Debt Management http://www.wisebread.com/taxonomy/term/7681/all en-US What's Better: Less Debt or More Savings? http://www.wisebread.com/whats-better-less-debt-or-more-savings <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/whats-better-less-debt-or-more-savings" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/credit_card_money_138077193.jpg" alt="Wondering if less debt or more savings is better" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Money advice can be confusing. Financial planners say that you should pay off high-interest debt &mdash; especially credit card debt &mdash; as quickly as possible. They also say that you should build an emergency fund you can use for repairs to a busted transmission or a leaking water heater. But what if you have just enough money in your emergency fund to pay off all your credit cards? Doesn't your <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt" target="_blank">high-interest credit card debt</a> qualify as an emergency?</p> <p>You might be surprised to hear that no, you should not spend your whole emergency fund on credit card debt. The better approach is to use <em>some</em> of your savings to pay off a chunk of your debt, while still keeping a reserve stashed away. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso" target="_blank">The Fastest Way to Pay Off $10,000 in Credit Card Debt</a>)</p> <h2>An emergency fund can help you avoid debt</h2> <p>Emptying all of your savings to pay off your credit card debt might feel good. But having an emergency fund is key to avoiding more high-interest debt in the future.</p> <p>Financial pros recommend that you build an emergency fund large enough to cover three to six months' worth of daily living expenses, but that's just the bare minimum. An emergency fund that can cover a year of daily living expenses is better.</p> <p>You might not realize just how badly you need this cash reserve until an expensive emergency pops up. Say your roof suddenly needs replacing, or your water heater calls it quits. Without any savings, you'll probably turn to credit cards to pay your contractors. Now, you'll have to pay interest on the repair.</p> <p>Or, what if you unexpectedly lose your job? Most people don't find new employment overnight. A job hunt can take months, and your emergency fund can help pay for your daily living expenses in the meantime. Without an emergency fund, a job loss could have you trying to use credit cards to pay for everything from groceries to filling your car's gas tank. And that could lead to a mountain of future debt.</p> <h2>The better approach to paying down high-interest debt</h2> <p>You <em>can </em>use your savings to help pay down credit card debt. The key is to use only some of the money, never depleting or critically draining the fund.</p> <p>Say you have $15,000 saved in an emergency fund, and $12,000 of credit card debt. Maybe you could withdraw $6,000 from your savings to cut your credit card debt in half. That will still leave you with $9,000 in savings that you can use to handle any financial emergencies that come your way.</p> <p>After you tackle that large chunk, you can work aggressively to pay off the remainder of your credit card debt on your own. There are several approaches to paying down this debt, two of the most common being the <a href="http://www.wisebread.com/snowballs-or-avalanches-which-debt-reduction-strategy-is-best-for-you" target="_blank">debt avalanche and debt snowball</a> methods.</p> <p>In the avalanche method, you first pay as much as you can each month on your credit card with the highest interest rate, making the minimum payments on your other cards. Once you pay off the card with the highest rate, you begin making larger payments on the card with the next highest rate, and so on until you've paid off all your cards.</p> <p>You can also try the debt snowball method, where you instead focus on first paying off your credit card with the smallest balance, making minimum payments each month on your other cards. Once you pay off your smallest debt, you move on to the card with the next smallest balance and so on, again until you've again paid off all your cards. (See also: <a href="http://www.wisebread.com/6-secrets-to-mastering-the-debt-snowball" target="_blank">6 Secrets to Mastering the Debt Snowball</a>)</p> <p>The avalanche method is the cheapest because you tackle highest-interest debt first. The snowball method, though, comes with a psychological boost: There's a good feeling involved with paying off a debt in full, even if it is a small one. For some people that provides critical motivation for sticking with a debt repayment plan.</p> <p>If you find yourself struggling to handle a large debt repayment effort, you can also try the <a href="http://www.wisebread.com/get-out-of-debt-faster-with-the-debt-snowflake" target="_blank">debt snowflake method</a>. In this approach, you find any minuscule way to shave money off your everyday expenses. You then use those savings to make frequent payments on your credit card debt. It may seem like you aren't doing much, but every payment, no matter how small, makes a difference. You can use this method in conjunction with the snowball or avalanche, too.</p> <p>Choose the approach that works best for you. And remember, as tempting as it might be, don't completely drain your savings. You never know when life will throw a financial emergency at you.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/whats-better-less-debt-or-more-savings">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-pay-it-off">5-Day Debt Reduction Plan: Pay It Off</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-prevent-a-debt-spiral">5 Ways to Prevent a Debt Spiral</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-personal-finance-resolutions-anyone-can-master">8 Personal Finance Resolutions Anyone Can Master</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moments-that-should-be-on-everyones-bucket-list">8 Money Moments That Should Be On Everyone&#039;s Bucket List</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-golden-rules-of-personal-finance-everyone-should-know">10 Golden Rules of Personal Finance Everyone Should Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Debt Management avalanche method cash reserves credit card debt emergency funds high interest debt saving money snowball method snowflake method Mon, 22 May 2017 08:00:15 +0000 Dan Rafter 1950127 at http://www.wisebread.com We Do the Math: Save for Retirement or Pay Off Credit Card Debt? http://www.wisebread.com/we-do-the-math-save-for-retirement-or-pay-off-credit-card-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/we-do-the-math-save-for-retirement-or-pay-off-credit-card-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-514332608.jpg" alt="Couple wondering if they should save for retirement or pay off debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Should you save for retirement or pay off credit card debt? If you're carrying a card balance, you may be wrestling with whether to put all your resources into attacking the debt, or start building your retirement nest egg while you slowly pay off debt.</p> <p>Which one will give you a better net worth? There's no simple answer. For some people the situation may warrant clearing credit card debt first; for others, it's better to start investing right away. To figure out which scenario is better in a given situation, we'll need to do some math. Don't worry, we'll show you how to do it in a few easy steps.</p> <h2>Step 1: Gather important numbers about your debt and your retirement plan</h2> <p>First, look through your credit card statements and accompanying information to pull up the following numbers:</p> <ul> <li>Credit card debt. You'll find this on the front of your credit card statement.<br /> &nbsp;</li> <li>Credit card interest rate, or APR (Annual Percentage Rate). You'll find this further down on your statement, in a section labeled &quot;Interest Charged&quot; or something similar.<br /> &nbsp;</li> <li>Minimum payment. You'll find this in your card's terms and conditions, under a discussion about how minimum payments are calculated. It will probably be a percentage, but there may also be a flat sum.</li> </ul> <p>Next, consider any retirement plan you are enrolled in or have available. What is the average annual return? You can identify past returns by reviewing your retirement account statements. For example, your 401(k) plan account may list your annual return. Note that past returns don't guarantee or predict future returns, but we'll use the average annual return as a proxy for future returns in this case, knowing that if our portfolio takes a long-term downward turn, our calculations will change.</p> <p>Finally, how much extra do you have in your monthly budget that you could put toward credit card payments, retirement investments, or both?</p> <p>Follow along as we consider a hypothetical debt situation and retirement opportunity. Let's say there's $500 in our monthly budget, which equals $6,000 annually ($500 x 12 months = $6,000) to put toward debt or retirement.</p> <p>Currently, the balance on our credit card is $5,000. Our APR is 22%. Our minimum monthly payment is 3% of our outstanding balance or $25, whichever is greater.</p> <p>Our employer offers a 401(k) plan. For the sake of keeping this illustration simple, we'll say our employer doesn't match employee contributions and we choose to make taxable contributions with a Roth designated account within the 401(k).</p> <p>In reality, you might choose instead to make tax-deductible contributions to a&nbsp;<a href="http://www.wisebread.com/how-to-set-up-an-ira-to-build-wealth?ref=internal" target="_blank">traditional retirement account</a>. With a Roth 401(k) there are no immediate tax benefits, which makes our calculations simpler and therefore better suited for this purpose.</p> <p>We'll say the default investment in our 401(k) is a&nbsp;<a href="http://www.wisebread.com/the-4-best-investments-for-lazy-investors?ref=internal" target="_blank">target-date mutual fund</a> with an average annual return of 6.3% since its inception. We know that future performance is unpredictable. But to run the numbers for the retirement vs. debt decision, we'll apply an annual return of 6% to our retirement account.</p> <p>We'll look at the retirement account and credit card balance after five years to compare the two choices: 1) making minimum payments on our card balance so we can start investing right away, or 2) putting all our extra money toward our credit card debt before we consider retirement investing.</p> <p>In both scenarios, we'll assume that we won't make additional charges on our credit card. In addition, we'll contribute to our retirement account when we have money available to invest.</p> <h2>Step 2: Calculate net worth if you prioritize retirement savings over paying off credit card debt quickly</h2> <p>In this scenario, we'll see what happens if we only make minimum payments on our credit card so that we can get started investing for retirement right away. Your credit card statement should state very clearly how long it will take to pay off your balance if you make minimum payments.</p> <p>You can also find an&nbsp;<a href="http://www.calcxml.com/calculators/how-long-will-it-take-to-pay-off-my-credit-card" target="_blank">online calculator</a> to help you with these calculations. Here's the information we'll enter for our example (you can put in your own numbers from your real-life situation):</p> <ul> <li>Current credit card balance: $5,000<br /> &nbsp;</li> <li>Annual percentage rate: 22%<br /> &nbsp;</li> <li>Proposed additional monthly payment: $0<br /> &nbsp;</li> <li>Minimum payment percentage: 3%<br /> &nbsp;</li> <li>Minimum payment amount: $25<br /> &nbsp;</li> <li>Skip December payment when offered? No</li> </ul> <p>Results indicate that we'll carry this debt for more than 17 years (205 months) and pay more than $7,000 in interest during this time. Click the button that says &quot;Detailed Results&quot; to see a breakdown of the payments. Make sure that under the Assumptions tab, you've asked for a monthly table display.</p> <p>In the first month, our payment is $150 and this amount slowly diminishes until we're paying the minimum amount of $25 for the last several years.</p> <p>Since we're making minimum payments on the credit card, we'll be able to put $350 of our total available $500 toward retirement in the first month ($500 - $150 = $350). The second month and subsequent months, we'll be able to increase the amount we invest, as our credit card balance dwindles. Every month we also earn some interest (6%/12 months), so our retirement account balance grows in that way, too.</p> <p>After five years (60 months), our credit card balance will be trimmed to less than $2,500.</p> <p>At the end of five years, our retirement account grows to just over $27,300. Considering our debt and retirement balances, our net worth is $24,800 ($27,300 in assets and $2,500 in liabilities). Note that investment returns are not guaranteed; the 6% rate is for illustration purposes only.</p> <p>You can&nbsp;<a href="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/Rains_We Do The Math Spreadsheet - Sheet1.pdf" target="_blank">download the spreadsheet</a> with these calculations.</p> <h2>Step 3: Calculate net worth if you pay off credit card debt completely before investing for retirement</h2> <p>In this scenario, we'll apply all of our extra income to credit card debt first. When the debt is paid in full, we'll begin to contribute to the retirement account.