![]() ![]() Lenders are placing increased emphasis on these histories in customer acceptance and denial of credit. You can make the request through the major reporting agencies such as Equifax for $8. Usually young people who have no mortgage will have a higher ratio.Įvery two years, you should request a report of your credit history. If the total payments exceed 15 percent of gross salary or net business income, you are in the danger or red light zone 5 to 15 percent suggests caution or yellow light zone, and less than 5 percent is the green light zone or a strong position. The next step is to add up all payments of household obligations: car, appliances, college tuition debt, and any payments to family or friends. Household Consumer Debt (Excluding Credit Card Debt) Time of year and past reputation of repayment of credit cards may influence interpretation. Five to 15 percent represents caution, and less than 5 percent would place you in the safe category. If the total balances on your credit cards exceed 15 percent of your gross income, you are in the danger zone. And, this balance is spread over 14 different cards. The average American has less than one month's reserve.Īccording to "Money Section" of the Novemissue of USA Today, individuals who have outstanding balances on credit cards typically have a total balance of nearly $6,000. Size of mortgage, job security, and personal debt obligations may influence the interpretation. Less than a month or no cash reserves means possible financial stress if an unexpected emergency should occur. One to three months denotes some vulnerability. Three months reserves or more would indicate strength. To determine your emergency reserve, divide the cash assets by your monthly gross salary or net income, if you are self-employed. If you become unemployed or have a tragedy, these sources of credit could be eliminated quickly. ![]() The emergency fund would not include available credit lines on home equity loans or credit card debt. Cash in checking and savings accounts, cash value of life insurance, and CDs and money market funds that can be withdrawn without penalty qualify. This fund includes all cash assets that could be turned into cash quickly, without disrupting your normal lifestyle. One of the first steps to financial security is to build a personal or family emergency fund. Overview: Criteria and Components of Scorecard While general guidance in ranges is provided, you must determine the specific ranges. A score of zero to three suggests major weakness and the need for immediate corrective attention. A yellow light with a range of four to seven usually denotes some weakness and the need for corrective action. A green light, a score between eight and ten, generally indicates strength or progress. The analysis of each criterion will be analogous to a stoplight (Figure 1). ![]() Age, personal and family circumstances, and goals can influence the interpretation of the results. Following is a ten-point checklist to evaluate your current financial position. The result is financial success and independence now and in the future.Īn extensive personal financial analysis includes examining a wide spectrum of criteria, ranging from the cash emergency fund to credit usage, investments, insurance, and long-term estate planning. A checkup allows an individual to be proactive rather than reactive in developing a plan for corrective action. Professional financial planners recommend a complete analysis of personal finances annually. The same feeling, though not physical, can be experienced in your personal finances. The results sometimes can be painful, both physically and psychologically, and can hurt the pocketbook. Many people have a tendency to postpone scheduling their annual check-up with the dentist. Of the Department of Agricultural and Applied Economics, Virginia Tech The Personal Finance Scorecard: Your Annual Checkįarm Business Management Update, December 1998 To see our latest newsletters and current information, visit our website at ![]() (through April/May 2009), and are provided for historical purposes only.Īs such, they may contain out-of-date references and broken links. These files cover more than ten years of newsletters posted on our old website You've reached the Virginia Cooperative Extension Newsletter Archive. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |