102 Common Sense But Often Forgotten Personal Finance Tips

These 102 money-saving tips are dead simple, which is why it never hurts to be reminded of them.

Stuff like saving 10% of what you earn, setting up an emergency fund, spending less than you earn, to investing in a 529 college savings account, to choosing higher deductibles on your insurance, and “building a nest egg that 25 times the annual investment income you need.”

Check the list and smack your forehead if you find one you should be taking care of. There is room for disagreement. We personally hate tip 16: “Don’t major in English.” Pssh. — BEN POPKEN

102 Personal Finance Tips Your Professor Never Taught You [Ask The Advisor via ConsumeristForums]

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  1. chrisgoh says:

    “Don’t use your credit card for cash advances. It will harm your credit score and the interest rates are outrageous.”

    I completely understand the interest rate part, but does using a cash advance in and of itself really hurt your credit score.

    Here is my situation. All of my interest rates are very low anyway. As of about 3 years ago, my highest rate was on my car at 4.5%. I got an offer from Citibank for a no fee cash advance good for 1.9% for the life of the loan. So, I paid off the card, took it out of my wallet, and locked it away, and made sure that there were no lingering charges on the card. Then I took an $18,000 cash advance and paid off my car. At this point I’m making minimum payments, sure it will take a while to pay off, but who cares, 1.9% is almost free money.

    So back to the question, does this really hurt my credit score?

  2. deletethisaccount says:

    I think tip 16 was placed by an author who had a 1.0 – 2.0 GPA in English.

    Sum of us dont need that there writin un grammer stuff since we be writin and sayin stuff reel gud.

  3. magic8ball says:

    Great. I already have a degree in English. Now what am I supposed to do?? Other than drop out of my grad program, obviously.

  4. GearheadGeek says:

    #74, “Don’t borrow from your 401(k)” is wrong about the “high fees and taxes” you’ll supposedly get hit with. Now, if you borrow from your 401 and don’t pay it back, you’ll get penalized and taxed, but if you’re in a market where the rate you’re paying in interest for borrowing from yourself is competitve with the gains on the funds available in your 401 plan, and you need the cash, it’s better to pay yourself interest than it is a bank. It would be better to say “Evaluate the situation and options before borrowing from your 401(k).”

  5. polarogak says:

    Tip 102: Don’t get a credit card at all. You’ll find a way around the things that “require” one. Check cards have been a HUGE help in doing this. Not only will you avoid paying interest and getting into debt, but you’ll stop buying things you can’t afford, which is what will get you into financial trouble in the first place.

    I’ve been thinking a lot about the “no car” thing lately. I’m in a perfect position not to have a car. I live 1.5 miles from work, and it’s served by a bus route. In ideal conditions, I can get there in 15 minutes by mass transit, and at the very most, it takes 30 minutes (to walk!). Let’s say I spend 90 minutes commuting to work that way each week, and thus 6 hours every month. Am I really saving that much money if I am sacrificing 6 hours of my time a month, when instead I could be earning money? Add to that the quality of life that comes with being able to get anywhere around town, and I think car ownership still has a good case, even with gas at $4.

  6. jamier says:

    I follow this one:

    102. # Money isn’t everything. Health, family, and happiness are important, too. And remember, money can’t buy you love.

    But none of the others. :(

  7. traezer says:

    I really want to know about that cash advance thing as well. I had to take one out to pay my tuition for summer. :( But I should be able to pay it off in a few months.

  8. Don’t major in English.

    Yeah, because the last thing this country needs is more decent teachers.

    Also, given recent events, isn’t number 47 debatable? Use a mortgage broker.

  9. moodytunes says:

    I may just be a disgruntled (and poor) English major, but aren’t numbers 1 through 7 essentially the same as 86 through 91?

    I guess 102 sounds better than 93 or 95 but hey, I don’t do the numbers real good.

    Spare a dime?

