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How to Get Out Of Debt Fast When You Don’t Have Much Money

by Phillip Warren

The post How to Get Out Of Debt Fast When You Don’t Have Much Money appeared first on Penny Pinchin' Mom.

How do you get out of debt when you are broke? After all, if you had the money,  you would not be in debt in the first place.  Right?

I hear this from people, just like you.  It is often not how much money you make, but the debt payoff plan you are using that is not working.  It is possible to get out of debt with no money; you just need to learn how.

get out of debt

There are plenty of inspiring stories of people sharing how they got out of debt, despite not making much money. In fact, you may feel you relate.  But yet, you don’t think you can do it. For whatever reason, you think you can’t get out of debt as they did.  It is impossible.

Or is it?

My husband and I were living on one income when we decided it was time to get out of debt.  It took us nearly 2 1/2 years but were able to pay off more than $37,000 in debt.  There are countless other stories of our readers who have paid off similar amounts in even less time.

I am here to tell you that you CAN (and should) get out of debt – no matter how little money you may make!!

 

HOW CAN YOU GET OUT OF DEBT WITH NO MONEY?

I am going to share the steps anyone can follow to learn how to get out of debt – no matter your income level.  If you struggle to make ends meet, you already know how to make the most of a dollar, and I’ll give you additional tips so that you can pay down that debt.

I have asked this on Facebook all of the time, and some of the comments include:

“There is no way I can do this. Not with my medical bills.”

“Sure, that only works or some people – not me.”

Many of you may be thinking similar things, and I completely understand that way of thinking. I was there myself and know that it seems like an unattainable goal.  That is why you are reading this right now – to find out how to make this dream a reality.

Debt is NOT a Good Thing.

If you are in debt, it could be because of your own decisions or even those you can’t control (such as health, job loss, etc.).  No matter how it happened, you need to get rid of it. Period.

The reason you need to eliminate your debt is that it genuinely is holding you back. How can you move forward financially with this obstacle standing in your way?  If you found that you needed to buy a new car, you would find a way, correct?  For most, that would probably mean an additional monthly payment – but you would do it because you needed to.  You need to look at debt the same way:

“Getting out of debt is not a desire – it is a need.”

MY STORY

I remember in 2009 when my husband and I thought there was no way we could get ever get out from under our debt.  It was an impossible dream. At that time, I was not working at that time, and so we had one income and two young children to feed.  I initially thought that there was no way at all that we could do this.  It was just not possible.

We started by looking at our finances (oh – they were awful).  Our goal was to live a great life.  We could have kept on and kept just getting by, but that was not how we wanted to live. Just “getting by” was no longer an option.

Knowing our kids would be watching us, we knew the importance of being a good role model for them.  We wanted them to learn how to handle money by following our example.

We both agreed that not having debt was pivotal in having a positive financial future. We wanted this not only for ourselves but also for our children as well. It was also essential for our marriage.  We needed to remove anything that could potentially cause stress – money, and finances being a big one.  Our relationship was good, but we knew we could even make it better.

To begin our journey, we read Dave Ramsey’s Total Money Makeover. We followed much of his advice but figured out some things that worked for us as well. Being debt free is a fantastic feeling that no one can describe.  You have to live it.

 

THE FIRST STEP TO GET OUT OF DEBT

The very first step to getting out of debt is to decide you want to do it.  That was the change both my husband, and I made.  Once we were ready and committed to getting out of debt, we began our journey.

You might be saying that you can’t do that though.  I’m here to say that you can – when you really, truly want to make it happen.

Getting out of debt doesn’t require you to be rich. Anyone can do it.  Even if you have a low income or don’t have much money. Like I said above, knowing that you want to make the changes and pay off your debt is only one small part.  The more significant issue is how in the world you actually can do this.

 

1. Face YOUR Reality

According to CNN Money, the average American family made around $59,000 in 2017. While that is the average, it is also true that many Americans make much less than this.

With a lower income, it is even more critical that you have no debt at all. After all, you are already stretching every dollar to cover your bills. You don’t need additional payments causing more financial stress.

Unless you win the lottery, a wealthy relative leaves you a small fortune, or you find a better job, you know your income won’t change.  That is the truth. You can’t change that.

However, what you can and must do is take the steps you can to work yourself out from under the mountain of debt you may be facing. You need to first create a budget, determine how much debt you have and then the steps to pay it off, no matter how much money you make.

 

2. Fully Commit

If you are not 100% ready to make changes, then you are destined for failure. It may be blunt, but it is true. If you can’t “go all in” and fully commit to making whatever difficult changes necessary (trust me, it will be challenging), then you need to stop reading right now.

If you are ready to make this lifestyle change, then read on. You’ve already made huge strides to make changes in your life.

 

3. Create (and use) a Budget and Debt Snowball Form

Knowing where your money goes is paramount to getting out of debt, no matter how much you make. Without your budget, you can’t even consider getting out of debt.

If you have never created a budget, it can be overwhelming.  But, it will also be eye-opening.  In addition to your budget, you should create a debt snowball, start using the envelope system and take better control of your money.  By doing this, you will get a better picture of your debts and how you can tackle them.

