"I don't dance now...I make money moves!" Ayeeee!! The song that got us all loving Cardi B. Well let's not stop there. Let's get on our Cardi B & make some Money Moves!
Too many times as minorities we're behind the ball. It's time for us to catch up! It's time for us to work smarter & not harder.
The above is an excerpt from a Forbes article entitled The Retirement Crisis Facing African Americans. It's a REALLY good article. Take a moment & click here to read it!
April is Financial Literacy Month so let's learn & start making Money Moves!
Money Move #1: Paying Bills
Paying your bills is the number one Money Move. You created the bill, so don't gripe to pay it. Furthermore, don't be out here living all lavish stunting on Snap Chat when all your bills past due. That's not cute.
Tips to paying your bills:
- Pay them on time to avoid late fees. If you already can't pay the regular payment why pay more with a late fee?
- Pay more that what's due. Say your monthly bill is $135. I'm willing to bet you can afford to pay $150. Paying more helps you to pay that bill off faster, save money on interest, & puts you ahead of the game for a rainy day. Say something comes where you can't afford to make a full payment. Well you've been consistently paying more so you either don't have a bill due that month or it's a lot less that the regular payment.
- Make a payment plan. You have those bills that are going to cycle like rent, utilities, cable, internet, etc. But bills like loans, credit cards, & your car note can end at a certain point. Keep track of these points & work to strategically pay them off. Start with the item with the lowest balance & work from there. For example, say you have a credit card with an $800 balance & you plan to pay it off in 4 months versus making just the minimum payment of $25 & taking forever to pay it off as well as collecting interest. So that means you need to pay $200 a month to pay it off. Boom you're done. Now you've been paying a small loan. The balance of that loan is $1000 & you have 10 monthly payments of $100. Well you're finished paying off that the credit card so now take that $200 & make $300 payments on your loan. Now that loan that was supposed to take 10 months, you pay off in a little over 3 months. Boom you're done. Now take that $300 & apply to your car note. You don't have to let your bills run the full term that's just more interest you're paying over time that you potentially don't have to.
Money Move #2: Create a Budget
& don't just create a budget but stick to it. Your bills shouldn't change too much from month to month nor should your income. You should have a monthly budget that you may split between your paychecks based on the due dates.
Additionally, I make a bi-weekly budget so I can factor in extra-curricular activities or small expenses. For instance, I have to pay for my bridesmaid dress for my friend's wedding coming up. Even though it's a short-term bill I like to factor it in to my budget.
Also will looking at your expenses for your budget, become aware of your DTI. Your DTI is your debt to income ratio; a percentage. How much you have in bills divided by your income. At one point I was getting money in & it was going so quick & I didn't know why. Well I sat down & made a list of all my bills & the amounts & it started to make sense. I had too many bills based on my income. So say you have $800 in bills a month & your income is $1800 a month. $800/$1800=44.4% is your DTI. Let's just say mine was a bit higher than this. lol. Well that's when I started a payment plan similar to one I referenced earlier. Theoretically, you want you DTI as low as possible. Less money to bills & more money to yourself.
Money Move #3: Establish Good Credit
It is not hard to establish good credit & the time to start is now! The main component of your credit score, which accounts for 35% is your payment history which is how well you pay your bills. So you should be good there because that's the first point we went over.
Tips to Establishing Good Credit:
- Don't max out your credit cards. Revolving accounts (credit cards) weigh more on your credit than installment accounts (loans). The rule of thumb is to stick around 30% of your credit limit. So if you credit limit is $1000, you should only charge $300. Once you show that you can handle this (time varies based on you credit card company) your credit limit should increase thus increasing the amount you should charge. Now if you do charge more than 30% just be sure to pay it down before the next billing cycle.
- Have a good mixture of credit. A credit card is a pretty good way to start your credit if used correctly. After than try getting a small loan. Basically showing that you can handle multiple types of credit shows that you have the responsibility to handle larger things like a car or a home.
- Watch your credit inquiries. Credit inquiries only account for 10% of your credit score however have long-term affects to your credit. Don't be getting your credit pulled habitually like 10 times a month. It show irresponsibility.
Basically your credit score is like a GPA. Keep it up because if you make a bad grade (a late payment or 100 inquiries) you have to work double to make it up.
I hope you enjoyed these Money Moves! These are just a few, but a great start. Let's start to channel our inner Cardi B! Comment below your Money Moves that help you financially!