How I Increased My Credit Score 230 Points

It was a tough time. I was young, inexperienced and had absolutely no idea about the importance of a good credit score. My job contract had ended and I was out of a job and essentially out of an income. I had $5,000 worth of credit card debt that slowly snowballed from careless eating out and other small things.

A few months later, I saw my credit score plummet down to 550 points. At one point I needed a car so I headed to the dealership to see what I could qualify for. He ran my credit and quoted me $700/month which really should have been $350/month had I come with good credit. I was stunned.

Essentially I had committed financial suicide…

So how the heck did I get out of this mess?

  1. Pay Off The Debt: I negotiated with the collection agency. I had them slash the original debt into a fraction of the amount. I paid it off in a lump sum.
  2. Don’t Miss A Payment: I decided to make every single payment on time on all of my credit cards. I didn’t miss even one. This was the most important thing I did.
  3. Apply For More Credit: Once my score was out of the red and into the black ( I was making payments on time) I began applying for credit. These cards were basic with small credit lines. But that’s all I was getting approved for. I started charging these cards immediately. You gotta use the cards. They just can’t sit there. My score edged even higher and so I started applying for competitive cards. Banks started to trust me again. They were comfortable giving me more credit.

These three rules helped me boost my credit from the 500s to the high 700s. This isn’t a one month process. This can take a couple of years. Just be steadfast and stick to the plan.

How To Prepare For A Recession

The Data, Generally Speaking

Stocks have been on a tear since Mid-2009. That is 9 years of explosive growth and one of the longest contractions we’ve ever had. Real estate has been on a rebound since early 2012 as Bay Area homes show no signs of a slow down. But that seems to be changing as we’ve hit an inflection point. You can talk to a hundred experts and you’ll get a hundred answers. But one thing is for sure, the market has never been higher.

SP500-Over The Years

So the 64 Trillion dollar question is: are we headed higher on the graph or are we headed for a free fall? As of August 2018 more news is coming out about an impending crash. Investors are quickly putting on the brakes.

But regardless of what the market does, what I really want to know is, are you prepared for a crash? How resilient are you to a market meltdown?

Let’s dive in and look at all the housekeeping you have to get in order before the going gets tough:

Pad Up Your Emergency Fund

Let’s get one thing straight, your emergency fund is completely separate from your savings. The emergency fund is there to carry you over in case you lose a job. A comfortable padding should allow you to take care of all your mandatory expenses for 6 months without any type of income. Money is time so the more you have stashed away, the more time you bought yourself.

Create A Budget

So how much are you really wasting on lattes? Be meticulous in putting it together. Typical expenses include: rent, car payment, school payment, groceries, utilities, cell phone, credit cards (better pay this fully each month!), gas, cable, subscriptions, clothing, travel…and you get the idea. If it’s not written down on paper you most likely can’t see it. Trim the fat!

Are You Invested In The Markets

Do you have a financial plan? When I say ‘plan’, I’m really talking about a playbook. The younger you are, the riskier your portfolio. The older you are the more conservative your portfolio. So think fixed income (bonds, T-Bills, CDs) or high yield savings accounts. If you are highly invested in equities (stocks), you may want to think about reshuffling. Many experts say to not time the market, and let the money grow long term.

Clean Up Your Resume and LinkedIn

Polish up your resume and Linkedin and start reaching out to your contacts. Get a conversation going with your friends, colleagues and especially LinkedIn contacts. You don’t want to reach out to them out of the blue when the situation is dire. Build connections now.

Attend Events and Network

Start attending events, workshops, conferences and just get out there. Most of the good events are paid, and the mediocre ones are free. Definitely pay for the good ones, they are worth it and attract a higher caliber crowd usually. You can volunteer at events and attend them for free.  Meet people, and add them to your network/Linkedin. Beef up your network so that you can tap into it later. Be ready to offer the help too.

The 5 Commandments Of Being Rich

We are living in a world of insane opulence. More millionaires and billionaires exist today than any other time in history. But the overwhelming majority of us, as in 98% of us, are just middle classers putting food on the table and keeping the lights on.

But…if you pause just for a second and straighten out your fundamentals, you can significantly increase the quality of life and see incredible results.

Below I have listed the 5 Holy Commandments Of Being Rich. Follow them, and avoid the pitfalls that most folk make:

  1. Pay Off All Debt

Debt is toxic. Do you really really need to make that purchase? A car, a Master’s degree, an expensive shoe? Bring awareness to your spending. If you can’t pay off your credit card  completely at the end of every month, you are spending too much.

