S1E6
· 30:57
Hey, y'all. Welcome to another episode. This is episode 6 of the Working Mamas podcast. I am your host, Nikki Winston, and, I'm just feeling a little extra popping color ish today because of y'all. I mean, all the love, all the comments on LinkedIn, the feedback on Instagram and Twitter, y'all have been hearting my post and clapping my post, and everywhere that I blasted my podcast has been so well received.
Nikki Winston, CPA:So I appreciate y'all for that because I sat on this content for a long time. And for whatever reason, I kept talking myself out of doing it, out of recording. Some of these episodes I wrote months, even years ago. Some of them I wrote while I was still studying for the CPA exams in the middle of the night when I was on the study break. So I get excited about this kind of stuff, and I get excited to share it with y'all because sometimes writing this stuff was what kept me engaged and kept me studying when I was going through probably a very challenging time as far as trying to pass these exams.
Nikki Winston, CPA:I mean, it was just such an emotional roller coaster. So this is cathartic for me in more ways than one. Thank you all. Keep listening. Keep sharing.
Nikki Winston, CPA:I love that y'all are loving this, so you know what that means. I'm just gonna record way more episodes. So if you have a topic that you want me to talk about, whether it's accounting and finance for small businesses, for freelancers or entrepreneurs, if you have a career question, whether you're a new graduate and you're trying to figure out how to make your presence known at your new job, if you're ready to go for that new promotion, really just whatever you wanna talk about in the accounting, finance, CPA exam questions. I feel like I need to do another CPA exam q and a, just based on some conversations I've had with students this week, but that's a that's another topic. But just know that there's more to come.
Nikki Winston, CPA:I I I'm glad I'm really glad that y'all are digging this, so thank you for the love. And, I mean, before I jump into today's topic, I just wanna say that I tried to put this show in a podcast box, but it just wouldn't fit. I I read so many books and did research about editing and how to do it the right way and which microphone was the best and trying to figure out what my core conversation would be about. Would it be just accounting and CPA stuff? No.
Nikki Winston, CPA:Because that shit is dry. If if you're not somebody like me that loves it, it's dry. It's confusing. It's complex, and that's why y'all hire us for our expertise. So would it just be the life of a busy working mom?
Nikki Winston, CPA:No. Because I know that a lot of you are entrepreneurs or working in corporate America, and you may not have children yet. So that really didn't work. Would it just be small business tips, personal finance, and career combos? And then I said, you know what?
Nikki Winston, CPA:It it's gonna be all that. It's gonna be all of that. I could not figure out a way to take all the things I love, accounting, motherhood, entrepreneurship, career advice, and all these things I know about, I just I couldn't fit it in a box, but this is what I'm doing. I want everybody to take something away from the Working Mamas podcast, whether you're a new professional, whether you're a busy mom and you're trying to figure out this work life balance bullshit that doesn't even exist anyway, if you desire to be a CPA, if you're an entrepreneur or freelancer, this is definitely the podcast for you to come and get some knowledge and and go back into your your life and your business and and make some things pop. So that's that's just everything you're gonna get.
Nikki Winston, CPA:I asked y'all, what do y'all want me to talk about? Because that's really where this came from. People who push me and motivated me to do this. So I'm excited to do this. The episode today, I'm doing for an entrepreneur who asked me to do it.
Nikki Winston, CPA:And that's a perfect segue because today, we're talking about credit. And, initially, I called this episode financial education for millennials because y'all know how this world do. I'm I'm a millennial too. Yeah. I know they like to throw the book at us just because we see, think, and do things differently than than the norm or than the tradition.
Nikki Winston, CPA:But the more I got into it, I felt like this is applicable to more than just millennials. Mostly to millennials, that's that's my core audience for the most point, but for the most part, but, definitely some important and relevant information for anybody regardless of your age. So I wanna talk about good credit, bad credit, what it is, and what it ain't. And I think that's what people get misconstrued the most is is really trying to understand what credit really is. So like I said, it's not just a millennial issue, but I was just reading up on some stuff, and I was listening to NPR, and I heard so many statistics about over half of millennials living paycheck to paycheck, Like, 62% of us are living paycheck to paycheck, and only about a third of us feel financially secure.
