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5 Things That Do Not Affect Your Credit Score

Your credit score affects many parts of your life, from the interest rate you pay on your mortgage to your ability to get a job or rent an apartment.  But there is an awful lot of confusion over which factors influence your credit score and which do not.

Did you know that the five factors listed below have absolutely no affect at all on your score?

Your Savings

Most people think that having a big chunk of money saved up will give their credit score a boost but that just isn’t the case.  Having a healthy emergency fund and savings account is certainly a smart financial move, but your credit score is meant to judge the likelihood of repaying your debts on time, not your ability to save. A million dollars in the bank won’t help your score if you miss a few credit card payments.

Your Income

No matter how high or low your salary is, it has absolutely no impact on your credit score.  Someone with a very low salary could have a higher credit score than someone earning much more.  Of course a lower salary could make it more difficult for you to pay your bills on time, and that would definitely have an impact on your credit score.  But don’t expect a new promotion and raise to have any effect on your FICO score.

Your Age

There can be a correlation between your age and your credit score but that does not mean that one actually causes the other.  While your age is not a factor in your credit score calculation, it can have an indirect effect on your score.  An older person will generally have a longer credit history and would have had more time to recover from any financial missteps they made when they were younger.  But being young does not automatically doom you to a low score.

Your Employment Status

If you are in the market for a loan, potential lenders will definitely look at your employment history when considering your application.  They will want to see that you’re responsible and have a stable job so you can pay them back.  However, your employment status does not affect your credit score.  In fact, you can be unemployed and still have a good credit score as long as you continue making payments on time.  Obviously your credit score will suffer if your lack of unemployment keeps you from paying your bills.

Your Marital Status

If you have a lousy credit score and you think you can give it a quick boost by marrying someone more credit-savvy than yourself, think again.  There is no such thing as a shared credit score for married couples.  You each keep your own individual credit file and getting married won’t wash away any money mistakes from your past.  Of course, if you take out a loan with your spouse, payment history will then be recorded on both of your credit reports.  Keep making those payments on time and you’ll both reap the benefits of a higher score.

Mike Collins is a freelance writer and blogger who specializes in personal finance topics. He’s also a husband and father of three children who keep him very busy.  You can read more about his quest to achieve financial freedom for his family at WealthyTurtle.com

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DIY Projects for 2014

When you own a home you need to be prepared to tackle some home improvement jobs yourself.  If you’re going to call in a professional every time you need a drain snaked or a light switch replaced then you’re going to be spending a fortune on home repairs.  Wouldn’t you rather be investing that money or doing something fun with it?

Since I became a homeowner I’ve learned to appreciate the power of doing things for myself.  Not only do I save money but I also get to feel a sense of accomplishment for a job well done.  I try to do at least a few DIY jobs each year.  Here are the projects I have lined up for 2014:

Painting

Last year I painted two bedrooms, my home office and the playroom.  This year I’m planning to do the master bedroom, living room, and hallway.  The ceilings are in pretty good shape so I might try and get away with saving myself some trouble and just painting the walls.  Either way, doing this project myself will save hundreds of dollars in labor costs.  Painting does take a bit of skill to do right, but I’ve had plenty of experience over the years so I wouldn’t even consider hiring a painter.

Removing Wallpaper in Bathrooms

We have two bathrooms with wallpaper that needs to come down. We don’t really like the patterns and there are some tears and rips that are very obvious.  I’ve removed wallpaper before and the rooms aren’t big so it shouldn’t be too big of a project.  I’ll also have to spackle any problem areas before I can paint.  How much work that will be depends on the condition of the walls once the paper is removed.

Replace the Kitchen Faucet

There’s nothing really wrong with the kitchen faucet other than a slight drip, but I want to install a nicer one with a higher spout.  Our current faucet has a lower spout that often gets in the way when you’re washing dishes and it gets on my nerves.

Rip Out Bushes in Front Yard

We live on a corner property and there are three gigantic boxwood hedges that have taken over a chunk of the yard.  I’ve used hedge trimmers to cut them down to size but they grow back quickly.  They’re the first thing you see when you pull up to the house and I think they’re an eyesore so I’d like to rip them out.  I had a landscaper take a look and he said they would charge $300 to rip them out, but I think I could have a couple buddies come over and give me a hand digging them out for the price of some pizza and beer.  Of course I’ll need to have a few yards of dirt delivered to fill in the holes left behind.

