More Financial Literacy!!
As we move into week 2 of Financial Literacy Month, we answer these popular questions...
How many credit cards should I have?
In our opinion – two. The first should be the one you use regularly, and pay off in full every month. The second one should be used in a certain emergency situation – when your first card become compromised and frozen.
Which debt should I pay first?
Pay off your debt that has the highest interest rate first. In the long run, this will save you the most money and get you out of debt quicker. We’ve read elsewhere that some people may be motivated to clear the smallest debt first, but this tactic may take you longer to pay off the debt.
How much should I have in an emergency fund?
Numbers vary, but in general, 2-3 to 6 months worth of your normal expenses. Since you are tracking your expenses (you are tracking, right?) you should have good idea of how much that is. The most important thing to do is to start now if you haven’t. Talk to us about setting up automatic withdrawals (they can even match to your payday) and you probably won’t even notice the dollars have moved. The last key point is that your emergency fund should be something that is not easily accessible; therefore it’s not as tempting to take dollars out unless it’s a true emergency. Call us to investigate the options we currently use for our valued clients.