Author Archives: admin

VA Disability Payments to Increase in 2023

Posted on by

Veterans Administration (VA) disability compensation rates are increasing in 2023 based on Social Security’s cost of living adjustment (COLA).

The official compensation tables will be provided by VA in December 2022.

Veterans who meet the requirements for a 100 percent VA disability rating become eligible for a host of additional benefits. Here are fourteen potential VA Disability benefits:

  1. Monetary compensation
  2. Free health care and medication
  3. Travel allowance for scheduled medical appointments
  4. Dental care
  5. Funding fee waiver with VA Home loans
  6. Employment assistance
  7. Veterans Readiness and Employment
  8. Additional compensation for eligible dependents
  9. Concurrent receipt of Military Retirement pay
  10. Educational assistance for dependents
  11. CHAMPVA – dependents can receive health care
  12. Burial and plot allowance
  13. Uniformed services ID card
  14. Adaptive housing and automobile grants.

In 2022, a veteran with a 100 percent VA disability rating receives compensation of at least $3,332.06 per month.

Monthly compensation amounts increase if a veteran has qualifying dependents, such as a spouse, children, or parents.

References:

  1. https://www.benefits.gov/agencies/U.S.%20Department%20of%20Veterans%20Affairs
  2. https://vaclaimsinsider.com/100-disabled-veterans-benefits/

High-Income Taxpayers Paid the Majority of Federal Income Taxes

Posted on by

In 2018, the top 1 percent of taxpayers (taxpayers with AGI of $540,009 and above) accounted for more income taxes paid than the bottom 90 percent combined. ~ Tax Foundation

Federal individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income, explains the Tax Foundation.

Federal individual income tax represent for more than 25 percent of the nation’s taxes paid (at all levels of government). Federal income taxes are much more progressive than federal payroll taxes, which are responsible for about 20 percent of all taxes paid (at all levels of government) and are more progressive than most state and local taxes.

Federal individual income taxes are the largest source of tax revenue in the U.S. In 2018, 144.3 million taxpayers reported earning $11.6 trillion in adjusted gross income (AGI) and paid $1.5 trillion in individual income taxes. Adjusted gross income is a taxpayer’s total income minus certain “above-the-line” deductions. It is a broad measure that includes income from wages, salaries, interest, dividends, retirement income, Social Security benefits, capital gains, business, and other sources, and subtracts specific deductions.

AGI is a fairly narrow income concept and does not include income items like government transfers (except for the portion of Social Security benefits that is taxed), the value of employer-provided health insurance, underreported or unreported income (most notably that of sole proprietors), income derived from municipal bond interest, net imputed rental income, and others.

In 2018, the top 1 percent of all taxpayers (taxpayers with AGI of $540,009 and above) earned 20.9 percent of all AGI in 2018 and paid 40.1 percent of all federal income taxes.

In contrast, the top 1 percent of all taxpayers (taxpayers with AGI of $540,009 and above) earned 20.9 percent of all AGI in 2018 and paid 40.1 percent of all federal income taxes.

In 2018, the top 1 percent paid a greater share of individual income taxes (40.1 percent) than the bottom 90 percent combined (28.6 percent). The top 1 percent of taxpayers paid roughly $616 billion, or 38.5 percent of all income taxes, while the bottom 90 percent paid about $479 billion, or 29.9 percent of all income taxes.

The top 1 percent of taxpayers (AGI of $540,009 and above) paid the highest average tax rate, 25.4 percent.

References:

  1. https://taxfoundation.org/federal-income-tax-data-2021/
  2. https://taxfoundation.org/summary-of-the-latest-federal-income-tax-data-2020-update/
  3. Internal Revenue Service, Statistics of Income, “Number of Returns, Shares of AGI and Total Income Tax, AGI Floor on Percentiles in Current and Constant Dollars, and Average Tax Rates,” Table 1, and “Number of Returns, Shares of AGI and Total Income Tax, and Average Tax Rates,” Table 2, https://www.irs.gov/statistics/soi-tax-stats-individual-income-tax-rates-and-tax-shares.

President Xi Jinping’s “Great Struggle”

Posted on by

“Institutional U.S. investors in China better be paying attention to Xi’s speech with regard to ‘Common Prosperity’.” Kyle Bass

69-year-old Xi-Jinping was appointed to a precedent-defying third term as Chinese Communist Party (CCP) leader, but his third term is unlikely to be a charm, states Dr. Richard Haass, President of the Council on Foreign Relation. Xi has arguably inherited, largely of his own making, one of the most difficult economic, health, environmental, and national security challenges.

