Set yourself up for financial success with these 3 easy money rules.
Money Girl
237 MG Three Personal Finance Rules for New Graduates
In Colorado, our freedoms are everything. Gabe Evans would rip them away. Just like Lauren Boebert, he'd ban abortion without exceptions for rape or incest, and overturn the right to marry for same-sex couples. Don't let him take our freedoms. Paid for by DCCC, www.dccc.org, not authorized by any candidate or candidate's committee. You spent a over here? Now at T-Mobile, get four 5G phones on us and four lines for $25 a line per month when you switch with eligible traders. All on America's largest 5G network. [MUSIC] Minimum of four lines for $25 per line per month without a paid discount using debit or bank account, $5 more per line without auto pay, plus taxes and fees and $10 device connection charge. Phones would be a 24-monthly bill credits for well-qualified customers. Contact us before canceling entire accounts to continue bill credits or credit, stop and balance on a required finance agreement to bill credits and if you pay off devices early. CTmobile.com. [MUSIC] >> Hi friends, thanks for downloading the Money Girl Podcast. I'm your host, Laura Adams. [NOISE] Life after college, it's like a breath of fresh air, no more cramming for exams, rushing to make deadlines for assignments, or eating really bad cafeteria food. Now you can start living life on your terms, right? Whether you've already landed your first job, or are still searching for one, I bet your finances are tight. Though you're just starting out, how you handle money over the next few years is incredibly important. If you learned the three fundamental rules of personal finance now, applying them will set you up for a lifetime of financial success. I'll show you how three different college graduates apply these three fundamental personal finance rules to their lives, and how it affects their future financial security and happiness. Rule number one, your credit tells a story. The first personal finance rule is that you will be judged by your credit. Your credit file is like a financial rap sheet, but thankfully it reveals good financial behavior as well as bad. A high credit score tells the world that you've been responsible with money, and it entitles you to credit at the lowest possible interest rates, which can save you a bundle. On the other hand, a low score means that you won't qualify for credit, and if you do, it will be expensive money to borrow. By the way, bad credit can also trip up other areas of your financial life, because it affects the rates you're quoted for insurance, whether you can rent a place to live, and how potential employers may evaluate you. Let me introduce you to Carla, who's a new graduate with a great job in the medical field. She diligently pays all her bills on time. She has a student loan, a car loan, and a credit card that she uses for everyday spending, but pays it off in full each month. Carla's stellar money management earns her an excellent credit score. After a few years, Carla saves up enough money for a down payment and buys a small condo for $150,000, near the hospital where she works. She puts down $15,000 and takes out a mortgage for the remaining $135,000. Because Carla has excellent credit, she's offered a 30-year fixed rate mortgage at 4%, which is very competitive. If Carla sells her cozy condo after seven years to buy a bigger place with her fiance, the amount of interest she would have paid on the mortgage is about $35,000. But what if Carla didn't have excellent credit when she applied for the mortgage? Let's say she got a rate of 7%, instead of 4%. Over those same seven years in the condo, the interest portion of her mortgage alone would have cost Carla over $63,000. Having excellent credit allowed Carla to keep $28,000 in her bank account instead of forking it over to a lender. Now she and her fiance can afford to take a honeymoon after all. If you want to learn more about how to build a credit score you can be proud of, whether you're a new graduate or an old one, I just created the credit score survival kit just for you. To download this free multimedia resource, visit smartmoves2growrich.com and click the button that says credit score survival kit, how to build credit fast. Rule number two, debt can be dangerous. The second personal finance rule all new college graduates should take to heart is that debt can be hazardous to your wealth. Debt is a powerful financial tool that can help you build wealth when used the right way. But if you're using consumer debt to finance a lifestyle that you can't afford, it can be devastating to your financial life. Here's an example. Danny got a promising job as a technology manager for a growing company. He earns a good salary, is at the top of his game, and knows his future is bright. He moves into a luxury apartment that's a stretch for his income. He goes on a shopping spree to fill his new bachelor pad with furniture, expensive electronics, and a well-stocked bar. In the course of a few hours, Danny charges $30,000 to a credit card that he figures he'll pay off as soon as he gets a raise at work. Let's see how this rookie mistake plays out. Since Danny doesn't have great credit, the interest rate on his credit card is high, 19%. If that big raise or promotion never comes through and he only