Everyday, we’re forced to make decisions about money. Like whether to pay down our credit card debt, or pay off a school loan. So here are some straight answers to your financial dilemmas, courtesy of Real Simple magazine.
- Should you have money automatically fed into your savings account, or just save bits and pieces when you can? Kathy Longo is a principal financial adviser with Accredited Investors. And she says automatic savings is a wonderful thing – so do it. Most people tend to pay themselves last in the form of savings. They wait and see what’s left. But you should make a habit of paying yourself a certain amount FIRST. Have your company filter between 5 and 10% of your paycheck directly into your savings account. The rest can go directly into checking. You’re basically forcing yourself to save.
- Should you upgrade to a larger house, or buy a second house as an investment? If your motives are purely financial, then buy the second house and rent it out. That’s the scoop from Gary Eldred, author of Trump University Real Estate 101. He says by upgrading your house, you’ll only make money if the value goes up. But this is a risky choice considering recent price inflation. But with a rental, you get income – IF you buy wisely. Look for a low-priced property in a stable area with a history of reliable tenants. You can check out the rental market in your area by going to Realtor .com.
- Should you pay down your credit card debt, or pay off your school loan? You should pay off whichever loan is charging you the higher interest rate. Most of the time it’s going to be your credit card. That’s because the typical federal student loan doesn’t have more than an 8-and-a-half percent interest rate, and most credit cards are higher than that. And like we’ve said before, try to renegotiate your credit card rate. If you have good credit, you probably have more leverage than you realize.