9 Financial Commandments for 20 Year Olds

Getting your finances off to a stellar start is easier said than done.  It is critical if you want to begin on the right side of the financial track.  I’ve discussed many of these commandments in previous posts; however, Kathleen Elkins from Business Insider lays out just what you need to do to take control of your finances early in your working career.

Try and see how all nine apply in your current life.  Don’t feel obligated to make a move on all of them at once.  Create a plan.  Tackle one of these commandments a month.  If you follow that plan you will be ready to start 2016 with a great financial outlook.


Budget Smart, Invest Wise

Graduating with Student Loans: To Do List

The past couple of weeks have been an exciting one for families across the country.  People have seen their loved ones graduate from college.  While this is an exciting time, it can also be a confusing one.  The recent graduates are hoping to enter the work force.  Some have jobs lined up.  Others do not.  Either way student loans have become the norm for recent graduates.  Here is a quick to do list for all graduates who have the financial burden of student loans upon graduation.

1) Know the Amount

It is crucial that you understand just how much you borrowed during your years of study.  When I graduated, I had no idea how much I owed.  The total ended up being $30,000, but I didn’t have the slightest idea of how much was borrowed during those years.  Total up your numbers and know the amount.

2) Develop a Payback Plan

Student loans tend to have a payback period of ten years.  Decide if you want to take the full ten years to pay them back.  If you have other life goals you might consider paying them back earlier.  I paid off mine in three years.  I was tired of seeing the majority of my paycheck disappearing to loans, but it did feel good to know I bought myself seven more years of saving capability after they were paid off.

3) Reward Milestones 

The process of paying back your student loans can seem insurmountable at the beginning.  Have milestones that you can reward yourself for achieving.  For example, go out to a nice dinner for every $5000 you pay back.  This will continue to motivate you to continue toward the end result of being debt free.

Budget Smart, Invest Wise 

One Year to a Higher Wealth

Small changes can make a big impact.  That is how you can grow your wealth.  Yes, you can win the lottery, but you’re not going to.  Wealth is created through the money and life decisions you make every month, week and even today.  Small decisions now can have a huge impact on your net worth in 30 to 40 years.  It can even make a difference in a year’s time.

Today I am sharing an article that outlines twelve things one can do to increase wealth in just a year.  All twelve might not apply to you, but even doing some of things will make a long term impact on the wealth potential you have.


Budget Smart, Invest Wise

When Your Income Disappears

Have you ever lost a job before?  I’m not talking about a high school job where you hit a parked car and didn’t tell anyone (happened to my cousin).  I’m talking about losing a job in your career, what you studied for.

Losing a job is pretty miserable, but try losing your job on your birthday.  A day of celebration quickly turns into a “Well shit, what am I to do?”  Simple answer: find another one.

No I did not lose my job on my birthday, so I cannot empathize with the person, but a friend of mine did.

If you do lose your job it is not the end of the world.  There are things more important, your health, your relationships.  A job simply provides you money so you can buy food and shelter.  However, having a emergency savings is great when your job does disappear.

We live in a time where machines are quickly becoming smarter and more efficient then man.  A world where companies, governments and everyone wants to cut or eliminate costs.  Fortunately for my friend, an emergency fund is already stashed away.  You can lose your job unexpectedly, you can have a medical emergency.  Having 3-6 months of liquid cash stored away in an account can help you make it through those tough times when your income disappears.

Budget Smart, Invest Wise

3 Things to do Every Payday

Friday’s are paydays for a lot of people.  The influx of cash in your hand in the form of a check or the increase in your online bank account is exciting.  Some follow proper protocol on payday.  They take the necessary financial steps to ensure their financial well-being.  There are three things you should focus on each payday to ensure your financial life is on the right track.

1) Pay Bills:  

Each time you get paid, whether it’s every week, two weeks or monthly you need to meet your liabilities.  More specifically you need to pay any bills that are due before you get paid again.  This could mean rent, a credit card statement or a car payment.  Avoiding these payments will be a costly mistake to your credit score and will ultimately cost you more money in the long run with accrued interest.

2) Automatically Invest:

Each time you receive payment from your employer you should be investing in your financial future.  This could be in the form of a 401k contribution with an employer match.  It also could be an automatic withdrawal from your bank account every pay period.  Brokerage firms have made it easier than ever to make investing a seamless process for the investor.

3) Have an Indulgence:

After you have met the first two objectives you can move on to this third.  Whether it is a nice dinner, a night out with friends or a small purchase, enjoy the fruits of your labor.  Of course you should still make sure this indulgence fits into your monthly budget.  Still a nice reward.

So there you have it, three things that you should do each time you get paid.  These steps allow you to not only take care of your financial future, but also ensure you will enjoy the journey along the way.

Budget Smart, Invest Wise


Video Series: Eye Opening World of Personal Finance

Today’s video is one that is almost two years old; however, the facts provided and insights suggested are timeless.  I honestly believe that the majority of people who follow my blog are in a better financial position than 90% of people throughout the world.  It is mind boggling to see how some do struggle.  We get caught up in a spend spend spend trend that we forget how important it is to save save save.  Maybe you know someone who isn’t in as good of a financial position as yourself.  Help teach them responsible personal finance and don’t let him or her become another statistic.

Budget Smart, Invest Wise

Video Series: Paying Down Debt

Many of us struggle with our finances, especially our debt.  Today’s video talks about a specific method one can use to not only limit your debt, but also a proactive approach to tackling your balance.

Whether your debt is from credit cards, student loans, a car payment or a home, debt is a financial black hole that sooner or later you WILL have to dig yourself out of.  Check out today’s video and find the best way to manage and limit your own debt.

