Cut Down These 5 Bills and Save $2,579

Bills, bills, bills. They never seem to end, do they? They take more and more out of your account each month before you even realize it.

You can’t escape them entirely (wouldn’t that be great?), but you can stop them from being so darn painful every month. All it takes is ending your loyalty to a few companies you currently use for bills and fees that come every month.

Trust us, they won’t miss you. And you definitely won’t miss them — especially when you realize how much money you’ve been needlessly throwing away every month.

1. Your Credit Card Bill: Save Up to 10x on Interest Payments

If you’re reading this, there’s a 50% chance you have credit card debt — nearly half of U.S. adults do. And if you don’t pay it off every month, you’re draining your bank account with unnecessary — and terribly high — interest payments.

And the truth is, your credit card company doesn’t really care. It’s just getting rich by ripping you off with high interest rates — some up to a whopping 36%! But a website called AmOne wants to help.

If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster.

With a $5,000 balance this month, that could be an extra $150 to your credit card company, or about $15 to a personal loan matched by AmOne. That’s $1,620 going down the drain every year.

AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.

It takes two minutes to see if you qualify for up to $50,000 online. You do need to give AmOne a real phone number in order to qualify, but don’t worry — they won’t spam you with phone calls.

2. Your Car Insurance Bill: Save $489/Year

When’s the last time you checked car insurance prices?

You should shop your options every six months or so — it could save you some serious money. Let’s be real, though. It’s probably not the first thing you think about when you wake up. But it doesn’t have to be.

A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options.

Using Insure.com, people have saved an average of $489 a year.

Yup. That could be nearly $500 back in your pocket just for taking a few minutes to look at your options.

3. Your Credit Monitoring Service: Cut $240 Down to $0

When it comes to your credit score, it’s important to stay organized and keep tabs on it. After all, it’ll play an essential role in any big purchase you want to make — whether that’s a home or a car.

But there’s no need to spend $19.99/month on a credit monitoring service, when you can get the same protection for $0.

So if you’re looking to get your credit score back on track — or even if it is on track and you want to bump it up — try using a free website called Credit Sesame.

Within two minutes, you’ll get access to your credit score, any debt-carrying accounts and a handful of personalized tips to improve your score. You’ll even be able to spot any errors holding you back (one in five reports have one).

James Cooper, of Atlanta, used Credit Sesame to raise his credit score nearly 300 points in six months.*** “They showed me the ins and outs — how to dot the I’s and cross the T’s,” he said.

Want to check for yourself? It’s free and only takes about 90 seconds to sign up.

4. Your Investment Broker: Never Pay Unnecessary Fees Again

Investing in the stock market is a great tool to grow your net worth. And for a while, it seemed like it was only available to the upper class — the people who didn’t mind paying up to $50 for each trade. What’s $50 when your investment broker is making you millions?

But if you work for a living and don’t happen to have millions of dollars lying around, smartly investing in the market can sound totally out of reach.

But with an app called Stash, it doesn’t have to be. It lets you be a part of something that’s normally exclusive to the richest of the rich — on Stash you can buy pieces of other companies for as little as $1.

That’s right — you can invest in pieces of well-known companies, such as Amazon, Google, Apple and more for as little as $1. The best part? If these companies profit, so can you. Some companies even send you a check every quarter for your share of the profits, called dividends.1

It takes two minutes to sign up, and it’s totally secure. With Stash, all your investments are protected by the Securities Investor Protection Corporation (SIPC) — that’s industry talk for, “Your money’s safe.”2

Plus, when you use the link above, Stash will give you a $5 sign-up bonus once you deposit $5 into your account.*

5. Your Banking Account: Skip the $15 Monthly Fees

The monthly fee your bank is charging you is a huge account-drainer. Especially because some banks charge when you don’t have enough money saved. We’re the people who need that $15 the most!

If you’re just looking for a place to safely stash it away but still earn money, a fancy account isn’t necessary. Under your mattress or in a safe will get you nothing. And a typical savings account won’t do you much better. (Ahem, 0.06% is nothing these days.)

But a debit card called Aspiration lets you earn up to 5% cash back and up to 16 times the average interest on the money in your account.

Not too shabby!

Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash.

Your money is FDIC insured and they use a military-grade encryption which is nerd talk for “this is totally safe.”

Kari Faber is a staff writer at The Penny Hoarder. 

***Like Cooper, 60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 20% see at least a 50-point increase after 180 days.

Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.

1Not all stocks pay out dividends, and there is no guarantee that dividends will be paid each year.

2To note, SIPC coverage does not insure against the potential loss of market value.

For Securities priced over $1,000, purchase of fractional shares starts at $0.05.

*Offer is subject to Promotion Terms and Conditions. To be eligible to participate in this Promotion and receive the bonus, you must successfully open an individual brokerage account in good standing, link a funding account to your Invest account AND deposit $5.00 into your Invest account.

The Penny Hoarder is a Paid Affiliate/partner of Stash. 

Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk. 

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Source: thepennyhoarder.com

Which Debt Repayment Strategy Is Right for You?

We’ve focused on giving you the information you need to know to get rid of your credit card debt once and for all this month. So far, we’ve explained how to get your debts organized and how to balance building up your savings while paying down debt.

Today, we want to discuss how you can choose a debt repayment strategy to make sure you stay on track and reach debt freedom as soon as you can. These methods can help you power through and repay every last balance.

The Debt Snowball

The debt snowball is a debt repayment strategy popularized by financial guru Dave Ramsey. This method asks you to take stock of all your debts — loans, credit cards, mortgages, and other lines of credit with balances — and list them in order of smallest balance to biggest.

That’s the only factor you need to take into account. So, for example, if you have three student loans and owe $5,000, $10,000, and $15,000 respectively, that’s exactly the order you list them out in. And that’s the order you’d work to pay them off in, too.

