7 Easy First Steps to Paying Off Debt

August 22, 2017

Relaxed young lady with bills talking on phoneFacing debt can be stressful and overwhelming. But it’s important to remember that no matter how much you might feel that you’re in over your head, debt is a hole you can climb out of. You can absolutely do this. Here are the first steps you need to take.

  1. Figure out how much you owe

The first step can be the most painful. It’s time to get an overview of your debt, which means you need to add up everything you owe and take a good look at your total. That, my friends, can be a difficult moment. But that difficult moment will also provide you with the clarity you need to start taking back power over your financial future.

How to do it

Gather your financial statements or log in to the online portal for each account you owe on: your credit cards, mortgage, student loan, car loan, lines of credit, home equity loan, etc. Create a simple spreadsheet with four columns: one to identify each debt (“Student Loan”), one for the amount owed, one for the minimum monthly payment, and one for the interest rate. Pull your credit report to search for outstanding debts, and compare the information against what you have in your own records.

  1. Sort and prioritize the debt list

Now it’s time to start sorting out your spreadsheet entries so you can come up with the best possible plan to get out of debt.

You might think that the most important debt to pay off is the biggest one; however, it’s often a good idea to identify the debt with the highest interest rate and knock that out first. This is known as the avalanche method of debt repayment. Higher interest rates lead to faster debt accumulation and result in you paying a higher amount over the course of your debt repayment. The faster you can get rid of high-interest debts, the better.

How to do it

Sort your spreadsheet by the fourth column, the one for the interest rate. You might see anything from a 4 percent interest rate (for example, on a student loan) to a whopping 22 percent interest rate on, say, a credit card. You may owe more principal on your student loan, but relatively speaking, you’re wasting more in interest every month on that credit card. The credit card is therefore the higher priority for complete repayment.

  1. Add up your minimum payments

You don’t get to stop making payments on the lower-interest debts, even though they’re not the highest priority. Instead, you need to continue making the minimum monthly payments on all lower-interest debts while making bigger payments on your debt with the highest interest rate. Once you knock one high-interest debt out completely, you prioritize the debt with the next-highest interest rate and continue paying minimums on everything else.

How to do it

Add up the monthly minimum payments for all the debts on your list, including the highest-interest debt. This is the total, bare minimum debt repayment amount that needs to fit into your current budget. This can be a nerve wracking step, especially if you don’t have enough income to comfortably afford that total monthly minimum amount. You may need to take steps to cut expenses elsewhere, or bring in sources of additional income.

  1. Determine your needed overage payment

Now it’s time to calculate the payment you need to get that highest-interest debt paid off as quickly as possible. If you keep making only the minimum payment on it, you’ll keep accumulating interest charges and it will take much longer to pay it off. Instead, think of a target timeline (maybe six months or a year) for paying off the highest-interest debt, and calculate an ideal amount you can pay above the minimum payment to achieve that goal.

How to do it

Use an online credit card payoff calculator. Enter the information for your highest-interest debt: total amount owed, interest rate, and the minimum payment. You’ll see how long it will take to pay off the debt if you only make the minimum payments. Now, instead of minimum payments, enter how many months you’d like to have it paid off in. The result will show you the monthly amount you need to pay in order to clear the debt within your target timeline.

  1. Give yourself the best possible conditions

You have the essential numbers that you need. They may be painful, but knowledge is power. The next step is to find ways to reduce the financial impact that these debts have while you repay them. Debt consolidation may be the best way to do this; however, you may also be able to lower your interest rates and negotiate better payment plans on individual debts, as well.

How to do it

This takes some time, depending on the number of debts you have. Call each creditor and ask how you can reduce your interest rate. You may be able to refinance a home mortgage or car loan for a lower rate, for example. If you have a good repayment history, ask credit card companies to consider your reliable record and give you a better interest rate. If you’re able to take out a low-interest loan, such as a line of credit or home equity loan with your bank, you may be able to use it to pay off your high-interest debt and consolidate at least some of your debts into a single, lower-interest loan.

  1. Protect your credit and your finances

If you’re late on a payment, being proactive can save you from accumulating fees and damaging your credit score. For example, if you call the credit card company and explain that you can’t make the full minimum payment on time, they may work with you to split the payment in half for the month so you can avoid late fees. Many times, a phone call and a courteous conversation can reduce or remove a fee, extend a deadline, or result in a more manageable payment plan.

