5 Big Mistakes People Make With Credit Cards

Have Your First Credit Card? Watch Out For These!

credit-mistakes-to-avoid-at-all-costs

This is something I’ve wanted to write about for a while. Learning to budget & save money is huge for people coming out of college, and people seem to understand that. However, they don’t seem to understand how to use a credit card. There’s more to it than just swiping it!

I’ve heard so many misconceptions about how credit works. If you are new to this, read my article on credit and come back! Click HERE.

Someone once told me they thought credit card companies would like them more if they didn’t pay their bills. They assumed their credit would go up because their credit card issuer would be happy to receive more interest money. My head popped off my body. It took a while to put it back on.

Now that’s an extreme, but there are plenty of pitfalls when it comes to using a credit card. Here are the top five.

(1) Only Making The Minimum Payment

You making the minimum payment is a credit issuers dream come true. The longer you delay paying off a balance, the more it accumulates and the more interest they can make off you. The interest rate on credit cards is extremely high. No matter what card you go with. An example of how much more you can pay in interest comes from CreditCards.com.

You have a $5,000 balance on a card with a 14 percent APR, and your card issuer’s minimum payment formula calls for you pay 1 percent of the principal plus interest charges monthly. If you pay only the minimum, you’ll end up paying another $5,000 in interest and take nearly 18 years to pay off the balance.

That is insane. Never make a minimum payment unless you absolutely have no other option. And if you do, stop charging things to your credit card immediately and come up with a plan to pay off your debts.

How To Avoid This: Only use your credit cards to pay for things you could afford in cash today. Someone told me this once and it changed the way I saw credit cards. Credit cards are useful for building up your credit, but should not be used to buy things you otherwise couldn’t afford. Then when it comes time to pay, you’ve got the money.

(2) Not Reading Your Statement

It’s important to make sure you can account for all the charges on your card. We unfortunately live in an age where hackers are able to get ahold of peoples information too easily. Somehow, someway, someone may have gotten your credit card number. This has happened to me a couple of times. I once got a $500 charge from the State Of Oregon DMV. Pretty weird.

Now a charge like that is easy to notice, but a lot of hackers don’t do this. Many will make small charges of $10 or less. They do this to make sure it is a working card number and see if they can get away with it. If it works the next time they charge a small amount, maybe the owner of the card is asleep at the wheel. Then they really go crazy.

Always read your statement (most are online now), just to be sure all the charges you see are yours. Many card companies will refuse to help you dispute a claim if you do not notify them of the error in a timely manner. If you let them know as soon as possible, they typically refund the charge and send their claims department after the party who made the charge.

How To Avoid This: Easy, always check your charges. I’ve heard stories from friends who let charges go unnoticed and it ends up costing them. Plus keeping on top of your charges is just good practice to understand how much you’re spending.

(3) Buying Things You Don’t Need

People seem to take credit cards as a blank check to buy whatever they want. Splurge on a night drinking in PB, buying a ton of new clothes, you name it. I can only reason people do this because using a credit card defers your personal payment and may feel to some like they’re not spending money. People also just buy impulsively. You have to remember that credit cards are micro loans. Every charge you put on there, you’re asking a lender to loan you the money to buy whatever it is you’re buying. You’re gunna have to pay them back. Don’t let it get out from under you to the point where you can’t pay them back.

How To Avoid This: Avoid impulse buying. If it’s a material item you want to buy, the rule is to wait 48 hours. If you still really want it, then get it. But not before figuring out how you’ll pay for it when the credit bill comes. 48 hours allows you to reconsider your need for the item. If you have issues putting dinner/drinks charges on your credit card, try switching to using a debit card or cash to pay for these expenses. Then when you run out, you’re out. Might teach you to rein in those expenses as well.

(4) Signing Up For A Credit Card For The Wrong Reasons

This is a huge one. Someone recently told me they opened up a credit card because the lender was offering them a $50 credit towards their first months bill to sign up. That’s crazy. You wouldn’t rush out to buy a new car just because the first months payment was free. It’s a gimmick they want you to fall for.

Lenders offer tons of different promotions and gear them to naïve college students because we fall for them more than anyone. Federal Regulations have reigned in the promotions they can offer, but it’s still the wild west out there. Look no further than the Wells Fargo scandal. At the end of the day, they want your interest money. Chances are if you fell for one of their sign up gimmicks, you’re more likely to not pay in full, pay late, or not pay at all. Then they get to jack up the interest charges.

How To Avoid This: ONLY sign up for a credit card because you need one. Shop around for the best cash back offers, rates, and balance limits to find the card right for you. But don’t do it just to get $50 or receive a t-shirt.

(5) Not Reading The Fine Print

Don’t skip doing this like you do with reading the User Agreement every time Apple puts out a new iOS update. That small text is where you’ll discover when the 0% or very low-interest rate expires. It’s also how you can find out about any balance transfer fees, as well as any offer limitations like your cash back. Many people skip doing this and don’t understand what they’re getting into. Although a cards introductory rate or offers may seem great today (like getting $50), will it be great in 6 months or a year when the intro rate expires?

How To Avoid This: It’s common sense. Just take the time to read through everything before you sign it. It’s worth it.


If you knew about all of these and actively avoid making these mistakes, you’re already well on your way. If this helped you out at all, leave a comment below to let me know what you think!

Sorry I missed last week guys! I was traveling last week and got caught up in some exams when I got back into town. I’ll work to prepare articles in advance on weeks I can’t write.

As always, thanks for reading and see you next week!

-Matt Dalton

10 YoungMoney Shopping Hacks

Did You Know About All These?shopping

Halloween weekend is upon us and almost everyone is looking to unwind after midterms. In the spirit of this, I’ve decided to change things up this week and write about a few shopping hacks I know of that many people aren’t aware of! Whether you’re in the market for a last-minute costume, cheap booze, or getting a price match, I’ve got 10 YoungMoney tips that might save you some cash.

1) You Can Buy Alcohol At Costco Without A Membership

A lot of people aren’t aware of this and it isn’t something Costco advertises. Many states have a law that requires you be able to buy alcohol from warehouse clubs like Costco without a membership. I don’t know why it’s a law, but thankfully, California is one of the states that has it. To do this (besides be 21), all you have to do is let the greeter at the entrance of Costco know you’re there to only buy alcohol. They will give you a paper slip that you must present to the cashier at checkout. Note that you will not be permitted to buy anything else. I have personally witnessed people do this (including my friends), multiple times. If you don’t believe me, Click here.

2) Kirkland Alcohol Vs. Name Brand

Costco has better alcohol deals than just about anywhere. Especially if you purchase one of their Kirkland brand liqueurs. A well-known rumor/conspiracy theory you may have heard is that Costco’s Kirkland brand Vodka (French One) is actually Grey Goose Vodka. Although Costco or Grey Goose will not comment on this, they have never denied it. Actually, Costco doesn’t bottle any of its own Kirkland alcohol. They’re not a brewing company. They instead pay distributors to bottle it for them in a Kirkland bottle. Just Google “Costco Vodka Grey Goose” and you’ll get pages of articles. Many of the Kirkland brands are rumored to actually be very familiar name brands you know.

In the case of the Vodka, a bottle of 1.75L Grey Goose at a local Costco in San Diego sells for between $35-40. The Kirkland brand sells for $19.99 for the French Version and $13.99 for the American Version (rumored to be Tito’s Vodka). So don’t shy away from Kirkland!

3) Getting Free Shipping On Your Halloween Costume (Or Anything)

Let’s say you’ve waited until tonight to decide what to order for Sigma Kappa Delta Omega Gemini Catfish Superman’s amazing annual Halloween mega party this weekend. Even your Amazon Prime won’t get it here in time! Don’t worry, you can almost always get free 1-day shipping from big retailers. Big retailers want to please customers. Especially online shoppers who now make up a majority of their businesses. If you need something in a hurry, don’t bother paying the expensive shipping fees. Quickly hit the customer chat window and ask for free shipping. It will take you 2 minutes, and the worst they could say is no. But often times, they’ll say yes. Especially if you come up with a good excuse like “I need it for a last-minute gift”, or “It’s a clothing item I need for an event tomorrow night”.

This has worked for me SO many times. I’ve gotten free shipping (sometimes up to a $30 value) from Amazon, Macy’s, Walmart, Target, Best Buy, Zappos, any many others. Amazon especially is extremely accommodating to these requests. Try for yourself!

4) Walmart Will Price Match Amazon In Stores

Amazon is really starting to scare Walmart. So much so that Walmart has invested big money into improving its online retail experience. Including starting its own 2-day shipping membership program and giving away 30-day free trials. Walmart has also begun to price match Amazon which it did not use to do. Find something on Amazon that is cheaper than what Walmart is selling it for? Just pull it up on your phone and show the cashier. I’ve personally done this a couple of times and it’s saved me $20 on a TV stand and $7 on a memory card. When you’re living the YoungMoney life, it all matters. Take a second and price check Amazon to see if you can save yourself a few bucks. I haven’t tried this at Target yet, but I wouldn’t be surprised if they do the same.

5) Abandon Your Online Cart

Many online retailers will email you a discount offer if you put items in your shopping cart and just leave the website. You might have to wait a few days, although some sites follow-up within minutes! Retailers use data like your shopping history and where you live to help determine what kind of offer you’ll get, or if you’ll get one at all. They’ve figured out that customers who get that close to placing an order can sometimes be coaxed into completing the transaction with a little extra incentive like a 15% off code. BONUS: always check sites like RetailMeNot.com for coupon codes before you press “Place Order”. Again, this takes seconds and you could end up finding a code online that would save you 10-20%.

6) Grocery Store Apps

If you regularly shop at a grocery store chain like Vons or Ralph’s, you definitely need to sign up for a club card. It’s free and can save you tons. Most people know that. But, did you know many grocery stores now have apps that can save you more money? Vons (and parent store Safeway) have an app that gives additional coupons on top of your club discounts. The best part is it’s super easy to use. The app will track the regular purchases on your club card and recommend coupons to you. Especially if you regularly buy an item each week (like Oreos) and then all of a sudden stop buying Oreos. They might send you a coupon for half of Oreos. They also will give percentage or dollar discounts to your purchase. Special offers pop up every so often that give you $5-10 or 10% off your entire purchase that day. Pretty nice if you regularly do your shopping there.

7) Shop For Items On Specific Days

Many retailers like Target mark down items on specific days of the week. For example, Target has these discounts each week:

Monday – Electronics, Office Supplies

Tuesday – Women’s Clothing, Domestic Items

Wednesday – Men’s Clothing, Toys

Thursday – Shoes, Housewares

Friday – Cosmetics/Make-Up, Automotive Products

Many stores follow this strategy as well. It’s all about how the stores turn over their inventory and bring in new stuff. These specific days are when they restock on new items and need to clear out old stuff. If you’re planning to go shopping, maybe pick a specific day to stop in!

8) Free VISA Gift Cards

Free money? That is about as YoungMoney as it gets. Many car manufactures want you to test drive their cars and offer promotions multiple times a year to do it. They often will give away $25-50 VISA gift cards and sometimes up to $100 for just test driving their car. But YoungMoney knows you don’t want to march down to a dealership and spend an hour doing this. So here’s a hack I’ve been doing for years. Now, disclosure, this is not the most ethically upstanding thing to do and isn’t something I can truly recommend. But here is a way to get the card by doing nothing.

  • Google “Test drive gift card” every few months. Find a car company doing the offer
  • Sign up for a test drive online, enter your email and whatever else they want (use a junk email address so you don’t get all their marketing emails all the time)
  • Get the email from them for your scheduled test drive
  • Call a local dealership for that car brand. Ask for a salesperson and ask them what the dealer code is for that location. Don’t tell them why you want it. It is not illegal in any way to ask for this and it is public information.
  • Open the link you got, enter the dealer code and the salesperson name from the phone.
  • Send the gift card to your house.

It’s that easy. That’s all the information you need to fill in for them to send it to you. My friends and I have done this for years and gotten hundreds of dollars in these gift cards. Again, I can’t claim this is the most honest thing to do. But, it is what it is. You can make this decision for yourself if you wanna do it.

9) Free 2-day Shipping Membership From ShopRunner

ShopRunner.com offers free 2-day shipping membership to anyone with an American Express Card. Go to their website and enter your card number. You’ll get free 2-day shipping from hundreds of retailers including GNC, Under Armor, NFL shop, and many others. If you have an AMEX card, it’s a great freebie.

10) Check Your Credit Card Offers

Many retailers partner with credit card companies and banks to offer you extra cash back for shopping on their website. I have a Wells Fargo Credit Card and got an offer this month for 10% cash back from Starbucks all month-long. Plenty of stores do this. Log onto your cards website and check for offers that might save you some money!

Have a great Halloween weekend and I hope everyone did great on their midterms! (Sorry if you still have more exams)

See you next week! Subscribe below for more YoungMoney101!

-Matt Dalton

Roth IRA vs. Traditional IRA: Which Is Better?

What’s The Difference?millennials

Many adults can’t even answer this question!

This post comes directly from a comment left by a reader in a previous article. That person wanted me to explain the difference between a Roth IRA and Traditional IRA, as well as explain how to open one, where to open one, and how much to contribute to one.

All of those questions would make for an extremely lengthy article. Instead, I’ll be breaking it into a few posts. Today, I’m going to just start by explaining the difference between the two. This is really easy for me to answer and may seem obvious for those who know about them. But for many college students (and adults for that matter), retirement accounts are a topic everyone seems to have questions about.

Retirement! Only 40+ years awayRetirement beach writing

I’ve indirectly explained the significance of starting to save for retirement at a young age in another article on compound interest. If you haven’t seen that, it might help to start there. Click HERE to read all about compound interest.

I will end up explaining more in-depth the importance of saving for retirement in your 20’s in another article. It’s really just important to start a ground zero if you will, and explain what the benefits and cons to these accounts are.

What is an IRA?

IRA stands for Individual Retirement Account. Meaning that you, the owner of the account, are solely contributing to the account and receive no contributions (help) from an employer. IRA’s are in contrast to a 401(k) retirement account that an employer typically provides where they contribute money in addition to what you contribute. I will explain more about 401(k)’s in the future.

Why Would I Need One If I Will Have a 401(k) From My Work?

This also seems to be a question that pops up a lot. The quick answer to this is so you can save additional funds for retirement outside your employer and possibly get better returns on the money you invest. In a lot of employer given 401(k) plans, there is a limited number of investments you can choose from. Employers set it up for employees to select from a smaller number of funds they have chosen. They do this to reduce costs on their end and also provide lower fund fees for you. Because this article isn’t about 401(k)’s, that’s all I’ll say about them in this post. If you want to know more, definitely research it or drop me a comment below!

Traditional IRA’s

An IRA is an account set up at a financial institution that allows an individual to save for retirement with tax-free growth or on a tax-deferred basis. Money put into an IRA is from your own income after taxes. This money you’re putting in is on a post tax basis, meaning it is income that has already been taxed just like all your other money. This is in contrast to a 401(k) that allows you to put money into it before taxes are taken out.

With a Traditional IRA, you make contributions with money you may be able to deduct on your tax return. Any earnings potentially grow tax-deferred until you withdraw them in retirement. All the money you make on your investments will not be taxed up until when you retire. Traditional IRA contributions are also tax-deductible on your tax returns for the year you put money in. So you’ll end up getting some savings on your taxes for doing this. To learn more about this, click HERE.

PROS:

-Tax deferred earnings you won’t pay until you take money out during retirement

-Tax deductible on your taxes each year you contribute to the account

-Contribute $5,500 a year to one of these bad boys, regardless if you’re rich or poor

CONS:

-You’ll end up paying taxes at the end when you retire which will definitely decrease your money for retirement

ROTH IRA’s

These are great for young people. Here’s why.

With a Roth IRA, you make contributions with money on which you’ve already paid taxes. Your money can then potentially grow tax-free, with tax-free withdrawals in retirement, provided that certain conditions are met.

What this means for you is that just like a normal IRA, you contribute money after taxes to the account. But when you withdrawal during retirement, there is NO TAXES. NONE. You keep all the money.

No taxes! What’s the catch?

The catch is you have to meet certain income requirements. You have to make less than less than $132,000 a year if you’re single (it’s higher for married couples filing taxes together). This is why they’re so great for young people. Early in your career, it is doubtful you’ll be making over $100,000 a year. Where as later in your career, it is possible that you may not qualify for one of these if you’re making the big bucks. Which YoungMoney really hopes you do.

PROS:

– Tax free withdrawals

-Contribute $5,500 a year to one of these, but only if you’re making less than 132k a year

-After five years, up to $10,000 of earnings can be withdrawn penalty-free to cover first-time homebuyer expenses

CONS:

-Money put into these are NOT deductible on your income taxes

-Have to make less than 132k a year to be eligible

Which One Is For Me?

There are pros and cons to both as you can see. But at a young age, many experts recommend contributing to a Roth, especially if you expect to not qualify for it later on. You can always switch to making an IRA account later on. Also to keep in mind is you can contribute to both if you like. However, that $5,500 annual contribution limit from the IRS isn’t per account. It is in total. Meaning you can only contribute 5,500 to any IRA in one given year. If you put 5,500 in a Roth one year, you’re maxed out and can’t contribute to a regular IRA that year.

I can’t tell you which is for you, but if you’re interested in reading more about them here is more info from Fidelity. Click HERE.

Hope That Helps!

Hope that gives you a better understanding of them. If you have any questions, comment section is below and you can comment anonymously.

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See you next week!

-Matt Dalton

Why You Need An Emercency Savings

You Need This Before You Do Anything Else!

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If you’ve been reading my blog closely, you’ve noticed the last few articles I’ve written have all mentioned setting up an emergency savings account. Today, I want to share with you why you need one before you save for (or buy!) anything else.

Why This Topic?

From my own experience, I’ve noticed very few people around my age seem to have one of these. If something were to happen like their car breaking down, scholarship money not being received, or getting fired from their job…they would have nowhere to turn except hoping their parents might help them out. For many, their parents are the emergency fund, and that’s fine for now. But what happens for these people when their parents can’t/won’t help them OR they graduate college and need to begin figuring things out on their own?

Ask yourself these questions:

  • Could I cover an unexpected expense of $500-1000 if I needed to? (Average cost of a car repair)
  • If yes, would that unexpected expense kill my budget for a month, two months, or more?
  • Would an unexpected expense keep me from being able to pay other obligations?
  • Would I resort to having to put that expense on my credit card?

If you answered yes to any or all of these, you definitely need an emergency savings. An amount of money set aside to easily dig you out of situations when you need it.

So What Is An Emergency Savings?

This one should be pretty obvious. An emergency savings is a separate savings account from your primary savings, checking, retirement accounts, and all other monetary accounts you have. It is set up to be used only in case of an emergency. You never spend anything out of this unless you absolutely HAVE to. This isn’t for when you spent too much money in PB last night.

Why Do You Need One?

Even if you do have coverage from your parents right now if an unexpected expense were to pop up, you’re going to thank yourself in another few years if you start learning to build one now. At some point, your finances will all (hopefully) be on you. If you learn to put money aside for emergencies now, you may end up with more money to put towards other things down the line. My own personal emergency savings is set up to cover me up to a year without working and covers living expenses, bills, gas, car payments, food, fun. I could honestly take a year off and change nothing about my style of living. Pretty nice, right? I want you to have that kind of security too.

So What Is Supposed To Be Used For Then?

Primarily, people set these up to cover them in the event of job loss. If you started working full-time and lost your job for whatever reason, an emergency savings is traditionally used to cover a few months worth of living expenses while you search for a new job. It’s like insurance in a way. You hopefully won’t need it. But you’ll sure be happy you’ve got it when/if you do.

However, this has been expanded by financial experts recommendations to also cover smaller emergencies such as a car repair, family issue, or whatever else is truly a critical emergency and you need money. Your pet monkey BoBo gets taken by kidnappers and holds him for ransom. You need cash. You get it.

How much do I need to save? The 3-6 Month Rule

So here is something that is really tricky to answer. Honestly, it depends on you. Someone working full-time and supporting a family probably needs more than a college student looking to learn to build their financial chops.

A broad guideline from many experts is three to six months’ worth of the money that you need for all non-discretionary expenses (such as health insurance, your rent, food, other essentials to live on). That way, you have enough that if you were to lose your job, you’d be able to continue paying your bills while you looked for another one.

The Problem With The 3-6 Month Rule

This assumes no variability. Some people go into professions that are more secure than others. Someone working for a Fortune 500 company has a lot more job security than a freelance photographer lets say. The more secure your job is, you could save maybe just 3 months. If you’re going to be working in a job that is less secure, you’ll probably wanna stash away a bit more in case something happens.

What Financial Experts Recommend: F**k 3-6 Months. You need more.

Many financial experts now recommend having 8-12 months of salary stored away. This also deals with people’s tolerance for risk. If you’re not someone who worries as much, you may me comfortable with only 3 months living expense stored up. Someone like me who is more risk averse when it comes to this subject, has saved an entire year up*.

Financial experts also recommend having some money saved for small expenses or emergencies such as car repairs, etc..

(*Side Note: my savings is accounting for a full year on my estimated living expenses after college. If you really wanna know how much I’ve saved, you can ask me personally or shoot me an email on the contacts page).

How Much You Need (as a college student) – Start With $500-$1,000

Now, I totally realize saving tens of thousands is hard to do. Although it is possible. BUT, for many readers this may seem overwhelming. So start small. Saving $500-$1,000 would be a good place to start. It’s where I started.  Keep it for when something happens and replenish it if you have to use it.

This small sum can get out of a lot of tricky situations. It’s enough to pay a speeding ticket, average car repair, a forgotten bill, losing your wallet in Vegas, and most other issues that may pop up for you.

Saving just $1,000 would make you better off than most American’s

Read this link: http://www.marketwatch.com/story/most-americans-have-less-than-1000-in-savings-2015-10-06

“Approximately 62% of Americans have less than $1,000 in their savings accounts and 21% don’t even have a savings account, according to a new survey of more than 5,000 adults conducted this month by Google Consumer Survey for personal finance website GOBankingRates.com. “

Did you read even that little excerpt?! 21% don’t even have a savings account? Holy Sh*t. And 62% have less than a thousand. That’s so scary. By just saving a thousand, you’ll be better off than 62% of the United States.

Where To Save

Don’t listen to any other baloney out there. You want your emergency savings locked up tight in a savings account. Not the stock market, not a money market, not bonds. It needs to be liquid and easily accessible – FDIC backed.  If the rate of return on that account is small, that’s okay. After all, says Greg McBride senior financial analyst at Bankrate.com, “It’s not an investment—it’s a safety net.”

I personally recommend an online savings. They pay a lot better on these than anyone else. I use Ally.com for my emergency savings. But you can keep it wherever. Just needs to not be touched and left for when it is needed.

Subscribe to YoungMoney!

Hey, I would really appreciate if you’d subscribe to my email list below. I know it’s a long scroll on your phones, but go to the bottom of the site and there’s a box to type your email in. You won’t get a ton of emails all the time. Just when a new post is published. It would really help for me to know how many people are regularly coming back to read and also helps build the site. Thanks in advance.

Have a great weekend and see you again next week!

-Matt Dalton

Having More Money In College

Help! I Spend All My Money.

save


Here we go. The top question I’ve gotten since the launch of this site.

How on earth did I save so much money during college? The answer to this question is honestly pretty boring.

People asked me a lot of ridiculous questions after I published how much I’ve saved. Let me just start by dispelling any rumors.

I didn’t win anything. I didn’t get a ton of money by receiving scholarships. The biggest scholarship I ever got was the $732 middle-class scholarship (Thanks, Obama).

Here is the big one: “Did you make all that investing in the stock market?”

The answer is no. Actually, the only investing I do currently is through my retirement accounts.

Like I say in my introduction to this website, it all has come from simply saving money I’ve made from working throughout college.

What Do You Mean No Stock Market?

I’d like to actually address the stock market question specifically. Stocks are sexy apparently, because that’s what everyone assumes is the sure-fire way to make money. Don’t get me wrong, it is. But any finance professional will tell you the stock market is a long-term play unless you’re a wiz like Warren Buffett. Even then, you’re going to need a bit of knowledge and a ton of luck to beat the markets.

You also have to understand where you’re at in life. As a college student, I can’t imagine you’ve got tens of thousands in capital just lying around at your disposal to invest in the stock market. Well, then again, I suppose many reading this went to Del Norte High School. Scratch that, you might.

All kidding aside, the amount of money you could put into investing would buy you probably a handful of stock shares. Not thousands. Unless you’re going to do some penny stocks, Jordan Belfort sh*t. If you are, god speed. A handful of shares even getting you a huge return (20%+) would make you a small amount by the time it went through Short Term Capital Gains Tax. As any accounting student will tell you, it’s hefty if you sell a stock if you haven’t owned it for over one full year. Yes, less than one year is considered short-term by the IRS.

Save More Today Than The Stock Market Will Make You

Here’s some food for thought. Let’s say I think Twitter is bound to shoot back up in value after Disney & Apple both decided to not purchase it today. (Did you know Twitter is for sale?) I put in $500 in order to purchase 25 shares at $20 a piece. Twitter comes through for me and shoots up 20%. This is a HUGE gain. I mean, seriously read that as a Donald Trump HUGE.

The stock price is now at $24. I made $4 on every share I own. My $500 turned into $600. HELL YEAH. Let’s cash out. I made 100 bucks doing nothing. BUT…now it is time for taxes.

Short term capital gains is done by your income tax bracket. Let’s say I’m in the 25% bracket. My 100 gain is now only 75 bucks. Thanks again, Obama.

So you made $75. You know where else you could have gotten $75 from? By just saving $75 from your paycheck instead of spending it. Chances are, you can end up with more money by just saving that you can make doing short-term sales in the stock market without investing a lot.

The Truth Is That Saving Money Is Boring.

To get better with money, you have to start by learning to save. People hate this. Mostly because it takes a while to do and also to get good at doing. It takes the commitment of making it a habit. You can’t half-ass it and do it for two weeks like people who promise to get themselves into the gym every new year.

But let me tell you something I learned.

You Learn To Love It

It took me a while to get going, but once I was consistently saving money, I loved it. You get excited to see your bank account balance growing and begin to set mini-goals for yourself. The more you start to save, you’d be surprised how much more you watch every aspect of your spending.

So How Do I Spend Less? I Have Bills, BRUH.

