The average couple has a number of topics to discuss on their to-do list before heading to the altar. The least romantic topics, if they even make the list at all, are probably concerning debt and the possibility of divorce. If you foresee a divorce in your future or are currently going through one, itâs safe to say that you have some burning questions about your finances. Perhaps you and your spouse acquired some debt during the course of your marriage and youâre now wondering who is going to be responsible for what. While itâs important to note that each situation is unique, there are some ground rules in the Divorced with Debt arena. In the below sections, weâll address the usual ways in which debt is divided up between each spouse.
Community Property vs. Common Law Property Rules
If youâre trying to figure out what debts you will be responsible post-divorce, you will first need to know if you live in an equitable distribution state that follows common law or if you live in a community property state. When it comes to debt and the divorce process, most states follow common law for property, meaning that following a divorce, each ex-spouse will be held responsible for the debt that they took on. In a community property state, both spouses, considered to be the âcommunity,â may both end up equally responsible for debt that incurred throughout the marriage, known as âcommunity debt.â The following states are Community Property States:
Most of the time, the banks arenât interested in how the courts decide to split up your debt. Even after a divorce, the original contract or credit card agreement will typically overrule a divorce decree. This means that if the original agreement was set up under your spouseâs name, the banks are going to expect the payments to be as such. As you can imagine, this could potentially cause problems with an ex-spouse who is being asked to pay off debt that is not under their name, or at least under a joint account.
To put it into perspective, letâs imagine that the court orders your ex-spouse to make payments on credit card debt under your name. If your ex neglects to make the payments on time, itâs going to have an effect on your credit report. The good news is that if this happens, you have a right to pursue legal action against your former spouse for not following court orders. However, itâs possible that by the time legal action is taken, your credit score may already be damaged.
Prenuptial agreements will affect these outcomes as well. Depending on yours and your spouseâs marital assets, the debt in question will vary. Here are the typical categories of debt that are affected during divorce proceedings:
Credit Card Debt
Auto Loan Debt
Credit Card Debt
Itâs possible that you could be responsible for your former spouseâs credit card debt, but itâs not likely. If you have a joint account, then the outcomes may vary. Usually, marital debt is considered to be any debt that was created during the time of the marriage. So if you racked up credit card debt under a joint account, expect that both of you will be equally responsible for paying it off.
If both spouses have their names on the mortgage, the easiest way of solving the mortgage debt is to sell the house and divide the earnings between both parties. It might be tempting to keep the home for a multitude of reasons, but at the end of the day, selling the property and splitting the money is usually the least complicated solution for everyone involved.
Once the house is on the market, itâs time to start communicating with your former spouse about who is going to be responsible for what amount. Come up with an agreement on who will pay which portion of the mortgage, so that neither partiesâ credit score is negatively affected.
If selling the home and dividing the earnings isnât a viable option for you and your ex, then one of you will end up fully responsible for the debt. In most cases, mortgage debt following a divorce is assigned to:
The spouse with the higher annual income.
The spouse who gains full custody of the children.
When this happens, one spouse will have to buy out the other spouseâs equity in the property.
Car Loan Debt
When it comes to car loans, things become more complicated. If the car loan has both names on it, here are the two best options:
Refinance the car without your ex.
Propose automatic payments to come directly from your former spouseâs account.
Letâs say one person ends up with the car loan debt, but the other person was also on the loan as a cosigner. Unfortunately, if one spouse is held responsible for picking up the tab on a debt, and they neglect their payments, both parties can suffer those consequences.
Each state has different laws surrounding medical debt and divorce agreements. If you live in a Community Property state, you might have to pay for your former spouseâs medical debt. However, if you live in a state that follows common law, the court will ultimately make the decision about who is responsible for what debt.
Pay off your debt before the divorce is finalized
Â If you and your spouse can find a way to work out the kinks of your debt issues before the divorce is finalized, itâll make things a lot easier in the long run. Work together to figure out who should be responsible for which debt, so that you can lower your chances of having to pay off a debt that isnât yours.
If youâre working with credit card debt, one of you may need to transfer your credit card balance to a separate card. Consolidating your credit card balances is another common option when dividing debts.
Generally, credit card debt is going to be easier to deal with than the big things, like home loans and car loans. In many cases, couples who are going through a divorce will have to consider refinancing their loans under one partyâs name.
Keep in mind that the original loan agreement supercedes the divorce agreement, so if you wait until your divorce is finalized, you might have a harder time moving things around. You can ask your lender to take your name off of an account and have it replaced with your former spouseâs name, but be prepared to provide the divorce decree as evidence. If it doesnât work out this way, then seek legal advice from your divorce attorney about your options. Another common solution is to sell the asset in question and use the earnings to pay off the debt.
How your former spouseâs bankruptcy can affect you
If your ex-spouse isnât able to keep up with the payments on their share of the debt, they might decide to file bankruptcy. This could cause problems for you if you didnât choose to file as well.
Filing for bankruptcy does not erase the debts, instead it erases your ex-spouseâs liability for the debt. In this instance, you could find yourself in a situation where the creditor is now pursuing you for the debt. Itâs also important that you check your credit report. Even if you werenât the one who filed bankruptcy, it could still end up on your credit report.
Be cautious about any joint accounts you may still have open post-divorce. If you leave joint accounts open and your former spouse has access to them, he or she could potentially transfer balances from other accounts onto those ones. Safeguard your credit by paying off any debts you can manage to pay off ahead of time, so that you donât have to worry about it later.
Marital Debt After Divorce: Who is Responsible? is a post from Pocket Your Dollars.
On the surface, reward cards are a great way to make a few extra dollars or grab some air miles without increasing your spending or your debt. If you spend a lot of money at a particular shop, store cards will seem like an equally beneficial prospect. But these cards exist for a reasonâtheyâre there to make more money for the providers and the retailers, not you.
Sure, reward/store cards have other benefits if you use them properly, but there are a host of disadvantages and hidden terms that you need to be aware of before signing on the dotted line.Â
What are Store Cards?
Store cards are tied to specific stores and offered by chains of retailers. These cards work just like traditional cards and are often branded by networks like Visa and MasterCard. The difference is that they can only be used in the issuing stores and their rewards are tied to those stores.
In essence, they are store loyalty cards that come with a lien of credit attached.Â
What are Reward Cards?
Reward cards are also tied to credit card networks, including American Express and Discover, as well as Visa and MasterCard. They award points every time theyâre used for qualifying purchases and these points can then be swapped for air travel and other benefits.Â
Some reward schemes award a specific amount of cash back, often fixed to 1% or 2% of purchases made on specific items, such as groceries or utility bills.
How Can Providers Offer These Rewards?
If a provider offers you cash back every time you spend money on your credit card, someone has to foot the bill. Many consumers assume that the credit card network covers the cost, and to an extent, they do. But itâs not quite as simple as that.
