How to Make your Extra Money Work for You

August 24, 2018

Couple searching on line with a tablet pcLottery winnings, inheritance, lawsuit, gift, severance pay, financial grant–all mean extra cash. So, what’s your plan when money suddenly appears in your hands?

Sometimes in life, you get lucky. The person in front of you buys your coffee, you are gifted tickets for your favorite team, or you make every green light on the way to work. Of course, sometimes this luck involves money, and it has the potential to change your life.

Sudden windfalls can take many forms. You could bring home extra cash from gambling winnings, an inheritance, or even a financial gift. It could also be the best result from a bad situation, such as a lawsuit settlement or severance package. No matter where the money comes from, though, it’s important to plan how to put it to work for you.

By having a plan in place, you can not only optimize your financial impact, but you will also avoid the all-too-common tendency to fritter it away.

Take the Time to Make a Plan

I’ll admit it: I dream about winning the lottery sometimes. Since I’m not in the wills of any rich uncles (that I know of) and I doubt anyone I know will be gifting me with some serious cash anytime soon, the lottery is probably my best chance for a sudden windfall. And boy, oh boy do I have my new-money strategy all figured out.

First, I would pay off my mortgage, student loans (sayonara, Navient!), and auto loan. The rest would be a combination of paying off my parent’s house, fully funding my kids’ college savings, fully funding my retirement accounts, traveling the world, and giving some to charity. I’ve given this some serious thought over the years, and my strategy has changed along with my life and obligations. (Now, I just need those winning numbers to hit! I’m ready for it.)

Depending on where your finances currently sit, though, your priorities might be a little different. In fact, there are a few things that you should absolutely focus on first, whether your unexpected windfall is $250 or tens of thousands of dollars large.

You might have a plan in place long before the dream money arrives (if it ever does) or you might be caught off-guard by a sudden influx. No matter what, though, the important thing is to establish a plan before you do anything. Even if that means parking the money in a savings account or short-term CD until you can figure out exactly how to optimize the spending.

Think About Taxes

The very first thing you should consider when coming into extra money is the tax implication of those funds. Depending on where they come from and what you do with them, you could wind up with a seriously inflated tax bill come next April.

Cash gifts are generally safe, up to a certain amount. This means that if your parents or Aunt Sally want to write you a $15,000 check for Christmas, you’re in the clear. Since this doesn’t cross the annual gift tax exclusion threshold ($15,000 in 2018), neither the giver nor the receiver has to worry about Uncle Sam taking his cut. Beyond that amount, the donor is supposed to report the gift and pay necessary taxes, but in certain cases (if the taxes go unpaid), the IRS can come after the donee instead.

Gambling winnings–whether through a raffle, on a lottery ticket, or in a casino, among others–must be reported as income. This means that come April, you will need to pay taxes on those winnings according to your overall tax bracket. This also means that you should take measures to lower your taxable income throughout the year and reduce the amount due.

If you inherit your windfall, it may or may not be subject to taxes, depending on the nature of the funds, the amount inherited, and even the state in which you live. For instance, some states charge an inheritance tax, though it will usually be taken out of the funds before you ever even see a check. There are also estate taxes to worry about if you are inheriting a sum of money from a large estate. If you inherit a 401(k) or IRA, or even property, you will need to pay taxes on the deductions or capital gains resulting from either.

If you aren’t sure about the tax implications of the money you’ve come into, you should consult with a tax advisor to be sure. By planning ahead for your tax bill, you can not only optimize your investments and spending to reduce your taxable income, but you can also avoid spending your windfall only to get stuck with a tax bill you can’t afford the following spring.

Focus on High-Interest Debt

Whether you come into $500 or $50,000, your first focus should be on high-interest debt. Credit card interest rates are an average of 15% but can easily top 30% on some products. If you have private student loans, you probably have some high interest rates (some might even be variable). This means that you are throwing a substantial amount of money into a hole each and every month because of your balances.

If you are carrying around high-interest debt, your windfall should first be directed at clearing out those accounts. Even if you don’t have enough extra money to pay down the balances entirely, you can still make a dent with your extra funds. This will not only mean less interest charged each month, but will jump-start your payoff progress.

You shouldn’t worry about low-interest debt just yet, such as an auto loan (usually 3-5% or so) or even your mortgage (averaging 4.7% right now).

Build an Emergency Fund

Did you know that less than half of Americans have enough money on-hand for a sudden, $1,000 expense? This means that if they have an unexpected medical or dental issue, if the water heater suddenly leaks, or if they lose their job, they don’t have a safety net. Credit cards can be a fall-back, albeit a dangerous one, but if those are already maxed out or unavailable, you could be one emergency away from homelessness.

Having an emergency fund in place gives you peace of mind in case something comes up, and can be the safety net that you need to make it out of an emergency situation.

If you’ve already taken care of high-interest debt, your windfall should next be directed at funding such an account. Start by building an emergency fund that can cover a full month’s worth of expenses in your home. Then, build up to one and two months. Your goal? A full six months’ worth of expenses, from your mortgage payment and insurance to gas, groceries, and utilities.

Think About Clearing Other Debt

Next on the list for you might be clearing out other, smaller/lower-interest debt, depending on your personal priorities. For some of us, this could mean paying off a mortgage (our own, mom and dad’s, or even grandma’s) or auto loans. Even though the interest rates on these are probably reasonably low, the peace of mind that comes from eliminating the debt could be exactly what you need to de-stress.

Some argue against this, opting instead to invest those funds (where you could be earning 7-8% or more a year in interest) versus paying down a debt that only charges 4% or so. However, investments aren’t guaranteed; by getting yourself entirely debt-free, you can have the financial freedom and peace of mind that you may desire.

Invest Wisely

Depending on your priorities and current financial situation, investing might be next on your list. For some, it may actually come before paying off smaller, lower-interest debt. It’s really a matter of personal preference at this point.

Building an investment portfolio with your windfall can vary depending on your interests, the amount of money you have to invest, and even where you are on your road to retirement.

If you are still working and haven’t already maxed out all of your tax-advantaged retirement accounts, this should be your priority. These accounts allow you an easy way to reduce your tax burden, and you should jump on that every chance you get.

If you’re already maxed out for the year on your 401(k) or IRA accounts, you could earn some interest by investing your money. You could choose to allocate some of the funds to peer-to-peer investing, for instance. These types of loans have a certain level of risk involved but the returns are excellent. You could also work with a robo-advisor (like Personal Capital) or financial advisor to choose funds and even individual stocks that interest you, and build up your investment portfolio.

Buying another home or investment property might be the right answer for you. Even if you just use your money as the down payment on a new house, it can still be an excellent investment. Just be careful: being able to afford the down payment doesn’t necessarily mean you will be able to afford the home in the long run. Be sure to plan your purchase(s) wisely.

Make Charitable Donations

I personally believe in tithing and doing for others, so my win-the-lottery dream has always included charitable causes. While my plan would be to donate 10% of my windfall to others, this may vary wildly for others. The percentage isn’t the most important thing here, but doing good for others when you can should always be on the list.

For you, this could take the form of donating to your church or an organization that speaks to your heart. You could also start a scholarship fund for underprivileged youth, support a special program in your area, or any number of other avenues.

Be sure to consult with a tax advisor regarding the implications of your donation. There may be ways to optimize your charitable giving so that you also reduce your taxable income in the process.

Plan for the Future

I have two small children, so their future is always on my mind. One of them has special needs as well, so that opens up a whole new can of “planning for the future” worms.

Whether planning for their inevitable education expenses to setting aside extra money for down payments, their wedding, etc., it would be great to establish funds for their future needs. I don’t necessarily want to create “trust fund children,” even if I could afford to do so, but planning for specific needs down the line is a priority of mine.

If setting aside educational funds, look into utilizing a 529 account. This tax-advantaged plan will reduce your income tax burden and also earn them interest as it grows. If they are working, you can also use the money to fund a Roth IRA for them; just be sure that you don’t cross the maximum contribution amount or the amount of money they actually make this year, whichever is lower.

