Money and Finance Articles

Learn to live a life of financial freedom and browse money-saving tips and tricks to stretch your dollar further than ever before. Browse dozens of great articles, hundreds of tips, and full tutorials to take control of your pocketbook!

From Simple Tips to Develop a Saver’s Attitude to understanding the difference between Paying Down or Paying Ahead to understanding When and Why to Give your Kids an Allowance, we have articles covering every money and finance question you have!

You can do it, we can help, and it starts with the articles here!

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How to Spend Money without Feeling Guilty

When you give yourself an allowance, it’s more than just cash—you give yourself the freedom to spend without feeling guilty. Early on in my long journey back to financial health, my husband and I agreed that I would have an allowance—my own cash, a regular expense listed in our fledgling household budget. That changed everything for me.

 

Girl with blue wallet showing her pulling out $10 bill

 

It used to be that when I felt broke, I’d turn to my bevy of credit cards to chase away the feeling. As long as I could spend money, it felt like I had money. My credit cards were my antidepressants (and my eventual undoing).

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The Secret to Staying Out of the Red and in the Black

When I am not writing about personal finance and consumer debt, I knit. Something about the gentle rhythm of yarn and needle calms my spirit and unwinds my brain.

professional woman sitting at her desk, knitting.

I have managed to finish a few projects, not because I’m a great knitter but because I can “tink” almost as well as I knit (knit spelled backward is tearing out).

Because all knitters make mistakes, tinking is a required skill for those who take the craft seriously. It doesn’t take too many oversized sweaters or undersized hats to figure out that the smallest error at the beginning of a project can produce disastrous results if not found and corrected.

Just two options

Money is a lot like knitting. By some miracle, all knitting consists of just two stitches: knit and purl. Likewise, with money you have two options: spend or save. And who among us can say they have never made a financial error? We all make mistakes but the secret to staying out of the red is correcting the little mistakes before they lead to disastrous results.

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Why You Need an Emergency Fund and How to Get It

Emergencies are a fact of life. When you’re faced with an expected event—from a broken bone to a job layoff—you can be ready. An emergency fund is a stash of money set aside to cover financial surprises life throws your way—events that can be stressful and costly.

Last year, Mitch and Jenn had a string of bad luck. Mitch broke his leg in a skiing accident, Jenn’s car broke down requiring major repairs and their home’s aged roof decided to fail right in the middle of a major storm.

 

The timing for all of this wasn’t ideal—four weeks before Christmas. The financial and emotional toll of these events continues to be huge, but nothing like it might have been if they hadn’t been diligently building their Contingency Fund, more commonly known as an emergency fund.

An emergency fund creates a safety net for a home and family. This way you are less prone to experience a disaster when an emergency comes your way.

Mitch’s health insurance is covering most of the costs of his surgery and follow-up therapy. Still they’ve had to come up with more than $2,400 to cover his deductible, co-pays, and prescriptions. The car repairs were just shy of $2,700—not surprising given the car’s age and 140,000 miles.

It was the roof that really threw them for a loop. The estimate to repair it—with no assurance that said repairs would last for longer than a few months—was $750, with a new roof coming in at an estimated $12,000.

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How to Win the Credit Card Balance Transfer Game

There’s nothing fun about credit card debt. An outstanding balance of $5,000 that is subject to 19.99% interest means you’re paying about $1,000 a year just in interest. Imagine if that $1,000 could go directly to repaying the balance instead. You could pay it off in record time instead of stringing it out for many years.

If you’re carrying credit card debt, transferring that balance to a new credit card with a 0% introductory rate could be the way out of your heavy debt situation. Just beware: There are pitfalls in the balance transfer game that if not avoided could end up making your situation worse, not better.

 

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To play the balance transfer game well requires financial maturity and personal discipline. Are you up to it? Should you wish to play, you’ll need to adopt this strategy to come out a winner:

Fine print

Find a balance transfer credit card application. You want one that offers at least 15 months of 0% interest, has no annual fee, and a small if any, balance transfer fee. Search at IndexCreditCards.com. Read the application very carefully. Know exactly what’s in the terms and conditions.

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One of the Best Ways to Help a Young Person Build a Good Credit Score

You can boost a young person’s credit by taking advantage of a little-known authorized user provision, but credit issuer policies vary widely on how old the child must be.