The debt snowball has you put as much money as you can toward your debt with the lowest balance first, while still maintaining minimum payments on your other balances. Once you repay that first debt, you take the amount of money you were applying toward it, and combine it with the minimum payment you were making on the loan with the second-lowest balance.

Your payment on this second-lowest balance loan “snowballs,” because the payment is the combination of what you paid toward the first loan and the minimum payment you were already paying on the second.

You’ll continue to snowball your payments and knock out your debts one by one, until you’re debt free.

The Debt Avalanche

The debt avalanche is another system for repaying your debt. With this strategy, you again take stock of all your debts and list them out — but this time, you’ll order them by interest rate.

With the debt avalanche, you’ll list them out in order from highest interest rate to lowest (regardless of balance). Then you’ll work to repay the balances in that order, taking out the loan with the highest interest rate first, then the second-highest, and so on.

The only difference from the debt snowball is the order in which you repay your loans. The biggest advantage to the avalanche is, from a mathematical standpoint, you come out ahead because you’re getting rid of your most costly loans first. Because you’re knocking out loans by interest rate, you’ll gradually pay less in interest over your repayment period.

Choosing a Debt Repayment Strategy

There’s no “wrong” way to knock out balances and become debt-free. But there’s probably one strategy that works best for you over other options. So how do you choose the ideal system for your personal situation?

Start by understanding your own personality. The right strategy is likely the one that’s a good fit for you and the way you think. It’s not necessarily about the details of your debt.

The debt snowball does a good job of taking the emotional and behavioral part of personal finances into account. For many of us, money is about more than just the numbers — it’s how we feel and think about it.

The snowball can keep you on track because it gets you to a “win” quickly. Since you’re paying off the lowest balance first, this repayment strategy will likely knock out your first loan faster than other methods of paying down your debt.

This can be the difference between sticking to the hard work it takes to become debt free, and getting frustrated and overwhelmed by the process.

The debt avalanche is, mathematically speaking, usually better than the snowball. That’s because you focus on getting rid of the debt with the highest interest rate first, regardless of balance. This should save you money over the long-term because you’re lessening how much you’re paying in interest.

But if your highest-interest loan also comes with a bigger balance than your other loans, it’s going to take you longer to repay that debt than if you focused on knocking out loans with balances in order from smallest to largest. For some, it’s emotionally tough to have that first milestone be further down the road.

And that’s okay — it feels good to get rid of loans or balances on your lines of credit!

It all depends on what motivates you. If paying off your first loan ASAP will keep you going and prevent you from feeling discouraged or hopeless, choose the debt snowball. If you want to put an end to interest rates eating up your discretionary income, choose the debt avalanche.

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What About Debt Consolidation?

Debt consolidation is another strategy that may be helpful if you’re struggling to keep track of multiple loans and their payments, due dates, and other information. Consolidation can also help those who have high interest rate loans but good credit scores (be sure to check your credit score with a free credit report on a regular basis).

When you consolidate, you start by taking out a single loan for the total amount of the debt you want to repay. You take the borrowed money from the new loan and repay all the individual loans with balances you already had. Then, you work to repay the single, new loan.

This is a good option if you’re feeling overwhelmed because it simplifies your financial situation. Instead of having multiple loans to keep track of, consolidating leaves you with a single loan — with a single interest rate, monthly payment, and due date.

It’s also worth looking into if your current loans carry high interest rates that cost you money. There’s no guarantee, but you can shop around with different lenders to possibly consolidate existing loans for a lower interest rate. This not only simplifies your debts — since, again, there will only be one balance to keep up with — but it could also save you money if you can get a lower interest rate.

Just make sure you take all the fees into account. A new loan may come with a lower interest rate, but the loan origination fees may mean it’s a wash when it comes to saving money. Everyone’s situation is different, so do the math before making any decisions.

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Dear Penny: I’ll Never Marry My Boyfriend, So Can I Hide My Debt?

Dear Penny,
Regardless of how you proceed with your boyfriend, I hope you recognize that not talking about this debt isn’t going to make it disappear. You need a plan for how to conquer this debt, whether that involves paying it off as quickly as possible or keeping the monthly payments as manageable as possible. If you haven’t done so, consider making an appointment with a financial planner or counselor to make sure your plan is solid. You may feel better about telling your boyfriend you have debt if you can also talk with confidence about how you’re handling it.
If you haven’t told anyone about this lingering debt, consider telling a trusted friend or family member first. Doing so could help you gauge your boyfriend’s reaction. You may also discover that talking about this isn’t as scary as you’ve imagined.
Your boyfriend’s reaction isn’t the only thing to consider when you make this decision. Be honest with yourself: By keeping this secret, are you spending more money because you’re trying to pretend like you don’t have any obligations? When you’re not upfront about your financial situation, you often wind up with a lifestyle you can’t afford. You say yes to the vacations and restaurants that are out of your budget because you don’t want anyone to suspect that you’re struggling.
The problem is, I’m in debt due to my last husband. My boyfriend always talks about how he is debt-free except for his mortgage. We are in love and committed to each other. 

