Things to know about the adult world.

Options
ZebraBri
ZebraBri Posts: 60
in Chit-Chat
So I'm finishing my sophomore year in college, and there are many things about the real world I still do not understand.
Stuff I should know about...but have always been embarrassed to ask.

Right now I'd say I'm independent...but from growing up until the time I actually physically left for college, everything was done for me, and I was never taught how to do it, for dumb reasons. This includes life necessities, including how to cook, do laundry, and things about the adult financial world.

Now, I know how to do laundry now ;) And I still need to learn how to cook.

But the main question I'm asking is about...finances.

Can someone please explain to me what an interest rate is?! Any anything else I need to know that is related to finances, that you think is important? I feel kind of silly for asking, but I also thought some of you might enjoy giving your two cents about being an adult. Feel free to add anything else!

Thank you!
«13

Replies

  • andrea198721
    andrea198721 Posts: 173 Member
    Options
    My bank actually offers workshops to hep explain those types of things, you should check and see if yours offers anything like that. Good luck to you!
  • Sp1nGoddess
    Sp1nGoddess Posts: 1,138 Member
    Options
    Avoid debt as much as possible. If you can't afford it, you don't need it, end of story.
  • tzeoli86
    tzeoli86 Posts: 75 Member
    Options
    Avoid debt as much as possible. If you can't afford it, you don't need it, end of story.

    ^^^Best financial advice there is!
  • mcrowe1016
    mcrowe1016 Posts: 647 Member
    Options
    If you give your money to someone, they will charge you an interest rate. The idea is that you are paying them to let you borrow money. You might get a $10,000 auto loan with annual interest of 5%. So over the course of the year, you would pay about $500 to the bank to let you borrow that money.

    It gets much more complicated, seeing as how the intererst is annual, but is charged every month. As you pay down the loan, the amount of interest you pay will decrease (you will only pay about $250 annually when you get the loan down to $5,000)
  • NoAdditives
    NoAdditives Posts: 4,251 Member
    Options
    My bank actually offers workshops to hep explain those types of things, you should check and see if yours offers anything like that. Good luck to you!

    definitely look for a class or workshop like this. It's best to get this sort of information/advice from professionals. My husband had to actually go to business school to learn all the financial stuff people need to know.
  • mjbrenner
    mjbrenner Posts: 222 Member
    Options
    Buy a copy of "The Everything Personal Finance in Your 20s & 30s Book". Read it cover to cover. Keep it and refer to it regularly. My wife and I cut our financial teeth on this book as young adults, and every young couple we have lent it to since has loved it and learned from it.

    Good job on taking your adult life seriously. That type of attitude leads to a successful, enjoyable adult life.
  • crat77
    crat77 Posts: 8
    Options
    Google Dave Ramsey. I'm not on board with 100% of what he says, but it's some old tried and true methods, and it's basically that Credit is bad. Debt is dumb. Cash is king. Rough it to make it.
  • Sarauk2sf
    Sarauk2sf Posts: 28,072 Member
    Options
    My bank actually offers workshops to hep explain those types of things, you should check and see if yours offers anything like that. Good luck to you!

    This is a good idea.

    And for explanations of terminology, wikipedia is actually a pretty good source.
  • divinebird
    divinebird Posts: 81 Member
    Options
    I agree with the person who suggested you talk to your bank. They have people who are used to dealing with all kinds of questions, and usually they have a private space for you to talk in (so no fears about embarrassing questions). Write down any particular questions you have and take notes. The banks want you to be informed because that means less chance you'll do something like overdraw your account!

    Also, if your bank DOESN'T do this, switch. Believe me, you owe them no loyalty if they won't take the time to help educate you. I always recommend credit unions, because they are owned by the people who bank there. (Also their interest rates are usually better!)
  • soccermoma11
    soccermoma11 Posts: 126
    Options
    There is alot to know about finances, and alot of it is highly complex, search Dave Ramsey he has amazing financial advice and a class that is so helpful. It walks you through things and explains it well. Also I would suggest getting a financial advisor as they will be able to help you with your individual circumstances, just make sure it is someone you trust and are comfortable with. If you are not than find someone else, just make an appointment at your bank and ask any and all questions, ask for clarity if you dont understand something. It is your finances and your money and you have the right to do with it as you please, you should be entitled to know what happens with it. So ask lots of questions and dont be afraid to switch advisors or banks! good luck to you!
  • happypath101
    happypath101 Posts: 534
    Options
    Check out this web-site. This lady is amazing. I'm a huge fan.

    http://www.gailvazoxlade.com/
  • mcrowe1016
    mcrowe1016 Posts: 647 Member
    Options
    The best advice I can give you is to keep track of spending. I use debit and credit cards (that I pay off every week) for everything I buy, and every week I will list off the amount I spend on bills, food, gas, and fun things for me.

    This way, you will be aware of what you have and what you are spending.

    Make sure you have financial goals (how much you want to save per month) that are realistic and that you follow.
  • garnet1483
    garnet1483 Posts: 249 Member
    Options
    If you have the credits to spare, take an intro to business math, or similar class. You'll learn everything you need to know about interest rates. The key in real life: if you have to use a credit card, make sure you have a plan to pay it off in a reasonable amount of time. The lower the interest rate the better, the better your credit score, the lower your interest rate should be.

