Tag: How To

 

How to Plan the Perfect Staycation: 6 Tips for Affordable Relaxation

It’s no secret that travel can be expensive even if you’re able to take advantage of hacks to lower the costs.

In fact, according to one study, the average family of four spends $4,580 on a vacation. And, many of these families expect to put at least $1,000 of their travel costs on a credit card.

Yet, there is a way to take time off without leaving your hometown and spending oodles of cash: Take a staycation.

What is a staycation?

A staycation is just like a vacation only you stay home. This means you don’t have to spend money on travel and lodging. You’ll still take time off and seek out new experiences, but you’ll be spending time near your home exploring your own town or taking day trips.

You can save a lot of money with a staycation and still bond and make memories with your loved ones.

Here are 6 tips to help you plan the perfect staycation.

1. Explore your city

A staycation can be just as fun as a vacation because you’ll have the opportunity to explore your city like never before. To start, think about whether there are there restaurants or attractions you’ve never been to.

Perhaps you can visit a new neighborhood eatery or attend a local festival. Maybe you can swap out your online shopping to check out some local shops and support the businesses in your area. Or, visit local museums and wander through the exhibits.

If you live near a metropolitan city, you may be able to take advantage of tourist attraction passes that allow you to visit several landmarks or attractions for one flat fee. You usually have a few days to visit all the places included in the pass. This is also a great way to experience the best of what your city has to offer – on a budget.

For example, CityPASS offers a low-priced pass in many cities, including Chicago, Boston, Dallas, Seattle and New York City. For a $64 adult Boston CityPASS ($52 for kids), you get access to five major attractions, including the New England Aquarium, Museum of Science and Boston Harbor Cruises. You’ve got nine days to visit the attractions and your pass also gets you expedited entry into all sites. Not so shabby.

2. Play Catch Up

A staycation is a great way to catch up on errands, set up appointments, and organize different aspects of your life. Dentist appointment anyone?

Yes, this may sound like work, but you can schedule tasks on your own terms and check off a few things on your list, leaving you feeling refreshed.

Just think: You can accomplish things that have been on your to-do list for weeks, like getting routine maintenance checks on your car, going to a doctor’s appointment, and decluttering and organizing your home.

In true staycation fashion, you can even treat yourself to a nice lunch after you finish errands or visit a day spa for the afternoon.

3. Embrace the Outdoors

Ready to embrace the outdoors? Use your staycation to explore local trails. You can also plan an outdoor picnic with family, visit a park, go swimming if the weather permits, or ride a bike along a scenic path. If there’s a nearby state or national park, you can even take a day trip to feel as if you’re getting out of dodge.

Another option to consider: Take a trip to the local zoo. There are several free or low-cost zoos across the country. Most will even allow you to bring in your own food and snacks, cutting down on your costs even more.

4. Take on a New Hobby or Learn a New Skill

Part of the thrill of going on vacation involves going someplace new. Yet, you can still experience something new without traveling far from home. A good place to start: Try out a new hobby.

Think of something you’ve always wanted to do and plan to hone that new skill or passion during your staycation. Whether you want to start playing a new instrument, learn photography, fix cars, start sewing, or practice cake decorating, this is a great opportunity to give it a whirl. Perhaps you can even take a class in the area or check out free resources online. Skillshare, for example, is an online community that allows people to learn new things.

If you’re stumped for a new idea, try a paint and wine outing with friends. These are typically budget-friendly and you don’t need a lot of artistic skills.

5. Make Time For Friends

Take the initiative to reach out to friends you haven’t seen in a while and plan a get-together.

You can simply have a lunch date, invite your friends over, or go somewhere fun. To stay on budget, look for Groupon deals. For example, maybe you can check out a new coffee shop or restaurant in town.

You can also use your staycation as an opportunity to meet new friends. Sites like Meetup have tons of local groups that are designed to facilitate meetings of like-minded folks. There are groups for runners, parents, couples, board game lovers, creatives, pet owners, and more.

6. Relax, Just Do It

Staycations are perfect for relaxing.

Sleep in, take naps in the middle of the day, catch up on your Netflix shows, and take long walks. Before you staycation, you can deep clean your home and organize your space as if you were leaving town.

You can even plan your meals and prep dinners in advance – then freeze them so you don’t have to worry about cooking. Decide on which days you’ll dine out and which days you’ll pull a ready-made meal from the freezer.

If there are any beaches by your home, plan to spend a day there relaxing and swimming. Or, if you have a sauna or pool at your gym, this is the week to make use of it.

Determine how you want to relax during your staycation and make it happen!

Save Money and Refresh With a Staycation

A staycation can not only be a huge money-saver, but it can help you relax, enjoy time with friends and family, and return back to reality feeling refreshed and rejuvenated.

Most importantly, you don’t have to save up a ton of money to have a successful staycation. And, you also won’t spend as much as you would if you travel far away. Just think: These staycation ideas will help you have a memorable experience without airline fees, hotel costs, and high restaurant charges.

Are you ready to plan a staycation?

 

This Millennial Saved $200K Before Turning 30 — Here’s How

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The majority of millennials have next to nothing in their bank accounts.

You’ve probably heard the stats: Millennials couldn’t cover a $1,000 emergency, and they have an average of $36,000 of debt. And when it comes to retirement — which, to most millennials, seems like a billion years away — 66% haven’t saved a cent.

The blogger behind Fiery Millennials, however, is tipping the scales. Gwen Merz is only 28 years old, and has already saved $200,000 for retirement. Want to know how she did it? Merz revealed her savings story to us — and also offered advice for fellow millennials who want to prepare for their futures. To learn more, keep reading.

Stumbling Upon Financial Independence

One day in college, Merz was using the 2000s relic known as StumbleUpon when an article about FIRE (financial independence, retire early) popped up in her browser. Merz, who had grown up poor, immediately became “hooked” on the ideals of frugal living and financial security.

“Here are these people who never have to worry about having enough money ever again,” she says.

