Grads: TAKE CHARGE's Money Q&A

Grads: Get your money questions answered here!

It's an exciting time when you go out on your own to start your life away from home, but money matters pop up every day and many of them are just plain confusing: credit scores, interest rates, apartment leases, insurance, taxes...you name it. Let's put those financial worries to rest. Rebecca Schreiber, a Certified Financial Planner with Solid Ground Financial Planning, is here to answer YOUR questions about money. So..ask away, we'll get an answer for you! Plus, stay a while and take a look at the other online resources, tips, and advice we've found for you...we'll be adding more almost daily!

Don't forget to return to the companion website for the book, GRADS: TAKE CHARGE of Your First Year After College! There you'll find advice, helpful online resources, contest, more expert Q&As, and much more to help you make a smooth and successful transition from campus to the real world of work and independent living.

Grab your copy, if you don't already have one! GRADS: TAKE CHARGE is the "CliffsNotes" for life after college...no grad should be without it!

How do I get started with a Roth IRA?

I promised myself that I would finally open a Roth IRA. Where do I get started?

Get Rich Off Your Roth

Congratulations for getting off your keister and starting your Roth IRA. This nifty little account, available to anyone with earned income (money you have earned and paid taxes on), is the golden brick road to a comfortable future. The younger you are when you start your Roth, the more money you will make over time. The bottom line is that a Roth IRA can only earn a ton of money if you sit and let it grow so only use money you can really part with for like, 35 years. If you can’t reach the $4,000 maximum ($5,000 in 2008) contribute whatever you can. It will pay off handsomely.

Keep Your Investing Expenses Low

Once you’ve figured out how much you can save every month you’re ready to open a brokerage account. With any IRA you have to not only put money in the account but invest it as well. This means choosing simple, low-cost investments that will work hard for you and earn lots of money. For investing beginners all you need are three index funds (funds run by computers instead of expensive stock pickers) that track the S&P 500, the Russell 2000, Wilshire 4500 or the Lehman Bond Index. All you need are three to get a “diversified” (safer) portfolio. Your account may even offer you a lower annual fee if you go with electronic statements so you can save some cash and some trees. Just keep pumping money into it and let it make you rich.

Save Consistently

Whether you want to retire on a diamond-studded yacht or a nature reserve you have to save consistently. Believe it or not, people make more money saving consistently than trying to pick the next big stock. Time does the heavy lifting so all you have to do is let your Roth IRA pull money out of your checking account every month and you’re set. The trick is to make sure the money you’re contributing is money you can really part with so that you’re not tapping your Roth money later to pay bills. Save consistently, invest in index funds and you’ll be laughing all the way to your beachfront villa.

Our Ask the Expert for your money questions is Rebecca Schreiber, a Certified Financial Planner with Solid Ground Financial Planning. What questions do you have about handling your hard-earned money? Ask now before you blow another dollar!

Budgeting is boring; what are my other options?

I keep hearing that creating a budget will help me save but it’s boring and I don’t want to do it. What are my other options?

Don’t Knock It Till You’ve Tried It

Believe it or not, most people feel less stressed about money after they’ve put together a budget - at least now they know where the money is going instead of feeling out of control.  Budgeting is simply putting numbers in categories such as student loan payments, credit card payments, rent, food, entertainment, cable, cell phone and clothes. Look at your credit and debit card statements for the last three months and figure out where your money goes every month. You’ll at least have the numbers in front of you to decide if these are things you really need or want to stand for. If it’s too scary the first time let a friend help you. After all, misery loves company.

Put Away The Calculator

So a budget isn’t your thing. There are still other ways to make sure you don’t spend every last penny and all your credit. Set up a regular transfer from your checking account to a savings account for every time you get a paycheck. Start small – maybe $25 or $50 dollars a pop. The key here is to get started. As long as you can pay your bills and keep up the savings then you can get by without a budget. But if you find yourself using credit to cover the money you’re saving – whip out that calculator because you have lost no-budgeting privileges. 

