paying bills

5 Money Moves to Make Before Applying For a Credit Card

Dan Rafter — Mon, 04 Jun 2018 09:00:16 +0000

You're ready to apply for your first credit card. Or, maybe you simply want to add another card to the rotating deck of plastic in your wallet. Whatever the case, there are certain money moves you must make before filling out an application.

Adding a credit card to your name might seem like a small thing, but a credit card carries tremendous weight. It can be either a useful tool for building credit — or, if misused, it can lead you straight toward high-interest debt. It all depends on how you use that card and if you're financially prepared for it.

To get yourself off on the right foot, here are some important money moves smart consumers must make before applying for a credit card — whether it's their first or their fifth.

1. Do some budgeting

Don't have a household budget? It's time to make one. Have one? It's time to review it to make sure that it accurately reflects the money you are earning each month and the dollars you are spending.

Getting a new credit card could tempt you to make purchases that you can't afford to pay off in full each month. This will lead to you carrying a balance on your cards from month to month. With interest rates on credit cards being so high, this balance can grow out of control quickly.

Make a household budget listing the income you earn each month and the expenses you face. Expenses should include fixed costs that never change, such as your car bill, mortgage payment, and student loan costs. It should also include estimates for expenses that aren't the same each month, such as your utility bill or grocery bills. And don't forget to budget for discretionary expenses such as restaurant meals and entertainment.

If you have a budget, study it to make sure that it accurately reflects how much you spend and earn each month. If you rarely meet your budget, adjust it. Once you have an accurate budget in place, you'll know how much you can charge on a new card and still be able to pay it off each billing cycle. (See also: Build Your First Budget in 5 Easy Steps)

2. Check your credit reports

If you want to qualify for the best cards — with generous rewards programs and low interest rates — you'll need a solid credit score. Before you apply for a new card, do some research on your credit. (See also: Best Credit Cards for Excellent Credit)

You are entitled to one free copy of your three credit reports — one each maintained by Experian, Equifax, and TransUnion — every year. You can order these reports at AnnualCreditReport.com. Once you've done this, review them carefully. They will list how much you already owe on your credit card accounts, car loans, student loans, mortgage loans, and other forms of revolving credit.

They'll also list any late or missed payments up to seven years old. Other financial missteps, such as bankruptcy filings or foreclosures, will also be listed on your reports if they are not older than seven or 10 years.

If there are mistakes on your reports, contact the credit bureaus to let them know. And if your credit report is filled with late payments and high balances, you might want to take some time to pay down your other debts and build a history of on-time payments before applying for a new credit card. (See also: How to Read a Credit Report)

3. Order your credit score

Your credit score is another important number to know when applying for a credit card. This number gives financial institutions an instant look at how you've handled your credit in the past. A low score indicates that you have missed payments or other negatives on your record. A high score indicates that you have a history of paying your bills on time and keeping your debt under control.

You can order your credit score from any of the national credit bureaus. Expect to pay about $15 or so for your score. You might even have a credit card that shows your credit score in your monthly statement.

If your score comes in low, it again might be a good idea to pause your search for a new credit card. Build that score up by making on-time payments and paying off your existing credit card debt. This will boost your odds of qualifying for the best credit cards. (See also: I Checked My Credit Score in 11 Places — Here's What I Learned)

4. Pay off your existing credit card debt

You shouldn't be adding a credit card to your collection simply because you're running out of available credit on your other cards. This will only tempt you to make more purchases that you can't afford and lead you deeper into a cycle of debt.

Instead, work on paying off the credit card debt you already have. Don't apply for a new card until you've gotten your existing credit card debt under control. (See also: The 7 Best Credit Card Debt Elimination Strategies)

5. Build your savings

Financial experts recommend that everyone have an emergency fund of cash to help them pay for life's unexpected expenses — everything from a furnace on the fritz to a car that needs a new transmission. If you don't have an emergency fund, you might find yourself needing to turn to credit cards to pay for such emergencies. And that will only make your debt grow.