Of course, be sure to also address your own future, as we talked about in the retirement account/portfolio section above.

Have (a Little) Fun

While it’s important to be smart and intentional with your windfall spending, it’s just as important to have a little bit of fun. After all, work and no play can drive anyone crazy.

Set aside a specific amount to just enjoy life with–this would be another 10% for me personally. I would use that money to travel the world or just buy myself a pair of fun shoes (depending on how much money I came into), but you can set whatever amount you’d like. Just be sure that you’ve left yourself enough to take care of the really big priorities, like high-interest debt.

Update Your Estate Plan

Once you’ve decided how to spend your windfall and allocated funds to the appropriate accounts, it’s important to then update your estate plan. Failing to do so could mean serious tax implications later on (for your heirs), many of which could be avoided with the right planning.

Consult with a financial and/or tax advisor if needed, to see how you can create a new estate plan that accounts for your newfound funds. If you only come into a few thousand dollars, this obviously isn’t an issue for you–when I inevitably win the Powerball, though, you best believe that I will be calling up an advisor first thing to create a decades-long plan for my money.

Coming into funds is exciting and almost always a welcome surprise. However, there are smart ways to spend this money and there are dumb ways. By planning your spending intentionally (and even consulting with an expert or two), you can maximize your new funds and ensure that they go the furthest.

 

Source: DoughRoller.com

How to Tackle Your Summer Vacation Credit Card Debt

Family hiking through rivier in Andalusia, SpainIt’s easy to rack up credit card debt while on summer vacation. After all, finances are probably the last thing on your mind, and you have a handy credit card in your wallet whenever you need something. You can sit back with a margarita in hand without having to look at that credit card statement until next month.

When summer comes to a close, however, it can be quite a shock to see how high your credit card balance has grown. It’s not a fun situation, but with a plan in place, you can get out of credit card debt before the snow starts to fall. Here’s how to do it.

  1. Assess your new debt

As tempting as it might be, now’s not the time to hide your head in the sand. In order to create a plan to get out of credit card debt, you first need to know how big of a monster you’re fighting.

Log into your credit card accounts — all of them — and record two things for each of your credit cards:

  • How much you owe.
  • What the interest rate is.

It’s also a good idea to go back over your credit card statements to make sure everything’s kosher. Look for any double-charged expenses (maybe that waiter at the bar was a little loose with his fingers while keying in your purchase), or any charges you don’t recognize, as this could be a sign that your credit card information has been stolen.

  1. Check in with your budget

It’s a good idea to check in with your budget again if it’s been a while. In this case, it also serves another purpose: Finding out how much extra you can afford to pay toward your debt each month.

Go through each line item and ask yourself if there’s any way you can reduce it without sacrificing too much. For example, do you really need to pay for cable if you’re mostly watching Netflix, or can you start bringing leftovers for lunch instead of going out to pricey restaurants? Cut those corners now and it could make a huge impact in your debt repayment plan.

  1. Commit to a monthly payment amount

After you’ve gone through your budget and found extra money, it’s time to commit to a monthly payment amount. If at all possible, strive to pay more than the minimum monthly payment amount for your credit card debt. The more you can afford to pay each month, the sooner you’ll be out of debt.

Once you decide on a number, the final step is to set it up on autopay. That way, it’s even harder to self-sabotage your debt-payoff plan.

  1. Decide which credit cards to pay off first

If all of your credit card debt is on one credit card, this’ll be easy: pay off that credit card and you’ll be done.

But what if your debt is scattered across two or more credit cards? In that case, you’ll need to make the minimum payment on each. If you have money leftover after making the minimum payments, you’ll need to decide where to send it.

Two popular debt-payoff methods are the debt snowball and debt avalanche methods. The debt snowball method has you paying off the credit card with the smallest balance first, then moving onto the next smallest balance. The avalanche method is similar in execution, but instead of starting with the card with the smallest balance, you start with the card with the lowest interest rate until your debt is gone.