“That was very appealing to me, as someone who internalized a lot of those lessons about poverty early in life.”

Though she couldn’t save much money as a college student, Merz says learning about FIRE gave her a “really good foundation” for her adult life. When she totaled her car, for example, she didn’t take out a loan, and instead bought a used vehicle with cash. And when she graduated debt-free, thanks to a full-ride scholarship and her service in the National Guard, Merz was “so ready” to put financial independence (FI)  into practice.

“I was super stoked that I got to put money in my 401(k) and open a Roth IRA,” she says. “So nerdy, but it’s true!”

The Road to $200K

After she graduated college in 2013, Merz landed a full-time information technology job at the Fortune 100 company at which she had interned.

Her base salary? A lucrative $65,000, plus bonuses that averaged $7,000 to $8,000 after taxes, and a 10% 401(k) match.

While her peers spent their paychecks on nights out and new clothes, Merz saved 60% to 80% of her income (which increased each year and eventually came close to six figures).

“It was really good that I got started so young because I didn’t have any set habits or lifestyle expectations,” she says.

Merz maxed out her 401(k) — the limit is now $19,000 per year — and her Roth IRA — the limit is now $6,000 per year — and put the rest into a health savings account (HSA) and other taxable accounts.

After six years of saving, her retirement accounts reached a balance of more than $200,000.

Cutting ‘The Big Three’

Despite her ample salary, Merz admits it wasn’t always easy to save so much.

“At the beginning, it was definitely harder. But that’s only because I was still trying to live a typical American life.”

As an example, she cites the fact that she was living in a three-bedroom house by herself — a decision she now deems “ridiculous.” So she got a roommate, and cut her monthly housing budget from $900 to $450.

She also kept the 2005 Pontiac Vibe she purchased in college. Whereas most of her peers have bought one or more new cars since graduating, her vehicle will soon hit the 200,000-mile mark.

“It’s the big three you have to watch out for: housing, cars, and food,” explains Merz.

“If you can keep those three to a manageable level — or figure out how to get rid of one — you’re going to be so much better off than the average American.”

Or, as she puts it: If “you make one or two different choices in life, that can make all the difference.”

How Millennials Can Save (No Matter Their Income)

Merz is the first to acknowledge that the FIRE movement is dripping in privilege.

“Some people say everyone can achieve FI — that’s just not true. It’s a lot easier to save half of your income if you’re earning a lot of money.” And, as she points out, it’s even easier if you don’t have student loans or dependents.

Still, Merz believes anyone can learn lessons about budgeting and consumption from the FI movement. Even if someone can’t save at high rates, for example, they can maybe build an emergency fund or open a Roth IRA.

If you want to start saving — regardless of your income — Merz says your first step should be automation.

When Merz received her first paycheck, she set up automatic withdrawals that funneled money into her savings and investment accounts.

“I never saw that money and didn’t miss it because I had never known what it was like to have that much,” she explains.

The good news with this automated saving approach is it can eliminate the need for budgeting. Since Merz covered her necessities and investment goals by paying herself first, she could then give herself “free reign” to spend whatever was left.

“There’s a lot of guilt and decision making that are involved with budgets. But if you artificially lower the amount of money that you have to spend… it’s easier to save.”

If your employer offers a 401(k) program, Merz also urges you to sign up. Not only will your contributions grow over the next several decades, potentially funding your retirement, but they will also lower your taxable income right now. For example:

  • Say you earn $50,000 per year and contribute $5,000 to your 401(k). You can deduct that $5,000 from your income, meaning you’ll only pay taxes on $45,000 of earnings.

 

  • Many employers match 401(k) contributions up to a certain percentage. A “3% match,” for example, means your employee will  match every dollar you contribute, up to 3% of your paycheck.

“There’s no reason to not save up to the match,” says Merz. “They’re giving you free money — who does that?”

When This Fiery Millennial Will Retire

When Merz began her FIRE journey, her goal was to retire at 35 with $635,000. But in the years since, her outlook has shifted.

“I don’t really have a number or a date in mind anymore. It’s less about early retirement now — and more about how can I optimize my life so I’m at peak happiness,” she says.

Even if she doesn’t retire early, Merz has learned a lot from FIRE, saying: “It’s been interesting to see all the things society says we need that I am actually quite comfortable living without.”

She has also given herself a significant amount of financial freedom in the years to come. By frontloading her retirement savings — and giving her accounts decades to compound — Merz could stop saving for retirement now and still have a healthy nest egg at 65.

“I gave myself the gift of not having to worry and stress out about money in the future,” she says.

 

How to Handle No Spend Sundays Like a Boss

Fun fact: Sunday is my favorite day of the week. Yes, I know it’s dangerously close to Monday. But, I still look forward to it because it’s a chance to treat myself after working for five days and then side hustling on Saturdays.

Yet, while I love Sundays, it’s easy to get caught up in my favorite day off and blow right through my budget. Let’s look at a hypothetical scenario of how quickly spending can add up on a typical Sunday:

Coffee – $5

Brunch – $50

Groceries – $75
Gas for the week – $30

Total: $160

When multiplied by four, this adds up to $640 a month or $7,680 a year. Yikes.

If this type of spending looks familiar to you, then a No Spend Sunday may be just what you need in order to boost your savings goals. If you’ve never tried one of these challenges before, don’t worry – we’ve got you covered. Keep reading to learn how to navigate a No Spend Sunday in 5 easy steps.

Step 1: Separate Wants From Needs

First, it’s important to understand the definition of a No Spend Day.

Think of it like going on a diet but for your finances. It means that you eliminate (or scale back on) anything that’s non-essential to your budget. For me, based on the above hypothetical list, I would cut out coffee, brunch and challenge myself to lower the amount I spend on groceries. Gas would remain on the list as a “need.”

Now it’s your turn: Take a step back and write down all the activities you normally do on a Sunday that cost money. Place a checkmark next to the ones that are essential and an “x” next to the spending you can do without.

