Personal Credit 101

WAKE UP! Class is in session. Personal Credit 101.





Credit is without a doubt the hot topic across the country. On the macro level (nationwide) we can't hear enough about the 'Credit Crisis.' On the micro level (you and I) it's interest rates that keep our tongues wagging and pocketbooks asphyxiating.

Some basics all ECONtrepreneurs and users of personal credit should know:

1. Know your status. Before you start using credit of any type, get a credit report. The Fair credit Reporting Act guarantees you a free credit report from each of the three reporting agencies - Equifax, Transunion and Experian - every 12 months. Read more about it here. The only authorized source to get your free report under law is AnnualCreditReport.com. Delasol advises getting the reports separately from each agency; that way you can monitor your credit more frequently throughout the year. You will need your name (a no brainer), date of birth, address (current and previous) and Social Security number.
   
2. Know why it's a big deal for you. The information in your credit report is used to evaluate your applications for credit cards, loans, insurance quotes, employment and renting or buying a home.
   
3. Protect yourself against identity theft and loss of purchasing power.Once you have your credit report in hand, search for accounts you don't recognize and inaccurate information. If you find any, dispute the errors by writing a letter to the reporting agency detailing the inaccurate information; include copies of documents that support your position. If you suspect identity theft, visit the Federal Trade Commission's identity theft website.Monitoring your credit will without a doubt increase your ability to buy the things you want in the future; that's what your purchasing power is. If you are in the dark about your credit history and potential, you're limiting how far your dollars can work for you. ECONtrepreneurs exploit strategies where their money does the work for them. Good credit health is wealth in itself.
   
4. Stay on top of the issues.News reports have picked up on the major credit card issuers' (Bank of America and Chase to name a couple) initiatives to changed the terms for tens of thousands of customers. People who have low card rates but carry a balance month-to-month are being penalized. Issuers are hiking up rates and demanding higher minimum payments from people with great credit and those with poor credit. While in many cases you may contest a rate increase, it is usually granted with the caveat to restrain from using the card further, and is based upon your credit history. If you use credit, use it wisely and don't spend more than you can afford to pay back in 28 days.
   
5. Tell a friend. Word gets around. Helping others become savvy about their finances has positive effects on the whole community. Each one, teach one.

Stay tuned for an upcoming 4-part feature Personal Credit Education series on building and improving your credit history and worthiness, brought to you by the Delasol Group.

Becoming the Change You Want to See

Shoutout to Ben Bernanke.




Yesterday the chairman of America's central bank addressed the nation from none other than Morehouse College in Atlanta, Georgia. Morehouse is a distinguished Historically Black College (HBCU), unique in that it is the only HBCU just for men. Bernanke made a strong statement by choosing the college for his remarks, as degree-seeking students are suffering disproportionately in the current recession.

Relative to their majority counterparts, minority-serving institutions on average have smaller endowments and higher percentages of students from less wealthy families, which means more Federal financial aid dollars per student. For these reasons - amid myriad shared threats to the viability of colleges and universities nationwide - HBCUs are petitioning alumni and outside donors to help struggling students stay in school. The reality for many HBCU students is that higher education is a luxury, not the standard.

Which brings us back to Mr. Bernanke, whose visit to Morehouse was unprecedented by our nation's most prominent economist. He is also trailblazing new ideas to make the Federal Reserve less mysterious, less sphinx-like to the American Public. Whereas in the past, the Fed was notorious for keeping taxpayers in the dark, a new day has arrived. In an online article in the Wall Street Journal it is revealed that the American Fed is considering holding regular news conferences to debrief the public on the Bank's strategies and concerns. The European Central Bank already provides this invaluable service to its citizens.

To back his statement, Bernanke said he is "fundamentally optimistic" about the U.S. economy. Saying,

"Recently we have seen tentative signs that the sharp decline in economic activity may be slowing....A leveling out of economic activity is the first step toward recovery."

Delasol is a business built on education and information. For this reason we strongly advocate Bernanke's proposed role as the nation's "Professor-in-Chief" (the WSJ's term, not ours). Information and preparation are the keys to success. Educate us on the issues, Ben.

How do you feel about a more open central bank?

A Crisis of Confidence

There's is a common belief that if people are confident in their government, businesses and neighbors, the economy will perform well. That is to say, that if people are more happy than mad, more confident than anxious about the financial markets and banks, things will run smoothly for everyone. However, now that we are in a recession caused by overconfident home buyers, investment bankers and speculators, we're just looking for the light of day.


America has at its helm a leader in President Barack Hussein Obama. According to myriad opinion polls, most of the country thinks he's doing a commendable job, considering the quagmire he's [been] elected to commandeer. What makes these arbitrary polls so important? Why do we poll people on the state of the economy, the progress and popularity of the President and the like? What is it that these polls reveal to us?