Look at paying off debt like a football team.  Each part of your finances is involved in the game:

Home Team – This is you and your family
Visiting Team – These are your debts and expenses
Your End Zone – This is where you will be debt free
PlayBook – Budget and debt snowball forms
Football – Your money
Refs and Penalties – Unexpected instances which set you back in reaching your goals

You would never expect a team to run onto the field and play the game without having the proper plays in mind. The same is true for you;  If every one of the members of your family has a different idea as to how to get your money down the field to pay off your debts, you will never make it there.

Instead, you design smart plays and work together to get there.  You work to get your money past all of the expenses you need to dodge.  There may be setbacks, and you may have to move back before you can get forward.  However, with hard work, you will get there.  You will get onto the scoreboard – and end up claiming victory!

 

4. Find extra money

Before you jump in to try to pay off your debts, you need to have savings.  The reason is that if an emergency comes up, you need to pay for it – in cash.  You do not want to run to your credit card to cover the expense.  It is best to have at least $1,000 in the bank before you get started.

So, before you jump in to pay off those debts, you listed above, make sure you’ve got money in the bank to cover your unforeseen expenses by creating an emergency fund.

Once you have that done, then you are going to have to find a way to squeeze everything you can out of every cent.  For some, it may mean no longer dining out.  For others, it could be shutting off cable television.  Where there is a will, there will always be a way to make this happen.  You just have to do what you can!

I share this true story in our budget post, but I’m putting it here again for you!  My husband and I gave up dining out. No joke. We ate dinner out very infrequently.

While I look back and think it might have been once every couple of weeks, I asked my husband recently, and he said that we were lucky to eat out once a month! It was painful, but now that we’ve cut down out all of our debts, we have income freed up so we can have dinner out more frequently (if we so desire).

For even more inspiration and ideas, you may have to find some radical ways you can get cash to help you get out of debt.  Do whatever it takes (legally and within reason, of course), to help you get out of debt.

Read More:  60 Creative Ways to Save or Make Money

 

5. Find ways to get more money (i.e. side hustle and selling items)

To be honest, if you are struggling to make ends meet on a low income, you won’t be able to just cut enough out of your budget to pay off your debt.  Like my mom use to say – “You can’t get blood out of a turnip” – which means if it isn’t there-there is nothing you can do about it.

That is the truth, and I’m not trying to lie to you. I am realistic and know that if you are making barely enough to cover your expenses, you won’t have any extra money for your debt.  I get that.

You can’t save enough money on your budget to eliminate your debt.  Well, I guess you could, but that is going to take a very, very, VERY long time.  So, what do you do when you’ve saved all you can and still can’t pay off your debts?  Well, you just have to get creative.

For some this may mean finding items you no longer need, which you can sell to raise money.  When we did this step, we had the same issue.  We could not cut anything more from our budget.

For us, this meant selling items we no longer needed. We did a large cleanout and got rid of furniture and other things we were holding onto, just in case we needed them. By doing this, we were able to come up with several thousand dollars — 100% of which went immediately towards our debt.

If that isn’t an option, you might want to consider getting a second job or side business to bring in income to indeed help you get out of debt.  We also did this. I started my website.  Now, let me be Frank in saying that this is not a great way to make money.  Most blogs make little to nothing in the first couple of years.  I was lucky, and we did pretty well, and I was able to bring a bit more each year – all of which helped us to pay off our debts.

It may not be a blog, but perhaps babysitting, or cleaning houses, raking leaves, shoveling snow — there are all sorts of ways that you can make money.

Read More:  Unique Ways to Make Money From Home

It is not the income that is holding most people back, it is the understanding and knowing even where to start.  You might have to scale back on various spending aspects of your life, but when you get to scream from the rooftops — WE’RE DEBT FREE!!!! — it will be worth it all.  I promise you!!!

 

get out of debt

The post How to Get Out Of Debt Fast When You Don’t Have Much Money appeared first on Penny Pinchin' Mom.


Source: pennypinchinmom.com

How To Open A Business Bank Account

by Phillip Warren

If you run a business, regardless of how big or small, you should have a business bank account. Learn how to open an account for your business in this guide.If you run a business, regardless of how big or small, you should have a business bank account. Learn how to open an account for your business in this guide.

The post How To Open A Business Bank Account appeared first on Money Under 30.


Source: moneyunder30.com

Best credit cards for Airbnb

by Phillip Warren

Many of us are avoiding travel during the pandemic.

But if you have to shelter in place under quarantine once you get to your destination, wouldn’t you rather do it in an environment that at least seems more within your control?

If the choice is between a hotel where you must trust your experience to a faceless corporation or a local host you can talk to through homestay sites like Airbnb and Vrbo, the latter may be the better option for these times (provided you don’t violate their party guidelines).

Whatever option you choose, credit card issuers now reward homestays with points and cash back in the same way they’ve long doled out rewards for hotels and other travel expenses.

These are the best cards on the market for homestays like Airbnb.

