Updated : Aug 31, 2019 in Articles


So you know those money questions that
you’re supposed to know because they’re meant to be common sense but to you they’re –
it’s not common you have no idea how to tackle them or even know what they mean?
well today’s video is all about those questions if you’ve been too embarrassed
to ask specific money questions I got you covered we’re going to talk about 9 questions
that you find too embarrassing to ask about money and finance and we’re going
to start right now Hey guys this is Beryl Oduor, founder and
CEO FreedomFromTheRut.com Okay question number one is what is a credit
score? A credit score is a numeric number that’s determined by three credit
bureaus that’s Equifax Experian and TransUnion. The most common used credit
score is FICO and this number is determined by how much debt you have, if
you pay your bills on time, how many credit cards you have if you have unpaid
bills among other factors. So this number is something you want to kind of nurture
kinda like a newborn because this number is considered in almost all purchases.
The credit score ranges between 300 to 850 if you don’t know what your credit
score is go on creditkarma.com and it’s a free program just putting your details
and it will populate for you want your credit score is and give you an idea of
what you’re looking at. Ok the next one is “What is good debt?” so
good debt There’s a difference between good debt and
bad debt and i’m going to cover bad debt next but good debt is pretty much
anywhere you put money or get a loan for something to put money towards that’s
going to bring you money back; so if you’re taking a loan to invest in
something – a business opportunity that is going to give you more money that you
put in to that idea or transaction, that’s considered good debt so it’s
actually using or leveraging other people’s money to help you get ahead. The next question is “How do I know what
bad debt is. What is bad debt?” so bad debt is anything that you put money in that you
don’t make on your own-so borrowed money- like credit cards towards the purchase that
does not give you a financial return of equal or greater value. If you’re
using a credit card to buy food, clothes, jewelry, vacations, things like that are
considered bad debt. Next is what is a budget and do I need one? A budget is
basically understanding how much money you spend how much money you save in
relation to each other and it gives you an idea of how you handle your finances in
a day-to-day basis a week-to-week basis A budget is definitely important because
you want to be able to keep track of your spending and also know how much of
saving and where your money is going If you’re old school like me and you
want a budget sheet that is quick easy you can put the information down and not
stress about it go ahead and click the link in my bio i’m going to have a
budget sheet attached for you guys and also watch last week’s video because
i’ll give you tips on how to make an easy and quick budget Ok this question is a big one, “How much
money do I need to put in an emergency fund?” a good rule of thumb is to save
money about 3 to 6 months of your monthly expenses. That number varies for
everybody; it depends on you and your lifestyle. For beginners i would say you
could even say one month amount of monthly bills before you start to do
anything else that would be huge but if you can work your way up to the
six-month mark that would be even better Another tip I want to throw in there is for those
of you who own cars if you can put aside even 50 dollars a month in a jar that’s
just for your car maintenance, that’s gonna help a lot. If any emergency
happens and you didn’t plan for it You’ll have a jar to go and dip into that’s
just for the car stuff and has nothing to do with your emergency fund and you
can still have that saved for any other bigger emergency. Next question is “how much do I save
for retirement?” This number depends on you and your lifestyle among other
variables. First of all have you been saving any
money or are you starting from scratch? What kind of job do you have? What kind
of lifestyle you want to live once you retire? Your age comes into play too: how
old are you? so these are factors that you need to
consider plus there’s a lot of retirement calculators on the Internet
today that you can use to determine how much savings you need. I’m going to link a
few of those retirement calculators below in the bio. Next question how
many credit cards should I have? This answer depends on you! Are you good with
your money? Are you good with your debt? How many credit cards do you have right
now? Are you able to maintain a good credit score with these credit cards? so
those are questions you need to ask yourself it’s different for everybody. If
you’re up to ears in debt and maybe you have debt across three or four cards,
don’t open a new card try to get out of the debt on those cards first if you
have amazing credit you’ve been doing with a good video payments and you want
to look for cards that have rewards on your purchases then I suggest you trade
up to get to the next level cards but do not close the cars that you had the
longest.The reason for this is it if you’ve been having a positive day back
on those cards your credit score may take a hit if you close those cards. What is an IRA? So an IRA is an
individual retirement account and this is the place you put your money or
money is put in it for you, for somebody else to invest on your behalf. IRA’s
have a contribution limit the most you can put in an IRA in one year is 5500
dollars and for those people over 50 it’s 6500 There’s two types of
IRA’s; there’s Traditional IRA and Roth IRA. For traditional IRA it just means that your
money that’s put into this account is tax deferred. Tax deferred means that you
won’t have to pay any taxes on this money until you withdraw it from the
account whereas the Roth IRA you pay taxes up front on that money and you
won’t have to pay taxes on it after you withdraw it. The only way you can contribute to a
Roth IRA is if you earn less than $131,000 a year, you’re
single, you’re the head of the household or you’re married and you’re filing
separately. If you’re a married couple filing jointly you cannot exceed $193,000
a year that you make together for you to use a roth IRA, so
that’s something you need to consider. Next what is a 401k? A 401k is money taken
out from your paycheck when you work for a company and you decide how much of it
is taken out and that’s put into a retirement account for you for the
future. This money usually gets invested on your behalf in a variety of
stocks and bonds so your money can create more money for you you get to pick your investments whether
either directly or from a mix of different types of investments that
have a specific risk level that you’re comfortable with and that’s it guys I
hope you enjoyed this video if you loved this video please give it a thumbs up.
Share it with your loved ones. Give me comments below and let me know if
I’ve answered your questions and if you have any more input on what I’ve said. Don’t
forget to subscribe because I make new videos every Wednesday! I’ll catch you
next time, take care. You guys are awesome thanks so much for watching if you
missed my last video you can catch it right here I talked about how to create
a simple budget See you later!


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