Personal finance expert Suze Orman had some excellent advice to share with us on the topic of whether or not to close inactive credit cards.
Suze recommends keeping all credit cards open, even if you don’t actively use them, especially those that do not charge an annual fee.
Another reason to keep inactive credit card accounts open: it helps boost your credit (or FICO) score. “30% of your credit score is made up of your debt, or what you owe to the credit card company,” she told us. Essentially, by keeping all of your credit cards open and paying off that debt, your debt-to-credit limit ratio improves.
“You want a 30% debt-to credit limit ratio or less for a good FICO score,” she told us.
Get one on one financial advice from Suze here.
For more advice on managing your money, see Suze's personal finance tips:
It may seem like your 401K is building slowly, but if you take the right steps, you’ll be set for retirement. If you work for a company that matches your 401K contributions, invest up to the max. To invest even more, open up a Roth IRA and invest up to the max. Just be patient and your investments will grow over time.
If you’re a saver and your spouse is a spender, it’s time to sit down and have a serious talk. In a marriage, this can lead to arguments and even divorce. Create a calm environment in which to speak and be sure to have a discussion with your spouse, instead of at them.
If you’re scared to move or invest your money, leave the majority somewhere safe, like a money market fund, a savings account or a CD. Make sure all of your debt is paid off and little by little, put some of your money in an exchange-traded fund. This way, you can test the waters and get a feeling for how investment works without risking too much.
After the economy took a hit, lenders became stricter about giving out mortgages to those who were not qualified. So, generally, you don’t have to worry about taking out a mortgage you can’t handle. Go for a 15 or 30 year mortgage, and make sure you have enough money to put down at least 20%.
If you don’t qualify for a credit card, you can still build your credit. Start by getting a secured card at a bank or a credit union and use the card responsibly. Eventually, you’ll be able to obtain a credit card or another form of credit.
It’s important to know your options when it comes to paying off student loan debt. FinAid.org is a fabulous resource with calculators and other resources to help you figure out the best repayment method for you. Beware of income-based repayment plans, as you can only pay back 10% of your income, and after 20 years the loan is forgiven, but you will still owe federal income tax on the original amount when all is said and done.
If all of your debt is paid off, you should put your money in stocks that have a secure dividend. This means that you’ll receive a payment from the investment every three months.
Budgets are like diets – you deprive yourself and lose 20 pounds, and then you wind up gorging and regaining 30. Instead of going on a budget, be in control of your money. Don’t cut back on everything. Cut back on the frequency of things like getting coffee at Starbucks or going to the movies every week. Start little by little and take notes on where your money is going. Use the Expense Estimator on SuzeOrman.com to determine where you are overspending and underspending.
Every time you spend money, ask yourself, “Is this a want, or a need?” Take the money you would have spent on “wants” and put it in a savings account. When you pay in cash, save your change and put it in a jar. All of these small steps can help you save up for that big thing you really want.
People think that they’ll never die, get sick or be in a position where they can’t work. Being prepared for the future is important so that your loved ones are taken care of when you can’t take care of them. Make a will, sign up for term life insurance and be sure to appoint the right beneficiaries. Children won’t be able to access the money until they reach adulthood, so it’s best to appoint a trustworthy adult who can handle finances until the children are grown.
Add Marlo On Facebook:
Follow Marlo on Twitter:
Sign up to receive my email newsletter each week - It will keep you up-to-date on upcoming articles, Mondays with Marlo guests, videos, and more!
Sign up here