Investing in Relationships

I was reading a financial blog, Get Rich Slowly, which was guest hosted by Tyler Tervooren from Frugally Green where he suggested that as we apply the principles that make us wealthy, it is important to give back to others. Not only will it make us happier in our own lives but "it is lonely at the top. Why not take some friends with you?"

He went on to mention how none of us has gotten to where we are today without a lot of help from others - even those who are very self-reliant. There comes a time when we should start giving back to others things that will help them on their way through life. There is nothing that we can take with us when we leave this life but we can choose what we leave behind, the most important of them being our legacy. What have I done to leave a legacy behind today? I can serve others around me. I can do something each day to make someone else happier.

Learning to give back is kind of like learning to make the bed every morning. Giving to others is made up of small habits which, after a time, become a part of us that makes us happy rather than just being something we do. The only question required when making a decision of how to give back is whether this course of action will provide value to someone else. And amazingly enough, this works for every part of life. It works in business. It works in finance. It works in relationships. If you want to make your business grow, serve your clients with everything that you've got. If you want to be more successful in your job, do the things that will make your boss successful. If you want to be loved more, love others more. It is not money that sustains us but our relationships. The best way to get ahead in life, in every area of life, is to constantly provide value to others - as Christ said, to be come the master you must be the servant of all.

Give much and much will be returned to you. You know the old saying, "What goes around, comes around." The thought is that if you do bad things, bad things will eventually come back to get you. But it is not just bad things that come back to "get you". Good things have a way of coming back to you as well. The more that you pass on good, the more that good will come back to you in many ways.

Will some people take advantage of you with such an attitude? Yes. I still remember being approached by a young man who told me that he had an interview for a job scheduled but needed a place where he could shower and clean up. I gave him $20, thinking that if that was all he needed to get a job it was worth the twenty bucks. Then a few weeks later I saw him again, giving the same line to another person and realized that it was a scam. At first I was angry that he had taken advantage of me. But then I realized that he may have gotten $20 from me but I was not having to live that kind of life. I was much happier. And I have also come to realize that the happiness that I receive from giving does not have to be tied to how someone uses my gift. I still feel sad for these people and the path that they have chosen in life but I am still happier giving, even when the approach is not totally honest. I have still tried to help.

Also, like investing your dollars, diversify your giving. Give something to all within your sphere of influence. I tend to have my favorite places to donate some dollars or time. I need to branch out, to work at a soup kitchen, donate to a homeless shelter, help to build a humanitarian home, and many other things that I have not tried yet. Some acts of kindness will pay better dividends than others but as you begin giving, it always seems to come back to you in many ways that you may not have expected.

Remember that your giving doesn't always have to be money. We also have time, skills and social resources that we can share with others along our path through life. Take time to watch a friend's child so that they can have some alone time, help to build or repair something for someone, give a listening ear to someone who is struggling, or visit someone in the hospital - maybe someone you don't even know.


As I was reading the above blog, it reminded me of my nephew, Jase Tinsley. He passed away on his 19th birthday in 2004. He was a young man who was old beyond his years in building a great legacy and giving to others of his time and abilities. He would often take time to visit his grand parents. He would talk, listen and do small chores for them. He fixed things, reached things they could not and got up to places that only young people seem to be able to get to in order to trim, clean and retrieve. He was always pleasant and helpful.

He enjoyed a good time as much as anyone. There was the time when he, with two of my boys, found a can of gold spray paint and it wasn't long before we had three little "Oscars" running naked and gold-colored around the backyard. But he did not even make a peep when a rough brush and granular Tide were used to scrub the paint from his tender skin.

I remember him also as a cub scout. For a time he was the only boy in the Webelos den I was working with. He and I both had fun doing the science activities and trying to swing a bucket of water over our heads with the goal of not getting wet. I guess it didn't quite work the first time. Fortunately, boys dry fast.

And there were the Cub Scout "Pig Parties" where a rain gutter would be placed on the back patio and filled with ice cream and the boys favorite toppings added along with whipped cream and a cherry. And then they would all dig in - without spoons. Jase's face was covered with ice cream, whipped cream and some sort of topping, but two big round eyes and a big grin were still shining through all of that messy stuff dripping off of his chin.

What a pleasure it is to have known Jase and to remember him with fondness on this day of Thanksgiving.

Yesterday a Miracle Occurred

Yesterday a miracle occurred. We have lived in our home for about 12 years now. In that 12 years we have not been able to park a car in the garage most of the time. We have had our "stuff" in there and we have had "stuff" from different kids temporarily stored there.

About a year ago we were able to consolidate this "stuff" down to one side of the garage when our youngest child got married and we convinced her to start carting her "stuff" to her new home. At that point we were able to shoehorn our medium-sized sedan into one side of the garage. That seemed sufficient until I realized that my plan for building a model railroad set was never going to be realized without either abandoning the idea of parking a car in the garage or disposing of, and re-packaging, the "stuff" that was consuming so much of our garage space.