  1. Throw extra money at your debt

So, you’ve committed to a monthly debt payment that is hopefully higher than the minimum required. This will get you out of debt on schedule, but wouldn’t it be better to get out of debt even sooner?

That’s why it’s a good idea to throw any extra money you have coming in toward your debt. If you earn any money from a side hustle, selling unwanted items, unexpected gifts, or a raise at work, throwing it at your debt rather than buying a new big-screen TV can go a long way toward getting out of debt sooner.

  1. Make a savings plan for next year’s summer vacation

In order to avoid a repeat event next year, why not take the time now to plan a savings strategy so you don’t go into debt again? Figure out a target savings goal, either based on how much you spent this year, or the cost of a trip you want to take next year. Then determine how many months you have between now and your vacation. Finally, divide your target savings goal by how many months you have to save, and strive to set that amount aside each month.

For example, if you have six months until you want to go on a $1,800 cruise vacation, you’ll need to set aside $300 per month until it’s time to go.

After all, won’t sipping cocktails on the beach be that much sweeter if you’re not worrying about facing a debt hangover once you return?

 

Source: WiseBread.com

How to Make your Extra Money Work for You

August 23, 2018

Young successful businessman win a lot of money.Lottery winnings, inheritance, lawsuit, gift, severance pay, financial grant–all mean extra cash. So, what’s your plan when money suddenly appears in your hands?

Sometimes in life, you get lucky. The person in front of you buys your coffee, you are gifted tickets for your favorite team, or you make every green light on the way to work. Of course, sometimes this luck involves money, and it has the potential to change your life.

Sudden windfalls can take many forms. You could bring home extra cash from gambling winnings, an inheritance, or even a financial gift. It could also be the best result from a bad situation, such as a lawsuit settlement or severance package. No matter where the money comes from, though, it’s important to plan how to put it to work for you.

By having a plan in place, you can not only optimize your financial impact, but you will also avoid the all-too-common tendency to fritter it away.

Take the Time to Make a Plan

I’ll admit it: I dream about winning the lottery sometimes. Since I’m not in the wills of any rich uncles (that I know of) and I doubt anyone I know will be gifting me with some serious cash anytime soon, the lottery is probably my best chance for a sudden windfall. And boy, oh boy do I have my new-money strategy all figured out.

First, I would pay off my mortgage, student loans (sayonara, Navient!), and auto loan. The rest would be a combination of paying off my parent’s house, fully funding my kids’ college savings, fully funding my retirement accounts, traveling the world, and giving some to charity. I’ve given this some serious thought over the years, and my strategy has changed along with my life and obligations. (Now, I just need those winning numbers to hit! I’m ready for it.)

Depending on where your finances currently sit, though, your priorities might be a little different. In fact, there are a few things that you should absolutely focus on first, whether your unexpected windfall is $250 or tens of thousands of dollars large.

You might have a plan in place long before the dream money arrives (if it ever does) or you might be caught off-guard by a sudden influx. No matter what, though, the important thing is to establish a plan before you do anything. Even if that means parking the money in a savings account or short-term CD until you can figure out exactly how to optimize the spending.

Think About Taxes

The very first thing you should consider when coming into extra money is the tax implication of those funds. Depending on where they come from and what you do with them, you could wind up with a seriously inflated tax bill come next April.

Cash gifts are generally safe, up to a certain amount. This means that if your parents or Aunt Sally want to write you a $15,000 check for Christmas, you’re in the clear. Since this doesn’t cross the annual gift tax exclusion threshold ($15,000 in 2018), neither the giver nor the receiver has to worry about Uncle Sam taking his cut. Beyond that amount, the donor is supposed to report the gift and pay necessary taxes, but in certain cases (if the taxes go unpaid), the IRS can come after the donee instead.

Gambling winnings–whether through a raffle, on a lottery ticket, or in a casino, among others–must be reported as income. This means that come April, you will need to pay taxes on those winnings according to your overall tax bracket. This also means that you should take measures to lower your taxable income throughout the year and reduce the amount due.

