Five Financial Figures Everyone Should Know

These five figures give good insight to your financial healthiness. The list comes from MSN Money article 5 financial figures you should know.

1) Credit Score

This number is very important maybe the most important number you need to know in US. Your credit score affects how much you pay for credit and even for apartment rental deposit. Even employers can use the figure in evaluating job applicants. One clear and concrete example is that when I moved to US and basically had no credit history I had to pay over $2000 deposit on my apartment and now last summer when I rented a new place I was able to get their promotional rate of just $99. Even though all the credit rating bureaus sell their credit score to you, you can still get it for free. I use following services to track my score for free. It’s not necessarily the same score your bank gets but it’s close enough to give a general idea. I use following two regularly and depending on which one you look my credit score is either 772 or 777 which means I’m in a range that is considered excellent by lenders.

You can get a score also from following places for free but they update it very infrequently or requires a paid subscription which can be cancelled immediately for one time free score:

  • Quizzle (Experian)
  • (Experian)
  • (Equifax) – Starts a monthly subscription but if you cancel it immediately after you’ve downloaded your report it’s free.

In addition to getting your score for free you can download your full credit report for all three credit bureaus for free once a year from It’s very advisable to get it every year and check that all the information in your credit reports are correct.

2) Your Tax Bracket

This is the maximum rate you pay income tax but it is not the effective rate because in US you pay for every step of the rate ladder so you end up actually paying less. It’s good to know that if your employer is deducting at your tax bracket rate or more you are probably being held too much taxes. This marginal tax rate also affects how much tax you pay for long term capital gains. So if you are investing that is something you need to take into account. My tax bracket is a 25% but my effective rate is 18.25% for both combined federal and state income tax. However social security, medicare etc push my total tax rate to 26.57%.

3) Your Personal Savings Rate

This is the rate how much of your net income you save instead of spend. For many people I know this rate is 0% or very close to it. I’ve been increasing my rate through out 2013 from a mere 8% to 35% by cutting expenses and then saving or investing the difference. That figure doesn’t even take into account my pre tax 401(k) savings. I’ve used it to save for future expenses like vacation but also to grow my emergency fund and my investments.

4) Your Student Loan Debt

Studying in US is very expensive and many people have 6 figure student loan debt by the time they graduate. It’s very important to keep this figure in sight before getting any other debt because this is one debt you can’t wipe out even in a bankruptcy. I was very lucky to be born in a country where all studying is free and even for my US studies I had a sponsor so my total debt was very small which I paid the first thing I got a job.

5) Your Net Worth

This number shows have you gathered any wealth or are you just in debt. If you have a negative net worth it means that you have more debt that you have assets. The basic formula for calculating net worth is to sum up all your assets (cash + properties + investments) and then deduct all your liabilities (loans + credit card debt + other outstanding payments of any kind) the result is your net worth. You can do those calculations with spredsheet or you can use some online tools like Mint and Personal Capital to do it for you.

My current net worth is around $220k it fluctuates because of currency conversion rates because all my real estate assets are outside US so I just usually us a constant conversion rate which currently is below the actual rate. I’ve been mostly using Mint but lately I’m been starting to use Personal Capital more because it’s more geared towards investors. Both of them have great mobile apps and can connect to most financial institutions to pull down your data automatically.