You probably don’t want to waste this cash and use it unwisely. If you’re looking for some wise ways to use $50k in cash, you’re definitely in the right place.

In this blog post, I’ll walk you through some great options to help you make the most of your money and even grow it.

Is $50k a Lot of Money?

$50,000 is a sizeable amount of cash and you’re wise if you’re trying to think carefully about how to use it. There are tons of ideas, but not all of them are helpful.

What is $50k in money?  Depending on how you received your funds, you may have to account for taxes, fees and other deductions. Still, you can accomplish one or several goals with this amount of money, so let’s consider starting with some of those goals.

Think First…Set Some Goals

To make the best decision on which ways to use $50k in cash, take a moment to reflect on your life and goals. Most goals we set for our lives to require finances and investing wisely. Is there something you’d like to do and accomplish within the next few years?

How could this money help you bring your goals to fruition? Approaching the decision from this mindset can prevent frivolous spending, so you don’t regret the choices you make with your funds.

Related: How to Achieve Goals You Set This Year

Where Can I Put My 50k in Cash?

Where you put your money depends on how soon you plan to use it. You shouldn’t keep the cash in your regular checking or savings account for long so it doesn’t get used on expenses that aren’t a priority.

You may want to transfer some of the funds to a high-yield savings account so it can earn interest. Long-term options such as transferring money to a CD or a brokerage account may also be a good idea, but it depends on your plans.

As you decide how liquid (or not liquid) you’d like this money to be, here are some solid ideas to help you make good use of 50k in cash.

1. Pay Off Debt

Paying off debt is always a good option whenever you have extra money or can budget for additional debt payments. According to an Experian study, the average American has $96,371 in consumer debt. This includes everything from credit card balances and student loans to car loans, personal loans, and mortgages. That’s a huge burden!

Consider using some of your cash to pay down high-interest debt. This isn’t the most exciting way to use the money, but you’ll be setting yourself up for success by freeing up more cash flow. Plus, you’ll save on interest you could be paying long-term if you don’t pay down your debt quickly.

2. Boost Your Emergency Fund Savings

Americans need a solid emergency fund more than ever. While financial experts recommend setting 3 to 6 months of expenses aside for emergencies, I understand that this can be challenging for most families.

I teach an online masterclass to help people save a full emergency fund quickly. But one of the best ways to boost your savings is with windfalls, bonuses, or other unexpected cash. If you receive or accumulate 50k in cash, consider using some money to build a full emergency fund.

Related: Emergency Fund Tips: How to Grow Your Account Fast and Where to Start

3. Invest in your IRA 

An IRA or individual retirement account is a great way to invest for retirement outside of your 401(k). I’ve personally never had a 401(k) as an option, so I’ve used different types of IRAs instead to save for retirement.

Right now, the maximum annual contribution limit for a traditional or Roth IRA is $6,500. With $50k in cash, you can easily max out your IRA for the year as well as your spouse’s account to boost your retirement savings.

4. Invest With a Brokerage Account

A brokerage account is an investment account that allows you to buy and sell different types of securities such as stocks, bonds, ETFs, and mutual funds. A brokerage account holds your investments and follows an index such as the S&P 500.

The great thing about brokerage accounts is that there is no maximum amount you can contribute each year. There are also no withdrawal fees or penalties to withdraw funds. Meanwhile, retirement accounts like 401(k)s have maximum contribution limits. Several financial institutions offer brokerage accounts such as Charles Schwab and Vanguard.

Related: How to Start Investing in Stocks With No Regrets

50k Invested For 10 Years

Want to see how much your $50k investment could be worth in 10 years? I love using this free compound interest calculator from Investor.gov. Over the past 10 years, the stock market had a positive return rate of 9.5%. But I plugged a more conservative return rate of 7% into the calculator.

As you can see, if you invested $50,000 and didn’t contribute anything additional for 10 years, you’d still have almost $100,000 with an average 7% rate of return.

5. Invest in Real Estate

Depending on the real estate market in your area, $50,000 can go a long way if you want to invest in property. This amount is enough to put 20% down on a $50,000 home. Or, you can buy a fixer-upper and use the money to make home upgrades.

Some real estate investor even purchase properties out of town or out of state if the prices are better. You’ll likely need to do a lot of research and educate yourself before investing in real estate. However, this can still be a way to build wealth or even start a real estate investing business.

Best Way to Invest $50k in Property

There are several ways to invest $50k in property. You can use it for a down payment, invest in home upgrades, or even buy a fixer-upper in cash.

You can also consider investing in commercial property through crowdfunded real estate projects.

6. Fundrise

Fundrise is a crowdfunded real estate platform that allows you to diversify your portfolio by teaming up with other investors to fund commercial and residential projects.

Fundrise is a long-term investment and the company does charge a 0.15% investment advisory fee. I also like how the company shares return rates from previous years right on the website for transparency.

7. Invest in Government Bonds 

Bonds are a lower-risk investment than stocks because you are loaning someone else money, and they pay it back plus some interest. Government bonds are a debt security that’s issued by the government, which helps support government spending.

These bonds are low risk since they’re backed by the government, and some pay interest quarterly. I probably wouldn’t invest the entire $50,000 in government bonds but this is an option to try out if you think it could work for you.

8. Save For a Home Down Payment

Homes are expensive and $50,000 down payment could be a sizable contribution to help you become a homeowner.

Buying a home also comes with many other expenses, such as closing costs, moving costs, home repairs, and so on. You may want to use some of this money to save for furniture or home upgrades you know you’ll need.

With a home purchase, I always advise people don’t spend more than 30% of their income on home costs each month. Even if you have a $50,000 cash cushion or down payment, it’s important to make sure you can afford the home and live comfortably.

9. Build a Profitable Niche Website

If you’ve always wanted to start a niche website – whether a blog or e-commerce site – you can easily do this for way less than $50,000. Niche sites are great because you can grow your traffic and monetize your site with display advertising, affiliate marketing, sponsored content, and even products.

First, you’ll need to think of a good theme for your website and perform some market research to narrow down your niche and target audience. Then, you will need a self-hosted website. I like Bluehost and Hostgator personally, and they are both affordable options.

With some funds to invest in the project, you can hire

Related: How to Make Money with a Blog or Niche Site

10. Start a Business

Have you been thinking of starting a business? This could be another great way to use $50k in cash. Lack of funding is something that holds a lot of entrepreneurs back from pursuing their venture.

Take some time to carefully plan out your business, perform market research, and plan for startup expenses. You may even want to utilize free resources from the SBA such as business mentorship and grant resources as well.

11. Travel

You may want to travel or book the trip of a lifetime when you have $50k in cash. There’s nothing wrong with this as long as you’re not drowning in debt and have a stable financial situation. I wouldn’t recommend traveling to Australia for a month when you have no emergency fund and $10,000 of credit card debt.

However, you could easily split the money up like this:

• $7,000 to pay off your credit cards and a personal loan
• $10,000 to top off your emergency fund
• $5,000 to $8,000 on a fun family trip
• $10,000 to retirement savings or investments
• The remainder toward general savings or other goals

Related: 9 Ways to Make Money While Traveling

Best Tips and Tricks to Plan a Frugal Last-Minute Vacation

12. Put Money Into a CD

A certificate of deposit of CD is a bank product and savings tool that helps you earn interest on your money. The only catch is that you can’t withdraw your money from the account before the term ends unless you pay a penalty fee.

However, CD terms can range from as little as 3 months to 5 years or more. CD rates are also very high right now, with many banks offering 4% or 5% interest. While I couldn’t recommend putting the entire $50,000 into a CD, you can consider this option for some of the money if you want a low-risk investment.

13. Bonus Ideas: How to Double $50k

Want to double 50k in cash? There are several ways to put your money to work from you and actually grow $50,000 to a bigger amount.

• Invest it. As you can see from my example above, investing in the stock market can likely double your funds in 10 years. And that’s if you let it sit and do nothing.
• Flip a house. If you’re interested in real estate investing and can find quality partners, you may be able to double your money by flipping a property. This will require a ton of work but can be worth it for the right person.
• Start a rental business. Rental businesses are great because you typically can buy your items once and rent them out several times. You will need to invest in things like insurance and other costs, but this is a strategic way to double your investment.
• Invest in other small businesses. Make money from supporting someone else’s success. Even if you don’t have an awesome business idea, you can participate in peer lending and invest in a business that is profitable to get a nice return.

