Gross Income is how much money you make before any deductions have been taken out of your wage.  For example, If you earn $11/hr and worked 40 hrs your check should be $440.  But is your check ever the full anount?  No, because you do not receive your gross income you receive your net income.

Net Income is your paycheck after deductions have been taken out.  Most commonly, Federal and State taxes are taken out of your paycheck.  There are a number of other deductions that can be taken out of your gross income such as retirement or stock payments, insurance premiums and others.

The bottom line is gross income is a total income of ones earnings and net income is what you actually get after taxes and other deductions.

True wealth isn’t just money; its the immovable balance of spirit, emotion, finance and health.  If these four are balanced and whole than you are wealthy with a foundation for success.  How do you achieve this balance?

John 14:6, “Jesus saith unto him, I am the way, the truth, and the life: no man cometh unto the Father, but by me.”

True financial planning is implemented in this life and the next.  Your faith in Jesus Christ is the only way you will go to Heaven and have a never ending retirement plan.  There are no bad investments in Heaven.

Acts 16:31, “And they said, Believe on the Lord Jesus Christ, and thou shalt be saved, and thy house.”

If you’ve never heard the truth about Jesus Christ then I will tell it to you.  God made people and they chose to disobey God; the outcome was separation from God.  Jesus came to get rid of that separation and take back the dominion people gave away through their disobedience.  When you believe Jesus Christ is the Son of God and Risen Lord asking Him to forgive you of your disobedience toward God He will forgive you.  If you ask Him to change you He will.  If you ask Him to save you He will.  All you have to do is believe in Him and ask him to be your Lord.

John 11:40, “Jesus saith unto her, Said I not unto thee, that, if thou wouldest believe, thou shouldest see the glory of God?”

In your quest for financial freedom don’t forget to plan your eternal investments; furthermore, seek the Lord with truth and honesty while anticipating growth. 

Be Whole,

GenerationWisdom

Dictionary.com defines integrity as, “adherence to moral and ethical principles; soundness of moral character; honesty.”  When applying the definition of integrity to business there are several conclusions to draw:  1) One must know what moral and ethical principles are, and 2) one must adhere to the moral character ethics provokes.

Moral and Ethical Principles for Business

1. Be honest – if you say you are going to do something then do it.  Let your yes be yes and your no be no.
2. Be fervent – Work hard and make a difference for the good of the people around you.
3. Be legal – Respect the laws of the land and obey them.  Pay your taxes, follow government regulation and behave in fairness.
4. Be humble – Don’t just say you are the best…be the best.  Let your success speak for you and don’t entertain prideful or selfish behavior. 
5. Be wise – Keep good business friends.  If you hang out with greedy people you will become greedy.  Keep your square clean and be careful when making business partnerships.

Adhere to Moral Character

If you cannot stand up for what is right than you will do what is wrong.  Be bold and courageous when walking in integrity.  If someone wants you to do something unethical than tell them, “No!”  You are in charge of you not them.  Saying, “It’s just business” is an accuse for being unethical that I do not buy.  If you are unethical in business you are unethical in other areas of your life and it will catch up to you eventually.  There is no accuse for behaving unethically whether in business or in your personal life.   

Proverbs 20:7, “The just man walketh in his integrity: his children are blessed after him.”
 

Having a financial mind set is not being greedy. In fact, my definition of a successful financial mind set is making wise choices to secure an abundant financial future for yourself and household, while helping others when you can. True financial character is not having or wanting wealth, but putting yourself in a position to abound and bless others.

There is no point to physical riches if you don’t enjoy them. By that I mean happiness is more important than money. If how you acquire wealth kills your happiness it’s not worth the price of your heart. Money is good, but its not everything life has to offer you.

What do the numbers in credit scores mean?

“The number ranges from 300 to 850. Although the exact formula for calculating the score is proprietary information and owned by Fair Isaac, here’s an approximate breakdown of how it is determined:

35 percent of the score is based on your payment history. This makes sense since one of the primary reasons a lender wants to see the score is to find out if (and how promptly) you pay your bills. The score is affected by how many bills have been paid late, how many were sent out for collection and any bankruptcies. When these things happened also comes into play. The more recent, the worse it will be for your overall score.

30 percent of the score is based on outstanding debt. How much do you owe on car or home loans? How many credit cards do you have that are at their credit limits? The more cards you have at their limits, the lower your score will be. The rule of thumb is to keep your card balances at 25 percent or less of their limits.

