I Will Teach You to Be Rich Chapter1

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(1)fees waived. IN WEEK 2, you’ll set up no-fee, high interest bank accounts that won’t gouge you. for every penny. IN WEEK 3, you’ll open investment. accounts (even if you only have $50 to start). IN WEEK 4, you’ll figure out how much. spending. And then you’ll learn how to you’re make your money go where you want it to go. IN WEEK 5, you’ll automate your new. IN WEEK 6, you’ll learn why investing. the same as picking stocks—and how isn’t you can get the most out of the market with very little work. BOOKLAND EAN. RAMIT SETHI is the founder and writer of. iwillteachyoutoberich.com, which hosts over 200,000 readers every month. He is a recent graduate of Stanford University and a co-founder of PBwiki, an online collaboration company. He lives in San Francisco, and can be reached at ramit@iwillteachyoutoberich.com.. Workman Publishing, New York www.workman.com ISBN 978-0-7611-4748-0 • $13.95 U.S.. SETHI. to make your accounts play infrastructure together nicely.. W. m ts co ee h . us h i c on ads it b e r s, b re Vis u t o l tip e sp o a iv h y tic act a c ac er t e y t nt i l l ail d i i w r d an fo ds, loa. WEEK 1, you’ll optimize your credit IN cards and learn exactly what to say to get. itty, entertaining, wise, and practical, Ramit Sethi is an irresistible force for learning how to master money with the least amount of effort. He explains how to automate your money flow— i.e., earn while sleeping. Why your new best friend should be named Roth—the IRA, that is. How to beat banks and credit cards at the fee game. How to negotiate for a raise. How to manage student loans. Why you can enjoy daily lattes or buy those Manolo Blahniks you adore if you practice conscious spending. You don’t have to be perfect to be rich. Or the smartest person in the room. Or a type-A personality. Just do 85 percent of what Sethi says, and then get on with your life.. wn. 7M\;IIOWXS *MRERGMEP0MXIVEG]. Down Wall Street. do. It contains serious advice on personal-finance decisions from budgeting and G. Malkiel, savings to spending and investing.” —Burton author of A Random Walk. I WILL TEACH YOU TO BE RICH. Don’t let the breezy, “irreverent style of this book fool you.. “A unique voice on money, one singularly attuned to…his generation.”. I WILL TEACH YOU TOBE —SAN FRANCISCO CHRONICLE. by. RAMIT SETHI founder and writer of. M[MPPXIEGL]SYXSFIVMGLGSQ. 2S+YMPX 2S)\GYWIW 2S&7 .YWXE ;IIO 4 VSKVEQ 8 LEX;SVOW.

(2) Get the full book at Amazon.com. About the book At last, for a generation that's materially ambitious yet financially clueless comes I Will Teach You To Be Rich, Ramit Sethi's 6-week personal finance program for 20-to-35-year-olds. A completely practical approach based around the four pillars of personal finance—banking, saving, budgeting, and investing—and the wealth-building ideas of personal entrepreneurship..

(3) Additional Praise for Ramit Sethi and I Will Teach You to Be Rich “Ramit Sethi is a rising star in the world of personal finance writing. . . one singularly attuned to the sensibilities of his generation. . . . His style is part frat boy and part Silicon Valley geek, with a little bit of San Francisco hipster thrown in.” —SAN FRANCISCO CHRONICLE. “The easiest way to get rich is to inherit. This is the second best way— knowledge and some discipline. If you’re bold enough to do the right thing, Ramit will show you how. Highly recommended.” —SETH GODIN, AUTHOR OFTRIBES. “You’ve probably never bought a book on personal finance, but this one could be the best $13.95 you ever spent. It’ll pay for itself by the end of Chapter 1 (check out the box on page 24 to see what I mean).” —PENELOPE TRUNK, AUTHOR OF BRAZEN CAREERIST: THE NEW RULES FOR SUCCESS. “Most students never learn the basics of money management and get caught up in the white noise and hype generated by the personalfinance media. Ramit’s like the guy you wish you knew in college who would sit down with you over a beer and fill you in on what you really need to know about money—no sales pitch, just good advice.” —CHRISTOPHER STEVENSON, CREDIT UNION EXECUTIVES SOCIETY. “Smart, bold, and practical. I Will Teach You to Be Rich is packed with tips that actually work. This is a great guide to money management for twentysomethings—and everybody else.” —J.D. ROTH, EDITOR, GETRICHSLOWLY.ORG. “Ramit demystifies complex concepts with wit and an expert understanding of finances. Not only is this book informative, it’s fun and includes fresh tips that will help anyone master their finances.” —GEORGE HOFHEIMER, CHIEF RESEARCH OFFICER, FILENE RESEARCH INSTITUTE.

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(14) WOULD YOU RATHER BE SEXY OR RICH?. XIFSFBNFBMNJHIUDPTU"OUPOMPWFTUSBWFMJOH"OE+FOMPWFTCVZJOH KFBOT*GZPVEPOµUDPOTDJPVTMZDIPPTFXIBUSJDINFBOT JUµTFBTZUPFOEVQ NJOEMFTTMZUSZJOHUPLFFQVQXJUIZPVSGSJFOET*DPOTJEFSNZTFMGSJDIOPX UIBU*DBOEPUIFTFUIJOHT N .BLFDBSFFSEFDJTJPOTCFDBVTF*XBOUUP OPUCFDBVTFPGNPOFZ N )FMQNZQBSFOUTXJUIUIFJSSFUJSFNFOU TPUIFZEPOµUIBWFUPXPSLJG. UIFZEPOµUXBOUUP N 4QFOEFYUSBWBHBOUMZPOUIFUIJOHT*MPWFBOECFSFMFOUMFTTMZGSVHBM. BCPVUUIFUIJOHT*EPOµU FH TQFOEMPUTPOWJTJUJOHGBNJMZJO/FX :PSL CVUEPOµUCVZUIF¿BTIJFTUTQPSUTDBS. N 4UBSUBTDIPMBSTIJQGVOEGPSZPVOHFOUSFQSFOFVST MBVODIFEJO. .BZ #FGPSFZPVHPGVSUIFS *FODPVSBHFZPVUPTFUZPVSHPBMTUPEBZ8IZEP ZPVXBOUUPCFSJDI 8IBUEPZPVXBOUUPEPXJUIZPVSXFBMUI . What You’ll Get Out of This Book. I. MPWFUPMBVHIBUQFPQMFXIFOUIFZUBMLBCPVUJOWFTUJOH1FPQMFUIJOL UIBUJOWFTUJOHNFBOT²CVZJOHTUPDLT ³TPUIFZUISPXBSPVOEGBODZ UFSNTMJLFIFEHFGVOET EFSJWBUJWFT BOEDBMMPQUJPOT4BEMZ UIFZ BDUVBMMZUIJOLZPVOFFEUIJTMFWFMPGDPNQMFYJUZUPHFUSJDICFDBVTFUIFZTFF QFPQMFUBMLJOHBCPVUUIJTTUVGGPO57FBDIEBZ(VFTTXIBU 'PSJOEJWJEVBM JOWFTUPSTMJLFZPVBOENF UIFTFPQUJPOTBSFDPNQMFUFMZJSSFMFWBOU *UTPVOETTFYZ CVUXIFOJOEJWJEVBMJOWFTUPSTUBMLBCPVUDPNQMJDBUFE DPODFQUTMJLFUIJT JUµTMJLFUXPFMFNFOUBSZTDIPPMUFOOJTQMBZFSTBSHVJOH BCPVUUIFTUSJOHUFOTJPOPGUIFJSSBDRVFUT4VSF JUNJHIUNBUUFSBMJUUMF CVUUIFZµECFNVDICFUUFSUFOOJTQMBZFSTJGUIFZKVTUXFOUPVUTJEFBOEIJU TPNFCBMMTGPSBGFXIPVSTFBDIEBZ 4JNQMF MPOHUFSNJOWFTUJOHXPSLT5IJTJEFBHFUTOPUIJOHCVUZBXOT BOESPMMJOHFZFTEVSJOHBDPOWFSTBUJPO#VUZPVOFFEUPNBLFBEFDJTJPO %PZPVXBOUUPTJUBSPVOEJNQSFTTJOHPUIFSTXJUIZPVSTFYZWPDBCVMBSZ PS EPZPVXBOUUPKPJONFPONZHPMEMJOFEUISPOFBTXFµSFGFEHSBQFTBOE GBOOFEXJUIQBMNGSPOET . .

(15) I Will Teach You to Be Rich. SIX. WEEKS OF ACTION STEPS. *8JMM5FBDI:PVUP#F3JDIXJMMIFMQZPV¾HVSF PVUXIFSFZPVSNPOFZJTHPJOHBOESFEJSFDUJUUP XIFSFZPVXBOUJUUPHP4BWJOHGPSBWBDBUJPOUP $IJOB "XFEEJOH +VTUXBOUUPNBLFZPVSNPOFZ HSPX )FSFµTUIFTJYXFFLQSPHSBNUIBUXJMMMFUZPV UBDLMFJU IN WEEK 1,ZPVµMMTFUVQZPVSDSFEJUDBSETBOE. MFBSOIPXUPJNQSPWFZPVSDSFEJUIJTUPSZ BOEXIZ UIBUµTTPJNQPSUBOU . IN WEEK 2,ZPVµMMTFUVQUIFSJHIUCBOLBDDPVOUT JODMVEJOHOFHPUJBUJOHUPHFUOPGFF IJHIJOUFSFTUBDDPVOUT IN WEEK 3,ZPVµMMPQFOB L BOEBOJOWFTUNFOUBDDPVOU FWFOJGZPV IBWFKVTUUPTUBSU IN WEEK 4,ZPVµMM¾HVSFPVUIPXNVDIZPVµSFTQFOEJOH"OEUIFOZPVµMM. ¾HVSFPVUIPXUPNBLFZPVSNPOFZHPXIFSFZPVXBOUJUUPHP IN WEEK 5,ZPVµMMBVUPNBUFZPVSOFXJOGSBTUSVDUVSFUPNBLFZPVS. BDDPVOUTQMBZUPHFUIFSOJDFMZ IN WEEK 6,ZPVµMMMFBSOXIZJOWFTUJOHJTOµUUIFTBNFBTQJDLJOHTUPDLT± BOEIPXZPVDBOHFUUIFNPTUPVUPGUIFNBSLFUXJUIWFSZMJUUMFXPSL. 1MVT UIFSFµTQMFOUZNPSF:PVµMMMFBSOUPDIPPTFBMPXDPTUBVUPNBUJD QPSUGPMJPUIBUCFBUTUZQJDBM8BMM4USFFUQPSUGPMJPT BOEIPXUPNBJOUBJO ZPVSJOWFTUNFOUTCZTFUUJOHVQBTZTUFNUIBUFOBCMFTZPVUPSFNBJOBT IBOETPGGBTQPTTJCMFXIJMFZPVSNPOFZBDDVNVMBUFTBVUPNBUJDBMMZ5IFSF BSFFWFOBOTXFSTUPNBOZTQFDJ¾DNPOFZRVFTUJPOT JODMVEJOHIPXUPCVZ BDBS QBZGPSBXFEEJOH BOEOFHPUJBUFZPVSTBMBSZ "GUFSSFBEJOHUIJTCPPL ZPVµMMCFCFUUFSQSFQBSFEUPNBOBHFZPVS ¾OBODFTUIBOQFSDFOUPGPUIFSQFPQMFJOUIFJSUXFOUJFTBOEFBSMZ UIJSUJFT:PVµMMLOPXXIBUBDDPVOUTUPPQFOVQ XBZTOPUUPQBZZPVSCBOL FYUSBGFFT IPXUPJOWFTU IPXUPUIJOLBCPVUNPOFZ BOEIPXUPTFF UISPVHIBMPUPGUIFIZQFUIBUZPVTFFPO57BOEJONBHB[JOFTFWFSZEBZ 5IFSFBSFOµUBOZTFDSFUTUPHFUUJOHSJDI±JUKVTUUBLFTTNBMMTUFQTBOE TPNFEJTDJQMJOF BOEZPVDBOEPJUXJUIKVTUBMJUUMFCJUPGXPSL/PXMFUµT HFUTUBSUFE. .

