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5 Credit Card Myths Hurting Your Financial Future

Five Credit Card Myths Hurting Your Financial Future

 

Convenience and risk all with the swipe of the wrist. Credit cards are a tool that many of us use in order to buy things in a convenient fashion, eliminating the need to carry cash. When used properly this tool can add value to our financial lives. Credit cards offer the ability to buy things now and pay later, build credit and accumulate rewards. However, they can also be used to accumulate debt, huge interest costs, and put you in a financial hole if not managed properly.

Recently, when sitting with a client they shared with us the situation their mother was in and I saw the need to share this information. The client was working with their mother in order to obtain a mortgage for a new home. As far as the kids knew mom should be in a good position to obtain a mortgage, but unfortunately the mortgage was declined. When they investigated further, it was discovered that mom had significant credit card balances which were having a detrimental effect on her debt to income ratio. The children approached their mom and asked her why she was carrying these balances and she explained that she was told her credit score would benefit from having an outstanding balance on her credit cards.

Luckily the children were aware that this was not the case and she was most likely causing a negative effect on her credit score, not to mention the significant interest expenses she was incurring. Mom is lucky to have her children on her side as they are working with her to become debt free and educate her on what the “truths” are regarding credit cards.

This experience ignited the need for me to help bring to light the truth about credit cards. Here are five credit card myths that may be hurting your financial future. 

  • Carrying a balance on my credit card will help my credit score. This is a complete myth and will actually do the opposite, it will hurt your score. The credit bureaus want to see that you can pay your debts and do so on time. The best way to utilize a credit card is to simply pay off the balance each month. This demonstrates that you have the ability to take on manageable debt and pay it off on time. There may be instances where you cannot pay in full and you will want to pay at least the minimum payment. It is always vital to pay on time, paying late will certainly hurt your credit score. Bottom line, not paying your credit card in full because you believe it is helping your credit score is incorrect and you should develop a plan to correct this. 
  • You should not have a credit card and only use a debit card. This myth was born from the idea that with a debit card you will only be able to spend what you have, where with a credit card you can accumulate debt beyond what you may have saved. Though this thought process makes sense credit cards tend to be safer. We are living at a time where data breaches and fraud is on the rise. It is true that both debit and credit cards offer protections against these issues, but credit cards tend to have stronger protections for the card holder. Should you have a fraud while using a debit card (even if you are swiping it as a credit card) the funds could be taken out of your bank account and it may take your bank a few weeks to clear it up. This could tie up the funds in your account and even result in bounced checks or insufficient funds while the fraud is investigated. Fraud on a credit card is not going to cause an issue with your bank accounts as they perform an investigation. Also credit cards often provide additional protections for your purchases that debit cards typically do not.
  • Interest begins to accrue right after my credit card purchase. This is another complete myth with no truth behind it. It is true that credit cards can come with significant interest rates attached to them, but they do not start accumulating until after your payment is due. Essentially by paying your bill on time, you will not incur any interest expense and the credit card will simply provide you with an interest free loan from the date of purchase until the payment is due. This is the ideal way to use a credit card for the consumer, not the ideal outcome for the credit card company.
  • Never pay an annual fee for a credit card. Paying an annual fee for a credit card is not necessarily a bad thing. This is a personal choice and you need to evaluate the cost benefit of the fee. Many cards available today have tremendous benefits attached to them. There are cards available that provide you with anything from additional purchase insurance or warranty coverage, airline credits, internet access on flights, baggage fees, travel insurance, access to premier lounges, access to a concierge, and many other benefits. You need to review what the benefits are, evaluate whether you will use them and decide if the card is worth the expense. The benefits for many consumers outweigh the cost.
  • Having too many credit cards will hurt my credit score. This is another common myth and having several cards can actually help your credit. The credit bureaus will look at the amount of credit you have available and how you are using it. Your score can benefit by having a lower utilization of a higher credit amount. One caveat here, this may not hurt your credit, but it may present a hurdle when obtaining a mortgage. The mortgage company will love your higher score, but they will not be fond of you having access to a larger pool of credit and this could present a challenge. The number of credit cards you have, or will want to have, may depend on the stage of life you are in and what your goals are at the time.

