Struggling With Money? Here’s Why You Need to Speak Up

It’s not easy to talk about money, especially when you’re not managing it well. In a society where appearances are sometimes more important than the truth, it’s easier to put on a good face — and maybe buy a shiny new car — than to admit that you’ve got money issues.

It doesn’t help that money is a taboo topic. According to a 2014 survey by the American Psychological Association, 32% of Americans feel uncomfortable talking about money with family. But even if you grew up thinking that talking about money is a no-no, here are 5 reasons why discussing your struggles is crucial to your financial future.

1. Vulnerability is empowering

The main reason it’s hard to talk about money problems is the fear of judgment. In some families or circles of friends, that fear is more than a mere possibility. But if you continue to act like nothing’s wrong, nothing will change.

Even if you don’t expect your family or friends to be super helpful, talk about it anyway. The act of sharing something you’re grappling with can give you the emotional strength to face it.

This process also forces you to be honest with yourself about your situation. Once you reach this point of self-honesty, it’s easier to take the next step and address it.

2. They might have some good advice

There may not be a financial advisor or money coach in your family or circle of friends, but that doesn’t mean your friends and family can’t offer guidance. Since they all deal with their personal finances on a daily basis just like you, they may have experiential knowledge that may be useful.

And, since money can be a tough topic to talk about, it’s likely that you don’t know what their experiences are until you ask. For example, if you’re considering bankruptcy, a family member or friend may be able to talk about a similar experience and how they got through it financially and emotionally.

Even if they don’t have experiences that they can draw upon, your family and friends may still know about some options that you haven’t considered yet. But again, you won’t know until you ask.

Along these lines, your inner circle may know of some good resources you can tap into. They may know a financial advisor or money coach that can help you out. Or perhaps they recently read a great book on managing finances, or know about some good websites that offer helpful advice on various personal finance topics.

3. They’re not perfect either

We’ve all made money mistakes.

Even if your family members or friends are in a good place financially, they may still be able to empathize with your situation based on past experiences. In some cases, that empathy can help you feel as if you’re not alone. It may also give you the confidence to get back on the right track.

4. They can keep you accountable

By reaching out for help, you may get more than you expect. For example, maybe someone in your inner circle will even volunteer to be your sounding board, aka accountability partner.

As you’re working toward improving your financial situation, having this partner can help you stay on track. For example, you can set up a time to chat with this person once a week to talk about how you’re doing. Or, if she has experience managing money, you can even ask her to take a look at your budget and help you see your blind spots.

5. They care about you

Above all, it’s important to understand that your family and friends care about you and want you to succeed.

This doesn’t mean that discussing money will be an easy conversation. It also doesn’t mean that your family and friends will have all the right answers. But it does mean that your loved ones will do anything they can to help you figure things out.

Next steps

Some of the best financial advice you can get comes from the people closest to you.

As you consider your situation, think about family members or friends that you feel most comfortable approaching to talk about your finances. And, if you don’t feel comfortable at all, push yourself a little. Once you get over that first conversation, your path forward will become a lot easier.

 

4 Ways to Pay Off Debt Faster

American consumers are carrying an unprecedented amount of debtRecent statistics lay out the unpleasant facts: as of 2015, households carry an average of nearly $16,000 in credit card balances, $27,000 in car loans, and a whopping $48,000 in student loan debt. It doesn’t have to be that way. In fact, a small but significant number of Americans are entirely debt free altogether. It does take patience and discipline to reduce the amount you owe to creditors, but it does not have to take forever. Here are four great tips to pay off your debt faster, and get on the road to debt-free living.

Freeze Your Debt

One of the first steps to take in paying off your debt is to immediately cease accumulating it, especially when it comes to credit cards. Once you have resolved to pay down your debt as fast as possible, stop taking additional loans out, or charging your credit cards, and focus your efforts on paying your existing debts down. Some people, for symbolic as well as practical purposes, either cut up or actually freeze their credit cards in Tupperware containers in their freezers. This serves as a constant reminder to the mission at hand and makes charging additional items on your credit cards a challenging affair.

Pay More than the Minimum

The minimum payment due on credit cards and other debt is not your friend. In many cases, particularly with credit cards carrying a high APR, paying the minimum monthly payment each month on a high balance will take you over a decade to pay the card down. You will continue to accrue interest charges, slowing down your debt payoff considerably; your credit rating could also take a hit when you only pay the minimum balances as well. Wherever possible, attempt to pay a minimum of 45 to a 100% above your minimum payment during each billing period, and start accelerating the decrease in your outstanding balances.