These are just a few creative ways to double $50,000. Which ideas appeal to you or what would you add? Also, how would you best use $50k in cash?

The post 13+ Wise Ways to Use $50k in Cash first appeared on My Debt Epiphany.

The post 13+ Wise Ways to Use $50k in Cash appeared first on My Debt Epiphany.

Several years ago when I first started my debt payoff journey, I was all about saving the most money in interest and tackling the big balances first (ie. using the avalanche method).

More recently though, I’ve experienced the benefits of using the debt snowball method to pay down some of my credit card debt from last year. The debt snowball method is a popular debt repayment strategy that’s based around providing you with continued motivation.

I actually believe the debt snowball method can help you get rid of your debt for good and achieve financial freedom.

Are you looking for a way to pay down your debt faster? Let’s learn more about how to use the debt snowball method strategically to help you reach your goals.

What is the Debt Snowball Method?

The debt snowball method involves paying off debts in order of smallest balance to largest balance. You start by first focusing on paying off the smallest balance first while making minimum payments on all other debts.

Once the smallest balance is paid off, you then move on to the next smallest balance and so on until all debts are paid off. This method makes it easier for you to stay motivated and keep track of your progress. As each debt is paid off, your total amount owed decreases significantly.

By utilizing this method, you can accelerate the process of paying off your debt and reach financial freedom sooner than you’d think.

How Does It Work?

The idea behind this technique is that by focusing on one small goal at a time, it will be much easier for you to stay motivated and feel like you’re making progress toward becoming financially free.

Since it’s easier to stay focused when you’re working toward smaller goals, this method helps speed up your repayment process. With the debt snowball method, you’re able to pay more each month and more quickly than if you were trying to tackle all of your debts at once.

Then, as each debt gets paid off, you’ll have more money available which can be used towards paying down larger balances faster.

By using this strategy, not only will it help speed up your repayment process, but it will also help boost your credit score by showing lenders that you can manage multiple debts responsibly over time.

Why Does the Debt Snowball Method Work?

I believe the debt snowball method words because it helps you focus on one thing at a time. Having debt can make you feel overwhelmed and you may not know where to start when it comes to tackling it.

Instead of just paying on different accounts at random times, the debt snowball method helps you narrow down a core focus.

Another reason why this works is it motivates you early on by seeing success right away. Sure, a small $200 debt for example isn’t much. But when you pay it off, you’ll instantly boost your motivation and be more likely to keep going.

Finally, this method works because your payment grows over time. Once you pay off one balance, you just roll that payment amount onto the next debt. Once you get to the last few debt accounts, you won’t have nearly as many minimum payments. This frees up more of your income to make progress on your debt.

Related: Prioritizing Your Debt-Free Strategy

How to Get Started With the Debt Snowball Method

Real Life Example of the Debt Snowball Method

So, now that we know what the debt snowball method is and how it works, let’s see this play out in action. Below is an example of how you can use this method to pay off your credit card debt.

• Synchrony Car Card: $128.85
• Best Buy: $144.98
• IHG Rewards: $151.43
• Southwest: $307.43
• Chase Slate: $620.13
• Amazon: $680.27
• Citi: $1,103.24

As you can see, I listed the balances from smallest to largest. The interest rate or minimum payment amount doesn’t matter. Only the balance amount is important.

Now, let’s say that each of these cards had a minimum payment of $35. Once we get to the last card, we already have more cash flow since we’re not paying $210 in minimum payments on the other cards.

You can use the debt snowball method for other types of debt too whether you have personal loans, a car loan, or student loans. Just list everything out and start tackling the debt with smallest balance first.

Don’t forget to continue to pay the minimum on all the other debts so you can avoid any late fees.

Pros and Cons of the Debt Snowball Method

Pros:

• Easy to start using ASAP (only focus on one thing – your balance amount!)
• Offers a quick psychological boost when you see your debt disappearing
• Helps you get organized and focus on one debt balance at a time

Cons:

• Could make it harder to get a handle on high-interest debt
• Since you’re only focusing on balance amount, your costliest debt may get paid off last

Get Started With a Debt Snowball Calculator

As I said earlier, the debt snowball method may not save you the most money in interest payments, but it will help you pay off debt regardless. To determine whether this debt payoff method would be best for you, I highly recommend using a debt snowball calculator.

Undebt.it has a great debt snowball calculator that you can use to plug in your own numbers. You’ll also see what progress you can make with other methods such as the avalanche method for debt payoff.

Just enter the name of your account, the current balance, minimum payment amount, and interest rate (if you know it).

Reduce Expenses While Paying Off Debt

While you use the debt snowball method, accelerate your progress by reducing expenses as well. It’s important to revise your budget so you can make room for minimum and extra debt payments.

Calculate how much you’re spending and see if there’s room to cut costs anywhere. Reviewing all your transactions (even just for the week) can seem daunting so I highly recommend using a budgeting app to help such as Simplifi.

Simplifi gathers all your transactions automatically and helps categorize them so you can build a realistic budget quickly. Another thing I like about Simplifi is that it helps you plan for upcoming bills, track subscriptions and even watch specific retailers and purchases in areas where you’re overspending.

Some other practical ways to reduce your spending include:

• Using a meal plan and cooking more meals at home.
• Shopping around for cheaper car insurance. My husband likes to call our current insurer first to see if they’ll give us any discounts.
• Switching to a more affordable phone plan. We have Total Wireless but Republic Wireless, Mint Mobile, and Tello are all excellent options.

Summary

The debt snowball method offers an effective way for consumers to pay down their debts faster and reach financial freedom sooner.

With this method, you can easily keep track of your progress and stay motivated throughout the repayment process.

Additionally, as each debt gets paid off, more money becomes available which can be used toward larger balances so that consumers can accelerate their repayment even further.

If done correctly, this strategy has the potential to help you achieve their financial goals much sooner. I’d love to hear your thoughts about the debt snowball method and if you’re ever tried it in the comments below.

The post Achieving Financial Freedom with the Debt Snowball Method  first appeared on My Debt Epiphany.

The post Achieving Financial Freedom with the Debt Snowball Method  appeared first on My Debt Epiphany.

Receiving a lump sum or money can feel good, I know, but it’s important to resist lifestyle inflation and use that money to improve your life overall.

Here are seven smart moves you can make with your tax refund to help improve your life and get ahead financially.

1. Pay Off Debt

Of course, this is a great use for a tax refund. It’s hard to stay motivated during debt payoff so when a chunk of money comes along like your tax refund, you can make put a serious dent in one of your balances.

Technically, I’m supposed to still have a car loan since I financed my car in 2014 with a 5-year loan. Instead of spending $233 each month on a car that was depreciating in value each month and paying a crap ton of interest, I decided to use my tax refund to decrease my loan balance and make extra payments to pay my car off three years early.

Now, I am loving the ‘no car loan’ life and the fact that I can keep more of my money. If you are planning to pay off some debt with your tax refund, I’d recommend that you make your payment as soon as your tax refund hits your account so you don’t accidentally use it for something else.

Related: Staying Motivated During Your Debt Payoff Journey

2. Build Up Your Savings

Having a fully funded emergency fund is so important. If your car breaks down, you lose your job or get sick, your savings can be a lifesaver. It’s important to have at least 3 months of expenses stashed away so if you don’t, using your tax refund to boost your savings is a great strategy.

I use CapitalOne 360 to house my emergency fund. It’s a high-yield online savings account that allows my money to earn interest each month while it’s sitting there waiting for the next unexpected expense.

I’d highly recommend putting your emergency fund in an online high-yield savings account because The Performance Savings Account at CapitalOne has a 3.30% interest rate while most brick and mortar banks offer savings accounts with pathetic interest rates like .02% so your money never really earns anything as it sits in your account all year.

Related: Emergency Fund Tips: How to Grow Your Account Fast and Where to Start

3. Use It As a Down Payment on a Home

If you’re planning on buying a house, you may have to come up with a big down payment depending on the market in your area. Your tax refund can help ease that financial burden or even jumpstart your house down payment fund and motivate you to deposit more each month.

