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June 2021
Help Your Grad Understand Credit Scores Useful Financial Advice for a Lifetime
I have to admit, there are some great things about getting older. I understand myself and the world around me a little more with each passing year. And the same is true of the many nuances of the financial world — one of which remains mysterious especially to younger people: credit scores. Statistics show that those in the older generation have higher credit scores than those in younger generations. In 2020, the silent generation and baby boomers had average credit scores — 758 and 736 respectively — that are considered “very good.” Both are well above the national average FICO score of 710. Generation X’s average score is still considered “good” at 699, but millennials don’t fare as well, coming in with an average FICO score of 680, which is only considered “fair.” The labels here don’t confer any judgment about the people behind the scores, but the numbers themselves do mean a great deal to creditors and can seriously impact what kind of credit you qualify for and accompanying interest rates. If you’re on sound financial footing with a very good credit score, it’s time to make sure your younger loved ones are also on the right path. One of the best graduation gifts you can give someone is mentorship on how to boost their credit score, which can save them thousands of dollars over their lifetime.
accessed for free from AnnualCreditReport.com. Remind your loved one that their credit report does not include a score, but let them know about free services, like Credit Karma, that allow users to see their score for free and access personalized recommendations on how to boost it. 2. Consistency is key. We know the two biggest things that affect a credit score: payment history and credit limit spending. (In finance- speak, this is called your debt utilization ratio.) Together, these comprise 65% of a credit score. It may sound simple, but it’s important to advise your loved ones to pay their bills on time. “Paying off a debt in full every single month is like fairy dust on your credit score,” says Tiffany Alice, aka the Budgetnista. Additionally, advise them not to spend more than 30% of their credit limit. If they have a $1,000 credit limit, tell them to think of it like a $300 limit instead. If they’re trying to rack up airline miles, cash back, or points and want to spend more than the 30%, advise them to do so only if they can pay it off quickly, meaning well before the due date (or right after making the big purchase). This will help decrease that debt ratio. 3. Start building credit ASAP. One of the reasons older folks have higher scores is that they have a longer credit history, which creditors like! In fact, it comprises another 15% of what goes into a credit score. Advise the young people in your life to start taking on whatever credit they can responsibly manage as soon as possible. That might start with a secured credit card, a small car loan, or a student loan. If you’re trying to help your adult child build credit, consider adding them as an authorized user on one of your credit cards or co-signing on a loan for them. Credit scores may not be the most exciting topic of conversation, but I can guarantee your younger loved ones will appreciate having some direction and knowledge about this often mystical number. And if it doesn’t all take the first time, that’s okay! Remember back to your high school or college graduation and conjure up some compassion for just how complicated it can be to learn these financial nuances.
Here are a few pointers to share:
1. You can’t fix what you don’t know. Ask your loved one if they’ve ever run their credit report or looked at their credit score. Let them know it’s free to run a credit report from each of the three main credit bureaus — Experian, TransUnion, and Equifax — each year. That amounts to three reports and three opportunities a year to check for (and dispute) inaccuracies and get to know the info behind the score.
Financial expert Paula Pant advises setting a calendar reminder every four months to check your credit report. In January, run your report from Equifax, in May, check TransUnion, and in September, check Experian. All can be
Congratulations to all the graduates! Enjoy your summer.
-Jeffrey Campbell
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The warm summer sun may be enough to beckon your family outdoors, but lawn games will guarantee hours of fun outside. If you’re handy, there are plenty of great lawn games you can make yourself. If not, buy an off-the-shelf alternative and enjoy the easy setup. GIANT JENGA: EASY DIY All you need to build a giant Jenga tower are two-by-fours that are cut to length. If you’re handy with a saw, you can do this at home. If not, ask to have the wood cut at your local lumberyard. Be sure to sand down the edges before stacking the boards to create a classic Jenga tower! For extra fun, pick a few paint colors and paint each board. Visit ABeautifulMess.com/make-this-giant-jenga to see a complete set of instructions. DIY or Buy? Lawn Games for Family Summer Fun
Buy: Check out the kid-friendly rubber horseshoe set from Wayfair. com, which requires no installation, can be used indoors or alongside your outdoor game, and is safe for younger children. CORNHOLE: ADVANCED DIY The humble beanbag may be the most versatile backyard game piece. It’s used in the popular game commonly known as cornhole. To build your own cornhole set, you’ll need a couple of sheets of 1/2-inch thick plywood along with two-by-fours, some hardware, and a variety of tools including a drill, jigsaw, and sander. Visit DIYPete.com/cornhole-board-plans to get both written and video instructions. Buy: Ready to play ASAP? Cornhole sets are available from many large retailers around summertime, or you can order a customized set featuring your favorite team, family name, or characters from your favorite movies by looking at Etsy.com. Whether you buy or DIY, remember to have fun and always supervise your children while playing outdoors, especially when it comes to yard games!
Buy: Skip the project and buy GoSports Giant Wooden Toppling Tower online, which retails for about $70 and stacks over 5 feet high.
CLASSIC HORSESHOES: INTERMEDIATE DIY Tossing horseshoes is a great way to pass an afternoon. To play, you’ll just need to set up two sand pits in your yard. Get a handful of horseshoes, and you’re ready to go! Many DIY plans are available online, including one from HousefulOfHandmade.com/ ultimate-diy-horseshoe-pit.
Why Are Celebrities Investing in SPACs? Should I Consider It, Too?