Privacy Policy
Whatever you choose, I hope you can stop feeling embarrassed about your debt. It’s not a character flaw. Life can throw a lot of unexpected hurdles at you. Sometimes your battle wounds come in the form of debt. Hopefully after seven decades in the world, your boyfriend is wise enough to recognize that.
You aren’t obligated to disclose every single aspect of your life and finances to your boyfriend. Of course you’d need to tell him you have debt if you were talking about marrying or moving in together. That’s not the case here.
I won’t try to pretend that learning your debt is a deal-breaker for him wouldn’t be incredibly painful. I certainly understand why the easiest thing to do is not to talk about this when you’re happy and in love. Still, I think it’s important to know whether he cares more about you or your net worth.
What I’m hoping is that you’re underestimating your boyfriend. You say he “always” talks about being debt-free aside from his mortgage. It may be that he’s simply more open to discussing money than you, so it feels like he’s constantly talking about his lack of debt.
Dear L.,
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I have no idea if this is happening here. You don’t say how much debt you have or whether it’s manageable. But if this debt eats up a significant part of your income and you’re a couple who tends to split things relatively equally when you go out on dates or travel together, it’s something you need to seriously consider.
My boyfriend and I are 71 and 72. He’s been divorced three times, and I’ve been widowed twice. We both have our own homes and good incomes. 
Context matters a lot here, too. Is he bringing it up because he’s proud of the accomplishment? Or because he’s excited about all the things he can do because his expenses are low? That’s a lot different than if he’s the type of person who thinks that just because he’s debt-free, anyone else who has debt is irresponsible.
I’m going to paraphrase Dan Savage, the legendary love and sex advice columnist, and give you the advice he often repeats when someone is scared to reveal something about themselves to a partner: If you tell your boyfriend about your debt, you’ll be revealing one thing about yourself. His reaction will reveal everything about him.
As long as your debt isn’t impacting him, you shouldn’t feel guilty for not telling him. But I wonder if you’d feel better if you told him.
Ready to stop worrying about money?
-L.
Not to add to your pressure, but the longer you keep this a secret, the harder it will be should you eventually open up. Even the most sympathetic partner may be hurt to learn that you’ve been keeping debt a secret for years because you were afraid of their reaction. Conversely if he doesn’t react well, your pain will be exacerbated after investing many years together.

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Do I have to tell him about my debt when we have said we don’t want to remarry? I am embarrassed about the debt.

Car Repossession: What to Do Before, During and After

If you haven’t been paying your auto loan, there’s a good chance you haven’t been paying your auto insurance either, and some lenders require insurance as a condition of your loan. Even if you haven’t missed enough payments to have your car repossessed, the lender could potentially take your vehicle due to inadequate auto insurance.
If you miss even one payment, and your lender technically can repossess your wheels.
Facing bankruptcy? You may be able to hold onto your car. Consult your bankruptcy attorney about whether your filing status allows you to retain property, including your vehicle.
You have a few options — some are less costly than others, but none are particularly easy:

Car Repossession: What Can You Do Before, During and After?

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So what can you do if you know you’re in danger of having your car repossessed — or if it’s already been repossessed? Check out this guide to help you before, during and after car repossession to help you and your finances survive this bumpy ride.
The lender will sell the car, typically at auction, to get some of its money back. It’s technically possible for you to buy back your car by bidding on it at auction, but you’ll still be responsible for paying your old loan, plus all those fees. Get the Penny Hoarder Daily
An auto loan contract states if you fail to make a payment — and the process can legally start after one missed payment — the lender has the right to take back your car.

What to Do if You Can’t Make Your Auto Loan Payments

“I would put it on that scale of somewhere around bankruptcy or foreclosure,” McClary said. “You can climb out of this hole, but it will take some time.”
If you have the cash, paying off what you owe to make your loan current again may be the ideal solution, but there are other options if you’re struggling to make payments:

Pro Tip
“The efforts to repossess your car typically start after you’ve missed a couple of consecutive payments,” he said. “If you miss two payments, you should start getting a little bit concerned, and if you miss three payments and your car is still sitting in your driveway, you may not have much more time.”

It’s to your lender’s financial benefit to work with you rather than spending the money to repossess your car, but they can’t help unless they know what you’re facing and what you’re able to pay, according to McClary.

  • Ask about forbearance programs. Call your lender to explain why you’re unable to make your monthly payment and request a forbearance. Be prepared to share details and documentation if it’s due to a job loss, illness or change in family status. Your lender may offer a delay in your payment or a revised schedule of payments, but you’ll still be responsible for the loan — and oftentimes the accruing interest. But if the situation is temporary, a forbearance could let you delay payments until you’re back on your financial feet.
  • Downsize to a cheaper car. If you can trade in your current set of wheels for a more economical version — think smaller and older — you could roll your old loan into a new, more manageable one. Be sure to get a pre-approved auto loan to give yourself some leverage when negotiating the interest rate.
  • Sell your car. If you don’t need the vehicle, you could potentially sell it for enough money to pay off the loan balance, which would free you from monthly payments entirely.
  • Refinance. This option may be the most difficult to successfully pursue for many borrowers, as lenders have tightened their standards due to the current economic situation. But if you have an excellent credit history and you have stable employment, you could qualify for refinancing your loan at a lower interest rate, thus reducing your monthly payment.

If you don’t have enough money to cover the missing payments, you should explain your situation and offer at least a partial amount — in cash — as a show of good faith, according to Davis.
Source: thepennyhoarder.com

What to Do if Your Car Is in Danger of Being Repossessed

If you had enough money to pay off your loan in the first place, you probably should have done this before the repo company took your car. But if you pay off the loan and all fees, you get your car back free and clear of any loans.
“There’s no shame in saying… ‘I have a couple hundred bucks in my budget, can I throw this on the loan so that I don’t get it repoed?’” she said.

  1. Find your contract and contact your lender’s loss mitigation or collections department to explain your situation, advised Jenelle Davis, who worked in the credit union industry for seven years.
  2. “Communication is one of the best tools that you have in the earliest stages when you’re late making car payments,” he said. “The fewer unanswered questions that your lender has, the more likely they are to try to cooperate.”

Because the repossession process is outlined in your loan agreement, your lender legally can repossess your car without notice or a court order. But most lenders will call, email or send notices (or all of the above) outlining the consequences if you begin missing car payments.
But a car repossession isn’t the end of the world, so long as you commit to making smart money-management moves that raise your credit score and help get yourself back on the road to recovery.
Your credit score will take a hit — a big one.