Before you apply for a new credit card, build an emergency fund. That way, you'll be less tempted to use your new card to pay for urgent big-ticket items such as a new water heater or an emergency brake repair for your car.

How much should you have in this emergency fund? It's generally recommended that you have enough to cover six months' to a year's worth of daily living expenses, though you may need more or less depending on your unique circumstances. (See also: 5-Minute Finance: Start an Emergency Fund)

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Money Moves to Make Even If You Don't Plan to Buy a House

Dan Rafter — Thu, 03 May 2018 08:30:11 +0000

You know that owning a home and making a mortgage payment each month is a big financial commitment. You know, too, that having a solid credit score is a must if you want to be approved for that mortgage loan.

But what if you never plan on owning a home? What if you plan on renting forever? You don't need to worry about maintaining strong credit and building a high credit score, right? Wrong. Even if you never plan on making the jump from renting to owning, there are still several money moves you need to make to ensure a happy financial future.

1. Pay your bills on time each month

Paying a credit card bill 30 days or more past due will send your credit score tumbling by 100 points or more. You might not think that matters if you never plan on taking out a mortgage and buying a home. But it does.

Other lenders rely on your credit score to determine how likely it is that you'll make your monthly payments. They also use that score to determine how high of an interest rate to charge you if they do approve you for a loan.

This means that lenders will look at your credit score when you apply for a loan to buy a car. They'll look at it if you need to take out a personal loan. And when you're applying for credit cards, you'll need strong credit to qualify for cards with the best rewards programs and interest rates. (See also: Pay These 6 Bills First When Money Is Tight)

2. Keep your credit card debt low

Consumers applying for mortgages know that having too much credit card debt can hurt their application. But even if you're not planning to own a home, it makes good financial sense not to carry a balance on your cards each month.

Credit card debt comes with high interest rates. If you don't pay off your balance at the end of each billing period, credit card debt can grow quickly. If you're not careful, those minimum monthly payments can become a huge financial burden.

High amounts of credit card debt can also lower your credit score. Only charge what you can afford to pay off in full when your credit card bill comes due. And if you do have outstanding credit card debt, use whatever extra money you have each month to pay it down. (See also: The Fastest Method to Eliminate Credit Card Debt)

3. Show landlords how financially responsible you are

You might think it doesn't matter that you missed two auto loan payments or that you skipped over a medical bill that's now in collections. But even if you don't need to prove to mortgage lenders that you're a good financial risk, you will need to prove it to apartment landlords. You have to live somewhere, right?

When you apply for an apartment, the odds are high that your landlord will run a credit check to determine if you're likely to pay your rent on time each month. You'll have to consent to have such a check performed. If you refuse, don't bet on getting that apartment.

The credit check will show negative financial moves such as late payments on recurring loans and credit cards, accounts that are in collections, car repossessions, and recent bankruptcies. It will also show how much you owe on your credit cards and other loans. You'll need to pay your bills on time, keep debts out of collections, and keep your debt levels low if you expect to qualify for the better apartments in your city. (See also: 10 Questions Landlords Can't Ask)

4. Build an emergency fund

Homeowners know how important an emergency fund is. They draw on these funds to cover such unexpected emergencies as a burst water heater, dying furnace, or leaky roof. By having money saved in such a fund, they can cover these home repairs without resorting to putting the costs on their credit cards.

But you should build your own emergency fund even if you never plan on owning. Even without a home, you will face big and unexpected bills. What if your car's transmission goes out? What if you lose your job? If you don't have an emergency fund of cash savings, how will you pay for these charges without running up credit card debt?

Experts recommend saving six to 12 months' worth of daily living expenses in an emergency fund. That might sound intimidating, but if you take it slowly by depositing whatever you can — even if it's only $100 a month — you can gradually build up a significant emergency fund. (See also: 5-Minute Finance: Start an Emergency Fund)

5. Save for retirement

Retirement is closer than you think. You need to steadily save for the days when you'll no longer be working. This is especially important if you never plan to own a home. Homeowners often receive a nice chunk of cash when they sell their homes and downsize to a smaller residence. If you plan on renting forever, you won't have that opportunity.

