Your First Credit Card – What to Consider

Sponsored by Capital One

Picking your first credit card can feel overwhelming. There are hundreds to choose from and how are you supposed to know what’s best for your unique situation? Parents, older siblings and friends may give advice – but personal finance is personal. What works for your loved ones isn’t necessarily the best card for you. However, there are six factors you can take into consideration to narrow down your options and find the credit card that’s best for you as you start building your credit history.

1. Ditch the credit card fees

43% of our generation deem little to no annual fee as the most important factor when considering which credit card to get, according to a Capital One survey. This gut feeling is spot on.

There are lots of credit cards out there all with various benefits, but why pay an annual fee (or any fees) if you can avoid it, especially when you’re a fledgling adult just starting to figure out the basics of a budget? Plenty of cards offer no annual fee. Run far away from any company asking for an activation or startup fee.

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2. Be sure the credit card you select reports to the credit bureaus

A credit card serves as a simple, effective way to start building your credit history and score. It allows you to get into the coveted 700+ credit score group without taking on any debt (like loans), as long as you pay off the card on time and in full every month. However, you can only get there if your credit card usage actually gets reported to the credit bureaus – or at least one bureau. It’s likely any card you take out would report to at least one bureau, but it never hurts to confirm.

3. Understand the APR and how to read your bill

You want your credit card to work for you. It’s important to understand the terms, especially how the annual percentage rate (APR) on your credit card works. The APR will be the amount of interest you’re charged on those items you bought if you don’t pay off your card in full by the due date. Paying just the minimum due, or anything less than the full balance, will lead you down the path of paying interest. Be aware of the APR rates when you are looking for a credit card and factor it into your decision making. Or even better, just avoid it from the get go by paying off all your purchases on time and in full every month.

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4. Access to your credit score

There are plenty of tools out there allowing you access to your credit score, but it is important to find one that is not only FREE, but also offers more than just your number. These days, you can access versions of your credit score for free through a variety of methods, but one of my personal favorites is having access via my credit cards. Four of my six credit cards provide monthly credit score updates. You can also use 100% free tools like CreditWise from Capital One, which is available to everyone – whether you have a Capital One product or not. Tracking your credit score helps you see if your behaviors are helping or hindering your progress. It’s also an excellent way to detect identity theft if your score suddenly plummets when you haven’t changed your own behavior.

5. Fraud security

Listen, fraud happens. Even the most diligent among us might eventually get hit with a dose of credit card fraud. I myself have been victim four times on three different cards and it’s a pain. It would’ve been even more stressful if I were on the hook for any of those charges. Be sure your credit card comes with a $0 fraud liability benefit, so you won’t be liable for that $700 shopping spree someone went on in your name.

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6. Rewards shouldn’t be your focus – yet

Rewards are awesome. Trust me, I’ve done my fair share of traveling by leveraging credit card rewards. But focusing on rewards is more of purple-belt-level financial power, and as a first-time credit card user, you’re a white belt. Capital One’s Platinum MasterCard gives those new to credit cards access to a regular, unsecured card with no annual fee. Not only that, the card comes with added perks that will help you build your credit with responsible use, such as alerts and the ability to customize your payment due date.

Once you’ve proven to yourself – and the credit card companies – that you can handle monthly access to credit without getting yourself into financial trouble, then you can consider leveling up to a card with healthy rewards.

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How did you select your first credit card and what was most important to you?

Disclosure: I was compensated for this post for Capital One, but opinions and advice are my own. However, there are no affiliate links in this blog post. I will not receive payment if you sign up for any products mentioned in this article.

Posted in Credit Cards Tagged with: ,

Balancing Unequal Incomes in a Relationship

There’s banking when you’re married, banking when you’re single, but what about that awkward gray area when you’re single in the eyes of the law but you’re in a long-term, committed relationship? How exactly do you balance the books when one of you out earns the other by a significant amount?

This question has been on my mind a lot lately.

11695966_10153188079031137_7623772260791663767_nPeach and I aren’t married nor are we are even living together, but our finances are still intertwined in a unique way because we are dealing with drastically different budgets. Peach is a high school history teacher with student loan debt, while I have a full-time job plus freelance income and no debt. Even discounting the debt, there’s several tens-of-thousands of dollars between our annual incomes.

Our income and net worth disparity isn’t an issue for us day-to-day. I’m not a big spender and relatively low maintenance about what constitutes a fun night out. Peach is the same. We’re both relatively frugal and save to travel and indulge in an occasional expensive experience. We go Dutch on most dates or just alternate picking up the bill. And because we aren’t living together, none of our expenses are linked, except maybe Mosby – but I cover the cost for him 95 percent of the time.

Then a unique opportunity presented itself and for the first time our financial situations were the source of tension.

The invitation

A few weeks ago a good friend asked if Joe and I wanted to join her and her boyfriend and other friends in Vegas over Fourth of July weekend. My friend’s boyfriend is no stranger to Vegas and actually could get us deeply discounted rooms, even on a holiday weekend. She figured we could keep the trip relatively affordable on a $500 budget for four days – assuming we didn’t fancy ourselves gamblers (which we don’t). This would be my first trip to Vegas and I relished the idea of going with some friends who knew the ins-and-outs of the casinos and general merriment to be had.

The problem arose because this budget didn’t include airfare. Flying across the country on a holiday weekend isn’t exactly thrifty. But I had some frequent flyer miles to burn, but not enough to accommodate Peach in addition to other trips I have planned in 2016 and early 2017. I could also afford the trip if I needed to pay for it out of pocket because I specifically save for travel and usually have around $4,000 earmarked for trips at any given time.

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We’re talking professional guest/bridal party status.