Pro Tip
If you’re unable to come up with the money to get your car back, the lender will use the proceeds from the sale to pay off what you owe. If the sale price is less than your loan balance plus any fees, the difference is called the deficiency balance. That’s the amount you’ll be responsible for paying.

Avoid a Friday evening car repossession if possible: Repo companies are often closed over the weekend, but they’ll charge you storage fees for Saturday and Sunday.
Your car has been repossessed. Now how do you get it back?
If the deficiency balance is small enough, McClary recommended trying to negotiate with the lender to settle the remaining balance so you aren’t still paying for a car you no longer own.
If the amount is too large to settle, though, the lender will contact you and, depending on the state where you live, can pursue the deficiency balance through collections.
If you can’t reach a deal with your lender, you should prepare to have the car repossessed by removing all personal items from your car, as repo companies can take your car at any time — whether the car is parked in front of your home, at work or at the grocery store.
“Act very quickly,” she said. “Because at that point, the loan has not been sent out to collections.”

Pro Tip
Depending on where you are in the car repossession process, you do have options for keeping your car — and more of your money.

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.
The best way for the lender to get that money is to sell the car, often through an auction. So you’ll have to act fast if you want your car back.

What to Do if Your Car Has Been Repossessed

Although lenders may have the legal right to start the repossession process the day after a missed payment, most give customers a grace period of at least 10 days when they won’t even charge a late fee. If you’re in this situation, the time to act is now.
By contacting your lender early in the process, you’ll not only create a record of your attempts to satisfy the loan, you’ll avoid additional fees that the lender may incur by hiring a third party to collect your vehicle.
Although losing your vehicle and the repossession expenses may be upsetting or even devastating, the lasting financial consequences of a repossession could hurt even more.
Don’t destroy your car to get revenge. Your lender may not take the vehicle if it’s deemed worthless, but then they can’t sell the car to pay off your loan. You’ll end up owing more.

  1. Reinstate your loan.

    Ready to stop worrying about money?

  2. Redeem your loan.

    “They could take you to court over the money you owe, and try to garnish your wages,” he said. “There are all kinds of ways that they could legally pursue repayment of that debt, beyond the sale of the vehicle.”

  3. Give up your car, then buy it back.

    The repo company cannot “breach the peace” — aka break the law. If the collector uses physical force or destroys your property, you can potentially file a lawsuit. Keep notes of all interactions.

Pay the past-due amount, plus any late fees and repossession costs. You get your car back and resume paying your car loan.

Pro Tip
Car repossession can remain on your credit report for seven years — making it more difficult to qualify for another loan, increasing the interest rate you’re charged on other loans and even potentially affecting your ability to get a job or a place to live.

How can your bank, credit union or leasing company possibly have the right to take back your vehicle? Read your loan agreement.
Privacy Policy
But will a lender really take your car if you’re late on this month’s payment? It’s unlikely, according to Bruce McClary, vice president of communications for the National Foundation for Credit Counseling in Washington, D.C.

The Long-term Effects of Car Repossession

“The difference between the two in terms of impact on your credit score is slight,” McClary said. “But if you’re thinking about trying to restore your good credit and how much effort it’s going to take, every little bit helps.”
Your loan agreement should state how many payments you can miss before the lender can repossess your car.
And if you think hiding the car will keep the repo company at bay, you’re likely only adding to the fees you’ll end up having to pay as the company expends resources — including paying someone to follow you — to locate the vehicle.
The first rule of preventing a vehicle repossession: Communicate early and often.
If you know that you’re already in danger of having the car repossessed, there is a way to mitigate the financial impact: voluntary repossession.
And although a voluntary repossession will affect your credit score, your lender will technically report it to the credit reporting agencies as a “voluntary surrender” rather than an involuntary “repossession” — which could help as you recover.

After taking possession of your car, the lender begins the process for recouping the money you still owe on the car loan, plus any fees incurred — think towing, storage of the vehicle, re-keying the car and legal fees.

The result is most devastating for subprime borrowers — those with credit scores under 600. Serious delinquency levels within that group rose about 22% between the fourth quarters of 2019 and 2020.

Save Money and Time With a Loan From LendingClub

When you need a loan, finding one — and getting approved — can bring as much anxiety as the thing you need the loan for. Whether it’s for debt consolidation, medical expenses or big home projects, waiting weeks just won’t cut it. On top of it all, big banks may charge you insane rates after making you jump through qualification hoops.

There’s another option, though. If you need to borrow up to $40,000, a website called Fiona can help you get a loan through a company called LendingClub. You can save an average of $1,000 on interest payments1, plus, you could get your money in only a few days — talk about relief!

Fiona will also show you additional offers from other lenders — because comparing your quotes can help you save even more money in the long run.

How to Borrow up to $40,000 and Pay Off Debt Faster

Getting started is simple. The application process only takes a few minutes, and you’ll see your loan offers immediately. Once you choose your loan, you could see your money in just a few days.

It costs nothing to apply, and it won’t affect your credit score, either. And by the way, your information is totally safe — the website uses higher encryption security than many banks.

Interest rates with LendingClub start at 8.05% — way better than the 20% or more your credit card is charging you — and many people may actually improve their credit scores when they take out a personal loan and make their payments on time each month. These lower rates can save you an average of $1,000 in interest payments and help you pay off your debt faster.

If you have a credit score above 600 and need a loan, let Fiona find your offers in only a couple of minutes. You can get approved and see your money in just a few days.