Step 2: Get Creative

Kristy Runzer, CFP® and Founder of OnRoute Financial, says that the key to surviving a money challenge like a No Spend Sunday is to get creative and find things to do that will bring you happiness without the price-tag.

“So, for example, let’s say that you typically enjoy going out to eat with girlfriends to fill the need of wanting to spend time with those closest to you and simply have fun. On a (No Spend Sunday), instead of spending money at a restaurant, you could meet up with your girlfriends at the park or hang out at someone’s house. The end result is the same – you fulfill the underlying need to connect, without feeling guilty about your spending,” says Runzer.

Sami Womack, Founder of A Sunny Side Up Life, also agrees that “having fun doesn’t have to cost money.”

Some of Womack’s favorite free activities include:

  • An at-home spa day
  • Hiking
  • Reading a book
  • A movie night at home
  • Subscribing to a new podcast
  • Spring cleaning your closet
  • Doing a pantry/freezer cleanout

Step 3: Get an Accountability Partner

It’s so much easier to stay the course with just about anything when you have extra support.

If you can’t find a friend or family member who wants to hop aboard the no spend train with you, then look no further than social media. Many money coaches and personal finance bloggers host money challenges throughout the year that you can participate in. All you have to do is search #NoSpendDay or #NoSpendWeek, etc.

Step 4: Give Your Savings a Purpose

When saving money, it’s important that you save for a specific purpose. Yet, oftentimes folks miss this when they survive a savings challenge.

So, let’s say you decide not to eat out or go to the mall during your No Spend Sunday. Estimate your savings by looking at how much you would normally spend on each of these activities.

Let’s say the total is $100. At the end of the No Spend Sunday, transfer $100 into a separate savings account until you figure out what to do with it (pay down debt, put it in your summer vacay fund, etc.) This way the money isn’t just floating around in your checking accounting, tempting you to spend it on things you probably don’t need come Monday.

Step 5: Keep Building Those Healthy Money Habits

The benefit of a spending challenge is that it teaches you money mindfulness.

“Every day, but especially on weekends, it’s easy to spend money without thinking twice. You don’t realize (the damage) until the credit card bill comes and you’re left with a spending hangover,” says Runzer.

“Putting even a little bit of thought into what you’re spending or wanting to spend on and why really goes a long way. This is truly empowering because it puts the choice and the control back in your hands. You get to make money decisions from a place of knowing where things are going and what they’re doing for you,” she says.

From here, you can make incremental changes that positively affect your finances over time, rather than trying to make a drastic overnight change. This is exactly what Lauren Tucker, Founder of An Organized Life has done. She started out with a No Spend Friday, then a No Spend Week, until she worked her way up to a No Spend Month.

“It’s definitely been a process,” says Tucker.

“But starting small is the best way to introduce a new habit,” she says.

“Everyone’s definition of a no spend (challenge) can vary, but for me, it means that I refrain from purchasing anything that’s not in the budget or that I have already identified to spend in my miscellaneous spending category.”

Tucker plans out her month using a Google Keep Note where she outlines what she intends to spend with any discretionary income. She also tracks her success each day and shares her monthly results on her social media feed.

Bonus Tip: Pay Yourself First

After my husband and I completed our first no spend challenge, we realized that one of the reasons we would overspend is that we had too much money left-over in our checking account after paying our bills. That money was just hanging out, waiting to be spent.

That’s around the time I learned about the importance of paying yourself first. This means that we save first before doing anything else. By doing this, it reduces the amount of “extra money” we have left in our checking account and forces us to be more conscious of how we spend – especially on the weekends.

We still incorporate no spend challenges every now and again, especially when we have a specific money goal, like saving for a vacation.

We challenge you to try out your own No Spend Sunday for yourself and see how much money you can save!

 

How to Budget on an Irregular Income

Understanding exactly how to budget can be difficult, even for someone with a consistent income. But, think about how complicated budgeting would be if you had an irregular income.

This is what millions of Americans deal with all the time.

Freelancers, small business owners, and salespeople all have incomes that can change from month to month. Sometimes the fluctuation can be drastic, and it can make it hard to save money.

If you find yourself in this situation, how can you develop a budget when you don’t know what your income is? Keep reading as we walk you through five steps to budget on an irregular income.

1. Calculate your bare-bones budget

The very first thing you need to do is calculate your bare-bones budget. These are the essential expenses that you need to cover each month. Make sure to include categories like housing (rent or mortgage), utilities, groceries, insurance, transportation (car payments, public transportation), and other essential costs.

Housing, insurance and car payments can be easy to factor in as the monthly amounts stay about the same. However, your utilities and groceries can fluctuate. To get an accurate figure, calculate how much you’ve spent, on average, for each category during the past 12 months.

While these are the critical expenses you need to cover each month, you should also include retirement, savings and debt payments. While these are not required, they are still important.

2. Add in your discretionary expenses

Now that you’ve calculated the bare minimum you need to get by, it’s time to calculate your discretionary expenses. These are things that you spend money on but can live without.

These expenses include going out to dinner, a date night at the movies, the cost of your daughter’s dance class, etc. Figure out how much you spend on these expenses, on average, each month.

Looking back through bank or credit card statements is a great way to locate these expenses.  Budgeting apps link Mint also do a good job of breaking down your expenses into categories.

3. Build up an emergency fund

Many of you have probably heard of an emergency fund. Its sole purpose is to cover an unexpected expense. If your income is always changing, an emergency fund is a must. The last thing you need is to have an emergency pop up during a lower income month and not have anything saved.

Simon Moore, a contributor to Forbes, recommends three to six months worth of expenses in an emergency fund. David Bach, a personal finance expert, takes it a step further and recommends that you save one year’s worth of expenses.

To get started, consider opening a Chime bank account. Chime’s Automatic Savings program is a great way to build your emergency fund. Here’s how it works: Each time you use your Chime Visa® debit card, Chime will round up your purchase to the nearest dollar and transfer the difference to your savings account. Plus, Chime makes it simple to save each time you get paid. As a Chime member, you can automatically deposit 10% of your paycheck into your savings account.