The Snowball Pay Down Technique

Many people have had considerable success rapidly paying down their debts using something called the snowball technique. In the snowball technique, you list out your outstanding debt balances from lowest to highest and commit to paying the minimum payment on all of them. Then, you commit more money each month to paying down the debt with the lowest balance. Once that debt is complete, you pay down the next bill, applying the minimum monthly payment and any extra money you had previously committed to the recently paid off debt. Once this debt is paid off, you repeat the process with the next one, until you are debt free. A recent study indicated that consumers who approach debt repayment in this manner are more likely to pay off their debts than those who do not.

Consolidate Your Cards and Loans

If you have a variety of outstanding debt, especially credit card debt accumulating at a high APR, consider consolidating all of this debt via a balance transfer. If you have a decent credit rating, there are many credit cards and some banks that will allow you to consolidate all of your debts into a single loan at a lower interest rate. Many credit cards actually encourage you to do so by offering low or no APR for a period of time, which gives you further incentive to pay down your debt rapidly. Consolidating your debt in this manner will help you escape high-interest bank fees, which accrue interest each month and slow down your ability to pay off debt. A single, consolidated loan also makes it much easier for you to track all of your debt in one statement, and to address it, another key factor in accelerating your debt pay down.

 

7 Things I Gave Up While Getting Out Of Debt

A few years ago, I was staring down an enormous amount of debt. I had no idea how to tackle it.

I had recently graduated college, and while I didn’t have any student loans, I did have some credit card debt. I also had racked up some hefty medical bills after my new baby spent his first week of life in the hospital. To top it off, my husband and I had bought our first house. All told, we had zero savings left and were in debt to the tune of $140,000, including our mortgage.

Things continued to worsen and by the time our son was six months old, we were getting collection calls and I was seriously worried about our financial future. This wasn’t how I wanted to live my life. It was time to make some big changes.

I dusted off a copy of The Total Money Makeover and read the whole thing in one sitting. Then, I read it a couple more times to make sure I had absorbed every last bit of information on how to get out of debt. Over the next five years, my mission was to become completely debt-free.

We paid off our credit cards and medical debt, saved up three months worth of living expenses, and then started attacking our home mortgage. During this time, we managed to pay off $35,000 in debt. We then bought a new home to accommodate our growing family. Although we do have a larger mortgage now, that is currently the only debt we have. If you had told me that I’d be in such a secure position back in my days of ignoring collection calls, I wouldn’t have believed you.

So, how did I go from financial floozy to money maven? To be honest, I gave up nearly all my spending. Take a look at what I had to sacrifice to get myself out of debt.

1. Vacations

My husband and I took only one vacation during these five years. We spent two days in Vegas and spent less than $1,000, including airfare. While we still made the occasional trip to visit my family in California (a four-hour drive away), other vacations were off the table while we focused on debt-free living.

2. Eating out

Aside from birthdays and anniversaries, there were precious few times we would splurge on a date night dinner. We only rarely went through a drive-through for food and never had take-out dinners unless we had a gift card. This frugal food budget wasn’t all deprivation though. We both learned to cook and spent many evenings trying new dishes. It became our own cheap form of entertainment. In fact, I would often invite my friends over for drinks and dinner and this turned into a fun monthly tradition.

3. Pre-packaged food

During our debt destroying days, our grocery budget was the first thing to get slashed. I would often spend less than food stamp allowances on our weekly grocery budget. That meant making refried beans and bread from scratch because the pre-packaged counterparts weren’t worth the extra pennies to me. It was a lot of effort, but hey, at least it got us eating more whole foods, right?

4. Gifts and cards

While I would try to save up money for birthday and Christmas gifts, it usually wasn’t enough. So instead of buying gifts, I often made them myself. To be honest, I probably didn’t save much as I still had to buy supplies. But, I enjoyed making my own cards and wrapping gifts in simple craft paper – something I still do today.

5. Gym classes and membership

While I do love a good yoga experience, the truth was, I couldn’t afford the pricey classes while getting out of debt. I gave up gym memberships and fitness classes, opting instead for the free alternative of Youtube workouts and running. Even now that I can afford to pay for this luxury, I like the flexibility of working out at home so much that I still opt not to go to the gym.

6. Haircuts and other beauty fixes

For five years I didn’t get my nails done, my brows waxed, or buy my favorite beauty brands. I only got my hair cut once or twice a year. And, there was a two-year period when I decided to forgo professional haircuts completely (until a very unfortunate “I’m going to cut my own bangs” night). My minimalist beauty routine saved me thousands over those five years. This all went straight towards paying off our debt.

7. Cleaning products

Don’t worry, I didn’t let my house become a total pigsty, but I did stop buying cleaning products for a while during our debt paydown. On my quest for the ultimate frugal lifestyle, I experimented with lots of DIY cleaning products that cost a fraction of the big name brands. Lesson learned? Vinegar cleans just about everything and it’s dirt cheap.

What was worth giving up?

Honestly, making my own cleaning products and gifts was probably going a bit overboard, but in the end, kicking my debt to the curb was worth every penny-pinching endeavor. If you want to pay down debt, don’t be afraid to get creative when cutting costs. You might be surprised by how many things you can live without when you have a clear financial goal in mind.

