Request for credit report, Can you please provide one FREE copy of my credit report?

Name:

Address:

Date of Birth
SS#

Yours truly,
MY SIGNATURE
MY NAME

4. Credit Reporting & Sample credit report dispute letter

Date
Your Name
Your Address
Your City, State, Zip Code

Complaint Department
Name of Credit Reporting Agency

Address
City, State, Zip Code
Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute are also encircled on the attached copy of the report I received. (Identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.)

This item is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why) . I am requesting that the item be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely, Your name
Enclosures: (List what you are enclosing)

Credit reporting agency must reinvestigate the items in question (usually within 30 days) unless they consider your dispute frivolous. They also must forward all relevant data you provide about the dispute to the information provider. After the information provider receives notice of a dispute from the CRA, it must investigate, review all relevant information provided by the CRA, and report the results to the CRA. If the information provider finds the disputed information to be inaccurate, it must notify all nationwide CRAs so they can correct this information in your file. l Disputed information that cannot be verified must be deleted from your file.

If your report contains erroneous information, the CRA must correct it.

If an item is incomplete, the CRA must complete it. For example, if your file showed that you were late making payments, but failed to show that you were no longer delinquent, the CRA must show that you're current.

If your file shows an account that belongs only to another person, the CRA must delete it.

4. Day Trading

I was very surprised when I took a survey about personal finances and day trading came up over and over. The reason I was so shocked is the fact that day trading is one of the riskiest ways to make money. In case you are not sure exactly what day trading is I will explain. It is when you buy and sell stocks throughout the day. The hope is that the stock will climb or drop to value while they own the stock to receive the profits. Sounds easy enough, but it is very risky.

Most of the times you are using a lot of money in order to make a profit and if the stock fails to do what you wanted you can sustain a great financial loss. The NYSE and NASD state that if you are a day trader you must have at least $25,000 in your account, and can only trade in margin accounts. Below I have listed some facts about day trading. Please read all of them before even thinking about using this as an option for making money.

Make sure you understand that you may lose a lot of money.
Day traders often times lose a lot of money especially in the beginning. Some day traders will make a lot of money and that will outweigh how much they lost. However, some will never make enough to supplement the losses involved. Be sure that any money you are investing is not needed for daily living. Remember you may lose it all. You know what they say, "expect nothing prepare for everything".

Day traders do not invest.
Please do not get the wrong impression investing are not what day traders do. They watch stocks and see which ones have a lot of movement in a short period of time and place their money in that stock. As soon as it moves in the direction they were hoping on the money is pulled out and the profit is collected. The problem is if it goes up and they were hoping it would go down the profit is lost. The money is never left overnight because the chance of losing the money is too great.

It is an expensive full time job and very stressful.
Day traders must watch the stocks at all times to make sure that you are not losing money. It is also very costly to pay commissions to the firms, the training and the overhead.

Do not be fooled and think that it is easy.
Some people claim that day trading is easy and the profits are unbelievable. Yes, it is true that you can make a lot of money, however it is not easy. If you are planning on trading with a firm be sure to ask how many clients have made money and lost. If the company chooses not to tell you move on to another company.

Look into day trading with your state securities regulator.
The firms must register with the SEC and states that they do business with. You should check out the firm first by calling (202)-737-0900 or going online to www.nasaa.org/QuickLinks/ContactYourRegulator.cfm.

5. Budgeting

Budgeting is important in all aspects of life. I will start by saying I do not like the word budgeting and will not use it anymore in this newsletter. I like to refer to it as a spending plan. It just sounds better to me. I do not feel like I am being restricted, punished or broke. Now, that we got that settled let's talk about spending plans and who needs them. I am a firm believer that everyone including Bill Gates and Oprah needs a spending plan. Regardless of how much money you have or don't have in your bank account you should know where you want it to go every month.

All spending plans can be advised the same way. Your first goal is to figure out how much money you have coming in every month after taxes, child support or alimony. List all the money you have including paychecks, social security, pensions, or any other income that you are receiving. Once you have completed this task put that number aside and figure out how much you have going out.

This is the tricky part. I have found out that it is easiest to do your fixed expenses first. I use my bank checkbook and refer to my bank online. Fixed expenses refer to things that do not change month after month. For instance, mortgage or rent, utilities, car payments, etc. After you have finished this then refer to your bank information to finish off any other expenses. I always use a miscellaneous spot where I add in some extra money that can include anything that I may have forgotten.

The goal to doing a spending plan is to hopefully be able to set aside money for a savings account. The spending plan also allows you to realize where you can cut back to save more money. For instance, instead of buying lunch at work everyday bring it from home. The savings will shock you. I have finally realized after many years money disappears. Now, you are probably wondering what I mean. My husband constantly asks me if my purse has a hole in the bottom. At the end of the month it seems that the extra money I had is gone.

So I go to my bank account and realize that coffee, magazine or the outfit that I just had to have really added up over the months. That is ok and I am sure it happens to everyone. Hopefully with the spending plan in tact you can be more aware of where every penny is going. As long as you are able to save a little bit each month it will add up and you will be happy you did in the long run. After you have figured out how much you spend each month subtract that from how much you make. Hopefully there will be money left over to save. I have attached one of my favorite worksheets on the next page for you to look over. I hope you enjoy it.

4. Heres and example on how much you can save by cutting some little things out of your daily spending.

The Soda

1 can of soda = $0.65

1 can of soda per day x 5 days per week = $3.25

1 can of soda per day x 5 days per week x 50 workweeks = $162.50

Total soda savings: $162.50 a year

The Donut and Coffee

1 cup of coffee and a donut = $1.90

1 cup of coffee and a donut per day x 5 days per week = $9.50

1 cup of coffee and a donut per day x 5 days per week x 50 workweeks = $475.00

Total donut and coffee savings: $475.00 a year

Total saving per year $ 637.50

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Got a question? Then contact our Education Team on 561-883-2398 Ex.310 United conducts regular seminars on financial education, including "How to Budget", come along and join us - to reserve your seat contact our Education Team on 561-883-2398 Ex.310

Newsletter 09
Rev.1
Sep, 2006