The "I'm Screwed" Guide to Money & Finances (20-Something Edition)

I sign up for as many free trials as I can find. I've gotten tons of free movies, video games, books, dating service memberships, gym memberships...all for free. Want to know my secret? I extend the standard trial periods by entering different credit or debit card numbers (and a slight variation of my name) each time I sign up. I had a subscription to a certain big-name DVD service for OVER SIX MONTHS for free.

Most people don't sign up for these things because they get freaked when they are asked enter their debit card info. But if you are careful to cancel before the trial period ends, you are NEVER CHARGED. You pay zero dollars!

IN THE LAST 6 MONTHS I'VE TRIED...
1. Free Video Games Get your free Gamefly trial. (enter code "TENDAY")
2. Digital radio, sports, news & entertainment Get your free RealOne SuperPass trial.
3. Unlimited access to 3,000,000+ songs Get 14 days of Rhapsody for FREE.
4. Napster is back! Get 7 days of Napster for FREE. (enter code "NAPSCJ14D")

If the company you work for offers you a 401k (or equivalent, like a 403b) with an employer match, good for you! Every time you put money in there, you are getting extra free money. But most people in their twenties aren't lucky enough to have that. In my case, I have never worked a full time job with benefits. I have always worked multiple part-time jobs or have been self-employed. So a 401k was never an option for me.

I opened a Roth IRA at 21. Everyone laughed and mocked. Why? I was deeply, deeply in debt and at the time made $11 an hour. Everyone said "shouldn't you pay off your debt first?" "why do you care about retirement when you are living in your parents basement and eating plain spaghetti with butter on it 9 meals out of 10"? "why, for the love of god, when you don't even OWN A CAR would you put money away that you won't see until you're geriatric?"

There are many standard conventional arguments I could have countered with. Like, it's the only savings vehicle that never taxes you on your earnings. Like, due to the magic that is "compound interest" (more detail) I will retire a multi-millionaire. Like, the fact that a Roth favors the young because I'll be in a higher different tax bracket when I retire (better pay small tax now than big tax later).

Instead laying out any of these facts, I simply said "because I want to buy a house one day." How can Roth savings help you buy a house? 1) You are allowed to tap your Roth savings to use as a down payment for a first home (and remember it's grown tax-free, so it's a larger amount than it would have been if you'd had your money in a savings account or money market account) and 2) It can help sway the opinion of an otherwise unconvinced loan officer.

When I walked into the mortgage company to purchase my house, he looked at my paperwork and LAUGHED. Literally, no exaggeration. I fought back tears. He thought he was being jokey, but he said "is this all you make? you gotta get a better job! look at your student loan debt--how do you even make these payments every month?!?!?!? (slapping his knee with delight). I'm not sure we can approve you for more than $99,000." $99,000? To buy a house? Where, the Ozarks? Would it have a roof? Would it be in a crack neighborhood?

Fighting back spicy hot tears, I knew I was going home empty handed. Until I saw him flip to the last page of my paperwork. He stopped, looked up and said "wait? you have retirement savings?" Wiping away a stray tear I'd let well, I said "yeah" and pointed to the piece of paper. The next words out of his mouth were "well, I wish I'd know this before! no problem. you are 100% without a doubt approved." And he proceeded to near double the loan amount.

And that friends, is why I opened that account when I was 21. It meant not eating well, not getting any fancy coffee treats, buying no clothes, paying nothing but the bare minimum on my student loans, and having my mother (yes, you heard correctly) drive me to work. But it was all worth it in the end. This year I'm researching buying a second property to rent...and guess what I'll be using as leverage. That darn Roth!

So go forth little ones, and scrape up enough to start that retirement account. Even if it kinda hurts. You'll see the benefits way before your 65th birthday.

I was talking with a group of recent college grads the other day and the topic of credit scores came up. One of the women had two cards, one with a decent 12% rate and another with a HORRIBLE 18% rate. Obviously she tries to use the card with the lowest rate. The tricky part was, the card with the higher rate was one she had the most history with. Her question was: "should I cancel the 18% card and risk it being a detriment to my credit score?"

