Money 101 | 5 simple money rules to last a lifetime

Published: Thursday, November 16, 2017 @ 7:30 AM

The concept of personal finance can be intimidating, especially if you’ve never learned much about it (which is the case for most people). And very often, when you try to learn, the Internet is full of so much clutter these days, it can be difficult to know whom to trust.

But here’s the good news: if you know nothing about money (or even if you know a lot), there are really just a few basic things you need to understand in order to start taking control of your financial life. Once you grasp these concepts and apply them to your own life, you will begin to see a much brighter financial future.

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Regardless of how much you’re making, there are five golden money rules to always live by — fundamental guidelines that will allow you to take, and maintain, control of your finances — both now and over time. Write these down and keep it somewhere you’ll see it, because these are essential money rules you can live by forever.

5 golden money rules you can live by forever

1. Spend less than you make

You’ve probably heard it before, and while it sounds like a simple concept, it can take people years and even decades to finally realize the impact this idea can have on their life (some people never do).

The reality is, until you learn to spend less than you make, you will never truly reach financial freedom — the ability to make your own decisions, when you want to make them, without having to rely on someone else’s approval (like say, from the bank, other lender or someone else).

The longer you continue living paycheck-to-paycheck, the more difficult it becomes to break the cycle. So the earlier you learn to spend less than you make, the sooner you’ll be able to have a confident and empowered relationship with money.

And it’s not about the amount of money you make, it’s about adjusting your habits and lifestyle in order to improve your life both now and down the road. So when you do start making more money, you can really benefit from the added income, rather than waking up one day and realizing you have no idea where it all went.

Once you start making small changes to your spending routine, you will quickly realize how big of an impact it can have on every aspect of your life. Each step you take, like paying off a debt or getting closer to a savings goal, will give you even more motivation to keep going, because you’ll be able to see the increasing control you have over your own life and your own money.

The hard part (which really doesn’t have to be that difficult)

Living below your means requires you to pick and choose. Maybe you take one less vacation or limit how much you go out to eat. Or maybe you go to dinner with friends, but eat before you go so you aren’t stuck with a big bill when everyone splits the check. You can have a social life without draining your wallet — it just takes some prioritizing.

Decide what’s most important to you and start saving for those things. A few examples may be building an emergency savings fund, paying off debt or buying a house or a car. By making your goals a priority, you give yourself a much better chance of reaching them — and on your own timeline, which is key. Because when it comes time to buy a house and you realize you wasted a lot of money that could have been saved for a down payment, having to put it off won’t be a very pleasurable situation.

Bottom line: If you want to get on the quickest path to reaching your goals, you have to start living below your means — and the best way to do that is to start paying attention to what’s going on with your money so you can keep your priorities in line.

2. Have a plan

The only way to get control of your spending and saving, and actually reach your goals, is to create a plan and track everything.

First, you need to set goals. Figure out what your priorities are for both the near and long-term future and then start putting money away for each of them.

If you don’t know why you’re saving, it often gets put on the back burner. So identify what your big goals are and then start taking steps to reach them. Write them down and put it somewhere you’ll see them — as a reminder of what you’re working for!

Once you’ve identified your goals, create a budget and identify expenses you may be able to reduce. Here are a few examples:

  • Subscriptions: You likely don’t need all of those monthly subscriptions and by cutting some of them out, you can put more money toward your goals.
  • Cable bill: Look for a cheaper plan or alternatives to traditional pay TV.
  • Cell phone plan: Consider a discount wireless provider or at least a cheaper plan that gives you only what you need.
  • Insurance: Frequently re-shopping your insurance policies is the best way to get the best deal.
    • Best car insurance companies
    • Best home insurance companies
  • Shopping, entertainment, extra spending.

Finally, once you’ve created a budget with your goals in mind, the only way to actually make it all work is to track everything — every dollar that comes in and every dollar that goes out.