So do I. And I also love going out with my friends and buying stuff. But it can be done! Slowly but surely.

HOW TO START SAVING

  1. Figure out how much you’re spending.
    • This might hurt. It’s like waking up after a night out and checking your bank account.
    • Start by going back through your bank account and determining all your spending for one full month.
    • You can’t start saving unless you know how much you’ve got to manage
    • Many banks offer a tool to check your spending categories and break it out for you!
  2. Determine money spent on needs vs. wants
    • Figure out what you have to spend money on (Rent, food, utilities, gas, etc..)
    • Figure out how much you’ve been spending on wants (Going out, drinks, eating out, movies, dates, your Amazon cart)
  3. Make A Budget
    • You can do this easily in Excel if you like that or I recommend Mint.com.
    • THIS IS KEY TO STARTING TO SAVE
    • Figure out how much money is coming in. (Paycheck)
    • Take away all money you must spend on your needs
    • You’re left with money you probably normally spend all on wants
  4. Determine How Much You’ll Spend On Wants OR how much you want to save
    • This can start two ways. People who are looking to really start saving may decide how much per month they want to begin saving. They save and then the left over is “spending money”
    • This might be tough for those who go out a lot currently or feel like they’re always low on cash. So start by deciding how much you’ll spend on those wants. $200 a month, $300 a month. Whatever it is.
    • The rest will be your savings
  5. STICK TO YOUR BUDGET
    • This is all your own self motivation. You have to stick to the budget. Divide your monthly spends into weeks so you have $50 a week to spend instead of one big sum you blow through at the start of the month.
    • Set limits through your bank. If you really have issues with this, you can tell your bank to cut you off. You can set a limit on yourself that once you spend a certain amount, the card stops working.
  6. Save
    • Put money into you savings account. Ideally one that might be separate than the bank you use for your checking/debit card. That way it’s harder to touch. So you’d have to request a transfer and wait a couple of days before getting it in your account.
    • Don’t take it out. You’re only hurting yourself.
  7. Watch your money grow!
    • This isn’t rocket science. It’s easy to do but hard to stick to doing. Just like going for a short run everyday isn’t that hard, but the hard part is you have to keep doing it.
    • You also don’t have to only save money for no reason. Save towards something. You first need an emergency savings for when stuff comes up. After that, you can save towards a vacation, a car, Coachella. Whatever. Learning to save really benefits you.

I really hope this helps to put you on the right track if you’ve been needing it. Ask any questions in the comments below!

Thanks for reading!

Matt Dalton

Hack Your Credit – A YoungMoney101 Guide

After publishing an article a couple weeks ago on what makes up your credit score, I’ve gotten a lot of questions about how you can improve it. So here we go.

crdidt

 

5 Ways To Hack Your Credit:

1) Get A Credit Card (3 ways)

This may seem obvious, but it’s going to be hard to effect your credit if the only outstanding information on your report is your student loans. You can’t change those right now (besides paying them off) and they’re just sitting there on your report. A lot of people I’ve come into contact with seem to be afraid to open one up. I’ve heard things like, “I don’t want a bad score. So I just won’t open a credit card.”

Credit is a good thing! You definitely want to establish it. Read more about that in the article I wrote on it HERE.

But, “Yo, YoungMoney guy…my bank won’t let me open one.”

Open a college credit card

Okay, so I’ve heard this argument too. First things first, you probably can’t qualify for a normal credit card right off the bat if it’s your first one. But lots of banks have college student specific credit cards! They keep in mind you don’t have a ton of income and limit your balance to a sum much smaller than a normal credit card. If you’re looking to get into one of these, I’d recommend checking with whatever bank you’ve been with for years for a checking/savings account. They’ll be more likely to approve you for this. It’ll also help you if your grades are higher and if you have a part time job to prove some income.

Secured credit card

If you can’t get a college card, check out a secured credit card. I won’t go into too much depth about these, but you can read about them HERE. I’ve never had one, but I have friends who speak highly of their ability to establish your credit. Basically, it works by instead of having a bank lend you money, it involves you putting down a deposit. You lend to yourself. You put down $500 for example, and then can borrow against your money as credit.

Sign up with your parents

Shoutout out to mom and dad. You can be a cosigner on their cards and get the credit history as they pay their bills. Definitely a smart move if your parents are down.

2) Continuously Pay During Each Month (Micropayments)

This is more a way to trick yourself into always paying your bills. Some people complain that by the time their bill comes each month, it’s just too high for them to pay all at once. So they just make the minimum payment and get that interest charge. Instead, try paying each week or even every few days after you make a charge on the card. I personally do this. It just helps me budget better. There is no limit to how frequently you can pay down your balance. It might help you keep on top of your payments and never get the chance to only pay the minimum each month!

3) Keep That Utilization Low

The absolute biggest factor you can influence is your utilization. You can’t do much about the length of your established history and credit card companies know that. So influence the 1 big factor you can. How much of your available balance you’re using! Figure out when your billing period closes each month. It’s on your statement. Pay your bill down before the closing date and your monthly amount is recorded. You ideally want to keep your utilization between 2%-5% at bill closing. This doesn’t mean don’t pay your whole bill, but instead let the billing period close with a small balance of 2-5% of your total available credit. Then when the statement closes, pay the rest of it off.

4) Increase Your Limit! The Big Hack To Credit

This will instantly bump up your score and is really the biggest hack you can do. At anytime you are allowed to call your credit card company and ask for a limit increase. By doing this, you lower your total utilization we just talked about above. I just did this a couple months ago.

If my limit is $1,000 and I spent $100 this month, my utilization is 10%.

If I increase to a $2,000 limit, I’m instantly down to 5% utilization.

See how big of a difference that can make?

Now it is important to note, you shouldn’t ask for a limit increase if you haven’t been paying your bills (duh) or opened the card within the last year. Wait one year to ask for one to allow your bank to establish some history on you first.

5) Ask Your Landlord To Report Your Payments To Credit Bureaus

You can ask your landlord to tell credit companies you’ve been paying your rent. You can also ask utilities companies to do this. Like SDG&E or Cox. They send a report each month saying you’re paying your bills. You’d be surprised how much this can help establish your credit.

*BONUS*

Always check your credit. At least once a month. It’ll only take you 2 minutes on www.creditkarma.com! Being on top of what your score is keeps you thinking about how you can improve your spending habits.

Keep your credit in good standing will save you money for the rest of your life!

You’ll qualify for lower rates on loans and save thousands when getting new auto, home, or student loans.

Thanks for reading and please subscribe to my email list! I’ll send money tips right to your inbox. Comment below any thoughts you have!

Matt Dalton

 

Compound Interest: The Stuff Of Savings Dreams

gold

How Do People Build Wealth?

There is really only a few options.