</p> <p>We enter this information to learn how quickly we'll pay off the debt with $500 per month (again, enter your own information to get personalized results):</p> <ul> <li>Current credit card balance: $5,000<br /> &nbsp;</li> <li>Annual percentage rate: 22%<br /> &nbsp;</li> <li>Minimum payment percentage: 0%<br /> &nbsp;</li> <li>Minimum payment amount: $0<br /> &nbsp;</li> <li>Proposed additional monthly payment: $500<br /> &nbsp;</li> <li>Skip December payment when offered? No</li> </ul> <p>To keep the credit card payment at $500 per month (and pay off credit card debt first), we'll enter the minimum payment percentage as 0% and the minimum payment amount as $0 &mdash; even though the actual terms of the credit card agreement will most likely specify a percentage of 2% or more and a minimum payment of $10 or more. When we view the results, we find that the payoff happens in 12 months. We'll make 11 payments of $500 and one payment of $74.</p> <p>After we finish paying off the credit card debt, we can begin investing. We'll invest $426 in the twelfth month ($500&ndash;$74) and $500 in subsequent months. Consider using a&nbsp;<a href="http://www.calculator.net/future-value-calculator.html" target="_blank">Future Value calculator</a>, to determine how much your retirement account will be worth at the end of five years.</p> <p>Here's the information we entered into the Future Value calculator:</p> <ul> <li>Number of periods: 48. (We'll invest for four years, or 48 months.)<br /> &nbsp;</li> <li>Start amount: $426. (We'll start with the first month's contribution as the balance in our account.)<br /> &nbsp;</li> <li>Interest rate: 0.5% (6% annual rate divided by 12 months).<br /> &nbsp;</li> <li>Periodic deposit: $500.<br /> &nbsp;</li> <li>Deposit made at the beginning or end of the period: End.</li> </ul> <p>If we earn 6% annually on our investments, our retirement account grows to $27,590 in five years. In addition, our credit card debt is paid off. Our net worth is $27,590 &mdash; that's $2,790 <em>more </em>than if we had prioritized retirement savings first and stuck with only paying the minimum on our credit card debt each month.</p> <h2>What else to consider</h2> <p>These calculations are a starting place. Your situation may be similar to this scenario, but it might not be. For instance, if your APR is considerably lower and your retirement returns higher than in the scenarios above, you may very well find that you're better off investing in the market while reducing your credit card debt slowly. Changes in one or several of these factors could alter results:</p> <ul> <li>Larger or smaller credit card balances;<br /> &nbsp;</li> <li>Higher or lower credit card APRs;<br /> &nbsp;</li> <li>Better or worse investment performance;<br /> &nbsp;</li> <li>Availability of a company match on your 401(k);<br /> &nbsp;</li> <li>Administrative fees associated with your 401(k);<br /> &nbsp;</li> <li>Choosing to invest in a traditional 401(k).</li> </ul> <p>If you opt for a traditional 401(k), your contributions come out of your pretax income, thereby reducing your taxable income, which could result in a lower tax liability and a higher tax refund. A tax refund could be applied to your credit card balance, allowing you to more easily pay off debt while also saving for retirement.</p> <p>To calculate the immediate tax benefit of saving within a traditional 401(k) account, multiply the contribution amount by your marginal tax rate. In addition, you could be eligible for a&nbsp;<a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit" target="_blank">saver's credit</a>, which further increases the benefit of retirement savings.</p> <h2>How to get started with either scenario</h2> <p>Whatever path you choose, you may need help taking first steps. Consider these ways to get started:</p> <h3>Debt payoff</h3> <ul> <li>Consider transferring or consolidating your balances on a&nbsp;<a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">0% balance transfer card</a>.<br /> &nbsp;</li> <li>Consider a&nbsp;<a href="http://www.wisebread.com/how-to-do-a-one-month-spending-freeze?ref=internal" target="_blank">no-spend week or month</a> in which you don't spend on anything except essentials.<br /> &nbsp;</li> <li>Apply cash gifts from family to credit card balances.<br /> &nbsp;</li> <li>Work a part-time job to pay down balances.<br /> &nbsp;</li> <li>Find ways to spend less on everyday expenditures and apply savings to debt payoff.</li> </ul> <h3>Retirement saving</h3> <ul> <li>Consider enrolling in your employer's retirement plan, if offered. You may have the opportunity to contribute to a&nbsp;<a href="http://www.wisebread.com/403b-vs-401k-how-are-they-different?ref=internal" target="_blank">401(k) or 403(b) account</a>, for example.<br /> &nbsp;</li> <li>Set up an&nbsp;<a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you?ref=internal" target="_blank">IRA</a> with a brokerage account or&nbsp;<a href="http://www.wisebread.com/should-you-trust-your-money-with-these-4-popular-financial-robo-advisers?ref=internal" target="_blank">robo-adviser</a>.<br /> &nbsp;</li> <li>Start an&nbsp;<a href="http://www.wisebread.com/the-sep-ira-is-how-the-self-employed-do-retirement-like-a-boss?ref=internal" target="_blank">SEP-IRA</a> if you have self-employment income.</li> </ul> <p>When considering your choices, keep in mind that credit card interest rates are relatively fixed, whereas investment returns tend to be much more variable. The main instances in which credit card rates fluctuate these days are when the Federal Reserve raises the federal funds rate, or when you make late payments and are charged a penalty interest rate.</p> <p>The point is, if your card's APR is 22%, you could be certain to save at least 22% of your balance by paying off credit card interest early. In contrast, the precise benefit of early investing is less certain.</p> <p>Should you save for retirement or pay off credit card debt? Doing the math can help you make a decision.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/we-do-the-math-save-for-retirement-or-pay-off-credit-card-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/all-the-ways-minimum-payments-are-evil">All the Ways Minimum Payments Are Evil</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-early-retirement-might-be-financially-risky">4 Reasons Early Retirement Might Be Financially Risky</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-face-4-ugly-truths-about-retirement-planning">How to Face 4 Ugly Truths About Retirement Planning</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/funding-your-401k-when-youre-in-debt">Funding your 401(k) when you&#039;re in debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Retirement 401(k) APR bills calculating comparisons interest rates nest egg Paying Off Debt Thu, 18 May 2017 08:30:15 +0000 Julie Rains 1949201 at http://www.wisebread.com Who Pays When Loved Ones Leave Debt Behind? http://www.wisebread.com/who-pays-when-loved-ones-leave-debt-behind <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/who-pays-when-loved-ones-leave-debt-behind" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-523154492_1.jpg" alt="Woman learning who pays when a loved one leaves behind debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Losing a loved one &mdash; a parent, spouse, or sibling &mdash; is difficult enough. But what if your loved one left mortgage, auto loan, or credit card debt behind? Will you now be responsible for paying those bills?</p> <p>In most cases, no. Creditors can't force you to cover the unpaid debts of loved ones who have died. But the money that your loved ones owed might cut into or even eliminate any inheritance that was meant for you or other survivors.</p> <h2>What usually happens</h2> <p>When people die, the money they owe creditors &mdash; everyone from their mortgage lender, to their auto loan providers, to their credit card companies &mdash; is collected from their estate. The estate in this case is defined as the money and assets owned solely by the deceased.</p> <p>This might mean that the house your parents owned has to be sold to pay off any mortgage debt they owed. Their car might have to be sold to pay off credit card or other debts.</p> <p>Whatever is left after these debts are paid off remains in the estate of the deceased. If your parents wanted to leave money behind for their children and grandchildren, the amount they wanted to bestow will be reduced by however much they owed creditors at the time of their death.</p> <h2>It can get more complicated</h2> <p>Of course, that's the most basic course of action. In reality, money matters can get more complicated after the death of a loved one.</p> <p>This is especially true when you lose a spouse. In most states, you won't be responsible for any debt that your spouse left behind when he or she died, as long as the debt was accrued in your spouse's name alone. If both you and your spouse share a credit card or a mortgage, then you will be responsible for making payments on that debt after your spouse dies.</p> <p>If you live in what is known as a community property state, you will be responsible for even more debt. In such states, the debts of deceased people are passed onto surviving spouses, even if the debt is not in the survivor's name. If your spouse took out a loan to buy a motorcycle and didn't finish paying it off before dying, you'd be responsible for paying off that loan.</p> <p>There are only 10 states that have community property laws: Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. If you live in any other state, you are not responsible for debt run up in your spouse's name alone.</p> <p>Co-signing presents another complication. If you co-signed on a loan with anyone, you will have to pay off the debt left behind when they die. Say your sibling dies, but before that tragedy, you co-signed their auto loan. You will now be responsible for paying off that loan.</p> <h2>Mortgage debt</h2> <p>Different types of debt come with different issues. Mortgage debt left behind can be one of the most complicated.</p> <p>Surviving children or siblings aren't personally responsible for the mortgage debt left behind by their loved ones. But it still needs to be paid off. Otherwise, the bank will sell the home to pay off the unpaid mortgage debt.</p> <p>This can be problematic if parents wanted to leave their home to their kids. If your parents leave their home to you, and they still owed money on their mortgage at the time of their death, you can take possession of the home. But you must make the monthly mortgage payments. If you don't want or can't afford to do this, you'll have to sell the home.</p> <p>If your spouse dies and you still owe on your mortgage loan, you'll have to continue making monthly payments if the loan was in both your name and your spouse's. If it wasn't, you'll have to take over the payments if you want to keep the house.</p> <h2>Credit card debt</h2> <p>Credit card debt is never passed on to surviving family members whose names are not on the credit card account. When your loved ones die, this debt will be paid off from their estate. If there is not enough money in the estate, the credit card company is out of luck.</p> <p>Some debt collectors might try to convince you that you are responsible for the credit card debt of a deceased loved one. Don't fall for this. If your name is not on the account, you are under no legal responsibility to pay off this debt.</p> <p>That goes for authorized users, too. Authorized users are never liable for the debt charged to a card, even if they made those charges before the person's death. Do not continue making charges on the account, though, or you could be held liable.</p> <p>Finally, if you shared a joint credit card account, the debt on that card becomes your responsibility. You must continue making payments on it.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/who-pays-when-loved-ones-leave-debt-behind">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-happens-to-your-debt-after-you-die">What Happens to Your Debt After You Die?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-financial-moves-to-make-when-a-loved-one-dies">12 Financial Moves to Make When a Loved One Dies</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-fair-way-to-split-up-your-familys-estate">The Fair Way to Split Up Your Family&#039;s Estate</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-better-less-debt-or-more-savings">What&#039;s Better: Less Debt or More Savings?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you">15 Surprising Ways Bad Credit Can Hurt You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Debt Management auto loans cosign death inheritance leaving debt behind loves ones mortgages settling estates Thu, 18 May 2017 08:30:15 +0000 Dan Rafter 1947500 at http://www.wisebread.com 6 Money Moves to Make If Your Net Worth Is Negative http://www.wisebread.com/6-money-moves-to-make-if-your-net-worth-is-negative <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-money-moves-to-make-if-your-net-worth-is-negative" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-546177782.jpg" alt="Woman making money moves when her net worth is negative" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>One of the most illustrative financial figures to know is your total net worth. This is the value of all of your cash and assets, minus your debts. For many people, that figure is below zero.</p> <p>Building a high net worth should be the ultimate goal of anyone seeking financial freedom. If your net worth is less than zero, consider making these moves ASAP. (See also: <a href="http://www.wisebread.com/10-ways-to-increase-your-net-worth-this-year?ref=seealso" target="_blank">10 Ways to Increase Your Net Worth This Year</a>)</p> <h2>1. Reduce your spending</h2> <p>One of the most direct ways to end up with a negative net worth is to spend more than you earn. Cutting unnecessary expenditures is the first step in having a net positive income each month. This can mean some tough choices, like eliminating cable, eating out, and your annual vacation. It may also require more extreme measures, like getting by without a car.</p> <p>You can help yourself by tracking your spending meticulously in a budget so you know where money is going each month. Even if you think you are already living frugally, there's a chance you can find savings just by taking a closer look.