How to Build a Rainy Day Budget

 

 

 

 

 

Many Americans know the importance of building an emergency fund, but few are able to do so successfully. Research from the AARP found that 53% of American households lacked an emergency savings account. 

Not only are Americans unprepared for emergency expenses, but most households would struggle with an unexpected $400 expense, according to the Federal Reserve. These findings indicate that few people have invested in either a rainy day budget or an emergency fund, relying instead on loans and credit card debt when unplanned expenses pop up. 

It doesn’t have to be painful to build a rainy day budget or an emergency fund. We’ll walk you through a few tips to illustrate how to save money, as well as provide a budget calendar to help you stay on track with your savings goals.

What is the purpose of a budget?

A rainy day fund is slightly different than an emergency fund, but the two often get conflated. A rainy day fund is something you can draw from to pay for smaller expenditures – if a major appliance in your house needs to be replaced, or if your child needs braces, for instance. A rainy day fund is important to have to avoid going into debt to cover small inconveniences that will pop up and disrupt your careful budgeting. 

An emergency fund, on the other hand, is your safety net in the event of a big financial emergency; loss of employment, illness, or a global recession, for instance. Most experts recommend building an emergency fund with at least six months’ take-home pay, e.g., your paycheck less taxes and other obligations for benefits and retirement. 

How much do you need in your rainy day and emergency funds? The numbers vary depending on your living expenses and income level. “To cushion against a simultaneous spike in expenses and dip in income, a middle-income family needs about $5,000 in a rainy-day fund but has just $2,000 — a gap of $3,000. Lower-income families need about $2,500 but have just $700,” reported the New York Times. The AARP recommends a slightly higher budget of $10,000 – $50,000 for your emergency fund.

Typically, a rainy day fund is smaller: between $500 and $2,500. There’s no amount too small to start with when you begin saving money. Start somewhere, and make saving a habit – here’s how.

How to save money

If you’re living on a shoestring budget, building both a rainy day budget and an emergency fund can feel daunting. Most experts suggest focusing on your existing expenses first. 

“Creating a rainy day savings strategy starts with getting a handle on any future expenses. For most people, monthly expenses such as house payments, utilities, insurance and groceries stay steady. Other costs are less frequent but not technically emergencies. Make a list of the expenses you’ll probably have to pay in coming years. In addition to car maintenance or house repairs, this could include kids’ braces or veterinary bills,” wrote Nerdwallet

A good way to track your expenses is to use a budget calendar. Use a budget calendar to log every bill due: from utilities to rent or mortgage to paycheck. Log each amount in your calendar to see what’s going out when. 

From there, you can start to estimate how much you need in your rainy day fund and in your emergency fund. For your emergency fund, The Balance recommends that you set a goal and then put aside a small amount each month. “Figure out how much money you’d like to have in your fund, then work backward from there. Divide the amount you’ll need to adequately fund your account by how much you can afford to put aside each month. Then, you’ll be left with the number of months it will take you to reach your goal.” 

When you first start out, you may need a little lift to help get your savings off the ground. Consider working with a community like LiftRocket.

This article is contributed by LiftRocket.

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How to Have Fun (Not) Traveling this Summer

Confession: Traveling during the busy summer season just isn’t for me. In our modern age filled with digital nomads and travel hacking devotees, it’s almost a sin not to be daydreaming about the next summer vacay.

But in my humble opinion, summer travel can be a bit unpleasant. Of course, it largely depends on the destination. But with the swarms of tourists at popular locales — not to mention prices for airfare, hotel stays, and tourist attractions spike — I’d rather stay local during the summer. I’m willing to swap jetting off to different countries for a leisurely bike ride around my neighborhood.

If you have a similar mindset, here are some ways to make the most of a non-traveling summer.

Go on a Staycation

Staycations are terribly underrated. You can use them as an excuse to explore your current town. I’m fortunate enough to live in Los Angeles, where there’s a bounty of art openings, food and music festivals, and delicious eateries popping up all the time. When I spent my summers in Chicago, there were free neighborhood street fests every weekend, concerts at Millennium Park, free yoga classes in the park, and neighborhood gatherings.

I moved a little east of Los Angeles city proper about a year ago, to a small nature area with a population of about 10,000. There are chili cookoffs, gorgeous mountains, and many hiking trails. I’m also looking for a bike to explore my new ‘hood.

