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Graduation

Graduation, the end is the beginning

Summary:

I call people who have completed the class, Wise Credit Advocates
I encourage Wise Credit Advocates to remain active and tell their story to other people who may be struggling through issues
Rather than summarize the entire class, I decided to give you a practical way to start thinking about money and how not to use your good credit
Assets appreciate and cars depreciate
Should you put your money into buying an appreciating asset or a depreciating car?
This class has focused on helping you get the lowest interest rate on a house by building a good credit score
Please do not use this class and a low interest rate on a car as an excuse to buy an expensive car and make your Debt To Income ratio so high that you can’t qualify to buy a home
Debt creates financial slaves, with the master being the lender
No one can serve two masters, you cannot serve God and money (your lender’s money)
By making wise financial choices, we demonstrate our commitment to honor God

Wise Credit Management is a free Bible-based class that teaches how credit really works by showing factual information directly from the Credit Bureaus and FICO, and simplifies the subject to show everyone how to build good credit or handle bad credit. The class is fairly comprehensive and focused on getting good credit to qualify for a good mortgage rate and terms. WiseCreditManagement.com is a free community for members to take the class, join local groups (online or in person) for mutual support, and to find local professionals who volunteer to use their skills to assist members to success.

I am not a lawyer or Credit Repair Organization.

Home ownership is the way most Americans build wealth and a lack of education about credit is a huge contributor to the growing “Wealth Gap” in our country. Wise Credit Management is focused on teaching how to get good credit and qualify for a good mortgage rate and terms.

My work is protected by the “fair use” section of U.S. Copyright Act.

Proverbs 4:7 ~ Wisdom is the principal thing – forget not wisdom and understanding. ~

In this class, I’ve shared the best wisdom and knowledge I have to offer. I am proud of everyone who makes it this far and wants to make their lives better. This step is a demonstration of your commitment and dedication to wisdom and understanding of your credit, personal financial situation and building a bright future.

It is my hope that you see credit as a tool that you now understand and know how to manage effectively. By now, you understand the basics of credit and how to use it to your advantage on your path. I have demonstrated clearly that credit has no racial or ethnic bias, and you can have good credit even with difficult economic conditions. Do not let the failures of the past, whether they are yours or someone else’s, keep you from building your future.

The first part of the video is a summary of the entire class.

Lesson 1: The System

The financial system, and specifically the lending system that we have, places a high value on your experience and track record of managing your personal credit. If you have not shown that you have successfully managed debt in the past, there is an increased risk that you will default on a loan. So the best thing to do is use the system to save yourself money through lower interest rates and open the opportunity to own a home.

We demonstrated that you could be paying $500 per month more than you would if you built and maintained a good credit score.

Lesson 2: Read & Understand Your Credit Report

We spent most of this lesson on how to read the information on your credit report. I want you to be comfortable with reading your credit report and understanding every account on it. If there is something you do not understand or recognize, it could be a sign of fraud. I also want you to understand that there is a way to have “free” credit monitoring, if you are willing to sign up for the Experian and CreditKarma Apps, or simply start a free account with the credit bureaus. They will try to sell you on credit monitoring and/or credit cards, but you can use the basic monitoring for free.

Lesson 3: How Credit Scores Work

Credit scores are simply a mathematical algorithm that produces a number and is based on the information on the credit report each bureau compiles for you. There are different algorithms created by two different companies, FICO and VantageScore. FICO created scores specifically for mortgages that have been widely used for decades and you can buy those scores at myFICO.com (affiliate link).

The different scoring algorithms have the same basic factors. Your score goes up if you have a long history of making your debt payments on time and if you maintain a low balance on your revolving accounts. Your score goes down if you apply for and open new accounts, and it goes way down if you miss any payments or have bad debt (aka collections) on your report.

Lesson 4: How To Build Your Credit

The step-by-step system that I demonstrate is:

Get an account with Credit Strong (affiliate link)
Get an account with Self.inc (affiliate link)
Open an account with Capital One (affiliate link)*
Open an account with Discover (affiliate link)*
Get a credit card after 3 months with self.inc

* you may need to put a $200 security deposit with these companies to open a “Secured” credit card account

Lesson 5: How To Maximize Your Credit Score

5 term loans
11 revolving accounts
Mix the type of accounts
Low (~1%) utilization ratio
Have a ~1% utilization ratio on each account
All your accounts should be over 4 years old
No derogatory marks

We also used a 3^rd party testimonial that showed you can buy a new home in fewer than 3 years after bankruptcy if you rebuild your credit.

Lesson 6: Wise Debt Reduction

In Wise Debt Reduction, the main principal is that you first pay down the lowest balance or highest interest rate credit card that you can use to spend on in an emergency (ICE). That way, from a practical “Real World” point of view you still have that money in an emergency fund, and it is saving you 20% interest on that card. It will also lower your Debt Utilization Ratio and it should lower your minimum monthly payment on that card which will reduce your Debt To Income (DTI) Ratio. In this way you combine the Snowball or Avalanche method (whichever is best for you) with the need for an emergency fund.

While you reduce your Debt Utilization Ratio your credit score increases, which will give you a “Small Win” every month while strengthening your overall financial situation and getting you closer to home ownership.

Lesson 7: How To Handle Bad Credit

We discussed the various laws in place that regulate the credit industry and debt collection. We also discussed how difficult financial setbacks can be on your personal life and family. Then we were introduced to professionals who can help settle or dispute bad debt.

Always remember Psalms 30:5, ~ Joy cometh in the morning ~.