Instead, you need to start saving for retirement as soon as you begin working. If your company offers a 401(k) plan, sign up. Explore other retirement options such as IRAs, too. (See also: 5 Retirement Accounts You Don't Need a Ton of Money to Open)

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

10 Signs You're No Longer a Personal Finance Rookie

Paul Michael — Wed, 02 May 2018 08:00:10 +0000

How are you doing with your money? Is your checking account flourishing? Do you have a well-stocked savings account, a growing 401(k), and an emergency fund ready to save you from life's unexpected money mishaps? That's great news. These are all signs you're out of the minor leagues and are now a major player in the world of personal finance. Here are a few more.

1. You're not panic-checking your financial accounts

When you are in full control of your finances, you know where your money is going, when it's coming in, and you have a pretty good idea of all your balances at all times. You keep track of your spending and you see the numbers you expect to see when you log into your bank or credit card account.

This is a far cry from the days when checking your accounts was like a horrible game show moment ('Let's see if there's any money behind door Number 1!'). You may not even notice this good habit anymore, but you can feel good knowing those panicky peeks at your balances are over.

2. You never get a huge tax refund (but you don't owe anything, either)

A massive tax refund is not a smart way to manage your money. By overpaying your taxes, you are giving the government an interest-free loan all year while you miss out on investment opportunities and the benefits of compound interest. Finance rookies overpay their taxes because a refund feels like a windfall. The fact of the matter is that money should have been in your paycheck all along.

No one wants to owe money at tax time, but if you calculate your withholdings correctly, you should come out as close to $0 as possible. That means you're taking advantage of every cent you earn throughout the year.

3. You have almost no monthly debt

Most of us are going to carry at least some debt for a chunk of our lives; after all, it's difficult to pay for a home with cold, hard cash. But excessive monthly debts mean that your finances are not as shipshape as they could be.

It's better to buy a car in cash, upfront, than it is to pay a lease or car payment. Credit card debt that lingers for years is a huge drain on your finances. Other loans or monthly debts almost always carry interest, and that means you're continuously throwing money away. If you're living with little to no monthly debt, you have financial freedom; and that means you're no rookie. (See also: The Fastest Method to Eliminate Credit Card Debt)

4. Your credit score is doing really well

When was the last time you checked out your credit score? It's a good idea to do it once a month, because erroneous things can creep up. Now, take a look and see where you are on the credit rating scale.

If you're above 700, it means you're doing great. Above 750, you're doing even better. And if you are in that magic 800+ category, you are considered by all credit agencies to be one of the best customers around. This means you have low debt, you pay everything on time, and you have accounts that date back many years. This is all evidence that you are definitely not a finance rookie. Congrats! (See also: 5 Ways Life Is Amazing With an 800 Credit Score)

5. You're automatically putting money away

Saving money when you can is great, and you should always try and pay yourself first. However, if you have automated this system, you have taken a much bigger step toward financial freedom.

By automating payments to savings accounts, retirement accounts, and an emergency fund, you have prioritized your future. Now, saving isn't just something you do if there is money left over at the end of the month. Instead, saving comes first, and you budget with what's left. It's tougher to do it this way, and it often requires discipline. But it's the best way to go about it. (See also: 5 Ways to Automate Your Finances)

6. You're not living paycheck to paycheck

This is a tough one. The sad state of affairs is that as many as 78 percent of Americans are currently living paycheck to paycheck, according to a poll by CareerBuilder. Wages have stagnated, and the cost of living has risen dramatically compared to income. However, a chunk of that 78 percent are living this way due to a lack of budgeting, discipline, and overwhelming debt. Even people earning over $100,000 a year are living like this, and that's just unacceptable.

