Tag: Stress

 

22% of This Age Group Thinks It’s Impossible to Get out of Debt

Debt can easily turn into a massive money problem — a problem millions of Americans struggle with. More than 80% of Americans consumers consider debt a financial priority. Debt can affect anyone, but there’s one age group that faces the biggest debt burden.

survey by LightStream found Gen Xers — those born between 1965 and 1979 — have accumulated the most debt. And as they head into what should be their highest earning years, they’re not feeling very optimistic of their ability to rid themselves of debt: 22% say they don’t see a way out.

While eliminating debt takes effort, patience and sometimes years of dedication, it certainly shouldn’t be viewed as impossible, say experts. Here are some quick tips to turn your debt around.

1. Take action

A person can wander into debt, but they can’t simply wander out, said financial author Dave Ramsey. You must become fed up enough with your situation that you decide to change.

Ramsey describes personal finance as “80% behavior and 20% head knowledge.” He said you need to start by getting to a point where you are mad enough to take action.

2. Cut back on credit cards

Break the credit card habit. If you want to get out of debt, you should work to stop accumulating more. Credit cards are only a convenience, says Michael Gerstman, CEO of Gerstman Financial Group.

“If you must use a credit card, then it needs to be treated like a debit card with all new purchases paid off weekly,” said Gerstman.

But the best way to cut out credit is by ditching it altogether. Here are some easy tips on going cash-only.

3. Track your expenses

At the beginning of each month, take five minutes to write down everything you are earning and spending, said Ramsey. In addition, go through all your credit card and bank statements to weed out unnecessary spending.

“This may sound difficult, but many people don’t realize how much they’re spending on things like cable television, landline phones, and coffee drinks,” says Marc Diana, CEO on MoneyTips.

Staying on top of your tracking will put you in control of how much you have left. Keeping a tight budget can help you pull in spending and understand where your money is going.

Here’s an easy budgeting spreadsheet to get you started.

4. Adopt a positive mindset

The human mind can be a very powerful thing, said Tiffany Welka, the vice president of VFG Associates. Having the positive mindset that you can tackle your debt often translates to real-life financial success.

“Cultivating a growth mindset will improve your ability to succeed in all areas of your life, not just your financial world,” she said.

Looking for more ways to get out of debt? Here are 9 ways to pay it off in 30 days (or less).


This article originally appeared on Policygenius.com.

 

These Facts About Overdraft Fees Will Shock You

In the All Things Pesky universe, overdraft fees rank right up there with mismatched socks and next-door neighbors who vacuum in the dead of the night.

However, these bank fees are not just minor annoyances. They can put a serious dent in your pocketbook. Not only can overdraft fees be expensive, but they can potentially impact your credit. (FYI: Chime doesn’t ever charge its members overdraft fees. Never ever.)

Here are 5 shocking facts about overdraft fees that will send you reeling (don’t say we didn’t warn ya):

1. Americans pay more than $300 in bank fees every year

According to data from BankFeeFinder.com, Americans pay an average of $329 in bank fees annually. What’s worse, one in 10 pay a whopping $1,000 a year in fees. This includes fees for non-sufficient funds (NSF), monthly maintenance fees, ATM fees, overdraft charges and more. Just think: This money could go toward your living expenses, emergency fund, that awesome vacay—anything is better than paying your bank for holding onto your money.

2. Overdraft fees have been on the rise since the recession

Based on recent data released by the FDIC, the 10 largest banks in America collected $11.45 billion in overdraft and NSF fees from American consumers in 2017. What’s more, a recent survey by Moebs Services reveals that consumers paid a whopping $34.3 billion in overdraft fees in 2017 (this includes overdraft fees from big banks, smaller banks, and credit unions). This is the highest since the Great Recession in 2009, and a three percent increase from 2016.

With that much money going toward mere overdraft fees, you may think twice before reaching for your debit card to make transactions. In our age of money micro-transfers, a small misstep can oftentimes result in a series of overdraft fees. I know because this has happened to me. For instance, you can get dinged financially for not having enough in your checking account when an automatic investment hits, or even when you buy groceries at the market.

According to Moebs Services, the median overdraft fee in 2000 was $18. It’s now at $30 (most of the big banks charge an average of $35.) And credit unions aren’t much better. In 2000 credit unions charged a median price of $15; in 2017 that fee is up to $29. It’s a sad reality when credit unions, typically known for lower fees, aren’t cutting consumers any slack when it comes to overdraft fees.

3. Big banks still engage in abusive practices

According to analysis from the non-profit Center for Responsible Lending, at least one of the top 10 big banks do the following: charge extended overdraft fees on top of per-transaction overdraft fees, use high-to-low transaction processing for some forms of debit transactions, and allow five or more overdraft fees to be charged per day to its customers. Indeed, some of the big banks are still manipulating transactions to wrangle as much money in fees from you as possible.

4. Banks leave customers in the dark about overdraft protection programs

Many customers who incur overdraft fees aren’t well informed about how overdraft protections work, according to a recent study by Pew Research. As It turns out, many consumers aren’t aware that if they don’t have enough funds to cover a transaction, they can actually decline the purchase and not have to pay an NSF fee.