1 On average, personal loans from LendingClub Bank are projected to be offered at an APR of 15.99% (based on loan approval amounts in aggregate) with an origination fee of 5.30% and a principal amount of $13,411 for loans with term lengths of 36 months, based on current credit criteria and an analysis of historical borrower data between September 2020 and October 2020. For credit card purchases made in October 2020, the average APR was 20.23%, according to publicly available information published by TheBalance.com. If you pay off a credit card balance of $12,700 with an APR of 20.23% over 36 equal monthly payments, you will pay $4,345 in total finance charges. If you obtain a loan with a term of 36 months and an amount financed of $12,700 (principal amount of $13,411 with an origination fee of $711) at 15.99% APR, you will pay $3,372 in total finance charges over the term of the loan, a savings of $973 as compared to the average credit card.

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Source: thepennyhoarder.com

Even 6-Figure Earners are Living Paycheck to Paycheck. How to Break the Cycle.

When your salary finally tips over $100,000, all your worries about living paycheck-to-paycheck should be gone, right?

Not necessarily. In fact, 16% of six-figure earners said they have difficulty covering basic expenses, such as food, rent or mortgage and car payments, according to a November 2020 survey by the Center on Budget and Policy Priorities.

They’re living paycheck-to-paycheck.

How is that possible? Here’s the thing: It doesn’t matter how much money you make if your expenses outweigh (or are equal to) your income. That’s why it’s so important to have a solid plan for your budget. Otherwise, you could end up with no savings and in debt.

No matter how much you earn, here’s how to break the paycheck-to-paycheck cycle.

Make a Budget and Stick to It

It’s no question that the cost of living is going up at a rapid pace — not just in big, growing cities, but all around the country.

Yet slowly rising wages can’t take all the blame for our $0 balances at the end of the month. Poor budgeting — and lack of budgeting education — is holding millions of us back. So if you don’t have a budget or haven’t updated yours in a while, get one together.

If you don’t know where to start, a simple and straightforward approach is a good way to begin your budget overhaul. We like the 50/30/20 method. You map out all your expenses like this:

  • 50% of your monthly take-home goes to what you need. That includes rent, groceries, utilities, minimum debt payments, childcare, etc.
  • 30% goes to your wants — like your Netflix subscription, dinners with friends and travel costs.
  • 20% is earmarked for financial goals, like paying down debt, growing your savings and adding to your retirement fund.

If you’re living paycheck-to-paycheck, that last 20% likely isn’t getting the attention it needs from your bank account. And while the “wants” can easily get out of hand, it’s your “needs” that can be the biggest culprits.

So, how do you fix that? Here are some secrets to help you regain control of your spending and put more money in your savings:

Cut Costs and Bills Where You Can

Usually, your biggest monthly expense is your rent or mortgage payment. And unless you’re living the #vanlife or have a sweet month-to-month set up, chances are finding a cheaper place to live next month is out of the question.

But there are some necessary bills you can cut down significantly, without sacrificing the services you need.

  • Car Insurance: Shop around for new car insurance every six months, and you could save some serious cash. Compare car insurance prices on a website called Insure.com and you could save an average of $489 a year. All you have to do is enter your ZIP code and your age, and it’ll show you your options. 
  • Homeowners Insurance: Homeowners insurance can be a huge waste of money if you get the wrong coverage. Luckily, an insurance company called Policygenius makes it easy to find out how much you’re overpaying. It finds you cheaper policies and special discounts in minutes. Plus, it saves users an average of $690 a year.

Eliminate Credit-Card-Debt Payments

If you have credit card debt that you’re just paying the minimum on, chances are you’re paying a ton in interest. And why would your credit card company care? They’re getting rich by ripping you off with those high interest rates — some up to 36%.

Credit card payments alone could keep you in the paycheck-to-paycheck cycle for years. That means it’s time to get rid of those payments for good. A website called AmOne wants to help.

If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.

AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.

It takes two minutes to see if you qualify for up to $50,000 online. You do need to give AmOne a real phone number in order to qualify, but don’t worry — they won’t spam you with phone calls.

Create a Separate Account for Savings

Once you’ve cut down your monthly costs, make sure you’re prioritizing your savings. Whether that’s contributing to your retirement plan, investing in the stock market or building up an emergency fund — you did it! Congrats on breaking the cycle and cleaning up your spending habits.

But speaking of emergency funds, many Americans don’t even have $400 saved in case their car breaks down or their kid ends up in the ER.

Where should you start saving for one? A typical savings account won’t earn you much interest.

That’s why we like a free account from Aspiration. Its Spend and Save account could earn you up to 16 times the national average interest on your money, plus up to 5% cash back, if you use Aspiration’s debit card. It’ll help grow your emergency savings fund that much faster.

Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC insured and they use a military-grade encryption which is nerd talk for “this is totally safe.”

Follow these secrets, and you’ll be well on your way to breaking the paycheck-to-paycheck cycle.

Kari Faber is a staff writer at The Penny Hoarder. 

Source: thepennyhoarder.com

How Does a Discharge of Bankruptcy Affect My Credit?

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

A bankruptcy discharge relieves a borrower from their legal obligation to pay certain debts. Not all types of debt can be discharged, but those that can may not be pursued by creditors—via phone, letter or other communication. This is because a bankruptcy discharge relieves the borrower of personal liability to pay certain debts.

A bankruptcy discharge relieves the borrower from their legal obligation to pay certain debts.

How Does a Debt Discharge Work?

The goal of a bankruptcy discharge is debt relief. However, when and how your debts will be relieved largely depends on which type of bankruptcy you file and the amount of outstanding debt.

For Chapter 7 bankruptcy, your nonexempt assets—like investments, valuables and property that is not your primary residence—may be divided among your creditors. Any remaining debts may be discharged. For Chapter 13 bankruptcy, you propose and prosecute a chapter 13 plan to repay certain debts. If approved by the bankruptcy court any leftover debt that is not repaid at the end of your plan may be discharged.

