What Not To Do While Trying To Get Out of Debt

What Not To Do While Trying To Get Out of Debt

Know how to pay off debt so you don't make costly mistakes.

By Jaime Catmull April 30, 2021

If worrying about how to pay off debt keeps you awake some nights, late-night television abounds with alleged solutions. Some ads even promise to get rid of your debt for “pennies on the dollar.”

Fall victim to these “deals” and you might be left with worse financial troubles than before. But these aren’t the only foolish ways of paying off debt. Financial experts shared some common mistakes people make while trying to get out of debt — avoid making these same missteps.

1. Not Having a Reasonable Debt Repayment Strategy

When sitting down to tackle your debt, the first step should be to see how much total debt you actually have. Add up any debt you have accrued from student loans, car loans, credit cards, medical debt, home equity loans, payday loans, personal loans and IRS and government debt. If you’ve been dealing with debt for a while, this might add up to a scary number that could leave you feeling overwhelmed, and you might feel like you don’t know how to even begin paying it back.

Why This May Be a Mistake

When you don’t have a clear debt repayment plan, your instinct might be to try to cut back on spending, save more and earn extra money until you’ve saved enough to pay back your debt all at once. However, if you are just making the minimum payments throughout this time, you’ll be accruing more interest all along.

Aim to consistently pay down your debt every month. Whether you want to tackle the highest-interest debt first or the smallest bill, know what your plan is and how you can achieve your goals.

Does It Ever Make Sense To Pay Down All Your Debt at Once?

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14 Money Moves You Will Be Thankful For

14 Money Moves You Will Be Thankful For

Keep your financial goals on track by tackling these tasks.

By Maryalene LaPonsie

Take these steps to improve your finances now.

There is no time like the present to start improving your finances. “Procrastination is the No. 1 reason people fail in retirement,” says Luke Lloyd, wealth advisor and investment strategist with Strategic Wealth Partners in Independence, Ohio.

However, it’s not just your retirement that will benefit from being proactive about finances. You can save money on debt, eliminate headaches for your heirs and free up cash for the things you want by making the following 14 expert-backed money moves.

Budget For Future Expenses.

A budget is at the foundation of good personal finance, and if you don’t have one already, it should be your first priority. Don’t just plan for regular monthly expenses either. Rather, look at the big picture. “If we have any debt, have we done anything to manage that?” asks Aaron Bell, a wealth management advisor with Northwestern Mutual in New York City.

In addition to extra debt payments, plan for quarterly and annual expenses such as insurance premiums, vacations and holiday spending. Track your spending by using an app like Mint or PocketGuard. When you hit the budgeted limit for each category, stop buying.

Max Out Your 401(K) Match.

If your employer offers a 401(k) plan, you should contribute as much as possible. Traditional 401(k) plans offer an immediate tax deduction on contributions while Roth 401(k) plans will let you take out money tax-free in retirement. In 2020, the contribution limit to a 401(k) account is $19,500.

Many employers will match a portion of worker contributions, up to a certain amount. “I’m surprised in my practice how many people don’t even put in their 401(k) what their employer matches,” says Steve Azoury, financial representative and owner of Azoury Financial in Troy, Michigan. If you aren't sure how much to contribute to a 401(k), make sure you're at least depositing enough to get the maximum employer match.

Consider Refinancing Your Home Equity Loan.

In the past, homeowners could deduct the interest on home equity loans on their federal income tax return. However, the tax code changes enacted in the Tax Cuts and Jobs Act of 2017 eliminated that deduction for many people. To keep deducting the interest, you could refinance your main mortgage and roll in the balance of the home equity loan. 

Even if you don’t have a home equity loan, it may make sense to refinance a mortgage right now. “We are in a historically low interest rate environment,” Lloyd says. To minimize the costs associated with refinancing, see if your current lender offers any streamline options that may waive or reduce fees.

Keep Your Home Equity Loan Deduction.

