Things You Should Know About Personal Finance
My parents didn’t teach me about money. It’s not that they were bad parents. They just didn’t seem to think that a child should have to focus on that sort of thing. Even as a teenager, I was on an allowance system, as were many people I knew. It wasn’t until after I graduated from high school that I started managing my own checking account, and (gasp!) it wasn’t until I divorced at thirty that I actually became solely responsible for my own finances. There was so much I didn’t know, and it was a little overwhelming in the beginning. I thought I was alone – that I’d somehow just had my head in the sand when it came to the world of finance that everyone else understood – but I was wrong. As I shared my experience with others, it became apparent to me that a lot of people are in the dark about certain things that greatly influence their financial well-being. I’d like to share some of those with you. Here are five things no one ever told you about personal finance.
Universal Default Clause. This clause, which may be in the fine print of any of your credit account agreements, states that the creditor can raise your interest rate based on late payments to another creditor. That means that one late car payment can result in increased rates on all of your credit cards. Be careful!
Late payment time frames. Late payments are not reported until thirty days past the due date. So, if your mortgage is fifteen days late and you’re thinking about giving up the thought of paying this month and putting off that payment until next month – think again. You can save yourself from a negative change in your credit score.
Retirement plans. Not all retirement savings plans are the same, or are created equal. Do your research and know what you are getting into before signing on the dotted line – even for employer-based plans. For example, when deciding between a 401K plan and a Roth IRA, it is important to take into consideration that payments made to a 401K are tax-deductible, while payments made to a Roth IRA are not. And make sure you START a retirement plan. SO many people think they don’t need to worry about retirement at 20 or 30, but the truth is you can double your savings by starting even 10 years earlier than others.
Late charge fee limits. Currently, there are no regulations limiting late charges. That means creditors can charge whatever they decide, and that those charges can compound with each passing month. Be aware of the terms of your credit agreements.
Minimum payments cost more. You see it on all your credit card bills: the minimum payment amount. Just so you know, sticking to the minimum payment plan will cost you – big time. For example, making the minimum monthly payment on a $10,000 account can end up costing you nearly quadruple the amount you borrowed in the first place. The same goes for your car loan or home mortgage – pay them off early if you can.
I learned a lot of my personal finance lessons the hard way. You don’t have to do the same. It doesn’t matter if you are worried about your personal finances or those of your business, in which case you should also contact a group like Accounting Principals finance staffing agency for extra help. Read over these personal finance facts and plot your course to financial well-being.