Thursday, May 30, 2013

So What Exactly Is Personal Finance?

It's a cute piggy bank. Don't you just want to feed him all your coins?
photo credit: enggul via photopin cc
I realized yesterday that as awesome as my blog may be, some people might not even know what personal finance is.

We don't really learn about it in elementary school, middle school, or high school (at least, not where I went), and even in college, I haven't seen any kind of personal finance education program. On campus, there are tons of resources for job placement, resume writing and networking, which is great. But let's say you go through all that and find yourself a wonderful job. Do you know how to handle the money?

There's a lot more to do with what you earn than just spending it.

Monday, May 27, 2013

Credit Reports: What, How, and When

Focus on the "Finance" part.


Read this if: 

1) You have no idea what a credit report is. 
2) You know what it is, but don't know where to get one. 
3) You don't know when to get one. 

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What Is It? 

A credit report is like a financial report card. Three agencies keep tabs on you and generate those reports: Equifax, TransUnion, and Experian. You can get three free reports a year (one from each agency), and after that you have to pay a fee. Each one looks a little bit different and might even contain different information.

It's important to get your credit report regularly once you start establishing credit because mistakes happen often and you don't want something false on your credit report to reflect badly on you. It's like if your college transcript had a stamp that said you cheated, when you really didn't. 

Thursday, May 23, 2013

Why This Stuff Is So Important (To Me)

Toolboxes are also very important me.
I am a twenty-year-old sophomore in college, and soon I will have to venture out into the real world, get a job and pay bills and taxes like a real person. It's incredibly important to me that I feel somewhat ready. My parents never really talked to me about money, and I've seen it come up all over the place as a source of conflict and sadness. If I can avoid conflict and sadness, I will. 

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Here are some statistics I found to coerce you into reading my blog:

Monday, May 20, 2013

FDIC Insurance: To Help You Sleep At Night

Safety first.

Read this if: 

1) You are worried about losing the money you have invested.  
2) You are worried about losing the money you have in your banks. 

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I've had several people ask me about the security of their investments, so here is an explanation as to why you shouldn't worry about your money. 


Saturday, May 18, 2013

Debit or Credit?

Swiping cards makes me feel like a grown-up.
Read this if: 

1) You're not clear what the difference between debit and credit is. 

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I've been asked surprising frequently about the difference between debit and credit. I prefer debit, but responsible handling of credit cards is acceptable as well. I would think that most people have at least a debit card, which most banks give you when you open a checking account.

Friday, May 17, 2013

Messages From Readers: Questions About IRAs

Questions?

A reader sent in a couple questions regarding a comment I left earlier, found here: http://orphanreceptors.blogspot.com/2013/05/retirement-funds-i-dont-care-if-youre.html

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"Sorry Joan, but can you reexplain this "4) You can only contribute the money you earned in 2012 until April 15th of 2013. (So you always have until April 15th of the following year to contribute the full amount of the current year). " I didn't quite follow it completely.

Also, could you do a post on IRAs in general and retirement plans too? I don't know too much about them.

Also, for Roths, is it like a mutual fund then? It sounds similar - pool your and other people's monies together, invest in stuff, and return the gained worth. Isn't there a chance of the investments going bad and me losing some of my retirement money though? (I'm not well read on this, so not sure...)

By the way, is there a minimum amount I have to invest to open/continue the account? And do I have to invest a certain amount every year?" 

Thursday, May 16, 2013

Messages From Readers: Professor Feedback

My professor's wife is in a stock picking club. That makes me think that stocks grow in gardens.
Large, expensive gardens.

In an attempt to get validation for my blog, I showed it to a professor. He gave me some great feedback, shared here:

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"Joan, I like your blog! Very cool. Excellent advice to put money away in tax deferred investments as much and early as possible. Mutual funds are better than individual stocks, unless you have some fun in evaluating companies and following the stock. A good way to do that is a stock picking club. My wife has been in one for a long time, with friends from the neighborhood.
My final tip for young folks would be to only borrow money for assets that appreciate (like houses). For assets that depreciate (like cars), try to save up the money first before buying." 

