Easy Change

Even though we hear over and over in the media, we, as Americans are still charging up a storm. According to a recent Federal Reserve survey, the median balance on Credit Cards in 2004 was 2400 dollars. This does not bode well. This means that many people are losing 240 dollars or more annually, just on credit card interest payments. There are some bright sides to the survey though. Only 3% of all debt is Credit Card debt. This means that what is often termed good debt: mortgages and college, are much larger amounts. This is important because mortgages are debts that have an a tangible asset associated with them: real estate. In the event that these debts cannot be repaid, at least there is an asset that is available. Although the increase is somewhat concerning, it is not quite so large when you consider inflation and the fact that over 20% of credit card users pay off their bill each month. This means that many people are using their cards responsibly. The key to keeping our national

Recently, I've discovered that there are even more high-yield savings accounts than I had imagined. However, for me, more important than the exact high-yield account that is used, I feel like these need to be my goals and guidelines with regard to my mid-to-long-term savings: Use it instead of Credit Cards for unexpected expenses but only when necessary. Covering 6 months of expenses is unrealistic for most people including myself. I will try 2-3 months as part of a contingency plan in the event of an accident, health problem, or unexpected Job loss. I know people don't think it will happen to them, but I worked with someone who had been laid off. So you should consider what you would do if you lost your job, if your roof caved in, if your car got wrecked. These are not crazy situations and it is important to be realistic about your plans if something like this happened. I think that cash or some other non-volatile holding is a good protection for at least some of their wealth

Paying off my debt is the first step though. I work hard. I think that most people would say the same thing about themselves. However, in this hustle and bustle of 403Bs, Roth IRAs, defunct pension funds and Medicare worries, we often lose sight of what retirement is all about and why these financial issues are so important. Recently, I had a nice, long vacation. Eleven days to be exact. And during that time I did some relaxing, some chores, and overall just enjoyed myself. This was what I would expect out of my retirement and what I am saving for. But I realized that many people are not in that position in their retirement. They are having to choose between their heart medicine and a decent dinner. This is not meant to scare anyone. However, the simple fact is that in our retirement we will likely be earning less than we do now. The worst shock of retirement for many people is realizing that the day they retire they will only have about 1/3 or 1/2 of the monthly income that they used

Most people follow the standard advice of financial planners and other advisors when deciding what debt to tackle first. This advice is usually fairly basic: pay off the highest interest debt first (usually credit cards) and continue to take that same monthly payment and apply to the next debt etc down the line until all the debt is paid off. But recently I considered this I am getting ready to start paying down principal on my student loans and last credit card. I discovered that this advice is not true for everyone, especially not in the case of a windfall. The reason that this is not true is because of the doom that compounding interest can bring. Here's a simple example to show you why time, not just your interest rate, should be a big factor in deciding your lump-sum payoff targets. Scenario There are two loans: one at 17.5% (a credit card with a 2000 balance) and a personal loan at 7% that has a 10000 balance. Each debt has a normal payment - the credit card is 125/month and

There is no avoiding it, the debt-income equation is the key to everyone's financial future. It is a key factor for everyone's fico score. If your monthly debt exceeds your monthly income, you are in trouble. It is that simple. And many people are in the same boat. The average credit card debt in the United States However, if you are in debt, how can you hope to repay it? Often times, interest rates for credit cards are the culprit. If you have a good credit score (check it at freecreditreport.com ), you may be able to do a balance transfer or negotiate with your current lender to reduce your rate. But what do you do when there is no way to get the rate reduced? Here are some options: 1. If you have an emergency fund , consider using that savings (either some or all) to pay off your credit card debt. It is likely that in this case you can mitigate your risk by paying it off in chunks over time to save money in interest and make sure you can handle any new expenses with existin

Recently there was an article on InvestorGeeks about whether or not you should buy or rent. I am a proponent (for the most part for many people) that renting is the way to go. If you a renter and you have decided to embark on that quest to buy a home or condo, there are a few things that I would advise you to do and consider during the process that might save you tons of time and sanity (and that I wish I knew before I started!). Before the Purchase: 1. Consider the type of Real Estate broker you are getting. If it is someone you know and trust, that is great. However, be aware that there are two types of brokers - a buyer's broker and a seller's broker. Even if you walk into a real estate office and get an agent on your own, they might not be acting completely on just your behalf. It is possible to have two 'sellers' agents that is - each one advocates for the seller, even though one works with you to close the deal. Consider this before you commit to an agent. 2. Take

One of the first things that I learned about personal finance from my grandfather is to have an emergency fund of six months worth of expenses. This still seems absurd to me in this day and age and given my income to debt ratio. Even though I think an emergency fund cannot be underestimated, according to a Federal Reserve survey, 8% less people even have savings accounts since 2001. The savings mentality is drifting away. Instead large percentages of people's net worth is in retirement accounts. This is a key mistake for most people. They confuse 401k loans and home equity lines of credit with emergency funds. In my opinion, neither 401ks or home equity should be touched until you are approaching retirement. Instead, a separate account (either savings or money market) should be set up and used for emergencies. That is the perfect self-insurance plan. It is for just what it sounds like - emergencies. Working at my first job out of college was great, but there were lay offs. Luckily

Double Your Money Fast When I was in middle school and high school, I would talk to my grandfather about investing. He would talk to me and teach me neat tricks like the Rule of 72 . Being interested in math and money, I was quickly interested. However, I found that the most difficult issue for me was that investing was so expensive. Even through college I was never able to get enough cash together for the minimum that was required for an initial investment in a mutual fund. My grandfather would simply say that the solution would be to save the money in a savings account until I had enough. This was difficult and it was not until I was able to start working at a job after college and had a 401k that I was able to do this, mostly because the money was gone before I even noticed it. This brings me to the main idea here. Although many of the nicer funds that I would like to get into today have high initial minimum investments like Vanguard , I don't feel pressured or upset by that any

I've had this realization recently. For young people (and I'm defining this broadly), working is highly underrated. We are conditioned to working a 40 hour week or less if at all possible. This however is very limiting. Many of us have a commute of 30 minutes or less to and from work and sleep roughly 8 hours per day. All in all, this adds up to 61 hours (including sleeping on weekends). However, each week has 168 hours in it. This means that there are close to 100 hours in the average week that are being wasted. Regardless of how much money or skill you have, one asset you definitely have is your time, and you can invest it! For many people, these hours are spent doing some fun things and some chores. However, regardless of what you are doing, chances are you might be able to work more and build wealth by doing it. Young people, especially those in college, training programs, or school have copious amounts of this free time. Any activity that could be done with any portion of