Credit cards can provide you with a great way to pay for things, build credit and ensure against fraud, but there are many myths out there and it is important to understand the facts. We have outlined what we believe to be the top five myths we have seen, but there are many more. It is critical to educate yourself on what is fact and what is myth. You will want to use credit cards in a way that they will enhance and not hinder your financial future.

Mitlin Financial assists our clients in addressing these myths and we would be more than happy to assist you with any questions. Feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone in your family needs assistance in debunking credit card myths.

 

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Nassau County Property Owners Please Read

 

 Real Estate Taxes

 

Mitlin Financial is always looking to share pertinent information with our clients, prospective clients, professionals we work with, and all those in our network. Those of you that own property, residential or commercial, in Nassau County will want to be aware of the assessments currently underway.

Nassau County has committed to evaluating every property by January 1st for the upcoming tax year. At this time it is unclear what this will mean for property owners, but you will want to be proactive, and there are things you should consider doing in anticipation of this being completed.

First and foremost, it is vital to have a tax certiorari review your current tax bill. A tax certiorari, for those of you that do not know, is an attorney that you can engage to grieve your taxes. They will typically evaluate how your property is currently being assessed to determine if you are being under or over charged in relation to similar properties in the area. They will commence the grievance process for you if they believe you are being over-assessed.

It is important that you have your property evaluated prior to the new assessment being completed so they know where your property stands today. This will be vital information to review against the new assessments when they are released.

Nassau County has not released any indication regarding the reassessment and it could go either way. Homeowners and commercial property owners may see their tax bills increase or decrease. It will be important to stay on top of this so you know what your options are once the information is released.

We highly advise all property owners in Nassau County, residential and commercial, have their taxes reviewed and develop a relationship with a tax certiorari that can walk you through the process as it unfolds.

Feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone you know needs assistance in having their real estate taxes reviewed. We have relationships with several top notch attorneys that practice in this area that will be able to lend you the assistance you need. We would be happy to make an introduction.

Please share this with your family, friends, co-workers and anyone else that you know who maintains residential and/or commercial property in Nassau County.

 

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Build Relationships, Not Assets

 

 It was a pleasure to be a guest on the NetworkWise Podcast, Conversations with Connors

Adam and I have been friends for over twenty years and I truly enjoyed sharing my business, networking and philanthropic endeavors with him on the show. 

I hope that this gives people a better sense of what I do and why.

NetworkWise Podcast Lawrence Sprung Topics Covered

You can also listen via Apple Podcast, for free, by clicking here: 

Apple icon50

 

 

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Happy Birthday! Be Sure To Review These 5 Things

Happy Birthday Be Sure To Review These Five Things

 

Using your birthday as a reminder to review and address things in your life is something we have been told to do from a very young age. As an example, I try and schedule my dermatologist and physical appointments around my birthday each year. I simply use this event as a reminder that I must take care of these things to maintain my health.

In the same vein, there are five things you should be reviewing each year financially in order to maintain your financial health. Using your birthday as a reminder for this is also a great way to make sure they get addressed.

  • Review your retirement plan contributions and see if you are in a position to increase them. Many people elect their retirement plan contribution amounts when they first start working for a company, and then hardly ever look at it again. Saving for retirement is now the responsibility of the employee, and it is important to make sure that we are doing our best to reach our goals. It would be a shame if you began contributing three percent when you started working for the company and still are today, but could afford to do more. Simply looking at and addressing this each year will allow you to make sure you are maximizing your retirement savings. 
  • Debt is something that is used when purchasing major assets, such as a home. It is vital to evaluate your debt to see if it is still working in the way you intended or if there are opportunities to put you in a better position financially. When used appropriately in a financial plan, debt can be a very useful tool. I would recommend that you look at the outstanding loans you have, and their rates and terms to see if they are still ideal for you. Would it make more sense for you to pay it off or continue the loan? Perhaps refinancing the debt would be a good move? This should be reviewed annually. 
  • Estate planning documents are key to making sure that your assets and wishes are carried out upon your death. These planning documents could include your will, trust, healthcare proxy, living will, and power of attorney. It is important to review the documents and make sure they are still relevant based upon your current circumstances. In many cases, you will find that these documents will only require updating every five to seven years, but by reviewing them each year, you will assure that they are properly addressing your current situation. 
  • Check the beneficiaries on all of your accounts. It is crucial that you make sure that your beneficiary designations are appropriately maintained. Many times, we establish our beneficiaries and never look at them again. We have encountered clients that are married with families who still have their parents named as beneficiaries. Checking them each year is a great way to make sure your financial assets will pass along to the people you want to receive them. 
  • Your financial plan should be reviewed annually to make sure it is accounting for any changes to your life circumstances or goals. In addition, it is important to review the plan in regards to the assumptions that are being utilized, such as inflation, returns, life expectancy, and savings. Once you have updated the plan, it is key to review the new outcomes and create an action plan for any items that should be addressed in the coming year. A plan is not static, but a living breathing document that needs to be updated and reviewed at least each year. 

