Checking your credit is simple.

Have you ever wondered if your credit is safe from identity theft or for that matter, who is looking at your credit?

Well, there is an easy way to check all of this and the best thing about it, it is free!

Yearly, the three main credit reporting companies, Equifax, Experian, and TransUnion allow you to check your credit for free. I recently checked my credit report, after hearing a news story on CNN, and was surprised at how easy the experience was.

I found through Kiplinger's Magazine that you can do a comprehensive check of all possible credit by going to www.annualcreditreport.com a free and a one stop shop to checking your credit from all three of the major credit reporting sites. Once getting to this website, it will take you through each credit reporting site and of course you will have enter some personal information and answer some questions for safety reasons, and then it will give you a report that you can print and verify.

It is important that you check all three credit reporting companies, as some financial institutions only report information to one credit reporting site. When completing my credit report, I found some information from one reporting site that I didn't find on the others.

Once you get the report, you should know all outstanding credits and credit lines open, if there is something that you don't know about, then you may be a part of a case of identity fraud. Not to worry however, they have some great directions on each of the sites on the steps to get rid of those credit lines that aren't yours. Most of the time however, they refer you back to that company where that credit line was opened with to file a report.

In fact, there was an incident with my brother's wife that prompted me to check my credit report. Apparently, someone opened a cell phone account under her name and social security number and did not pay off the bill, therefore, it was an outstanding credit for three years. This was detrimental because this hurt her when she was trying to get a mortgage on a house when she didn't know about this fraudulent line of credit. Of course it was eventually taken off of her credit score, however this really set them back as her bad credit at the time made a difference on the down payment that they needed to make on their house and they had to wait longer to get all of her credit straightened out.

Thus, it is important to at least check yearly to ensure that all of your credit lines are in order. Additionally, one interesting aspect of credit reports is that it lists all of the companies that have inquired about your credit. Some are legitimate and the others are mostly credit card companies who send you those annoying credit card offers. I had about 10 companies looking at my credit, the biggest being American Express. Interesting, I know.

In conclusion, know what is going on with your credit lines, as that is the first line of defense in ensuring that your credit is pristine. It is free once every year, so there is no excuse on why you don't do it.

Leveraging your pennies

Remember that old saying, "A Penny Saved is a Penny Earned?" You probably have heard the phrase and thought it is was something that no longer is relevant to us. And that may be true, as today it costs more than a penny just to make a penny. Despite this bad economics, you can really supplement your savings account by saving just a few extra pennies. Any way to make our savings account is a very good thing, especially for those us with very little income. Just a word of warning however, you won't become a millionaire just saving pennies, but it is a good place to start. Lets take a look at a few scenarios.

Let us assume that you are 20 years old, and will retire at age 60. You don't have much money so you start with one penny and will add another penny every month for the next 40 years. You will save these pennies in a high yield savings account that gives you a 4.5% annual interest rate compounded monthly. So let us take a look at the outcome...

After 40 years, you will have saved $13.47. Granted that you only contributed only $4.80 into the account, I'd say that is a pretty good deal.

Let's translate this to if you decided to save $5 monthly for the next 40 years with the same parameters above, you would end up with $6,705.75. A nice chunk of change and a nice outcome for only contributing $2,400.

If you just saved $100 today, and didn't add anything more to it, you would have $602.93 when you retire.

Again, you by no means will you become a millionaire by saving pennies or just a few dollars, however this just shows how saving a few pennies or dollars each month or starting a savings account now can truly add up.

The key here is having compounding interest work for you, which means interest is paid to you every so often. Then, for the following periods you can earn interest on both the interest that you earned and the initial amount that you put in, then the process continues. Remember, the more frequent an account pays you the better, as the effect of compounding increases. Usually, on solid savings account, interest will accrue daily, and paid out monthly.

Why such an urgency to save? Well, aside from having your money work for you, you must remember that your money today will be worth less than the same amount in the future. This is because when you take into account inflation, something that you can buy for a $1 today, you won't be able to buy for $1 in 40 years.