(16) CHAPTER 1. OPTIMIZE YOUR CREDIT CARDS Ahpmh[^Zmma^\k^]bm\Zk]\hfiZgb^lZmma^bkhpg`Zf^. Y. PVµMMOFWFSTFFBO*OEJBOESJWJOHBUXPEPPSDPVQF 4FSJPVTMZ UIJOLBCPVUJU*GZPVIBWFBOFJHICPSIPPE *OEJBO±MFUµTDBMMIJN3BK±IFµTQSPCBCMZESJWJOHB GPVSEPPSDBS VTVBMMZB)POEB"DDPSEPS5PZPUB$BNSZ )PXFWFS *OEJBOQFPQMFBSFOµUKVTUGBOBUJDBMBCPVU ESJWJOHQSBDUJDBMGPVSEPPSDBST8FµSFBCTPMVUFMZOVUT BCPVUIBNNFSJOHEPXOUIFQSJDFUPUIFMBTUQFOOZ5BLFNZEBE GPS FYBNQMF)FµMMCBSHBJOGPS¾WFTUSBJHIUEBZTKVTUUPCVZPOFDBS%FBS(PE JUµTOPUQSFUUZ*µWFCFFOBMPOHGPSUIFSJEFPOUIFTFXFFLMPOHOFHPUJBUJOH TFTTJPOTXJUIIJNCFGPSF0ODF BTIFXBTMJUFSBMMZBCPVUUPTJHOUIF QBQFST IFTUPQQFE BTLFEUIFNUPUISPXJOGSFF¿PPSNBUT BWBMVF BOEXBMLFEBXBZXIFOUIFZSFGVTFE5IJT BGUFSIFµETQFOU¾WFEBZT CBSHBJOJOHUIFNEPXO"TIFESBHHFENFGSPNUIFEFBMFSTIJQ *KVTU TUBSFETUSBJHIUBIFBE TIFMMTIPDLFE "TZPVDBOJNBHJOF CZUIFUJNF*XFOUUPCVZNZPXODBS *IBECFFO TUFFQFEJOBSJDIUSBEJUJPOPGOFHPUJBUJOH*LOFXIPXUPNBLFVOSFBTPOBCMF EFNBOETXJUIBTUSBJHIUGBDFBOEOFWFSUBLFOPGPSBOBOTXFS*UPPLB. .

(17) I Will Teach You to Be Rich. NPSFNPEFSOBQQSPBDI IPXFWFS*OTUFBEPGTQFOEJOHBXFFLHPJOHGSPN EFBMFSTIJQUPEFBMFSTIJQ *TJNQMZJOWJUFETFWFOUFFOEFBMFSTJOOPSUIFSO $BMJGPSOJBUPCJEBHBJOTUPOFBOPUIFSGPSNZCVTJOFTTXIJMF*TBUBUIPNF XBUDIFE5IF3FBM8PSME BOEDBMNMZSFWJFXFEUIFFNBJMTBOEGBYFTBTUIFZ DBNFJO 'PSNPSFBCPVUCVZJOHBDBS TFFQBHF *OUIFFOE *GPVOEB HSFBUEFBMJO1BMP"MUPBOEXBMLFEJOSFBEZUPTJHOUIFQBQFST&WFSZUIJOH XBTHPJOHTNPPUIMZVOUJMUIFEFBMFSXFOUUPDIFDLNZDSFEJU)FDBNFCBDL TNJMJOH²:PVLOPX ZPVIBWFUIFCFTUDSFEJUPGBOZPOF*µWFFWFSTFFOBU ZPVSBHF ³IFTBJE ²5IBOLT ³*SFQMJFE BDUVBMMZXBOUJOHUPTBZ ²"888 :&") *,/&8*5³5IBUJTCFDBVTF*BNBXFJSEUXFOUZTPNFUIJOH*OEJBOXIP DIPPTFTBGPVSEPPS"DDPSEGPSIJTESFBNDBSBOEQSJEFTIJNTFMGPOIJT DSFEJUTDPSF 5IFOUIFEFBMFSTBJE ²)NN³ ²)NN ³*BTLFE ²8FMM ³IFTBJE ²JUMPPLTMJLFZPVIBWFHSFBUDSFEJU CVUOPUFOPVHI DSFEJUTPVSDFT³5IFCPUUPNMJOF IFUPMENF XBTUIBUUIFZDPVMEOµUPGGFS NFUIFMPXJOUFSFTUPQUJPOXFIBEUBMLFEBCPVU*OTUFBEPGQFSDFOU JOUFSFTU JUXPVMECFQFSDFOU5IBUEJEOµUTPVOEMJLFNVDI CVU*QVMMFE PVUBOPUFQBEBOEEJEBRVJDLDBMDVMBUJPO5IFEJGGFSFODFXPVMECFNPSF UIBO PWFSUIFMJGFPGNZDBSMPBO#FDBVTF*XBTHFUUJOHTVDIB HSFBUEFBMPOUIFDBS *DPOWJODFENZTFMGUIBUUIFIJHIFSJOUFSFTUSBUFXBT PLBZ BOE*TJHOFEUIFQBQFSTGPSUIFMPBO#VU*XBTTUJMMQJTTFE8IZ TIPVME*IBWFUPQBZBOFYUSBUXPHSBOEXIFO*IBEHSFBUDSFEJU . How Credit Can Help You Be Rich. P. FPQMFMPWFUPQJDLTFYZJOWFTUNFOUTBOEVTFGBODZXPSETMJLF EJTUSFTTFETFDVSJUJFTBOE&#*5%"XIFOUIFZGPDVTPOHFUUJOHSJDI #VUUIFZPGUFOJHOPSFTPNFUIJOHUIBUJTTPTJNQMF TPCBTJD UIBU JUKVTUEPFTOµUTFFNJNQPSUBOUUIFJSDSFEJU*SPOJDBMMZ DSFEJUJTPOFPG UIFNPTUWJUBMGBDUPSTJOHFUUJOHSJDI CVUCFDBVTFJUµTIBSEUPXSBQPVS NJOETBSPVOEJU XFPGUFOPWFSMPPLJUFOUJSFMZ*UµTUJNFUPXBLFVQBOE QBZBUUFOUJPOUPJU BOEOPUKVTUCFDBVTFPGUIFDSFEJUDSJTJT CFDBVTF FTUBCMJTIJOHHPPEDSFEJUJTUIF¾STUTUFQJOCVJMEJOHBOJOGSBTUSVDUVSFGPS HFUUJOHSJDI5IJOLBCPVUJU0VSMBSHFTUQVSDIBTFTBSFBMNPTUBMXBZT. .

(18) OPTIMIZE YOUR CREDIT CARDS. NBEFPODSFEJU BOEQFPQMFXJUIHPPEDSFEJUTBWFUFOTPGUIPVTBOET PGEPMMBSTPOUIFTFQVSDIBTFT$SFEJUIBTBGBSHSFBUFSJNQBDUPOZPVS ¾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hat your credit score is based on:. What your credit report includes:. QBZNFOUIJTUPSZ )PXSFMJBCMFZPVBSF -BUFQBZNFOUTIVSUZPV. N#BTJDJEFOUJ¾DBUJPOJOGPSNBUJPO. BNPVOUTPXFE )PXNVDIZPVPXFBOEIPX NVDIDSFEJUZPVIBWFBWBJMBCMF PSZPVSDSFEJUVUJMJ[BUJPOSBUF. N"MJTUPGBMMZPVSDSFEJUBDDPVOUT. MFOHUIPGIJTUPSZ )PXMPOHZPVµWFIBEDSFEJU. N:PVSDSFEJUIJTUPSZ PSXIPN. OFXDSFEJU 0MEFSBDDPVOUTBSFCFUUFS CFDBVTFUIFZTIPXZPVµSF SFMJBCMF. N"NPVOUPGMPBOT. UZQFTPGDSFEJU 'PSFYBNQMF DSFEJUDBSET TUVEFOUMPBOT7BSJFEJTCFUUFS. N$SFEJUJORVJSJFT PSXIPFMTF. (FUZPVSDSFEJUTDPSFBU XXXNZ¾DPDPNGPSBCPVU. (FUZPVSGSFFDSFEJUSFQPSUPODFB ZFBSBUXXXBOOVBMDSFEJUSFQPSUDPN. ZPVµWFQBJE IPXDPOTJTUFOUMZ BOEBOZMBUFQBZNFOUT. IBTSFRVFTUFEZPVSDSFEJU MJLFPUIFSMFOEFST. .

(19) I Will Teach You to Be Rich. :PVSDSFEJUSFQPSUHJWFTQPUFOUJBMMFOEFST±UIFQFPQMFXIPBSFDPOTJEFSJOH MFOEJOHZPVNPOFZGPSBDBSPSIPNF±CBTJDJOGPSNBUJPOBCPVUZPV ZPVS BDDPVOUT BOEZPVSQBZNFOUIJTUPSZ*OHFOFSBM JUUSBDLTBMMDSFEJUSFMBUFE BDUJWJUJFT BMUIPVHISFDFOUBDUJWJUJFTBSFHJWFOIJHIFSXFJHIU :PVSDSFEJUTDPSF PGUFODBMMFEZPVS'*$0TDPSFCFDBVTFJUXBTDSFBUFECZ UIF'BJS*TBBD$PSQPSBUJPO JTBTJOHMF FBTZUPSFBEOVNCFSCFUXFFO BOEUIBUSFQSFTFOUTZPVSDSFEJUSJTLUPMFOEFST*UµTMJLF$MJGGµT/PUFT GPSUIFDSFEJUJOEVTUSZ5IFMFOEFSTUBLFUIJTOVNCFS IJHIFSJTCFUUFS BOE XJUIBGFXPUIFSQJFDFTPGJOGPSNBUJPO TVDIBTZPVSTBMBSZBOEBHF EFDJEFJGUIFZµMMMFOEZPVNPOFZGPSDSFEJUMJLFBDSFEJUDBSE NPSUHBHF PS DBSMPBO5IFZµMMDIBSHFZPVNPSFPSMFTTGPSUIFMPBO EFQFOEJOHPOUIF TDPSF XIJDITJHOJ¾FTIPXSJTLZZPVBSF *UµTSJEJDVMPVTMZFBTZUPDIFDLZPVSDSFEJUTDPSFBOEDSFEJUSFQPSU±BOE ZPVTIPVMEEPJUSJHIUOPX0ODFBZFBS CZMBX ZPVµSFBMMPXFEUPPCUBJO ZPVSDSFEJUSFQPSUGPSGSFFBUXXXBOOVBMDSFEJUSFQPSUDPN*UJODMVEFT CBTJDJOGPSNBUJPOBCPVUBMMZPVSBDDPVOUTBOEQBZNFOUIJTUPSZ#FDBSFGVM UPUZQFUIBU63-DPSSFDUMZ OPUUIFPOFUIBU¾STUDPNFTUPNJOEXIFOZPV UIJOL²GSFFDSFEJUSFQPSU³ 5PHFUZPVSDSFEJUTDPSF POUIFPUIFSIBOE ZPVµMMIBWFUPQBZ* SFDPNNFOEHFUUJOHUIFCBTJDDSFEJUSFQPSU XIJDIXJMMSVOZPVBCPVU :PVµMMHFUUIFPQUJPOUPQJDLBOZPGUIFUISFFNBKPSSFQPSUJOH BHFODJFT+VTUQJDLBOZPOF±JUEPFTOµUSFBMMZNBUUFS 8IZBSFZPVSDSFEJUSFQPSUBOEDSFEJUTDPSFJNQPSUBOU #FDBVTFBHPPE DSFEJUTDPSFDBOTBWFZPVIVOESFETPGUIPVTBOETPGEPMMBSTJOJOUFSFTU DIBSHFT)PX 8FMM JGZPVIBWFHPPEDSFEJU JUNBLFTZPVMFTTSJTLZUP MFOEFST NFBOJOHUIFZDBOPGGFSZPVBCFUUFSJOUFSFTUSBUFPOMPBOT²#VU 3BNJU ³ZPVNJHIUTBZOBJWFMZ ²*EPOµUDBSFBCPVUUIJT*EPOµUOFFEUPCPSSPX NPOFZ³.BZCFZPVEPOµUUPEBZ#VUJOUISFFPSGPVSZFBST ZPVNJHIUOFFE UPTUBSUUIJOLJOHBCPVUBXFEEJOHPSBIPVTF8IBUBCPVUDBST 7BDBUJPOT 5IPTFSJEJDVMPVTCBCZDSJCTUIBUDPTU "OEJUHPFTPOBOEPO 4PQMFBTFEPOµUTDPGGPSEJTNJTTXIBUZPVKVTUSFBE0OFPGUIFLFZ EJGGFSFODFTCFUXFFOSJDIQFPQMFBOEFWFSZPOFFMTFJTUIBUSJDIQFPQMF QMBOCFGPSFUIFZOFFEUPQMBO *GZPVEPVCUUIBUBMPBOµTJOUFSFTUSBUFSFBMMZNBLFTUIBUNVDIPG BEJGGFSFODF DIFDLPVUUIFGPMMPXJOHUBCMF"TTVNJOHZPVCPSSPXFE GPSBZFBSNPSUHBHF MPPLBUUIFEJGGFSFODFTJOXIBUZPVµE QBZCBTFEPOZPVSDSFEJUTDPSF .

(20) OPTIMIZE YOUR CREDIT CARDS. HOW CREDIT SCORES AFFECT WHAT YOU PAY On a $200,000 30-year mortgage, if your FICO score is . . .. . . . your APR* (interest rate) will be . . .. . . . with interest, you’ll pay a total of . . .. ° CFTUSBOHF. . . °. . . °. . . °. . . °. . . ° XPSTUSBOHF. . . "13DBMDVMBUFEJO+BOVBSZ. "TZPVDBOTFF BIJHIDSFEJUTDPSFDBOTBWFZPVIVOESFETPG UIPVTBOETPGEPMMBSTPWFSZPVSMJGFUJNF±BOEUIBUµTKVTUPOBNPSUHBHF 8IJMFPUIFSQFPQMFTQFOENBOZIPVSTDVUUJOHDPVQPOT HSPXJOHGPPEJO UIFJSHBSEFOTUPTBWFPOHSPDFSZCJMMT PSCFJOHGSVHBMXJUIMBUUFT UIFZµSF GBJMJOHUPTFFUIFCJHHFSQJDUVSF*UµT¾OFUPCFGSVHBM CVUZPVTIPVMEGPDVT POTQFOEJOHUJNFPOUIFUIJOHTUIBUNBUUFS UIFCJHXJOT4P MFUµTEJHJOUP UBDUJDTGPSJNQSPWJOHZPVSDSFEJU XIJDIJTRVBOUJ¾BCMZXPSUINVDINPSF UIBOBOZBEWJDFBCPVUGSVHBMJUZ. Building Credit with Credit Cards. C. SFEJUDPNFTJONBOZGPSNT DBSMPBOT NPSUHBHFT BOETPPO CVUXFµSFHPJOHUPTUBSUXJUIDSFEJUDBSETCFDBVTFBMNPTUBMMPG VTIBWFPOF BOENPTUJNQPSUBOU UIFZµSFUIFGBTUFTUBOENPTU DPODSFUFXBZUPPQUJNJ[FZPVSDSFEJU.PTUQFPQMFBSFNBLJOHBUMFBTU POFPSUXPNBKPSNJTUBLFTXJUIUIFJSDSFEJUDBSET5IFHPPEOFXTJTUIBU JUµTJODSFEJCMZFBTZUP¾YUIJTCZMFBSOJOHBMJUUMFCJUBCPVUIPXDSFEJU DBSETXPSL. .

(21) I Will Teach You to Be Rich. GUESS HOW MUCH AN iPOD COSTS IF YOU FINANCE IT WITH A CREDIT CARD?. O. OFPGUIFCJHHFTUQSPCMFNTXJUIDSFEJUDBSETJTUIFIJEEFODPTUPG VTJOHUIFN*UNBZCFJODSFEJCMZDPOWFOJFOUUPTXJQFZPVSDBSEBU FWFSZSFUBJMFS CVUJGZPVEPOµUQBZZPVSCJMMUIFTBNFNPOUI ZPVµMMFOEVQ PXJOHXBZNPSFUIBOZPVSFBMJ[F5BLF GPSJOTUBODF BOJ1PE*UMPPLTMJLF JUDPTUT CVUJGZPVCVZJUVTJOHBDSFEJUDBSEXJUIUIFBWFSBHF"13 BOEBNJOJNVNQBZNFOU BOEUIFOPOMZQBZUIFNJOJNVNFBDINPOUI ZPVµMMCFPVUBMNPTUQFSDFOUNPSFJOUPUBM. Let’s say you buy this . . .. Paying minimum payments, it will take this long to pay it off . . .. You’ll pay this much in interest . . .. J1PE. ZFBSTNPOUIT. . DPNQVUFS. ZFBSTNPOUIT. . GVSOJUVSF. ZFBSTNPOUIT. . *GZPVQBJEPOMZUIFNJOJNVNNPOUIMZCBMBODFPOZPVS QVSDIBTF JUXPVMEUBLFZPVNPSFUIBOZFBSTBOEDPTUZPVNPSFUIBO JO JOUFSFTUBMPOF3FNFNCFS UIJTEPFTOµUFWFOGBDUPSJOZPVS²PQQPSUVOJUZ DPTU³*OTUFBEPGQBZJOHPGGB TPGBGPSZFBST JGZPVµEJOWFTUFEUIF TBNFBNPVOUBOEFBSOFE JUXPVMEµWFUVSOFEJOUPBCPVU 5SZ DBMDVMBUJOHIPXNVDIZPVSPXOQVSDIBTFTSFBMMZDPTUBUXXXCBOLSBUF DPNCSNDBMDNJOQBZNFOUBTQ. 'SPNPOFQFSTQFDUJWF DSFEJUDBSETBSFMJLFBEFMJHIUGVMHJGUGSPN IFBWFO*GZPVQBZZPVSCJMMPOUJNF UIFZµSFBDUVBMMZBGSFFTIPSUUFSN MPBO5IFZIFMQZPVLFFQUSBDLPGZPVSTQFOEJOHNVDINPSFFBTJMZUIBO DBTI BOEUIFZMFUZPVEPXOMPBEZPVSUSBOTBDUJPOIJTUPSZGPSGSFF.PTU PGGFSGSFFXBSSBOUZFYUFOTJPOTPOZPVSQVSDIBTFTBOEGSFFSFOUBMDBS JOTVSBODF#VUVOGPSUVOBUFMZ UIFSFµTNPSFUPUIFNUIBOUIBU $SFEJUDBSETBSFBMTPDPOWFOJFOUFOFNJFT"MNPTUFWFSZPOFIBTB CBETUPSZBCPVUMBUFGFFT VOBVUIPSJ[FEDIBSHFT PSPWFSTQFOEJOH/PU TVSQSJTJOHMZ NBOZQVOEJUT BOEQBSFOUT IBWFBLOFFKFSLSFBDUJPOUPDSFEJU DBSET²6TJOHDSFEJUDBSETJTUIFXPSTU¾OBODJBMEFDJTJPOZPVDBONBLF ³ UIFZTIPVU²$VUUIFNBMMVQ³8IBUBOFBTZCBUUMFDSZGPSQFPQMFXIPXBOU TJNQMFTPMVUJPOTBOEEPOµUSFBMJ[FUIFCFOF¾UTPGNVMUJQMFTPVSDFTPGDSFEJU .