Mitlin Financial assists our clients in addressing these five areas over the course of the year, but it is important to make sure you do address them yourself. A birthday is a great time to take a look, reflect, and make sure your financial health and wellbeing are being looked after.

Feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone in your family needs assistance in getting started on reviewing these areas today.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Include A Life Plan In Your Financial Plan

Life Plan

 

Financial advisors are always preaching the importance of a financial plan, and I believe they are important too.  Mitlin Financial’s belief is that a financial plan is paramount to reaching and exceeding your financial goals.  Most people spend more time planning their family vacations than they do their financial lives.  Having a life plan is an important factor when designing and developing your financial plan, and it is frequently overlooked by financial professionals.

What is a life plan?  How does this integrate and/or affect my financial plan?  Essentially, a life plan is having a plan for what you are going to do with all the free time you will have when retired. 

As a firm, we spend a considerable amount of time having these types of discussions with clients when we begin the planning process.  This conversation continues as they approach their retirement date.  We all have different ideas as to what our ideal retirement is going to look like, or what it means to us.  In some cases, retirement may mean never working another day in their life, while others may look at retirement as the day they wake up in the morning and know they do not “have” to go to work, but may continue anyway.  Some may simply slow down and maintain a part-time job.

The fact is that most people are preparing themselves financially for retirement, but not thinking about the emotional and life fulfillment aspects of retirement.  Many of us will spend upwards of forty-plus years working, and raising a family, and we do not have time to develop hobbies and outside interests to keep us busy during retirement.  In most cases, people do not view their ideal retirement as not going to work and sitting home all day to watch television and old movies; there has to be something more meaningful than that.

When thinking of retirement, most people still want to be productive members of society.  It is for this reason that you must begin to think about a life plan as part of your financial plan.  It is imperative to think about how you will spend all of this free time that you will now have since you will no longer be going to work.  You may decide that golf, fishing, travelling, watching after your grandchildren, consulting or having part-time employment may be your life plan, and these are all great things.  It is important that you know what your plan is and refine it as time goes on.

Thinking about your life in retirement is the equivalent of using a telescope to look out and see how you would ideally like to be spending your time in retirement, and what you will need financially to support that.  Then, it is important to dial the telescope back and use a microscope to see what you can do today to help you get there.  This may mean adjusting your priorities to begin getting involved in some of those activities you plan on taking part in now so you have the knowledge, the ability, and the social circles to support your involvement.  You will also need to make sure that you are in the right financial circumstance to support it as well.  As an example, if you plan on retiring and travelling around the world sailing for a few years, you need to make sure that you have the skills and the desire to embark on that type of trip.  In addition, you need to make sure that you have the financial wherewithal to support it.

We find that those that have their life plan and retirement plan in place are the most successful at having an enjoyable retirement.  People who have addressed a retirement plan from a financial aspect- which is a minority- typically have not explored their life plan, and this is a recipe for disaster.  Imagine retiring and having the financial ability to sustain yourself for the rest of your life, but you have no idea what you are going to do with that time.  This is a major contributor to why we are seeing people working longer and later in life.  Although some of these individuals have no other choice than to work, for financial reasons, many of them continue to work because they failed to design their life plan for after work.  Not having a life plan for retirement has caused them to continue working so they can still be a productive member of society, and not someone that is sitting home doing nothing.

Mitlin Financial assists our clients in addressing both the financial and life planning they need to be successful in retirement.  We are here to help you instill these concepts within your own family.  Feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone in your family needs assistance in getting started on their plan today.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

 

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