How to do it

Set up alerts or schedule automatic minimum monthly payments so you don’t miss due dates. If you know you won’t have the money on time for a particular payment, call in advance to negotiate an extended deadline or set up a split payment plan. Additionally, you may want to keep an eye on changes in your credit report.

  1. Protect your financial future

As difficult as it seems to save money when you’re trying to pay down debt, it’s so important. You need an emergency fund for those unpredictable expenses that will happen. Building an emergency fund will keep you from having to add to your debt when the car breaks down or you don’t get that bonus you were counting on. In other words, it’s the essential tool that keeps you climbing out of that debt pit, even when life happens. Without it, one setback can set off a downward spiral deeper into debt. You don’t want that.

How to do it

If your budget is absolutely maxed out, you can pick up a side hustle or employ another short-term strategy — such as selling off a few high-value items, or taking on seasonal work — to quickly build up an emergency fund.

Consolidate your bills>> 

 

Source: Wisebread

5 Things They Don’t Teach You About Money in College

August 15, 2017

University in AutumnIt’s August, which means one thing – millions of college students are about ready to walk on campus to start back for the year. The college experience, crazy expense aside, is one many should experience. In the midst of all the fun and hard work, one thing is missing – practical lessons on money.

That is a true shame. In an age when many take on crazy amounts of debt to fund the college experience, the one thing that should be discussed, or at least offered, are basics on personal finances.

Personally speaking, I learned a lot during my time in college, but one area that fell short was true, actionable ways to manage money. A lot of that was due to my own personal mistakes, but a lot of it was also a lack of teaching on the basics.

Whether you’re just starting college or are in your last year, here are some things they don’t teach you about money in college that you absolutely must know. Earning that paycheck once you graduate is awesome, but these tips will show you how to manage it to get the kind of life you want.

  1. YOU CAN START PAYING ON YOUR STUDENT LOANS NOW

Student loans are the 800-pound gorilla in the room. Reports indicate the average 2016 graduate had over $37,000 in student loans when they walked across the stage.

That’s a staggering amount of debt to graduate with, especially if you don’t land a high-paying job. Many will point to limiting as much as possible what you take out, not spending loan money foolishly to finance things you want, and consolidating loans into a lower interest rate once you graduate.

Those are all great points and I completely agree that they’re must follow tips to pay off student loan debt. However, one thing they don’t really tell you is that it’s possible to begin to repay your loans while you’re in college.

This will require some sacrifice and likely some reprioritizing to make it possible. You will also want to look at this specifically if your loans are not subsidized. If they are subsidized, interest will not begin to accrue until six months after you graduate – assuming you’re at least part-time.

Unsubsidized loans, on the other hand, start accruing interest the moment you receive the loan money. If you have a job while in college and you can afford it, making a payment to cover interest on a regular basis may be the best way to keep your debt balance down and help you kill the loans quicker after you graduate.

Once you do graduate, assess where you stand with the loans and make a plan to attack the debt.

  1. NETWORK, THEN NETWORK SOME MORE

You may not realize it, but networking plays a huge role in your financial life. As the saying goes, it’s not what you know but who you know. There are many opportunities to learn how to network while at college.

You can network with other students when you work on projects. You can network with co-workers if you have a job in school. You can also network with your professors.

I have someone in my family who networked with several professors during, and after college and it has turned into several career opportunities for them.

What they may not tell you is much of networking is not what about you can get out of a situation, but how you can help. This sounds counterintuitive but it’s true, and the more you give, the more you get back.

There are many other benefits to networking from learning how to clearly communicate to building relationships to learning how to appropriately receive feedback – all of which you can use grow in while in college.

  1. IT’S THE BIG EXPENSES THAT KILL YOU

You may have heard your parents talk about saving money around the houseand finding ways to save money each month. Both of those are great to do, but what they don’t tell you in college is that it’s the large expenses that kill you.

There are two big expenses this focuses on:

  1. Where you live
  2. What you drive

Those two expenses have a direct impact on what you have leftover at the end of the month. Go high on both of them, and you may be living paycheck-to-paycheck with nothing leftover for the things you enjoy.

Assuming you’ll be renting, you want to spend no more than 30 percent of your income on rent. You can lower this by getting a smaller place or getting a roommate.