Young woman with killer credit score super happy with two fists in the air

 

Like it or not, ours has become a culture of credit. Good credit is necessary to get the best mortgage rates, a decent credit card, to qualify for an apartment, to get hired or buy a phone. If you don’t have good credit you’ll be denied that apartment, lose out on the job, pay outrageously high fees, and be required to come up with a large deposit to secure a mobile plan. Credit is required to establish utility services like electricity, water and cable. Just about anytime you need to borrow money or secure service, your credit is called into question.

One question that lands in my inbox regularly goes something like this: How can I help my son or daughter build credit? The reasons for good credit are myriad including renting an apartment, getting his or her own phone plan, getting a good job, and on it goes.

Credit, like job experience, presents a quandary: How can a young person have good credit if he or she has never had any credit?

One of the best ways is to take advantage of a little-known benefit most credit card issuers extend to their cardholders. Add this young person to your credit card account as an “authorized user.” Generally, this is how it works:

The authorized user provision

By adding a child (or any person for that matter) as an authorized user to one of your credit card accounts, you are allowing him or her to benefit from your good credit. This is totally legal and a way to help this responsible young person build a good credit score.

As an authorized user, he or she will be able to use your account according to your rules. Each month, as the activity on that account is reported to the credit bureaus and added to your credit file, it will also go to authorized user’s credit file to build his or her credit history. Credit file history is used to calculate that all-important 3-digit number we call a credit score.

Surprisingly, perhaps, as an authorized user your young person will have no legal obligation to make payments or repay the debt that he may run up on that account. He gets all the benefits and none of the requirements of repayment.

The way it should work is that you have great credit, you are not close your credit limit and are never late with payments. So far so good. However, if you have lousy credit, continuously keep that account close to being maxed out and are late with payments—that terrible credit activity is going to be reported to his account, too, as your authorized user.

Are you getting the picture here? It takes two great candidates for this method of allowing another person to piggyback off your good credit to work well—a financially mature accountholder and a responsible, trustworthy authorized user.

It is ridiculously easy to add an authorized user to a credit card account. Simply call the Customer Service number on the back of the card and make your request.

Authorized user benefits

A parents’ well-aged credit card can help a young person’s “credit age”—the number of years that credit-card account has been in place. Credit age is a critical part of a credit history file, and your authorzied user will benefit by claiming your “credit age.”

An authorized user is able to use the credit card account freely, which for a responsible user solves the problem of a young person finding it impossible to qualify for a credit card account on his or her own. Because the credit card issuer will send you a physical credit card in the authorized user’s name, he or she will be able to use it for emergencies.

There is a downside

Most, but not all, credit card issuers offer the authorized user provision. Call and find out if yours does.

Another pitfall to watch for: Some issuers who allow an authorized user to be added to the account do not report credit activity to that authorized user’s credit file. Bummer! Don’t worry, most do. But again, call to find out.

By authorizing this user on your account, you run the risk of him or her going nuts and actually using it without your knowledge—running it up to the max and thereby ruining your credit and costing you a fortune. It can happen! This provision should be reserved for only highly responsible and trustworthy individuals. Make sure you set up very clear guidelines and rules for your authorized user. More on that in a bit.

Then there’s the other side of the coin: Should you as the primary account holder on this account run into tough times so that you cannot keep up with payments, run up the balance to near or past the credit limit, or God forbid default altogether, you will not only ruin your credit score, you’ll tank your authorized user’s credit history, credit score, and future too. It takes years and years of clean credit living to repair and reverse bad credit.

Must the authorized user know about this?

No. This may sound odd or at least manipulative, but you can add your young person as an authorized user and not tell them. When the card arrives in your authorized user’s name, put that credit card away in a safe place. Then sit back and allow your “user” non-user to  grow a killer credit score based on your credit activity on that card. Just keep in mind that good or bad, how you handle that account will go to either help or harm that person’s future.

Can you add a minor to your card?

Each credit card issuer has its own minimum age rule from no minimum  (you could add an infant, but I wouldn’t advise it) to a specific age. Most however, do allow minors to become authorized users. Here are a few examples of the minimum age requirement, according to latest data from CreditCard.com:

  • American Express, age 13
  • Bank of America, no minimum
  • Barclays, age 13
  • Capital One, no minimum
  • Chase, no minimum
  • Citi, no minimum
  • Discover, age 15
  • U.S. Bank, age 16
  • Wells Fargo, no minimum

Adding a very young child to your account would be, in my opinion ill-advised. There’s no reason to do that. It doesn’t take 18 years as an authorized user to build a great credit score. You don’t know what may happen during those years that might backfire for the child, especially if you add him or her to your account and then forget. Should you run into a rough patch on the financial highway of life, you could harm that child’s future.

What information is required?

