The debt dilemma continues to resurface as people become aware through the front page of newspapers and television outlets. With the convenience of debit, credit, and smartphone apps, it’s no wonder the resurgence of unsavory spending habits have a wave of consequences crashing down. The truth is, it’s easier to get into debt than out of it but with a little patience and extra discipline, these 5 action steps can help anyone get their wallets out of debilitating debt and into better financial fitness.
- Don’t beat yourself up, get motivated! According to a recent survey by Northwestern Mutual, 4 in 10 Americans said that debt is a “moderate” or “high” source of stress, and almost half of those interviewed were carrying at least $25,000 in debt. Putting off payments and ignoring the issue creates even more stress in the long run. It’s important to shift mindsets and release any shame attached. The power to change the financial outlook is all ours and booking an appointment with a debt counselor or financial advisor can make a huge impact in the journey towards a more positive attitude and eventual prosperity.
- Take inventory and prioritize. Tackling debt like a pro means diving deep into all facets of spending habits and balances. Pay minimums on all obligations, then work your way towards paying down the high-rate debt like credit cards as opposed to the low-rate debt of student loans or mortgages.
- Craft a budget. This step is crucial to disentangling yourself from former and future debt. Understand what buys are essential versus leisurely to enable a firmer grip on spending habits. Consider breaking down annual costs like insurance and expected vehicle costs and budgeting them on a monthly basis. Having a visual of costs by writing them down is a great way to get proactive about eliminating debt.
- Consolidate debt if necessary. Sometimes consolidating debt can be a way to simplify the situation and empower individuals to make their way out. A credit union, for example, can often provide a lower rate on a single larger balance. This can motivate people to pay off the balance more aggressively.
- Pay with cash and pace yourself. Paying with cash gives a tangible image of how much is actually being spent. It’s simply more difficult to go over the budget when all you have is cash in your wallet. It’s also important to pace yourself when making purchases. Shopping can create quite a rush of endorphins and can even become addictive. Slow down when gliding through the aisles, and consider waiting 24 hours before committing to any big purchases.
Technology is constantly redesigning the landscape of personal finances. With so many online tools equipped to cater to our individual financial needs, where does one begin? Classic money managing programs such as Quicken and Mint have paved the path for people to stay in touch with finances online, but it’s time for an upgrade to match the ever-evolving technological and financial times. Below are 5 replacements to consider next time you want to elevate your financial experience:
- Personal Capital. This program is free and has become a popular tool to manage money and just about every aspect of one’s personal finances. It tracks cash flow and enables users to their spending by account and category. You can also track your investments and it allows you to link all of your investment accounts. It even offers a retirement planning tool and you can see if you are on track to retire as planned.
- YNAB. Short for You Need a Budget, this budgeting tool uses a spreadsheet format that’s easy for people to use and categories can be assigned to your spending habits automatically. The goal of this program is to live off the money you earned the previous month, rather than living from paycheck to paycheck.
- Banktivity. Calling all Macbook users: this program is specified for macs and is much like Quicken as you can connect bank accounts, credit cards, mortgages, and investment accounts. Once connected, it manages your entire financial life in one place.
- Every Dollar. This online budgeting and money tool is broken down into categories such as housing, transportation, and food. You can even customize expense categories.
- PowerWallet. With this online banking tool, you can link bank accounts, credit cards, loans, and investment accounts. It also uses a cash flow model of budgeting and shows your cash inflows, outflows, and what’s left in the dashboard. Better yet, it highlights your top spending categories.
As educational debts reach the trillions with over 44 million Americans have some form of student debt, it’s clear that a wave of scammers can cave in on vulnerable people looking to pay off debts. The problem has given rise to the Federal Trade Commision (FTC), enforcing a campaign against student loan scammers. According to the FTC, scammers had collected over $95 million in illegal fees.
So, who do scammers target?
They target borrowers who are in major financial distress and those struggling to understand how to navigate the student aid system.
If you are contacted by a debt-relief company promising student loan relief, beware of these 3 red flags:
- Paying upfront fees. It’s actually illegal for companies to apply advance charges and once scammers have your money, it’s very difficult to get it back.
- Pressure tactics. If you feel pressure to agree to a deal or are put on the spot without ample time to think about options, this is a major red flag. Allow plenty of time to research the company to greater detail.
- Rapid loan forgiveness. Simply put, any company that promises rapid loan forgiveness is wrong. If you qualify for it under one of the Federal Student Aid programs, you can seek it on your own timeframe (no company has the right to speed up that process for you.)
In truth, there is no fast and easy way to eradicate student loan debt. Like many things in life, it takes a combination of time, patience, and due diligence. The expression, “if it sounds too good to be true, it usually is” goes hand in hand with student loan assistance. As a general rule, the student loan relief should come from your loan servicer and/or the Department of Education. Always research any third party assistance and make sure you fully comprehend the terms first.
The topic of student debt is often buzzing in the mainstream media and even more, articles cater to ways millennials can climb out of debt. But what about college students who are just getting started on their educational journey? Maintaining personal finances can feel like a put off with tuition, textbooks, and living expenses. Have no fear! Below are 6 simple ways for students to get off on the right track before entering this new phase of finances:
- Go Local. Taking care of all of your financial business in one place is a great way to keep track of everything. Consider getting a checking and savings account and ask about student loans if necessary. Financial advice is also easily accessible if you have any last minute questions from their experts.
- Think about a nearby insurance agency. Consider a local insurance agency as you can work with them in person to determine what type of coverage you need. Most likely, you will need health insurance, as most colleges require that you have a policy, as well as car insurance if you drive. You might even consider renter’s insurance if you want to keep your belongings safe from fire, theft, etc.
- Start saving. Even if it is just a few dollars put aside each week, saving money to fall back on in case of an emergency is always a good idea.
- Know your credit score. A good score makes it easier to get credit and that credit tends to come with much better rates. Aim for a high score and try to keep it there.
- Create a budget. Find out where you stand in your finances. Start with the net income as it’s the money you have to spend each month. As you determine the total cost of expenses, you can find ways to cut spending if necessary.
- Avoid credit cards (for now.) As tempting as it is to sign up for a credit card, consider paying in cash as much as possible. This makes it easier to keep track of spending habits and avoid going over budget or into debt. Better yet, this ensures a higher credit score for the future.
The fact that technology can help us to elevate our financial outcome and solve problems is both exciting and empowering. With so many choices, it can be a little overwhelming to decide what is best. Here are 6 apps to be on the lookout for. Each one is designed to enable a particular facet of personal finance. Have fun researching and remember, the power to change the money game is in your hands, and as modern times prove, could be a double tap click.
- If you are looking for creative ways to save and put some money aside, the app called Digit trickles small increments of money into your savings account.
- If you are more a goal-oriented saver, Qapital actually rounds up purchases to help you slowly save towards a specific goal.
- There are also apps like Mint that focus more on the overall financial picture and assist in managing budgets, income expenses, and expenses.
- If micro-investments are your style, Acorns makes them from the leftover change of your transactions.
- Beyond budget planning and tracking spending habits, the app called Clarity Money has tools to help you transfer money between bank accounts and will also get you a free credit score.
- If you are looking for ways to more easily invest in ETF’s, Stash Invest does so as well as setting up an “Auto Stashes” that let you schedule automated investments.
As with any investment of time, energy, or money, it’s always a good idea to do your research before committing, even to a financial app. The options are limitless and the rise in technology allows for more creativity in the way we spend and manage our money. It is truly an exciting time to dive into the tech world of finances. Explore and find what works best for your unique financial fingerprint.
Photo by Christine Roy