Debts Subject to Discharge

When considering bankruptcy, consider the type of debt from which you’re seeking relief. If credit card debt or medical bills are overwhelming, bankruptcy discharge may help. Some common discharged debts include:

  • Credit card debt
  • Personal loans
  • Past rent payments (if vacating the rental property)
  • Utility payments
  • Some business debt
  • Attorney fees
  • Medical bills
  • Some unsecured debt
  • Certain older tax debts

Debts Not Subject to Discharge

Contrary to popular belief, bankruptcy is not always the best option for relieving debt. This is because there are many forms of debt—19 forms, according to the United States Courts—that cannot be discharged. Below are 10 common examples:

  • Child support
  • Alimony
  • Student loans
  • Car loans (If you are retaining the car)
  • Mortgages (If you are retaining the real property)
  • Condo fees
  • DUI debts
  • Criminal fines
  • Court costs
  • Retirement plan loans

When Does a Bankruptcy Discharge Occur?

The timeline for a bankruptcy discharge varies greatly depending on the bankruptcy chapter. Chapter 7 bankruptcy discharge occurs relatively quickly—60 to 90 days after the scheduled meeting of creditors.  The timeline for Chapter 13 bankruptcy is much lengthier, as discharge only occurs at the end of a successful repayment plan. This typically takes three to five years.

When does a bankruptcy discharge occur? Chapter 7: 60 – 90 days. After all creditors have met. Chapter 13: 3 – 5 years. At the end of your repayment plan.

What Happens After a Bankruptcy Discharge?

After your bankruptcy discharge, it’s important to be aware of your rights and options. This way, you can start your path towards rebuilding your finances.

Notify Cosigners and Joint Account Holders 

Even though you’re no longer personally liable for repaying discharged debts, any cosigners or joint account holders may be. They should be listed in your bankruptcy schedules as “Co-Debtors” and notified by the Bankruptcy Noticing Center when creditors are notified of your bankruptcy filing.

Save a Copy of the Discharge Order 

Once your discharge goes through, you’ll receive a copy of your discharge papers. Be sure to keep this copy safe, as court clerks may charge a fee to obtain future copies. Additionally, your discharge papers (coupled with copies of your bankruptcy schedules that list your creditors) act as proof of the entry of a discharge and protect you in case a creditor attempts collection in the future.

There were over 750,000 non-business bankruptcy filings in 2019 alone.

How Does a Bankruptcy Discharge Affect Credit?

Generally, a bankruptcy discharge itself does not affect your credit score as much as the bankruptcy itself does. A bankruptcy discharge does not reset your credit history, nor does it affect the length of time in which a bankruptcy remains on your credit report. After a bankruptcy, no matter how high your credit score was, you’ll likely see a dip. 

If you default on just a few accounts with low balances—and have other accounts still in good standing—it’s likely that your credit score won’t be as damaged as it would have been if you had defaulted on many high-balance accounts. 

It takes time and effort to rebuild your credit score after bankruptcy, but the good news is that it can be done. Consider the following best practices:

  • Continue to make on-time payments on your post-bankruptcy accounts.
  • Ensure these payments are reported to the three major credit bureaus.
  • Consider applying for new credit if you think you can manage the payments.
  • Stay at your job. Borrowers with steady employment are seen as less risky.
  • Keep credit utilization low. Aim for 30 percent utilization to avoid a credit score dip.

It’s also important to continue monitoring your credit report after a bankruptcy discharge. Discharged debts should show up as “discharged” with a balance of zero. Any debts that are mistakenly reported “late” or “active” may wrongfully harm your credit score. You’ll also want to ensure that Chapter 7 bankruptcy is removed from your report after 10 years and Chapter 13 after seven years.  If you spot any of these errors, dispute them as soon as possible. Lexington Law can help do the legwork to get questionable items removed from your credit report. Contact our team to learn more about credit repair.


Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.

Reviewed by Vince R. Mayr, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Vince has considerable expertise in the field of bankruptcy law. He has represented clients in more than 3,000 bankruptcy matters under chapters 7, 11, 12, and 13 of the U.S. Bankruptcy Code. Vince earned his Bachelor of Science Degree in Government from the University of Maryland. His Masters of Public Administration degree was earned from Golden Gate University School of Public Administration. His Juris Doctor was earned at Golden Gate University School of Law, San Francisco, California. Vince is licensed to practice law in Arizona, Nevada, and Colorado. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

How Going Out Cost Me 40 Credit Score Points

Can we all please talk for a moment about how expensive it is nowadays to enjoy a night out at a restaurant or bar. Even a quick run to Chipotle will cost a couple upwards of $20. Especially in pricey urban areas (like New York, San Francisco, or Atlanta) a simple night out each week can run upwards of $70, which quickly turns into $280 per month.

And thanks to the advent of new fintech apps like Venmo and CashApp you can go out with your friends, NOT use your credit card, still spend more than you intended, and never really be able to track it or tie it back to your budget. Also factor in drinking and the relative ease of spending with an app and if you’re not careful – your finances and credit score could be in trouble.

Debt Has Lasting Effects

It’s crucial in your early-to-mid twenties to live within a budget. Why? Because your entry-level salary (likely) can’t keep up with the rate of spending. Suddenly you could find yourself in a hole, not even an annual bonus can dig you out of. Even going over budget just a little each month adds up over time. Say you’re putting $300 on the card each month (from just one night out with friends after a long work-week.) This is $3600 a year, or $14,400 over four years, and I’m not even factoring in interest!

For me, it took me fourteen months of frugality to pay off nearly five years of bad financial behavior post-college: pizza takeout, shopping binges on the low days, and drinks every night after work.

When it comes to your credit score, it isn’t just about how much money you owe, it’s about how much money you owe compared to how much overall credit you have. This is called credit utilization and if you are carrying close to the limit on your cards, this lowers your score. It’s important to check your score using a free online credit report so that you can see where your credit score stands.