The answer is confidence.

In addition to managing the world's second largest economy*, President Obama must also become a cheerleader of sorts. If the President is pessimistic about the economy, how can we, his constituents, have hope in his actions to revive it? Inspiring confidence is central not only to the success of the President's economic agenda, but as we saw during the campaign, it's a key ingredient that is central to Obama's success as a person. The audacity to hope, the willingness to accept change and hard work are values that helped him gain the trust - and ultimately the votes - of the American public.

But when is it too much? The President's critics are already clamoring that he's just another tax-and-spend stuffed suit, looking to say and do whatever is necessary to retain his position as the world's latest and greatest political poster child. Others simply opine that he's pulling the wool over our eyes to dupe us into supporting his massive $787 billion stimulus package announced in February. All speculations aside, we believe it's a most prudent move to encourage and rally the masses who are feeling the direct effects of this recession. While many feel that spending is not the way out of the Recession, President Obama has taken great pains to explain his legislative and budgetary actions, most recently in front of a group of Georgetown University students and faculty on yesterday (read the transcript of his remarks here). Sports teams get pep talks before winning games and motivational speakers make a ton of money. While there is no harm in inspiring confidence, it is dually prudent for Americans not to be gullible, vulnerable as we are. It is our responsibility to educate ourselves on the issues and hold our administration accountable for its actions. After all, that's what any reasonable ECONtrepreneur would do.

How has Obama's first 12 weeks in office affected your confidence in the government's (mis)handling the economic crisis?

*The decline of the dollar has resulted in the European Union becoming the world's dominant economy, in terms of Gross Domestic Product.

ECONtrepreneur of the Moment

ECONtrepreneurs are economists and entrepreneurs. Because they must be about the business of securing their economic health - by keeping costs down and building assets - they often have to be opportunists. Now that's not a pejorative term, but an honest one. When a great deal comes along you may have to make a split second decision, no matter how much preening and primping you've done to prepare for that magical money moment.

In a recession, people tend to look inward for inspiration. It is true that one tends to explore their "inner entrepreneur" when money gets tight, often posing the question, "How can I make what I have work for me?" This is a telltale sign of a promising ECONtrepreneur.

Take Mr. Ethan Nicholas for example. I stumbled across his success story in the New York Times earlier this week. Back in August he worked as a computer programmer for Sun Microsystems until he learned he wasn't getting a bonus. Having heard about another guy who earned $250,000 for creating an iPhone application, he gave it a shot. He had to teach himself Objective-C (the coding language of the iPhone) and worked "morning, noon and night" for six weeks. After he finished, Apple approved the application in mid-October. The first day his appliation (iShoot) was made available to consumers, he made $1,000. When it was all said and done, he made $800,000 in five months.

Whoa.

Well, the featured ECONtrepreneur of today is The Delasol Group, founded by Suneye Rae Holmes. Yes, this is shameless self-promotion. However, it is also ECONtrepreneurship in action. Armed with two degrees in economics and a natural gift of gab, I longed to teach but couldn't get hired. So I created my own curriculum to teach my community to become economically literate. This means understanding how big economic news affect you as an individual, defining net worth and its importance and becoming more confident in managing your personal finance skills. I've been helped by the recession as well, because with everyone broke there's a demand for economic and financial literacy. To that end, once everyone is rich again, there will be a demand to know how not to go broke! However while I can't guarantee riches, I can offer you a common sense and reasonable approach to understanding the relationship between your money and the broader economy.

I've been privileged to work with a group called Teen Mothers in Washington D.C. I've designed lessons, board games and simulations to encourage them to open up about their strengths and weaknesses regarding money. Then we build from there. This is the second series of an Economic Literacy workshop I've done for this group and we're moving into the final days of the class. In the coming weeks I am planning to get the students out and into the community, communicating their economic needs and goals to working professionals in a real-life setting. For many of my students, they wish to get their own apartments or purchase a car. I am designing a real-life scavenger hunt to get them some practical experience in securing these things. Not only is this good practice for when they are ready to get said apartment or car, but it's also great networking, providing a point-of-reference when they have questions in the future. In the meanwhile, I am building my company's brand by blogging, designing a website (for myself and others...another ECONtrepreneurial pursuit) and looking to network with other ECONtrepreneurs. Be on the lookout for Delasol and I hope you enjoy watching my small start-up company grow over time.

Do you know an ECONtrepreneur who deserves recognition or at least a little promotion? Shoot us an email about them and we will feature them here! sunrae@delasol.biz

Cheers!