3. Get out of debt

This is primarily about consumer debt, like credit cards, because this is the type of debt that will prevent you from reaching your big goals in life. While paying off student loans and other debts may still be a big priority for you, credit card debt typically carries the highest interest rates and also has a bigger impact on your credit score.

Here are a few reasons getting out of debt is crucial to improving your short-term and long-term financial life:

  • Carrying debt will cost you a lot of wasted money in interest charges over time.
  • It can damage your credit score, which impacts your ability to make big purchases, like a car or house — since your credit score is a big factor used by lenders to determine your mortgage rate, car loan rate and interest rates on other loans.
  • Debt can cause a lot of added stress on every aspect of your life.

So when it comes to getting out of debt, it’s important to get your cards with the highest interest rates paid off first.

Paying off credit card debt that’s several thousand dollars or more takes time — and it also takes discipline. Setting a goal of paying down debt in 60 months (five years) or less typically works best for most people. If you can set a goal of three years, that’s even better! But anything greater than 60 months and people tend to lose their focus. And once you start making progress toward paying off your debt, you may find that you can make it happen a lot quicker than you thought.

Creating a budget and reducing your expenses will help you find the extra money you need each month to put toward paying down debt.

Then start putting the most money toward the credit card with the highest interest rate — this is the one that will cost you the most money in interest over time. So take any extra money you have each month (from reducing bills etc.), and put more toward that card and slightly less toward the other cards. When you reach a zero balance, do not close the account. This only hurts your credit score. Just let it sit at a $0 balance and move on to paying off the next card.

Bonus tip: While you’re trying to pay off debt, it’s important to not take on any new debt. If you find this to be difficult for you, then start paying for things in cash. It’s a lot harder to part with $10 when it’s in your hand and it’s all you have left for the day (or week).

RELATED: Follow this #1 rule to avoid big credit card debt

4. Save and invest

A dollar today is worth a lot more than a dollar tomorrow.

The earlier you start saving, the more time you have to build up the funds to cover an emergency and reach your big spending goals (again, think a car or down payment on a house). On top of that, the earlier you save and invest, the more time your money has to grow.

Here are some basic guidelines on starting to save and invest.

Emergency savings: More than 40% of Americans experienced an unexpected emergency expense over the past year or had a family member who did — and a majority of people don’t have the money to cover the cost. The best way to save for unexpected financial shocks is to have two separate emergency funds: a rainy day fund and an emergency fund. This is money you want to keep somewhere you can access quickly and easily, like in a savings account.

  • A rainy day fund is money you might dip into every once in a while to cover an unexpected expense, like a medical bill or a car repair.
  • An emergency fund is a bigger, longer-term savings fund. This money should be able to cover at least three to six months worth of living expenses in case you can’t work for a period of time, for whatever reason.

Here’s how to start building your emergency savings.

Automate your savings: Pay yourself first. Otherwise, you’ll get to the end of the month and realize you’ve spent what you intended to save. So using your budget, figure out how much you can save each month and have the money directly deposited into your savings account and/or other retirement savings accounts.

Start investing: If you have extra money after saving for an emergency and other short-term savings goals, start investing. Compound interest is one of the most powerful financial forces, because it allows the money you invest now to be worth a lot more down the road. Money saved today is worth a lot more than money saved tomorrow — and this is true for money in a savings account, as well as money in short- and long-term investments.

Here’s a simple investing example: You invest $1,000 today and earn an annual 5% gain, so $50. That $50 is added to the principal amount of your investment, and then next year, you earn a 5% gain on $1,050, so you earn $102.50. And so on …

RELATED: How to invest your first $1,000 – $5,000 wisely

5. It’s about YOU!

The decision to take control of our financial life is up to you, because no one is going to do it for you.

The most important thing to understand about taking control of your money — and ultimately reaching financial independence — is to know that YOU are the only person who can make it happen. Of course there are others who will help you along the way, providing guidance and motivation — and in fact, that support is a key part of the process, because surrounding yourself with people who support you and whose goals are aligned with yours is the best way to keep yourself on track.

