April 2017 - Smart Money Seed

4/25/17

Sneezing Can Make Your Eye Fall Out and Ruin Your Credit Report

4/25/2017

Injury Prone (to say the least)

Nearly four years ago I suffered one of the worst injuries of my athletic career. Now before I get into the details, you should probably know I was pretty good at getting hurt while playing sports; pulled hamstrings and sprained ankles were commonplace for me. I even tore my achilles tendon as a 16 year old, and that is an injury that's only supposed to happen to old men! For anyone that knows me, this story may sound like just another drop in the bucket, but trust me, I promise this one is a little different.

During a summer league at-bat back in 2013, the pitcher gave me a fastball right down the middle. Being the great hitter I was, I licked my lips, took a giant swing, and... hit a weak ground ball. I unfortunately came to the quick realization that the ball did not sail over the fence for a home run, but instead was slowly rolling down the third baseline, very similar to a bunt. A glorious home trot was out of the equation, so I jolted into top speed to try to beat out this swinging bunt. As I was closing in on first base, I could tell it was going to be a close play. The second baseman came charging over to field the throw from the pitcher, and then it happened.

The pitcher's throw was a little right of center which caused the second baseman to lean in towards the base path. I was crossing first base at this exact moment and my face struck square on the shoulder of the second baseman, knocking me straight to the ground. As I attempt to collect myself, I noticed a pile of blood on the ground and realized I had at least suffered a bloody nose and really bad headache. Because it was a head-related injury, the medical staff (which consisted of an off-duty nurse and my parents) suggested that I remain still and wait for professionals to check it out.

Playing ball in rural Ohio meant that I had to lie on the ground for about 20 minutes before an ambulance arrived, and then another 20 minutes on a stretcher until we got to the hospital. I then went through a series of tests and exams to determine just what had happened to my body. All brain and spinal cord tests came back normal (which I am extremely thankful for), but the x-ray on my face came back with some bad news. I suffered a pretty severe fracture the facial bones near my left eye, and it required reconstructive surgery.

About a week before surgery my doctor told me to try to avoid sneezing or my eye might fall out. 
I'm not sure if it actually would have fallen out if I sneezed, but talk about nerve-racking!


So what in the hell does that story have to do with personal finance and credit reports?

Insurance is Complicated

Believe it or not, for a kid that just turned 21, the details of health insurance were not on the forefront of my priorities. At the time of the surgery, I was partially covered under my parents' insurance, but I also had some coverage through college since I played baseball. To make a long story short, a couple hundred bucks from a multi-thousand dollar surgery did not get paid as a result of the complicated insurance split, and a claim was filed against me. To the credit bureaus it looked like I was purposefully avoiding paying off my debt, but I didn't even know a serious issue even existed.

About a year ago I applied for a credit card and that's when I noticed I had negative claims on my report. This was very alarming to me because as a recent college graduate I thought I had done very little to impact my credit score one way or the other. Alex may tell you that I take too long to pay him back for beer and baseball tickets, but outside of that I always pay my bills in full every month and have never taken on bad debt such as a payday loan.

After checking my credit report and seeing that it was from my surgery, I (with the help of my parents) swiftly moved into action to correct the debt against my name. Thanks Mom and Dad!

Lessons Learned

I still don't know the secret formula that makes up our mysterious credit scores, but I did learn two very important lessons as a result of this unfortunate oversight.

First, IF you can be responsible, consider getting a credit card early in your life and use it frequently for purchases such as groceries or gas. THEN PAY THE ENTIRE BALANCE OF THE CARD IN FULL, EVERY SINGLE MONTH. This method isn't right for everyone, but if you can refrain from using the credit card for personal purchases (clothes, beer, video games, etc.) this is an easy way to slowly build some positive entries on your credit report. Had I done this, I would have had some positives notes on my credit report to help offset the negative outlier.

Second, check your credit report and check it often. Here are my top 7 reasons why:
  • It's free for anyone to do up to 3 times a year (some banks and credit unions allow you to easily check them, too)
  • It only takes a few minutes
  • Your credit can be affected by something you may be unaware of
  • It can help you find errors - sometimes wrong information can be filed in your name
  • You can save money - good credit equals better interest rates on things like mortgages and auto loans
  • Good credit qualifies you for the best credit cards with awesome reward perks - it pays to be financially responsible!
  • It can help protect against identity theft
Need an example to really show you why this is so important? You got it. Just a 1% increase to your interest rate on a 30-year $300k mortgage could cost you more than $50,000 in interest payments! I don't know about you, but that's cash I want to keep in my wallet.