The same Pew Research study also showed that banks ineffectively communicate with consumers about overdraft protection programs. What’s worse, even among customers who had a straight-up convo with their bank, their understanding of exactly how overdraft programs work was pretty low. This cloud of confusion can result in even higher bank fees.

Case in point: Per the Pew research on overdraft programs, one in three of those who overdrafted treat these overdraft programs as a type of loan. For example, when they don’t have enough funds in their bank account to pay for those groceries, they use overdraft programs as way to borrow small amounts of cash.

5. Those who opt-in to overdraft protection pay more in fees

Indeed, overdraft programs are not loans and they don’t save you money. As it turns out, people with overdraft protection usually pay $450 more in bank fees, per a recent study by the Consumer Financial Protection Bureau (CFPB).

It’s no surprise that many of those who frequently incur overdraft fees are also financially vulnerable – meaning they tend to have lower credit scores and account balances than those who don’t overdraft as often.

No overdraft fees with Chime

If you want to avoid overdraft fees entirely, look toward Chime. Chime’s fee-free structure means you won’t ever have to incur bank fees. You won’t have to pay overdraft fees, monthly maintenance fees, foreign transaction fees, or minimum balance fees. Plus, you can enjoy ATM withdrawals sans fees from over 38,000 MoneyPass ATMs.

Overdraft terminology 101

To help you better understand the lingo, check out this basic overdraft fee glossary:

Overdraft

An overdraft occurs when you don’t have enough funds in your account to cover a transaction. In turn, your financial institution (i.e. bank or credit union) pays for that transaction. A fee may be charged for this service. You can overdraw your account by paying for bills, writing checks, withdrawing money from ATMs and shopping online.

Overdraft protection

In the case that your bank account balance falls under zero, overdraft protection provides a guarantee that your debit card transaction will clear. When you opt-in to overdraft protection, the financial institution takes money from a linked account to cover the transfer. A fee is often tacked onto the transaction.

Non-sufficient funds

Non-sufficient funds (NSF) is a common banking term that means you don’t have enough money in your checking account to cover a check, online bill payment, or debit card transaction.

 

What Do Banks Do With All Those Outrageous Fees?

When it comes to your bank, you are basically entrusting a financial institution with your hard-earned dough. You want to keep your money safe and watch it grow, right?

Yet, get this: Banks often charge tons of fees that cost you money without you even realizing it. To help you better understand these bank fees, let’s take a closer look at all of the different types of fees – from overdraft fees, account maintenance fees, monthly maintenance fees and more. From there, we’ll examine what banks actually do with bank fees.

Monthly maintenance fee

Ah, the monthly maintenance fee. It can seem harmless at first – until you really think about it. Your “free bank account” isn’t really free when there’s an account maintenance fee involved.

Banks typically charge monthly maintenance fees when your account balance goes below a certain amount. In fact, Bank of America charges $14 per month in fees if your account balance falls below $1,500. While there are some ways to counter this monthly maintenance fee, you are generally required to have a certain amount of money in your account.

So, in other words, your bank is trying to tell you what to do and how to use their products. Not only that, but they decide on the account balance limit. What’s worse is that you’ll have to pay the price if you don’t play by the rules. And, you may not even realize there are monthly maintenance fees unless you read the fine print or suddenly see a charge hit your account.

Look at it this way: If you put your extra dough into an interest-earning savings account or you invest it, your money will grow. But parking it in a checking account with a hefty monthly maintenance fee won’t help you build wealth.

Overdraft fees

One of the biggest ways that banks make their money is through overdraft fees. Overdrafts happen when you don’t have enough money in your account to cover your transaction and your bank allows it to go through anyway.

If this happens, you could be hit with a $34 fee every time you overdraft. And, while legislation has improved since 2010 (banks now require consumer consent), overdraft fee are still unnecessary charges that can hurt a lot of people. In fact, the Consumer Financial Protection Bureau found that consumers who have opted-in frequently pay almost $450 more in overdraft fees.

For a bit of history, overdraft fees have been a huge money-maker for banks and that’s basically why they exist. According to data in the American Banker, banks that surpassed one billion dollar in assets collected a whopping 11.54 billion dollars in overdraft fees last year. Overdraft fees can turn a simple and affordable purchase into something much larger. According to Business Insider, a young adult had $1.68 in her account when she purchased fries and a drink for $4.32. Because she didn’t have enough in her account, she was hit with an overdraft fee of $35. Not only that, but she was charged $6 per day until she was able to deposit her paycheck and restore her balance. Suddenly a purchase of $4.32 turned into a $71 fiasco.

One way to avoid an overdraft fee is opt out of overdraft protection completely. Pro tip: If you never want to worry about these fees, bank with Chime and avoid overdraft fees forever.

ATM fees

When you need to get some cash, sometimes you opt for convenience and just withdraw at the closest ATM. While that’s convenient for you, you’ll end up paying for it in many cases.

According to Bankrate’s 2018 Checking Account Survey, ATM fees have peaked and are at the highest they’ve been in more than 14 years. On average, the cost of withdrawing money from an ATM that is out of your network is $4.68 — a 36 percent spike since 2008. That may not seem like much, but over time, it adds up. For instance, that one mistake just cost you the same price as a fancy cappuccino.

