Should You Delay Your Retirement Contributions To Clear Debts?

78% of Americans said they were concerned about not saving enough money for retirement, in a 2018 study conducted by the Northeastern Mutual Planning and Progress. Conventional wisdom advises focusing on saving for retirement right from when you are young, either through a 401(k), IRA or any other convenient plan. But a critical dilemma to consider is whether you should delay these contributions or investments to clear your debts. Since massive debts, including student loans, burden many people, it can be hard to make financial progress. So when is the right time to prioritize clearing your debt?

When settling debts should come first

Let us say that you are earning $40,000 per year but have $70,000 worth of loans. Such a situation could mean that you are approaching bankruptcy, which is disruptive, and can leave you with little freedom and affect your employment. In this case, it would be more prudent to put a stop to other obligations and prioritize paying your debt. Think of it as a move to channel all your resources and effort into dealing with the biggest blockage to growth and happy retirement. After clearing these debts successfully, you can now focus your full energy on savings and investments, which will place you in a better financial point after retirement.

The opportunity cost of paying your debt first

There is a negative side to committing to pay debts without saving for retirement. Assume it will take you 5 years to completely get rid of your loans. During this time, you would have saved $5,000 per year plus your employer’s addition (50% of your contribution). If you invest this money in stock, giving an average annual return of 10%, you would have more than $48,000 at the end of these 5 years. This is the opportunity cost of choosing to clear debt first, which is a steep mountain to climb. The same goes for freelancers seeking a retirement plan that works best for them. Also, the IRS puts a limit on how much you can contribute to tax-advantaged retirement accounts yearly, and if you miss out on it, you will not enjoy the chance again. This and the fact that you lose time to grow financially is enough incentive to make you reconsider your options.

Pay loans and save for retirement if you can

If your monthly income puts you in a position to pay the debt and still invest for retirement, you should do so. But this arrangement could also work for those whose income does not give them much space. In such a case, you can go ahead and do both while giving one more weight. For example, focus on paying your student loan while saving minimally. Inc advises that regardless of your financial situation, you should contribute a certain percentage of your income, aiming to generate maximum employer match on your 401(k) or whichever plan you are using. Additionally, there are available loan-payoff-calculators that can help you to determine how best you can settle your loans while still growing your nest egg.

One of the biggest financial challenges is that many vital commitments compete for limited income. While delaying retirement investments is a bad idea, sometimes you can forego it and focus on clearing your debt. Everybody’s situation is unique depending on their type of loan, payment terms, and age, amongst other factors. As such, it is essential to consult a professional financial adviser, who will guide into selecting the plan that works best for you.

Chrissy Helders

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5 Numbers More Important Than Your Income

As my friend Mel says, “Numbers are sexy.” We love talking about numbers, and tend to fixate on them — particularly when it comes to how much we earn. “I’m a six-figure freelance designer,” or, “If I take this job, I’ll earn $10,000 more.”

We oftentimes measure our worth based on how much money we rake in. It can be easy to feel like you’re behind, or a grade-A underachiever when your cousin or bestie or partner makes more than you. Sure, your income is important, but there are other numbers that deserve a closer look than how much cash you earn. When it comes to financial wellness, here are five metrics that trump your income.

1. Cost of Living Index

Bottom line: the salary you earn living  in one part of the county might not stretch as far living in another part of the country. Say you earn $80,000 in Los Angeles. If you move to Nashville, Tennessee, you’d only need $45,269 to enjoy the same comforts, according to Sperling’s Cost of Living calculator. Expect to spend 26.1% less in health and 39.2% less in transportation. And if you were to buy a home, you’d be spending 62.6% less in housing.

How much you make is relative to a number of things — one being the cost of living in your stomping grounds. So the next time someone says they’re making $120,000 but live in Silicon Valley, chances are they aren’t enjoying the same standard of living, than those in less-expensive parts of the country.

2. Compensation Package

When it comes to your work salary, it’s also important to look at the entire kit-and-caboodle for your benefits package. Your employee benefits can make up to one-third of total compensation costs. That includes health benefits (which alone can cost employers $15,000 per worker) and an employer-sponsored 401(k) plan.

If your workplace offers an employer match for retirement savings, that also boosts your total compensation. You might also get discounts on gym memberships, and group rates on car insurance, life insurance, and even financial and legal advice.

Besides your take-home pay, you’ll want to factor in the full suite of benefits that your employer offers. In turn, that makes a difference as to how much you have to work with each month.