Attracting capital seen less important than Xi’s ideology.

Xi’s growing dominance has increased concern among global investors that Beijing has abandoned pragmatism for ideology, as the party shifts its focus from economic development toward security. Effectively, President Xi Jinping has put in place a wartime cabinet, warns Kyle Bass, Founder and Chief Investment Officer of Hayman Capital Management, and an ardent critic of China, in a Twitter post.

Bass commented that China’s 20th Party Congress purge not only installed Xi loyalists, but also installed two spy chiefs, and military leaders responsible for China’s ‘reunification’ strategy for Taiwan.

Moreover, President Xi Jinping sacked the only three men with markets experience (the heads of the PBOC, the CSRC, and finance minister). Xi also added the Ministry of State Security head to the Politburo and the Central Committee (Chen Wenqing).

“Chinese Communist Party (CCP) and its state champions have been using US capital markets to fund the development of China’s armed forces.” ~ Kyle Bass

These moves send a clear message to the world that conflict and ‘Great Struggle’ are coming soon, warns Bass. Not since Mao has a Chinese leader stacked his cabinet with hardliners with aerospace, weapons, surveillance, and military expertise. These moves by Xi signal that conflict with Taiwan is now around the corner.

Additionally, the Great Chinese Liquidation of public and private equity is in full swing, according to Bass. Today’s 10-20% crash in Chinese shares is just the beginning of the destruction of western capital invested in Chinese companies.

It appears that Xi’s ‘Great Struggle’ is also meant to inflict maximum pain to those who believed ‘reform and opening’.

Just think about what Henry Fernández (MSCI), Larry Fink (Blackrock), and Steve Schwarzman (Blackstone) have done to retirees with their pushing Chinese investments into everyone’s portfolios, states Bass.

Beijing’s sweeping regulatory crackdown on technology, education, food delivery and property sectors has sent shockwaves across global markets, driving Chinese markets down, Bass says. “It’s ‘unconscionable’ for global fund managers to invest in China.”

The writing was always on the Great Wall, opines Kyle Bass. Here comes the ‘Great Struggle’.

References:

  1. https://www.cfr.org/expert/richard-haass
  2. https://hiddenforces.io/podcasts/kyle-bass-china-hong-kong/
  3. https://www.realvision.com/shows/the-kyle-bass-interviews
  4. https://thesoundingline.com/kyle-bass-predicts-chinese-invasion-of-taiwan-in-next-24-months/

Social Security Administration (SSA) Benefits Increase in 2023

Posted on by

Social Security Administration announced that the COLA will increase Social Security benefits by 8.7% beginning January 2023 — the largest since 1981. 

Approximately 70 million Americans will see a 8.7% increase in their Social Security benefits and Supplemental Security Income (SSI) payments in 2023. On average, Social Security benefits will increase by more than $140 per month starting in January 2023.

A COLA at the this level is almost unprecedented. There were only three other times since the start of automatic inflation adjustments that COLAs were higher (1979-1981)

The Social Security Administration (SSA) will mail COLA notices throughout the month of December to retirement, survivors, and disability beneficiaries, SSI recipients, and representative payees.

But if you want to know your new benefit amount as soon as possible, you can securely obtain your Social Security COLA notice online using the Message Center in your personal my Social Security account. Your personal my Social Security account gives you immediate access to important information and tools.

According to The Motley Fool, December 2022, the Social Security Administration estimates monthly payouts for an assortment of beneficiaries will be as follows:

  • Average retired worker: $1,681/month
  • Average worker with disabilities: $1,364/month
  • Average aged couple, both receiving benefits: $2,734/month
  • Average widowed mother and two children: $3,238/month
  • Average aged widow(er) with no children: $1,567/month

Here’s what these same monthly Social Security checks will look like once the 2023 COLA takes effect in January:

  • Average retired worker: $1,827 ($146/month increase)
  • Average worker with disabilities: $1,483 ($119/month increase)
  • Average aged couple, both receiving benefits: $2,972 ($238/month increase)
  • Average widowed mother and two children: $3,520 ($282/month increase)
  • Average aged widow(er) with no children: $1,704 ($137/month increase)

For a majority of recipients, a triple-digit monthly “raise” is on the way, explains The Motley Fool.