Budget Smart, Invest Wise

January 2015 Budget Review

The month of January was an exciting one.  I switched jobs and left the corporate world.  Because of unused vacation days, my income for the month of January was quite high.  This allowed me to put extra money towards my student loans.

I did incur some extra costs that I typically didn’t have.  As of now, I have elected COBRA continuation health coverage.  It is quite expensive and ate up more of my income than I had initially planned but no worries.  Life insurance is another category that I have to take on now as well.

After I had met all of my expenses for the month of January, I had a remaining $45.22 balance.  This amount I used to make an extra payment on my student loans.  My income for the month of February will most likely not be as high as it was for the month of January.  This means that the amount I have to spend and use to pay down debt will be less.  Every dollar, every penny is accounted for.  Take a look at an in-depth review of my January 2015 budget.  There is no perfect science to budgeting your income and expenses.  Everyone has their own way they like to do it.  The purpose is to hold yourself financially responsible and take steps towards your financial well-being.

Earned Income (After-Tax)$5430.94
Car Payment($300.00)
Car Insurance/Cell phone($121.46)
Eating Out($142.54)
Roth IRA Contribution($300.00)
Miscellaneous Expenses($321.82)
Student Loans($2545.22)
Life Insurance($33.98)
Health Insurance($307.25)
Final Amount$0.00

Budget Smart, Invest Wise

What to do with Your Tax Refund

It’s that time of year when we begin collecting our W-2’s, 1099’s and other documetns to prepare our tax returns.  For some of us, including myself, we get excited about this tax time of year.  The main reason: a tax refund!

I found out last year through a car salesman that the car industry loves tax season.  The reason why?  Because many people end up using their tax refunds to help with a down payment of a new automobile.  A friend of mine last year used her tax refund to purchase a designer purse.

If you get a tax refund, you might view it as a “bonus”.  Unexpected money just fell into our lap.  We get the urge to spend this money on a luxury that we might otherwise have not been able to afford.  It’s YOUR money, do with it as you please, but I will offer some advice on how to spend your tax refund wisely:

Pay down Debt:  Instead of buying a new car with your refund, use it to pay down an existing car loan if you have one.  Make an extra payment or two to a student loan you might have.  Debt is an obligation you will  have to pay down eventually, so why not use the extra money to give you an extra step to being debt free.

Go on a Vacation:  Maybe you feel like you have worked hard, and you probably have.  Use the money, or part of the money, to treat yourself to a vacation.  The enjoyment and peace of mind you can get out of an experience far outweighs any “thing” you might want to purchase.  You will have created lasting memories.  Plus, more than likely, you will be more focused upon your return.

Just save it:  Suppose you are 25 years old and receive a tax refund of $1000.  If you used that money to open a Roth IRA or put it in a taxable brokerage account, you will be well on your way to creating future financial freedom for yourself.  Let’s use the following example: You take the $1000 and open a Roth IRA.  If you put in just $100 a month into that Roth IRA, then assuming an 8% return annually, you will have an account balance of well over $300,000 in 40 years.  Granted 40 years is a way off, but that money can help supplement your retirement.  You can also use the refund to build up an emergency fund or to contribute to a taxable brokerage account.

A tax refund is welcomed by everybody who receives one.  You worked hard last year, you paid a little more in taxes then you should have, now it’s the government’s turn to give a little back to you.  Spending our refund on cars, purses and consumer electronics is what American society has conditioned us to do with extra money.  Don’t fall into the trap of what everyone else does with his or her refund.  Use it to create a better life for yourself, for the present and the future.

Budget Smart, Invest Wise

Establishing Good Credit

Growing up I was told by my parents, “With good credit you can afford anything”.  That was then, and this is now.  We all saw what happened with the housing bubble and what will soon probably happen with student loans.  Credit is important, but not meant to purchase things above your means.

Having good credit is important; however, using that credit isn’t always wise.  I saw an info commercial the other day for a product that cost $250.  They were offering people 12 months interest free financing.  If you have to finance $250 for a 12-month period then you already have money issues and shouldn’t be buying it in the first place.

A friend of mine had an old Ford Expedition with a couple hundred thousand miles on it.  He bought it for around two grand, drove it for 12 months, and then it broke down.  Either he didn’t have another two grand lying around to purchase another piece of junk, or he wanted something a little more reliable.  Either way he decided to purchase a used one for around ten grand this time.  He didn’t have enough money to purchase the car, so he needed financing for the purchase.  Problem was, he had no credit.  He was offered an interest rate of 13% for a car loan that was over 36 months.  An absolute ridiculous rate.  He ended up getting his mother to cosign on the loan and got it for 1.9%, very good and reasonable.

Moral of the story… You never know when you need credit.  It is important to have it established for that rare chance that you do need it.  Young people are notorious for abusing credit cards.  They spend and spend, and I can only assume they are disillusioned that they never have to pay.

Those individuals who have a good mind set around money should consider establishing credit in one way or another.  Establishing credit by signing up for a credit card is fairly easy.  Proceed with caution.  I would only recommend that someone get a credit card if he or she has income (don’t be a college student without a part-time job at the very least).  If you don’t have any credit then start with a well-known card such as through Capital One or Chase.  Charge a tank of gas on the card every month.  Circle the date when the amount will be due every month and pay off the balance.

Showing responsibility early on when it comes to credit cards will not only keep you away from high-interest debt, but it will also allow you to avoid a 13% or higher auto loan if and when you might need it.

Budget Smart, Invest Wise