NEWS: New Website for Managing Student Loans

The New York Times featured a blog post yesterday (posted below) detailing a new site that helps young people manage their student loans. The site, called Loanlook, seems fairly useful for staying on top of payments and paying off debt efficiently, although there are certainly downsides to keep in mind.

For one, a conflict of interest might exist between the site and its sister organization, which aims to collect on student debt. For another, it seems that Loanlook might be introducing a per-transaction fee for certain features in the future, which could hamper the cost-savings for users.

Saving for Retirement as a Young Adult: Using Roth IRAs

This post is a bit more serious than the others, but it’s also among the most important. This post is about saving for retirement—and, specifically, using a tool called a Roth IRA—to get the most from your money.

Now, I know what you’re thinking: “Do I really need to start saving for retirement this young?” “Shouldn’t I just enjoy my money for now and start saving once I have more?” I had a lot of the same questions until I started researching the importance of saving money. Since then, I’ve been thoroughly convinced that saving often and saving a lot is the best way to have money for a comfortable retirement.

Applying for Your First Credit Card

In a previous post, I wrote about how credit cards can cause you to spend more money than you otherwise would. Still, credit cards can be incredibly convenient, and some of the time you’ll really need them. Given those benefits, many young people wonder how they can get a credit card as a teen or young adult.

If you are under 18, talk with your parents or legal guardian. In fact, you should probably do this even if you are above 18. Certain credit card companies will prey on young people by offering easy credit or low initial rates that jump up later in the card, and you don't want to start off on the wrong foot.

Giving Better Gift Cards

 How much would you estimate that your family has in unused gift cards? $50? $100? The odds are good that the total is a lot larger. In fact, a recent study found that the average American household has about $300 in unredeemed credit cards. When you add up all households, the sum comes to about $30 billion—nearly double NASA’s budget for the year 2012.

Gift cards are a $90 billion industry annually, but roughly 7% of them go unredeemed. Why is such a seemingly popular gift so unpopular with consumers? How can gift card givers ensure that the recipient enjoys the present and gets the most out of its value?

What Will This Cost Me?: How Credit Cards Can Distort Spending

Pretend for a moment that you have just bought a gray sweater from me. It costs $100, and I give you two options in terms of how you can pay.

The first option is to pay me in cash and be done with the transaction—simple enough. Of course, you might not have cash on you; you might not have the cash for the payment at all. In that case, you can delay payment, but there are a few catches.

Groupons, Coupons, and the Illusion of Savings

Picture the scenario: It’s a hot day, and you walk into a convenience store to buy a drink. When you get to the display case, you see that there’s a special deal for two of your item, promising a savings of $1—two drinks for $3, as opposed to $2 for one. Would you buy the additional drink to gain the $1 savings?

I know all too well from experience that I would make the purchase. On more than one occasion this year, I walked into the CVS near my dorm intending to purchase a Powerade or two and instead walked out with ten, lured by the promise of “savings.” I certainly spent less on the 10-for-$10 deal than if I had bought ten at their normal price of $1.40 each, but had I really “saved” money by buying more of the good?

Welcome to Young Adult Financial

Imagine that it is poker night with a few of your friends. You glance around the table and notice that you’re up quite a bit of money so far—nearly triple what you paid to enter. The betting on a particular hand swings around to you, and the amount is larger than you would normally wager. On this night, however, you’re playing with ‘found money’; why not just toss in a few extra chips?

This blog discusses financial advice to help young adults with newfound independence. Much of the advice is derived from the fields of psychology and economics, which jointly form the field known as behavioral economics, but I will also use real-world examples to (hopefully) stay relevant and engaging.

Here are some questions this blog will tackle: