Downsizing Your Home to Reduce Debt

Dealing with personal debt and drowning in credit cards is a tricky business no one wants to experience. One of the solutions for this kind of problem can be an aggressive debt payoff method or an elaborate debt management plan. However, if you own a home, there is one more option you might be overlooking – downsizing. Downsizing is something many homeowners opt for when it comes to reducing debt nowadays. It’s a more straightforward solution to financial problems, but it’s something you should get familiar with before committing to the process. So, if you’re thinking about downsizing your home to reduce debt, keep reading for some helpful information regarding the topic!

If you’re thinking of ways to reduce your debt, downsizing might be your solution.

What does downsizing require?

Downsizing a house is a process that implies swapping your current home for a smaller or more affordable one. For example, you can downsize to a condo or townhouse, or relocate to a house similar to yours in a less expensive part of the city. If done smartly, downsizing your home to reduce debt can be a huge success. So, what will you need to do to make this plan work?

You’ll have to put your current home on the market and come up with enough funds to buy another, more affordable one. To make this two-step transaction easier, you’ll have to have a strong credit score and a low mortgage rate. This will help you get another mortgage for the new house and will ultimately lead to getting rid of debt altogether.

If you want to qualify for a mortgage loan, it’s preferable to have a credit score over 700. Additionally, if you have mortgage obligations for your current home and want to pay it off quickly, you’ll need a sufficient amount of home equity to cover all the expenses. They include selling your property, covering the down payment for the new house, and paying off your debt in full.

Obstacles to look out for when downsizing your home to reduce debt

Selling your current home and then buying a smaller property may seem simple, but it isn’t. It can be challenging to obtain a mortgage for a new property while your present mortgage is still active. You’ll need a good credit score and sufficient funds to convince the lender that you can undertake a second mortgage.

If you can’t meet these financial necessities, don’t despair! There is another solution to downsize your home and still reduce debt. You can always sell your current home first and then use that money for the down payment for the new one. Of course, don’t do this on your own; consult your financial advisor and real estate agent first! With their professional advice and the use of today’s technology, you can improve your finances and decrease debt.

However, you must prepare yourself for another common challenge. Many homeowners overprice their homes because they’re not aware of their actual value. You may need to downsize to a condo rather than a house if you want to reduce debt. So, before getting your hopes up, get a professional opinion about this and then start planning and budgeting.

When it comes to downsizing, you’ll either have to have a great credit score or a low mortgage.

Is smaller space always more affordable? 

Not every kind of downsizing will reduce debt. You need to think smart, create a budget, and follow up on it to succeed. For example, if you do downsize to a smaller house but move to a neighborhood with a more expensive lifestyle and higher monthly utilities, you’re back to square one. That’s why you need to think about all these things before you actually move to a new place.

The fact is, if you downsize to a smaller place in an affordable neighborhood, your mortgage will probably be lower, you won’t have a massive bill for heating the house in the winter, and you won’t have as much maintenance. These are all perks of living in a smaller space. It’s cozier, and it brings families closer. As a plus, the fact you reduced your debt by downsizing will make you feel comfortable in your small home even more! You’ll be thankful for it, and so will be your bank account.

How much does downsizing cost?

Even though people are downsizing their homes to reduce debt, the sole process of downsizing is not cheap. That’s why you need to involve experts and take their advice regarding your finances and real estate.

Some of the main costs you can’t forget are taxes, legal fees, moving expenses, and remodeling. That’s why you have to find out the actual value of your current home, close the sale and then look for a smaller place that can fit into your new budget. Of course, if you paid off the majority of your current mortgage, you can focus more of your budget on reducing your debt. The important thing is to be aware of your finances at all times and not fall into the trap of adding more to your debt.

Don’t think downsizing won’t cost you a few bucks; it definitely will.

It’s time to make a plan for downsizing your home to reduce debt!

As you can see, downsizing can be quite good for your bank account, if not profitable. However, it’s not an easy process you can do on your own. That’s why you need a plan. So, here are some crucial points you have to consider when downsizing your home to reduce debt:

  • Calculate all the numbers: before taking the first step, you have to know whether downsizing will be profitable and if you will be able to pay off your debt or not.
  • Hire a professional financial advisor and real estate agent: in order to get an accurate picture of your financial situation and the value of your current home and the new one, you’ll have to consult experts; this way, you’ll know at the beginning what your opportunities are.
  • Make your current home desirable for potential buyers: since you want to have the highest possible home equity, make sure to maximize its pros and minimize its cons.