When you buy a house, it’s best to put at least 20% down in order to avoid private mortgage insurance (PMI) which can add up each year.

If you’ve been meaning to refinance your home, you can also use your tax refund to help cover the costs of the process. If refinance mortgage rates are low, this could be a great option if you’re looking to save money on your existing mortgage with a lower interest rate.

Related: Non-Traditional Housing Alternatives to Consider

4. Invest It

Ahh investing. Did you know that YOU can become a millionaire on an average salary as long as you start investing early and strategically? Don’t believe me? Plenty of people have done it.

When it comes to investing, there’s really nothing better to do if you want to build wealth and retire someday. I know retirement may seem like it’s far away, but the key with investing is to use all the time you have to let compound interest work and grow your money.

You’ll never be younger than you are today, so I’d advise you to start investing what you can now. Your future self will thank you.

If you’re interested in getting started with investing and building wealth, this post will definitely help you out. → How to Start Investing in Stocks With No Regrets

Related: Have Debt But Want to Invest? Here’s What You Need to Know

5. Home Repairs

Home repairs can be expensive and add up quickly. But upgrades and repairs can make your home a more comfortable place to live and even increase its value.

If you’ve been meaning to renovate your home or repair something that has been on your to-do list for a while, your tax refund can help so you don’t have to use your credit card or take out a loan.

Related: 10 House Projects You Can Do For $100 or Less

6. Treat Yo’Self to a Relaxing Vacation

There’s nothing wrong with doing something special for yourself every now and then. Going on a vacation doesn’t have to cost an arm and a leg but for some people, there’s often not enough time or money to go on vacation.

If you’ve already established your emergency fund and paid off some of your debt, using some of your tax refund to fund a little getaway wouldn’t be a horrible idea.

Vacationing is great for your mental health and can make you feel refreshed and ready to tackle the rest of your goals upon your return. To save money on travel, you can go on a weekend trip or stick to a domestic location.

Related: 10 Ways to Afford a $1,000 Vacation

7. Invest in Yourself

Investing doesn’t always have to relate to the stock market. You should always prioritize investing in yourself first because it can pay off big time. There might be a course or training program you’d like to sign up for if you’re looking to learn a new skill.

You may need new equipment or tools for your job or side hustle which would put your tax refund to good use. Whatever your goals are, be sure to invest in yourself from time to time so you can take your progress to the next level and become successful.

There are a number of smart ways to use your tax refund if you usually receive one this year.

At the end of the day, you just need to focus on using it to improve certain aspects of your life as opposed to blowing it on materials things you won’t even remember next year.

However, you shouldn’t get into the habit of spending the money before you receive it (since it could vary) and you should always focus on using the income you already have to boost your finances.

Establish a realistic budget, automate your savings, pay off debt, and commit to spending less than you earn. That way, your tax refund will just be considered extra and not a necessity to get by.

Will you be getting a tax refund this year? If so, how so do you plan to use it?

The post 7 Smart Moves to Make With Your Tax Refund first appeared on My Debt Epiphany.

The post 7 Smart Moves to Make With Your Tax Refund appeared first on My Debt Epiphany.

While there are many strategies to help you get your debt down to zero, it can be hard to figure out which one is best. However, once you find a way that fits your particular goals and lifestyle, it’ll be easier to reduce your debt quickly. 

Read on for great tips to help you discover the best ways to prioritize your debt-free strategy and grow your financial confidence.

Know What Debt Is Actually Bad

Although debt is usually associated with negativity, not all debt is actually a bad thing. Once you know the difference between good and bad debt you’ll be able to take charge of your debt situation a lot better.

Good debts are considered things that you owe money on but they grow your wealth. A few examples are:

• A mortgage (that you can afford)
• Student loans that are paying your tuition and eventually allow you to go further in a career, both position and compensation wise. 
• Business and home equity loans
• Auto loans that are very low or zero interest (as long as you pay it off before the promotional period ends)

Bad debts are considered things that reduce or don’t improve your finances substantially. Two common examples are:

• Credit cards because what you purchase on it usually depreciates over time
• Payday loans because the interest rates are sky high

When you’re about to take on a debt long term be sure to ask yourself a few questions: 

1. Why am I taking on this debt?
2. Are there alternatives that can prevent me from having to take on this debt?
3. If I have to take on this debt, will this debt appreciate or depreciate over time? Will this debt pay me back more than what I put in?

Get Organized

It’s always important to have things in order before you embark on any journey. Here are two important ways to get your debt-free strategy organized and set up for success. 

Know Your Amounts Owing And Interest Rates

It’s important to really know the ins and outs of your debt expenses. Create a list that has the name of who you owe, the outstanding amount, the loan term (if applicable), the minimum payment amount, the frequency of the payment, and the interest rate.  

Find The Best Plan For You

Now that you have all of your debt information in order, you’re ready to choose a plan that is best for you to pay it off.

There are several options to choose from. Each debt payment plan will rank your debts in order of what to pay off first and last based on its unique method.

The Highest Interest First Strategy

Personally, I believe this plan is the best debt repayment strategy. Commonly called the avalanche method because you gain speed quickly, this payment plan focuses on the interest rate. You’ll be required to list the interest rates from highest to lowest.

Once you pay off one debt on your list, put the money that you were spending on the completed debt toward the next debt. Then, you can continue that process until your list is complete.

The Debt Snowball Strategy

Another popular debt repayment option is the snowball strategy. This is a great option to help you gain confidence with quicker wins because this method works from smallest to largest outstanding amount. 

The point of the method is that, like a snowball, you start out small but your wins become bigger and bigger as you gradually complete your list. Just as you would in the avalanche method, roll forward the money you use to make payments from debt to debt until your list is complete.

Other repayment strategies are:

• Pay off the largest balance first
• Consolidate the debt so you’ll be able to pay them off with one monthly payment

Savings Are Important Too

After paying off your debt, you should have freed up some money to contribute to savings. Building a healthy savings account is important for your ongoing budgeting. 

Having a savings account to dip into prevents you from putting unexpected expenses, such as auto or home repairs, on a credit card, which starts the cycle over.

Saving money on your expenses will also be helpful with speeding up your debt repayment. Check out these awesome money saving resources:

• $5 Meal Plans—Healthy, time and budget friendly meal plans
• My FreezeEasy–Freezer cooking meal plans
• Billshark—A bill negotiation service that works on your behalf to lower your monthly bills
• Digit—A robo-financial assistant app to help you save and grow your money
• ThreadUp–The largest online consignment & thrift store
• Tello—amazing cell phone plans that start at $5/month and have no contract or fees attached 
• Bestow—A life insurance company with an uncomplicated, 100% online buying process, no doctor or medical exams and plans that start at $8/month

Final Points To Remember

When it comes to debt repayment it’s important to budget for your payments the same way as you would pay for your other bills. This will also make sure that your minimum payments on your other debts don’t fall behind. 

Also, if you’re thinking of making additional payments on your debts, be sure to review the loan or credit card policy on making additional payments. Some banks may have an extra payment fee in place so it’s better to be safe than sorry.

What debt repayment strategy have you used? How was your debt-free journey? What resources helped you to save money?

The post Prioritizing Your Debt-Free Strategy first appeared on My Debt Epiphany.

The post Prioritizing Your Debt-Free Strategy appeared first on My Debt Epiphany.

Hearing all the success stories of others who just paid off large amounts of debt can be pretty inspiring, but it can also hit a sore spot if you’re still looking at a sizable balance yourself.

We all know that becoming debt free doesn’t happen overnight; it takes hard work and perseverance. Staying motivated during debt payoff is the key, but what happens when you start to plateau and lose some of that motivation that burned so fiercely at the very beginning of your debt repayment journey?

We’ve all been there. The feeling is somewhat similar to those days when you can barely leave bed but have to pull yourself together just to make it through the day.

If you’re getting bored or feeling discouraged about your debt repayment process, I’ve got a few simple yet effective motivation-boosting tips for you to implement. You’ll be feeling like your debt busting self again in no time.

Embrace the Journey

Debt repayment and anything to do with personal finance for that matter, is about the journey. It’s not a sprint, but a marathon.