If you inherit your windfall, it may or may not be subject to taxes, depending on the nature of the funds, the amount inherited, and even the state in which you live. For instance, some states charge an inheritance tax, though it will usually be taken out of the funds before you ever even see a check. There are also estate taxes to worry about if you are inheriting a sum of money from a large estate. If you inherit a 401(k) or IRA, or even property, you will need to pay taxes on the deductions or capital gains resulting from either.

If you aren’t sure about the tax implications of the money you’ve come into, you should consult with a tax advisor to be sure. By planning ahead for your tax bill, you can not only optimize your investments and spending to reduce your taxable income, but you can also avoid spending your windfall only to get stuck with a tax bill you can’t afford the following spring.

Focus on High-Interest Debt

Whether you come into $500 or $50,000, your first focus should be on high-interest debt. Credit card interest rates are an average of 15% but can easily top 30% on some products. If you have private student loans, you probably have some high interest rates (some might even be variable). This means that you are throwing a substantial amount of money into a hole each and every month because of your balances.

If you are carrying around high-interest debt, your windfall should first be directed at clearing out those accounts. Even if you don’t have enough extra money to pay down the balances entirely, you can still make a dent with your extra funds. This will not only mean less interest charged each month, but will jump-start your payoff progress.

You shouldn’t worry about low-interest debt just yet, such as an auto loan (usually 3-5% or so) or even your mortgage (averaging 4.7% right now).

Build an Emergency Fund

Did you know that less than half of Americans have enough money on-hand for a sudden, $1,000 expense? This means that if they have an unexpected medical or dental issue, if the water heater suddenly leaks, or if they lose their job, they don’t have a safety net. Credit cards can be a fall-back, albeit a dangerous one, but if those are already maxed out or unavailable, you could be one emergency away from homelessness.

Having an emergency fund in place gives you peace of mind in case something comes up, and can be the safety net that you need to make it out of an emergency situation.

If you’ve already taken care of high-interest debt, your windfall should next be directed at funding such an account. Start by building an emergency fund that can cover a full month’s worth of expenses in your home. Then, build up to one and two months. Your goal? A full six months’ worth of expenses, from your mortgage payment and insurance to gas, groceries, and utilities.

Think About Clearing Other Debt

Next on the list for you might be clearing out other, smaller/lower-interest debt, depending on your personal priorities. For some of us, this could mean paying off a mortgage (our own, mom and dad’s, or even grandma’s) or auto loans. Even though the interest rates on these are probably reasonably low, the peace of mind that comes from eliminating the debt could be exactly what you need to de-stress.

Some argue against this, opting instead to invest those funds (where you could be earning 7-8% or more a year in interest) versus paying down a debt that only charges 4% or so. However, investments aren’t guaranteed; by getting yourself entirely debt-free, you can have the financial freedom and peace of mind that you may desire.

Invest Wisely

Depending on your priorities and current financial situation, investing might be next on your list. For some, it may actually come before paying off smaller, lower-interest debt. It’s really a matter of personal preference at this point.

Building an investment portfolio with your windfall can vary depending on your interests, the amount of money you have to invest, and even where you are on your road to retirement.

If you are still working and haven’t already maxed out all of your tax-advantaged retirement accounts, this should be your priority. These accounts allow you an easy way to reduce your tax burden, and you should jump on that every chance you get.

If you’re already maxed out for the year on your 401(k) or IRA accounts, you could earn some interest by investing your money. You could choose to allocate some of the funds to peer-to-peer investing, for instance. These types of loans have a certain level of risk involved but the returns are excellent. You could also work with a robo-advisor (like Personal Capital) or financial advisor to choose funds and even individual stocks that interest you, and build up your investment portfolio.

Buying another home or investment property might be the right answer for you. Even if you just use your money as the down payment on a new house, it can still be an excellent investment. Just be careful: being able to afford the down payment doesn’t necessarily mean you will be able to afford the home in the long run. Be sure to plan your purchase(s) wisely.

Make Charitable Donations

I personally believe in tithing and doing for others, so my win-the-lottery dream has always included charitable causes. While my plan would be to donate 10% of my windfall to others, this may vary wildly for others. The percentage isn’t the most important thing here, but doing good for others when you can should always be on the list.