Nikki Winston, CPA:And then I saw another article talking about all of the financial support, or I think it was, like, the top ten things that millennials get financial support from their parents on. And this was stuff like student loans. I mean, toiletries. Come on. Car insurance, your rent, your mortgage, your cell phone bill.
Nikki Winston, CPA:Cell phone bill was the number one thing, and I was just flabbergasted. Like, my parents have not paid my cell phone bill since I was, like, 14. Like, who who mom and daddy still paying their cell phone? Who is paying y'all mortgage payments? I mean, come on.
Nikki Winston, CPA:I just I just could not digest that at all. And for clarity, the report defined the millennials for as anybody from ages 23 to 38. So I know sometimes that age group is a question and gets debated too, so I'm just putting that out there for clarity. But I wanna put some context around this because we're often compared to baby boomers. A lot of this is in comparison to, this is very much an apples to oranges comparison, comparing a a boomer to a millennial.
Nikki Winston, CPA:We have 2 different sets of problems, 2 different types of lifestyles. We, as millennials, are dealing with more consumer debt than ever. Student loans make up a large part of that, so we we start out in jobs that may not be the job that we intended or the job that we went to school for, you know, less income, fewer pay raises, just so many things to to factor in. We like to pay for our time and pay for experiences that baby boomers don't really trip about. I mean, they might take a nice vacation once a year.
Nikki Winston, CPA:We like to go every month, every week if we can. So just a lot of different factors to consider. We eat out more. I mean, I'm a person that loves to get in the kitchen, but, you know, I love to throw down, but sometimes I love to go to a nice restaurant, and part of it is because of where I live. I live north of north of Atlanta, and this area specifically has a lot of local amenities.
Nikki Winston, CPA:I need to find my water. I do not have my water today, y'all. Lot of amenities, rising cost of living, these lower salaries, we are really out here. Some of these millennials, some of us are really out here struggling, y'all, but that does not have to be you. This episode today, I really wanna dive into some of those things that are hindering our credit, our financial livelihood, and then give y'all a couple tips for y'all to put in place and improve your financial situation.
Nikki Winston, CPA:So give me a second. Let me get my water. Yeah. I know I don't edit my podcast because I don't live an edited life. I gotta get my lemon water.
Nikki Winston, CPA:I gotta tell my son to go find him something to eat real quick because he think he's supposed to eat filet mignon every day. I made it one day for them, and now they want that shit, like, every day. And I'm like, no, sir. Get you some lunch meat and some crackers. So y'all hold on.
Nikki Winston, CPA:Let me get my water real quick. Okay. That is much better. So where are we at? Okay.
Nikki Winston, CPA:We talking about credit. I feel like I need to do a master class on credit because your credit impacts so many areas of your life, and not having a good credit score can keep you away from a lot of things you want, that house, that car, that job, insurance, opportunities. Hell, it can keep you out of rooms that you wanna be in. Why is that? Because credit is a tool.
Nikki Winston, CPA:It gives you access to people, to places, to things you may not be able to get if you have bad credit. So what credit is not? Credit is not extra money, an emergency fund, or any excuse to buy those shoes that are on sale. We have all done it. I know I have.
Nikki Winston, CPA:And I think that's where a lot of us go wrong and that we don't really understand what credit is. Some people have this misconception that they get a credit card in the mail, and they can go ball out, or some people don't even use credit at all because they're afraid of it, or they feel like it's a bad thing. When it's used wisely, it can really be a game changer, So now let's define good versus bad credit. And, without going too deep on it, I just look at it like this. These days, if you are not in the 700 club, you are not getting the best rates on debt.
Nikki Winston, CPA:That's on a mortgage, a car loan, a credit card, business loans since a lot of y'all are entrepreneurs. There's always there's always some extra questions your lender is gonna ask if you're not at that 700 plus. And, honestly, it's not hard to get there. I just find that a lot of us are in recovery mode where we're trying to rebuild after some credit catastrophe. So I'm just I keep thinking about this master class.
Nikki Winston, CPA:Like, I don't want y'all to just sit and listen to me. I want y'all to do some work. Like, download your bank statements. Get copies of your credit reports. Get a red pen and highlighter, and just start writing and marking up some things.
Nikki Winston, CPA:And there's so much misinformation circulating around, and, I've seen and heard some things that are not accurate, and I just want y'all to win in this credit game. So my son is back. What's up, babe? Can you call my son Give me a second. Let me finish recording this episode.