You can avoid ATM fees altogether by choosing a bank that has no in-network ATM fees and zero ATM fees for out-of-network transactions on their end. If you find a no-fee bank, just make sure you always read the fine print. Banks can change their policy at any time, leaving you in the dark. This happened to one consumer who made a switch and didn’t realize he was getting hit with fees until he checked his accounts.

Another unfortunate reality is that these ATM fees disproportionately affect low-income families who need every dollar they earn.

Foreign transaction fees

If you’ve ever traveled abroad, you know how important it is to access your cash. Yet, when you use a debit card or credit card abroad, you may be hit with a foreign transaction fee. This often amounts to about three percent in fees.

But, there’s good news. There are banks that have zero foreign transaction fees. This means you can enjoy your trip without worrying about racking up added costs. Chime, for example, has no foreign transaction fees at all.

Card replacement fee

Sometimes things happen and you lose your debit card. That’s life. When you want to replace your card, it should be easy and free. But most banks charge a $5 to $25 fee to replace your card. Paying that fee can hurt when you’re already frustrated about your missing card. The good news: Chime will replace your card at no cost.

What do banks do with these bank charges?

The average consumer pays $329 in bank fees each year. Multiply that by millions of customers, and you can see why banks are getting rich off of bank fees.

Besides lining their pockets, financial institutions use these bank charges to help pay for the brick and mortar locations, staff, and general overhead costs. Luckily for you, you don’t have to pay the price.

Getting a no fee bank account

At Chime, we believe that fees aren’t consumer friendly and we want you to keep your hard-earned cash, That’s why we have no fee bank accounts. These accounts come with no monthly maintenance fees, no overdraft fees, no foreign transaction fees. No fees at all. We got you covered. We have your back.

 

Money Manners: Should you Stage a Money Intervention for Your Family?

Talking about money with trusted pals and your boo may be hard enough. But, envisioning a holiday sit-down for a mature pow-wow with your family over finances? Well, that may feel like a far-fetched, unicorn scenario.

But, what should you do if you have a relative who is royally screwing up his finances, especially if you know this mess may have a ripple effect on other loved ones? You may need to step in and intervene.

Take a look at our tips for determining whether you should stage a money intervention with the fam bam during the holidays, and our shortlist on how to proceed.

Assess the Gravity of the Situation

Communicating about money matters is well, extremely complicated. Add to the mix deep-rooted resentment, history and family dynamics, and you may feel like you’re precariously tip-toeing over landmines.

To gauge whether you should set up a money intervention, figure out exactly how serious the matter is. Is someone committing an act of financial infidelity, such as running up credit card debt, hiding bank accounts, or keeping a huge sum of student loan debt under wraps from a significant other? Or, maybe you have a teenage cousin who has no idea how to manage her finances and constantly spends everything she has. This can turn ugly once she hits college.

If it’s a serious matter, think about what would happen if nobody stepped in to intervene. If doing nothing can lead to debilitating, long-term consequences, a money intervention may be in order.

Figure Out If It’s Appropriate to Stage an Intervention

On the flipside, let’s say your sister has been complaining about how her money habits don’t align with her boyfriend’s. Perhaps she’s a saver and he never puts enough in a savings account. This would perhaps be considered a minor “flare-ups” and may be better handled between the two of them. While you feel inclined—or may have even been asked —to have a “little talk” with the couple, it may heighten feelings of tension and cause resentment.

Don’t be afraid to set boundaries around the types of money matters you’re comfortable discussing with your relatives. And, perhaps you can simply suggest resources such as a money management app or a mobile wallet that can help them with some of the issues they’re facing. Maybe this is all that’s needed to point your family members in the right direction.

Determine If You’re the Right Person

Let’s say that you’ve looked at the facts at hand, and determined that a money intervention is appropriate. If that’s a given, it’s time to decide whether you are the right person to facilitate this type of discussion.

Ideally, the facilitator should be an unbiased person who can remain calm throughout the intervention. Maybe a family friend who knows both parties would better suited. Or, you may want to bring in an experienced, trained professional, such as a financial therapist. Someone like this has no emotional ties to your family and may be the best person for the job.

If you’re the one handling the intervention, here are a few dos and don’ts to get started:

Don’t: Make Assumptions

Most of the time you only know one side of the story. For example, you may only hear from your Uncle Bill about how his wife Jane neglects to pay the bills on time. But to be fair, you may not have gotten wind from your Aunt Jane that Bill is no money saint, either.

It’s tough to do, but leave your assumptions at the door. Go into the situation with an open mind, and get the facts and details from everyone involved. If you take an unbiased, balanced perspective, you can then stage a more effective intervention.

Do: Time It Well

Just like it’s a major faux paus to ask for a loan during someone’s birthday party (yes, I’ve been guilty of this), a holiday gathering is not be the best time to stage a money intervention.

Instead, choose a time that works for everyone involved, and pick a private space so you can discreetly discuss touchy matters.

While the holidays are one of the few times during the year when all your family members may be in the same place, avoid discussing money matters over the dinner table. If you must have an intervention the day of a holiday gathering, schedule it before or after the festivities in a separate location.