 

Should You Side Hustle to Get Out of Debt?

Unfortunately, it’s all too common for people to carry debt. It could be from having a home mortgage, a car loan, student debt, or any number of other reasons.

However, if you have debt, no matter the reason, there are only so many things you can do to get out of it. You could consolidate your debts in order to try to pay it off more easily. Or, you could try to cut your expenses to the bare minimum in order to throw more money at your bills.

But what about working another job? Should you side hustle to get out of debt?

Here are a few things to think about before you decide to take on a side hustle to pay off debt.

1. Set Your Own Schedule

Depending on the type of side hustle you decide to do, you might be able to set your own schedule in your side hustle. For example, if you do the bookkeeping for a business you may be able to do it from home and work when you want to.

Of course, there are any number of other side hustles you could do that would allow you this kind of freedom. But the advantage is that you have a flexible schedule which is one thing that makes a side hustle an appealing choice to help you get out of debt.

2. Use Your Skills

The side hustle allows you to use the skills you already have to help you get out of debt. Let’s say you are great at math. You may be able to side hustle tutoring students in math which is a win for you and a win for the students you help.

Or, you could clean houses if you are good at cleaning well and fast. The point is to turn your strengths into a marketable skill you can earn money from to help you get out of debt.

3. Do What You Like

When you like what you do it is easier to stick with it. That is why it’s important that you enjoy whatever you choose to do as a side hustle to get out of debt.

Liking your side hustle can also help you to stay motivated and work harder. You may find that you are more tired and sleep less with a side hustle. But when you like what you do and you see your debts decreasing, it can be worth the sacrifices.

4. Know Where to Draw the Line

When you choose to side hustle to get out of debt you must also know what your limits are. It can be hard on your family when you side hustle because they may see less of you.

In addition, if you are sacrificing some sleep to do your side hustle, it can wear you down and even be hard on your health. You must know where to draw the line. After all, you must sleep and rest sometime.

Obviously having a side hustle that allows your schedule to be flexible can help with this situation. But you must pay attention to the needs of your family and spouse as well as your own when considering a side hustle.

Nobody likes to have outstanding debt. As to whether or not you should side hustle to get out of debt, only you can decide.

 

5 Money Myths That Can Harm You Financially

You may have heard that sticking to good financial rules of thumb can help you achieve financial security. But, you may also want to be aware of money myths that can have major negative implications.

To help you stay informed and make smart money moves, you may want to read up on these 5 money myths.

1. Checking your credit hurts your credit score

With credit reports, there are two types of inquiries: a hard inquiry and a soft inquiry. A hard inquiry happens when a lender checks your credit report — at your request — to make a lending decision. Hard inquiries can knock a few points off your credit score and stay on your credit report for two years.

A soft inquiry happens when a company or person checks your credit report to pre-qualify you for a loan or credit card or perform a background check. It also happens when you check your credit score. Soft inquiries don’t affect your credit score in any way.

If you believe this myth and don’t check your credit score often, potential errors or fraud could go undetected long enough that it would be hard to clear up quickly. And, a ruined credit report can also make it hard to get approved for credit when you need it.

2. A home is a good investment

There’s no guarantee that your home will appreciate in value at a reasonable rate. We only need to look to the Great Recession to see how quickly home prices can plummet.

Even some homeowners who could afford their monthly payment were “underwater” as the value of their home descended below their loan balance.

There are also extra costs involved with owning a home that should be considered in calculating your return. For example, homeowners insurance, private mortgage insurance, and property taxes are all mainstays with many mortgages. Maintenance and unexpected repairs can also get pricey.

That’s not to say a home can’t be a good investment for someone who is willing to take on the risks. But, it’s important that you don’t make such a long-term financial commitment thinking you’ll automatically make money – especially if the housing market suffers another crash.

3. All debt is bad

Focusing all your efforts on paying off debt can leave you without adequate emergency fund and retirement savings. When creating a plan to tackle your debt, keep all of your financial goals in mind.

Mathematically, low-interest debt can be good if you’re using it as leverage to work toward your other goals. For example, say you have $10,000 left on your auto loan with a 2.49% interest rate. You can put an extra $200 a month toward the debt, or you can put that money into your retirement account, where you could realistically get a 5% to 7% return over the years.

4. Carrying a balance on your credit card boosts your credit score

If you’re paying off your credit card every month, that means there’s no balance to report to the credit bureaus, right? Not necessarily. Credit card companies typically report your card balance to the credit bureaus once a month, and the reporting date is rarely the same as the due date.

So, unless you don’t use your card at all, it’s likely that the company will always report a balance. What’s more, credit card companies don’t report whether or not you’ve paid in full, just whether you’ve paid on time.

As a result, carrying a balance doesn’t have any effect on your credit at all. Instead, it could lead you to paying interest unnecessarily for years – and that’s money that you could use for other things.

5. Buy high, sell low

It’s a common emotional response to buy into the stock market when things are going well and to sell as the market tanks. The problem with this is that you’re losing money by buying your stocks at a premium and selling them at a discount.

Instead, think of stocks as groceries. Focus on what can provide you the most value for your money and avoid overpriced items until they go on sale.

If you invest in mutual funds, use the dollar-cost averaging method, investing a fixed amount every month regardless of how the market is doing. This strategy can mitigate the risks that come with a volatile market.

Don’t believe everything you hear

Not every money tip you hear is in your best interest, no matter how good it sounds. If something sounds even a little off, spend time researching it to make sure it holds water. This is especially important when it comes to debt and investing, as these often involve a lot of money over time.

The more you know, the more control you’ll have over where your money goes. This, in turn, makes it easier to reach your financial goals.

 

Should You Make Charitable Contributions When You’re Drowning In Debt?

While millennials get an unwarranted bad rap for being lazy, they don’t usually get called generous. But, millennials are part of a truly giving generation. In fact, a recent survey showed that 85% of millennials made charitable donations in 2015.

Indeed, if you’re a millennial, you likely already donate to a cause you believe in. At the very least, you’ve probably thought about which nonprofit organization you’d like to support. This brings us to an important question: Is it a good idea to be charitable if you’re saddled with thousands of dollars in debt? As with any other money decision, your answer should depend on your personal circumstances and preferences. But know this — if you have a penchant to give, there are many creative ways to do so without getting into more debt or hurting your plans to achieve the debt-free dream. Read on to learn more.

Avoid Impulse Giving

A new study from Fidelity Charitable found that 71 percent of millennial women give to charity “in the moment.” This makes me feel proud to know that we are such a passionate generation. At the same, impulse giving can be viewed as a form of impulse spending and this can bust your budget – especially when you’re already strapped for cash.

A good rule of thumb is to come up with set times to make charitable contributions throughout the year and stick to them. I like to give weekly at church and donate a larger amount around Christmas. Since I’m still on my journey toward debt freedom, I’ve also limited my impulse giving to in-kind donations. For example, I participate in social sharing and volunteering my time (more on this one later).

In order to figure out your own giving breakdown, be sure to evaluate charitable giving against your other money priorities.

Get Your Money Priorities in Order

The purpose of creating a list of priorities is to rank your financial goals in order of importance. Once you’re clear on your priorities, you will be more likely to devise a plan to achieve your goals. For example, your list of financial goals for the next 12 months could look something like: paying off 50% of your student loans, moving out of your parents’ house and giving to two charitable causes.

These events don’t have to be mutually exclusive. In other words, you don’t necessarily have to pay off all of your debt before you can start planning to move out on your own or begin donating to your favorite charities.

To get going, start with priority number one, such as paying off debt. With the debt snowball method, as soon as your smallest debt is paid off, use the freed-up money to tackle your next debt even faster. Alternatively, you could choose the debt avalanche approach where you focus on paying off the highest interest-bearing debt first.

Now that you have an action plan for your financial obligations, you can tweak your budget to determine how much of your income you can use to pay down your debt and how much you can allocate to other priorities that are important to you. When it comes to charitable giving, the good news is that you don’t have to give a lot to make an impact.

Most Nonprofits are Powered by Small Donations

Most nonprofits run on the cumulative effect of small donations and appreciate all contributions, regardless of the size. America’s Charities noted in a recent survey that “If the individuals who donated $10, $25, and $52 each decided that their donation wasn’t enough to make a difference, the 2015 pledge results for [one] particular nonprofit could easily have been $100,000 or $200,000 less…”

One simple way to free up funds for donating is to save up all your change each week. Or better yet, put out a change jar at your job if your employer will allow it.

You can also put your Chime bank account rewards to good use. If you enroll in the automatic savings program, Chime rounds up each purchase you make to the nearest dollar and places this amount in your savings account. On average, if you swipe your debit card twice a day every day for a year, you’ll have about $400 in your savings account.

You can easily donate this money to your charity of choice when #GivingTuesday rolls around.

Your Time Can Be Just as Valuable as Your Money

One of the most valuable things you can donate is your time. By volunteering with an organization, you may get the chance to work directly with individuals who are in need. Opportunities like this allow you to take a look at your own circumstances and practice gratitude more often.

On top of this, you could possibly pick up some new skills along the way which may be valuable as you seek to take your career to the next level.

Not sure where to start? Check out your town’s Salvation Army, church or library to see if they are in need of volunteers. Or register with Volunteer Match to find a local cause to get involved with.

Ask Your Employer to Help

In addition to these options, you can also check out your company’s corporate social responsibility (CSR) policy to see how your employer can get involved. Most organizations will match employee contributions dollar-for-dollar while others will even triple or quadruple these amounts.

