Credit Cards - Which one is right for me?

In the personal finance book The Money Book for the Young, Fabulous and Broke, which I highly recommend everyone under the age of 30 to own and re –read three times, the author gives some great points on how to choose a credit card that’s right for you.

The bottom line is that you need to build credit, so you should have your name on a card. This blog is JUST an introduction to the topic. In future articles, I’ll expand on the topic since there are several important points.

First, some quotes from the chapter that will set the tone:

“If you think you are entitled to use your credit cards for blowout vacations, a closet full of expensive clothes, and going out four times a week, you are financially deranged.”

My addendum: “It’s also not a smart move to pay for rent using credit card checks; that’s a sure sign that you can’t afford where you’re living currently and that your desires are not practical at the moment.”

So how do I choose the credit card with the best deal?

“If you’re going to use your credit cards to live on, you can’t afford to spend a penny more than necessary in interest rates and fees.” However, if you use your credit cards to rack up points and flyer miles, and pay off the balance in total on each bill, the rate doesn’t really matter. But BE SURE to make that an inflexible habit. Always remember, the money you are paying in interest if you leave a balance on your credit card is the companies’ way of robbing you of what you need to spend on gas or student loan payments!

Other factors to consider:

Is there an annual fee? How much?

What is the interest rate? How much has it increased in the past 3 years?

What is the grace period to pay the bill?

Are there any fees or penalties levied for late payments?

What are the rewards that would most benefit me? Cash back? Frequent flier miles? Gas?

THE FINALE: this is your go-to resource for credit card research, comparison and information.

http://www.bankrate.com/credit-cards.aspx

Apartment Hunting? Know This!

Apartment Hunting? Know this!

For the newly-graduated demographic, apartment hunting and leaving the nest could just be your next step in life. Say you secured a job and need to shorten the commute. Say you can’t stand to live with your parents anymore. Whatever the case may be, you’re in the market for a new apartment and on your way to new (and expensive) freedom!

According to an article in last week’s Bloomberg Businessweek, demand for apartments, and apartment rents, are both set to rise over the next three years. Read below to find out why, and how this change can affect you.

The national foreclosure rate for the fourth quarter of 2010 (October – December) was 4.63%. That means that thousands of people in our nation were kicked out of their homes as they defaulted (couldn’t pay) on their mortgages for several consecutive months. These foreclosures helped drive people out of the homeowner/ homebuyer market and into rentals. As you may recall from any economics course, when demand skyrockets, so do prices.

Some apartment prices could also be higher as apartment owners hike up the price to make up for losses they’re experiencing on some of their vacant apartments and properties. In effect, you might be charged more for rent simply because you’re helping owners keep their rental incomes steady if some of their properties are not currently rented or leased. It’s a business, after all.

In the early 1930’s, the Rothchild Family convinced the American people through highly effective campaigns that the “American Dream” is to be a homeowner. Thus, citizens could own their own piece of America and exercise full autonomy on their plot(s) of land. This occurred much in the same way that Debeers (the world’s largest diamond company) convinced the American people in the early twentieth century through again, highly-effective campaigns, that a diamond engagement ring (…and a BIG one) was the only way to express a man’s intention to make a woman his bride. Needless to say, in America currently, you’re considered socially-accepted and successful if you’re wearing a big rock and you own a home. No wonder.

Why do I mention this? After the median (middle) home price plummeted 27 percent in the last 5 years, some Americans no longer consider homeownership “the American dream”. Your investment would be solid, because home prices can only rise! If you’ve read Robert Kiyosaki’s Rich Dad, Poor Dad, however, homeowners might consider themselves the American suckers, rather than those who realized their own dreams. I don’t mean to be disparaging, but if you paid $1.4 million for your house, which is now worth $900K, and you want to sell your home, you’ll be taking a huge loss. Thus, the sucker punch. The drop in the prices (or values) of homes are driving people to rent, according to the article entitled, “Apartments Are on the Rise Again.” They’ve lost money on their investment (their homes), and who knows if the prices will ever rise again to the amount they paid. This will contribute to the upswing in demand for apartments.

