A Quick Financial Awareness Wake-up Call

by golbguru on September 19, 2007

Most readers who frequent personal finance blogs/websites must have read about a lot of financial advice by now - some of which is almost repeated to the point of boredom. However, I am not sure if everyone processes all the information they get from such resources - even after reading it several times.

Often, we read about something good, but then we procrastinate, and later, completely forget about it. For those of us who are in a habit of doing this, here is a quick wake-up call.

It comes in the form of a poll with 20 affirmative statements that could be expected of a person who is in decent control of his/her financial situation. See if you can give a resounding “YES” to all the questions. Most of the questions are based on topics that are generally covered (or should I say “ruminated”) on many financial websites.

If you cannot say YES with confidence, don’t despair… at least you will know what you need to work on. Also, you will better appreciate the fact that there is always some financial advice that needs to be repeated over and over again. :)

Check all that applies, work on all that doesn't:

View Results

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The poll results are set to appear in the ascending order of number of votes - that way, hopefully, we will also figure out where people have the most problems when it comes to finances.

By the way, a good personal finance course would have most of the stuff above labeled as “Personal Finance 101″ - so it’s not really rocket science.

Feel free to suggest additions to these statements and/or provide additional explanation to your answers.

[Note: this is the first time I am using this particular poll plugin - if things appear broken, it means I messed up - please shoot me an email and I will look into it]

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{ 23 comments… read them below or add one }

1 Jeremy Bettis 09.19.07 at 9:39 am

Several of those statements don’t apply to me because I don’t have any credit cards. Likewise, since I don’t borrow money, I don’t care what my credit score is. I am certainly not going to pay any credit bureau to find out.

2 Beth 09.19.07 at 10:02 am

The credit card ones (likewise the bank overdraft) don’t apply to me, as I pay off my credit cards each month. I should see my credit reports, though, just in case there’s some untoward behaviour on there by someone who’s not me.

This is not to say my financial life is in great shape. I spent a good ten years spending what I earned (with the exception of an above-average-but-not-great 401(k) contribution), so I have very little in savings (other than the 401(k)). I need to learn to stop the money leaks, so I can spend an acceptable amount, and save an acceptable amount.

I continue reading because there’s inspiration to do little things to save money, and hints on how to make my money work most effectively. Each topic may be discussed many times, but each time there’s either a refresher, or a new look at something old. (And I like the person stories of what people are doing–successes and failures are both inspiring and encouragin.)

3 Steve Austin 09.19.07 at 1:29 pm

I echo Jeremy Bettis’ comment.

4 TraderMark 09.19.07 at 2:10 pm

I do agree that reading the financial personal finance blogs gets to be tedious in relation to I see almost the exact same things/comments/and in fact PEOPLE posting on all the major blogs in this space. Part of that is because most of it is quite simple, spend below your means and save/pay yourself first. Not rocket science.

As to your poll maybe we should give that checklist to anyone who applies for a mortgage (don’t you think that would of stopped the mess we are in now?) and if they could not check off 80% of those as yes then no mortgage for you. With the financial illiteracy in this country it would be an eye opener. Takes more work to get married than to get a $400K mortgage approved.

5 Lisa 09.19.07 at 4:12 pm

Great checklist…. And I personally like reading and re-reading the financial advice that is out there in “blog world”. Sometimes I just don’t understand some of the concepts, but after reading about it multiple times, it usually will come together for me.

6 golbguru 09.19.07 at 7:05 pm

Steve and Jeremy: .. and guys like you who are not using credit cards at all.. have you been to No Credit Needed Blog? I guess you can connect with the dude who writes it - he is a Ramsey fan and doesn’t believe in “credit”.

Also, not using credit cards doesn’t absolve you of checking the other 3/4th items in the list. ;)

TraderMark and Lisa
: Yes, a part of the purpose of this post was to create a preliminary checklist - to get things started. I hope it’s useful to some of the folks who read this blog.

Beth: I hear you. It’s the inspiration and the “refresh” factor that keeps me interested in often repeated topics. Also, it’s some sort of a fine tuning process. The first time I read something, it forms the base. The next time I read a similar topic, I am able to better understand what’s going on - sort of becomes a constructive building process.

About the repetition of content - it’s not the main topic of this post, but I just wanted to put it out there, because every now and then, some of us get disillusioned by the repeating topics and it’s in order that people look at this issue with a positive perspective.