Sounds lucrative, right? It can be, but not for everyone. For a long time, SPACs were seen as last-ditch efforts on the part of small start-ups that couldn’t afford to raise money on the open market. Many investors argued that if a business couldn’t raise these funds, how well could they actually perform once public? Plus, CNBC also reports that a five-year study found the average return on investment from SPAC mergers was generally less than returns from IPO investors. This should make investors wary, especially since they have no idea which company a SPAC might acquire. The risk is much higher than traditional investing. However, recent SPAC acquisitions of big corporations like DraftKings, the online sports gambling website, and a space exploration company, Virgin Galactic, have some investors hopeful. This could shift the thinking on the usefulness of SPACs and attract larger businesses to this arrangement. A SPAC may or may not be right for you, but that’s your decision to make. If you want to learn more about SPACs, speak with a trusted financial advisor to assess your risk.
This past year, the volatility of the pandemic and independent Reddit-based investors bidding up shares of GameStop has turned Wall Street toward a trend of nontraditional investing and trading — and it continues. Starting as early as last summer, celebrities and big-time Wall Street players began investing more and more money in special purpose acquisition companies (SPACs). SPACs are shell corporations with no assets. A pool of investors sets up one of these companies with the sole purpose of raising money through an initial public offering (IPO) to eventually acquire a private company and take it public. SPACs don’t have products or services. Its only asset is typically the money raised in its own IPO. SPACs are usually given two years after its IPO to find a company to acquire, although investors rarely know what business the SPAC will acquire. (Shareholders do have to vote to approve the acquisition.) As CNBC explains, once acquired, shares of that business can be swapped for the SPAC shares (a SPAC merger), or investors can redeem their money plus interest. If a business cannot be acquired within an established time frame, the investors get their money back plus interest.
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Have a Laugh!
EXPLORE A NATIONAL FOREST FOR FREE On National Get Outdoors Day
Many people in the U.S. and across the world have a national park trip on their travel bucket list. While Zion, Yellowstone, and the Great Smoky Mountains are all awesome locales, outdoor enthusiasts often overlook a resource that is less busy, less expensive, and usually right in their backyard: national forests. All but 10 states have a national forest (or more than one!), so if your home state doesn’t have one, it’s very likely a neighboring state does! And there’s no better time to hike, bike, forage for mushrooms or berries, or camp at a nearby national forest than this month. The tree-filled landscape will provide shade and help you beat the summer heat, and to further incentivize visitors, the U.S. Forest Service (the organization that oversees the national forests) is offering a fee-free day on Saturday, June 12, in honor of National Get Outdoors Day! While parking and day-use fees to access national forests tend to be relatively modest, fee-free days open up the opportunity to all visitors. The U.S. Forest Service has a great interactive map tool that prospective park-goers can use to learn more about the forests in their area, amenities and activities, and accessibility. Visit FS.fed.us/ivm to access the map and see what’s near your hometown!
Suduko
If you’re dreaming up travel plans beyond your state’s border, consider visiting these notable U.S. national forests.
• El Yunque National Forest: Located in Puerto Rico, El Yunque is the only tropical rainforest in the United States.
• Tongass National Forest: Spanning 16.7 acres and several islands across Southeast Alaska, the Tongass is the country’s largest national forest. • Salmon-Challis National Forest: This Idaho forest is the largest contiguous wilderness area in the lower 48 and contains the Frank Church-River of No Return Wilderness. • Cibola National Forest and Grassland: Spread across north-central New Mexico, west Texas, and Oklahoma, this forest and grassland area is notable for its diverse ecosystems and wildlife. The Sky Islands portion of the park is also home to over 200 rare plant and animal species.
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The Ins and Outs of Consumer Credit Scores For Grads DIY or Buy: Summer Lawn Games SPACs Are the Latest Celebrity Trend — Should You Invest, Too?
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Take a Break Have You Explored a National Forest?
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4 Why It’s Illegal to Sell Exploding Golf Balls in Massachusetts Explosive Swings Are Allowed on the Golf Course Explosive Balls (at Least in Massachusetts) Are Not
With the U.S. Open coming up in June (barring any major COVID-19-related developments), the participants are sure to leave audiences in awe of their explosive drives. While “explosive” in this context doesn’t mean anything is actually exploding, there is a precedent for golf balls that literally explode. In fact, that precedent led to the creation of a pretty interesting state law in Massachusetts: No one is allowed to sell exploding golf balls.
According to Chapter 148, Section 55 of the General Laws of Massachusetts, “Anyone who sells or knowingly uses … a golf ball containing any acid, fluid, gas, or other substance tending to cause the ball to explode” can be fined $500 for the first offense and up to $1,000 or imprisoned for a year for any offense after that. You would think that the existence of this law means that at some point, people were just smacking exploding golf balls around the Bay State before the lawmen kiboshed it. However, the truth is a little more nuanced. While it’s unknown what exactly prompted the legislation, there are a few clues as to what sorts of incidents Massachusetts governments were trying to avoid. The first clue is that prior to the late 1960s and early 1970s, golf balls were actually manufactured with a caustic liquid at the center. This led to the unforeseen injury
of a boy named William J. in 1912, who, while “dissecting” a golf ball, ruptured the rubber fluid sack at the center. Some of the liquid got in his eye and caused permanent damage to his sight, despite multiple visits to the doctor. Even though golf ball manufacturers stopped using caustic liquids in the centers of their golf balls in the 1920s, the liquid centers of golf balls made in the following decades could still cause harm. If someone dissected a golf ball and ruptured the fluid sack of one of these later balls, the crystalline material within could still cause injuries. Fortunately, solid core golf balls became common during the 1970s, removing liquid core golf balls from the course for good. However, even though they’re gone, their legacy lives on in this strange Massachusetts law.
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