Now that you learned everything about downsizing your home to reduce debt and you have a plan of action, it’s time to act. Finally! So, get a hold of your bank statements, contact the experts and start the process. Good luck!

Dorothy Carter

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Money-Saving Tips for Renters

Not owning your own home is expensive – monthly rent will put quite a dent in your budget. And yet, it is only one of many necessary expenses you have to plan for. With all the costs piling up, how will you save money for buying your own home down the line? The answer lies in these money-saving tips for renters. From getting a better deal on rent to making small changes in your everyday life, here’s what you can do to increase your budget while renting.

The best money-saving tips for renters looking to lower housing expenses

If you’re trying to save money while still getting out of debt, the best thing you can do is to cut down on the biggest expenses. Your rent is chief among them. So if you can find ways to pay less for rent, you’ll surely be able to save some money.

Pick the right location

Location is everything when it comes to housing. The better and more sought-after the location, the higher the price of the property will be. Renting downtown, near the city center, in safe and newly built neighborhoods, or in areas that have excellent traffic will be expensive. So try looking in neighborhoods that aren’t that popular. You might not be as comfortable there, but it can save you a lot of money.

Look for properties within your budget

It’s tough saying no to your dream home. So if you find the perfect place to rent, you might convince yourself to take it even if it is a bit on the expensive side. Don’t do this! Stick to the 30% rule – your rent should not exceed 25-30% of your monthly income after tax, and don’t even look at places more expensive than that. That way, you can be reasonably confident you’ll be able to afford rent every month, and you won’t fall in love with a property you can’t pay for. If the house or apartment isn’t exactly what you’re looking for, you can always personalize it on a budget; it’ll cost you less than renting outside of your means.

Opt for a longer lease

This may sound counterintuitive, but longer leases are better for you. It’s true that they are a commitment and that you’re spending more money when you rent for a longer time, but you need to be realistic. What are the odds that you’ll buy your own home within the next few months? If you can’t achieve that, you’ll need to look for another place to rent. So sign a long lease – you’ll get a better deal. Most landlords offer lower rents for long-term contracts.

Get a roommate

Every burden is lighter when you share it; rent is no exception. If you split the rent with someone, you’ll both have a much easier time paying it. You may even be able to afford a better place. Of course, you’ll have to share your space with someone else. This means you might need to get rid of some of your things or put them in storage. Because of the risks associated with cheap units (such as poor conditions and a lack of security), storage is something you shouldn’t save on. But with the money you save on rent, you’ll be able to afford it.

The best money-saving tips for renters looking to lower overall expenses

In addition to cutting down your rent, you may be able to save on other everyday expenses. This will help pad your budget a little and make it easier for you to save money.

Plan your budget in advance

One of the best habits to get into when you’re trying to avoid debt is planning a household budget. Start by calculating your income and your expenses. Track how much you’re spending and on what. Where can you cut costs? What are some things you simply must pay every month? How much can you set aside for emergencies? Put it all on paper to make it clearer. Then, set aside a certain amount of money for each category of expenses – housing, transportation, groceries, hobbies, savings. Finally and most importantly, stick to your budget! That way, you’ll avoid sudden, unexpected, and unplanned impulse spendings.

Walk, bike, or take public transport instead of driving

Owning a car is a great perk, but it’s not cheap. If you live in a rural or suburban area, you might not really have a choice. But if you can do it, giving up your car can be the best financial decision you’ve ever made. You’ll save thousands of dollars on insurance and gas alone. So if you can walk or bike to work or live in a city with well-developed public transport, consider those alternatives.

Prepare meals at home

Food is something you obviously can’t give up. But you can make it cheaper to eat. First, stop eating out and ordering in (or at least, cut down on it drastically) – this is the biggest money-drainer when it comes to food. Then, get into meal prep. You’ll be able to buy tons of groceries in bulk, which usually means taking advantage of deals. Next, take one day to prepare food for the week to both save time and use up all the groceries instead of wasting food when it goes bad. This is a great tip for both singles, couples, and large families on a budget; although it can take time to prepare all the food at once, it will drastically cut down your food costs and can even make you healthier.

Other money-saving tips for renters to consider

These are the money-saving tips for renters that will make the biggest impact on your budget. But if they’re not quite enough and you find yourself struggling with your finances still, consider also:

  • saving on utilities by being more careful with water and energy consumption;
  • shopping second-hand for furniture and clothes;
  • using your powers of negotiation to lower rent or argue for a raise at work;
  • changing your mindset and focus more on experiences rather than material things;
  • asking for help from family and friends – it’s better to owe them than go into debt.