Don’t: Go for the Jugular

While you may know what the main issue is, consider starting out by having a general conversation about money. This can lead into deep-seated matters, such as financial infidelity, debts that have remained long unpaid, issues with gambling or bouts of overspending.

The key here is to harbor healthy and respectful communication. Otherwise, it can escalate into a shouting match and reflexive rounds of pointing and blaming.

Do: Defer to a Professional If Necessary

As I mentioned above, it may be easier to bring in a pro, such as a licensed therapist or maybe even a money coach who works with couples or groups.

A money intervention can cause tension, and dredge up deep-seated, bad feelings. Without proper training, a well-intended conversation can quickly go south.

Handle the Situation Gently

When trying to decide whether staging a money intervention is appropriate and necessary, just keep this in mind: For every action, there is a reaction.

Do your best to create a safe space before bringing out the elephant in the room. And whatever you do, tread with care. If executed properly, facilitating a family financial intervention can shift your family’s money situation in a positive direction. It can also foster deeper communication and trust.

 

How to Make Your Life Work with Two Jobs

We talk a lot about saving money, but there’s another big way to improve your personal finances: Make more money. Working a second job can be a good way to do that, and a new study finds workers with two jobs perform just as well as colleagues with one job.

But moonlighting comes at the expense of personal and family time, the study published in the Journal of Business and Psychology finds. The study, led by Brian Webster, an assistant professor of management at Ball State University, looked at the job performance and engagement of a sample of bartenders and teachers who moonlighted in a range of jobs.

Webster believes successful moonlighters understand their employers expect them to be focused at work.

“There seems to be that recognition that if I’m at work and I’m doing this, I’m going to perform adequately,” he said.

If people can’t perform, they leave. Webster noted the study didn’t look at people who used to moonlight, but stopped.

This is good news for employers, who can count on their workers being focused, but that extra time and energy has to come from somewhere, and that somewhere tends to be family, the study finds. Only about 4.9% of workers have multiple jobs, according to the Bureau of Labor Statistics, but over the course of a lifetime, many people could find themselves moonlighting, Webster said.

So how can moonlighters find a healthy balance?

How moonlighting affects you

People moonlight for two reasons, Webster said: To make more money or to do something they enjoy, like an accountant teaching a class on weekends. Warren Robbins, senior sales associate for Policygenius, found himself needing to do the former in 2015, when he took a job as a bartender while working full-time at a health insurance company.

Robbins had just learned his partner, now his wife, was pregnant. The pregnancy wasn’t planned, and the two decided they needed more money.

His solution was to take a second job. Robbins worked 8 a.m. to 5 p.m. Monday through Friday at his day job and took on two overnight shifts at a bar, from Saturday night into Sunday and Sunday night into Monday at 4 a.m.

“My sleep schedule was all messed up,” he said.

The beginning of the week was tough, Robbins said. He would sleep all day Sunday after getting off work early that morning, work a night shift at the bar and then get to the office on maybe four hours of sleep.

His focus and drive at work suffered. So did his personal life.

“It was tough,” Robbins said. “I never saw my wife, and if I did, it was after work on a weekday. We never got to spend quality time.”

The only moments he could take for himself were during closing time, when he would pour himself a Guinness, lock the door and count the money as the sun rose.

How to find balance

Moonlighting can be stressful, but there are ways to make it better, said Paul Gionfriddo, president and CEO of Mental Health America. The first is to get enough sleep.

Sleep deprivation can take a toll on your mental and physical health, he said.

Also, take time each day to rest and recharge to relieve any stress from work.

“It’s free to sit back for 15 minutes and just rest,” Gionfriddo said. “It’s free to spend 20 minutes and take a walk.”

Find even a short amount of time for something you want to do, whether it’s family or a hobby, as a break from people telling you what to do, he said. If work becomes life and life becomes work, you can lose sight of who you are and who you want to be.

It’s important to be able to say why you’re working so hard, whether it’s to save for a trip, or support your family or retire early, he said.

“If you lose purpose in what you’re doing, then you’re in a real downward spiral that can lead to some real serious mental health problems,” Gionfriddo said.

You may not notice the signs of a problem, he said. You don’t necessarily have to feel suicidal to be clinically depressed.

If you feel excessively tired, or your eating habits suffer, those could be signs your mental health is suffering, Gionfriddo said.

“A lot of these things happen on a continuum,” he said. “It’s not that one day I have depression and the day before I didn’t.”

The Mental Health America website has free and anonymous screening toolsthat can tell you whether it’s likely you have a mental health condition like depression or anxiety. The tools also offer more information on mental health conditions, referrals to services, self-help tools and engagement with other people who may have the same condition.

If you do have a diagnosable condition, the law offers protections against being fired or disciplined for that condition, Gionfriddo said.

“There’s no shame in having a mental health condition or concern, even a diagnosed one,” he said. “In fact, the sooner you seek help for it if you think you need help, the quicker your recovery and the more likely your recovery is going to be.”

Before moonlighting, you may want to talk to your boss to see if your current schedule can bend enough to take on a second job, Webster said, or try to find a second job flexible enough that it won’t strain your existing schedule too much. You may also want to look for a second job that complements your existing job.

