Who Said You Shouldn't Talk About Money?

Let me get the disclaimer out in the open first, I have no real financial training other than Personal Finance in college and a slew of books I have read over the years. But, I have always been interested in the world of finance and feel like people my age are overwhelmed and scared and don't understand some of the basic things. Also my nephew apparently thinks I am smart and asked for advice on how to adult correctly... (one day he will realize NONE of us know exactly how to "adult" all the way)

So here are some things I have found useful/practical/worthwhile when it comes to money, credit, investing, and saving (especially while you are in your 20's and 30's). 

and PLEASE share with me the things you do and know! Being an adult is expensive and stressful and I have some new big purchases coming up in my future (car and house) so I would appreciate anything you do! And how do you decide if you can afford something? I love talking about finances because there isn't one right way to do anything. My way is not superior, it is just the way I happened upon. Also if you hate talking about money, remember that you can have a lot of financail discussions without ever using actual figures.

1. Use Credit Cards

  • A lot of people are afraid of credit cards, don't let them scare you! If you use them correctly (treat them like debit and pay them off in full every month) you can build your credit and get paid to do your normal shopping. Each year I get hundreds of dollars back in cash and store credit for my normal shopping. 
  • Don't sign up for just any card, use ones that work with your spending. My favorite cards are:
    • Citi Costco (visa): 
      • Perks:
        • 4% back on travel, 3% on restaurants and travel, 2% at Costco, 1% everywhere else. The cash-back comes in the form of a check once a year that can be cashed out at Costco.
      • When it Makes Sense:
        • If you shop at Costco.
      • Extra Things to Know:
        • Costco has an annual membership of $60 for basic or $120 for executive. If you have the executive you get 2% back on all Costco (excludes gas) purchases. So if you spend more than $3000 a year it pays to get the executive. Plus, if you have the executive AND the credit card you are double dipping and getting 4% back on normal (non-gas) Costco purchases.
    • Chase Freedom (visa)
      • Perks:
        • 1% back on everything, 5% back on rotating categories that change every 3 months. The cash back can be used for gift cards or, the way I use it, cash applied to my balance. I redeem my cash-back every month.
        • If you refer a friend you get $50-$100 per referral up to $500 a year. If you want this card ask me and I will send you a link (shameless plug, I am not below that...)
        • When you sign up you always get a cash-back incentive, usually $150-200. You only have to spend $500 within 3 months to get the bonus and you can apply the amount directly to your balance. FREE MONEY.
        • Zero interest for the first 15 months. I never recommend carrying a balance but there are times in life when you need some time without paying a bill or you want to pay off a large purchase over time. I will totally admit that I got this card while I was waiting for a business deal to go through and it carried me for the entire 15 months (I paid it off right before my interest kicked in).
      • When it Makes Sense:
        • If you want free money, the bonus is worth it
        • If you need a card without interest for a short time
        • If you don't mind being up to date on the rotating categories (gas, restaurants, movies, etc) so that you can get the most out of the 5% cash-back
    • Store Cards--if you shop enough at a store
      • The store cards I have are Target and Banana Republic. 
      • Why I have them:
        • Target: you get 5% off every purchase and you can get it in a debit or credit version (I use the debit, same perk but without having the credit card bill to pay each month).
        • Banana Republic: Their clothes fit me well and you can ALWAYS find things for at least 40% off retail (or much lower, what can I say, I am an AMAZING shopper). You get 5% back to use at their brands (GAP, Old Navy, Banana Republic and Athleta) and if you get Luxe status you get free shipping (from all their brands) and basic alterations. It is a visa and can be used outside of the store (they also do bonus incentives at least once a year like their most recent: earn 100 bonus points (equal to $1) for everyday you make a purchase outside their brand. This lasted for 3 months and I racked up over $60 in extra rewards).
    • Amex Gold Delta Skymiles
      • Perks:
        • signing bonus, anywhere from 30-60k miles
        • signing bonus, $50-100 statement credit after you book a flight
        • free checked bag on Delta flights
        • 20% off all in-flight purchases. I seem to buy food a lot more on flights now...
      • When it Makes Sense:
        • If you are flying internationally on Delta. I signed up when I bought my ticket to Europe, I say international because you are going to get more miles on an international flight so adding bonus miles makes sense to get you closer to a free frequent flyer ticket.
        • If you fly Delta often.
      • Extra Things to Know:
        • There is a yearly fee of $95, waived the first year (so if you are only planning on flying once cancel the card before your year renewal)
        • Amex has member only deals that you can apply to your card. I don't use them often but occasionally I find deals for things I already buy so it pays to check them out occasionally (like $25 credit if you spend $25 on Hulu, I have a subscription already so by applying the deal I automatically got my credit after a few months).