For you, this could take the form of donating to your church or an organization that speaks to your heart. You could also start a scholarship fund for underprivileged youth, support a special program in your area, or any number of other avenues.

Be sure to consult with a tax advisor regarding the implications of your donation. There may be ways to optimize your charitable giving so that you also reduce your taxable income in the process.

Plan for the Future

I have two small children, so their future is always on my mind. One of them has special needs as well, so that opens up a whole new can of “planning for the future” worms.

Whether planning for their inevitable education expenses to setting aside extra money for down payments, their wedding, etc., it would be great to establish funds for their future needs. I don’t necessarily want to create “trust fund children,” even if I could afford to do so, but planning for specific needs down the line is a priority of mine.

If setting aside educational funds, look into utilizing a 529 account. This tax-advantaged plan will reduce your income tax burden and also earn them interest as it grows. If they are working, you can also use the money to fund a Roth IRA for them; just be sure that you don’t cross the maximum contribution amount or the amount of money they actually make this year, whichever is lower.

Of course, be sure to also address your own future, as we talked about in the retirement account/portfolio section above.

Have (a Little) Fun

While it’s important to be smart and intentional with your windfall spending, it’s just as important to have a little bit of fun. After all, work and no play can drive anyone crazy.

Set aside a specific amount to just enjoy life with–this would be another 10% for me personally. I would use that money to travel the world or just buy myself a pair of fun shoes (depending on how much money I came into), but you can set whatever amount you’d like. Just be sure that you’ve left yourself enough to take care of the really big priorities, like high-interest debt.

Update Your Estate Plan

Once you’ve decided how to spend your windfall and allocated funds to the appropriate accounts, it’s important to then update your estate plan. Failing to do so could mean serious tax implications later on (for your heirs), many of which could be avoided with the right planning.

Consult with a financial and/or tax advisor if needed, to see how you can create a new estate plan that accounts for your newfound funds. If you only come into a few thousand dollars, this obviously isn’t an issue for you–when I inevitably win the Powerball, though, you best believe that I will be calling up an advisor first thing to create a decades-long plan for my money.

Coming into funds is exciting and almost always a welcome surprise. However, there are smart ways to spend this money and there are dumb ways. By planning your spending intentionally (and even consulting with an expert or two), you can maximize your new funds and ensure that they go the furthest.

 

Source: DoughRoller.com

7 Ways to Lower Your Fixed Monthly Expenses

August 20, 2018

Completely happy at their new placeCutting your expenses is a great way to almost instantly start saving more money. When considering cutting your expenses, it’s easy to think about the variable expenses that change each month like dining out, transportation, groceries, entertainment and so on.

However, there are various different ways to cut your fixed expenses which can prove to be more significant and make a big difference in the grand scheme of things.

The best part about cutting your fixed expenses is that you only have to do it once (instead of every month), then you can enjoy the benefits of being able to save more and have less of a financial burden.

Here are some real ways reduce 7 common fixed expenses.

1) Refinance Your Mortgage

A good rule of thumb is to not allow your total housing costs to exceed 30% of your income. While there’s nothing wrong with wanting to have a nice place to stay, you have to consider your other living expenses and how you’ll afford them as well.

If housing costs are too high, you should consider refinancing your mortgage. If rates are lower now than when you took out your mortgage, you may be able to save money by lowering your interest rate and/or your monthly mortgage payment.

Refinancing does come with some expenses attached like closing costs, fees etc. so make sure you compare offers and do the math to see if refinancing will actually help you lower your housing costs and allow you to save money over time as well.

2) Move to More Affordable Housing

If you don’t have a mortgage and still want to lower your housing costs, you could consider moving to a more affordable place. Moving can be a huge process though so it might not be worth it to you but again, calculate how much you could potentially save.

You don’t have to move far away either. When I moved to lower my housing expenses, I found a much better deal elsewhere but it was also in the same neighborhood so I didn’t have to go far. After it was all said and done, I only had to move once and I saved a ton of money by doing so.