Nikki Winston, CPA:Jesus y'all the life of a busy working mama So like I was saying, I want y'all to really win and really be informed about the right things and the wrong things to do when it comes to managing your credit and being responsible with it. So I'm gonna tell y'all some things. I think I am gonna do this master class. I'm a start working on it tonight. Just really deep dive into this topic because this is where we are just so disadvantaged as African Americans, as women.
Nikki Winston, CPA:We just get so caught up in in being misinformed and maybe adapting some some financial habits that we picked up in our childhood that were not necessarily the best. So first and foremost, most important thing is to pay your bills on time. And there's really there's no explanation. There's no deep dive needed there. This is the easiest way to at least maintain the score that you have so that it doesn't drop any further.
Nikki Winston, CPA:Just pay your bills on time. Get in the habit of doing that. Next, pay your bills more. This helps to build your credit score, and it even helps with your cash flow and keeping money in your pocket. So I like to talk in examples to help y'all make sense of this.
Nikki Winston, CPA:So let's say your cell phone bill is $100 a month. You pay $100 on the 5th of every month. Instead of paying that $100 at one time, pay $50 every 2 weeks. That's how most people get paid anyway get paid every 2 weeks. But this is especially true with your car payment or your mortgage payment.
Nikki Winston, CPA:Any debt that you have where there's interest involved because the more often you pay it, the less interest you will pay. So another example. Let's say you're a homeowner. You have a mortgage payment that's $1,000. If you pay $1,000 on the first of every month in in a year, which is 12 months, you've paid $12,000 a year.
Nikki Winston, CPA:Or another way to look at that is there are 52 weeks in the year. So every 52 weeks, you you've paid $12,000 on this mortgage. Now let's say you take this same $1,000 mortgage, and you pay $500 every time you get paid, if you get paid every 2 weeks. Right? So in a year, in 12 months time, you will have paid $13,000 all because you paid your bills more.
Nikki Winston, CPA:So let's break this down because I don't want y'all to get confused. I don't want y'all to say, what the hell is she talking about? It's just basic math. A $1,000 times 12 months, which is equivalent to a year, is $12,000. So if you pay that that bill on the 1st of every month, you will pay $12,000 in the year.
Nikki Winston, CPA:Now there's 52 weeks in a year. If you get paid every 2 weeks, that means you get paid 26 times a year. So I'm a pull out my my calculator because I put this post on Instagram. Like, accountants can do some of the most complex math in our heads, and we will break out the calculator for the simplest thing. So 26 pay periods in a year, if you get paid every 2 weeks, and you pay half of your payment every 2 weeks.
Nikki Winston, CPA:26 times $500, which is half of the $1,000 mortgage payment, is $13,000. So right there, you have paid a extra $1,000 towards your mortgage just by recalibrating your cash flow, just by making your money work for you. And it might not sound like a lot, but $1,000 a year for 15 years or 30 years on a mortgage, that's over $30,000 that you have saved when you factor in compound interest. So your principal balance will decrease a lot faster. Same methodology on a car with a car.
Nikki Winston, CPA:If you have a car payment, that's $300. You pay $300 a month for 12 months. You pay $36100. You get paid every 2 weeks, and instead, you pay a $150. I'm still on my calculator.
Nikki Winston, CPA:A $150 every 2 weeks for 26 weeks. That's $39100. So you have basically just made a extra car payment. So this paying your bills more helps to lower your overall balances, which in turn helps to lower your debt to equity ratio, and your score can go up just from having a lower debt to equity ratio. Now the other thing I wanna say about this is if you do choose to switch from monthly payments to biweekly payments, you have to kind of ramp it up in the beginning so that you were always ahead of the game, and you don't get hit with the late fees.
Nikki Winston, CPA:So let me go back to the mortgage situation. Let's say that this is June. So let's start with July. July 1st, your $1,000 mortgage payment is due. If you wanna do this, I would advise you to go ahead and pay your $1,000 full mortgage payment on July 1st.
Nikki Winston, CPA:Okay? When you get paid on July 15th, start working on August. Pay $500 towards your August payment, and then when you get paid on the 31st July, pay another $500 towards your mortgage payment. That way, you always ahead of the game. You don't have to worry about getting hit with any late fees or negative credit reporting or anything like that.