  10. plim says:

    cash advance and balance transfers are two separate transactions. some CCs actually treat them as one and the same (in terms of rates/fees), but some CCs actually have different rates and fees. Most of what people are talking about here are balance transfers. I have heard rumors that a history of balance transfers from card to card could be deemed as bad credit behavior and can ding your credit, but i would assume that would have to be something on a monthly basis (like charge $1k on card 1, pay it off with a BT from card 2 next month, pay off card 2 with a BT from either card 1 or card 3, wash, rinse, repeat).

    that said, another way BT/CA could inadvertently ding your credit is that most people tend to max out their credit limit for the BT/CA, because, you’re paying for a car/tuition or consolidating debt. so while the BT/CA in it self may not ding your credit, the fact that you’ve maxed out one card and cut into your overall balance available over total credit line ratio does hurt your credit.

  11. Pasketti says:

    @chrisgoh: If you’re only paying the minumum, you’re getting raped on the TOTAL interest paid, no matter how low it is.

    Find an amortization schedule online, and start plugging in numbers. Even an extra $50 on the payment can save you hundreds of dollars in the long run.

    Here are a couple:
    http://ray.met.fsu.edu/~bret/amortize.html
    http://www.amortization-calc.com/

    More at: http://www.google.com/search?q=amortization+schedule

    To pay off $18,000 at 1.9% in 5 years, you need to be paying at least $314/month, and you’ll pay a total of $882 in interest. If you’re paying less than that, the payoff time goes up, and so does the total interest.

    Paying $200/month stretches the time to over 8 years, and the total interest goes to $1432.

    That goes for house payments, too. An extra $50 or $100 on the payment gets applied directly to the principle, will knock years off the payment time, and save tens of thousands of dollars.

  12. etinterrapax says:

    I suppose from a purely financial standpoint, my English degrees were not the world’s best decision, but if I wanted to keep working in insurance, I could have gone on doing it and hating it. There’s more to life than money. Besides, my husband’s English-major salary supports our entire household, and what I make doing what I love gets us some nice extras. I’m sure he’d be surprised to hear that was an unwise choice.

  13. drezdn says:

    Clearly the English degree comment is there to make more people turn away from the programs. In turn, the writer will have less competition in a PhD program. Well played, personal finance writer.

  14. Beerad says:

    @Pasketti: “If you’re only paying the minumum, you’re getting raped on the TOTAL interest paid, no matter how low it is . . . An extra $50 or $100 on the payment gets applied directly to the principle, will knock years off the payment time, and save tens of thousands of dollars.”

    No, no, no, this is just wrong. The whole point of having low-interest debt is that the money you choose not to pay against the loan can be put into a better investment, earning you MUCH more in the long run. At 1.9% on the loan, I’d much rather sink my extra 50 (better yet, 100) bucks per month into an online savings account at 5.25% interest. Do the math on that over time, and it’s a no-brainer.

  15. #16 is, in fact, the reason I began blogging about personal finance. English majors can TOO be financially responsible!

  16. thrillhouse says:

    I know several people with English degrees. It always seemed pointless to me. Some of them went on to become well-paid lawyers and they swear by their English undergrad.

    So maybe the English degree is like so many others and it is what you make of it. And maybe its better to approach your plan of study with the attitude of, “in 4-5 years, what am I going to do with this?”. Start the process with the end in mind.

  17. thrillhouse says:

    @Beerad:

    Be sure that your little equation takes taxes and risk into account, otherwise you’re not looking at the whole picture and your simplified view is inaccurate.

    I’ve been told to account for a factor of 4% for taxes and inflation when dealing with investments. So 5.25%-4%-1.9% = you’re getting your butt kicked.

  18. DXDawg says:

    @polarogak:

    Or even better, GET a couple of credit cards, manage them responsibly, and build yourself a stellar credit file so that when you go to get a mortgage, the lenders don’t look at you like you immigrated from Bolivia last week.

    Having no credit cards is not the solution to anything. One of the biggest lies out there is that credit cards are BAD BAD BAD. Wrong. Credit cards are good, DEBT is bad. Credit does not equal debt. Responsible use and management of revolving credit can be your best friend, financially speaking.

    Just my $.02, ’cause that’s all I can afford.