Yesterday I got this wild hair that I could complete the task of clearing the garage in about an hour. But since some of the stuff was my wife's and some of the stuff was my daughter's, and the wife wanted to be involved in the disposal of the daughter's stuff, I asked for her help.

As some of you who have worked "in committee" realize, nothing done by a committee gets done fast. You need to discuss this and do "a study" about that. Make assignments. Bring refreshments. Decorate. And on, and on, and on. But I was brave and asked her to help anyway.

The miracle occurred because we actually got through it all, loaded two trash and recycle barrels and donated stuff to Good Will in only about 3 hours. I hung one of Shelley's old balls from The ceiling for my new parking marker. (Shelley chewed all of the tennis balls up years ago). We put Quentin's "stuff" in the cabinets, which we could now open because there was no "stuff" blocking the doors. I arranged some of the "stuff" of mine from the front of the garage to the other side to make more room for bumper space. It will have to be relocated again to clear the intended Train Table spot, but that is OK.

Now the wife and I have to stop and admire the emptiness of the garage each time we come and go. It is a lot like having a king sized bed all to yourself. You can park left, or you can park right. You can park in the middle or all whopper-jawed. Now that is what I call freedom! If it lasts until the 4th of July we will really have something to celebrate this year.

The Blue Man

I am not one to dress up much for Halloween but for some reason, when I heard that we needed to come in costume to the party, even though I was working in the spook alley, I decided to go as one of the Blue Men from the Blue Man Group. I really didn't know much about them except that they were blue and they did shows. I had seen them a couple of years ago on those Intel TV commercials and they had intrigued me.

So, I went to the costume shop and they had everything I needed for feeling a little blue. Just $35 later (now I am really feeling blue) I was on my way out the door. Gaye did all of the hard work to make this happen, since she knew a lot more about make up than I did, and since she has a colleague at work who has done a lot of acting.

First came the cap. You glue the thing on! I guess that is why they send you home with the glue remover as well. Then there is the powder. No idea what that is for but they said I needed it. Then we started getting blue. It took about an hour to get me ready to walk out the door. But it was a great success. Lots of comments. Most of them were positive.

If I do this one again, though, I need to do some better prep. I went out to YouTube and watched a couple of clips from their concerts. They were really entertaining, like the DrumBone concert, or the I Feel Love concert. First thing is, they don't talk. The second thing is they drum on things like PVC pipes. And then, according to The Complex Tour there are standard rock concert movements that I need to be up on, such as Head Bobbing, the Fist Pump and Up Down Jumping Motion.

Now I have a plan. Shop for drumsticks (not the chicken kind). Shop for big pipes that will slide inside of each other. Practice drumming on everything until Gaye threatens me (and then just a few more to be sure she means it).

See you next Halloween!

Your Credit Score and How it Works

The October 2009 Reader's Digest had a good article about that number called your FICO Score which affects how low of an interest rate you get when buying a home or car and even whether you get a loan or not.

What is edit Score?
I'm glad you asked. Your Credit Score is a number which indicates in one simple 3-digit statement how reliably you will repay any loans extended to you on time. It is a calculation based on a formula owned by the Fair Isaac Corporation (FICO) and they charge credit bureaus a royalty for each use of that calculated number. The number ranges from 300 to 850. The higher the score is, the more likely it is that you will be given the loan and the better interest rate that will be offered. Each of the credit reporting bureaus pulls their information for a slightly different group of lenders and so they will each have a slightly different score, sometimes as divergent as 50 points.

The Reader's Digest chart displays the scoring as something like this:

• SCORE RATE
• 760+ 4.981%
• 700-759 5.203%
• 680-699 5.380%
• 660-679 5.594%
• 640-659 6.024%
• 620-639 6.570%
• Below 620 It will be tough to get a loan at all.

So, if you are buying a home where you will borrowing $166,850 (after your down payment and including any additional costs), the difference between having a top score, where your monthly payment would be $893.75 for a total cost of $326,900 and the low score (620) where your monthly payment would be $1,062.30 for a total cost of $387,578 is a difference of $168.55 every month for the next 30 years, or more than $60,000 dollars.

You are entitled to one free credit report each year. You can get your scores, based on your TransUnion and Equifax credit reports through myfico.com for $15.95 each. The third agency, Experian, no longer sells its FICO scores to non-businesses.

How is Your FICO Score Calculated?

The score is designed to show how well you've managed your debt. Bad choices such as late payments stay on your record for seven years, some types of bankruptcy stay for 10 years.

