Your Dating Life and your Money

It shouldn't come as a shock that when you become involved in a relationship there is a real and substantial impact on your personal finances. And I don't just mean that you now have to buy anniversary and birthday gifts (or, in the case of my ex-wife, she demanded "monthiversary" gifts. Ouch).

Your partner's spending and saving habits are going to affect you directly. One of my favorite quotes from the Wall Street Journal is:

"Whether you wind up with a nest egg or a goose egg depends on the kind of chick you married."

 Sorry ladies. The quote is obviously geared towards men, but the principle is the same either way. Having a serious talk about finances before things get too serious may not be the most romantic of conversations, but it is vital to your own financial health.

Don't compromise your financial future. You will both be happier with that nest egg when you need it than with a monthly bauble that she'll soon forget.

A Look at Checks: The Back of the Check

We looked at the front of a check several weeks ago, it is time to look at the back. At first glance there isn't really much to see. Usually, the only relevant thing on the back of the check is the signature line.

The signature line on the back of the check is extremely important, and often handled incorrectly. It is deceptive in its simplicity, it is one of the most important parts of the check. Signing the back of the check, or "endorsing" it transfers ownership of the check. When you sign the check, you are assuming responsibility for the check as well.

Assuming responsibility. What exactly does that mean?

Recall that a check is, in essence, a contract between you and the person that wrote it out to you. They are agreeing to transfer funds to you. By signing the back of that check you are agreeing to receive those funds, take possession of them, and be completely responsible for those funds, even before you receive them.

If that check is no good, you are liable for the check. You took ownership and responsibility for the check. If you deposited the check in your bank account, the bank will subtract the amount of the check from your account and charge you a fee for depositing a bad check. If you cashed the check, the bank will take money out of your account for cashing a bad check, and also charge you a fee.

The reason for the fee? Essentially, the bank gave you an unsecured, short term loan when they let you use that money while the check was still out and had not yet been returned unpaid.

Now that we have talked about the importance and significance of endorsement, let's look at how the endorsement should be done.

The back of the check should be signed exactly the same way as the front of the check is made out.

But that's not MY signature, I don't ever sign with my full name! You might be thinking.

In that case, sign your name as it appears on the front of the check and then resign like you normally do underneath it.

But they misspelled my name! Same as above, sign it wrong then sign it right.

If the front of the check is made payable to you AND someone else, you both need to sign the check.

If the check is made payable to a minor, the legally responsible guardian can sign the back of the check as follows:

The name on the front of the check
the words "A minor by"
The guardian's signature, followed by the relationship of the guardian, aka, "mother"

Generally, this is all there is to signing the back of a check. Writing the words "For deposit only" is NOT an endorsement, the check still needs to be endorsed. Although, writing "for deposit only" restricts what can happen to the check and it often done for security.

There are other ways to endorse a check, but don't do them. I won't even go into them here. Any financial institution paying even a little attention will invalidate the check if you try to endorse it using another method and you will have to go back to whoever made the check out to you and get a new check.

Handling Identity Theft

Perhaps you went to get the mail just like any other day and among your mail is a notice saying you are overdue on your Disney credit card. The only problem is that you don't have a Disney credit card. The name on the letter is obviously yours, the address is yours, but the numerous and expensive  charges are definitely not yours.

Maybe you applied for a mortgage for that dream home you've always wanted. The price was right, the rates looked good, the house is perfect. Then the loan officer tells you that you are declined. Your credit report is riddled with collections and no pays.

No matter how you find out, identity theft is tragic and destructive. It can easily destroy your credit and may even land you in jail. So now that you know about it there are some immediate steps that you need to take to address the theft

Immediately contact the big three credit bureaus. Request a free copy of your credit report. You are entitled to a free copy once a year from each at www.annualcreditreport.com. Review the reports to see just how extensive the theft is. Brace yourself, this may have been happening for years. If not, then you are truly one of the lucky ones.

