In God We Trust

Teaching You How to Get OUT of Debt and Live Debt-Free

Archive for March, 2009

Mar
8

You would naturally think that in times of economic turmoil, especially with decliining and fluctuating stock markets, that it would be prudent to take a conservative attitude towards your 401-k or other retirement vehicles.

You would be right.

Conserve is the name of the game.

Should I Sell My Stocks or Mutual Funds?

To this question, I say – NO!

The reason is that you bought them over time at a generally higher price than they are currently worth. BUT, you haven’t actrually lost anything UNTIL you actually sell them. Then, yoiu are selling them at a loss which you won’t ever recover.

The traders are the ones making money in these days. They aren’t any smarter than we are, they just do it for a living all day long. You have the advantage of being able to hold onto your investments for a long time – years, not hours. I’m pretty sure we’ll see the end of this Recession or even Depression. And when it ends, the stock market will recover. Sure, a stock here and there will disappear, but who can predict that?

What I can predict is that if you Sell now, you’ll sell at a loss and you won’t get it back.

Should I Quit Contributing to My Retirement Fund?

Again, the answer is NO!

Currently, most all stocks in the market are “on sale”. The secret to making money in the stock market isn’t to not invest, but to invest and stay invested.

Since stocks are on sale, you get more shares for the same amount of money. When the market recovers, you will reap a larger profit than if you stayed on the sidelines. When something good is on sale, it is good to buy lots of it.

Besides, most companies have some sort of matching percentage for your contributions. That’s free money – a raise in times when jobs are vaporizing. If you don’t participate, you don’t get the money.;l

What Do I Do?

My advice is to FREEZE! Don’t do much of anything right now.

Don’t stop your 401-k contributions, Increase them. Certainly don’t try to re-balance your holdings right now. (You can re-balance your contributions, not your holdings.) Don’t sell anything, but be prudent and keep buying now while stocks are on sale for you.

In 5 or 10 years, you’ll look back on this time as one of the best opportunities you had to improve your financial condition. Don’t let it pass you by.

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Mar
7
Factors contributing to someone's credit score...
Image via Wikipedia

I am not a proponent of paying a lot of attention to my FICO Scores or Credit Reports. Since our goal is for you to get Out of Debt and to live Debt-free, spending too much time fretting over scores seems unproductive.

That said, they are a great tool to use for status checks.

There are 3 companies whose only business is to compile and report on the credit history of consumers. The 3 are Experian, Equifax, and TransUnion. They rely on a credit granter to send them regular reports on total balance, minimum payments, if late and by how much, and total credit available. They then compile this info and send it to member merchants if you should need credit from them.

Congress Did a Good Thing

The House Financial Services committee meets. ...
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Yes, I can admit that the US Congress isn’t totally inept. A couple of years ago, they forced open the secret world of Credit Reports, and gave us all a peek at our own records.

Credit Granters, or merchants, could always pay a fee to any of the 3 Credit Reporting agencies and get your various credit history results so they could decide whether and how much credit to grant you. In order for you to get a peek, you had to pay a fee, too. One exception – if you got turned down for credit, you could request a free report.

I used to review those reports, and they were a pain to read. It took a special concentration to get the rhythm of the entries and what they meant. And they used to cost a pretty penny. And corrections??? What a pain.

So, to help consumers have it easier to make corrections in the notoriously erroneous reports, Congress made each of the reporting agencies provide consumers one free report each year. But, you have to ask for it.

Get Your Report

Don’t go to the reporting site. You’ll be able to get a report, but you’ll be enrolled for a fee in a program of frequent monitoring. You don’t need that.

Instead, go to AnnualCreditReports.com.

There, you enter your State, and then select which company’s report you want.

We recommend that you get one at a time, and get another one in about 4 months. That way, you will be able to track your status fairly regularly without cost.

Get one for each of you – there might be differences. Print them out.

Now What?

Once you get your report, take a few minutes to get the lay of the land. See what they are keeping track of. Look at the accounts they are tracking. Some are open, some closed, some negative, most positive (we hope).

If you note any glaring errors, you have the right to have them corrected. Each company has their own process. Be sure to initiate the process to get those errors corrected.

Otherwise, Staple the report together and file it away for comparison with the next one.

Conclusion

Go ahead and get your reports, and be sure they are correct. However, don’t obsess over them.

Pay attention to getting out of debt. The credit reports will eventually take care of themselves.

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