  1. Inherit money! Why are you reading this website? Get back to maxin’, relaxin’, and livin’ large! You belong on East Egg and probably had your father give you a small loan of a million dollars to start out. Dope, dude!
  2. Zuckerberg somebody! Get out there and steal someone else’s idea and profit on that sh*t. No mercy.
  3. Come up with a billion dollar idea! Get your Elon Musk on. This is probably the fastest way to make a huge amount of money. You already knew this.
  4. Become a really smart investor. This also takes time. Warren Buffett didn’t just wake up one day to find he had billions in the bank. He makes smart picks, no doubt. But don’t think he’s always beating the market. The only person who can do that is someone with insider trading knowledge.
  5. Invest Money & Let It Grow. This is how most of us do it.

Sorry to bum you out if you were hoping I had an answer to making you wealthy through the first 4 options. If I did, I’d tell ya.

The truth is that most people build wealthy slowly and overtime. That’s how people save for retirement. They invest money as they go and eventually have a sizeable nest egg to retire on.

UNLESS, of course, you don’t invest enough or do so at a young age. Plenty of people can catch up if they work at it. But honestly, no matter how much you think you could catch up later on, there is NO advantage to building wealth better than TIME. The more you have of it, the more wealthy you’ll be based on how much you put in.

Now, you’ve most likely heard this before. That saving money while you’re young is really important. But hey, it’s tough to save money when you’re young. You don’t have as much of it right now. But it’s okay, even a little bit will make a huge difference.

What Is Compound Interest?

Investopedia defines it as, “Compound interest is interest calculated on the initial principle and also on the accumulated interest of previous periods of a deposit or loan.”

Okay, so what does that really mean? It means that when you invest money in the stock market, a mutual fund, a bond, a savings account, whatever…you’ll be paid in interest for investing your money. Stocks go up, you’re making money. Duh, you know this.

BUT, here is what it really means for you. Let’s say you invest $100 in your savings account. The bank pays you 5% interest. (We can only dream, but it works for this example)

After 1 year, you now have $105. ($100 you invested plus the $5 they paid you in interest for the year)

Now is when you start making MONEY ON YOUR MONEY. This is the sh*t if you’re into finance.

After 2 years, you now have $110.25. Wait, shouldn’t I have only $110 if they pay me $5 every year? NOPE. They paid you interest money on the $5 you earned last year too. So lets calculate that. $105 * 5% is $5.25. Add that together to get $110.25. You made 25 cents on the interest money they paid you from year one. Interest on your interest! Get it?

How Huge A Deal This Is

Here is an example of someone saving money and investing in the stock market that assumes a 7% return. (From BusinessInsider)

moejss

 

Damn, Chris. You’re a millionaire now. You’re all all-star. Get your game on, go play.

So what happened here? Chris invested way earlier than the other two as you can see. This is what I was talking about in regards to time being on your side while you’re young. Compound interest doesn’t make a huge difference until around 40-50 years old for him compared to the others. But after 50, he skyrockets away from those other shmucks. This is because compound interest begins to snowball as you get older.

The Rule Of 72

There is a rule that says to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. Let’s try it with Chris’s presumed 7% return. 72/7 =10.29. This means that every 10.29 years, he doubles the total amount of money in his account.

So if he is starting 10 years before anyone else…he doubles his money 1 more time than anyone else. This is where the ending of retirement gives you HUGE gains. Just by starting 10 years earlier, he has the chance to double his money once more before retirement. That is why he has roughly double what Bill has. Chris roughly got to Bill’s number 10 years before he did. Therefore, he doubled his money once more by the time they retired. Instead of 500k, he has over a million. One more time…Damn, Chris. Back at it again with that compound interest.

Do you see how big of a difference it can make to start early? Even small contributions earlier on makes the difference in how much you’ll have later on. And this assumed Chris ONLY had a 7% return. The AVERAGE return of the stock market from 1928 to 2014 was 10%.

How big of a difference would 10% make for Chris? He would have $2.8 Million.

dmaaa

What if he bumped up his savings to 10k a year instead of just 5k? $5.6 Million

dmaaa2

Imagine The Possibilities!

This is how compound interest works and how people really build wealth. They invest wisely and save as much as they can. And they do it earlier than later.

THE PROBLEM

People in the United States don’t realize this. They push this off until later in life when they think they’ll be making more money and have more to save for retirement. But later in life you’ll probably have a significant other…then a spouse…then some kids. There is always an excuse for not saving. Which is why older generations getting ready to retire are in CRISIS.

Here are some stats to scare you. (Found here.)

  • 45% of Americans have saved nothing for retirement, including 40% of Baby Boomers.
  • 38% don’t actively save for retirement at all.
  • 20% of Americans tap into their 401(k) assets early, either through a loan or withdrawal.
  • 80% of Americans between the ages of 30 and 54 believe they will not have enough saved for retirement.
  • 36% of American adults over 65 are completely dependent on Social Security.
  • 63% are dependent (but not necessarily completely reliant) on Social Security, relatives, friends, or charity at age 65.
  • Social Security is running out of money, and will only be able to cover 77% of promised benefits beginning in 2034.

All those dreams of traveling the world in retirement? Consider them gone if you don’t seriously start thinking about this. There will be millions of American’s who will be just scraping by in their old age. It’s sad and it shouldn’t be that way.

But the reality is no one cares more about you than you. So do yourself a favor and begin saving as young as possible.

The Great News

You’re super smart. Yep. You are. You obviously care about this enough to read this site or have done some digging on your own. You can set yourself up and benefit from the knowledge others don’t have. Start thinking about saving!

In a future article, I’ll tell you where to do it and how to do it.

Thanks for reading! Subscribe to my email list! I’m basing how often I write on the subscribers I get. If you enjoy my content, please help me out and let me know you do. Just joining my email list is all I need to know you’re enjoy the posts!

Until next time!

Matt Dalton

YoungMoney101 Posting Schedule

Hello!

Thanks for being a reader of YoungMoney101. I really appreciate your interest in the site. Along with today’s post, I’ve decided to write an update on the happening of this site. The biggest question I’ve gotten so far is in regards to how often I’ll be writing.

As of now, I plan to be posting a new article 2 times a week.

Although YoungMoney101 is only 2 weeks old, it’s getting lots of attention! More than I originally anticipated. This makes me excited to write more and do more for you, the reader. I feel 2 postings a week in manageable for me to do, as well as the right amount of content for my regular readers. The intended audience for YoungMoney101 is young people looking for explanations, tips, and tricks for how money works and how manage it better. Although finance nerds like me love updates on these kinds of things everyday, I recognize many do not. For now, I’ll stick to 2 posts a week and manage the demand for content as time goes on.

Guest Posts Coming Soon!