(22) OPTIMIZE YOUR CREDIT CARDS. 5IFUSVUIBCPVUDSFEJUDBSETMJFTTPNFXIFSFCFUXFFOUIFTFUXP FYUSFNFT"TMPOHBTZPVNBOBHFUIFNXFMM UIFZµSFXPSUIIBWJOH#VU JGZPVEPOµUDPNQMFUFMZQBZPGGZPVSCJMMBUUIFFOEPGUIFNPOUI ZPVµMM PXFBOFOPSNPVTBNPVOUPGJOUFSFTUPOUIFSFNBJOEFS VTVBMMZBCPVU QFSDFOU5IJTJTXIBUµTLOPXOBTUIFBOOVBMQFSDFOUBHFSBUF PS"13 $SFEJUDBSEDPNQBOJFTBMTPUBDLPOBXIPQQJOHGFFFWFSZUJNFZPVNJTT BQBZNFOU±VTVBMMZBSPVOE"OEEPOµUGPSHFUUIFGFFTGPSNBLJOHB QBZNFOUFWFOKVTUBEBZPSUXPMBUF*UµTBMTPFBTZUPPWFSVTFDSFEJUDBSET BOE¾OEZPVSTFMGJOEFCU BTNPTU"NFSJDBODSFEJUDBSEVTFSTIBWFEPOF .PTUPGVTEPOµUUIJOLBCPVUUIFTFGFFT8FKVTUDIBSHFBXBZBOEUIFO NBLFPVSNPOUIMZQBZNFOUT SJHIU 6OGPSUVOBUFMZ BMUIPVHIUIFZµSFOPU PCWJPVT DSFEJUDBSEDIBSHFTBSFTPNFPGUIFMBSHFTUVOOFDFTTBSZGFFT ZPVµMMFWFSQBZ±NVDINPSFUIBOUIFDPTUTPGFBUJOHPVUPODFBXFFLPS CVZJOHUIBUOJDFPVU¾UZPVµWFCFFOFZFJOH 5IJTJTOµUNFBOUUPTDBSFZPVBXBZGSPNVTJOHDSFEJUDBSET*OGBDU *FODPVSBHFZPVUPVTFDSFEJUDBSETSFTQPOTJCMZ*GZPVDBOBWPJEUIF VOSFBTPOBCMFGFFTBOEUSJDLT DSFEJUDBSETPGGFSFYDFQUJPOBMCFOF¾UT NPSFPOUIJTMBUFS 5PHFUUIFNPTUPVUPGVTJOHDSFEJU ZPVOFFEUP PQUJNJ[FZPVSDSFEJUDBSE T BOEVTFUIFNBTBTQFBSIFBEUPJNQSPWF ZPVSPWFSBMMDSFEJU5IJTJTBMMUIFNPSFJNQPSUBOUJOUIFXBLFPGUIFDSFEJU DSJTJTJGZPVEPOµUIBWFHPPEDSFEJU JUNBZCFEJG¾DVMUUPHFUBOBGGPSEBCMF IPNFMPBO±FWFOJGZPVIBWFBIJHIJODPNF#ZUIFFOEPGUIJTDIBQUFS ZPVµMMLOPXIPXUPTRVFF[FUIFDSFEJUDBSEDPNQBOJFTGPSFWFSZUIJOH UIFZµSFXPSUI±XJUIPVUQBZJOHVOOFDFTTBSZGFFTPSMBUFDIBSHFT±BOE ZPVµMMLOPXIPXUPVTFZPVSDBSETUPCPPTUZPVSBMMJNQPSUBOUDSFEJU TDPSF-FUµTEPJU. W. Getting a New Card IFUIFSZPVµWFOFWFSIBEBDSFEJUDBSECFGPSFPSZPVµSFUIJOLJOH BCPVUHFUUJOHBOBEEJUJPOBMDBSE UIFSFBSFBGFXUIJOHTUPUIJOL BCPVU. Avoid those credit card offers you receive in the mail.-FUµTDVUUPUIF DIBTF*GZPVIBUFUIPTFDSFEJUDBSEPGGFSTJOUIFNBJMBTNVDIBT*EP WJTJU XXXPQUPVUQSFTDSFFODPNUPHFUPGGUIFJSMJTUT5IFBWFSBHF"NFSJDBO. .

(23) I Will Teach You to Be Rich. SFDFJWFTUXFOUZDSFEJUDBSEPGGFSTFWFSZZFBS BOEGPVSPVUPGFWFSZ UIPVTBOEQFPQMFBDDFQUUIFN5IFOVNCFSTBSFNBSLFEMZEJGGFSFOUGPS TUVEFOUT0VUPGFWFSZUIPVTBOETUVEFOUTXIPBSFNBJMFEPGGFST BDDFQUUIFN BOBTUPOJTIJOHMZIJHIOVNCFS4UVEFOUT±BOEZPVOHQFPQMF JOHFOFSBM±BSFFTQFDJBMMZTVTDFQUJCMFUPUIFTFPGGFSTCFDBVTFUIFZEPOµU LOPXBOZCFUUFS-FUµTHFUSFBM5BLJOHBDSFEJUDBSEPGGFSZPVHFUJOUIF NBJMJTMJLFNBSSZJOHUIF¾STUQFSTPOXIPUPVDIFTZPVSBSN±QFSDFOU PGUIFUJNFJUµTUIFFBTZEFDJTJPO OPUUIFSJHIUPOF.PTUQFPQMFLOPX CFUUFSBOEHPPVUBOE¾OEXIBUµTCFTUGPSUIFNUIFZEPOµUKVTUTFUUMFGPS UIFIPSSJCMFPGGFSTUIBUGBMMJOUIFJSMBQ'PSTPNFUIJOHBTJNQPSUBOUBT ZPVSDSFEJU NBLFUIFFGGPSUBOEQJDLBHPPEDBSE. Avoid cash-back cards, which don’t actually pay you much cash.1FPQMF HFUSFBMMZNBEBUNFXIFO*TBZUIJT CVUDBTICBDLDBSETBSFXPSUIMFTT ²(FUQFSDFOUCBDLPOBMMZPVSTQFOEJOH³8PX JG*TQFOE QFS. Getting a Credit Card When You Have No Income. A. while ago, one of my friends called me and asked if she could borrow my credit card to buy something online. “How come?. Don’t you have a credit card?” I asked. Given all the benefits of having a card (assuming you use it wisely), you can imagine how angry I was when I learned that she didn’t have a card of her own. In my mind, this was the equivalent of one of Dr. Koop’s friends being morbidly obese because of eating only butter. Anyway, I told her to get a credit card and start building her credit. Her response: “I can’t get approved for a credit card because I have no income.” Okay, fair enough. Getting your first credit card can be tricky, especially if you’re young. But there’s an easy solution: Get a secured credit card. These are cards that require you to put down a few hundred bucks in a savings account, and then the bank uses that as collateral to issue you credit. After a few months, assuming you’ve behaved responsibly, you can graduate to a regular (“unsecured”) credit card. To get one, call your bank and ask about it.. .

(24) OPTIMIZE YOUR CREDIT CARDS. NPOUIPONZDSFEJUDBSE *µMMHFUCBDL²#VU3BNJU ³ZPVNJHIUTBZ ²UXFOUZEPMMBSTJTCFUUFSUIBOOPUIJOH³4VSF CVUXIBUJGZPVDPVMETBWF NPSFCZHFUUJOHBGSFF¿JHIU *UXPVMEOµUCFBTPCWJPVTBTSFDFJWJOH NPOFZFBDINPOUI CVUJOUIFMPOHUFSN ZPVµETBWFNPSFXJUIBUSBWFM SFXBSETDBSE. Compare cards online. 5IFCFTUXBZUP¾OEBDBSEUIBUJTSJHIUGPSZPVJT CZSFTFBSDIJOHEJGGFSFOUPGGFSTPOMJOF USZXXXCBOLSBUFDPN *ONPTU DBTFT UIFTJNQMFTUDSFEJUDBSETBSFPGGFSFECZZPVSCBOL TPUIJTJTPGUFO BHPPEQMBDFUPMPPL5IFZµMMDPOOFDUXJUIZPVSCBOLBDDPVOUBOEZPV DBODIPPTFGSPNBWBSJFUZPGPQUJPOT JODMVEJOHDSFEJUMJNJU SFXBSET BOE NPSF0OUIFQMVTTJEF UIFZµSFFBTZUPHFUXJUIPVUNVDISFTFBSDI5IF EPXOTJEFJTUIBUUIFSFXBSETBSFVTVBMMZGBJSMZNFEJPDSF. Rewards are important.:PVµSFHPJOHUPCFVTJOHUIJTDBSEBGBJSBNPVOU TPNBLFTVSFUIFSFXBSETJUPGGFSTBSFTPNFUIJOHZPVµMMBDUVBMMZXBOU* USBWFMBMPU TP*HPUBOBJSMJOFDBSEUIBUHJWFTNFGSFFDPNQBOJPOUJDLFUT GSFF¿JHIUT BOEQPJOUTGPSFWFSZEPMMBS*TQFOEBOEFWFSZNJMF*¿Z*HFU NVMUJQMFGSFF¿JHIUTQFSZFBS BOEFBDIPOFTBWFTNFBCPVU#VUJG ZPVIBSEMZFWFSUSBWFM UIJTDBSEXPVMEOµUNBLFTFOTFGPSZPV#PUUPN MJOF*GZPVµSFHFUUJOHBSFXBSETDBSE ¾OEPOFUIBUHJWFTZPVTPNFUIJOH ZPVWBMVF. Don’t go card crazy./PXUIBUZPVµSFJOUIFNBSLFU ZPVNJHIUCFUFNQUFE CZBOZOVNCFSPGDBSEPGGFST#VUEPOµUPWFSEPJU5IFSFµTOPNBHJD OVNCFSPGDBSETZPVTIPVMEIBWF#VUFBDIBEEJUJPOBMDBSEZPVHFUNFBOT BEEFEDPNQMFYJUZGPSZPVSQFSTPOBM¾OBODFTZTUFN5XPPSUISFFJTBHPPE SVMFPGUIVNC 5IFBWFSBHF"NFSJDBOIBTGPVSDSFEJUDBSET :PVSDSFEJU TDPSFJTCBTFEPOPWFSBMMTPVSDFTPGDSFEJU3FNFNCFS UIFSFBSFPUIFS TPVSDFTPGDSFEJUCFTJEFTDSFEJUDBSET5IFTFJODMVEFJOTUBMMNFOUMPBOT TVDIBTBVUPMPBOT QFSTPOBMMJOFTPGDSFEJU IPNFFRVJUZMJOFTPGDSFEJU BOETFSWJDFDSFEJU TVDIBTVUJMJUJFT ²5BLFJUTMPX ³$SBJH8BUUTPG'BJS *TBBD$PSQPSBUJPOTBZT DBVUJPOJOHBHBJOTUQSFTDSJCJOHBTQFDJ¾DOVNCFS PGDSFEJUTPVSDFT²*UEFQFOETPOIPXMPOHZPVµWFCFFONBOBHJOHDSFEJU 5IFMFTTJOGPSNBUJPOJOZPVSDSFEJUSFQPSU UIFIJHIFSUIFQSPNJOFODFPG FBDIOFXSFQPSU'PSFYBNQMF JGZPVµSFJODPMMFHFBOEZPVPOMZIBWFPOF DSFEJUDBSEJOZPVSOBNF XIFOZPVPQFOBOPUIFSBDDPVOU UIFXFJHIUPG UIBUBDUJPOJTNPSFUIBOJUXPVMECFUFOZFBSTEPXOUIFMJOF*GZPVMJNJU ZPVSTFMGUPPQFOJOHPOFDBSEBZFBS ZPVµMMCFEPJOHZPVSTFMGBGBWPS³. .

