Credit Utilization

Do you know what your credit utilization percentage is?

Easiest way to explain credit utilization is the balance owed as a percentage of available credit limit on all open cards. For example, total credit limit it $10,000 and you owe $5,000 - your credit utilization is 50%. So, why are we concerned about that percentage? What does it mean?

Your credit utilization percentage is one of the easiest way to increase or decrease your credit score. The higher your utilization, the lower your credit score. The lower your credit utilization, the higher your credit score. The reason for this is the higher your score, the higher the likelihood you will max out your available credit. That means you will use all the available credit. This is not good as far as your credit score is concerned.

To improve your credit score using utilization, you first have to know what your utilization is. Once you know that figure you can then start to pay down each debt. The method of pay down is up to you. In the past I have paid down my credit card with the highest utilization first. Back when I had tons of credit card debt, I had cards with utilization 90% and more. (please never, ever do this) The faster you are able to pay down debt and bring down your utilization, the faster your score will increase. Credit Karma is my website of choice. I monitor my credit on a monthly basis.

In a perfect world, credit utilization wouldn't really matter because the balance would be paid in full each month. However, we are not in a perfect world and life happens. If your credit utilization is above 50%, the goal should be to bring it down to 30% . Once you have achieved that goal then it should be brought down to below 10%.

Please calculate your credit utilization and work on paying down your debt.

Update

Time to bring this blog back to life and keep it going. 

I have a few blog posts I am working on:

1. Improving your credit score

2. Building your savings

3. Buying a home

4. Student loan pay off

Work and Life

I have been in my current job since September 2013. It came with a decent raise which allowed me to boost my savings a bit, take a few vacations and save more for retirement. However, I now know this job is not a good fit for me. I am in the process of trying to find a new job and relocate to a  new state. More on this as the process plays out.

Relocation will cost a pretty penny so I am preparing for it by saving more, and cutting back expenses. I am slowly doing things around my apartment in preparation to rent it out. My to do list will cost a bit, but I am trying to keep those costs down. One thing I need to do is read more on the tax benefits and consequences of renting out your home. 

Resurrection

Time to bring this blog back to life.

I will be updating on a weekly basis to keep myself accountable.

Quick updates:
 My savings account is looking the best it has in years.
Credit cards are still an issue. That is a post I am not ready to write, and haven't been ready to write in years.
School: I am back in school doing an MBA using student loans. No, Sallie Mae is not my servicer...that heifer can stay 10 feet away from me at all times.
Retirement is still coming along nicely. That is one area of my finances where I am consistent and successful.

Taxes

Last Thursday night I finally sat down and finished my taxes using Turbo Tax. This is a chore but one that is necessary or Uncle Sam will coming looking for me. I filed both my federal and state taxes electronically and both were accepted within 24 hours. There is a bigger than expected refund coming my way so I have decided to half on student loan and half to my travel fund.

The federal refund is bigger than expected but it is too small for me to adjust my withholdings. I am afraid if I do that then next year I may end up owing Uncle Sam and that is not a position I want to be in. Each year my goal is to break even with Uncle Sam or come out just ahead.

Money Update......I'm back.....transparency

I suddenly had the urge today to blog about my money. Why? Maybe because this morning it hit me that my retirement is coming along nicely but my everyday finances are still in shits and shambles depending on the day. LOL

Retirement: My retirement funds are coming along very nicely. I contribute to my pension and an IRA with vanguard. Combined there is about $35,000.

Credit card debt: This is a blog post by itself about emotions, cycles, life etc

Regular Savings: I am still saving what little cash I keep on hand in CDs. Why? This works for me. I use 3 month CDs from my credit union.
My other savings account is where I stash my travel dollars. Now you may ask why am I traveling and still have debt to pay off? Well because I can and my travels are not being put on a credit card.

Student loan: SallieMae was finally paid off in 2012 I think. Don't remember exactly. I now have one student loan remaining that has around $6,700 remaining. This will be my focus this year. It would make more sense mathematically if I paid off the credit card. However, I am not interested in the math. I just want the student loan gone forever and ever amen!!!!

Vacation

I am going on vacation.....woohoo. It was paid for with cash. I can't wait to the in the sun, sea and sand of the Dominican Republic.

Retirement

Retirement savings now total a little over 21K. Slow and steady wins the race.

Still running

Ran 1.75 miles this morning. This has been my longest distance ever.