Some corporations also offer volunteer grant programs, which means they provide monetary donations to organizations where employees volunteer on a consistent basis. You’ll typically need to provide a time sheet confirming the hours you volunteered before your company will send in a donation. For example, a company could offer a $250 payment to a nonprofit for every 15 hours that you volunteer. This is an impressive opportunity because you can donate your time and raise money on behalf of your favorite cause.

Charitable Giving is a Smart Tax Move

Apart from the altruistic reasons of being a do-gooder, charitable giving also yields benefits come tax season. In addition to monetary contributions, many organizations also accept physical goods, such as clothing, furniture or canned food. However, before stopping by a charity with a car full of stuff you’re no longer using, check to see if the organization accepts in-kind donations. Also, remember to ask whether your contribution is tax deductible and make sure to get a receipt.

According to the IRS, you can generally deduct anywhere from 20% to 50% of your adjusted gross income (AGI). However, if you choose to take the standardized deduction, you won’t be able to deduct any charitable contributions.

Be Careful Who You Give to

Before you give to an organization, check to see if it has been properly vetted. There are many scams out there that claim to be legitimate yet they are actually fronts to fund personal coffers. Sites like GuideStar, GreatNonprofits, and Charity Navigator are helpful because they provide independent reviews on various nonprofits. Charity Watch also provides details on how organizations actually use the funds you donate, ensuring that you make the most intelligent giving decision possible.

Armed with these guidelines, it’s time for you to flex your altruistic muscles and see how charitable giving opens doors for those in need. You may be surprised to find your sense of purpose without breaking the bank or sacrificing your debt-free dreams.

 

How Debt Denial Can Really Cost You

One of the most common symptoms of being in debt is denial. You might know you owe money, but it’s easier to sweep the nitty-gritty details under the rug and remain blissfully ignorant.

I should know. When I graduated with my M.A. in 2011, I knew I took out a lot of student loans, but wasn’t really sure how much I owed. I just knew that I made payments for five years and that when I decided to go to NYU for grad school, I took on even more debt.

It wasn’t until after graduation that I knew something had to give. I had to get my financial life together and I started by signing up for a Mint.com account. Using Mint, a budgeting software and money management app, I linked my financial accounts. Suddenly, everything became clear as day. After making payments for five years, I still owed a whopping $68,000. I felt a sinking feeling in the pit of my stomach.

After realizing I was deep in debt, I deleted my Mint account. I was in complete and total denial. I couldn’t face the reality of my debt and it was easier to go back to ignorance. If you’re feeling the same way, read on to learn why denial is so common, how much it can cost you and how you can reclaim your financial life.

Why denial is so common

More often than not, denial and debt can go hand in hand. When you’re not mindful of your financial situation, this can lead to more debt. The more debt you take on, the less you want to face the reality of your situation.

Denial is a safe, cozy place where you can pretend everything’s okay. Staying in denial means you can keep the status quo, yet this will cost you – big time. Facing debt head-on, however, is tough and requires facing the facts.

How debt denial can cost you

As you saw with my own situation, debt denial can have a big impact on your financial life. On a smaller scale, you might not realize just how much you owe. You may be buried in credit card debt, but opt to just pay the minimum and think it’s sufficient — not realizing that doing so could mean many years of repayment and paying much more than you borrowed.

On a larger scale, debt denial can lead to avoidance. The bills keep coming in and you ignore them. Past due notices arrive and remain unopened. Soon enough, debt collectors call and you find yourself being hounded. If you’re in credit card debt, your credit is shot and your creditors may take action. If you’re ignoring your student loans, your wages could be garnished in order to repay the loans.

The thing about denial is that the truth will always come and find you — even if you don’t want to face it. No matter how much you try to avoid something, there it is. That’s why it’s crucial to face your debt head on, if you want to get your financial life under control.

How to get out of debt denial

I often equate getting out of debt with the “5 stages of grief” — denial, anger, bargaining, depression, and acceptance. Having paid off a total of $81,000 in student loan debt, I know about this first-hand as I went through all of these emotional states. Yet, although denial is powerful, you can’t move forward unless you move past it. But how can you get out of denial without losing your mind?

The first step is to face the numbers and have a heavy dose of self-compassion. You can start by logging in to all your loan servicers and creditors’ accounts and writing down each total and the corresponding interest rate. Next up: add up all of your debt. And let it sink in. Take a deep breath and don’t panic. It can be tough to swallow, but the world isn’t going to end.

The next step is to create a plan of action. Look at your minimum payments and see how much more you can put toward your debt each month. Minimum payments are just that — the very minimum, but this won’t get you out of debt quickly. Taking action is the best way to combat denial.

Stick with this as. After a while, you’ll start to see progress. And progress can be addictive and used to your advantage!

