Budgeting Your Money Wisely in Troubled Economic Times

The current economic situation may make it seem more than difficult to earn money, much less save it. However, with the right budgeting plan, you can ensure that you have the most money available, when you need it. How do you create this budget and ensure that you have the cash set aside that you and your family will require?

Our consumer-driven society may make it seem like you must always have the whole enchilada when it comes to services and technology, but when it comes to saving some of those greenbacks, there is no better place to start then by cutting back. Where should you cut back? 

Consider the following areas:

• Cell phone plans

• Satellite programming/cable programming

• Internet access plans

• Home phone plan

These four areas are often "high dollar" and can constitute needless expenditures when times get tight. For instance, consider cutting back on your cell phone expenses by removing any data plans that are not truly necessary. You can also remove text messaging, limit the number of minutes you are allotted each month and more.

Your satellite/cable programming is another area in which you can cut back to save some money. For instance, you don't really need 300 channels, do you? The minimum package might not have all the channels that you want, but you won't be without TV altogether, either. In addition, you can always opt to increase your channels once money becomes a bit less restricted.

For consumers with high-speed Internet access, reducing your costs can be as simple as cutting back on your connection speed. You'll find that you still have a connection that's faster than dialup, but you're not shelling out quite so much money each month.

Finally, you can cut back on your home phone bill, as well. For instance, caller ID, call waiting, three-way calling and all those other handy extras are not necessary. Consider removing your home phone altogether, if you have a cell phone and your phone company provides an option for just a DSL connection. This can save you a dramatic amount of money over the course of several months.

Of course, you can reduce expenses, as well in many other ways. Consider purchasing store brands when you buy groceries. Consider using cheaper fuel in your vehicle. Regardless, if you are driven enough, you'll find many ways that you can get your finances back in line.

What is a FICO Score Anyway?

Realtors and lenders are almost as bad as computer tech people at tossing out words and phrases you don't understand. The funny part is, sometimes even they don't know what those words really mean.

FICO is one of them. It's not really a word, but the initials that identify the score given to your credit rating. A few Realtors and a few lenders have some idea of how those scores are reached, but they probably can't tell you what the letters stand for.

Nothing. They're just the initials of the Fair Isaac Corporation. So now you're wondering what or who a Fair Isaac is, right?

Bill Fair was an engineer, and Earl Isaac a mathematician. In 1956 they formed a consulting and decision management service, and in 1981 devised the credit scoring system now known as FICO.

Under their system, each of a set of details about an individual's financial history is scored and given a weight, based on the past performance of others whose financial history is similar on that particular detail.

Among other things, the system gives a score to: The length of time an individual has had and used credit The Existence of bank accounts The number of recent credit inquiries Debt to income ratio Debt to available credit ratio Bill paying history Lenders believe that by applying this compiled score, they know the statistical likelihood that a person will pay his or her debts. It must work, because FICO has become the standard, and this publicly traded company is a giant in the world of finance. With over 3,500 employees on 5 continents, FICO has an annual revenue of over $800 Million.

Contrary to what some might believe, FICO is not associated with the government. In addition to providing credit scoring, FICO still provides consulting and management services.
If your FICO score is over 720, you'll have an easy time getting a loan - or at least you would have before the current financial crisis. Right now that threshold may have been raised as many lenders have changed guidelines.

If your score is under 600 you'll be considered a poor risk, and in today's climate probably will not qualify for a mortgage loan. If you do, you'll be charged a higher rate of interest and will likely need a larger down payment. So it really does pay to take the steps to raise your credit rating as high as possible.