Every time you use your credit card to make a purchase, the retailer is charged a fee, often between 1% and 3% of the purchase. This is the networkâs charge. With reward cards, this fee increases, and the extra money is used to fund the rewards program.
As a result, retailers are not exactly happy with these programs as they drive their costs up and reduce their profits. The only way around this, is to increase the cost of the product or, more likely, to reward customers who pay with cash/debit. Retailers are not allowed to add a surcharge for credit card use, but thereâs nothing stopping them from choosing which cards they do and donât accept.
Your local Mom & Pop enterprise isnât being antiquated and old-fashioned by refusing credit cards. They just canât cover the costs. 5% may not sound like a big deal, but for retailers with minimal buying power and the massive overheads of running a brick-and-mortar store, 5% can be a deal breaker.
Smaller retailers are fighting back against reward cards while bigger ones are embracing them by adopting their own store cards. With a store card, they have more say, more control, and they know that those small losses will be offset by the increased purchases.
Issues with Store Credit Cards
Store cards carry a big risk and have far few benefits than reward cards. The advantages of these cards are obvious: If you shop a lot in a particular place, you can save money via the cash back schemes.Â
They can also help with emergency purchases, providing you clear the balance in full. But, while the benefits are obvious, the same canât be said about the disadvantages.
Con 1: They Have High Interest Rates
The average credit card interest rate in the United States is around 16%. The average rate for store cards is over 20%. That 4% may not seem like much, but if you donât repay your balance every month that interest will compound, grow, and cost you a small fortune.Â
At 16% with a $10,000 balance and a 60-month repayment term, youâll pay $243 a month and over $4,000 in total interest.
Increase that rate to 20% and your monthly payment grows by $20 while your total interest increases by nearly $1,500. The longer you leave it and the smaller your monthly payments are, the greater that difference will be.
For example, if you repay just $200 a month on that balance, the difference between 16% and 20% is 26 extra months and close to $5,000. Of course, store cards rarely offer such high limits, but this is just as example to show you how much of a difference even the slightest percentage increase can cause.
Itâs worth keeping this in mind if you ever apply for a traditional rewards card. Getting rewards in return for a higher APR is great if you repay your balance in full every month and terrible if you donât.
Con 2: They Have High Penalty Rates
If you miss a payment on your store credit card you could be hit with a penalty APR as high as 29.99%, as well as a late payment fee of $39. The rates are high to begin with, but these penalty rates are astronomical and will make a bad situation worse.
Thatâs not all, as some providers are known to be very unforgiven when it comes to missed and late payments. In some cases, your account will default even if you underpay just once and just by a few dollars.Â
Con 3: They Have Low Credit Limits
Retailers are not lenders. They donât have the time, funds or patience to chase debts and deal with collection agencies. As a result, they donât offer high credit limits and generally youâll get a fraction of what an unsecured credit card might provide you with.
This might not seem like much of an issue. After all, a smaller credit limit means youâre less likely to accumulate large amounts of debts. However, this has a massively negative impact on your credit score that few borrowers consider.
30% of your credit score is based on something known as a credit utilization ratio. This looks at the total available credit and compares it to the debt that you have accumulated. If you have several cards with a combined credit limit of $10,000 and a balance of $5,000, then your ratio is 50%, which is considered to be quite high.
If a store card is your only account and you spend $450 on a $500 limit, then you have a credit utilization ratio of 90%, which will reduce your score. Your credit report is also negatively affected by maxed-out credit cards, a feat thatâs much easier to achieve when you have a low credit limit.
Con 4: There Are Better Options
Itâs better to have one good reward card than multiple store cards. The former will provide you with far better interest rates and terms, while the latter will hit your credit report with several hard inquiries and new accounts.Â
A rewards card will still benefit you when shopping at those stores and will also provide you with a wealth of other benefits.
Con 5: You May Spend More
Store cards are not designed to make your life easier and give you a few freebies. Regardless of what the store tells you, theyâre not made to reward loyalty, theyâre made to encourage spending.Â
This doesnât always work, and research suggests that many individuals use reward cards just like they would normal cards. But for a small minority, the idea of acquiring points is enough to convince them to spend more than they usually would.
Some good can be good debt, such as when itâs used to acquire an asset or something that wonât depreciate. But very rarely do we use credit cards for this purpose and generally, if youâre spending more on a store card it means youâre wasting more money on things you donât need.
Con 6: You Canât Use Them Anywhere Else
A store card can only be used in that particular store. This renders it redundant as an emergency card and also means youâre encouraged to shop in that one place. You donât have a chance to shop around and find the cheapest price; you may spend more just to use your card and get the benefits, with those benefits rarely covering the additional money you spend.
What About Reward Cards?
Some reward cards have very high rates as these rates are used to offset the rewards program. However, this isnât always the case, because, as discussed above, networks often charge retailers more to offset these purchases and therefore donât always need to cover the costs themselves.
Some credit cards, such as the Discover It, offer solid reward schemes and would also be included on any list of the best non-reward credit cards. Itâs a solid all-rounder and itâs not alone. However, many reward cards charge high annual fees and penalty rates, just like youâll find with a store card.
Itâs important to study the small print and make sure the card is viable. If youâre going to clear the balance every month, a slightly higher interest rate wonât hurt, especially if it comes with some generous rewards. But if there is any doubt and even the slightest chance that you wonât clear the balance, itâs always best to focus on a low-interest rate first.
Even the most generous 5% cash back reward card will not offset the losses occurred by paying a few more percentage points of interest.
Will Reward/Store Cards Affect my Credit Score?
Credit cards trigger hard inquiries, which can reduce your credit score by up to 5 points. This is true for every credit card that you apply for. Rate shopping can combine multiple inquiries into one if they are for the same type of credit, but this doesnât apply to credit cards.
A new account will also impact your score. This impact is often minimal and if you keep up with your repayments then it will vanish in time. However, if you miss a payment, max-out your card or increase your credit utilization score, it could have a detrimental effect on your score and your finances.
Keep store cards to a minimum and only sign up if youâre 100% sure youâre getting a good deal that will benefit you in the short-term and the long-term.
Truth About Reward and Store Credit Cards is a post from Pocket Your Dollars.
Imagine this: You’ve gone to collegeâeven grad schoolâto pursue a career path you always thought you wanted. But after a few years and many tuition dollars spent, it suddenly hits you: If you have to write one more press release, it might push you over the edge. If this is the case, it’s time to prepare for a career change.
Transitioning careers is not unusual. In fact, according to a survey conducted by the American Staffing Association, 38 percent of working adults say they are likely to change careers within the next year. The only problem is, if you are unsure of how to make a career change and whether it will be financially sound, you might be hesitant to make the leap.
âNo one wants to change careers without knowing the chances of success,” says Mark Anthony Dyson, host of The Voice of Job Seekers podcast, a show designed to help those in career transition. “Adequate preparation can make all the difference.”