When you decide to make your financial well-being a priority, you’ll quickly discover that certain relationships and other aspects of life will empower you to reach your goals — and it’s important to hang on to them — because you’ll also discover that there are some things in your life that need to change.

Giving yourself the best chance at financial success means living a life that involves the right people, habits and behaviors. It’s about figuring out what really matters to you and your ultimate happiness, because no one can decide that — or accomplish it — except for you.

5 fast facts that will help make filling out FAFSA a breeze

Published: Wednesday, December 13, 2017 @ 10:32 AM

The following points are what you need to know, as well as common mistakes to avoid when filling out the FAFSA Fill it out – you have nothing to lose The sooner you submit your FAFSA, the better Gather the information you'll need Watch out for common mistakes like leaving fields blank Keep an eye out for requests for more information

It's that time of year again when parents and college or college-bound students fill out the FAFSA (Free Application for Federal Student Aid).

The idea of wading through a form – especially one that requires financial information – is definitely not an appealing idea, but the FAFSA could be a tremendous help in getting your student money to attend college.

RELATED: 20 financial aid terms every college student and parent should understand

The following points are what you need to know, as well as common mistakes to avoid when filling out the FAFSA.

Fill it out – you have nothing to lose.

You may think that you don't need to fill out the FAFSA, especially if you believe you might not qualify for need-based aid. But there's no income cut-off point with federal student aid, according to the U.S. Department of Education. In addition, the FAFSA can help you qualify for all kinds of grants, loans and scholarships, including those offered by your state, school or private organizations.

By investing a few minutes of time, you could reap thousands of dollars in potential rewards.

Submit it ASAP.

The sooner you submit your FAFSA, the better, according to consumer adviser Clark Howard. Although the federal deadline isn't until June 30, 2018, you should check with the financial aid administrator at colleges you're interested in to make sure their deadlines aren't earlier.

Submitting earlier will help you plan how you'll pay for college. You'll also have a better chance of getting as much aid or scholarship money as possible since some colleges distribute their available money on a first-come, first-serve basis, Howard says.

Gather the information you'll need.

The FAFSA asks questions about the student as well as his or her parents if the student is a dependent.

You'll need the following information on hand as you fill out the FAFSA:

  • The student's Social Security number
  • The parents' Social Security numbers
  • Driver's license number (if you have one)
  • Alien registration number (if you're not a U.S. citizen)
  • Federal tax information for the student (and his or her spouse, if applicable) and the parents. This can often be imported online, so you may not need your records.
  • Information on the student's and parents' assets, such as money held in bank accounts and real estate holdings (not your primary residence)
  • Records of the student's or parents' untaxed income, such as veterans benefits and interest income

Watch out for common mistakes.

The National Association of Student Financial Aid Administrators points out some common mistakes that can delay your form's submission or cause you to not get the aid and scholarships you might qualify for. They include the following:

  • Leaving some fields blank – Instead, put in a "0" or "not applicable."
  • Listing an incorrect Social Security or driver's license number – It pays to recheck these numbers.
  • Failing to use your legal name – Use the name on your Social Security card, not a nickname.
  • Forgetting to list colleges – Even if you're not sure of which college you'll be attending, add any reasonable possibilities to the list of colleges that will receive your information. You're under no obligation to apply to or attend these colleges, and they can't see which other colleges you're interested in.

Keep an eye out for requests for more information.

Your FAFSA may be selected for verification, which means you'll have to provide some additional or supporting information, U.S. News & World Report explains. This process doesn't necessarily mean you've done anything wrong. You may have a discrepancy or mistake on your form, but some FAFSAs are just randomly selected for verification (lucky you!).

These requests will often come to the student's personal email account or university email address, so he or she will have to be diligent about checking it and responding to any requests by the stated deadline.

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Is credit monitoring a scam?