Implementing all of these practices might be hard in the beginning, especially when it comes to big changes like living with a roommate, giving up your car, or cooking at home. But it’ll be worth it in the end because you’ll save tons of money!

Dorothy Carter


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4 Ways to Minimize Your Student Loan Debt

Higher education is, for most people, a stepping stone to better career and financial success. That said, the steep tuition fees prevent many Americans from obtaining their degrees, or lead to them taking on large student debts. In fact, CNBC estimated that the average debt load of student loan borrowers of all ages is a staggering $39,351.

Erasing student loans is another discussion altogether, but there are ways you yourself can minimize your debt before you even step into the hallowed halls of academia. Here are our top four tips:

Apply for Scholarships and Grants

If there are scholarship and grant programs available, every student should, needless to say, take their chances. There is no harm in applying for one even if you weren’t able to maintain a 4.0 GPA in high school.

Students with exceptional transcripts and high standardized test scores do get priority in most universities and colleges. For instance, the Ohio State University-Columbus offers academic scholarships like the Eminence Fellows program, similar to Indiana University-Bloomington’s merit-based Wells scholarship. However, there are also scholarship opportunities for community service, like the Equitable Excellence Scholarship or the Prudential Spirit of Community Awards offered in various educational institutions. Finally, the Hispanic Scholarship Fund is available for STEM students with a Hispanic heritage, while incoming African American freshmen can apply for the Ron Brown Scholarship.

Explore Remote Learning Opportunities

Remote education has risen in popularity due to the COVID-19 pandemic, allowing a wide range of students to benefit from the flexibility and accessibility of online learning. Online schools have taken huge steps in creating collaborative learning environments for their students, so there’s no need to worry about the quality of education you’re receiving. Kristina Coleman, a student from Maryville University’s online business administration degree, pointed out that she’s able to have “great interactions” with her peers and support from the faculty, despite her program being completed remotely. This support network is crucial for online universities, and Maryville’s 96% success rate of graduates forging careers in their chosen field is proof of the value of remote education.

These degree programs are also more cost-effective compared to traditional schools because you can cut costs on school supplies, housing fees, and application fees. By obtaining your degree online, you can also keep a day job while having access to a wider range of courses. This allows you to invest in your education while you’re solidifying your financial security through work at the same time.

Consider Schools that Offer Various Financial Options

Though public universities are funded by taxes, many of them remain unaffordable for students who come from low-income families. If you’re facing the same dilemma, consider universities that offer more affordable and flexible options for students.

NPR promotes need-based programs offered by The University of North Carolina at Chapel Hill and the University of Wisconsin-Madison for students with great financial need. Aspiring students can apply for UNC’s Carolina Covenant, which offers grants, scholarships, and even work-study options! On the other hand, the University of Wisconsin-Madison offers the same benefits through the FASTrack program. Finally, do not overlook community colleges, which allow students to learn relevant skills and earn credits so that they can transfer to a university for a lower fee.

Create Strategies for Your Loans

Before you sign on the dotted line and make things final, consider how much you really need. Student loans can be avoidable, but you have to carefully calculate all the expenses first. Maybe there are cheaper housing options off-campus or second-hand bookstores that provide what you need. Or, maybe, there is a more affordable university offering the program you want. You can minimize your debt by only taking out the amount that you can pay off at the moment.

Afterwards, study and implement our 6 Steps to Ditching Your Debt. For example, you can utilize the snowball method by paying off the smallest to the largest amount, or the avalanche method where you pay off the debts with higher interest rates first. Furthermore, look into various repayment plans offered by your university or the Department of Education.

Your education is an important investment. Consider these various financial opportunities and learning options so that you can propel yourself forward and achieve success.

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By Jona Simmons

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5 Ways Large Families Can Cut Expenses

Fewer and fewer young people are dreaming about having large families, and one of the main reasons for it is financial – raising children is expensive, and most people fear they won’t be able to afford the expense. But what if you could make it more affordable? There are several highly effective ways large families can cut expenses that will help you live your dream without going into debt. So don’t give up: financial stability is not just for people who prioritize their jobs. You can both have a large family and save money if you’re smart about it.