See related: Strategies for planning 2021 travel

Wells Fargo Propel American Express® card: Best no-annual-fee, high rewards option
  • Chase Sapphire Reserve: Best introductory bonus
  • Bank of America® Premium Rewards® credit card: Best for bonus rewards
  • Capital One Venture Rewards Credit Card: Best flat-rate miles card
  • Amazon Prime Rewards Visa Signature card: Best for online shopping
  • Discover it® Miles: Best no-fee option
  • Wells Fargo Propel American Express® card: Best no-annual-fee, high rewards option

    The Wells Fargo Propel American Express card includes arguably one of the highest rates of return on points for some of the most popular redemption categories out there, including homestays like Airbnb and Vrbo.

    The greatest advantages of this card – besides earning 3 points per dollar spent on some popular spending categories – are that there’s no point limit or expiration, no annual fee and no rotating categories that you constantly have to remind yourself to activate. You get three times the points in the relevant categories all the time without restriction, with travel – including all homestays – and transit being one of those prominent categories.

    The card also charges no foreign currency conversion fee, so buying things abroad is less expensive. If that weren’t enough, here’s what you also get:

    • 3 points per dollar spent on travel and transit purchases
    • 3 points per dollar spent on eating out and ordering in
    • 3 points per dollar spent on gas and rideshares
    • 3 points per dollar spent on select streaming services such as Hulu, Netflix, Sirius XM and Spotify Premium
    • 1 point per dollar spent everywhere else
    • No annual fee
    • No points limit or expiration
    • Premium access to presale tickets, offers and protections from American Express
    • 20,000 points when you spend $1,000 in the first three months
    ProudMoney.

    Chase Sapphire Reserve: Best introductory bonus

    Before the Wells Fargo Propel card debuted, Chase Sapphire Reserve was the go-to credit card option for Airbnb fans. It offers a 50,000-point introductory bonus when you spend $4,000 in your first three months of membership. Those points are worth up to $750 when you book travel through Chase Ultimate Rewards.

    Though equipped with fewer spending categories offering 3X points and carrying a large annual fee of $550, the benefits of the Chase Sapphire Reserve card are more specifically geared toward frequent travelers.

    At the same time, that large annual fee is offset by a $300 annual credit that will reimburse any travel expense – including Airbnb. And from June 1, 2020, to June 30, 2021, gas station and grocery store purchases count toward the travel credit.

    Add to that a $100 credit covering the application to Global Entry/TSA Precheck every four years and the annual fee is almost completely offset in the first year.

    Meanwhile, there are even more travel benefits:

    • 50,000 bonus points after you spend $4,000 in the first three months (worth up to $750 in travel)
    • 3 points per dollar spent on travel (excluding purchases covered by the $300 travel credit)
    • 3 points per dollar spent on dining (including delivery and takeout) and travel; $1,000 in grocery purchases, including eligible pick-up and delivery services, from Nov. 1, 2020 to April 30, 2021
    • Complimentary airport lounge access through Priority Pass Select Membership
    • Trip cancellation/interruption insurance
    • Primary car rental insurance
    • Lost luggage reimbursement

    Bank of America® Premium Rewards® credit card: Best for bonus rewards

    While the points per dollar offered by Bank of America Premium Rewards credit card on travel and Airbnb are fewer than the credit cards above, the sign-up bonus and up to $200 in annual statement credits make it a decent option, even with less flexibility on what qualifies as a credit than the credit cards above.

    This card should absolutely move to the top of your list if you are already a Bank of America Preferred Rewards client. That designation automatically increases your return even higher than what the other credit cards above offer on travel and dining – you can get a rewards bonus of up to 75%.

    Combine that with a generous sign-up bonus and the Bank of America Premium Rewards is one of the most potent rewards cards for Preferred Rewards clients.

    The card includes:

    • Introductory bonus: 50,000 points when you spend $3,000 in the first 90 days (worth up to $500 in free travel)
    • 2 points per dollar spent on dining and travel purchases, including Airbnb and Vrbo
    • 1.5 points per dollar spent on everything else
    • Get up to $200 in travel statement credit rewards, including $100 for incidental spending per year and $100 toward a TSA Precheck/Global Entry application every four years
    • No foreign transaction fees
    • Bank of America Preferred Rewards clients earn up to 3.5 points per dollar on travel and dining purchases and up to 2.62 points per dollar on all other purchases
    • $95 annual fee
    Travel loyalty programs offer extended perks in pandemic

    Capital One Venture Rewards Credit Card: Best flat-rate miles option

    The Capital One Venture Rewards Credit Card is remarkably similar to Bank of America’s Premium Rewards card, right down to the $95 annual fee, but without the additional benefits afforded to Bank of America Preferred Rewards clients.

    However, Capital One Venture Rewards offers 2 points per dollar spent on every purchase, not just travel and dining.

    • Earn 60,000 travel miles after you spend $3,000 in purchases in the first three months – equaling $600 in travel credit
    • Earn 2 miles per dollar spent on every purchase, every day
    • Points can be redeemed for statement credit on travel purchases, including Airbnb
    • $95 annual fee
    • No foreign transaction fees

    Amazon Prime Rewards Visa Signature card: Best for online shopping

    You may be wondering why the Amazon Prime Rewards Visa Signature card is on a list highlighting the best credit cards for AirBnb, Vrbo and other homestays.