Using a credit score simulator, you can see this visually and it becomes more dramatic.  For me, simulating the previously mentioned amount of $14,400 dropped my score to a 704. If I paid off all the balances, my score is a much better 742 (where it is currently now that I am debt free.)

The Higher Cost of (Many) Nights Out

40 credit score points may not seem like much, especially if you have a higher score overall, but here’s how much a 40 point swing could cost you if you were shopping for a large, expensive purchase like a home.

Lenders separate credit scores into ranges.

  • Excellent credit = 720 and above
  • Good credit = 660 to 719
  • Fair credit = 620 to 659
  • Poor/bad credit = 619 and below

The better your credit score, the better interest rate you’ll get. If I’m shopping for a first home with a 742 credit score, lenders are more likely to offer me the most competitive interest rates, perhaps a 4.5% because my credit is “excellent.”

If I’m shopping with just above a 700, this is still good, but they will likely offer me something higher, like the 4.9% range.

Here’s where having lower credit can really sting. A $300,000 mortgage at 4.5% will cost $547,220 over the life of the loan. At the higher 4.9% interest rate, a $300,000 mortgage will cost $573,185. This difference of  $25,965 may not seem like a lot when you’re making payments over 30 years, but imagine the financial difference having an extra $26k could mean. Is that your retirement nest egg? Funds for any future kids college? Try to think of the big financial picture instead of the monthly amounts.

I’m not telling you to skip your lattes or your nights out, but be careful when spending in excess. Budgeting is never any fun, but when factoring in the damage to your credit score, your financial future just might depend on it.

The views and opinions expressed in this content are those of the author and do not necessarily reflect the opinion or view of Intuit Inc, Mint or any affiliated organization. This blog post does not constitute, and should not be considered a substitute for legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.
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Hey, Big Spender! Can You Afford It?

Big goals can carry price big tags. Whether you plan to buy a home, a new car or treat yourself to a much-needed vacation, you’ll need the money. And before you can really start planning for these big expenses, you’ll want to ask yourself, “Can I (or should I) afford it?”

If the answer is yes, then begs the question, “What’s an appropriate amount to spend?”

Here’s some advice on how to tackle a few big-ticket buys. And, if saving money isn’t exactly your strong suit, keep reading. I’ve included some of my favorite resources to get a jump-start at the end.

Buying a House? Cap Monthly Payments at 30%

When it comes to budgeting for housing costs, my rule of thumb is to spend no more than 30% of your take-home pay. That includes the mortgage, property tax and maintenance payments. The truth is that becoming a homeowner comes with hefty responsibilities and often, unforeseen costs.

Should your new home require a repair, you’ll want to be able to comfortably afford it without stretching yourself too thin. A rookie homeowner mistake is assuming you can spend the same monthly cost on a mortgage as rent. But renters aren’t necessarily required you to pay for plumbing damage or repair broken major appliances on their own dime.

Once you’ve calculated how much you can spend per month, figure out what size mortgage that equates to and that should help you narrow down homes by price. Home search website Zillow.com has a calculator that produces your target home price based on your annual income, monthly debt payments and the size of your down payment.

Speaking of, you’ll want to prepare to put down 20%, especially in competitive markets. For more on the specifics of home buying, check out my previous blog post.

Save more: To minimize monthly mortgage payments, be sure your credit is in great standing. Borrowers with high credit scores (often a 760 or greater) are best suited to qualify for the lowest interest rates on a home loan in today’s market.

Eyeing a Car? Ideally, Budget 15%

When it comes to purchasing a new car, aim to spend no more than 15 to 20% of your take-home pay. This includes maintenance and gas. if you pay with cash, take your annual salary and multiply it by .15 to calculate a max spend.

If you plan to finance or lease the vehicle, take your monthly take-home pay, multiply that number by .15 and that is a healthy budget for car payments (assuming you don’t have other major outstanding debt).

Save More: Go pre-owned. If you’re okay with a few scratches and some wear and tear but with the assurance that the car comes with a manufacturer’s warranty, then opting for a pre-owned vehicle could be a great way to save anywhere from probably 10 to 25%. This option can be more costly than going with a regular used car. But CPO’s come with benefits like a longer warranty and proper inspections.

If you’re set on purchasing a new car, wait until the end of the year when dealers are desperate to unload the current year’s models to make room for new inventory.

And for what it’s worth, waving cash at the dealer won’t necessarily earn you any discounts (unlike in years past). I recently purchased a new car and thought we would get a lower price by offering to pay entirely in cash. Wrong. Turns out, by signing up for auto-financing I was able to score a discount. With the loan interest rate at only 2% I decided to finance the car and commit to paying it off within the year (as opposed to four years) to keep interest payments to a minimum.

Fancy a Piece of Jewelry? Or any Luxe Item? Mind Your Savings.

Who doesn’t want to treat themselves to a little something every once in a while? Personally, I’ve been eyeing the new iWatch.  But for such discretionary expenses (aka “splurges”) it’s best to pay them with cash on hand. If you can’t pay it off in a month, then I question whether it’s really something you can afford. If it’s a financial stretch, perhaps it’s wiser to hold off on the purchase?

For discretionary or miscellaneous expenses, I think it’s responsible to cap spending at no more than five percent of income and that includes things like luxury items and recreational spending. If you need to tap savings, just be sure you replenish the account within the next month and aim to leave yourself with at least a six-month rainy day cushion at all times.

Save more: Similar to pre-owned cars, what about buying secondhand? Tradesy and Poshmark are two websites that have a large inventory of gently used (or in some cases brand new, but discounted) designer goods. These online vendors verify that items are authentic and match the seller’s description.