Doing all these jobs by myself will probably save me a couple thousand dollars this year.  Don’t be afraid to roll up your sleeves and do some home improvement jobs yourself. Of course you also need to keep your own limitations in mind and don’t bite off a job that’s too big for you.  If you do that you‘ll end up spending even more to have a pro come in and fix your mistakes.

Mike Collins is a freelance writer and blogger who specializes in personal finance topics. He’s also a husband and father of three children who keep him very busy.  You can read more about his quest to achieve financial freedom for his family at WealthyTurtle.com

 

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Planning Our Next Summer Vacation

Mr. BFS and I usually take about a week off in the summer to travel.  Usually, it’s either to take a cruise or to fly to Las Vegas.  This summer, we may have to get creative since I am spending $1500 to go to London to visit my uncle in mid-summer too.

Vacation Options

  • 5 Day Cruise – I generally can get us great prices right before school lets out or right after it starts again.  Last year, our 5 day cruise cost us less than $1500 overall including the tickets and money spent on the cruise itself.  We didn’t do any planned excursions though, and this time it may be an extra $150 since I would want to at least snorkel.
  • Las Vegas – I don’t think we’d be able to do better than $1500-$2000 overall.  We do gamble, in person instead of online like at www.888casino.com/casino-games/, but the majority of our budget is spent on plane tickets, the hotel, food, and the events.  We love to eat and see shows in Vegas.
  • Bed and Breakfast in our state – We could have a long weekend for about $500, but Mr. BFS may get bored.  I don’t mind some peaceful walks and hanging out, but he enjoys planned activities more.
  • Long weekend to San Antonio, Austin, or New Orleans – We’d be looking at $500-$1000, but we’d definitely have fun.  They all have cool places to see and eat.  And we haven’t been to New Orleans in 10 years!
  • Staycation – we could just splurge on some nice food and stay in for the summer to save money, but we’d still be looking at $150-$200 and we may regret not getting away together like usual.

So, we have options, but we may not know what we’re going to do until we do it.  How about you, any summer vacation plans?  Do you have traditions or normal travel plans?

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How Bloggers Make Money

If you’re looking for a reliable side gig to help supplement your income and have a while to build something up, blogging may be just the thing you’re looking for.  Blogging is a business opportunity that comes with extremely low startup costs, a flexible schedule, and the chance to earn a living while sitting at home in your pajamas.

It may seem hard to believe but many bloggers are able to earn a full time living online.  How do they do it?

While there are many different ways to make money online, most successful bloggers use a combination of the methods listed below.

Google AdSense. This method requires the least amount of work.  All you have to do is create an AdSense publishers account and paste a snippet of code on each web page you want ads to appear.  Google automatically reads the content of your page and displays relevant ads.  If a visitor clicks on one of the ads you make money (anywhere from a few pennies to several dollars per click).

How much you earn depends on the content you write about, the amount of traffic your site gets, and the percentage of visitors that click on your ads.  Generally speaking, you need a good amount of traffic to make significant money this way.

Affiliate Links.  Many merchants offer a commission to affiliate sites that help generate sales. For example, let’s say you own a site about fitness.  You review various exercise equipment and link to the manufacturer’s website through an affiliate link.  If someone clicks on your link and then makes a purchase you earn a commission on the sale.  This can be a very profitable method but it takes some practice and requires targeted traffic.

Private Advertising.  An extremely profitable way to make money with a blog is to offer private advertising such as sidebar ads or sponsored posts.  But be aware that selling links that pass Page Rank goes against Google’s guidelines and it could negatively affect your search engine rankings.  You could also lose your site’s PR which means most advertisers will steer clear of you.  Use this method at your own risk.

Create a Product.  This is probably the most difficult method simply because it takes a lot of time and hard work (unless you outsource it all) to create a product worth selling.  You can sell a physical product or a digital one such as an ebook or training course.  The best part is that you get to keep all the profits instead of only getting a small commission as an affiliate.  Of course, you could always build your own army of affiliates to help promote and sell your product to the masses!

