The Magic of Compound Interest (And Why You Should Save for Retirement While in College)

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If I could go back in time to do college over again, I would have started saving for retirement.

You see, I never really thought about compound interest and how by investing early in life I could multiply my money faster.

I also didnt realize that by simply investing a small sum each month could help me on my path to saving a million dollars.

Investor.gov has a great compound interest calculator to help you discover how much you could save based on different monthly payments, interest rates, and years to grow. In the example below, I show that by initially investing $1,000 and adding an additional $200 per month, you could reap over $1 million dollars at a 7% interest rate after 50 years. I know 50 years is a long time, but the point is for you to see how investing a small sum over a long period of time can help you multiply your money.

However if you waited to save until later you would need to save about $900 per month for 30 years to earn $1M at the same 7% interest rate. Check out the drastic difference in monthly payments just because you waited:

The earlier you start investing, the more your money will multiply. Conversely, the longer you wait, the more money youre losing.

So start planning a retirement fund today.

Even if you cant afford $200 a month thats okay. Just commit to investing a certain sum of money every month and watch your money grow.

As you get older and earn more money you can save even more in your retirement funds.

Just focus on starting to plan for retirement now. Youll be glad you did.

If you have time, check out this awesome video by Jim Wang (Bargaineering.com) as he talks about the true power of compounding interest:

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6 Reasons Why You Shouldnt Get a Credit Card in College

Credit cards can be useful in college but not everyone should have one.

You see, some college students use credit cards as a way to pay for everything they want and get themselves into major credit card debt. Right now, the average undergrad carries $3,173 in credit card debt and the average senior will graduate with about $4,100 in credit card debt (Credit.com).

Here are 6 signs you shouldnt get a credit card while in college:

1. Do not get a credit card if you cant control your spending.
If youre not saving any money right now, a credit card can be very dangerous because it opens you up to a line of credit you might not be able to pay back quickly. Ask someone you trust (and who will be honest with you) if he or she thinks you would handle a credit card wisely. If youre not financially responsible, dont get a credit card. Youll just regret it.

2. Do not get a credit card if you think paying the minimum balance due is acceptable.
According to Sallie Mae, only 17% of college students are paying off their credit card bills in full each month. We all fall on hard times when were in college. There was a time in college when I didnt have money for food and necessities and had to rely on my credit card. That was a difficult time for me financially, but knew that paying the minimum balance was dangerous. I ended up taking a side job to get my debt paid off. If youre using a credit card, plan on paying the debt in full every month.

3. Do not get a credit card if youre not going to read through the terms and conditions.
Never sign-up for a credit card without reading through the terms and conditions. I know its boring and looks like legalese but read through the sections dealing with interest rates and penalties. Know in advance what penalties exist and when debts are due. Study it and call with any questions before signing-up. Spend the time to know what youre getting yourself into.

4. Do not get a credit card if youre planning to use it to pull cash out.
Credit card companies love when people use credit cards to pull cash out of ATMs. You see, there are often penalties attached for pulling out cash and they assign strict deadlines on when that money needs to be returned. And interest rates on cash out are brutal.

5. Do not get a credit card if youre planning on paying for things you dont need with money you dont have.
Getting a credit card doesnt mean you have a license to go buy all the things you want now. Thats not what a credit card is for. Treat a credit card like cash. If you dont have money for an item that you dont need, dont use a credit card. Look, most of us have student loans to pay for college. Dont add on additional debt for yourself with credit cards.

6. Do not get a credit card without understanding the impact it has on your credit score.
When you take on a credit card, youre immediately impacting your credit score whether for good or bad. Understand that revolving credit card debt can hurt your credit score if your utilization rate is over 30%. This means that if youre holding a balance of $400 on your card, and your credit limit is $1,000 youve reached the 40% mark and hurting your credit score.

You should also know that any missed payments can severely impact your credit score. So if you take on a credit card, pay off your debts quickly and on time. And make sure to never use over 30% of your available credit. You need a good credit score to help you get the best interest rates when buying a car, home or to show your future employer that youre responsible in paying off debts as agreed.

Be smart about how you use money and credit in college it impacts your financial future.

7 Frugal Apps to Help You Save Money in College

According to College Board, the average cost of tuition and fees for college students in 2012 2013 was $8,655 for state residents at public colleges and $21,706 for out-of-state residents. And costs of private colleges rose to $29,056 on average last year.

Aside from tuition, most students have to pay for housing, meals, books, supplies, and sometimes transportation if not living near campus.

To help you keep more green in your pocket while in college, check out these 7 money-saving apps:

GasBuddy
With the cost of gas going up, gas prices can often vary 25 cents a gallon at gas stations near you. The GasBuddy app helps you locate the closest gas stations near you with the best prices. The app also allows you to earn points and awards for posting gas prices at stations near you with a chance of winning $250 every week. We all need fuel and GasBuddy will help you find the cheapest gas near campus.

Craigslist App
A frugal app that you might not think about is the Craigslist App. This is the app to help you save tons of money simply by buying the things you need used. Dont buy anything new if you dont have to. Try to buy used to help you save loads of cash. And you could also use this app to help you make money by quickly snapping a picture of something you want to sell and then writing a brief note about the item.

RetailMeNot
If there is one app that can help you save money when youre off campus, its the RetailMeNot app. Its an app that allows you to see all the discounts and deals at stores near you. You can find discounts at dozens and dozens of popular retail stores that you frequent. Once you have this app, youll never buy anything again in a store without finding out if there is a coupon available.

SnipSnap
I dont know about you, but I dont do a very good of job holding on to paper coupons. They end up all crunched up in my wallet, so I just stop holding on to them. To avoid holding on to paper coupons, simply use the SnipSnap app to take a picture of the coupon to save the coupon on your mobile device. You can then organize the coupons into nifty bundles. And whats really cool is that you can follow friends and share coupons. Yep, a very nifty app the means you never need to clip coupons again just snap. Check out SnipSnap.it.

RedLaser Barcode and QR Scanner
The RedLaser app is considered one of the top shopping apps by The New York Times, CNN Money, and Smart Money magazine. Aside to finding coupons and deals, the app will help you compare prices on practically anything you want to buy. All you need to do is scan the item you wish to purchase by taking a picture of the ba code, the app will then query the cost of that item at stores near you (including websites like ebay and amazon). This is a dope app that can help you save big bucks while in college.

GroceryiQ
If you dont have a meal plan and need to buy food at a grocery store check out the GroceryiQ app. You simply build your grocery list in the app (which you can sync and share with other devices) and it will query its database to find coupons for those items at stores near you. You can do searches with text, barcodes, or voice search.

Mint.com
Mint is not a app that helps you get discounts, but it is one of the best apps out there to help you manage and track your money. It connects your bank accounts and shows you how much money youre earning and spending. Just by keeping a close eye on how you spend money will help you save more and live more frugally while in college. You can set up alerts for yourself to remind you about important payments and the app has killer graphs to help you budget. And whats awesome is that this app is completely free.

What is one of your favorite apps to help you save money in school? Let me know in the comments.