If you're a parent who could use a few pro tips on how to shape up personal finances, get ready to become proactive. The good news is that even in a down economy, it's still possible to save money when purchasing a car, develop a sensible retirement strategy, be smart about financing a child's college education, handle credit cards wisely, and get on track to buy a first home. There's no magic formula for getting your money situation in order, but it's always helpful to explore suggestions and try out techniques that suit your situation. Consider the following approaches.
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Avoid Buying New Cars
From a practical viewpoint, new cars represent one of the worst ways to spend money. The primary reason is that the value of a new automobile drops by about 15% the minute you drive it off the dealership's lot. A far better way to get all the benefits of newness without any of the downsides is to purchase vehicles that are one or two years old. Not only do they have several years of original warranty remaining, but they're also low-mileage models compared to most other used offerings on the public or private market.
In some cases, it's possible to acquire them from private sellers. However, it's to a consumer's advantage to go through a dealer who has tuned up the cars, repaired any damage the original owner caused, and prepared them for resale. Keep in mind that markups are considerable, so it's usually productive to negotiate aggressively with the dealership to get substantial discounts off the sticker price. Always have your own mechanic check out a newer vehicle before you purchase it.
Think Before Cosigning On College Loans
If your child, relative, or a family friend asks you to cosign on a college loan, avoid the immediate impulse to agree to the suggestion. Of course, most want to help a young person finance an education, especially when the prospective student has no other way of paying for school. However, before leaping to grab your pen and sign the loan documents, it's crucial to learn all the pros and cons of being a cosigner. If you're wondering how cosigning might affect your credit scores, then you're already on the right track. That's because there are many things to think about before appending your signature to someone else's loan application, including the potential impact that it could have on your otherwise good credit rating.
Be Smart With Credit Cards
Savvy credit card users know that careful management of accounts can boost credit scores. How? In addition to striving to keep balances below the 30% mark, make all payments on time and only use plastic when you must. In fact, the most skilled users pay all balances to zero every time they receive a statement in their e-account. That kind of activity achieves two benefits at once. First, you never pay interest. Second, with rock-bottom usage statistics, the reporting bureaus will record the fact that you use cards responsibly. Let plastic work for you, not against you, by keeping balances between zero and 30% of the allowed maximum. If you want some extra support in this area, you can download any number of money management apps available for smartphones. These solutions can help you build and maintain a healthy relationship with your credit habits, and personal finance overall.