Remind yourself every now and then to embrace that journey. Once you’ve established a detailed plan and debt free date, stick with it but know that everything might not turn out exactly how you planned. Unexpected events both good and bad will pop up and that’s the beauty of life.

While I was paying off my student loans, there were so many times when other expenses came up or when I just didn’t have the money to do anything fun or relaxing since I put everything extra toward my debt.

In order to stay motivated, you need to make the best of the setbacks that occur and press on. Don’t let it break you, rather let it make you and your journey all that much more worthwhile.

During those times, I would just try to make the best of my situation by utilizing my small emergency fund or switching some money around and finding something fun and cheap to do instead. I’d visit my family who lives nearby and watch a movie with my sisters.

Or, I’d organize a game night at my home and make nachos for dinner which is probably my husband’s favorite meal Super cheap comfort food and super relaxing activities can often lift your mood when you need it most.

Related: Prioritizing Your Debt-Free Strategy

How to Get Started With the Debt Snowball Method

Reflections on Paying Off My Student Loans In Less Than 3 Years

Acknowledge Your Progress

When you have a large amount of debt and/or a high interest rate, it’s easy to focus on what you haven’t paid vs. the progress you’ve made. Maybe you’re making more than the minimum payment on your student loans each month.

Or, perhaps you’ve found a way to cut an expense so you can add more to your monthly debt payments. Pat yourself on the back and don’t discredit your efforts. Every little bit truly does count.

Tracking your progress each month with a spreadsheet will help you better visualize and appreciate the payments you’ve made so far.

If you’re making more than the minimum payment on your student loans each month or if you’ve found a way to cut an expense so you can add more to your monthly debt payments, pat yourself on the back and don’t discredit your efforts. Every little bit truly does count. Tracking your progress each month with a spreadsheet will help you better visualize and appreciate the payments you’ve made so far.

Every little bit truly does count. Tracking your progress each month with a spreadsheet will help you better visualize and appreciate the payments you’ve made so far.

Also, take screenshots of your payment history for your debt. I know with federal student loans, the history tends to delete itself as you make more payments over the course of a year. Look at those old screenshots and see how far you’ve come and how much money you’ve saved in interest.

Related: Creating a Student Loan Debt Repayment Plan of Attack

How My Husband and I Paid Off $14,354.81 of Debt This Year

Celebrate Milestones

Setting smaller goals within your overall goal of paying off your debt, and celebrating those milestones is a great motivator to look forward to.

If you’ve been side hustling and using the income to add to your loan payments for the past six months, that’s a BIG deal so celebrate that milestone! You don’t have to go overboard and throw a big party but do something small for yourself to celebrate the goal you set.

This could be something as simple as purchasing a new book or gadget that you’ve had your eye on for a while, grabbing a bottle of wine and having a movie night with your friends.

Or, if you have a sweet tooth, check out your local confectionary for a small seasonal treat. You don’t even have to spend money if you don’t want to!

Related: 20+ Frugal Ways to Live Your Best Life

30 Frugal Ways to Spoil Your Spouse (+30 Budget Date Ideas)

Read Other Personal Finance Blogs and Interact

Reading other PF blogs really helped boost my motivation when I was in a funk with my debt situation. Reading engaging content from like-minded people who are in the same situation or have recently become debt free can be very uplifting.

Hearing about someone else’s struggles and how they overcame them will help reinstate the notion that YOU can make it through too. The PF blogging community is very friendly and it’s very easy to meet and connect with new friends that can help encourage you just by commenting on a post and sharing your viewpoint.

You can also join Facebook groups to connect with other people who are eager to pay off their debt just like you. Having support from people who ‘get it’ and have a similar mindset can do wonders.

Make a Visual

One easy thing you can do to help boost your motivation during debt payoff involves creating a visual that you can reference. Some people color an image based on how much debt they pay off.

For example, if you have an auto loan, you may put a clear picture of a car up on the wall in your kitchen. Every time you pay off $500 of the car loan, you’ll shade in more space on the car until it’s completely covered in once you pay off your loan in full.

Other people use vision boards which is something I like to do to keep me focused and motivated.

Let’s say you want to go on vacation to the Bahamas after you pay off your debt. Print out a picture of the island and put it somewhere you’ll look at each day or even make the image a screen saver on your phone or computer.

Related: How to Use the Living Well Planner to Meet Your Goals

Think About Your End Goal

It’s so important to keep your end goal in mind at all times as you pay off your debt. If you don’t have a solid reason for why you’re paying off debt, all the hard work and effort you’re contributing may not seem worth it at times.

Take some time to think about where you want to be in the next 5-10 years. How will your life be different/better when you become debt free?

Personally, my end goal is to retire early and become financially independent by the time I’m 45. It’s a steep goal, but it’s what I really want and I know that it won’t be possible if I have debt.

That’s why I’m eager for my husband and me to become and stay debt free so we can truly live life on our own terms.

Related: 10 Easy Financial Goals You Can Meet This Month

How to Start Investing in Stocks With No Regrets

How I Found Money to Start Investing

Remember You’re Not Perfect

This is the best mindset you can have during your debt repayment journey. You’ve already proved to yourself how committed you are simply by establishing the goal to become debt free.

You don’t have to constantly keep reassuring yourself that you are worthy and disciplined enough to make it happen. Stay dedicated and stick to your plan and budget but remember, you’re not perfect.

You’re not going to make perfect financial decisions 100% of the time. You might go out and grab a lunch one day instead of bringing it from home like you’d originally planned.

Don’t beat yourself up if you have small slip-ups like these. I’m not saying go buy a $300 designer sunglasses and say screw the budget, but focus on the bigger picture overall and not the minor setbacks.

Budget Fun Into Your Life

Don’t forget to budget in money for the fun stuff while you’re paying off debt. I understand the ‘all or nothing’ approach and how it can be beneficial to throw everything you have toward your debt to pay it off ASAP.

However, if you expect to be on your journey for several years, you’ll find it much more tolerable if you establish a reasonable budget for fun and entertainment so long as you’re still able to keep up with your goal.

With this year being the last year of paying off my student loans, I decided to put a fixed amount toward my debt that would ensure I paid it off before December. First, I decided to put $1,100 extra toward my debt each month.

There were some months when I wasn’t able to contribute that much due to having other expenses pop up but I didn’t beat myself up over it and I played catch up for about 2 months when I had more money to play with.

During the summer, I realized I could reduce my extra payment to $950 and still pay off my loans by October, so that’s what I did. I stuck to those $950 extra payments and whenever I had extra money to go out to dinner with friends, buy a new bike, or go see a movie, I did all of that and more guilt-free.

Could I have paid off my student loans before October if I didn’t spend that extra money on fun and entertainment? Yes, but it wouldn’t have made a huge difference financially and I would have been more stressed and unhappy because I still value the experiences and items I spent money on.

Related: How to Keep Your Entertainment Budget Frugal This Year

Best Frugal Hobbies For Adults

Frugal Summer Bucket List

What do you like to do to stay motivated during debt payoff? Have you tried any of these techniques? 

The post Staying Motivated During Your Debt Payoff Journey first appeared on My Debt Epiphany.

The post Staying Motivated During Your Debt Payoff Journey appeared first on My Debt Epiphany.

Most experts recommend you pay off high-interest debt sooner rather than later. My personal debt repayment journey has involved all sorts of debt ranging from credit cards and personal loans to student loans and car loans.

When you pay off your debt, it instantly frees up money in your budget to use for other purposes. Paying off high-interest debt early will also save you money in the long run since interest costs can add up.

What Exactly Is High-Interest Debt?

Determining what is high-interest debt is pretty subjective since ‘high interest’ can mean something different for each person. There are certain types of debt that are known to have a higher interest rate than others.

Some debts that tend to have be lower interest include student loan and mortgage debt. Higher interest debt could be credit card debt or even a personal loan.

The interest rate on your debt also depends on your creditworthiness at the time when you took out the loan. For example, if you get a car loan and your credit score is bad, you could be paying 7% to 10%. Compare this to a car loan with a rate of 2% or 3% if you have excellent credit.

Some say high-interest debt is anything over 5% or 6%. You’ll need to set your own benchmarks for what is high-interest debt and run some numbers to see how much the debt is costing you.