4. Pay yourself a reasonable salary

Having an irregular income can be stressful. This is why a budget is so important. It helps you forecast your monthly expenses. It also gives you the ability to see how much you have in your bank account so that you can perhaps pay yourself a salary.

To start, try paying yourself based on your budget the previous month. You can do this by combining the totals from your bare-bones budget and discretionary expenses and depositing that in your checking account on the first of the month. This will cover the entire month worth of expenses. Everything else you might have made will be put toward either short- or long-term savings.

By doing this, you are never spending more money than you actually have. Instead, your income is based on the past.

5. Pay your bills using a zero-sum budget

If you’ve never heard of a zero-sum budget it’s a fairly simple budgeting method where every dollar has a purpose.

At the end of every month, your income minus your expenses should leave you with zero in your checking account. For example, if you have $200 left in your account at the end of the month, your job isn’t done. That $200 needs to be allocated to something. For example, perhaps it will go toward debt payments, retirement or short-term savings.

So, to pay your bills using a zero-sum budget, you need to start with your list of bare-bones budget items and discretionary expenses. Go down the list and pay each item, starting with the most important. Once all those are taken care of, see how much money is left over. Remember what we talked about – every dollar has a purpose. Look for a place to allocate the extra cash.

One important thing to note with a zero-sum budget is that you need to pay attention to your variable expenses throughout the month. Make sure you’re staying below the amount you budgeted for items like groceries, clothes and anything else that fluctuates.

Irregular income doesn’t need to complicate the budget

You can still budget – even with a fluctuating income.

As long as you stick to your budget and live on the income you generated from the previous month, you should begin to see your financial situation improving. Are you ready to give it a try?

 

How to Stop Taking Money out of Your Savings

Dipping into your savings account constantly can be a sign that you’re letting FOMO control your spending habits.

We’ve all been there. One week you’re patting yourself on the back for growing your savings. And the next week you’re trying to transfer money back to your checking before you get socked with an overdraft fee.

No need to beat yourself up over the past. But, if you want to change your money habits for the better, here are some tips to grow your savings.

Have a Separate Emergency Fund

Create a separate account devoted only to real emergencies. By real emergencies, I mean paying for a new engine for your car so you can get to work.

If you don’t have an emergency fund yet, make this your main money goal and build it up to at least $1,000. The longer you go without an emergency fund, the longer you’ll keep dipping into your primary savings account to pay for these expenses. Worse yet, you can go into credit card debt.

Identify the Trigger

Why do you keep dipping into your savings? Are you overspending when it comes to eating out? Or, maybe you forgot to save up for larger expenses like your car registration.

Identify what is causing you to spend and this way you can learn how to fix it.

For flexible spending categories, it can be easier to stick to a tight number if you limit yourself to cash. For example, say you are going out to lunch and Target with a friend. If you know you may overspend, take the exact amount of cash budgeted and leave your bank card at home. You’ll think twice before ordering an extra drink or buying that cute shirt.

Out of Sight, Out of Mind

When I wanted to stop taking cash out of my savings account, I opened up a new account at a different bank and set up automatic bi-monthly deposits. Since it was not my main bank, I grew my savings account as I was less tempted to withdraw money from another bank.

Get a New Mindset

When you buy a seven dollar burrito, you don’t ask for your money back a week later because your account is a tad short. When you made that purchase, you counted that money as gone forever.

You need to adopt a similar mindset with your savings.

So, deposit money into your savings account and consider it gone forever. This means that when you are $50 short before payday, you may have to curb your spending.

Another powerful mindset tool is to give your savings account a purpose. There is no fun in saving for a vague someday. Take time to think about why you want to save money and how much money you need to save.

For example, if you want to save $20,000 for a down payment for a house, this gives you something to really save up for. Every time you deposit $200, you’ve hit one percent of your goal. You’ll be less tempted to take money away from this goal, too. Just think: transferring $50 from this savings account to your checking account means you’re slipping further away from your home ownership dream.

Set Up Rewards or Punishments

Are you motivated by the thought of getting a reward? Do you want to avoid punishment? Knowing which one of these is a greater motivator can help you break the habit of dipping into your savings.

If rewards motivate you, for example, set up two to three savings goals and rewards. For instance, if you save $4,000, perhaps your reward is to buy a new gaming system guilt-free.

If fear of punishment motivates you, recruit your friends or family members to help. What embarrassing thing will you have to do if you don’t keep your savings account balance in check? Perhaps the thought of wearing a loud, outdated suit from your dad’s closet to work will be just the thing to keep you saving faithfully.

Let Your Bank Account Do the Work for You

Use the power of automation to make saving painless. The point is: When you don’t have to think about saving money, it’s easier to save.

So, consider automatically depositing money from your paycheck into your savings account – on the day it hits your account. Chime members can opt for 10% of each paycheck to go into their savings.

Another way Chime helps streamline your savings is with the Chime Visa® debit card. Just use your debit card to spend as you usually do, and Chime will round up the transaction to the nearest dollar. The difference is then transferred to your Savings Account.

Max Out Your Transfer Allowance

The Federal Reserve Board sets a limit of six transactions per month on certain transfers and withdrawals from your savings account. The reason? To encourage you to use your savings to actually save money – and not spend it.

Some Chime members use this rule to their advantage to cut out the temptation to dip into their savings. How? They initiate six one-cent transfers at the beginning of the month from their Savings Account to their Spending Account. After the six transfers, they can only transfer money to their savings, but they cannot withdraw it.

Every savings account has this same rule, so you can use this hack at any bank. However, it’s important for you to understand your bank’s rules to ensure you don’t get dinged with unnecessary fees if you try to make a seventh withdrawal for the month. Along these lines, Chime will never charge you fees, so you may want to consider switching to a bank that will actually help you get ahead financially.