To continue reading, please go to the original article here:

https://money.usnews.com/money/personal-finance/saving-and-budgeting/slideshows/14-money-moves-you-will-be-thankful-for

12 Essential Money Tips for Every Phase of Your Financial Life

12 Essential Money Tips for Every Phase of Your Financial Life

Get the secrets money experts want you to know.  By Gabrielle Olya May 17, 2021

Everyone makes money missteps at some point in their lives, whether it's splurging on unnecessary items or neglecting to contribute to retirement funds as soon as possible. Even financial pros are not immune to making mistakes.   To help you avoid unnecessary pitfalls, check out these tips and tricks that can help you live your best money life -- no matter your age.

Start With Saving

Although it’s tempting to spend rather than save when you get a paycheck, it’s important to prioritize putting money away into your checking or savings account. On top of that, you should also use the right checking or savings accounts to grow your money.

Avoid Lifestyle Inflation

It's important to increase your savings rate whenever you start earning more in order to keep growing your net worth.

"Save one-third of every pay raise you get so you don't succumb to lifestyle inflation," said Ted Jenkin, a certified financial planner. By starting this practice early in your career, you'll develop good habits like saving, investing and paying down debts instead of spending it on more stuff you won't care about in a few years' time.

Don't Waste Your Money on Things You Don't Need

Whether you've just received your first paycheck or your first raise, it can be tempting to spend your money on things you want rather than on things you need -- but this can be a huge mistake.

"Don't spend so much money on clothing," said Michelle Schroeder-Gardner, founder of the personal finance blog "Making Sense of Cents." "I've worked full-time since I was around the age of 14, yet I didn't really start saving money until nearly a decade later."

Don't Buy Things To Impress Other People

Spending on immediate wants can hurt your future needs, said John Rampton, founder and CEO of Calendar.

"Don't waste your time on expensive cars or gadgets," he said. "It's better to save money for the long-term and for things that can keep generating money, rather than taking (your) money."

Start Investing In Your Retirement ASAP

A GOBankingRates' retirement savings survey found that 64% of Americans have less than $10,000 saved for retirement. It's easy to put off saving for retirement when you're in your 20s, but that's the best time to start. The sooner you save, the sooner you can take advantage of compound interest. No matter your age, it's important to prioritize investing in your retirement accounts.

Don't Fear the Stock Market

Doing something that scares you can be a good thing for your finances. Novice investors are often scared of the stock market, but just by getting started, even on a small scale, you're furthering your financial life. Learn some of the safer ways to invest for the long term if you're worried about making mistakes. And the sooner you get started, the better off you'll likely be.

Now, Invest Even More

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https://www.gobankingrates.com/saving-money/savings-advice/money-tips-for-every-phase-of-life/

Easy Tips and Home Projects to Help You Save Money

Easy Tips and Home Projects to Help You Save Money

July 5, 2021   Teresa Siqueira

Whether you rent your home or have a mortgage, total monthly costs can seem overwhelming. Fortunately, there are plenty of simple and easy home projects you can do that will not only improve the value of your home, but that will also help you to save money over time. From making a few simple updates to your plumbing or growing a garden, it’s easy to tweak your lifestyle and home to put more cash in your pocket. Read on to discover how making a few strategic improvements around the house can benefit your bottom line.

Set up a household budget

The best way to save money is by drafting a budget to track your income and expenses and determine where you could save.

Determine your income. Every budget starts with determining how much money you bring home. You should use your net income when budgeting, including what you take home after income taxes, insurance, and other costs. This will give you a clear starting point to work from.

Determine your fixed monthly bills. The next step in making a budget is to figure out your monthly expenses. Be sure to write down everything you spend money on, from mortgage or rent to your monthly insurance costs, utilities, Internet, cell phone, and food. You should also include debt like credit card balances and payments as well as automobile payments.

Determine your needs. Think about what your household needs the most. From food costs to kitchen appliances, getting a clearer picture of what you use and need may make it easier to decide where and how to slash some costs. For example, if you order food or go out to dinner once a week, reducing it once per month can save a significant amount of money over time.

Re-evaluate your subscriptions. Take a look at all of your monthly subscription services and decide which ones you can cancel. Cable, streaming services, Internet service, and even monthly magazines are just a few examples. Add these subscription costs to your monthly bills when you write down the budget.