    Shouldn’t this card be limited to the “best credit cards for online shopping” list? Not when Amazon offers Airbnb gift cards and the Amazon Prime Rewards card gives you 5% cash back on Amazon.com purchases as long as you have a Prime membership, which essentially acts as the annual fee ($119).

    Just purchase an AirBnb gift card from Amazon with the card, and it’s as if you are getting 5% cash back for your AirBnb stay when you apply the gift card towards it. It’s the highest rate on this list, Amazon or not.

    You’ll receive the following additional benefits:

    • 5% cash back on Whole Foods and Amazon purchases (with Prime membership)
    • 2% cash back on purchases at drugstores, gas stations and restaurants
    • 1% cash back on all other purchases
    • A $100 Amazon gift card upon credit card application approval
    • No foreign transaction fees
    • $500,000 travel accident insurance
    • $3,000 per passenger lost luggage reimbursement
    • Baggage delay insurance of up to $100 a day for three days
    • Extended warranty coverage for an additional year

    See related: How to pay off Amazon purchases over time

    Discover it® Miles: Best no-fee option

    Though the points per dollar on this card are lower than any other credit card on the list, Discover it Miles gives you much more freedom in how you can manage your points and account.

    You can redeem miles in any amount, your miles don’t expire even if you close your account and 1% of your miles can be converted directly into cash for your bank account.

    Discover it Miles offers:

    • 1.5 miles for every dollar spent on every purchase (matched at the end of the first year)
    • Points can be redeemed for statement credit on travel expenses, including Airbnb, gas stations and restaurants.
    • Miles can be converted into cash at rate of 1 cent per mile and transferred directly into your bank account
    • Redeem miles in any amount
    • Miles never expire and you don’t lose them even when you close your account
    • No late payment fee or penalty APR on your first late payment, up to $40 thereafter
    • No foreign transaction fees
    • No annual fee
    • 0% APR on purchases for 14 months (11.99% to 22.99% variable APR after that)
    creditcards.com

    How Late Can You Be on a Car Payment, Mortgage or Other Bill?

    by Phillip Warren

    A man sits on a chair, looking concerned.

    It’s always frustrating to come across a bill and realize it was due yesterday—or last week. If you’re late on a payment or if you miss it completely, you could end up paying late fees and taking a hit on your credit score. It can be especially difficult if you want to apply for a loan or credit and are about to make a big purchase like a house or a vehicle.

    If you’re a reliable customer and have only missed this one payment, it likely shouldn’t be a big problem, and you can probably avoid a late fee. But if you wait too long, it might not be possible.

    Either way, we’re going to help answer some of your biggest questions:

    • How late can you be on a car payment before it affects your credit?
    • Is there a late car payment grace period?
    • What about for rent?
    • What happens if you miss a payment completely?
    • Who should you notify?
    • How will it impact your credit score?

    Read on to learn how late a credit card or car payment can be before it affects your credit score and what to do if it does.

    How Late Can a Credit Card Payment Be?

    People often wonder how late a payment has to be before their creditors report it to the credit bureaus. A credit card payment is considered late if it’s received after the cutoff time in your credit card agreement or if the payment submitted is less than the minimum amount due.

    Missed credit card payments are generally added to your credit report when the payment is more than 30 days late. This same entry is updated if your payment is 60 days late, and then 90 days. It is important to know what your specific credit card issuer’s policies are, so you can know what to expect.

    Keep in mind that one late payment among years of on-time payments is far less serious than a late payment and limited credit history.

    When Is a Credit Card Payment Considered Late?

    As far as credit card companies are concerned, the payment is considered late if it’s submitted after the cutoff period, which varies depending on the lender. Sometimes it’s 5 p.m. on a business day while for others it’s 8 p.m. or 11:59 p.m. Also be aware of when a late fee will be charged. Generally speaking, a late fee is issued if payment is received after the credit card issuer’s cutoff time.

    30 Days Past Due

    Late credit card payments usually aren’t reported to the credit bureau until after 30 days. In other words, if you make a payment after the due date but within this initial 30-day period, it won’t show up on your credit report, but you may have to pay a late fee.

    60 Days Past Due

    If your payment is more than 60 days late, the 30-day entry on your credit report is updated and your card’s interest rate could increase. If it increases and by how much depends on your card’s terms.

    How Late Can You Be on a Car Payment?

    Typically, the grace period on auto loans is 10 days, but this depends on the lender. The grace period your lender allows should be listed under the terms and conditions of your loan. This is where you’ll also find the details of the loan, including your loan balance, your interest rate, the term of the loan and the fees associated with a late or missed payment.

    If you can afford to pay but simply forgot, you’ll want to pay it as soon as possible. But if you feel you can’t afford the car payment, you should get in touch with your lender and see if they would be willing to renegotiate the terms of the loan.