If you don't live above your means, don't try and keep up with the Joneses, and don't make rash decisions with your money, you should be able to escape this paycheck to paycheck existence. It's not only bad for your finances, but extremely bad for your health and mental wellbeing. (See also: How to Escape the Paycheck-to-Paycheck Cycle)

7. You have an emergency fund

An emergency fund is just that; a stash of money that can be used for a crisis, such as losing your job, unexpected home repairs, medical care, and even emergency travel. Ideally, this fund should cover at least six months' worth of daily living expenses for you and your family — even more if you have a high-paying job or unique living expenses such as a medical condition.

Socking away a few months' worth of expenses can be daunting, but if you at least have a few thousand dollars put away, you're off to a great start and doing better than the majority of the population. You'll thank yourself when a financial speed bump comes along. (See also: 5-Minute Finance: Start an Emergency Fund)

8. You pay all your bills on time

Have you ever seen people play fast and loose with their bills? They will choose to pay some one month, and others the next. But sooner or later, everyone has to pay the piper. Utilities will get shut off, debt collectors will call, and credit scores will tumble. And, it often costs even more money to put things right. If you pay all your bills on time, every month, you're doing a fantastic job with your finances.

9. You don't make impulse purchases

It takes willpower to shed the 'personal finance rookie' title, and if you are no longer throwing money at purchases without thinking, you have moved beyond that role.

Impulse buying should not be confused with taking advantage of a sale on a needed item or even an occasional treat. If you carefully consider the purchase and decide it is one you need or deserve, that's great. The problem arises when you see a 75 percent off sticker and automatically grab the item regardless of whether or not you would ever actually use or need it. In that case, you didn't 'save' 75 percent … you wasted money on the remaining 25 percent. (See also: 7 Effortless Ways to Prevent Budget-Busting Impulse Buys)

10. You have a monthly budget and stick to it

Perhaps the most important item on the list is a monthly budget. In fact, if you adhere to a monthly budget, most of the other habits on this list will follow naturally.

A monthly budget is the linchpin of financial stability. It tells you exactly what money is coming in, what is going out, where it's being spent, and what you can expect to see when you look in your different accounts. By sticking to a monthly budget, you have fewer financial surprises. Even if you're not yet at the point where you can save, you are at least managing the money you have, and that will lead to financial freedom down the road. (See also: Stop Using These 5 Excuses Not to Budget)

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Budget During a Crisis

Rachel Slifka — Tue, 17 Apr 2018 08:00:07 +0000

When circumstances are normal, budgeting really isn't that difficult. For the most part, you can predict your expenses, income, and your day-to-day activities with relative ease. But what happens when an emergency comes up and threatens to ruin everything, including your finances?

Maybe you or a spouse lost a job, or a major medical situation is costing you a lot of time, concern, and money. How can you continue to budget when your circumstances aren't regular?

Remain calm

After a crisis, dread and fear can quickly set in. You may even be afraid to open the mail for fear of yet another bill. It can feel like the world is collapsing in on you, and rational thought goes out the window. Through all of the stress, remember that this crisis is temporary; you can and will get through this in due time.

Panic might be your natural reaction, but it isn't helpful in moving forward. Acknowledge your feelings, but try to remain as calm and levelheaded as possible.

Prioritize expenses

What bills do you need to pay immediately? Many types of debt, including your mortgage, auto loan, and credit cards won't be officially reported as late until they are more than 30 days past due. Are there bills that are approaching or past that time frame? Do you have enough income to cover all that you owe?

If you aren't sure that you can pay all your bills, you have a couple of options. The worst thing you can do is to simply stop paying. That will only get you further behind and you risk racking up a mountain of overdraft and late fees, not to mention the potential blow to your credit.

