Have you ever gone through your bank to take a look at your credit score and haven't been super happy with the results? Or have you ever looked into getting a mortgage or needing to borrow money, and nobody will give you a loan? It's likely because you don't have a credit score that's in tip-top shape. This article will explain what a credit score is, and how to increase it. 

What is a Credit Score?

You Credit Score is a number (typically between 300-900) that is based on your credit report. Your Credit Score your financial report card, and it’s used by lenders to predict the likelihood that you will repay any future debt.  Your Credit Score is based off of your Credit Report, which is a summary of how you pay your financial obligations. Lenders use your Credit Report to verify information about you and how you have been with paying off your financial obligations in the past.

Why is This Important?

Your Credit Score will determine if you are a risk to lenders and it will affect the interest rates that you pay on any loan that you’re applying for. If you have a “Poor” – “Fair” score, and are looking at securing a mortgage, you may not qualify through a bank or Credit Union. You may have to go with a B-Lender or even a Private Lender, where you’re looking at interest rates 3-6% higher than a traditional A-Lender.

The Credit Score is one of the metrics that we track in our Financial Freedom Coaching program, and if you can believe it, we’ve helped our average coaching client increase their credit score by 21 points in a 6-month period.

How Can I Increase My Credit Score?

There are 5 main ways that you can increase your Credit Score. All of these ways need to be monitored and properly managed in order to work.

1. Payment History: this is the most important factor in your credit score, and it makes up to 35% of it. Creditors want to know that you’re going to pay back the money you are asking to borrow from them, so they will look at what your payment history has been like from previous consumer debts. ALWAYS make your payments on time and make the full (or at least minimum amount owed) payment each time.
2. Amounts Owed: this makes up about 30% of your overall score, so it’s an important one. How much you already owe on your debt vehicles will really matter to a lender. Try to keep your credit utilization rate less than 35% of your available amount, and don’t max out all of your available debt vehicles. If you use a lot of your available credit on your debts, lenders see you as a great risk EVEN if you pay your balance off in full by the due date.  

For example, if you have a credit limit of $10,000, you should not carry a balance of more than $3,500.   

3. Length of Credit History: this makes up about 15% of your score. Creditors and lenders like to see that you’ve been able to handle credit accounts correctly over a period of time. Newer accounts will lower your average account age, which may negatively impact credit scores. Never cancel one of your first cards because that marks the beginning of your credit history. 
4. New Credit Applications or Credit Checks: every time you apply for more credit, your score will be affected, so try to limit hard inquiries. There is a difference between a soft credit check (checking your credit score) and a hard credit check (looking for more credit). Every time you do a hard credit check, your credit score will be lowered. This takes place when you apply for a mortgage, loan or credit card. 
5. Use Different Types of Credit: You should have at least 2 credit vehicles open (credit cards, LOC’s, car loans and mortgages.) Showing you can manage different types of credit will have a positive impact on your score. 

You should check your credit report and score once per year. One small error can have a horrible long-term impact on your credit score, which is why we get our Wealth Mastery and Financial Freedom Coaching clients to check it. Your credit score is like your financial report card and having a bad score can have a really negative affect on your long-term financial plan. We’ve helped 1000’s of clients increase their score by an average of 21 points through our Financial Freedom one-on-one coaching program. If you feel like you need a little one-on-one help, make sure to sign up for our free Coaching Assessment Call.

It’s been a few years now since the term Robo-Advisor has surfaced, and we get a TON of clients in our coaching program not knowing what it is. So, while you sit there, scratch your head, and wonder what this new type of tech is, I'll explain it to you. As easy as possible.

What is a Robo-Advisor

A Robo-advisor is a new class of financial advisor. It uses algorithms to provide investment management and/or advice with little human supervision. Using a certain type of software and algorithms, a Robo-advisor is able to figure out your asset allocation, and then build a portfolio for you that is only made up of ETF’s. From there, they actively manage your portfolio whenever necessary; buying, selling, and re-investing dividends. Don’t want to do self-directed investing but still want to invest in ETF’s? A Robo-advisor may be perfect for you.

What are the Fees?

