Establish and Maintain Credit Part 1
Posted in Business on March 14th, 2012 by Dave – Be the first to comment
Credit is your track record with regard to meeting your financial responsibilities, sometimes called your creditworthiness. If you pay your bills on time and no one has any lawsuits against you, your credit should be fine. However, all credit is not the same. Depending upon your earnings, the property you own, and other factors, you may have credit up to a certain amount of money, but not beyond that amount. This is sometimes called your borrowing capacity.
For advice with regard to investing savings, you will have to consult someone else. I am not an investment adviser and do not pretend to be. I can say, however, that every investment adviser I have ever met recommends a certain amount of diversity. However little money you may have saved at a particular time, you are able, if you wish, to place part of it in a regular interest-bearing account, a stock or mutual fund, bonds, or other forms of investment. 
No matter how thoroughly you prepare your budget and how conscientious you are about keeping it up-to-date, unforeseen expenses may arise. Such expenses may arise because you decide to do things you had not planned to do, or they may arise because of circumstances completely out of your control. Whatever the case may be, some slack must be allowed for such items. A good rule of thumb is to allow at least 10% of your known expenses for unforeseen items. 
This is the most difficult part of a good budget and the one many people fail to prepare fully and properly. The first items on the expenses side of a budget are income taxes (federal, state, and possibly city or local), FICA payments (Social Security and Medicare), any dues and expenses that are required by your employment, and all costs associated with your work, such as commuting, parking, day care expenses, supplies you must pay for, and so forth. 
People who get into financial trouble have usually made certain basic mistakes. Calls from collection agencies, lawsuits, and sometimes bankruptcies occur to people who could have avoided them. Once things start going wrong, they go from bad to worse. Difficulties with your job and family often follow financial problems. The advice in this chapter depends upon two things. First, you need a source of a reasonable amount of income to make anything work. For most, this means a job, a partner with a job, or both. Second, you must have some self-control over how you spend money. If you make a modest income but insist on driving a Lexus, there is very little anyone can say to help you. However, with a decent income and reasonable control over your spending, there are a lot of things you can do to make things better for yourself. 
If your contract with your old employer restricts you in some way with respect to future employment, be certain that you have addressed that matter. If you are planning to go to work for a new employer who is not affected by the restrictive covenant, you may nevertheless need to obtain a letter for the new employer stating that this is the case. New employers of persons who may have restrictive covenants with former employers are always concerned about that matter.