3. Happiness Report

Yes, happiness is a difficult thing to pinpoint. But in recent years metrics have been developed to gauge how happy nations are as a whole, giving us a good idea of wellbeing and work-life balance.

The U.N.’s World Happiness Report uses data from the Gallup World Poll, which surveys citizens in 156 countries on how happy they feel — to determine the overall well-being of a country’s denizens. The Cantril Ladder, or Cantril’s Self-Anchoring Ladder of Life Satisfaction, is made up of 10 rungs. The bottom of the ladder equals 0, and represents the worst possible life for you. The top of the ladder equals 10, and equates to the best possible life for you.

Per the Gallup World Poll, Finland, Norway, and Denmark, respectively,  ranked highest for happiness. The bottom three countries were Afghanistan, Central African Republic, and South Sudan. Where does the U.S. fall? Nineteen out of the 156.

Consider doing your own happiness assessment using the Cantril Ladder. Are you living your best life? What does it exactly mean for you to be living your best life? What steps can you make in the right direction to boost your well-being?

4. Net Worth 

Remember: Your income isn’t a measure of your wealth. Your net worth is. To figure out your net worth, tally up your assets — this includes your investments, how much you have sitting in your savings, and any other assets, like your home or car. Next, tally up your debt. Subtract your debt from your assets and you have your net worth.

Net worth gives a full picture because it factors in how much money you make, how much debt you owe and how quickly you’re paying it off. It’s what you have left at the end of the day that’s for Future You. Having a positive net worth shows that you’re financially healthy.

5. How You Spend Your Money

Are you putting your paycheck toward paying off debt, helping your family, or are you squandering it? Not only does how you spend your money affect your progress toward net worth, but it’s ultimately an indicator of what you value.

For instance, while I am typically pretty frugal when it comes to clothes, I spend more on high-quality, nutritious foods. That’s because my health, especially as I get older, becomes more important. I recently splurged on some fancy cookware because I’ve been preparing more meals at home. I also pay for weekly yoga classes at a nearby studio. Because my physical health is important, I’m willing to spend more on food and exercise.

There you have it. Five metrics that are more important than your income. As you can see, while your take-home pay does play a key role in your financial well-being, there are other ways to measure your financial success.

This article was originally published at HiCharlie.com

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Money-saving Tips for the Self-employed

Gone are the days when the American dream means climbing the corporate ladder. Over the last years, the mindset of the American worker has shifted to valuing flexibility and freedom over stability. Self-employment continues to be a rising trend as employees leave their day jobs to do freelance work or start their own business.

One of the major challenges self-employed individuals face is managing cash flow. Since you do not have the regular pay that a day job provides, not to mention health insurance and tax duties, it can be challenging when all these things fall on your shoulders. Saving and budgeting can be taxing, too, as there will be months when you’ll be flushed with cash, while there will be months when you’ll need to tighten your belt a little.

Below are a few money-saving tips for the self-employed.

Set a budget.  Whether you are a business owner or a freelancer, this is very crucial. Good financial planning can determine the success of your new venture. Total all your income sources. Make sure to list down all your expenses every month. Determine all the fixed costs such as monthly bills, subscriptions, and mortgage, which takes up a huge part of your budget. You may want to consider paying off your mortgage early to get it out of the way and have more room in your budget for other things like savings and retirement fund.  After listing down the fixed costs, add the variable expenses such as payment to freelancers if you hire some, and any other expense that vary month-to-month. By doing this, you’ll know the amount of cash you need every month to live comfortably. Stick to the budget as much as you can. There are plenty of budgeting apps and tools that can assist you with this.

Set your rate. Do not undersell yourself and do not be shy to increase your rates as you gain more experience. In terms of billing, it’s better to be billed in installments rather than in lump sum at the end of a project. It would be harder to budget your money if your cash comes in once every three months rather than having them sent in monthly installments.

Build your emergency fund. And maintain it. It is important to always save for the rainy days. An emergency fund can save you from high-interest debts in times of financial stress. Make sure you have a fund, ideally a 6-month cushion – for when something unexpected happens such as a big client backing out. This 6-month cushion cannot be built right away, but you must work towards building it as soon as you begin getting paid. Set a certain percentage of your income to be allotted to this fund every month.

Know your taxes. Now that you are self-employed, you no longer have your HR department’s compensation and benefits people to look after your taxes. You must do them yourself now. Be aware of the tax bracket you are in now that you have gone solo. If you are a business owner, seek the help of a financial advisor in determining the best entity type to register your business as.