    Deferring Car Payments

    You can also look into deferring your car payment if you don’t have the funds now but you expect to later. A deferment essentially means you’re changing your due date by postponing the date of your next payment. Deferments usually don’t negatively affect your credit score.

    What If I’m Late on Paying My Rent or Mortgage?

    If you’re a few days late paying your rent, usually you shouldn’t have to worry about this affecting your credit score. If you know your landlord, chances are they’ll say something if you continue to submit late payments. If you’re paying a property management company, they likely won’t be as lenient on late payments. Our best advice is to pay your rent within the week it’s due.

    Mortgage lenders typically report late payments to credit bureaus and usually have different grace periods. Paying within seven days should help you avoid decreasing credit scores.

    One of the best ways to stay on top of your mortgage or rent payment is to set up a monthly reminder for a few days before the first of the month or, if possible, set up an automatic payment. Because your rent or mortgage payment is the same each month, it should be easy to calculate it into your personal finances.

    Can a Late Credit Card Payment Made Under 30 Days Still Affect My Score?

    If you make a credit card payment within the 30-day period, it generally should not be reported negatively or have any effect on your credit score. Beyond that time, however, there is a possibility your credit score could be affected. Make sure you know the terms of your credit card however, terms can vary and you don’t want any surprises.

    If it turns out your late payment has been reported, know that its impact on your score generally diminishes with time, especially if it’s an isolated event. Other on-time payments can help counter the negative effects of late payments. And, as with almost any other mistake, the sooner you realize you’ve made it and try to fix it, the less likely it is to turn into a big problem.

    Late Fees vs. Overdue Payments

    Late fees are essentially fees charged by lenders to borrowers if a payment is received after its due date. So, if your payment is sent late—or is not the minimum payment or above—you could be charged a late fee.

    Most credit card payments are due within a minimum of 21 days after the billing cycle ends, but remember, the grace period is usually only 30 days, so you’ll want to pay them off as soon as possible. Credit card late fees vary depending on your lender and requirements under the CFPB, but the late fee amount can’t be more than the minimum payment. For example, if your minimum payment is $35, your late fee won’t be higher than that.

    An overdue payment, however, is a payment that was not paid by the due date. If you miss a due date, you will see the minimum balance plus the overdue payment on your next billing cycle. The overdue payment may be the full amount or a partial amount, such as if you paid part of your minimum but not all of it.

    Removing Late Payments From Your Credit History

    If there’s an error on your credit history, such as if a car payment is marked late but it actually wasn’t and you have proof, you can challenge it with the lender. The process involves explaining exactly what happened and asking that the error be fixed. Technically, the lender or servicer has 30 business days to respond to the error. If you don’t hear from them within about 45 days, follow up with them.

    If a late payment ding on your credit report is accurate, you can still contact the lender and dispute it, especially if you’ve been diligent about paying your bills on time. The lender can provide what’s called a goodwill adjustment, which is when the lender essentially forgives your late fee.

    As part of this process, you may be asked to explain the circumstances surrounding the reasons for your payment being submitted late. For example, maybe you went on vacation and forgot or you had to pay a large unexpected cost, such as medical fees, and you couldn’t afford the payment that month.

    The lender may offer you a chance to enroll in automatic payments to lessen the chances of a late payment happening again.

    How Long Does It Take for a Missed Payment to Come Off My Credit Report?

    Unfortunately, if there’s a missed payment or a negative item on your credit history and you’re not able to have it removed, it can stay on there for seven years.

    Keep in mind that if the incident occurred five years ago and you’re applying for a loan, it will have less effect than if it occurred last week. The more time that passes after the missed payment occurs, the better. Why? Because credit scores are based on recent financial behavior, so if you only miss one payment and not multiples, eventually your credit score takes your frequent on-time payments into account.

    How to Prevent Late Payments in the Future

    It’s hard to keep track of everything—grocery lists, kids’ schedules, work to-do lists and, of course, bill due dates—but there are ways to manage your personal finances better to ensure you never miss a payment.

    • Go paperless. Going paperless may increase the likelihood you notice when a bill comes through each month instead of being lost in piles of other mail.
    • Set up reminders. Banks sometimes offer text and email reminders that tell you when a bill, such as a car payment or credit card payment, is coming up. You can also set these up yourself to recur each month on your personal digital calendar.
    • Enroll in automatic payments. Automatic payments ensure your car payment or other loan payment is made on time. Just make sure the funds are available in your account on the day it’s due to be withdrawn to avoid potential overdraw fees.

    Keep an eye on your credit report and past late payments when you sign up for Credit.com’s Credit Report Card. It gives you a letter grade in each of the five key factors of your credit.

    The post How Late Can You Be on a Car Payment, Mortgage or Other Bill? appeared first on Credit.com.


    Source: credit.com

    How to Build Credit Without Student Loans

    by Phillip Warren

    College graduates saddled with student loans may find this hard to believe, but there is one upside to having to pay back all that debt: It helps you build credit.

    That may seem like a small consolation — particularly if the balances you owe are even average — but credit can be hard to come by. Of course, all hope isn’t lost for those who don’t have student loans.

    Here are some ways to build credit without that kind of debt.