Check the calendar section of your town’s website to keep up to date with all the fun, free activities in your town or city.

Create Mission-Based Adventures

You can create what I call a mission-based staycation, such as trying out the best hikes in your area, tasting one ice cream (or a few!) at every ice cream shop in town, or reading every book by your favorite author at the local library.

Some examples: My friend Mel decided to have a  “year of museums,” where she’ll visit different museums and art happenings around town. My other pal Lindsay plans on going on one hike a month throughout the year. Fun can be found right under your nose!

Make Small Tweaks

You don’t need to make a big plan to enjoy the summer months where you live. Try switching out your habits. For instance, try biking to the park instead of driving there. Or enjoy breakfast out in your yard instead of at your dining table with the curtains drawn. You’ll be surprised at how the small changes can really help pave the way to new experiences, or a new way of looking at things. It could even make feel like you’re somewhere else.

Swap Homes with Friends

See if any pals and family members in other parts of town are up for swapping homes for a weekend. You can either do it Airbnb-style or stay with them for a few days — that way you can change up the scenery and enjoy a new neighborhood.

I have apartment swaps planned with pals who live in Hollywood and West L.A. It will certainly feel like a mini-vacation!

Try a No-Spend Weekend

I experimented with a no-spend weekend a few years ago, and not only did I save money, but it was fun! Before I embarked on the journey, I set up some ground rules: I could stock up on food to last me through the weekend, I could use my public transit card, and I was allowed to spend any gift cards. I planned my weekend around free activities and using up my gift cards.

If forgoing doling out cash on the weekend is too tough for you due to social commitments and general temptations, do a test run during the workweek. Because you typically have less free time and social outings, you won’t be as tempted to spend.

Ramp Up Your Side Hustle

If you’re looking to boost your cash flow, summer is ripe for seasonal gigs. Take advantage of the fact that more people are traveling to snag jobs pet sitting or tending to a neighbor’s plants. You can also scoop up more gigs as a rideshare driver or brand ambassador at outdoor festivals. In summers past, I’ve sat for friends’ furbabies and proctored at a local university during the summer session.

I work my buns off during the summer so that I save up for stuff I want, and aim to less some time off during the holidays. Co-worker taking time off? See if you can take extra shifts. Or if you’re a freelancer or gig economy worker, see if your clients are in need of extra help during the summer months.

Save for Off-Season Travel

Rather than put everything on a card and pay it off post-travels, have the money saved up front.  Peak travel seasons for most places tend to generally be June through August. If you’d like to travel during the fall or spring, figure out exactly how much you’ll need by when, and get to work saving your beans.

Besides a short camping trip in June, I only travel in the off-season. I have a trip to the East and Midwest scheduled for the fall and am steadily saving for a trip to Southeast Asia next year. I’ve committed to saving a set amount each week and will bolster my goal with any “extra cash” I earn.

Remember: Staying local doesn’t have boring or induce cabin fever. By getting creative, putting on your exploration cap and making small tweaks, you can have a blast this summer in your city!

This article was originally published at HiCharlie.com

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Creative Ways to Shop on a Budget

blue and brown tote bag

A survey by Gallup in 2019 found that only 32% of Americans maintain a household budget. Roughly half of Americans are living paycheck to paycheck, meaning many of us have to get creative in how we shop for things like groceries, clothes, and entertainment. 

Living on a shoestring budget can be stressful, but it is possible with some of these creative tips to shop and make the most of what you have.

Grocery shopping on a budget

Food tends to be one of the biggest spending categories in anyone’s budget. The USDA estimates that Americans spend an average of 6% of their budget on food; 5% of income also goes to dining out. How can you stretch that grocery shopping budget to go even further?

First, time your shopping trip to capitalize on sales and promos:

Wednesdays: The middle of the week is often when grocers release their weekly circular. “You’ll have first dibs on sale items for the week ahead and, if you’re lucky, the store may still honor price reductions on items you forgot to pick up from the previous week’s sale,” says one expert.

Avoid Tuesday and weekends: Weekends tend to be busier as people shop on non-workdays. Tuesdays can also be crowded as other shoppers try to take advantage of last week’s expiring deals, and therefore sale items go quickly. 

Shop late or early: The hour before closing is when some grocers reduce prices on bakery items or produce items that won’t last until the next day. Early in the morning is also when there is less competition for sale items. 