2. Use sites like eBates if you shop online often

  • Perks:
    • You get cash-back on purchases you would make anyway.
    • It is fairly simple, you can install a browser pop up to show you when a store has cash-back available, or you can look up stores on their site and enter the store that way.
    • You get a bonus for every person to refer. When your friend signs up they get $10 (after their first purchase of $25 or more) and you usually get $5-25 (depending on their promos, I have always gotten $25).
    • Your cash-back is mailed to you a few times a year in the form of a check.
  • When it Makes Sense:
    • If you shop online often (except Amazon, only certain categories count)
    • If you have lot of people you can convince to do things and rack up the referrals, speaking of which, you should sign up and use my link HERE :)

3. HSA's Are Amazing and Often Not Taken Advantage Of

  • Health Saving Accounts were made (in my opinion) for people my age. It is  "A type of savings account that allows you to set aside money on a pre-tax basis to pay for qualified medical expenses. A Health Savings Account can be used only if you have a High Deductible Health Plan"
    • Perks:
      • Uses pre-tax dollars
      • Is invested so it grows until you need it
      • If you don't need it for health related expenses it can grow until your retirement and act as another IRA (at this point you can withdraw for any reason)
    • Why I Have one:
      • I feel like young people should jump on this train because most of our medical expenses are in our future. This lets us build up a reserve in case we need it in the future and have more time for it to grow as an investment.
      • As far as I understand, you can pay yourself back at any point for medical costs. So, if I have the money now to pay my bills I can leave the account alone but keep a record of all medical costs (except insurance premiums) and then when I need the money I can pay myself back--even years after the fact.
      • It is my way of having more retirement since I am self-employed and don't have a 401K etc.
    • Extra Things to Know:
      • 2017 contribution limits are:
        • Single $3,400
        • Family $6,750
        • you have until 4/15 of the next year to make a contribution
      • 2017 insurance requirements:
        • Family $6,750 (minimum deductible: $2,600 and max out of pocket: $13,100)
        • Single $3,400 (minimum deductible: $1,300 and max out of pocket: $6,550)

4. ROTH IRA (Individual Retirement Account)

  • Perks:
    • Uses post tax dollars and withdrawals within their guidelines are tax free
    • You control the investments and if you open it early you have decades to have it grow.
  • Why I Have One:
    • Roth's are perfect for young people, they make the most sense for people who will be in a higher tax bracket when they retire.
    • It has a yearly cap so I don't have to stress about how much I should be setting aside, I just try to do something up to the max (though the max is obviously the goal).
    • You can use $10,000 penalty free for your first house, since this will be my next purchase it doesn't stress me out as much to put money in it.
    • You can borrow from yourself (contributions and interest) and as long as you pay the amount back within 90 days it does not count against your contribution and is penalty free.
    • You can withdraw your contributions at any time, penalty free (obviously not something you want to do since there is a yearly cap so you can't ever "catch up" but it is a good option if you are strapped for cash).
  • Extra Things to Know:
    • 2017 contribution limit:
      • $5,500
      • you have until 4/15 of the following year to contribute

5. Shop Smart

  • Shopping is my number one skill, I am good at it for a few reasons:
    • 1. My mom passed down her talent of mental math and being able to price out any deal
    • I am not opposed to buying second hand or "blemished" items
      • I only really know the best deals for Utah, but I am sure places exist everywhere. In Utah I get all my best housewares and furniture from DownEast (name brands like William and Sonoma, Pottery Barn and West Elm for up to 95% off retail), everything random from NPS (groceries, clothes, office supplies, etc), clothing and shoes from the Sundance Outlet (leather shoes for as low as $10) and clearance flowers from Smiths (usually 70-90% off). Great stores outside of Utah; Winco for food and REI garage sales for all things outdoor. 
    • I hold out for things I want and don't slowly upgrade all of my stuff: I buy what I want for a good deal when I see it and try to do without until then
    • I return things I don't need or don't fit right. I only return unused things, if you get home and have buyer's remorse RETURN IT.
    • I understand my favorite store's promos
      • Target:
        • If you have the Red Card you get 5% off every purchase
        • If you bring your own bags you get $0.05 off per bag
        • The Cartwheel app is awesome, I am not a mom so I am usually only in there for a few things and it is really fast to search the app to see if the items I am already buying happen to have an extra discount available
        • Their promos stack. One week I saw a Cartwheel deal for a $5 gift card with $20 personal care product purchase AND a bunch of deals for similar items that gave you $5 gift card (ex. buy three Herbal Essence products are get a $5 gift card). So if your purchase fulfilled both promos you could get $10 to spend later for a $20 purchase.
      • Banana Republic:
        • They do 40% off sale ALL THE TIME so don't settle for full price or normal sale price
        • If you find an item in store that you want but it isn't in your size they will locate it for you and have it shipped from another store. So if an item is super clearanced but not in your size you still might be able to get it.
        • All the stores (GAP, Old Navy, Banana Republic, Athleta) use the same cart so you can check out once (and not have to pay separate shipping charges and it is easier to get to the free shipping amount) and if you use sites like eBates you can pick whichever store has the highest cash back to check out through.