Published: Wednesday, November 22, 2017 @ 12:01 PM

Clark Howard explains how to protect yourself.

With the recent massive security breach of Equifax — one of the three credit bureaus with which many may have thought their private information was safer than most — now many people are dealing with more insecurities, wondering where they can entrust their private information, if anywhere.

Here are some options:

Credit freezing

Better and cheaper than credit monitoring, an option for optimal security is freezing your credit through each of the three credit bureaus (Experian, Equifax and TransUnion), according to WSB money expert Clark Howard at Clark.com.

The fee is $3 to $10 per person per bureau, depending on your state, to allow you to seal your credit reports — except now it's free with Equifax from here on out due to the recent data breach.

You will be provided with a personal identification number (PIN) that only you know and can be used to temporarily unfreeze (or "thaw") your credit when legitimate applications for credit and services need to be processed such as when you are buying a car.

This added layer of security means thieves can't establish new credit in your name even if they are able to obtain your personal information.

LifeLock vs. CreditKarma.com

While LifeLock advertises it can help consumers secure their information to guard against identity theft, LifeLock charges monthly services that start at $10 a month.

This kind of credit monitoring is not the same or as effective as a credit freeze, said Craig Johnson for Clark.com.

Instead, he recommends CreditKarma.com for free credit monitoring.

Equifax

If you haven't already frozen your credit, now would be the time since Equifax recently got hacked and the information of possibly 145.5 million people was attained by these hackers.

Information accessed primarily includes names, social security numbers, birth dates, addresses and, in some instances, driver's license numbers.

To try to compensate, Equifax is offering free identity theft protection and credit file monitoring (but only through Jan. 31, 2018) with its TrustedID Premier.

Experian

Another point of confusion is the unsolicited free Dark Web Email Scan offered by Experian to your email, leading to a monthly fee for further scanning.

Experian IdentityWorks also offers a free 30-day trial membership for identity theft protection and resolution, involving a monthly automatic deduction of $9.99 for the plus plan or $19.99 for the premium plan.

It's free to cancel within the 30-day trial period, but the consequences are not revealed up front for those who decide to cancel their membership once the monthly fees begin.

TransUnion

The third credit bureau, TransUnion, also offers credit monitoring at $19.95 monthly. However, TransUnion says it offers free identity protection through its TrueIdentity program.

Free helpline

Those with specific questions about the Equifax breach and how it may impact them may contact Howard's Consumer Action Center — a free helpline open 10 a.m. to 7 p.m. EST Monday through Friday with Team Clark volunteers available to answer concerns at 404-892-8227.

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4 of the best ways to turn your home into a cash cow

Published: Friday, November 17, 2017 @ 4:17 PM

Sites like Airbnb let you rent out your home to make money.
Sites like Airbnb let you rent out your home to make money.

Your house is a large expense with many associated costs like a mortgage payment, insurance, maintenance and more.

RELATED: How to Cash In on Short-Term Rentals Like Airbnb, VRBO

It provides a roof over your head, of course, but since it usually costs you money each month, why not put it to work for you and earn some cash in the process?

The following are four ways your house can make you money:

You can relax on the lake, in the woods or even in the back of a van when you're looking for a staycation in Gwinnett County.(Airbnb)

List your home with Airbnb or VRBO.

If you're planning to be out of town for a few days or don't mind bunking with a friend, you may be able to make some money by renting out your home through sites like Airbnb and VRBO.

Before jumping in, you'll need to take time to learn about the market, your expenses and any taxes you may need to pay. And before you list your property, you'll need to understand how to make it stand out with a good listing, including compelling photos and competitive pricing. Airbnb has a series of toolkits to help with this.

RELATED: Atlanta has Airbnb's most desired rental property in the world.

Rent it out to the area's growing TV and film industry.

When TV, film and commercial producers want to depict a home on screen, many times they'll rent the real thing, according to Money. It can be inconvenient for owners, however, since their homes may be taken over by a large crew and be completely rearranged.