Sallie Krawcheck, Wall Street veteran and co-founder and CEO of the online investment platform Ellevest, revealed to me on my podcast So Money that discount site The RealReal is her go-to place to splurge. She calls it “financially savvy.” Hey, if it’s cool for her, then it’s cool for me!

Longing to Getaway? Time it Right.

I always say it’s most rewarding to spend on experiences, especially travel. It’s important to recharge your mind, body and soul or to simply learn about other cultures.

For vacations, again, coming from your discretionary budget, aim to spend within 5% of your take-home pay.

Save more:  Depending on when you book your flight you can earn more bang for your travel buck. Data from FareCompare show airfare tends to fall to its lowest level all week on Tuesdays starting at 3pm. That’s typically when airlines release the greatest number of deals and subsequent pricing wars lead to low prices.

Need Help Saving?

All of the above assumes that you have money left at the end of the month after covering your bills to save up and spend on big-ticket items. That may be a big assumption. Many of us live paycheck to paycheck and quite frankly, as humans, we’re not exactly hard-wired to save. As famed behavioral expert Dan Ariely once told me, “We see something, we want it and we go for it without thinking very much. The world is designed to tempt us and we follow and get tempted.”

Here are some free tools that can help us to curb some of that ill-fated temptation.

  • Digit – Save money without really having to think about it. Sign up for Digit by creating a free account. After a few days, Digit checks your spending patterns and moves a few dollars from your checking account to your Digit account, if you can afford it. Users can easily withdraw money any time, quickly and with no fees.. Over time, you’ll build a nice slush fund for yourself
  • Qapital –Qapital lets you set a savings goal and then create rules that trigger automatic transfers toward your goal. For example, users can charge themselves a determined amount for a guilty pleasure. Say they choose to charge $5.00 every time they order takeout, that $5.00 will go toward a goal of their choosing. Or, users can round purchases to the nearest dollar and the change will be allocated toward their specified goal. On this platform, the average user saves $44 each month.
  • SmartyPig – This is a free, high-yield savings account that lets you allocate money toward different financial goals. It can be hard to save for a big purchase if you’re lumping it in with your regular savings or checking account. But by compartmentalizing your savings for a particular goal (e.g. a new car, vacation, etc.) you can better track your progress. Like Digit, you can transfer funds at any given time.

Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at Farnoosh@farnoosh.tv (please note “Mint Blog” in the subject line).

Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.

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Summer Travel Spending: Don’t Go Overboard

I’m of the opinion FOMO (“Fear of Missing Out”) never strikes harder than during the summer months. Perhaps it’s the laid-back vibe in the air, the fact that things slow down at work, or an indescribable itch leftover from eighteen years of formal summer vacations. Whatever the reason, it’s easy to overindulge when the weather heats up.

But that doesn’t mean overspending in the summer months won’t come back to haunt you come fall. Whether it’s an expensive European sojourn, two bachelorette parties in a row, or that irresistible last-minute deal on an all-inclusive getaway, I’m here to make a handful of strong arguments for why it’s important to exercise restraint when it comes to summer spending.

Impacts to Your Credit Score

If you pay for summer frolic on a credit card (instead of in cash) and don’t pay off the balance each month, it can decrease your credit score. Here’s how:

When the amount of debt you carry increases, it impacts your debt-to-income ratio, which is what some lenders look at when you apply for a loan. Your debt-to-income or DTI, shouldn’t exceed 36% of your take-home income each month. While DTI doesn’t directly impact your credit score, it could be hazardous in the event you’d like to make a large purchase in the fall.  Lenders will be looking at your credit and you want it to be in the best shape possible in order to qualify for the lowest interest rate. Splurging on summer vacation now could cost even more if you factor in the increased interest amount you’ll pay due to credit card debt’s effect on your score.

A “high” DTI also means you’ll qualify for a smaller amount in the event you do apply for a loan. Was that week in Provence worth the smaller house, car, or student loan you wanted? These are your financial decisions to make, but especially in the event of a larger purchase, you’ll need to be careful with your credit card spending in the months prior.

You can check calculate your debt-to-income ratio and credit score for free with Turbo so you can see where you truly stand financially. For each of your numbers, Turbo also gives you the “whys” behind them, key takeaways, and comparisons to people like you.

Little Time to Recover Before the Holidays

Going into debt over the summer is one thing, but if you’re not saving up for the holidays either, it could spell financial trouble long after the seasons change. Charging summer travel, not paying it off, and then relying on credit cards for holiday spending can quickly evolve into a vicious cycle of living paycheck to paycheck.

An Abundance of Free Activities

When’s the last time you tried something different? Look at what your local community has to offer in terms of free or cheap options to learn. Some town recreation centers are the perfect starting point for finding fun community activities or renting gear to have your own “staycation.”

When its warm out, there’s free parks, lakes, and beaches to enjoy without having to break the bank. Grill out in your backyard instead of dining at a restaurant. Save the higher cost activities (dinner, drinks at bar, movies) for winter when it’s necessary to be indoors.

Plenty of Time to Prepare

I’ll leave you with one last lesson: summer isn’t a surprise. What I mean by this is that you’re able to plan ahead for all of your summer expenditures by saving throughout the year. If you’ve already spent a hefty amount this summer, don’t worry. There’s still time to hustle up extra cash this fall to pay it off. And the good news is that if you want similar things for next summer, you can learn from your spending this year. Use a budgeting app like Mint to take a look at your summer spending. Then divide that number by 9 to get the amount you need to put away each month!

You can’t plan for everything, but for the things you can plan, do so. Unless you can bank on paying your balance in full during each payment cycle, see if you can save for some of those big-ticket purchases you’ll want to make for next summer. This will help you avoid dinging your credit in the first place.

Summer always feels good, but spending summer debt free? Even better. What are your best tips for having an active summer while keeping your finances afloat?

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Source: mint.intuit.com