    1. Get a Secured Credit Card

    The Credit Card Accountability Responsibility and Disclosure (CARD) Act prohibits lenders from giving credit cards to anyone under 21 who doesn’t have a willing co-signer or a demonstrated ability to repay, but if you’re over that age or you have a source of income, you can apply for some entry-level plastic.

    Secured credit cards — which require you to put down a deposit that serves as your credit line — are specifically designed to help people repair or build credit. These cards generally require a deposit to “secure” the limit of the credit card. (You can go here to learn more about the best secured credit cards in America.)

    There are also student credit cards geared to young borrowers that could be worth considering. The better ones have low credit limits that can keep new borrowers out of trouble and tout rewards or alerts designed to build smart-spending habits.

    Get It Now
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    2. Become an Authorized User

    If you can’t qualify for a credit card, you may want to see if a parent, guardian or family friend is willing to add you as an authorized user to one of their credit cards. Authorized users aren’t responsible for paying off an account, but will get credit (pun intended) for any good activity associated with it. Just be sure to have the primary cardholder check if the issuer reports authorized users to the major credit bureaus, since not all of them do so.

    3. Take Out a Credit-Builder Loan

    An alternative to starter credit cards, credit-builder loans, offered by some credit unions and banks to help people improve their credit, allow you to borrow a nominal amount (often $1,000 or less) and make payments for 12 to 24 months. The payments are deposited in an interest-bearing CD or savings account. These loans typically have relatively low interest rates and can help people with a thin credit history develop a more solid credit profile as long as on-time payments are reported to the three major credit reporting agencies. (Again, you may want to check this ahead of time.)

    4. Apply for a Personal Loan

    You may be able to qualify for a personal loan. These installment loans do not require collateral and typically have slightly higher interest rates than secured loans. A bank or credit union that you have a relationship with may be willing to extend financing, though you may be asked to get a co-signer.

    5. Establish Good Habits

    Of course, you’ll only build good credit if you use any financing you are able to obtain wisely. You can establish a good credit score over the long term by making all your payments on time, keeping debt levels lower than 30% (ideally 10%) of your total available credit limit(s), and adding a mix of credit accounts (revolving lines, like credit cards, and installment loans, like an auto loan) as your score and wallet can handle them.

    You can track your progress by viewing your two free credit scores each month on Credit.com. If you make a misstep, you may be able to fix your credit by disputing errors on your credit report, identifying your particular credit score killers and coming up with a game plan to address them.

    More on Credit Reports & Credit Scores:

    • The Credit.com Credit Reports Learning Center
    • What’s a Good Credit Score?
    • How to Get Your Free Annual Credit Report

    Image: LifesizeImages

    The post How to Build Credit Without Student Loans appeared first on Credit.com.


    Source: credit.com

    What is Panic Selling & How Does it Work?

    by Phillip Warren
    woman covering eyes

    Panic selling is when enough investors want to sell their holdings at the same time that it creates a profound drop in prices. That drop scares other investors into selling, which causes prices to fall still further, which frightens more investors, and so on.

    The resulting panic can erase vast amounts of wealth. It can take weeks or even years for the markets to recover from a serious panic.

    markets can crash.

    Throughout the history of every kind of market, panic occasionally sets in. Sometimes it’s a major global event that sets it off, like what happened with the stock markets in March of 2020 as the global COVID-19 pandemic picked up speed and countries entered lockdown.

    Other times, it’s simply a matter of a given asset—like housing in 2008—being bid up to unrealistic levels, followed by the mass consensus of what it’s worth changing seemingly overnight.

    What Causes Panic Selling?

    While panic is a very human response to the prospect of major financial loss, there are also other factors that can trigger investors to start panic-selling stocks.

    Panic Selling and Margin Calls

    In the Great Crash of 1929, there were many investors who had borrowed heavily to invest in the stock market. When the markets dropped, they received something called a margin call, requiring that they pay back the loans they took out to invest. Those margin calls required that they sell potentially even more stock to pay back the loans, which caused the markets to fall even further.

    Panic Selling and Stop-loss Orders

    Similarly, there are trading programs that can throw fuel on the fire of a bout of panic selling. These can be as simple as a stop-loss order, a standing order to buy or sell a particular security if it ever reaches a predetermined price, which investors commonly use in their brokerage accounts.

    A stop-loss order can be a way to take advantage of price dips to buy a stock at a discount. But during a sudden drop in the markets, stop-loss orders often lead to automatic sales of stocks, as investors try to lock in their gains.
    These automatic sales—in large enough numbers, can accelerate the decline in a market, and contribute to the panic.

    Panic Selling and Algorithms

    There are algorithms employed by major financial institutions and professional investors that will automatically sell if the price of a given stock falls to a certain level. The crash of 1987 was caused in part by some of the first computerized trading programs. And in 2010, one trader who lost control of his highly sophisticated trading software was responsible for the “flash crash,” which caused roughly a trillion dollars of market capitalization to disappear in under an hour.

    The system-wide risk presented by these tools is one reason that most major stock exchanges have installed a series trading curbs and “circuit breakers” in place to slow down panic selling and give the traders who use these programs to recalibrate them before a full-fledged selling spree can run out of control.