“If you enjoy what you do, the two jobs might benefit or contribute to each other in some way,” he said.

Robbins only moonlighted for three months. The birth of his son made his second job impossible. He wouldn’t moonlight again, given the choice.

“It was this period where you would get revived just to get depleted again,” he said. “I would never do that again.”

A second job isn’t the only way to boost your savings. Try making these small changes.

If you or anyone you know is experiencing suicidal thoughts please call the National Suicide Hotline at 1-800-273-8255 or contact them online.


This article originally appeared on Policygenius.com.

 

Hygge Hacks for Healthy Finances

Have you ever heard of hygge?

The concept of hygge has been around for centuries, but it has recently resurfaced as a popular lifestyle trend. In fact, the word hygge was on the short-list for Oxford Dictionary’s Word of the Year in 2016.

So, what does hygge mean? While it can’t be directly translated into English, this well-known word in Denmark loosely means “coziness.” It’s the practice of slowing down and prioritizing time spent with the ones you care about and doing more of the things you love the most. Incorporating hygge into your life can help you find more joy, but it can also improve your finances.

Read on to learn more about how practicing hygge can help you can spend less, save more, and prioritize your financial future.

Does hygge lead to happiness?

Hygge is a Danish concept (pronounced hoo-ga). According to Visit Denmark’s website, hygge is described as “creating a warm atmosphere and enjoying the good things in life with good people.” Visit Denmark goes on to say: “The warm glow of candlelight is hygge. Cozying up with a loved one for a movie – that’s hygge, too. And there’s nothing more hygge than sitting around with friends and family, discussing the big and small things in life. Perhaps hygge explains why the Danes are some of the happiest people in the world.”

And they must be onto something. Denmark has been named one of the happiest countries in the world for the last four years, according to studies done by the World Happiness report.

So, it certainly doesn’t hurt to incorporate some hygge into your daily life.

What does hygge have to do with your finances?

The concept of hygge means trying to find joy in the little things in life – and usually those things are cheap or even free.

You don’t need a fancy lifestyle in order to be happy. You don’t need an enormous house, expensive cars, or luxury vacations to find joy or peace. You can find hygge by slowing down, taking in the moment, and spending more time doing the things you truly love.

How to embrace the concept of hygge this year

There are dozens of ways you can incorporate hygge into your life – for free. Here are a few tips to get you started:

  • Stay in instead of going out

You can have just as much fun spending an evening at home as you can going out to a fancy and expensive restaurant. So, try having a hygge-ful evening by lighting the fireplace, baking some cookies and reading a book.

By staying in, you won’t just sneak in your fill of hygge, but you could save a good chunk of change simply by not going out on the town.

  • Give hygge-related gifts

Gifts can not only be expensive, but can often be forgotten after a year or two. Maybe it’s time for you to give the folks you care about the gift of hygge.

Gifts like candles, cozy socks, books, and gourmet coffee make great gifts and these presents also give the gift of well, presence. These gifts won’t break your budget and your loved ones will also get the chance to incorporate hygge into their lives.

  • Enjoy a home-cooked meal

What could be more hygge than a home-cooked meal? By cooking at home more often, you’ll get to regularly enjoy the benefits of hygge.

Not only can you eat dinner in your favorite and most comfortable clothing, but you can create a warm and inviting ambiance by lighting candles and dimming the lights. As if this isn’t enough, you’ll save a boatload of cash.

So, instead of going out, invite your friends and family over for a home-cooked meal. Or, lower the cost and increase the hygge even more by hosting a potluck, where everyone can bring over their favorite, home-cooked dishes to share.

  • Decorate with frugal, hygge decor

With winter just around the corner, now is the perfect time to invoke a sense of coziness in your home and practice hygge while you’re at it. Fortunately, home decor doesn’t have to be pricey – there are plenty of frugal ways to liven up your home.

You can decorate with candles, family photos and plants. From there, get creative. These items are easy to find, don’t cost much money, and up the hygge level of your home.

Prioritize time with family and friends

The bottom line: the idea behind hygge is to spend time doing more of the things that are truly important to you.

As you can see by the examples here, you don’t have to plan extravagant get-togethers or even leave the house in order to enjoy time with your loved ones. In fact, most people can claim that the best memories spent with family or friends are the times spent just sitting around, catching up at home.

Now it’s your turn to up your hygge ante. So, invite guests over, crack open a bottle, and enjoy shared plates around the fireplace this winter. By doing so, you’ll save money while creating memories that will last a lifetime.

 

The Best Way To Pay Off Debt On A Budget

If you aren’t earning a lot of money or you’re barely making ends meet, paying off your debt may seem impossible.

People fall into debt for a variety of reasons. Regardless of whether you have mounting credit card bills from past financial mistakes, student loans, medical bills, or something else, debt can feel all-consuming and completely overwhelming. Yet, did you know that it’s possible to pay off every last penny you owe? It’s not always easy, but with some determination and dedication, you can pay off your debt, save more money, and improve your entire financial situation.

Here’s how to pay off debt when you have a small income.

1. Create an emergency fund first

While you may be eager to jump right in and start tackling your debt, if you don’t have an emergency fund, this should be your first goal.

