Here’s an interesting article I found regarding hidden fees your credit card company may charge you, even if you pay off your balance every month.  Click Here to read the article.

Matt Wegner presenting during Money Smart Week

What a great week teaching classes for Money Smart Week!  I’ve had a blast making a difference in the lives of all who attended the classes this week.  A special thanks to all who helped organize, plan and promote the events.  Without them this week wouldn’t be possible.  If you missed the classes this week, keep watching for updates on future offerings.

Why generous giving leads to generous living.

Written by Matt Wegner Founder and Lead Counselor, Matt Wegner Financial Coaching, www.mattwegnercoaching.com

Is it possible to give your way to prosperity? Are rich people able to give away lots of money because they have lots of money, or did they get lots of money by giving away lots of money? Are poor people poor because they are generous and give too much away or do they give very little because they have little to give? The correct answer may be a combination of several of these. I’d like to suggest that holding on too tightly may cause us to lose more in the long run and that being generous with your money paves the way for you to grow wealthier in many respects. Here’s why:

When we are worried about losing our money we start watching it closer and closer. We hang on to it tighter and tighter. We become more and more obsessed with not letting our money slip away. The harder we try to keep our money, the more obsessed we become. The more obsessed we become, the more it consumes our time, our resources, our energy, in essence our lives.

Imagine you have a stack of $100 bills in your hand. If you’re not careful some of these $100 bills might slip out of your hand. What’s your natural reaction? To close your hand around the money and hold on tighter. Now that’s a lot of money in your hand so you start thinking you need to be a little more careful. What do you do? Hold on a little tighter. The tighter you hold on to your money, the tighter your fist clenches around your money. The tighter the fist you make, the more energy you spend holding on to those dollars. Here’s the irony of this situation: By holding on to your money so tightly, you may keep some or all of it from falling out of your hand. But you also prevent any more money from coming in. You can’t receive money with a closed hand. So when you learn to live with an open hand, you may have a few dollars slip out of your grasp from time to time but you have much more room for more money to come in.

Just as you can’t receive money with a closed fist, you can’t receive love with a closed heart. When you learn to give more of your time and money, a piece of you changes. You release some of the selfish nature we were all born with. Each time you release some of that selfishness, your heart opens up to receive a little more in.

By making giving a priority in your life you not only reduce the selfishness in your own heart, but your opinions change with respect to what is truly important in life. By feeling the benefits of giving for the right reasons, the petty and material things in life feel much less important.

Monetary giving is an important part of your financial plan because it forces you to not get too attached to the money that flows in and out of your life. But you can’t give generously if your income is strapped by debt payments. That’s why we teach the Ladder of L.I.F.E. If you’re still working to eliminate your debt, keep in mind that financial giving is not the only way you can give. Donate your time once in a while for a good cause. Help out at a soup kitchen. Raise money for a charity. Donate some clothes to the local thrift shop. Prepare a dinner for some friends who have a family member in the hospital. Little things make a big difference in the lives of others. The little things also add up to a big change in your life. Start giving, but only for the right reasons and only if you’re prepared to change your life!

- Matt Wegner

Matt Wegner is a personal finance, career, small business and leadership coach focused on teaching his clients the tools for L.I.F.E. (Living In Financial Excellence).  Learn more about Matt at www.mattwegnercoaching.com.

Over the past few months, Money Smart Sheboygan County has been sponsoring a Financial Makeover Challenge.  Six families were chosen to work closely with a financial counselor to help them change their lives financially.   The family with the biggest overall improvement in their financial situation will be awarded $1,000!  As a financial coach, I have volunteered my time to help three of these deserving families establish good financial habits in their lives.  Now it’s your turn to help.  The Sheboygan Press published an article on each of these families and you have the opportunity to vote for your favorite family online.  Click here to vote!

We have some busy weeks ahead of us.  Mark your calendar for October 10th-17th, when Money Smart Week comes to Wisconsin.  During this week, free classes are provided all week to help you make smarter decisions with your money.  I am offering two classes that week on three different days.  You can find out more at www.moneysmartwi.org.

