References:

• fincancialsoft.about.com
• math.about.com
• articles.moneycentral.msn.com
• www.ira.com
• www.wisegeek.com
• www.ehow.com
• financialplan.about.com
• www.fivecentnickel.com

Important Economics

This semester in Economics we learned about poverty.  I think poverty was one of the most imporatant topics we covered because the poverty rate is increasing, which affects all of us, and we learned ways to stay out of poverty oursleves. 

• The poverty threshold is the lowest income that a family or household of certian composition needs to maintain the basic standard of living. 
• The pverty rate is the percent of people in total population living in pvery (under the poverty line).
• Income gap is the amount of income inequality between parts of the population. 
• Poverty exists at the point where the government says it is.
• What will it take to fix poverty?
• increased access to education resources/ training for low-skilled workers
• increased taxes for the wealthy and use that money to pay for other programs
• spend more on programs to give assistance for low-income groups
• raise minimum wage

Investments

There are a few different ways you can invest your money; stocks, mutual funds, and bonds.  A stock is a share of ownership in a company.  Mutual funds are professionally managed pool of money from different investors.  A bond is a loan that you yourself gives out; you pay your money and you recieve regualr payments back with interest.  Everytime you invest your money somewhere, you run the risk of not getting that money back, or only getting some of your money back.  You have to be patient when investing money.  Your goal is to buy cheap, and sell high, so in order for that to happen, you have wait and know when to buy and sell.  Investing money differs from a savings account becasue a savings accout, you are not going to earn very much money by just having your money sit in an account, but it is vary stable and your money is insured so you will not lose it.  Investing can earn you a lot of money for putting little money into it, but your money is not insured.  Before investing you should know that your money is not insured and you may lose is, you should be prepared to hold stocks for a long time, and buy low, sell high. 

• Read this article to learn about good investment options: http://investmentarticle.com/
• Watch this video to got good investment advice: http://www.youtube.com/watch?v=SpA-QcnpI5M

Buying a Home

To purchase a home, you must get a loan.  In order to get a loan, you must (1) find a lender, (2) fill out a loan application, (3) get an estimate of the closing costs, (4) negotiate fees, (5) fill out required documentation, (6) pay up- front fees, (7) review and sign loan papers, and (8) deposit your down payment.  Down payments are important because you can eliminate Private Mortgage Insurance, have a smaller mortgage, which means lower interest rates, and you have intstant equity.  The time frame of the loan affects you because the longer the loan time, the more money to will end paying through intrest; the shorter the loan time, the more the payments will be each month.  The value of houses increases as time goes on, therefore buying a house is a good investment.  In order to buy a home you should know that interest rates on loans can be high, you should familiarize yourself with the mortgage process, and you should get pre-approved before you search for homes. 

•  This article explains why buying a home is a good idea: http://www.realestateabc.com/homebuying/goodidea.htm
• Watch this video to get more advice on buying a home: http://www.youtube.com/watch?v=jlkjHD9fY-Q

Retirement

You need to plan for your retirement.  There are a couple different ways you can prepare finacially for your retirement; and IRA and a 401(K).  An IRA is an Individual Retirement Account, which is a personal savings plan that provides income tax advantages to individuals saving money for retirement purposes.  Another way to save for retirement is through a 401(K), which is a qualified plan established by employers to which eligible employees may make salary contributions to the plan on a post tax/pre tax basis. 

Social Security is a mandated supplemental retirement system.  Its goal is to ensure a threshold subsistence level below which any worker who had paid into the program cannot fall. Social Security has become a big issue now because many people complaign that system is falling apart, and after paying into the system their entire working lives, there will not be any money left for them when they are retired. 

Retirement relates to personal savings because you need to know how much to put into your retirement savings out of each check you recieve.  It is important to start looking at retiremnet funds now so you won't have to put away as much each month later on, and you have a longer time period to save all the money to need in order to retire at an earlier age. 

• Read this article to learn more on your 401(K).: http://www.investopedia.com/articles/retirement/11/401k-investing-for-retirement.asp

• Watch this video to get more advce on retirement: http://www.youtube.com/watch?v=1JaYyGqQQ6s 

Credit Cards

Credit cards can be a good thing or a bad thing, depending on how you use them.  Credit cards can charge you on many things, for example; reward redemption fees, foregin transaction fees, reward recovery fees, activity fees, payment protection fees, and paper statement fees, to name just a few.  The average APR on credit cards is 18% per year.  You can apply for a credit card by looking up the credit card company online and filling out an application, or wait until you get an application in the mail.  Credit cards are convenient to use, you can use them for emergencies, you can use them to establish a good history, and use them for indentification.  Credit cards also have negatives to them; they cost more if the unpaid balance isn't paid monthly, they can tie up future income, they tempt you to overspend and they can reduce future buying power.  Three tips everyone should know about credit cards; they carge the highest intrest rates, you should only spend what you KNOW you will be able to pay back monthly, and don't exceed 30% of your credit card limit on your cards. 

• Read this article to learn more about credit cards: http://www.indexcreditcards.com/creditcardnews/
• Watch this video to get more advice for to be safe with your credit cards:                               http://www.youtube.com/watch?v=wIgy24PTg2I

Personal Budget

Having a personal budget is very important.  In your budget you need to accout for fixed expenses and flexible expenses.  Fixed expenses are expenxes that do not change.  Examples of these are; mortgage payments or rent payments, and car payments.  Flexible expenses are expenses that are easily altered or avoided.  Examples of these are extra clothes, CD's, and junk food.  

There are two types of interest you may have on your savings account; compound and simple.  Compund interest is interest that is paid on both the prinicpal and on anyinterest from past years.  Simple interest is interest paid only on the principal.  compound interest will earn you the most money. 

It is important to save your money, rather then spend it at soon as you get it.  You need to save incase of emergencies.  If there is some type of accident, and your insurance does not cover it, you need extra money so you do not put yourself in debt.  it is a smart idea to not only save your extra money, but also invest some of it so you could possibly gain more money and earn interest.  If you know you are going to have a stable income, I think it is okay to spend some of your money right away, you just need to be careful on how much you spend.  You can know how much you are able to spend by putting yourself on a budget, and know what needs to be paid and when. 

• Watch this video on how to make your own personal budget: https://www.mint.com/budget/creating/how-to-make-a-personal-budget/
• Read this article and learn how to stay out of debt: http://www.bills.com/staying-out-of-debt/