January 2023 marks when other changes will happen based on the increase in the national average wage index. For example, the maximum amount of earnings subject to Social Security payroll tax in 2023 will be higher. The retirement earnings test exempt amount will also change in 2023.

There are few, if any, federal agencies that impact the lives of the American people to the extent that the Social Security Administration (SSA) does. Millions count on SSA—retirees who worked hard their whole lives, people who are no longer able to work due to disability, and many more.

SSA’s programs touch the lives of almost every person in the nation. SSA employees work diligently to ensure that they receive critical benefits and other services, and it is my honor and privilege to lead them in their efforts.

References:

  1. https://blog.ssa.gov/social-security-benefits-increase-in-2023/
  2. https://www.ssa.gov/news/newsletter/
  3. https://www.fool.com/retirement/2022/10/18/how-much-social-security-checks-increasing-in-2023/
  4. https://seniorsleague.org/week-ending-october-15-2022/

The VA PACT Act

Posted on by

Over 5 million Vietnam, Gulf War, post-9/11 Veterans are eligible for expanded VA health care and benefits under the PACT Act. ~ Veterans Administration

The Sergeant First Class (SFC) Heath Robinson Honoring our Promise to Address Comprehensive Toxics (PACT) Act is one of the largest benefit expansions in the history of the Department of Veterans Affairs (VA).

The bill is named in honor of Sergeant First Class Heath Robinson, an Ohio National Guard service member who died in 2020 due to exposure to toxic chemicals.

This bill is an effort to expand coverage, treatments, and resources to sick Veterans and others who were impacted by toxins due to service in the U.S. military. The bill passed Congress on August 2, 2022, and was signed into law on August 10th, 2022.

What Does the PACT Act Do for Veterans?

The PACT Act expands VA health care and benefits for Veterans exposed to burn pits and other toxic substances. This law helps VA provide generations of Veterans — and their survivors — with the care and benefits they’ve earned and deserve.

The PACT Act also improves the VA’s processes and ability to determine presumptive conditions due to harmful exposure.

The PACT Act will bring the following changes to previous VA health care and benefits:

  • Expands and extends eligibility for VA health care for Veterans with toxic exposures and Veterans of the Vietnam, Gulf War, and post-9/11 eras
  • Adds more than 20 new presumptive conditions for burn pits and other toxic exposures
  • Adds more presumptive-exposure locations for Agent Orange and radiation
  • Requires VA to provide a toxic exposure screening to every Veteran enrolled in VA health care
  • Helps VA improve research, staff education, and treatment related to toxic exposures

Presumptive conditions

To get a VA disability rating, your disability must connect to your military service. For many health conditions, you need to prove that your service caused your condition.

But for some conditions, the VA automatically assume (or “presume”) that your service caused your condition. The VA calls these “presumptive conditions.”

The VA considers a condition presumptive when it’s established by law or regulation.

If you have a presumptive condition, you don’t need to prove that your service caused the condition. You only need to meet the service requirements for the presumption.

If you’re a Veteran or survivor, you can file claims to apply for PACT Act-related benefits.

VA disability compensation

VA disability compensation (pay) offers a monthly tax-free payment to Veterans who got sick or injured while serving in the military and to Veterans whose service made an existing condition worse.

You may qualify for VA disability benefits for physical conditions (like a chronic illness or injury) and mental health conditions (like PTSD) that developed before, during, or after service.

References:

  1. https://www.va.gov/resources/the-pact-act-and-your-va-benefits/
  2. https://www.va.gov/disability/file-disability-claim-form-21-526ez/introduction
  3. https://www.va.gov/files/2022-08/PACT-Act-1-Page-Summary%20and%20FAQ.pdf
  4. https://www.aarp.org/home-family/voices/veterans/info-2022/pact-act.html

