A Personal Finance Guide

7 Things About Money I Wish I Knew in My 20s

If only there was a mandatory class in high school or college to prepare students for the often-confusing world of personal finance - or at the very least, a crib sheet handed out at graduation listing all the common money traps that befall 20-somethings.

Unfortunately, most young adults find themselves on their own when entering the “real world” without guidance about money and how to manage it. It’s time to play Monday morning quarterback and review some of the basic money pitfalls that many of us post-20-somethings wish we had known in our twenties:

Start saving for retirement as early as possible.

For most 20-somethings, the budget is tight and there isn’t a whole lot of room for extras. But when it comes to saving for retirement, allowing time for your money to grow is just as important as the money itself.

Consider this: Your money is worth more now invested than it will ever be. If you invest just $1 when you’re 20, it will be worth 1.75 times more than $1 invested when you’re 30, 3.5 times more than $1 invested when you’re forty and seven times more than $1 invested when you’re fifty because of the power of compound interest (assuming 8 percent rate of return and retirement age of 65).

What’s more is many companies will match your retirement contribution - that’s essentially free money! So start saving for the future now… even if it’s just a little bit.

Don’t skip out on health insurance.

I get it - health insurance isn’t sexy. It’s not even tangible. But if you find yourself in the hospital without health insurance, you may be headed for financial ruin very early in life. If you’re not covered at school or by your employer, consider purchasing a health plan on your own. The new Affordable Care Act allows you to stay on your parents’ insurance until you’re 26 (starting in Fall of 2010) and some insurance providers offer plans designed for cash-strapped 20-somethings.

Live below your means.

If you went to college, you should be used to this lifestyle by now anyway. Why not extend the frugality for a few more years? Living modestly will allow you to save more money for your future. Consider living with mom and dad for a little longer, driving that jalopy for another year and avoiding new monthly bills for services you don’t really need.

Save early, save often.

When you’re barely scraping by, it’s tough to think about saving money. But having an emergency savings fund can help you avoid financial hardship in the event that you lose your job, encounter a major car repair or are slapped with a large unexpected expense. Keep in mind this is a totally different fund than your retirement savings. This one is for emergency purposes, the other is for your future and should be considered off-limits until then.

No one expects you to sock away thousands of dollars when you’re living on Ramen noodles, but even a small contribution can add up with time.

Just because you qualify for credit, doesn’t mean you need to take advantage of every offer.

You don’t need five credit cards and 10 retail store credit cards. I know it’s tempting to take advantage of those “10 percent off your purchase today” offers that retail stores throw at you, but those cards often carry high interest rates and fees. Now is the time to build your credit. Start with one card and pay your bill on time and in full every month.

Credit card balance transfers often cost more than they’re worth.

On more than one occasion, I’ve been swayed by tempting zero percent balance transfer offers only to get stung with outrageous fees. If you carry a balance on your credit card and are interested in taking advantage of a lower interest rate on another card, make sure you read the fine print. Often, balance transfers come with fees that cost more than the savings you’d get in return.

Avoid the slippery slope of debt.

In your twenties, you should be thinking about building your credit, not sinking it. Only charge items on your credit card that you can pay back immediately. And avoid only paying the minimum - If you get into this habit, you will be in debt for a long, long time.

It’s also important to only borrow what you need. Just because you may qualify for a large loan - whether it be a student loan, auto loan or home loan - doesn’t mean you should take on the full amount. Consider what you really need to get by and only borrow that amount.

Taking on too much debt, too early, is one of the most common money mistakes 20-somethings make. The freedom to charge whatever you want whenever you want is a tempting proposition. But when you finally come to and realize the error you’ve made, you may spend the rest of your twenties - and in some cases, the better part of your thirties - paying off what you owe. Don’t let this happen to you.

By avoiding many of the traps that 20-somethings commonly encounter, you’ll set yourself up for greater financial success. And at 30 or 40, you won’t have to wonder, “If only I knew then what I know now.”