Bottom line

Being in denial is often easier than facing the overwhelming burden of debt. But it won’t help you pay off debt and your debt won’t magically go away (we can dream right?). In order to avoid trouble with creditors, protect your credit and reclaim your financial future, it’s crucial to get out of denial and ditch debt – forever. Your freedom is priceless.

 

Money Habits of People Who Have Achieved the Debt-free Life

When you think of the American dream, what’s the first thing that comes to mind? Perhaps a comfortable home with a white picket fence, two kids, and a dog? This might be the traditional perfect life, yet millennials have a different idea in mind. They not only want a life with less “stuff”, but they know achieving the white picket lifestyle may not be a reality – especially if they are trying to climb their way out of debt.

According to a 2016 NerdWallet study, the average American household has credit card debt totaling $16,748. Average household debt – including credit cards, student loans, mortgages, auto loans, and more – hit a whopping average of $134,643. This marks an 11% rise over the past decade.

So, what does it take to break the debt cycle and live life within your means? For starters: good money habits. Let’s take a look at some money habits that might help you get out of debt.

Budget wisely

Understanding exactly where your money is spent each month is critical for getting out of debt now and staying debt-free in the future. A budget can help you get there.

Yet, creating a budget is only half of the equation. The other half is knowing how your budget can help you achieve your goals. With established goals, the budgeting process is much more enjoyable.

Holly Wolf, director of customer engagement with Solo Laboratories in Kutztown, Pennsylvania, says her budget goals help her focus on what’s important so she doesn’t spend on things that don’t matter.

“My husband and I have found ourselves in debt a couple of times, but we have made the necessary changes to end that. Each year we list our goals for the year. We know how much we’ll save for retirements, for general savings and how much we can spend on home improvements and vacations,” says Wolf.

Find ways to save

I am a firm believer that no matter how much money you have, you should always look for more ways to save. This might mean using a coupon to save 50 cents at the grocery store or putting loose change into a vacation jar to save for your trip to Europe. Simple money saving strategies will help you build wealth and hopefully stay out of debt.

Deacon Hayes, the founder of Well Kept Wallet, is a firm believer in using coupons – with a caveat. “The key is to only use coupons for things that you actually need or were planning to buy already,” he says.

“My goal typically is to have at least ten dollars worth of coupons when shopping, which saves us at least $40 per month. This was very effective when we were paying off our debt and is still helpful even today.”

Switch to a cash-only lifestyle

The math behind living a cash-only lifestyle is simple. If you make the decision to make all your purchases with cash, there is no way for you to end up in debt.

“As my wife and I were working to become debt free, we noticed our biggest overspend was on food. To kill this problem and redirect more than $200 a month away from food and toward our debt, we switched from using our debit card for food purchases to using cash,” said Paul Moyer, founder of personal finance blog, Saving Freak. Moyer paid off $16,000 worth of debt in 14 months.

Eliminate the burden of student loan debt

It’s no secret that student loan debt is a growing problem in the United States. According to Student Loan Hero, Americans have more than $1.4 trillion in student loans. The average student from the class of 2016 graduated with $37,172 worth of student loan debt – a six percent increase over those graduating in 2015.

If you’ve got student loan debt, what can you do about it? A lot. There are several government programs that can help you reduce outstanding loan amounts. Plus, if you’re lucky, your employer might even have a program in place. No matter what your individual plan consists of, it’s important to make this a priority.

“The biggest factor in battling debt was ultimately paying more than the monthly minimum on my student loans,” said Brian Meiggs, founder of Millennial Money Guide. “At times, I would be making $1,000 or up to $4,000 lump sum payments when the minimum was only $300! Got a bonus check? The entire amount went towards paying down those pesky student loans.”

Make more money

Nearly everyone you talk to that has experienced debt will tell you one thing: You need to make drastic lifestyle changes in order to break this cycle. This may mean curbing your spending or finding a way to earn more money[a]. Many people do a combination of both.

“Making extra money completely change my life,” said Michelle Schroeder-Gardner, founder of Making Sense of Cents. “It allowed me to pay off my $40,000 student loan debt in just seven months. I was working around 100 hours a week between my day job and all of my side jobs, and while I was definitely tired, it was well worth it!”

Start Automating Your Savings

For many of us, finding additional money each month to put into savings can be difficult. According to a recent Bankrate.com report, nearly six out of every 10 Americans have less than $500[b] in savings. So what can be done to help change this growing problem? Try automating your savings by setting up a Chime bank account. Chime rounds up each purchase you make to the nearest dollar and places this amount in your savings account. Small savings like these make a big difference throughout the year.

While debt is certainly a burden, it’s not impossible to eliminate. It just takes some changes in the way you approach your life. In the end, breaking free of debt may help you realize exactly what makes you happy. A win-win.