It varies from one issuer to another. Some, like Chase, ask for only the name and address of the user you want to add. Others don’t seem to verify age. Citi and Wells Fargo request the name, address and date of birth of the authorized user. American Express, Bank of America, Capital One, Discover, and U.S. Bank, at last check, require name, address, birth date and Social Security number.

Pro-tip: It takes a Social Security number to report anything to credit bureaus. That should be your clue which credit card issues will report to your user’s account. Don’t assume, however. Check to make sure.

Managing your authorized user

As the primary cardholder, it would be foolish for you to adopt a hands-off approach. Your authorization for this person to piggyback onto your account should come with very clear guidelines and specific rules—from any actual use to the requirement that if you use it, you repay it. You’d be wise to set up the account with online access, then trust but verify. Daily.

Make sure your authorized knows what to expect if he or she violates your terms and conditions on this arrangement. The consequences should be swift and sure.

How long will it take?

Don’t expect your authorized user to go from no credit history to having a credit score equal to yours overnight. First, your score reflects many years of credit history based on many things—not just this one account. Your authorized user should see some movement after 6 months of being an authorized user, provided it is an account you use regularly, pay flawlessly, and never carry a balance of more than 30% of the available credit.

Can I un-authorize my user?

Absolutely. And it’s very easy. A simple phone call from you—or your authorized user—will remove him or her from the account with no further consequences, at least not from the credit card company!


UP NEXT:

Like It or Not, You Need a Good Credit Score

The Joys of Raising Financially Confident Teens

This Is What Happens When Financially Immature Students Get a Credit Card

Authorized User May Have Cause for Concern

How to Splurge on a Budget

I got the biggest shock of my life the day I realized that living on a budget wasn’t the straitjacket or rigid “diet” I assumed it would be. It was my life as a credit-card junkie that put me in financial bondage.

 

Woman happy with a piggy bank

 

Living on a budget saved my life because it allowed me to get out of debt. It gave me my freedom. Want to know my secret for staying on a budget for so many years? I splurge. Seriously. And I do not feel guilty. I love nice things and I love to travel.

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How to Give Yourself a $2,000 Raise in a Hurry

If there’s one thing that I love about you, my loyal readers, it’s how responsive you are. Sometimes you like what you read, other times not so much. Now and then you simply need more information. But no matter what, I can always count on hearing from you. Which brings me to what I wrote on pulling the plug on subscription pay-TV. It brought a huge response.

According to this 2012 article from NPD Group, the average pay-TV bill was predicted to hit $123 per month by 2015—more than $1,400 a year—and will hit $200 ($2,400 a year) in 2020. So far the predictions are right on the money.

For many, that’s money that could be better used to build an emergency fund or pay off debt. No wonder that column struck a chord with so many readers.

Overhead close up photo of a woman putting money in her purse.

 

The most-asked question had to do with the need for an antenna to receive free, local HD broadcasting. Which kind? Which one works best?

As I was fielding your messages, my husband and I were in the process of relocating. In 2015, we moved from California to northern Colorado. What a change from big city life in Orange County to a little village boasting a population of just 18,000. And what a perfect opportunity to test antennas to find the best way to enjoy free TV and quality programming in our new location. Read more

5 Home Buying Mistakes That Will Make You House Poor

Buying a home is likely the largest purchase you will ever make. This is not the time to make mistakes that could easily plunge you into a financial situation you cannot afford. 

During my 18-year career as a real estate broker, I learned a lot of things but none as valuable as what not to do! I didn’t learn this in a seminar or while studying to pass the licensing exam. I witnessed real-life situations where buyers did really dumb things related to buying real estate—buyers who then went on to regret the decisions they’d made.

Avoid these five home-buying mistakes and you will avoid getting in over your heads with a house you cannot afford—and save yourself many thousands of dollars and heartaches in the process.

 

Young couple looking at their dream house

Mistake: Allowing a lender to determine how much you can afford

When you meet with a lender to get pre-approved for a mortgage, that lender is going to tell you how much house you can afford and how much money the company is willing to lend to you. Understand this: He or she is concerned about only two things: 1) Your ability to repay the mortgage and 2) the size of his commission.

This lender wants to steer you into the biggest mortgage possible. Ignore that number. It is not based on what you can afford because the lender has no idea what you can afford.

You need to set your own housing budget before you ever sit down with a lender or other real estate professional, which is based on your specific financial situation and lifestyle. And that housing budget should be realistic enough so that you can afford to make progress on all your other important financial goals like maintaining a healthy emergency fund, getting debt-free, and funding retirement accounts. Read more