Money Management Tips

Good financial habits have their rewards

• Make your monthly payments on time and build a good credit rating. Your lender may offer incentives for good repayment behavior such as:



• 1/4 percentage point interest-rate reduction on eligible loans for using "direct pay" - having monthly payments deducted directly from your personal checking account. Not only do you make payments on time, but you also maintain good credit.



• A two-percent interest rate reduction after making on-time payments. On a $15,000 loan, you could save nearly $1,000 in interest and reduce your payments by six months.



• Make additional payments or pay extra on your loan each month. Student loans are calculated on a simple interest basis. There is no prepayment penalty for paying off some or the entire loan before payment is due. This can save you hundreds, even thousands of dollars in interest.

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Be a smart borrower

• Do not overload on credit and do a loan reality check!
  
  Avoid high interest credit cards…Use a credit card only for important items.
  
  Since a credit card purchase is essentially a loan, ask yourself, "Would I take out a loan to buy this?" before using the card.
  
  Instead of using a credit card to make a big purchase today, wait until you have saved enough money to make the purchase with cash and avoid owing any money on it. Experts recommend that your student loan payments not exceed 8% of your first-year income. Most mortgage lenders do not permit more than 8% of your income for student loans in order to buy a house.



• Keep track of your loan documents. This simple piece of advice is VERY important.



• Keep records of the people you talk to regarding your loans, the date of the conversation and the conversation. Keep copies of letters and responses in your file.



• Notify your school and lender if you move or change your name.



• Ask questions! If there is something you do not understand or if you are having trouble making payments ask for help.



• Understand your obligation. Know your payment due date, your rights and responsibilities as a borrower.

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Pay yourself first!

• Create a budget
  
  With a budget, you look at the money coming in and the money going out and then find ways to balance the two. There are four steps to creating a useful budget:
  
  
  1. Identify your income
  
  
  
  2. Identify your expenses
  
  
  
  3. Compare your income with your expenses
  
  
  
  4. Set your priorities

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Saving your pennies

By cutting some nonessential expenses, you might be able to set aside funds for emergencies or savings. If you do not have a lot of money to save, do not worry. Just a few dollars a week is great and will add up over time. What is important is that you start putting money aside and make it a habit. "Needs" are what we need to live. "Wants" include everything else we might like to have, but we do not need to survive.

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Benefits of banking

It can seem easier just to cash a paycheck, pay for most things with cash, and use money orders to pay for other items. In reality however, opening a checking account is the easiest way to keep your money safe and still have it on hand when you need it. While check-cashing stores, money orders, payday lenders, pawnshops and rent-to-own stores seem to make life easier, they're usually expensive options that you're better off avoiding.

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Enlist professional help

Talk to a financial planner about your short and long-term goals. Planning today with a professional will help you prepare for your retirement and future.

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Links to information on financial planning, saving and investing

Smart Money Magazine: http://www.smartmoney.com/pf

Young Money: http://www.youngmoney.com

Money Magazine: http://money.cnn.com/pf

Fidelity Investments: http://www.fidelity.com

Bankrate.com: http://www.bankrate.com

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