Part 2 of 3 Parts: Equal The Financial Playing Field With Financial Literacy

The "key" componets of financial literacy

There many componets to financial literacy, but what I consider the "key" componets is to have the knowledge and skills that enable you to (1) review financial agreements, contracts, statements, (2) understanding how to utilize the numbers to save money, (3) understand how to restructure the numbers to your benefit, and (4) knowing all due dates, interest rates, and terms/conditions associated with your accounts.

Heres why

When you know how to read and understand financial documents, you can identify important information that may not have been expressed verbally. This can include right of recision, cancellation dates, late payments, acceleration clauses, collections, servicing, interest rates, and other items that can be used to benefit you, if needed. When you know how to utilize the numbers to benefit you, you can save yourself lots of money. Example; When you know your credit scores you know if you qualify for a better interest rate and terms if you have a high credit score (750 and up), or if you have a low credit score (625 below) you know you need to work on increasing your credits so you can get better interest rates. 

Knowing how to restructure a loan can save money, increase credit scores, and decrease debt ratio, at the sametime. Example: Your credit scores were 575, 585 & 600 when you purchased an automobile and got a high interest personal loan. Two years later you have been making your payments on time and now your credit scores are 685, 700, 715. Now, you go to your lender(s) and request to refinance or reamortize the loans based on having better credit scores and lower balances. By doing this you get a lower payment and interest (money saved), and assuming you refinance you are paying off (early pay off, good for your credit scores) the loans and replacing them with newer lower balanced loans with lower payments. 

Knowing all billing ending dates, late payment days, and delinquency days allows you to plan, strategize, and manage your cash flow. By knowing your billing date(s) you can wait until 2-3 days prior to your due date to make your payment(s). Assuming you are able to pay down your balance down to 30 percent or less of your total credit limit. Once you make the payment wait 2-3 day and use the again if you need to. Do this every month if needed. This shows that you are mainting a 30 percent or less useage ratio, therefore your credit scores will increase, which in turn will position you to request a lower interest rate. 

These strategies only work if you are good at managing your money, otherwise they are useless.

Click here to get your free digital copy of Ten Proven Strategies For Increasing Credit Scores.

In Part 3 I will talk about the benefits of refinancing or re-amortizing your loans.