Since Robo-advisors don't use a lot of human management on the back end, they often have lower management fees than other investment firms. Robo-advisors charge an MER on Assets Under Management of anywhere from 0.30%-0.60% for their services, and then the ETF portfolios typically charge an average of 0.10%-0.30%. At the end of the day, this is probably going to put more money in your pocket because you’re saving a bundle on fees.

Let’s break down how that looks compared to an actively managed account from one of the big banks. Canada has some of the highest mutual fund fees in the world with an average 2.3% in MER fees. Let's say you have a portfolio of $100,000 with a financial advisor. You're probably paying an average 2%-2.5% MER or $2000-$2500 in commission regardless of how your fund performs. But if you're using a Robo-advisor, you're only paying a commission of $400-$900 (based on the 0.40%-0.90% MER). That extra money that you're not paying in fees will go a long way with that sweet principle called compound interest.

Which Robo-advisors is best for me?

Good question! This really depends on your preferences, your goals, and the portfolios that the Robo-advisors use. Each Robo-advisor offers something different so it’s important to take a look at which one works best for you. Here are some of the different things to look into;

• Fees. Although this isn’t the most important thing, it is an important factor.
• ETF’s that make up the portfolio.
• The dashboard.
• Other benefits. Some Robo-advisors provide you with a dedicated financial advisor, estate planning, insurance needs, tax-loss harvesting, etc. This may be something that you require, so it’s good to look into your own personal needs.  

And now?

Well.....there’s no better time than the present, and if you find that your returns haven’t been stellar over the last few years, it may be time to re-think your current investment strategy. Or maybe you’re ready to grab the bull by the horns and start tucking away some money for long-term financial growth if you don’t have any high-interest debts that you need to pay off.

And if you feel like you’re still lost, and need some one-on-one guidance, consider signing up for a coaching assessment call to learn more about our one-on-one coaching program. We can provide you with a deep dive analysis on your current investments, teach you about alternatives, and provide you with unbiased assistance to make the most of your money. You can sign up for your coaching assessment call here.  

Crush Your Debt – For Good

Have you heard about our brand spankin’ new program that we launched in May? It’s for all of you out there that have a little (or a lot) of debt to pay off. And we’re not just talking mortgage debt. This goes a little bit deeper than that. This program is tailored specifically for those who have credit card debt, line of credit debt, personal loans, and debts to family members. Interested in finding out more? You can take a look at the program here: https://enrichedacademytraining.com/debt-sales-page

Why did we create this program?

Getting out of debt is hard if you’re not educated on a wide range of topics. After launching our coaching program back in 2017, we saw a need for continual education surrounding debt. We kept seeing the same debt patterns time and time again, and we wanted to help our followers get out of debt by being able to use the same tools and worksheets that we use with our one-on-one clients. Introducing…….our Debt Elimination Program.

What’s so great about this program?

I think the question is, what is NOT great about this program? It’s specifically constructed to provide you with the education, tools, and resources that you need to get rid of your debt. These are proven methods that we teach to our one-on-one clients, but now you can have access to the education, the resources, and the worksheets to feel more empowered and confident in the next steps. The principles work, so long as you’re willing to do the work yourself.

The other thing that is really great about this program, is that we wanted to make it affordable because we know that getting out of debt can feel really daunting. We priced this at $197+tax. That’s it. And you get 7 modules, tools, resources, and an exclusive Facebook group to ask questions and get support.

What do you cover in the program?

Here are the 7 modules that we cover:

1. Creating Your Net Worth Tracker and Analyzing For Quick Fixes
   1. This is probably the most important thing that you can do to help organize your finances. We’re going to teach you how to go through all of your assets and liabilities with a fine-tooth comb and figure out any opportunities you can go through to get rid of your debts faster.
2. Understanding Your Cash Flow and Creating Your Budget
   1. My personal favourite module is all about creating your budget, and figuring out different way to manage your cash flow moving forward so you can prioritize your spending towards what matters most (getting out of debt).
3. Creating New Goals and Tracking Your Spending
   1. Chances are that you got yourself into this debt because you didn’t track your money coming in and money going out. We’re going to help you create some realistic goals that you can stick to moving forward so you can get our of debt faster.
4. Using the Debt Crusher Tool
   1. We have this really amazing tool on our website that calculates how much you need to put onto debts to get rid of them by a certain time. This really looks into goal setting.
5. Organizing Your Debts and Understanding Different Paydown Methods.
   1. Consolidation? Debt Avalanche? Debt Snowball? If you don’t know what these methods are, it’s difficult to focus on one thing at a time. This module teaches you all about those different method.
6. Understanding Compound Interest and How Your Credit Score is Calculated.
   1. Do you know your credit score? Do you know how your credit card or line of credit calculates interest? If you don’t, this module is for you.
7. Financial Freedom
   1. Ahhhh yes. Finally, debt-free. Now what? This module will take you through how to become financially free and what the next steps are.

