“I recently graduated college, and have been living at my parents’ house for the past few months while I get settled into my new job. I am hoping to move out into my own apartment soon, but am worried that I can’t afford it. How do I know what I can afford to spend monthly on rent and bills?”
-Victoria, New York
Living at home — as so many recent grads are these days — gives you a great opportunity to build a savings cushion. But you’re right, before you move into your own place, you need to understand what it will actually cost you to live there.
Generally, I like a budget to break down like this:
35% Housing — this is not just the rent or the mortgage, More…
Today on Money 911, we tackled your most pressing financial questions. How can you get yourself off of a mortgage? What is the best way to ease your student loan payments? How does a Roth IRA work? If you missed the segment, watch the video for the answers to these questions and more.
HOW: While most five-year-olds dream of being astronauts or ballerinas, Rachel Kruse, president of Organicville Foods, dreamed of bottling salad dressings. (Really!) A third-generation vegetarian and entrepreneur, Kruse knew that her grandmother’s homemade, vegan dressings were delicious. She also knew she couldn’t buy anything like them. “When you go to the grocery store, you can buy lots of organic vegetables to make nutritious salads, but when you get to the dressings aisle, you’re out of luck,” Kruse says. “Most salad dressings are made with eggs, and when you can find a vegan dressing, it isn’t organic, or it’s made with low quality oils and lots of added sugars, which defeats the purpose of buying the organic produce.” More…
It’s a very merry Christmas for Courtney Story of Pennsylvania, the winner of the Franklin Covey Jean Chatzky Collection binder! This week, to ring in the new year, we’re giving away another prize — the Jean Chatzky wallet! It’s perfect for those of us with money-related resolutions to keep. Click here to enter by typing “WALLET” in the message box. Then, take a look at the other Jean Chatzky products at Franklin Covey!
“I received a letter about my APR going up from 14.72% to 18.99% on my credit card, and was given the option to ‘opt out’ of the rate increase. I understand that by opting out, the APR will remain the same until the card expiration date, and then at that time the account will close. I seldom use the card, and have been paying down the balance on a monthly basis with a bit over the minimum payment. Does closing an account at a ‘customer’s request’ hurt a credit score? Currently, my credit score is 775, and I don’t want to do anything to hurt that.”
-Kerry, New Jersey
Your credit score is partially calculated using something called your debt-to-credit ratio (also known as your utilization ratio) – it accounts for about a third of your credit score. When you close an account, you lower the amount of credit you have available to you. That will generally lower your credit score — the question is by how much. Your ratio works to your best advantage when you’re using only 1/3 or less of your available credit.
So, to answer your question, think of your available credit as a pie. Is this card a big slice of the credit you have available, or is it a small, “I’ll pass on the whipped cream” sliver? For example, if you have $10,000 in available credit, and this card equals $8,000 of that, that’s a big piece of pie – you may want to re-think letting that account close. But if it’s only a small piece of your available credit, it may be worthwhile to pay off the card at the lower rate by the time it expires, and take the inevitable (but small) hit on your score. More…
“I recently graduated college, and have been living at my parents’ house for the past few months while I get settled into my new job. I am hoping to move out into my own apartment soon, but am worried that I can’t afford it. How do I know what I can afford to spend monthly on rent and bills?”
WHO: Rachel Kruse
“I received a letter about my APR going up from 14.72% to 18.99% on my credit card, and was given the option to ‘opt out’ of the rate increase. I understand that by opting out, the APR will remain the same until the card expiration date, and then at that time the account will close. I seldom use the card, and have been paying down the balance on a monthly basis with a bit over the minimum payment. Does closing an account at a ‘customer’s request’ hurt a credit score? Currently, my credit score is 775, and I don’t want to do anything to hurt that.” 
