thank you for this information everyone I appreciate it I am going to be getting my own job soon and i need some info on some of these things.

 

Thank you and before i ask anything here i will look on the internet and some info on IRA's. Quick question is the roth a typo i meant is it suppose to spell both

 

I actually think it is good your asking these questions. It's better to ask now then to be screwed later.

First off, I would recommend taking a look at Radiology. I think it is a better field and you will be better respected. Plus I think it's the same schooling but the salary is $65K vs. $40K.

Now to your questions:

1.) What does making ends meet this month exactly mean

Every month you will make x amount of money. Every month you will spend y amount of money.

As long as x - y = $0 or greater you are making ends meet. What you want to do is be on the greater end of that. So bring in more money then you put out on a monthly basis.

2.) What are mortgages

When you buy a house, there is no way you will be able to pay the house out in cash. Unless you have 300K sitting around. So what you do is get a loan or a "mortgage".

Most mortgages expect you to put down 20% of the final cost of the house. So if you are looking to buy a $150K house, you will need to have $30K saved up.

The remaining $120K is your mortgage that you have to pay back to the bank.

6.) I tried looking this up on the internet and i still have trouble understand this. What is interest rate.

I put this after mortgage on purprose. So let's say you borrow $120K from the bank. The bank will charge you interest on that loan. What this means is that every year you pay a % extra.

To simplify this. Let's say your interest rate is 5% and your mortgage is $100K. Every year, you will pay the bank $5K on top of your normal money you will pay back the bank on your house.

Interest rates are all dependant on your credit scores. That is why it is so important, especially at your age to pay off your credit cards on time, and usually in full or over the minimum payments. This will get you a better credit score.

The better the credit score, the better the interest rate. If you have a great credit score, you can have interest as low at 3.5%. Bad credit score, and you can be in 7% or higher range. Or worst yet, not be allowed to have a mortgage cause a bank won't trust you with their money.

3.) Not a 100% sure what this is your 401K. Isnt that a retirement fund where you can put money in for when ever you retire.

A 401K is a retirement fund. Usually the company you work for will match your contribution in a retirement fund up to 3%.

So how this works is as follows. Let's simplify this. Let's say you make $10K a year. You will put in 3% into your 401K. That would be $300 a year. Your job will match that 3% as well, which would make up another $300.

Usually, your company will only do up to 3% matching. However, you can contribute more. What I recommend is doing 10% of your salary as soon as you get a job. This will teach you to live with less money from the get go.

Also, another reason for this, is because some one who starts doing a 401K at 20 will save over $1 Million more then someone who does it at 30. So the earlier the better.

Best part of the 401K is that it is pretaxed money. But that comes later in life. So don't worry about that.

4.) Not exactly sure what insurance is but correct me if i am wrong about this one. Insurance-is something that will pay for and fix up a problem if an accident occurs even though it is probably not that simple

There is all type of insurance:
- Health insurance, which your employee usually pays for. This is so that you can go to the Drs and not pay all of it. The insurance will cover a large % of the bill. Usually you will be responsible for a copay around $40 or less.

- Car insurance. You pay that, and it covers your accidents.

- Home insurance. You pay that, and it covers your house in case anything bad happens to it.


5.) How do you get insurance and how do you pay them each month.

Car and Home insurance is purchased through different companies like Allstate and Geico and so on. You call them and tell them what you have, and they let you know how much it will cost per year.

What you need to do is shop around and find the best deal, however, you want to also make sure you have the best coverage. Never cheap out on insurance. Best deal doesn't mean cheapest. It means 2 companies offer the same thing, but one is offering it at a lower price. Not 1 company is 50% cheaper and offering half the stuff.

OK, that should be a good start. Once you get a car or house and so forth, you will learn all of these things.

The only two things I can leave you with is:

1- 10% or higher into 401K
2- Always pay your credit card bills on time, either in full or above what the minimum payment is.

Do those two things and you will be fine.

