Outlaw FinanceEverything You Never Learned In School

Ask 100 people for money advice or advice on personal finance and you will get 100 different answers I can almost guarantee that.  Although you get hundreds of different answers many of them will contain at least one of the 7 items below.  If you follow the 7 rules below you will keep yourself out of financial trouble.

1.  Don’t carrying a balance on your credit card. Credit cards are great tools if used properly.  They are great for tracking your spending habits.  You can earn cash back or other rewards with rewards cards.  If you lose them you aren’t liable for purchases made (as long as you report them).  Carrying a balance means you are paying interest and when you pay interest in excess or $200 a month (as I am now) you realize that you are just throwing away your money.  Pay your credit card in full each month and take your cash rewards or points and use them.

2.  Start saving now. Compound Interest is the most powerful force in the world.  The sooner you start saving the longer your money has to grow.  $1000 invested for 40 years at 8% interest grows to $21,724 years.  If you wait 10 years you need to invest $2150 and then you are still have $90 less.  So start saving now and let interest work for you.

3.  Don’t miss out on free money. Most companies that offer a 401(k) offer a company match.  Now I have seen some matches that aren’t that great and others that are outstanding.  My friend worked for a company that matched 1/4% for every 1% he put in up to 2%.  Basically he had to commit 8% of his salary and they commited another 2% for a total of 10%.  On the other hand McDonald’s has a generous 401(k) that alows some managers to recieve 16% from the company for investing as little as 5%.  Whether you match is dismal like my friends or great like the McDonald’s one it is still FREE MONEY.

4.  Pay yourself first. Don’t wait til the end of the pay period or month see how much you have left and then commit that to savings.  Instead set up an automatic savings plan.  Set aside a set amount each time you get paid and have that transferred into a savings account.

5.  Don’t trust friends or family if the bank doesn’t. If a bank is asking for a cosigner on a loan it means that the person asking for the loan either has shotty credit or doesn’t make enough to get the loan themselves.  If this person doesn’t pay the loan the bank comes after you.

6.  Driving upside down/rolling cars into each other. Vehicles are an asset that do not appreciate.  In fact they depriciate at an incredible rate.  Always try to put down at least 20%.  Also if you are upside down on your car don’t trade it in on a new car.  Why would you add 1000s of dollars to a loan on something that won’t even be worth what the “sticker price” was once you drive it off the lot.

7.  Ensure to Insure. Make sure that you carry enough insurance not only on your car but also on your homeowner’s/renter’s policy.  God forbid you get in an accident or something terrible happens at home and you don’t have enough insurance to replace/fix everything that was damaged.  Also make sure that you are properly insured both life insurance and medical insurance.  You don’t want something to happen to you and your family be loaded with hospital bills or left high and dry if you don’t have life insurance.

These simple steps will get you on the road to financial freedom.

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