The best ways large families can cut expenses

Large families come with significant expenses. So you’re probably looking for just about any way to spare a few dollars. But with so many money-saving tips online, how will you know which tactics work best? The answer is simple – these are the 5 most effective ways for your large family to cut living costs:

#1: Plan your budget (and stick to your plans)

When you have a large family, saving a couple of bucks every few weeks is simply not going to cut it. You need to be more systematic in your efforts – that’s the only way to cut costs consistently and considerably. This means that you need a plan, so your first step should be to create a household budget. Don’t be vague about it either; putting hard numbers on paper is the only way to honestly assess the situation. How much money are you (and your partner) bringing in every month? How much are you spending on necessary expenses like housing and utilities? What about groceries, clothes, hobbies?

It’s important to be realistic about your finances when planning a budget. If you’re not sure about the exact numbers, always estimate your earnings low and your expenses high – this prepares you for the absolute worst-case scenario. Finally, remember to set aside a bit of money for things you and your family enjoy doing. Denying yourself fun will only make it more tempting, and you’ll end up splurging on something eventually. Planning how you’ll spend every dollar in advance will prevent this.

#2: Change your mindset

Here’s something you already know: things cost money. New clothes, school supplies, birthday gifts – all of these things will inevitably put a dent in your budget. Some of them are unavoidable expenses, but some you can replace with something even better than material things – experiences and memories. There are tons of ways to have fun without spending much money. So next holiday season, skip buying gifts; plan a family hike in the local national park, or a visit to the grandparents’ house. You may still need to pay for something, but it’ll be less of an expense than buying expensive gifts, and the memories will last forever. Furthermore, focusing on experiences will teach your children an important lesson – that material belongings aren’t the most important thing in the world.

#3: Look for deals and discounts

It seems very obvious, but when it comes to unavoidable expenses, you should always try to get the best possible price. To achieve this, you may need to learn some creative ways to shop – shopping later in the day can get you discounts on baked goods, and bins for products close to expiration date can be a veritable treasure trove, for example. Other things you may want to consider are shopping in bulk, subscribing to store newsletters to learn about sales, thrifting, and couponing.

#4: Give up on some luxuries

When you’re planning your budget, one of the things you should pay attention to are expenses that you can cut out entirely. You may be spending money on things that make your life easier, things you’re used to, and things you enjoy which are not strictly speaking necessary. Smoking, drinking, eating out, or getting food delivered ate good examples – you can give up bad habits and start preparing meals at home to cut down on your living costs.

There are other, seemingly more important expenses that fit this bill too. For example, if you own two cars, you can sell one or switch to public transportation entirely. If you were planning on repainting, redecorating, or remodeling an old home, ask yourself if that’s really necessary; adding a personal touch is not complicated, so you can personalize your home for free and postpone major changes until you have more solid finances. Even buying new clothes for yourself and your children is not always necessary – you can alter or sew instead to spare a bit more money.

#5: Focus on the largest expenses – housing, transportation, loans

If you’re serious about saving money, cutting down on minor expenses is secondary. While giving up Starbucks and not taking your kids to McDonald’s will add to your budget, it’s not as impactful as getting rid of the real money-drainers like housing costs or debt payments. So try to find ways to lower your biggest expenses. Consider downsizing to lower your rent or mortgage rate. Walk, bike, or take the metro instead of driving to save on transportation expenses. Finally, pay off your debts and loans so you’ll have more cash coming in.

Other easy ways large families can cut expenses

These five tactics will help any big family save quite a bit of money, but they’ll work even better if you supplement them with everyday habits for saving money:

  • always make a list before grocery shopping – you’ll avoid unexpected and unnecessary expenses
  • get the most out of everything you buy – don’t waste food, don’t throw away clothes just because they’re out of style, and use everything you own for as long and as much as you can
  • use cash, not card – it’ll be easier to keep track of your spending when it’s material
  • avoid loans and credit when possible – you’ll end up paying more in the long run

The benefits of finding ways large families can cut expenses

Some of the ways large families can cut expenses may feel like a downgrade. After all, you’ll need to invest time and effort for an often less convenient life than before. But remember: this doesn’t have to be forever. If you can save enough money for enough time, you’ll eventually have more to splurge on things you enjoy. Besides, you may find that some of these things are a lot easier than they seem. And who knows, maybe you’ll even get some enjoyment out of learning to sew or planning free activities for your kids. It’s really all about the attitude you approach the situation with.