On the other hand, homeowners often have fun with the experience while making some extra money. And while you're watching TV or a movie, you may be able to spot your home.

Host a foreign exchange student or faculty member.

Temporarily hosting a foreign exchange student or faculty member who's studying or teaching in this country can help you make some extra cash for anywhere from six weeks to six months at a time. You'll also be exposed to a different culture and language, and the experience could help you form a bond that lasts even when your guest returns home.

The Penny Hoarder suggests contacting student housing offices at local community colleges and universities, asking to be placed on their list of host families. After this, you'll have to apply, be interviewed, and allow your home to be toured. You'll also need to pass background and reference checks.

The 4-bedroom house sits on a corner lot with a concrete driveway that leads up to the two 2-car garages both having rear service doors. CONTRIBUTED PHOTOS BY KATHY TYLER

Rent out your driveway or storage space.

If you have extra space in your driveway, you may be able to make some money by letting others park there, according to Men's Health. This is especially true if you live near a commuter rail line or sports stadium, but you'll need to check to make sure you're not violating any local ordinances. Check out websites like JustPark to get started.

The Balance also suggests renting out any extra storage space you may have. From vehicles to personal items, your garage or home could help you make money through a site like StoreAtMyHouse.

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5 ways to get the most out of your health insurance plan

Published: Tuesday, November 14, 2017 @ 3:15 PM

Here are five ways to ensure you're getting the most out of your health insurance Choose your plan carefully Take advantage of preventative care benefits Work within your formulary Utilize HSAs and FSAs Watch out for surprise out-of-network charges

Health insurance has a large impact on your finances, so it pays to get the most out of your plan.

Understanding its ins and outs can be confusing, but it's worth your time to check on benefits you could be losing out on or mistakes that could cost you money.

Here are five ways to ensure you're getting the most out of your health insurance:

Choose your plan carefully.

When it's time to renew your health care coverage, consumer adviser Clark Howard recommends not just blindly signing up for your current plan, even if you've been happy with it.

Your plan – as well as other options you may be able to sign up for – may have changed. Take a close look at the co-pays, deductibles, in-network providers and other specifics to make sure you're making the best possible choice.

Take advantage of preventative care benefits.

Almost every plan, according to healthcare.gov, offers preventative care benefits that are free. You won't have to pay a co-pay or meet your deductible to get these services at no charge.

Services for adults include age-appropriate vaccinations and colorectal cancer screenings for patients over 50.

RELATED: 8 ways to get the cheapest car insurance possible

Work within your formulary.

Health care plans typically have a formulary, which is a list of medications that they're willing to pay part of or the entire cost of. It may include a list of preferred medications, for which it will pay the highest percentage of the cost.

It pays to be familiar with your formulary before you get an unpleasant surprise at the pharmacy, according to NerdWallet. Print out a copy of the document from your health insurance company's website, or call up an online copy at your doctor's office. Your doctor can work with you to make sure you get an effective medication that you can afford.

Utilize HSAs and FSAs.

If your health insurance plans allow you to put aside tax-free dollars in a Health Savings Account (HSA) or Flexible Spending Account (FSA), you should learn how they can help you. Consumer advisor Clark Howard's website, Clark.com, has a chart that explains the pros and cons of each.

An HSA is usually associated with high-deductible plans, and like an FSA, it helps you save money to pay for health care expenses. These can include everything from prescription eyeglasses to medication.

Watch out for surprise out-of-network charges.

Your insurance plan has a list of network providers, and when you can, you should stay in-network. That's easy enough if you're visiting a single doctor, but if you need to have surgery, things can get more complicated.

For pre-planned surgery, Consumer Reports recommends talking with your doctor's billing department to get a list of everyone who will provide your care, including radiologists and anesthesiologists. Call your health care company to see if they're in-network, and if not, ask your doctor if in-network providers can be used.

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