Question

Anne is 22, just out of college, and moving to a new city for her first job. She is concerned about her finances. She wants to start saving for an emergency fund and to buy a new car for about $24,00 in 2 years with a 20% down payment and finance the rest over 4 years. Her gross income is $40,000 and her disposable income is $31,000. Her monthly living expenses will be about $2,000 ($1,400 fixed). Her employer offers a retirement plan and a credit union. She has $5,000 in a regular checking account. Anne has started shopping around for accounts to hold her liquid assets and would like the highest rate possible as well as avoiding fees if her balance falls below a specified minimum balance. Her thought is to open 2 accounts; one for paying monthly bills and the other for short-term savings.

3. Anne has narrowed her choice of liquid asset accounts to a checking act at the credit union paying 0.25%, a money market deposit act paying $1.00% and a money market mutual fund paying 1.75%. She is concerned that if she used a CD she could incur early withdrawal penalties. What would you recommend for an act to pay monthly expenses (and why)?; an act to save for a car downpayment (and why)?

Answer 1

This is my answer

A credit score is a measure of how responsible you are with credit. Do you pay your bills quickly and in full, or do you just pay the monthly minimum, and late at that? There are a lot of factors that make up your credit score, and knowing them will help you plan for good credit:

Payment history — 35%. How often do you pay your bills on time? Late payments hurt your score.
Debt usage — 30%. How much debt do you have in relation to your overall limit? Low debt and high limits is what you're after.
Credit age — 15%. How long have you been establishing your credit? The longer the better.
Account mix — 10%. How many accounts or lines of credit do you have open? The more the better.
Inquiries — 10%. How often do you apply for new credit? Too many inquiries can hurt your score.
steps to raise your credit score:

> Watch those credit card balances.

> Eliminate credit card balances.

> Leave old debt on your report.

> Use your calendar.

> Pay bills on time.

> Don’t hint at risk.

> Don’t obsess.

Thank you...