(25) I Will Teach You to Be Rich. N. The Six Commandments of Credit Cards. PXJUµTUJNFUPUBLFGVMMBEWBOUBHFPGZPVSDBSETBTBNFBOTUP JNQSPWJOHZPVSDSFEJU0QUJNJ[JOHZPVSDSFEJUJTBNVMUJTUFQQSPDFTT 0OFPGUIFNPTUJNQPSUBOUGBDUPSTJTHFUUJOHPVUPGEFCU XIJDIXFµMM UBDLMFBUUIFFOEPGUIFDIBQUFS#VU¾STU XFµMMTFUVQBVUPNBUJDDSFEJUDBSE QBZNFOUTTPZPVOFWFSNJTTBQBZNFOUBHBJO5IFO XFµMMTFFIPXUPDVU GFFT HFUCFUUFSSFXBSET BOEUBLFFWFSZUIJOHZPVDBOGSPNUIFDSFEJUDBSE DPNQBOJFT )FZ JUµTCVTJOFTT BOEUIFZµSFJOJUUPHFUZPVSNPOFZ UPP . 1. Pay off your credit card regularly. :FBI XFµWFBMMIFBSEJU CVUXIBUZPVNBZOPULOPXJTUIBUZPVSEFCU QBZNFOUIJTUPSZSFQSFTFOUTQFSDFOUPGZPVSDSFEJUTDPSF±UIFMBSHFTU DIVOL*OGBDU UIFTJOHMFNPTUJNQPSUBOUUIJOHZPVDBOEPUPJNQSPWFZPVS. Awful Consequences. I. f you miss even one payment on your credit card, here are four terrible, horrible, no good, very bad results you may face:. 1. Your credit score can drop more than 100 points, which would add. $240/month to an average thirty-year fixed-mortgage loan. 2. Your APR can go up to 30 percent. 3. You’ll be charged a late fee, usually around $35. 4. Your late payment can trigger rate increases on your other credit. cards as well, even if you’ve never been late on them. (I find this fact amazing.) Don’t get too freaked out: You can recover from the hit to your credit score, usually within a few months. In fact, if you’re just a few days late with your payment, you may incur a fee, but it generally won’t be reported to the credit bureaus. Turn the page to find out what to do if you miss a payment.. .

(26) OPTIMIZE YOUR CREDIT CARDS. DSFEJUJTUPQBZZPVSCJMMTPOUJNF8IFUIFSZPVµSFQBZJOHUIFGVMMBNPVOU PGZPVSDSFEJUDBSECJMMPSSJTLJOHNZXSBUICZQBZJOHKVTUQBSUPGJU QBZ JUPOUJNF-FOEFSTMJLFQSPNQUQBZFST TPEPOµUHJWFZPVSDSFEJUDBSE DPNQBOZUIFPQQPSUVOJUZUPSBJTFZPVSSBUFTBOEMPXFSZPVSDSFEJUTDPSF CZCFJOHBGFXEBZTMBUFXJUIZPVSQBZNFOU5IJTJTBHSFBUFYBNQMFPG GPDVTJOHPOXIBUXJMMHFUZPVSJDI OPUPOXIBUµTTFYZ5IJOLBCPVUZPVS GSJFOETXIPDBUBMPHFWFSZTJOHMFXFCTJUFUPHFUUIFCFTUEFBMTPOUSBWFM PSDMPUIFT5IFZNJHIUCFUISJMMFEBGUFSTBWJOH±BOEUIFZDBOCSBH UPFWFSZPOFBCPVUBMMUIFTQFDJBMEFBMTUIFZHFU±CVUZPVµMMRVJFUMZTBWF UIPVTBOETCZVOEFSTUBOEJOHUIFJOWJTJCMFJNQPSUBODFPGDSFEJU QBZJOH ZPVSCJMMTPOUJNF BOEIBWJOHBCFUUFSDSFEJUTDPSF ²1BZJOHZPVSCJMMTPOUJNFJTBCTPMVUFMZDSJUJDBM ³TBZT'*$0µT$SBJH 8BUUT²*UµTCZGBSUIFNPTUJNQPSUBOUUIJOHZPVDBOEPUPJNQSPWFZPVS DSFEJUSBUJOH³*GZPVNJTTBDSFEJUDBSEQBZNFOU ZPVNJHIUBTXFMMKVTU HFUBTIPWFMBOESFQFBUFEMZCFBUZPVSTFMGJOUIFGBDF5IFDSFEJUDBSE DPNQBOJFTBSFHPJOHUPHFUZPV±BOEUIFXPSTUQBSUJT ZPVFBSOFEJU .PTUQFPQMFQBZUIFJSDSFEJUDBSECJMMTPOMJOFOPX CVUJGZPVIBWFOµU TFUVQBVUPNBUJDQBZNFOUZFU MPHPOUPZPVSDSFEJUDBSEµTXFCTJUFUP TFUJUVQOPX/PUF%POµUXPSSZJGZPVEPOµUBMXBZTIBWFFOPVHINPOFZ JOZPVSDIFDLJOHBDDPVOUUPQBZPGGUIFGVMMBNPVOUZPVPXFPOZPVS DSFEJUDBSE:PVµMMHFUBOFNBJMGSPNZPVSDBSEDPNQBOZFBDINPOUI CFGPSFUIFQBZNFOUHPFTUISPVHITPUIBUZPVDBOBEKVTUZPVSQBZNFOU BTOFFEFE. * KVTU UPUBMMZ GPSHPU UIF EVF EBUF GPS NZ DSFEJU DBSE 4P OPU POMZ EJE UIFZ DIBSHF NF B MBUF GFF CVU UIFZ DIBSHFE NF JOUFSFTU PO UIBUNPOUIµTBOEUIFQSFWJPVTNPOUITµQVSDIBTFT*DBMMFEVQUIF DVTUPNFS TFSWJDF MJOF PG NZ DSFEJU DBSE BOE UPME UIFN UIBU * IBE CFFO B HPPE DVTUPNFS JO UIF QBTU BOE BTLFE JG UIFZ DPVME EP BOZUIJOHGPSNFXJUIUIFGFFT5IFSFQSFTFOUBUJWFSFNPWFEUIFMBUF GFF BOE SFGVOEFE PG UIF JOUFSFTU DIBSHF CBDL UP NZ BDDPVOU 5IFZSFUVSOFEBUPUBMPGUPNFXJUIPOFQIPOFDBMM —ERIC HENRY, 25. 2. Get all fees waived on your card. 5IJTJTBHSFBU FBTZXBZUPPQUJNJ[FZPVSDSFEJUDBSETCFDBVTFZPVSDSFEJU DBSEDPNQBOZXJMMEPBMMUIFXPSLGPSZPV$BMMUIFNVTJOHUIFQIPOF. .

(27) I Will Teach You to Be Rich. What to Do If You Miss a Payment. N. obody’s perfect. Despite my warnings, I understand that accidents happen and you might miss a payment at some point. When this. happens, I use my Indian heritage to beat the companies by negotiating with them, and you can, too:. YOU: Hi, I noticed I missed a payment, and I wanted to confirm that. this won’t affect my credit score. CREDIT CARD REP: Let me check on that. No, the late fee will be. applied, but it won’t affect your credit score. (Note: If you pay within a few days of your missed bill, it usually won’t be reported to the credit agencies. Call them to be sure.) YOU: Thank you! I’m really happy to hear that. Now, about that fee . . .. I understand I was late, but I’d like to have it waived. CREDIT CARD REP: Why? YOU: It was a mistake and it won’t happen again, so I’d like to have. the fee removed. (Note: Always end your sentence with strength. Don’t say, “Can you remove this?” Say, “I’d like to have this removed.”) At this point, you have a better-than-50-percent chance of getting the fee credited to your account. But just in case you get an especially tough rep, here’s what to say. CREDIT CARD REP: I’m very sorry, but we can’t refund that fee.. I can try to get you our latest blah blah marketing pitch blah blah. . . . YOU: I’m sorry, but I’ve been a customer for four years and I’d hate. for this one fee to drive me away from your service. What can you do to remove the late fee? CREDIT CARD REP: Hmm . . . Let me check on that. . . .Yes, I was able. to remove the fee this time. It’s been credited to your account. You don’t believe me that it can be so simple? It is. Anyone can do it.. .

