Getting a Credit Card with Bad Credit

Getting a credit card with bad credit is not as hard as you may think. The types of credit cards that can be obtained with bad credit is the real problem.

There exists a financial practice called adverse selection. Adverse selection is the process of singling out potential customers who are considered higher risks than the average. Credit card companies combat this risk (the risk that people will default on their credit cards) by charging higher interest rates and annual fees. However, this is where the problems begin. If I have a great credit score, why I am going to get a credit card with high interest rates and high annual fees? The answer is, I would not get the card. Therefore, because people with good credit do not want the card, only people with below average credit scores (people that are “high risk”) apply for and obtain the card. Thus, a vicious circle is created. As the credit card companies charge more interest and fees on particular cards to offset the potential of default by high risk cardholders, those particular cards are only obtained by high risk cardholders. Thus, the behavior that the credit card company set out to deter is actually being promoted by the credit card companies’ practices.

So, if you have bad credit, where does this leave you? This leaves you with bad options as to credit card ownership. First, you could get one of those high interest, high annual fee, and low credit limit cards. You will probably pay more in annual fees and interest than you will principal. However, having the card (as long as it is a major credit card; Visa, MasterCard, American Express, or Discover) and using it responsibly will help raise your credit score.

Second, you could obtain a secured credit card. This means that you have to put down a deposit. The amount of the deposit is the amount of your credit limit. It works as a debit card except that it is reported as a credit card (which is a benefit), but it also has high fees and interest rates (these are disadvantages).

Last, you could obtain a merchant credit card (Macy’s, Dillard’s, Sears, etc.). Having this kind of a card will help boost your credit score. However, the interest rate is going to be very high. These cards usually do not have annual fees, but the high interest rate is a great disadvantage.

Even though options are limited and not the best, they are options. Start reestablishing your credit today so that you can help finance your future and save money.

Conventional Personal Finance

There are many bad things that you can do with your money or to your money. There are also many goods things you can do with or to your money. What should you do and what should you avoid?

(1) Plan Your Finances – Budgets are very hard to stick to and can cause many headaches, however, planning the big purchases can help protect you from a financial blunder. Always plan out the big purchases before reaching a final decision. This will not guarantee that you made a wise purchase, but it will make you think out and research all the details before concluding one way or the other.

(2) Always Use Interest Bearing Accounts When Possible – Many banks offer interest bearing checking accounts, and various other interest accounts. While deciding between investment opportunities or for the money you keep in an account to pay the bills, collecting interest on this idle money can quickly add up. You will not become rich, but this is the easiest, risk free money you will ever collect.

(3) Diversify – This is very common and effective advice. The recent volatility of the real estate market is a perfect example. Many people lost everything because they threw all of their investment money into the real estate market during the boom. Unfortunately, like gravity, what goes up must come down, and that is what the market did, with a vengeance. If these people had been diversified (meaning they had spread their investment dollars through various industries and markets) these people would have minimized, and probably offset any loss they received from the real estate market.

Doing these three, simple things will help you generate and maintain income for many years to come.

Defining Financial Freedom

What is financial freedom? Basically, one would probably define financial freedom as being rich or as being wealthy. But, what is rich? What is wealthy? Do you define “being rich” or “being wealthy” as having a lot of money? Do you define “being rich” or “being wealthy” as having the time to do what you want when you want, or do you feel that spending more time with your family is the defining characteristic of success?

Here is the million dollar question: do you need a lot of money to be able to have the freedom to do what you want and to be able to spend more time with your family? In other words, do you have to be “financially free” in order to achieve your “higher” goals?

Up to this point I have asked many questions but have provided few answers. The reason for this is because each person is different. A lot of money, a big house, and an expensive car are not necessary for many people to be happy. Many people who are not financially rich lead exceptionally happy lives. These people create a budget and stick to it, however, these people enjoy quality of life over financial success. Some of the happiest people on earth make barely enough money to fit into what is defined as the “middle class.”

How does this help define financial freedom? Basically, there are two ways to think of financial freedom. First, one can have an abundance of money and can, therefore, afford anything one wants. This means that money is not an issue of concern. The other way one can be financially free is for one to not care about money. These are the travelers and movers in the world that make just enough money to support themselves, but because they are always on the move, traveling around and discovering new things, money is not an issue. These people believe that life experiences are more important than the size of a bank account.

The big question you need to answer is: what kind of financial freedom do you want?

Entrepreneurs Need to Think Big

Any entrepreneur is a person, by definition, that takes a risk in the business world. So why should you be any different? Think BIG!

What exactly does “think big” mean? Thinking big means that you take into consideration any and all ideas that you feel are too hard, too expensive, too time consuming, or are out of your reach. Why limit yourself by things that you think are easy to obtain? If a project or investment is easy to obtain, this usually translates into a small amount of risk. If a project or investment has only a small amount of risk attached to it, this usually means that the reward will also be small. As an entrepreneur, you should challenge yourself to take a risk and to consider all possibilities regardless of intensity or degree of impossibility.

Keep in mind that thinking big and acting on those thoughts are two very different things. When I tell you to think big, the point is to prevent you from limiting your options before you have even considered the possibilities, advantages, or chance of success. This does not mean that you should blindly follow an idea merely because it is a “big” idea.

Thinking big means accepting all ideas and working through the details until you reach a decision as to your course of action or inaction, if that is the case. Think big, reach for the stars, dream about the impossible, but follow your intuitions, education, and instincts as to a course of action to pursue.

Strategies for "Thinking Outside of the Box"

In this day and age, telling somebody to think "outside the box" is pretty cliche. However, despite the overuse of the phrase, the concept that is encompasses is still sound strategy. Thinking outside the box or creative idea creation is an important skill that all entrepreneurs should try to obtain. The problem that most entrepreneurs have is that they become slaves to their ideas. This is a problem because a person, regardless of race, religion, gender, creed, educational status, and economic position, is restricted by the boundaries of his/her own biases, tastes, and opinions. However, you can overcome these boundaries by practicing a few simple strategies.

First, you can bring in an outside opinion. By bringing on an outside perspective, you are able to identify your biases and correct them or accept and utilize your bias, depending on your situation.

Second, you can evaluate your idea or decision to see if your biases have infected your thought process. This is very hard to do because a person usually does not recognize or know his/her biases. Most people write their biases off as fact and therefore, do not analyze the bias. This is the biggest problem with self-evaluation. However, it is a helpful tool that will be able to help you identify some, but not all, of your biases.

Last, when all else fails, do not use your idea. Thinking outside the box can include using the ideas of others. Talk with others, brainstorm, or get a "think tank" together to see what can develop.

Learn to identify your biases and how to evaluate their affect on your idea, and you will be able to come up with more creative, successful ideas.