</p> <h2>2. Pay off your high-interest debt</h2> <p>If your net worth is negative, it may be partially due to <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=internal" target="_blank">high interest credit card debt</a> and other loans. Interest can quickly pile up and eventually overwhelm your earnings, putting you in negative net worth territory. Tackling debt starting with the highest interest rate first is called the avalanche method, and this can save you a lot of money on interest payments in the long run. Sometimes, even paying off just one credit card can make a huge difference in your financial situation. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso" target="_blank">The Fastest Way to Pay Off $10,000 in Credit Card Debt</a>)</p> <h2>3. Bring in more income</h2> <p>If you're crumbling under a mountain of debt and you don't have enough income to pay off the debt, you must find a way to bring in more money. Start by searching for higher paying jobs or <a href="http://www.wisebread.com/5-times-you-should-demand-a-raise?ref=internal" target="_blank">asking for a raise</a> from your current employer. Consider starting a side hustle, small business, or taking an additional part-time job. It may also be worth exploring income-producing investments, such as dividend stocks or peer-to-peer lending. If you have a maniacal focus on earning more money, you will help yourself move from negative to positive in the net worth department.</p> <h2>4. Invest</h2> <p>Arguably the most important way to build net worth is through investing. If you are able to put even a small amount of your earnings into stocks or index funds that grow, you'll give your financial picture a boost over time. Obviously, investing in the stock market carries risks. But U.S. stocks have consistently risen in value over time, with long-term growth eventually surpassing losses during market crashes. The more you can invest, the better off you'll be, especially if you stay in the market for many years. You won't get rich overnight, but your overall net worth will eventually rise.</p> <h2>5. Set a financial goal</h2> <p>If you had enough money, what would you ultimately want to do with it? Would you want to buy a home? Start a family? Build a hefty retirement account? To increase your net worth, it helps to have a goal to motivate you to save. Ideally, your financial goal should be geared toward building a high net worth, not a one-time purchase like a car. Whether it's a down payment for a home, a comfortable retirement, or saving for college, your dreams can help keep you accountable.</p> <h2>6. Refinance your mortgage</h2> <p>Homeownership can be a great way to build net worth, but it can also be a drain on your finances if you have the wrong kind of mortgage. If your loan term is very long, or if you have a high-interest or interest-only loan, you may not be paying much toward the principal of the loan (or building any equity) for a while. And that could be a serious problem if you're having trouble making payments.</p> <p>If you find yourself in this situation, you may want to consider refinancing to a shorter term or lower interest rate. There's no sin in borrowing to buy a home, but ideally, homeowners should seek a fixed-rate mortgage with a relatively short loan term: 30 years is standard, but a 15-year mortgage offers you the ability to build equity &mdash; and thus your net worth &mdash; at a faster pace. Just be sure you can comfortably make the monthly payments.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/6-money-moves-to-make-if-your-net-worth-is-negative">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-inspiring-people-who-each-paid-off-over-100000-in-debt">5 Inspiring People Who Each Paid Off Over $100,000 in Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-money-moves-to-make-the-moment-you-decide-to-retire">12 Money Moves to Make the Moment You Decide to Retire</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/refinance-these-4-common-debts-before-year-ends">Refinance These 4 Common Debts Before Year Ends</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-meditation-can-make-you-a-money-master">6 Ways Meditation Can Make You a Money Master</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-personal-finance-rules-you-should-be-breaking">15 Personal Finance Rules You Should Be Breaking</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management assets goals investing mortgages net worth refinancing saving spending stocks Wed, 10 May 2017 08:00:08 +0000 Tim Lemke 1941242 at http://www.wisebread.com Get Out of Debt Faster With the "Debt Snowflake" http://www.wisebread.com/get-out-of-debt-faster-with-the-debt-snowflake <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/get-out-of-debt-faster-with-the-debt-snowflake" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-629801718.jpg" alt="debt snowflake" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Credit card debt can be very dangerous. With revolving balances and double-digit interest rates, your debt can quickly balloon out of control.</p> <p>There are several strategies experts recommend for paying off debt, including the <a href="http://www.wisebread.com/snowballs-or-avalanches-which-debt-reduction-strategy-is-best-for-you" target="_blank">debt avalanche and debt snowball methods</a>. With the debt avalanche approach, you prioritize paying off the card with the highest APR, saving you interest charges in the long run. With the debt snowball method, you focus on paying off the smallest debts first, racking up small wins quickly that can give you the motivation to stick with your debt payoff plan.</p> <p>Both methods rely on budgeting money every month for minimum payments on some debts, plus extra money to throw at the debt you're prioritizing. But what if you feel there is no money in your budget to set aside for these payments? That's where the snowflake method comes in. It doesn't replace the avalanche or snowball methods, but rather is a way to find the money you need for either approach.</p> <h2>What is the debt snowflake method?</h2> <p>Instead of worrying about how to come up with large lump sum payments for your debts, you look for ways to shave money off your everyday spending or earn a little extra pocket change. You then use that &quot;found money&quot; to make very small, frequent payments on your credit card accounts. While the amounts may seem microscopic compared to your overall debt balance, over time, the little payments add up and knock off months from your repayment term, saving you hundreds of dollars.</p> <p>Debt snowflake is a method that you can use in combination with other repayment methods. Whether you decide to tackle your highest interest debt first, or the debt with the lowest balance, using the snowflake approach can help you find money to pay down the debt.</p> <h2>How the debt snowflake method works</h2> <p>With the debt snowflake, you apply everyday savings directly to your debt right away. For example, let's say your weekly grocery budget is $50. But thanks to coupons, you only spent $46 this week. If you follow the debt snowflake approach, you will take that surplus and make a $4 payment on your credit card balance.</p> <p>You do this for every circumstance where you save a little money. If you normally spend $60 at the salon for a haircut, but you go to Hair Cuttery or Great Clips instead for $25, you would put that extra $35 toward your debt as soon as you get home.</p> <p>Little savings can add up quickly. If you swap out one restaurant lunch a week for a bagged lunch, carpool with coworkers, use coupons, or just go without, you can find a little extra change in your budget that can go toward your debt balance.</p> <h2>Is it really effective?</h2> <p>When facing a mountain of debt, the idea that an extra $4 or $5 here and there could make a difference may seem ludicrous. But those little snowflake payments can have a big impact.</p> <p>For example, say you have a credit card balance of $3,000 and with an APR of 15 percent. If your minimum payment is $100, it would take you 38 months to pay off the balance and you would pay $784 in interest.</p> <p>If you applied the debt snowflake approach, you could cut the repayment term and interest charges. Let's say you clipped coupons and shopped for deals at the grocery store, and were able to save $4 a week. If you applied that extra $16 a month to your debt payments, your repayment term would be just 32 months and you'd pay just $647 in interest. Applying your small savings each month gets you out of debt a full six months earlier!</p> <p>And if you look for additional savings and apply small windfalls (like gifts or a bonus from work) to your debt, your snowflakes can accumulate that much faster.</p> <h2>Using the debt snowflake approach</h2> <p>When facing credit card debt, finding large sums of money to repay your balance can be unrealistic. But that's why the debt snowflake is so effective. By being diligent about applying your little savings and daily wins, you can take control of your debt and pay off your balance ahead of schedule, saving yourself hundreds or even thousands of dollars. (See also: <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=seealso" target="_blank">5 Ways to Pay Off High Interest Credit Card Debt</a>)</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kat-tretina">Kat Tretina</a> of <a href="http://www.wisebread.com/get-out-of-debt-faster-with-the-debt-snowflake">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-pay-it-off">5-Day Debt Reduction Plan: Pay It Off</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/try-these-6-money-saving-challenges-now">Try These 6 Money-Saving Challenges Now</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-pessimism-can-actually-improve-your-finances">4 Ways Pessimism Can Actually Improve Your Finances</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-prevent-a-debt-spiral">5 Ways to Prevent a Debt Spiral</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-invest-when-youre-in-debt">6 Ways to Invest When You&#039;re In Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management avalanche debt snowflake debt strategies micro savings repayment methods saving money snowball Wed, 19 Apr 2017 08:30:10 +0000 Kat Tretina 1930447 at http://www.wisebread.com How to Handle Credit Card Debt When You're Unemployed http://www.wisebread.com/how-to-handle-credit-card-debt-when-youre-unemployed <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-handle-credit-card-debt-when-youre-unemployed" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-503543640.jpg" alt="handle credit card debt while unemployed" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As if unemployment isn't a big enough blow on its own, dealing with debt while out of work can make things even worse. You might be able to catch a break from federal student loans and even some private loans through temporary deferment and forbearance &mdash; but what about credit card debt?</p> <p>See also:<a href="http://www.wisebread.com/how-to-manage-debt-while-unemployed?ref=seealso2" target="_blank"> How to Manage Debt While Unemployed</a></p> <h2>Call your creditors</h2> <p>While your unemployment status might want to make you hide from the world, it is best to deal with the situation head on and right away. Call your creditors first thing and explain the situation. See what they can offer in terms of assistance. Even if they can allow you to skip a month of payments without penalty, it will help.</p> <h2>See if you qualify for a 0 percent balance transfer card</h2> <p>If your credit score is strong, you could qualify for a credit card with a promotional <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">0 percent balance transfer</a> <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal">o</a>f<a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal">f</a>e<a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal">r</a>. Transferring your credit card debt can help you save money on your monthly credit card payments by avoiding interest charges. Just know that there are a couple of catches. First, you will usually have to pay a balance transfer fee (3 percent is typical). Secondly, if you do not pay off the transferred balance during the promotional period, you'll be subject to an interest rate that's usually higher than average on the remaining balance. (See also: <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=seealso" target="_blank">When to Pay Off Credit Card Debt With a Balance Transfer</a>)</p> <h2>Put your budget in emergency mode</h2> <p>Even if you don't plan on being unemployed for long, it is still a good idea to put your budget in emergency mode until you have secured another position. Cut everything but the basic necessities. This includes all of your cable or TV streaming options, fast food and dining out, and any unnecessary shopping. Live as if you only have enough money for basic groceries and utilities.</p> <h2>Don't fall for quick fixes</h2> <p>When money is tight, people get desperate. Don't fall for quick money fixes that will only mess up your finances further. Payday loans and cash advances might seem like promising solutions, but they come at a grave price. You don't want to waste money or ruin your credit during this time. (See also: <a href="http://www.wisebread.com/how-to-protect-yourself-from-predatory-lending?ref=seealso" target="_blank">How to Protect Yourself From Predatory Lending</a>)</p> <p>Also avoid racking up more credit card debt to cover your living expenses. While a new credit card might make one month of living easier, it will certainly make balancing your finances harder in the future.