Category Archives: guest post

Your Credit Score

trivial pursuitWhen she read that I was talking about buying or building a house, Foundry reader Ethel mailed me and asked if she could write a guest post about an important elephant in the room when making a large purchase: your credit score. Ramit Sethi from I Will Teach You To Be Rich points out that a bad credit score will cost you tens of thousands of dollars over the course of even a modest mortgage.

Take it away, Ethel…

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Why it’s Frugal to Build a Better Credit Score

A good credit score can make it easier to secure loans and get better interest rates, but what many don’t realize is that a bad credit score can hit your wallet in ways you are not aware of. Besides having to pay higher interest rates on loans and mortgages, a poor credit rating can cause denial of employment, higher insurance premiums, or paying a higher security deposit when renting a house or apartment. Cell phone companies may even require those with a low credit score to pay a security deposit of as much as four or five hundred dollars before they can open an account.

What is a Good Credit Score?

Most credit reporting agencies use what is known as the FICO (Fair Isaac Corporation) model or a version of it to calculate your credit score. Various factors such as your bill payment history, the types of credit you have, the length of your credit history, and recent borrowings are considered in its calculation. A “good” credit score, according to Experian, one of the major credit reporting bureaus in America, depends on the system used by your lender. Most credit scores fall in the range of 600 – 750, and the average score for the United States is around 720. Generally they say, a score of 700 or above suggests that you manage credit well.

How to Improve Your Credit Score

There are several steps you can take to improve your credit score if it’s on the low side. One of the most effective methods is to pay off any outstanding bills and continue to pay them on time in the future. Your history of paying bills makes up 35% of your credit score, so making timely payments can raise it quite quickly.

Another effective way to raise your credit score is through the responsible use of a credit card. If you charge only small amounts which you can pay off in full every month, your credit score will gradually rise. If you aren’t able to pay the full balance, maintaining one of less than 30% of your card’s limit is also effective. For instance, if you have a $1,000 limit on your credit card, make sure you keep the balance at around $300 or below. [ed: NEVER use a credit card if you can’t pay the balance in full each and every month.]

If you don’t qualify for a standard credit card, you can get a secured credit card. You simply deposit an amount of money with your bank, and they will issue you a card with a limit equal to the amount you deposit. You must follow the same practices as with a normal credit card, keeping your balance at below 30% of your limit, or paying it off in full every month when you can in order to increase your credit score.

Raising your credit score is really not that hard. It does require a focused plan and a bit of discipline, but it is well worth the effort it takes. Paying your bills and making loan payments on time can save you from costly penalties or late fees. For those seeking a mortgage, a healthy credit score can save you tens of thousands of dollars over the course of the loan. Why pay more of a security deposit than you need to? A little effort can go a long way, not only towards raising your credit score, but to raising the balance of your bank account as well.

Ethel Wilson is a financial and credit specialist with 12 years experience in the banking, credit scores, and financial industry.  She has advised countless clients on how to improve their credit score rating.  She now shares the best of her credit score rating information as a contributor and editor of creditscoreresource.com

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Thanks, Ethel! One thing I’d add is to check all 3 credit scores yearly. The official website for checking your scores is annualcreditreport.com. Do NOT use the websites that you see advertised, even if they say “free” they are for-pay services. You can also get your credit score checked for free by 3rd party sites like creditkarma.com. They “guess” your score so it isn’t 100% accurate, but it’s close enough to monitor if you’ve been the victim of identity theft, between your yearly official credit check-ups.

The Anti-Accumulation Holiday [Guest Sermon]

not my synagogue Each week, my Rabbi gives a moving and informative sermon. They’re always top-notch, but this week’s was also very topical for Foundry in the Forest. I asked him if he’d be willing to let me turn it into a guest post, and he was kind enough to oblige.

The holiday of Passover is coming up next week, so Jews around the world are doing spring cleaning: literally, to get rid of the bread crumbs in the cupboards, and also metaphorically to try to rid ourselves of the excess in our lives.

The sermon is long but I encourage you to read the whole thing, regardless of your faith, as the message is universal.

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The Anti-Accumulation Holiday
Rabbi Jay Rosenbaum

I have made it known over the years that the most valuable lessons I have learned in life come from television. But, today, I’m not going to limit my comments to TV. I’m going to start with a television show. But, then, I’m also going to talk about an insight into the Exodus story I learned from a Muslim friend, and how it’s connected to the show.