You Can Do It

Breaking bad money habits takes time and effort.

But, as you can see, there are many ways you can develop healthy money habits to save more money. Why not start right now by setting yourself up to get paid early?

 

How to Save Money for a Car

According to the vehicle appraisal website Kelley Blue Book, the average cost of a new car in 2018 was more than $35,000. There’s no denying it: Cars are expensive.

Furthermore, it costs an average of $8,469 per year to keep and maintain a car. This includes fuel, car payments, maintenance, parking, and other vehicle-related expenses. Ouch.

And while there are many more affordable alternatives to vehicles, like public transportation, carpooling, and even walking, this simply isn’t realistic for everyone. If you do need a car, there are ways you can save money to purchase one, and then afford the ongoing expenses.

Here are six strategies to help you save enough money to buy a car.

Consider your budget

You probably already know that the newest and nicest cars don’t come cheap.

But this doesn’t mean you have to spend more than you can afford to get a car with a leather interior, moonroof, and other fancy bells and whistles. It’s more important that you create a budget and stick to it.

Start by considering both your income and what you can realistically afford. For instance, if you can only afford a $300 per month car payment, then don’t buy a vehicle that will cost you $600 a month.

To get an idea of how much car you can afford, check out this free calculator from Money Under 30. And, CreditDonkey suggests spending no more than 20 percent of your income on car-related expenses. Of course, the less you spend, the more money you will have for other things, including savings.

Make a list of needs versus wants

There’s no shame in wanting every luxury feature a new car has to offer. However, those additional gizmos and gadgets come at a steep cost. So, focus on keeping you priorities in check.

For instance, maybe it’s most important to have a car with a high safety rating. Whereas a red car with a hatchback seems like a great idea, that’s simply not as important as getting a safe car.

Remember, with some wise budgeting you can purchase what you really need, but you won’t ever be able to afford all of your wants. It’s all about prioritization!

Don’t forget about additional expenses

Unfortunately, the initial car purchase is only part of the cost. Gas, parking fees, insurance, and maintenance is part of the package, too. And these expenses are costly!

To save money over the long-term, gas mileage is particularly important. Fuel prices are largely uncontrollable, so by choosing a car that gets low gas mileage, you can save money over time. Check out this list from Carmax of 10 cars with great gas mileage.

Save for a down payment

When you go to purchase a new or used vehicle from a dealership, it will require you to make a down payment. A down payment is money you pay upfront for your purchase. After that, you’ll typically take out a loan to pay for the rest of the cost – and make monthly payments to pay off that loan. Autotrader suggests aiming to put at least 20% down on the total cost of a car.

While it may be tempting to purchase a car before you have an adequate down payment saved up, think about it this way: The more you can put down, the less you’ll pay over time in car payments in order to pay off your car loan. Plus, car loans accrue interest, and the more money you borrow, the more you will theoretically owe in interest over the lifetime of your loan.

Establish a realistic timeline

In order to save up for a car, it’s important to create a realistic savings timeline.

One easy way to estimate a timeline is to take the total cost of the vehicle you are considering. Multiply the total cost by 20%. This will show you what 20% of your total vehicle cost will be, and this will also give you an amount to save for your down payment. So, say your dream vehicle is $25,000. Then you should plan to save at least 20%, or $5,000, for a down payment.

From here, it’s time to look at your budget. If you can set aside $500 a month, you can have enough for a solid down payment in 10 months’ time. However, if you can only save $100 a month, you may find you need to look at more affordable vehicles. Of course, remember the more you save up front, the less you will owe over time.

Make your savings automatic

Now that you have your savings plan in place, you need to figure out where to put that money.

The best place to park your hard-earned cash for a short-term goal is in a specific savings account. And, Chime gives you a savings edge through its automatic savings program.

With Chime, there are two ways you can automatically save money. First off, you can download the easy-to-use Chime app and set your savings goal. Chime members can automatically transfer 10 percent of every paycheck directly into their Savings Account, allowing you to save for that new car even faster.

Secondly, Chime helps you save money every time you make a purchase with your Chime Visa® Debit Card. How? Chime’s Save When You Spend program automatically rounds up your transactions to the nearest dollar. Then, it transfers that round up amount to your Savings Account. The more you use your Chime card, the more funds you can add to your savings.

Are you ready to save up to buy a car?

 

How to Get Ahead If You’re Behind on Your Car Payments

Buying your first car is almost like a rite of passage. You’re officially an adult!

But then reality sets in. Having a car payment is a big responsibility and, with your other financial burdens (AKA student loans), things can get stressful  – fast. In fact, you may find that you are falling behind on your car payments.

This can be especially frightening because if you can’t make your payments, you run the risk of your car being repossessed by the lender. And, this can seriously hurt your credit.

So, what should you do if you find yourself struggling to make your car payments? We spoke to two experts who shared their tips for getting back on track financially. Read on to learn more.

What to Do If You’re Temporarily Behind on Car Payments

If you’ve recently faced tough times financially but expect to be back on your feet within a month or two, then your best bet is to negotiate with your lender. Kristy Runzer, CFP® and Founder of OnRoute Financial says it’s important to explain your situation in a clear and succinct way.

“Let them know you want to pay this loan back and that you would like to work together to find a solution. This will show lenders you’re serious and not trying to just skip out on the loan,” says Runzer.

After all, the last thing any lender wants is to spend time and resources to repossess your car. This is a lose-lose situation for both you and the lender. Runzer explains that by being proactive, you may be able to negotiate with your lender to extend your payment due date or extend the life of the loan to lower your monthly payment amount.

“Don’t be afraid to ask for what you want. The worst case scenario is that they say no to your request, but they will usually be able to offer some alternative solutions,” says Runzer.

What to Do If You Can’t Afford Your Payment for the Foreseeable Future?

If you’ve found yourself in a situation where it’s going to be tough to make your monthly payment, Bola Sokunbi, CEO and founder of Clever Girl Finance, says to consider one of these options:

  • Trade in your car for a cheaper model.