âPreparation in every formâfrom updating job skills to financial planning and really taking time to think about what you desire in a fulfilling careerâwill be a huge factor in your career-change success.â
“How do I make a big career change with this adequate preparation,” you ask?
Learning how to prepare for a career change financially and finding out which skills you’ll need in your new career are great places to start. Take these steps to understand your career intentions, then determine the best financial strategies for achieving them:
Figure out if a career change is right for you
Before preparing for a career change, start by doing an honest self-assessment on whether or not a switch is right for you. This is important, says Dyson, because you’ll want to weigh the advantages and disadvantages of changing careers versus exploring a job transition within your current field. Doing the latter might make more sense for you if you aren’t quite ready to go through a full-blown career transition. Either way, taking the time for self-reflection will help you get to your desired career path sooner.
When you are thinking about how to make a career change and if it’s the right time for you, Dyson suggests asking yourself these questions:
What are the professional and financial impacts if I stay on my current career path? A quick list of pros and cons might help your analysis.
Are there other opportunities in my current field that I haven’t yet considered? Talk to a human resources professional or research online to understand the qualifications, salaries and opportunities for advancement within your area of expertise.
What does my ideal career look like?
Do I currently have the skills and experience that can transfer to a new career?
What are the possible financial and professional outcomes if my new career doesn’t work out?
Kelan Kline, a jail deputy turned personal finance blogger for The Savvy Couple, felt stifled by his previous job and the limitations it imposed on his time. He believed that in order to achieve career growth and increase his money-making potential, he would have to change careers. “I knew I was done working for others altogether,” Kline adds.
You may not think you have the skills and experience necessary to transition into a new career, but a tip to prepare for a career change is to consider the skills that have led to your career success thus far. That’s what 10-year human resources veteran Lisa Cassella did when she decided a new career direction was in order and wanted to follow her passion for real estate.
“As hiring and program manager for a senior living facility, I met face-to-face with with people everyday,” says Cassella, now a licensed real estate salesperson for the brokerage firm Compass. “Sometimes you have to have some difficult conversations,” she continues. “It’s the same in real estate. But for the most part, you are helping peopleâwhich is what I enjoy and a strong connection between both careers.”
Sasha Korobov, a career and success strategist, agrees that a tip for preparing for a career change is to use your current skills as a foundation for a new career. Having undergone a career change herself, she advises people to âreally think about what you want to do next, and see if you can start getting those skills and experience in the job you’re already in.”
Once you understand your motives and capabilities, you’ll have the groundwork for what needs to come next: smart ways to financially support yourself through the transition.
Prepare yourself financially for making the switch
One of the best things you can do when figuring out how to make a career change is to have a financial plan. Depending on how you approach your career change, the steps that you take to move to a new industry could impact your finances in various ways.
For example, when you start out in a new industry, you might be taking a lower level position than what you had in your previous career. This may come with a dip in income, for which you will need to adjust your budget as you progress in your new career.
If you plan to take any time off before you make the switch, you may experience a gap in income. “You have to think about how many months of income you need to save to get over that hump,” Cassella says. Cassella planned in advance so that she had at least six months of income in the bank before she made the switch to her new career.
Another consideration when you prepare for a career change is whether there is a cost investment required in moving to the new career you have chosen. For example, you might need to spend money on additional education, training, certifications and other measures before you can move into your new role. Your financial plan will have to consider dips in income that could occur if you need to reduce your hours or quit working in order to get the training and education your new career requires, Korobov says. Cassella had to get licensed before moving into real estate sales. She quit her job and took a two-week course, then immediately took the state test.
If your career change means starting your own business venture, you may have to prepare for all of the financial scenarios mentioned above. Your income might decrease as you establish your own business and gain traction, for instance. You might also have to pay for things that were once provided to you by an employer, such as supplies, computer equipment, software and health insurance.
Because of these potential challenges, having a savings plan is key when considering tips to prepare for a career change.
Fine-tune your savings to prepare for a career change
No matter which path you choose, preparing for a career change may present you with some financial risk. Therefore, it’s beneficial to have savings set aside to manage the transition. With just a few small lifestyle changes that will save you money, you can build the financial safety cushion you need to prepare for a career change, says finance blogger Kline.
Here are Kline’s tips to prepare for a career change and the areas he focused on most when he prepared for his professional move:
Reduce unnecessary expenses. As you work on how to make a career change, consider cutting back on discretionary spending such as eating out, entertainment and vacations, and set that money aside for your career change. Don’t already have a budget to track your expenses? Now is the perfect time to start one.
Pick the right type of savings account. You’ll want to put the money you save from reducing your expenses into the best type of account to support your career transition. A high-yield savings account, such as the Discover Online Savings Account, will help you grow your savings. For a long-term savings strategy, a Discover Certificate of Deposit might be a great fit.
You earned it. Now earn more withÂ it.
Online savings with no minimum balance.
Discover Bank, Member FDIC
Start an emergency fund. Similar to establishing a budget and picking a savings account, if you haven’t already started an emergency fund, now is the time to create one (or add to it if you already have some momentum with your rainy day savings). An emergency fund can help you prepare for unexpected expenses and the financial risks involved in changing careers. Experts suggest that you keep at least three to six months’ worth of living expenses in your emergency fund.
Pay down debt. If you are able to pay down debt, such as student loan and credit card debt, it will free up cash to save toward your career transition. Pay more than the monthly minimum to reduce or eliminate the debt altogether as you prepare for a career change.
With just a few small lifestyle changes that will save you money, you can build the financial safety cushion you need to prepare for a career change.
Approach your new career at a gradual pace
For some, a slower transition, with moonlighting or side hustling until they are ready to go full time, has proven effective. When Jeff Neal started his online retail site selling bait and live feeders, he was still a full-time project manager in e-commerce, but not passionate about his day-to-day. He was able to use his skills from this position to build his own online ventures.
Neal says he started his online business as a side hustle, with the intention of always having a full-time job keeping his household afloat. He has now been able to transition into being a full-time internet entrepreneur.
Korobov, the career and success strategist, also started to prepare for her career change with a part-time entrepreneurial venture that grew out of corporate coaching. “I wanted to go into business for myself as a career strategist for women, and I knew that having corporate coaching experience would fast-track my credibility with a lot of potential clients,” she says.
“I began offering workshops and brown-bag lunches at my office,” Korobov continues. This experience was a valuable lesson for Korobov in how to make a career change, helping her boost her confidence and allowing her to tweak her workshops as she got more experience.
One of Korobov’s biggest tips to prepare for a career change that she learned firsthand: “Your entrepreneurial ventures, even if done part-time, can make the transition into your career smoother, while giving you extra income to help with your financial preparation process.”