    The biggest advice I can give, though, is learn how to budget. Figure out how much money you have in a given month, and balance that against your bills. Consider your savings as a "bill" that you pay into every month. Make a plan to pay everything you owe, plus your savings, before you spend on anything else, and stick to that plan. Budget in an amount for fun, too. For going out, getting coffee, having lunch, buying clothes. Be realistic. Budgeting properly can get you through the worst financial spots, as can making sure you have a savings account. You could actually think of it like dieting. You have a certain number of calories a day, and you have to figure out how to responsibly spend them in order to lose weight. Similarly, you have a certain amount of money a month. You have to figure out how to responsibly spend it while still saving.
  • scagneti
    scagneti Posts: 707 Member
    Options
    Finances are insanely important. A lot of you adult relationships will depend on what you do now.

    1) Banks are not your friend. Don't sign up for a credit card or an account for a t-shirt or whatever. Even though it may seem like a zillion years away, always think of your credit score. A mortgage with a bad credit score will take forever to pay off.

    2) Do a budget and learn to live within it. The greatest person I've ever seen for budgets is Gail Vaz-Oxlade from Til Debt Do Us Part. She has fantastic budget spreadsheets and ideas. Highly recommend.

    As for your question, an interest rate is what the bank will lend you money at. Obviously you want that to be as low as possible to ensure you pay off as quickly as possible. If you have a 20% rate, it will compound much faster than a 4% rate.
  • skullshank
    skullshank Posts: 4,324 Member
    Options
    Avoid debt as much as possible. If you can't afford it, you don't need it, end of story.

    boom. best advice. please take it.
    ESPECIALLY in these economic times.

    my wife and i inflated a decent amount of credit card debt...nothing crazy, but i think it was around $30k total.
    it took us 10 years and a financial management firm to get out of it. we are FINALLY financially independent (out of unsecured debt) and i cannot tell you how wonderful it feels. we have NO credit cards and we pay for things with our OWN money. imagine that.
    economic times are not getting any better. the best thing you can do is avoid unsecured debt and plan for the future.

    don't make the same mistake many have and live out of your means. it's a tough road to go down and can easily end in financial ruin.

    *edited to add*
    because of telling the credit card companies to **** off, we are now able to sock away about $250/week into savings.
    that will come in extremely handy when it's time for a vacation, home improvements, or when the 30year old furnace finally gives out. :)
    my point is...don't get stuck giving them your last dime every month to make the minimum payments. instead, keep that money for YOU, as you will need it for sure.
  • porcelain_doll
    porcelain_doll Posts: 1,005 Member
    Options
    Don't be tempted to use credit cards, and don't get sucked in with their "0% interest for 2 years" offers, etc. Like an above poster said, if you can't afford it, you don't need it. I racked up $15,000 of credit card debt and it took me 3 years and a 2nd job to pay it off. It sucked. Don't get sucked into that hole. I have one credit card now, and that is only for when I book a hotel room or rental car where they ask for a credit card to put a hold or deposit, etc.

    Also, don't live above your means. If you get to the end of the month and you have little or no money leftover, something needs to go, whether it be an expensive phone plan, extra cable channels, or some other miscellaneous service you can cut out.

    If your employer offers a 401k program, take advantage of it (in the future when you are out of school!). I don't fully understand the financial world, either, but these basic things are essential to know about. Kudos to you for thinking ahead and trying to live as an adult, instead of figuring things out later after you're in the red!!
  • DrKittyCat
    DrKittyCat Posts: 108
    Options
    Try to avoid buying things on credit as much as possible. Pay off your student loans before interest starts accruing. I'm putting off medical school for two years, so I can pay off my loans and get a bunch of money in the bank...you can never be too young to start saving!
  • Gt3ch
    Gt3ch Posts: 212 Member
    Options
    Wow you're halfway through college and this never came up? That doesn't speak very well for our educational system.

    I remember vividly in 1st grade being taught how to fill out a check. I think it was in 4th or 5th grade math class we learned about interest rates and compounding interest. What the hell is going on these days?

    On the plus side you have this amazing learning tool. Use it. Pump "interest rate" into Google. Read on Yahoo and Google finance. Discover and read all the free content in the numerous financial websites. You can do it in your underwear and you don't have to go to a bank that may be more interested in selling you products than teaching you.

    Others talk about interest in terms of a loan. My advice is to pay as little of that as possible. Instead focus on interest you earn like when a bank pays YOU for borrowing your money
  • michellekicks
    michellekicks Posts: 3,624 Member
    Options
    Dave Ramsay for sure.

    And yeah... just don't borrow. Except for a house. If you need something else, save up for it. Really and truly you will never regret that decision. There are loads of websites that go into detail about how to live frugally so you can stretch every dollar as far as possible. Learn to do this and you will have far more financial freedom in the years ahead.

    An interest rate can be the cost of borrowing, but it is also the return on your investment if you're the lender. Once you've saved some money, you can invest it in any number of ways to earn you interest i.e. the people who are using it while you're not, will pay you money so you end up with more.
  • taxidermist15
    taxidermist15 Posts: 677 Member
    Options
    Can anyone explain to me credit scores?

    Im 21, and so far I have paid everything off in full.

    car, rent, food, groceries, holidays everything paid IN CASH

    however next up on my list is a house. I dont have a credit score, and so they wont give me a loan ( I assume..)
    how do i get around this? and do i HAVE to put stuff on credit (they pay it off straight away) just to get a goos score?

Categories