The answer isn't clear-cut. Everyone is trying to build a good credit score. High scores help you get the lowest credit card & insurance rates, they boost your home-purchasing power, they can help convince a potential landlord to rent you an apartment. So how big of an effect can canceling a card have on your score?

According to pueblo.gsa.gov, there are 5 parts to your score:

1. 35% = your payment history
Have you paid your credit accounts on time? Have you ever declared bankruptcy? Paying everything on time helps boost your score.

2. 30% = how much you owe
How much do you owe on all your accounts? How many accounts do you have with balances? How much of your available credit you are using? Keeping low balances on all your accounts helps boost your score.

3. 15% = length of your credit history
How long have you been paying these particular lenders? A longer credit history will increase your score. However, you can get a high score with a short credit history if the rest of your credit report shows responsible credit management.

4. 10% = new credit
Have you recently opened up a bunch of new accounts? Your credit score will weigh this fact against the rest of your credit history.

5. 10% = other factors Do you have a mix of credit types on your credit report - credit cards, installment loans such as a mortgage or auto loan, and personal lines of credit? This can add slightly to your score.

In my opinion, canceling one high rate card (even one that you have a longstanding relationship with) and trading it for a new one that has a 0% intro rate doesn't have a tremendous influence on your score. Unless you did it all of the time, it's unlikely that it would significantly lower your score.

There are also plenty of other ways to establish a long, solid credit history. Have you consistently paid your student loans or car loan on time? Then you should be golden.

Have you had a long-standing relationship with a phone, oil, gas company? Though this normally won't help your credit score, it can help convince a skeptical landlord or mortgage broker that you are a great candidate.

So if canceling the high rate card will have a negative effect (even if it is just a little)...why do I suggest that she cancel it?

Because if she cancels it, she can't use it. People who have credit tend to use it. I know for myself, if I have a card in my hand, my definition of "emergency" sometimes gets a little loose. One time I convinced myself that buying a $500 mattress on my card was an "emergency" because my old one was hurting my back (that's a real stretch). So I say, why keep a card that you will be tempted to use? If you've got one card that has a decent rate, keep it stashed (or even better, locked) in a drawer for real, genuine emergencies and call it a day.

In my personal opinion you don't need five cards. You need one "oh s-#$% my car broke down" card and that's it. Build your solid credit history instead with timely payments to your bank for your car loan and your student loan carrier.If you are really, really, really good about not using your cards, keep a few. It depends on who you are and how you spend.

When it comes time to rent that apartment or buy that house or car, it's much better to have a nice chunk of cash in the bank than a nice chunk of debt and a lengthy credit history. It's not the conventional logic, but it has certainly worked for me.

If you don't have a card with a good rate, shop around. Try bankrate.com - they let you compare card rates and rewards before you apply.

I personally like cards with rewards. Check out Discover's "Open Road" card below. It's one of my favorite programs.

In the coming weeks, I'm looking forward to filling this lens with rich, indispensable content. Until then, here's a little to get you started.

Just like a car can't go from 0 to 100 mph in an instant (at least...my old car couldn't!), you can't go from newly graduated, dead-broke and living in your parent's basement to a NYC penthouse. You have to start with small, simple steps. And that very first step is an emergency savings account.

Whether you make $800 a week or $100 a week, you HAVE to have a small amount of money set aside for absolute emergencies. It doesn't matter if your nest egg is only $100--you NEED it. And you need it in an interest-bearing account that you do not access unless there is an absolute genuine emergency.

As a first step in our journey together, check out financial-guru Suze Orman's site Suze Orman's Save Yourself

I know what you are thinking...she has a tragic fashion sense, an electric fake tan, and speaks like a scary top-secret tactical robot that's been developed by the Chinese government...but the truth is that she is crazy smart and CRAZY RICH. So get over it and check out this site. It will help you set up an emergency savings with as little as $50 a month...and it gives you a sweet FREE $100 BONUS.

You're supposed to buy her book to get the secret "activation code" but don't do it. You shouldn't have to spend money to save money. I used code "700". If that doesn't work, use google to find one-there are plenty of discussion groups out there that are handing out little secrets like this.