Tag Archives: money management

Life 101 for the New Millennium: 3 Things You Should Know About Saving

June 6, 2015Advice, Budgeting & MoneyCFP, emergency fund, financial planner, investing, investments, money management, nest egg, retirement, roboadvisors, saving, savings, savings account, tax-deferredKurt Kirton

saving, financial planning, money — Photo by Mark

THE WHY
With layoffs, economic downturns and upswings, and unexpected expenses, I’m sure you’ve already noticed life is an uncertain thing! For that reason—and also other happy ones like saving up for a house or first child—you’ll want to polish up your savings skills and start thinking about a strategy.

It’s always good to have at least one to two months salary in savings in case of layoff or emergency. This can really take the stress off if you run a little short one month and need to take a brief loan from this fund—also there’s 0% interest this way vs. borrowing from a bank, your credit card, or a cash advance establishment.

Another reason to save is to build up a nest egg for retirement. Even starting small as soon as you can is a smart idea since the money will have more years to accumulate interest if you start early. Begin by checking into the 401k plan your employer may offer since it will usually match a percentage of what you put in.

WHO CAN HELP
A financial planner (CFP) can give you advice on how you should save your emergency fund, build up a house down payment, and/or add investments to your retirement strategy—which will earn more interest than simply stuffing money into a savings account. And I don’t mean playing the stock market, although some folks do that.

To find a trusted CFP, ask your social network and your parents. Then go into the meeting with your goals and discretionary income in hand so they can recommend investments that fit your goals and level of risk tolerance. Non “fee only” CFP’s will not charge to work with you and tend your investments since they make a small percentage of the interest generated. Each investment should send you regular statements so you can see how it is performing.

Always tend toward investments that are tax-deferred. This means the money is not taxed on dividend, interest, and capital gains income until you begin to withdraw the funds when you retire. This way your income grows tax deferred.

ROBOADVISORS?
If you’re an “early adopter” of technology, there’s a new field of “roboadvisors.” The thinking here is that if you’re already using technology to find a date or restaurant, why not use it to invest? The idea is that managing money shouldn’t have to be more expensive, exclusive, or time consuming than grabbing some coffee at Starbucks.

These roboadvisers have lower minimums than a big firm like Schwab and, after gathering info from you and drawing on its algorithm, will output custom investment suggestions without any human interaction. Wealthfront, AssetBuilder, Betterment, and SigFig are examples. (Source: Jennifer Barrett, “Know & Tell,” Details, (Nov. 2014): 48.)

So whatever your level of interest or ability to save up for retirement, your first home, etc., it’s always wise to start early thinking about savings, money management, and investment. Reduce all the stress you can, I say!

This post concludes the “Life 101 for the New Millennium” series. I hope it has been helpful and that you pass it along to friends and colleagues. There is additional information you can reference on saving and checking out prospective financial planners in one of my earlier posts.

Don’t miss a thing. Subscribe to receive updates by email.
Looking for a new job? Want to get the one you want faster? Check out my new book, Here Today, Hired Tomorrow.

Life 101 for the New Millennium: Why and How You Should Build A Good Credit History

May 23, 2015Advice, Budgeting & Moneyborrower, budget, budgeting, credit, credit bureaus, credit card, credit history, credit limit, credit score, debt, Equifax, Experian, lenders, loans, money management, payment history, personal finances, rent, TransUnionKurt Kirton

credit history score — Photo by Giovanna Baldini

Although some financial gurus like Dave Ramsey recommend avoiding them altogether, credit cards can help you establish a credit history. You’ll need a good record of credit when it comes time to finance large purchases like a car or home. When I was a college senior, my parents let me get a Discover card. I paid off the debt for every month I had a balance and was never late with payments. Thus, I began my credit history.

Not carrying too much debt, not having too many credit cards, paying your utilities and rent on time, and never being late on credit card payments are some major ways you can build a good credit history. And like I’ve preached before, try to pay off your whole credit card balance each month. Not only will you avoid paying interest on the unpaid balance, but it makes for a good habit of staying within your means.

Your credit score is derived from your credit history (also called a credit report.) It is a numerical representation of the health of your credit at any point in time and also an indicator to prospective lenders of how much of a risk you are as a borrower. Avoid pulling a credit report on yourself too often, and make sure you’re doing so with a reputable online vendor.

