Banking

Financial Mistakes You Make In Your 20s

June 4, 2018 By Twila VanLeer

Financial Mistakes Made in Your 20s — Trim your expenditures to match the income, being sure to pay yourself with a little savings each pay period

Humans don’t learn all there is to know about personal finances in a day. It’s commonplace for people to learn by their mistakes early in life.

Among the most common financial errors people make in their 20s are:

Ignoring your financial flow.

A first job sometimes is the shocker. You find out after a few paychecks just how much of what you have earned goes into taxes and deductions such as health insurance. If you don’t pay attention, your expectations compared to your realities may get out of sync. Learn from the experts who say, “It’s not what you make, it’s what you keep that counts.” And develop a realistic budget. Trim your expenditures to match the income, being sure to pay yourself with a little savings each pay period.

Letting friends create your financial agenda.

It may be a tough decision, but learn to say no when your friends suggest ways to spend money that you really can’t afford, such as eating out or stopping at the local watering hole for a day’s end refresher. Use public transportation if possible, and brown-bag lunch now and again.

Not realizing that time will cure some financial stresses.

It is likely you will make more in the future, but don’t wait for the future to start serious saving. If your company has a 401(k) option, hop on it. If you can’t take full advantage of the plan to begin with, keep upgrading your contribution as raises come along. It’s the beginning of a trend you should maintain throughout your working career. If you save $200 per month beginning at age 23, with a 6 percent rate of return, you will have $425,000 when you retire at 65. If you wait until you’re 33 to begin, the same savings will only total half that amount.

Work on getting student loans repaid.

Some 2.6 million student loan borrowers in the first quarter of this year opted to pause their monthly payments through forebearance, a government allowance that stops payments, but allows interest to accrue. Make such a move a very last option if you possibly can. Ask your loan servicer first for deferment, but if that can’t be managed, opt for an income-driven repayment plan. If you never get to the point where your payments can be raised, the debt may be forgiven after 20 to 25 years.

Consider more debt for grad school.

Though a higher degree is likely to provide more financial flexibility in the future, additional education should be a carefully planned option. More Americans are getting advanced degrees – about 12 percent of those 25 and older. But it is wise to plan. Go to school part time and take advantage of any tuition assistance your work may provide. Before you sign up for classes, use a student loan calculator to see what debt you will have accumulated in exchange for enhanced earning ability. It may shock you and encourage you to take baby steps toward an advanced degree rather than incur more student debt.

Choose the Right Credit Card for Your Business

June 1, 2018 By Twila VanLeer

Business Credit Card — Don’t begin using your business credit card without being firmly conversant with the card’s interest rate, payment terms and fees

A credit card is a handy tool for your small business, but you first need to study the options and choose the card that best fits your needs. It provides a convenient way to establish credit, manage cash flow and keep your business and personal expenses separate.

According to the Small Business Administration, there are numerous possibilities, including teaser rate cards (among the most popular), low interest rate cards, rewards cards, airline or frequent flyer cards, unsecured business credit cards, secured cards and prepaid cards.

Start by analyzing how you spend money in your business. Do you want to pay the charges monthly or over time? What grace period does the card you are considering allow?

Expect a credit check when you apply for a business credit card. In most cases, a personal check will be conducted as well as your business credit. Find out if you will be personally liable for outstanding debt on the card. That may depend on whether the card carrier offers commercial liability, joint or several liability.

Don’t begin using your business credit card without being firmly conversant with the card’s interest rate, payment terms and whether it requires fees. Do the benefits offered outweigh the fees? Fees may be charged for cash advances, late payments and foreign transactions. If you expect to carry a balance, what is the annual percentage rate? Create an action plan for using the card, including payoff limits on the balance.

If you will use the credit card for company travel, you might look into a card that offers airline-mile rewards. Look at other awards a card offers, such as internet and phone services, shipping services, gift cards and discounts to selected retailers or simple cash rebates. If your business spends consistently in particular categories, compare cards and get the most benefit for the way you spend company dollars. If you tend to carry a large balance, you could pay more in interest than you earn in perks.

Know Your Credit Score

April 5, 2018 By Twila VanLeer

Your credit score is an essential facet of your personal finances. Even so, a great number of people don’t ever know what their credit score is or how to affect it in their favor.

It makes a difference. Your credit score is one of the factors that lenders look at when they consider whether to loan you money for a home or other big-ticket item. A lower score could mean a higher interest rate or otherwise affect the mortgage agreement. Your goal should be to have a score above 760.

So find out what your score is and then apply these five steps to upgrade:

• Know your risks. You can learn what your current credit report contains by contacting one of the three main credit reporting agencies, TransUnion, Equifax and Experian. Once a year they are obligated to provide a free report. It won’t include your overall score and you usually will have to pay a fee to see that bottom line. Usually, the score will come with a list of risk factors. Study them as a starting point for improvement. There can be as many as 300 risk factors. If you choose not to pay one of the reporting agencies for a score, many credit card companies will include it on statements and there are third-party websites that provide a simulated score. They include credit.com and creditkarma. Their scores may not exactly match those of the reporting companies, but it is close enough to set you on a correction course.