</p> <h2>Get creative about cash flow</h2> <p>While your paycheck might be cut off, you can still bring in a few hundred dollars through creative means. What side jobs can you do while you are looking for new work? Can you take on a few hours of lawn work or babysitting each week? (See also: <a href="http://www.wisebread.com/how-to-come-up-with-1000-in-the-next-30-days?ref=seealso" target="_blank">How to Come Up With $1,000 in the Next 30 Days</a>)</p> <p>Also, don't underestimate the value of the clutter lying around your home. Deep clean your house and find all of the stuff you no longer use or like. Sort into three piles: an eBay pile, a Craigslist pile, and a garage sale pile. Everything small and with a resale value of more than $5&ndash;$10 can be listed on eBay (think designer clothing, tech gadgets, and profitable character items or collectibles). Anything large with a decent resale value can be listed on Craigslist (think furniture). And finally, everything else can be sold at a garage sale. (See also: <a href="http://www.wisebread.com/make-money-and-declutter-by-selling-these-5-unlikely-treasures?ref=seealso" target="_blank">Make Money and Declutter by Selling These 5 Unlikely Treasures</a>)</p> <p>The process can bring in about $500&ndash;$1,000 extra cash, depending on what you have to sell. You will be surprised by what types of things sell on eBay, so be sure to look items up before deeming them unsellable.</p> <h2>Save drastic measures for last</h2> <p>Hopefully your unemployment will be short-term, but in case it isn't, have a backup plan. Here are a few things to discuss with your family and to consider further. They might not be desirable, but they can keep you financially stable in the face of your debt burden:</p> <ul> <li>Expanding your job search geographically</li> <li>Moving in with relatives for a short duration</li> <li>Renting out a room in your home or renting out your whole house</li> <li>Selling a vehicle</li> <li>Downsizing your home and moving to a more affordable area</li> </ul> <p>Dealing with credit card debt on top of unemployment is hard, but you have options. Don't take your situation lying down and don't be ashamed to tell people, especially your creditors who may be able to offer temporary relief.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-eneriz">Ashley Eneriz</a> of <a href="http://www.wisebread.com/how-to-handle-credit-card-debt-when-youre-unemployed">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-manage-debt-while-unemployed">How to Manage Debt While Unemployed</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-negotiate-credit-card-debt">4 Ways to Negotiate Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt">The Fastest Way to Pay Off $10,000 in Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-ways-to-make-money-outside-your-day-job">15 Ways to Make Money Outside Your Day Job</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management budgeting credit card debt emergency money negotiating out of work selling side jobs unemployed Mon, 03 Apr 2017 08:30:17 +0000 Ashley Eneriz 1919579 at http://www.wisebread.com Pay These 6 Bills First When Money Is Tight http://www.wisebread.com/pay-these-6-bills-first-when-money-is-tight <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/pay-these-6-bills-first-when-money-is-tight" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-503389404.jpg" alt="Man paying certain bills when money is tight" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Is your money situation a little tight this month? It happens to the best of us. What if you don't have enough money this month to pay every bill by its due date? For the time being, you might need to prioritize your payments.</p> <p>This isn't the ideal solution. Far from it &mdash; paying any bill late could result in a late fee. But thanks to a bit of leeway when it comes to credit reporting, paying bills <em>just a bit late </em>might not hurt your all-important FICO credit score.</p> <p>This makes it a bit easier to determine which bills you absolutely <em>must</em> pay on time, and which bills you can more easily tackle after their due dates pass.</p> <h2>1. Mortgage</h2> <p>It's important to keep the roof over your head. And not paying your mortgage payment on time can send your credit score plummeting by 100 points or more. Credit scores are important: Lenders rely on them to determine if you qualify for a loan and at what interest rate.</p> <p>There is some leeway, though, with mortgage payments. First, lenders can't report your payment as late to the credit bureaus until you're at least 30 days past due. This means that paying your bill one, two, or three weeks late won't hurt your credit score.</p> <p>Second, according to the U.S. Department of Housing and Urban Development, lenders usually won't start the foreclosure process until three to six months after your first missed mortgage payment.</p> <p>Even though these safeguards are built in, you don't ever want to take the chance of losing your home. Make sure to pay your mortgage as soon as you can.</p> <h2>2. Rent</h2> <p>If you're renting an apartment, do everything you can to pay this bill on time. Your landlord can send you an eviction notice if you're just one day late with your rent payment. Now, actually evicting you will take time, and most landlords probably won't file a notice that quickly. But you don't want to give your landlord any excuse to start this process in motion.</p> <h2>3. Car payment</h2> <p>As with your mortgage, there is a grace period before your late car payment starts to affect your credit score. Your auto lender can't officially report your payment as late to the credit bureaus until that payment is more than 30 days past due.</p> <p>However, you need to be aware that if you stop making car payments, your vehicle can be repossessed. If this happens, your credit <em>will </em>suffer the consequences &mdash; by up to 100 points. Auto lenders can repossess your vehicle quickly, too. In fact, in most states they have the legal right to repossess your car as soon as you miss a single payment. It's unlikely that your lender will move to take your car that quickly, but why take that risk? If you're prioritizing your bills, this is definitely one to move to the top of your list.</p> <h2>4. Utility bills</h2> <p>Typically, you'll receive plenty of advance warning before your utility providers shut off your services. But you will have to pay these bills eventually to keep them on. Put these bills at the top of your priorities list.</p> <p>If you are struggling to pay these bills, don't ignore them; call the utility company. Utilities will often work with homeowners who are struggling financially. They might lower your bill for a period of time or defer your payments for a few months to allow you to rebuild your finances.</p> <h2>5. Student loans</h2> <p>Student loan debt is a financial burden for many, but you might be able to work out a new repayment plan with your lender if you are struggling. This is usually easier to do with federal student loans. You might qualify for a deferment, depending on your financial situation. But even if you are struggling to pay private student loans, call your lender. The company issuing your loans might be willing to work with you to keep you from falling into default. (See also: <a href="http://www.wisebread.com/8-surprising-ways-to-pay-off-your-student-loans?ref=seealso" target="_blank">8 Surprising Ways to Pay Off Your Student Loans</a>)</p> <h2>6. Credit cards</h2> <p>Yes, your credit card issuer can hit you with a late fee if you miss a payment. And yes, your card's interest rate might then soar. But credit cards don't need to be at the very top of your priorities list if you are struggling with critical bills like your mortgage.</p> <p>Your credit card provider can't throw you in jail if you miss payments, and it can't take your house or car. So paying this provider <em>after</em> making your mortgage and car payments is OK in a financial pinch.</p> <p>It typically isn't a smart move to pay only the monthly minimum on a credit card, because it's often such a small amount. However, if you're really struggling with money, this is another temporary option you can take. This will keep you current on your bill, and you can always boost your payments back up again once you've regained financial footing. (See also: <a href="http://www.wisebread.com/5-simple-ways-to-never-make-a-late-credit-card-payment?ref=seealso" target="_blank">5 Simple Ways to Never Make a Late Credit Card Payment</a>)</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/pay-these-6-bills-first-when-money-is-tight">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-financial-mistakes-that-wont-hurt-your-credit-score">5 Financial Mistakes That Won&#039;t Hurt Your Credit Score</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-late-payments-affect-your-credit">How Late Payments Affect Your Credit</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/prioritize-these-5-bills-when-youre-short-on-cash">Prioritize These 5 Bills When You&#039;re Short on Cash</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-why-you-shouldnt-freak-out-if-you-miss-a-payment-due-date">Here&#039;s Why You Shouldn&#039;t Freak Out If You Miss a Payment Due Date</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/you-missed-a-student-loan-payment-now-what">You Missed a Student Loan Payment. Now What?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Debt Management bills car loan credit score late fees late payments mortgage rent repossession student loans utilities Fri, 31 Mar 2017 08:00:16 +0000 Dan Rafter 1915858 at http://www.wisebread.com 5 Times Personal Loans May Be Better Than Credit Cards http://www.wisebread.com/5-times-personal-loans-may-be-better-than-credit-cards <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-times-personal-loans-may-be-better-than-credit-cards" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_62580866_LARGE.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Certain life events require more cash than we have on hand. It is easy to just grab a credit card, charge those expenses, and forget about them until it&rsquo;s time to make a payment. Although sometimes more convenient, credit cards aren&rsquo;t always the best answer. Depending on your credit rating and your needs, a personal loan can be the less expensive option.</p> <p>If you need long-term option financing, you can likely get a lower interest rate and possibly higher limit with a personal loan than you would with a credit card. Here are a few instances in which a personal loan can be better than a credit card. (See also: <a href="http://www.wisebread.com/best-lenders-for-personal-loans?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=article">Best Personal Loan Companies</a>)</p> <h2>Weddings and Important Life Events</h2> <p>Because events like weddings and other big celebrations are not the types of purchases that benefit from rewards programs or the extra benefits that credit cards provide, you aren&rsquo;t losing anything by using a personal loan to pay for them. You can choose the loan amount, based on your budget and according to the installments you can pay each month. Personal loans also allow a longer period to pay off the wedding expenses, at a lower interest rate than most credit cards offer. Companies like <a href="http://promisefinancial.evyy.net/c/27771/245132/4106">Promise Financial</a> specialize in financing for life events.</p> <h2>Health Expenses</h2> <p>Whether you end up with a bill for an emergency visit or have unexpected medical expenses, unless you can pay the entire balance in full right away, it isn&rsquo;t a good idea to charge it to a credit card. You can often qualify for much higher amounts with a personal loan than many credit cards will offer. In fact, personal loan providers such as <a href="http://lendingclub.pxf.io/c/27771/322506/4962">Lending Club</a> offer an exclusive Lending Club Patient Solutions loan specifically for medical expenses. Loans for as much as $50,000 are available with terms from 2 to 7 years, and interest rates as low as 3.99%. Lending Club Patient Solutions loans also offer a 0% promotional period for up to 24 months, in which you can save quite a bit of money if you pay your balance in full during that time.</p> <h2>Business Startup Expenses</h2> <p>Although a plethora of <a href="http://www.wisebread.com/the-5-best-credit-cards-for-small-businesses?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">small business credit cards</a> exist designed to reward business purchases, credit cards aren&rsquo;t great for startup capital. Companies such as <a href="http://www.kqzyfj.com/click-2822544-11145625-1452787774000">Kabbage</a> specialize in <a href="http://www.wisebread.com/10-smart-ways-to-get-a-small-business-loan?ref=internal">small business loans</a> and can help get your business going. Loans with Kabbage can be from $2,000 to $100,000 with fees ranging from 1% to 12% of the loan the first two months and 1% the remaining four months.</p> <h2>Debt Consolidation</h2> <p>If you have acquired an enormous amount of debt that includes credit card debt, there&rsquo;s a good chance you won&rsquo;t be able to consolidate it all with another credit card. Even if you get a credit card that offers a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">0% introductory APR for balance transfers</a>, you might not get a credit limit high enough. Using a <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">balance transfer to pay off credit card debt</a> only works if you can pay it all off within the promotional period. Otherwise it&rsquo;s not worth it, because credit card APRs are generally very high.</p> <p>An alternative option for consolidating large debts is personal loans. Loan providers such as <a href="http://www.kqzyfj.com/click-2822544-11789034-1427835327000">Avant</a> specialize in providing personal loans to consumers with bad credit that not only consolidate your debt but also help you build your credit in the process.</p> <h2>Home Improvement</h2> <p>Although there are credit cards for home improvement projects that award supplies and materials with special cash back and discount offers, many only award these purchases at certain times of the year and charge much higher interest rates. <a href="http://www.wisebread.com/store-credit-cards-that-dont-suck?