Five Reasons to Budget Now

Let’s be honest, budgeting isn’t fun. It’s never fun. However, it’s an important part of personal finance for a variety of reasons. I’ll discuss five of them below in hopes that it will change your mind about budgeting if you don’t do it now. If you do budget and you do it for a reason I haven’t listed, I invite you to share it in the comments! Read More »

5 Things to Learn this Semester Other than History 101

With the semester underway, it’s almost too late to point out the obvious, but: college is such an interesting time for a young adult. It’s your first real taste of absolute freedom where you (well, mostly you) are responsible for yourself. It also builds the foundation for the rest of your life, for your career, for your finances, and even your love life. That’s why it’s important that you take advantage of your time and add these five financial tips to your homework list. I believe, by following these tips, you will build a solid financial and career foundation for years to come. Read More »

How Many Credit Cards Do You Need?

The answer: It depends.

Isn’t that a terrible answer? Unfortunately, it’s the truth. If you’re neck deep in credit card debt, the answer is zero. If you’re not in debt and want to maximize your credit card rewards, you probably will need at most three or four. For everyone else looking to maintain good credit, chances are you’ll need only two.

Credit: andresrueda

The Zero Crowd

If you’re in debt, I believe you need absolutely zero credit cards. It’s not because I believe you’re irresponsible and it’s not because I think credit cards are evil. I say zero because your first priority should be to pay down your debt. Credit cards aren’t evil, but debt is. It has the power to dictate what you can and cannot do. It is a weight that will hold you back so your priority should be to pay that down as much as possible.

If that is your goal, you don’t want to carry any cards and be tempted to add to your debt. You don’t have to cancel the cards, just stick them in your desk drawer or some other place that is safe until you pay off that debt. If you’re concerned about your credit score, it will still improve even if you don’t use the cards.

Maximize Cash Back

Credit card companies are very clever. When it comes to their credit card offers, they generally only offer good cashback promotions on one category. Some cards give you 5% cash back on groceries and gas stations, others will offer you 5% cash back on office supply stores, yet others will give you a tiered system that increases the rewards as you spend. Whatever the case, you’ll probably need three or four cards to maximize the cash back rewards at the stores you spend at.

If you have debt, I recommend you stick with the zero card, all cash method until your debt is erase. Earning 5% cashback on your transactions but paying 20% in interest just doesn’t add up.

Maintaining Good Credit

If you don’t want to juggle credit cards to maximize cash back, then you’ll only need two credit cards. The number of credit cards you carry isn’t a big factor in your FICO credit score but practicing credit card diversification is always important. By carrying two, you are protecting yourself in the event you run into problems with one of the cards. Be sure to carry cards from two different issuers and use them both to avoid a credit card company canceling the card. Regular use of those cards will help build a strong credit history that will prove invaluable should you ever want to buy a house or car on credit.

As you can see, there is no one size fits all answer to this question. Like many questions in personal finance, it really does depend on your situation.

Jim writes about personal finance and other money issues at Bargaineering.com..

New Grad's Guide to Credit

Just when you thought grades were behind you, life throws you a curve ball. Instead of A’s, B’s, C’s, D’s, and F’s, you will now be judged, in part, based on your credit score! After you’ve sorted through all your sweet gifts, had the fun parties and celebrations, there will come a time (probably right about now) when you’ll have to start supporting yourself and learning the financial ropes of the real world. Read More »

Do You Have an Emergency Fund?

An emergency fund is a bit of money you’ve set aside to cover any unforeseen emergencies you may have. Car problems? Emergency fund swoops in for the rescue. Slip and fall? Emergency fund helps you cover your deductible. Lose your job? Your emergency fund is there to pay for things until you can get back on your feet. Emergency funds are absolutely crucial, especially in these economically weak times, because they give you a little bit of extra room to breathe after something bad happens. Instead of scrambling for money, you can focus on fixing the problem. Read More »

Protect Your Cash: A Quick Guide to Checking Your Credit Report Every Year

Identity Theft

CC Image Courtesy of TheTruthAbout

Several years ago, one of my employers did a routine background check that included pulling my credit report from one of the three bureaus. They were confirming that the details on my resume matched the details on my credit report, which is common for companies in that industry. They discovered that in addition to living in Pittsburgh, PA for college, I spent some time living in rural Pennsylvania a hundred miles away from Pittsburgh. The only problem was I didn’t live in rural Pennsylvania. Ever. Read More »

How to Grow Savings with CD Laddering

a ladder

A CD ladder is a certificate of deposit ladder. A certificate of deposit is a type of account you have at the bank where the bank will agree to pay you a certain interest rate for an agreed period of time. Let’s say you saw a 2.50% APY 12-month CD, that means the bank will pay you 2.50% APY for twelve months. It also means you don’t have access to the money for twelve months. Unlike a savings account, you lose the flexibility of accessing your funds whenever you want and replace it with a guaranteed interest rate. With how quickly rates are falling these days, locking in a good rate is very important. In extraordinary circumstances, you can always close your CD and get your money back if you pay a small penalty, usually 3-6 months worth of interest. Read More »