Contact the bureaus and dispute the items that are not yours. Further, place an alert on your report.
After contacting the credit bureaus themselves it is time to contact the individual companies that have items on your report. Each company that appears on your credit report that is not a legitimate entry of your own needs to be contacted.

Inform them of the crime and dispute the transactions. They will have paperwork for you to fill out. Especially if there are many companies to contact this step may take a long, long time. Complete the paperwork as quickly and thoroughly as possible and get it back to the company.
United States law protects you in some cases in this, but your time is limited and short. If you are only catching this after many years you may not have much recourse.

After completing all of this, and immediately, for time is a major factor, take the appropriate steps to prevent it from happening again and to prevent the situation from escalating even worse.
Sign up for a credit monitoring service to keep an eye on your credit. This will alert you whenever anything happens on your credit, allowing you to know if the thief is trying to use your identity again. You may even be able to catch the thief in the act, if not, at least you can limit the damage that the thief does to your identity.

Identity theft is scary and damaging, if it happens to you your best bet is speedy action.

Using a Personal Loan to Help Repair Your Credit

Credit repair can be a long and difficult process, often showing little result for a lot of time and hard work. Depending on the extent of the damage that you are trying to repair one option may be to consolidate your loans and credit cards into a single, lower monthly payment with a lower interest rate.

Finding a low interest personal loan typically means that it will have to be a loan secured by some manner of collateral. A home equity line of credit typically allows the flexibility necessary to consolidate multiple debts and provides a very competitive interest rate. Other forms of collateral may include a vehicle, a bank CD, a savings account, or even securities (like stocks and bonds).
By offering collateral the risk to the lender is lowered and they will offer you a lower interest rate.

The key here is to secure a loan large enough to cover all of your debts and with a rate lower than what your other debts offer.

Then use the new secured personal loan to pay off your other debts. The thing to remember is that you never get out of debt by taking out more debt. Just because you have paid the loans off with another loan doesn't mean that these debts have disappeared, you do not suddenly have extra money.

The danger is that people often think it is now acceptable to go out and charge up their credit cards again. Doing this means that the method of credit repair they are attempting actually adds to their debt and puts them in a worse position than where they started.

Provided that you pay off all your loans and that the interest rate is lower now, after consolidating, than it was before means that you will now be paying less money to pay your debts. Any debts that were overdue have now been paid off. If the temptation is too great to start charging again call and cancel the paid off credit cards.

Consolidating your debts into a personal loan can help you to begin repairing your credit but it needs to be done responsibly. If you cannot provide collateral and the only loan that you can secure for debt consolidation increases your rate it most likely is not a good idea. For more severe credit problems seek professional help. If you do not have the personal discipline to keep from going more deeply into debt this method may not be right for you.

Five Mistakes that First Time Homebuyers Make

You have decided that the time has come to purchase your first home. Congratulations, you are taking a major step on your way to living out the American dream. The euphoria that overtakes you when you enter that perfect home, that home that you want to make your own, is incredible, overpowering, even life-changing. That rush, however, could be quickly dashed and dampened if you make any of these common 5 mistakes that of first time homebuyers.

1. You're mother might have told you to shop around; this is the time to thank her for that bit of wisdom. Failing to do enough shopping when looking for a home can lead to serious problems. Your excitement can make even a poor choice seem like an ideal one. Shop around and get help from a professional. Carefully consider the neighborhood and the market.
Nothing is worse than finding that perfect home and then discovering that it is well out of your means. Three of the five most common mistakes first time home buyers make involve poor planning concerning their financial condition.

2. Mistake number two is failing to know the condition of your credit. I've seen people in the office with their mortgage lender receiving the news that their identity had been compromised and they were ineligible for a mortgage. The devastating possibilities of not keeping track of your credit report can cost you your first home. Fortunately, thanks to the FACT Act you are entitled to a free copy of your credit report annually from the three major credit-reporting bureaus. Visit www.annualcreditreport.com right now and see what is being reported about you. Make sure that it is accurate.