Submitted By – Dorothy Carter – Arizona Moving Professionals


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The 3 Smartest Ways to Use Your Stimulus Money

More stimulus checks were sent out in early June: 2.3 million of them, some of which were “plus-up” payments to people who were due more money once their tax returns were processed. In July, Child Tax Credit payments for people with children are scheduled to begin and will continue monthly. Plus, there’s talk of a fourth stimulus check in Congress, though that’s still an iffy proposition.

We’re still feeling some of the fallout from the pandemic, and the stimulus checks have had an impact, both on our pocketbook and our stress levels: Between December and late April, rates of food insufficiency fell by 40%, financial instability was down by 45%, and depression and anxiety dipped by 20%.

How have people used their stimulus checks so far — and more importantly, how should you use yours? Here are some things you should consider.

So far…

It turns out, the three different stimulus checks have been used slightly differently.

  • Nearly three-quarters (74%) of the money dispersed during the first round, or CARES Act, was spent, while 14% of it was saved and 11% of it used mostly to pay off debt.
  • During the second round, more than half of recipients (51%) used most of their money to pay off debt, while 26% saved most of it, and 22% spent most of it.
  • That ratio held up pretty well for the third disbursement: 49% used it mostly to pay down debt, 32% mostly saved it, and 19% mostly spent it.

Check recipients were also grouped into three income categories: under $75,000, $75,000 to $150,000 a year, and $150,000 or more a year. For all three disbursements, those with higher incomes were more likely to save their money than those who made less.

Moving forward…

Of course, none of this means that’s how you should use your money if you happen to fall into a particular group. Your situation is unique to you, and your financial needs should help dictate what you do with the money. Here are three of the smartest ways to spend your stimulus money.

  • Pay Off Debt

A stimulus check is a lot like an IRS refund: It’s a one-time windfall that you can’t count on to come around again, regardless of what chatter you might hear in Congress.

That’s probably why so many people used it for the one-time purpose of paying down debt in the second and third go-rounds. It’s not a bad idea. If you’ve got your regular monthly expenses under control, but you have significant debt — especially debt with high interest rates — you can save a good deal of money by paying off a big chunk of it.

It’s possible that more people spent the first stimulus check because they needed it to cover immediate expenses like food and utilities. Then, as their financial situation improved (either because of the first check, because they got more income, or both), they were free to use more of the second and third checks to pay down debt.

  • Rebuild Your Credit

Did you take a big hit financially during the pandemic? Maybe your credit suffered; if so, it would be wise to pay any overdue or delinquent bills and clear your books of any problems that could affect your credit history. Then, check your credit report to find out where to go from here.

If your credit score has suffered, you can take steps to rebuild it by setting aside some money to open a secured credit card account. These types of credit cards require a deposit, making it easier for people with low or no credit to qualify. Otherwise, you use it like a regular credit card and make minimum (or larger) payments every month.

That will get your credit score headed in the right direction in case you want to apply for a mortgage, car loan, or personal loan down the road.

If, on the other hand, you have good credit and you’re able to handle all your bills without stimulus money, think about investing it or putting it away for retirement or some other future goal: a vacation, your kids’ education, etc. Or maybe invest it in your business or education to acquire more skills and increase your marketability.

  • Be Prepared

The pandemic blindsided most of us, but it also reminded us of how important it is to be prepared. Of course, we can’t be ready for everything, but we can do our best to head off the crises we can foresee.

Do an inventory of your health, car, and home insurance coverage and see whether it’s adequate for your situation. Consider risk factors, deductibles, what you can afford to pay monthly, and what costs you could absorb if the worst occurred.

Think about problems that could occur at home if your house were damaged by a severe storm, for example, or if your plumbing sprang a leak or your air conditioner stopped working in the middle of summer. Savings for emergencies such as these, and the kind of maintenance that can prevent some of them, is always a good idea.

Along those same lines, take care of vehicle maintenance you have been putting off. Changing your oil, replacing your tires, and getting new brake pads regularly will help your vehicle last longer and help you avoid more costly problems, saving you a lot of money in the long run. It’s also a good idea to invest in an emergency repair kit for your car, truck, SUV, or RV. Include things like a jack and tire iron, road flares, flashlight, jumper cables, a tire gauge, and any items you might need to deal with cold weather, like a foldable shovel, ice scraper, and extra antifreeze.

In the end, the smartest way to use your stimulus money depends a lot on your personal situation. So take stock of where you stand, see where it would be best put to use, and go from there.