In other news, I plan for this site to occasionally feature guest writers. I’m fortunate to know quite a few brilliant young people who have perspectives on money, the job market, or something else that I think you guys would really enjoy. Any articles written by guests will be found in a new guest posts section of the site I’ll be creating. All guest writers will have to stick to a standard of citing any sources they pull information from so you know you’re getting just the facts.

Other YoungMoney101 Info:

This site will continue to be a work in progress. My background isn’t in web design or search engine optimization. But I’ll be figuring it out as we go! I recently figured out how to get my site indexed. You can now find me on Bing and Yahoo! as the first search result when typing in “YoungMoney101” or “Young Money 101” to the search bar. Google is a work in progress. You can find me there, but probably further down the first page. Help me get further up by searching my site!

As always, thank you again for reading! Comment below any questions you have about YoungMoney1o1.

Please subscribe to my email list for updates sent right to your inbox!

What’s The Deal With CD’s?

Certificates Of Depositcds

(You didn’t think I meant compact disks, right?)

I’m not sure what’s happened, but everyone seems to want to know about CD’s these days. I’ve had at least 6 people ask me about this in the last couple months. In fact, my best friend’s fiancée asked about them last week.

Are your banks trying to pitch you on buying these or something? Just curious. With a strange amount of interest on these and because they’re easy to explain, I’m going to write about them.

So What Is A Certificate Of Deposit?

It’s an investment product offered by banks that offer a specified rate of return over a set period of time. The period of time varies depending on the bank, but common time frames are 6-Month, 1-Year, 2-Years, 3-Years, and 5-Years.

They are super easy to understand.

The deal is that you deposit a preset amount of money with your bank and agree to let them hold onto it for a period of time that you choose. In return for letting them hold your money, they will pay you interest on the money you deposited. At the end of the time period you get your principal (money you deposited) back.

If you’re wondering how this benefits them, it gives them cash reserves. Banks have a complex system of managing all the money that comes in and out. Basically, while your money is being “held” in the CD, they’re lending out your money to other customers or simply holding it because federal law mandates banks to keep a certain amount of money in reserves. But don’t worry, you’ll get your money back. CD’s are FDIC insured and are one of the safest investments you can make. You might as well go buy some T-Bills.

So They’re Safe To Invest In? Sweet, Dude! Sign Me Up.

Yes, they’re basically risk free investments that will make you money.

BUT: How much money you make largely depends on 2 things.

  1. How much you deposit
  2. How long you’re willing to deposit it for (this is the key to CD’s)

The more money you deposit and the longer you’re willing to let them hold onto it, the better interest they will pay you. I’m tempted to explain why time value of money (TVM in the finance world) makes this the case. But, for now, just know you’ll make more money for letting  them hold onto it longer.

So How Much Can I Make?

Ah, finally, what you really wanted to know. The best answer to this is you’d need to figure out how much money you’re willing to invest in one and how long you’d be OK with not having access to that money. This is because if you withdrawal from the CD before it matures, there’s a pretty big penalty. You don’t wanna do that.

You can check your own banks rates on CD’s, but here is a list of the BEST rates I could find. (As of 9/15/2016)

6 Months – Capital One 360 (0.9%) No min deposit

1 Year – Barclays (1.20%) No min deposit

2 Years – First Internet Bank (1.36%) $1,000 min deposit

3 Years – Barclays (1.50%) No min deposit

5 Years – First Internet Bank (1.92%) $1,000 min deposit

I found all these using NerdWallet.com. These also assumed my zip code and a minimum balance of $1,000. You can go play around with their tool to see if you can find higher ones that I did. You probably can, I didn’t dig that hard. I just wanted to give you an example of the going rate for them these days.

So the first thing you’ll notice is that to get higher rates, sometimes there is a minimum amount you need to deposit and that the longer you keep it in there, the more you make. Unless you find a CD like the ones Barclays seems to be offering right now that don’t require a minimum. This happens sometimes because banks just need to raise their capital reserves.

Great! I’ll Go Buy Some!

Well not so fast. Here comes the catch.

You knew there had to be one, right?

CD rates are at historical lows. Check out this graph from Bankrate.com.

dhd

Sorry to disappoint but the rates on CD’s have literally never been lower. You’ll notice a serious drop off somewhere between 2005 and 2010. I’ll let you figure out what happened there.

Anyways, this doesn’t necessarily mean you shouldn’t buy any. Just that they are not what they used to be.

Warning, Unqualified Opinion Ahead!

The reason I’m confused why people are so interested in these is because there are just so many better options out there to make money. Especially for college students who 1) don’t have tons of cash to invest and won’t earn a ton of interest money 2) don’t know where they’ll be 6 months, 1 year, 5 years from now as a CD requires.

Things are going to change for you a lot in the next few years. I’m going to tell you the same thing I told my best friends fiancée:

“What happens when you need that money for something next year?”

Now, this is something I’d really only say in a select set of situations. Investing money is very wise to do at a young age because of the immense benefits of compound interest. It’s the only way you could possibly ever retire! But investing in CD’s in my opinion is just not worth the draw backs of the time factor as well as the minimal amount you receive for all that commitment.

The stock market will give you way better returns than a CD as I’m sure you know.

BUT, that’s actually not what I recommend you do unless:

  1. Have a solid emergency savings account first
  2. Pay off all bad debt (there is a difference between good and bad)
  3. Get a retirement account set up and begin contributing (This is investing, but not in the same sense as a non-retirement investment account that invests in stocks, funds, ETF’s…etc.)

I probably just opened a can of worms. I swear this website will explain all that stuff.

But here’s my deal.

If you’re looking to make a bit of money on your savings (or at least better than your banks measly .01%)…

Check out an online savings.

Online banks can pay beyond 100x better than your brick and mortar bank. They can also pay better than lots of Money Markets!

This is because they don’t have the costs of running an actual retail location you can walk into. It’s all online. Less costs means they can pass the savings onto you in the form of higher interest rates on your savings.

The case for an online bank:

  1. Higher interest rates
  2. Higher than almost any CD under 1 year
  3. Take out your money anytime! No need to commit! (which I know you love)
  4. Often times, better user interface than your regular banks website
  5. Better customer service
  6. Move your money between your bank and online savings account very easily
  7. No monthly fees

OK, So How High?

Up to 1.05%! (Synchrony High Yield Savings)

Ok, so that’s not a ton of money. But hey, it is WAY better than your banks .01% by a huge margin.

You might be able to find a bank with 1.10%. Offers like that happen every so often.

Who Do I Use?

Ally Bank.

They pay 1.00% on all balance tiers. No minimum. I also really like their user interface and think they’ve got good customer service from my own experience with them. I just opened with them 6 months ago. So far, so good! They deposit my earnings at the end of each month. Now again, it’s not a ton. But it’s better than nothing.