3. Once your credit report has been verified for accuracy secure that mortgage! Research lenders and programs (remember that failing to shop is mistake number 1), choose a lender and apply for pre-approval. See what the lender is willing to lend to you. Knowing how much you can borrow will help narrow your search to homes within your range and help you avoid the disappointment of finding that your home of choice is outside what a lender will lend you.

4. A startling fact to keep in mind is that 100% of foreclosures are on loans that the lender felt the borrower could repay. Just because the lender will lend you all that money does not mean that you can necessarily afford that much home. Remember that with that home comes bills that you may not have paid before, taxes, and various expenses, like lawn care. Budget for all of these and more. A general rule of thumb is that your housing expense, i.e. your mortgage, should be around 30% of your monthly income. Calculating the true cost of that home is crucial if you want to be sure that you can afford to keep that home.

5. The final big mistake that first time homebuyers make is failing to get the house inspected. There are thousands of things that can be wrong in that house that you think is so perfect. Hire an inspector to make sure the house is sound. Do not assume that since the bank is having the house appraised that you do not need an inspector, that is not what the appraisal is for. Also do not assume that because the seller has done an inspection everything is OK, that inspector was working for the seller, not you. Get the house inspected!

There are many things that can go wrong when looking for your first home. Don't let any of these five mistakes be one of those things that go awry. Buying your first home should be euphoric, do everything you can to keep it that way.

Protecting Your Identity

Few things are scarier in this modern age than having your identity stolen. Your very identity being stolen, used, and abused. It is a crime where the thief is faceless, unknown, and seldom caught. This veil of secrecy is part of what is so scary; the thief could be anyone, anywhere.

This frightening crime can happen t almost anyone without notice and often can takes months or even years to detect. Someone can be living off of your identity for years, even worse, someone may even be committing crimes in your name.

Is there anything you can do? How can you protect yourself?

The best defense against identity theft is to be proactive about monitoring your credit report. By keeping a close eye on your credit you can detect if there is anything happening with your identity. Fortunately there are a couple ways to do this.

The FACT act allows you to obtain a copy of your credit report from each of the three main credit reporting bureaus every 12 months for free. This allows you to check your report for inaccuracies every year. If there is anything incorrect on your credit report contact the bureau directly.

Several web sites will offer these reports, but many will charge you for the privilege. The Federal Trade Commission established a web site where you can access the free reports every year. Do not be fooled into paying for the right to see your report.

Credit monitoring services can also help protect you from identity theft. Again, with identity theft becoming such a major problem an entire industry has arisen around offering identity theft protection. Some services are reliable and helpful, others not so much.

Deal with a reputable service to ensure that you are getting what you pay for. Ask for referrals from friends and family, or just go with one of the big three bureaus- Equifax. They offer a comprehensive plan on there site that includes another free copy of the credit report.

Another excellent way to protect yourself from falling victim to identity theft is to limit the amount of information that may be stolen. Never, ever, provide sensitive information in E-mails or respond to requests for account numbers, passwords, social security numbers, or any other personal information.
All personal documents that you are discarding should be shred. Dumpster diving can compromise your personal information and allow it to fall into the hands of potential thieves.

Identity theft is scary and dangerous. It can lead to years of damage to your good name. Take action to protect yourself and monitor your credit. Simple steps now can save you a lot of trouble later.

How to Report Identity Theft

Finding that you have fallen victim to identity theft can be an awful experience. Maybe you received a large credit card bill in the mail for a card that you have never owned; maybe you were denied credit for a car loan; even worse, maybe you were told that you could not get a mortgage on your dream home because of your credit.

No matter how you learn of the theft of your identity there are four places you must contact immediately:

1) The credit bureaus

When you contact the credit bureaus you will need to place a fraud alert on your reports. This will prevent the thief from opening any future accounts in your name. This will also entitle you to a free copy of your credit report.