    The Risks of Panic Selling

    When markets drop suddenly, it can be scary for investors. And one of the biggest risks may be to give into that fear, and join in the selling.

    But one thing to remember is that markets go up and down, but an investor only loses money when they sell their holdings. By pulling their money out of the stock market, an investor not only accepts a lower price, but also removes the chance of participating in any rebound.

    Loss is a big risk of panic selling. People who invest for goals that are years or decades away can likely weather a panic. But if a person is investing for retirement, a sudden panic just before they retire can create a major problem, especially if they were planning to live off those investments.

    The danger of sudden, panic-driven drops in the market is one reason it makes sense for investors to review their holdings on a regular basis, and adjust their holdings away from riskier assets like stocks, toward steadier assets like bonds, as they get nearer to retirement.

    That risk is also why most professionals recommend people keep 6-12 months of expenses in cash, in case of an emergency. That way, even if a financial crisis causes a person to lose their job, they can stay in the market. It’s a way to protect their long-term plans from being jeopardized by everyday expenses.

    Finding Opportunities in Panic Selling

    During a panic, there are typically enough scared people making irrational decisions to create valuable buying opportunities. The stock-market crashes in 1987 and in 2008, for instance, were each followed by a decade in which the S&P 500 rewarded investors with double-digit annual returns. (As always, however, past performance is no guarantee of future success.)

    The problem is that there’s no way to know when a panic has reached its end, and when the market has fallen to its bottom. Professional traders with complex mathematical models have had mixed results figuring out when a market will rebound. But for most investors—even savvy ones—it’s a guessing game at best.

    There are two ways an investor can try to take advantage of a bout of panic selling:

    1. The first is not to panic.
    2. The other is to keep investing when the market is down, while stocks are selling for much lower prices.

    Dollar Cost Averaging

    One way to take advantage of panic selling is with dollar cost averaging. With this long-term plan, an investor buys a fixed dollar amount of an investment on a regular basis—say, every month. It allows an investor to take advantage of lower purchase prices and limits the amount they invest at when valuations are higher. As such, it’s a strategy for all seasons—not just during a panic. Most investors already employ some form of dollar cost averaging in their 401(k) plan.

    The Takeaway

    SoFi Invest® offers an active investing solution that allows members to choose their own stocks, or take advantage of an automated investing solution that invests their money based on personal goals and risk tolerance.

    Find out how you can get started investing today with SoFi.


    SoFi Invest®
    The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
    1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
    2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
    3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
    For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

    Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
    SOIN20283

    The post What is Panic Selling & How Does it Work? appeared first on SoFi.


    Source: sofi.com

    Money Moves to Make in Your 20s, 30s, and 40s

    by Phillip Warren

    Reaching your twenties is an exciting milestone for most as it means you’ve officially entered adulthood. Along with that milestone comes new responsibilities and worries that we didn’t picture when our teenage selves dreamed of turning 21. We imagined our college graduation, moving into our first apartment, and launching our new career. That vision didn’t include dealing with student loan debt, taking on a low paying entry-level job, or having to confront that despite spending 4 years in college, you’re still unsure how the world of personal finance actually works.

    It’s easy to dismiss it all because well you’re a 20 something, and you’ll have plenty of time to play catch up. The reality is that each decade plays an important role in our future financial health. Take the time now to learn about your money and follow the money moves outlined below to put yourself on a path of lifelong financial success and eventual freedom.

    Money Moves to Make in Your 20’s:

    Learn How To Budget

    Building a budget doesn’t have to be overly complicated or time-consuming. It’s actually the first step in putting yourself in control of your finances because it means you know where your money goes each month. The good news is that there are lots of apps and online tools that can make the process a breeze. Consider a system like Mint that will connect to your accounts and automatically categorize your spending for you. The right budgeting tool is simply the one you’ll stick with long term.

    Pay Off Debt

    Debt isn’t all bad. It may be the reason you were able to earn your degree, and a mortgage may help you one day buy a home. It can also quickly overrun your life if you aren’t careful. Now’s the perfect time before life gets more hectic with family commitments to buckle down and tackle any loans or credit card balances so you can be debt-free going into your 30’s.

    Build a Cash Cushion

    The financial downturn caused by the pandemic has reminded the whole world of the importance of having an emergency fund. We don’t know what life is going to throw at us and having a cushion can help you navigate the uncertain times. Though it’s not all about having a secret stash of cash to deal with the bad news of life (medical bills, car repair, layoff), it can also be about having the cash to seize an exciting opportunity. Having savings gives you the freedom and security to deal with whatever life brings your way – good or bad.

    Understand Credit

    Your credit score can dictate so much of your life. That little number can play a big role in the home you buy, the car you drive, and even the job you hold as some employers (especially in the finance world) will pull your credit. It’s important that you check your credit report and score (also available through Mint), learn how it’s calculated, and work to improve it.

