401(k)

If your employer offers you a 401(k), you should contribute the maximum that they will match. Feel free to add more but at a minimum, you should put in what they'll match. For example, lets say that your company will allow you to contribute 6% of your income and they will match 50% of the 6%. If you earn $36K/yr ($3K/month), then you can contribute $180 per month to your plan. That means that your company will GIVE YOU FREE MONEY in the amount of $90 per month. Effectively, that is a 3% raise in your salary. The only downside is that in most plans you must wait a certain period of time (like 3 years or 5 years) to become fully "vested". All that means is that the money the company matches is not completely available until after the vested period. However, even if you leave a company before you are fully vested, the money you contributed is 100% yours and you can move to another 401(k) with you new company. That's called a "rollover".

How to Use Credit Cards

Here are some basic tips for using/getting a credit card:

1. Find the lowest interest rate possible.

2. If you are financially able, pay your balance in full each and every month. If you are riding out a 0% introductory rate, ensure you can pay the full balance at the end of the introductory period.

3. If you are unable to pay your full balance each month, pay as much as possible and always tackle the cards with the highest rates first.

4. Try to find a credit card that offers "cash back" or some other incentive. I have a Chase Freedom Card that has literally EARNED me thousands of dollars over the years.

5. Try to find a card with no fees at all. For some people who've had credit challenges in the past, this may be difficult and you may have to get a card that has fees just so you can start establishing good credit. Ironically enough, bad credit is better than no credit. I used to work at a car dealer and it was easier for customers with bad credit to get a loan than customers with no credit history.

6. Pay your bill online each month if possible. Save the money that you would spend each month on stamps and put it towards your bill.

7. Don't overspend. This will help you meet #2. Sometimes you just need to make a budget so that you know how much you can afford to spend each month on your credit card.

Manage Your Money Online

One of the key things about managing your money is knowing where it is, knowing where it is coming from and knowing where it is going. There are quite a few ways to do this. If you follow the guidance from the book, "Your Money or Your Life", you should know about EVERY PENNY that comes in and out of your life.

Some people choose to use a spreadsheet. You can also use something like Quicken or MS Money. Additionally, many banks have an online tool for managing all of your accounts. However, my personal favorite is Yodlee Money Center. Yodlee is the company that creates the software that is run by so many of your favorite banks. I like the generic site provided by Yodee because it's simple and easy to use and doesn't have any sort of bank flavor.

Generation Debt

I ran across an interesting book when I was reading throught the "I Will Teach You to be Rich" blog. The name of the book is Generation Debt, by Anya Kamenetz. Although I haven't read the book yet, she poses some issues that plague many of us in our 20's and 30's.

The book is linked here:

Out of control spending

I ran across this today on bankrate.com and it just irks me that this soldier is probably going to get stuck with this huge bill.

http://www.bankrate.com/nltrack/news/debt/20070511_soldier_credit_card_debt_a1.asp?ec_id=brmint_ns_cc_20070521

I guess we only get to ready 1/2 of the story as we hadn't heard from the wife.

"It's Only"

How many times do you say to yourself "it's only" when you try to buy something. "It's only $10.99." Or, "It's only $6.99/month". Or, maybe you hear it from you significant other when they buy something they want (but don't need). First of all, stop buying things that you simply "want". Buy things that you NEED. I'm not saying to not treat yourself to things once in a while because you should. But, you must stop buying little knick-knack things that are only valuable to you at the time you see them. Before long, those things that seemed so desirable will be collecting dust in a closet. So, there are really two points here. Don't buy something just because you want it (using the "it's only" argument to justify the purchase to yourself or to your partner). Secondly, it's extremely important to realize that all those little things add up over time. Figure out how much you could have left over at the end of a year if you didn't buy the little things that you didn't need!

Online Banking

Get rid of your crappy Bank of America savings account (or whatever other low interest bearing account you may have) and put your money in an online bank. Two of my favorites are ING Direct (http://home.ingdirect.com/) and Countrywide Financial (http://my.countrywide.com/). Currently, CWF has a better rate (5.4%) so it's my primary savings account but ING Direct has a MUCH better interface. I'd recommend that if you are just getting started in online banking for your savings account, go with the ING account. It's very easy to use and easy to transfer money. If you start an account and refer your friends to ING, you get a bonus (and so do they!). No matter which online bank you use, look for no fees to transfer money to your external account (usually your checking account). Let me know how it goes!