Buying a new to you car can be fun, but it’s also very expensive. Instead of opting for a more expensive car, look for a reliable used car like a Honda or Toyota that will last you and has a relatively good retail value.

If you have to borrow to buy a car make sure the car payment is no more than ten percent of your monthly income. Car payments may seem “normal,” and all your friends may have them, but they destroy your wealth in the long run.

  1. THERE IS SUCH A THING AS FREE MONEY

Investing in the stock market is likely the last thing on your mind while in college. I get that. It was for me as well.

I have just one question to ask – do you have a job? Then, a follow-up question, does that job offer you access to a 401(k) with match? If they do, that is free money. It doesn’t matter how far off retirement seems, free money is still free.

You may not have a job right now, and that’s ok. However, you will have a job when you get out of college, and it will likely offer you a 401(k) plan. Not only is a 401(k) the easiest way to save for retirement but if you get a match, you’re actually paid to save for retirement.

Even if you have student loans to pay off, it still makes sense to take advantage of the free money. The rest of your extra money can go towards killing the student loans, but take the free money and run with it. Your future self will thank you.

  1. PAYING YOURSELF FIRST IS THE BEST HABIT YOU CAN START

The biggest thing they don’t teach you about money in college is this – paying yourself first. This is such a simple, yet incredibly important pillar of personal finance.

It works like this. The moment you get paid you want to pay yourself like you would pay a bill. This can be into anything like a Roth IRA or a savings account if you’re just starting out. It’s ok to start small, even if it’s $25 per paycheck.

It’s not really the amount that matters in the beginning. What matters is that you do it and develop that mindset of saving. In the beginning, you can use it to build a small emergency fund, and as you earn more and are able to save more, you can use it for retirement savings, saving for a house, car, etc.

The best way to get into the mindset of paying yourself first is by automating it.  Decide how much you will save, then, have a transfer go through each payday.

You won’t feel the transfer, it’ll force you to live on less, and you’ll be on your way to growing wealth – which is the real long-term goal. Following this simple, but vital rule helps you avoid foolish spending and prioritize what you want in life.

 

Source: Frugal Rules

Argent is Proud to Support the Salvation Army

August 14, 2017

Argent is proud to support the Salvation Army. They have a rich history of service to families and individuals in need in the Central Virginia area. The Salvation Army provides service thanks to the generous support of local donors, volunteers and partners. Visit their website.

How to File a Consumer Complaint

August 1, 2017

Woman Working From Home On Laptop In Modern ApartmentYou bought an item or paid for a service that did not turn out the way you had expected. Here’s how to get your money back or have the service performed to your satisfaction.

  1. Gather your paperwork including receipts, contracts, or order confirmations.
  2. Contact the seller, preferably in writing. Write a construction complaint of an experience, product, or service. Posting a complaint on a business’ social media site could be the fastest way to get a response.
  3. Contact third parties. If the seller doesn’t fix the problem, file a complaint with your State’s Consumer Protection office or Better Business Bureau.

 

Source: Credit Union National Association

Think Twice Before You Meme

Afro american young woman in a home officeEarlier this year, a Facebook meme went around called “10 Bands I’ve Seen, And One Is a Lie.” Posters then listed the names of nine bands they’d seen and one that they hadn’t, and their friends had to guess which, was the lie.

The person sharing the list often included a note about the first band he or she had seen play live. Sharing that information, security experts pointed out, is a risk, because the first-band question is a common one used to verify a person’s identity when he or she is accessing online accounts.

According to an April 2017 New York Times story about the 10 bands trend, security experts warned that memes which encourage you to share personal details can be used to unlock your accounts. Even if your Facebook account is set to private, it’s not impossible for bad actors to access it. Think about the number of times your friends have notified you their account was hacked and warned you not to accept a friend request.

So what can you do? It’s still possible to participate in fun trends on Facebook, just be cautious—especially when it comes to quizzes and other activities encouraging you to reveal information about yourself.

Here are some tips:

  • Think twice about what you share. If you’re concerned about privacy, sharing any kind of personal information on Facebook—or in a public space online—means offering valuable data to marketers who can use it to advertise to you.
  • Don’t share information that answers common security questions. Things like the name of your first pet, the street where you grew up, or your mother’s maiden name should never be shared online.
  • Consider making up answers to your security question. Questions like “where you went to high school?” are too easy. Change your answer to something random (but memorable) for additional security.

 

Source: Credit Union National Association