Get help. Time is money. If you think it would be best to delegate some of your tasks to freelancers in order for you to focus on more crucial tasks, hiring help could be a great idea.

This article was originally published by Uncapped Mortgage

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Can Debt Be Used to Build Wealth? Let’s Weigh In

Image result for suitcase cash

Generally, people think of debt as something to avoid. Debt usually means “bad” and no debt means you are better off financially. So the idea of using debt to build wealth can seem a bit dubious. Can you really build wealth using debt?

In order to answer this question, we first need to know that there are two kinds of debt. There is good debt and bad debt. And though the thought of debt being “good” seems counter-intuitive, the fact remains that some debt is actually good.

Good debt is a debt that will increase your finances over time. So something like a small business loan is good debt because you use the money you borrowed to build up your business, thus, bulking up your finances in the long run. Good debt also has a smaller interest. So while you are expanding your business with your small business loan, you aren’t paying an exorbitant amount in interests. This type of debt also allows you ample time to pay back your debt.

Bad debt is the exact opposite. This kind of debt has astonishingly high-interest rates and usually involves some form of collateral. There is also a very short turnaround time for you to pay your debt, plus interest, back. Some examples of bad debt are credit card debts, car title loans, and payday loans. A loan of $100 will have you paying back nearly the same amount in interests alone. Bad debt will sink you financially faster than a boat riddled with holes.

So now that you know the two types of debt, you can probably guess which one can be used to build wealth. The question now is “how”.

A good way is the example stated above. Use debt to expand your business. If you do not have a business, use debt to invest. It could be in property or in various investment funds. Whatever you decide to invest in, it is important to know your risk tolerance and how much you are willing to invest.

The principle of leverage can help you out as well. Say for example you are investing 100 dollars of your own with an expected return rate of 10%. This will earn you a return of $10. If you borrowed money with an interest rate of less than 10%, you can add to your initial $100 investment and still earn from it despite having to pay off the debt you used to invest. You can diversify your financial portfolio using this strategy as well; borrow to invest in different institutions and different kinds of investments.

There are a few to consider when using debt to invest. Think of your tolerance for debt. Can you realistically pay off your monthly payments? Can you pay off that debt within the time frame or do you need more time? Consider your cash flow as well. You need to make sure that you have enough income to pay off your debt.

So the answer to the question can debt be used to build wealth is yes, you can. You just need to choose the right kind of debt, invest in the right things, and keep in mind your debt tolerance.

This article was originally published by Uncapped Mortgage

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10 Ways to Save on Insurance

Having insurance is great when the universe decides it’s time to give you a major (or even minor) problem. But when you can get a policy for practically anything, it’s easy to spend more on protecting your life than living it. Don’t worry, though. We can help you keep these expenses under control while still getting the coverage that you need.

Here are ten ways to be protected for less:

1. Assess Your Needs

Rather than buying coverage simply because you think you should, it’s important to consider your specific situation. Your life today and your future plans should dictate what insurance policies you need and how much coverage is appropriate.

Although there are lots of factors to consider for each type of insurance, you should think about the following to determine your needs:

  • Your assets: More assets (cash, investments, businesses, property, etc.) may mean more insurance
  • Your family: Having dependents typically requires more coverage
  • Your health: Poor health could necessitate a more robust medical policy or more life insurance

2. Shop Around

Before committing to any policy, get pricing from multiple companies. You may be surprised at how much variation you see. And remember — don’t just set it and forget it. It pays to do this before every policy renewal.

3. Bundle Policies

As you get quotes for coverage, ask each company for a bundle price on the types of insurance that you need. You could score big savings and simplify your bill paying process.

4. Get a Discount by Association

Sure, you can likely get a deal on health, life, and disability insurance through your employer. But did you know that you may be eligible for discounted group rates on home and auto policies, too? Check with your HR department!

5. Raise the Deductible

Increasing your policy’s deductible could be an easy way to save a few bucks each month. Be sure, however, that you can cover the higher deductible if you ever need to make a claim.

6. Keep Your Credit Report Clean

Unless you live in CA, HI, or MA, poor credit history could cost you. Insurers may assign you an insurance score (similar to a credit score), with lower scores resulting in higher premiums. They believe, right or wrong, that a low score indicates irresponsibility and therefore more risk.

7. Save on Car Insurance

If you want to own a car in 48 out of 50 states, you need car insurance. The good news is that you can defray the expense with tons of different discounts. You may be able to save cash for being a student, taking a defensive driving course, being a member of AAA, driving a car with low miles, and more. Additionally, if your car is older and paid off, you may not need as much insurance. Remember: carry sufficient liability coverage to protect your assets.