Jessica Larson,

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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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Why is it important to pay off credit card debt when you are applying for a mortgage?

When you are applying for a mortgage, you should make payment to your credit card debts first. There are certain reasons for this logic.

If you are carrying a large amount of credit card debts then there may be less chance of your home loan getting approved. Because before approving a home loan the lender will check your DTI or Debt To Income Ratio. The maximum the debt amount will be to the ratio of your income the less chance for you to get your home loan approved.

But the Debt To Income ratio is not the only important factor you should be concerned about before applying for a mortgage loan. There are other factors also.

You can have a detailed look at all the important factors you should know before applying for a mortgage. 

First, take a look at the Debt-to-Income ratio

As we have discussed in the introductory paragraph, the lender can assume the risk factor from the DTI ratio before providing a home loan to a borrower. Because, if the debt amount of the borrower is too high then chances are the borrower can default on the loan amount.

Usually, the lenders follow a rule that the borrower can have a home loan if the DTI ratio is a maximum of 43% of the particular borrower.

So, a borrower who needs a home loan should repay some debt amount first, it will help the borrower to reduce the DTI (Debt To Income) Ratio.

Thus the borrower can qualify for a home loan with a favorable interest rate.

Secondly, you should be aware of the credit utilization ratio

Before approving a home loan, the lenders check the credit score. The credit score largely depends on the credit utilization ratio. The credit utilization ratio means you have utilized upto what percent of your credit limit.

Your credit score will be low if you borrow closer to your credit limit. Thus the chances of your getting approval for a home loan with a favorable interest rate will be less.

The strategy you have to adopt is to pay off at least a portion of your credit card debt. It will help you to make your credit utilization ratio low and you can get approval for a mortgage with a favorable interest rate.  

Thirdly, paying off credit card debt will make the burden less on your monthly income

You have to remember one thing that your income is limited. You are managing your spending, your credit card debt payment within this income.

With the monthly mortgage loan payment, a new debt burden will be included in your income. Thus if you pay off the credit card debts, you will have less debt payment on your shoulder.

You can pay off the monthly home loan payment in a tension-free manner. 

Why it is important to pay off your credit card debts before applying for a mortgage

When you are going to apply for a home loan, the lender will, first of all, check your credit score and the DTI ratio.

The interest rate of your home loan will depend on your credit score and the DTI ratio. Be it a secured loan or an unsecured loan, the most important factor is the interest rate.

The lower, the lender, will offer you an interest rate the quicker you can pay off the principal balance.

That is why it is important to pay off your credit card debt quickly when you are thinking about taking out a home loan. It will help you to improve your credit score and subsequently, you will get approval for the home loan with a favorable interest rate.

Not only your credit card debt, if you have any other loan burden you should try to pay it off also. You can search the internet regarding the right way to pay off debt. Thus you will be free from any unsecured debt burden.

Final words,

You may have already understood that the lenders will check your affordability first before approving a home loan to you. Whether or not you can afford a home loan payment, your lender will come to know about it when they will check your credit score and DTI ratio.

So, when you can show an impressive credit score and DTI ratio to your lender, chances are you can get the home loan with a favorable interest rate. Thus it is important to pay off your credit card debt before applying for the mortgage.

Author Bio: Phil Bradford is a financial content writer and an enthusiast. He has expert knowledge about personal finance issues and he is a regular contributor of IAPDA. His passion for helping people who are stuck in financial problems has earned him recognition and honor in the industry. Besides writing, he loves to travel and read books.

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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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How can you manage your credit score once you retire?

Are you on the verge of retirement?

If yes, you might be planning to relax once you hit your golden years. That’s why you might have paid off a mortgage or any other debt obligations so that you won’t have to worry about making debt payments after retirement.

In short, you have been managing your finances in a good manner. And thereby, it might have helped you to build a decent credit score. But as you are going to retire, you may let your credit score droop, thinking that it won’t be required after retirement.

Well, you are not alone. Many retirees have a preconceived notion that credit score is of no use after leaving the workforce. But it’s not true. A credit score is equally important after your retirement too. Your credit score may be checked for various reasons like:

  • After retirement, if you are stuck with mortgage payments, you can refinance it to a lower rate.
  • You may feel like applying for a part-time job after retirement and the employer can check your credit score.
  • In most states, auto insurers check your credit score to decide your premium amount. So, a lower credit score can help you to fetch lower premium amounts for auto insurance.
  • You want to opt for a business loan to open a small business after your retirement. The lenders might deny your credit application if you don’t have an adequate credit score.
  • You want to help your children or grandchildren to take out loans by cosigning for their loans.
  • If you need to take out a personal loan for covering emergency expenses, lenders will check your credit score to determine your creditworthiness.