Without an emergency fund or financial buffer, any unexpected costs can derail your debt repayment process. Maybe your car breaks down and needs repairs, or you had a larger heating bill than you budgeted for. Whatever the case, when emergencies come up, you need money – and fast.

So, start an emergency fund now with a separate savings account. This way you aren’t tempted to use it for your day-to-day spending. If this feels overwhelming, start small. Even $500 saved up can help you out in a stressful financial situation.

2. Develop a “minimum needs” budget

A “minimum needs” budget is a budget that covers just your most basic living expenses, such as rent, groceries, and debt-repayment. It should be pretty bare-bones and should eliminate all non-essential spending.

To start your budget, you first need to determine the cost of your everyday living expenses.

These are bills you can’t cut out – bills that need to be paid every single month, like rent, groceries, and utilities.

As you create your budget, see if there is any way you can work to lower your bills. For instance, if you have an extra bedroom, can you find a roommate to save money on rent or your mortgage? Can you lower your grocery budget by clipping coupons and signing up for your grocery store’s rewards program? Perhaps you can consider cutting out cable to save hundreds, if not thousands, of dollars every year. Every little bit helps. The point of a minimum needs budget is to free up as much cash as you can. Every dollar you have to spare can be put towards paying down your debt.

To help you get going, start budgeting on a spreadsheet or use a budget app. And remember: no matter how you choose to track your money, the most important thing is to set a budget and stick to it.

3. Consider refinancing

If you have debt, it’s a good idea to find out if you can save money by refinancing your loans.

Refinancing your debt essentially means another company buys out your debt. In return, you start making payments to your new debt servicer, and this new company then collects your interest payments.

Refinancing companies typically offer you a lower interest rate to gain your business. This helps you because over time, you won’t have to pay nearly as much money in interest and can make a bigger dent in your principal loan balance.

Take it from me: it’s worthwhile to do your research and refinance if possible. A few years back, my husband and I refinanced some of our student loans and now pay a two percent lower interest rate than we were originally paying. This is saving us thousands of dollars in the long-run.

4. Set goals and find accountability

You can’t succeed on your own. Without solid goals and accountability, you’re much less likely to ever become debt-free.

In fact, in a study done by psychology professor Gail Matthews of Dominican University, it was found that sharing your goals with a friend is the key to accomplishing your goals. In her study, Matthews found that people who both wrote down their goals and had an accountability partner had a 76 percent success rate of accomplishing their goals. In comparison, there was another group in the study which was instructed to only think about individual goals. Only 43 percent of those people accomplished their goals.

So, practice writing down goals following the SMART method. With this method, your goals meet the following criteria – Specific, Measurable, Achievable, Relevant, and Timely. Once you’ve developed your SMART goals, share them with a friend or two. Ask a trusted friend or family member to check in with you and hold you accountable.

5. Focus on increasing your income

Cutting back on your spending certainly helps you pay off debt faster. But unfortunately, there is only so much you can cut out.

The best way to pay off debt quickly is to trim your expenses and increase your income at the same time. Then, use your freed up cash to throw extra payments towards your debt. There are thousands of ways you can increase your income. For you, maybe that means finding a higher paying 9 to 5 job. Or, you can start side hustling to earn a few extra hundred dollars each month. These are just a few ideas to get you started:

  • Drive for Uber or Lyft
  • Babysit on the weekends
  • Start blogging or freelance writing
  • Have a garage sale
  • Mow laws
  • Pick up part-time or seasonal work

Once you start earning more money, put the entire amount of extra cash towards your debt. You’d be amazed at how much faster you can progress when you can put $100, $500, or even an extra $1,000 a month towards your debt.

6. Give yourself a guilt-free allowance

Even if you’re taking all the right steps, it can take years to pay off debt. In order to stay in the debt-repayment game for the long-haul, it’s imperative that you give yourself a little break once in a while.

The idea here is to give yourself a small, guilt-free allowance each month. Because it’s already in your budget, this is money you can freely spend without feeling regretful. The concept of a financial allowance is a lot like dieting. People are more successful when they allow themselves a rest day and a cheat meal once a week. It keeps them from feeling deprived and prevents large, impulsive purchases later.

So, factor a little free spending into your budget. Whether you give yourself $15 a month to go to the movies or $30 for a night out with friends, the choice is yours to enjoy…guilt-free of course.

Improving your financial situation

Paying off debt isn’t easy, especially on a small income. But with grit, hard work, and a whole lot of commitment, it is possible to live a life free from the burden of debt. Are you ready to follow these 6 steps and get started?

 

Biggest Financial Regrets Across America

For three years in a row, American adults have the same top financial regret. A May 2018 survey from Bankrate looks at the top financial regrets among Americans and how they deal with those financial regrets. By looking at the most common regrets, we know where we can best focus our future efforts on our investments, bank accounts, and beyond.

The top financial regrets of Americans

The number one financial regret among Americans is not saving for retirement early enough. This financial regret claims the top spot for the third year in a row in Bankrate’s annual Financial Security Index survey. This answer was number one for 18% of respondents.