Tip: Try this calculator to see how much car insurance you may need.

8. Save on Homeowners/Renters Insurance

If you have a mortgage, you’re probably required to have homeowner’s insurance. To make this expense more budget-friendly, ask your insurer if they offer price breaks for having smoke detectors, a home security system, modern plumbing and electrical systems, etc. Many of the same discounts are available to renters, too.

Bonus read: Check out this article on determining how much coverage you could need.

Tip: Use this guide to take an inventory of your belongings and determine the value of your stuff, which gets factored into your insurance requirements.

9. Save on Life Insurance

If you have a family to protect or want to leave loved ones a little something when you’re gone, you may want to purchase life insurance. There are a few different types, each with their own pros and cons, but generally, the most affordable type is term life insurance. Term life insurance will pay your beneficiaries a specified amount if you die within a certain timeframe (usually 10-30 years). There are a number of ways to save on life insurance such as paying the entire year’s worth of premiums upfront or getting a volume discount (aka getting more insurance for less money!).

Tip: Try this calculator to see how much life insurance you may need.

10. Save on Health Insurance

It’s no secret — medical care is crazy expensive. Adequate health insurance can save your wallet from a beating if you become seriously ill or injured.  If you’re in good health, don’t go to the doctor frequently, and have a cash reserve, consider saving money on your monthly premiums by choosing a plan with a high-deductible. You’ll pay the full tab if you go to urgent care with the flu or a sprained ankle, but you’ll (hopefully) pay less overall each year due to premium savings. You can also save money by using in-network providers and practicing healthy habits — like eating right, getting those steps in, and going easy at happy hour.

Tip: A Health Savings Account (HSA) is a perfect partner to a high-deductible medical plan. Check out how an HSA can help lower your tax liability, set money aside for medical expenses, and save for retirement here. To get started, click here.

Final Thoughts

Insurance can be a significant line item on your budget, but there are many ways to minimize the expense. While this article isn’t an exhaustive list of ways to save, it gives you a good start to being covered affordably.

Tell Charlie: What’s your favorite way to save on insurance?

Please note: We don’t have an affiliation with or personally endorse any of the services linked to in this post. We’re just trying to give you some ideas.

This article was originally published at HiCharlie.com

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The Cost of Love: Differences in Dating Expenses Between Men and Women

The game of love can cost a pretty penny. Take the popular reality TV series The Bachelor. Female contestants are expected to bring their own wardrobe for the entire show. (That’s seven whole weeks!) This includes the entire kit and caboodle, from stiletto heels and evening gowns to hair products, accessories, and makeup to city cruising and hiking outfits. The cost for these single ladies? Anywhere from $1,800 to a whopping $8,000. Looking good on the prowl ain’t cheap!

Getting the bachelor to ask you, “Will you accept this rose?” could add up quickly.

Male contestants on The Bachelorette, however, spend a lot less on appearances. How much do they spend to be on the show? Anywhere from $500 to $3,500 in an attempt to woo the bachelorette.

When it comes to the real world, the costs of courtship are lower, but there’s still a discrepancy in how much men and women spend in their journeys for love.

The Costs of Dating
According to Match.com’s 7th annual Singles in America survey, men spent an average of $1,855 per year on dating, whereas women spent $1,423, per Mental Floss. This includes throwing down dough on eating out, entertainment, clothes and personal grooming, and on dating apps. Singles are spending roughly $80 per date and going on about 20 dates each year.

As you might’ve guessed, it costs more to date in major cities: $2,069 in the Big Apple, $1,816 in Chicago, and $1,788 in Washington, D.C. Despite the major costs related with courting, talking about cash in a relationship is tricky. Here are our tips for approaching the subject:

Don’t Assume 
Whether it’s what we observe from our parents, or what’s been culturally instilled in us from an early age, we might bear assumptions that no longer ring true in our modern age.

For example, who takes the bill at the end of a date? Per the Singles in America Survey, nearly half of men believe in footing the bill, while only 36 percent of women think that men still should. What’s more, when it comes to going splitsies, 71 percent of males enjoyed it when a woman offered to pay, and 78 percent of women said they had offered. When my partner and I first started dating, we went Dutch from the get-go. It wasn’t about gender roles, it was just what felt right for our dynamic.

You also don’t want to assume you know what the true costs of courtship entail. A good friend of mine was getting annoyed that his girlfriend wasn’t paying her fair share. He was paying for most of the meals and movie tickets. Plus, he had to fork over gas money to drive out to see her. When he brought this up to her, she pointed out that she had made up for it by buying pricey lingerie. This was a “hidden” cost that my friend hadn’t even considered. If you’re not sure what your date is thinking, don’t be afraid to ask. That can help prevent conflict and bouts of resentment.

Start Simple 
You probably don’t want to talk about credit scores, debt loads, and tax brackets on the first date — unless you want to scare them off. As the tried-and-true adage goes: Keep It Simple, Stupid (KISS). In the early days of courtship, start with the easy stuff. There’s no need to pry when all that’s required is deciding who will be paying for dinner.

In the early days of the relationship, it might be best to observe instead of outright asking. You can learn a lot about someone’s approach to money in the spending decisions they make and their lifestyle choices. Are they are a saver or a spender? Do they generally seem optimistic about their finances, or can you sense glimmers of pessimism? Piecing together these hints can help you figure out whether they have a healthy relationship with money.

Handle With Care 
Chatting about finances in a romantic partnership is no easy feat. As it can be a heavy and sensitive topic, you’ll want to approach it with finesse. I like to bring up light topics when it comes to money, such as finding a bargain at my favorite online store. If I feel like talking about my finances, I’ll do so in a way that could lead to a deeper discussion. If they’re not feeling it, don’t pressure them to share.

And whatever you do, don’t judge. People might feel shame about not earning enough, or about their debt situation. (Yes, debt shame is a very real thing.) If you’re going to approach a tricky subject, come from a place of empathy and understanding.

Time the Ask 
Getting financially naked is essential to a healthy relationship. Once you get more serious, you’ll need to pull back the hood and reveal the state of your finances. This includes your credit card debt, net worth, how much you earn, as well as your hopes, fears, and concerns about money.

Yes, it’s a lot. But the last thing you want in your relationship is financial infidelity, or keeping a money secret from your S.O. If you don’t know where your partner stands, you won’t be able to build a life together based on shared values. Talking about money is oftentimes difficult and scary. But doing so will help you build trust.

Know There Will Be Differences

We come in with our own mindsets, behaviors, and habits around money. If you and your partner have different ways of handling money, you’ll need to communicate boundaries, expectations, and work on shared goals.

My partner and I have pretty different ways on how we treat our money. I am super cautious, and need a lot tucked away for emergencies to feel safe. My partner feels comfortable having a smaller cushion for his rainy day fund. My threshold for what makes me feel safe isn’t the same for him. He doesn’t own a credit card, and pays for everything upfront. While I pay off my credit card balance in full each month, I love racking up those credit card points!

Pencil in Money Dates 
Most of my coupled money nerd pals carve out time to go on money dates with their significant others. It’s a perfect time to discuss progress on shared money goals, share wins, and hash out any issues. You can make it fun. Get out of the house, and chat over coffee or ice cream. As you most likely each lead busy lives, you can squeeze in a time to chat while driving to dinner once a week.

Dating is expensive, and talking about money is hard. But unless you swear to a life of singlehood, these are costs and challenges you’ll need to take into account. With a bit of know-how, planning and tact, you can incorporate finances into dating and relationships like a pro.

This article was originally published at HiCharlie.com

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8 Ways to Stop Impulse Shopping

Raise your hand if you’ve gone into Target just to buy a pack of toilet paper and left with a full basket of stuff.

Hey, we’ve all been there. It’s fine to make light of it all (I mean it does make for some great Target run memes, amiright?) but when it comes time to look at your bank account, it’s probably not going to be fun.

Impulse shopping happens to the best of people, but it can lead to blowing your budget, missing financial goals, and even going into debt. Worst of all, you may regret purchases, leading to those pesky emotions known as shame and guilt.

Before you go hiding under a rock, vowing never to come out again — please don’t, the world needs your awesomeness — keep reading to find out what you can do to curb impulse shopping.

Forgive Yourself

We all make mistakes. It’s not helpful to dwell on them and beat ourselves up on the past.

The more negative self-talk you engage in, the more you’re going to shop impulsively again. If you feel like you can’t escape the wrath of the Target run, you’ll end up blindly going into the store and tossing unnecessary items into your cart.

If you end up overspending, take some time to tell yourself it was a mistake and that you can become better with your money. One step at a time.

Notice Your Urges

… Shopping urges that is.

When you feel the need to shop — and it’s not because you ran out of toilet paper — take note. You can even go as far as marking it down in your note-taking app or a journal. The idea is to draw attention to it so that you can stop and think about why you feel the need to shop.

In most cases, the reasons are emotional. Maybe you’re going through a stressful time and want to do some retail therapy. Or you’re feeling a bit insecure at your new job and want to impress your coworkers. It could even be as simple as you celebrating your birthday, leading you to buy things you weren’t planning on purchasing.

 

Avoid Temptation

  • Here are some simple tricks to avoid the urge to buy things in store or online you don’t need: Block websites of your favorite retailers
  • If you need to purchase something, see if they have a pickup service, so you’re less tempted to be swayed by shiny displays
  • Don’t go to the mall
  • Give yourself a time limit when you do need to buy something, like 5 days to see if you actually want it
  • Take a different route to work if there are any stores you’ll see that may lead you to impulsively shop
  • Have hours where you’re not allowed to browse online (like past midnight, when you might not be thinking straight…)

Stick to a List

A lot of people end up making impulse purchase because they don’t have a plan. Of course, sticking to a list isn’t going to be 100 percent but at least it can help deter you by having something you can reference.

Sticking to a list will require you do some advance planning on your part. For example, if you go grocery shopping, check your pantry to see what you items you need. Or if you’re buying new clothes, write down the types of styles, color and clothing item before you go try stuff on.

Try a 30-Day Challenge

Gamifying your finances can be a fun way to work towards a better financial future. Call it a “shopping ban,” “spending fast,” or something more fun. Whatever you do, see if you can challenge yourself to stop impulse purchases for 30 days.

If you do, make sure you get as specific as possible. Maybe you’ll only purchase necessities, but nothing outside of groceries, bills, etc.. Or you want to stop clothes shopping for the next 30 days. Consider making some rules or guidelines on what you can and can’t purchase during the challenge.

When the challenge is over, see how you feel. What did you learn about yourself??

Have an Accountability Partner

Sometimes having an outside force can help you to stick to your goals. If you have a friend who you can chat all things money with and trust, challenge each other to stop impulse purchases.

This plan will have a higher chance of success if you make specific goals. Think about keeping each other accountable throughout a 30-day challenge (as mentioned above) or even having a weekly chat to talk about your thoughts around spending money.

The win-win here is that you can work towards a better financial future and help a friend out at the same time!

Bring Cash

You can’t spend money you don’t have, right? If you need to head into a store to make a purchase, bring only the cash you need and that’s it. That way you’re not tempted to buy anymore because you won’t be able to purchase it.

If you hate the thought of carrying around cash, consider using a prepaid debit or credit card so you can still limit the amount you spend.

Understand Your Why

Sounds super cheesy, but you can’t maintain a habit without understanding why you’re doing it in the first place. Sure, it’s a good idea to stop impulse shopping, but why is it important to you specifically? Do you want to save more money so you can replace your old laptop? Or do you have a bunch of credit card debt you want gone by the end of the month?

Giving a reason for changing your behavior will help keep you motivated during the tough times. And when you get through to the other side, you’ll be thankful you took the time to understand the why behind your finances.

This article was originally published at HiCharlie.com

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What Entrepreneurs Can Teach Us About Getting Out of Debt

Credit card debt surpassed $1 trillion in 2017, according to a report by the Federal Reserve. Getting out of this kind of debt can be challenging, but there is one group that can help show you a way out; entrepreneurs. They understand that debt involves having more liabilities than assets according to Forbes. In general terms, debt can be defined as owing more than you own. Owing something to someone else can be beneficial to your productivity, prosperity and value creation. When you cannot use debt for these benefits, then debt becomes a burden not an opportunity.

Learning to negotiate your way out of debt

When even the smartest entrepreneurs get into debt because a certain product did not sell well or because of a downturn, they often find ways to negotiate better rates and monthly payments with their lenders or creditors. Creditors do not refuse to negotiate because if the business fails, the creditors will not get their money. Similarly, your creditors want you to continue paying your debts because if you stop paying, it may force them to litigate.

Most creditors prefer to receive smaller amounts rather than to receive nothing at all. This process of negotiation may be brought before a third neutral party called an arbitrator to resolve any debt repayment dispute. This is often done to avoid spending time and money going to court to resolve the dispute. During time period of debt repayment after the debt negotiation process, your cash flow may stabilize.

Cash flow can be irregular

An illusion of invincibility may envelope you when cash inflows start exceeding outflows, but that quickly dissipate when irregular cash flow unexpectedly sets in. Some people turn to more credit cards when this happens, but credit cards may only make you dig yourself deeper into debt.Entrepreneurs ensure that they do not sell anything at a loss when they are experiencing more cash inflows than outflows. Another way entrepreneurs keep the cash flow regular is by offering no discounts and adding more value by creating bundles of products or services. So maintain your former budget, but do not add any more expenses. You will also need to prioritize your debt.

