Prepare well before asking for a loan. Go into a meeting with a loan officer with some idea of the monthly payments you can afford (usually, fixed obligations – including the loan you’re requesting, your rent or mortgage, car payments, credit card payments, etc. – should not exceed 40 percent of your gross income). Be prepared to answer these questions: "What do you want the money for?", "How long do you want to take to pay the loan back?", and "Where do you plan on getting the money to pay it back?".
Save all you can. Build a nest egg for the future that will help you with both short-term needs (such as an emergency fund of three to eight times your monthly salary to cover an unexpected job loss, medical bills, car repairs, etc.) and long-term needs (such as your children’s college costs and your own retirement income requirements). Spend less than you earn. As soon as you receive each paycheck, deduct a certain amount and immediately put it into a savings account. Then discipline yourself to make do with what’s left.
Invest wisely. Understand that every financial investment involves risk, and that, in general, the higher the risk, the more you should expect to earn. Educate yourself about investments such as savings accounts, stocks, bonds, and mutual funds. Diversify by putting your money into a variety of different kinds of investments to spread out the risks while earning the most you can. Keep in mind that the mix of assets you choose should be based on the amount of time before you’ll want to use the money and how much risk you are willing to take. Periodically review your investments to see if they are performing as expected.
Give all you can. Invest toward goals you embrace by tithing and giving money to worthy causes. Check out charities before you donate to make sure they’re legitimate.
Use credit responsibly. Figure out how long it will take to repay credit card debt at various interest rates and monthly payment amounts. Visiting a Web site such as www.bankrate.com can help you do so. Do all you can to pay off your credit cards in full every month.
Order a copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion); you’re entitled to one free credit report from each bureau per 12-month period. Call 1-877-FACT-ACT or visit www.annualcreditreport.com to order them. Promptly correct any inaccuracies you spot on any of the reports. Improve your credit rating by avoiding collection actions, foreclosures, or repossessions; paying on time; staying well below your credit limit; and keeping your current balance low.