Reduce Housing Costs

There are several ways you can reduce your housing costs to help you save money.

Options if you rent. If you’re a renter, consider getting a roommate to help you split the costs. You can also give up a paid parking space and either park on the street or sell your car and take public transportation if you live in a city. Consider doing some DIY repairs around your apartment in exchange for a discount on your rent if possible. You can also move to a cheaper city where the cost of living is lower or simply move into a more affordable building once your lease is up.

Options if you own your home. One great way to reduce your mortgage costs is to refinance your home to get a lower interest rate. Talk to your lender about possible refinancing options, which can save you a significant amount of money each month once the refinance is complete. You should only refinance your home if you plan to live there for several more years. Otherwise, you could sell your current home and downsize into a smaller one with a lower mortgage cost.

To continue reading, please go to the original article here:

https://porch.com/advice/home-projects-save-money

36 Things That Are Worth the Money

36 Things That Are Worth the Money

These are the products and experiences worth splurging on.

By Jaime Catmull

It's always tempting to look for the best deal, but some things are simply worth splurging on — even if you're on a budget. As you decide when to spend and when to save, consider where quality matters to you and which experiences are on your to-do list.

I spoke to financial experts and business leaders to get insight into their thoughts on the best ways to spend money. Some of these recommendations -- like international travel -- might not be realistic now, in the middle of a pandemic, but they're still worth keeping in mind for the future.  These are the purchases experts say you won't regret.

Hiring a Virtual Assistant

Anthony Clervi, managing partner at Una, said investing in a virtual assistant can be "invaluable." Hiring an efficient assistant to take care of administrative tasks enables you to focus more on the aspects of your work that need your attention and could help shave hours off your workweek.

Virtual assistants typically cost an average of about $16 an hour, according to PayScale.

Working Out With a Personal Trainer

Personal trainers cost an average of $26 per hour, PayScale reports. This might seem like an unnecessary expense, but personal trainers can help you meet fitness goals that you might not be able to achieve on your own — and you can't put a price on your health. The benefits of hiring a trainer include a personalized workout, detailed instruction, motivation, accountability, a variety in your workouts and efficiency, according to Livestrong.

"Hiring a fitness coach is absolutely worth the investment and here's why: If you're Batman, your physical body is your Batmobile, which means it's the vehicle that not only allows you to move and perform optimally as a human being, but keeps you feeling confident and attractive when you look in the mirror each day," said Andrew White, co-founder of IVRY Fitness. "We pay for tons of things in life that function purely for our own entertainment, so why not flip the script and invest in yourself?"

If a personal trainer is out of your budget, do the next best thing and join a gym.

"I find having a gym membership to be worth spending money on," said Anna Barker, founder of the personal finance website LogicalDollar. "Although it's true that there are plenty of free exercise options on the internet these days, having all the equipment that the gym offers can make these workouts far more effective, which is perfect when I may be short on time. Paying money for the gym is also a good motivation to go to avoid wasting your membership fees."

Subscribing To Newspapers and Other Publications

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Want To Borrow Money From a Friend or Family? How To Approach the Subject

Want To Borrow Money From a Friend or Family? How To Approach the Subject

By Laura Woods  May 7, 2021

You’re strapped for cash, so you’re thinking about asking a friend or family member for a loan. Whether you need a small amount to get by until payday or a larger sum for a major life event — i.e., seed money to start a business — you’re not sure how to structure the ask.

There’s a common school of thought that mixing loved ones and money just doesn’t work. Of course, everyone doesn’t share this mindset, so tread lightly to ensure you don’t inadvertently tarnish your relationship with the other person.

Jodi RR Smith, president of Mannersmith Etiquette Consulting, said borrowing money is rarely easy — especially when you’re asking friends or family for the loan.

“This is not a topic easily approached or discussed,” she said. “When you find yourself in need, take a bit of time to strategize before officially asking.”

She said it’s important to begin with a self-assessment, so you can go in with a plan. For example, think about why you need the money, whether you’ll disclose the reason for the loan, how much you need and your repayment strategy.