      2.  Pick A Job That Is A Fit, And That Hopefully Pays Well

Pick a job that you love, can do for a long period of time and can master. Having a good, consistent income is the cornerstone of life.

      3. Have A Strong Credit Score

This is the most important number in your life. Having a good credit score is like being in a full blown relationship. Guard it. Respect it. Build it. Imagine what kind of savings you can get over the duration of a car loan or home loan. The savings literally in the thousands of dollars.

      4. Consistently Add To Your Savings and Investments

Sock away your paycheck. Invest your money in passively managed funds: Index ETF Funds, Index Mutual Funds (we’ll explain these in a following article). Keep what’s left over in a high yield online savings account.

      5. Make The Right Relationships

They say you are the average of your 5 closest friends. It’s true. Be selective in friendships, your love life and all relationships. Be purposeful in who you connect with. Time is limited.

That’s it. That’s my list of Commandments to a happier life. Thoughts? Leave me a comment!

Is It A Good Time To Buy A House In The Bay Area?

I am always being asked by people on whether it’s a good idea to buy a house in the Bay Area. If you are going for the long haul, as in willing to hold for more than 5 years I’d say you are making the right move. I am expecting a dip of 10% to 15% in 2019 depending in which neighborhood you live. But that’s not all that significant since a $1.5M house would now still be worth $1.35M. That’s a $300k vs $270k down payment. Really no difference and your mortgage doesn’t change too much.

One thing is for sure, we are at the highest point in the curve than we have ever been in the past, and the higher you are the harder you fall. People are expecting a crash on the same scale of 2000 and 2008. But those were once in a century crashes even though only 8 years separates them. We don’t have a dot com situation and we don’t have a sub-prime problem out here in Silicon Valley.

Check out this chart provided by Paragon Research:

The Bay Area is price protected as there is no more free land to develop and a huge percentage of the population can pay cash, liquidate stocks or have access to other windfalls to use as purchase. Way, way more buyers exist than sellers. Inventory continues to remain insanely low because people don’t want to sell. Foreign money, company exits, RSU’s, VCs, lawyers, dentists, doctors, are your competition when buying a home in this area.

SV has exceeded the critical mass point. It’s too big too fail. It’s the tech capital of the world and nothing is threatening that position. The perfect weather and tech industry is why people flock to the Bay Area. With over 40,000 startups and a myriad of large cap corporations, the next 15 years will bring about more technological advancement than the last 50 years have. Buy housing now or forever hold your peace.

 

Introduction To Credit Cards. What Makes Up Your Score?

Let’s get straight to the point. Your credit score is literally the most important number in your life. It’s a three digit number between 350 to 850 which lets lenders figure out how trustworthy of a borrower you are. As in, how likely are you to pay back the money you are borrowing?

Quick background: The credit score was originally formulated by the Fair Isaac Corporation. In reality, you have three credit scores, each assigned from a credit bureau: Equifax, TransUnion and Experian. Yes, these three bureaus decide how easy or tough your life will be.

Below are the Holy Commandments of using credit cards? Relax. You’ve got this…

Payment History

This single handedly makes up the core of your score. Have you made a late payment? How late did you pay your bill? You have 30 days after your due date to pay up. If you don’t, your pristine credit report will be tarnished for a long time and you will see your score plunge into a deep dark abyss. Do not make payments more than 30 days after the due date.  

Keep Your Utilization Rate Low

How much of your credit card have you used up? Here’s a tip most people don’t know: you are better off spreading your charges over multiple cards rather than charging it all on one card. If you use up more than 30% of your available credit, you may trigger off a signal to the credit bureaus. Spread your debt, and keep your utilization rate low.

Apply For Multiple Credit Cards.

Contrary to popular belief, having more cards doesn’t reduce your credit score. You can have an amazing score with 2 cards, or 7 cards. It’s how you use them not how many you have. Keep your utilization rate on all cards low. More credit cards gives you a higher total credit line.

Length Of Credit History

Your credit history begins the day you first open up your credit. A longer history helps establishes your credit age. People may unintentionally close their oldest credit card which will reduce your credit history. That hurts your score.