 

How a 28-Year-Old Entrepreneur Paid Off Her Debt in 18 Months

 Do you ever wish there was a silver bullet to paying off your student loans faster?

As millennials, we’re a generation hell-bent on pursuing our dreams with a YOLO mentality. Meanwhile, our paychecks disappear into monthly bills, loan payments, and rent–putting those dreams of financial freedom just out of reach. The struggle is certainly real and requires a combination of ingenuity and self-discipline to accelerate the process of getting out of debt.

Jesse Genet, the 28-year old founder of Lumi, literally found her silver bullet in the form of a vintage airstream and an “aggressive saving” strategy that enabled her to pay off her student debt in just 18 months. The best part? She did it without giving up on her dream of starting her own company which manufactures innovative packaging and branded supplies.

Being an entrepreneur, Jesse is no stranger to overcoming adversity. Not only has she found incredible success with her startup after a challenging Shark Tank appearance, she’s also paid off tens of thousands of dollars of debt in just 18 months. Here’s Jesse’s story:

Tells us about your financial journey.

People often assume that as an entrepreneur I have millions of dollars, but that’s definitely not the case. I bootstrapped my business, Lumi, for five years while also trying to pay down thousands of dollars in student debt. Entrepreneur finances can be rough. I often found myself taking financial hits for the sake of my company at the beginning. I was paying myself very little and I was in and out of credit card debt as a result. The little money I made here and there would usually go toward necessities. However, without a steady paycheck, the debt was persistent. For me, credit card debt was truly anxiety producing and it really started to affect me emotionally. That’s when I decided to become an aggressive saver.

 

What did you do to become an “aggressive saver?”

It really just means that I spent time finding unique solutions to cut down my living expenses. About 18 months ago, I decided to focus only on necessities. Two major expenses I eliminated immediately were rent and car payments. I moved into a 220 square foot airstream that’s parked behind my company’s office building. My partner and I bought the used airstream for $25K and put about $5K into remodeling it. It has queen size bed, full kitchen, and shower. It took a little bit of getting used to a smaller space, but it has everything I need and I no longer pay rent. I also opted to skip the lease and just go for a used car that gets me to get from point A to B. It’s a 1972 truck that I absolutely adore.

That’s a pretty amazing way to reduce your expenses.

Yeah. It might not work for everyone, but I think just focusing on eliminating a specific type expense can lead anyone to find some creative solutions. Case in point! But cutting back on my day-to-day spending also really helped.

What did you do to change your spending habits?

I cut way back on how many credit cards I regularly used and instead opted to simplify my spending with a debit card account. That’s actually when I started using Chime.There’s absolutely zero anxiety with a debit card. My Chime debit card and the Chime app really help me stay self-disciplined with my spending. The app makes it super easy to always know where I stand and it helps me figure how much I should spend in a given week.

I love the daily balance notifications and having a bank account that’s actually well designed makes staying on top of my spending actually enjoyable. I use Chime for all of my daily expenses and to pay my bills through the app because I know it will provide clarity on my finances. Chime has basically become the central hub for my spending. I also have all my other bank accounts linked into Chime as well so I can see all of my balances in one place. I feel way more in control now compared to the old habit of putting random purchases on random credit cards and then paying the price later.

What advice would you share with others who are struggling with debt? 

You can have radical financial change quickly. I was able to eliminate tens of thousands of dollars in debt in just 18 months, not 10 years. Of course, I took an aggressive approach, but a big part of what led to that transformation was simply changing how I thought about my money. Finances can be fun. Not onerous and scary. I think having financial goals is the key to thinking of saving money as fun. It becomes addictive when you start to see progress and it feels great to achieve what you set out to accomplish. I also think it’s important that people take the time to understand the math of compounded interest on student loans. I paid the absolute max I could on my on my student loan every month and ended up saving $18,000 over the life of the loan. 

What are your goals now that you’re debt-free?

My financial stability and freedom is all very new. Freedom and autonomy have always been life goals for me. It flows with entrepreneurship and always trying to build something. I feel like my first goal was to achieve freedom by no longer making financial decisions out of fear e.g. staying in a job because I needed the money. Now that I’m debt-free, the next bar is making the right choices in my new autonomy. I’m thinking that someday I’d love to build my own home. To have a space that I really feel like I own. I’m just now starting to think about how to save for that goal. There’s a gorgeous lake just 90 min from LA called Lake Arrowhead that’s been calling my name.

Are you a Chime member with a story to share? Please email us: contributors@chimebank.com

 

 

Student Loan Debt Relief Hacks

We are in the midst of a student loan debt crisis. College costs are increasing alongside a $1.3 billion in collective student loan debt. In early 2016, our Money Mindset of U.S. College Grads: 2016 Report found 73% of college seniors and juniors said they would be graduating with an average of $32,000 in student loan debt. It’s no wonder college education and student loan debt relief are one of the most important issues in the 2016 election.