Next, before you head to the store, download an app. Not just any app, but one that gives you discounts: try Food on the Table, an app that lets you type in your food preferences and then generates a list of recipe options based on current promotions at your go-to grocery store. Or, try Ibotta, an app that lets you retroactively apply coupons to items you purchased by scanning your receipt and claiming deals.  Many grocery stores also have apps that deliver exclusive offers and digital coupons. 

Finally, put your dining out budget into your grocery shopping budget. A meal at a fast-food restaurant costs around $8; if you stop eating an $8 lunch every day during the workweek, you can save $40 a week ($160 a month!). 

How to budget for an apartment

Rent is a big budget item for most people, and there are lots of hidden costs in budgeting for an apartment. Whether you’re on the hunt for a new lease or looking to reduce your utility costs and other apartment expenses, there are a few key things to consider when budgeting for your apartment. 

First, if you’re looking to sign a new lease, try to find an apartment that’s close to public transportation. Longer-term leases (a year or more) tend to be cheaper, as the landlord doesn’t have to search for a new tenant or spend on renovations as often. If there are fixes that need to be made, offer to do them yourself in exchange for a discount on the security deposit. 

If you’re in an apartment and hoping to save on utility costs, go beyond basic steps like turning off lights and turning down the heat. Think about turning off the devices that consume energy in a passive way, like your microwave and water heater that you aren’t using constantly. Winterize your apartment to cut your cooling and heating bills (winterize is a bit of a misnomer, as many of these steps can also keep your apartment cool in the summer). And, avoid running your energy-intensive appliances – washing machine, dishwasher, or dryer – during “peak hours”. Electricity companies tend to discount rates during the night when fewer people are using their grid.

Thrifting and other shopping ideas

What about other expenses: clothes, gifts, and entertainment? There are creative ways to shop on a budget for these items too. 

Thrifting is an obvious choice for saving your clothing budget. Many shoppers also turn to fast-casual brands like H&M and Forever 21 – but be aware that those retailers may be more expensive in the long-term. Spending $10 on a t-shirt that lasts fewer than 10 wears is worse than spending $50 on a shirt you’ll own forever. “Unless it’s practically free, you’re better off buying clothing items from good brands with a reputation for well-made items,” wrote The Simple Dollar.

Look to see if clothes are well made by checking the seams and material. Seams on a good quality item will be perfectly straight, with no dangling strings; any patterns should match up well. The material should be higher-quality. Look for natural fibers and blends like wool, and avoid synthetics like polyester. 

For gifts, go for something thoughtful rather than expensive. Find gifts that are unique to the recipient and require time, rather than cash. For instance, give someone the gift of time by babysitting or hiring a house cleaner. Give your family member a recipe book of meals from your childhood. Or, start a new tradition – holiday cookie-baking, for instance – that leads to memories rather than things. 

Shopping on a budget isn’t always easy. Sometimes, what you really need is a little Lift to cover a shortfall or meet a financial emergency. 

This article is contributed by LiftRocket.

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How Going Green Can Boost Your Savings

Nearly 3 in 5 Americans make ‘green’ resolutions, according to a poll by marketing firm Tiller LLC. Also, 71 percent of consumers consider the environment when shopping — a rise of 5 percent from 2018. Besides the significant impact that adopting a sustainable lifestyle can have on the environment, being eco-friendly is also a great way to save money. With 50 percent of Americans feeling worried about their debt and 84 percent trying to save for a goal, going green may be the perfect answer to help you shave expenses. By adopting sustainable habits, you be bolster your finances in a way that pays off in the long run.

You Pay More UpFront, But Less Overall

Eco-friendly products tend to cost more than traditional alternatives. As more consumers tap into a sustainable way of living, demand for eco-friendly products is on the rise. As a result, prices are steadily rising. A great example is the cost of a reusable cup ($7.50) versus disposable one ($0.0045).

Thanks to the staggering price difference, many Americans are finding it difficult to buy green, even if the intention is there. However, over its lifetime, a reusable product such as the cup can easily repay its higher cost (if used multiple times). The same premise applies to reusable bottles, straws, and containers, in lieu of eliminating single-use plastics in the office or at home. If you are after immediate gratification, there are some sustainable habits you can adopt at home that can help you experience the cost benefits sooner rather than later.

