ReddinUp: Financial Pointers

Financial Pointers

I have been very fortunate and I count my blessings everyday! I learned at a young age how important saving for a rainy day really is. During college, I worked for an investment company and learned about saving, investing, life insurance, and mortgages. I tried to keep my debts down in college and also when my kids were young. I'd like to share a few things I learned about money that I have passed along to my children:

	Something the bank won't tell you about your mortgage! If you are paid every 2 weeks, you will receive 26 paychecks this year -- That works out to the same as 13 monthly payments. Send in your mortgage every 4 weeks, instead of monthly -- That extra payment goes to directly to the principle. Your 30-year mortgage will be done in 16 years! Another option, round your payment up -- A $641 payment rounded to $700 will pay off the mortgage 33 months early! Some folks use their tax refund to send in an extra amount. That's a great idea too.
	I didn't realize this about the minimum payment on your credit cards! By law the banks only have to charge you a 1 to 2% minimum payment. At that rate, no wonder we never get our credit cards paid off! Ideally pay off your credit cards each month. If you can't pay it off, send in more than the monthly minimum. Don't use a credit card that charges an annual fee. Only use rewards programs that you will benefit from. Find a card with the lowest interest rate. Oh, and don't buy what you don't have the money to pay for!
	I'm very lucky that someone gave me this example when I was young about saving money! Let's say a couple starts saving when they are 27. They manage to save $1000/year for just 10 years. They never add a dime to their $10,000. Then just let it grow until they retire at 67 ... That savings, at rate of 8%, would grow over 40 years to $379,757. Let's say another couple waits to save until they at 47. They've lost 20 years for their money to grow! They would need to save $7700/year for 20 years, at the same 8% rate, to reach $380,556 at age 67. They had to save $154,000 instead of only $10,000 because they waited. Start saving early and show your kids the time value of saving money! Help them realize that it's not $10 they are saving, but the $300 it's going to grow to down the road!