How Do I Check My Report?

At this point if I haven't convinced you take action, then one of two things must be true; you already check your credit report regularly, or I am a terrible blogger. While the latter may inevitably be true, I still hope you'll consider taking control of your financial wellbeing and check out www.annualcreditreport.com. This is where you can view your credit report for free up to three times a year (one from three different agencies) and see what is impacting your score. The reports do not show your actual credit score itself, but they show you the positive and negative components that are considered when the bureaus calculate your score.

How Often Should I Check?

Like most things in the finance world, it depends. If you are getting ready for a major purchase (i.e. a house), then it might not be a bad idea to check your credit report with all three agencies (Experian, TransUnion, and Equifax) at the same time to ensure that all reports do not have any erroneous claims. Otherwise, I recommend splitting up your reports to check it periodically throughout the year. For example, look at Experian's report in January, TransUnion is May, and Equifax in September. This method helps quickly identify any unfavorable items that could pop up on your report throughout the year and enables you to take action to get it removed ASAP.

My Last Rant

Credit scores and reports can seem scary and mysterious, and I think this is mostly because no one really tells you about them. This not only is unfair, but is also one of the serious flaws of the personal finance climate in America. Only the rich and well-off are privy to these financial secrets, and personally I think that's a load of shit. Here at Smart Money Seed we believe in our generation, and in order for us to become the most financially successful generation ever, we have to break down the wall of privileged information. 

Now I challenge you... Start living your fiscally proactive life today and alleviate the burden of the unknown.

4/17/17

Why I Paid off $25k in Debt in One Day and Why You Need a Financial Goal (Even if it isn't Perfect)

4/17/2017
The memories made during my 4 years at Ohio State will stay with me forever.
I made sure the $11k in student loans didn't stick around long.

Achieving my First Major Financial Goal

I was sitting on my parents' couch last August with a little over $30k in the bank and almost $25k in debt between my student loans and car. "I'll pay it all off soon," I had been telling my parents and Amanda (my girlfriend) for several months. I tried to come across as completely confident in my ability to take the leap and become debt free.

The truth was that I was extremely uncomfortable with the idea of spending $25k in one day. But I had run my numbers and projections about a hundred times and decided that paying off my debt was the best option for me. And guess what-- it might not be the best decision for you!

"Always remember you are unique, just like everyone else." --Alison Boulter

The upgrade from a 1994 Toyota Corolla to a car over 20 years
newer was enough to entice me to sign up for a $19k car loan.
Ultimately, I made my decision to break the shackles of debt based on my analysis of what became a perfect opportunity based on timing and my value system. I knew that I would never have another opportunity in my life to sock away so much cash in such a short period of time.

My parents were kind enough to allow me to live with them rent-free and relatively expense-free for a while after graduation. Although my living expenses were close to nothing, I was still paying essentially a rent payment (around $600) in debt payments each month. I wanted to capitalize on the time of low expense and make sure I was setting myself up for long-term financial success, and I decided that becoming debt free was the best way to do that.

Watching that $600 leave my bank account each month also just plain annoyed the shit out of me. I value the freedom to make decisions and to take advantage of opportunities, and I knew that monthly $600 punch in the gut would really restrict my freedom once I moved out on my own.

Most financial experts would say that I should've paid extra each month to minimize my interest payments, but I decided the minimal increase in interest was worth the freedom to take advantage of opportunities with a stockpile of cash in the bank. Some examples of those opportunities included several trips to NYC with my beautiful girlfriend Amanda, a trip with Christian and other friends to LA to watch some Cleveland Indians baseball, and a trip to Italy over Thanksgiving.

What's Your Why?

Just because I decided that living a debt free life is the best decision for me doesn't mean that it's necessarily the best decision for you. As long as you're not paying any horrible debts such as credit card debts or payday loans, small, manageable debt payments aren't the worst thing in the world.

Along with paying off my debt, I had considered putting that money towards a down payment on a house, dumping some of it in an IRA, or simply hanging on to the cash for a while. All 4 options would have been perfectly fine and extremely effective in moving me forward financially. The point was that I made a decision to work toward a specific goal, and that fueled me to success.

Consider all your stakeholders when determining your why. Mya much preferred
riding in the new car, so I knew I had to eliminate the risk of debt. Believe it or not, this
post is not sponsored by Cane's despite how much I enjoy their chicken fingers and sweet tea.