6. Find Random Ways to Save Money

  • My family has always made fun of me because I don't spend $1 bills and I haven't since high school. It started back then as a way to stop myself from spending what little money I had in things like vending machines. I pull the one's from my wallet and started an iPod fund. As the years have gone on I changed it to a wedding dress fund (which is slowing turning into a wedding fund since it has been growing for so many years and there isn't an end in sight hahaha). It is a small saving tactic but it has grown to a substantial amount of money over the past decade. I also started having $5 a day (once a month, $155) automatically transferred to a savings account. I call this my wedding saving account, I guess my next goal should be finding a husband with all these financial goals I have set up.... but saving money is SO much easier than finding a boyfriend.

7. Don't "Promote" Your Lifestyle When You Get Promoted

  • Sure, we will most likely spend more money the older we get; we can't always live like college students. But, the goal should be to use promotions and or new/higher incomes to go towards saving or debt and not increase your lifestyle. 
  • Read THIS article from The Atlantic, The Secret Shame of Middle-Class Americans. It touches on issues middle-class people are causing for themselves (it is not talking about low-income earners and how they should somehow have saving to cover unexpected bills, that is another topic all together and a lot of those people are stuck in a horrible cycle that they cannot get out of. Middle-class people should be making enough to not be in this predicament though obviously things can thwart even the most prepared).
  • Here are some of the insights from it that I found interesting:
    • "The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. "
    • "So I never spoke about my financial travails, not even with my closest friends—that is, until I came to the realization that what was happening to me was also happening to millions of other Americans, and not just the poorest among us, who, by definition, struggle to make ends meet. It was, according to that Fed survey and other surveys, happening to middle-class professionals and even to those in the upper class. It was happening to the soon-to-retire as well as the soon-to-begin. It was happening to college grads as well as high-school dropouts. It was happening all across the country, including places where you might least expect to see such problems. I knew that I wouldn’t have $400 in an emergency. What I hadn’t known, couldn’t have conceived, was that so many other Americans wouldn’t have the money available to them, either. "
    • "David Johnson, an economist who studies income and wealth inequality at the University of Michigan, says, “People studied savings and debt. But this concept that people aren’t making ends meet or the idea that if there was a shock, they wouldn’t have the money to pay, that’s definitely a new area of research”—one that’s taken off since the Great Recession. According to Johnson, economists have long theorized that people smooth their consumption over their lifetime, offsetting bad years with good ones—borrowing in the bad, saving in the good. But recent research indicates that when people get some money—a bonus, a tax refund, a small inheritance—they are, in fact, more likely to spend it than to save it. “It could be,” Johnson says, “that people don’t have the money” to save. Many of us, it turns out, are living in a more or less continual state of financial peril."
    • " I didn’t have savings, but not because I thought I could rely forever on credit instead or because I chose to spend my money extravagantly rather than salt it away. In retrospect, of course, my problem was simple: too little income, too many expenses. Credit enabled me to forestall this problem for a time—and also to make it progressively worse"
    • "I never wanted to keep up with the Joneses. But, like many Americans, I wanted my children to keep up with the Joneses’ children..."
  • The author talks about different studies focusing on finances and then touches on his own story. He fell victim to the idea of being able to pay for things later and that things will get better so he could live past his means. As he made more money he found more things to spend it on and promoted his lifestyle along with his career.

8. Clearly Define Your Financial Goals

  • What do you want in life? Do you want to buy a house? Do you want to retire by a certain age? Do you want to own real estate as an investment? Do you want to pay for your kid's college? Do you want to travel? How much do you want in a Rainy Day fund? These are your goals and they get to be whatever you find important! 
    • Write your goals down. Do it. Right now. 
    • Start a saving plan. I love using Mint to see my goal progress and show me how my budgeting is going. It can pull in all your accounts into one place so you can see everything conveniently and create budgets and goals.
    • Even if you can't save much now, it is great to know where you eventually want to go. Start saving small and add more when you can. People laugh at my $1 fund, but even ones can add up to hundreds or thousands over time...