  19. orielbean says:

    It is about managing your debt to income ratio. If you keep it looking good, your credit score will improve. If you fill up all your cards and tread water with the minimums, you will be hurting… pretty simple stuff in terms of math.

  20. methane says:

    odd that he would give the advice “buy a used car” and get a better cell phone plan, but doesn’t suggest canceling your cable TV. I guess that most people’s $100+ bill for cable each month isn’t even on the chopping block when they go to get that payday loan.

  21. Anitra says:

    I’d change #16 to say “Don’t major in Music or Art”. An English major still prepares you for a career, albeit indirectly. But a fine arts major prepares you to… be an artist. Probably a starving one at that.

    Every music major I’ve known has gone on to do sales (if male) or be a glorified receptionist (if female). Those of us who kept music as a hobby and studied something ELSE (or had a second major) in college pity them – they’ve got just as much debt, but they’re making half as much money.

  22. Beerad says:

    @thrillhouse: “Be sure that your little equation takes taxes and risk into account, otherwise you’re not looking at the whole picture and your simplified view is inaccurate.”

    Fair enough, but a tasty FDIC-insured savings account is going to eliminate all risk (okay, if the whole government goes belly-up, but we’ve got bigger problems in that case). As for taxes and inflation, let’s say that I invest $1000 and get a flat 5% simple return at year’s end so $50 profit. (In reality, it would be higher with compound interest.) Your math suggests that in reality I would only be getting a 1% return, or $10. Not sure where you pay taxes (or deal w/inflation), but it just isn’t that bad.

  23. MeOhMy says:

    @Rectilinear Propagation:

    Don’t major in English.

    Yeah, because the last thing this country needs is more decent teachers.

  24. MeOhMy says:

    @Troy F.: Woops :-)

    @Rectilinear Propagation:
    I don’t know how they do it in your neck of the woods but around here you need an education degree to be a teacher. I’d says being a English/Secondary Ed. major is quite a bit different than just being an English major.

    That said, 8 and 16 are at odds with each other. Not everyone can be an engineer. You have to love it. My first day as a CompSci student, our prof did the typical icebreaker thing and went around the room and each of us said why we chose Computer Science. One girl said “My mother told me that people with computer science degrees make a lot of money.” She didn’t make it through midterms.

    It’s better to have a bullshit degree than one at all.

  25. thrillhouse says:

    @Beerad:

    “Fair enough, but a tasty FDIC-insured savings account is going to eliminate all risk (okay, if the whole government goes belly-up, but we’ve got bigger problems in that case).”

    WRONG. Try to follow. Debt = Risk.

    When you take on debt – of ANY amount at ANY interest rate – you are rolling the dice that you will pay it back as agreed. Taking on a loan at 1.9% to “invest” at 5.25% is stupid – on multiple levels. 5.25% is a pretty shitty return for an investment. Its great for savings. But savings =/= investment.

    “Your math suggests that in reality I would only be getting a 1% return, or $10. Not sure where you pay taxes (or deal w/inflation), but it just isn’t that bad.”

    Math was never my strong suit, but 1% of $50 does not equal $10. Try 50 cents. Lets look at the numbers a bit. I’m betting that at least 1/4 of that income will go to taxes, but I don’t where you pay your taxes, but thats about what I plan for. That will leave you 3.93% of the original 5.25% return. With last years inflation looking like 3.25%, that will leave you with an effective gain of 34 cents.

    Now, what MY math really suggests is that debt-free investing has the least risk and the best rate of return – with a real rate of return, like 12%+. So leveraging yourself for a measly 3.35% return before taxes, before loan principle VS. Debt-free 12% before taxes. Yeah, now thats a no-brainer.

  26. chrisgoh says:

    Thanks for those jumping to my defense on the logic of my original question.

    The money I am saving by paying the minimum on the 1.9% credit card advance used to pay off my car is being pumped into my mortgage. Even at minimum payments on the credit card, it will be payed off before my car. Also, I can’t itemize, so there is no net tax effect in the equation. Therefore, the finances of the situation are sound.