So, precisely, the credit score plays an important role after your retirement. But how will you manage your credit score once you retire? Let’s find out. 

Always make timely payments

FICO is going to implement a new scoring model (FICO 10 system) by this year. And if you have a history of making late payments, you may notice a decline in your credit score.

According to a FICO report, depending on your credit history and the severity of the late payment, a recent late payment can slash your credit score by up to 180 points.

So, if you have debts to pay off, it’s important to make payments on time. Remember, payment history accounts for 35% of your credit score. Eventually, making timely payments can help you to maintain a good credit score after retirement. 

Get rid of revolving debt before retirement

Usually, retirees have a fixed income, and making hefty debt payments can affect your safe withdrawal rate. And thereby, it can drain your retirement savings. So, it’s better to get rid of revolving debt like credit cards before you retire.

If you pay off your credit card debts, it will lower your credit utilization ratio (the ratio of the amount you owe on your revolving accounts to your credit limit), which accounts for 30% of your credit score. Eventually, you might notice an improvement in your credit score within some time.

However, don’t expect an instant rise in your credit score after paying off your debts. It can take about 30 to 45 days from the day you make payment to notice the update in your credit report.

If you are having problems with paying off revolving debts, you can approach a reputable debt relief company. They can provide help paying off debt and you can lead a debt-free and worry-free life after retirement.

Don’t close your old credit accounts

Let’s say, you have paid off credit cards to enter into a debt-free retirement. And you have decided to close those credit accounts. But that can be a bad move as closing your old credit accounts can hurt your credit score.

The reason being, closing old accounts can lower your credit history which accounts for 15% of your credit score.

So, after paying off debts, it would be better not to close your old credit accounts as it can affect your credit score adversely. But at the same time, make sure to use credit cards wisely after retirement, so that you don’t fall prey to the debt trap.

I would suggest you charge your credit cards for small amounts and pay off your outstanding balance amount in full within the due date to maintain a decent credit score during your golden years. 

Keep a tab on your credit report

According to a report by the Federal Bureau of Investigation (FBI), older adults are vulnerable to falling prey to identity theft. The reason being, they usually have a decent amount of retirement savings along with a fair credit score that allures the scammers. And they become the soft targets of the scammers because of their politeness and trusting people easily.

So, you need to keep a tab on your credit report to find out any fraudulent activities or errors. You can get a free copy of your credit report once a year from each of the three credit bureaus by visiting

If you come across any errors in your credit report, dispute it as soon as possible. Because errors can result in a drop in your credit score.

Besides, if you notice any fraudulent activities, inform it to your bank or credit union at the earliest. Identity thieves can take out new credit cards by using your personal information. And they won’t be repaying any amount and they can max out your credit cards as well. Eventually, it will hurt your payment history and credit utilization ratio, and thereby, your credit score can get reduced by considerable points.

So, you can request your creditors to freeze your accounts so that no new accounts can’t be opened in your name. And thereby, you can protect your score too.

So, the bottom line is, the credit score is equally important after your retirement too. And I hope that the above 4 ways can help you to manage your credit score once you retire. So, don’t worry and be aware. And plan your retirement in a well manner so that you can enjoy your golden years.

Author Bio: Phil Bradford is a financial content writer and an enthusiast. He has expert knowledge about personal finance issues. His passion for helping people who are stuck in financial problems has earned him recognition and honor in the industry. Besides writing, he loves to travel and read books. 


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What to look for while hiring a debt settlement company?

Are you up to your neck in unsecured debt?
If yes, you might be looking for a way out to get rid of your unsecured debt like a credit card, payday loan, etc. at the earliest. Due to its easy availability and faster cash disbursement, payday loans are lucrative options for the people in need of urgent cash. But you have to pay a hefty price for this convenience as payday loans have incessantly high-interest rates.

In this situation, what if I tell you that you can get out of debt by paying off a much lower amount than what you owe?

Seems impossible? Well, it’s not. Once you hire a debt settlement company, the financial experts will analyze your financial situation. And based on that, they will chalk out an affordable monthly payment plan. You will have to deposit the money in an escrow account, created by the settlement company, until you have accumulated enough to offer a lump sum amount to your creditors.