Speaking/Appearance Fees.  Most bloggers will never reach the popularity level required to take advantage of this method but I figured I would include it anyway.  If your blogs becomes very well-known and respected you could get paid to appear at conferences or business events.

Classic Ways.  Even bloggers know about side hustles, getting roommates, finding quotes on getting lump sums from a current structured settlement from a website or two, selling their stuff, and even cutting expenses.

What do you think about blogging for a living?  Which money-making method do you think is best?

Mike Collins is a freelance writer and blogger who specializes in personal finance topics. He’s also a husband and father of three children who keep him very busy.  You can read more about his quest to achieve finance freedom for his family at WealthyTurtle.com

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New Year’s Resolutions That Will Save You Money

Now is the time when people start looking back at the past year and thinking about some of the things they’d like to change going forward.  The start of a new year is the perfect time to wipe the slate clean and start being the person you really want to be.

Most people make New Year’s resolutions that are somehow related to health.  For example, you might resolve to exercise more regularly or lose a certain amount of weight.  That’s not too surprising since the holiday season is often a time for overindulging in food and drink.

While trying to improve your health is certainly a good idea, don’t forget to look at your money habits and find ways to improve your financial situation in 2014.

Here are a few suggestions to get your juices flowing:

Start an Emergency Fund

When I was growing up my family always lived paycheck to paycheck and there was never any kind of emergency fund to fall back on.  When the washing machine broke or we had unexpected medical expenses, my dad did what many other people do: he charged it.

Unfortunately that is a recipe for disaster and if you find yourself in the same situation as my parents did it’s time to start building an emergency fund.  It’s ok to start small and set a few bucks aside to start but your goal should be to save up enough to cover a few months of expenses in case you run into a financial emergency.

Set Up an Automatic Savings Plan

Even if you know you should be saving money, getting the ball rolling and staying with it can be a challenge.  This is where automation can be a real ally.

You can plan to wait until the end of the month and manually deposit $100 into a savings account, but life has a way of getting in the way of your best intentions. Something always comes up and you end up not having the extra money to save.

You can keep that from happening by setting up an automatic direct deposit into a savings account so the money goes right into your savings before you even have a chance to spend it.  You can start with a small amount that you won’t even miss and then gradual increase it so your savings will really have a chance to grow.

Quit Smoking

If you are currently living paycheck to paycheck you might have a hard time finding any money at all to save.  In this case you need to reevaluate your spending and see where you can trim some fat.

If you smoke, you can easily save a small fortune by kicking the habit.  The average price of cigarettes varies by state, from “only” $4.96 per pack in Kentucky to a ridiculous $14.50 in New York.

Let’s say you’re on the lower end of the spectrum and you pay $6 per pack of cigarettes and you smoke a pack a day.  At the end of the year you would have spent $2,190 on cigarettes!

Just think of all the different ways you could have spent that money!

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Inexpensive Valentine’s Day Gifts

Remember when Valentine’s Day was all about passing around Hello Kitty or Transformers cards to your classmates?  Those innocent days were a long time ago.  In today’s world, Valentine’s Day has grown into a huge holiday that involves a ton of spending to prove how much you love your significant other.

But you don’t have to spend a fortune to demonstrate your love.  Instead, choose one of these inexpensive Valentine’s Day gifts.  They may seem a little corny, but being in love isn’t supposed to be all about how much you spend. Sometimes it’s the simple expressions of love that show how much you care.

Coupon Books

I remember making one of these for my mom when I was little.  She loved it because she could cash in coupons that would require me to take out the garbage, wash the dishes, or take the dog for a walk.

You can do the same for your spouse requiring you to do chores around the house, or you can make them into “love coupons” good for a hug, kiss, or any other fun act that your imagination can come up with.

Time Alone

This gift is especially valuable to couples with young children.  Between school, work, sports, clubs, and other extracurricular activities it can be extremely difficult for parents to find any time for themselves.

Take the kids out by yourself for a few hours and let your spouse get some much-needed time to relax and unwind.  They can use that time to do whatever they enjoy…reading a good book, catching up on their soaps, taking a nap, etc.  Then meet up later for some couples time together.