Ensure your path to career-change success
Making a career change can seem like a huge risk, since you don’t really know if it will work out in your favor. But with research and readiness, you can confidently prepare for a career change. Dyson, of The Voice of Job Seekers podcast, can’t emphasize enough that âpreparation in every formâfrom updating job skills to financial planning and really taking time to think about what you desire in a fulfilling careerâwill be a huge factor in your career-change success.”
Understanding your goals and expectationsâand trusting your gutâbefore you begin is a big step in the right direction. Says Cassella of her move into real estate: “It just made a lot of sense for me and my family. My expectations are that once I really get going, there is no limit to what I can make.”
The post Taking the Leap: How to Make a Career Change and Land on Your Feet appeared first on Discover Bank - Banking Topics Blog.
It takes two minutes to see if you qualify for up to ,000 online. You do need to give AmOne a real phone number in order to qualify, but donât worry â they wonât spam you with phone calls.
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Rates start at just a month. The peace of mind knowing your family is taken care of is priceless.
Blunder No. 1: Not Getting Free Gift Cards When You Shop
Plus, when you use the link above, Stash will give you a sign-up bonus once you deposit into your account.*
But if you work for a living and donât happen to have millions of dollars lying around, that can sound totally out of reach.
But maybe youâre just looking for a place to safely stash it away â but still earn money. Under your mattress or in a safe will get you nothing. And a typical savings account wonât do you much better. (Ahem, 0.05% is nothing these days.)
When you download the app, use the code PENNY to automatically earn 2,000 points when you scan your first receipt. Then start snapping photos of your recent receipts to see how many points you can earn without a single trip to the store!
Thatâs right â you can invest in pieces of well-known companies, such as Amazon, Google, Apple and more for as little as . The best part? If these companies profit, so can you. Some companies even send you a check every quarter for your share of the profits, called dividends.1
Blunder No. 2: Not Earning Anything On Your Savings
But a debit card called Aspiration lets you earn up to 5% cash back and up to 20 times the average interest on the money in your account.
But a free app called Fetch Rewards will turn them into gift cards. It partners with tons of brands to give you points for every grocery receipt you share. Then you can exchange them for gift cards to places like Amazon, Walmart, Chipotle and dozens of other retailers.
A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and itâll show you your options.
For Securities priced over ,000, purchase of fractional shares starts at If you owe your credit card companies ,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.
Blunder No. 3: Paying Too Much Interest To Credit Card Companies
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Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC insured and they use a military-grade encryption which is nerd talk for âthis is totally safe.â
But with an app called Stash, it doesnât have to be. It lets you be a part of something thatâs normally exclusive to the richest of the rich â on Stash you can buy pieces of other companies for as little as .
So when you start to think youâre worse off than your parents, or your nephew, or your friends, remember that allÂ 20-somethings have made mistakes that can cost them big time.
AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.
2To note, SIPC coverage does not insure against the potential loss of market value.
Blunder No. 4: Paying Too Much For Car Insurance
The Penny Hoarder is a Paid Affiliate/partner of Stash.Â
Youâre probably thinking: I donât have the time or money for that. But your application can take minutes â and you could leave your family up to million with a company called Bestow.
You should shop your options every six months or so â it could save you some serious money. Letâs be real, though. Itâs probably not the first thing you think about when you wake up. But it doesnât have to be.
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Nobody is perfect when it comes to their finances â even millionaires slip up sometimes.
Blunder No. 5: Thinking You Donât Have Enough Money To Invest
Take a look at the Forbes Richest People list, and youâll notice almost all the billionaires have one thing in common â they own another company.
1Not all stocks pay out dividends, and there is no guarantee that dividends will be paid each year.
What do you usually do with your receipts? You check out, they hand you a mile-long piece of paper, and you frantically stuff it to the bottom of a grocery bag. Pretty worthless.
If you have credit card debt, you know. The anxiety, the interest rates, the fear youâre never going to escapeâ¦
Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.Â
But if youâre guilty of making some of these blunders, donât fret. You can still redeem yourself! Here are some of the worst blunders you can make, and tips to help dig you out of the hole.
Blunder No. 6: Assuming Life Insurance Is Expensive And Time Consuming
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And the truth is, your credit card company doesnât really care. Itâs just getting rich by ripping you off with high interest rates. But a website called AmOne wants to help.
Not so bad for a useless receipt, right?
Yup. That could be 0 back in your pocket just for taking a few minutes to look at your options.
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Youâve probably heard the best way to grow your money is to stick it in a savings account and leave it there for, well, ever. Thatâs bad advice.
Source: thepennyhoarder.com Whenâs the last time you checked car insurance prices?
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Take a moment. Think about being your best self â living your best life.
What do you really want to do with your life? Raise a happy family? Travel the world? Buy a nice house? Start your own business?
Reality check: To accomplish any of those things, youâre going to need to know how to save money.
Unfortunately, Americans are bad at saving money, and weâre getting worse. Thanks to rising costs, stagnant salaries and student loan debt, weâre saving less than ever.
Table of ContentsÂ
Step 1: Develop Savings Goals and Strategies
Step 2: Pick Budgeting and Debt Repayment Methods
Step 3: Choose a Financial Institution and Accounts
Step 4: Automate Your Finances
Step 5: Establish a Budget-Conscious Lifestyle
Step 6: Make More Money
Here Are Our Best Tips to Save Money
Are you ready to actually start saving money? What youâre reading is a step-by-step guide on how to do it â how to come up with savings strategies, choose a budgeting method, pick the right financial institution, automate your finances and live a budget-conscious lifestyle.
Pour yourself a cup of coffee and buckle up. Itâs time to get serious about this.
Step 1: Develop Savings Goals and Strategies
Youâre probably asking yourself, âHow much should I save?â
Your first move is to set specific savings goals for yourself â emphasis on specific. Naming your goals will make them more real to you. Itâll help you resist the temptation to spend your money on other stuff.
Think Long Term and Short Term
What exactly do you want to save money for? How much will you need to save? And what do you need to save for first? Think short- and long-term:
Short-term: Save for a real vacation or nice holiday gifts. But first, save enough to have a decent emergency fund â three to six monthsâ worth of living expenses, in case you run into an unexpected car-repair bill or lose your job, for example.
Long-term: This involves big-picture thinking. Here, youâre saving money for things like your childrenâs college fund or for your retirement plan.
Analyze Your Income
How much can you realistically save for these goals, now that youâre making them a priority?
Write down your income and expenses â all of your expenses, from utility bills to your Netflix subscription.Â There are probably more ways to save money than you realize. Donât forget your student loans or credit card debt. Make sure you know what youâre spending in every budget category. Pay special attention to what youâre spending on non-essentials, such as eating out.
An easy way to automate this process is to use Trim, a little bot thatâll keep track of all your transactions.