When you have your plan together, Smith said your ask should be as professional as possible.

“Let the person know you have something serious to discuss and schedule a specific time to speak,” she said. “Surprising the person in the middle of a party or family gathering does not bode well for any future trust.”

Don’t expect an immediate response, as Smith said most people will need time to consider your request. Instead, she said to just ask when they expect to make a decision, thank them for listening and allow them time to think.  “If this conversation is confidential, remind them, and take your leave,” she said.

It’s very possible your request will be declined, as Smith said not everyone is comfortable lending money. She also noted that the person’s financial situation might not truly reflect what you see on the surface.

“There are some people who present as having plenty, but are actually in debt themselves,” she said. “And others who live simply with large bank accounts.”

To continue reading, please go to the original article here:

https://www.gobankingrates.com/money/financial-planning/modern-money-etiquette-need-borrow-money-from-friend-family-how-to-approach-subject/

Someone Owe You Money? How To Get It Back Without Ruining the Relationship

Someone Owe You Money? How To Get It Back Without Ruining the Relationship

By Laura Woods  July 9, 2021

You lent money to a friend or family member and they haven’t paid you back. Since you thought this was a short-term arrangement — and definitely not a gift — you feel like it’s time to ask for repayment, but you’re stressed about it.  This is a person you care about, so you don’t want to strain your relationship. However, you need your money back, so you’re willing to initiate this uncomfortable conversation, but you want to do it the right way.

“On many occasions the way we ask for the money to be paid back can be truly detrimental,” said Maryanne Parker, founder of Manor of Manners etiquette consulting.  She said the best way to ask depends on your relationship with the other person, the amount of money owed and the situation.

 “If you are lending money to your brother or a sister, you definitely won’t feel uncomfortable asking for the money back — especially if it is an ongoing family situation,” she said. “If we are lending money to someone else, then we can use different techniques without ruining the relationships.”

Having proper communication from the beginning is a must, Parker said. This includes making it clear you’re lending them the money — not giving it to them — and want to be repaid within a specific timeframe.

“On some occasions people get confused or misunderstand the situation — especially if there is known ‘financial superiority,’ when one of the parties is doing better financially because [they have] a better job, career, business and so on,” she said.

She said it’s also important to be understanding because it’s possible the other person is very aware they owe you money but is in a difficult financial situation.

“They might even feel much more uncomfortable than us, just because they are in need,” she said. “Owing money to someone puts us in a very vulnerable situation and if we want to keep the relationships going, we should be understanding.”

To continue reading, please go to the original article here:

https://www.gobankingrates.com/money/financial-planning/modern-money-etiquette-someone-owe-you-money-how-to-get-it-back-without-ruining-relationship/

23 Money Mantras to Live Your Life By

23 Money Mantras to Live Your Life By

Start living a richer life today.

By Barri Segal

Achieving financial freedom is no easy task. If you're tired of living paycheck to paycheck, relying on coupons and dodging bill collectors, you might be in desperate need of some solid money advice to help improve your financial situation.

With that in mind, GOBankingRates asked America's top money experts to share their money mantras. Consider these quotes the next time you need to make any money decision -- big or small. Even better, you could use their words of wisdom to grow your wealth.

Click through to see the experts' motivational money mantras. With advice ranging from how to take control of your finances to becoming a better investor, these money tips can help you get rich.

I Can Become a Money Master

"Stop being the chess piece, and start being the chess player. It's time to master the game of money once and for all." -- Tony Robbins

If you want to finally secure financial freedom and get rich, use Robbins' best money tips.

How to Follow This Mantra

A New York Times No. 1 best-selling author and the author of "Money: Master the Game," Tony Robbins is certainly a money master. And you can be one too. It starts with taking control of your money.

Robbins has plenty of advice that you can apply to every aspect of your life.

I Am a Money Magnet

"'I am a money magnet' -- I say it anytime I receive money in my life, a penny on the street or a five-figure paycheck." -- Stefanie O'Connell

Find out how to become a money magnet.

How to Follow This Mantra

Author and millennial money expert Stefanie O'Connell's money mantra reiterates the power of positive thinking. If you want to make more money, you have to believe that you can become a money magnet.

