Debt is defined as any money owed to anyone for anything.
There are 5 different types of debt:
1.Credit Card Debt
When using any of these debts always ask these questions:
1.Does it make economic sense?
2.Do my spouse and I have harmony and agreement about taking on this debt?
3.Do I have spiritual peace about entering into this debt?
4.What personal goals and values am I meeting with this debt that can be met in no other way?
The fundamental danger of debt is that compounding works against you rather than for you. Anytime debt is incurred there should be a guaranteed way to pay it back and have at least the required installment amount in your discretionary income.
Never incur debt to pretend a lifestyle that doesn’t exist, live strategically and always calculate the cost before entering into any debt contracts.
First-Time Home Buyer Tax Credit at a Glance
- The tax credit is available for first-time home buyers only.
- The maximum credit amount is $7,500.
- The credit is available for homes purchased on or after April 9, 2008 and before
July 1, 2009.
- Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
- The tax credit works like an interest-free loan and must be repaid over a 15-year period.
Fair Isaac Announces Changes to its Credit Scoring Formula
The credit scoring system is being modified yet again as Fair Isaac Corporation, developer of the FICO credit score rolls out a new model dubbed FICO 08. The third formula “upgrade” that Fair Isaac has released since inception, it’s hard to predict how long it will be (if at all) before FICO 08 is embraced by lenders and subsequently used on a widespread basis.
A demand by users for a better way of analyzing risk in the wake of rising mortgage defaults and consumer credit delinquencies has pushed Fair Isaac Company into speeding up the release of the revised formula. Of the three major credit reporting bureaus, Experian and TransUnion indicate that they will likely offer FICO 08 to lenders by the second quarter of 08. Due to the pending litigation between the credit bureaus and Fair Isaac regarding the VantageScore system, Equifax has announced it will not offer the new version of the FICO score until the lawsuit is resolved.
FICO 08 will have the same numerical range as the current FICO scoring system, 300 to 850, with higher scores indicative of lower credit risk. According to Fair Isaac, FICO 08 should result in a minimal increase for most consumer’s credit scores as compared with the current FICO system. They say the new FICO 08 formula takes a more refined look at people who have credit problems, giving some leniancy to those consumers who had only experienced one serious credit setback. As long as their other active credit accounts are in good standing, a single charge-off or repossession for instance will not hurt them as significantly as it does under the classic FICO scoring formula.
A summary of the major differences in the FICO 08 Credit Scoring Formula:
- A “moderate” level of credit inquiries will be less detrimental
- High balances on existing credit cards may hurt more
- “Piggybacking” or “authorized user” loopholes will not be allowed
- Acively utilizing existing credit accounts will increase in importance
- A combination of installment and revolving credit accounts will be optimal
What does this all mean? FICO predicts that the new FICO 08 scoring system will help lenders reduce default rates on consumer loans between 5 and 15 percent. They indicate that FICO 08 should be less strict on consumers who make the occasional slip, while coming down harder on those with multiple offenses. For example, it will give a slightly higher score than previously to a borrower who is late on one payment obligation but current on multiple other accounts. Those with several delinquent accounts could find their credit score reduced.
The FICO 08 formula will still take into account the same factors as the classic version namely on-time payment history, length of credit history, amount of debt, ratio of debt to available credit, type of debt, and any excessive amount of recent new credit (of course definition of excessive is unclear). One will also receive a higher score for the “optimum” mixture of credit debt. For example, a consumer with both revolving and installment credit will score higher than one with strictly credit card (or revolving) debt.
Another signficant change in FICO 08 involves the practice of “authorized users.” An authorized user is a consumer who is not responsible for paying a credit card, but that card’s history is reported on the user’s credit as well as on the owner’s credit. It is a common practice for parents to make children authorized users of their cards in order to help them build credit. Additionally, many spouses obtain the bulk of their credit histories from being authorized users of their husband’s or wife’s card.
In summary, the jury is still out as to whether the revised FICO 08 credit score will become the industry standard for lenders anytime soon, but be aware of the potential changes that may affect your credit rating at some point in the (perhaps not so distant) future.
I was thinking today and wanted to share with everyone a major key to financial progression. In order for a persons finances to experience a steady growth trend, I believe there are 5 prerequisites that should be met before ANY bills are paid.
1. Tithes (10% of monthly income)
2. Pay Taxes
3.Investments (401K,Stocks,Education Funds, Roth IRA etc..)
4.Savings (put money away for emergencies) typically 5% of your monthly income
5. Fund your Life Insurance
One or two of these categories may change depending upon your personal situation. After these items have been funded the remaining balance is what I refer to as your lifestyle fund. This remaining amount is what a person or family has left to cover their living expenses. Below is an example:
Person “A” earns $2000/month and after they cover the 5 prerequisites they have $1200.00 remaining. It is from this amount that a person begins to fund their lifestyle. The golden rule is to never allow any future purchase to interrupt these 5 financial requisites. Every human being should purpose to fund their financial future before they fund their lifestyle.
I just wanted to take out the time to say, “Thank God for you”. I just completed this Pathways Class on the other day and what a blessing!!! This ministry is feeding the whole me (spirit, soul, and body). My life and family life has been so blessed by what God is doing in your lives. One of the things I desired from God was to be challenged from the pulpit. I thank God for this class because now I know what I need to do to be a better man, christian, father, and husband for my family. I’m better equipped now to move from where I am at. So, thank you for the information you’ve provided. My life will not be the same.
Love you much,
YBIC Andre Williams
I would like to thank you all for this awesome opportunity and for the wisdom that was shared throughout the Pathways sessions. Since we began Pathways, God has opened up so many doors for us. From employment, favor and yes unexpected income. We had divine intervention in our Adjustable Rate Mortgage. We were expecting an increase of $300.00. God stepped in and we only had a $55.00 a month increase in our payment. Praise God!! This allows us A) to comfortably afford our mortgage payments and B) gives us time to prepair for refinancing. We are so thankful for pastors Mike and Connie and Minister Raines and his Wife. We are moving in the right direction financially.
Thank You all!
Leroyce and Shevill Bel
With the rebate checks beginning to pour in, remember to pay yourself first and consider paying one or more of your debts off. Remember this was unexpected income. This is the time to invest in yourself. The government is depending on you to put the money back into their system to clean up their mess. Why don’t we put this money towards cleaning up our debts.
Remember, you are anointed to advance, therefore we don’t engineer our own poverty.
One of the easiest ways to make sure that your credit report is in the best shape that it can be in is to use a credit monitoring site. For a small monthly fee you will have a service that notifies you if there is a change in your credit report, an inquiry or changes to your information.
Monitoring your credit can also be one of the first steps in helping to detect identity fraud before it does damage to your credit report.
One of my favorite services is True Credit. This site provides information on all three of your credit bureau reports. It also provides your credit score for the three bureaus. This site is one option that is available to you for monitoring your credit reports.
There are many others to choose from. You should pick the one that fits your needs and budget. Additional links can be found on our Links page.