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">Store cards</a> specific to home improvement may offer cash back and deferred interest. However, after the promotional period the APRs are very high. In addition to personal loans offering higher credit limits that are more likely to cover the costs of your home improvement project, interest rates are available with various lenders for as low as 3%.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/christina-majaski">Christina Majaski</a> of <a href="http://www.wisebread.com/5-times-personal-loans-may-be-better-than-credit-cards">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/credit-cards-vs-debit-cards-a-comprehensive-comparison">Credit Cards vs. Debit Cards: A Comprehensive Comparison</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards">The Best Low Interest Rate Credit Cards</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-rebuild-your-credit-in-8-simple-steps">How to Rebuild Your Credit in 8 Simple Steps</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt">The Fastest Way to Pay Off $10,000 in Credit Card Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking Credit Cards Debt Management best personal loans Mon, 06 Feb 2017 20:52:46 +0000 Christina Majaski 1776218 at http://www.wisebread.com 6 Secrets to Mastering the Debt Snowball http://www.wisebread.com/6-secrets-to-mastering-the-debt-snowball <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-secrets-to-mastering-the-debt-snowball" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-109722901.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You probably already know it makes more financial sense to pay off debts with the highest interest rates first, a payment method known as the debt avalanche.</p> <p>But here's a surprise: A study published last year in the Journal of Consumer Research found that people were more likely to actually pay off their debts if they relied on the <a href="http://www.wisebread.com/a-comprehensive-guide-to-the-debt-snowball-method-0" target="_blank">debt snowball method</a>, instead. In this approach, you pay off your smallest debt first, followed by your next smallest, and so on &mdash; until you've paid off all of them. You take this approach without worrying about which debts have the highest interest rates.</p> <p>Why does this method seem to work better? Researchers say it's about that all-important feeling of accomplishment. You'll get a rush of good feelings when you pay off a credit card, even if the debt on that card isn't that high. Yes, you'll pay more in the long run by not targeting debt with the highest interest rates first. But if the snowball method works better, and if you've long struggled with your credit card and other debts, you might be better off taking this approach.</p> <p>So, if you're ready to give the debt snowball method a chance, here are some tricks to boost your chances of success.</p> <h2>1. Draft a Household Budget</h2> <p><a href="http://www.wisebread.com/build-your-first-budget-in-5-easy-steps" target="_blank">Creating a budget</a> doesn't sound like fun, but it's critical if you're ready to get serious about paying down your debt. Your household budget should include the money that flows into your home each month and the money you spend, including estimates for such discretionary expenses as eating out and entertainment.</p> <p>Once you have a budget, you'll better know how much money you can allocate to paying down that smallest debt each month. Without a budget? You might be paying too much, putting yourself at financial risk. Or you might pay too little, dragging out the process of paying down your debts.</p> <h2>2. Don't Use the Card You're Trying to Pay Off</h2> <p>It might sound obvious, but don't add to the debt you're trying to pay off first. Don't use your credit cards to pay for anything. Follow your budget and pay cash or check for your allocated expenses. If you have a balance already on the card from the previous month, using it will immediately start interest charges on that amount. Nothing stalls your <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=internal" target="_blank">debt elimination process</a> more than adding additional interest.</p> <h2>3. In Fact, Don't Purchase Anything You Can't Afford to Pay Off</h2> <p>You're going to have to get used to a different sort of lifestyle, and that means no longer buying things you can't pay off at the end of the month.</p> <h2>4. Automate It</h2> <p>When you're concentrating on paying off one debt quickly, it can be easy to overlook some of your other bills. You can avoid this, though, by turning to automated bill payment. If you find yourself overlooking your cellphone bill, create an automatic payment from your bank account to cover that bill each month. You can do the same thing with car payments, student loan payments, or utility bills. Do this, and you'll dramatically reduce the odds of paying one bill late while you're whittling down another.</p> <h2>5. Don't Waste Bonuses or Promotions</h2> <p>Are you in line for a bonus at work? Don't blow that money on a new laptop. Instead, funnel it toward the debt you are trying to pay off. There's no better feeling than lopping off a huge chunk of debt.</p> <p>Or, maybe you've earned a promotion and a nice pay raise. Don't think that this gives you more spending money each month. No &mdash; until you pay off your debts, spending extra on fun shouldn't be a consideration. Instead, take the extra money you earn each month and use it to pay down your debt even faster. And then when you eliminate a student loan, credit card bill, or car loan, keep using that extra money to help pay down your next largest debt.</p> <h2>6. Consider a Balance Transfer Carefully</h2> <p>This strategy is only for those who are diligent and committed to paying off a certain amount of debt within a specific period of time. Credit cards offer new cardholders various balance transfer offers. Some have <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">longer promotional periods (18-21 months)</a>, while others will <a href="http://www.wisebread.com/5-best-credit-cards-with-no-balance-transfer-fees?ref=internal" target="_blank">waive the balance transfer fee</a> (usually 3%-5%). Using a <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=internal" target="_blank">balance transfer to pay down credit card debt</a> can save you a lot of money in interest. However, if instead you misuse this opportunity, by not paying off the debt during the 0% promotional period, and continuing to rack up debt on the cards you transferred balances from, you will find yourself in a crisis dealing with more accumulated debt than you started with, and at an even higher APR. (See also: <a href="http://www.wisebread.com/7-important-things-you-should-know-about-balance-transfer-cards?ref=seealso" target="_blank">7 Important Things You Should Know About Balance Transfers</a>)</p> <p>Paying down debt is never easy. But if you remain committed, and you need a series of smaller, but quicker, victories, the debt snowball method can work. Just make sure to remain focused on that goal of eliminating each debt one at a time.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/6-secrets-to-mastering-the-debt-snowball">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-stop-student-loans-from-ruining-your-life">How to Stop Student Loans From Ruining Your Life</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-debt-management-questions-youre-too-embarrassed-to-ask">5 Debt Management Questions You&#039;re Too Embarrassed to Ask</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-pay-it-off">5-Day Debt Reduction Plan: Pay It Off</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-simple-way-to-decide-which-credit-card-to-pay-off-first">The Simple Way to Decide Which Credit Card to Pay Off First</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-get-back-on-track-when-youre-behind-on-your-bills">How to Get Back on Track When You&#039;re Behind on Your Bills</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management automatic payments bills bonuses budgeting promotions repayment plans snowball method strategies Tue, 31 Jan 2017 10:00:08 +0000 Dan Rafter 1877971 at http://www.wisebread.com The Best Credit Cards to Wipe Out Holiday Debt http://www.wisebread.com/the-best-credit-cards-to-wipe-out-holiday-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-best-credit-cards-to-wipe-out-holiday-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/614640554.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you leaned heavily on credit over the course of the holidays, you&rsquo;re probably not alone. Forbes reported that families added <a href="http://www.forbes.com/sites/nickclements/2016/12/27/already-feeling-regret-how-to-deal-with-holiday-credit-card-debt/#1856307e3b0e">$1,073 of credit card debt</a> for gifts, holiday parties, and other seasonal treats.</p> <p>With the new year in full swing, it&rsquo;s time to put debt behind you and start anew. If you&rsquo;re committed to paying off your holiday debt, these credit cards can help. Wait, what?</p> <p>Yes, that&rsquo;s right. Certain credit cards were created to help people pay down debt over time. These balance transfer credit cards offer 0% APR for anywhere from 12 &ndash; 21 months, making it easier to save on interest and <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=internal">pay off debt faster</a>.</p> <p>If you&rsquo;re struggling with holiday debt and tired of forking over hefty interest payments, a balance transfer card could help. Here are the best cards to solve your holiday debt woes &ndash; once and for all.</p> <h3>Chase Slate&reg;</h3> <p><img style="float:right;margin:0 5px 5px 10px;" class="img-exempt" alt="" src="http://www.imgsynergy.com/191x120/chase-slate-060216.png" width="154" border="0" height="97" /><a style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;" target="_blank" alt="Chase Slate&reg;" title="Chase Slate&reg;" rel="nofollow" href="http://ct.wisebread.com/click.php?pg=248&amp;pid=39&amp;pp=1&amp;uv=xcardbutton"><img alt="" class="img-exempt img-button" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" /></a>If holiday debt has you down, the <a href="http://ct.wisebread.com/click.php?pg=248&amp;pid=39&amp;pp=1&amp;uv=xname">Chase Slate&reg;</a> might be exactly what you need. You&rsquo;ll get 0% intro APR on purchases and balance transfers for 15 billing cycles. After that, a variable APR of 15.74%-24.49% will apply. That&rsquo;s well over a year to pay down your holiday debt without forking over a dime in interest payments.</p> <p>To sweeten the pot, the Chase Slate&reg; doesn&rsquo;t charge an annual fee. It also comes <strong>with no balance transfer fees for the first 60 days </strong>&ndash; a perk almost unheard of among competing cards.</p> <p>The only caveat here is that <em>your transferred balance cannot come from another Chase product</em>. If your holiday debts are lingering on another Chase credit card, you&rsquo;ll need to consider one of the other balance transfer cards on this list.</p> <p><a href="http://ct.wisebread.com/click.php?pg=248&amp;pid=39&amp;pp=1&amp;uv=xend"><strong>Click here to learn more and apply for the&nbsp;</strong><strong>Chase Slate&reg; card</strong><strong> today!</strong></a></p> <h3>BankAmericard&reg; Credit Card</h3> <p><img style="float:right;margin:0 5px 5px 10px;" class="img-exempt" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/bankamericard-0523.jpg" width="154" border="0" height="97" /><a style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;" target=" rel=" href="http://ct.wisebread.com/click.php?pg=248&amp;pid=107&amp;pp=2&amp;uv=xcardbutton"><img alt="" class="img-exempt img-button" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" /></a>The <a href="http://ct.wisebread.com/click.php?pg=248&amp;pid=107&amp;pp=2&amp;uv=xname">BankAmericard&reg; Credit Card</a> gives you 0% intro APR on balance transfers for a full 18 billing cycles. After that, a variable APR of 11.74% - 21.74% will apply.</p> <p>This card also has the advantage of having a low APR, so even if you can&rsquo;t pay off your entire balance, its APR is most likely much lower than the APR on your current card. Keep in mind that this introductory offer only applies to balance transfers made within the first 60 days and that a 3% balance transfer fee ($10 minimum) applies.</p> <p>The BankAmericard&reg; Credit Card comes free of annual fees as well, making it a smart option for paying down holiday bills.</p> <p><a href="http://ct.wisebread.com/click.php?pg=248&amp;pid=107&amp;pp=2&amp;uv=xend"><strong>Click here to learn more and apply for the&nbsp;BankAmericard&reg; Credit Card today!</strong></a></p> <h3>Citi Simplicity&reg; Card - No Late Fees Ever</h3> <p><img style="float:right;margin:0 5px 5px 10px;" class="img-exempt" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/CitiSimplicityCard-3.29.17.jpg" alt="" width="154" border="0" height="97" /><a style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;" target=" rel=" href="http://ct.wisebread.com/click.php?pg=248&amp;pid=54&amp;pp=3&amp;uv=xcardbutton"><img alt="" class="img-exempt img-button" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" /></a>If you need as much time as possible to pay down your debts at 0% APR, look no further than the <a href="http://ct.wisebread.com/click.php?pg=248&amp;pid=54&amp;pp=3&amp;uv=xname">Citi Simplicity&reg; Card - No Late Fees Ever</a> from our partner Citi. With this card, you&rsquo;ll get 0% intro APR on balance transfers made within four months of account opening&nbsp;<em>and purchases</em> for a full 21 months &ndash; that&rsquo;s almost two years! After that, a variable APR of 14.24%-24.24% will apply.</p> <p>A 3% balance transfer fee (minimum $5) applies to transferred balances, but this card does come without an annual fee. As a bonus, it doesn&rsquo;t charge late fees or penalty interest rates for late payments. You&rsquo;ll also score access to exclusive benefits like Citi Price Rewind and EMV chip technology that is compatible with Apple Pay.