Budgeting to Save Taxes

Nope, that’s not a typo. There are four things the government doesn’t want to pay for, so if you pay for them, the IRS will give you a tax break. These four things include your education, home, retirement and the medical expenses your insurance is too stingy to pay for. If budgeting is not your idea of a good time at least track your medical expenses. If your job offers a medical Flexible Spending Account (FSA) you can use it to save big money on your regular medical expenses (regular prescription co-pays, doctor and dentist visits, even Advil). Without a medical FSA you may still get a tax break. Besides, if you don’t know what you’re paying you could be paying too much – instead of happily squeezing your health insurance company for every penny it’s worth.

Our Ask the Expert for your money questions is Rebecca Schreiber, a Certified Financial Planner with Solid Ground Financial Planning. What questions do you have about handling your hard-earned money? Ask away!

How can I give gift cards safely?

I want to give gift cards to some of my friends for the holidays but I’m worried about gift card identity theft. How can I protect myself and my friends? 

The Virtual Mugging

Kudos to you for not only sharing your hard-earned money with your friends but protecting them, too. Gift card theft is getting to be more and more of a problem. Here’s how it works: identity thieves go into stores and scan the bar codes on the backs of the empty store cards. Then they wait for people to buy the cards and put money on them. Once there is money on the card the ID thieves use it to buy stuff online and have it shipped all over the country so it can’t be traced. Meanwhile the person walking around with the card has no idea their card has been emptied. It’s like being virtually mugged. 

Score A Clean Gift Card

But you can protect yourself and stick it to the ID thieves. The trick is to use cards that were never in the store to begin with. Almost all gift cards are purchased in stores where they are vulnerable to ID theft. Even large companies buying hundreds of cards have to pick them up at a store. However, if a card is lost or stolen the new card gets issued by the company’s headquarters, not the store. If the card comes from the corporate office you don’t have to worry about sketchy guys trolling the stores scanning gift cards.

Protect Yourself And Your Friends

If you receive a card with no receipt use it right away (cha-ching!) or spend a small amount and use the tracking number on the receipt to report it lost. If you’re shopping for friends a couple of weeks in advance, buy the card, then report it lost or stolen. This way a new card will be issued to you directly by the company’s headquarters instead of the store. It can take up to two weeks to get the new cards but they’ll be safe. If you don’t have time to wait then make sure to give the receipt with the gift card so that your friend can report it and have it replaced. This way you can relax and know that not only are you giving a great gift but your friend will truly enjoy it. Besides, it’s always fun to stick it to an ID thief.

Our Ask the Expert for your money questions is Rebecca Schreiber, a Certified Financial Planner with Solid Ground Financial Planning. What questions do you have about handling your hard-earned money? Ask now before you blow another dollar!

How do I boost my credit score?

You asked...we got the answer!

My financial aid counselor told me that if I could raise my credit score I would get a better deal on my student loans. How do I boost my score?

Dating Your Lender

Your credit score is like your Facebook profile – lenders use them to determine who they want to get involved with. If you have a high number (over 700) it means that you’re good at paying back money so lenders will offer you a lower interest rate. For people who don’t pay their bills or are late paying them a lender will charge them a much higher rate because they are unpredictable borrowers. Loans that come directly from the federal government aren’t based on your credit score so those will carry the best rates – it’s the “private lenders” that will suck you dry. If you can, max out your federal loans first to buy yourself some time to make over your credit score before swimming with the private lender sharks. If you look closely you can see the dorsal fins sticking out of their suits….

A Buff Credit Score

So how do you look like a million bucks to your lender? It’s not complicated - pay your bills on time and pay off some credit card debt. These two actions will show them that you are now a responsible, predictable bill payer and that you will pay them back on time. It only takes 3-6 months to transform your credit score so the sooner you start the sooner you will be eligible for lower interest rates. Lower rates mean a lower payment which puts more money in your pocket when you get out of school. New wardrobe, anyone?