One option is to call the company behind each of your debts, explain your situation, and ask if you can get an extension or work with them to develop a payment plan. You will need to go back to your bills and prioritize them with any updated information and due dates. Pay the most urgent bills first. (See also: Pay These 6 Bills First When Money Is Tight)

If you still are coming up short, you will need to find a way to drastically cut your costs. Are there bills you can lower or cut out entirely? Start with the unnecessary expenses. Things like entertainment and dining out should come to a halt. Canceling subscription services such as magazines, gym memberships, and cable can put hundreds back in your pocket. Next, see what necessities you can lower. Find ways to shave dollars off your costs for gas, groceries, utilities, and more until your crisis has been dealt with. (See also: Are You Spending Too Much on "Normal" Expenses?)

Check in with your finances daily

Until your financial situation is under control, make it a point to check in with your money every day. Review all of your bank accounts, credit card balances, bills, budget, and know when your income is available. It's easy to get distracted and disorganized during a crisis, and that will only make your money matters worse. Overdraft or late fees can quickly pile up if you aren't diligent.

Know what to avoid

In a crisis, you may not know where to turn. By far, the worst resources you can turn to are credit cards or payday loans.

Credit card debt is very easy to get into. Getting out of credit card debt can take you years, especially on the heels of a financial crisis. Using credit cards during an emergency should be a last-resort option when you have no other choice. Prioritize repaying that debt ASAP once your crisis has been handled.

Payday lenders, meanwhile, deliberately target people in desperate situations. Believing they have no alternatives, people turn to these loans and rack up staggering amounts of debt at exorbitant interest rates. This practice of predatory lending leaves many people worse off than they were before. Avoid using these types of services at all costs.

Create a plan to protect your finances in the future

Digging yourself out of a financial hole will take time, but with persistence and smart money moves, it is absolutely possible. Once you are back on your feet, it's time to take action to ensure the next financial crisis doesn't land you back in the same hole.

Start by prioritizing building an emergency fund so that you are protected to weather another financial storm. Many experts recommend saving between three and six months' worth of everyday living expenses in this fund. With that cushion in place, another job loss, medical emergency, or other major financial blow won't be as devastating. (See also: 5 Ways to Boost Your Financial Resilience)

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This article is from Rachel Slifka of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Surefire Ways to Maintain a Good Credit Score in Retirement

Dan Rafter — Thu, 29 Mar 2018 09:00:06 +0000

You're nearing retirement. Once you hit this milestone, you won't have any reason to worry about your credit score, right? Not exactly.

Maybe you expect to have your auto loan and mortgage paid off by the time you hit retirement. Maybe you don't even expect to apply for any new credit cards once you leave the working world. But what you plan is often far different from what actually happens.

What if you haven't paid off your mortgage by retirement and you want to refinance your existing loan to one with a lower mortgage payment? You'll need a good credit score. What if your car breaks down and you need to buy a new one? If you want to finance the purchase of a new car, you'll need a solid credit score to qualify for an auto loan.

There's good news here, though: Keeping your credit score high during your retirement years doesn't have to be difficult. You just need to remain diligent about paying your bills on time and using your credit wisely. Here are some ways you can do that.

1. Keep using credit

You might decide after retirement to live an all-cash lifestyle. This makes a certain amount of sense: You're on a fixed income, and you certainly don't want to run up debt on your credit cards. Paying for everything in cash will prevent that from happening.

But if you don't use credit, your credit score will start to suffer. You build a strong credit score by using credit wisely. If you don't use it at all, how can you prove you remain a good credit risk after leaving the working world?

This can be especially difficult in retirement. If you don't have a mortgage or auto payment anymore, you won't be making as many monthly payments to boost your credit score. So, it's a best practice to keep using your credit card regularly to make some purchases. But only charge what you can afford to pay off in full each month. When your credit card bill is due, pay off your entire balance, and do so on time. This way, you demonstrate good credit skills while also avoiding credit card debt. (See also: Why Your Credit Score Matters in Retirement)

2. Don't close credit card accounts you don't use

After retirement, you might not use as many credit cards as you did while working. You might even consider closing those credit card accounts that you no longer use. Resist this urge, though.

A good chunk of your credit score depends on how much credit you are using. This is known as your credit utilization ratio. The more of your available credit you are using, the worse it is for your credit score. If you close an open credit card account, even one you no longer use, you will immediately increase your credit utilization ratio.