When I first pitched the idea to Peach I’m about 90 percent sure he thought I was pulling a belated April Fools joke. We’d just been talking about how we were going to handle attending seven weddings this year and here I was throwing Vegas into our calendar? Peach, being the kind soul he is, didn’t immediately shut down the idea. He indulged my current travel fantasy for a bit before gently trying to bring me down to earth by redirecting my focus to the aforementioned seven weddings, the two bachelor parties, one bachelorette party and bridal shower, as well as a couple of previously booked trips we had to handle.

When what’s mine isn’t yours…

Then, I started to get defensive (in my head)…

I had already budgeted for all those trips and still had money left over to blow on a trip to Vegas if I wanted. Sure, Peach wasn’t asking me not to go, but my mind started to spiral with rebuttals anyway. Why shouldn’t I get to go if I wanted to go? He didn’t have to come if he felt it was too big a budget buster. After all, we’re not married. I can do what I want with my money. Sure, we’d talked about having a relaxing Fourth of July at home in NYC – but those plans weren’t set in stone.

As my brain stopped yelling in indignation, I recognized that I’d want him there with me to enjoy the experience together – especially with it being more of a couples’ trip.

If we were married…

The odd part of all this posturing is that I knew this conversation would be so much easier if we were married. If we were married then our money would be joint and it wouldn’t seem emasculating or slightly outrageous for me to pay for a trip, because again, it’s a joint pot. If we were married, then we’d have 100 percent transparency about our budgets and spending habits to see if we could mutually afford the trip. Currently, we’re pretty open in communication but there isn’t access to each other’s funds or regularly updates about our individual bank accounts.

13072778_10153767820061137_4997090207511301795_oBeing long-time partners who don’t share our finances does make certain aspects of life just a little more complicated, particularly because our incomes and net worths aren’t equally matched. I also hate to say it, but it’s seemingly a bit more awkward when the woman is the higher earner. It wouldn’t be strange if I was a man talking about taking my girlfriend on vacation, but somehow it can be emasculating if a woman pays for her boyfriend to come along.

Peach does an incredible job of being progressive about our current income disparities and doesn’t begrudge me for out earning him nor does he get defensive if I pick up a bill here and there. Then again, it’s likely this disparity in income may not last forever. You never know what the future will hold for either of us and therefore it’s important we don’t allow money to set up some sort of power structure in the relationship.

I respect that he chose a profession that’s incredibly important, but isn’t compensated the way he deserves. I respect we come from different backgrounds and the choices I made about college meant I graduated debt free and he ended up with student loans. I respect that we find value in different things and aren’t always going to see eye-to-eye on when and how to spend money. And right now, I have to respect that it just makes more sense for us to save our money (and take some down time between weddings) and do Vegas another time.

How Peach and I avoid constant arguments over money

  • We’re open about our individual financial situations and our current and future money goals.
  • Neither one of us is a spender – which means there isn’t tension about someone not keeping up.
  • We set budgets for most things we do like gift giving at Christmas and how much to spend on a vacation, so there isn’t unevenness.
  • We talk about finances quite a bit – more than the average couple I’d guess – so we’re on the same page.
  • I’m willing to pay a bit more if I want to do something for which his monthly budget cannot cover.
  • Peach is man enough not to be uncomfortable with the fact I out earn him and I’m now announcing it for the world to know.
  • We speak honestly about how we think money should be handled in a marriage, which gives us a framework for how our incomes will be used in the future.
  • I constantly appreciate and reflect on all the non-financial ways Peach helps bring happiness and balance into my life. He’s a stabilizing force and our different backgrounds do help keep me in check when I get a little too amped up about the importance of the almighty dollar.
Posted in Relationships

Take the Risk and Invest in Yourself

Nearly a decade ago I left for college with the intention of getting a degree in theatre and then bursting onto the scene in New York City as an actress. I didn’t fantasize about being famous, but rather about being in plays with social missions that would spark conversations and change public opinion. It’s no surprise I adored shows like Rent, The Vagina Monologues and Fat Pig.

It didn’t happen.

The biggest part of the reason it didn’t happen is because I never really tried. I went to a university with absolutely no notoriety in the theatrical world. I landed a lead as a first-semester freshman and instead of encouraging me it made me feel like there was no competition to push me and develop my chops as an actor. By the time I graduated, I’d talked myself out of even giving it a proper go and instead focused on finding fringe ways to experience the entertainment business without having to risk failure.

Then I landed as a page at The Late Show with David Letterman.

Spending a year of my life surrounded by aspiring comics, writers, actors and actresses who pushed themselves daily to create content and risk humiliation on stages around New York City just made that little voice in my head go, “See, you don’t want it badly enough. If you did, then nothing would stop you. Now get back to making this lady’s bone dry cappuccino.”

So, I let the little voice of doubt win.

After my gig in the often-not-so-glamorous world of entertainment ended, I snagged the first salaried job with benefits that would have me and then stumbled into a short-lived career in public relations. Thanks to the sheer boredom I felt about my then job, I returned to my childhood love of writing in my spare time (mostly because I could do it for free) and Broke Millennial was born.

While this story does have a happy ending, I offer it up as a cautionary tale about what happens when you fail to invest in yourself and follow your dreams. The reason I say this is because I’ve been able to live vicariously through a special person in my life and get a glimpse into the should’ve, could’ve, would’ve of my decision to avoid potential failure. That person is my sister.

13007291_10153745165556137_4197155523140332029_nMy younger sister (even though she doesn’t look it) of three years did everything exactly as I wish I had. She believed in herself. She invested in herself. She dragged herself through the trials and tribulations of freelancing full time and never being quite sure when she’d be getting another paycheck. She dealt with balancing paying gigs with the pursuit of creative projects. Then, at the tender age of 23, she found herself a co-writer/producer/director of a short film in the Tribeca Film Festival.