Budget For Debt Payoff

Paying off debt is a strategic effort that you need to play for. Assess your current spending to see exactly where your money is going. Then, you can determine how much money you can realistically put on your debt each month.

To pay off high-interest debt faster and save money, you’ll need to pay more than the minimum payment each month. Doing this helps you keep up with interest charges and get ahead.

Whether you need to set a specific budget category for debt payments or send money to your accounts as soon as you get paid, be sure to budget for debt payoff and plan to be intentional with your payoff strategy.

Related: The 50-30-20 Budget Plan: What Is It and How Does It Work?

Why and How to Create an Annual Budget

Consolidate Your Debt

Consolidating your debt allows you to combine multiple debt payments into one. Instead of paying multiple accounts at different interest rates, you can make just one payment each month.

If you have multiple credit cards, it may make sense to consolidate this debt with a low-interest personal loan. Credit card interest rates can be high up to 25% so a consolidation loan can simplify your debt and save you money in the long run.

Refinance or Ask For a Lower Interest Rate

Refinancing often gets confused with consolidation but it’s a very different process. With refinancing, you get a completely new loan with a lower interest rate.

You’ll have to go through all the application steps as you did originally and get another hard credit inquiry. However, you may be able to save hundreds to thousands of dollars with a lower interest rate.

Always make sure you get an accurate quote or estimate on the new loan terms before you agree to submit an application to refinance. Also, with students loans keep in mind that it’s not common to refinance federal loans since you’d lose out on benefits such as determent, forbearance, and loan forgiveness.

Private student loans on the other hand have higher interest rates and could be refinanced to help you pay off high-interest debt quicker.

Another option if you don’t want to refinance is to simply ask your creditor to lower your interest rate. Many credit card companies might do this willingly if they see that you’ve been making payments on time. Plus, there’s not much to lose by simply asking.

Set Up Automatic Payments

Sometimes, setting up automatic payments with lenders and creditors can help you with paying off high-interest debt. With student loans and some personal loans, companies will give you a small interest rate reduction if you agree to set up automatic payments.

Every little bit truly counts when it comes to being able to pay off high-interest debt. Also, setting up automatic payments helps you avoid late or missed payments which could also result in fees or penalties.

Pay Off Smaller Debt First

When you have high-interest debt, consider paying off smaller debt first. This is a great way to ease into a debt payoff journey and clear away smaller balances so you can see some quick progress.

Paying off smaller balances is great for your level of motivation. Many of us know that staying motivated during debt payoff can be challenging. Commonly referred to as the snowball method, making small and consistent payments on your debt allows you to visualize your success at the start of your efforts.

This makes it much easier to see yourself paying off the larger balances.

Related: Prioritizing Your Debt-Free Strategy

What Debt Should You Take Care of First?

Earn Extra Money

Earning extra money was probably the best thing I did to pay off high-interest debt faster. I ended up paying off my high interest car loan in about 14 months. This aggressive debt payoff was thanks in large part to my ability to earn extra money on the side.

I started freelance writing and earned anywhere from $400 to $800 during the first few months. Then, I started earning $1,5000 to $2,500 per month on average during that time.

You can certainly budget effectively and find ways to lower your costs. However, I’d also recommend determining what your interest are and exploring areas where you could be earning extra money to pay off high-interest debt.

Related: Finding the Right Side Hustle For You

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The post How to Pay Off High-Interest Debt first appeared on My Debt Epiphany.

The post How to Pay Off High-Interest Debt appeared first on My Debt Epiphany.

Aside from the cost of your housing payment, it’s can also be expensive to fill your home with furniture, appliances and other things that you may need or want for comfort.

We’ve recently been in the market for a new couch and a stainless steel stove. Both some pretty expensive purchases. These weren’t really emergency items. So, I felt no need to dig into the emergency fund and tried to cash flow them instead.

The idea of quoting prices from our local Rent a Center did sound like an option as well. We all know I’m not a fan of financing furniture, but I knew Rent a Center has a ‘6 months same as cash’ program. BIG mistake.

After doing some research on this company and its offers, I realized Rent a Center was doing some serious scamming and more people needed to understand how this place operates. In this post, I’m going to explain why Rent a Center is a rip off to the average person.

Pay as You Go?

What attracts people most about Rent a Center is the option to purchase that big-ticket item like a furniture set or an appliance without really paying for it in full.

Can’t afford a new couch? Come to Rent a Center and get on a plan so you can take it home today with little money down and pay as you go to settle your balance.

Rent a Center sells everything from TVs, living room furniture, and bedroom sets to kitchen appliances, computers and smartphones. They carry big brands and don’t have credit check requirements for their payment plans.

This means, as long as you have an income and make a down payment, you can likely get on a plan to pay your item off in weekly, bi-weekly and monthly payments. Of course, you’ll pay more overall if you use their long-term payment plans because you’ll get charged interest.

However, Rent a Center has a 6-month ‘same as cash’ program. This program ensures that you won’t pay extra so long as you pay off your purchase in 6 months. If you’re looking to save money on interest, this 6 months same as cash option may sound promising, but don’t fall for it!

You’re Not Building Credit

When I financed my first couch back in college (something I’d never ever do again BTW), I did it under Ashley Furniture’s credit building program. This means my payments were reported to all three credit bureaus. Paying off the couch helped me build some positive credit history.

Rent a Center doesn’t check credit when you apply. This means they have no intention of reporting your payment to the credit bureaus – and they don’t. Still, you’re getting charged interest and a general up-charge on your purchases anyway. There are much better ways to build your credit aside from financing furniture, but I’m just trying to make a point.

Related: I Raised My Credit Score By 150 Points, Here’s How

Your payments are simply lining the pockets of Rent a Center. Meanwhile you’re stuck making overpriced weekly and monthly payments. The items Rent a Center sells don’t appreciate in value so it makes more sense to just buy them in cash on your own.

Overpriced…Everything

I mentioned earlier how I did some browsing on their site as I was considering the 6-month same as cash offer. I looked up a stove along with some furniture since I was also in search of a leather couch. Having a dog really summed up why we need to switch to leather furniture from now on.

I was really shocked to see Rent a Center’s prices for a single piece of furniture. Then it hit me. The prices are severely marked up regardless of how soon you pay the item off.

If anyone would do a quick Google search to compare prices, they’d see that Rent a Center is overcharging customers. Sure, they carry good brands but you can honestly find a better deal by going straight to that brand and buying the furniture or appliance you need.

As you can see, this sofa and loveseat set is $160.31 per month at Rent a Center. You’re required to make payments for almost 2 years….in other words, $3,687.13!!!

If you decide to pay the set off in 6 months, you’d still pay $2,404.35. Ouch.

You may find it interesting that Amazon is selling the exact same loveseat for $476 and the sofa for $509. If you avoid those marked-up prices, you could score this set for under $1,000.

This Whirlpool 5-burner gas range stove is $138.64 per month at Rent a Center. It takes 16 months of payments to own it and you’d end up spending $2,218.24. The 6-month ‘same as cash’ price is $1,596.46.

A similar stainless steel gas oven from Lowes costs around $900. Other brands like General Electric only cost around $600 to $700 depending on the type.

Sketchy Contract Terms

Rent a Center’s contract is a legally binding agreement stating the terms of the transaction including payments, taxes, fees, the number of payments, cost to acquire ownership, late fees, and more. If customers don’t follow the terms of the agreement, they could get their items revoked.

After making all those overpriced payments, imagine falling on hard times and getting your furniture repossessed so you now have nothing to show for it.

One of the most interesting things about Rent a Center’s contract is how it states that you do not build any equity toward the merchandise as it remains the property of Rent a Center until you pay the agreed amount to own it. This company’s contracts are super sketchy. Many people have shared that they really didn’t understand the nature of the terms and how much the fees were initially involved.

There are thousands of people who have complained about being trapped in a contract with Rent a Center and got scammed out of a ton of money. It sucks to hear about how some people have been harassed over the phone and in person by payment collectors. Nerd Wallet published an article to lend some tips to frustrated customers longing to get out of their Rent a Center contracts.

In it, they suggested that you avoid the biggest markup and added fees by paying off your merchandise within 90 days of the lease agreement. If you really want out of the contract, you may need to return your stuff altogether.

Fees on Top of Fees

I searched high and low for a breakdown of Rent a Center’s fees but that information seems locked and sealed for some reason. Luckily, Nerd Wallet completed an in-depth study in 2017 about their fees and outrageous interest rates.

Their APR rates can be comparable to payday loans and in the triple digits on average.

Source – Nerd Wallet

The company also offers options fees that can add on to what you’d have to pay.

Their loss-damage wavier can be up to 10% of the total cost of the lease in some states. If you enroll in RAC Benefits Plus, this can provide you with some coupons and discounts. However, you may not use them and it adds around $13 per month to your lease agreement.

Don’t forget about state and local taxes. It’s no secret that you will have to pay them for lease the item but Rent a Center customers also pay additional for the extra ‘services’ as well.

The Trouble With Instant Gratification

Truth be told, stores like Rent a Center and their other counterparts wouldn’t exist if people weren’t so tempted to give in to instant gratification. This company seeks to benefit from the fact that our society is praising unhealthy convenience factors and fast transactions.

Why wait to pay for furniture in cash when you could put $10 down and get a week free of payments – only to be stuck overpaying for your item by thousands of dollars over the next year or two…

When you look at it this way, the math certainly doesn’t add up. We paid about $460 for our leather couch in cash which was much cheaper than what Rent a Center was charging.

We paid $644 for our new stainless steel gas range oven when Rent a Center would charge us $1,400+ for something similar. The main difference? You have to be willing to be patient, weigh other options, and practice delayed gratification.

My husband and I waited to get a new oven and used an electric skillet (that was a wedding gift) to cook our meals for a few weeks. In the meantime, we both hustled hard to come up with half of the cost. He drove some extra hours for Uber and I picked up additional client work. We both came to the table with $322 each to put down to buy the oven in cash.

Delaying your gratification can save you so much money in the long run and also allow you to truly appreciate and cherish the things you have. I’m grateful for that fact that no one can come knock on my door and take my furniture or appliances away because I own them outright.

Related: 80+ Extra Income Ideas That Don’t Suck

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Some Alternatives to Leasing Furniture and Other Stuff

Although it’s clear that Rent a Center is a rip-off, they’re not the only store scamming people out of their hard-earned cash. Other similar furniture leasing stores are basically doing the same thing.

So what’s an alternative if you want to buy some furniture, expensive electronics, or big household items?

Be Patient

This is our top option. When we bought our house, of course I wanted to furnish and decorate it. I also didn’t want to finance a bunch of stuff and be buried in monthly payments. So I waited.

We bought one small sectional practically new off the Facebook Marketplace and I used my old couch (from our apartment) for our family room. Slowly, we saved up money and came across deals to add furnishings and other decor to our home. Sure, it wasn’t the quickest solution, but I’m glad that I own everything in my home and don’t have to be bogged down by all the payments.

Holiday Sales

We actually bought our stove for a steal thanks to a 4th of July sale. Whether you’re looking to buy furniture or household appliances, you can count on holiday sales to help you save anywhere from $100 – $200 on the item.

I took advantage of an online Black Friday deal at Best Buy to get my Macbook Pro for several hundred dollars less than it was normally listed for.

Shop Online

There are tons of discount sites you can use to buy your furniture and other items for less. I like sites likes Wayfair, Brad’s Deals, and Overstock can be great places to score deals on quality furniture.

Don’t forget to use Rakuten (Ebates) when shopping online to earn cash back.

You can also bid for items on eBay and see what Amazon has to offer.

Related: Rakuten (Ebates ) Review: Earn Cashback For Everyday Shopping

Shop Used

The small sectional I bought when we first moved into our house was gently used and from the Facebook marketplace. I also got our kitchen table from the marketplace as well and saved hundreds of dollars on both purchases combined.

Our glass table sits 6 and the chairs were recently upholstered so it looked just like new. You can check out resale shops and other sites for gently used options if it helps you avoid getting scammed by Rent a Center.

Related: How to Start Saving Money on Furniture (New and Used)

0% APR Credit Card

I present this option with caution because I’m not really a fan of people racking up debt on a credit card, even if there’s no interest. However, if you need to make an urgent purchase, this is a much better option than doing rent-to-own with Rent a Center.

You’ll need good credit in the first place to qualify for a 0% interest credit card but this is how I paid for my Macbook Pro.  I really needed a reliable computer for my business – it couldn’t wait because how else would I be able to make money since this is my full-time job?

These laptops are so expensive and even with the sale price, I didn’t want to drain my savings so I used Best Buy’s 0% APR option. So I put $200 down and paid $100 per month until the end of the year.

With this option, the key is to avoid going overboard with the purchase price of the item to ensure you can actually pay it off during the o% APR promotional period. Avoid making other purchases on the card while you’re paying back the balance to make it easier.

Related: 6 Healthy Habits That Lead To a Better Credit Score

Summary – Is Rent a Center a Rip Off?

I hope this didn’t come off as an ‘I hate Rent a Center’ article, but I just really don’t like when I see companies take advantage of other people who are looking for a solution that provides some financial relief.

A scam is defined as a dishonest scheme. A rip off is defined as cheating someone out of money financially. I believe Rent-a-Center is doing both. 

Just because people sign an agreement doesn’t mean they fully understand the terms and can’t see past the marketing and claims to “buy now and pay $10 a week later”.  Rent-a-Center should do a better job at explaining their contract because from the looks of all their complaints online, people did not fully understand or support the terms of the agreement.

The truth is, if you can’t afford to buy furniture, household appliances and other items, you shouldn’t even consider going to a store like Rent a Center in the first place. They prey on people who need certain items but can’t afford them. They entice customers with the idea of flexible, low-cost payments but this ends up locking you into a long-term contract with ridiculous fees and interest.

Instead, play the waiting game and really ask yourself if you need to purchase the item at this time. Can you put it off and save up instead or wait for a good deal? If so, you probably won’t regret it waiting a few weeks or even a few months to potentially save over a thousand dollars.

What are your thoughts on leasing furniture?

When I got my first apartment in college and looked at my empty living room, I felt bad. I caved and financed furniture but looking back, I wasn’t going to die or be scarred for life had I went a few months without that stuff and saved up. Have you ever done business with Rent a Center or a similar store?

The post Is Rent a Center a Rip Off? first appeared on My Debt Epiphany.

The post Is Rent a Center a Rip Off? appeared first on My Debt Epiphany.

I changed my debt repayment goals and focus several times and there have also been times when I’ve felt completely defeated and unmotivated to continue.

When it comes to replenishing your motivation and determination to pay off debt, there are plenty of personal finance books you can read to help. Some of which can even help you with your debt payoff strategy.

People favor different learning formats. So if you love reading books, this common hobby can really help you with your debt payoff.

Here are 4 personal finance books to start reading if you want to get out of debt.

1. Hustle Away Debt

I love this book! Hustle Away Debt was written by David Carlson who runs the personal finance blog Young Adult Money.

David and his wife have a lot of student loan debt, but he side hustles like crazy and wrote this book to highlight some of the best side hustles to try in order to increase your income. One of the best ways to pay off your debt faster is to earn extra money through a side hustle.

During my first year of debt repayment, I was only earning $15/hour. I’ve never shared that openly on the blog until now because I believe it’s a crucial part of my story.

Yet and still, I paid off $11,000 of debt thanks in large part to my side hustle. In Hustle Away Debt, I like how David confirms the fact that you don’t have to settle for the income you earn from your job and you can give yourself a raise and start earning more on the side.

He offers information on several unique side hustles along with plenty of anecdotes and in-depth examples so there is something for everyone regardless of what your interests and skills are.

Knowing which side hustle is right for you is key because it ensures you’ll be able to sustain it long enough to pay off your debt and this book will help you do that.

2. You Only Live Once (YOLO)

You Only Live Once is another one of my favorite books and it’s from Jason Vitug. It’s a great book about personal finance, but I highly recommend it if you’re in debt because it challenges you to think about life after debt and what you truly want to do with your money.

Many of us have heard the phrase ‘YOLO’ before and unfortunately, people use it as an excuse to do silly things on impulse because they only live once and why not, right? Wrong. This book is all about improving your finances and using money as a tool to live the most fulfilling life.

Since we only live once on this Earth, why not treat your money right and use it to help you live your dream life?

Jason is the founder of the personal finance website, Phroogal and he’s the founder of the Road to Financial Wellness, a nationwide event.

This book is broken down into three main categories: awareness, creating a plan, and taking control. Jason mentions his past and history with money which involves always wanting more of it, then trying to keep up with the Joneses only to still feel unfulfilled with his life.

Often times, debt repayment is only the beginning of your financial journey. You often need to change your money habits, develop a vision for your life, and set the right goals to get ahead long-term. This book can help you with that.

3. How to Get Out of Debt, Stay Out of Debt, and Live Prosperously

How to Get Out Of Debt, Stay Out of Debt, and Live Prosperously is a great book to read if you’re longing to become debt free but are still unsure about how you’ll get there. If you’re currently looking at a mountain of debt right now and have no idea where to start, you’re not alone.

Many of us have felt like we’ve been on an uphill battle with debt payoff but this book will help you manage your debt, and create a plan to free yourself from it.

This book is written by Jerrold Mundis offers practical tips and advice to help you cope with your debt and start implementing simple strategies to get rid of it once and for all.

4. The Debt Escape Plan: How to Free Yourself From Credit Card Balances, Boost Your Credit Score, and Live Debt-Free

The Debt Escape Plan by Beverly Harzog is super relatable and motivates you to take actionable steps to pay down your debt. Beverly refers to herself as a former credit card junkie who racked up thousands of dollars in credit card debt during a decade of overspending.

Yes, you read that right. She spent more than 10 years overspending and was still able to fix her money issues and get out of debt and in 2 years time too. You can do it too and if you’re drowning in credit card debt, this book is a must read!

Credit card debt is the worst in my opinion because it comes with a high-interest rate and tons of temptation. Unlike student loan debt, it’s super easy to get back in credit card debt repeatedly especially if you can’t control your spending.

Related: Best Tips and Strategies to Crush Credit Card Debt
How I Raised My Credit Score by 150 Points

In this book you’ll learn things like:

• Why a one-size-fits-all approach to credit card debt doesn’t work
• How to use the Money Personality Quiz to customize your own debt escape plan
• The nine biggest debt mistakes and how to overcome them
• Secrets for giving your credit score a quick boost
• How to debt-proof your future so this never happens to you again

Beverly’s book takes conventional finance advice to the next level as she uses her story and lessons learned to help readers create a plan to conquer and stay out of credit card debt.

How Bad Do You Want to Get Out of Debt?

It all comes down to this question? If you really want to become debt free, you already have the determination. Now, you just need the motivation and a strategy that works best for you.

These 4 books can help. As I said before, everyone learns differently and resonates with different material. Many people have paid off thousands of dollars of debt because they picked up a helpful book that prompted them to take action.

Books are just one of the many resources out there that can help you pay down your debt. Whichever solution you choose to help you improve your financial situation, just realize that it won’t work unless you do so be sure to take action.

The post 4 Books To Start Reading If You Want to Get Out Of Debt first appeared on My Debt Epiphany.

The post 4 Books To Start Reading If You Want to Get Out Of Debt appeared first on My Debt Epiphany.

One thing I’ve been slow to get started on due to my debt is investing. Investing is such an important financial move to make – early on if you can. Wondering if you should pay off debt or invest?

We all want to retire someday and build wealth. Getting started with investing is one of the best ways to do it.

The Importance of Compound Interest

I used to think I could never become a millionaire but then I heard about compound interest. If you start investing at 20 years old and want to retire in your 50s, you can very well retire a millionaire thanks to interest compounding on your consistent contributions.

But enough talk about why investing is important. Today, I want to talk to you about your investing options while you are in debt. Some people advise against investing while in debt while other people prioritize it over their debt payments because there’s no better time than the present to get started.

So Should You Pay Off Debt Or Invest? Can You Do Both?

Everyone’s situation and preferences are different. What I can do, however, is provide you with the options, tools, and resources to make your own educated decision.

Paying off debt and investing are both important goals and spending your money on either could be a wise decision. What it boils down to is a few key factors like:

• Your age – If you’re in your early or mid-20s, you may want to power through debt payoff and forego investing for a few years. Even though you’ll miss out on compound interest, if you’re looking forward to a long career, you can always catch up with your investments over time.
• How much debt you have – There’s a big difference between having $10,000 or debt and $100,000 of debt. If you have a smaller debt amount, you may be able to knock it out in a few months so you can focus solely on investing. If your debt repayment journey will likely take a few years, you may want to incorporate investing so you don’t miss out on precious time.
• The type of debt you have – Do you have high-interest debt that needs to go ASAP? Or do you have low-interest debt and want to take advantage of earning a higher rate of return on your investments.

Remember, you can always do both. If you don’t want to miss out on either opportunity, consider investing and paying off debt at the same time. Sure, it may take you longer to pay off your debt, but you’ll also be growing some of your money at the same time.

The choice is really up to you, but you should start investing sooner or later. That said, here are some options for easy investing even if you still have debt.

Your 401(k)

Contributing to your 401(k) is one of the easiest ways to invest. A 401(k) is an employer-sponsored retirement plan that might be a part of your benefits package. The great thing about a 401(k) is that it allows you to contribute funds as taxes are taken out of your check, so you never really see the money leave your account to begin with.

Most 401(k) plans allow contributions to be made pre-tax meaning you’ll have to pay taxes on the money when you withdraw it. What I love about 401(k) plans is that some employers will match your contributions so it’s basically like getting free money. As an example, if you contribute up to 3 percent of your income to your 401(k), your company would match your contribution by adding 3 percent of their own so you’ll have 6 percent of your income saved up for retirement.

I’ve personally never had the privilege of being offered a 401(k) plan through my employer but my husband has and I was sure to have him check to see if his company provided a match. When we found out they did, it was a no brainier that he would contribute to his 401(k) despite having student loans and other debt.

Contribution limits change every year currently, you can contribute up to $19,500 annually if you are under 50 and an additional $6,500 catch-up contribution if you are over 50.

If you end up switching jobs, don’t forget to roll over your 401(k) contributions. DON’T attempt to withdraw the money.

Individual Retirement Funds

For people who don’t have a 401(k) plan as an option but still want to invest, an individual retirement account like a traditional IRA or Roth IRA is the next best thing. Your contributions get taxed differently with an IRA vs. a Roth IRA . With a traditional IRA, contributions are taxed when you withdraw the money and with a Roth IRA, contributions are taxed before when you deposit them into your account so when it’s time to withdraw the money, you don’t have to pay any taxes.

Since tax rates have been known to inflate over the years, it may sound better to pay your taxes upfront so you don’t have to worry about higher taxes when you retire. With a traditional IRA, you have to start making at least the minimum distributions by age 70 1/2 but with a Roth IRA, the money can continue to grow tax-free in your account throughout your lifetime.

In 2016, traditional IRA and Roth IRA annual contributions limits are $6,000 or $7,000 if you are over the age of 50. While there are no income limits for contributing to a traditional IRA, there are for a Roth IRA and you can find those here.

What I like about IRAs is that you get 15 months to make contributions that count for the calendar year instead of 12 so I will definitely start maxing out my Roth IRA next year. Another thing I like about both of these options is that after 5 years of making contributions, you can withdraw up to $10,000 penalty-free to cover first-time homebuyer expenses.

SEP IRA

The SEP IRA gets its own category because it is a type of traditional IRA for self-employed individuals or business owners. Since I’m a full-time freelancer now, this type of plan has piqued my interest.

With a SEP IRA, contributions are tax-deductible and taxed upon withdrawal just like with a traditional IRA. You can contribute up to $57,000 annually or 25% of your income to a SEP IRA (whichever is less). Unlike a Roth IRA, there isn’t a strict cap as to how much you can earn in order to contribute.

Pay Off Debt or Invest? – Other Investing Options

Let’s say you want to explore your other investing options but you don’t have a lot of money to start with. If you’re wondering whether you should pay off debt or invest, it’s understandable that most of your disposable income is going toward your debt each month.

However, if you have really low-interest debt, and can spare $100+ per month, you can start building your nest egg immediately.