</p> <p><a href="http://ct.wisebread.com/click.php?pg=248&amp;pid=54&amp;pp=3&amp;uv=xend"><strong>Click here to learn more and apply for the&nbsp;Citi Simplicity&reg; Card - No Late Fees Ever today!</strong></a></p> <h3>BankAmericard Cash Rewards&trade; Credit Card</h3> <p><img style="float:right;margin:0 5px 5px 10px;" class="img-exempt" alt="" src=" http://www.wisebread.com/files/fruganomics/BoA_Cash_Rewards-154.jpg" width="154" border="0" height="97" /><a style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;" target="_blank" alt="BankAmericard Cash Rewards&trade; Credit Card" title="BankAmericard Cash Rewards&trade; Credit Card" rel="nofollow" href="http://ct.wisebread.com/click.php?pg=248&amp;pid=106&amp;pp=4&amp;uv=xcardbutton"><img alt="" class="img-exempt img-button" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" /></a>If you&rsquo;re looking for the right combination of balance transfer offers and rewards, you should also consider the <a href="http://ct.wisebread.com/click.php?pg=248&amp;pid=106&amp;pp=4&amp;uv=xname">BankAmericard Cash Rewards&trade; Credit Card</a>. Once you sign up, you&rsquo;ll get 0% intro APR for purchases and qualified balance transfers made in the first 60 days for a full 12 billing cycles. After that, a variable APR of 13.74% - 23.74% applies. Depending on how much you owe, 12 months could be plenty of time to destroy those holiday bills. A 3% balance transfer fee ($10 minimum) does apply. There is no annual fee.</p> <p>On the rewards side of the equation, the <strong>BankAmericard Cash Rewards&trade; Credit Card</strong> offers a sweet $100 bonus after you use your card for $500 in purchases within the first three months. You&rsquo;ll also get ongoing rewards with 1% cash back on all purchases plus 2% at grocery stores and wholesale clubs and 3% on gas for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter.</p> <p><strong><a href="http://ct.wisebread.com/click.php?pg=248&amp;pid=106&amp;pp=4&amp;uv=xend">Click here to learn more and apply for the&nbsp;BankAmericard Cash Rewards&trade; Credit Card today!</a></strong></p> <h3>Chase Freedom Unlimitedâ„ </h3> <p><img style="float:right;margin:0 5px 5px 10px;" class="img-exempt" alt="" src="http://www.imgsynergy.com/191x120/chase-freedom-unlimited-072116.png" width="154" border="0" height="97" /><a style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;" target=" rel=" href="http://ct.wisebread.com/click.php?pg=248&amp;pid=130&amp;pp=5&amp;uv=xcardbutton"><img alt="" class="img-exempt img-button" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" /></a>Another card for paying down holiday debt and earning cash back on all your purchases is the&nbsp;<a href="http://ct.wisebread.com/click.php?pg=248&amp;pid=130&amp;pp=5&amp;uv=xname">Chase Freedom Unlimitedâ„  card</a>. There is a 0% intro APR for 15 months from account opening on purchases and balance transfers. Then, a variable APR of 15.74%-24.49% applies. The balance transfer fee is 5% of the amount of each transfer ($5 minimum). There is no annual fee.</p> <p>This card awards unlimited 1.5% cash back automatically on every purchase you make with the card, which is ideal if you don't like rotating categories or rewards categories that focus on just one or two types of purchases. Also, new cardholders can earn a $150 bonus after you spend $500 on purchases in the first 3 months of opening the account.</p> <p><strong><a href="http://ct.wisebread.com/click.php?pg=248&amp;pid=130&amp;pp=5&amp;uv=xend">Click here to learn more and apply for the&nbsp;Chase Freedom Unlimitedâ„  card today!</a></strong></p> <h2>Using a Balance Transfer Card to Your Advantage</h2> <p>While any one of these cards could make paying down lingering holiday debt a lot less painful, you need to know how to play the game. To get the most out of any balance transfer offer, it&rsquo;s crucial to use your 0% APR introductory offer to its fullest advantage; in other words, you should strive to pay as much debt off as possible while you can. If you don&rsquo;t think you can pay it all off, choose a card with a low APR after the 0% intro rate, so you won&rsquo;t be killed with interest after. You should <em>never</em>, use a card with a balance on it, to get rewards. Interest will obliterate any rewards, every time.</p> <p>Remember, credit cards are in the business of making money. If you fail to meet your card&rsquo;s terms and conditions, don&rsquo;t pay your debt down before your 0% APR offer expires, or use your card to rack up more debt, you may end up worse off than when you started.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/holly-johnson">Holly Johnson</a> of <a href="http://www.wisebread.com/the-best-credit-cards-to-wipe-out-holiday-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards">The Best Low Interest Rate Credit Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-5-credit-cards-for-groceries">The Best Credit Cards for Groceries</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-credit-cards-with-airline-companion-tickets-and-3-bad-ones">The 5 Best Credit Cards With Airline Companion Tickets</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-best-credit-cards-with-no-balance-transfer-fees">The Best Credit Cards with No Balance Transfer Fees</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards Debt Management Shopping best credit cards holiday debt Fri, 20 Jan 2017 15:38:35 +0000 Holly Johnson 1875970 at http://www.wisebread.com 4 Ways Pessimism Can Actually Improve Your Finances http://www.wisebread.com/4-ways-pessimism-can-actually-improve-your-finances <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-pessimism-can-actually-improve-your-finances" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_rain_umbrella_498559502.jpg" alt="Man learning ways pessimism can improve finances" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>While I've never had bluebirds help me clean my house or anything, I tend to be a pretty optimistic person. I have faith that people are mostly kind, the world tends to be a good place, and life in general will get better.</p> <p>The one major exception to my optimism is my attitude toward finances. I always plan for the worst when it comes to money, and I proudly embrace my paranoia.</p> <p>As it turns out, my doom-and-gloom view of money is probably responsible for some of my healthiest financial choices. That's because optimism and positive thinking can lead you astray when it comes to your financial goals.</p> <h2>Why Optimism Can Backfire</h2> <p>According to a study by Heather Barry Kappes and Gabriele Oettingen, imagining a desired future actually makes you <a href="http://psych.nyu.edu/oettingen/Barry%20Kappes,%20H.,%20&amp;%20Oettingen,%20G.%20(2011).%20JESP.pdf" target="_blank">less likely to achieve it</a>. That's because your fantasy future wherein you have built up a multimillion-dollar empire is missing the obstacles, frustrations, setbacks, and effort that are necessary to make it happen in the real world. So you are more likely to give up upon reaching any of those obstacles.</p> <p>In addition, telling people about your major financial goals can also backfire. According to career coach Shana Montesol Johnson, &quot;when we tell someone that we are going to do something big &hellip; the <a href="http://developmentcrossroads.com/2010/12/enough-already-about-your-new-year%E2%80%99s-resolutions/" target="_blank">praise and positive reaction</a> we get from our audience gives us a part of the experience of having already accomplished these things &hellip; And so we are less motivated to actually work toward these goals.&quot;</p> <p>So quit it with the positive thinking about your money. Embrace your pessimism, since it can help your finances in many ways.</p> <h2>1. Financial Pessimism Prompts You to Save Money</h2> <p>When you live with the viewpoint that there is nothing but blue skies ahead, then it won't occur to you to save up for a rainy day. A pessimistic outlook about the likelihood that you may lose your job (or that your car may need an expensive repair, or that you may get sick) spurs you to save money so you can be prepared for such contingencies. Optimists are often caught flat-footed in those situations because they had been so focused on the pie in the sky.</p> <p>Thinking through the worst that could happen on your current path might seem like a good way to discourage yourself from taking that path. But taking the time to really think through what could happen if X, Y, or Z in your plan goes wrong gives you the necessary framework to deal with such problems. You'll have already put in the thinking time to come up with a solution when the problem crops up, so you'll be in a better position to fix it.</p> <h2>2. Financial Pessimists Recognize Their Own Money Weaknesses</h2> <p>A financial optimist isn't just optimistic about the lack of coming emergencies &mdash; they are also optimistic about their ability to handle a problem. This is a symptom of the cognitive bias known as the <em>restraint bias</em>. (A cognitive bias is an error in logical thinking that is very difficult for people to recognize in themselves.)</p> <p>With the restraint bias, people tend to seriously overestimate their own impulse control. We all tend to believe that we will be able to show more restraint in the face of temptation than is realistic. The restraint bias is a hallmark of financial optimism. Such an optimist might think &quot;I'll spend less this month and bank the savings at the end of the month.&quot;</p> <p>But it's likely that the optimist will be paying for things with sofa-cushion change at the end of the month. The pessimist, on the other hand, set his savings aside at the beginning of the month, since he knows he is not to be trusted with money in his checking account.</p> <h2>3. Debt Relies on Optimism</h2> <p>Whenever you take on debt, there is a risk that you may not be able to pay it back. But feeling optimistic about your finances, your job, your health, and your family makes you less likely to recognize such a risk. Positive thinking about how well your life is going may put you in danger of over-relying on debt.</p> <p>Barbara Ehrenheich, author of <a href="http://amzn.to/2iJKYfo" target="_blank">Bright-Sided: How Positive Thinking Is Undermining America</a>, suggests that the Great Recession of 2008 may have some of its roots in positive thinking. In an interview with The Telegraph, she states, &quot;Many, many people got way <a href="http://www.telegraph.co.uk/news/worldnews/northamerica/usa/6952353/Positive-thinking-making-us-miserable-says-author.html" target="_blank">over their heads in debt</a> &mdash; ordinary people. And in what frame of mind do you assume large amounts of debt? Well, a positive frame of mind. You think that you're not going to get sick, your car's not going to break down, you're not going to lose your job and you're going to be able to pay it off.&quot;</p> <p>Pessimistic people are more likely to avoid debt because of the possible things that could go wrong &mdash; and that means they are less likely to get into financial trouble or waste money on interest.</p> <h2>4. Pessimists Are Less Likely to Fall for Scams</h2> <p>My first thought, whenever I hear someone offer me a solution to any kind of financial problem, is to wonder &quot;What's in it for them?&quot; Though I believe in the goodness of people, I am incredibly paranoid about sales pitches, &quot;free&quot; lunches, door-to-door solicitors, insurance agents, salespeople, Nigerian princes, or anyone else who wants me to take advantage of a &quot;once-in-a-lifetime&quot; offer. I don't trust anyone's motives when it comes to money.</p> <p>Scams tend to rely on people's greed, fear, and discomfort. Pessimists are no less likely than optimists to feel greedy, fearful, or uncomfortable, but their overriding distrust of people's motives tends to be stronger than any of the emotions scam artists play on.</p> <p>Distrusting people when it comes to money is generally not a bad thing. It forces you to do your own homework and become your own financial advocate, which is what everyone needs to do. Because even if you do have a trustworthy financial adviser/broker/bookie/insurance agent/Nigerian prince, it is ultimately your responsibility to understand what is happening with your money.</p> <h2>Embrace the Darkness</h2> <p>Instead of thinking and talking positively about your financial future, take a page from a pessimist's book and imagine some worst-case financial scenarios. You'll find that seeing the glass as half-empty (at least sometimes) will help ensure your financial future spilleth over.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/4-ways-pessimism-can-actually-improve-your-finances">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-let-outdated-money-advice-endanger-your-money">Don&#039;t Let Outdated Money Advice Endanger Your Money</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-we-really-need-help-in-getting-more-debt">Do we really need help with getting more debt?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/uk-banks-are-blocking-customers-credit-cards-will-the-usa-be-next">UK banks are blocking customers&#039; credit cards. Will the USA be next?