But let me go back to the beginning.

It all started on a warm summer’s day in 1992…nope, too far.

Cailin began her journey by making a risky college decision. She went to film school. This wasn’t just any film school. Cailin went to number one film school in the country: University of Southern California. Sorry, NYU – it’s true. Suffice to say, she had the talent from the get go.

Through four years of college, I fielded many a phone call from her questioning her career desires. Did it make sense to pursue not only a ridiculously competitive field, but also one not particularly kind to women? Would she ever make it or would she instead just turn to a desk job within a few years of graduating once all the hustling and working for free got old – and unsustainable? And as with all talented individuals, she dealt with some imposter syndrome and voiced concerns about whether or not she was actually good enough.

Then graduation hit and she left the cozy cocoon of USC in May of 2014 and started trying to make it on her own, or at least pay her bills.

The first year came with lots of highs-and-lows. She learned the hard truth about determining your financial value and how to market yourself and network for jobs. She realized how easy it was to set a price that meant you were actually making less than minimum wage because you’d pull 20-hour days. She learned she should’ve listened to her sister and filed quarterly estimated taxes. But she kept pushing, while occasionally calling to voice some doubt about her chosen career path.

During this time, Cailin and two of her cohorts from USC kept working a project born out of summer boredom. (Apparently getting inspired when you’re bored is a thing in the Lowry family). The idea was for a TV show focusing on four women in a band who weren’t boy-crazed and instead actually wanted to be successful. You know – like how we empowered women are in real life but never actually gets reflected on TV?

The three of them kept writing and re-writing drafts of a pilot episode as well as original music for the show. Eventually, they 12961413_10153742971106137_3902783143092027630_ostarted getting some attention and meetings with people that pretended to matter and thus created a “bible” aka a huge document with proof of concept that you’d take into a pitch meeting. Cailin would keep calling about these big meetings that seemed to go somewhere to a point, and then traction would just stop.

Tired of feeling like folks (or rather middle-aged-white-guys) just weren’t totally grasping the concept of Girl Band, the ladies took matters into their own hands and decided to invest their own savings, and capitalize on the friend economy of having other wildly talented friends who could pitch in for free, to create a pilot episode.

Months passed and rather on a whim, Cailin and her two co-creators decided to submit the film to the Tribeca Film Festival. The notion of being selected seemed absurd to these three smart, driven, talented women. So, Cailin went back to life as usual. Hustling to make ends meet while writing in her limited spare time and trying to figure out where exactly she wanted to go next.

Then the phone rang.

Tribeca came a calling and invited Girl Band to have its world premiere at the festival in the Shorts Program.

This is only the beginning. But the point is that my sister invested in herself, believed in herself and fought through the downturns in freelance life to keep pursuing her dream. There may be a day she decides to walk away from the entertainment industry, but I doubt she’ll ever regret investing her time, money and creative capital to make her dreams a reality. Because no matter what happens next, she’s already achieved the greatness so many of us only dream about because she was willing to take the risk. For that reason, and plenty of others, she’s a role model to me – even though she’s my little sister.

For those interested in freelance life, I offer you a little insight from the always witty Cailin:

Here is a partial syllabus for the class on freelancing I wish I had been given the option to take in film school:

  1. Much of your life as a freelancer will be spent chasing down money people owe you. Treat it as an entertaining hobby, like running or something. It’s brain/emotional cardio which is good because you never get real cardio.
  2. How to set up an LLC properly and when to do this, it’s probably before you start being taxed income on full production budgets oops.
  3. Don’t undersell yourself with your day rate, you partially determine your worth also you will one day hire a model younger than you are who makes $1,500 a day and a dog who makes $1,200 a day so…
  4. People are shitty and people are wonderful in equal measure (maybe this is just a life lesson).
  5. When a woman comes onto your set asking why/how you are filming at her home, you should remain calm and not suspect your location contact of committing fraud.
  6. Most people try to make themselves and their experiences sound more legitimate than they actually are, you probably aren’t as behind as you think. Also, sometimes you might find yourself doing this and it makes you seem like an asshole so stop.
  7. When you actually do something cool and people are nice to you about it and you’re all like “no, no, it’s not a big deal, it’s so random, I didn’t earn it” you are also being a bit of an asshole, say thank you and shut up.
  8. Tax season happens every year, it’s your own damn fault if you forget about it. You should’ve listened to your sister when she told you to start doing them quarterly.
  9. As much as it is your singular dream, it would be unfair to own a dog right now.
  10. It is possible to get sick of bagels.
  11. One day your Costco membership will pay off when the manager sees how much stuff you’re buying, comes over with big eyes and seduces you into becoming an Executive Member.
  12. It’s best to shop for craft services stuff really late at night due to no lines, but avoid the Hollywood Vons because shit goes down there past midnight slash in general.
  13. Do not post extras casting calls on Craigslist and expect anything but bad results or people who e-mail you once a day for a month.
  14. Be nice to everyone except for the PA who gets in a screaming match on the phone at base camp, you can be mean to him.
  15. If you upload a picture of yourself onto IMDb, your friends will find it and tease you relentlessly.
Posted in Career

A Simple Trick to Save More Money (It isn’t automating)

Save more, spend less. Earn more, still spend less. Those are the two ways you’re going to get advice about how to build wealth (and to me saving includes investing — should probably make that clear upfront). When people lecture about how to save more (myself included) the number one strategy is to automate, automate, automate. For those who never heard this sermon from on high, it means you’re routing a percentage of each paycheck into savings before it even hits your checking account. Of course anyone who took Psychology 101 can tell you this technic of stashing your cash before you see it increase likelihood you actually save instead of falling into the “whoops, spent too much and can’t afford to save again this month” mentality .

