No matter how much or how little money you have, there is only one rule-- you cannot spend more money than you make. Period. You cannot rack up debt on credit cards or you will enslave yourself to credit card companies.  Being in debt ties you down, restricts your movement, and narrows your opportunities.

 Don't Finance Fat Cats

As far as Mama is concerned credit card companies steal money from people legally.  They get it from merchants when you pay with a credit card and then they get more from you when you pay interest.  Think about it.  They make money for doing nothing but having money.  If you pay for everything with cash and pay your credit cards in full every month all the money you earn belongs to you. Once you get caught in the web of debt you officially become an upaid slave to the banks, working to cover that interest payment every month. The choice is yours.

Banking Your Money

Banks are good for something -- a secure place for your money.     

• Open two bank accounts – one for saving and one for checking.
• Have your money directly deposited into an interest bearing savings account so that it starts making money for you right away.
• Calculate your budget for the month and only move what you need over to checking.
• Don’t think about what is in savings – this forced discipline will pay off in spades later.
• Most banks only allow a minimum of transactions from savings per month so you have to be judicious.
• All your bills should be paid for from your checking account online because it saves time, postage and paper.
• Have a check book, too, for incidentals that come up like a deposit on an apartment, a car or any transaction you make that won’t take plastic. 
• Keep track of your money so you don't bounce a check.  Banks will penalize you for that with high fees. 

Credit Cards

• Despite what I said above, you need at least one credit card to pay for things on line, to book hotel rooms, flights, car rentals, etc.
• It also builds up your credit rating and provides a record to credit companies that you are capable of paying your bills on time.
• When you go on to make even bigger purchases like cars and homes you will be happy to have a good credit rating.
• Remember to PAY THE BALANCE IN FULL EVERY MONTH.

Even though we agreed you should pay on time you should still look for a card(s) with the lowest interest rate possible and no annual fee. You can find comparisons on line from sites like compare cards and bankrate.com. Why? Because humans are fallible. You may stumble and fall into the debt trap. Just get yourself out of it as soon as humanly possible.

Avoid the Debt Trap

• Pay your bills on time and in full.
• Distinguish between needs and wants. You need food, water, clothing and a roof over your head. You don’t need music, movies, video games, fancy headphones, cameras and designer clothing.
• Learn to save for what you want. When you have satisfied your needs and there is money left over, you can choose which “want” to get.
• Reward yourself for saving money. Learn to have discipline, avoid debt, and you will have more rewards, not less!

Buying a Car

Remember that money you stashed away in your savings account? That can now be turned into a deposit for a set of wheels. 

• Most people will need to go to a bank to get a loan. Again, shop around. See who offers you the best deal. Make sure you are comfortable with the terms of the loan, that you can afford to pay it back every month.
• Get the car you need, not the car you want. You are not yet at that point in your career where you can buy your fantasy car. Some day hopefully you will be. But for now, get real.
• What are you going to use it for? How much driving will you do on an average day?  Do you need to carry a lot of equipment around? How long do you expect to own it?
• Mileage is important, so is safety, so is durability. You will have to set your priorities for what you need and then figure out what you can afford. Only then should you start shopping.

Know What You Are Paying For

When you are negotiating to buy a car don't just look at the monthly payment and whether you can afford it. 

• Make the dealer show you exactly how much you will be paying if you keep the car till the end of the loan.
• If you are trading in a car don't let them wrap the whole deal with a nice little bow.  Make them tell you exactly what they are paying you for that trade in.  You may decide to sell your car for more money on your own. 

Leasing a Car

Leasing means you are renting a car for 3 or 4 years and then you have to give it back. 

• The advantages are it's cheaper than buying a car and the interest on the rent is tax deductible.  You also get rid of the car when it begins showing age and needs parts replaced. 
• The disadvantage is after 3 or 4 years of paying for something you have nothing to show for it and nothing to trade in for the next car. 
• Also, if you damage to the car beyond typical wear and tear you will have to pay for it.   

Renting an Apartment

Landlords have two priorities:

1. That you don’t wreck their property.
2. That they make money.
3. Your happiness is not on this list.

 Tenants (for the most part) get what they pay for:

• There is a direct relationship between how much you pay and what the landlord will do for you.
• The economy also has a huge impact on how nice landlords will be to you. High demand=less repairs.  Low demand=more repairs. 
• Before you move in, make sure you document what the place looks like either in writing or with pictures or video.
• Sign and date everything and send a copy to the landlord once the lease is signed so that you don’t get charged for damage you didn’t cause. Be very specific about what kind of damage is there and where it is located.
• Ask the landlord to commit to making repairs by a certain date. 

Know Your Rights

Every state is different but in general if you don’t have basic service like electricity, heat and hot water you are not obligated to pay rent.

• You will have to let the landlord know the reason for withholding rent in writing and then be ready to pay it once the repairs are made. 
• If the unit you are renting is unihabitable call the housing inspector in your town and report your landlord.  They'll force the landlord to make the repairs. 

Buying A Home 

I know this seems really far off but, you should think about this sooner rather than later.  You shouldn't pay rent any longer than you have to.  The only time you should NOT buy a home is if you are not going to live in one place for very long because the costs associated with buying and selling could wipe out your profits.  

• Renting means you are giving someone else money so that they can own your home or apartment. 
• You are taking your hard earned money and making someone else wealthy.  Why not buy your own apartment or co-op? 
• All you need is good credit.  You get good credit by paying all your bills on time, car payments, credit cards and rent.  Never be late with a payment and you will have excellent credit.  
• Take a look at what you pay in rent.  If that amount is the same or more than a monthly mortgage payment then you should start saving for a down payment on a home.  Once you have a 10% deposit you can qualify for a mortgage loan. 

Qualifying for a Mortgage

• Monthly payments should never exceed 30% of your income. 
• Shop around for mortgages and really educate yourself on the terms. 
• Generally fixed rate mortgages are the safest way to go.  That means interest rates don't fluctuate and you always know what you owe. 
• Don't take out an interest only loan.  If you can't afford to pay down principal then wait until you can.   
• Get pre-approved for a loan before you start looking for a home so you know how much home you can afford. 
• Spend money for a home inspector to find all the problems with the home.  Make repairs to the home a condition for your purchase. 

Getting in the Game

The reason I am suggesting you should buy a home is because you have to get in to the housing market in order to be able to reap the rewards. 

• Start with something small and work your way up. 
• Your investment grows over time so that when you sell the first place you have all the money you put into it PLUS the amount it appreciated to put towards the next place. 
• You keep trading up until you get to where you want to be. 
• If you keep saving up for your dream house in the perfect neighborhood you may never get there because prices will keep rising faster than your savings. 

*I know we just went through a pretty horrific housing slump and prices plummeted.  That was not a normal event.  Prices were artificially inflated for numerous bizarre and random reasons.  Housing prices have hit rock bottom and credit is now tighter.  I am not suggesting prices will never go down again because I can't predict the future.  But I am old enough to have bought and sold lots of homes and can tell you that owning your own home is generally a very good investment.