Credit Cards

What are some of the charges on credit cards? Include different interest rates, APR, late fees, over charge. How do you apply for a credit card? What are the pros and cons of owning a credit card? Three tips every person should know about credit cards.

 First off you may not know what a credit card does exactly. A credit card charges a purchase, but lets you "pay" for it later. So say you have a credit card and it's limit is 100$. It's almost as if you have an extra 100$. Now that may seem glamorous to you, but let me tell you what all comes with a credit card besides just having "extra" cash. When you use a credit card it's kind of like a loan. When you use your credit card there will be charges and interest, late fees and all the good stuff. Some different charges that come with a credit card are; Finance charge which is a fee on an unpaid balance at the billing time which is usually at the end of the month. An APR is an Annual Percentage Rate. The average APR rate is at 18%/per year. So about 1.5% a month. So that means what ever you have purchased using your credit card that month and is not paid by the end of the month will be charged with the finance charge and your APR percent per month. Late fees is a fee a credit card company will charge you if you make your payment late or if you don't pay the minimum required amount for that month. Late fees on average are abut 35$. So think about this. You spend 50$ for gas and you don't pay that at the end of the month. You get a finance charge, your APR, and a late fee. Ending up spending almost a hundred bucks. And if you keep going every month and not paying it the bill gets higher and higher taking your credit rating also known as credit score down. Now if your still interested in credit cards and want one you can apply for one it's very simple. You can go online or fill out by paper which you usually get in the mail about three times a week. After applying the will look at: Are they able to pay meaning do you have income, do they have any assets, and what is there credit history like. After that the credit card company will say yay or nay.  You have heard me bag on credit cards let me tell you the pros and cons. Yes I said pros there are some good things that can come out of credit cards.
 PROS

• Earlier consumption of product
• Good convenience to have for emergencies, ect.
• Establishment of good credit history making your credit score higher!
• Consalidation of all your debts
• Identification

CONS

• Cost more if unpaid balance is not paid monthly
• Ties up future income (buy now, pay later)
• Temps a person to overspend 
• Reduces comparison shopping if you only shop in stores extending credit cards
• Decreases future buying power

Those are some pros and cons of having credit cards. Now last thing I want to say. I have three tips for you that you need to know about credit cards. One credit cards are not necessarily a bad thing if you pay all of your bill monthly you wont have any extra charges and your credit score goes through the roof making it very easy to get a car loan or a house mortgage and then you usually can get a lower interest rate! Two if you get a credit card don't go out and spend money because you have that card. Just having that card doesn't mean you actually have that money. Remember buy now, pay later. And three stick with one credit card having multiple credit cards will only cause confusion and temp you to buy more that you can't really afford!

Check out this article on business credit cards!
Business Credit Card
Check out this article on credit card debt!
10 ways to avoid credit card debt!

Investments

State the difference between stocks, mutual funds, and bonds. What does risk have to do with investing? What does time have to do with investing? How do these differ from savings accounts? Three tips every person should know for investing.

The difference between stocks, mutual funds, and bonds is this: Stocks are very liquid and not stable, mutual funds are liquid and stable, and bonds are long-term investments that are both not liquid, not stable, and inflation can kill it. Investing is about risk when it comes to the amount of money you're willing to invest. You do not want to invest a large amount of money if you're going to constantly worry about how it does after investing it. Investing is about making your life easier by gaining money so you need to know your risk tolerance. You should invest in the stock market when the time is right. When I say that, I mean you need to look into the stock market every couple days and see when companies are doing well and when investing in them would make you money. These differ from savings accounts by the fact that your money isn't in a bank gaining interest and once you invest into stocks, mutual funds, or bonds your money could easily be lost without profiting anything. Three tips every person should know for investing are invest objectively, not emotionally, create an investment strategy that takes into account your personal objectives and constraints, and be selective when choosing stocks to invest in.

Here is an informational video of the importance of investing posted by Dr. Kathy Walsh from the School of Banking and Finance at the Australian School of Business
http://www.youtube.com/watch?v=gRSJG6QB03I

Here is an investment article 
http://www.fool.com/retirement/general/2011/05/18/this-investment-will-absolutely-kill-you.aspx 

Retirement

What's the difference between IRA and 401(K)? What is Social Security? Why is it a big issue now? How does retirement relate to personal savings? Look at an investment calculator and state why it is important to start looking at retirement funds now, as opposed to ten years from now.