makes minimum payments of 3% of the balance, it'll take a whopping 27 years to pay off. He'll pay over $33,000 in interest alone, which more than doubles the original price of the stuff he bought. That's $33,000 that Danny could have been putting aside for his retirement over all those years. In Colorado, our freedoms are everything. Gabe Evans would rip them away. Just like Lauren Bobert, he'd ban abortion without exceptions for rape or incest, and overturn the right to marry for same-sex couples. Don't let him take our freedoms. Paid for by DCCC, www.dccc.org, not authorized by any candidate or candidate's committee. He's been over here now at T-Mobile. Get four 5G phones on us and four lines for $25 a line per month when you switch with eligible traders, all on America's largest 5G network. Minimum of four lines for $25 per line per month without a paid discount using debit or bank account, $5 more per line without auto pay, plus taxes and fees and $10 device connection charge. Phones would be a 24-month in bill credits for well qualified customers, contact us before canceling entire accounts and continue bill credits or credit stop and balance on a required finance agreement to bill credits and if you pay off devices early, ctmobile.com. I love learning and anything that makes learning easier. If you're a parent and your child needs some homework help, then IXL is a right for your family. IXL is an online learning program for kids covering math, language arts, science and social studies. IXL has interactive practice problems for topics from pre-k to 12th grade and everything is organized by grade and subject. As kids practice, they get positive feedback, awards and explanations for wrong answers. IXL figures out what your kids need more help with and recommends more topics to practice. Their videos, lessons, sample problems and learning games too. One subscription to IXL gets you all subjects and all grade levels. Membership started just $9.95 a month. It's no wonder IXL is used in 95 of the top 100 school districts. I think the positive feedback that IXL gives is really crucial when it comes to learning. So make an impact on your child's learning. Get IXL now and money girl listeners can get an exclusive 20% off IXL membership when they sign up today at ixl.com/moneygirl. Visit ixl.com/moneygirl to get the most effective learning program out there at the best price. Rule number three, investing early is powerful. The third personal finance rule that many new graduates don't appreciate is that investing sooner rather than later is a massive advantage. Putting away smaller amounts of money that grow for a longer period of time is exponentially more powerful than investing larger amounts of money later on. Why? The earnings your investments make have more time to generate additional earnings, which is called compounding. Take Chris. He's a smart new graduate who works in sales for a Fortune 500 company. Though he wasn't entirely convinced that he could afford to contribute to the 401k retirement plan, he signed up to contribute $50 a week anyway. Assuming Chris never increases his contribution throughout his entire career and earns an average of 7%. After 40 years, he'll have over half a million dollars to spend during retirement. That's impressive considering he only had to contribute $104,000 of his own money to amass that nest egg. But Chris's boss, Jennifer, isn't so smart. She waits until she's in her mid-40s, just 20 years or so away from retirement to get started investing. To accumulate half a million dollars in 20 years, assuming the same 7% return, Jennifer has to contribute over $220 per week or $230,000 of her own money. That's more than double what Chris will contribute to have the exact same retirement nest egg. So you can see that when it comes to your personal finances, time really is money. Being young doesn't mean you have to be foolish. It's easy to start off on the right financial foot by spending less and earning more when you know how to build your credit, avoid consumer debt, and invest for your future as early as possible. For much more about credit, debt, and investing, grab a copy of my award-winning book Money Girl Smart Moves to Grow Rich. It tells you what you need to know about money without bogging you down with what you don't. It's available at your favorite bookstore in print or as an e-book. And remember that I'm giving away two free book chapters and the brand new credit score survival kit at smartmoves2growrich.com. And one more thing, are you on the brink of success? In his mini e-book, Three Bad Habits Successful People Break, Stever, aka our Get It Done Guy, not only reveals what those three bad habits are, but he shares proven and simple ways to break them. Download it from Amazon, Barnes & Noble, the iBook Store, or Books a Million. Previously published as part of Get It Done Guy's Nine Steps to Work Less and Do More. I'm glad you're listening. To Ching. That's all for now. Courtesy of Money Girl. Your guide to her richer life. Earning your degree online doesn't mean you have to go about it alone. At Capella University, we're here to support you when you're ready. From enrollment counselors who get to know you and your goals, to academic coaches who can help you form a plan to stay on track. 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