 

I assume IRA stands for Individual retirement account. a retirement plan that allows you to contribute a limited yearly sum toward your retirement; taxes on the interest earned in the account... Sounds useful so i guess it is similar to a 401k plan almost

 

Thank you for the information

 

Start with a 401K. When you start making so much money you no longer are allowed to put money in a 401K, then worry about Roth IRAs and so on. That's usually how that works.

 

Well, sometimes too much info can be over bearing and scare people. He is asking some big questions, so once you get into the nitty gritty is gets overwhelming. So trying to keep it simple.

And I thought I kinda explained it. Everyone I know that has a Roth IRA is cause their company won't let them put more money in their 401Ks and so they put money in their Roths.

I am no where close to making that money, so I am no where close to that.

 

My best advice for anyone starting out with a credit card when your building your credit; charge about 25 bucks on it once a month and when the bill comes due pay it off in full. Do this for a year and you'll be racking up your credit score.

 

Dude, since your school didn't teach you these things (the Contemporary Life class I had in high school was the most useful class I ever took), and we're extremely limited here in what we can describe to you, sit down with your parents and ask them to SHOW YOU things like bank accounts, checkbooks, mortgage papers, 401k, and insurance stuff. Ask them what you'll need starting out. And do things like go with your mom to the grocery to find out how to buy food, and do laundry, etc.

--Moony

 

well i graduated high school 6 months ago. The next day my dad and I went out started me a checking account. Then in the mail i got my own check book and debit card. I am familiar with all that stuff. I know what the debit card is about and i know how to deposit something or cash something. Your checking account is used for lets just say for helping paying bills and such or for other use. Savings account is putting money into the account for future use if need money for lets just say schooling or a car or house possibly. It was those interest rates that I did not understand. I am only 19 years old have a lot of life ahead of me and I will be starting my very own job here soon and if i enjoy it enough i would decide to do nursing school sometime in the future whether it is a year or two down the road. I do not think i need to worry about retirement funds/accounts such as the 401k plan or IRA that much, but of course it does not hurt to get it started early. Like you guys said it would be better if i got this information from my relatives. My grandfather always has a good advice and i could always trust his judgement so i can always ask him.

 

Well hold on I am not about to get my own place like apartment or anything like that. I know how to buy food and I do laundry every week end for my dad and i have my very own checking account and check books.

 

Interest is what it sounds like. You wouldn't be interested in giving someone more time to pay back your money if he wasn't going to pay back more than he borrowed.

 

That is intersting and a person told me savings account usually have that kind of thing. The interest rate would be the percentage of such as 2% 5% 10% etc.

 

Yes, that is exactly it. Most banks will pay interest monthly, but the interest rate on your savings is calculated yearly, not monthly. So, say your interest rate is 5% and you have $1000 in the account fir the month of December than what you get interest will be $50 / 12 (for 12 months in the year). So, around $4 for that month. Say January you deposit another $1000 so you now have $2004 in the account and so you'll get 100.20 / 12 (for the 12 months in the year so around $8.02 in interest for January. See how you get interest on the interest if you don't withdraw - that's called compounding interest.....and it's how to really grow your savings. Get up to $10,000 in your savings account and your getting around $80 in just interest.

You make money on money that has essentially been given to you because you gave the bank the use of your money to invest (lend to other borrowers and get their - often much higher interest and they pass some of that interest to you.

 

thank you for this info. What is usually an interest rate for a savings account just give an estimate it probably depends on what bank you go too. what does lend to other borrowers mean

 

Don't mean to inadvertently turn this thread into a "why the public school system sucks" thread, but this is true.

Admittingly, I didn't know about this stuff untill I got home schooled.

 

Why didn't you ask these questions at the bank when you got the account? Why did you wait six months to ask them, and why here?

 

I'm gobsmacked. If this is a serious thread I'm actually flabbergasted.

I know we are all different but I got my first mortgage at 19. Someone, somewhere has severely let you down OP.