Connect your checking account, credit card and savings account for a big-picture look at your spending habits. Then, take a closer look by checking out each of your transactions. Set alerts thatâll let you know when bills are due, when youâve hit a spending cap or when youâve (hopefully not) overdrafted. This will help you stick with your savings plan.
Check in on Your Credit
Do your own credit check. Keeping tabs on your credit score and your credit reports can help guide you to a financially healthier life â especially if you use a free credit-monitoring service like Credit Sesame. It gives you personalized suggestions for improving your credit.
The better your credit, the better off youâll be when youâre getting a home or car loan. Credit Sesame can estimate how big a mortgage you might qualify for, for example.
Hereâs our ultimate guide to using Credit Sesame.
Step 2: Pick Budgeting and Debt Repayment Methods
Itâs time to start making a monthly budget and sticking to it â especially if you have debt.
This way, you can put savings right into your budget. Itâs never an afterthought.
Here are five different budgeting methods. We canât tell you which one to choose. Be honest with yourself, and choose the one you think is most likely to work for you. This is how to save money on a tight budget.
The 50/30/20 Rule
This one was popularized by U.S. Sen. Elizabeth Warren, a bankruptcy expert, and her business-executive daughter Amelia Warren Tyagi.
Split your income into three spending categories: 50% goes to essential bills and monthly expenses, 20% toward financial goals and 30% to personal spending (all the stuff you like to spend money on but donât really need). Put the money earmarked for your financial goals into a separate savings account.
Good for: People who worry they wonât have a life if theyâre on a budget. Hereâs our complete guide to 50/30/20 budgeting.
So-called envelope budgeting is traditionally a cash-only budget. Every month, you use cash for different categories of spending, and you keep that cash for each category in separate envelopes â labeled for groceries, housing, phone, etc.
Prefer plastic? Hereâs our review of Mvelopes, an app that lets you digitize this method.
Good for: People who know they need help with self-control. If thereâs nothing left in one envelope toward the end of the month, thereâs no more money to spend on that category, period.
Hereâs how you draw up this budget: Your income minus your expenses (including savings) equals zero. This way, you have to justify every expense.
Good for: People who need a simple, straightforward method that accounts for every dollar. Hereâs our guide to the zero-based budget.
This debt-repayment method helps you budget when you have debt. Pay off your debts with the highest interest rates first â most likely your credit cards. Doing that can save you a lot of money over time.
Good for: People with a lot of credit card debt. Credit cards generally charge you higher interest than other lenders do. Learn more about the debt avalanche method here.
Money management guru Dave Ramsey champions the debt snowball method of debt repayment. Pay off your debts with the smallest balances first. This allows you to eliminate debts from your list faster, which can motivate you to keep going.
Good for: People who owe a lot of different kinds of debts â credit cards, student loans, etc. â and who need motivation. Hereâs how to use the debt snowball method to eliminate debt.
FROM THE DEBT FORUM
Zero % Credit Cards
Eviction on credit report
Helping Covid-19 Victims
Struggling to pay debt or going bankrupt
See more in Debt or ask a money question
Step 3: Choose a Financial Institution and Accounts
You might be thinking, I already have a bank. And of course you do. If youâre like most of us, youâve had the same bank for years.
Most people donât give this a second thought. They figure itâs too inconvenient to switch. But itâs worth shopping around for a better option, because where you bank can make a real difference in how much you save.
What to Look for in a Bank Account
Does your checking account pay you interest? What are the fees like? What other perks does it offer?
Did you know the biggest U.S. banks are collecting more than $6 billion a year in overdraft and ATM fees?
Maybe itâs time to try another financial institution. Weâve found some great online bank accounts to help you avoid fees and get features you wonât find with the brick-and-mortar banks.
Hereâs one example: Thereâs a mobile baking app calledÂ Varo Money.
The FDIC reports that the average savings account pays a paltry .08% APY*, but when you open an online checking and savings account with Varo, it will pay you more than 20 times that amount on your savings account.Â
We know opening a new bank account isnât exactly everyoneâs idea of fun, but Varo makes it easy. You can open an account with just a penny, and more than 750,000 people have already signed up.
Oh, and there are no monthly fees.Â
Want more options? Hereâs our ultimate guide to help you choose the right account.
To free up more money for savings, try to spend less paying interest on your debts â especially if you have high-interest credit card debt.
These days, credit card interest rates often climb north of 20%. How can you avoid paying all that interest? Your best bet is to cut back on your expenses and pay off your balance as soon as you realistically can.
Start by using the right credit card for you, based on your situation and needs. Would you prefer a card that gives you cash back or travel incentives, a balance-transfer card, or a card thatâll help you build credit?
Also consider paying off your high-interest debt with a low-interest personal loan. Itâs easier than you might think. Go window-shopping at an online marketplace for personal loans. Here are some weâve test-driven for you:
AmOneÂ allows you to compare rates side-by-side from multiple lenders who are competing against each other for your business. Itâs best for borrowers who have good credit scores and just want to consolidate their debt.
Fiona is also a marketplace but allows you to borrow more money and borrow it for a longer period of time â if thatâs what you want to do.
Upstart tends to be helpful for recent grads, who have a young credit history and a mound of student debt. It can help you find a loan without relying on only your conventional credit score.
Step 4: Automate Your Finances
Thatâs right. Weâre deep into the 21st century, here, so make technology do the work for you.
The best ways to save include automation. Youâll save time, and time is money. Here are a few money-management steps you can take today to ensure you wonât have to think about money for more than a few minutes every month.Â
Automate Bill Pay
Most bills are paid online now, reports the Credit Union Times. But you can take it a step further. Set it up so youâll receive and pay all of your bills online through your bank. That simplifies things so youâll never miss a payment.
Hereâs how: Go to your bankâs online bill-pay feature. Enter all the companies that bill you, and the account numbers for each. Arrange to receive e-bills from whichever billers will do that.
You can also have your bank send digital payments to individuals (like a landlord).
Whatever you need done financially, thereâs an app for that. Weâve put several to the test.
Digit is an automated savings platform that calculates how much money you can save. Hereâs our review of Digit.
Long Game Savings combines online games and saving money.
Also, see whether your bank offers automatic savings transfers that will move money from your checking account to your savings account each month.
You donât have to be Warren Buffett to be an investor. You donât even have to follow the stock market, read The Wall Street Journal or watch CNBC.
You can take advantage of these apps offering easy, automatic ways to start investing â the âset it and forget itâ method. Theyâre useful for tricking your brain into saving more. Youâll do it without even realizing youâre doing it.
Stash lets you start investing with as little as $5 and for just a $1 monthly fee for balances under $5,000. Bonus: Penny Hoarders get $5 just for signing up!
Acorns connects to your checking account, credit and debit cards to save your digital change. It automatically rounds up purchases with your connected cards and invests the digital change into your chosen portfolio. Bonus: Penny Hoarders get $5 just for signing up! Read our full review of Acorns here.