It’s good advice. Perhaps the best advice when it comes to efficiently saving. But there’s one more trick that’s even easier than automation: nicknaming your savings accounts.

The nickname strategy

saving moneyI’m not the kind of person who creates vision boards or believes in the power of “The Secret”. Wishing something true doesn’t work. Otherwise I could keep binge-eating Ben & Jerry’s and still have Gigi Hadid’s body. Action and diligence are what make a dream become a reality. And, I’ll acquiesce, a dash of visualization. Knowing why you’re saving instead of just participating in the action of saving keeps you motivated.

This is why I nicknamed each one of my savings accounts. The name on each account provides me with daily (yes, I check my cash on the reg) reminders why I’m stashing money away instead of routinely indulging in my desire to never have to cook.

Why I have multiple savings accounts

Instead of adhering to the K.I.S.S. (Keep it simple, stupid) mentality of personal finance – I do have three different savings accounts and two checking accounts spread across two banks. Part of the reason I keep money in multiple locations is to chase a high interest rate on my savings with accounts like Ally. If you’re only getting 0.01% APY on a savings account – then you’re doing it wrong. (I’ve earned $68.51 in interest on a single savings account from switching banks less than a year ago. #worthit)

The other reason I spread out accounts is to simplify how I can track my budgets. This might sound strange, and I recognize it decreases the interest I can earn by not putting it all in one pot, but I like being able to just glance at my travel fund and know how much I can spend on an impromptu trip.

Yes, this could all be meticulously tracked in an excel spreadsheet – but I opted for the multiple account method because it works for me. Remember, this is personal finance.

My (sort of uninspired) nicknames

I know you’re dying to know what clever monikers I attached to each of my savings account for that daily dose of motivation. I hate to disappoint, but they’re pretty run-of-the-mill names.

Honey Pot

The O.G. of my savings accounts received the cliché name “Honey Pot”. This account serves as my emergency fund and Mosby’s stash of cash. I do actually keep an excel grid for this account because I like to track Mosby’s expenses separately.

Travel

You can blame this lackluster nickname on my bank. Apparently “Other People’s Weddings Fund” was too long a name. This fund is used to pay for all trips, which as a mid-twenty-something is primarily weddings right now. I do actually use this fund to pay for all wedding-related expense such as gifts, travel, and bridesmaid necessities like getting my hair done. It’s lovely to be able to always afford weddings without it busting my monthly budget. 25 percent of all my freelance income goes into this account because none of my regular take-home pay subsidizes my annual adventures – or other people’s weddings.

Down Payment (and paying Uncle Sam)

Usually the healthiest of my savings accounts – until tax time – this one is meant to focus on my medium-term goal of buying a house. Frankly, I have no clue when that will be, but I figure I’ll want to own some land sooner or later. I tuck away 50 percent of all freelance income into this account. This strategy helps make sure I’m prepared to cut my check to Uncle Sam and the remainder will eventually help me put 20 percent down on a house.

And to think, I didn’t have a proper savings account three years ago. (Spoiler: I kept it all in checking).

Image taken from StockSnap

Posted in Saving money Tagged with:

The Money Pit of Overextending Yourself

“Put on your own mask before assisting others.”

I’ve heard flight attendants, or more recently the inflight video, state this line hundreds of times. The moral of course being you don’t do anyone any good if you fall over gasping for breath before you finish putting a mask on your child or panicking seatmate.

Currently, I’m flailing around in the aisle gasping for air and blocking everyone else from the emergency exit row. Or at least, that’s how it feels as I eat TUMS like its candy.

This hyperbolic imagery comes to you as the result of me overcommitting myself on several fronts. Running Broke Millennial and posting a minimum of once a week, handling freelance gigs (one of which is now Forbes!), taking CFP classes, working on a currently top secret project with a deadline and balancing it all around a full time job. It’s a classic entrepreneurial move. Instead of saying no to moneymaking and brand-building opportunities, I’ve just stopped caring for myself. This also turns into quite the money pit.

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Full disclosure: this is a bit of self-indulgent rant or therapeutic writing if you will. However, it can provide some insight for those interested in balancing freelancing with a full-time job or serial over-commiters.

How exactly is me having less time to go out and indulge in activities that would normally cost me turning into a money pit? Seems like being a hermit would be quite beneficial to the ol’ savings account.

Not for me thanks to the increase in ordering meals, eating junk and doubling my coffee intake. I may or may not be noshing on a chocolate Easter bunny as I’m typing. It should also be stated that after much effort, I just can’t turn myself into a morning person so I’m a night owl who stays up late to get work done.

MosbyI usually get home from work around 7 or 7:30 at which point Mosby immediately needs to get walked and fed (putting on his oxygen mask first). He deserves a long walk after being inside most of the day, so it’s about 30 minutes of my time to give him a mile or two walk and then feed him.

Now it’s 8:00 pm and I need to feed myself. Normally meals have been prepped over the weekend so I can just pop something healthy and homemade into the microwave or heat it up on the stove. Not so much lately. Weekends are dedicated to slogging through work and getting some errands done (like laundry). Not much time is left to spend three to four hours grocery shopping and bulk cooking meals.

So, I’ve been reduced to quick, often unhealthy, meals (partially because it’s what I’m craving) or ordering out to save some time and get to work. This has become quite the little money pit in the last few weeks as I’m used to spending about $120 max on food each week.

I’ve also been putting off a much needed hair cut and exercise is often a low priority item these days, which has left clothing feeling tighter than normal and energy levels drained. (And yes, I know, I could just prioritize exercise but it’s hard to get it up about going out on a run when you’re tired and the habit just isn’t there.)