Number two on the list is not saving enough for emergency expenses, with 14% of respondents most regretful about this. For workers in any profession, an emergency fund is an important part of maintaining financial stability. For freelancers and entrepreneurs, it is best to save at least six to 12 months of expenses in emergency savings.

The third most common regret is taking on too much credit card debt, with 10% of responses marking this as number one. This is no surprise, as Americans have over $1 trillion in credit card debt. The average household holds $8,600 in credit card debt.

Number four on the list is taking on too much student loan debt, a top regret for 8% of respondents. Americans have nearly $1.5 trillion in student loan debt. 44.2 million Americans have student loans, according to Student Loan Hero data.

The fifth most common financial regret is not saving enough for a child’s education, coming in with 7%. Both number four and five on this list share a commonality: they relate to a high cost of college. Number one and number five also have a big common trait: they both involve savings. These two topics are an important part of Americans’ biggest financial struggles.

Last on the top financial regrets list is buying more house than you can afford, with two percent of respondents choosing this answer. Like college, housing costs generally go up, up, up over time. In some areas, buying even a modest home takes up a huge portion of take-home pay.

Here is the full results care of Bankrate:

Biggest financial regrets
via Bankrate

How Americans respond to financial regrets

The list of common financial regrets does not yield many surprises to those who follow economic news, but how people respond to their biggest regrets is a bit more interesting. A full 25% have no plans to deal with their biggest financial regret and continue to go on living with it.

Dealing with financial regrets
via Bankrate

A nice relief, however, comes from the 49% who are already working on addressing their biggest financial regret. Whether it is debt, savings, or something else, a good budget and focus on finances can help overcome most money challenges.

While better than the quarter of Americans with no plans to address financial regrets, 19% plan to start work on their money problems within a year while six percent plan to do so later on in the future.

Only with a long-term focus on your finances can you rise above the statistics and go forward with no money regrets. While most of us would want to be wealthy someday, it takes a real effort to turn that dream into a reality.

Avoiding the biggest financial regrets

The best way to avoid many common financial regrets is simple: avoid going into debt. While it may not seem like a big deal swiping a credit card for a TV or choosing the expensive out-of-state school, credit card debt and student loan debt payments are a very real.

The next major focus to avoid a big regret is to save. Start with even $1 per week. No amount is too small. You can always increase it later. But if you don’t start saving, you will never build up savings to pay for a home, education, or retirement.

Thanks to the time value of money, the sooner you save, the better. Compound interest and compound investment values help your money grow over time. If your money has more time to grow, the impact of that growth is exponentially helpful.

Live a life free of financial regrets

Recovering from financial regrets is very difficult. Rather than turn around a difficult situation, avoid it from the start. That is one of the best paths to lifestyle satisfaction and a life free of financial strain and worry.


This article originally appeared on Due.com.

 

How to Avoid Regrets About How You Spend Your Money

How you spend your money is a loaded subject. Nearly half of Americans deem finances a hard subject to address with others. They rate it more difficult to navigate than politics or religion. Sixty-eight percentwould rather disclose their weight than talk about finances. More than 40 percent don’t even broach the subject with the person they marry before entering into holy matrimony. Even to yourself, how y0u spend your money is a topic you most likely avoid thinking about.

However, treating money as a taboo subject hurts people. Families tend to feel chronically anxious due to a lack of clear conversations about money. Many times, with little discussion about goals and expectations, people end up following some financial gurus’ guidelines to the letter. This can actually be damaging to their personal finances. Plus, it can make them feel like “financial sinners” for making different choices. That”s why it’s time to think differently about how you spend your money.

Rules About How You Spend Your Money Can Lead to Regret

James Lenhoff, CFP, the president of Wealthquest and the author of “Living a Rich Life,” has seen dozens of clients who’ve accumulated a lot of money in their later years — and a lot of regrets. “Many of them get to a stage where they realize they didn’t create many memories with their money,” Lenhoff says. “They’re watching their kids have families and regretting all the things they didn’t do — they’re seeing the breaks or weaknesses in the logic.”

These clients often see their own kids are reluctant to take vacation time or splurge on a family excursion, yet many of these behaviors have been “inherited.” However, it’s hard to lay all the blame at their feet in a society that champions short-term “good” feelings over long-term satisfaction. “Society reinforces this mistake of thinking that status symbols and things are worth more, encouraging us to buy the bigger house, the newer car. The messaging is all geared toward making us feel better about ourselves,” Lenhoff explains. “In the end, we all want experiences, but society has confused us into thinking products areexperiences.”

In order to combat that messaging, most personal finance books give us rules to follow that keep us from splurging. But, it’s a Catch-22 because the money “rules” teaches us to grit our teeth and “do the right thing.” This is always assumed to mean saving more. “There’s an assumption among some financial experts that we need to treat people like children, give them harsh black-and-white boundaries,” Lenhoff says. “Like kids, they develop a sense of shame for disappointing Mom and Dad. The behavior is so deeply ingrained that even when they have saved enough, they are paralyzed by the ‘rules,’ and they can’t let go and use some of their money to enjoy themselves.”

Forces That Impact How You Spend Your Money

These two forces are always fighting within us. That means many people end up being filled with money-driven regret for one of two reasons. First, they spent their money on products, which didn’t fulfill them. Second, they hoarded their money, waiting for the right time to spend it.