A Homemade Dinner

This one is great for guys who don’t normally cook.  A homemade meal shows that you’re willing to put in some extra effort to make her feel special.  Just don’t overshoot and bite off more than you can chew.  Find a recipe for a simple meal like grilled pizza or spaghetti and meatballs and don’t forget a bottle of wine.  You’ll spend a lot less than you would at a restaurant and she’ll appreciate it more too.

Love Notes

Remember when you first started dating and you’d leave all sorts of cute notes, drawings, and poems for your significant other to find?  As time went by you stopped doing romantic things like that, so why not restart the habit for Valentine’s Day?

It doesn’t have to be anything fancy.  Just take some Post It notes and jot down little notes like “I love you” or “Your smile lights up my day” and hide them all over the place so she finds them one at a time throughout the day.  Each time she finds one she’ll think of you.

Flowers (Other Than Roses)

Every Valentine’s Day the price of roses suddenly goes through the roof, so why not avoid the added expense and pick up a small bouquet of some less expensive but still beautiful flowers?  Another tip…if you’re having flowers delivered, send them a few days early.  Florists are so busy on V-day itself that they charge a premium for delivery.  Get them delivered a day or two early and you’ll pay the regular delivery fee.

How do you celebrate Valentine’s Day?  Are you expecting something special this year?

Mike Collins is a freelance writer and blogger who specializes in personal finance topics. He’s also a husband and father of three children who keep him very busy.  You can read more about his quest to achieve finance freedom for his family at WealthyTurtle.com

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3 Simple Financial Concepts People Just Don’t Get

Personal finance isn’t really all that complicated.  If you want to stay in control of your finances and not let your money get the better of you, there are only a few basic concepts that you need to understand.

Unfortunately many of these lessons are never taught in school so some people just never have an opportunity to learn them.  Sure, you could say that sort of thing should be learned in the home.  But if one generation misunderstands something they are likely to continue passing down misinformation to their children and grandchildren.

The cycle will go on and on until someone in the family finally learns basic financial lessons such as:

The Difference Between Saving and Investing

Saving is the process of putting money aside somewhere safe and accessible where it will be available when you need it in the near future.  Typically, you will have several things to save for at the same time.

For example, you might have some money set aside in an emergency fund in case of an unexpected illness or job loss.  At the same time you could be saving money to buy a new car, go away on a family vacation, or something else that means a lot to you.

The most important thing about your savings is that it is safe.  You want it in a CD or an online savings account where you can rest assured it won’t lose value.  If you’re saving for a down payment on a house, you wouldn’t want a sudden stock market dip to cost you the home of your dreams.

On the other hand, when you invest money you’re less concerned with safety and more concerned with growth.  You want that money to work for you and grow as much as possible.

Your retirement savings are an example of investing.  You sock a little money from each paycheck into your 401(k) and invest it into mutual funds in the hopes that it will grow well beyond the amount you initially deposited.  If you simply “saved” that money in a bank account or under your mattress, you wouldn’t even be able to keep up with inflation.

Net Income vs Gross Income

When you’re young and just starting out in your career you might be surprised at how small your first paycheck is.  After all, you know what your starting salary is and you divided that by 52 to determine what your weekly paycheck would be.  How come your actual check is so much less?

The answer is simply the difference between gross income and net income.  Gross income is your earnings before any taxes and other deductions are taken out.  If your salary is $26,000 a year, your gross weekly earnings equal $500.

But you won’t actually get paid that much.  Your employer is required to withhold taxes from your paycheck and you might also have deductions for health insurance, life insurance, and other expenses too.  The final amount you receive in your check is called your net income.

Tax Withholding

I used to work part-time at night in a retail store and most of the people I worked with were high school kids who had never worked before.  They had no understanding of taxes, how they’re calculated, or how they come out of your paycheck.

Think of tax-withholding as a way to pre-pay your tax obligation each year.  The amount from your check is an estimate based on your earnings. Depending on your individual circumstances, other earnings, deductions, and tax credits you may qualify for, you may end up underpaying or overpaying.

You don’t want to be in the situation of owing money at the end of the year, and you also don’t want to give the government a tax free loan all year by overpaying your taxes.  If that happens, you should ask your employer to adjust your tax withholding.

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Tips for Paying Off Your Mortgage Early

We just bought our house a little over a year ago and since we took out a thirty year mortgage to pay for it I still have about 29 years of payments remaining.  I’ll be 65 then and I’d rather not have to worry about making a monthly mortgage payment when we’re in our sixties.