If you have too much car for your budget, you may be able to downsize for a more affordable model. However, be sure to check if the trade-in value of your car will be enough to cover the full amount of the original loan. If the value isn’t enough, you may be on the hook for extra payments on the original amount. This is why it’s so important to read the fine print and crunch the numbers before you agree to any new terms.

  • Consider going without a car…at least temporarily. “Take a full assessment of where you live. You may be able to get rid of your car altogether [if you are not upside down on your loan] and leverage public transportation,” says Sokunbi, also a certified financial education instructor. Other options include biking to work or carpooling with your co-workers. In fact, some companies may offer incentives for employees who walk, bike or take public transportation to work.
  • Buy a cheaper car for cash. Sokunbi says that you can “absolutely find a reliable enough vehicle for between $3,000 and $5,000 that will get you from point A to point B.”

It may take you a few months to save up to make this purchase, but then you will only have to worry about your auto insurance payment instead of a hefty car payment as well. Plus you’ll benefit from having peace of mind — and you can’t put a price-tag on that.

Genius tip: Find a side hustle to accelerate your savings goal. There are so many options out there from selling plasma to teaching English online to turning your spare bedroom into an Airbnb. Just a few hours a week could totally transform your finances within a few short months!

Improve Your Credit

Sokunbi explains that a lack of credit history is a contributing factor of high car payments for some millennials. However, by taking steps to build up your credit score, you’ll have a lot more options to choose from that will be easier on your pockets.

“With an improved credit score, you can expect to benefit from a better interest rate which will save hundreds or even thousands of dollars over the life of your car loan,” says Sokunbi.

This option worked well for me a few years ago. When I bought my first car in 2013, my car payment was $405 per month. Although I earned a relatively good salary at the time, when coupled with my student loan payment and rent, I didn’t have much of a disposable income at the end of each month. It took me about six months to build up my credit score by strategically opening a few credit cards and keeping my credit card utilization ratio below 10 percent. After that, I was able to work with my lender to reduce my payments to $300 based on my improved credit score. This, in turn, gave me much more wiggle room in my budget.

Next Steps: Steer Your Finances in the Right Direction

Once you get a handle on your car situation, then it’s time to take control over the rest of your finances. An excellent starting point is to pay yourself first. This means you pay yourself each time you get a paycheck  – even before you pay your bills. It might sound like a strange concept but it’s a huge game changer for anyone who wants to get ahead with their money. Paying yourself first helps you prioritize your financial goals so that you can get on a path to financial security!

 

How to KonMari Your Money

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For a 4’ 7” human, Marie Kondo is huge.

More than 11 million people have bought her books, and still others are binge-watching her Netflix series “Tidying Up With Marie Kondo.” People are drawn to Kondo’s philosophy: You can change your life by getting rid of all the things that don’t “spark joy.”

Want to give it a try? You don’t need to limit yourself to clothing or books or Beanie Babies. In fact, nearly all of us could stand to tidy up our finances, too. Here’s how to “KonMari” your bank accounts, credit card purchases, and investments — and maybe even spark financial joy.

Envision Your Ideal Lifestyle

As Kondo wrote in “The Life Changing Magic of Tidying Up”: “The question of what you want to own is actually the question of how you want to live your life.”

So, take a moment to reflect. Do your expenditures and money habits reflect your ideal lifestyle? Or, are you, say, spending your money on bar tabs when you actually want to travel the world? Or living in an expensive city, even though you dream of retiring early?

Think about how you can align your finances with your ideal lifestyle.

“Start with the vision of your best financial life to help you shift your mindset and shape your criteria for what sparks joy,” says Kristyn Ivey, a KonMari Consultant who co-hosts the Spark Joy podcast.

Make a Money Mountain

If you were organizing your wardrobe, Kondo would tell you to make a “clothing mountain” by removing everything from your closet and piling it on the bed. This way, you’d get a full picture of what you own — and can therefore make better decisions about what you do or don’t need.

The same goes for your finances. While the results won’t be as physically impressive, collecting a mountain of data about your money habits will hopefully have an even greater long-term impact.

The most accurate way to assemble this information would be to track your spending and income for a few months. (That’s especially true if you often use cash to make purchases.) If you’re in a hurry to KonMari, however, you can get a decent overview by compiling your credit card, bank, and investment account statements from the past year.

“The reason we ask you to gather everything in one category all together is so that you see all that you have at the same time,” says Jane Grodem, a KonMari Consultant in the Bay Area.

“This is an opportunity to consider the state of your finances with clarity, and ultimately the goal is to let go of those [expenses] that do not serve you in your current or future life.”

Decide What Sparks Joy

Once you’ve created your money mountain, analyze the information.

  • Are you spending more than you earn?
  • Where are you spending the most money? Did those purchases spark joy?
  • Do you have enough saved to cover at least three months of expenses?
  • What have you saved for your future goals?

Unlike physical objects, finances are tricky because saving money often doesn’t spark joy in the moment. So, to help you feel that joy in your bones, visualize your financially secure future — whether it’s holding the keys to your first home or treating your grandkids to all the ice cream they desire.

You can also note the financial data points that definitely don’t spark joy, like an ATM fee from your bank, a spartan retirement account, or an expensive takeout meal.

Now that you know which financial behaviors do and don’t spark joy, you can look for ways to augment or disrupt them. For instance, you can spend more money on plane tickets instead of shoes, or you switch to a fee-free bank.

According to Liv Cloud, who blogs at Funding Cloud Nine, viewing her life and finances through the KonMari lens has saved her “thousands” of dollars.

“I no longer mindlessly spend money on unnecessary things,” says Cloud.

“I have become more intentional with my spending and with the items that I bring into my home. If it isn’t something that I really love, then I simply leave it at the store,” she says.

View Your Budget as Plentiful

Kondo is all about what your woo-woo friend might call an “abundance mindset.”

