Personal Finance Makeover |

One of the main reasons our economy took a dive these past two years is because people took their mind off of the basics. Wealth and financial stability are created not by fancy and complicated investing strategies, not by being overleveraged and hoping for a great return; Wealth and financial stability are created by following a very basic, common sense approach to your finances. I am not a financial advisor, but I do know a thing or two about managing personal finances. Here I will share with you some basic yet proven strategies.1. Pay Yourself First. The first 10% of your income should go into some type of savings account. If your employer offers a 401(k), a great way to hit this target is to commit 10% of your income pre-tax. This lowers your tax liability, and creates a nice nest egg. Whatever vehicle you choose for this money, it should be no less than 10%. Trust me, you can live off of the other 90%2. Do not buy what you cannot afford. Sounds simple right? Yet millions of people purchased homes that they could not afford using bizarre adjustable rate mortgages. If you cannot afford something, save up until you can. Do not use credit cards if you are going to have to carry the balance forward, that means you can’t afford it.3. You need a rainy day fund. You must put away some money just in case something happens. Most experts recommend 3 months salary. I suggest going past that and shooting for 6 months. Whatever number you choose, put it away in a safe and easy to reach account, and don’t touch it unless absolutely necessary.4. Do not expand your lifestyle. Too many people expand their spending to meet their income when things are going well. If you are in sales, just because you have a few good months, does not mean you should go out and by a new car. When times are good, and you are getting more money than normal, you should be looking to save and invest that money.4.1. Contract your lifestyle. If we piggyback off of the previous concept, we will be lead to the logical conclusion that we should spend less money. Take your lunch to work as often as possible. Clip coupons (what, you’re too good for saving money?), and look for sales. Buy items off season whenever possible. I know this may not sound like the most fun, but no one has ever become rich by writing checks.5. When in doubt, consult a professional. When investing, seek qualified advice. Would you visit a gas station clerk to ask advice about a heart condition? I know that sounds ridiculous, but people do this all the time when it comes to money. Financial professionals are professionals for a reason.There it is, five simple ways to get your finances where you want them to be. Nothing fancy, no get rich quick tips, but it works. It has worked for millions of people, it can work for you too. As always, now is the best time to start!

Personal Finance Basics – Do You Know What APR Means? |

Have you looked at the ads for credit cards? If you have with even minimal attention you will know that one of the most prominent things they display is the APR, or the credit card rate. Lots of people simply choose the card with the lowest APR rate, which is a good first step. It is correct that the APR of your credit card is one of the most important factors you should consider when choosing your card (although it is not the only one). So, if you do not understand the APR you really should start improving your personal finance basics by gaining a proper understanding of them.The APR on your credit card is the rate if interest your supplier will charge you on the amount you owe them. So obviously, the lower the APR, the lower your payments, unless you pay off your card in full each month. If you do clear your card monthly, the APR will not be as important as it is to those who do not clear their cards each month.Each month your card supplier will send you a bill stating the full amount you owe them and the minimum payment you must pay by the due date. If you do not meet this date you will be charged a late fee and perhaps other penalties depending on the terms and conditions of your supplier.So you can pay the minimum amount specified, or the whole amount, or any amount in between. The important thing to understand is you will NOT be charged any interest if you make full payment.But, if you do not pay off the whole amount, you will pay interest charges on the amount left. This interest will be added to your next bill. The interest you will be charged is that you agreed to when you signed up for your card. And compared to, say, a bank loan, the interest, or APR, is very high.So it is possible to start a spiral of debt in this way if you do not know how these things work. Always borrowing on your card without paying it off each month will accrue high interest charges which you will have to pay eventually.Do not misunderstand me here. I am not saying you should never use your card if you cannot pay it off in full at the end on the month. I am saying your personal finance basics should be good enough to inform you when you can do this and when you should look for another source of funds.