Review this free copy of your report to check for errors and for instances of fraudulent accounts. Any accounts that you cannot identify should be immediately reported to the credit bureau. The credit bureaus will allow you to dispute inaccurate information right on their websites.

The three major credit bureaus are: Equifax, Experian, Transunion

2) The companies that have fraudulent accounts on your report

Contact all of the companies that are reporting illegitimate information on your credit report. You will want to talk to someone in their fraud department and send them any supporting documentation that you may have in your possession. Be sure to send only a copy, not the originals, keep those in your possession.

In many cases the company will require that you fill out an affidavit of fraud, particularly banks. Ask for a copy of this form if the company does not automatically give you one. If they do not have such a form ask if they will accept a copy of a police report or the Federal Trade Commission's ID Theft Affidavit.

3) The Federal Trade Commission

You can, and should, file a complaint directly to the Federal Trade Commission (FTC). By doing this you will help the federal government and law enforcement track down and fight ID theft. The FTC will distribute the information about the theft to appropriate agencies and investigate companies that may be participating in the theft.

By filing the complain online you can print it and provide it to companies that may request it and to local law enforcement. According to the Federal Trade Commission, this filing, along with the police
report, can be used to:

(1) permanently block fraudulent information from appearing on your credit report;

(2) ensure that debts do not reappear on your credit report;

(3) prevent a company from continuing to collect debts that result from identity theft: and

(4) place an extended fraud alert on your credit report.

4) Local law enforcement

Call your local police department and inform them that you need to file a report concerning identity theft. This is best done in person but occasionally must be done on the phone or online. Give the police department a copy of the FTC filing so that they may add it to the police report.

Of course, get a copy of the police report once it has been completed and keep this for your records. The police report may be necessary to file a claim with individual companies.

While identity theft can be incredibly damaging and scary, don't allow it to paralyze you into inaction. Immediately contact these groups and file the necessary reports.

Have you checked your credit score?

The American Bankers Association has launched a Get Smart About Credit campaign for the month of October. So for most of this month the focus here will be on managing credit.

The first most important thing to know is where you stand. You can get free copies of your credit report from annualcreditreport.com. There you can get your credit report from each of the three major credit bureaus for free, once a year.

Additionally, Wells Fargo Bank is offering a free credit score and complimentary credit report to all customers until mid November.

No matter how you.do it, get your credit report this month and check it for accuracy. Know where you stand!

Investing on a Shoestring

The number one reason I hear from people for not investing is "But I just can't afford it."

Despite what many people think, it is possible to invest for the future effectively while still living on a low income. There are a few strategies that can help you to invest consistently and responsibly and build your future.

 Make it automatic

The easiest way to get over the investing mental hurdle is to make your investments automatic. But wait! Your income is low enough as it is, right? How can you lower your income and still live?

The answer is that if you never see the money you will never miss it. When you get a raise, your spending habits increase to meet the new income. It works the same way in reverse. If your paycheck is smaller, you find a way to live on it.

Obviously, if you are having severe money problems and can't support yourself on your income at all it is time to get financial help. Investing is not appropriate for you at this time. Contact a financial councilor.

But otherwise, having a small amount of money come out of your paycheck automatically so you never see it is the best way to build up your investing money. Having this money go directly into an investment is ideal.

Retirement savings

The first place that investments should be made is into retirement plans like a 401(k). With employer sponsored plans they can take this right out of your pay and make this very easy. What's even better is that with many plans your contribution is tax deductible. This means that while you may be investing $100 a paycheck into your retirement fund, your paycheck is only $70, or so, less than it was.
With a 401(k) there is also frequently an employer match. This should be understood for what it is, free money.

Investing in this way will allow you to put money away, automatically, and potentially make you a profit, even on a low income.

Dollar cost averaging

Dollar coast averaging is the strategy of investing a specific amount of money into a specific security or fund over a specific time period. This is a great way to invest on a low income because you can put any amount into this strategy, as long as you do so consistently. So you could, for example, invest ten dollars a paycheck.