First the show. There is a show on HBO called “Enlightened” starring Laura Dern as Amy. In one of the episodes, there is a five minute encounter between Amy’s mother, Helen, and Helen’s old friend Carol, played by Barbara Billingsley.

Helen and Carol used to be good friends. They were both married to successful husbands, and they ran in the same circles. They run into each other in the store, after not having seen each other for several years. At first, they are delighted to see each other, and they start to catch up on each other’s lives.

Carol tells Helen about her daughter who is married and has two beautiful little children. She pulls out her iPhone to show Helen the photos. Then Carol asks Helen about her children. Well, Helen has one daughter, who has a child, but she hasn’t spoken to this daughter in years.

Her other daughter, Amy has just gotten divorced from Levi. They used to be the envy of everyone in high school—the energetic, beautiful blonde that all the boys wanted to date, and the handsome, star athlete. But, things haven’t worked out for them. And, now Amy has been demoted from her job and is living with her mother, trying to figure things out.

When Helen tells Carol about her children, Carol makes a feeble attempt at sympathy, but change of facial expression and tone of voice reflect a sense of superiority laced with contempt. “You know,” she says to Helen, “my daughter was always jealous of Amy in high school. Everyone wanted to be Amy. She had it all.” And, it was clear that Carol believed she had won the race. She had children, she had grandchildren who were flourishing. And, the former prom queen had nothing. And, she was happy about it.

The whole conversation lasted no more than five minutes, but it was brilliantly done. Because it showed how a simple exchange between two women who were supposedly friends and interested in each other’s welfare, was really about an intense jockeying for power and position. No one pulled out a gun, no voice was raised even a notch. But, this was war. It wasn’t enough for Carol that she had so much to be grateful for in her life. She had to derive additional satisfaction from the fact that her friend Helen had less than she did, and so she had won.

What causes human beings to behave this way? Here I would like to turn to a story we spoke about a few weeks ago, but which I saw differently because of a discussion we had in our Muslim-Jewish dialogue group this week. We were studying the story of the manna. After our people left Egyptian slavery, and we were traveling in the desert, we were anxious about not having enough food. So, God gave us a guaranteed food supply for forty years. But, God only gave us one day’s supply of manna at a time.

And, there were rules. We were not allowed to save any manna for the next day. We were to take only as much as we needed and no more. And, the Torah tells us that no matter how much we gathered, every one of us had just enough, but no surplus. So, clearly, many of us tried to grab as much as we could, but to no avail.

Many of us tried to save the manna for the next day, but it spoiled. We were only allowed to save the manna once. That was on Friday, when God gave us a double portion, so we wouldn’t have to gather on Shabbat. But, that didn’t prevent the Jewish people from going out the next day and looking for more.

Why did God choose this particular method of feeding the Jewish people at the moment we had been released from slavery? What would have been wrong with allowing us to save up some of the manna, and relieve us of the anxiety that we wouldn’t have enough for tomorrow?

When we were studying this story in our Muslim-Jewish dialogue group, one of the Muslims, David Suissa, remembered that in the Joseph story, there was an opposite scenario. Joseph was the ultimate saver of food. He presided over the saving of food in Egypt during the years of plenty so that when the famine hit, there would be enough to feed everyone.

That sounds so sensible. But, what actually happened? Joseph controlled the entire food supply for Egypt. He rationed out food as he saw fit. Initially, people bought the food. When they ran out of money, they sold their land to the government in exchange for food. When they ran out of land, they sold themselves to Pharoah in exchange for food. Now Pharoah controlled all the land in Egypt and he had a huge slave force.

When we look at life as a zero-sum battle for scarce resources, the result will be slavery. In our fear that we will not have enough, we will want to grab as much as we can. We will horde, we will try to corner the market. And, the result of that kind of unbridled competition is always going to be that a small number of people are going to control a disproportionate share of the resources, and a huge population is going to have little or nothing. The resource could be land, money, oil, water, and even things like friendship, or sexual partners.

The Torah traces human oppression to the propensity of every human being to take more than we need. It’s why the Torah says of the king, ‘The king was not to accumulate too much gold, too many horses, and too many women.’ Because if the criterion of a successful life is having more and more and more—if the more we have, the better we are, that’s a recipe for gross inequality and mass human misery.

When the Jewish people left Egypt, the goal was to create an egalitarian society, How do you do it? You attack the source of inequality—our human tendency to want more than we need. If God had allowed the Jewish people to collect as much manna as they could, there would have been a fierce competition, with the Jewish people stepping on each other to grab as much as possible.

