Coffee Break Recap

We went over budgets, credit scores, and student loans. Here are some takeaway tips!


Some of the reasons why budgets fail:

  • We forget to check in at least once a week
  • We don’t set financial goals
  • Not every strategy works for everyone, we need to find a strategy that works
  • They feel too restrictive

Secret tips to better budgeting:

  • Start checking in once per week. Mark it on your calendar.
  • Find a way to monitor your spending, whether it’s online banking, or keeping your receipts. (This can be eye-opening!)
  • What are your short- and long-term financial goals? Setting goals will help you stay on track and motivated!
  • Try out different budgeting strategies. This could be a cash-only budget, using a budgeting app, or using online banking.
  • 50/20/30 rule. Your spending falls into three categories:  fixed costs, financial goals and flexible spending, respectively.

The Credit Score Mystery

Credit scores are complex and critical to our financial well-being. They affect whether we can get approved for loans, and the interest rate we’ll pay. They can also have an impact on your ability to rent, or get a job.

Credit scores are made up of:

  • 35% payment history:  making your payments on time, every time.
  • 30% amounts owed or capacity:  it’s ideal to stay below 30% of your credit card limit.
  • 15% length of credit history:  the longer your accounts have been opened, the clearer the snapshot of your credit.
  • 10% new credit:  be careful not to open too many different cards, it looks risky.
  • 10% credit mix:  repaying a variety of debt indicates the borrower can handle all sorts of credit.

Best practices for building credit

You have to use credit in order to build credit. Aim for an excellent credit score, 750 or above.
    • Excellent Credit: 750+
    • Good Credit: 700-749
    • Fair Credit: 650-699
    • Poor Credit: 600-649
    • Bad Credit: below 600

The two fastest ways to build your credit score are to focus on the two highest percentages of your credit score:  payment history and capacity.

Aim for 30% or lower balance on your cards. Maxing out your cards will hurt your score.

Have one credit card that you use for one thing. For example:  gas. Pay it off within the next couple of days every time you use it. You’ll never accrue a balance, and will build your credit.

Pay all of your bills on time, every time. Even one late payment can hurt your score.

Get in the habit of checking your credit report on an annual basis. You’re entitled to 1 of 3 credit bureau reports (Equifax, Experian, and TransUnion) free, every 12 months. It’s smart to stagger them every 4 months. Look for red flags.

creditkarma.comYou get your score online. It’s free, but they do get your email. 100% free. You don’t get your credit score online (via mail).

Student Loans

17 tips for paying off student loan debt faster

1. Don't ignore the debt.
2. Read the fine print and know the repayment guidelines.
3. Be prepared to sacrifice in order to meet your goals.
4. Keep your contact information current.
5. Make more than minimum payments every chance you get.
6. Start paying immediately.
7. Pay more than once per month if possible.
8. Live well below your means.
9. Set a strict cash budget.
10. Don't carry balances on credit cards.
11. Don't buy a new car if you don't need one.
12. Look for cheaper places to live while you are paying down debt.
13. Learn to negotiate on salaries, sign on bonuses, relocation, lower interest rates, etc.
14. Track your payments closely.
15. Take advantage of discounts.
16. Pay off the highest-interest-rate loans first.
17. Set achievable milestones, and reward yourself as you reach them.

Hope to see you at the next Coffee Break!

Take care,