Nikki Winston, CPA:So you're kind of in a prepay status all the time, but that goes back to the first, the most important point is paying your bills on time. If you pay it in advance, you don't have to worry about falling behind. And, again, it might look better for you in your bank account if you pay $500 in one pay period and $500 in another period instead of paying $1,000 at the 1st of the month when you probably got gas, electric, water, cell phone, groceries, gas, kid expenses, all this other stuff that's due. So like I said, I want y'all to win out here in this credit game and and really get your money together. So lastly, this is the one that gets debated a lot, and it's about managing your credit card balances.
Nikki Winston, CPA:And you might have heard people say to pay off your credit card balance in full each month. But me? I advise that you don't do that for two reasons. Now stick with me on this. Now I like to talk in examples like I said.
Nikki Winston, CPA:Let's go back to this $1,000. Let's say you have a credit card that has a a $1,000 limit, and you're one of those people that you like to run up your card then pay it off at the end of the month. You'd be like, you know what? I'm good because I pay it off every month. So let's say over the next 2 weeks, you charge $980 on this card.
Nikki Winston, CPA:Right? So another week goes back. So now we're in the 3rd week, and your statement you get your statement, and it shows that you owe $980.80. So when your credit card company sends you that statement, they're also telling the credit bureaus that you owe $980. 980 divided by a1000 is 98%.
Nikki Winston, CPA:That means that your credit utilization, something that a factor in your credit score that's, what, 35% or more, Your credit utilization has gone from 0 to 98% in 1 month. And utilization is just the balance on your card compared to the total available credit limit that you have. So to maximize your credit score, a lot of the credit agencies suggest that you use 30% or less of your credit limit. So in the case of a $1,000 card, they suggest you should never charge more than $300. That's 30% of the 1,000.
Nikki Winston, CPA:So y'all know we gotta be twice as good. Y'all know this. So I tell people to never use more than 10% of your available credit limit. So with this card, never charge more than a $100 because, actually, the agency say that to maximize your credit score, you should be using 9% or less of your total available credit. If you desire to get into this, excellent credit score club, those people who have a 760 score or better, their average utilization is, last time I looked at it, 6 or 7%, which means they're never spending more than $70 on a credit card that has a $1,000 limit.
Nikki Winston, CPA:That's filling up your gas tank, a nice dinner, something like that. That's all. Because like I said before, credit is a tool. It's not extra money. It's not a pay raise at work.
Nikki Winston, CPA:You get evaluated on how well you use this tool, and that determines whether or not you get more. That determines how much house you can buy. That determines can you go on the lot and pick out the car you want, or do you just have to settle for the hoopty they gonna drive around from the back and charge you an arm and a leg and interest for it? It determines whether or not you'll get a job. I work in accounting, dealing with 1,000,000, 1,000,000,000 of dollars accessing confidential information, so credit checks are necessary in the accounting and finance space.
Nikki Winston, CPA:And, I mean, it's just it's important to know these things and to be aware of it because, I mean, we just get so misinformed, and we don't really understand how to use it. We're going off of what we heard somebody say, what we saw somebody do, and we're trying to apply that to our own personal credit situation when that might not be applicable to you or that's not gonna be beneficial to you in in trying to raise your credit. And don't get confused because credit is is is somebody else's money. That's why you pay interest on credit cards. Interest is the cost of using somebody else's money, and that's just that on there.
Nikki Winston, CPA:I'm laughing because I've discovered light skinned Keisha, and she says that, and it is the funniest thing ever to me. I watched her and, her guy. They have a video series where they talk about their relationship, and they go behind the scenes on their shows and stuff, and they just seem so cool. They are definitely funny. So that just that just kinda cracked me up, but off the tangent, back on credit.
Nikki Winston, CPA:So the second reason I say not to pay off your credit card balances every month is because if you if you pay your balance down and you have a zero balance, some credit card companies might not even report that to the credit bureau. And if they do, they might do so on a quarterly basis. So if you're in underwriting for a house or you're trying to get your score up real quick, like, in the next 30 days or something like that, if it's 0, it might not update for 3 months or more. And you gotta understand, you have to look at this from both sides. Your credit card company has to pay the credit bureaus to report your information.