Success, financially or otherwise, is hard to come by without setting goals-- defining your why. Your why fuels you to success because it's exactly what YOU want, not what anybody else wants for you. My why for my 45-minute commute to live rent free and sacrificing time on the weekends to work and make a little extra cash started out as becoming debt free and has since changed to saving for things like travel, a house, and potential business investments.

Life is going to slap you in the face with constant temptation. It's hard to resist spending your money because there's so much awesome shit out there to buy! Your why is going to give you that extra push you need to resist that temptation and  align your day to day decisions with your ultimate goal of success. Your why doesn't have to be the absolute best answer that you could possibly make, but it does have to be something that you can stay motivated to stick behind. It doesn't have to be a perfect why. It just has to be YOUR why.

Make A Choice!

We believe in you. You're not a complete moron, and your why-- your goal-- is going to propel you towards financial success. You just have to have that clearly defined, work towards it every day, and you will be successful. It doesn't have to be the absolute perfect answer. Just pick something!

So, what's your why?


4/12/17

Debt Series Part 1: Speed Debting

4/12/2017

Don't waste your time dating bad debt. She's rude, unfaithful, and will make you pay for everything.


No one wants to be in debt. Debt doesn’t just take a toll on your financial well-being, it’s also one of most common causes of anxiety and stress. But what if debt didn’t have to be a bad thing? Is there such a thing as good debt?

Avoiding debt altogether is definitely preferred, but unfortunately life doesn't always make this possible. Education, a house, or kids can turn your bank account upside down, but this doesn’t mean your financial prosperity is doomed. Some financial professionals disagree with the notion that good debt exists. Instead they say there is debt that is preferable and debt that is not preferable. In any case, the type of debt definitely matters.

Let’s make some basic debt categories in order to classify the most common kinds of debt.

Horrible Debt - does not hold its value over time; often used to finance a way of living (fashion, gadgets, eating out, vacation, etc.) 

In general, if the debt you’re taking on only provides the value of pleasure, it’s probably horrible debt. You should always do your best to avoid short-term loans like payday loans or cash advances, and by "do your best" I mean please, for the sake of your bank account, never take out a payday loan. These loans come with super high interest rates and can cause a major hit to your credit score. Even worse, people that take out just one payday loan are much more likely to fall into a cycle of taking out more and more cash advances. Make life easier on yourself and never take on horrible debt.

Don't worry, if you've already fallen into the trap of a cash advance we've got you covered. Here's what to do:

  • Never, ever take one out again
  • Check out our blog each week for more awesome articles

OK Debt - backed by an asset, but the value decreases over time

The easiest example of ok debt is a car. You’ve all probably heard the saying “once you drive the car off the lot, it will lose half its value.” With the exception of classic cars that can sometimes appreciate with age, this saying is pretty accurate and is a perfect example of ok debt. Although the value of the car will go down over time, unlike with horrible debt, you still have a tangible asset. This isn't the worst kind of debt, but it's also not the best. Use ok debt sparingly.

Good Debt - will hold its value or even increase over time

Education and real estate are the best examples of good debt. Education will (hopefully) lead to an income, and over the course of a lifetime, most educated workers’ earnings will far surpass the debt they incurred to obtain the education. Unlike cars that lose significant value over time, real estate typically holds its value, and can even be used as a source of income. If you have to take on debt, this is the best you can find. Use good debt to improve your future.

Debt Free Dreams

My dreams for a debt-free life quickly diminished when I decided to attend a small, private university. Despite some of the scholarships and grants, I will still be paying off my school loans for a handful of years to come. It's not all bad though; the investment in my education allowed me to land a good job in Columbus, and I have been lucky enough to make aggressive monthly payments to get rid of that debt ASAP!

In addition to my education, I also made the decision to purchase a used car with a loan. Sure, I probably could have scrounged around for an older car and paid in cash, but I made sure that my monthly payments were well within my means. I also knew buying a lightly used car would likely reduce the amount cash I spent on general maintenance. Having said that, I now can probably count on getting a flat tire or dead battery soon.

I'm trying my best to get the most out of my money with this car. So far it has seen NYC, Philadelphia, D.C., Baltimore, Pittsburgh, the Outer Banks, and not to mention all over Ohio. Looking forward to many trips to come!

How does your debt stack up?