Best Investing and Trading Advice

Posted on by
  1. “History repeats because of the weakness of human nature. The greed for quick fortunes has cost the public countless millions of dollars. Every experienced stock trader knows that overtrading is his greatest weakness, but he continues to allow this weakness to be his ruin. There must be a cure for this greatest weakness in trading, and that cure is STOP LOSS ORDERS. The weakest point must be overcome and the stop loss order is the cure for overtrading.” ~ WD Gann
  2. The only true test of whether a stock is “cheap” or “high” is not its current price in relation to some former price, no matter how accustomed we may have become to that former price, but whether the company’s fundamentals are significantly more or less favorable than the current financial-community appraisal of that stock.” ~ Philip Fisher
  3. “Trading is a waiting game. You sit, you wait, and you make a lot of money all at once. Profits come in bunches. The trick when going sideways between home runs is not to lose too much in between.” ~ Michael Covel
  4. “I learned to avoid trying to catch up or double up to recoup losses. I also learned that a certain amount of loss will affect your judgment, so you have to put some time between that loss and the next trade.” ~ Richard Dennis
  5. “Trading is a psychological game. Most people think they are playing against the market, but the market doesn´t care. You’re really playing against yourself.” ~ Martin Schwarz
  6. “Value investing requires a great deal of hard work, unusually strict discipline, and a long-term investment horizon. Few are willing and able to devote sufficient time and effort to become value investors, and only a fraction of those have the proper mind-set to succeed.” ~ Seth Klarman

References:

  1. https://www.t3live.com/blog/2017/12/01/best-trading-investing-quotes/

Dividend Growth

Posted on by

“One common trap that dividend investors can fall into is chasing stocks with high yields when they should be buying dividend growth stocks that can promise years of steady income raises.” ~ Dan Burrows, Senior Investing Writer, Kiplinger.com

Over the last few years when non-dividend paying growth stocks were delivering significant double-digit gains in the span of months, it was easy to ignore the benefits of equity income, writes Stephen Dover, CFA, Chief Market Strategist, Franklin Templeton Institute. Today, given rising interest rates, slowing growth and heightened volatility, the role of dividends is changing amid a more challenging environment for multiple expansion.

Over the long-term, dividends have proven to be a significant driver of total return. Over the last 31 years, spanning January 1990 through December 2021, the receipt and reinvestment of dividends accounted for about 50% of the cumulative total return of the S&P 500 Index, according to Franklin Templeton. In addition, dividend growers, proxied by the S&P 500 Quality High Dividend Index, have outperformed their value and growth counterparts over the more than two decades since 1995.

Dividend payouts can act as a useful quality barometer. A solid track record of growing dividends consistently and sustainably over an extended period of time is typically seen as a signal of healthy company fundamentals, astute and efficient capital allocation and a firm commitment to shareholder value.

Dividend payouts are often cut during periods of grave economic stress, particularly in the most vulnerable companies.

  • Dividends offer evidence of financial strength. Historically companies that initiated or increased their dividend have significantly outperformed those that cut or don’t pay a dividend.
  • Often, stocks with the highest dividend yields come from companies whose market prices have fallen, indicating stress.

In the U.S., 242 companies cut or suspended dividends, according to Capital Group. This number of dividend cuts and suspension nearly match the total for the previous 11 years combined.

After historic cuts, some U.S. companies are restoring dividends

Source: Wolfe Research, LLC. Copyright © Wolfe Research, LLC 2021. All rights reserved. Only companies with market cap of at least $250 million included. Reinstated dividends statistic is through 5/31/21.

But the picture is improving. With the rollout of COVID-19 vaccines and the reopening of economies, many U.S. companies have begun to resume payments.

Many investors, when they search for dividend paying stocks, tend to start with companies that pay the highest dividend yields. These companies can be sound investments, but the high yield can also be a warning sign. “Companies that have very high dividends to start may not be able to sustain them,” Joyce Gordon, Capital Group equity portfolio manager, notes. “The high yield may indicate a company is a melting ice cube, and their business is in decline and they’re not reinvesting.”

Gordon says that dividend growing stocks represent a compelling value for investors. “I look for companies that are yielding around 2.5% to 3.0%, and that are growing their dividends and earnings around 10% or 12% a year. Today I am finding a number of companies that meet that criteria across a wide range of sectors and global markets.”

The best dividend stocks – companies that raise their payouts like clockwork decade after decade – can produce superior total returns (price plus dividends) over the long run, even if they sport apparently ho-hum yields to begin with.

Dividend growers are strong companies that are likely to be even stronger in five or 10 years. “I look for a company that can demonstrate the capacity and commitment to raise its dividends over time,” Gordon says. “I look for dividend growth that matches the underlying earnings growth of the company.”

