Category Archives: Credit Cards

Just Landed Your First Job??

Important tips to use from now on….

Congratulations!  You’ve been hired and are now in the workforce earning your own money for a job well done.

The following tips are each very important on their own and can, and should, be continued to be followed all throughout your working years….right up to retirement. And  as a whole is good solid advice which will over the years save you time and money.

Whether you’re paid directly in cash, or a check where you cash it at your bank, or have it direct deposited, the advice is the same.

First and most important……   Pay.  Yourself.  First.

That means, however you are paid, and whatever you are paid, save something, hopefully at least 10%, for yourself…… not to spend, but to put away in a savings account and kept and added to each and every time you get paid.

The next is to save your W2 slips from each year you work, and from each job you work….. if you work one job, save one slip (each year), if you work 2 or 3 jobs, save 2 or 3 slips etc.  Just keep them in a folder or some filing system you may have.  They are proof you worked and contributed to your future Social Security and Medicare taxes.  If they, for some reason, don’t have a record you worked a particular job, you can, using your W2, show proof you did… and raise your Social Security income for that working that job.

If you have a charge card, use it diligently.  That means….. do not purchase anything you can’t pay for when the bill comes due.  The idea is to pay your charges in full and on time each month.  If you don’t, you will quickly, very quickly, fall into the financial debt hole which can and does take years and wasted money paid by you to climb out.  Don’t do that to yourself.

Again, congratulations!

 

FREE…… is a good word.

Don’t add expenses if you can get it free.

Banks….. they now have fees for just about everything. Do. Not. Pay.  Instead…. choose another bank. After all, you are allowing them to ‘use’ your money when you open an account.  And, yes the interest rate these days is pretty close to ‘0’, but every penny helps.  So, if they have fees for ‘minimum balance’, or have limits on withdrawals or ATM transactions. Choose. Another. Bank. There are many banks that have no minimums, no limits on transactions, or any other ‘usage’ fees.

That said, if you overdraw on your account, well, that’s different. You absolutely need to keep your accounting up to date and correct.  Use a check register… at least as a back up. Review your addition and subtraction figures.  Keep your balance up to date and to the penny.

Charge cards…..  Use these only if you are diligent in paying off the entire balance when the bill comes in.  This means you will never pay finance charges on outstanding balances. And pay before the due date. This means there will be no hefty late fees.  Also, choose a ‘no annual fee’ card.

If you use your credit card as noted above you will be ‘using’ the banks’ money for a few weeks each month…… without paying to ‘use’ it.

The idea is to hang on to as much of your money as you possibly can.  It’s doable.

 

The Impact of Paying Only the Minimum

Credit Card Savvy…..

You have a credit card…. do you know, really know… how to use it to your advantage?

The Savvy Rule…… Use your credit card for purchases you know you can completely pay for when the bill comes due. Otherwise,…… do not use it.

Reason???    …… You get the benefit of generating a high Credit Score.  You get the benefit of possibly getting something on sale so you save money there, but unless you pay for the item(s) in full when the bill comes due, you won’t.  You’ll wind up paying finance charges on the portion you don’t pay along with additional finance charges added each month on the unpaid balance.

And, if you’re late in paying, even one day late, you are charged a hefty late fee as well….. so the sale item (or whatever your purchases are) are no longer a bill for just the purchase(s), but rather a bill for the additional fees.

This is now called a financial nightmare!  If you pay the minimum or anything other than the full balance the fees pile up, and continue to pile up so you’re in a financial hole that can take years to climb out of.

And….. your Credit Score will take a nosedive causing headaches when you want to get an apartment, mortgage or a loan…. as they check out your history and if your’e too risky at repaying, then they’ll deny your request.

So…….  Use a credit card wisely……..   Charge —- then pay…..  Pay the full balance when you receive the bill.

If you can’t do that…… then don’t use the credit card!

Outstanding Debt

Paying down and eliminating further debt

Most of us have at least one charge card.  The idea with a charge card is to purchase something when we don’t have the available cash to do so.  This has a small good point….. you can get the sale price, and you don’t have to carry cash around.  But….. the bad point is if you purchase an item(s) and then the bill comes due, but you don’t have the money to pay for the item in full as well on time.

The only way to use a charge card is ….. purchase the needed item, and when the bill comes due, pay it in full, and before the due date.

This means you’re paying only for the item.  You aren’t paying finance charges on the outstanding balance nor are you paying a late fee.  These added charges are not only a waste of money, but over time add up, piling fee upon fee and putting you in debt….. debt that mounts and puts you in a financial hole which can – and has for some – taken them years to get out of. And, for some, with their continued use of the credit card as well as their continued behavior of only paying the minimum and/or paying late, puts them in financial ruin for life.

Do not do this to yourself!

Only use your credit card in an emergency and pay for what you spent in full and on time when the bill comes in. This is the ONLY way to use a credit card.

Doing this will mean that you have less stress, and shows that you are disciplined at living within your means. It will also reflect on your Credit Score.

If you are already in financial debt because of your credit card history, now is the time to shred the card(s).  Work on paying down your outstanding debt…. pay more than the minimum due and do so before the due date.  This will, eventually, pay the card off.  It will also, hopefully, teach you to never put yourself in that position again.