Don’t Close Credit Cards

In my younger, naive days I would apply for credit cards, use them for their perks, and then close out the card. Very bad idea. Closing out cards hurts your score. You reduce your total line of credit. So next time, just pay off the card and throw it away.  Now you’re done.

Pay Off Your Card In Full Each Month

If you can’t pay off your entire balance by the monthly due date, something is wrong. You are spending too much and will soon enough owe a small fortune to the banks. You are now officially in credit card debt and can’t get out. Remember what you don’t pay at the end of the month gets charged toxic interest. What a waste of your hard earned dough.

Request a Higher Credit Line

After you have paid your dues (no pun intended) by making on time payments, call up the bank and request a credit line increase. I have done this time and time again to receive credit increases. Remember, more credit is a good reflection on you. It will help keep your utilization rate lower. If you were given a raise at your job, use that as a leveraging point during this call.

You Can Get Fees Waived

Say you get a late fee of $25. A simple call to the bank can get you a courtesy waiver. I’ve done this multiple times, even with the same card. I even had the $59 annual fee removed from my Capital One card simply because I didn’t use the card enough and forgot it had an annual fee. Be tactful and courteous when speaking to the representative.

Negotiate a Lower Interest Rate

No one wants a credit card with soul crushing 24% interest. After you’ve established longevity with the card (around 6 months) you can give them a call and request them to bring the interest rate down. I haven’t personally tried this, but it can make a huge difference if you have massive balances. Again, be super courteous on the phone. It helps.

Verdict: Your credit score is made up by a lot of attributes. The most important one is if you make your payments on time. Your credit score is the biggest factor in saving you the most money over the duration of your life.

 

Surviving Bay Area Rent

Living anywhere in the Bay Area is hard as heck without a tech salary, an exit or considerable stock options. It’s just plain tough for anyone making less than $100k/year.

Making less than $75k/year in The Valley probably means that you are just surviving, not thriving. As you Bay Area denizens know, the single largest expense we have is rent/mortgage. The annual rent on a 2 bedroom apartment in a mediocre area in Silicon Valley is $2,400/month. That’s almost $29k a year. So a person making $60,000 probably won’t break even at the end of the month after they pay other expenses.

Why Be In Silicon Valley?

My first question to you is, Do you really need to be here? If you aren’t a venture capitalist, an angel investor, a coder or some IT guy then do you really need to be tied to this pricey land? Even if you are a techie, you would do yourself a big service if you worked remote from a much more sanely priced place.

Relocate To Another City

Rent is the biggest line item on our expense sheet. Cutting this down will help put more back into your savings so you can build your financial foundation. Chaper areas usually have lesser pay but you will still come out ahead.

Cities like Atlanta, Chicago, Dallas and Houston are economic powerhouses with cheaper rent. If you want to stay on the west coast then LA, Portland, San Diego, Seattle are cheaper than the bay but still pretty expensive.

Ok, so I can’t convince you to move on out of here…

Get Roommates To Split Rent

Save on the big ticket items first: Rent. It can single handedly wipe out more than 40% of your net paycheck. It’s a huge expense item here in the Bay Area.

Solution? Roommates. It’s much more economical to rent a large house and split it up by rooms. Check out this Craigslist page to get started on your roommate hunt. Don’t forget to filter by neighborhood! Also checkout roommates.com. People are taking on people to move into their spare bedrooms and living rooms to help cut costs. Many of these smart people are using AirBnB to rent out unused space.

Back To Your Parents Basement

If you have parents in the Bay, then why not live with your parents and pay them a marginal rent instead of paying silly money to live elsewhere? Spending triple the rent to not live with your parents never made any sense.

Move Further Out From The City And Valley

The further you get from the bay, the cheaper it is. If you work in SF, best bet is to move across the pond to Oakland/Berkeley for a sizeable reduction in rent. You can move farther still and pay a more discounted rent. Consider the farthest cities that BART directly travels to: Richmond, PIttsburg or Dublin. Be prepared for a seventy five minute commute time each way. You may qualify for Section 8 Housing as well. Living close to your work is a big part of having a quality life. But people in the bay are helping their bottom line by suffering longer commute times.

Verdict: If you don’t have to live here, don’t. But if you do, then find a roommate and move to a humbler pad to help your bottom line.

 

What The Hell Is Bitcoin?