Let's say you have three credit cards, each with a limit of $5,000. That means you have $15,000 in total available credit. Now let's say you owe $3,000 in credit card debt. You have a credit utilization ratio of 20 percent ($3,000 divided by $15,000), which is considered good — lenders typically like to see this number under 30 percent. If you close one of your cards, you will automatically lower your total available credit to $10,000. Now, owing $3,000 out of $10,000 just bumped your credit utilization ratio up to 30 percent, all without you spending a cent.

You don't have to use the credit cards that have been sitting untouched in your wallet. But you shouldn't close those accounts, either. (See also: How to Close a Credit Card Without Dinging Your Credit Score)

3. Be careful when co-signing

It's natural once you hit retirement to want to help your children or grandchildren financially. But be careful when one of your relatives asks you to co-sign on an auto or mortgage loan.

Young adults often have limited credit histories and it can be difficult for them to qualify for financing. They often turn to co-signers — usually a parent — for help. Lenders are more likely to approve their loan requests if someone with a longer, more established credit history is signing up for the loan, too.

There's a huge problem with co-signing. If the person you're helping doesn't pay the bill, those late payments go on your credit reports. You are now equally responsible for this new debt. And if your relative defaults on the loan? You'll be the one on the hook.

Co-sign with caution. It is very rarely an advisable move, and can land your credit score in hot water. (See also: When Should You Co-Sign a Loan?)

4. Check your credit reports

You might not think much about your credit in retirement, but you should still check your three credit reports once every year.

You can do this for free at AnnualCreditReport.com. Make sure to order copies of each of your three credit reports — from Experian, Equifax, and TransUnion — as each might have slightly different information.

Check the reports for any mistakes. Maybe a report lists that you missed an auto payment last year and you know you haven't. Correct the mistake by notifying the offending credit bureau. You can do this through email. A mistake on your credit report can cause your credit score to plummet.

It's also a good habit to monitor your reports for accounts you did not open. If something looks suspicious, you may have a case of identity fraud on your hands. (See also: How to Read a Credit Report)

5. Keep paying those bills on time

The last step to keeping your score high during retirement might be the most important: Keep paying your bills on time each month.

Of course, this is good advice for anyone trying to maintain a good credit score. A single missed payment on a credit card account, mortgage loan, auto loan, or student loan can cause your credit score to fall by as many as 100 points. So even after you leave the working world, keep making those payments on time. (See also: 3 Ways Retirees Can Build Credit)

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Should You Make Your Young Kids Pay "Rent?"

Denise Hill — Tue, 06 Mar 2018 09:30:14 +0000

A young mother named Essence Evans recently posted on Facebook that she charges her five-year-old daughter $1 each for rent, utilities, food, water, and cable out of her weekly $7 allowance. The remaining $2 is the child's money to spend however she wishes. The $5 that Evans takes for "bills" actually goes into a savings account she'll give to her daughter when she turns 18.

The internet went berserk. Some people loved this idea, while others thought it took things too far. Whether you agree or disagree with the method, something has to be said for the initiative Evans is taking to teach her young daughter money management and the value of a dollar.

Should you follow her example and charge your little ones "rent?" Here are five important lessons you'd be teaching them by having them "pay bills."

Financial responsibility

From birth until death, you need and deal with money in some capacity. The earlier you learn how to earn, spend, lend, borrow, and invest, the better off you are. By making your little kids pay for living expenses, you teach them very early how to handle money responsibly. It helps them begin the journey of distinguishing wants from needs and prioritizing taking care of their needs first.