The strategy with this is to be consistent. As the price of the security or fund changes you will acquire a different number of shares each time you invest, but over time you will be building your portfolio and investing for your future.

Investing is important to securing your financial future. No matter what your level of income, it is possible to invest. Look into these investment strategies and begin saving for your financial goals and dreams.

What is the FDIC?

With the stream of bank failures more and more people are becoming concerned about the stability of their bank. Also, people are starting to rely upon the guarantees made by the FDIC to protect their money. But what exactly is the FDIC? And what does the FDIC protect anyone against?

The FDIC is the Federal Depositors Insurance Corporation. And that is exactly what it is, an insurance corporation. Contrary to popular belief, the FDIC is not a government institution. It is backed by the US Federal Government, but it is not an obligation of the government.

It is an insurance company that insurers deposits in a participating bank. In order to receive this insurance a depositor does not need to pay a premium, the bank pays that. The depositors only concern is to be sure that their financial institution is a member of the FDIC.

How does someone tell if their bank is a member of the FDIC?

Every bank insured by the FDIC must display a sign advertising FDIC coverage beside the teller window.

What institutions are covered by the FDIC?

Most banks are covered by the FDIC. This means that credit unions, insurance companies, investment firms, and some smaller banks are not covered.

The FDIC protects depositors against the loss of their money in the event of a bank failure. It does not insure against monetary loss at an institution, therefore it does not cover any variable investments.

The FDIC was created to reassure depositors and strengthen the banking system. It was not created to insure against a collapse of the banking system on a widespread scale. This is why there is concern every time a bank fails over how much it cost the FDIC. The FDIC does not have an unlimited amount of money to cover banks.

The FDIC only keeps a very small amount of money in reserves to back up all the deposits that it is insuring. If several large banks fail at once, causing a collapse of the banking system, the FDIC would not be able to cover all of its insured deposits.

Being backed by the Federal government means that the FDIC will likely eventually return all of that insured money to its depositors, but it could take quite some time.

In the final analysis, many people have been encouraged by the government to believe that the FDIC is a foolproof system to guarantee the banking system. Also, many people have come under the impression that the FDIC is government run, also incorrect.

The FDIC is not perfect, but it is a system that has worked in the past, has even worked recently to return money into the hands of depositors. It is very important that people understand how the system works and not put an unreasonable amount of faith in the system.

How to Pay for College

Colleges and universities enjoy a unique position in the American economy. Normally as prices rise fresh products hit the market. The new products provide competition that keeps prices in check. In the world of higher education, however, supply stays relatively constant, prices go up and there is very little to keep prices in check.

So what does that mean? College is expensive, and it is only going to become more expensive. So how do you pay for a college education?

There are many options when it comes to paying for college. In most cases college expenses are covered through several sources in addition to savings and earning; scholarships, loans, grants, in addition to several popular programs.

Still, the best strategy when planning for college is to assume that no aid is forthcoming and start putting the money away. The longer you have until college the more reasonable options you'll have.

Three primary methods of college funding are investments, financial aid, and loans. They are not exclusive and most people use all three.

Investments

The more time you have before college the more attractive this method is. There are several investment options for saving for college.

* Dollar Cost Averaging in Funds

A college savings portfolio should be well diversified. The further away college is the more of the portfolio that should contain stock oriented funds. Dollar cost averaging works particularly well here as college funds are generally saved over time.

Of course, the general rules of dollar cost averaging should be kept in mind, if using mutual funds avoid those with high front-end loads.

* Tuition Savings Plans (also known as 529 plans)

These typically come in two varieties, Pre-paid Tuition Plans and College Savings Plans.

Pre-paid tuition plans:

These guarantee that if you pay the price of tuition today, in a lump sum or in payments, the state will cover the cost of tuition when your child is ready to attend a state university.

College savings plans:

These are essentially state sponsored investment accounts. The state invests the money and participants share in the profit. There is no guarantee and you could actually lose money.