Bitcoin (BTC) like most cryptocurrencies is a difficult and vague concept. The creation of cryptocurrencies is single handedly the greatest invention since the internet itself. In the future, as this system becomes more refined, we will see its true power. Below is a condensed synopsis of what Bitcoin is as opposed to how it works.  Let’s get right to it:

  1. Bitcoin is a digital currency which may be used to purchase goods, be kept as an asset, or can be converted to your local currency.
  2. Bitcoin is P2P, meaning it can be sent from any person to any person. No bank or middleman is involved. Exchanges and apps charge a transaction fee to buy/sell BTC.
  3. BTC can be purchased on many exchanges, or through a mobile app like Coinbase (the fees are substantial)
  4. The maximum number of Bitcoins that can be mined has been preset to a maximum of 21 million. Nearly 17 million have been mined as of March 2018.
  5. Every Bitcoin user is in possession of a public and private key.
  6. Public keys allow Bitcoin to be sent to a person. It’s like their public mailbox.
  7. Private keys allow people to spend Bitcoin and should be stored in an extremely safe place.
  8. Blockchain is the technology that allows users to buy, sell, and trade Bitcoins.
  9. The blockchain is made up of blocks. Each block contains a timestamp and transaction data within it. Each block is a hash of the previous block.
  10. Bitcoin mining is the act of adding validated transactions to Bitcoin’s public ledger.
  11. Miners earn Bitcoins when they support the system by solving proof of work problems
  12. Each miners computer contains the entire copy of the virtual ledger (all BTC transactions in the world).

Remember, buying Bitcoin or other cryptocurrency is extremely risky due to its recent volatile nature. Some risks to Bitcoin include: Government banning or imposing regulations, countries banning Initial Coin Offerings/Exchanges, high transaction fees, or simply longer calculation times for proof of work to be validated. Also, Bitcoin is being treated as an asset not as a currency which is against its whole purpose. The short term looks negative, while the very long term could pay off tremendously. I am confident that crypto currencies will be the long term solution, of which Bitcoin may not be a part of.

7 Realistic Ways To Boost Your Income Every Month

By now you are probably starting to get the point that reaching financial freedom by cutting back on latte’s and movie tickets is imaginary.  In this article what I really want to focus on is how you can make extra money and supplement your day time income.

There’s a hundred ways to make a few bucks on the side with odds and ends types of jobs. But I wanted to create a simple list on sensible ways you can add an income stream to your day job. Let’s look at a few different ways you can do this:

1. Consulting & Coaching

  • If you truly are good at a specific skill then you probably want to engage in side consulting. You can bill at a tremendously high rate. If you are specialized in: finance, accounting, auditing, taxes, SOX, personal development, organizational efficiency, change management, product management, project management, UX design, graphics, coding or whatever, then you can create a massive income for yourself. If you still need more ideas check out the categories at Upwork.

2. Blogging

  • There are generally 4 ways to monetize a blog: Google Adsense, Affiliate Marketing, selling advertising space to a sponsor, and selling digital/physical goods. This is a long term business and driving traffic to your product is the hardest part. This isn’t a get rich scheme. It’s a long term, elaborate play.

    You shouldn’t start a blog strictly to make money. Churning out captivating content is back breaking work, and if the passion isn’t there, you’ll just end up with a broken back. Pick a topic you know very well or at least have a ton of passion about, then create content and drive people to the source of that awesome content. Remember, writing content is just half the story, you need to drive traffic which is a separate skill set.

3. Selling Digital Downloadable Goods

  • Creating a specialized course to sell online is an insanely great way to make passive income. You can launch it on Udemy and split profits with them, or create your own website and market it through there. You can also use Teachable.com to create awesome course content.

4. Tutoring

  • Tutoring is a strong way to make side money. STEM tutoring in particular can bill at a really high rate:  programming languages, physics, calculus etc. You can also bill at a high rate if you know a specific tool or software like Excel, SAP, or Oracle. It basically comes down to specialized knowledge of a subject or a tool.

5. AirBnB

  • Depending on your situation this can be easy money sitting on the table. It has the potential to give you the most return for the least amount of work. If you have the tolerance to keep a stranger in your home this is an amazing way to make a buck. Your specific neighborhood, size of your home and quality of your home will determine how much you can charge Sign up to become a host on AirBnB.