I Need to Sustain Wealth — Not Just Make Money

"Don't make money, create wealth. Making money is easy. Being able to create and sustain wealth is what will set you apart from the rest." -- John Rampton

How to Follow This Mantra

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https://www.gobankingrates.com/money/wealth/money-maxims-to-live-by/#6

Here’s How Much Emergency Cash You Need Stashed If an Emergency Happens

Here’s How Much Emergency Cash You Need Stashed If an Emergency Happens

Are you financially prepared for a national emergency?

By Jaime Catmull June 9, 2021

You've probably heard time and again that it's important to have a rainy-day fund set up "just in case" something unexpected were to happen. But we're now at a time when having an emergency fund is more vital than ever.

The coronavirus pandemic has already had devastating effects on the economy at large and, on an individual level, it has led to job loss and reduction of hours for many workers around the world. Even if the coronavirus' financial impacts haven't hit you personally, here's how to be prepared in case it does -- plus how to set up a fund for unexpected future national emergencies.

Why You Need a National Emergency Fund

Part of being prepared for any contingency, big or small, is having a reserve of emergency cash at your disposal at all times. When you can't rely on accessing your funds electronically, you'll need some legal tender to buy food, gas or other necessities.

"Whether it's Mother Nature or some other disaster out of your control, you always want to be prepared by having some emergency cash on hand," said Annalee Leonard, an investment advisor representative and president of Mainstay Financial Group. "Banks and ATMs may not be up and running for days after a strong storm. I recommend my clients have three to five days' worth of spending money, just in case."

How To Decide How Much To Save

To decide how much to save for an emergency fund, you'll need to ask yourself a couple of questions:

How much will I need for an extreme catastrophic event?

How much can I afford to save?

"It's wise to have a small amount of physical cash at home for the truest of emergencies when banks are not operating," said Priyanka Prakash, managing editor at Fit Small Business, a company that finds the best small-business software, services and financing options.

Aim To Save $2,000

"Individuals should be prepared to pay for essential or non-discretionary expenses out-of-pocket," said Brett Tharp, CFP and financial planning education consultant at eMoney Advisor. "Temporary lodging or shelter, fuel, food, water and necessary medications fall into this category. This will differ for each person depending on their level of preparedness or perception of how likely a catastrophic event might be."

Two-thousand dollars should cover those costs.

"The rule of thumb I advise my clients is to keep $1,000 to $2,000 in cash in case banking operations are shut down due to a national emergency or catastrophe," said Gregory Brinkman, president of Brinkman Financial in Tulsa, Oklahoma.

There's No 'Magic Number' for How Much To Save in Your Emergency Fund

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https://www.gobankingrates.com/money/financial-planning/how-much-physical-cash-need-hand-case-national-emergency/

7 Steps To Take for Financial Wellness in 2021

7 Steps To Take for Financial Wellness in 2021

Nicole Spector   Thu, July 8, 2021

At the start of 2021, you may have vowed to pay down debt, boost your credit score or build an emergency fund. Perhaps you're still going strong with these financial goals, or perhaps you’re starting to lose your momentum. Maybe you've surrendered altogether.

If you’re in any of these boats, rest assured that you’re not alone. According to a study by researchers at Scranton University, only 19% of people keep their resolutions, and most give up by mid-January. There are a lot of reasons why we fail at our resolutions, and usually, it has nothing to do with our willpower or lack thereof. One common reason we’re unsuccessful is that we don’t give ourselves clear paths to achieve the lofty goals we’ve set. Sometimes, all you need to triumph is to simply reframe your approach.

We consulted financial experts to learn common money goals that are harder to stick to than they might seem, and what you can do to make them easier to follow through on.

1. Goal: Pay Down Debt

Why it's hard to do: “Debt can be overwhelming, and many people don't even know how much debt they have so tallying it up and organizing all your bills can feel insurmountable,” said Steffa Mantilla, certified financial education instructor, Money Tamer. “Then once you do know how much debt you have, there are conflicting thoughts on debt payoff strategies and whether you should even pay your debt off or keep it.”

