How To Make A Million

Today was a productive day. I met with my psychology group to finalize everything for our final presentation on Friday, did some more birthday shopping for my Dad, got my workout on, and mailed off some textbooks I sold online. Holla for a dolla!

I also made one of the best dinner salads I’ve ever had. Using Mama Pea’s tofu dippers recipe I broiled some tofu and placed it over a bed of spinach and peppers marinated in salad dressing. It was so good I already have plans to make it again tomorrow. If you’re looking for a tofu recipe I definitely recommend trying it out, its amazing!

I also had some tasty homemade peach sorbet that I’ll tell you guys about more tomorrow! ;p

And I learned how to make a million! Just kidding. The article talked about a couple who had a brilliant idea, left their careers, used their kids college education funds as seed money and then struck it rich. While I’m really happy for them, that’s a little too risky for me. And while I’ll likely never be a millionaire, I’m happy on the safer path.

What I love about Kiplinger’s is all the personal finance information. I’m a huge finance nerd. I love Roth IRA’s and Credit Scores and all that stuff that gives me knowledge to have a more secure, financially sound future. I’m graduating next semester and its got me thinking about apartments and student loans and all that grownup stuff I’ll have to deal with very soon. There were some useful tips in this month’s magazine that I wanted to share with you guys. Hopefully it will be of some use to you, it definitely was to me!

  • Your monthly rent/mortgage payment shouldn’t exceed 28% of your monthly gross income. (I did the math on this and if you make $30,000 a year that’s $500 a month for an apartment. Yikes!)
  • Recurring monthly payments for all debts (mortgage, car loan, credit cards, and student loans) shouldn’t exceed 36% of your monthly gross income.
  • If you have a credit score of at least 740 and can put down 40% of the purchase price of a home  you’ll secure the best 30-year fixed-rate possible.
  • If you put down less than 20% of the cost of the home you’ll have to pay private mortgage insurance.

As I definitely plan on renting before buying a home I found this really useful information. I want to make sure I have enough saved so that when I do buy a home I get the best possible rate and don’t have to worry about buying extra insurance.

I also think its good to know how much debt is okay to take on, and how that is proportionally related to your income. I feel like most people out there have monthly debts worth more than 36% of their monthly income. I feel really lucky to not have a lot of student loans (since my stepmom works at my school) or car payments (since I bought my old but still kicking car outright in a Walmart parking lot) and want to make sure I continue to make good decisions when it comes to finding a place to live and potentially getting a new(er) car and not get myself into too much debt. I feel like my generation has to deal with so much debt and stress, and I don’t want that to be my life. Like everyone else, I just want to enjoy my life and I’m hoping soaking up financial knowledge will help me do that. :)

Question of the Day: Do you have any useful finance tips? Please share! I’m always looking for more!

My tip: If you’re looking for a way to monitor your credit score on a more frequent basis than the one free report from each of the three major credit agencies a year I recommend using Credit Karma. Its completely free and you can use it as often as you like. They pay TransUnion for your score each time you request it and make money off the ad revenue on the site. They are completely safe and do not send you spam emails or sell your information or anything else. I have been using Credit Karma for years and got my dad and Josh hooked on it. If I needed my exact credit score I would go through the government for my free one to have all three of the credit agencies compile my score but for just month to month monitoring using one of the big three’s scores (in this case TransUnion) works perfectly fine for me. Credit Karma is awesome because it lets you monitor how your score changes over time and gives you a report card on what you are doing right and what you are doing wrong in terms of building a good credit score. I recommend it to all my friends, it is such a useful site.

Comments

  1. Carrie@familyfitnessfood.com says

    Excellent advice! Everyone finishing up college should be as well prepared as you are.

    • says

      Aw thank you, that was very sweet! There’s so much information out there, I’m just trying to learn as much as I can!

  2. says

    Hi Erin. How do you get your free credit score from the government? I used to use one of the free sites that accesses all three of the major companies, but the credit score you actually had to pay for. I like to view my credit reports annually, but I never can get my score without paying for it. It’s my score, I really shouldn’t have to pay for it. Thanks for the info.

    • says

      Hey Kathy! Oh sure, the government website talking more about it is here: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre34.shtm
      And then the actual government sponsored website to get your free scores is here: https://www.annualcreditreport.com/cra/index.jsp
      You can chose to get all three scores at the same time, hence giving you your overall score, or you can stagger them and do one score every four months that way you can track your score all year. The scores themselves shouldn’t vary greatly from one credit reporting agency to another although they can since they all report different things. Since I’m not trying to buy a home or get approved for any major loans I’m fine with just knowing my score from one of them for now.

  3. Nicole says

    It’s really awesome that you are gaining all of this knowledge with fiances/debt. That salad looks bangin and I can’t wait for the peach sorbet recipe =)

    • says

      The salad was soo good! And the peach sorbet will be up later! And thanks, there’s so much information out there and it can get really confusing so I’m trying to weed through it all.

  4. says

    All great advice! One thing we have done over the years is always apply extra to our mortgage principle. It has helped us pay it down much faster and now we are just a few years shy of being mortgage free!

  5. Maria says

    Credit Karma is such an excellent resource! I recently closed one of my really old credit cards (from when I was 18) and it dropped my score a bit, but using the tools that it provides online, I learned that I can increase my score again by opening a new credit card line or increasing the limit of my current one.

    I need to start subscribing to this magazine, as I haven’t heard of it before.

    • says

      It is a really great magazine, its all about personal finance. And yeah, Credit Karma’s tools are awesome! I love getting to see how to raise my score and how what I’m doing affects it.

  6. says

    I love that you’re a finance nerd! Since you are maybe you can answer this for me…I have a portfolio in which I have invested in various mutual funds, but want to start trying to invest in some individual stocks too. Facebook is going public and I want to invest in it – can I? Do I have to wait until after the IPO? Help me! Haha
    I’m lucky too that I’m debt-free. My parents paid for the college that wasn’t covered by my scholarships since I chose an in-state school (they actually ended up w/money left over from the savings they’d set aside for me due to that) and I received my car as a college grad gift. I also still live at home and save a bundle that way! I am so cheap.

    • says

      Haha I’m cheap too girl! I think its something to be proud of! ;p

      I’m not a financial adviser so I would definitely double check with them to make sure this information is correct. But from what I understand unless you have millions of dollars in investments the Facebook IPO is pretty offlimits and regular investors have to wait until it hits the stock market. Even to the ones who have millions most of the ipo has probably been snatched up.

      However facebook authorized etrade to sell ipos in an effort to let everyone have access to their ipo which I thought was pretty cool. So any chance of an average investor getting in on the ipo would have to go through them.

      Here’s an article I found about it. Good luck and I hope it helps! Let me know if you end up getting some! You’ll make a killing when it goes to the stock market and the price triples!!

      http://money.cnn.com/2012/05/07/markets/facebook-ipo-investors/

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