Personal Finance.

How do people let their personal finances get out of hand? In a world that allows online banking, text alerts for low balances, same-day bill payments, retirement planners, and flexible financing options, people still find themselves deep in debt. Underwater on most assets, maxed out on credit cards and HELOCs, overdrawn in checking accounts, no savings to speak of... this is a very sad and real position many people get stuck in.

This is a personal rant of sorts. I understand that many people fall on hard times because of unavoidable circumstances, such as medical bills, but many also willing turn a blind eye to their financial heath. I'm 21 and have a FICO score of 805. This was accomplished by starting my credit history when I was 16. And the true secret? I had help and guidance from my parents. Everyone needs guidance, without it we would go nowhere.

So today I want to offer some guidance. This is by no means perfect fact, or for that matter an example of what you should do, but I will share what has worked for me:

+ First you must understand that a simple banking relationship with any financial institute is the basis for personal financial health. You must understand how your bank handles deposited funds, what fees are associated with your accounts and what interest you earn. All this information can be found in your disclosure brochures that are handed to you when you open an account. LOOK THEM OVER! This will help you avoid fees. In my 7 years as a bank customer, I have never once paid an overdraft fee. Can they always be avoided? Maybe not... which brings us to point two.

+ Second you must protect yourself from mistakes and shortages in cashflows. See if your bank has options for overdraft protection such as a line of credit, or balance sweep from your savings account. This can greatly reduce the cost of your banking relationship. Along with avoiding cash shortages comes budgeting. SET UP A BUDGET. Even if you can't follow it to a T you need a budget. This will force you to consider your purchase decisions.

+ Third you must consider how you pay for things. I almost exclusively use my credit card to pay for every purchase. Thats right, I almost never use cash. This is because I earn rewards for each dollar I spend on the card. The trick credit card companies play works against them. They entice me to use my card with points, but as long as I stick to my budget, I wont carry a balance because I pay in full each month. I also use online banking to pay for all of my bills, the credit card included. This saves on check printing charges and late payment fees because the electronic payments are scheduled ahead of time. Take advantage of payment options that offer the most reward.

+ Fourth you must understand how you save. Personal goals determine how much you should save, but you can always consider how you save. Maximize your interest earned. Plain and simple. Understand how your interest is compounded. Take advantage of retirement perks from your employer. Meet with multiple financial consultants, and cross reference their recommendations.

+ Fifth Look at your credit report! Make sure nothing is out of place. Pay bills on time. Pretty basic, but this is a step most people skip.

Five simple steps. This is how I've managed to live a financially responsible life. These points are rather distiled and simplified but they serve as a jumping off point. The links below are recommended for further study.

Bank Rate has great information on loan and savings rates at hundreds of banks.

Mint allows you to track personal spending and income, set up budgets and alerts for when accounts near the negative.

annualcreditreport.com allows you to request a free credit report from each of the three major credit bureaus annually.

creditcards.com gives great advice on personal finance and credit cards. Showing rewards and interest rates.

Fool.com has information on investing, but they try to sell their "premium" services rather hard. So I've linked you to their personal finance page, which has some good information.