- Professor 

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I want to clarify a couple of things that he mentioned: tax-deffered investments, appreciation, and depreciation (of assets).

Tuesday, May 14, 2013

Credit Cards: How to Choose One

Choosing a credit card is almost as confusing as navigating a maze.
Maybe more so?

Read This If: 

1) You want to know how to choose a credit card. 

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Keep in mind while you're reading this that I'm talking about credit cards that the younger people would qualify for. As you get older and a more established credit history, you can qualify for many, many, many more different types of cards.

So what features should you look for?

Saturday, May 11, 2013

Mishaps in Money: Fined by my bank. :'(

It was a sad moment.

I pride myself on being on top of things, especially when it comes to money.

So when I got fined by my bank, it was a confusing and embarrassing experience. 

I called the bank and asked them why they charged me, and they explained. I am only allowed to withdraw three times from my savings account a month, and apparently I had exceeded that limit by 3. That incurred a fee of $12, so $4 per withdrawal. 

My mistake with withdrawing too often happened because I decided to use $25 a week from my savings account to buy shares in a mutual fund. (I'm still not sure why I felt this had to be done). The service I invest with would automatically transfer the money, and I didn't realize that there were limits on how often you could withdraw from my savings account (for any purpose). 

There are three things that I learned. 

Thursday, May 9, 2013

Messages from Readers: A Success Story

Struggle and success are related, but when it comes to your finances, you have a lot of control over the amount of struggle you have to endure.

So in an effort to get my blog recognized, I reached out to potential readers by asking them to share my blog whenever they could. I received a message from someone that gives a great example of what starting early can do for you. 

This was written in response to my post on Roth IRAs found here: http://orphanreceptors.blogspot.com/2013/05/retirement-funds-i-dont-care-if-youre.html 

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"…You wrote, "Before we proceed, understand that doing this will not make you rich."  Which is true; there are no guarantees.  But investing early greatly increases your odds of becoming rich, due to the power of compounding.  Time is on your side.  If you put $5,000 in your Roth IRA at age 20 and earn an average 8% annual return, and never touch the money, that $5,000 will grow to $160,000 by the time you reach age 65. But if you wait until you're 39 to start, that $5,000 would only grow to $40,000. Time is the primary ingredient to the magic that is compounding. If you can contribute $5,000 annually to your Roth IRA for 45 years, and earn an average 8% return, your retirement savings will total over $1.93 million.  Inflation will reduce the purchasing power of 1.9 million; but that will still be a good nest egg.  

Wednesday, May 8, 2013

Basics of Investing: It's easier than you think!

You have to start somewhere. There's no line for learning how to invest though.

Read this if: 

1) You are interested in understanding basics terminology and processes of investing. 

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When I first started looking into this stuff, I was completely overwhelmed. Even after reading some books and articles, I still felt like if I didn't know 100% what I was doing, then I would make a catastrophic mistake and I would lose all my money forever and ever. (There are circumstances you can't control, but in general, this is not very likely). 

Let's talk about a couple things you should know, and hopefully by the end, you'll feel more confident in starting the process.

Tuesday, May 7, 2013

Imaginary Banks

Why would this be a good picture for this post? I'm not sure.

Read this if: 

1) Well, why not. 

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Just kidding, there aren't actually imaginary banks. I'm actually talking about online banking. 

There is a difference between online banking and using your bank's website. Most banks have actual buildings that you physically go to, while some don't. These banks are exclusively online.

Monday, May 6, 2013

Retirement Funds: I don't care if you're 12 - start one ASAP

Money and retirement go hand-in-hand.

Read this if: 

1) You have a job. 
2) You have had a job. 
3) You have enough money to save (that is, daily groceries/rental bills don't wipe you out). 

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As soon as you get a job, you should get a 401(k) or a Roth IRA. 

The point of saving for retirement is not to do it when you're close to retirement. The earlier you start, the better off you'll be. Before we proceed, understand that doing this will not make you rich. It's also not something you "need" to do - any kind of savings is better than nothing and there is nothing wrong with having your money in a regular savings account. 

Personally, I have a Roth IRA. I like them because they have very simple rules and the company that I invest with has a wonderful website that makes me feel secure.