The result would be that a small number of people would control the majority of the food supply. They could sell it at any price they wanted. And, now, once again, you have a slave society. By forbidding the Jewish people from even saving for one day, God was reversing what went wrong in the Joseph story, where hording led to slavery.

And, the way we celebrate Passover is a reflection of this philosophy. In the month before Pesach, it’s a liability to save. You’ll end up throwing things out.

Passover is the anti-accumulation holiday. To get ready for the holiday of freedom, we have to un-save, we have to un-accumulate. We have to get rid of all the extra stuff that we don’t need. It’s a way to rid us of the insecurity that leads us to horde and take as much as we can. Because it’s this compulsion to take more than we need that leads us to be blind to what others need.

It’s no accident that the most popular song at the Seder is Dayenu, which means “We have enough.” To create a truly just society, it is essential that each of us master the ability to take what we need, and no more. Passover challenges us to ask ourselves: what do we really need to be happy and fulfilled?

And, not just in regard to material resources. There are many ways to play the hunger games. We can hunger for attention. We can hunger for applause. We can look at life as a bank account in which we have to continually pile up credits to our name. In our mussar class in the Fall, Ann Trail called them merit badges. The more badges we have, the more worthwhile we are. When that hunger to accumulate becomes obsessive, even in the most polite society, we can end up taking joy in our neighbor’s unhappiness.

Passover encourages us to live more simply, to live more modestly, not only in our physical needs, but in our emotional needs, too: to take for ourselves enough attention, enough praise, enough appreciation, but not more.

Passover encourages us to sing Dayenu, not only at the Seder, but in our lives, as well.

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Who knew that the main theme of Your Money Or Your Life (having enough) has its roots in an old Jewish Passover song?

Thank you to Rabbi Rosenbaum for allowing me to publish his sermon. Happy Passover, Happy Easter, Happy Spring, no matter what you celebrate!

Last-Minute Frugal Date Night Ideas

Items from a frugal date night As if she was reading my mind, Foundry follower Sally Ashley asked if she could do a guest post on Frugal Date Nights. Just in time for Valentine’s Day! When she’s not reading this blog, Sally writes about romance and personal finance. Her most recent work focuses on how to pick the best finance schools.

So if you don’t have anything planned for your sweetie tonight, and you want to keep it frugal, read on…

How to Plan a Frugal Date Night
Planning a date doesn’t always have to be expensive, and you can have just as much fun on a frugal date as you can on an expensive date. Below are some great ways you can plan a frugal date night and still have a great time!

Hangout at Home
You can plan a fun but cheap date night in your very own home. You probably have food there, so look up some recipes online and cook a great meal for you and your date. More than likely, you have some good entertainment in your home as well. A stereo, television, computer, video game system or just some good old-fashioned board games can be fun on a date. Simply invite your date over to hangout and listen to music, watch a movie and share a meal, or play some fun games.

Attending Local Events
Most every city has local newspapers that list local events and happenings that will be going on in the next few weeks. Some cities have their own websites that list these events. Look in those papers or Internet sites, and search for some local events that you and your date can attend. When you see something that looks fun, and go out and have some fun. Most of the time, these events are relatively cheap or even free.

Visit the Park
A romantic AND cheap date that can be a lot of fun is going to the park. If you or your date has a dog, take your pet along. You can pack a nice picnic lunch and a blanket and sit under the trees and enjoy good conversation while eating lunch. Some parks host events and activities as well. They might have a swimming pool, walking/jogging trails or some secluded areas to get some privacy. If it’s winter, there might be somewhere to go ice skating.

Cheap Movie 
Going out to the movies on a date is ridiculously expensive, and more often than not, boring. Staring at a screen and being silent for over two hours can make it tough to get back into the vibe after the movie is over. However, if there is a movie you both want to see and it is available by rental, check it out and watch it at home. You can pop your own popcorn, have your own drinks and sit down and share a movie together. Every now and again, you can stop the movie to enjoy some conversation or refresh your beverages. If you know your date pretty well, take advantage of the cheaper movie specials during the daytime, or visit the dollar movie to catch a really cheap one. [ed: Even cheaper, borrow a movie from the library for free!]