Install Low Flow Shower Heads And Water Aerators

Water usage is a large part of the eco-friendly debate. American households waste 9,400 gallons of water annually, according to the United States of America Environmental Protection Agency (EPA). However, they also estimate that we can reduce our water usage by 20 percent by simply installing water-efficient fixtures such as low flow showerheads.

Showers account for around 22 percent of water usage in households and by installing an expensive water aerator or low flow showerhead, some claim you can save as much as 50 percent of both water usage and heating costs. Most low flow faucets cost $5-$10 while low flow showerheads can average $8-$50, depending on the features and model. With the average American water bill being $70.39 per month, that equates to a saving of $14 per month, using EPA’s 20 percent cost reduction estimation.

Invest In A Smart Heating System

Around 45 percent of a home’s energy goes towards heating and cooling, according to Energy Star. In financial terms, that is between $2,100 and $2,500 each year. A smart home heating system can cost as little as $40 or in some cases, cost as much as $300. However, it allows you to avoid overheating and limit it to when and where it is needed- a key feature in idle home heating. Builder Insights estimates that for every 1 degree Farenheit you reduce your home heating, you use 1 percent less energy. By installing a smart heating system you can expect to see savings of 10-30 percent, starting with your very next heating bill after installation.

Get Into Gardening

With Spring in full bloom, there is no better time to get outside and test out your gardening skills. By composting your food waste and dedicating a small portion of your garden, you can dedicate yourself to a new hobby and grow your own produce in the process- reducing your food bill. Supplies for creating a garden at home are minimal since you can use homemade compost for fertilization. Best of all, once your crops grow the reduction to your grocery bill is immediate.

While on the topic of food waste, adopt a ‘nothing goes in the trash’ attitude in the kitchen. The average household spend on groceries in America can range between $314 in Atlanta to $516 in Seattle, yet 31.9 percent of it ends up in the trash. Bulk cooking and meal prepping can help you use up all your food before they go bad while simple habits like writing and list and checking your pantry or refrigerator before heading to the supermarket can help you eliminating mindless or double buying.

While the cost-saving benefits are often seen in the long term, there are still ways you can do your part for the environment and save money now. All it takes is a bit of DIY, creativity, and commitment to the cause. Your wallet will thank you for it.

Chrissy Helders

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How To Buy A Car On Finance While Repaying Your Debt

A recent report by the New York Times showed that 44 percent of car buyers used finance to purchase their vehicles in 2019. Of that population,The Federal Reserve Bank Of New York estimates 7 million of them are three months behind on their car repayments. This is not surprising since eight in 10 consumers are currently in debt and looking for a way out – or simply a way to keep up. A car has always been a sizeable investment for any consumer; it takes up around 13.5 percent of your gross annual salary. With car loans surpassing $31,000 and rising car finance prices, buying a new car is beginning to seem out of reach for many, especially those that trying to get rid of their debt. Yet you may find yourself in a place where a new car becomes a need. In fact, 85 percent of Americans rely on their cars to get to work. If this happens, it is possible to do both successfully with a little planning and the use of clever tactics to minimize the impact of adding car finance to your debt.

Go Second Hand

One great way to reduce the financing charges of buying a new car is, of course, to reduce the purchase price. Second-hand cars cost a fraction of a new car’s price, and therefore come with lower finance payments if you purchase one on credit. In May 2019, the average cost of a new car rose to $36,718. With average interest rates at 6 percent, consumers end up paying $2,203 in interest annually. However, a used car can cost around $20,000, according to estimates from Kelly Blue Brooke, which halves your interest charges and overall monthly repayments. The reliability of the car model you do choose will play a large part in minimizing the financial impact – less reliable used car models would require more repairs and upkeep. Expert and driver ratings and reviews both have a role to play in informing you about a vehicle, and incorporating these into your decision will help you pinpoint cars with high-reliability ratings and the best resale value.

Maximize Promotional Credit Card Balance Offers

Typically, financing a car purchase using a credit card is not advised since they come with notoriously high-interest rates. However, there are also ample credit card offers out there, including 0 percent APR or on balance transfers. The key to this is being able to calculate and repay the amount before high-interest kicks in. Alternatively, you can use a credit card to pay just a part of the price and enjoy the benefit of credit card protection.