(28) OPTIMIZE YOUR CREDIT CARDS. OVNCFSPOUIFCBDLPGUIFDBSEBOEBTLJGZPVµSFQBZJOHBOZGFFT JODMVEJOH BOOVBMGFFTPSTFSWJDFDIBSHFT*UTIPVMEHPBMJUUMFTPNFUIJOHMJLFUIJT YOU:)J *µEMJLFUPDPO¾SNUIBU*µNOPUQBZJOHBOZGFFTPONZDSFEJUDBSE CREDIT CARD REP:8FMM JUMPPLTMJLFZPVIBWFBOBOOVBMGFFPG. 5IBUµTBDUVBMMZPOFPGPVSCFUUFSSBUFT YOU:*µESBUIFSQBZOPGFFT8IJDIDBSEDBOZPVTXJUDINFUPUIBUEPFTOµU. DIBSHFGFFT *µEMJLFUPNBLFTVSFNZDSFEJUTDPSFJTOµUBGGFDUFECZDMPTJOH UIJTBDDPVOU UPP$BOZPVDPO¾SN :FT *SFBMMZUBMLMJLFUIBU 5IFWBTUNBKPSJUZPGQFPQMFEPOµUOFFEUPQBZBOZBOOVBMGFFTPOUIFJS DSFEJUDBSET BOECFDBVTFGSFFDSFEJUDBSETBSFTPDPNQFUJUJWFOPX ZPV SBSFMZOFFEUPQBZGPSUIFQSJWJMFHFPGVTJOHZPVSDBSE5IFPOMZFYDFQUJPO JTJGZPVTQFOEFOPVHIUPKVTUJGZUIFFYUSBSFXBSETBGFFDIBSHJOHBDDPVOU PGGFST *GZPVEPQBZBOBOOVBMGFF VTFUIFCSFBLFWFODBMDVMBUPSPONZ XFCTJUFUPTFFJGJUµTXPSUIJU. .PTUQFPQMFTIPVMETXJUDIGSPNBGPSGFFDBSEUPBGSFFDBSE TPBTL ZPVSDSFEJUDBSEDPNQBOZXIBUUIFZµMMEPGPSZPV*GUIFZXBJWFZPVSGFFT HSFBU*GOPU TXJUDIUPBOPGFFDSFEJUDBSE*TVHHFTUZPVEPUIJTBUUIF TBNFDSFEJUDBSEDPNQBOZUPTJNQMJGZZPVSMJGF±BOETPZPVEPOµUIBWFUP DMPTFPOFBDDPVOUBOEPQFOBOPUIFS XIJDIXJMMBGGFDUZPVSDSFEJUTDPSF *GZPVEFDJEFUPDMPTFUIFBDDPVOUBOEHFUBOFXDSFEJUDBSE MPPLGPSPOF XJUIOPGFFTBOEHPPESFXBSET SFBENPSFBCPVUUIPTFPOQBHF . 3. Negotiate a lower APR. :PVS"13 PSBOOVBMQFSDFOUBHFSBUF JTUIFJOUFSFTUSBUFZPVSDSFEJUDBSE DPNQBOZDIBSHFTZPV5IFBWFSBHF"13JTQFSDFOU XIJDINBLFTJU FYUSFNFMZFYQFOTJWFJGZPVDBSSZBCBMBODFPOZPVSDBSE1VUBOPUIFSXBZ TJODFZPVDBONBLFBOBWFSBHFPGBCPVUQFSDFOUJOUIFTUPDLNBSLFU ZPVS DSFEJUDBSEJTHFUUJOHBHSFBUEFBMCZMFOEJOHZPVNPOFZ*GZPVDPVMEHFUB QFSDFOUSFUVSO ZPVµECFUISJMMFE±ZPVXBOUUPBWPJEUIFCMBDLIPMFPGDSFEJU DBSEJOUFSFTUQBZNFOUTTPZPVDBOFBSONPOFZ OPUHJWFJUUPUIFDSFEJUDBSE DPNQBOJFT 4P DBMMZPVSDSFEJUDBSEDPNQBOZBOEBTLUIFNUPMPXFSZPVS"13*G UIFZBTLXIZ UFMMUIFNZPVµWFCFFOQBZJOHUIFGVMMBNPVOUPGZPVSCJMMPO UJNFGPSUIFMBTUGFXNPOUIT BOEZPVLOPXUIFSFBSFBOVNCFSPGDSFEJU DBSETPGGFSJOHCFUUFSSBUFTUIBOZPVµSFDVSSFOUMZHFUUJOH*ONZFYQFSJFODF . .

(29) I Will Teach You to Be Rich. UIJTXPSLTBCPVUIBMGUIFUJNF*UµTJNQPSUBOUUPOPUFUIBUZPVS"13EPFTOµU UFDIOJDBMMZNBUUFSJGZPVµSFQBZJOHZPVSCJMMTJOGVMMFWFSZNPOUI±ZPVDPVME IBWFBQFSDFOU"13PSQFSDFOU"13BOEJUXPVMECFJSSFMFWBOU TJODF ZPVEPOµUQBZJOUFSFTUJGZPVQBZZPVSUPUBMCJMMJOFBDINPOUI#VUUIJTJTB RVJDLBOEFBTZXBZUPQJDLUIFMPXIBOHJOHGSVJUXJUIPOFQIPOFDBMM. 4. Keep your cards for a long time and keep them active. -FOEFSTMJLFUPTFFBMPOHIJTUPSZPGDSFEJU XIJDINFBOTUIBUUIFMPOHFS ZPVIPMEBOBDDPVOU UIFNPSFWBMVBCMFJUJTGPSZPVSDSFEJUTDPSF%POµUHFU TVDLFSFECZJOUSPEVDUPSZPGGFSTBOEMPX"13T*GZPVµSFIBQQZXJUIZPVS DBSE LFFQJU"OEJGZPVµSFHFUUJOHBOFXDSFEJUDBSE EPOµUDMPTFUIFBDDPVOU POZPVSPMEPOF5IBUDBOOFHBUJWFMZBGGFDUZPVSDSFEJUTDPSF"TMPOHBT UIFSFBSFOPGFFT LFFQJUPQFOBOEVTFJUPDDBTJPOBMMZ CFDBVTFTPNFDSFEJU DBSEDPNQBOJFTXJMMDBODFMZPVSBDDPVOUBGUFSBDFSUBJOQFSJPEPGJOBDUJWJUZ 5PBWPJEIBWJOHZPVSBDDPVOUTIVUEPXO TFUVQBOBVUPNBUJDQBZNFOUPO BOZDBSEUIBUJTOPUZPVSQSJNBSZDBSE'PSFYBNQMF *TFUJUVQTPUIBUPOF PGNZDSFEJUDBSETQBZTBNPOUIMZTVCTDSJQUJPOUISPVHINZDIFDLJOH BDDPVOUFBDINPOUI XIJDISFRVJSFT[FSPJOUFSWFOUJPOPONZQBSU#VUNZ DSFEJUSFQPSUSF¿FDUTUIBU*µWFIBEUIFDBSEGPSNPSFUIBO¾WFZFBST XIJDI JNQSPWFTNZDSFEJUTDPSF1MBZJUTBGF*GZPVIBWFBDSFEJUDBSE LFFQJU BDUJWFVTJOHBOBVUPNBUJDQBZNFOUBUMFBTUPODFFWFSZUISFFNPOUIT. 5. Get more credit. (Warning! Do this only if you have no debt.) 5IJTPOFJTDPVOUFSJOUVJUJWF BOEUPFYQMBJOJU *IBEUPSFBDIJOUPQFSTPOBM ¾OBODFMFTTPOTPGZPSF.BOZQFPQMFEPOµUSFBMJ[FUIJT CVUJOUIFDMBTTJD µT4BMUµ/1FQBTPOH²1VTI*U ³XIFOUIFZTBZUIBUUIFEBODFJTOµUGPS FWFSZCPEZ±²0OMZUIFTFYZQFPQMF³±UIFZBSFBDUVBMMZEFUBJMJOHBTPVOE QFSTPOBM¾OBODFTUSBUFHZ #CFGPSF*FYQMBJO *XBOUUP¾STUBDLOPXMFEHFUIBUZFT *EJEKVTURVPUF 4BMUµ/1FQBJOBOBDUVBM QVCMJTIFECPPL"OZXBZ XIFO4BMUµ/1FQBUBML BCPVU²POMZUIFTFYZQFPQMF ³XIBUUIFZSFBMMZNFBOJT²UIJTUJQJTPOMZGPS UIF¾OBODJBMMZSFTQPOTJCMFQFPQMF³*µNTFSJPVTBCPVUUIJTXBSOJOH5IJT UJQJTPOMZGPSQFPQMFXIPIBWFOPDSFEJUDBSEEFCUBOEQBZUIFJSCJMMTJO GVMMFBDINPOUI*UµTOPUGPSBOZPOFFMTF *UJOWPMWFTHFUUJOHNPSFDSFEJUUPJNQSPWFTPNFUIJOHDBMMFEZPVSDSFEJU VUJMJ[BUJPOSBUF XIJDIJTTJNQMZIPXNVDIZPVPXFEJWJEFECZZPVSBWBJMBCMF DSFEJU5IJTNBLFTVQQFSDFOUPGZPVSDSFEJUTDPSF'PSFYBNQMF JGZPVPXF BOEIBWF JOUPUBMBWBJMBCMFDSFEJU ZPVSSBUJPJTQFSDFOU XIJDIJTCBE*G IPXFWFS ZPVPXFPOMZ CVU .

(30) OPTIMIZE YOUR CREDIT CARDS. Always Track Your Calls to Financial Companies. U. nfortunately for you, credit card companies are very good at using B.S. late fees to increase their revenues. Unfortunately for. them, I’m giving you lots of tactics for getting these fees reversed. One of the best ways to improve your chances of getting fees waived is by keeping track of every time you call your financial institutions, including credit card companies, banks, and investment companies. This is especially true of credit card companies, whom you should treat just slightly better than you would an armed militia coming after your younger sister. It’s tempting, when calling, to be really nasty, but because I was raised right, I don’t scream or threaten violence. Instead, when I call to dispute anything, I open a spreadsheet that details the last time I called them, whom I spoke with, and what was resolved. If only all criminals were as diligent as I am.. The Pocket Tracker for Tracking Credit Card Calls Call Date. Time. Name of Rep. Rep’s ID#. Comments. %PXOMPBEUIJTTQSFBETIFFUGSPNXXXJXJMMUFBDIZPVUPCFSJDIDPN. Whenever you make a call regarding a dispute on your credit card, you wouldn’t believe how powerful it is to refer back to the last time you called—citing the rep’s name, date of conversation, and your call notes. Most credit card reps you talk to will simply give in because they know you came to play in the big leagues. When you use this to confront a credit card company or bank with data from your last calls, you’ll be more prepared than 99 percent of other people—and chances are, you’ll get what you want.. .