Know Where You Stand

Check your credit report and score through www.annualcreditreport.com. Watch out for other credit score websites – they’ll sell your information to the highest bidder. This one goes right to the credit agencies themselves: Experian, Equifax and TransUnion. Because credit scores are constantly changing check yours again 3 months before your next round of student loans. Cutting back on your expenses to pay down your credit cards for a few months will make a huge difference in your loan interest rate. That lower payment could make the difference between taking the first job that comes your way to make your huge payments and being able to wait for the right job. A lower interest rate and lower payment will give you that kind of flexibility.

Our Ask the Expert for your money questions is Rebecca Schreiber, a Certified Financial Planner with Solid Ground Financial Planning. What questions do you have about handling your hard-earned money? Ask away!

You asked...we got the answer!

My financial aid counselor told me that if I could raise my credit score I would get a better deal on my student loans. How do I boost my score?

Dating Your Lender

Your credit score is like your Facebook profile – lenders use them to determine who they want to get involved with. If you have a high number (over 700) it means that you’re good at paying back money so lenders will offer you a lower interest rate. For people who don’t pay their bills or are late paying them a lender will charge them a much higher rate because they are unpredictable borrowers. Loans that come directly from the federal government aren’t based on your credit score so those will carry the best rates – it’s the “private lenders” that will suck you dry. If you can, max out your federal loans first to buy yourself some time to make over your credit score before swimming with the private lender sharks. If you look closely you can see the dorsal fins sticking out of their suits….

A Buff Credit Score

So how do you look like a million bucks to your lender? It’s not complicated - pay your bills on time and pay off some credit card debt. These two actions will show them that you are now a responsible, predictable bill payer and that you will pay them back on time. It only takes 3-6 months to transform your credit score so the sooner you start the sooner you will be eligible for lower interest rates. Lower rates mean a lower payment which puts more money in your pocket when you get out of school. New wardrobe, anyone?

Know Where You Stand

Check your credit report and score through www.annualcreditreport.com. Watch out for other credit score websites – they’ll sell your information to the highest bidder. This one goes right to the credit agencies themselves: Experian, Equifax and TransUnion. Because credit scores are constantly changing check yours again 3 months before your next round of student loans. Cutting back on your expenses to pay down your credit cards for a few months will make a huge difference in your loan interest rate. That lower payment could make the difference between taking the first job that comes your way to make your huge payments and being able to wait for the right job. A lower interest rate and lower payment will give you that kind of flexibility.

Our Ask the Expert for your money questions is Rebecca Schreiber, a Certified Financial Planner with Solid Ground Financial Planning. What questions do you have about handling your hard-earned money? Ask away!

My parents can't support me anymore...now what?

My parents just told me they can’t pay my expenses anymore because they need to save for retirement! What do I do?

Don’t Panic

Ouch! You’re not alone. Parents are in a tough spot these days with trying to take care of their parents, save for retirement and help out their kids. You might be freaking out right now but think of it this way--they can either save for their own retirement now or move in with you when they turn 65. Do you really want them sleeping on your couch for 20 years?

Work Out A Plan

If your parents need to cut you off right away because of an emergency then you’ll have to cover all of your expenses immediately. No matter what keep making your debt payments and charge the rest if you need to. Missing a credit card or student loan payment or even paying them late will haunt you for years. If there is no emergency then come back to your parents with a plan of how to you’ll slowly cover your own costs. Make a list of your expenses every month (student loan payments, credit card payments, rent, food, phone, clothes and entertainment). Take a close look at what you can really cut back on. Work out a plan to be completely on your own in six months with your debt payments being the last thing they pay for. They’ll appreciate you taking their request seriously and you’ll be able to buy some time to adjust.

What You’ll Learn Will Help You

It may suck for awhile and you may even have to get a new job but at least you’re learning how to cope with a sudden loss of income. If you pay attention you’ll even learn how to spend better on the things that really matter to you. Being able to track your expenses and know where your money is going is the first step to becoming a millionaire. Most people who get rich spend it all and then some because they never actually keep track. Ask a millionaire how much they spend on private jets every year and they’ll rattle off the numbers. Know where your money is going and you’ll learn how to do more with it.

Our Ask the Expert for your money questions is Rebecca Schreiber, a Certified Financial Planner with Solid Ground Financial Planning. What questions do you have about handling your hard-earned money? Ask right now!