Blooom is a company that offers a free âhealth check-upâ for your 401(k). Then, for only $10 a month (Penny Hoarders get the first month free!), itâll optimize and manage your retirement savings for you. See how Blooom helped one Penny Hoarder make the most of her 401(k).
You can automate your budget, too. Thereâs an app for that. Actually, weâve found several.
Charlie is a money-saving penguin who lives in your SMS text messages or Facebook Messenger (your choice, though Charlie is more fun and reliable on Messenger). He helps you save money through things like making sure youâre getting the best deals around (ahem, overpaying $24 a month on that cell phone bill?).
Mint lets you see all your accounts, cards, bills and investments in one place.
Medean for iOS ranks your finances based on how they stack up to those of people of similar age, income, location and gender. It calls itself a âhealth index for your finances,â and helps assess your situation and find ways to save money.
MoneyLion offers rewards to help you develop healthy financial habits and will literally pay you for logging onto the app. You can earn points in the rewards program by paying bills on time, connecting your bank account or downloading the mobile app.
Step 5: Establish a Budget-Conscious Lifestyle
Hereâs the harsh reality: To save more money, youâll need to spend less money. (Or make more money, but weâll get to that next.)
That doesnât mean you have to live like a monk. Nor do you have to survive on ramen noodles and the dollar menu, wear scuffed shoes and patchy clothes, or cut your own hair with hedge clippers.
You just have to be smart and strategic. Here are some of our best tips to help you spend less:
Save Money Around the House
Your home is your castle. But castles are so, like, expensive. Fortunately, there are lots of ways to save money around the house.
Your priciest purchases â like appliances and furniture â are a natural place to look for savings. Try repairing your appliances instead of replacing them. And hereâs a good list of other tricks for saving on furniture and appliances.
The cost of cooling, heating and lighting your home is massive. Try installing thermal curtains and a programmable thermostat. Or check out these creative, energy-saving ways to slash your utility bills.
Find Free Entertainment
Entertainment can cost an arm and a leg. But hey, we have to live, right? So do it for free! Next time youâre planning a night out, take advantage of one of these free date nights or group outings.
If youâre going to stay in, cut the cord. More and more people are doing this, because their cable bill has gotten so expensive.
If youâre thinking of switching to an online streaming service and youâre wondering which would be best, weâve got you covered with our comparison of Netflix, Prime Video and Hulu. We compared costs, type of content, number of available titles and more.
You also should reconsider that gym membership if youâre not really using it.
Cut Your Food Budget
Groceries are a huge part of everyoneâs budget, so theyâre a big target for savings. Next time youâre putting together your shopping list, make sure to check out our favorite tricks to save money at the grocery store:
Look for free printable coupons.
Compare your local grocery prices using this worksheet.
Ibotta pays you cash back on purchases if you take pictures of your grocery store receipts. Plus, youâll get a $10 bonus for signing up!
Scan grocery storesâ websites for deals and hit more than one store.
Not loving the supermarket? Nearly 70% of us say we spend too much on take-out or going out to eat. Hereâs how to save money at restaurants, too.
Find out If Youâre Wasting Money on Insurance
Buying insurance can be confusing and overwhelming, because there are so many options.
Hereâs how to find affordable insurance:
For Your Car: Auto Insurance
Here are the blunt facts about how to get lower car insurance premiums: Have fewer accidents, get fewer traffic tickets and boost your credit score.
Automotive experts also gave us the following tips:
Buy a used car.
Participate in your insurerâs safe-driving program.
Shop around for better rates. One easy way is The Zebra, a car insurance search engine that compares your options from more than 200 providers in less than 60 seconds. Hereâs how one guy is saving $360 this year on car insurance because of The Zebra.
For Yourself: Health Insurance
Letâs face it: Health insurance can be confusing and intimidating.
If youâre buying insurance for yourself, start with the federal health insurance marketplace at Healthcare.gov to see whether you qualify for any discounts or assistance.
Finding affordable health care coverage is a huge challenge for freelancers. Hereâs how to get covered if youâre self-employed.
For Your Family: Life Insurance
Life insurance pays your dependents a set amount of money if you die. Whether to buy it is a judgment call.
Life insurance is considered more important if youâre married or have children. You might also want a basic policy that would pay off your funeral, mortgage or other debt.
Youâll probably be asked to choose between two options: term or universal life insurance. If youâre like most of us, youâll choose term â the simplest, cheapest and most popular kind of life insurance policy.
To help you save money and navigate this complicated industry, modern companies are updating the old model:
Policygenius is an online-only platform that offers instant quotes from top carriers to help you make a quicker decision.Â Once you choose a life insurance company, you can apply right online, and a Policygenius rep will give you a quick call to ask a few follow-up questions.
Haven Life can insure you quickly based just on the health information you provide online.
Ethos can get you term life insurance in less than 10 minutes â with no medical exam â for coverage up to $1 million. Ethos offers a digital application, and customer service is available if you have questions.
Step 6: Make More Money
How can you increase your income? Itâs easier to save money if youâre bringing in more money to begin with.
Here are a couple of simple ways to make extra cash at home:
Share Your Opinion
You wonât get rich taking surveys, but if youâre just vegging out on the couch, why not click a couple buttons and earn a few bucks? Weâve tried a lot of paid survey sites, and two of the best weâve found are My PointsÂ andÂ InboxDollars.
Clear Your Closets
Sell your old stuff! Use the Decluttr app to get paid for your old DVDs, Blu-Rays, CDs, video games, gaming consoles and phones.
You can also sell nearly anything through the Letgo app. Just snap a photo of your item and set up a listing in about 30 seconds. If you have more free time, try selling items on Craigslist or eBay.
Find a Side Gig
For our best ideas to boost your bottom line, check out the following:
Unique ways to make money at home.
How to make extra money online.
How to earn passive income.
The Penny Hoarderâs continually updated page on open work-from-home jobs.
Mike Brassfield (firstname.lastname@example.org) is a senior writer at The Penny Hoarder. Heâs slowly getting better about saving money.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
When I first connected with Julia and John, the Queens, NY couple was expecting their first child and grappling with some debt, a lack of savings and income prior to the baby’s arrival. The couple was basically living paycheck to paycheck and in need of some advice to break through that cycle.
We reconnected this month to see how they’ve been doing. Julia is now nearing the end of her third trimester. The baby is due to arrive in two months.
I was hoping that with a baby on the way the couple would have found some ways to chisel away their debt or bulk up savings. Unfortunately, fie months later, they’re more or less still in the same money boat.
But they did act upon a couple of my tips and are benefiting from the goodness of New York and their parents, which has their futures looking brighter.
First, John, who lacks a college degree and was struggling to find full-time work, is going back to school. Not to a college or university, but to a 9-month software boot camp in New York that’s going to give him the skills and network to become a software developer. His potential earnings in the first year in the market could be as much as $75,000 (based on some people I know who’ve gone through similar programs in New York.)