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The Practice of Offering Insolvency Services

There are many practitioners who specialize in helping people deal with insolvency problems. Insolvency practitioners can sometimes be both an accountant and a lawyer or either or neither. It is not required for any practitioner to be registered as a lawyer or an accountant although if they are all the better for the client. Insolvency means the lack of ability for a company to pay off any required or necessary debt and therefore is in trouble and may require the help of a insolvency practitioner.

There are different types of insolvency some of them deal with cash flow insolvency. This is when a business has managed their free cash flows poorly and therefore are in need of help to generate some cash flows. There are insolvency practitioners who can specialize in these duties specifically. When having cash flow insolvency many business are unable to pay off debt as they come due because they lack the funds at the proper times. This means that it cause many problems for your business such as suppliers being unwilling to supply the materials or the inability to pay fixed costs such as rent and wages.

Another time of insolvency is balance sheet insolvency and this deals with the value of assets that are left over. A business may find themselves cash flow insolvent but not balance sheet insolvent because they are simply only having issues generating a cash flow and when it comes to the assets they hold such accounts receivable or their inventory and equipment still hold value over their debt then they simply just need to figure out better methods to generate faster flow of cash. This can mean finding a practitioners who can help you figure out how to collect money owed to you much faster, or try to help increase the inventory turnover rate which would allow for much faster generation of inventory into cash. The business is considered to be balance sheet insolvent if they have a negative amount of assets versus their liabilities. This means that the worth of the company does not exceed the worth of their debt. If this happens there are some serious problems and the business should consult a insolvency practitioner as soon as the business possibly can.

Insolvency can be a difficult thing to comprehend. For more information on what to expect during such difficult times and how a legal firm can assist you during insolvency and in corporate recovery, please visit an insolvency practitioner.

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30Day No Spending Marathon

It was a Canadian from Vancouver who invented “Buy Nothing Day”, an annual 24-hour challenge to Canadians-and now people around the world-to not buy a single thing for one day. That means no gas, groceries, or any other kinds of purchases. Seems easy, doesn’t it? But it takes a surprising amount of preparation, making sure you have the food you need and gas to get where you need to go, to not make plans with friends (that cost money) and so on. But this challenge is to try and go 30 days without spending money. Think you can do it?

Here are some challenges. Choose one or more. Challenge your family and friends. Get as many people as you can to join in. Even make it a competition with prizes, or put some of the money not spent towards a favorite charity.

Can you not charge anything to your personal credit card for 30 days? Reflect pretty seriously on every buy before you make it, for the next 30 days. If you make it through, ask yourself what you’ve been chocking up on that card that’s got you knee-deep in debt today?

Bag your lunch, use no vending machines and skip buying coffee. Every time it occurs to you to go buy lunch, pick up a chocolate bar, or down some java, put that money into a sealed jar. Even consider labeling the jar, “30-day Challenge”. You’ll get lots of people-especially at work-joining in. Make it a competition. Buy the winner a pound of coffee and a great lunch box.

No DVDs or movies out for 30 days. These entertainment costs can take a huge bite out of your pocket book-and some people suffer serious withdrawal when they stop going to the movies or buying DVDs. To make it a bit easier, remember that the library carries lots of great television series (remember “Get Smart”? It’s a great family show many libraries carry) and old movies that you can get for free. Hold a “summer movie night” and invite friends to see some of the great classics.

No take-outs. That means no pizzas, sub sandwiches, Chinese food or other late-night favorites. Instead, go to the grocery store and buy the equivalent and make it at home. That big white thing with the 4 black round things on top? It’s a stove. Make it your friend and learn how to use it. Put the difference between the take-out cost and what it cost you to make your late night treats at home into a jar, and see how much you don’t spend in 30 days.

These are just a few ways to try and save for 30 days. There are plenty more, like only buying with cash, budgeting your groceries, comparison shopping before you buy, and many more ideas you and your family can think of. So try not spending for 30 days-and good luck!

If saving extra money is on your summer to-do list and you’re not sure where to start, perhaps gathering all your debt into one monthly payment is the place to begin. Visit our Car Title Loans website for more information. Visit our Bad Credit Loans Blog for more articles like this one.

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