Discipline is the key word here.

 

Thinking of Getting a Credit Card??? ……

Don’t…….. at least not until you read further….

Getting a credit card has responsibilities that go along with it.  So, unless you’re able to take them on, put off getting one until and unless you’re going to adhere to some things which will keep you out of a financial debt nightmare.

This is for your own benefit.

A credit card is a direct link to your Credit Score.  It shows how you handle your expenses and payments of them.  A Credit Score can, in many instances, either get you a car loan, a mortgage, rental apartment, college loan etc….. or not.

There are numerous cards available….. most have ‘rewards’….. perks that keep you spending in order to rack up the miles, or cash back, or whatever else it promotes.

There are also annual fees to some cards….. steer clear of those.

And they all come with rules of their own….. if you don’t adhere to them, what you think you’re getting by using the card can change drastically from what you think.

And they all have very staggering fees …… for not paying the whole balance before the due date there are finance (interest) charges tacked on to your next bill.  If you’re late, even a day late with getting the payment in, there are steep late charges. These charges are a complete waste of money!

So…… Unless you are sure, very sure, you can use the card only if you know you can pay the full bill before the due date, you probably should not open a credit card… yet.

If you do, and pay only a portion, or worse, only the minimum, then be prepared for as much at 27% (and more) interest tacked on the balance you don’t pay.  And each month, it continues to add on, so that eventually, your purchase is only a bit of the bill you’re looking at, and the rest are interest charges, and possibly late fees if you don’t pay on time.

This would be a financial hole you want to definitely avoid.  It’s a nightmare to dig out of.

Do You Know The Cost Of Being In A Wedding Party?

You want to say “yes”, but…..

Your best friend is getting engaged!  You are as excited as they are, and rightfully so.  You are also sure you will be asked to be in the wedding party, but before you agree, know what the cost to you will be….. and….can you afford it?

For the girl:  No matter the size of the wedding itself, there are certain things the maid of honor and bridesmaid(s) are expected to buy, and do.  These days the bride-to-be will usually choose a color for the dresses, then each girl in the party will purchase a dress which is flattering to her, but in the chosen color.  Along with the dress there are shoes, sometimes jewelry, and possibly specific undergarments depending on the style of the dress. Hairdos, manicures, pedicures, even facials or massages are sometimes done as a group, each girl paying their own cost, and, not always, but sometimes, possibly sharing the cost for the bride-to-be.

There is at least one shower, where the girls split the cost for the location, food, decorations, favors for each guest, and a gift for the couple.  There is sometimes a bachelorette party where each girl pays her own way, and shares the cost equally for the bride-to-be.  And, of course, there is the cost of a wedding gift, usually shared equally between the girls.

For the guy:  Usually there is a bachelor party, where the guys in the group pay their own way, and share the cost equally for the groom-to-be.  These parties can go from going out for a couple of drinks, or dinner…or maybe a larger group gathering for a party, or a night or weekend get- away.

For the wedding, a tux is usually worn, and are usually rented, along with the shoes, so everyone will be dressed alike. And, a wedding gift for the couple is usually shared by the guys.

In any case, whether you’re a girl or a guy, be prepared to be asked at least once in your lifetime.  And be prepared in your budget for the cost of accepting. Your budget should guide you to your answer.

If you cannot afford the cost, say so.  Explain how you’d love to, but your not financially able, that you are just as excited for them being a guest. And offer your help with putting up decorations, or if you’re crafty, making the favors.  Even as a guest, there is a shower gift and a wedding gift to be bought by you. So if 2 gifts are what works in your budget, let it be that, and politely decline being in the wedding party.

It isn’t wise to go into debt (or deeper debt) because you can’t say no to your friend.

 

Teens and Credit Cards

Learn to be Credit Card Savvy Before You Sign On

When teens are in their Senior year of high school, along with all the college info coming their way, companies are handing out credit card applications.  Whoa……learn the rules first.

  • Know that when you sign the dotted line, you are held legally responsible for the debt.
  • Know that along with carrying the card in your pocket, there are large fees if you don’t pay up in full and do so on time.
  • Know that there is something called a Credit Score, which will follow you, and if it’s not in the good to excellent range, you can be turned down for a loan (college and car), job, home.
  • Know that when your name is on the card, the bill for any purchases made belongs to you.
  • Know that it’s wise to keep your sales slips, and match them to the charges on the bill when you receive it.  Scrutinize it.  Any discrepancies, call Customer Service on the back of your card.
  • Know that you don’t let anyone else, not even your BFF, use it.
  • Know that if you don’t think you can handle the above, don’t fill out the application.

However, if you’re sure you are mature and responsible enough to handle it, then okay.  A suggestion would be to get no more than a $500. limit.  Remember, don’t purchase what you can’t pay for in full, when the bill comes due.  Pay in full, and make sure it’s received by the company before the due date.  Otherwise, you will have interest fees tacked on to the unpaid balance, as well as a hefty late fee.  Even if it arrives in their afternoon mail, some companies post payment the next day.  Late is late.  Then next month you’ll be paying the interest and late fees….a total waste of money…. as well as purchases made.  Doing this gets you into a financial hole.  It will be tough to dig out.  Along with that your Credit Score takes hits.

