Life is confusing...?

Question

Can somebody explain to me the basics of insurance, stocks, and credit cards? I am going to die once I get out of my parent's basement.
Also, how do you make coffee?

Answer 1

The advice on making coffee has been good, but the advice on the financial topics hasn't been great.

Insurance basics. You are paying someone to accept risk. That is all insurance is. Now there are many different types of insurance, life, homeowners, renter's, auto, health, etc. Each one is a company that pools risk together to make money.

Take auto insurance for example, you pay an insurance company money based on your risk factors. They have been in business a long time, have a lot of access to historical accident rates, theft rates, etc., and want you to pay a certain amount based on your profile and your car. Their risk changes depending upon your age, your car, etc., so the price they charge you changes. Their risk also changes when you have collision insurance (physical damage to your car) versus just liability insurance (insuring other people's property and everyone's health from an accident).

Hopefully you will never have to collect on an insurance policy, but in the event of an accident the insurance company pays for damages, etc., that are spelled out in your policy. As you get older and have more assets to protect it is important to increase the liability limits on your car insurance. Many states and countries have a minimum amount of insurance required to get a car registration. So, imagine the worst case, you get into a serious car accident that damages a lot of property and sends people to the hospital. Not many people could afford to repair all of the damages and pay for hospital stays, etc., but with insurance they cover it and pay for it with the many people they insure who don't have accidents that year.

Health, life, homeowner's and all insurance works in pretty much the same way. The better the protection for you, the more financial risk for the insurance company and the more you will pay to have them assume the risk.

Credit cards - are basically an agreement between you and a lender. They will pay for an item and you will pay them back later. If you don't have the money to pay them back within 30 days, they start to charge you interest on your money and want you to start repaying them over time. Let's say you charge $100 (put it on your credit card) and don't the $100 after 30 days. They will want a portion of their money every month until the $100 is paid off. Interest rates of between 12-24% per year are not uncommon, so at the end of the 30 days you actually owe them $102 (let's use the 24% interest annually, for 2% per month). You pay $20 toward the item and still owe $82. At the end of the next month you owe $83.60 (add 2% to the $82). You pay another $20 and still owe $63.60. Keep this going and you can see that it takes you 5-6 months to pay it off and cost you an additional $6 to buy that $100 item.

People get into trouble because they don't just buy $100 and pay on it until it is paid off, but they keep adding and adding to the principal. Have a $1000 balance and pay $20 per month in interest that doesn't come off the balance. Have a $10,000 balance and you could pay $200 per month in interest and not make a dent on the principal. BE VERY VERY CAREFUL with credit cards.

Stocks represent a small portion of a publicly traded company. If you buy a share of stock you own a very small percentage of a company (it varies and depends on how many outstanding shares the company has). Hopefully you have done your research and it is a company that good prospects going forward. You are hoping for price appreciation and that the value of the stock goes up. Sometimes companies return a portion of their earnings to their shareholders with something called a dividend. For most investors, individual stocks are too risky (or should only be bought with money you really don't need) and you could buy a mutual fund. A mutual fund is a collection of people's money that buys stocks in many different companies to spread everyone's risk around. You might make a little less, but it is also a little less risky.

I hope that helped. There are thousands of good books on financial basics and even Yahoo! Finance is a good place to start reading up on it. Good luck!

Answer 2

Haha same here.

Coffee- 1 spoon of Taster's Choice, 3 of Sugar, 3/4 of hot water and 1/4 of milk. Thats how I like it.

Insurance, on car? Your car dealer will help you will that because it depends on how long you've been driving and how old you are and if the car is new/used.
Insurance on other things... depends....There are lawyers you can ask.

Stocks, dont get into it unless you really know what you are doing because you will be competing against very experience stockbrokers..

And credit cards. Viola. American Express is the best in terms of protection, but alot of stores hate it and wont accept it for the fact that their interest rate is high on their end. Mastercard is the second best because every person that accepts credit cards will accept mastercard and the interest rate on your end is low. =]

And also, always pay your bills.

PS. Im 18 and have a nice credit score because of ^^^. =]

Answer 3

Assuming you have a Mr. Coffee type of coffee maker:

Use 1 tablespoon of freshly ground coffee for every
6 oz of fresh cold water.
Turn on coffemaker, add milk, cream and/or sugar to taste.

The other questions are too complicated to answer here intelligently.
Feel free to email me.

Answer 4

buy a coffee maker and don't use credit cash is king

Answer 5

do you not ask your parent this?