So we understand that demand is climbing. Please understand also that supply is not climbing quickly enough to meet the 1 million additional renters per year. “New rental apartment construction plummeted to a 50-year low”, according to the Census Bureau Report, and current apartment construction is the slowest since 1959.

AvalonBay Communities, one of the largest public U.S. apartment homeowners, stepped up its new apartment building efforts, as they reasoned that since rents will increase, their costs will stay unchanged. Since materials costs are rising and rental rates are increasing (remember demand…!), the overall effect on net profit is steady. The Company started 11 new developments in 2011, which will undoubtedly help with the supply shortage. 

What's Changing During Tax Season?

Tax laws are complex and always changing. With any new administration, tax laws are adjusted that either ease the burden of the lower and middle classes (albeit very temporarily) or strengthen the tax shelter of the wealthy. In an article from the Wall Street Journal on February 7, 2011, many of the amendments that were made last year are set to expire in 2012. Therefore, in regards to tax law, always keep in mind that is like an energetic toddler, always moving and never consider one of life’s constants.

This year’s tax rates, per the Journal’s article, are listed below:

*Note: Single taxpayer rates are listed first, and married taxpayers rates are presented in parentheses.

Up to $8,500 (up to $17,000) à 10%

Up to $34,500 (up to $69,000) à 15%

Up to $83,600 (up to $139,350) à 25%

Up to $174,400 (up to $212,300) à 28%

Up to 379,150 (up to $379,150) à 33%

Above $379,150 à 35%

Notice the biggest jump in tax rates is when you cross the $34,500 mark as a single taxpayer, or the $69,000 mark as married taxpayers. That’s about the mark of lower-middle or middle class. Thus, the uproar that the middle class is the body most reprimanded for earning a higher income from one year to the next.

If you have investments and have to pay taxes on capital gains because you sold stocks or bonds this year (assuming the price of your security increased), the rates are at an all-time low. For taxpayers in the 15% tax bracket and below, the capital gains tax is 0%. For taxpayers in the 25% tax bracket (or above that mark), the capital gains tax is 15%. So let’s say you bought Apple’s stock (1 share) at $100 on April 1^st. On June 1^st, you sold the stock for $250. First of all, congratulations! Second of all, the price rose by $150. That is your profit. But wait; this is America. You pay taxes on that profit? How much? Fifteen percent of the $150, or $22.50. So your real profit is $150 - $22.50 = $127.50. Again, congratulations!

Click on THIS LINK to the Wall Street Journal article about 2011 tax law changes to acquaint yourself with other new changes!

http://online.wsj.com/article/SB10001424052748703675904576063903166546250.html?mod=WSJ_PersonalFinance_RightMostPopular

"Why?", you ask...

After the enormous residential real estate bubble burst in 2008, followed by a 3,000 point crash in the market in the fourth quarter of that same year, America was forced to take a REALLY good look at its financial position. If you’re like me, you just graduated college and know relatively little about investments or what to do with your first paycheck beyond buying a new iPod and some awesome, and incredibly shock-absorbing running shoes. And then you see the financial mess that has impacted the nation, and you may  wonder if what you could be doing with your income, whether meager or plump, could prevent you from suffering financially like the rest.

That’s the purpose of this blog. I’ve noticed how little my counterparts – recent college graduates – actually know about personal finance. I’m no whiz, but I have a passion for personal finance for a reason unknown to me. And I have a responsibly to share what I’ve learned.

Debt stresses me out. You, too? In this blog, I plan to present practical ways to help pay off college loans, car payments, and credit card debt you might have racked up for “must-have” purchases. I will define terms that are thrown around on the news all the time so that you can understand what on earth they’re talking about. I’ll present a digested version of relevant articles from the Journal and other business publications, and applications for that new information. I will also present my own strategies for investment based on my own experience and what I’ve learned from personal finance books, newspapers and business magazines.

I’ll always cite sources, so that you can easily refer to the sources I use and so that those authors receive the credit due to them.