Cheap Coffee Dates

Meeting up for coffee can be a good idea if you know your date pretty well. If so, you can engage in good conversation the entire time you are there. If you do not know your date well, a coffee shop can be intimidating – trying to find something to say for a couple of hours. If you have a nice coffee maker or cappuccino machine at home, ask your date over for some homebrew, and make your own coffee at home while enjoying conversation, a meal or just watching television together. First dates at a coffee shop are easier if you go on a double-date to help break the ice. Afterwards, you can go to a cozier place alone if things go as planned.

Hopefully, you can use some of these frugal date ideas for yourself. They are easy on the wallet, and they will allow you the opportunity to get to know your date better. You can learn a lot about a person by using one of these cheap date ideas over the more expensive options.
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Thanks, Sally! Readers, how are you spending your Valentine’s Day (frugally or otherwise)? In our family, we exchange hand-made cards for each other, and Mrs Foundry usually bakes a treat for the family. This year I splurged and got her a bouquet of her favorite flowers (even though we agreed on no gifts). Oops!

How to Become Free From Debt [guest post]

highline trailAlmost any form of debt is antithetical to the Foundry lifestyle: credit card debt and car loans are out of the question; college and home loans are a maybe, but should be avoided if possible. If becoming financially independent is akin to climbing a mountain, taking on debt is like leaving the trail to take a crap in some poison ivy.

Not having any personal experience with debt puts me at a disadvantage when it comes to writing about the topic. Luckily, Foundry reader Randolph Warner offered to write up some tips on getting oneself out of debt. Randolph writes about personal finance and business. His most recent work is focused on helping people earn Master of Finance Degrees.

Take it away Randolph…

Freedom from debt is something that many people are seeking. Nothing about pulling yourself up out of a financial hole is easy, but there are many steps that you can take to make the process a little simpler. To give yourself a little bit of assistance, here are a few tips to help you along your path to regaining financial freedom:

Assess The Situation 
Many people know that they are in great financial distress, but really do not have a lot of specific knowledge regarding their situation. The best thing that you can do is to gather up all the information you have, including the current bills you are receiving and the information that can be obtained from your credit report to get a complete list of what you owe and to whom you owe it to. Then, you can see where you’ll be 6 months, even a year from now, assuming things stay the same.

Start Small 
Take your newly acquired budget and order all your expenses so that the smaller amounts are at the top of the list, and put the rest in ascending order from there. The game plan is to start making payments on these smaller amounts to begin paying off items that you have to check them off of your list. With each of these paid off things, your credit score then has room to improve.

Get Some Help 
Many services are available to give people an opportunity to lower their overall debts to specific collectors. Consider how much easier it might be for you to pay off a bill if it had hundreds of dollars shaved off of the total amount. These services specialize in bartering with companies to get them to settle at a lower amount, which could theoretically save you thousands of dollars, depending on the current debt situation you are in.

Pace Yourself 

This is not a problem that you are going to be able to solve today. You have to take some time to figure things out and make changes. Professional assistance can help save you a lot of money, but it still might not be something that you can take care of all at once. Pace yourself and ensure that you are not putting significant financial strain on yourself to take care of this, which could result in a cyclic return to debt in the future.

Avoid Traps
All kinds of things play a role in reducing debt. Some people think debt consolidation loans are the way to go, but these carry problems of their own. Never leap at an opportunity like this, no matter how promising it may sound, as it could have severe consequences for even the slightest mistake or setback.

Seek advice from a professional who can give you a sound approach and a plan to get out of debt that can work with your current budget limitations and a time span that you can live with. It is not an easy road, but one that you can easily travel if you take the right steps.

Thank you, Randolph! Great article. The only thing I would add is that even if you’re in debt, you should still have a small emergency fund. Having said that, I can’t stress how huge of a financial emergency it is to be in debt. Do whatever you can to get out of that situation, as it will set you back decades on your path to financial independence.

Why you SHOULD invest in gold [guest post]

This is a guest post from my friend Katie, at Oakhill Organics. She isn’t a “goldbug,” but she has some interesting counter-arguments to my last post about gold, the most interesting one is that we’re not seeing a gold bubble, but rather the crash of the value of the US dollar (which makes it look like gold is relatively worth more). This would make investment in gold a way to at least preserve the value of your stash.