We don’t want to be making mortgage payments in 2042 so one of our financial goals is to pay off the mortgage early.  If you’re thinking of doing the same, there are several different methods you can use to pay the balance down quicker.

Round Up

Putting a little extra towards your mortgage each month is a painless way to pay down the balance ahead of schedule.  Even small amounts can make a big difference over time but the key is to make sure the overage is applied to principal. If you don’t provide specific instructions your lender might apply it to future interest or to your escrow account.

I’ll use my own mortgage to give you an idea of how much you can save by rounding up.  Our monthly payment is $1,039.34.  That’s just the mortgage; I don’t like escrow so I pay the property taxes and home insurance myself.

I ran some numbers through the amortization calculator and found that if I round the payment up to $1,050 we’ll have the loan paid off six month ahead of schedule and save almost $3,000 in interest.

If we go a little further and pay $1,100 a month we’ll shave off almost three years of payments and save over $14,000 in interest!

Refinance

With interest rates still near historical lows, it’s not too late to save some money by refinancing.  The key is to not pull out any additional money because that will just put you further into debt.  Refinance for the same amount but at a lower interest rate so your monthly payments will decrease and you’ll pay much less in interest.

If you can afford it, you might want to consider a 15 year mortgage.  Interest rates are even lower than a 30 year mortgage, though the payments will be higher because you’re paying them off over a shorter period of time.

Of course, you could always just calculate what your payment would be with a 15 year mortgage and add the extra money to your payment each month.  The interest rate would still be a bit higher but it would give you some wiggle room if you had a tight month or two and couldn’t afford the higher amount.

BiWeekly Mortage

Let’s say your mortgage payment is $800 a month.  Over twelve months you’ll pay a total of $9,600.  If you switch to a biweekly mortgage you’ll make 26 payments a year at $400 each.  At the end of the year you would have paid $10,400, effectively making one additional payment.

Biweekly mortgages can save you thousands of dollars a year over the course of the loan, but keep in mind many lenders will charge a setup or account maintenance fee if you go this option.  You could easily do it all on your own by calculating how much extra you should pay each month and simply sending in along with your regular payment.

Extra Payments

Another option is to periodically send in additional money and have it applied towards principal.  If you get a big tax return or a yearly bonus at work, just take a portion of it and send it in to your mortgage lender.  Depending on the size of your extra principal payment, you could have your loan paid off years ahead of schedule.

Mike Collins is a freelance writer and blogger who specializes in personal finance topics. He’s also a husband and father of three children who keep him very busy.  You can read more about his quest to achieve finance freedom for his family at WealthyTurtle.com

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5 Ways to Save Money on Baby Stuff

Welcoming a new baby into your family is one of the most joyous and exciting experiences you can imagine.  It’s also one of the most expensive.

Cribs, car seats, high chairs, swings, strollers…there’s so many decisions to make and it all costs so much money.

As a father of three I’ve been through it all and I’ve got some great tips to help you save money on all the baby stuff you’re going to need.

Register at Babies”R”Us

Even if you’re not going to have a baby shower, you should still take the time to set up a baby registry.  Not only will you get on their mailing list so you can receive lots of coupons to use in stores, you’ll also be eligible for the Registry Completion Discount Program.

Just add whatever baby items you’re planning on buying to the registry and about six to eight weeks before your due date you’ll receive a certificate to save 10 percent on all the unbought items on your registry.  There are no restrictions or exclusions so you can save good money on items you were going to buy anyway.

Formula Samples

If you use baby formula, you’ll be shocked when you realize how much it costs and how quickly your little one goes through it.  You should jump at every opportunity you can find to save money on formula.

The hospital where you deliver will gladly give you some free samples to take home with you, and most pediatricians will have plenty of samples to offer if you ask.  But you can also go directly to the formula companies for freebies.

For each of our kids, we went to the baby formula websites and signed up for their newsletters.  Not only did we get free cans of formula in the mail, we also got tons of coupons to use at the store.  Some coupons were for only $1 off, but many were $10 off.  Great deal!