The program will be about $15,000, a fraction of what it would cost to earn a bachelor’s degree. John’s parents have agreed to loan him the money. The couple’s decided to place that $15,000 family loan in savings and, instead, take out a small student loan to pay for John’s school. I agree with that strategy, given that their family is about to increase in size and having some cash on hand will be very important.
Once John completes school and finds work, I’d recommend the couple prioritize the credit card debt by paying at least double the minimums each month. Be most aggressive with the highest interest credit card debt first. Their student loan will likely have a smaller interest rate and can be paid over a 10-year period, making the monthly minimums relatively manageable. Automate those payments as soon as possible and benefit from a 0.25% interest rate reduction when they do.
While they’re taking on more debt, I’m okay with it. Investing in John’s education is one of the best ways this couple can get ahead and better secure their finances in the future – so long as they commit to earning more and paying it down.
Ahead of that program starting, John’s also taken on a side hustle (per my advice). He’s been working a few shifts here and there at Julia’s company, working with special needs patients as a social aide, taking them to community and outdoor events.
Some other good news that’s developed since we last spoke is that New York State has enhanced its Family and Medical Leave Act by implementing Paid Family Leave. In the past, certain employers were only required to provide workers with their jobs back after taking a leave of absence for up to 12 weeks. Now, qualifying private employers must provide paid time off and a continuation of health insurance for 8 weeks in 2018.
This came as a surprise bonus for Julia, who was preparing for zero paid time off from her employer.
It would be my recommendation to use part or all of that extra money to pay down their high-interest credit card debt.
Once Julia returns to work after her maternity leave, her mother-in-law will be the go-to caretaker during the day, another huge help.
They’re fortunate to have free childcare from a trusted, loved one. With that very big expense covered and John’s schooling about to start, I feel confident that the couple’s future is a financially bright one.
The post Check-In: Expecting Couple Struggling with Debt, But Future Looks Bright appeared first on MintLife Blog.
Debt traps you in a seemingly endless cycle. More debt means more interest and less disposable income, which means youâre constantly fighting against the tide and are always one issue away from complete financial disaster.Â
Once you start making repayments on this debt, there will be less interest to compound, which means the grip will loosen, youâll have more breathing space, and you can look forward to a debt-free future.
In this guide, weâll look at some of the ways you can earn extra cash to start clearing your debt, from acquiring additional work and responsibilities to making money-saving sacrifices.
Stop Wasting Money
The average American household wastes over $10,000 a year on unnecessary purchases. These purchases all fuel the economy and keep you and your family happy. But if youâre losing sleep because you have so much debt, itâs worth making these sacrifices to give you some peace of mind and build towards a better future.
Save on Grocery Bills
The average family spends between $300 and $500 a month on groceries and as much as 40% of this food goes to waste. The majority is fresh food past its expiration date but we also have a tendency to cook monster-sized meals that end up being thrown away.
To save money on your grocery bill, try the following:
Plan your shop carefully. Only buy fresh when youâre confident that the food will be eaten in the next day or two.
Reduce your portion sizes when cooking. Itâs okay to err on the side of caution and make more than needed, but to cook double or triple what will be eaten is just wasteful.
Donât worry too much about best-before dates. It doesnât mean the food should be thrown away, just that itâs not at its best. The same applies to lots of fresh fruit and vegetables. In this case, you can rely more on the squeeze and sniff test.
Cook food that is about to expire and would otherwise be thrown out. You can freeze the meals for later. You can also try picking, preserving or juicing to reduce waste.
On average, American families spend close to $3,000 a year eating out. Itâs a great way to spend time with the family or have a date night with your partner. However, if you have a lot of debt then $3,000 worth of restaurant visits is a little excessive.Â
Stop spending so much money eating out and focus on some cheaper alternatives. A picnic is a great alternative. You can use some of that uneaten food and spend time with the family without paying a small fortune for the pleasure.
Stop the Vacations
Big families take one vacation a year on average and this costs them between $4,000 and $5,000. The more children you have, the more expensive it becomes. Whatâs more, around a third of these families will take as many as three additional, smaller vacations every year, potentially spending over $7,000.
Donât sacrifice spending some time with your family but look for cheaper options instead. Choose a small cabin instead of a plush hotel. You can go for walks, play games, swim, hikeâall free activities that could bring you even closer and cost even less.
Hold the Vices
Thousands are spent on cigarettes and gambling, and much more is spent on shopping sprees. If you have any of these habits, itâs time to put a stop to them. We donât need to tell you about the benefits of stopping smoking or giving up those shopping sprees, but if youâre still not convinced about the gambling, then spend a few months recording every single dollar that you bet.
Most gamblers think they are breaking even or only losing a little, but when they monitor their activity, they discover they are actually losing a lot.
Check Your Subscriptions
According to a recent survey, most Americans underestimate how much money they spend on subscriptions. Weâve turned into a nation of subscribers, spending hundreds of dollars a month on dozens of services we barely use.
We pay for cable, streaming services, gymsâwe convince ourselves that it wonât matter as itâs only a few dollars, but those costs can add up to a lot of wasted cash at the end of the year.
Sell Your Stuff
Many sites can help you offload your unwanted items. Thereâs a home for all the things you no longer need, from electronics and video games sold on eBay or Amazon, to clothes and furniture sold through sites like Craigslist, Facebook Marketplace, and Swappa.Â
Itâs time to let go, stop hoarding, and earn some cash from the things you donât need. Be honest with yourself and get rid before the value of those items depreciates more and you end up with worthless, dust-covered junk that just takes up space.
As an example, letâs imagine that you have a dozen old video games worth just $5 each on average, 10 old school textbooks worth just $2 each, a couple of furniture pieces worth $10, an unwanted guitar worth $50, and a couple of handbags worth $25 each.
Individually, those items arenât worth much and you might think theyâre not even worth your time trying to sell them, But combined, youâll get $200 and if you put that towards a high-interest credit card debt, it could save you twice that in interest over the term. You will also free up some space in the process.
Get Another Job
You know you can make more money by asking for a pay rise. It goes without saying. The problem is, life isnât quite that easy and, in most cases, asking for a pay rise will elicit little more than a short, sharp laugh from your employer.Â
However, there are many ways you can earn money from a side hustle, taking advantage of the gig economy and swapping a little talent, a little time, and a lot of hard work for some cash.
Get a Part-Time Job
There is a multitude of ways you can earn some extra cash these days. The pay isnât always great, but if youâre working towards clearing your debts and have some free time, every dollar helps.