The three credit bureaus are Equifax, TransUnion, and Experian and all will have a slightly different score for you. These numbers are fluid and will change over time depending on your spending habits, how you handle your credit, etc. And here’s how to request your credit score from the three bureaus . Here’s how your score is calculated:

35% – Payment history
30% – Amount owed vs. total credit available to you
15% – Length of credit history
10% – New credit
10% – Types of credit used ¹

And here are what the score ranges mean: ²

If you tend to forget payments, create recurrent reminders in your phone or calendar, or set up automatic payments that draft your checking account. Definitely avoid allowing a bill to become so overdue that it’s sent to collections. Again, like with a lease, if you see that for some reason you will not be able to make a full payment, work with the lender on the best course of action instead of letting it go overdue, which can negatively affect your credit score.

Don’t max out your card, spending up near the limit. ³ Just because you have a high limit doesn’t mean you should take advantage of that regularly or with too many purchases of non-necessities.

Making good financial choices isn’t always easy. But being informed, staying on top of your finances, and guarding your credit history will keep you on the path of financial stability and maintain your good reputation as a borrower (not to mention lowering your stress!)

References: ¹Myfico.com ²usleaseoption.com ³regions.com/mygreenguide

Don’t miss a thing. Subscribe to receive updates by email.
Looking for a new job? Want to get the one you want faster? Check out my new book, Here Today, Hired Tomorrow.

Life 101 for the New Millennium: Demolish Your Debt

May 9, 2015Advice, Budgeting & Moneybudget, budgeting, credit, credit card, credit score, debt, debt consolidation, debt reduction, discretionary income, eviction, loan, minimum payment, money management, plan, repossession, student loanKurt Kirton

debt reduction, budgeting, interest — Photo by Erwin Zueger

Some people may not think about recent grads when it comes to debt. After all, how many recent students have a house, luxury vehicle, kids, etc. But those graduates who didn’t have the benefit of scholarships or parents who paid their way through college most likely had no other choice than student loans.

The faster you pay off the debt you owe—be it on a car, student loans, etc.—the better. Unless there’s a prepay penalty on the loan, you’ll save in interest when paying it off early. And student loans and/or credit card debt are a great place to start this practice.

First, make sure you have a budget. This way you can make sure you are covering your needs before your wants each month. Live within your means, spending what you have and saving up for anything that costs more than you have the money for. Then list out all your debts: the creditor, the total, the interest rate, and the minimum monthly payment.

The preparation above will help ensure (or identify if) you have some discretionary income to apply toward debt reduction (always pay against the principal when paying more than the minimum payment). You can also pick up additional work on the side, be it freelance or a part-time job in the hours around your full time job. For example, my friend Jason bartends two nights a week.

Pay off the debt with the highest interest first, then on down the list. Obviously, don’t take out mini loans from your bank, do Cash Advance type loans, or go on shopping sprees with your credit card. You don’t want to add to your debt when the goal is to be as debt-free as possible.

You may want to investigate consolidating all your debt into one lower interest loan. This strategy may help reduce the amount of interest you accumulate monthly, providing you more cash to use toward paying off the balance.*

If you have a month where for some reason you will not be able to make the full payment, contact that creditor. Creditors are used to working with their customers and would rather you be proactive in working out an alternate arrangement than get behind on payments. Further, you may have more options if you get in touch before that month’s deadline rather than waiting until the payment is overdue.

If you ever see you cannot make, for instance, your car payments, contact the lender to discuss options. It’s far better to do this than to allow repossession…or in the case of an apartment, eviction. Eviction has many consequences, and just running from the aftermath of that situation will not absolve them.

Though having your debts paid off may seem like an ideal but distant goal, don’t give up. Chip away at that debt. Getting it off your plate can reduce stress, save you money, establish good money management habits, and help raise your credit score.

*“How to Pay Off Debt: Six Steps to Success,” 2014 Regions Bank article

Don’t miss a thing. Subscribe to receive updates by email.
Looking for a new job? Want to get the one you want faster? Check out my new book, Here Today, Hired Tomorrow.