Posts Tagged ‘Yvette Owo’

Will applying for rewards cards hurt your credit score?

Ever see the reward cards that advertise thousands of travel miles for just opening an account?  I recently got the Capital One Venture Card and was wondering how my credit score would be affected if I applied for several of these cards.

The post below is by RJ Weis at Gen Y Wealth.  He applied for several cards and tested the impact on his credit score.  What do you think happened?  The results were surprising! Read below:

The Impact of Travel Hacking on Your Credit Score

by RJ on May 15, 2011

The last time I checked my credit score, it was at 717. That was on June 12, 2010.

Since then, I have applied for 4 different credit cards. The purpose for applying to each of these cards was to earn free miles.

The four cards I applied four earned me 200,000 miles. That’s good for 4 round trip tickets to many international destinations.

So how did this impact my credit score?

Let’s find out.

Last time I checked my credit score, I did so using MyFico. Now it costs $20 to get a credit score at MyFico, so instead I’m using Equifax. You can view your FICO® score through Equifax for $15.95.

I’m happy to report that my credit score as of 5/13/2011 is 752. An actual increase!

Why did it go up? I can think of a few reasons.

  1. I only had one credit card before, so more credit cards improved my utilization rate.
  2. I paid all of my bills on time.
  3. I didn’t apply for many credit cards all at once. Although, I’m not entirely sure if this helps or not.

One of the biggest assumptions about travel hacking is the negative impact on your credit score. Everyone’s credit situation is different and nobody knows exactly what goes into this calculation. However, my point is that you should always test assumptions. Many times, they’re incorrect.

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Stocks are still on sale, BUY, BUY, BUY!

Yes, that’s right, I said it, stocks are still on sale. My ROTH IRA (Individual Retirement Account) earned a 15.95% increase from March 2010 to today.  Most of the increase was due to the overall stock market doing better. During the recession, stock prices crashed hardcore.   Two things determine stock prices:

  • Fundamental value of the company: company’s annual profit, upcoming products/services, and the cash you’d make by selling all the company’s assets
  • Perceived value by investors: people’s opinion of how well a company’s going to do in the future

During a recession, the fundamental value of a company changes some and the perceived value changes A LOTPeople worry that the economy won’t recover and forgot that recessions happen periodically. They see their investment balances dropping fast, become terrified, and sell their stocks.

Stock prices continue to drop until people feel comfortable investing again.  This is the best time to buy!  It’s a sale.  

Stock prices in a recession resemble a post-Christmas sale—which are the lowest prices of the year. (When else can you buy a $300 Banana Republic jacket for $15?) Think of a recession as a surprise sale (a cyclical discount on stocks).

If you have extra cash now, buy! If you don’t have cash, get ready for the next major sale. It will happen. We’ve had 4 recessions since 1982 (Dec 2007 – June 2009, March 200 1- Nov 2001, July 1990 – Mar 1991, and July 198 1– Nov 1982).

During the next recession when everyone else is running out of the market, we’ll come in with buckets of cash, buy stocks on sale, and bolster the economy!  Ha, buying during a recession helps you and helps the national and world economy! Call that my community service message for the day.

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Have you been investing during or after the recession? If not, are you thinking about getting in? Share your experience!

About Me – Why I’m Doing This

Thanks for checking out Financially Fab.  Here’s background on why I’m doing this.

My Passion

I’m passionate about helping middle class people hold on to their money. I want you, me, everyone, to confidently make savvy financial decisions. To make those savvy decisions, you need information that makes sense for you, right now. I started Financially Fab to offer sound, timely, information for your life, speaking your language as young professionals. This is not your parent’s website.  I use examples from my life and the lives of other young professionals.

Financially Fab is about helping you and creating a safe space to learn about personal finance, especially if you’re starting from scratch.  I want you to ask questions! Write comments! Email me at FinanciallyFab at Gmail . com. I respond to all emails and comments.  And if you’re really shy, write an anonymous comment. 😉

The Beginning

When I was 18, my parents divorced, kick starting my current views on personal finance.

I was born in Nigeria and moved to the US at age 6 with my family. My parents moved halfway across the world, leaving family and friends, partly so their kids would never worry about money. Like a good immigrant daughter, I was expected to get outstanding grades, go to a good college, get a professional masters or PhD, and pursue a professional career.  I followed that plan and willingly handed over my financial life. I expected them to manage my finances behind the scenes until I finished grad school. 

During the divorce, finances became more transparent. My college tuition, housing, and other expenses got thrown into their arguments.  In an 8-month period my mom took full financial responsibility of her 3 kids, got divorced, and buried her father.  I was very close to my mom.  I saw firsthand how money touched all areas of our lives—funerals, education, Christmas holidays, relationships, and lying awake stressed each night. I’m sure my parents, like all others, experienced financial worries several times during my childhood. But this was my first time seeing the details.

I was almost Kicked Out of College

On my end, I kept spending like nothing had changed. I had less cash each month and was using more credit, but I wouldn’t admit it to myself. For example, I hoped that $1,000 dollars in my account would stretch to pay for $700 in rent and bills, $200 in food, $200 in shopping, $150 in other random expenses.  I was stressed.  Seven days before spring semester started, I didn’t know how I would pay for tuition.  If couldn’t pay, the university would drop my classes—I would be kicked out of school.

That woke me the hell up. I got a short-term university loan.  I asked myself how I could spend $5,000+ shopping and studying abroad, but didn’t have $3,500 for tuition. I was spending money like it grew on trees.  I realized it wasn’t mom’s or dad’s problem. I was accountable for my finances.  It was my life, not theirs. That spring and summer, I dove into personal finance, reading about mutual funds, budgeting, efficient market theory, consumer debt, etc.  I also started budgeting, got a federal student loan, worked part-time, and paid off $5,000+ in credit card debt within 5 months.

Starting my Financially Fab Lifestyle

For the rest of college, I increased my financial control, using a combination of support from both parents, loans, part-time work, and scholarships.  While still in college about two years later, I had a 6-month emergency fund and opened an IRA with $4,000.

Over time, the sense of control expanded to other areas, including choosing the job I wanted, moving to my 1st choice city, picking up ballet as an adult, and travelling the world.  I became Financially Fab.  I became accountable for my decisions, worried less, and enjoyed more.

Realizations that Changed My Life Forever

  • If I don’t prioritize my spending, I could lose what really matters–in this case, my education.
  • When I take ownership of my finances, I sleep better.
  • I worry less when I have an emergency fund.
  • Going forward, I will be 100% accountable for my finances, the good and the bad.
  • I will never blame someone else for my spending decisions.
  • I am in control of my life.

Ready to take control of your life?  I’m here to help. Wanna dive in? Check a post and post comments!