Dividend growers historically have tended to generate greater returns than other dividend strategies, while also keeping up relatively well with the broader market. People assume that growth companies far outpaced dividend paying stocks over the past decade, and that’s true when you look at the highest yielding stocks. But dividend growers did nearly as well as the overall market.

By providing a growing stream of income, dividend growth can be a sign of company executive management’s more rigorous capital allocation process. “Because they are committed to setting aside some proportion of their earnings for investors, they tend to have better discipline and may be less likely to make some ill-advised acquisition,” Gordon says.

Because it is reflective of growing earnings, dividend growth can also offer a measure of resilience against interest rate hikes, Gordon adds.

Reinvested dividends. The power of reinvested dividends

One company that has consistently grown its dividends is McDonald’s. To get a sense of how regularly reinvesting dividend payments can compound over time, consider a hypothetical $100,000 investment in the company for the 20 years from December 31, 2000, through December 31, 2020, with all dividends reinvested.

Sources: Capital Group, FactSet. Growth rate calculations for value of shares from reinvested dividends and dividends paid use the first year’s dividends payment ($676) as a starting value.

Reinvested dividends tend to provide a downside cushion for total returns during periods of modest capital gains. The 2000s—the “lost decade” for stocks—is a crucial case-in-point. While the S&P 500 delivered annualized total returns of -0.95% in the 10 years from January 2000 through December 2009, the figure would have been worse had dividends been removed from the calculation. Annualized price return for the index in the 2000s averaged -2.72% versus dividends, which provided 1.77% annualized return over the 10-year period.

Using the power of the compounding of re-invested dividends is a good way to build real wealth, simply. Albert Einstein has called compound interest the “Eighth Wonder of the World,” since the power of compounding can be a wonder to behold. The magic of compounding, as Ben Franklin famously said, “Money makes money. And the money that money makes, makes money.”

“Compound interest is the Eighth Wonder of the World. He who understands it, earns it. He who doesn’t pays it” ~ Albert Einstein

Compound interest or “interest on interest” is effectively what compound interest is for investors. “Interest on Interest” or “dividends on dividends” is why the compounding effect on dividend reinvestment creates wealth. The longer you reinvest the dividends, the more dividends you receive because you own more shares. And the cycle continues as long as the investor stay invested in the market and reinvests his/her dividends.

S&P 500 Dividend Aristocrats.

The objective is to find companies that are growing their dividends faster than the market average over time. The Dividend Aristocrats are companies in the S&P 500 Index that have raised their payouts for at least 25 consecutive years. This list of the S&P 500’s best dividend stocks is a mix of household names and more obscure firms, but they all play key roles in the American economy. And although they’re scattered across pretty much every sector of the market, they do all share one thing in common: a commitment to reliable and long-term dividend growth.

References:

  1. https://www.capitalgroup.com/advisor/insights/articles/dividend-growth-special-sauce-long-term-investing.html
  2. https://www.franklintempleton.com/articles/strategist-views/the-case-for-dividends
  3. https://www.kiplinger.com/investing/stocks/dividend-stocks/604131/best-dividend-stocks-you-can-count-on-in-2022
  4. https://www.wealthplicity.com/investing-strategy/stocks-and-equities/the-power-of-compounding-dividend/

All investments involve risks, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested.

U.S. 10 Year Treasury Note

Posted on by

The benchmark 10-year yield matters to financial markets because it informs prices for everything from mortgages to corporate debt. Higher borrowing costs can slam the brakes on economic activity, even provoking a recession.

The 10-year treasury bond is a debt instrument issued by the government of the United States. As its name implies, it matures in ten years. Over the course of that time, investors holding 10-year treasury notes, earn yields. The 10-year T-notes are issued at a face value of $1,000, and a coupon.

The Coupon is the nominal or stated rate of interest on the 10-year Treasury Note. This is the annual interest rate paid by the U.S. government, based on the note’s face value. These interest payments are made semiannually. 

The 10-year Treasury Note is also an economic indicator. Its yield provides information about investor confidence. While historical yield ranges do not appear wide, any basis point movement is a signal to the market. The 10-year treasury note is the gold standard of interest rates. Nearly every United States lending institution derives its interest rates by benchmarking the 10-year treasury note. This makes it both a powerful investment tool and a financial barometer for evaluating other types of investments—including debt securities. 