If you’re not interested in moving, you can always get a roommate to lower your housing expenses, or rent out part of your house if you’re allowed.

3) Ask Your Internet Provider for a Discount

Sometimes it doesn’t hurt to ask for a discount. If you use the internet a lot and want to try a new company, be sure to ask if they have any introductory promotions that you can take advantage of to lower your bill.

If you’ve been a customer for a while, see if the company will offer you a discount based on your customer loyalty and the fact that you’ve continued to pay your bill on time.

Some companies raise their prices over time which I don’t think is fair, but I always call and ask for them to lower the rates again. I compare the costs with other companies and ask for a discount based on what the competition is saying.

If you do this, odds are, you will receive some type of discount on your bill because your internet provider would rather you stay with them than go with another company.

4) Compare Insurance Rates

How much is your insurance costing you each month and what benefits is your plan providing you with? It’s best to compare insurance rates every now and then to make sure you’re getting the best deal.

After you’ve been with an insurance provider for a few years, they don’t really have much of an incentive to keep offering you the lowest rate. This is why there’s no shame and choosing a different insurance company if they will provide you with the benefits you need at an affordable rate.

You can also see if you can get a discount by bundling your insurance packages as well. I have auto and insurance and renter’s insurance with the same company and they offer me a discount as a result.

5) Get a New Cell Phone Provider

If you’re still paying a crazy amount for your cell phone bill, it’s time to start looking at other options. I’m not a fan of getting locked into 2-year contracts because I like to be able to change carriers if I find a better deal.

Many prepaid cell phone companies have been improving their service over the past few years and offering unlimited talk and text plans so there really isn’t a major reason to sign up for a contract with a large well-known company.

I’ve had Republic Wireless for about 2 years now and I really like the service and the price. I only pay about $30 per month for my cell phone bill for my smartphone. I’ve also had Straight Talk and I’ve also heard that Net10 and Boost Mobile are really good too.

6) Get Rid of Cable

If you haven’t already, be sure to get rid of cable this year. There are so many other more affordable options you can take advantage of so there’s really no need to have a cable bill anymore.

According to The Motley Fool, the average American pays $64.41 a month for expanded basic cable but many people admit to paying $150 or more per month for their cable services.

Needless to say, there are much cheaper alternatives to help you save money including streaming services like Netflix, Hulu, Amazon Prime, Sling TV and more.

You can also rent movies and television shows at the library or use YouTube for free. If you’re not yet ready to cut the cord, you could always ask your cable service provider if you can downgrade your service but think about what you could do with an extra $1,000-$1,800+ annually if you got rid of cable once and for all.

7) Refinance Your Student Loans

With $1.3 trillion in outstanding student loan debt in the United States, many feel the impact of their student loan payments dragging down their finances month-after-month. DC and his wife graduated with $100k in student loans and it largely was the motivating factor behind his website and book.

Because of how much student loan debt there is in the United States, there are companies like SoFi that offer student loan refinancing. They are willing to refinance all your debt at a lower interest rate so that you can save potentially thousands of dollars that otherwise would have gone towards interest.

This can be a great option for people who are looking to pay off their student loans faster and/or are looking to put less towards interest and more towards the balance of their student loans.

The Key to Cutting Fixed Costs: Focus on Shopping Around

Shopping around and comparing prices is one of the best strategies to implement when you’re trying to lower some of your fixed expenses.

Since fixed expenses are constant, it’s pretty easy to get comfortable with them year after year and forget about trying to get the most bang for your buck.

Switching your cell phone provider or refinancing your mortgage make a big impact on your finances allowing you to spend less and save more.

Whenever you can, lowering the interest rate on your debt you are going to save money. For many people interest rates are what keeps them in debt, especially when it comes to high-interest debt like credit cards. With so much going towards the interest on debt it can be tough to find the money to put towards the balance. Shopping around for lower interest rates can be a big win from a fixed-cost perspective.

Finally, one of the big benefits of renting instead of owning a home is that you are not as tied down to the property. Even better is that in many metro areas there are hundreds or thousands of options for places to live. If you currently rent, do yourself a favor and shop around before you sign that lease renewal.