An IRA is a private investment that you do on your own, funded only by your own money, which is also non-taxable until you withdrawal money, while 401(K) is offered through your work and involves your contributions and the contributions of your employer. Social Security is a program in which people receive benefits or services and protection against socially recognized conditions such as poverty, old age, disability, unemployment, and others. The big issue in Social Security now is because so many people are deciding to retire, it's undetermined if there is going to be enough money going into Social Security to be able to support the fund itself. The reason this is a problem is because the World War II babyboomers are beginning to retire and because they have not produced enough children to replace themselves, the number of taxpayers is shrinking. So the question is will there even be Social Security when it's our time to retire? It's an advantage to have other personal savings accounts other than just a retirement fund because they are very liquid which means it easy to take money out while putting as much money you want back into the account gaining interest. It's just some extra money to fall back on in case of emergencies or just for casual spending. It's a good idea to start thinking about investing into a retirement fund at a young age or starting sooner than later because putting a little money into savings each paycheck will add up more quickly then you realize. Investing earlier will mean you could possibly retire earlier or just have a good amount of money to live off of when you do decide to retire.

Here is an informational video posted by Ameriprise Financial giving causes, statistics, and tips for a successful retirement.
http://www.youtube.com/watch?v=UL8FkMkx9EY&feature=player_embedded#at=114 

 

Here is a retirement article from the San Francisco Chronicle

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/05/16/investopedia52203.DTL 

Car loan

What is the process of obtaining a loan? State why down payments are important. How does the time frame on the loan affect you? How does value change over time for this purchase? State three things every person should know to buy this item.

When obtaining a car loan, you first have to pick out that set of wheels that fits you. After you have picked out that car, you submit your loan application to get pre-approved for the loan. The car dealership will deal with your application as soon as possible and hopefully they approve the loan.

In order to having a better chance of getting a loan, putting a down payment is important because the more money you put down on a loan, the less you have to pay and the lower the interest is going to be. The time frame on a loan affects you a lot. Usually most car loans are either 36 months or 72 months. The less months you have to pay, usually the higher the interest is going to be and more you would have to pay monthly. If you get the 72 months, it's usually going to be lower interest and pay less each month, but that's another two years you would have to pay. whenever you purchase something whether it's a new car or a new house, over time the value of that item will drop. Especially with cars, because every year new cars come out with different models. The longer you have the car, the more the value on it will drop. There are many things to know when buying a car, but there are three main things that every person should know before purchasing an automobile. First, they should be able to pick out the right car that fits them. Secondly, you have to be able to apply for a loan and hopefully get it approved. Finally, make sure to pay your bill each month. If possible, try and pay off the car earlier because it will end up cheaper. 

Here is an informational video 
 http://www.videojug.com/interview/car-loans-and-other-means-of-payment

News article about how to get a car loan
http://www.carloan.com/car-loan-news/best-cars-for-bad-credit.aspx 

Personal Budget

What is the difference between fixed and flexible expenses? Provide examples of each. Also know the difference between compound and simple interest on savings account. What is the importance of savings? Is it okay to spend money now? Why?

You have a budget and on that budget there will be fixed expense and flexible expenses. A fixed expense is an expense that remains the same. For example a fixed expense would be your phone bill every month or your monthly mortgage. A flexible expense can very from budget to budget. An example would be buying your groceries every month or what you might have to fix on your car. Simple interest does not consider the effects of compounding. Simple interest calculates interest as the product of the original balance, the nominal interest rate, and the time period (in years). For compound interest it's calculated much like the simple interest, but instead of taking interest off the beginning product only it will gain interest off the interest it has already made. So to make it sound easier: Simple interest: $5,000 in a savings account with 6% interest every 6 months or 12% a year. By the end of the year you will have made $600 making your new balance $5,600. Because you have $5,000X12%. Compound interest: $5,000 in savings account with 6% interest every 6 months or 12% yearly. By the end of the year you will have $5,618. Because at 6 months you will gain the interest making your balance $5,300 at the end of the year you get interest on top of the interest = $5,000 x (1+12%/2)^2. Saving money is very important because you always want to have a back up. Just say your car breaks down and it's the transmission. That's an expensive fix possibly won't have the money right there and then if you haven't say put some of your money away previously. My advise to saving money is to just every month just put as much as you can away. Even if it's $200 a month. That will add up and especially with interest which we talked about earlier. Spending money is always fun and of course it's okay. It helps boost our economy, but you don't want to go on a shopping spree every time you get paid and spend all your money. My rule save a set amount of money every month if possible and use the rest for my self if I want to. It's always good to reward your self after all the hard work you put into just getting your money.  


Check out this article on saving money!
MSN Money Article