Tackle loans with large interest rates first

Entrepreneurs prioritize debts that affect their business relationships and those with large interest rates and penalties before other loans.  Penalties include having to lose an asset which you placed as collateral for a loan from a lender. So you can start repaying the loan that has either your house or your car as collateral because losing those properties can plunge you deeper into debt.

Debts can affect your relationships if you borrowed the money from relatives, friends or co-workers or when the debt is putting a strain on your marriage. Failing to pay the debt on time can actually end these relationships making you more vulnerable the next time you get into debt. For entrepreneurs, a supplier or vendor may refuse to deliver certain products to a business because of a debt that wasn’t paid.

Generally, you need to have a debt repayment plan, which involves drawing up a budget and sticking to it with the discipline of an entrepreneur. The changes you make may be hard on you and your family but that sacrifice will lead to a more secure future.

Chrissy Helders

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How to Save Money Each Month While Paying Off Debt

You have oodles of debt that you want gone. But you also have other important financial goals, like saving money, that need your attention. These competing priorities can make you feel like you’re trapped in a chicken or the egg conundrum. If you pay down your credit card debt, you’ll have more wiggle room in your budget and can save that extra cash. But, if you save more money, you won’t have to whip out your credit card next time an unplanned expense pops up. So do you pay off debt or save? The short answer is: porque no los dos?

Here’s your plan of attack to slay debt and pad your bank account:

Divide and Conquer

To work on both goals simultaneously, you’ll have to split your available resources between them. But, you need a clear plan to ensure that you allocate your dollars in the most effective way.

To get started, prioritize your debts and savings goals, keeping these things in mind:

  • High-interest debt will sink you. If you only make the minimum payments on your credit cards, you’ll be in the hole for years and pay potentially thousands extra in interest. Get rid of this debt first.
  • Lower interest debt isn’t as urgent. While you definitely want to pay off all of your obligations, “good” debt like student loans and your mortgage do less damage to your financial health.
  • Paying extra on installment loans doesn’t help your budget now. If you sock extra cash at your mortgage or student loans, you’ll reduce the total time you’re paying on them. But — it doesn’t change your required monthly payment amount.
  • An emergency fund will save you in a pinch. A cash reserve will keep you from going further in the hole when something breaks or you lose your job.
  • Start saving for time-sensitive goals ASAP. The holidays, your sister’s destination wedding, and your car registration renewal are all known events. Squirrel away a little bit here and there in the months leading up, and you’ll pay for them in cash with ease.
  • Don’t ignore retirement. It may seem like a million years away, but delaying saving for retirement will have long term negative effects. You’ll miss out on the compounding interest that actually works in your favor. If you can afford it, contribute at least enough to your retirement account to get your employer’s full match.

Choose the Right Mix

Once you’ve got your priorities in order, you need to divvy up your funds in a way that makes the most sense for you. For example, from your discretionary income, you could put 6% into retirement, 50% toward your credit card debt, and 44% toward your savings goals. As you pay off debt and your goals are completed or change, be sure to adjust your mix accordingly.

Remember: While there are some good guiding rules of thumb, how you manage your money is up to you. Personal finance is personal!

Find the Dollars

To make faster progress toward your financial goals, try freeing up more of your existing resources, increasing your cash flow, or both. Here are some steps you can take today:

  • Review your spending. Is there anything you can scale back on or nix?
  • Negotiate your bills. You may be able to get a lower rate on things like car insurance or cell phone service just by calling your provider.
  • Buy smarter. It doesn’t matter if you’re getting groceriesclothing, or shopping online, there are countless ways to get what you need and come in under budget.
  • Earn more dough. Consider picking up extra shifts at work, getting a second job, taking on freelance clients, or selling some of your unwanted stuff.

Remember: While it’s tempting, be sure to use your budget wins and side income for your debt pay off and savings goals, not for brunch and a new pair of shoes.

Final Thoughts

It can be overwhelming to juggle multiple, seemingly-competing financial goals. But if you proactively map out what you need your money to do, you can strike a balance that allows you to live your best life.