Shop at Consignment Shops

When I see new parents spending a fortune on clothes for their kids I just shake my head.  Kids grow out of clothes so quickly that it just doesn’t make sense to spend a lot of money on them.  Why spend $20 for a designer t-shirt that won’t even fit them in three months?

Instead of throwing your money down the drain, find a local consignment shop that carries baby clothes.  You’ll be able to score name brand merchandise at rock-bottom prices, and because the clothes probably received very little use before they were grown out of they should be in nearly new condition.

Stick to the Essentials

Walk up and down the baby aisles of any retailer and you’ll quickly become overwhelmed.  There’s just so much stuff to choose from it can be hard to figure out what you need and what you don’t.

Obviously you’ll need plenty of diapers, wipes, formula, and onesies.  Make sure you stock up on those items because you’ll go through them quickly.

But other items you can skip entirely.  Baby wipe warmers, pee pee teepees, and baby knee pads are all examples of items dreamed up by the baby industry to make money off of new parents who don’t know any better.

Stock Up on Sale Items

As I mentioned above, your little one will go through diapers and formula faster than you can imagine.  A newborn can easily use up to 10 or 12 diapers a day!  You definitely want to keep a sizable supply on hand so you don’t end up making a late-night trip to the store.

Of course the best time to stock up is when they’re on sale.  Combine sale prices with coupons and you can find some killer deals.  Those formula coupons you received in the mail will certainly come in handy.

One final money-saving tip:  send an email to diaper companies like Pampers and Huggies and tell them you’re a fan of their product but you’re on a tight budget and can’t always afford them.  When we emailed them they happily sent us plenty of manufacturer coupons, including some for totally free products!

Mike Collins is a freelance writer and blogger who specializes in personal finance topics. He’s also a husband and father of three children who keep him very busy.  You can read more about his quest to achieve finance freedom for his family at WealthyTurtle.com

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Common Reasons People Give for Not Investing

Most people know that if they want to have enough money to support themselves in retirement they need to start saving and investing early.  Earlier is better as the magic of compound interest can help turn even small sums into a sizable fortune.

Yet many people still aren’t putting away anywhere near enough to reach their goals, and that’s going to create a huge problem when they reach retirement age and realize they’ve come up short.

Let’s take a look at three of the most common reasons people give for not investing.  They might just sound a little familiar to you.

They Have No Money to Invest

I can sympathize with this line of thinking as I used to feel the same all the time.  When I got my first job out of college I wasn’t making much money at all and there was rarely anything left after I paid all of my bills.  I just kept telling myself that I would make up for it later when I made more money.

Flash forward a few years and I was definitely making more money but now I had more bills to pay too.  Before you know it I was married with a mortgage and a kid on the way and I had hardly any savings at all.

That’s when I realized I needed to start following the mantra of paying yourself first.  Rather than paying my bills first and saving whatever was left (which was often nothing) I set up automatic deductions into an online savings account so I knew I’d be forced to save.

Paying myself first made me shift my priorities and reevaluate my spending.  I did away with some unnecessary expenses and managed to add to my savings every month and still pay all of my bills.

They’re Afraid They’ll Lose All Their Money

This wasn’t as common a fear when the stock market was booming in the 1990’s, but these days the question marks surrounding the economy have forced us all to think twice about our investments. 

Can you lose money when investing in stocks, bonds, or real estate?  Of course, there are no guarantees.  But keeping every penny you save in a savings account or under your mattress is no solution. You’re better off counting cards in a casino than doing nothing.

Remember, if your savings don’t grow at least enough to stave off inflation you’ll still be losing ground.  The tidy sum you have saved up now won’t have nearly the same buying power a few decades from now.

They Don’t Know Where to Begin

Investing seems very complicated and it’s full of confusing concepts and indecipherable acronyms.  But you don’t need to know everything to get started.  Heck, you might even enjoy investing when you get the hang of it. Just pick a cost-effective index fund for starters and set up automatic deposits each month.  That one step alone will push you ahead of the majority of people who do nothing.

And who said you can’t learn more about investing?  Your local library has plenty of books on the subjects that you can borrow for free.  You just need to take the time to sit down and read them.

Mike Collins is a freelance writer and blogger who specializes in personal finance topics. He’s also a husband and father of three children who keep him very busy.  You can read more about his quest to achieve finance freedom for his family at WealthyTurtle.com

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