(31) I Will Teach You to Be Rich. The Cards I Use. I. have two credit cards. My primary credit card is a Citibank Premier Pass Elite. Citibank offers no-fee and for-fee versions of this card. (the no-fee card offers half the rewards). I ran the calculations and decided to pay the $75 annual fee because I spend enough to justify the cost. With this card, I earn one point for every dollar I spend and one point for every mile I fly, plus free companion fares for domestic flights over $379. You can check this card out, along with the free version, at www.citicards.com. I also have a United Airlines student card that I got many years ago. I use this card only to maintain my credit history, so I’ve set up an automatic charge of $12.95/month for a music subscription site (see page 26 for why this is important). You can learn more details about this card at www.united.com.. IBWF JOBWBJMBCMFDSFEJU ZPVSDSFEJUVUJMJ[BUJPOSBUFJTBNVDICFUUFS QFSDFOU x -PXFSJTQSFGFSSFECFDBVTFMFOEFST EPOµUXBOUZPVSFHVMBSMZTQFOEJOHBMMUIFNPOFZZPVIBWFBWBJMBCMFUISPVHI DSFEJU±JUµTUPPMJLFMZUIBUZPVµMMEFGBVMUBOEOPUQBZUIFNBOZUIJOH 5PJNQSPWFZPVSDSFEJUVUJMJ[BUJPOSBUF ZPVIBWFUXPDIPJDFT4UPQ DBSSZJOHTPNVDIEFCUPOZPVSDSFEJUDBSET FWFOJGZPVQBZJUPGGFBDI NPOUI PSJODSFBTFZPVSUPUBMBWBJMBCMFDSFEJU#FDBVTFXFµWFBMSFBEZ FTUBCMJTIFEUIBUJGZPVµSFEPJOHUIJT ZPVµSFEFCUGSFF BMMUIBUSFNBJOTGPS ZPVUPEPJTUPJODSFBTFZPVSBWBJMBCMFDSFEJU )FSFµTIPX$BMMVQZPVSDBSEDPNQBOZBOEBTLGPSBDSFEJUJODSFBTF YOU:)J *µEMJLFUPSFRVFTUBDSFEJUJODSFBTF*DVSSFOUMZIBWF¾WF. UIPVTBOEEPMMBSTBWBJMBCMFBOE*µEMJLFUFOUIPVTBOE CREDIT CARD REP:8IZBSFZPVSFRVFTUJOHBDSFEJUJODSFBTF YOU:*µWFCFFOQBZJOHNZCJMMJOGVMMGPSUIFMBTUFJHIUFFONPOUITBOE*. IBWFTPNFVQDPNJOHQVSDIBTFT*µEMJLFBDSFEJUMJNJUPGUFOUIPVTBOE EPMMBST$BOZPVBQQSPWFNZSFRVFTU REP:4VSF*µWFQVUJOBSFRVFTUGPSUIJTJODSFBTF*UTIPVMECFBDUJWBUFE. JOBCPVUTFWFOEBZT. .

(32) OPTIMIZE YOUR CREDIT CARDS. *SFRVFTUBDSFEJUMJNJUJODSFBTFFWFSZTJYUPUXFMWFNPOUIT 3FNFNCFS QFSDFOUPGZPVSDSFEJUTDPSFJTSFQSFTFOUFECZZPVS DSFEJUVUJMJ[BUJPOSBUF5PJNQSPWFJU UIF¾STUUIJOHZPVTIPVMEEPJT QBZPGGZPVSEFCU*GZPVµWFBMSFBEZQBJEPGGZPVSEFCU POMZUIFOTIPVME ZPVUSZUPJODSFBTFZPVSBWBJMBCMFDSFEJU4PSSZUPSFQFBUNZTFMG CVU UIJTJTJNQPSUBOU. 8IFO NZIVTCBOEBOE*XFSFJODPMMFHF XFHPUBGSFF5TIJSUPS TPNFUIJOH BOE HPU DSFEJU DBSET XJUI SFBTPOBCMF MJNJUT 4VSF *IBEOPJODPNF CVUUIBUEJEOµUTFFNJNQPSUBOUBUUIFUJNF 8PVMEOµUZPVLOPXJU *XBTSFTQPOTJCMFFOPVHIUPIBWFNZMJNJU SBJTFE UP BGUFS B WFSZ TIPSU QFSJPE PG UJNF &YDFQU UIBU * XBTOµU BDUVBMMZ SFTQPOTJCMF BOE * QBJE UIPVTBOET PG EPMMBST JO JOUFSFTU BOE MBUF GFFT BOE XSFDLFE NZ DSFEJU SBUJOH GPS TFWFSBM ZFBST*UUPPLNBOZZFBSTGPSVTUPDMFBSVQUIJTEFCU*DBOµUOBNF POFQVSDIBTFUIBUXBTUSVMZOFDFTTBSZFJUIFS —MICHELE MILLER, 38. 6. Use your rewards! #FGPSF*HFUJOUPSFXBSETQSPHSBNT MFUNFTBZUIJT+VTUMJLFXJUIDBS JOTVSBODF ZPVDBOHFUHSFBUEFBMTPOZPVSDSFEJUXIFOZPVµSFBSFTQPOTJCMF DVTUPNFS*OGBDU UIFSFBSFMPUTPGUJQTGPSQFPQMFXIPIBWFWFSZHPPE DSFEJU*GZPVGBMMJOUIJTDBUFHPSZ ZPVTIPVMEDBMMZPVSDSFEJUDBSETBOE MFOEFSTPODFQFSZFBSUPBTLUIFNXIBUBEWBOUBHFTZPVµSFFMJHJCMFGPS 0GUFO UIFZDBOXBJWFGFFT FYUFOEDSFEJU BOEHJWFZPVQSJWBUFQSPNPUJPOT UIBUPUIFSTEPOµUIBWFBDDFTTUP$BMMUIFNVQBOEVTFUIJTMJOF ²)JUIFSF*KVTUDIFDLFENZDSFEJUBOEOPUJDFEUIBU*IBWFBDSFEJU TDPSF XIJDIJTQSFUUZHPPE*µWFCFFOBDVTUPNFSPGZPVSTGPSUIFMBTUGPVS ZFBST TP*µNXPOEFSJOHXIBUTQFDJBMQSPNPUJPOTBOEPGGFSTZPVIBWF GPSNF*µNUIJOLJOHPGGFFXBJWFSTBOETQFDJBMPGGFSTUIBUZPVVTFGPS DVTUPNFSSFUFOUJPO³ $SFEJUDBSETBMTPPGGFSSFXBSETQSPHSBNTUIBUHJWFZPVDBTICBDL BJSMJOFUJDLFUT BOEPUIFSCFOF¾UT CVUNPTUQFPQMFEPOµUUBLFBEWBOUBHF PGBMMUIFGSFFTUVGGUIFZDBOHFU'PSFYBNQMF XIFO*IBEUP¿ZUPB XFEEJOHJOBOPCTDVSFUPXOJO8JTDPOTJO *SFEFFNFENZDSFEJUDBSEµT USBWFMSFXBSEUPTBWFNPSFUIBOPOUIF¿JHIU5IBUµTBOFBTZPOF CVUUIFSFµTCFUUFS%JEZPVLOPXUIBUDSFEJUDBSETBVUPNBUJDBMMZHJWFZPV. .

(33) I Will Teach You to Be Rich. Disputing a Charge: How to Mobilize Your Credit Card’s Army for You. O. nce, when I canceled my Sprint cell phone service, they told me my account had a $160 charge. For what? I asked. Wait for it. . . .. “An early cancellation fee.” Yeah, right. I knew I didn’t have a contract, and I had negotiated. out of an early cancellation fee a long time before that. (Cell phone companies make a lot of money from trying these shady moves, hoping customers will get frustrated, give up, and just pay.) Unfortunately for them, ever since Sprint had started trying to rip me off three years before, I had kept records of every phone conversation I’d had with them. The customer-service rep was very polite, but insisted she couldn’t do anything to erase the charge. Really? I’ve heard this tune before, so I pulled out the notes I had taken the previous year and politely read them aloud to her. As soon as I read them, I experienced a miraculous change in her ability to waive the fee. Within two minutes, my account was cleared and I was off the phone. Amazing!!!!! Thank you, madam!!! Wouldn’t it be great if that were the end of the story? Although they told me they wouldn’t charge me, they did it anyway. By this point, I was so fed up that I called in the big guns. Many people don’t know that credit cards offer excellent consumer protection. This is one reason I encourage everyone to make major purchases on their credit card (and not use cash or a debit card). I called my credit card company and told them I wanted to dispute a charge. They said, “Sure; what’s your address and what’s the amount?” When I told them about my experience with Sprint, they instantly gave me a temporary credit for the amount and told me to mail in a form with my complaint, which I did. Two weeks later, the complaint was totally resolved in my favor. What happens in disputes like this is that the credit card company fights the merchant for you. This works with all credit cards. Keep this in mind for future purchases that go wrong.. .