So, if you’re unsure of any of the module breakdowns mentioned above, it sounds like you’ll get LOTS of value out of this course. Come check it out. You can learn more about it here.

We’ve been in isolation now for what seriously seems like forever. But the time is flying by, isn’t it? Our coaching division has been working diligently with our clients to help them navigate through this time, and I’ve compiled a list of ways to help clients cut back and think outside of the box to stretch their dollars the furthest. Here are some that may help you if you’re finding that funds are tight.

Take This Opportunity to Clean the House and Sell Your Unused Stuff: Have you ever taken a step back and thought about how much stuff you have but never use? Craigslist, LetGo, Kijiji, Bunz, Facebook Marketplace are some of the amazing platforms out there that allow you to sell and buy used (if you need anything). Not only will it feel amazing to get rid of everything, but if you can free up some cash, it will help in the long run. One person’s trash really is another person’s treasure!

Do You Have Any Reward Points That You Can Use?: I don’t know about you, but I’ve been accumulating PC Points for years. I signed onto my PC Points last week and found that I had $500 worth of free groceries. WINNING! So, then I started to look at some of my other rewards points that I’ve been accumulating all of these years and found that I had $100’s of dollars in reward points. This is the PERFECT time to use those points if you find that you’re strapped for cash. Air Miles? Coffee rewards? Points from your bank? Sign onto your platforms and see what you have and start to use them if you need. Also take a look at unused gift cards!

If You Absolutely NEED to Shop: Have you Heard of Rakuten? We all have things that we absolutely need right now. Perhaps those necessities can be purchased through Rakuten. It’s a website that gives you cash back on purchases that you’d be making in-store anyways. And if you use this link, you'll get $5 cash back on your first purchase!

Take a Look at Your Insurance: Do you have insurance on two or more cars that you’re not driving right now? Time to call your provider and cut one of the monthly car insurance premiums. If you’re able to drive one car between a family, you might as well scrap the monthly cost for the time being. Have you read the fine print of your insurance premiums? Maybe you haven’t taken a look at your insurance policies in a while. There are a few really awesome websites out there such as PolicyAdvisor and PolicyMe that will provide you with a quote in minutes. You can compare them to the policies you currently have. Maybe you can save a few bucks every month by making the switch.

Get Rid of Those Pesky Monthly Bank Fees: I've always asked my friends why they're paying a financial institution a monthly bank fee to take out their own hard-earned money? Unless you actually need a service that a No-Fee bank cannot provide you with, this idea has never made sense to me. Bank fees typically range anywhere from $5-$30/month, but it doesn't need to be that way. There are TONS of no-fee banking options out there that also offer high-interest savings accounts. Here are a few of them; Simplii Financial, Tangerine, and EQ Bank.

I know that times are tough right now, but with a little more thinking outside of the box, I’m sure there are a few other ways that you can think of. Feel free to share them with us!

Looking for a few extra ways to cut back during COVID19? We’ve compiled our top 5 list of proven ways that you can cut back on your spending to allocate your finances to what’s most important to you during these tough times.

