Yesterday I read an infuriating news story. At a time when more and more families are forced to finance basic necessities, many of the largest banks are raising credit card rates! Why? Because the government is looking at credit card reform. And banks want to make as much money as they can, before new legislation takes effect that would limit their ability to tack on extra fees. Unbelievable.
People may say, well don't use credit then! Pay cash! I don't know anyone [my age] who doesn't have credit cards. And here's the reason. They are a necessity if you want to establish a credit history, and the history is needed in order to qualify for a mortgage. Unless you have a fairy godmother, you are required to literally buy into this system if you want to be responsible for putting a roof over your head. And you have to pay all your bills on time, or your FICA score will be adversely affected. I learned a lot by reading the article How Credit Scores Work, and got a perfect score on the credit quiz (yay!). However, PRIOR to doing the reading, I didn't realize that loan inquiries or applying for a credit card can negatively effect your credit score, or that people with less than perfect credit are charged higher insurance rates. Your scores may also determine how big a deposit you will have to pay for telephone, electricity, or natural gas service, and whether or not your application for a rental apartment is approved. One's credit history has many more implications than I ever realized, so I'm pleased this topic is being addressed as an iHCPL learning module. For people like me who would like to be better informed about personal finance, there is also an online guide from CNN money called Money 101 here.
Since I find the current credit/lending/banking situation somewhat exasperating, I have the adopted the following spending plan. It is: If you can't pay for it by the end of the month, don't buy it.
There are many web resources which explain how to develop a monthly budget. Someday, when the word "budget" doesn't immediately induce in me a dizzy spell, headache, and/or angina, perhaps I will actually access one of these resources, such as About.com's Frugal Living site. Bankrate.com's article "8 experts recall their best personal finance advise" was very informative. I liked Neale Godfrey's suggestion: "Step away from the television and the magazines. All they serve to do is show you how stupid you are because you've missed whatever they're talking about..." I also found Peter Navarro's counsel timely and astute: "Take every piece of advice you get from any investment adviser with a barrel of salt. Most are trying to sell you things that you probably don't need or want. Think for yourself."
I looked at the TCDRS web page briefly. I wanted to see my personal account, but the site told me I had to contact a TCDRS representative to get a PIN number first. I called the number listed on the site, but I haven't received my PIN number yet. Hopefully I will get "instant access" sometime soon. Not that I'm impatient or anything. I am a looooong way from retirement. And happily, my retirement fund, however much it is, is earning 7% in spite of stock market fluctuations. Now that's a blessing.
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