Nikki Winston, CPA:So they don't really have an incentive to pay money to report a zero balance. They might say, well, her balance was $800, and, yeah, she paid it off, but we're not paying to report that in June. We're gonna wait till September and and report it once a quarter instead of once once a month. They'd rather wait as long as they can because that's a cost savings for them. And that's also why just something else to tell y'all real quick that I just thought of.
Nikki Winston, CPA:If you have an account, that maybe only reports to 1 credit bureau, usually, when that happens, they only report to TransUnion. TransUnion must be the cheapest one. But if you have an account that only reports to 1 credit, bureau, for example, they might choose to do that because it costs too much money to report to all 3. So I tell people, as petty as this may sound, but it works. Whatever your balance is, let's say your balance is $200.
Nikki Winston, CPA:Pay a $190. Pay your whole balance except, like, $10. That way, your creditor has to report your credit balance even if it's $10, but that's also a great utilization. Even if you have a credit card that only has a $100 limit, if you got a $10 balance, that's only 10% utilization, which is where I told y'all y'all should be anyway. So you gotta really understand these things and look at this from both sides of the coin.
Nikki Winston, CPA:I know that we all want our scores to go up. We're trying to get collections and stuff removed and going through these credit repair agencies. You really don't need to go through a credit repair agency. And, you know, don't at me. Don't say, but will I do credit repair?
Nikki Winston, CPA:And you this, this, and this. Listen. I am not going to pay somebody and give them my personal information for them to fix my credit, and it's not even guaranteed that it's gonna work. So a lot of this is just financial literacy, not knowing. And, you know, I don't want y'all to be misinformed.
Nikki Winston, CPA:I don't want you to hand off your personal financial information to somebody you don't even know, paying them money to fix things on your credit that they probably can't even fix. And this is something that you can pretty much do on your own. As long as you have the right information, as long as you make the right calls to the right people, this is something that you should be doing on your own, especially if you're a business owner or if you're a parent because you're gonna have to teach this to your kids. You don't want to have this you've built up this stellar credit history, and you have nothing to tell your kids. So when they get to be teenagers and young adults and they start messing up money and they don't know, what are they gonna do?
Nikki Winston, CPA:They're gonna have to repeat the cycle and go through being in the fours and the 5 100s with the credit score and having to go through this baptism by fire thing and rebuild and deal with overdraft fees and frivolous spending and living for the moment and buying things that don't generate a return. I mean, that's what we do in our twenties, but if I can do anything to prevent my kids from making all the financial fuck ups I made, I'm definitely gonna do that. So, I just wanted to put this out there. I hope that this was helpful for y'all. I'm glad to answer any questions you might have about credit.
Nikki Winston, CPA:I really am sitting here thinking about creating a master class for this, where we where we're pulling some bank statements and we're looking at credit reports and looking at the things that need to be disputed because you can literally do this on your own. And when you think about all these cases of identity theft and all of these things that are going on where people's financial lives are ruined, it's because somebody has obtained your personal information, your Social Security number, your birthday, your address. And what you don't wanna do is put yourself in a situation where you're basically opening the door and inviting somebody to steal your personal information. So this is not a knock against anybody who does credit repair. If you do it and you do it well and you're successful, kudos to you.
Nikki Winston, CPA:I'm never gonna knock anybody's hustle. But as those of you who are struggling to improve your credit, rebuild your credit, or whatever, you do not have to outsource your personal information to somebody who you might not even know. So, that's it for this episode. I gotta go chop up some celery for my son and do some other stuff. We we went to boot camp this morning, me and him.
Nikki Winston, CPA:So he probably wants some celery juice because I've been making celery juice for them. But let me go be a mom real quick because, it's a lot. My my kids, I thought as they got older, it would be easier, but it seemed like the older they get, the more stuff that they need, the more stuff that they want, and the more money they cost me. So, thank you all for tuning in. Again, hit me on Instagram, Twitter, medium at nickwinston, n I k k w I n s t o n.
Nikki Winston, CPA:On Instagram and Twitter the most. Shoot me an email, hello at nickwinston.com. Glad to chat with you, answer any questions you have about this episode, about upcoming episodes and topics that you want me to talk about. And, of course, share this with your friends. Tag me as you're listening to it.
Nikki Winston, CPA:I would love to know what you think about it. And, I will talk to you out soon. Bye.
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