Colorado Money Basics

Keeping track of your money is easier said than done. Money management requires time and attention and can be difficult if you have never learned money basics and how to track where your money goes. So learn how to keep your finances under control now from Colorado Home Loan.org.

If you have a job or get an allowance, start thinking about money basics - not how to spend it, but how to manage it. Learning how to manage your money will save headaches and financial crises down the road. Here are some of the money basics that will get you on your way to financial control:

Interest - When you borrow money from the bank for a Colorado home loan or Colorado mortgage, you pay interest on the money that you are given that is not yours. When you save money at the bank, interest is the money the bank pays your to put your money in a savings account. The bank pays you because it is 'borrowing' or using your money to lend it or give home loans to other borrowers. The U.S. Government ensures that the bank has enough to pay you back when needed. The more money that you add to your savings account and the longer you keep it in there, the more money the bank will pay you. The bank multiplies the amount in the account by the interest rate. The higher the rate, the more money the bank pays. Receiving interest from the bank is a good reason to put it into a savings account.

Compound Interest - This is when the bank pays interest on certain types of accounts for the money put in at the beginning and on the money the bank has already paid you in interest. The process continues each time the bank 'compounds' the interest which could be daily, weekly or monthly. It gives your more money faster.

This can be a problem when you borrow money for a Colorado home loan or mortgage, especially if you are borrowing with a credit card. Each time you use a credit card, you are 'borrowing' money from the bank, that they are also charging you interest that you must pay each month. If you do not pay on time, then you are also charged additional fees along with the balance.

The younger you are and the less credit you have used, the higher the interest rates and fees because you do not have a track record for paying bills. The interest could be 20% or more. When all of the interest and fees are compounded, the balance goes up very quickly. There is a minimum that you are asked to pay each month, and unless you pay each month, the balance will move up very quickly. Credit card companies are attracting the younger generation. This generation is often blinded by the enticing offers and they do not understand how costly it can be. Beware at the age of 18, offers for credit cards will begin to come in, and you must be prepared. If the offer sounds too good to be true, it probably is. Read the fine print. You can learn more about your current living circumstances under the Your Situation tab under the the 'Help Center' section

Debit Cards - Money in basic checking accounts do not earn interest and some banks offer special student accounts that do not charge fees. With the account, you receive a debit or ATM card that allows you take money out of you checking account at any time from an ATM. If it is a debit card, it may act as a credit card in stores to make purchases, but there is no interest involved. When a purchase is made, the money comes directly out of your checking account. Debit cards may be free, but they can be hard to manage and expensive in not watched carefully for over withdrawing your account. When you use the card, you must have money in your account at the very moment you use it. The bank may charge your $40 or more for your overdraws.

As you use the ATM machines to get out money, pay attention to which one you use because you may have to pay a fee to the company or bank that owns that specific ATM. The ATM can charge you $2 or more for any withdraw that if it is not from your specific bank. Finding your bank's ATMs will save you from unnecessary fees.

Using either ATM or debit cards, make sure that you know whether your bank charges "per transaction" fees which means that they charge you money each time you use your card, even if it is your bank's ATM. This fee may also apply if you are using a debit card in a store, be sure to ask if this applies when you get the card. Also, you maybe given a fee if you have to use your PIN number to pay. You may prefer to use it like a credit card and sign for the purchase or you will be given a fee. If you may receive money back if you use your PIN but you will most likely be charged a transaction fee.

Other risks with debit cards can include the "holding" or "blocking" of certain amounts to make sure you can pay for a certain purchase, if stolen it is easy for someone to clean out your checking account, or if you use it on the Internet, you risk losing protection from the Colorado bank if the item is damaged or lost.

Checks - Using checks is another possible way to pay for something in a Colorado store. Because checks take longer to process, you can sometimes write a check today knowing the money will be there tomorrow, but make sure you are careful in managing this. You need to carefully track you spending to ensure that you have enough in your Colorado checking account to cover all checks written on a specific date. If a bank catches that there is not enough in your account to cover it, they may charge you a large overdraft fee as well as charges from the business you owe.

Having a good understanding of money basics will keep you out of sticky situations such as bankruptcy and foreclosure. Continue searching Colorado Home Loan.org for more information on money basics and how to manage your personal finances. 

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