There are many factors that affect the 10-year yield, the most substantial being investor sentiment. When investors have high confidence in the markets and believe they can profit outside of Treasury securities, the yield will rise as the price falls. This sentiment is determined by both the individual investor and investors as a whole, and can be based on any number of factors such as economic stability, geopolitical fluctuations, war, black swan events and more.

The 10-year treasury note is both a powerful investment tool and a financial barometer for evaluating other types of investments—including debt securities. 

If bond investors think the economy will do better in the next decade, they will require a higher yield to keep their money socked away. When there is a lot of uncertainty, they don’t need much return to keep their money safe. Usually, investors don’t need much return to keep their money tied up for only short periods of time, and they need a lot more to keep it tied up for longer.

Treasury yields change every day because they are resold on the secondary market. Hardly anyone keeps them for the full term. If bond prices drop, it means that demand for Treasurys has fallen, as well. That drives yields up as investors require more return for their investments.

Thus, on the secondary bond market, when there’s a bull equity market or the economy is in the expansion phase of the business cycle, there are plenty of other favorable investments. Investors are looking for more return than a 10-year Treasury note will give. As a result, there’s not a lot of demand. Bidders are only willing to pay less than the face value. When that happens, the yield is higher. Treasurys are sold at a discount, so there is a greater return on the investment.

The 10-year Treasury note yield is also the benchmark that guides other interest rates. As yields on the 10-year Treasury notes rise, so do the interest rates on other types of debt instruments like fixed-rate mortgages. Investors who buy bonds are looking for the best rate with the lowest return. If the rate on the Treasury note drops, then the rates on other, less safe investments can also fall and remain competitive.

10-year bond yields provide insight into a number of interrelated variables, including bond prices, mortgage rates, investor confidence, and more. This means that Treasury yields can provide insight into upcoming market conditions, or otherwise reflect current investor sentiment.

This all begs the question, what do the currently elevated 10-year Treasury yields say about the state of the economy.

Rising yields in particular present a uniquely terrifying possibility to investors. Should the yield grow too high, the stage could be set for a substantial stock market selloff as investors instead funnel their money into safer Treasurys. This could spell the end of whatever bull market Americans have been enjoying.

With that said, historically troublesome 10-year yield rates are closer to the 3% to 4% psychological level. But the above 4.0% yield currently in play is actually not as troublesome as one might have anticipated.

Depending on inflation expectations, the point where investors begin to look at Treasurys as a substitute for stocks will change. Should investors expect more inflation, which, despite the Fed’s plan is still the general consensus, the yield may have to hit 4% to present a comparable threat to the markets.

There may not exist a static roadmap for understanding 10-year Treasury yields, as they themselves are dynamic. Understanding the role Treasurys play in reflecting economic expectations and investor sentiment can dramatically enhance your understanding of financial markets, and facilitate better decisions for your portfolio.

Government bonds are the safest, because they are guaranteed. Since they’re the safest, they offer the lowest returns. U.S. Treasury notes and bonds are the most popular.

The 10-year Treasury yield is used to determine investor confidence in the markets. It moves to the inverse of the price of the 10-year Treasury note and is considered one of the safest—if lowest returning—investments that can be made. Although the investment is guaranteed by the U.S. government, investors could still lose money if inflation outpaces the 10-year yield.

The 10-year Treasury note is worth paying attention to as a key metric for tracking other interest rates. Use it as a barometer for understanding why other debt securities behave the way they do.

You can learn a lot about where the economy is in the business cycle by looking at the 10-year U.S. Treasury note. It indicates how much return investors need to tie up their money for 10 years.

References:

  1. https://www.thebalancemoney.com/10-year-treasury-note-3305795
  2. https://investorplace.com/2022/02/10-year-treasury-yields-today-what-to-know-as-yields-continue-climb-above-1-9/
  3. https://investmentu.com/what-is-a-10-year-treasury-note/

Credit Score

Posted on by

Credit scores are mathematical formulas that help lenders determine how likely you are to pay back a loan. Credit scores:

  • Range from 300 to 850.
  • Are not based on your income.

Here’s a breakdown of all the factors that affect your scores, according to Nerd Wallet:

Payment history. Your credit reports reveal your payment history, or whether you’ve consistently paid bills and other obligations on time. FICO says payment history accounts for 35% of your score. Paying bills late by 30 days or more can dent your scores — and the later you pay, the greater the damage.