* Zero-Coupon Bonds

These bonds get their name from the fact that they pay their interest only at maturity. There is no interest or income until then. They are attractive to conservative investors for college education expenses because you can buy them to time them to mature when college expenses should begin.
For example, if your 2-year-old son will be starting college in 13 years (Harvard?) you can purchase a 13-year maturity zero. The longer time until maturity the cheaper the bond, so a 13 year maturity $1000 zero may sell for somewhere around $600. That same bond maturing in 5 years may cost you over $800. In both cases when Junior is ready for college that bond can be exchanged for $1000.
The big catch? You have to pay taxes on that income that you are not earning every year. Even though you get "zero" from the bond the "ghost" interest is still taxable.

* Savings Bonds

These are popular, especially to conservative investors and grandparents. When purchased in the parent's name, when the parent is at least 24 years old, and used for college tuition or fees the bond's interest can be tax-free.

There are certain income provisions to qualify, contact a tax advisor.

Financial Aid

There are several places to get specific information about available financial aid programs: high school guidance councilors, financial aid officers at the college, and the Federal Aid Information Center.

Here are a few major sources of Federal assistance:

* Pell Grants
These are reserved for the most needy students and vary greatly in amount.

* Stafford Loans
These are loans directly from the government, often through banks. The interest rate is tied to Treasury rates and usually has a 10-year pay back period.

* Perkins Loans
These are also limited to students with great need. They typically have very low interest rates and certain jobs after graduation could result in the canceling of the loan altogether. If your child takes specific jobs the government might actually pay back the loan for him or her.

* Private Loans
And of course you can always take out a private loan to help pay your child's college expenses.
Scholarships

For information on scholarships talk with guidance councilor or a college financial aid officer. Other excellent sources for scholarship information include: your employer, professional organizations, religious associations, local civics group, unions, state agencies, and social groups. You should also go to the library and look through scholarship guides.

Finally, use the Internet to search for scholarships. Try:

The College Board:
www.collegeboard.com

FastWeb:
www.fastweb.com

And finally, for more information visit:

Seven Mistakes Made When Saving For College:
http://www.e-personalfinance.com/article/7-Mistakes-Made-when-Saving-for-College.html

What is a 529 Savings Plan:
http://www.e-personalfinance.com/article/What-Is-a-529-Savings-Plan.html

College Scholarships 101:
http://www.e-personalfinance.com/article/College-Scholarships-101.html

Why Checks are Becoming Obsolete

Everyday there are bills to be paid and things to be purchased. Money transfers hands in stores, at banks, for services and goods. For many years a check was the preferred method for transferring money between two parties.

Checks were far safer than carrying or sending cash. They also provided a convenient way to move funds and pay bills. In more recent times other forms of payment have eclipsed the benefits of checks and have rendered checks obsolete.

Amid the aftermath of the September 11th 2001 terrorist attacks on the United States no planes were permitted to fly over US soil. This crippled the system of checks clearing vital to the transfer of money through checks.

For a check to clear it needs to physically be transported to the other bank that has the funds so that the funds can be pulled from that bank. With no planes flying there was no way to clear checks. In response the US government instituted Check 21 legislation.

Check 21 allowed any institution that receives a check to convert it into an electronic transaction and clear the check electronically. This allows for checks to clear without actually physically needed the check to be transported.

Check 21 delivered the crushing blow to checks, making them completely obsolete. If a check can be converted into an electronic transaction there is no need for a physical check any longer/

While Check 21 finally made checks obsolete they were already becoming obsolete for many other reasons:

* Cost

Many banks still charge a fee to purchase checks. This fee can range anywhere from a few dollars up to over one hundred dollars for some types of business checks. If the checks on an account cost money then it becomes more cost effective to use fewer checks, or cease using them altogether.

* Security

When giving someone a check you are providing them with access to a lot of information. On the face of the check is your account number, your name, address, sometimes even your phone number or drivers license number.