After another day of not getting down to work until about 8:45 and needing to stop at 10 to give Mosby another long walk it hit me: I’m growing a business and I can’t do this alone.

It’s time to get my act together and hire an assistant (virtual or real) to help take some tasks off my plate and consider ponying up for indulgences like a dog walker for Mosby during the day, laundry service and Fresh Direct to nix the time spent doing and folding my own laundry as well as grocery shopping. It should be noted here, I’m a city dweller without a car and no washer/dryer in the apartment. So tasks like grocery shopping and doing laundry aren’t as simple as they may sound. This of course, will require spending more into the money pit. But it goes back to the notion of when is it time to stop being cheap? These are certainly practices I can cease when life settles down a little bit, but perhaps they’ll still be worth the cost in exchange for my time.

P.S. I decided to add another thing to my workload and figure out Instagram. I am a millennial after all. If you’re feeling generous and want to follow someone who will post money tips (and obviously dog pictures) you can find me @brokemillennialblog.

Posted in Millennials, Random Tagged with:

Should You Tell Your Friends Your Financial Picture?

Up popped a gchat screen and my friend asking if I had a few moments to answer a money question. Always happy to dish about finances, I obliged. For the sake of her privacy, I won’t get into the particulars, but she had a financial strategy in place and wanted my two cents about whether or not I thought it made sense.

“Are you comfortable giving me your specific numbers?” I typed.

“No, not really.” She chatted back.

Never deterred from a financial conversation, I continued to give her my opinion on the question by working with a hypothetical budget and giving her numbers I felt satisfied the situation. Aka me saying, “You need to have at least $15,000 saved before you consider doing this. If you don’t, then don’t do it.”

About a week later, while chatting with a different friend, the conversation inevitably turned to money (that seems to happen to me a lot). He divulged his savings information and I took pause.

“I tend not to tell people my net worth because I don’t want to deal with their responses,” I told him. “It’s annoying when people feel they can pass judgment on what I can or can’t afford because they have a snap shot of my financial picture.”

The truth is, I usually avoid telling friends my net worth because I never want to hear the expression, “Come on, you can afford it” come out of someone’s mouth.

His curiosity was piqued and, being one of my closest friends, he gently pressed for a little more information.

Finally, I indulged him and provided a reference point. (I hope to one day be able to say: my net worth is Scrooge McDuck diving into piles of gold kind of money.)

These two events have left me wondering at what point, if ever, should we be sharing our financial picture with friends?

While I’m all for ridding our culture of the taboo surrounding money, I still hesitate to share details with friends.

155HWe humans crave a good benchmark. You know the kind that says X percentage of people in Y age group have Z amount of money saved for retirement. You look at that metric and think, “suck it other 25 – 29 year olds! I’m better than 95% of you.” Or perhaps you think, “well, I guess I’ll work myself into the grave.”

Sharing your financial picture with friends in your age bracket, with about the same education levels and/or similar socio-economic backgrounds can feel like you’re all “whipping it out to measure up” – and you know exactly what I mean. This is because money, and our decisions related to money, is often used as a touchstone for our self worth and our intelligence. Not saying that’s right, just saying that’s how it is.

Except, I don’t want it to feel that way with my friends.

Personal finance is intensely personal. How we choose to spend money or save money or invest money or completely ignore money is our decision. I’ve had a lot of advantages bestowed upon me in life for simply being born into my family, with the skin color I have and given opportunities for quality education. Some of these advantages, like graduating college without debt, automatically put me financially ahead. While some of my friends started post-colligate life with -$30,000 or -$60,000 or -$150,000, I left with +$10,000 and kept building from there.

So yeah, when a friend tells me he saved $4,000 or another says she finally started investing or a reader emails to say he just paid down all credit card debt – I’m thrilled for them. I’m not mentally calculating how their accomplishments stack up next to mine, because who knows what could happen? Maybe my heavily invested net worth tanks this year, or I lose my job, or a medical issue arises and I suddenly find myself massively in debt.

To be honest, I don’t have an answer to my own question.

There is value in demystifying finance by being really open in conversations. The more we’re willing to go on record about failures and victories with money, then the easier it will be for everyone to have a high rate of financial literacy. But for the same reason my friend hesitated to share her real numbers with me, I often opt out of getting financially naked with all my friends.

Image from Gratisogrpahy

Posted in Financial Literacy, Millennials Tagged with: ,

When it Pays to Stop Being Cheap

“I think I’m going to make an impulse purchase.” 

“Erin, if you’ve been thinking about it for more than a few hours, it doesn’t count as an impulse purchase.”

(Recent conversation with a close friend – and I’d been thinking on the purchase for four days.)

When you develop a moniker like Broke Millennial, it gives people in your life permission to start passing judgment on your spending patterns – or lack thereof. Friends have teased me about my extremism as I can violently swing from penny pincher to Kanye West. There’s the fact I’ll treat Peach to fourth row orchestra seats to a Broadway Show but then I refuse to get an air conditioner in my apartment because it would drastically hike the monthly electric bill.

There seems to be no apparent rhyme or reason to when I make financial choices, except, I know the pattern: travel and time savers.

When it pays to stop being so cheap

Inspired by a post written by Cait of Blonde on a Budget, I started reading through some of my old musings. A 23-year-old, still dating Peach long distance, Broke Millennial waxed poetic about finding the glamour in riding the Greyhound bus from New York City to Rochester and back.

The 26-year-old Broke Millennial with a significantly larger savings account is here to tell you there is nothing but grit to riding the Greyhound bus.