Next time you are taking on debt, see if you can decide which category it would fall into. Are you taking on debt to live a certain lifestyle? Or will this debt hold it’s value over time?

Remember, just because some debt can be labeled as “ok” or “good” doesn’t mean you should go take out a new loan to buy a Tesla Model X or a Beverly Hills mansion. If at all possible, try to avoid debt altogether and remember to live within your means. Your savings account will thank you.

4/9/17

4/3/17

You Deserve a Vacation... So Take One!

4/03/2017
Vacations are easy on the mind and spirit, but unfortunately they can be heavy on the wallet. Flights, hotels, beer, golf, rental cars, entertainment... did I mention beer? It doesn't take much for a week long trip to eat into your hard earned money, but that's not going to stop me from traveling. I love seeing new places and escaping from the real world. After all, like we said last week, what's the point of having money if you can't spend any?

I might have been the oldest person waiting in line to get a picture with Buzz, but I'm not ashamed.

Go Big or Go Home... Sort Of

This is the part of the article where I am supposed to tell you to save money by choosing a less desirable destination or by doing something you don't actually want to do. Well I think that's bullshit. Magic Mountain is not a worthy substitution if you dream of going to Disney World, and Hocking Hills doesn't cut if you want to see the Rocky Mountains. If your heart is set on a headliner trip, then save up for it and go!

But just because you go on big trip doesn't mean you need to spend big. One common fallacy about traveling is the idea of vacation money (i.e. money that can be spent on whatever the hell you want because it's just "vacation money"). I hate to be the bearer of bad news, but there is no such thing as vacation money. It does not exist. Money is money, and every dollar of vacation money is equal to a dollar of gas money, food money, or rent money. If you could fill up your car for $5 instead of $25, you'd take that deal, right? Well if you follow the vacation money approach you'd probably say "Nah, go ahead and take my $25, it's just gas money".

I recently went on a trip to Florida, and I'll be the first to tell you, it was not cheap. We spent 4 days at Walt Disney World and then rented a car to visit grandparents down in Naples. Disney is certainly a magical place with tons of great attractions, but they aren't necessarily known for their bargains. Just to get inside the parks I had to spent about $80 a day. But even though I spent a lot of money on tickets, I did my best to still take a few steps to live within my means.

Tried-and-True

Here are some of things I did during our trip to save some cash:
  • Planned in advance by booking hotels and flights 4 months ahead of time
  • Used the city bus to get from the airport to our hotel ($2 per person vs a $25 Uber ride)
  • Stayed at an offsite hotel rather than one of the Disney hotels or suites
  • Destroyed the free breakfast buffet at the hotel and took coffees to go
  • Utilized the hotel's shuttle service to and from the park to bypass Uber rides
  • Packed snacks for the park to limit expensive meals
  • Bought shirts before going to Disney to avoid the price mark-ups inside the park
  • Opted to only have a rental car for the second half of the week
  • Stayed with grandparents in Naples instead of a hotel (thanks Grandma Margie and Gramps Allen!!)
  • Made our own fun on the beach rather than splurging for paddle boarding lessons (see sandmen photo at the end)
If you like pineapple juice and ice cream, you might want to try a Dole Whip. You won't regret it.

I Believe in Transparency

To quote a good friend of mine, sometimes it's okay to "have your cake and eat it too". As important as it is to save some cash, you still have treat yourself. After all, vacations are supposed to be fun, right? Here are some of the things I did not save money on while in Florida.
  • At Epcot I had a $10 Guinness from Ireland and a $7 Warsteiner Dunkel from Germany. Not only did a couple of beers make standing in line with a bunch of six year olds more tolerable, I also discovered that Guinness is one of my favorite beers.
  • Disney is known for a fantastic ice cream treat called a Dole Whip, so I obviously had to give one a try. You probably should too, you won't regret it.
  • In Naples we went to a nice seafood restaurant and I ordered an Arnold Palmer, a sushi appetizer, and an ahi tuna entree. These were certainly not those most frugal options on the menu, but I take my seafood eating very seriously. Oh yeah, after dinner we went to Ben and Jerry's, too.
The point is simple; don't blow all of your money just because you're on a vacation. A trip to California doesn't mean you need to eat at ocean front restaurants every night and take surf lessons. You don't need front row seats for a baseball trip. Do some really fun things, make memories that will last a lifetime, and stash away a couple bucks in the process.

"I wish there was a way to know you're in the good old days before you've actually left them." - Andy Bernard