Uber and Lyft are always looking for new drivers; retailers need shelf-stackers and greeters, and there is no shortage of delivery jobs. Review your free time, calculate when you can work, and see whatâs available.Â
Teach a Skill
Can you play a musical instrument or speak a second language? Do you have some other teachable skill? It has never been easier to make money as a part-time teacher, as sites like Preply.com, Udemy.com, Tutor.com, Noodle.com, TakeLessons.com, and many more bring all of these opportunities to you.Â
You can visit the studentâs house, invite them to yours or simply conduct the lessons via Skype or the siteâs built-in conferencing software.
Upwork.com, Guru.com, Fiverr.comâthese sites and more have created a world of possibilities for skilled writers, designers, coders, and other experts. But they offer so much more than that.Â
You donât need to be particularly skilled to work on these sites as the pay is scaled based on ability and experience. If you have a little free time and some competent language skills, you can hire yourself as a virtual assistant to do basic admin work.
There are countless entrepreneurs seeking individuals to complete basic tasks such as transferring data, reviewing images, and answering emails. The pay isnât great if your skills are limited, but you get to work from home on your own time.Â
Cover the Basics
Freelancing and teaching may be out of the question if you donât have any skills and are not computer literate. But there are still a few other options, including dog walker, lawn mower, babysitter, and general handyman.Â
Ask your neighbors, friends, and family if they need any work; check Craigslist and local classifieds. Everyone can do something and there are always odd jobs available if youâre willing to work.
Try Some Other Methods
When the ordinary fails, itâs time for the extraordinary. There are some weird and wonderful ways you can make extra cash when needed.
Sell Your Hair
If your hair is long and untreated, you could make a tidy sum by selling it. Good quality human hair is used to make premium wigs and some companies are willing to pay thousands for the right locks. However, there are some strict conditions, such as the fact that it must be untreated and very well looked after.
Sites like Thumbtack can connect you to homeowners looking for skilled workers, as well as people willing to look after their homes and belongings. They will pay you to stay in their homes and perform some basic chores while theyâre away, such as watering plants, feeding pets, and mowing the lawn.
If your skills are practical and not creative, turn your hand to making things and sell them through sites like Etsy, Facebook or your own online store. The world has been obsessed with single-use plastics for many years and itâs now waking up to the damage that has been done. Many consumers are willing to pay extra for something that has been handmade and is unique, especially if the money supports an independent creator.
Grow Your Own
If you have a yard and some free time, start growing some produce. Crops like potatoes, carrots, greens, and even some fruits are easy to grow and can give you a bumper crop every year. Youâll pay a few cents for the seeds and simply need to devote some time to digging, watering, and harvesting.
Think about how much money youâll save if you have your own supply of vegetables and fruits and can just pick fresh from the yard whenever youâre cooking. If your family eats a lot of cheese or drinks a lot of wine or beer, you can also start producing your own supply.Â
Cheese can be made with a lot of milk, a little rennet, and a few simple steps. Beer can be made using some do-it-yourself kits.Â
As for wine, itâs one of the easiest things you can make yourself. You donât even need grape juice as wine can be made from a multitude of fruit juices, vegetable juices, and more. You can even make a strong, fragrant white wine with a handful of fruit teabags. The only expense is the sugar, which means you can make several dozen bottles worth of wine for less than $10.
Join a Clinical Trial
Although itâs not a method we would recommend, itâs one thatâs worth including. If you join a clinical trial, youâll be paid to act as a guinea pig. The good news is that the majority of these trials run without incident and most subjects are as healthy at the end as they were at the beginning. The bad news is that there is always a risk and thereâs no telling what will happen.
You can search for available trials on the Clinical Trials website run by the US National Library of Medicine.Â
Summary: Paying Off Your Debt with Extra Money
Your first priority is to meet your minimum payment obligations and avoid any missed payments. Once you meet this obligation every month, you can put any extra cash you have towards clearing those debts. Every little helps, even if itâs just $50 or $100 here and there.
As an example, if you have a credit card debt of $10,000 with an APR of 25% and a minimum payment of $300, youâll repay $17,251 in total over 58 months. Add just $100 a month and youâll reduce the term by a whole 12 months and the balance by a massive $3,000.Â Take a look at our guides to the Debt Snowball Method and the Debt Avalanche Method to find the right payoff strategy for you. Both methods rely on you earning some extra cash and now that youâve made it to the end of this article, youâll know just how to do that!
Ways to Earn Extra Money for Paying Off Debt is a post from Pocket Your Dollars.
The new year is right around the corner and if youâre like most people, youâve probably got a running list of resolutions to achieve and milestones to reach. If getting out of debt ranks near the top, nowâs the time to starting thinking about how youâre going to hit your goal. Developing a clear-cut action plan can get you that much closer to debt-free status in 2016.
1. Add up Your Debt
You canât start attacking your debt until you know exactly how much you owe. The first step to paying down your debt is sitting down with all of your statements and adding up every penny thatâs still outstanding. Once you know how deep in debt you are, you can move on to the next step.
2. Review Your Budget
A budget is a plan that sets limits on how you spend your money. If you donât have one, itâs a good idea to put a budget together as soon as possible. If you do have a budget, you can go over it line by line to find costs you can cut out. By eliminating fees and unnecessary expenses like cable subscriptions, youâll be able to use the money you save to pay off your debt.
3. Set Your Goals
At this point in the process, you should have two numbers: the total amount of money you owe and the amount you can put toward your debt payments each month. Using those two figures, you should be able determine how long itâs going to take you to pay off your mortgage, student loans, personal loans and credit card debt.
Letâs say you owe your credit card issuer $25,000. If you have $500 in your budget that you can use to pay off that debt each month, youâll be able to knock $6,000 off your card balance in a year. Keep in mind, however, that youâll still need to factor in interest to get an accurate idea of how the balance will shrink from one year to the next.
4. Lower Your Interest Rates
Interest is a major obstacle when youâre trying to get out of debt. If you want to speed up the payment process, you can look for ways to shave down your rates. If you have high-interest credit card debt, for instance, transferring the balances to a card with a 0% promotional period can save you some money and reduce the amount of time itâll take to get rid of your debt.
Refinancing might be worth considering if you have student loans, car loans or a mortgage. Just remember that completing a balance transfer or refinancing your debt isnât necessarily free. Credit card companies typically charge a 3% fee for balance transfers and if youâre taking out a refinance loan, you might be on the hook for origination fees and other closing costs.
5. Increase Your Income
Keeping a tight rein on your budget can go a long way. But thatâs not the only way to escape debt. Pumping up your paycheck in the new year can also help you pay off your loans and increase your disposable income.
Asking your boss for a raise will directly increase your earnings, but thereâs no guarantee that your supervisor will agree to your request. If youâre paid by the hour, you can always take on more hours at your current job. And if all else fails, you can start a side gig to bring in more money.
Hold Yourself Accountable
Having a plan to get out of debt in the new year wonât get you very far if youâre not 100% committed. Checking your progress regularly is a must, as is reviewing your budget and goals to make sure youâre staying on track.