 

Source: YoungAdultMoney.com

How to Get Through Back to School Shopping on a Budget

Schoolgirl with father buying school supplies in stationery shopInternships are coming to an end, blockbuster movies are in their final few weeks at cinemas, and slowly but surely people are beginning to pack up their pineapple floaties. It’s officially mid-August, which means summer is slowing down, and school is back in session.

Whether you’re in your final years of high school, or beginning your first year of grad school in a new city, there is something about this time of year that makes people want to shop, shop, and shop. According to the National Retail Federation, total back to school spending for K-12 schools and college combined is projected to reach $82.8 billion, nearly as high as last year’s $83.6 billion.

Don’t be a statistic of this season’s shopping spree. Follow these 4 rules when doing your back to school shopping that will help keep your wallet dent- AND debt-free!

Make Your List, Check it Twice

Whatever you are about to shop for, there’s always one thing you should do first: determine your actual, needs, not just your wants. Maybe it’s a new backpack, calculator, or tennis shoes; spend on those items first, and plan on budgeting for the rest later in the year. Unless you’re going away to school in Alaska, chances are you don’t need a winter coat or boots for the first few weeks of school. It’s tempting to get all of your shopping out of the way while the racks are full of gear, but you are more likely to get a bargain on that adorable new coat when it goes on sale before the holidays.

Once you have developed a ‘needs’ list, shop in your own house before you head to the store. Take your list around your house and look through what you already have and might be able to reuse. It’s likely your junk drawers and closets are full of common back to school items like highlighters, pencils, pens, calculators, and notebook paper. While it’s fun to have brand-new school supplies and clothes in the beginning of the school year, the savings you will see from shopping in your own home first are significant. Plus, you may find that old 90s denim skirt is back in style!

Budget, Budget, Budget and…. Budget!

Now that you have saved some money by going through what you already have, it’s time to create a budget. Whether you use the old-fashioned way with pen and paper or use an app like Mint, have a clear budget and stick to it. If you’re armed with a shopping list and a budget, you’re much less likely to succumb to impulse buys like the tricked out Swell water bottle, or the pricey Lilly Pulitzer planner. Skip the unnecessary, fancy stuff. You’ll save a ton of money if you buy plain, generic school supplies and save the flash for another time.

Meet ‘Sale’ + ‘Coupon’ – Your Two New BFFs

You can do it, just put your time into it! Coupon finding and sale searching is time intensive, but time is money, and you are saving it! Visit a drugstore or office supply store to buy notebooks, pens, and other supplies where the prices are college-student-friendly.

And don’t forget discount apps, such as Target’s Cartwheel app, that offer coupons for in-store purchases, as well as credit cards that offer rewards like cash back. While you shouldn’t be opening any new credit cards just for back to school shopping, use your preexisting ones wisely! Whether you prefer points for travel or retailer-specific credit cards, don’t be afraid to take advantage of a good deal. You can also find coupons in your newspaper or via apps and online sources such as Coupons.com and RetailMeNot.

Also, don’t feel the need to start shopping too early. According to Deloitte, about two-thirds of shoppers (62 percent) people who start shopping sooner in the late summer spend about $100 more than shoppers who get a later start.

Go Online, It’ll Save You Time

Instead of buying textbooks at the university bookstore where prices tend to be inflated, consider renting textbooks through Amazon or another service, at a fraction of the price. Not only will you be able to efficiently compare prices by going online, but you are more likely to stick to your shopping list.

ALWAYS check prices online before you buy anything in the store. Apps like Price Comparison Shopping and ShopSavvy make it easy. Just open the app, scan the barcode of whatever you’re thinking of buying, and you’ll automatically see available online prices. And don’t forget to check retailers’ websites. Many big retailers offer online-only specials.

These tools will help you finish the overwhelming (and fun!) task of back to school shopping while staying smart with your spending. Saving money is possible, and if you get sidetracked, just remember to clearly define your list and stick. to. your. budget!

 

Source: MintLife.com