50/30/20

When I was in High School I was taught the normal subjects. I can honestly say I am horrible in Math, I hate Math. Till this day, I still use my fingers. I guess you can say it’s a habit I may never grow out of. You learn all these things in Math that the world says are important. My first semester in college was the same thing. The moment I stepped in that Algebra class I knew that I would be taught from a textbook. What about the real life stuff? People like me who aren’t going to school to do anything with Math or have someone tell them how for example how credit and debit work or what a good credit score even means. I mean sure you can read about it and touch the surface but all in all you never really learn that stuff. I mean credit is just one prime example of “real life” stuff. I wanted to make a blog post by asking a series of questions to a student in college who is a junior working for a law firm and knows money. I have the pleasure of this student being my boyfriend. He literally has taught me so much when it comes to money. So we get to talking and one thing leads to another, I pull out my phone and start recording.

“My names Eduardo, I’m a junior at Sam Houston State University. I am getting my Bachelors Degree in Business Administration and Finance. I am now working for a law firm, getting the most experience I can.”

How do you start building credit if you have none? “Go open up a cell phone plan and put it in your name. It sounds simple, but it’s something you must pay every month.”

How does credit work? “It’s basically a history of how well you’re meeting payment deadlines and how good you are at paying people back. So when you pay your bills, pay off credit card debt, you don’t go delinquent on any debts that you have, that starts building up good credit history and increases your FICA score.”

Whats a good score? “Anything above 670, I would say is good. Anything above 720, I would say is excellent. Anything below 600 is getting there.”

What is the best way to save money? “Just look at your monthly income. I live as a student the 50/30/20 rule. obviously you can adjust the numbers as needed if you have certain obligations. Half of my monthly income goes to bills, 30% is for gas, food, going out( to a certain extent.. maybe four times out of the month. 20% goes to savings.”

How do you fix credit? “If you have a lot of debt then you can consolidate it. Lump everything into one, then pay it off that way. If you recently filed bankruptcy or if you’re really trying to repair your credit you can always find consultations at a finance firm or there are certain credit cards that help rebuild credit. Capital One is really good for that. Don’t get any credit cards if you just finished paying off one.”

Something you should do when your young? “Save your money. Invest it. Don’t blow it on dumb shit.”

I just wanted to touch base on a few things that when I got out of High School I knew nothing about. I even worked at a retail store at the mall during my senior year and I had to convince someone to get one when I knew nothing about them! I never knew how to save my money either. I thought people just put some aside every month. You can do it that way but if you’re trying to save a big amount his rule of the 50/30/20 works for me. I have a car payment, rent, car insurance, 3 credit cards, apple music, and a cell phone bill to pay every month. It sounds like a lot but it works. If you’re tired of living check to check and not have to worry about having some money extra to spend incase you need it or want to go on a special trip, try the rule. Let’s say your monthly earnings are $1600.00. The 50% rule means $800.00 should go to bills. The 30% rule means $480.00 should go to gas, food, and going out. The 20% rule means $320.00 should go to savings. That’s it. You can do some major savings that way. That way if a tire goes out, there’s no need to stress because you have the funds to replace it without dipping into that checking. I know getting a credit card can be exciting but be smart about it. Do the research. I mean this credit can dictate you like a voodoo doll. You don’t want to be the reason you can’t move into that dream home or lease a car. I hope these small tips help or answer questions regarding credit and help you save.

Until next time

-esswest

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