6. Uber/Lyft

  • If you are free in the evenings or the weekends you can make more than a few bucks driving people around. Here are the requirements you need to meet before driving for UBER. UBER drivers usually net somewhere between $10/hour and $30/hour. It’s a big range, yes, but a ton of factors influence the rate like location, time of the day, neighborhood, holidays etc. Generally speaking the more you drive the more you will make per hour.

7. Run Errands

  • You can earn a few bucks doing errands for people on this site. Mount a TV, make a bookshelf, put together furniture, move heavy items and a myriad of different things. It’s a decent thing to do on the side or if you are jobless. It’s great for students, and it’s great for a part time gig. That’s about it. Check out TaskRabbit.

 

So that’s it folks, these are a mix of things you can do to bring in a side income. Don’t just dabble in it. Own it.

Why An Emergency Fund is Crucial And How To Set One Up

For those of you who don’t have an emergency fund, this is the article for you. It’s basically a fund that you keep separate from your finances in case you lose your job or need fast cash right away. For best practices you should keep your 911 fund separate from your savings and checking account. You don’t want to be tempted to dip into your stash.

If you don’t have a 911 fund set up: You will most likely be forced to dip into your checking, or savings, or forced to put it on a credit card or even borrow from someone.

When you have 6 months of savings set aside for emergency expenses you are buying yourself time.

Here are the steps you should take to get an emergency fund started:

  1. List out all your necessary expenses that you cannot live without: Rent, Food, Utilities, Medical Costs, Internet, Cell Phone bill.
  2. Now add up all of these expenses  (For example, $1200 for all expenses per month)
  3. Generally speaking you should have 6 months of expenses on hand. (For example, $1200 x 6 months = $7,200)
  4. The emergency fund amount you need today should be $7,200.
  5. If you don’t have $7,200 saved up then…
  6. …Determine how much can you save each month after you pay all of your necessary expenses. If you can save $300/month it will take you 24 months to have a sufficient emergency fund.

If you already have your emergency fund amount, then congrats. You just bought yourself 6 months of time in the case of really tough times. If you don’t have your minimum emergency fund amount, don’t stress. Start contributing as much as you can to your fund every month until you get to your 6 month figure.

Verdict: You should have 6 months of necessary expenses saved up. This should be separate from your checking and savings account. If you don’t have an emergency fund, cut excessive expenses and contribute as much as you can until you hit the reserve amount. It will buy you precious time and a nice padding when you need it.

Tips On How To Save Money Booking Flights

So you want to travel without reducing down your net worth to zero. Worry not, I’ve got some good tips to help you see some beautiful cities around the world without having to go bust. Let’s take a look into the details:

  1. Clean Your History: Before searching for flights, delete your browser history and go into incognito mode. This doesn’t ensure cheaper flights, but is definitely a best practice. Sometimes sites can catch on to repetitive searches and boost your price.
  2. Sign up for AirFareWatchDog
    • Set price alerts from one city to another so you can get automated emails
    • Get a list of the cheapest flights from your city to global destinations
    • Look at a compilation of the cheapest 50 random destinations
  3. Sign up for The Flight Deal
    • Check out the cheapest flight to random destinations from your city
  4. Use ITA Matrix as a planning guideline to find the cheapest days to travel on (you won’t be able to purchase from here though)
  5. Use Google Flights to show you prices of destinations for certain dates around the world, all conveniently plotted on a map. Also track flights to your destination and get notifications.
  6. Book Off Season And In Advance:This is probably the most important advice. I can’t tell you how many insane deals I have booked by traveling off peak. For example, don’t visit England in July, go during Fall/Winter to get massive discounts. Europe can be more than 50% off September to May. Making your reservations late can cost you a lot of money, so don’t blow your savings because of your procrastination!
  7. Search One Leg At A Time: Don’t book multi city vacations all in one shot. Break down the legs to get the cheapest flights. It’s a tedious way to go about air fare hacking, but a great way to save.
  8. Get Your Timings Right: Don’t try to depart or arrive on a Fri, Sat, Sun or Mon as they are usually more expensive. Also, early morning flights and late night flights will be the cheapest.
  9. 24 Hour Rule: You have 24 hours to cancel your ticket after purchase. So if you find an awesome deal, grab it. You can always get a refund if you find something even cheaper.
  10. Try Other Airports: This is going to be inconvenient but you can travel to smaller airports that are further from the main city. A major city may have nearby airports outside the main city. They are usually cheaper. Run multiple searches to do comparisons. Always check how far your airport is on the map and if there is easy public transport.