15 percent of the score is based on the length of time you’ve had credit. The longer you’ve had established credit, the better it is for your overall credit score. Why? Because more information about your past payment history gives a more accurate prediction of your future actions.

10 percent of the score is based on new credit. Opening new credit accounts will negatively affect your score for a short time. This category also penalizes hard inquiries on your credit in the past year. Hard inquiries are those you’ve given lenders permission for, as opposed to soft inquiries, which include looking at your own score and have no effect on the score. However, the score interprets several hard inquiries within a short amount of time as one to account for the way people shop around for the best deals on a loan.

10 percent of the score is based on the types of credit you currently have. It will help your score to show that you have had experience with several different kinds of credit accounts, such as revolving credit accounts and installment loans.”

This breakdown of credit scores came from How Stuff Works: http://money.howstuffworks.com/personal-finance/debt-management/credit-score1.htm

You are the CEO of a brand new corporation, and you need money.  How are you going to get money to run your business?  Well, if you are like most CEO’s you’ll seek out investors.  Investors give the CEO money, and the CEO repays the money that the investor gave with interest.  So, Investors give their money to the company to make money for themselves. 

Stocks are a way for CEO’s to get money.  Investors (people who buy stocks) give their money for ownership in the company.  Each stock is a portion of company ownership. 

Scenario:

You are the CEO of Movie Pop Star Corporation.  And you need $1 million to expand your company.  So you decide to issue stock to make that $1 million.  So you issue 20,000 stocks at $50 each.  I am an investor, and think your company is a stellar winner!  I am so excited about your corporation and see a potential to make a profit off of owning a portion of your company, so I buy some stock.  I buy 200 stocks at $50 each for a total $10,000.  I now own 1% of your corporation (200 stocks divided by 20,000).

I as an investor want to buy stocks when the price is low and resell them when the price goes up again.  For example, I bought the Movie Pop Star Corp. stocks for $50 each, so I will hold the stocks for a while until I see an opportunity to sell.  Let’s say the stock value moved to $75 per stock and I sell my ownership (stocks) then…I would make $5,000 ($25 times 200). 

Someone can make a lot of money buying and selling stock, but you can also loose money.  Like most things in life, markets go up and down in cycles over time. 

Let’s say the Movie Pop Star Corp. stocks lost value and went down to $10 each.  I have a potential loss of $3,000, which would be horrible.  But there is no real loss until I sell lower than what I bought it for.  If I hold the stocks I still own 1% of the company and have 200 stocks.  The trick is knowing when to sell and cut losses if the company is going bankrupt and when to hold knowing the company will get back on it’s feet to become profitable again. 

Short Version:

1. Stocks are a way for companies to get money.
2. When you buy stocks you are buying ownership in the company.
3. Buy low sell high.
4. Research the company before you buy.
5. You can gain money or loose money in the stock market.

Awesome question!  Yes, a person can climb out of bad credit, but it can take several years to really turn credit around.   Just like any serious problem it doesn’t just happen overnight; the problem occurs after several poor decisions over a period of time.  So, to correct the problem you have to make a series of good choices over a period of time. 

Your credit is your financial reputation, so you (if you have bad credit) have to rebuild your reputation and that takes time.  Credit doesn’t get bad overnight and it doesn’t get good overnight either.  You have to make a decision about what kind of credit you want and line your actions up with what you chose to do. 

It is just like a friend who always borrows money and never repays you.  After a few times of loaning them that $5’s they never give back you wise up and realize they are never going to repay you.  So you stop lending them your money.  But what happens when you have a friend who always gives back what they borrow?  You as a lender happily let them borrow, because they have a great reputation.  Their is no question about their integrity, because they have proven it to you.

Credit is the exact same thing.  Bad credit is someone with a bad financial reputation, and good credit is someone with a good financial reputation.  The lender looks at your credit score and determines what kind of reputation you have, because he wants to know you’ll be the kind of person with integrity to pay him back.

If you have any questions about credit send me an email generationwisdom@yahoo.com or drop me a comment at the end of this posting.

Your credit reputation is very important!  With bad credit or no credit you’ll be over charged by companies, banks and you may not even qualify for credit.  Here are some reasons you’ll want good credit as an adult: to get a cell phone account, have decent car insurance rates, receive home loans or car loans, get credit cards…the list goes on.  At one financial meeting I went to the speaker said soon employers will judge your ability to do a job you are applying for based on your credit scores.  For all these reasons and more I want to stress the importance of having a good financial reputation. 

Take care of your financial future today by learning what you need to do in order to build a great financial reputation through your credit score.