The debt relief experts of the settlement company will try to negotiate with your creditors to reduce the total outstanding balance amount by offering the lump sum. A Center for Responsible Lending report has revealed that the average debts are settled at 48% of the outstanding balance amount.

So, if you are looking to settle your debts, you need to hire a genuine debt settlement company. Otherwise, you might end up getting trapped with more debts.

Here are some of the important factors that you need to consider while hiring a debt settlement company.

 Does the company have IAPDA-Certified debt consultants?

Negotiating with creditors to settle your debts is not an easy task. Why would anyone agree to take less than the amount you owe? A good debt settlement company usually has a team of debt specialists, preferably with IAPDA Certification. Being IAPDA-Certified means they are well-trained in debt settlement and have met a minimum standard of excellence to earn the certification.

So, they will be able to negotiate with your creditors in a much professional way. And your debts might get settled in a much lower amount than you expected.

That’s why while hiring a debt settlement company, check whether or not the company has IAPDA-Certified debt consultants. If yes, I would advise you to talk to them about your debt problems instead of talking to any salesperson; because salespeople are usually more concerned with making a sale than helping you with your debts.

 Do you need to pay upfront fees?

It’s quite obvious that when you are opting for professional services, you have to pay a charge for it. But a reputed debt settlement company won’t charge you any fees until they settle your debts.

According to a 2010 Federal Trade Commission (FTC) rule, no for-profit debt settlement companies are allowed to charge fees until they settle a customer’s unsecured debts.

So, you need to ask about the fees that you need to pay to the settlement company. If they mention paying any upfront fees for settlement, I would suggest you not to look forward to that company.

A reputable debt settlement company will charge you a fee only when the negotiation is successful. Usually, they charge about 10% to 25% of the debt amount you owed when you hired them.

If you have any questions about their fees, feel free to call their customer helpline. Usually, they have a team of customer service representatives who are always eager to help you with any questions about debt settlement, its related fees, etc. So, make sure to clear all your doubts before you hire a debt settlement company.

 How is the feedback of the settlement company?

Before you hire a debt settlement company, you need to do thorough research about it. First, check with your state Attorney General and local consumer protection agency that whether or not there are any consumer complaints against the company. You can verify with the Attorney General that if the company has a valid license to run its business in your state.

Besides, you can ask your friends or colleagues who have opted for debt settlement. Try to know about their experience and get feedback from them about the settlement companies. Also, you can know what the customers are saying about the company by typing “complaints” after its name in any search engine.

However, complaints are normal because it’s quite impossible that everyone will be satisfied with their services. But the number of complaints should not exceed the number of good reviews.

So, a reputable debt settlement company may have a few negative reviews. But they won’t indulge in any unfair practices that are against FTC rules.

 How long has the company been in the debt settlement business?

A company’s experience matters when it comes to debt settlement. If the company has been conducting business for a long time, it implies its success and confidence in settling debts.

The Consumer Financial Protection Bureau (CFPB) has sued many settlement companies that have failed to settle debts by an appropriate amount. New companies are likely not to have much experience in debt settlement. If you hire one of them, your debt might get settled in a very nominal amount.

That’s why if a debt settlement company doesn’t have the requisite experience, it might not be a wise option to hire that company.

 Is the company a member of American Fair Credit Counseling (AFCC)?

AFCC is the “watchdog of the debt settlement industry”. It ensures a standard of practice and operational compliance for all its members to abide by the guidelines of the FTC. For example, AFCC members operate under a “No Advanced Fee Model”, meaning that they won’t charge any fee until a debt has been settled.

A debt settlement company can become a member of the AFCC only when they are in full compliance with the FTC rules and regulations.

So, before you hire a settlement company, check here whether or not it’s a member of the AFCC. If yes, you can expect a smooth settlement process to get rid of your debts.

 So, the bottom line is, while hiring a debt settlement company you need to consider some factors that separate the reputable companies from the rest.

Remember, you are making an important decision by settling payday loan debt or any other unsecured debt. The reason being, you are going to spend a good amount of money to get rid of debt by trusting the settlement company.

So, I hope that the above-mentioned parameters will help you to find a legitimate debt settlement company and decide accordingly.

Author Bio: Phil Bradford is a financial content writer and an enthusiast. He has expert knowledge about personal finance issues. His passion for helping people who are stuck in financial problems has earned him recognition and honor in the industry. Besides writing, he loves to travel and read books.

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