All this personal information can be used by potential identity thieves This information is best kept strict control over, by giving out a check you jeopardize the security of your personal information. Using a check card or a debit card limits this information and keeps your personal data out of potentially dishonest hands.

* Convenience

Carrying a checkbook around can be clumsy and burdensome. While they easily fit into a purse they do not fit anywhere into a wallet and can be uncomfortable to carry in a pocket. In addition, having to pull out the checkbook, find a pen, and make out the checks at a point of sale can be time consuming.

Having a check card on hand will allow access to the money in a checking account without requiring the space, the pen, or the time involved in writing out the check. A little card will easily fit into a wallet or pocket, easily replacing the burdensome checkbook.

* Liability

When a merchant received a check there is no way to guarantee that the funds will be available when the merchant comes to collect. There are millions of bad checks out there, written by people that had no intention of actually honoring the check.

Even if a check is verified by the merchant with the bank it is drawn on there is no guarantee that the money will still be in the bank when the merchant comes to collect.

When a check card is authorized the merchant has an extremely good chance of actually receiving payment for that transaction. This makes checks a far greater liability than other forms of payment.

Checks are quickly becoming obsolete. On many fronts checks are proving unreliable and burdensome. Check cards offer a safer, more convenient alternative and make checks outdated.

Understanding Checks: The basics

Checks are so rarely used these days that a lot of people just don't understand them anymore. But if you get paid from an employer, chances are that you will receive a paper check at some point.

There are five parts to the front of the check that are important to its negotiability, that is, to its ability to be used as a way to exchange money.

1. The date-- The date must be current. After six months the check is stale dated and cannot be deposited or cashed. If the check is written for a date in the future, it is post-dated and no good until that date. That is not to say that a bank won't accept the check early; banks are not breaking any laws in negotiating a post dated check. But as  a courtesy to the account holder who wrote the check, if the bank notices the post date it probably won't accept it.
2. The Pay to the Order of line-- this is who the check is made payable to. No one else has the legal right to the money. NO ONE. Not the parent, not the spouse, not a neighbor. Only the person named in the check has the right to negotiate it. Sometimes a bank will cash a check for a parent or spouse IF both the person the check is made payable to and the person negotiating it are on the same account. This is an exception. Even if the person that the check is made payable signs the check over to someone else, a bank may require that both parties appear in person in order to negotiate the check.
3. The numeric amount of the check-- this is where the amount of the check is written in numbers like: 100.00. This is for convenience only and must match the legal line.
4. The legal line-- this is where the amount of the check is written out in words like: one hundred dollars. This is the amount that the check is legally made out for. If it doesn't match the numeric amount, it is the legal amount that the bank must use. The bank can, alternately, refuse to negotiate a check where the numeric and legal amounts don't match.
5. The authorized signature-- a check is a contract. If the check is not signed by the account holder on the bottom right hand corner, the check is not authorized and not legal. Only the owner of the account from which the check is drawn can sign the check.

These are the things that make the front of a check legal. Endorsement (signing the back of the check) is a completely different matter that I will touch upon in the near future.

What is a Money Market Account?

There are so many different types of financial products in the market that sometimes it can be difficult understanding the right one for you. Most banks offer the typical checking accounts and savings accounts - and money market accounts.

Very often you will see a rate sheet or board advertising the bank's current rates on CD's and money market accounts. The money market rates are higher than the savings account rates, but typically lower than the CD rates. But what exactly is a money market account?

The first thing you may notice about a money market account, after the higher interest rate, is the high minimum balance. Depending on the bank the minimum balance for a money market may be anywhere from $2500 to $10,000. And just because that is the minimum balance on the account doesn't mean that that is the minimum balance to get that great advertised rate.

Interest rates on money market accounts are typically tiered, the more money you have in the account the higher the yield. So in order to capture the interest rate you are looking for you may have to maintain a significant balance.