Before your child is allowed to spend any money, they should be required to "pay their bills" and set money aside in savings of some sort. The action of giving money to them and having them give a portion of it back is a powerful lesson in and of itself. It becomes a normal part of having money. You teach them to save and pay their bills first, which is a powerful tool in keeping them out of financial trouble later in life. (See also: 4 Parenting Mistakes to Avoid When Teaching Kids About Money)

How to budget

Making your kids pay bills before allowing them to spend their money on things they want teaches them the power of budgeting. Budgeting is all about setting priorities and planning. Budgeting teaches them that they can have some of the things they want if they plan correctly. It also teaches them that they cannot afford all of their wants. It drives home the point that there are certain bills that they will always have (rent, utilities, groceries) and they should always plan for those recurring expenses.

Teaching them these lessons in a controlled and loving environment is so much more humane than neglecting these lessons and having them learn it the hard way as an adult.

Nothing in life is free

You can't buy love, happiness, peace, or good health. But everything else will cost you. The sooner kids learn this, the better off they will be.

Your kids need to know how the financial system works. You should teach them that in order for you to withdraw money at the ATM, you had to deposit money in the first place. They need to know that every time you use a credit card to buy something, you have to pay it back with interest.

Teaching them that everything costs money — including the bed they sleep in, the food on the table, and the internet they enjoy — is a lasting life lesson that will help guide them into being contentious spenders. It is also important to teach them to always look for the cost in everything. This doesn't mean you should make your kids neurotic, but you do want to ensure that they are aware that everything they ask for costs you something. (See also: 21 Things You Should Make Your Kids Pay For)

The world doesn't owe them anything

Entitlement is one of the leading underlying causes of debt and credit abuse. Teaching your kids that hard work pays off is a valuable lesson. But you also have to teach them that working hard doesn't mean they can have whatever they want. They must learn that they can only have what they can afford.

In life, we don't always get what we deserve — good or bad. Sometimes life is unfair and we have to wait, work harder, or settle for an alternative. The quicker your kids learn this, the more content they will be in the long run. Teaching them to focus on and be grateful for what they do have in lieu of what they don't have or what everyone else has is far more valuable than getting them everything their tiny hearts desire. Helping them develop self-governance and the ability to tell themselves no is more valuable than a giving them a hefty trust fund.

Opportunity cost

Making kids contribute to their living expenses helps teach them about opportunity cost. That lesson is all about being able to pause, weigh all of the options, and make a rational decision. They have to learn that if you have $5 and spend it all on candy, you can't also get a toy. The concept of delayed gratification will slowly be seared into their tiny minds and help them become less impulsive. Even kids who are impulsive by nature will learn (with your guidance) how to stop and consider what else they may want to do with their money.

Teaching your kids about opportunity cost also helps them to become rational decision makers. When you make each transaction more about business and less about emotions, they will learn how to make purchases using logic and practicality. You have to model for them how to talk themselves through paying bills and making purchases. When you ask them questions and help them view money objectively, you will help reduce feelings of buyer's remorse and they will become confident in their financial decision-making.

In the end, you may not agree with Evans' approach, but you must appreciate and applaud her moxie. Your value system may not allow you to charge your kids rent, but it's important to find some system that can ingrain these lessons into your kids.

Fiscal responsibility is one of the greatest things you can teach your children. Failing to teach them how to handle and relate to money will create a type of poverty in them than no amount of money can fix.

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This article is from Denise Hill of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Financial Skills to Master Before You Graduate

Kentin Waits — Mon, 12 Feb 2018 09:00:06 +0000

With graduation only months away, you can finally see light at the end of the tunnel. After four (or more) long years of study, you're well-prepared to embrace adulthood, independence, and professional success.

But are you really? Before you don that cap and gown, make sure you know the ABCs of personal money management. It could be the most important course you'll ever take. Here are the financial skills to master before you graduate.

