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Category Archives for Manage Your Money

Why Sustainability Is an Important Personal Finance Principle

  • April 8, 2021

sustainability

When it comes to ensuring that your financial life is as stable and optimal as possible, there are a variety of different practices that are important to keep in mind.

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What Is A Parked Debt On Your Credit Report

  • April 8, 2021

credit report

 

Reviewing your credit report is a must. It’s recommended by the Federal Trade Commission (FTC) and is always a talking point in blogs about taking care and building your credit score - and for good reason. Creditors or collection agencies will sometimes park debt in an attempt to collect old or even non-existent debt.

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What Fatherhood Means For Your Finances

  • April 1, 2021

fatherhood and finances

When we become parents, everything changes. There’s undeniably pressure, but there’s also intense joy in the realization that now, you have a valid reason to get your life in order at last. And, for many fathers, the first step towards doing that is a financial one.

After all, the average cost of raising a child to the age of 17 is currently $233,610, so ensuring you have plenty in the bank is more important now than ever. But, that’s not all. You’ll also likely want to do everything that you can to make sure your child is comfortable no matter what. And, that’s what we’re going to focus on here.

Admittedly, the future (specifically a future without you in it) can be the last thing that you want to consider during those blissful newborn days. But, you really can’t be too prepared in this sense and, as soon as your child is registered and out there in the world, you’re going to want to protect their financial future in the following ways. Here's a few lessons on fatherhood and finances.

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How To Take Care Of Yourself Financially After An Injury Or Accident

  • March 29, 2021

injury

Your physical well-being is understandably at the forefront of the mind after being involved in an accident, whether it’s a workplace injury or one you’ve obtained elsewhere. However, when you're injured, it's possible that you'll take more time to recover, which can have a significant financial impact. So, what would you do if you can't go out and work to earn money? We have some advice on how to manage your money following an injury or accident to avoid financial problems.

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How To Deal With Student Loan Debt

  • March 24, 2021

student loan debt

After US President Biden announced the cancellation of $1 billion worth of student loan debt, student loan debt relief has become a major topic not just in the United States, but around the world.

Unfortunately, not everyone will be included in the program. Bu, there are other more feasible ways to deal with student loan debt, not to mention dealing with student loans is much easier than before, especially with programs like student loan repayment plans

If that's your ultimate goal, then there's no time to lose. Here are some of the things you can do to eliminate or, at least, make it easier for you to pay off your student loan debt: 

Pay More Than The Amount Due Per Month 

Believe it or not, paying more than the minimum monthly payment can go a long way when dealing with your student loan debt, and here's why.

If you have a debt of $40,000.00 with an interest rate of 5% due in 10 years, that will yield a total interest of $10,911.45 by the end of the repayment term. But, that's assuming that you pay the minimum amount each month, which is around $424.26. 

However, if you pay a bit more than the amount due per month, that will chip away at the $40,000 principal debt's potential interest. For instance, if you pay $500.00 per month instead, the interest will go down to $8,757.32. 

Simply put, paying more than the amount due per month can potentially reduce student loans and may also allow you to pay off all the debt in less than ten years. 

Take note that when loan providers notice this change, they may automatically credit that extra amount to the next payment, so you need to give them a heads up. 

Put Your Extra Money Into The Debt 

If you ever get extra money from any source, be it from tax refunds or a raise, you'd be better off putting all that extra money into your loan debt. Don’t get a new smartphone or a new television set. 

You've been paying the minimum of your loan debt for several years now, and you've survived until now, which means there's no need to improve your quality of life with unnecessary purchases, at least, not now. 

Don't Rely Too Much On Student Loan Forgiveness 

One factor that pushed you to take out a student loan is perhaps because you thought you'd be forgiven later on, but that's not how it works. 

At the very least, you need to work as a public service officer for ten years to even get a chance at student loan forgiveness. If that's not a job you want, then it's a lot better to earn money to pay off your debt doing a job you like.

Besides, certain companies offer several perks to their employees, including student loan debt payments, so you don't have to get a public service job to enjoy special programs. In fact, you don't need a job at all.

Get To Know Your Student Loan Debt 

Up until now, you probably have no idea what loans you took as part of your student loan debt. Remember, student loan debts are not just one big loan. It consists of numerous loans with varying interest rates, such as federal loans, private loans, and others. 

Your goal is to find out more about these loans. If you're lucky, one of your loans may have some sort of special repayment plan or deferment program, which can be extremely helpful when dealing with student loan debts.

It's also worth listing the interest rates of your loans. That way, you can prioritize loans with the highest interest rates before they grow into massive amounts. 

Why Pay Off Your Student Loan Debt Early? 

You might be thinking, why should you put some extra effort into dealing with your student loan instead of just paying the minimum and doing it the way everyone does? 

Unbeknownst to many, there are certain perks to paying off your student loan debt early: 

  • If your student loans have high-interest rates, such as 8%, it's best to take care of them as soon as possible. If you don't, then 10 years from now, the interest may exceed the initial loan amount, which brings you back to the beginning. 
  • Going to a graduate school is usually what makes the difference between whether you can get a low- or high-salary job. But, that seems to be a far-fetched dream if you still have a student loan debt, so you better take care of it as soon as possible. 
  • Having a high credit score means that you will get low-interest rates on credit cards and loans. It may also help you get approved for higher amounts of loans. However, if you still have a student loan debt, your credit score will suffer. 

Wrapping Up 

Whether you like it or not, your student loan debt will affect you as long as it exists, so the best-case scenario is to eliminate this debt as soon as possible, but that's not going to happen if you remain financially reckless. This guide, however, should get you started on your way to eliminating your student loan debt.