Once the money is in this account you have greater liquidity than you would in a savings account. Savings accounts, by law, are restricted in the number of withdraws you may make in a monthly statement cycle. While Federal Regulation D allows six withdrawals from any savings-type accounts, banks typically limit regular savings accounts further.  Money Market accounts, however, are usually not limited by banks in this way and are permitted the six withdrawals.

Even more surprising, three of those six withdraws can be by check. Yes, this is a savings vehicle that allows you to write checks. You do not, however, have the ability to use a check card on this account for point of sale purchases, although you may have ATM access.

A money market account gives you a higher yield on your money, gives you greater access to your funds and allows you to write checks, but it requires a high balance. Sounds good, but is it safe?

Unlike a money market fund, a money market account is FDIC insured up to the maximum legal limit. The money in a money market account is completely safe. The higher interest rate can be provided to you because the bank is not as restricted in how it can safely invest these funds as it is in a savings account. The bank has the ability to better diversify money market deposits, allowing it to make more money. While no risk is placed upon your money the bank can pay you more.

Also, money in a money market account is likely to remain with the bank for a longer period of time than money in a savings account. This allows the bank a greater return on their investment of your funds, allowing them to pay you better.

A money market account offers may great advantages over a regular savings account. If meeting the minimum balance requirements is not a problem consider placing some of your liquid capital into this account type.

Dollar Cost Averaging: A painless way to start investing

Particularly when you are young, learning how to get started investing can seen impossible. Chances are good that you don't have money socked away to drop into the stock market, but you've probably heard about the incredible potential of growing your money through the market.

Dollar cost averaging is a popular investment strategy that can be used by almost anyone. It allows for investments using small amounts of money over long periods of time. Dollar cost averaging reduces risk, makes investing more manageable and grows your investments over the long term.

How does Dollar Cost Averaging work?

Dollar cost averaging is simply the strategy of investing a predetermined amount of money into a specific investment or investments over a specific period of time. For a beginning investor this may look like investing $50 every paycheck into an index fund or Exchange Traded Fund (ETF).

That $50 would be automatically invested into that fund every other week, buying however many shares that can be bought for that price. As the share price fluctuates the number of shares purchased will also fluctuate. For example, if one week the price is $10 this investor would have purchased five shares. If the next investment date the share price was $5 ten shares will have been purchased.

Reducing Risk

Dollar cost averaging reduces risk for an investor by spreading their investment out over a long period of time. The full investment amount is not used to purchase the shares at one time, risking potentially volatile price changes.

Using this system there is no worry that the money was used to purchase shares at a point when the price was particularly high. Since the price at which the shares are purchased keeps changing the focus in on share accumulation.

Making Investing Easy

Dollar cost averaging makes investing easy for anyone. Once the automatic investments are established there is no worry about making sure the shares are purchased at the correct times and since the investments are going into the same securities there is no worrying about picking the right investment.

Better yet, the stress of watching your portfolio go up and down is reduced as when prices are down the investor can rest assured that they are going to get a good deal on picking up a few more shares.

Then it is just a matter of time until the share price grows and the added number of shares will multiply the earnings.

Grow Your Investment!

As the price of the security goes up and down, the one constant is that the number of shares in the portfolio will continue to increase. This is an excellent way to grow an investment, as the number of shares, if not the share value, goes up and up.

Investing into an index fund or ETF helps to make sure you are well diversified and reduces the risk of major loss. Dollar cost averaging allows the investor the peace of mind of knowing that value is being built as the number of shares increases.

Dollar cost averaging provides many great benefits to investors of all levels of experience. It grants peace of mind, spreads out risk, and promotes portfolio growth. It is an effective strategy that can work for anyone, and that can work in your investment portfolio!

Introducing Youth Cent

Youth Cent is a new blog, brought to you by The Wicked Googly. We explore personal finance for teens and young adults, delving into such things as saving for a car and retirement, how to write a check, how to invest, and everything in between.

If you have questions about personal finance, feel free to reach out to us! Otherwise, check back with us often and we'll explore topics relevant to you and your money.