Finance tips for young adults

I found this great article on www.asic.gov.au and reccomend you visit their site to read the whole thing:

"Money is an important topic for everyone. If you're young, and just starting out in the world of work, you may not have much of it yet! But it's never too early to learn some basics.

Whether you're thinking about banking, insurance, superannuation, or investing, we can provide some help to get you started. We've collected our top 10 finance tips - follow these, and you will be well on your way to making the best use of your money."

Click to read the full article...

Types of Car Insurance - whats the difference

• Compulsory third party (AKA CTP / green slip insurance) is the minimal cover that every car must have by law. It provides essential cover against claims for compensation if you injure or kill someone in a motor accident.
  
  If you don't think your car is not worth much you may wish to take out compulsory 3rd party insurance only. Keep in mind that it doesn't cover you for damage caused to other people's property such as if you're unlucky enough to run into a Ferarri.
  
  
• Third party property is the least expensive option. It covers you for the damage you may cause to another car and may include limited cover for damage caused to your car by an uninsured driver.
  
  
• Third party property, fire and theft also covers you if your car is stolen or burnt.
  
  
• Comprehensive car insurance is the best cover option but also the most expensive. It includes the cost of crash repairs or replacing your car, even if you're at fault.

(source captaincompare.com)

Credit Card Tips - Other "hidden" fees

Lets be honest not many people read all the way through the terms and conditions of their credit cards. Lately there has been a rising trend of "hidden" fees and penalties. Your financial institution may charge you for:

• making a late payment
• exceeding your credit limit
• having a second card on the same account
• replacing a lost card
• duplicate or extra statements
• taking cash advances
• making an overseas ATM withdrawal
• converting currency when buying overseas

These fees can cost anywhere from a few dollars to hundreds of dollars so it is advisable to try and find out what these things will cost you before you accept the card.

Credit Card Tips - Avoid Cash Advances!

I often have people asking me about cash advances. They explain that they are really handy when you need some cash and that they still have the 55 days interest free to pay them off. This is what I tell them:

The Interest-free period on your credit card accounts do NOT apply to cash advances. In almost every case, you will pay interest on that cash you took out right from the time you grab it from the ATM. Some banks even charge a fee of 1.5 per cent of the withdrawal. That's a $15 fee straight away on a $1000 credit card cash advance.

I often get promotional material from my financial institution telling me I can have so much cahs straight away. The best way not to get sucked in to this little ploy is to throw your credit card pin away (burn it or something) before you learn it - then you can't get a cash advance anyway!

Credit Card Tips - Help I have fallen behind in my payments

Even the most responsible of people can get into trouble at times. I know many lovely people that simply aren't good at managing their finances. If you have fallen behind in your credit card payments there are some steps to take that may help you in your situation

1. Don't hide it
Banks and other credit card companies hate it when people try to hide the fact that they can't make their payments. Instead of waiting for them to send a nasty letter or call you asking what is going on, give the credit card company a call and explain to them you can't make the payment on time. Some will give you an extension to pay the bill and others will lower the interest rate until you can pay it off.

2. Cutting Back
If you are in trouble then you need to consider cutting up those cards or using your credit card sparingly (if you have good self control). Making your own lunch or coffee can often save you more than you think!

3. Get Some Advice
Find someone who is registered to give out financial advice and get a plan drawn up to get you out of debt.

Good luck managing the beast!

Car Loan Tips - Don't blindly accept dealer finance

Sure - dealer finance might be easier to get and be much less hassle, but always remember to compare what they are offering you with finance options from your bank or other financial institutions. Dealer finance may be more restrictive and have hidden fees and charges that you do not realise until it is too late. You may even end up paying more in interest.

I am sure you Aussies reading this have heard about a certain dealer who offers motor finance that has been ripped to pieces by A Current Affair lately (although I don't recommend watching this show!)

Personal Loan Tips - Shop Around

When applying for a personal loan there are many options available to you. Don't take the first one you come across. The big banks all offer personal loans, but also consider community banks, credit unions and other smaller financial institutions. These smaller companies often want your business and will have special deals and lower rates in certain cases. Don't be afraid to make some enquiries and tell you bank that you can get a better deal elsewhere. They might say fine then do it or they might just make you a better offer!

Tips on avoiding credit card debt

Credit Card debt is at the highest levels it has ever been in this country. Some simple tips can help you avoid becoming another statistic:

1. Pay more than the minimum payment each month - The best solution is to pay the entire balance off your card each month. If your balance is very high still try to pay as much as possible.

2. Transfer the balance of your credit cards to low interest rate cards. Most credit cards will offer up to 6 months interest free on balance transfers when you sign up giving you longer to pay off the debt.

3. If you don't receive or care about rewards programs sign up to a credit card with no annual fee. This can save you over $100 in many cases.

4. If you can't control your spending use the new pre paid credit cards or cards that link directly to your bank account so you are using your own money.

5. If you are in serious debt there are a couple of options that might just help you out:

• Talk to the financial institution about lowering the interest rate while you try to pay it off (lets face it they would rather have their money back than have you declare bankruptcy)
• Talk to a financial adviser about taking out a loan to cover the whole debt at a lower interest rate than the credit cards. This is often called a consolidation loan, where all your debts are put together into one loan.

These simple tips may save you some money.

Good Luck
Tom