A quick trip down Greyhound memory lane:

  • Man next to me had been recently released from prison (didn’t share what had put him in there) and he felt particularly chatty about his post-prison plans for six hours.
  • Woman boarded the bus, preceded to remove her shoes and unwrap a tuna fish sandwich.
  • Sleeping woman next to me (not stinky-feet-tuna-fish-eating woman) kept shoving into my side. When I refused to huddle up against the window and give her the entire armrest, she decided to start screaming at me in Thai at full volume.
  • Four frat boys (they did get off at the Syracuse stop) boarded the bus and pulled a 30-rack of Keystone out of their duffle and then got extremely inebriated.

Optimized-road rewardsNow, the former first-class flying part of myself was well served by the humbling experience of only being able to afford the bus if I wanted to see my boyfriend on an even semi-regular basis.

The current me cringes a bit at the entitlement in the fact I flat out refuse to board another Greyhound.

Before you judge me too harshly, I have a valid reason for upgrading to traveling almost exclusively via plane and occasionally rail or car.

Time.

Riding the Greyhound bus from New York City to Rochester often ended up taking close to eight (sometimes even nine) hours. The best time I’ve made in a car, even driving with Mosby, was six hours and 15 minutes. Flying takes about 3.5 hours door-to-door. It saved me approximately nine hours on a weekend trip to fly. Not only did this mean I could spend more time with Peach by staying later than 10 am on a Sunday, but it also maximized productive hours. I can’t tell you how rough it is to try to get anything done on the tiny space of a Greyhound bus with extremely touch-and-go WiFi access.

What’s your time worth?

Travel Three years ago I did everything possible to save a buck. I’d spend 40 minutes taking the bus to the airport instead of hopping in a cab or Uber for a six-minute ride that cost $12. I once made it from my front door to the gate at LaGuardia in 17 minutes, true story.

Then my mentality slowly started to shift as I upgraded my job while steadily building my freelance career on the side. With the increased income also came the realization my ability to earn more is tied to available time. This time needs to be utilized properly.

Embracing and controlling lifestyle inflation

Sure, increasing my spending to save myself some time can be seen as lifestyle inflation. In many regards, it is. So let me share how I am still allowed to claim myself a relatively frugal person.

  • 35 percent of my regular salary gets auto saved into an emergency fund and 401(k). A bit more gets saved with the use of Digit and other habits.
  • 100 percent of freelance income gets saved.
    • 50 percent immediately goes into a bank account set aside for paying Uncle Sam
    • 25 percent gets put into my Honey Pot fund and ultimately invested
    • 25 percent goes into my travel fund

Now, don’t go thinking I’ve exclusively morphed into some high roller. I still bring reusable water bottle on trips to avoid paying airport prices for some H2O and pack a lunch for the flight. I do my own laundry, walk my own dog, clean my own apartment, eat mostly homemade meals – not even with Blue Apron – and usually grocery shop over going the Fresh Direct route (wow, I’m a city person). Plenty of chores in my life could get outsourced, but I’m not that rich yet. But one can dream because I would really love to hire someone to handle the dreadful task of cooking.

Posted in Career, Saving money Tagged with:

Financial Pet Peeve: The Worst Credit Score Myth of All

There is a perverse myth that’s taken hold in our recently credit-score-obsessed culture. A myth so upsetting to my delicate feminine emotions, it leaves me longing for the days of fainting couches. This myth is doing damage to the already weakened bank accounts scores of millennials attempt to fatten each month. This myth is my Lord Voldemort, my Lady Macbeth, my Ivan Drago…you get the point.

Myth: Carry a balance on your credit card  

NO, God. NO. God, please. NO. NO. NOOOOOO.

There is absolutely no need to carry a balance month-to-month. To clarify, this myth suggests that you are not paying your balance in full. Instead, you pay at least the minimum due or an amount close to the total, but leave a little bit left to carry over.

Origin of the myth (well, my assumption)

Yeah, yeah I know all about making assumptions, but I’m pretty sure I’m right about this one.

There is a general confusion about carrying a balance and having a statement balance. A confusion the banks have no interest in correcting, because you misunderstanding what it means to have a balance verse carry a balance earns them extra money in interest payments.

For the love of God, don’t pay interest to the banks! You can build a strong credit score for free.

Truth: You need to have a statement balance, but pay it off on time and in full

You actually have to use your credit card in order to get kudos from your credit card provider that you’re a responsible borrower. However, the usage doesn’t count if you pay off your purchase the moment it posts to your online dashboard. For example, you just bought dog food in bulk for your adorable little budget buster and charged it on your credit card. It posted to your account three days later and you immediately pay it off.

This instant payoff tactic means that you’ll have charged $0 and owe $0 when your statement cycles. Even though you actually did use your card, if it doesn’t show as owed on your monthly statement then it didn’t actually happen. Consider this the “if a tree falls in the woods” of credit scores.

In the eyes of your credit card provider, this strategy means you aren’t irresponsible nor are you responsible – you just are.

The credit card provider reports to the credit bureau that you didn’t utilize your credit at all – which means 0% utilization. That’s like getting an incomplete on 35% of your credit score because utilization is a major factor in determining your credit score. 

So, what’s a diligent millennial hoping to build a strong credit score to do?

The easiest strategy is to make one or two small purchases per month. Then wait until the statement arrives and pay it off in full.

Screen Shot 2016-03-02 at 10.46.20 PMYou should be able to tell when your billing cycle ends by looking at your account online or the most recent statement. You can also set up text alerts, email notifications or an old school letter to ensure you don’t miss when the bill comes due. The black belts of budgeting will also feel confident enough to automate their credit card payments, so the bill is paid on time and in full. Automatic is also an easy strategy if you only charge a Netflix subscription and your cell phone bill, so you know exactly how much your statement will be each month.

Solution: Small charge. Wait for the bill. Pay it off on time and in full. Rinse. And. Repeat.