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-mental-habits-that-make-the-rich-richer">5 Mental Habits That Make the Rich Richer</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-golden-rules-of-personal-finance-everyone-should-know">10 Golden Rules of Personal Finance Everyone Should Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Debt Management debt financial weakness optimism outlook pessimism saving money Wed, 11 Jan 2017 10:30:32 +0000 Emily Guy Birken 1870056 at http://www.wisebread.com 7 Unique Ways Millennials Are Dealing With Student Loan Debt http://www.wisebread.com/7-unique-ways-millennials-are-dealing-with-student-loan-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-unique-ways-millennials-are-dealing-with-student-loan-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_graduate_debt-450067439.jpg" alt="Millennials dealing with student loan debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Many Millennials are wracked with student loan debt and don't see a way out anytime soon. Fortunately, there are some unique opportunities available to you &mdash; both while you are in school and after you graduate &mdash; that can help you deal with this obligation. (See also: <a href="http://www.wisebread.com/why-you-shouldnt-panic-about-your-federal-student-loans?ref=seealso">Why You Shouldn't Panic About Your Federal Student Loans</a>)</p> <p>According to Debt.org, student loans account for <a href="https://www.debt.org/students/" target="_blank">over $1 trillion in debt</a> in America, and among those who borrow, the average debt load is about $30,000. However, with the right plan of action, you can tackle this debt in less time and with a smaller overall effect on your life and financial well-being.</p> <p>See also: <a href="http://www.wisebread.com/which-student-loan-repayment-plan-saves-you-the-most?ref=seealso2">Which Student Loan Repayment Plan Saves You the Most?</a></p> <h2>1. Take Advantage of Income Share Agreements</h2> <p>Purdue University was the first to offer such a program (theirs is called &quot;<a href="http://purdue.edu/backaboiler/" target="_blank">Back a Boiler</a>&quot;), which provides funding to students who are willing to repay the foundation a portion of their salaries for up to10 years following graduation. These are often referred to as Income Share Agreements or ISAs.</p> <p>With an Income Share Agreement, there is less risk for the student because payments are based on a percentage of your income. (If you earn less, you pay less; when your income increases, you pay more, up to a defined maximum.) Conversely, with a traditional loan, there is a set loan repayment amount that you must find a way to pay every month, even if you don't have a job (although you may be eligible for a variety of deferments or other payment plans; check with your lender).</p> <p>See also: <a href="http://www.wisebread.com/the-definitive-guide-to-pay-as-you-earn-a-great-student-loan-repayment-plan?ref=seealso2">The Definitive Guide to Pay As You Earn</a></p> <h2>2. Find an Investor</h2> <p>Some schools offer programs where an &quot;investor&quot; buys &quot;shares&quot; in a student's future. This is similar to an ISA, but can also be agreed upon privately. If the student does well financially after graduation, then the investor profits, but the student may end up paying even more than they would have on a private loan. On the other hand, if the student doesn't make much money during the repayment period, then the investor loses. As an added bonus, by selling stock in themselves, students may have even more motivation to do well after graduation. (See also: <a href="http://www.wisebread.com/8-surprising-ways-to-pay-off-your-student-loans?ref=seealso">Surprising Ways to Pay Off Your Student Loans</a>)</p> <h2>3. Plug Your Venmo Account</h2> <p>Once you've opened a Venmo account, you can begin accepting payments from friends, family members, and concerned strangers who want to help you pay off your student loan. Ask for money to be deposited into your Venmo account for your birthday, graduation present, and during the holidays. Loved ones may be willing to contribute even more if they know the money is going toward your student loan.</p> <p>You can share your Venmo account via email or social media. Better yet, you can even make signs with your Venmo account on them, which you can hold in front of the camera at large events or in the background of your favorite news shows. There have been two successful instances where someone <a href="http://www.abc-7.com/story/33099003/what-the-tech-money-app-and-student-make-money-after-stunt" target="_blank">holding a sign</a> with their Venmo account received more than $20,000 in payments from amused viewers. While these feats pulled in 2013 and 2016 weren't for noble purposes, it just goes to show that this quick stunt can really pay off.</p> <h2>4. Volunteer More</h2> <p>With organizations like <a href="http://www.sponsorchange.org/" target="_blank">SponsorChange</a> and <a href="http://www.zerobound.com/" target="_blank">Zerobound</a>, you can volunteer your time and skills to meaningful organizations and your student loans will also reap the benefits. While you accumulate good karma from volunteering your time, the organizations will contribute toward your student loan debt as repayment. Organizations like <a href="http://www.nationalservice.gov/programs/americorps" target="_blank">AmeriCorps</a> and <a href="https://www.peacecorps.gov/" target="_blank">Peace Corps</a> also offer partial loan cancellation incentives to volunteers.&nbsp;</p> <h2>5. Find the Right Employer</h2> <p>More companies are now offering student loan payoff programs as a perk to new employees. This is becoming especially common with new startups. When you are meeting with a potential employer, you may want to ask if their benefits program offers student loan repayment options.</p> <h2>6. Consider Student Loan Forgiveness Programs</h2> <p>There are various <a href="http://www.wisebread.com/8-ways-to-get-student-loan-debt-forgiveness?ref=internal" target="_blank">student loan forgiveness programs</a> available, but only to select people. While most borrowers won't qualify for these programs, it is worth looking into.</p> <p>For instance, with the <a href="https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service" target="_blank">Public Service Loan Forgiveness Program</a>, people working in public service can have their loans forgiven after 10 years of payment. There are also income-driven repayment plans, which can forgive your loans after 20&mdash;25 years of repayment. You may also qualify for special federal student loan forgiveness programs if you work in low-income schools or in public service jobs, such as for a nonprofit or the government.</p> <h2>7. Explore Traditional Methods</h2> <p>Traditional means of student loan repayment are always a great option. <a href="http://www.wisebread.com/4-times-student-loan-refinancing-can-save-you-big?ref=internal">Debt refinancing</a> or debt consolidation can help lower the interest you pay in the long-run. You can also take advantage of automatic debt payments, make payments twice per month, or trim your budget so there's more left over for repayment. These methods will all help you to pay off your student loan faster and can save you a great deal of money in the long-run. (See also: <a href="http://www.wisebread.com/15-ways-to-pay-back-student-loans-faster?ref=seealso">15 Ways to Pay Back Student Loans Faster</a>)</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/7-unique-ways-millennials-are-dealing-with-student-loan-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-get-student-loan-debt-forgiveness">8 Ways to Get Student Loan Debt Forgiveness</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-sobering-facts-about-student-loan-debt">5 Sobering Facts About Student Loan Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-tax-tricks-to-try-if-youre-stuck-with-student-loans">8 Tax Tricks to Try if You&#039;re Stuck With Student Loans</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-things-financial-aid-might-not-cover">6 Things Financial Aid Might Not Cover</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-stop-student-loans-from-ruining-your-life">How to Stop Student Loans From Ruining Your Life</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Debt Management Education & Training college income share agreements investors loan forgiveness millennials repayment student debt student loans tuition volunteering Thu, 15 Dec 2016 10:30:31 +0000 Andrea Cannon 1853983 at http://www.wisebread.com 4 Ways to Negotiate Credit Card Debt http://www.wisebread.com/4-ways-to-negotiate-credit-card-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-to-negotiate-credit-card-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_holding_credit_card_507799950.jpg" alt="Woman learning ways to negotiate credit card debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Are you having trouble keeping up with credit card payments? Do you wonder if you'll ever pay off your balances? (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso">Fastest Way to Pay Off 10K in Credit Card Debt</a>)</p> <p>Perhaps you've heard you can negotiate and settle your credit card debt. But how does that work? Do you need professional help or can you manage it all on your own?</p> <p>Learn about four ways to negotiate and settle credit card debt.</p> <h2>1. Enter a Credit Card Hardship Program</h2> <p>If your debt woes are attributable to a significant change in your life's circumstances, you may be able to qualify for a hardship repayment or forbearance program.</p> <p>Donna Holmes, financial counselor with <a href="https://www.safefed.org/">SAFE Federal Credit Union</a> says, &quot;Financial hardship can be caused by several unfortunate life events, such as a divorce, job loss, furloughs, layoffs, moving, or a death of a loved one. Positive events such as the birth of a child can also create financial hardships at times too, especially if there are unexpected medical complications.&quot;</p> <p>In addition, &quot;simply being financially overextended&quot; could classify you as experiencing hardship, says Thomas Nitzsche, credit educator with <a href="http://www.clearpoint.org/">Clearpoint</a>, a nonprofit agency that provides credit counseling.</p> <p>Entering a hardship program could give you a lower APR and fee reductions. Nitzsche says &quot;With credit card hardship programs, you are typically given a reduced interest rate at a fixed payment and term.&quot; As a result, you may pay less in interest. In addition, you may be able to get fees waived.</p> <p>To pursue this course of action, Holmes says to ask your lender if it has a program to assist with financial hardship. In addition, you may be able to locate your card issuer's hardship department on your card company's website or your monthly statement.</p> <h2>2. Negotiate a Modified Payment Plan</h2> <p>The types of programs available to a credit card borrower in trouble may vary by personal situation and financial institution. If you're unable to qualify for a hardship program, you may be able to <a href="https://www.consumer.ftc.gov/articles/0145-settling-credit-card-debt">negotiate a modified payment plan</a> or work out an arrangement with your credit card company.</p> <p>Such a plan could reduce your monthly payment. A lower monthly payment could enable you to make payments on time without becoming overextended in other areas.</p> <p>Before making a call, consider reviewing your finances, developing a budget, and determining how much you can pay monthly on your card balance. You may be able to prepare yourself to negotiate a lower monthly payment along with possible concessions, such as fee waivers similar to those available through a hardship program.</p> <p>Find the phone number to call on your credit card or card statement. Be aware that you may need to make several calls before finding a representative or manager who is agreeable and authorized to assist you.</p> <p>With a modified payment program, Holmes says that sometimes the rate is increased &quot;even though the payment has been reduced.&quot; Nitzsche says a delinquent amount may be tacked onto the balance or the repayment period. As a result, though a modified payment may mesh better with your budget, you could <a href="https://www.fdic.gov/regulations/examinations/credit_card/ch9.html#3sub23">pay more overall</a>, depending on how the deal is structured.</p> <h2>3. Settle Debts for Less Than You Owe</h2> <p>Debt settlement involves offering a lump-sum payment to receive forgiveness of your outstanding credit card balances.</p> <p>With this approach, you offer this lump-sum to the card company in exchange for erasing or settling your debt. Building this balance may involve setting aside money in a dedicated savings account over a long period of time; selling items that you no longer need, or using a windfall from an employment bonus, tax refund, inheritance, or other source.</p> <p>To explore the possibility of settling debt, you may plead your case to your credit card company on your own, or you might hire a debt settlement company to negotiate on your behalf. The FTC offers guidelines on <a href="https://www.consumer.ftc.gov/articles/0145-settling-credit-card-debt">choosing a debt settlement company</a>.</p> <p>If you work with a debt settlement company, you may be asked to stop making credit card payments and default on your debt. This process could allow you to accumulate funds and, at the same time, induce the card company to accept a settlement.</p> <p>Generally, your debt must have been charged off as a loss before you can negotiate a settlement with your credit card company. Nitzsche says that creditors are not motivated to cut a deal if they are still receiving a minimum monthly payment.</p> <p>However, defaulting on credit card debt can cause problems. Failing to make payments could have a negative impact on your credit report, lead to calls from creditors and debt collectors, and result in late fees and penalties that increase your indebtedness.</p> <p>Nitzsche says an exception to getting a settlement only after debt has been written off may occur &quot;if you can prove to the creditor that you are at a high risk of default, but have a lump sum available to settle the debt for less than is owed.&quot; For example, if you have a severance check from a recent layoff, you may be able to settle without going into default.</p> <h2>4. Enroll in a Debt Management Plan</h2> <p>Credit counseling agencies offer debt management plans (DMPs) to help consumers pay off credit card balances. With a DMP, you make monthly payments to the counseling organization, which in turn pays your credit card bills. The agency may also negotiate more favorable terms such as a lower APR, more manageable payment schedule, or fee waivers with your credit card issuer.