1. Call current utility providers and ask for a better deal. I recently called my car insurance provider and cut back on my annual premiums by $150. It took me 5 minutes on the phone, and I was able to cut back on my car insurance since I’m no longer driving anywhere. You can do the same with all of your recurring bills. You just have to make time to call. And most of us now have the time! This is always something that you should always do on a yearly basis. Negotiate, negotiate, negotiate. 
2. A lot of the restaurants are no longer open, so your dining out and coffee bills are probably minimal. This is a good thing. Take this as an opportunity to get ahead of your spending and cut back in dining out as much as possible. This should also be a good opportunity to learn about your habits and how much you spend on a monthly basis on areas that may leave your wallet empty.
3. Sell unwanted stuff on Craigslist, Kijiji, Facebook Marketplace, or other apps like LetGo and Bunz. This is the PERFECT time to organize your house and go through your stuff to figure out what you need, and what you could sell for a little extra cash in your pocket.
4. Negotiate your Mortgage or look into a refinance. With dropping interest rates in Canada, it would be a good time to take a look at your mortgage and look into refinancing at a lower rate if it makes sense. Talk to your bank representative or connect with a mortgage broker.
5. Organize your pantry and make a shopping list when grocery shopping. If you already have lots of dry goods in your pantry, this will assist in not repurchasing it. Use up when you need and organize your pantry so that you know exactly what you have. On top of that, when you go grocery shopping, there is often a discount section for produce at the grocery store where products can be anywhere from 30-50% off. If you’re anything like me, I like to do my grocery shopping on Sundays which is also when I prepare my food for the week. I always hit up this discount section first to fulfil whatever I can in my shopping list. That extra 30-50% in money saved goes a long way and you’ll see this reflected in your grocery bill.

Some of these techniques have helped our own coaching clients save $1000's per month by executing on these tasks. It's a good time to start to analyze your credit card bills to make sure that you're not spending money on something you're not using. 

And now is the perfect time to do so, since we all have a little bit more time on our hands. 

In light of everything that’s going on in the world right now, I thought there was no better time to write about managing your cash flow. Hundreds of thousands of Canadians have lost their jobs and income over the last few weeks, and they’re scrambling. This is not good. And from what I’m seeing, I think this is going to be a wakeup call for a lot of people. I wish things didn’t have to be this way, but this should be a learning lesson that money is not infinite. It comes and goes. But when it comes, it’s important to manage the crap out of it, and set yourself up for anything that may come.

I find it fascinating (and also scary) that a number of Canadians couldn’t financially support themselves until the end of the month. The amount of calls that the big five banks have received in regard to mortgage deferrals is incredible. Almost 300,000 as of today (April 4, 2020). And the number of people who couldn’t pay their rent on April 1 was through the roof (I’m sure).

However, regardless of where everyone is right now in their financial situation, it’s important to take a step back, look at what you do have, and stretch your dollars as far as you possibly can. Here’s a step by step breakdown on how to approach the next few months. More on managing cash flow in weeks to come, but here’s where to start.  

1. Sit down and organize your finances. Take a look at your deposit and investment accounts (or look at your Net Worth Tracker if you have one), and understand which accounts are easy to take money from, and which ones aren’t worth touching right now. Write down the total amount of money that you have in all of these accounts.

2. Figure out how much income you have coming in every month. If you had to apply for EI, or will be applying to any government assistance programs, write down these amounts. If you have other income from other sources, include those as well. I don’t care if it’s a few dollars here and there – every dollar counts.

3. Print out the last 3-6 months of your credit and debit statements and add up the averages in each category that applies to your spending. Figure out what you spend on a monthly basis. Write it down somewhere.
   1. Fixed Expenses don’t change on a monthly basis (rent/mortgage, insurance premiums, bank fees, etc).
   2. Variable Expenses change every month (grocery bills, dining out, utility bills, etc).
   3. Irregular Expenses are those expenses that happen infrequently (holidays, vacations, car maintenance, annual membership fees, etc).

4. Analyze. On a monthly average, are you spending more than you currently make? If you are, it means that you have some serious cutting back to do. You have to rework your numbers and completely change your lifestyle around for the time being (and maybe for a little while after that if you didn’t have an emergency account). On top of that, once you have your monthly expenses figured out, does the money in your accounts from Step 1 cover those expenses for the next 3-6 months? Example: if you spend $3000/month on average on everything, do you have $9000-$18,000 sitting somewhere that you can live off of?

Just remember that what we are going through is not permanent. There are going to be sunnier days, and hopefully, we’ve all taken something away from this. There are lessons to be learned, and mindsets to shift. There is no better time than now to actively start learning about personal finance because of how important of a role that it plays in our society.

If you're interested in learning more, please take a look at our website and find some upcoming webinars. www.enrichedacademy.com