“The biggest mistake people make is to focus on what to discard instead of what to keep,” Kondo told Mic. “If you focus on this, you look for flaws… and cannot appreciate the things you own. The correct mindset is to keep what you love instead of throwing out what you don’t like.”

Although she’s talking about physical items, that’s the perfect way to look at your budget, too.

When you’re deciding which expenditures spark joy, don’t agonize over what you’re cutting out. Instead, delight in what you get to keep: rent for your (hopefully tidy!) apartment, groceries for next week’s potluck with friends, a splurge-y fancy coffee every Friday.

Organize Your Financial Paperwork

Being overwhelmed by paperwork is totally normal. In fact, Kondo devotes an entire clutter category to it, with her baseline rule being “discard everything.” (What a relief!)

Of course, some paperwork, like the past three years of tax returns, must be kept. Which is why Kondo recommends three folders, each with a different purpose: currently in use, needed for a limited period of time, or kept indefinitely.

You should also make a “pending” folder for papers you haven’t had time to organize yet. And then get in the habit of recycling paper as soon as you get it, so it doesn’t ever have the chance to — horror of horrors — pile up.

Be Grateful for What You Have

Before Kondo embarks on any decluttering mission, she sits on the floor and thanks the house. Before discarding an item, she thanks it for its service. Although it might sound loony, numerous studies have suggested that gratitude can vastly improve your outlook.

So, while you’re in the midst of KonMari-ing your finances, take a step back — and be grateful for what you have. Maybe you don’t have the latest designer handbag, but you have enough to eat. Maybe you don’t have enough money to take a vacation this year, but you have a job.

“I now surround myself with things, people, and experiences that bring joy to my life. Instead of focusing on what other people have, I focus on what is going to make me happy and make me the best person I can be,” says Cloud.

 

How to Be Prepared for a Market Downturn in 2019

If you had money invested in the stock market in 2018, you may be feeling a tad bit of anxiety. Well, maybe a whole lot of anxiety. That’s because last year was the worst year for stocks in a decade, with the S&P 500 down 6.2%, the Dow falling 5.6%, and the Nasdaq dropping four percent. Yikes.

As we move into 2019, you may be wondering if the stock market will continue to decline or whether it will rise. While no one has a crystal ball to see into the future, some financial experts believe a period of slowed economic growth is headed our way, according to Investor’s Business Daily. So, what can you do to prepare for a potential market downturn in 2019?

There are many steps you can take to protect your finances and stay ahead in the event that we head into a period of financial decline. Take a look at these four tips from financial experts:

1. Set expectations for your money

First things first: Figure out your money goals. For example, if you need cash for short-term goals, like living expenses and paying off debts, this money should ideally be held in an emergency fund or another savings account that isn’t subject to stock market fluctuations, says Ellen Duffy, CFP and owner of Parkway Wealth Management in Boston. Parkway’s services are provided through Aevitas Wealth Management, Inc., a registered investment advisor.

According to Duffy, you should keep three to six months worth of expenses in an emergency fund. This way the cash is available if you should need it for any unforeseen reason, like a job layoff or major car repairs.

Also, consider life cycle changes happening in your life now or in the near future. For example, are you expecting a baby, planning to buy a home or considering leaving your job to start a business? If these or other life changes are on your horizon, you’ll want to beef up your cash reserves – regardless of which direction the stock market goes.

“Understanding that you have ample cash on hand can a great tool for being patient during periods of market fluctuation,” says Duffy.

2. Understand that market fluctuation is part of investing

Here’s a fact: Market declines are part of investing.

“They occur regularly and are difficult to predict,” says Duffy.

So, why do we feel nervous and emotional when the stock market declines?

“Because we are human! It is natural to feel uneasy during periods of market volatility,” she says.

But, here’s the good news: Declines don’t last forever and generally speaking – while past performance does not predict the future – markets do go up over long periods of time  – “they just don’t go up in a straight line,” says Duffy.

The best thing you can do if you’re worried about the volatility of the stock market is to educate yourself on the fluctuations over time, prepare for this and ride it out. Remember: What goes down, will come back up.

According to Fidelity, it’s impossible to predict when the good and bad days will happen. If you miss even a few of the best days, it can have a lingering effect on your portfolio. For this reason, it’s best to stay the course. 

Adds Duffy, “try to avoid making emotional decisions or trying to time the market – both actions can be harmful to investment performance.”

Here’s another tip: A market decline can be a good time to add to your investments – that is, if you have ample cash on hand, are prepared to invest long-term, and can handle potential volatility. Think of this like getting a great deal on a vacation or new car.

“People love to buy clothes, cars, airline tickets etc. when they are available at a reduced price… yet this premise often doesn’t translate to some investors,” says Duffy.

When stock prices fall, this may benefit you as you may be able to buy more shares or spend less money per share. Case in point: The worst times to jump into the market may actually turn out to be the best. For example, the best 5-year return in the U.S. stock market began in May 1932—in the midst of the Great Depression, according to Fidelity.

3. Don’t put all your eggs in one basket

Ok, this may seem cliche but this major premise in investing is also called “diversification.”

“Downside risk and performance can be amplified if you are invested in a single asset class or single stock – also referred to as ‘concentrated position risk’,” says Duffy.

Instead, you should consider investing in multiple asset classes, including: large cap stocks,  growth or value stocks, and small cap stocks. You may also want to consider investing in international stocks, emerging markets, commodities, real estate, and multiple categories of fixed income securities.

“Each asset class has its own attributes and over time may outperform or underperform for any given period ..and no one particular asset class has been the top performer year over year.”

If this information seems too high-brow, let’s boil it down this way: Diversifying, or spreading your investments across various asset classes, may help lower the fluctuation in your portfolio. To create a diversified portfolio, it’s important that you also understand your risk tolerance, as well as your timeline and goals for investing.

4. Save money automatically

Regardless of whether you have a lot, a little or no money in the stock market, it’s important that you save money. This can help you during a time of financial uncertainty (see #1). It can also help you reach your financial goals regardless of whether the market goes up or down.