</p> <p>A certified credit counselor should review your financial situation and offer customized money-management advice before enrolling you in a DMP. For example, Nitzsche says Clearpoint identifies and addresses reasons for financial difficulties first. Counselors may help clients create a household budget, outline financial goals, and address financial concerns in addition to developing a DMP to deal with debt.</p> <p>Consider examining the DMP to make sure you understand and agree to its details. You may want to confirm that credit card payments are scheduled according to your due dates in order to avoid late fees. Nitzsche says you can contact creditors to adjust due dates if needed.</p> <p>The FTC offers guidance on checking the credentials of <a href="https://www.consumer.ftc.gov/articles/0153-choosing-credit-counselor">credit counseling agencies</a> and verifying that a DMP may work for you. In addition, consider asking for a schedule of fees so you'll know what services you may receive and how much they cost.</p> <p>Consider getting documentation of any deals in writing. In this way, you'll be able to confirm your understanding of agreements.</p> <h2>The Downsides of Negotiating and Settling Credit Card Debt</h2> <p>Having a plan to eliminate credit card debt can be rewarding. But there can be downsides to negotiating and settling this debt. They may include:</p> <ul> <li>Your credit card accounts may be closed. As a result, you won't be able to continue using your cards.<br /> &nbsp;</li> <li>Your <a href="http://www.wisebread.com/10-surprising-ways-to-negatively-affect-your-credit-score?ref=internal">credit score may drop</a>. This drop may result from <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal">increased credit utilization</a> or other reasons.<br /> &nbsp;</li> <li>You may owe taxes on debt that's forgiven.<br /> &nbsp;</li> <li>You may pay more than originally scheduled. While you could save money on fees and interest, there's also the possibility that you'll pay more interest over a longer time frame.<br /> &nbsp;</li> <li>You could incur costs from fees to companies that help you with debt management and debt settlement. These expenses could increase your debt load, rather than eliminating balances.</li> </ul> <p>If you're overwhelmed by credit card debt, negotiating a new agreement or settling your balances for less than you owe may sound attractive. Determine the best course of action by evaluating your finances on your own or finding qualified counselors who can help you. Understand the benefits and consequences of negotiating or settling your debt before getting started.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/4-ways-to-negotiate-credit-card-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt">The Fastest Way to Pay Off $10,000 in Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-handle-credit-card-debt-when-youre-unemployed">How to Handle Credit Card Debt When You&#039;re Unemployed</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-debt-settlement-can-leave-you-deeper-in-debt-even-with-trustworthy-companies">6 Ways Debt Settlement Can Leave You Deeper in Debt (Even With Trustworthy Companies)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dealing-with-post-holiday-credit-card-debt">Dealing with Post-Holiday Credit Card Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards Debt Management credit card debt debt management plan dmp hardship programs modified payment plan negotiating Mon, 12 Dec 2016 11:30:07 +0000 Julie Rains 1849993 at http://www.wisebread.com 6 Ways to Invest When You're In Debt http://www.wisebread.com/6-ways-to-invest-when-youre-in-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-to-invest-when-youre-in-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/plant_tree_stump_462868653_0.jpg" alt="Learning ways to invest when you&#039;re in debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You know you need to begin investing to save for the future, but you still have some debt to pay off. It is possible to take care of both at the same time?</p> <p>The short answer is that yes, you can pay down debt and invest at the same time. In many ways, this is a personal choice. If you despise debt and sleep better at night knowing that you're paying it off as quickly as possible, that's fine. But if you can tolerate paying off debt at a slower rate and investing some money, you may end up ahead of the game financially over the long-term.</p> <p>Here are some things to consider when deciding how much to invest and how much debt to pay off.</p> <h2>1. Minimum Payments First, Then Invest</h2> <p>While it's certainly possible to pay down debt and invest at the same time, it's never a good idea to invest if you can't make your minimum payments first. If you don't make minimum payments, you'll be on the hook for higher interest, late fees, and penalties. Not to mention that your credit score will take a big hit. Consider investing your money only if you know you can set money aside and still make at least the minimum payments on debt.</p> <h2>2. Tackle the High Interest Debt</h2> <p>If your debt is tied up in credit cards and other things that come with high interest rates, you may want to hold off on investing until that's under control. Credit cards have interest rates in the double digits, and you're unlikely to generate an investment return that outpaces that. Once that high-interest debt is down to zero, then investing becomes much more possible. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso">Fastest Way to Pay Off 10K in Credit Card Debt</a>)</p> <h2>3. Use Your 401K Plan</h2> <p>If you work for an employer that offers a 401K plan or something similar, it's worth taking part even if you have some debt. That's because most employers will match contributions up to a certain amount. So it's like getting free money. Any contributions you make to a 401K are deducted from your taxable income, so there are great tax advantages for taking part. Invest what you can while still paying down your debt. Then, when your debt is paid off, increase your contributions.</p> <h2>4. Look at Low-Cost Mutual Funds and ETFs</h2> <p>If most of your debt is tied up in low-interest things like student loans or mortgages, it's okay to set aside some money to invest in things that will generate a good return. In fact, there are many financial planners that argue against paying off low-interest loans early if market returns are higher than interest rates. Over time, stocks have averaged returns of about 7%, which is much higher than interest rates these days. To get this type of return, consider looking at mutual funds and exchange-traded funds that have low fees and are designed to track the performance of the overall stock market.</p> <h2>5. Find Investments That Trade Without a Commission</h2> <p>If you're trying to invest and pay down debt at the same time, there's a good chance you may only be able to invest a little at a time. That's okay, but it's important to be aware of the fees and commissions you pay every time you buy and sell. If you're only buying a few shares of a stock but paying $8 in a commission, for example, that fee is cutting into a sizable percentage of your investment. Fortunately, many discount brokerages allow you to trade certain types of investments without paying a commission. Fidelity offers fee-free investing on all iShares ETFs, ETrade offers many commission-free ETFs from WisdomTree and Global X, and TD Ameritrade offers more than 100 ETFs with no transaction fees.</p> <h2>6. Automate as Much as Possible</h2> <p>Finding the balance between investing and paying off debt requires some discipline. If you have some debt but are considering investing, determine in advance what your ideal balance is. Then, set up automatic monthly transfers of money into an investment account, and automate your bills as well. If you get extra money or a raise, consider tweaking the balance accordingly. When you automate, it takes the guesswork out, allows you to stay consistent, and makes it easier to do other financial planning.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/6-ways-to-invest-when-youre-in-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-to-make-as-soon-as-you-conquer-debt">7 Money Moves to Make as Soon as You Conquer Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-warren-buffett-says-you-should-invest-in-index-funds">Why Warren Buffett Says You Should Invest in Index Funds</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-etfs-can-put-more-money-in-your-pocket-than-mutual-funds">8 Ways ETFs Can Put More Money in Your Pocket Than Mutual Funds</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-things-your-financial-advisor-wishes-you-knew">7 Things Your Financial Advisor Wishes You Knew</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Investment 401k ETFs fees interest rates market returns mutual funds saving money Wed, 23 Nov 2016 11:30:07 +0000 Tim Lemke 1838645 at http://www.wisebread.com Your Brain Is Keeping You in Debt (And How to Fix It) http://www.wisebread.com/your-brain-is-keeping-you-in-debt-and-how-to-fix-it <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/your-brain-is-keeping-you-in-debt-and-how-to-fix-it" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_stressed_thinking_84125877.jpg" alt="Woman learning how her brain is keeping her in debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Your debt never seems to shrink. Each month you resolve to ditch your credit cards, spend less, and devote more money to paying down your outstanding debts. When next month rolls around? You're staring at even more debt.</p> <p>What's the problem? Blame your brain.</p> <p>Recent research from Scientific American suggests that our brains are wired so that when we do decide to pay off our debt, we tend to focus on our smallest ones first. But it'd make much more sense to pay off highest-interest debt first.</p> <h2>Your Brain on Debt</h2> <p>Scientific American, which published the results of its <a href="https://blogs.scientificamerican.com/mind-guest-blog/why-don-t-people-manage-debt-better/">debt study</a> in February of this year, started its research by concluding that the most effective way to battle debt is to pay off those debts that come with the highest interest rates first. Usually, that'd be the debt piling up on one of your credit cards.</p> <p>The reason that this makes the most sense is that higher-interest-rate debt grows more quickly. If you pay that debt down first, your overall debt load will not rise as fast.</p> <p>But instead of attacking higher-interest-rate debt first, consumers usually focus on paying down what they consider the most manageable of their debts, generally the smallest ones they face. They do this even if the interest rates attached to these smaller debts are lower.</p> <p>How did Scientific American determine this? They performed an experiment in which participants were asked to pay multiple debts, all of which came with varying interest rates. Researchers gave these participants a paycheck at the beginning of each round of this game, asking them to use it to pay off their imaginary debts in whatever way they deemed best.</p> <p>According to the study, only 3% of the participants &mdash; just five out of 162 &mdash; focused on paying down the debt with higher interest rates. Scientific American reported that the majority of participants paid off their smaller debts, instead.</p> <p>This isn't just bad money management. It's psychological. Your brain does you no favors when you're battling multiple debts.</p> <p>The Scientific American story says that people are naturally averse to debt accounts. This means that consumers with many different debts naturally want to reduce the total number of these accounts. This pull is so strong, it overwhelms the more rational approach of first paying down those debts that cost the most.</p> <h2>Teach Your Brain to Battle Debt</h2> <p>Can you fight your brain? Can you resist the natural temptation to close out those smaller debt accounts first? Sure, if you focus.</p> <p>Consider the avalanche approach to debt repayment: Consumers pay off those debts with the highest interest rates first, making only the minimum monthly payments on the rest. Once they pay off the debt with the highest interest rate, they then move on to the debt with the second-highest rate. (See also: <a href="http://www.wisebread.com/snowballs-or-avalanches-which-debt-reduction-strategy-is-best-for-you?ref=seealso">Snowballs or Avalanches: Which Debt Reduction Strategy Is Best for You?</a>)</p> <p>The benefit here is obvious: Debt with higher interest rates cost consumers more. Eliminating it first saves lots of money in the long run.</p> <p>And if you want to outwit your brain's natural tendency to steer you in the wrong direction? You'll go with the avalanche method, too.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/your-brain-is-keeping-you-in-debt-and-how-to-fix-it">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-use-peer-to-peer-lending-to-pay-down-credit-card-debt">Should You Use Peer-to-Peer Lending to Pay Down Credit Card Debt?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-reasons-your-debt-isnt-diminishing">12 Reasons Your Debt Isn&#039;t Diminishing</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-pay-it-off">5-Day Debt Reduction Plan: Pay It Off</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-unique-ways-millennials-are-dealing-with-student-loan-debt">7 Unique Ways Millennials Are Dealing With Student Loan Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/getting-your-money-back-without-losing-your-friendship">Getting Your Money Back Without Losing Your Friendship</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management avalanche method brain psychology repayment research science thought process Mon, 21 Nov 2016 11:00:06 +0000 Dan Rafter 1835352 at http://www.wisebread.com