Another nifty financing option is to check out your local credit union or alternative financing institution. A little research and the use of loan comparison websites like BankRate.com and ELoan.com can help you identify interest rates in your local area and great car finance offers, like Bank of America’s interest rate discounts for current customers (2.99 APR for new car purchases or 3.49 percent APR for used car financing). Credit unions like the NASA Federal Credit Union and Connex Credit Union also match these rates with a loan term of up to 84 months.

Splurge on Your Debt Repayment And Capitalize on A Better Auto Loan

When it comes to paying a downpayment on your car or putting it towards paying down your loan, it makes sense from an interest rate point of view to pay down your debt. As you repay your debt, your debt to income ratio and credit score increases, as does your FICO Auto Score – key factors that affect your auto loan interest rate, loan term and acceptance.Building a better credit profile may also increase your chances of securing promotional offers from your dealer, such as 0 percent APR for a limited time. This essentially reduces the financing and overall cost of a new car, making it more tolerable to add to your current debt levels.

Keeping up with your debt repayments can be a precarious process for many. Add in a sizeable new purchase like the cost of a new car, and it can easily go awry. However, you can do both if you need to and still stay on track with your debt. It all comes down to having the right information and making the right financing choices. With this article, you’re halfway there.

Chrissy Helders

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Why Taking Responsibility Could Be An Important Start To Addressing Your Debt

A majority of Americans are carrying some form of debt; approximately 77 percent of them according to Northwestern Mutual’s 2018 Planning & Progress study.The average debt per person has surpassed $37,000 in the last year and more people are finding it difficult to face their increasing debt. While having there are a host of debt management tools and apps available to help you on your journey, the key to resolving it begins with taking responsibility both for your past spending habits, and your future. If one is to become debt free, it takes a good amount of sacrifices, cost-cutting, and self-reflection. The sooner you accept responsibility, the earlier you can begin to make progress in your debt journey. Here are a few ways you can face your debt problems; and why it works.

Change The Narrative

The first step in conquering your outstanding bills is to change the way you view it. Debt can impact much more than your financial health; debt can affect your mental well being as well. Therefore, changing the way you approach it is important for many more reasons than simply being free of repayments or rebuilding a credit score. While it is a financial obligation and can be a source of financial stress, focusing on the end result can be much more motivating than looking at the current problems it presents. So instead of focusing on how little disposable income you currently have thanks to debt repayments, try considering what you would like to do with the cash once it is no longer pledged to repaying debt. Changing your view also means embracing responsibilities for repaying your debt.Being accountable allows you to better yourself and the decisions you make when it comes to your finances; allowing you to truly move forward and become debt free (and remain that way).

Get Comfortable With Your Means

Often, the reason that many of us end up in debt is that we purchase or spend on items that are not within our current means or income bracket. As a result, we end up using credit cards or other financing options and having high-interest charges compounds it further. Instead, get comfortable with your income without any reliance on savings, credit cards or other financing sources. Can you afford your current lifestyle on your monthly income? If not, this is a sign to examine the different aspects of your spending and get to budgeting. It can also pinpoint the problematic areas for you when it comes to debt. Knowing your triggers is a vital part of the battle against debt.

Take The Emotion Out Of It When Dealing With Money

Money worries are the number one trigger when it comes to stress in America. Being emotionally invested when making financial decisions can cloud or influence our judgment. As a result, you may end up choosing not the best option financially. One good example is cutting costs to put extra money towards repaying your debt. Often we may be hesitant to reduce money spent on items or activities simply because it has a meaning to us but it is not necessarily a need in our daily lives. Taking the emotion out of it means being objective and a great way to do this is writing everything down on paper. Focus on the numbers and your debt plan; this will help you stick to your resolve.

Chrissy Helders

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6 Steps to Ditching Your Debt

Let’s face it — debt sucks! Keeping up with the payments means less cash to do what you really want. And, the interest makes the burden grow, often faster than your payments reduce the balance due. With a solid plan and a lot of determination, you can ditch your debt and get back to having more fun.

Not sure where to start? Here are Charlie’s 6 steps to ditching your debt:

Stop the Bleeding

Unless it’s completely unavoidable (like that student loan for next semester), don’t take on any more debt. Avoid new credit cards, lock up/cut up the ones that you have, and consider freezing your credit. It’s important to take control.

Assess the Damage

Now, it’s time to see what you’re up against. Make a list of all of your debts to include who you owe, how much you owe, the minimum monthly payment, and the interest rate. Then, brace yourself and determine the grand total.  (It’s OK to have a glass of wine, a chocolate cake, or a bubble bath after this step!)