• Pay your bills on time and every time. The biggest factor in determining your credit score is how faithfully you pay your bills. Obviously, no potential lender wants to hand its resources to someone who has a patchy record of repaying. Even a few days late matter. A single missed payment can drop your score by 100 to 300 points. Start by refusing to allow yourself to add to your debt. Charge only what you can afford to pay off every month in full.

• Manage the debt you have. Keep your balances low to build your credit score. Debt utilization – how much of your available credit you actually use is an important part of how you score. Your balance should never be more than 30 percent of the credit limit on any single charge card or on the total of all your cards. If your balance now exceeds that goal, plan to get them paid off as soon as possible. Add as much money as possible on each payment. Decide if you want to concentrate on the smallest balances first or whittle away at those with the highest interest.

• If you don’t have a credit card, open one. A wallet full of credit cards isn’t necessary, but one or two, carefully managed, can help you establish a good score. Don’t just apply without a plan. Know how much credit you need and how you plan to repay it. If you opt not to have a credit card, open a credit account and faithfully pay it. You need some evidence that will get back to the credit reporters to enhance your score.

• Be patient. Good credit is not built in a day. It may take a few months of faithfully paying bills, keeping credit lines tidy and controlling your spending to produce the results you are looking for. But it will all be worth it when you face a mortgage lender across the desk or have other credit requests to make.

Help Children Avoid Student Debt

February 5, 2018 By Twila VanLeer

Where does the time go? All of a sudden, the playground phase is past and your child (children) are getting serious about college. If you are lucky, you will have started preparing while they were still small, but it’s never too late to take steps that hopefully will see them through higher education without an unmanageable amount of debt.

Share these tips with your college-bound kids:

Start savings accounts that will give a better return than regular savings. If you don’t have a large amount of cash to begin, open a term deposit account with whatever you can afford. Many financial institutions offer perks such as low (as little as $5) initial deposits; allow you to continue making deposits through the term; set the term from 12 months to five years.

If your child has money from gifts or from early jobs, teach him or her wise money habits, putting a set percentage of personal money into savings. The best gift you can give your child as he or she sets out to undertake adult activities is to arm them with sound financial management skills.

Encourage high school students to work hard, taking high school concurrent enrollment and Advanced Placement courses that will minimize the number of college courses they will need to get a degree. Advise that they look at scholarship opportunities and maintain the grades needed to take advantage of them.

The Internal Revenue Service has authorized two types of education plans: prepaid tuition and college savings. Paying tuition ahead of time avoids the increases that are tacked onto tuitions nearly every year. You can purchase credits at current prices for attending in-state colleges and universities. (Helping the student to make a choice of a higher education institution well ahead of time can ease the issues at enrollment time.)

College savings plans, money set aside in investment accounts, can cover tuition, fees and room and board. Make a careful study of these “529 plans” and get an early start on savings.

Bottom line: Start your planning as far ahead of high school graduation as feasible. If possible, be as specific as you can about your higher education goals so you don’t waste time by too-frequent course adjustments.

Has A Hacker Victimized You?

December 14, 2017 By Twila VanLeer

“Pwned.” Strange word that you won’t find in an English dictionary, but one that has affected people all over the world. It’s the coined word used to identify a person whose personal information has been breached when a corporate data base is hacked. Gamers recognize it as meaning “utterly defeated.”

We hear about it a lot these days. Large retailers and other companies have been attacked by hackers, compromising the data of millions of customers. Even Equifax, the credit rating company, was not immune. A breach of its data gave fraudsters millions of names to work with. The list of other well-known companies that have lost data has become long. The thieves have a hey day using the personal data for their own purposes.

Are you one of them and how can you find out?

An Australian named Troy Hunt may be able to tell you. He has accumulated some 4.8 billion pieces of hacked data and he uses it to help ordinary people determine if they have had their personal data lifted. His website, Have I Been Pwned?, has been in operation since 2013. It’s free.

Hunt has become a specialist regarding big breaches and has exposed some hack jobs before the victim companies have been aware themselves. He used to be a software architect at Pfizer, the pharmaceutical giant, but quit to work as an independent information security consultant and instructor.

The U.S. Congress recently availed itself of his expertise when he testified before that body, which has become increasingly concerned at the number of their constituents who have been victimized. He had to buy a new suit and tie (and visit a website to find out how to tie the tie.) His usual garb is beachwear or jeans — what the well-dressed Aussie wears while working on the beach.

The problem is serious. So much personal data has been breached that traditional methods for verifying identity, such as user names, passwords and/or knowledge-based questions, have become less reliable.

Hunt’s relentless search for hacked information has put him ahead of the game in several instances. He has made it harder for big companies that have been hacked to hide the fact. Uber, for instance, had failed to publicize a breach that put 57 million bits of information on passengers and drivers into the hands of fraudsters. On the other hand, when he advised Imgur, a photo-sharing corporation, that they had been hacked, they made the information public within a day.

People using his site to determine the status of their information can search Hunt’s website on their email address. Some 1.7 million people also have subscribed to alerts that sound when their data pops up in newly discovered breaches.