The other tip is to ensure you spend no more than 30% of your total available credit limit per month (that means no more than 30% of the credit available across all your cards). Brownie points if you stay in single digit utilization.

To make this personal, I have six credit cards with the following credit limits:

  • $11,000
  • $8,000
  • $4,500
  • $4,000
  • $4,000
  • $3,800

This equals a grand total of $35,300 in credit available to me each month.

I need have no more than $10,590 across my statement balances to be in good shape. Spoiler: this isn’t a problem.

Most months, I spend less than $2,000 on my credit cards and typically stay around 5% utilization.

Why does this matter?

Screen Shot 2016-03-02 at 11.13.58 PM

It matters because I’ve never had another form of credit in my life (no student loans, no mortgage, no auto loan, no personal loan) so this is the only way I build credit. And with this, I’ve managed to be a 700+ FICO credit score, and once even break 800, without paying a penny in interest.

All it takes is making a small charge and paying it on time and IN FULL!

Posted in Credit, Credit Cards Tagged with: ,

Beneficiaries: the Easy Way to Protect Your Money

During the course of a three-hour class that occurs from 6 pm to 9 pm after working a full day, the mind may begin to wander. I on occasion will begin to plot my next travel adventure or wonder when I’ll be able to get another dog or fantasize about reaching that next money goal (it’s border on an unhealthy obsession). During one these moments of brain relaxation, I heard the statement, “or else your money could end up stuck in probate court.”

My mind immediately snapped back from picturing Mosby frolicking in a three-acre backyard with two new canine sisters (pitbulls in case you were wondering) and honed in on my professor.

She went on to give a high-level explanation of probate court, which I will sum up as: the tenth circle of hell in which the government (well the court of your land) gets to determine where and to whom your assets are distributed after your demise.

The next day I immediately phoned up my bank and double-checked on my investments to ensure the proper precautions were taken to keep my money out of probate court.

Unless you simply have no care about passing along your assets (even the most meager sums) to a loved one upon your death or you really just think it should get partially squandered on needless court fees because you were too lazy to take 10 minutes of your life to get your house in order, then that’s on you.

For the rest of you – there’s a simple, two-pronged solution to keeping your money out of probate court.

  1. Put beneficiaries on your accounts
  2. Have a will

The first solution is incredibly simple and honestly will take probably a collective 30 minutes of your time, depending on how many financial institutions you use. In fact, when you set up your work 401(k) or your IRA or whatever other investment you might be using, there probably came a time you were prompted to designate a beneficiary. The second takes a bit more time and can actually cost you money, but it’s important to have a will once you have some assets in your name. Until then, the beneficiaries will probably do.

Yes, you do need to read this if you only have a couple hundred bucks and barely anything in your 401(k).  

I can sense what so many of my fellow millennials are thinking. “Please, I only have a few hundred bucks to my name. Why does it matter?

Well, don’t you still want your parents or siblings to get those few hundred bucks? At the very least it could offset some of the costs of your funeral. And, if you don’t die soon (which you probably won’t) then you’re all good to go as that savings account and retirement account(s) grow and you suddenly do have a sum worth passing along.

Protecting Your Money in 3 Steps

Step 1: Set up beneficiaries with a PoD and a ToD

It’s incredible simple to set your beneficiaries up. You can probably just log into your bank or investment portal and put beneficiary in the search bar and be directed to the appropriate place. Otherwise, call up customer service and say you want to set up a Payable on Death (PoD) for bank accounts or a Transfer on Death (ToD) for investments. In many cases you might have already set up a beneficiary when opening a retirement account or investment account.

Seriously, super easy

You will need your beneficiary’s full legal name, birth date and possibly Social Security number in order to complete the process.

Step 2: Tell your beneficiaries

Cailin (my sister) got a morbid text a few months ago.

“Hey, can you call and tell me your Social Security number? I need it to name you as a beneficiary on my accounts.”

When she called, I explained that I wanted to set it up so she’d inherit all my money upon my death from two savings accounts, two checking accounts, a 401(k), both a traditional and Roth IRA as well as a handful of index funds. I told her the financial institutions I used, so it would be easier for her to track them down. In full disclosure, our family is pretty comfortable talking about death, wills and inheritances.

Well, she doesn’t get everything. One savings account is earmarked for Peach because he’d inherit Mosby, should I meet my maker prematurely, so I’d like him to have a little money to use towards caring for my dog-son.

Setting beneficiaries is important, but it’s also important that they know so it simplifies the process. Grieving is an awful time, so everything you can do to make it easier for your loved ones the better. And setting it up so they don’t have to worry about your estate is a beautiful parting gift.

Step 3: Check in on your designations as life events occur (they trump your will)

IMG_2362The final piece is to check in on your designations each time a life event occurs. Some examples being: marriage, the birth of a child, divorce, re-marriage, death of an existing beneficiary.

Hopefully only two of those actually happen to you (you be the judge of which ones), but each time a life event occurs it may mean a shift in your beneficiaries.

For instance, if Peach and I get married then my sister will get knocked off as my primary beneficiary (sorry, Cailin) and it will change over to Peach. Then if Peach and I decided to have/adopt kids, then they would likely also be named as beneficiaries.

It’s important to keep tabs on beneficiaries because they often supersede a will.

Unfortunately for many a second-spouse, a beneficiary on an account will inherit funds even if the will has been updated to remove spouse #1 and leave everything to spouse #2. You can image how many a scorned first spouse has been tickled with delight when the ex forgot to update beneficiaries.

A parting gift

As a congrats for reading about this most morbid topic, one that makes many people uncomfortable, I leave you with a parting gift.

Ron Swanson and I agree on many things, but this is not the way to plan your estate.

