Hey guys brand new to reddit and hoping to help some people and learn some stuff as well. To start I want to just say this is stuff I have learned over the years and if anyone disagrees feel free to tell me why. I have been a personal financial advisor for about 5 years now and this is a basic rundown on the start of planning. I know many people already know these things but trust me you would be surprised at the amount of people who don't.
First and foremost please understand the difference betweens savings and a safety net. I recommend everyone to have 4000 dollars in a bank account and 1000 cash at home (incase power goes out and cards wont work) at all times for emergencies. I live in NJ and when sandy struck it was amazing to see how many people could not get by and had no cash on hand when debit/credit cards would not work and banks where not open.
- Saving money with debt is counterproductive.
- Many people I meet all have a similar problem and that is debt. But even with this problem they all ask how to save money and invest... best answer save yourself the most money by being debt free.
- The problem with most debt is there interest rates. Credit cards for example have an interest rate commonly between 15% and 25%. Meaning that no interest on any bank saving account (right now usually being 1% in America) or investments (average 5% to 10% a year for most investment accounts) could ever hope to match.
- The best way to calculate your debt and just how much you are losing in interest is simple. Your interest rate for your credit card is 19% and you owe 3,000 on it. Take 3,000 x .19 = 570 this is your interest for the year. Take 570/365= 1.56 This means for this credit card alone you are paying 1.56 a day in interest for your debt. Meanwhile if you had that in a savings account you would of made around 30 for the year or 45 if it is in a cd account and if you would have invested maybe high around 300 almost only half of what your debt would cost you.
If you feel any information is wrong feel free to tell me so in comments I will try to write more tips throughout the month.
Submitted March 19, 2017 at 03:02AM by Syrus375 http://ift.tt/2mIillw