    Money Moves to Make in Your 30’s:

    Invest For Retirement

    Now that you’ve spent your 20’s building the foundation for your financial life, it’s time to make sure you’re also tackling the big picture goals like saving and investing for retirement. I typically recommend that clients save 10% to 15% of their annual income towards retirement. That may seem like an insurmountable goal, but starting small by saving even 1 to 3% of your salary can make a big difference in the future. Also, make sure to take advantage of any matching contributions that your employer may provide in your retirement plan. If, for example, they offer to match contributions up to 6%, I would try hard to work towards contributing at least 6%.

    Buying Your First Home

    Buying your first home is a top goal for many, but it also seems to be getting increasingly more difficult especially if you live in a major city. The most important steps you can take is to improve your credit score, pay down high-interest debt, and be aggressive about saving for a down payment. Saving 20% down will help you qualify for the best loan terms and interest rate, but there are still home loans available even if you aren’t able to save that much. Just be realistic with your budget and what you can afford. Don’t let a lender or real estate agent determine what payment will fit into your budget.

    Be Covered Under These Must-Have Insurances

    You’ve spent the last several years building your savings and growing your family. It’s now crucial that you have the proper insurance coverage in place to protect your assets and your loved ones. Life and disability insurance are top of the list. Life insurance doesn’t have to be expensive or complex. Get a quote for term-life that will last a set number of years and protect your partner and children during those crucial years that they depend on you. Disability insurance protects your income if you become sick or injured and are unable to work. Your earning ability is one of your biggest assets during this time, and you should protect it. This coverage may be offered through your employer, or you can request a quote for an individual policy.

    Invest in Self-Care and Well Being

    Mental health is part of self-care and wealth. Most people don’t talk about how financial stress and worry affect their overall health. When you can take care of yourself on all levels, you will feel healthier and wealthier, and happier. But it is not easy. It takes work, effort, awareness, and consciousness to learn how to detach the value in your bank account or financial account from your self-worth and value as a human being. When you feel emotional about your money, investments, or the stock market, learn ways to process them and take care of yourself by hiring licensed professionals and experts to help you.

    Money Moves to Make in Your 40’s:

    Revisit Your College Savings Goal

    As your kids get older and prepare to enter their own journey into adulthood, paying for college is likely a major goal on your list. Consider opening a 529 plan (if you haven’t already) to save for their education. 529 plans offer tax advantages when it comes to saving for college. There are lots of online resources that can help you understand and pick the right plan for you. Visit https://www.savingforcollege.com. This is also a great time to make sure you’re talking to your kids about money. Give them the benefit of a financial education that you may not have had.

    Get Aggressive with Retirement Planning

    Your 40’s likely mark peak earning years. You’ll want to take advantage of your higher earnings to maximize your retirement savings especially if you weren’t able to save as much in your 20’s and 30’s. Revisit your retirement plan to crunch the numbers so you’ll be clear on what you need to save to reach your goal.

    Build More Wealth

    You’ve arrived at mid-life probably feeling younger than you are and wondering how the heck that big 4-0 got on your birthday cake. We typically associate being 20 with being free, but I think we’ve got it wrong. There is something incredibly freeing about the wisdom and self-assurance that comes with getting older. You’ve proved yourself. People see you as an adult. Your kids are getting older and your finances are more settled. Now’s the time to kick it up to the next level. Look for ways to build additional wealth. This may mean tapping into your entrepreneurial side to launch the business you’ve dreamed of or buying real estate to increase passive income. Now’s also a great time to find a trusted financial advisor who can help guide your next steps and help you plan the best ways to build your wealth.

    Revisit Your Insurance Coverage

    Insurance was crucial before, but it’s time to revisit your coverage and make sure you’re protected especially if you decide to launch a business or buy additional real estate. This is also where a financial advisor can help you analyze your coverage needs and find the policies that will work for you.

    Consider Estate Planning

    Estate planning (think wills, trusts, power of attorney) isn’t the most fun / exciting topic. It involves imagining your gone and creating a plan for the loved ones you leave behind. It is also often overlooked by adults in their younger years. It’s easy to assume estate planning is something the wealthy need to do. It really comes down to whether you want to decide how your life savings will be managed or if you want a court to decide. It’s also crucial for parents with children who are minors to select a guardian and have those uncomfortable conversations with their family members about who would care for the children if the worst were to happen. It’s also a good time to visit this topic with your own aging parents and make sure they have the proper documents and plans in place.

     

    Whether you’re in your 20’s, 30’s or 40’s, it can be easy to put off planning your finances especially in the middle of a pandemic. Most of us are busy, and it’s easy to tell yourself that you’ll have time to work on a goal in the future. Commit to setting aside one hour each week or even each month to have a money date and review your finances. Don’t let yourself reach a milestone birthday (30, 40) and regret not being farther ahead. Follow these money moves now to seize control of your financial future.

    The post Money Moves to Make in Your 20s, 30s, and 40s appeared first on MintLife Blog.


    Source: mint.intuit.com

    Best Personal Loans For Bad Credit (Credit Score Under 580)

    by Phillip Warren
    Getting a loan when you have poor credit can seem impossible, but it can be done, as long as you make sure to make on-time monthly payments.

    Source: moneyunder30.com