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Description: A financial guide aimed squarely at "Generation Debt"--and their anxious parents-from the country's most trusted and dynamic source on money matters The Money Book for the Young, Fabulous & Broke is financial expert Suze Orman's answer to a generation's cry for help. They're called "Generation Debt" and "Generation Broke" by the media-people in their twenties and thirties who graduate from college with a mountain of student loan debt and are stuck with one of the weakest job markets in recent history. The goals of their parents' generation-buy a house, support a family, send kids to college, retire in style-seem absurdly, depressingly out of reach. They live off their credit cards, may or may not have health insurance, and come up so far short at the end of the month that the idea of saving money is a joke. This generation has it tough, without a doubt, but they're also painfully aware of the urgent need to take matters into their own hands. The Money Book was written to address the specific financial reality that young people face today, and it offers a set of real, not impossible, solutions to the problems at hand and the problems ahead. Concisely, pragmatically, and without a whiff of condescension, Suze Orman tells her young, fabulous & broke readers precisely what actions to take and why. Throughout these pages, icons direct readers to a special YF&B domain on Suze's website that offers more specialized information, forms, and interactive tools that further customize the information in the book. Her advice at times bucks conventional wisdom (Did she just say use your credit card?) and may even seem counterintuitive (Pay into a retirement fund even though your credit card debt is killing you?), but it's her honesty, understanding, and uncanny ability to anticipate the needs of her readers that have made her the most trusted financial expert of the day. Over the course of ten chapters that can be consulted methodically, step by step, or on a strictly need-to-know basis, Suze takes readers past broke to a secure place where they'll never have to worry about revisiting broke again. And she begins the journey with a bit of overwhelmingly good news (yes, there really is good news): Young people have the greatest asset of all on their side-time.
eBook Publisher: Penguin Group/Riverhead,
Books By Dames Release Date: February 2007

Available eBook Formats [Secure Mobipocket/Microsoft Reader/eReader (recommended)/Adobe PDF - What's this?]: SECURE MOBIPOCKET FORMAT [1.1 MB], SECURE MICROSOFT READER FORMAT [2.7 MB] - Requires Microsoft Reader 2.1.1 for PCs, SECURE EREADER (RECOMMENDED) FORMAT [979 KB], SECURE ADOBE PDF FORMAT [6.0 MB]
All formats: Printing DISABLED, Read-aloud DISABLED

If you forced me to pick one single bit of advice that would have the biggest impact on turning around your financial situation, I wouldn't hesitate for a second. You have to know the score: your FICO score.

Just about every financial move you will make for the rest of your life will be somehow linked to your FICO score. Not knowing how your score is calculated, how it is used, and how you can improve it will keep you broke long past your young-and-fabulous days.

Yet I also know that you are probably FICO-ignorant; I get a 90 percent failure rate when I ask YF& Bers if they know their FICO score or why it is so important.

That's got to change. Right now.

FICO FUNDAMENTALS

A FICO score is a three-digit number that determines the interest rate you will pay on your credit cards, car loan, and home mortgage, as well as whether you will be able to get a cell phone or have your application for a rental apartment accepted. FICO stands for Fair Isaac Corporation, the firm that created the formula that seems to lord over your financial life. The way the business world sees it, your FICO score is a great tool to size up how good you will be at handling a new loan or credit card, or whether you're a solid citizen to rent an apartment to. A high FICO score gives you a great reputation with the business world; you'll get the best deals. A lower FICO score translates into paying higher interest rates on cards and loans. Your credit history can even affect your auto insurance premiums or your ability to get that job you applied for. I wasn't kidding when I said it was connected to just about every part of your life.

With so much on the line, I hope it's clear now that you can't afford to stay FICO-ignorant.

Your FICO score is based on your spending and bill-paying habits, and your overall debt load. I know this might come off as a bit of disturbing big-brotherism, but nearly every financial decision you make is being watched, tracked, and massaged, with the goal of determining your financial profile. The folks you do business with, from lenders (school loans, auto loans, mortgages) and the phone company to credit card companies, constantly file reports on your financial activity to one of three major credit bureaus. These credit bureaus know what you have spent, what you owe, and if you tend to pay bills on time or let them slip. From all that raw personal data, the three credit bureaus calculate your FICO score using a formula developed by Fair Isaac.

Fair Isaac and the credit bureaus make a ton of money sharing your FICO score. Mortgage lenders, auto lenders, employers, cell-phone companies, and insurance companies are happy to pay up to get a glance at your FICO score. They use it just like colleges used your SAT score. It helps them assess whether they want to accept your application, or what terms they will offer you. To the financial world, you are your FICO score—plain and simple.

THE FICO FORMULA

Fair Isaac sorts the data from the credit bureaus into five broad categories that have varying degrees of importance in calculating your FICO score. Don't worry, this is not going to require dusting off your calculus textbook. It's fairly straightforward.

On pages 29–32, I explain what moves you can make to boost your score on these five key elements.

YOUR FINANCIAL LIFE REDUCED TO THREE DIGITS

After massaging all that info, Fair Isaac uses a formula to come up with a score for you that can range from 300 to 850. Anything between 300 and 500 means you are a toxic financial risk and you are going to be hard-pressed to find any business that will want to work with you. Scores between 500 and 850 are sliced and diced to fall into six ranges; the exact cutoffs for those ranges can vary from lender to lender, and for different types of loans, but typically this is what you may encounter.

So your goal is to get your score into the 760–850 range. The good news is that someone with a score of 761 can get just as good an interest rate on an auto loan as someone with an 849. That's true within every score range.

A MATTER OF INTEREST

The range your score falls into ultimately determines the interest rate that you will pay on loans. Other factors, such as your employment history and salary, will also affect the deal you get, but your FICO score is a major component in determining the interest rate you will end up paying for a home mortgage or car loan.

Copyright © 2005, 2007 by Suze Orman