 

Posted in Investing, Saving money, Wealth Tagged with: ,

Are You Paying a Luxury Tax for Your College Degree?

If you’re reading this, then it probably means you have some interest in money. Or, you liked the headline of this post and you’re already thinking about clicking away if I don’t grab you soon.

Those who love money in a Warren Buffet kind of way instead of a Kardashian* kind of way often sneer at the thought of paying a 1000% mark up for a good simply because the label slapped across the front or the notoriety associated with the color/shape/texture – here’s looking at you Birkin bag.

There is so much chatter about not keeping up with the Jonses and being a minimalist and living below your means once you’re earning a living – but why not fixate on an earlier problem?

The college degree problem.

College is important. Perhaps it will become increasingly less so in the future, but right now, a college degree helps springboard you into opportunity. Well, sometimes. College is also an ideal place to network and build a community from which you can later call upon to help you find a job. (That’s what happened for me.)

I’m not about to make a bold claim that you should ditch college entirely – although I will strongly encourage those who don’t find a four-year degree enticing to consider trade school. Why do we constantly overlook trade schools?! But that’s a rant for another time.

Hannah Rounds over on Unplanned Finance recently discussed why a college degree is no longer a safety net and guaranteed job security – even degrees in STEM. She’s right. This fact just fuels my need to scream from the highest Internet mountaintops: DON’T PAY A LUXURY TAX FOR YOUR COLLEGE DEGREE.

via GIPHY

The luxury tax on your college degree

We’re far too fixated on where the degree is coming from instead of what it’s meant to accomplish and how well a person is suited for the school. And it isn’t just high school seniors that are the problem. Plenty of parents obsess over wanting their children going to a name brand college. The Louboutin, Chanel, Louis Vuitton and Guccis of the collegiate world when a Kate Spade, Tory Burch or Coach will serve you just fine. Heck, why are we overlooking the TJ Maxx, Marshalls and Home Goods options?

Opting into the high-end world of colleges means significantly higher sticker prices (for most) and much of that burden gets placed on the child’s shoulders.

Graduating with a piece of paper validating that you were smart enough to make it through Harvard or M.I.T or Yale is great – but here’s the secret: no one is really going to care in a few years. Unless you feel the need to whip out your paper and measure up against someone else to get an elitist feeling of superiority of course.

via GIPHY

But sometimes it’s worth it to pay a luxury tax, right?

Sure, I might be willing to buy that argument. If you are highly advanced in a specific field and the crème-de-la-crème professors and peers will help push you to be the best version of yourself at a school – then sure, pay the luxury tax. Well, pay it if you can afford it or are going to get a high-paying job afterwards that will make the ROI for that degree so obvious I should be embarrassed for writing this rant in the first place.

But ultimately, I don’t think it truly matters where the self-starters go to college.

[Insert cliché list of famous women and men that didn’t go to a top school or dropped out *cough* Bill Gates *cough*]

Maybe one argument can be made for when paying a luxury tax is worth it: if you’re planning to get your Mrs. degree. (This is sarcasm…sort of).

It isn’t about the brand; it’s about you (and graduating debt free)  

IMG_1285_2

Shout out to my family at graduation

Listen, if you’re going to be a big deal in life, then you’re going to be a big deal. A fancy school isn’t going to be the determining factor. It may help you in certain ways by giving you a valuable network of high-powered individuals. Just remember, you can network at smaller schools too and most schools still have some illustrious alumni. And don’t discount how a school makes you feel – beyond the name brand.

Or going name brand may leave you crippled with debt and therefore clinging to a mediocre job for far too long because you’re too afraid to take a risk.

Graduating debt free turned out to be a huge advantage in my life and a reason I’m far more willing to take career risks.

Is all this just because you didn’t go name brand, Erin? 

You know, maybe I’m biased. Most of you have probably never heard of the school I attended. St. Bonaventure is a small liberal arts college “nestled in the foothills of the Allegheny Mountains” and “cradled by the Allegheny River” (read: in the middle of nowhere).

I applied to St. Bonaventure out of tradition (21st in the family to graduate from there), but truthfully never really planned to go. I’d actually sent in a deposit to Wake Forest before the fateful conversation with my father changed my mind and instead I switched over to becoming a Bonnie (that’s the mascot, it’s a wolf…?).

Do I regret it today?

Absolutely not.

Not only did I make wonderful friends, and meet Peach, but I also received a lot of individualized attention that helped develop me as a writer. Frankly, I don’t think much of my success today would’ve been possible without the Journalis31833_412558826136_3194986_nm department at St. Bonaventure.

It also didn’t hurt that being a Bonnie means an intense network. Most graduates probably say this about their schools, but here’s a little taste of what my “off-brand” school did for me:

Summer internship with CNN’s Atlanta Bureau – Did I have to be good? Yes. But a Bonaventure connection got my foot in the door and my name on the right desk.

IMG_2144First job out of college as a page for The Late Show with David Letterman – This is my closest thing to being in Greek life. A then page and fellow Bonnie from class of ‘10 got me an interview and I replaced him, then I (class of ’11) got another Bonnie an interview there (class of ’12) and he replaced me.

Second job out of college working in public relations in NYC – While I often gripe about how much I disliked working PR, it can’t be overlooked that a Bonaventure alumnus helped me get an interview (and coached me a bit) for my first career job post-college.

Please, just think it through

This may come off as a crazy rant (hopefully it at least made you laugh), but I sincerely hope that current high schoolers and millennials that are now parents themselves, think twice about paying a luxury tax for a college degree. Or hey – maybe college isn’t even the right fit at all.

*But props to the Kardashians for building that empire. They’re laughing all the way to the bank – if their faces can still allow them to express such emotion.

Posted in Millennials, Saving money Tagged with:

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