Credit utilization The amount of your credit limit you use, expressed as a percentage, is called credit utilization. FICO says the amount of available credit you use counts for 30% of your score.

Other credit score factors you should know about

Other credit factors that also affect your scores include:

  • The length of time you’ve had credit: Longer is better, so keep old accounts open unless there is a compelling reason to close them, such as an annual fee on a card you no longer use.
  • The kinds of credit you have, or credit mix: It’s best to have a mix of installment accounts — those with a set number of equal payments, such as car payments or mortgages — and credit card accounts.
  • The length of time since you’ve applied for new credit: Each application that causes a hard inquiry on your credit may take a few points off your score.
  • Total balances and debt: It’s best if you’re making progress in paying off your debt.

Factors that don’t affect your credit score

  • Checking your own score: If you get your own score through your bank or a free credit score service, it does not affect your score. That’s because checking your own score is considered a soft pull on your credit. You can check it as many times as you want with no impact to your score.
  • Rent and utility payments: In most cases, your rent payments and your utility payments are not reported to the credit bureaus, so they do not count toward your score.
  • Income and bank balances: Credit reports do include some employer information, but it’s used only to match account data to the right person. Getting a raise won’t bump up your score, and it is possible to build credit on a small income. And since reports list only credit accounts — not savings, checking or investment accounts — your balances in those also won’t help your score.

Want to raise your credit score? Here are some tips!

  • Start by checking your score (for free).
  • Tackle your debt, even when you can’t pay very much.
  • Avoid asking for more credit.

It’s an often repeated myth that keeping a balance when using credit cards will raise your credit score. The truth is that paying on time, every time, is what’s good for your credit — and paying in full is the most economical, because it lets you avoid interest, explains Nerd Wallet.

It’s important to put at least some of your spending on a credit card from time to time, but spending more will not benefit your score. Aim to use no more than 30% of your credit limit on any of your cards, and less is better. That’s because the second-biggest influence on credit scores is credit utilization — the portion of your credit limits you use.

To keep your credit utilization low, you can:

  • Sign up for balance alerts via text or email from your credit card issuer so you can stop using a card if the balance gets close to 30% of the limit.
  • Consider making several payments throughout the month to keep balances low.
  • If your credit is good or your income is up since you applied, ask for a higher credit limit. This will lower your credit utilization by bumping up your total credit limit, as long as your spending stays the same.
  • Think twice about closing old or little-used cards, because they contribute to your overall credit limit. Your credit utilization could shoot up due to the loss of available credit from a canceled card.
  • You could also increase your available credit by opening a new credit card, but it’s important to research the best credit card for your financial needs before applying.

Checking your credit score

There are several ways that you can check your credit score for free. A great place to start is to check if your bank or credit union offer this service for its customers. Additionally, each of the three credit reporting agencies (Experian, Equifax and Transunion) allows you to check your credit score for free.

Everyone is entitled to one free credit report a year from the three agencies at annualcreditreport.com, according to the federal government.

References:

  1. https://www.nerdwallet.com/article/finance/credit-score-does-carrying-a-balance-help
  2. https://apnews.com/article/business-0a536993ce494fc8d6fe2c5d637da5b5

Improve Your Life

Posted on by

“The key to happiness is really progress and growth and constantly working on yourself and developing something.” —Lewis Howes

Self-improvement, improvement of one’s mind, character, habits, and life through one’s own efforts. Life only changes as a result of the improvements you make by the actions you take.

Here are 10 Things You Should Do Every Day to improve your life.

1) Get out in nature

You probably seriously underestimate how important this is. (Actually, there’s research that says you do.) Being in nature reduces stress, makes you more creative, improves your memory and may even make you a better person.

2) Exercise

We all know how important this is, but few people do it consistently. Other than health benefits too numerous to mention, exercise makes you smarter, happier, improves sleep, increases libido and makes you feel better about your body. A Harvard study that has tracked a group of men for more than 70 years identified it as one of the secrets to a good life.

