In honor of Financial Literacy Month, we created a microsite that offers 30 simple steps to financial wellness–one for each day of the month. To enrich the experience, we asked some amazing people to guest post during the month on a topic that is related to the day’s step. Their dedication to financial literacy is truly inspiring! Today, The Weakonomist talks about assembling a financial team.

So you’re getting your finances in order, but you haven’t yet mastered all aspects of financial literacy. That’s okay, none of us ever do. We can make our financial lives easier though by establishing a team of trusted advisors to help out. To help make better sense of who you need and when, let’s compare your financial team to a football team.

Quarterback: You are the quarterback. The quarterback is in charge of every play on the field. They decide who to throw the ball to, if they should pass it off to someone else, if they should make a run for it themselves, or perhaps throw the ball away and start over. You are in charge of your own financial destiny. You decide who gets what and when, and that decision should always be yours and yours alone.

Center: The center is the big guy who hikes the ball to the quarterback at the start of the play. Your tax advisor is your center. Before you (as the quarterback) ever see the ball on each play, it must pass through the center’s legs, just like before you ever get paid you pay taxes to the government. Your tax advisor can help you with setting up the proper withholding taxes, and help you at your annual or quarterly tax meetings to optimize your returns. After the ball is hiked, the center will also help protect you from the other team trying to get you. By the same token your tax advisor will help protect you just in case the IRS or some other regulatory agency has a problem with your tax filings.

Guard: Another protector of the ball and quarterback is the guard. He lines up next to the center. The guard in your financial life is the lawyer. Your lawyer will help protect you and your assets from all the governments (and relatives) that may come after you. There are lawyers that specialize in estate planning, bankruptcy, and any other legal matters you may need to attend to. Make sure you find one that is a specialist in your area.

Running Back: Many plays the quarterback will run rely on the running back. He stands behind or beside the quarterback and can do a variety of tasks. He can block, run the ball, and go out for a pass. The versatility of the running back is akin to the versatility you can get with a financial planner. Your financial planner can help you with investments, debt management, estate planning, budgeting, and even taxes.

I recommend finding a Certified Financial Planner (CFP) as they are required to meet education, experience, and ethics requirements. If you have assets around or above $500,000 consider finding a CFP that is also a member of NAPFA; they are the National Association of Personal Financial Advisors and they only work on a fee basis, as opposed to a commissioned position.

Wide Receiver: Sometimes the line breaks through and all your guards aren’t able to protect you from the overload. You’ve got nowhere else to turn but to look down field. You throw up a Hail Mary pass. Your ball is caught by the wide receiver! This is your credit counselor. Despite our hopes to not to rely on a credit counselor, they are there when you need them and can often get you out of the tightest spots of your finances.

Remember a team is only as good as the individual players on your side. The positions I listed above aren’t everyone you may need on your team to keep your financial house in order. You want to surround yourself with friends and family that support you in this journey.

The Weakonomist fell in love with finance at an academic level and then migrated his way into personal finance. Read more on his blog Weakonomics.com.

In honor of Financial Literacy Month, we created a microsite that offers 30 simple steps to financial wellness–one for each day of the month. To enrich the experience, we asked some amazing people to guest post during the month on a topic that is related to the day’s step. Their dedication to financial literacy is truly inspiring! Today, Wise Bread blogger Julie Rains talks about the cost of credit.

When I consider the cost of credit, two categories come to mind: financial and psychological.

Financial Costs
Most borrowers will consider these elements in making a borrowing decision:

• Monthly payment - can I make the monthly payment?
• Interest rate - does the interest rate seem reasonable?

There are many other factors to bear in mind, such as:

• Total interest paid over the life of the loan (for example, a $200,000, 30-year, 5% fixed-rate loan will cost more than $186,500 in interest; credit card interest rates may run from 7.9% to 29.9% or more, dramatically increasing the cost of a purchase);
• Fees associated with obtaining credit such as mortgage loan closing costs (which may run 2.5% of the total loan value) and convenience check charges (often 3% of the check amount, which added to even a low teaser rate of 2.99% can make a substantial difference in the cost of credit);
• Unexpected fees such as late-payment fees;
• Even moderate amounts of debt can prevent borrowers from saving and investing, foregoing interest earnings on savings account or potential investment growth.

Psychological Costs

• Too much debt can cause stress, especially if income covers monthly payments only and not eventual payoff of a mortgage loan or credit card charges.
• Outstanding loans can be a burden for some borrowers, keeping them tied down to the past (making payments on items purchased, used, and discarded long ago) rather than moving forward with the future (such as saving for a new home or major home improvements, college for their children, or retirement).

There can be benefits to credit as well, such as being able to lock in a price for a new home at a good price with affordable payments, purchasing a car to provide transportation to work, or obtaining a student loan to attend college. It is helpful, though, to consider the entire cost of credit, and not just monthly payments, in making an informed decision to buy now, pay later.

Julie Rains is a Senior Writer for Wise Bread and a freelance writer specializing in career services. She holds a BSBA-Finance, Kenan-Flagler Business School, UNC-Chapel Hill. 

In honor of Financial Literacy Month, we created a microsite that offers 30 simple steps to financial wellness–one for each day of the month. To enrich the experience, we asked some amazing people to guest post during the month on a topic that is related to the day’s step. Their dedication to financial literacy is truly inspiring! Today, book author and financial advice columnist Steve Bucci talks about protecting your financial future.

Why Kim asked me to write to you about insurance must be because she doesn’t like me! Just the name can kill a good conversation. “Question: What do you do for a living? Answer: I sell insurance. Response: silence.” You get my drift.

Still, insurance plays an important role in all our lives if we are to be successful; whether we like to admit it or not. And it’s not just Life Insurance anymore. There are other types like, Mortgage Insurance, Pet Insurance, Flood, Home Owners, Renters and of course Auto.

I want to take a minute to talk about two lesser known types: Credit Insurance and ID Theft Insurance.

Credit Insurance: Generally this is insurance that pays your credit card bill if you get disabled, loose your job or buy the farm. You pay a fee base on the balance you have on your card. The devil is, as they say, in the details. If you are unemployed or disabled you may have a waiting period. If you qualify, they may only make you interest payment or a minimum payment that would be spelled out in your policy. Yes, you get a policy and I suggest you read it. I think they write these things on Swiss cheese because they tend to have a lot of holes. My take is that they are not good bets. I’d rather see you take the money you’d spend and add it to your emergency savings account. An emergency savings account can be used for all sorts of emergencies, not just for a credit issue and you are paying money to yourself, not a credit card company.

ID Theft Insurance: This covers some of your expenses in recovering from having your identity stolen. Some ID theft insurance comes with a service that notifies your credit bureaus and lenders; while others have a staff that tries to unravel any mess or phony bills charged in your name or to your accounts by the thief. None of them pay for time lost from work to file documents, make police reports or attend court hearings if you are sued. Identify theft insurance is included in some homeowners policies, comes for free with some credit cards or may be purchased separately.

Steve Bucci is the author of Credit Repair Kit For Dummies, a book in the popular Dummies series that deals with all aspects of credit and how to keep yours healthy. He also is the Debt Advisor for Bankrate.com and answers question through the Advice Team at MoneyManagement.org.