Choose Your Strategy

There are two main ways to tackle debt: the snowball method or the avalanche method. With the snowball method, you pay your debts off from smallest to largest amount owed. This is great for momentum building — you’ll feel like you’re #winning pretty quickly. With the avalanche method, you pay off your debts from highest to lowest interest rate. Ultimately, the math works out in your favor here because you’ll pay less in interest overall. If you’re paying off debt, ignore any haters, because it’s a victory regardless of how you do it!

Tighten Your Purse Strings

Trimming your budget may be painful at first, but crushing your debt will feel amazing. There are some easy places to cut spending first: eating out, shopping, travel, entertainment, etc. If there are things you can’t cut completely, find hacks to spend less. Use gift cards, skip the expensive cocktail at dinner, or shop thrift stores. If you can’t cut these categories any further, consider going more extreme. Get a roommate, sell your car, or move back home. These strategies are hard, and may not be possible for you (or you’re already doing them!), but every dollar helps.

Hustle for Extra Cash

In addition to cutting your spending, try earning some extra money specifically to go toward your debt. Look for side gigs, sell your stuff, or offer freelance services.

Track Your Progress

Ditching your debt is hard work. It takes commitment and willpower. This process could take a long time, so it’s important to track how far you’ve come to keep your motivation level high. Be sure to reward yourself (in a budget-friendly way!) as each account balance hits zero.

Remember: You’re not in this alone. Charlie can help. Just tell him ‘pay off debt’ and he’ll guide you.

Share with Charlie: What’s your favorite debt pay off story? Do you have any tips for the community?

This article was originally published at HiCharlie.com

 

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How Side Hustle Agency Work Can Help Pay Off Debt

Due to mounting financial pressures and student loan debt, 51% of millennials report having at least one side hustle that they rely on for income outside their primary job. Among the many pieces of advice that debt relief professionals give to individuals looking to relieve or diminish their debt is to find unique ways to put more money towards paying off your debt, and a side hustle is one of them. While this might include taking on additional hours at work, it can also include seeking other job opportunities on the side or, even better, signing up with an agency who will find you work when you need it.

Benefits of Agency Work

Aside from being a great way to expand your professional abilities and learn something new, deciding to work for an agency allows you to work pretty much as much as you like. This provides you with more flexibility, meaning you can make it work around your existing work schedule or within the hours that you need according to your lifestyle. While agencies sometimes take a portion of your pay for their services, you will often find yourself working fewer hours for better pay, which is great when you’re trying to save money in order to increase your debt payments. By working fewer hours for, generally, more pay, you will be able to make more than the minimum payment on your debt, which has actually been shown to only prolong a debt payoff strategy.

Think About What You Love

Generating income from a hobby is everybody’s dream, and it’s a dream that is easier to reach than you might think. If you are going to try and monetize a hobby or gain income from a side hustle, it’s important to first figure out what exactly you’d like to do. The work will be easier and more engaging if you are pursuing something you love to do or are already making a career out of. This is easy to do as agencies exist for pretty much every industry nowadays and can even specialize in particular areas, such as agencies that help travel nurses find the right fit or ones that will pitch you to potential employers according to your particular skill set.

Pay Off Your Debt Wisely

Assuming you have already created a budget and know how much you need to save in order to increase your debt payments, you will want to be smart about how you spend the extra savings. One strategy is to increase the frequency of your payments to weekly or bi-weekly in order to immediately put it towards debt instead of leaving it in your bank account where you might be tempted to spend it. Another strategy is to put all of your bonuses towards paying off debt, and if you are freelancing, working with an agency or earning money from any type of side hustle, it’s smart to consider this “bonus” money. Ensure you are able to meet your basic needs with your normal job’s income and use all of the additional money for debt payments.

Working Smarter Not Harder

Finding work through an agency that specializes in your career path, or even with one who will find general, temporary work for you, is a great way to increase your cash flow in order to pay off debt faster. Agency work provides you with flexibility while also ensuring you’re developing your professional skills in a way that will help you long after your debt is paid off. Be sure to budget wisely and make more than the minimum payments and you’ll find yourself progressing professionally while also reducing your debt. It’s a win-win for you and your career.

Chrissy Helders

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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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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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