We heard it throughout Bernie Sanders’ campaign, with promises of free student tuition for all. And we’re continuing to hear the push for student loan debt support by Hillary Clinton, who recently released a student loan forgiveness plan and Donald Trump has spoken out on student loans, but hasn’t released a detailed policy outline.

Needless to say, the 43 million borrowers across the country are perking up to hear how each candidate plans to make a dent in the student debt crisis.

With the overwhelming amount of debt graduates are shouldering on average, it can seem nearly impossible to keep up with payments. In 2014, The Federal Reserve Bank of New York Consumer Credit Panel conducted a study that showed nearly 20% of student loans were delinquent or defaulted (nine months past due). The study also showed that the number of borrowers who default each year increased from about 500,000 in 2002 to 1.2 million annually in 2011 and 2012. Although the number of borrowers who default each year peaked in 2012, there’s no arguing — this is still a major problem for several Americans.

Although we can’t fix the problem right away, there are things you can do today to climb out of student loan debt. Here are eight hacks to student loan debt relief:

1. Setup automatic payments.

This one is a no-brainer. Most student loan agencies offer online services that make it easy to set up automatic payments. Your student loans are likely your biggest chunk of debt, so you want to be diligent about paying them down each month. Missing payments or paying late can hurt your credit and ruin your chances of any Federal program that offers loan forgiveness. Setting up automatic payments allows you to continue to make your payments regularly without having to worry about missing one or being late.

2. Take advantage of prepayments.

All student loans are prepayment penalty free. This means you can start paying them down right away and you won’t be charged for any additional amount. Most graduates may not even realize that interest is front-loaded and starts accruing immediately (yes, even while you’re in school). They often don’t realize it until they graduate and see the loan amount is much higher than they remember. So do what you can to pay off loans as soon as you’re able. A little extra contribution beyond the minimum monthly payment goes a long way.

You can use Chime’s automated savings account to use some of your weekly savings to pay down your student loans each week.

3. Consolidate and refinance your loans.

If you have older loans with variable interest rates, refinancing could be a good way of lessening your overall interest rate. Student loan refinancing has become more accessible to borrowers thanks to increased competition from private lenders such as SoFi and Earnest.

Private lenders may be able to save you thousands of dollars over the life of your loans, especially if you have good credit and income. According to data from Credible, an online marketplace for student loan refinancing, the average borrower can save almost $14,000 when they refinance. Keep in mind however that when you refinance through a private lenders, you won’t be eligible for some benefits provided by federal loans such as income-based repayment plans or public service loan forgiveness.

Even if you aren’t able to lower the interest rate, consolidating your loans so that you can make one payment as opposed to several a month can lessen your mental burden and help you stay on track.

4. Use your tax return to pay off a bigger chunk of debt.

The interest you pay on student loans is tax deductible. This means that when you file your taxes, you will likely get money back based on how much interest you paid in the previous year. It may be tempting to think of that as extra cash for spending. But using any tax refund toward your loan in the immediate term can have a bigger benefit to you in the long run. Don’t calculate it as a bonus or income. Just send it straight to your loan provider and pretend you never had it in your spendy little hands.

5. Negotiate loan payments in your compensation package.

Whether you’re applying for a new job or coming up on an annual review, consider asking your employer to include a lump sum payment or making monthly payments for student loan debt relief. This is becoming more popular with recent legislation, but for today, you may need to negotiate in lieu of additional salary or benefits.

6. Get a side gig to lessen debt faster.

Picking up a side job is more accessible than ever. Apps like Rover, TaskRabbit, Lyft and several others make it easy to pocket a little extra cash. The benefit of these jobs is that you can control the amount of time you want to dedicate each month, and it’s fairly easy work that can help you pay down student debt faster.

7. Pay while you’re in school.

If you’re still in school, there’s no time like the present to start paying off your student loans. Take on a part time job and dedicate your income to paying off your student loans ahead of schedule. Although it may be tempting to spend your income on beer and last minute game tickets, dedicate at least a portion of your income to getting a head start on your loan payments.

8. Work in public service? Your loans may be forgiven.

For those dedicated to a career in public service or non-profit work, you may be eligible for Public Service Loan Forgiveness. To qualify, you’ll have to work at least 30 hours a week within a government organization (at any level) or for a not-for-profit organization that is tax-exempt under Section 501(c)(3) for and make monthly qualifying payments for 10 years. After those 120 qualifying monthly payments,, your remaining federal student loan balance will be forgiven.

Bonus: If you have Perkins loans while working in public service, you may also benefit from the Federal Perkins Loan Forgiveness program.

Double Bonus: Plan on teaching for more than 15 years? You’re in luck. You may qualify for the public service loan forgiveness program in addition to teacher-specific forgiveness options. You can learn more about the program on the Federal Student Aid’s website.