Thus, that is why it is so important to have your savings continually grow at a steady interest rate so your money will keep its value. Knowing this, it is never a good idea to just let your cash lay around, or even have your cash lie in accounts that bear little or no interest, as its value will quickly diminish.

Remember, you must have your money work for you, and you not working for your money.

A penny saved is truly a penny earned. Simply leverage your pennies and it will go a very long way to shaping your financial success.

A Solid Checking Account

Cheques. Or better know as us Americans as Checks is a very important part of a personal financial portfolio. Yes, checks are quite old fashion but checking accounts still have a very important function. You may be like me and never use paper checks, but the actual account serves many important functions such as:

- Keeping your connection to a physical bank where you can cash checks, withdraw money, or deposit money.
- It serves as your link to your savings and investment accounts.
- You can directly deposit paychecks into your checking account.

Checking accounts come in many different forms.  The first is the traditional one, which I prefer for the ease of use, and the amenties that come with it. These checking accounts can be easily opened up in person either at your local Chase Bank, US Bank, Wells Fargo, etc. Most checking accounts are free to open for college students and/or are free if you set up direct deposits to the account.  Some require minimum balances, others do not, so that may be a factor in selecting your traditional checking account.

Some of the amenities that I enjoy that come with these type of accounts include:
- A Debit Card
- Free Checks
- Online account access
- Readily available FREE ATM machines (those transaction costs do add up)
- Convenient locations for depositing and withdrawing money.

This option may be the most popular due to its convenience, however the only problem is that most checking accounts do not accrue any interest.  This means that the bank gets to hold your money without paying you.  However, for me this is fine, as the conveniences of the bank holding my money for free outweighs the potential interest that I may earn.

However, if convenience is less of an issue and every penny truly matters to you, another place to look for a checking account that accrues interest is Credit Unions. Credit Unions were first developed as membership banks where ordinary citizens were able to pool there money together.  The benefit this pool of money was not to make a profit, but to yield the best interest rates for savings and lending purposes.  Traditionally, Credit Unions are based around some type of function or organization (teachers association's, government association, university, etc.). The downside is that these Credit Union's may not have the widely available amenities as stated above. They may have some, but not as many as any national bank.  However, the trade off for conveniences may be more worth it, as these checking accounts yield less than 1% per year and most of the time event less than 0.5% annually.

Finally, the last option is a new emerging option for savvy online individuals. It is called an online checking account. ING is one example and offers one of the best online options in what it calls an Electric Orange Account. It yields 1.75% annually in interest and includes ammenities such as:

-  No paper checks (rather checks are ordered online when they need to be written)

-  A debit card

-  Free ATM withdrawals in the Allpoint Network. 

-  Deposits are done  via mail (so it could be more or less convenient)

 You can check out more information at their website here. The downside and upside is that banks like ING have no physical bank locations, however that is the reason they can give much better interest rates. Therefore, if you are comfortable with online only locations, this checking account may be for you.

Overall, there are many options for checking accounts, however the bottomline is that you must have one, as it is the first line in a personal financial portfolio. There are many great options and there is something for everyone - so don't delay!

Finances for the 20's

This blog has been created for those individuals in their 20's who want to become not only financially prudent, but extremely successful in their finances. I am gearing my posts to those individuals that are college students and/or making a start on a career where finances are tight. Although finances are tight, it is not an excuse to not save for the future. Being young does mean that we have time to splurge on whatever we want, but when we are young is also the best time to save and invest. 

Remember, money saved today means that we will have more time to sit back and relax and see our finances grow and work for us.

For me, as a college student, money is definately tight and I too feel the financial crunch just like anyone else, but I have strategies that can help make your money work for you - some simple, some more time consuming but all will be tools that can be used to help you become financially successful. I believe everyone can be financially prudent and can enjoy a life where money becomes something that we think less and less about, and can be something that will in fact work for us.