Starting right
By Dave Ramsey
AGE
18–25
The experts
Dave Ramsey is a
nationally syndicated
radio talk-show host,
bestselling author of
14 books, creator of
Financial Peace University and the host
of The Dave Ramsey
Show on the Fox
Business Network.
Tiffany Bass Bukow,
a social entrepreneur
committed to empowering America about
money, is the CEO of
www.msmoney.com,
the number-one
personal-finance
Web site for women
and families.
Eric Tyson is the
bestselling author of
Personal Finance for
Dummies, winner of
the Benjamin Franklin
Award for the Best
Business Book of the
Year. His latest book
is Let’s Get Real
About Money.
DEBT HAS BEEN sold to us so aggressively,
and has become so ingrained in our culture,
that most Americans can’t even envision a car
without a payment, a house without a mortgage, a student without a loan and credit
without a card. But debt brings risk, and the
risk outweighs any advantage debt may have.
I hear from people in their late 20s and 30s all
the time who traded their financial souls for a
free T-shirt or pizza. Their credit-card debts
and student loans are still hanging around
their necks like an anchor, keeping them from
getting traction financially.
When the credit-card companies approach
you on campus or you get one of the billions
of offers in the mail, run the other way. Just
say NO! If you’re just starting college, be one
of the many who get creative and work or use
scholarships instead of student loans. If you
already have student loans, get intense and
pay them off. Don’t keep them around so
long that you think they’re pets. Don’t let the
payments hold you back.
The Forbes 400 is a list of the 400 richest
people in America as rated by Forbes magazine. When surveyed, 75 percent of the
Forbes 400 said the best way to build wealth
is to become and stay debt-free. I have met
with thousands of millionaires in many
years as a financial counselor, and I have
never met one who said he made it all with
Discover Card bonus points. They all lived
on less than they made and spent only when
they had cash. No payments.
Now is the time to develop good money
habits. If you can come out of college with
little or no debt and no monthly payments,
you’ll be off to a great start! C
The importance of
maintaıning good credit
By Tiffany Bass Bukow
AGE
26– 39
Laurence J. Kotlikoff
is a professor of
economics at Boston
University, a research
associate at the
National Bureau of
Economics Research
and co-author (with
Scott Burns) of Spend
’Til the End.
Liz Pulliam Weston is
the most-read personal-finance columnist on
the Internet, according
to Nielsen/NetRatings;
an award-winning,
nationally syndicated
personal finance
columnist; and author
of Easy Money.
SO YOU SKIPPED a few car payments last
year. No big deal, right? Wrong! Your purchasing and savings power as a consumer
is determined by how good your credit
score is.
One of the best ways to build a good
credit history is to have a consistent
stream of payments paid on time,
whether they are student loan payments,
car payments or credit-card payments.
If you don’t keep on top of paying your
bills, you won’t just be losing money by paying higher interest rates on your credit cards
(up to 28 percent or more a year), you could
end up losing money in other areas.
If you have poor credit or excessive
spending habits, it will reduce your eligibility
for a mortgage with a desirable interest rate.
You could lose hundreds of dollars a month
on your mortgage payment as a result.
Poor money-management skills could
also adversely affect your relationships. In
fact, financial squabbles are the number-one reason for divorce. To help mitigate or
avoid disaster, make sure to keep communication lines open about money, especially
about how much credit
each partner is willing to
be burdened with. Work with a
money coach who can serve as an arbitrator
between your needs.
Did you know that your credit can even
affect your insurance rate? Not only will you
get a discount for being a good driver, and
for the type of car you drive (minivans have
better rates than sports cars), but those with
good credit may also get a discount for a
good credit history.
With identity theft being such an
endemic problem in our country, it is critical for you to stay on top of credit reports
and make sure any claims against you by
creditors are legitimate. Otherwise, next
time you go to apply for credit you might be
denied, and the problem could be very difficult to fix at that point. Sign up for an
online credit-monitoring service. C