Mutual Funds- Mutual funds are made up of a pool of funds collected from many different investors. Money managers operate the funds and invest them in an attempt to produce capital gains and income for the group of investors. Charles Schwab offers dozens of different mutual funds all requiring a minimum investment of around $100 once you open an account. Fidelity Investments mutual funds are also around the same price.

My Favorite Investing Apps and Programs

Betterment- Betterment is my favorite because they do all the heavy lifting for you. When you sign up for an account, you’ll fill out a brief survey about your investing goals and set up recurring deposits from a checking or savings account of at least $100 per month. Betterment then distributes your funds into ETFs based on your portfolio allocation whether it’s stocks, bonds, or both. You can even open a Roth IRA with Betterment which was perfect for me because my current employer doesn’t offer any retirement benefits.

If you choose to sign up for Betterment and start investing, be sure to use my referral link which will give you 6 months free. Normally, Betterment takes a 0.25% fee annually which is small, but with my link, you’ll be able to allow your investments to grow more with half of your first year fee-free.

Acorns – Acorns is another one of my favorite money-saving apps because it’s easy to use and helps you invest your spare change. Acorns connects to your checking account and will round up your purchases to the nearest dollar then invest the difference.

For example, if you spend $4.50 at Starbucks on a latte, Acorns will take $0.50 from your checking account and invest it. Elect that Acorns transfer 2x or 3x the amount that gets rounded up to the nearest dollar to grow your balance faster. You can also set up weekly deposits starting at just $500 per week. Acorns will invest your money in a variety of stocks, bonds, and mutual funds. Fees start at just $1 per month to use Acorns.

Sign up for Acorns using my referral link and you’ll get $5 to invest to get started.

Digit – Digit is an amazing robo-financial assistant app that helps you you grow your money and reach for your lifestyle goals. It provides a truly personalized and automated savings plan that is designed around your specific spending habits, which it uncovers through using a sophisticated algorithm. I really love how it creates one stop for all of your financial goals from paying off debt to saving for different reasons to investing.

Get started with your free Digit trial here.

Love Your Budget Course – The Love Your Budget Course was created by me to help anyone who is ready to get serious about their financial goals and make sure to account for all of them. When it comes to paying off debt or investing, as I mentioned earlier, you can do both but knowing where all your money is going is crucial to make both goals happen. This course will help you get familar with your numbers and help you feel confident in designing a budget that meets all your needs while removing stress from the equation.

Enroll in the Love Your Budget Course here.

Trade and Travel Program – The Trade and Travel Program is your entry into the world of investing in stocks. With online classes, coaching calls and bonuses you learn the complete ins and outs of the world of stocks. Your confidence will grow in learning how to pick good companies to invest in and make your first trade, protect your portfolio from losses, price your trades correctly and read stock chart as well as regulate your stock trading efforts so you’re not just having one-time surprises but frequent regular income through stock trading.

Learn more about how the Trade and Travel Program can help you build your stock investing portfolio.

Book Suggestion

If you want to learn more about investing in general, I’d highly recommend reading The Simple Path to Wealth. This is one of my favorite personal finance books and it’s worth reading over and over again.

The author, JL Collins, retired early and shares his passive strategy for getting rid of debt, having a cash cushion and investing for long-term results. This book is so easy to understand and I love how the information and ideas are clearly laid out so you can start executing them right away. It’s definitely worth the read!

Getting Started Is Easier Than You Think

It’s not difficult to get started with investing whether you have debt or not. You don’t have to start out by maxing out your retirement accounts if you can’t afford it right now but if you can contribute around $100 per month or contribute up to your 401(k) match, you’ll be off to a great start and won’t miss out on these precious years for investing that you’ll never get back.

The post Have Debt But Want to Invest? Here’s What You Need to Know first appeared on My Debt Epiphany.

The post Have Debt But Want to Invest? Here’s What You Need to Know appeared first on My Debt Epiphany.

I remember telling myself that once I got through that, I needed to become more committed to slowing down and taking better care of myself. Then Covid-19 hit and changed everything. I’m sure so much in your life has changed too.

Validating Negative and Positive Feelings

This year hasn’t been a walk in the park, and I have no intention of making it seem like it has. Last week, I sat down with my family and asked them what were some of the negative impacts of Covid-19 that have affected them. The rules were to complain as much as possible with no guilt and to share even the smallest inconveniences of this pandemic.

I was especially interested to hear my son open up about how he was tired of wearing masks everywhere (even though he understands why it’s necessary) and not being able to see my friends. It was important for me to make sure that his and my husband’s feelings were validated and that it’s okay to feel icky sometimes about this whole thing.

When 9/11 happened, I was still in school and I remember my teacher allowed us to sit in the dark for weeks afterward and discuss our thoughts and feelings about the terrorist attacks. It was much-needed therapy…and we made it through that hardship.

So know that if you’re still standing now, you will make it through whatever you’re going through as well. That said, I wanted to share some things that I’m super grateful for each year. Of course, dealing with the hardships of Covid-19 would have been 10 times harder had I not had these things and people impact me so I’m truly thankful.

My Family

Family is so important to me and I feel truly spoiled to have such an amazing family. My husband is so supportive and has taught me so much about love and respect. The fact that he managed Pinterest for this blog for a few months during the shut down just proves how awesome he is. He doesn’t even like Pinterest or know the first thing about it but would do anything to help me out and share my posts so they reach more people.

My son has created so much light and joy in our household since he was born but especially this year. A day hasn’t gone by where I didn’t laugh at something he said or did. As a child, he’s been so thoughtful and understanding through this whole pandemic (something I couldn’t even imagine going through as a 10-year-old).

I’m also super thankful to be so close to my parents and siblings. My mom is a modern-day superwoman who’s been fearlessly facing Covid-19 head-on while working in the nursing field. I’m grateful that my siblings and I are so close. We talk all the time and would do anything for each other.

A Flexible Business

“Aren’t you so glad we started this years ago?” One of my friends said this to me over a Zoom call back in April. It’s crazy to see how successful some of the people are who started their blogs around the same time as me.

To answer my friend’s question, yes, I feel extremely grateful to have a flexible business that allows me to work from home. I know this is a privilege that not everyone has. However, not a day goes by that I take for granted all the hours I spent building my online business, getting up at 5:30 am, researching SEO and marketing, and writing tons of articles.

If you’re like to learn more about how I created an online business that I enjoy working in every day, check out some of the links below.

Related: How to Make Money with a Blog or Niche Site

Side Hustles Explored: How to Become a Freelance Writer

How to Start a Successful Money-Making Blog in 10 Days

Crucial Steps to Take Before Taking a Leap of Faith and Quitting Your Job

This Community

As always, I’m so thankful for the online communities that I have including this one. When I started this blog, I didn’t really know what I was doing. I just wanted to share my debt payoff journey and what I was experiencing as I learned more about personal finance.

I’ve enjoyed connecting with so many people on here over the years and hearing your stories. I enjoy the community Facebook group I started for My Debt Epiphany readers as well as the communities of financial bloggers I’ve been a part of. It really makes me feel like I’m not alone and I’m grateful to be able to interact with people who get it.

Debt and Financial Hardships

Let’s be honest. Being in debt and facing financial hardships is not easy and it’s not something I’d wish on anyone. Still, I feel like struggling with finances years ago allowed me to learn how to overcome those obstacles and get better with money. Had I never gotten into debt I’m not sure that I would have started this blog in 2014 which is hard to imagine.

Over the years I’ve learned so much about how to save, stretch, get creative, and find contentment with where I’m at in my financial journey.

Overall, I’m thankful that I went through my debt repayment journey because truly knowing how it feels to struggle with money gives me a much better appreciation of how far I’ve come.

Related: Life After Debt; Remembering Your Why

Staying Motivated During Your Debt Payoff Journey

What are you thankful for this year?

Giveaway!

December 2020 marks my 6th year anniversary of running this blog and I always love to celebrate with a giveaway. This time around, I’m giving away a $100 Amazon gift card to one lucky person. I hope it helps someone who may need help getting gifts for loved ones this holiday season. You have until December 9th to rack up as many entries as you can, then on December 10th I’ll notify the winner. Good luck!

The post What I’m Thankful For… first appeared on My Debt Epiphany.

The post What I’m Thankful For… appeared first on My Debt Epiphany.