I’ll do a full review of Ally soon, but just figured you’d might wanna know who I use. Not being paid by them to say this!

I’ve hoped you’ve learned something and feel better educated on CD’s pros and cons!

Please comment below! I want to hear from you guys. (Yes, you can comment anonymously if you like. Just don’t enter your info and press submit)

I also have an email subscription list! Please subscribe to that and get updates when I post something new!

Please share and help my website grow! I would really appreciate it. It takes time to write these as you can imagine.

Until next time!

Matt Dalton

Credit: What The Heck Is It?

3 Most Common Question I Get About Money:

  1. How do I start saving more money? And where do I save it?
  2. Should I invest in the stock market?
  3. I don’t know what my credit is like. How do I find out?

Today, I’m going to answer the third question. Now, most commonly when someone asks me this, they’re asking how their credit is effected based on how they use their credit cards. But your credit is decided by far more than that.

I’m going to explain how your credit gets decided and where you can check it.

Your parents or someone in your life has most likely told you that building good credit is critical.

And it is.

SO WHAT IS CREDIT?

Your credit is defined by a variety of factors. These factors are weighed differently so that some matter more than others. Based on the calculation of the various factors, credit reporting agencies give you a credit score. Different ratings agencies decide on their rating scales differently. But the most common scale is rated between 300-850. This is known as the FICO score.

In the Untied States, there are 3 big credit reporting agencies. ALL of them have your information. Even if you don’t have a credit card.

These 3 are…

reports

 (1) Equifax

 (2) Experian

 (3) TransUnion

 

WHAT DETERMINES MY SCORE?

  1. Credit Card Utilization (High Impact)
    • The amount of your total available credit that you’re using on your credit cards.
      • For example, lets say my credit limit is $1,000. I spend $100 this month. My utilization is 10%. Easy, right?
  2. Payment History (High Impact)
    • Hey, are you paying your bills on time? (This can include credit cards, auto loans, student loans, your rent, utilities)
  3. Derogatory Marks (High Impact)
    • The number of collection accounts, bankruptcies, foreclosures, civil judgments or tax liens on your report
      • Hopefully you have none!
  4. Age Of History (Medium Impact)
    • How long have you had credit accounts for?
  5. Total Accounts (Low Impact)
    • How many credit cards or loans do you have right now?
  6. Credit Inquires (Low Impact)
    • How many lenders, possible landlords, employers have asked about your credit?
      • There is a difference in credit inquires called Hard Pulls and Soft Pulls.

Learn more about these factors HERE.

There ya go! You now know how your credit is determined.

WHAT IS A GOOD SCORE?

Credit Score Range Definitions (Sourced from Experian.com)

  • 800 +: Indicates an exceptional FICO Score and is well above the average credit score. Consumers in this range may experience an easy approval process when applying for new credit. Approximately 1% of consumers with a credit score of 800+ are likely to become seriously delinquent in the future.
  • 740 to 799: Indicates a very good FICO Score and is above the average credit score. Consumers in this range may qualify for better interest rates from lenders. Approximately 2% of consumers with a credit score between 740 to 799 are likely to become seriously delinquent in the future.
  • 670 to 739: Indicates a good FICO Score and is in the median credit score range. Consumers in this range are considered an “acceptable” borrower. Approximately 8% of consumers with a credit score between 670 to 739 are likely to become seriously delinquent in the future.
  • 580 to 669: Indicates a fair FICO Score and is below the average credit score. Consumers in this range are considered subprime borrowers and getting credit may be difficult with interest rates that are likely to be much higher. Approximately 28% of consumers with a credit score between 580 to 669 are likely to become seriously delinquent in the future.
  • 579 and lower: Indicates a poor FICO Score and is considered to be poor credit. Consumers may be rejected for credit. Credit card applicants in this range may require a fee or a deposit. Utilities may also require a deposit. A credit score this low could be a result from bankruptcy or other major credit problems. Approximately 61% of consumers with a credit score under 579 are likely to become seriously delinquent in the future.

OK, SO WHY DO I NEED A GOOD SCORE?

This is why:

  • Having good credit shows your ability to pay back debts
    • Whether that be on a credit card, student loan, auto loan, mortgage, etc.
  • Building credit is also evaluated by your potential landlords or employers (to evaluate your ability to repay something)
    • Apartment companies or landlords will more often that not pull your credit when evaluating your potential as a renter
    • Employers frequently check your credit during their background checks on you
      • Companies say they primarily do this to prevent or reduce theft (More Info On that Here)
  • Building good credit will qualify you for lower interest rates over the course of your life saving you TONS of money.

Matt, I don’t have any credit cards, student loans, auto loans, rent payments, or utilities payments in my name. This is useless information to me, dude!

It’s not! Here is why you should still check your credit.

Fake accounts get created all the time. It’s called identity theft. Someone out there can easily be using your name to open accounts. Heck, your own bank could be opening accounts without telling you! If you haven’t heard, Wells Fargo opened millions of UNAUTHORIZED customer accounts without people knowing. They’ve been convicted and owe $185 Million in fines. That happened last week. (Sept 2016) Learn more about that HERE. I personally bank with Wells Fargo. I’m not leaving them. I’ll write a future post on it.

Don’t let someone mess up your credit without you knowing. Check it.

Also- If you’re an authorized user on one of your parents credit cards (even if it’s not in your name), it’s still on your credit report.

FINE, WHERE DO I CHECK IT?

Federally mandated law requires you have access to 3 free credit reports a year. One from all the big 3 companies I mentioned above.

CREDIT REPORTS HERE: https://www.annualcreditreport.com/index.action

You can report fraud, misinformation, and get a good idea of what’s out there for you. This website is 100% safe. I recommend checking one of them every 3-4 months so you have year round coverage of your credit report for free.

BUT WHERE IS MY SCORE?

Your credit report doesn’t give you a score. In the past you had to buy it from one of those 3. But this is 2016, my finance curious friends.

Many banks are beginning to offer the score for free on their websites when you log in. Not all do, but see if your bank does!

WHERE I GET MY SCORE: CREDIT KARMA  —   https://www.creditkarma.com/

You’ve seen a commercial for these guys. Have you thought it was a gimmick? It’s not. I promise you. I’ve been using them for years. They will give you your score AND your credit report from 2 of the 3 FOR FREE. Anytime you want, as much as you want.

(It doesn’t effect your credit because it is a soft pull)

It’s super user-friendly and I’ll go into detail about why I love CreditKarma so much in a future review. CreditKarma is not paying me to say this. I truly love their site.

You can see your credit score each month super easily. (Mine got a nice boost this month as you can see)

my-scofre

Even break out possible scenarios!

my-scofre-w

Super handy!

SO NOW GO CHECK YOURS!

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Thanks for reading!

-Matt