A good way to stash away more money is to automate your savings. If you open a no-fee Chime Bank account, you can start saving more money right away. How? You’ll get a Chime Visa Debit card and every time you use your card, Chime will round up your transaction to the nearest dollar and deposit that change into your Chime Savings Account. Those pennies add up – fast. For example, if you use your Chime card twice a day on average, you’ll save more than $300 a year – without even thinking about it.

Stay the course

We get it: A potential stock market downturn may cause you to feel stressed out. But, if you use the four tips above, you’ll be more apt to weather a financial storm.

With that in mind, here’s a final pro tip: If you want or need more expertise on how to best manage your money, it’s a wise idea to seek help from an investment professional or financial advisor. This way you’ll have an expert who can help guide you through market ups and downs, as well as help hold you accountable to your money goals.

 

How to Invest Small Amounts of Money

When you think of investing, you might think of wealthy finance types or people straight out of The Wolf of Wall Street.

But, in reality, everyone can invest for the future, and you don’t have to have a ton of money to do so. We’ve scoured the web for some great resources and found these 10 best ways to invest small amounts of money. Read on to learn more.

1. Invest with a robo-advisor: $10

If you’re not sure how to start investing, try a robo-advisor. A robo-advisor is an online investing platform that can help manage your money.

For example, you can try investing with Betterment, one of the bigger robo-advisors out there. There is a minimum deposit of $10 and the annual fee is 0.25 percent. Other fees are based on your account balance.

When you get started, Betterment will ask you what you’re investing for — such as retirement or a down payment on a house. After that, based on your goals and risk tolerance, Betterment will create a custom portfolio for you. You can get started at Betterment.com.

2. Invest your spare change: $0.01+

When you make a purchase, it can feel like your spare change isn’t that important. But we know that small amounts of money can add up fast. That’s why Chime offers a round up savings program.

Applying this same philosophy to investing, you can invest your spare change with Acorns, a micro-investing platform that takes your change and builds a portfolio for you. And, investing your spare change with Acorns will only cost you one dollar per month.

Through Acorns, you invest with exchange-traded funds and the company will build a portfolio based on your financial goals.

3. Invest in certificate of deposits (CDs): $0-1,000

One way to invest small amounts of money with not-so-much risk is through certificates of deposit (CDs). According to Investor.gov, “A certificate of deposit (CD) is a savings account that holds a fixed amount of money for a fixed period of time, such as six months, one year, or five years, and in exchange, the issuing bank pays interest. When you cash in or redeem your CD, you receive the money you originally invested plus any interest. Certificates of deposit are considered to be one of the safest savings options.”

You can typically get certificates of deposit from a bank or financial institution. The minimum investment may vary but could be between $0-$1,000. Though CDs are considered safer and less risky, it also means they don’t have as high returns as other investment vehicles.

4. Invest with Prosper: $25+

Online loan marketplaces bring borrowers and lenders together. One such marketplace is Prosper. Through Prosper, you can invest $25 as a minimum per loan. These personal loans are offered to creditworthy borrowers and you can earn around 5.4 percent, according to the historical average. The best part is that you can get your earnings deposited into your account each month. While this comes with a moderate level of risk, it may not be as volatile as the stock market. Get started on Prosper.com.

5. Invest in social good: $50

What if you could invest money to support causes you care about? Well, you can do this through impact investing. Impact investing, aka socially responsible investing, allows investors to support causes like green energy, clean water, gender equality and more.

Using Swell Investing, you can begin growing your money and supporting causes you love with an initial deposit of $50. There’s a 0.75 percent annual fee and there are no trading fees or expense ratios. While there is risk with any type of investing, at least this way you know your money is supporting something you care about.

6. Invest based on themes: $250

Investing can be confusing, but it becomes simpler when you focus on a specific theme that you care about. Motif Investing offers you a way to invest in specific thematic portfolios such as technology or sports. You do need a bit more money than some of the other options here, with an initial investment of $250.

Once you select a theme, Motif builds a custom thematic portfolio. Find out more information on Motif.com.

7. Invest in fractional shares: $5

Investing doesn’t have to cost a lot of money! That’s certainly true with Stockpile, where you can start investing with just five dollars. You can buy fractional shares of stocks and exchange-traded funds. There are no fees or minimums and it’s 99 cents per trade. There are also mini-lessons, so you can learn as you go instead of waiting to invest when you have everything figured out. Get started at Stockpile.com.

8. Invest in low-cost index funds: no minimum

Low-cost index funds are Warren Buffett’s secret weapon. Index funds track different securities on an index, like the S&P 500.

Index funds can have lower costs and can offer more diversification. While investing in the stock market can be risky, diversification of index funds can help manage risk. Fidelity, for example, offers the ability to invest in index funds with no minimums and no account fees.

You can get started with Fidelity or Vanguard.

9. Invest in your retirement with a IRA: no minimum

You may or may not have a 401(k) with your employer. But anyone can invest for their retirement with a Traditional IRA or Roth IRA (Individual Retirement Account).

Using a brokerage firm, you can set up a retirement account and begin investing in your retirement immediately.

As of 2019, the contribution limit for IRAs is $6,000 per year. While the main tax difference is paying taxes now (Roth) or paying later (Traditional), there are income limits with a Roth IRA. To invest the full amount in a Roth IRA, your income must be less than $122,000 for single filers.

10. Invest in a 529 College Savings Plan: $25

If you have children, you can invest in a 529 College Savings Plan to help save for their education. Using an app like U-Nest, you can open an account with just $25. U-Nest costs three dollars a month and takes five minutes to set up on your phone. You can get started at U-nest.com.

Additional resources: How to invest small amounts of money

Using these 10 ways to invest small amounts of money, you can start growing your money today. Here are some additional resources you may want to check out:

  • Fidelity:  Fidelity is a brokerage offering various investment products and education resources.
  • Vanguard: Vanguard is another brokerage offering varying products and education material.

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