Some credit-type factors don't affect your score such as employment status, income, debit card habits, savings, bounced checks, overdraft fees, utility bills and late rent . . . if they have not gone to court.

35%: Payment History
The bureaus use when you last paid an account late, how often you pay late and by how many days. To make this work for you set up automatic payments to guarantee that you are never late. One skipped or late credit card payment could drop your score 100 points which could cost you big time on the percentages above. To improve your score pay your bills on time, every time and you will improve your score within months.

30%: Total Debt
Higher debt loads work generally against the consumer (you). To make this work for you watch your "usage ratio" - the percentage of credit that you have used up on your cards. To keep this percentage low, don't max out your cards and don't cancel credit cards.

As an example, you have five cards with a total credit limit of $5000. Spread across these five cards, you owe $500. Your usage ratio or percentage is 10% (500/5000). Now, suppose that you consolidated all $500 onto one card and canceled the other four. This card has a limit of $1000. Your usage ratio is now 50% (500/1000), and that is enough to lower your FICO score.

To improve your score, according to the article, the people with the best scores tend to use no more than 9% of their available credit limit. They also never go above 50% of available credit because that affects the score in a big way.

15%: Duration
The longer that you have had an account, the better. A hit on a newer account will hurt your score more than the same late payment would on an older account. To make this work for you avoid opening new accounts that are not needed. Keep your oldest accounts active so that they don't get closed by the lender. To improve your score and keep the account open, set up an automatic payment each month from your oldest accounts and pay them in full every month.

10%: New Credit
Multiple credit requests imply that you are a greater credit risk. The FICO formula takes into account the number of new accounts opened and the number of requests/inquiries for your credit score or report. To make this work for you to squeeze your applications for loans (mortgage, car, school, etc.) into the same 45-day period so that FICO will consider them one request. Banks and insurance companies routinely check credit reports on their clients. if your credit score has dropped they may possibly raise your interest rate, lower your credit limit (or both) or cancel your card. Beginning 2/22/2010, companies will no longer be able to raise your rates on old balances if you have a fixed rate card.

Some requests do not count agains your credit score. These include making a request for your own credit report, and those "preapproved credit" offers.

To improve your score don't apply for new credit if not needed since the inquiry will hit your score. If you do need to apply for credit, do all of the requests within 45 days so that they are viewed as a single request.

10%: Types of Credit
The FICO formula looks at the number of each type of account as well as the "quality" of each type of account. For example, a major banking card carries more weight than a department store card. To make this work for you realize that revolving accounts (credit cards) carry more weight than installment loans (mortgage, car, student loans) because they tend to better predict debt management abilities and control. If your "mix" of debt seems off balance to the FICO formula it can cost you points on your score. You can have too many cards (4 or 5 is probably okay) and not enough other types of loans. Again, how long the accounts have been open plays a role here as well. To improve your score be aware of the types and numbers of accounts that you have open with thoughtfulness regarding what types of credit that you need to stay balanced.

Can You Improve Your Score?
If you've made mistakes, get back on track quickly. The faster you clean up your situation, the sooner your score begins to improve. In today's tightened credit economy, you will need better scores to get the credit benefits that you used to get more easily.

Don't get fooled by the "free" reports that aren't
Check all three of your credit reports annually. Do not check them all at once. Check one every four months so that you can see trends happening to your credit more readily.

Check your reports for free at annualcreditreport.com. Don't fall for those commercials and ads for other free sites. You get three for free (one from each reporting bureau) every year without charge.

Check your reports for errors
Check for accounts that you don't recognize that do not belong to you.
Check for addresses where you have never lived.
Check birth date and SSN.
Check inaccurate reporting of delinquencies.
Watch for stolen identities or cross reporting with someone of a similar name.

Report any errors found
One study found, according to Reader's Digest, that 79% of all credit reports had mistakes. One in four had mistakes that could cause a lower score to be calculated. Report errors to the appropriate credit bureau. It has 30 days to investigate and respond.

Don't get flipped
Sometimes figures get flipped in error such as reporting that you owe what your limit is and that your limit is what you owe, which would impact the credit score dramatically. If this happens, write to the credit reporting company and to the creditor that provided the information providing the details of the inaccuracies.

Time your report requests
Since you don't really have a permanent report, but rather a report which continues to change as lenders report information, if a business asks for your report the day before you have paid all of your bills, it will be different a few days later. You acn request a "rapid rescore" but it will cost you $30-$90 per reporting agency.

DIY
You don't need to hire (and pay) experts to fix your credit score. You don't need credit monitoring services. You don't need dispute mills to argue every black mark on your report.

Some items will disappear (for awhile) because a lender did not respond to a letter within 30 days. But if it really belongs on your report it will reappear on your report in a month when the lender again reports your status. The best strategy to get your score up: Change your financial habits sot hat your score will go up and stay up.