Take it away Katie…

I haven’t personally invested in precious metals (we’re on the “100 acres of farmland” model — literally!), and I tend to think cigarettes, coffee, and alcohol will be most valuable “currency” when the shit truly hits the fan. BUT I’m not sure that gold fits the same “bubble” model as houses and tulips. The housing bubble (and most bubbles, including dot-com, etc.) are generally created by artificially low interest fueling unwise investment choices. If you have to pay a lot in interest, you really think through your borrowing choices — on the other hand, if it seems gravy and borrowing is easy-peasy, then why pause? (especially if there’s wide-spread hype)

I think the current bubble-about-to-burst is higher education. An undergraduate college degree has already lost a ton of value at the same time that the price of that degree has skyrocketed, and I think we’re going to see a day when a basic college degree is almost worthless (ESPECIALLY in comparison to the extreme debt loads people are acquiring to attain them right now — with a few exceptions, you literally can’t get a job out of college that would even begin to pay off a 100k debt).

Graphs don’t always tell the whole story. Gold and silver were the original historical currencies and have held their value amazingly well — really, they’ve just held their value, while the dollar has lost its value. Most investors of gold are not trying to increase their monies — they’re just trying to hold on to liquid assets in an era when interest rates are low and all other cash type investments are losing traction! Right now we have over $10k in the bank and only earn about $0.57/month in interest.

Not many people are concerned with the 100 year timespan for their investments — they want to have money in 5, 10 or 20 years — and they want it to increase in value to at LEAST keep up with the rate of inflation (impossible right now from what I can see for cash type investments — we feel great about investing in land and our farm). The stock market is no longer a safe place for these shorter-term holdings. I’m not an expert on this subject, nor even a real “believer,” but I do think it’s fundamentally different, especially since people are buying gold with cash and not with easy-to-get loans.

Not having an Emergency Fund IS an Emergency

This is my first guest post, from lucky writer Allen Long. Alan enjoys writing about economic news, finance, and employment verification, and long walks on the beach. Take it away Allen…

Financial emergencies are not only common, they’re inevitable. Whether you lose your job, acquire sudden medical expenses, your car breaks down, or a water pipe explodes, making your home inhabitable, unforeseen circumstances can easily make having an emergency fund necessary. Not having the funds to handle a situation like this can cause you to lose your home, lose your job, or ruin your credit rating. Being prepared is part of being financially responsible. The following guidelines will help you begin an emergency fund to ensure your future financial stability should you face an emergency situation.

How Much Do I Save?
The general rule of thumb has always been to save at least 3 months’ worth of living expenses. With the current state of the economy however, it could be beneficial to aim for 6 or even 9 months instead. If you should lose your job, it could take some time to find something else. Unless you want to have to settle for something you really don’t want to do, saving enough money for a sufficient job search is the only way to fully protect yourself.

Don’t Mix
It’s important to know the difference between an emergency and other forms of savings. You don’t want to mix your emergency funds with your vacation funds, for example. If you’re saving for a wedding, keep the emergency money separate. The best way to do this is to have separate accounts for the two. Keep your emergency funds somewhat liquid without making them too easy to access. Don’t get a debit card for the account. This way, it is there when you need it, but not easy to grab when you don’t.

How to Start
You don’t want to start off by dumping half your paycheck in the account. This might trigger a financial emergency earlier than it has to be. Start out small. If you generally have trouble saving, try putting 5 percent of your pay into the account. Chances are you won’t notice this amount, and you can always bump it up later on. Don’t get discouraged; it will take a while to accumulate 3 or 6 months’ worth of expenses. The important part is to start saving as soon as possible and save something every single paycheck. If you are particularly short on cash one week, throw $10 in the account. Everything adds up, and once you convince yourself you can skip one week, you’ll quit putting money in altogether. Stay consistent.

Don’t Spend It
What’s the point in having it if you can’t spend it? I know the temptation is tough when you’ve got that money sitting there and you want to take a much needed vacation. However, you must resist. Dipping into your emergency fund for non-emergencies is the fastest way to spend the money before an emergency happens. This fund needs to be limited to real emergencies, such as the loss of a job or another financial disaster. Be tough on yourself.

Having an emergency fund will give you peace of mind and lessen your stress should an emergency arise. Don’t take it for granted. If you do lose your job, it’s not going to benefit you to wait the 6 months before looking for another job. Use your funds sparingly, even during an emergency. Just remember how long it took you to save up that amount, and remember you will have to replenish it once you get back to work.

Thank you, Alan! Great article. The only thing I would add is that if you’re in debt, limit your emergency fund to $1000-$2000 and then work like mad to get out of debt before adding more to the emergency fund.