7 kitty 09.20.07 at 5:01 am

There are some good points in the check list, but there are some which may be irrelevant to one’s ability to live within and below one’s means.

I use credit cards, but I couldn’t care less what the APR on my credit card is or what two-cycle billing is as I’ve been paying it in full for 20-something years and never once needed this information. With my math background, I can certainly calculate compound interest, but who cares? Suffice to say that I cannot get this interest on my savings. I don’t know the exact size of my grace period - my full balance is automatically deducted from my checking every month. When I get the bill, I look at the due date to know when they are going to deduct my balance. It is usually the 28th or the 29th.

Given that I currently have about 50% of my take home (after max 401K contribution) left every month, I don’t have a formal budget, and I don’t worry much about small money leaks. I do have above-average salary and below-average expenses, though. Also being single, it is much easier to keep it all in my head. I imagine that if I had ever gotten a credit card bill I couldn’t easily pay in full, I’d start keeping budget. But this has never happened. When I had a mortgage, my saving rate was much less, although in addition to 401K, it probably came close to 20% if I include ESPP. I’ve never thought of myself as frugal, but though many years ago when I just started working and had a roommate (coming from Illinois to NY State rents seemed too high), she told me “you are so cheap”. I’ve never figured out why she thought so because I’ve never refused to buy anything we needed for the apartment.

I also don’t divide my savings into “emergency” and non-emergency. In case of an emergency all of my non-retirement savings is a fair game, at least the part I have in a regular savings and CDs that mature within a year. Granted I probably have more savings than an average American.

8 Barbara Stanny 09.20.07 at 1:57 pm

I thought your list was great, golbguru. But I would add something:

“I am confident that I am earning what I’m worth.” (if not, I will ask for a raise this month.)

Making sure you’re well compensated is an important part of being financially responsible.

Barbara Stanny, author of “Overcoming Underearning”

http://www.barbarastanny.com

9 Pam 09.20.07 at 3:48 pm

It really isn’t necessary to know what your credit score is.

And you can check your credit report for free once a year at annualcreditreport.com. More than that is overkill. If you must look more often, check all three, one at a time, at three month intervals.

The credit monitoring services are doing a great job of advertising/brainwashing their services!

10 Pam 09.20.07 at 3:48 pm

Oops. I meant at four month intervals.

11 golbguru 09.20.07 at 7:09 pm

Pam, good point.

I thought over it and yeah, it’s not really “necessary” to know your credit score at all times.

However, it really depends on how often you apply for credit (and how important that credit is to you). It’s a good idea to be on top of things if you are looking for some kind of a loan, applying for a credit card (for any reason), or applying for any other credit in which your interest rate will be dependent on your credit score (or the approval or denial will be based on credit score). Also, it hardly takes a few bucks, so it’s shouldn’t really burn a hole in anyone’s pocket.

Having said that, I agree that if you rarely apply for credit, there isn’t any reason to be aware of your credit score at all times - just make sure you are aware of your score well BEFORE you apply for credit in future (allowing for enough time to take corrective actions if things appear broken).

As for credit report is concerned, of course you should get it for free through annualcreditreport.com. Like you did it, I really meant 4 months (instead of the 3 that appears above). :) But, when I noticed it, it was too late to change. That’s OK.. this poll was just meant to serve as a gentle “reminder” - it’s not a strict guideline of any sort. So, as long as it kicks some thought wheels in action, its purpose will be served.

I recommend checking credit report at regular intervals (by spacing the free credit reports over spans of 4 months each) just to make sure that your identity is not being misused. Personally, I am a little uncomfortable staying out of touch for one full year. :)

In summary, I think it’s enough to make sure that your credit history (score and report) is in order BEFORE you apply for credit - with sufficient time to take corrective actions if necessary.

12 justin 09.20.07 at 7:35 pm

I don’t know the APRs on my credit cards because I pay in full every month.

13 Pam 09.21.07 at 10:36 am

IMHO regarding credit, rather than worrying about your score, it’s better to make sure to:
1. Pay everything on time
2. Keep revolving balances low (or pay them off each month
3. Don’t apply for credit except when necessary

Your credit score will reflect the responsible use of credit.

I check my credit report to make sure it accurately reflects my credit usage.

Bankrate has an excellent FREE calculator to estimate your credit score. Free fits my budget best. :)

14 Cancun Mexico 06.18.12 at 6:49 am

Its interesting to see how many people voted for each one. I guess we all have somethings we need to work on.

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