3) Spend time with friends and family

Harvard happiness expert Daniel Gilbert identified this as one of the biggest sources of happiness in our lives. Relationships are worth more than you think (approximately an extra $131,232 a year.) Not feeling socially connected can make you stupider and kill you. Loneliness can lead to heart attack, stroke and diabetes. The longest lived people on the planet all place a strong emphasis on social engagement and good relationships are more important to a long life than even exercise. Friends are key to improving your life. Share good news and enthusiatically respond when others share good news with you to improve your relationships. Want to instantly be happier? Do something kind for them.

Every morning send a friend, family member or co-worker an email (or text) to say thanks for something. There’s tons of research showing that over time, this alone – one simple email a day – can make you happier.

Harvard professor Shawn Achor’s The Happiness Advantage explains:

“This is why I often ask managers to write an e-mail of praise or thanks to a friend, family member, or colleague each morning before they start their day’s work—not just because it contributes to their own happiness, but because it very literally cements a relationship.”

4) Express gratitude

Gratitude is more powerful than you realize. In an experiment, people were asked to spend some time helping a student improve a job application cover letter. After they sent their feedback, the student replied with a message, “I just wanted to let you know that I received your feedback on my cover letter,” and asked for help with another one in the next three days. Only 32% of the people helped. When the student added just eight words—“Thank you so much! I am really grateful”—the rate of helping doubled to 66%.

In another experiment, after people helped one student, a different student asked them for help. Being thanked by the first student boosted helping rates from 25% to 55%. The punch line: a little thanks goes a long way, not only for encouraging busy people to help you, but also for motivating them to help others like you.

Plus, by expressing gratitude:

  • It will make you happier.
  • It will improve your relationships.
  • It can make you a better person.
  • It can make life better for everyone around you.

5) Meditate

Meditation can increase happiness, meaning in life, social support and attention span while reducing anger, anxiety, depression and fatigue. Along similar lines, prayer can make you feel better — even if you’re not religious.

6) Get enough sleep

You can’t cheat yourself on sleep and not have it affect you. Being tired actually makes it harder to be happy. Lack of sleep = more likely to get sick. “Sleeping on it” does improve decision making. Lack of sleep can make you more likely to behave unethically. There is such a thing as beauty sleep.

Naps are great too. Naps increase alertness and performance on the job, enhance learning ability and purge negative emotions while enhancing positive ones. Here’s how to improve your naps.

7) Challenge yourself

Learning another language can keep your mind sharp. Music lessons increase intelligence. Challenging your beliefs strengthens your mind. Increasing willpower just takes a little effort each day and it’s more responsible for your success than IQ. Not getting an education or taking advantage of opportunities are two of the things people look back on their lives and regret the most.

“There is nothing noble in being superior to your fellow man; true nobility is being superior to your former self.” Ernest Hemingway

8) Laugh

People who use humor to cope with stress have better immune systems, reduced risk of heart attack and stroke, experience less pain during dental work and live longer. Laughter should be like a daily vitamin. Just reminiscing about funny moments can improve your relationship. Humor has many benefits.

9) Touch someone

Touching can reduce stress, improve team performance, and help you be persuasive. Hugs make you happier. Intimate contact may help prevent heart attacks and cancer, improve your immune system and extend your life.

10) Be optimistic

Optimism can make you healthier, happier and extend your life. The Army teaches it in order to increase mental toughness in soldiers. Being confident improves performance.

Bonus:

Email a good friend and make plans.

Research says that to keep friendships alive, you should stay in touch every 2 weeks.

Got 14 friends, then you need to be emailing somebody every day and making plans to get together. Research shows the best use of electronic communication, like email or social media, is to facilitate face-to-face interaction:

The results were unequivocal. “The greater the proportion of face-to-face interactions, the less lonely you are,” John T. Cacioppo, author of “Loneliness: Human Nature and the Need for Social Connection” says. “The greater the proportion of online interactions, the lonelier you are.” 

Facebook is merely a tool, and like any tool, its effectiveness will depend on its user. “If you use Facebook to increase face-to-face contact,” Cacioppo says, “it increases social capital.” So if social media let you organize a game of football among your friends, that’s healthy. If you turn to social media instead of playing football, however, that’s unhealthy.

“Beginning today, set an intention and a relentless focus on living your life as the greatest person you can be, in all situations.” —Brendon Burchard

References:

  1. https://bakadesuyo.com/2012/05/what-10-things-should-you-do-every-day-to-imp/
  2. https://bakadesuyo.com/2013/07/make-your-life-better/