However, they could never relax enough to do so when it was time. The good news is that those outcomes aren’t inevitable. There are steps you can take to avoid financial regret.

As Lenhoff says, “Nobody lived beyond their means because they couldn’t do math; they were emotionally motivated to do something.” He recommends that younger savers and spenders approach their relationship to money in a way that may be antithetical to the “rules.”

Find out where you stand

Because of the taboos surrounding money discussions, most people don’t actually know where they fall on the financial spectrum. Are they in a healthy position or not? Many couples, Lenhoff explains, contain a “Go” and a “Whoa”: The “Whoa” is the self-controlled saver, while the “Go” is the free-spirited spender. “Go” assumes they’re fine, but “Whoa” assumes they’re not. The problem is that neither one really knows who is right.

To overcome this, you must have a clear-headed conversation to lay out what you have and where you’re going. What does it take to make your life work right now? And, what are your non-negotiable goals for your family? A financial planner can help you outline how far ahead or behind you are on hitting those targets. Then, once you’re confident that you’re saving what you need to save each month to fund your goals, you can spend the rest as you like.

Don’t be fooled by others’ exteriors

In a world where we’re constantly cajoled to keep up with the Joneses, people often look around and feel their neighbors, friends, and family members are doing better.

But, the secrecy surrounding money — and the prevalence of living on credit cards — has erroneously led us to assume others are killing it. In reality, they could simply be swimming in debt. Don’t make decisions on how you spend your money based on how well you believe others are doing.

Use your net worth as your golden rule

Many people are overly focused on their income as a measure of progress. However, your income doesn’t matter if you aren’t using it to grow your net worth. If your net worth didn’t go up last year, that’s a problem no matter how much income you had. Your net worth changes only through saving or paying down debt.

You should be doing both. Don’t focus so much on paying down low-cost debt that you miss opportunities to save for future goals. Make sure you’re using your income to grow your assets over time. A growing net worth is the clearest indication of financial health.

Avoid budgets

Budgets are very restrictive, and they start from made-up numbers. Lenhoff says, “Most people approach budgets with ‘What can I squeeze myself into?’ They should start with ‘What’s my current reality?’” Just because you could eat freeze-dried Ramen for six months doesn’t mean it’s likely you will.

And, a shoestring budget that’s a far cry from your usual existence will feel overly prohibitive. Also, it’s impossible to stick to. Instead, create a spending plan that focuses on how you’ll spend your money rather than on how you’ll avoid spending your money. Acknowledge that you will be spending money so you can plan to spend it wisely.

Think not just about how the money will serve you in the future

There’s truth in the saying, “You can’t take it with you.” Therefore, you need to celebrate milestones along the route to your biggest goals. Enjoying the money you’ve earned while meeting your financial obligations and saving for your long-term goals shouldn’t be considered taboo but smart. It’s giving you pleasure now and later. This is what money that exceeds your necessities is intended to do.

While money may often be treated like a dirty secret, it doesn’t have to be a source of pain and regret. By shifting your mindset about how you spend your money now, you can ensure you use it in a way that brings you peace today and security tomorrow.


This article originally appeared on Due.com.

 

Money Stress Is an American Problem; Here’s How to Fix That

Americans are stressed out about money.

The statistics about Americans and money aren’t great in most cases; in 2015, 76% of CFP’s said that their clients number one financial stressors was healthcare costs. A 2016 survey of Baby Boomers revealed that 60% fear running out of money in retirement. And 30% of adults in the US feel stressed about money constantly.

Money is supposed to be a tool. But when you don’t understand it, or earn enough of it, it gets to feeling stressful really quickly.

If you’re feeling stressed out about money, here are a few ways to calm down and sort the situation out.

Take a Deep Breath

When you’re beginning to feel that money stress get out of control, take a deep breath. Stress is physically unhealthy for us and it keeps us from being really productive. Before you can do anything else, you need to take care of yourself.

Figure Out Your Numbers

Numbers always tell the truth. Sometimes it might be difficult to hear that truth, but it’s always the first step.

You can start by listing out all your monthly expenses and categorizing them into needs and wants. This helps you see where you can cut back, if you can cut back at all. Second, do the same thing with your debts; list them out so that you know what you owe and where to send it.

Knowing your numbers gives you the power to change them. Whatever your next move is, reduce your money stress with figuring out the numbers.

Learn About Money

Learning and reading about money is a great way to demystify it. If something feels foreign to you it’s probably going to stress you out more than the thing that feels familiar. Money stress will go away over time as you learn more about money.

You can read blogs and books about money. Start listening to money podcasts. You can talk to friends and family about how they manage their money. There are a lot of options to learn about money once you start looking. Here’s a list of three books about money to kickstart your journey.

Start Small

Taking one step today and one step tomorrow is the way to go. Don’t try and climb your money mountain all at once. Small things become big things, and time can be your friend.

For example, something you’ll hear a lot in the personal finance world is that you need to have an emergency fund with 6 months living expenses saved in it. That can take months, if not years to save! But starting off my saving $50 a month is great- it lays the groundwork for your emergency fund and introduces the habit of saving.


This article originally appeared on Due.com.

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