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Asset Allocation

Often financial "experts" make asset allocation difficult to understand. My goal in this series of articles is for you to understand asset allocation thoroughly, in an easy to understand format.
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What They Didn't Tell Ya About Money In High School Part 1

Dear Wise Consumer,

Okay, who reminisces about high school? I thought about some of the classes offered to help us in adulthood. There was drama, math, U.S. History and Home Skills.

But one subject was never discussed. I don't remember a teacher quizzing and teaching on money. That's why I'm starting this short series of articles. It's to help get you learning and applying new money habits.

I got to thinking what would I teach if I were a Personal Finance Teacher, in high school? What awful financial blunders would I help my students avoid?
And boy did several come to mind!

First up is one we all love and hate. We love it, because it instantly gives us what we want. We hate it, because it can cause our financial downfall.

The "Bloodsucker" of Personal Finance

I would warn my financially challenged students about credit cards. On television, whipping one of those suckers out to pay looks cool. It sometimes symbolizes status, bling and the gateway to luxury.

However, the "bloodsucking" qualities of credit cards are never mentioned.

Bloodsucking Quality #1: Interest Rates

Here are some average credit card rates from www.indexcards.com. See if these puppies don't make you cringe.

Consumer credit card rate, overall market: 14.99%
Credit card rate, non-reward consumer cards: 14.07%

Student credit card rate: 15.33%
Business credit card rate (non-reward): 13.19%
Business reward credit card rate: 13.71%

Imagine if you took one of these percentages from your salary and socked it away for retirement. Let's say you pull down $40K a year. Take 15% or $6,000 of that and put it in a 401K or Roth IRA. With employer matches and a compound interest of 9%, you'd have a cool $27,993.05 after 5 years!

Bloodsucking Quality #2: Eating Your Young

When my son turned 17 he got a gift in the mail. You guessed it. A nice and fancy credit card offer! It came with his name, member letter and activation code. Thankfully, we educated our boys on the perils of credit cards. He quickly tossed it in the recycling bin.

Our schools don't teach sound financial habits. That means parents must do it. And since this all leads to retirement, keep this in mind. One day your kids may have to take care of you. Wouldn't it be smart to make sure they're financially stable to do so?

Here's a tidbit for your high school students headed off to college. I found some astounding info about credit cards and college students. It was in an article by Tony Pugh of McClatchy Newspapers (www.mcclatchydc.com). A survey done by the U.S. Public Interest Research Group revealed...

*Two thirds of college students have at least one credit card
*At least 70% pay their monthly bills with a credit card
*A shocking 24% have used credit cards to pay tuition
*The average student will graduate with $2,600 in credit card debt

And did you know some colleges allow credit card companies to sell their wares to students on campus? Like I said above, the suckers are designed to eat your young!

Bloodsucking Quality #3: Creates Debt Quicksand

Do you remember the old monster movies where they fall through quicksand? This is what happens financially with credit cards. The more you use them the deeper you fall into debt. Remember something about credit card companies. They stay in business as long as you stay in debt. The longer you stay in debt the longer your retirement is delayed.

And where there's debt there's worry. How can you enjoy the retirement you deserve, by staying in debt?

I've shown ya three "bloodsucking" qualities of credit cards. Now here are three things you can do to get out of it.

How to Roll Up Your Sleeves
And Give Credit Card Debt
The Beating It Deserves!

First, learn all you can about how credit cards really work. A wonderful thing will happen when you do. You'll pay them off faster and get off the plastic. In any competition or war a key strategy is used to win. Thoroughly understand your opponent. Knowing the strengths and weaknesses of credit card companies will set you free.

It doesn't matter how nice they are on the phone. It doesn't matter how attractive their mail pieces are. They're out to steal your money and retirement!

Second, learn to pay with cash. I love paying for something, knowing I truly own it. No credit card company has power over me once I pay in cash. The "credit cord" is severed for life! As your credit card debt lowers you'll have more money to pay things with cash.

Third, get help if you're mired in credit card debt. A few helpful sites are www.careonecredit.com, www.creditsolutions.com and www.debthelp.com. Google for more sites and pick one that fits you. These three simple steps will help get you on the road to "bloodsucker" recovery.

Clyde McDade is a Financial Copywriter. He's the author of the upcoming E-book, "How to Grow More Money for Retirement and Your Child's College Fund." He can be reached at accelcs@comcast.net.

The information in this article is not to be taken as financial or investing advice. Always seek the services of a Financial Advisor, Accountant or Financial Planner.