This article was originally published at HiCharlie.com

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10 Best Tips for Saving Money

It’s not called “hard-earned money” for nothing and unless you’re amazingly wealthy, all that money requires a lot of planning to ensure it is ending up in the right places. Being intentional with your money requires a good amount of time and effort but creating both short- and long-term goals for your savings can make it a lot easier to start saving up to reach these goals. Whether your goal is to retire safe and soundly at age 65 or to travel around the world twice before you’re 40, it can be difficult to determine the best place to start saving. Consider these following ways to cut back on costs and save your money overtime without flipping your current lifestyle upside-down.

1. Set Goals for Your Savings
If you don’t already have goals set for where you would like to be financially in the following years, now would be a great time to start thinking about it. Visualizing what you are saving for can help to reinstate some money-saving motivation – Are you looking to purchase a car in 2 years? Get married in 5? Retire in 30? Knowing what your target is and the amount you need to save each month to reach this goal is one of the best ways to really gain some inspiration to stop spending and start saving.

2. Uncover All of Your Unused Subscriptions
Be completely honest with yourself – do you really need 4 different movie streaming services? It’s easy to forget just how many subscriptions we have signed up for over the past years, but the end result can be costly. If you realize that the magazine subscription that you have had for 6 years ends up in the recycle every month without ever being read, maybe it’s time to consider cutting that one loose.
This may not save you thousands of dollars a month, but if you’re looking to find quick and easy ways to cut back on unnecessary spending, this is a great place for all of us to start.

3. Make Your Home Greener
This option isn’t only great for the environment – it’s great for your wallet, too. By making more energy-efficient life choices in your home, it may feel like you’re spending more now, but the overall savings will be worth it. A great place to start is with LED or CFL lights to reduce energy usage while also lasting longer than regular bulbs. If you’re really looking to go green, install a programmable thermostat and set your home’s temperature within your financial means or on eco-mode to save even more on energy costs.

4. Buy Generic, Not Name-Brand
Sometimes it pays to be a label snob, other times it doesn’t. When it comes to trash bags, simple pantry items, and even snacks, going generic can be a simple and easy way to save a few bucks every trip you make.

5. Buy Quality Home Products that Will Last
If you’re looking to purchase new appliances, furniture, or other home products, it’s worth it to do a bit of research before purchasing. A reliable appliance may feel like a lot of money now, but you will significantly save money in the long run if you don’t have to repurchase the same item every five years.
When you’re looking to buy something new for your home, take a peek at the reviews; it doesn’t have to break the bank initially to save you money in the long-run, but consider budget-friendly home products such as kitchen utensils, vacuum cleaners, and mattresses that are built to last and stand the test of time.

6. Meal Prep
On average, an American household spends over $3000 a year on dining out. Can you think of other personal financial situations where $3000 would do some good?
It can be difficult to hold yourself back from dining out with your friends during lunch or taking your family out to dinner after work, but it’s worth it to plan out your meals so that you can have a healthy and savings-friendly meal. Meal prepping is great for meals and snacks alike, and is especially handy if you have a big road-trip planned. Skip the convenience stores and fast food lines by preparing snacks ahead of time. Added bonus: meal prepping is way healthier than dining out!

7. Sign-Up for Rewards Programs
It’s easy to sign-up for your local grocery store’s rewards program but be sure to utilize it to its full potential. Take use of their coupons and other deals as often as you can when shopping to watch that receipt start to shrink. This can be done either through signing-up with your email or by registering for a rewards card – either way, let the savings begin!

8. Cut Gas Consumption
Cut your cost of gas in half by carpooling with a neighbor or friend to work. If you don’t know of anyone who is going in the same direction as you but you’re still looking to reduce costs on your commute, consider public transportation instead. Taking the subway or a public bus will not only lower the amount of gas that you have to purchase, but it will also reduce the usual wear-and-tear on your own vehicle. Not to mention your risk of those unavoidable fender benders during rush-hour will be completely mitigated by using public transportation instead.

9. Maintain Your Car
We have all pushed our car’s limits by ignoring the lights on the dash that tell us when something is wrong. However, a very important aspect of owning a car is proper maintenance and can help you prevent surprise issues from popping up in the future. This includes getting your oil changed routinely, keeping your tires properly inflated, and keeping your engine in-check to make sure your car is running as efficiently as possible.

When your car is running properly and you don’t have to worry about random technical issues arising out of (seemingly) thin air, driving becomes a lot less stressful, and a lot more cost efficient.

10. Lower Your Cell Phone Bill
It’s not uncommon to feel like you’ve been tricked into an unnecessary cell phone plan that includes costly data plans, insurance, and unneeded warranties. Don’t be afraid to switch to a simple plan or provider that saves you money upfront – we don’t all need 50 GB of data per month!

Elise Morgan

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