Learn early.  Buy only what you know you can pay for when the bill comes in.

Nuts and Bolts….A Financial Guideline

Some wise tips to learn early…. but it’s never too late

  1. Start saving early….. every cent counts.

2. Do not amass credit card debt… what you purchase with a credit card, you pay for in full               and before the due date.

3. Begin a retirement account(s) as soon as you can. Add the maximum allowable.

4. Don’t try to keep up with the crowd.  Their ‘norm’ for spending might be more than you can         handle.  Don’t pretend you have money.

5. Live within your income.  Pay yourself first and save it.  Be disciplined with budgeting.

6. Scrutinize your bills…. know what you’re paying for.

7. Keep a paper check register, and balance it yourself…..to the penny….. continually.

8. Set realistic financial goals, and save consistently to make them happen.

9. When you get a pay raise, save it…. you got along without it before you got it.

10. Keep your life simple.  Your finances will fall into place in that way too.

Reducing or Eliminating Fees

Vigilance in keeping tabs on your accounts

We all have accounts, various bank and credit card, retirement, and they all charge fees.  Some of these can be easily avoided.  If you don’t keep tabs on your accounts, at years end, you will find that you’ve spent a small fortune on…….just fees.  Money that can be put into your savings.

Banks charge fees if you don’t adhere to the accounts’ rules….this is irksome because it’s your money, and they are using it.  But, nevertheless it’s true.  So, be vigilant about checking to make sure you stay within the agreement you signed up for.  That means, keeping at least a minimum balance, no overdrafts, staying within deposit/withdrawal and ATM limits,  If you don’t keep a watchful eye, you are paying them fees to hold your money.  You can find a bank with no fees.

Some credit cards have an annual fee.  Tons do not, choose one of those.  Credit cards are fine if you use them properly…make purchases, pay in full before the due date.  Most cards have reward points, so that’s a bonus for you, but only if they’re useful to you. The fees come in to play when you carry a balance resulting in huge interest charges on the balance carried over until the next bill.  If you only pay the minimum or anything less than the full amount of the bill, interest is added to that remaining balance and carried over again.  Late fees show up if you are even one day late. If they have an ‘afternoon mail delivery’, that delivery is posted the following day.  So it’s late, even though it was physically received on the due date.  Lesson:  Pay in full, before it’s due.

Retirement Accounts are necessary to have for future living.  You can, in some cases, oversee your own accounts, but usually a Financial Adviser has more knowledge and time. And they charge a fee for this service, it is legitimate, and because you want to have a nice nest egg, you need to find the best one.  So in choosing, interview some, find one you trust and feel confident with since they’re handling your future.  Ask if they are a Fiduciary…some are not.  A Fiduciary is one who serves in your best interest.  If they are not, they will usually be receiving a commission to sell you something that may not be the type of account that best serves….you.  So check.

All this is called due diligence.  It’s doing your homework before you decide.

 

Have Your Money Work For You

Ways to have your net worth add up on its’ own

Bank interest is compounded on a daily, monthly, or annual basis.  Daily is best.  As time moves forward, your interest is gaining interest.  Keep adding to the account and it will add up faster.

Make additional payments to your mortgage.  Be sure you make them as ‘Principal Only’ payments.  Make them in any amount and as often as you can.  They will not only reduce the length of the loan, but they will save interest charges as well….if you do this often enough, you can save thousands of dollars over the length of the loan.

Most who have a mortgage have it for 30 years.  From the second payment on, you can pay it off in 27 1/2 years….saving 2 1/2 years, and thousands in interest.  Tell the lender that instead of paying your mortgage monthly, you want to pay it bi-weekly, (1/2 the mortgage amount 2 x a month plus 2 more half payments a year, as the calendar falls,…which totals 26 payments).  It’s just a phone call and they can switch it over.  With a regular 30 year loan, it’s 12 payments per year.  Bi-weekly payments are made every 14 days (52 weeks divided by 2 = 26 payments a year. The 25th and 26th equals an additional full payment…credited totally towards the principal only.  It’s just a matter of setting it up, and it saves thousands in interest costs.  Twice a year, usually May and October, but as the calendar falls, there is the extra 1/2 payment needed, so make sure it’s in your account to cover it.  You should make a habit of checking on available totals.

If you are disciplined with your credit card (paying in full and on time), this, of course, will save rollover interest fees and late fees.  But should you need to make a purchase which is necessary yet a little more costly than usual, check your closing date, and make the purchase a day or two later than that. In that way, you’ll have the entire billing cycle, plus the two or so weeks after that but before that purchase is due to be paid.  It gives you a few weeks extra to put money aside to pay in full when the bill does comes in.

If you pay your car insurance in full when the bill comes due, you can usually save 5% on your comprehensive coverage — a savings of about $40.-50. annually.  With a good driving record, there is a discount, as well as others…. check with your insurance agent to make sure you’re getting all the discounts you deserve.