Also, the Money Smart Sheboygan County’s Financial Makeover Challenge is nearing a close.  Six families were chosen to change their lives financially and one of them will win $1,000 for their efforts.  You will have a chance to vote for the winning family in an online poll hosted by the Sheboygan Press.  Be watching for articles in the Press during the week of Sept. 21st.

Building a good credit history without debt

Hi Matt,

Hi Terry,

I have a couple of thoughts on this subject.

My first concern is that as well as you have taught your daughter, the credit card in her pocket will serve as a great temptation over time.  It will always be there whispering, “This is an emergency.  You’re out of beer money. Use me.  I’m convenient.  It’s only a few dollars this time.”  At least that’s what my credit card said to me when I was in college.  I think she’ll be better able to stick to the cash only values you’ve taught her if we remove the temptation altogether.

She will indeed need a good credit report to get approved for a mortgage loan, but she won’t necessarily need a good FICO score.  Here’s the difference.  Your FICO score (generated by the Fair Isaac Corporation) is based on the following: 1. Payment history (35%).  2. Amounts owed (30%).  3. Length of credit history (15%).  4. New credit (10%).  5. Types of credit in use (10%).  It’s almost entirely based on how much credit or debt you’ve had and how you’ve used it.  That then creates a score that is supposed to indicate how well you will handle credit and debt in the future.  Your credit report lists all the accounts you’ve held in the past, and whether there was any history or patterns of late, missed or delinquent payments.  Many banks got themselves into trouble recently (See Economic Crisis, broadcast daily on every news channel…) by loaning strictly based on credit scores.  I’ve even been told that you can’t borrow money any more without a FICO score.  But the truth is there are small, local banks and credit unions that still use their brains and take other things into consideration when underwriting loans.  It’s called manual underwriting.

Things they consider include:

• Your job history (length of time with a steady income). If you’ve had a steady job with the same company for a few years, you appear to be a reliable person with some discipline.
• Your credit report and payment history for things like rent and utilities.  If you miss payments on these, they will report the incidences on your credit report, so keeping them current shows you can manage regular payments.
• Your account history with that bank.  If you’ve had a frequently used checking account with that particular bank for years and you’ve never had an overdraft, it shows that you might have a clue about how to handle money.
• Your debt to income ratio, meaning how much total debt are you asking to take on in relation to your income.

Now there aren’t too many banks these days that fit the small hometown bank description with a personal touch, but they are out there.  Again, credit unions and local banks are the best place to find the personal service with the ability to use more than just your credit score.  The best advice is to get through college with as little debt as possible (zero is preferred) and start saving for the down payment on the home.  For mortgages I recommend at least 20% down, with payments equal to or less than 25-35% of your take home pay on a 15-year fixed interest rate.  If your daughter climbs the Ladder of L.I.F.E. she will be debt free and have the down payment saved up within a few years after college.  Saving for the down payment would come just after fully funding the emergency fund and before retirement savings (or after retirement savings depending on her age and income after graduation).  By then she should have a good job history, good payment history on her rent and utilities, good account history with the bank and good payment history on her student loans (if applicable).  She will have the student loans paid off before she saves the down payment so she will have a great debt to income ratio. By going to a bank that actually uses their brains instead of a number she should have no problem getting approved for a mortgage.

-Matt Wegner

Last week I spoke to the Unemployment Support Group for Professionals at the United Way in Sheboygan. I had an absolute blast interacting with the group. This is a group of people who aren’t accepting the recession as “the way things are.” These motivated individuals are taking responsibility for their futures and doing something about their situations. I’m so motivated by their positive attitudes. These are future leaders in our community. A special thanks to Kirk Nick who organized the group and continues to do a phenomenal job with it. (By the way, the group meets every Wednesday at 7:00 p.m. at the Sheboygan United Way if you are unemployed and looking to change your situation for the better).