Lesson 8: Debt Management Plans & Bankruptcy Protection

We discussed the details of the help that is available. You can get out of financial trouble and it does not have to be a life sentence of bad credit. Debt Management Plans are useful if you hit a rough patch and just need to stop the late fees so you can catch back up. If you are going through great difficulty, the laws were created for a reason. Chapter 13 can stop foreclosure and repossession, but you have to set up a payment plan. Chapter 7 can wipe away all of your debt if you are below a certain income level.

Lesson 9: Identity Theft

Realizing your identity has been stolen can be traumatic and there is a burden on the victim to recover. This lesson goes into a deep dive about how it can happen and what to do. It is so common that about 5% of Americans have their identity stolen every year, so eventually it is likely to happen to you too. There are several steps you need to take to recover.

Lesson 10: Credit For Mortgage Approval

There most important thing to focus on when you are preparing to own a home is lowering your revolving debt and not taking out any new loans. You can get your mortgage scores from myFico.com (affiliate link). Talk to a mortgage professional about what the best things for you to do are. You can find professionals willing to help you at wisecreditmanagement.com/members

Bonus Lesson: Automobiles

Bonus Lesson: Automobiles

Automobiles are a transportation expense, not a trophy. When you start thinking about owning a home and investing you might start to see that what you spend on a car can be measured in cost per mile rather than personal pride. You can prioritize housing and food first, then paying off debt and investing for your future over having a cool car. The most important quality of a car might start to be, does it always start and get you where you need to be. After that need has been filled, you are just spending based on desire (or ego).

A reliable car might cost as little as $5,000. How much does the car you desire cost? What is the difference in monthly payments between the minimum you need to spend for a car that fills your need, and the monthly expense (don’t forget insurance) of the car you desire?

But they gave me a 0% interest rate on my brand-new car! That would be great if it was the least expensive car you need. A $5,000 car at 20% interest costs about $6,000 if you pay it at $500 per month over 1 year. How long do you need to make monthly debt payments (plus higher insurance payments) on your new car at 0% interest? Add those payments up and now you start to see how much money you are losing on your car, even with a great low interest rate.

New Truck (this) OR Old Truck + House + $250,000 (all that)

Remember that we just talked about Debt-to-Income (DTI) ratios? Your DTI will be higher because of your car payments thus reducing the amount you can qualify for and perhaps drop you below the price of your minimum acceptable house. Now, your choice of transportation has stopped you from being able to become a homeowner. Which would you rather have, an old ugly (reliable) car in your garage or a new car (at 0%) in front of your apartment?

A new truck could cost about $55,000, with a reasonable interest rate of 4% (who knows what your rate will be) which will give you 7 years of payments at $700 per month, plus insurance (totaling $1,000?). How much less would you be paying for an old ugly truck with the minimum insurance? Maybe $500 per month less? Let us consider that $500 per month invested in a solid return of 8% over 7 years will grow to $53,500. Keep that money in that investment without adding to it and it will grow to $250,000 in 20 more years. That $55,000 truck today will cost you $250,000 from your retirement. $250,000 at 8% is around $1,800 per month more that you can spend in retirement. That new truck cost you the ability to qualify for a home, which you would have almost paid off right about the time you have that extra $250,000 (remember 7 years plus 20 years) ready for retirement.

Let me clarify all that. Today you can make a choice between having a nice new $55,000 truck or an old ugly cash car. If you choose the new truck, in 27 years it will likely be in a junk yard. If you choose the old ugly cash car, you will then be able to save and invest the money you didn’t spend on your future piece of junk and in 27 years, you will likely have about $250,000 in investments. Plus, that new truck could have kept you from qualifying for a house today that would be almost paid off in 27 years. Now explain to yourself which you would rather have.

A Car Worth $250,000

When you have to make a decision about which car to buy, the principals taught in Wise Credit Management point you to automobiles that are reliable, easy to maintain and work on (because stuff will go wrong on every car) and you need to be able to find after market parts. One fairly reliable way to determine which car will still be there for you is to look at which older car models are still on the road today. There are a lot of older Nissans, Toyotas and Hondas with over 200,000 miles on them. You need to keep a maintenance fund open for them and handle repairs as they happen. You would also benefit from having a trusted mechanic to call. Many people can’t find inexpensive mechanics and therefore the maintenance cost is too high. That is why reliable and inexpensive mechanics are worth their weight in gold.

Wise Credit Advocates

I like to call graduates of my class “Wise Credit Advocates”. You have been given the knowledge and wisdom to successfully build and manage your own credit. After you receive that knowledge, you begin to have the responsibility to use that knowledge and create your own success story. It helps to have good people around you for mutual support and it will be even more helpful to have professional guidance. That is why we have groups, both online and in person. Your success story will include other people and should be shared with those who also need this class. When you begin to share your journey, you are advocating for Wise Credit Management.

Galatians 6:10 ~ Therefore, as we have opportunity, let us do good to all, especially to those who are of the household of faith. ~

There may be people in your life who need to know how to improve their credit, but you don’t even realize it. Most people know someone who could benefit from this class.

Please post a link to Essentials of Wise Credit Management to your social media and spread the word to anyone you know could use the help:

I don’t know who might need this, but this is a free credit management class which combines biblical wisdom, factual information and professional guidance. WiseCreditManagement.com/essentials

The end of class is the beginning of your journey.

Blessings on your journey.

Sincerely,

Jason Johnson

Next: Complete the “Final Exam” (first make sure you completed the Lesson 10 Quiz)

Then you will have access to the Advanced Classes!