 

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Tips on Investing Late in Life for Retirement

  • March 16, 2021

Tips on Investing Late in Life for Retirement

Sometimes, the best-laid plans fall through due to circumstances beyond our control. When we are young, retirement seems like a lifetime away—then, during midlife or beyond, it begins to loom closely in our future. There is no need to panic, though. Follow these tips on investing late in life for retirement to get the ball rolling today.

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Debt Avalanche vs. Debt Snowball: What’s the Difference?

  • March 1, 2021

Taking credit has never been so easy, whereas paying that off is just as tricky. Being in debt is one of the most challenging times for any individual. This article will give us an understanding of the two popular techniques to pay off debts.

On discussing the two approaches, namely Debt Avalanche and Debt snowball, you can decide which method will significantly impact clearing off your debt. It will save you from tons of opposite counseling from the crowd.

In both the techniques following are some list you should consider before implementation

  • Pen down your exact list of debt.
  • Know your income in hand.
  • How much money can you share out to clear your debt?

Debt Avalanche

Prominent Debt counselors and financial planners recommend Debt Avalanche. It is known as the most desirable technique to clear off your debt. Once you have your list ready, this technique directs you to pay your debt with the highest interest rate to the minimum interest rate.

The concept of Debt Avalanche is to rank your interest rate from the highest to the lowest. Then, clearing off the debt accordingly (highest to lowest). It will decrease the risk factor and save your repaying time and money.

The example illustrated below will help you in better understanding Debt Avalanche.

Suppose a particular individual has the following credit outstanding amounts:

  • Personal loan - $3000 at 7% interest
  • Credit card Debt - $5000 at 17% interest
  • Auto loan - $7000 at 5% interest

According to the Debt Avalanche method, you will first pay off the Debt with the highest interest rate: the credit card debt. Once you clear the debt with the highest interest rate that takes a large chunk of your monthly repayment, it becomes easier to pay the debts with lower interest rates.

Thus, prioritizing your credit from highest interest rate to lowest becomes an efficient method mathematically that saves you maximum money. It will also decrease the duration for paying off your debt and simulate the feeling of achievement with it.

It is always a human tendency to avoid more significant debt first and start paying off with a smaller amount. Debt avalanche requires a religious practice and dedication to pull off unseen expenses for daily life maintenance. It becomes a disadvantage for some people.

Debt Snowball

As said earlier, after sorting your list to consider before clearing off the debt, this is another method you can consider.

The Debt Snowball is reciprocal to the Debt Avalanche. In this technique, you pay off the debt ranking from lowest interest rate to highest interest rate. In comparison, this technique costs a higher total interest rate than that of Debt Avalanche. Clearing off the debt from smallest to next smallest gives the creditors an impression of getting rid of their debts in no time.

Financial counselor Dave Ramsey has publicized this technique and firmly believes that it works in the most suitable way to pay off your debts in a short duration.

The table below may provide you with a more in-depth understanding between the Debt Avalanche and Debt Snowball technique.

Debt Avalanche Debt Snowball
  1. This strategy focuses on paying off the debt from the highest-ranking interest rate to the lowest ranking interest rate. 
  1. This strategy focuses on paying off the debt from the lowest loan to the highest loan.
  1. It costs less total interest rate on paying off the overall debt and saves you more money.
  1. It costs more in total interest rate on paying off the overall debt.
  1. This technique requires a dedicated routine of a firm hand on your money and unseen expenditures.
  1. It gives instant hope and motivation to keep going as you pay off your smaller debt. 
  1. It takes a longer duration to pay off the debt.
  1. It usually takes about 18 to 24 months to clear off the debt on an average.
  1. This technique is proven mathematically to save more money.
  1. This technique has proven to be the most effective on the human mindset for progress.

Which technique should you choose?

The above techniques will only give you a broader perspective on how each strategy will work. In the end, it is always up to an individual to select the best method that will be for him to clear off the debt.

If one technique works well for one, it is not necessarily required to be the other's best option. It always depends on how you plan and execute either of the techniques.

Both the techniques apply not only to credit card outstanding amounts but also on all kinds of debt like a house loan, car repair loans, education loan, etc. One should be more focused on being a responsible spender and a saver when it comes to your hard-earned money.

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Tips to Manage Finances the Right Way

  • March 1, 2021

How do you manage finances?

Are you always stone broke before the month ends? Do you end up spending unnecessarily? With the rising trend of digital stores, online shopping has become a guilty pleasure. Often, people end up swiping credit cards for things they don’t even need because of impulsive behavior. All this might not be a problem if you are as affluent as Elon Musk or Bill Gates. But for a middle-class person with fixed paychecks and income, overspending money can lead to severe financial constraints. 

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5 Times You Should Consider Contacting a Financial Advisor

  • February 23, 2021

5 Times You Should Consider Contacting a Financial Advisor

Your financial choices matter as much as anything you ever decide. A minor decision, like whether to get burgers or pizza for lunch, probably isn’t going to change your life dramatically. However, when you start making long-range financial decisions, you have to realize that a misstep can change your future in a profound way.

That’s why some people decide at a certain point that it’s time to contact and retain a financial advisor. When should you do it, though? No people are the same in this regard, but here are a few scenarios where you might decide to contact a financial advisor for the first time.

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Ways To Achieve Early Retirement

  • February 3, 2021

Ways To Achieve Early Retirement

Retirement seems like a distant goal. If you’ve made a habit of watching the financial markets, you may feel that retirement isn’t even possible at all. But with simple strategies, conscientious saving, and a few dares that pay off, these three ways to achieve early retirement will make it more possible to retire ahead of schedule.

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