How to do it better: “Commit to taking an hour listing all your debts in a spreadsheet, then list them from the smallest debt to the largest debt,” Mantilla said. “By focusing first on paying off the smallest debt, you'll get to a 'win' faster. You'll likely be able to pay off a few small debts before getting to the larger more daunting amounts. These smaller wins will give you the motivation to propel you through the larger debt payoff amounts.”

2. Goal: Stick To a Budget

Why it’s hard to do: “As we’ve seen this past year, life is unpredictable and creating a budget can help safeguard you from some of the uncertainty,” said April Schneider, head of consumer and small business products at Bank of America. “But, if you set a rigid budget and never change it, it may not remain relevant from one month to the next as your income and expenses fluctuate. Even more so, when it is safer to travel and dine out without restrictions, your spending habits may look different and you may find yourself spending more than anticipated in certain categories.”

How to do it better: “I recommend routinely adjusting your budget to maintain its effectiveness and using a rewards credit card that matches your spending habits to help you stay on track with your financial goals.”

Christopher Stroup, a financial advisor working for Abacus Wealth Partners, suggests handing some of the chores of budgeting over to software to see better success. “Some of our favorite resources, such as Mint or You Need a Budget, allow users to link all of their accounts into a central financial hub,” Stroup said.

“From there, the software can suggest a budget given your historical spending. One of my favorite tricks is to teach the software to recognize certain expenses and put them in the proper budget category I have created. Moving forward, this saves me a tremendous amount of time as I no longer have to itemize my expenses by placing them in the appropriate spending bucket. The software does this for me, which gives me more time to understand where I met (or missed) my budget goal for the month.”

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/7-steps-financial-wellness-2021-120041798.html

14 Key Signs You Will Run Out of Money in Retirement

14 Key Signs You Will Run Out of Money in Retirement

An accurate budget is the foundation for a happy retirement.

Cameron Huddleston  Life and Money Columnist Jul 10, 2021

You don't want to go broke in retirement. Despite all your preparation, however, you might discover that your retirement is going to cost more than you planned. First and foremost, you need to become aware of the reasons that the budget you have in mind could be smaller than it needs to be. If you're worried about having enough money, check out the signs that you might not be saving enough for retirement.

You could quickly run out of money in retirement if you need long-term care but didn't have a plan to pay for it. More than half of adults turning 65 today will need long-term care and about 1 in 7 will need care for more than five years, according to the Department of Health and Human Services.

If you receive care in an assisted living facility or nursing home, you'll have to shell out big bucks. The average annual cost of care in an assisted living facility was $48,612 in 2019, according to the Genworth Cost of Care Survey. The annual cost of a private room in a nursing home is over $102,000.

"Even the wealthiest people are at risk if they have a lot of long-term care expenses," said Dave Littell, professor emeritus of taxation at The American College.

What To Do

You can use several strategies to be financially prepared for long-term care, Littell said. Options include getting a long-term-care insurance policy or hybrid life insurance policy that will pay out if you have a long-term-care event. Another option is a longevity annuity, Littell said.

This is an insurance product that requires a lump-sum investment and will provide a steady stream of retirement income. But, you have to wait several years or until a certain age to start receiving your payout. As a result, "you can't time it exactly with a long-term care need," Littell said. Ideally, you should meet with a financial planner who specializes in long-term care planning to help you devise a strategy, he said.

You Underestimated Your Life Expectancy

Your retirement could easily be more expensive than you thought if you live a lot longer than you expected you would. About 1 in 4 65-year-olds today will live to age 90, according to the Social Security Administration.

If you saved enough to cover expenses for 20 years in retirement but end up living for 30 years in retirement, you'll have to find a way to stretch your savings for another 10 years.

What To Do

Littell recommended using the life expectancy calculator at Livingto100.com to get an estimate of how long you will live based on your health and family history. To reduce the risk of outliving your savings, you shouldn't rely on just one source of income in retirement.

To continue reading, please go to the original article here:

https://www.gobankingrates.com/retirement/planning/signs-retirement-is-going-to-be-more-expensive/