(34) OPTIMIZE YOUR CREDIT CARDS. BNB[JOHDPOTVNFSQSPUFDUJPO )FSFBSFBGFXFYBNQMFTZPVNJHIUOPU LOPXBCPVU . N "VUPNBUJDXBSSBOUZEPVCMJOH.PTUDBSETFYUFOEUIFXBSSBOUZPO. ZPVSQVSDIBTFT4PJGZPVCVZBOJ1PEBOEJUCSFBLTBGUFS"QQMFµT XBSSBOUZFYQJSFT ZPVSDSFEJUDBSEXJMMTUJMMDPWFSJUVQUPBOBEEJUJPOBM ZFBS5IJTJTUSVFGPSOFBSMZFWFSZDSFEJUDBSEGPSOFBSMZFWFSZ QVSDIBTF BVUPNBUJDBMMZ N $BSSFOUBMJOTVSBODF*GZPVSFOUBDBS EPOµUMFUUIFNCVMMZZPVJOUP. HFUUJOHUIFFYUSBDPMMJTJPOJOTVSBODF*UµTDPNQMFUFMZXPSUIMFTT:PV BMSFBEZIBWFDPWFSBHFUISPVHIZPVSDBSJOTVSBODF QMVTZPVSDSFEJU DBSEXJMMVTVBMMZCBDLZPVVQUP . N 5SJQDBODFMMBUJPOJOTVSBODF*GZPVCPPLUJDLFUTGPSBWBDBUJPOBOE. UIFOHFUTJDLBOEDBOµUUSBWFM ZPVSBJSMJOFXJMMDIBSHFZPVIFGUZGFFT UPSFCPPLZPVSUJDLFU+VTUDBMMZPVSDSFEJUDBSEBOEBTLGPSUIFUSJQ DBODFMMBUJPOJOTVSBODFUPLJDLJO BOEUIFZµMMDPWFSUIPTFDIBOHF GFFT±VTVBMMZVQUP QFSZFBS . N $PODJFSHFTFSWJDFT8IFO*DPVMEOµU¾OE-"1IJMIBSNPOJDUJDLFUT. MBTUZFBS *DBMMFENZDSFEJUDBSEBOEBTLFEUIFDPODJFSHFUPUSZ UP¾OETPNF)FDBMMFENFCBDLJOUXPEBZTXJUIUJDLFUT5IFZ DIBSHFENF BMPU BDUVBMMZ CVUIFXBTBCMFUPHFUUIFNXIFO OPCPEZFMTFDPVME .PTUJNQPSUBOU ZPVSDSFEJUDBSENBLFTJUFBTZGPSZPVUPUSBDLZPVS TQFOEJOH'PSUIFTFSFBTPOT*QVUBMNPTUBMMNZQVSDIBTFTPOBDSFEJU DBSE±FTQFDJBMMZUIFMBSHFPOFT$BMMZPVSDSFEJUDBSEDPNQBOZBOEBTL UIFNUPTFOEZPVBGVMMMJTUPGBMMUIFJSSFXBSET5IFOVTFUIFN. .Z EJHJUBM DBNFSB CSPLF BCPVU FJHIUFFO NPOUIT BGUFS * CPVHIU JU 5IF NBOVGBDUVSFSµT XBSSBOUZ FYQJSFE BGUFS UXFMWF NPOUIT CVU * LOFXUIBU"NFSJDBO&YQSFTTFYUFOEFEXBSSBOUJFTPOFMFDUSPOJDTGPS BOFYUSBZFBS*DBMMFE"NFSJDBO&YQSFTTBOEFYQMBJOFEUIFQSPCMFN 5IFZKVTUBTLFEIPXNVDI*IBEQBJEGPSUIFDBNFSB BOEPOFXFFL MBUFS*IBEBDIFDLGPSUIFGVMMQVSDIBTFQSJDFJONZNBJMCPY —RAVI GOGIA, 26. .

(35) I Will Teach You to Be Rich. Mistakes to Avoid Avoid closing your accounts (usually)."MUIPVHIDMPTJOHBOBDDPVOU EPFTOµUUFDIOJDBMMZIBSNZPVSDSFEJUTDPSF JUNFBOTZPVUIFOIBWFMFTT BWBJMBCMFDSFEJU±XJUIUIFTBNFBNPVOUPGEFCU 'PSFYBNQMF IBWJOH JOEFCUBOE JOBWBJMBCMFDSFEJUJTCFUUFSUIBOIBWJOHUIF TBNFEFCUXJUIPOMZ JODSFEJU5IJTJTZPVSDSFEJUVUJMJ[BUJPOSBUF GSPNQBHF 5IFCPUUPNMJOFJTUIBUJUµTVTVBMMZBCBEJEFBUPDMPTFZPVSDSFEJU DBSEBDDPVOUTVOMFTTZPVLOPXZPVSTFMGBOEZPVLOPXZPVµSFHPJOHUP TQFOEBOZDSFEJUZPVIBWFBWBJMBCMF )FZ JUIBQQFOT"UMFBTUZPVµSF CFJOHIPOFTUXJUIZPVSTFMG. 1FPQMFXJUI[FSPEFCUHFUBGSFFQBTT*GZPVIBWFOPEFCU DMPTFBT NBOZBDDPVOUTBTZPVXBOU*UXPOµUBGGFDUZPVSDSFEJUVUJMJ[BUJPOTDPSF. Manage debt to avoid damaging your credit score.²*GZPVDMPTFBOBDDPVOU CVUQBZPGGFOPVHIEFCUUPLFFQZPVSDSFEJUVUJMJ[BUJPOTDPSFUIFTBNF ³ TBZT$SBJH8BUUTPG'*$0 ²ZPVSTDPSFXPOµUCFBGGFDUFE³'PSFYBNQMF JG ZPVDBSSZ EFCUPOUXPDSFEJUDBSETXJUI DSFEJUMJNJUTFBDI ZPVSDSFEJUVUJMJ[BUJPOSBUFJTQFSDFOU EFCU UPUBMDSFEJU BWBJMBCMF *GZPVDMPTFPOFPGUIFDBSET TVEEFOMZZPVSDSFEJUVUJMJ[BUJPO SBUFKVNQTUPQFSDFOU x #VUJGZPVQBJEPGGJO EFCU ZPVSVUJMJ[BUJPOSBUFXPVMECFQFSDFOU x BOEZPVS TDPSFXPVMEOPUDIBOHF. Think ahead before closing accounts.*GZPVµSFBQQMZJOHGPSBNBKPSMPBO± GPSBDBS IPNF PSFEVDBUJPO±EPOµUDMPTFBOZBDDPVOUTXJUIJOTJYNPOUIT PG¾MJOHUIFMPBOBQQMJDBUJPO:PVXBOUBTNVDIDSFEJUBTQPTTJCMFXIFO ZPVBQQMZ )PXFWFS JGZPVLOPXUIBUBOPQFOBDDPVOUXJMMFOUJDFZPVUPTQFOE BOEZPVXBOUUPDMPTFZPVSDSFEJUDBSEUPQSFWFOUUIBU ZPVTIPVMEEP JU:PVNBZUBLFBTMJHIUIJUPOZPVSDSFEJUTDPSF CVUPWFSUJNF JUXJMM SFDPWFS±BOEUIBUµTCFUUFSUIBOPWFSTQFOEJOH. Don’t play the zero percent transfer game.4PNFQFPQMFIBWFTUBSUFE QMBZJOHUIFQFSDFOUUSBOTGFSHBNFUPQSP¾UPGGPGDSFEJUDBSETCZNBLJOH CBMBODFUSBOTGFSTPSUBLJOHDBTIBEWBODFT5IFZUBLFUIFJOUSPEVDUPSZ[FSP QFSDFOU"13UIBUZPVHFUXIFOZPVPQFONBOZDSFEJUDBSET XIJDIVTVBMMZ POMZMBTUTGPSTJYNPOUIT 5IFOUIFZCPSSPXNPOFZGSPNUIFDBSEBUUIJT .

(36) OPTIMIZE YOUR CREDIT CARDS. Oh No! My Credit Score Just Dropped. S. ome of my Type-A readers worry too much about their credit scores. If your credit score suddenly drops, first you should figure. out why by getting a copy of your credit report and score (see page 15). Then what’s important is how you deal with it going forward. Your credit score can start recovering immediately as more positive information is reported, like paying your bills on time. So work to manage your credit wisely and consistently. As FICO’s Craig Watts notes, “The natural movement of these scores is to slowly grow. How do you think people end up with scores in the mid-800s? It’s through years and years of consistently boring credit management.”. MPXSBUFBOETUJDLJUJOBIJHIJOUFSFTUTBWJOHTBDDPVOU XIJDIBMMPXTUIFN UPQSP¾UPGGUIFJOUFSFTU4PNFBDUVBMMZJOWFTUUIFNPOFZJOTIPSUUFSN$%T PSFWFOTUPDLT"UUIFFOE UIFZQMBOUPSFUVSOUIFNPOFZBOELFFQUIF JOUFSFTU*¾OEUIFTFQFSDFOUDSFEJUDBSEHBNFTTPNPSPOJD4VSF ZPV DBONBLFBGFXCVDLTBZFBS PSNBZCFFWFOBGFXIVOESFE CVUUIFXBTUF PGUJNF SJTLPGNJTNBOBHJOHUIFQSPDFTT BOEQPTTJCJMJUZPGTDSFXJOHVQ ZPVSDSFEJUTDPSFKVTUBSFOµUXPSUIJU.PTUJNQPSUBOU UIJTJTBEJTUSBDUJPO UIBUHFUTZPVPOMZTIPSUUFSNSFTVMUT:PVµSFNVDICFUUFSPGGCVJMEJOHB QFSTPOBM¾OBODFJOGSBTUSVDUVSFUIBUGPDVTFTPOMPOHUFSNHSPXUI OPUPO HFUUJOHBGFXCVDLTIFSFPSUIFSF%BWF3BNTFZ BQPQVMBSQFSTPOBM¾OBODF BVUIPSBOESBEJPIPTU TQFDJBMJ[FTJOIFMQJOHQFPQMFHFUPVUPGEFCU)F TBZT ²*IBWFNFUXJUIUIPVTBOETPGNJMMJPOBJSFTJONZZFBSTBTB¾OBODJBM DPVOTFMPS BOE*IBWFOFWFSNFUPOFXIPTBJEIFNBEFJUBMMXJUI%JTDPWFS $BSECPOVTQPJOUT5IFZBMMMJWFEPOMFTTUIBOUIFZNBEFBOETQFOUPOMZ XIFOUIFZIBEDBTI³'PDVTPOUIFCJHXJOTJGZPVXBOUCJHHFSSFTVMUT. Avoid getting sucked in by “Apply Now and Save 10 Percent in Just Five Minutes!” offers.4UBZBXBZGSPNUIFDBSETJTTVFECZFWFSZTJOHMFSFUBJM TUPSF5IFTFDBSETNJHIUBTXFMMIBWF²:PV"SFB%VNCBTT³XSJUUFOPO UIFNJOUIJSUZTJYQPJOUUZQF*DBOµUDPVOUUIFOVNCFSPGUJNFT*µWFTFFO TPNFPOFTUBOEJOHJOGSPOUPGNFBU5IF(BQPS#MPPNJOHEBMFµTXIPHFUT TVDLFSFEJOUPUIFTFDBSET²*GZPVTJHOVQUPEBZ ZPVµMMHFUQFSDFOUPGG. .

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