1. Basic budgeting

If you can't build and stick to a basic budget, you risk having your life divided into a series of stressful 30-day cycles. Bills may be late, savings an afterthought, and credit cards could become an absolute necessity. Avoid this bleak fate. Set up a practice budget using the envelope system or get acquainted with online money management tools like Mint. (See also: Build Your First Budget in 5 Easy Steps)

2. Living within your means

Consistently spending more than you make is the cornerstone of bad financial decision-making. You'll have no surplus money to invest. You'll rack up credit card debt (harming your credit scores in the process). And, you'll live in a constant state of stress. Create a realistic budget, stick to it, and don't pad your lifestyle with easy credit. (See also: How to Escape the Paycheck-to-Paycheck Cycle)

3. Paying your bills on time

Credit scores affect everything from interest and insurance rates to employment. And once your score is damaged, it can take years for it to recover. Protect your credit scores, avoid late fees and penalties, and keep the bill collectors away by paying your bills on time, every time. It's a fundamental part of being an adult. (See also: Here's What to Do if You Can't Pay Your Bills On Time)

4. Using credit responsibly

Ready for my best Dad impression? "Credit is a tool, not a toy." But Dad is right. Using credit responsibly means controlling impulses, only charging what you can pay off at the end of every month, and not confusing your credit limit with your budget. Seriously — credit abuse destroys the financial lives of countless families every year. Choose to be different. (See also: 12 Habits of Highly Responsible Credit Card Users)

5. Negotiating

The unsung hero of personal finance, negotiating is a skill that can save you thousands of dollars over your lifetime. Imagine paying full price for every car and every house you buy. Or worse, imagine not knowing how to respectfully push back on the first salary offer a potential employer makes. Launch into adulthood from a position of power; know how to negotiate with confidence.

6. Setting goals and saving for the future

Financial skills are a means to an end. Determine what kind of relationship you want to have with money, exactly what you want to achieve financially, and what level of discipline and attention it will take to turn your goals into your reality. Save with that plan in mind — and save without interruption. In short, apply the same level of dogged determination to your financial life as you applied to your education. The rewards will be just as great. (See also: 5 Money Moves to Make the Moment You Graduate)

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This article is from Kentin Waits of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Your Good Credit Doesn't Mean You Have Good Money Habits

Dan Rafter — Thu, 12 Oct 2017 09:00:06 +0000

Your credit score is great. You have no trouble qualifying for auto or mortgage loans. Credit card providers stuff your mailbox with offers for rewards-laden cards. You're obviously practicing good money habits, right?

Not necessarily. It is possible to have a high credit score while still struggling with bad financial habits. Don't let your solid score blind you to these key money mistakes that could cause you financial pain.

Carrying a balance on your credit card

If you charge items on your credit cards each month and make at least your minimum required monthly payments, that will boost your credit score. And if you have high enough credit limits, carrying a moderate balance on your credit cards each month won't drag your score down too much.

But carrying a balance on a credit card, even if it isn't preventing you from having a high credit score, is a big financial mistake. It's not unusual for cards to come with interest rates of 17 percent, 18 percent, or even 20 percent. If you carry a balance on your cards from month to month, those high rates can cause your credit card debt to soar.

The better move? Only charge what you can afford to pay back in full each month. That will help maintain your good credit score without leaving you with an ever-growing pile of credit card debt. (See also: The Fastest Method to Eliminate Credit Card Debt)

You're not saving anything

Maybe you pay all of your bills on time. Maybe you don't have any credit card debt at all. But if you don't have any savings, that's not a good financial sign.

How much you've saved, or haven't saved, doesn't impact your credit score. Whether you have $20,000 in a savings account or $100, your credit score won't budge either way. It's important to have a strong credit score and to pay your bills on time, of course. But not having any money leftover to build a savings is a bad money move. (See also: 4 Easy-to-Fix Reasons Your Savings Account Isn't Growing)

You've never built an emergency fund

An emergency fund is a bit like having savings; only with this kind of fund, you're saving money, usually in a low-risk savings account, specifically to cover unexpected financial emergencies. That way, if you suddenly must shell out thousands of dollars to repair your car, you won't have to resort to charging this expense on a credit card. You can take the funds out of your emergency fund instead.

Also like savings, you can have a high credit score and no emergency fund. Having a high credit score is no excuse for not building this financial safety net. (See also: How to Balance Saving for Retirement, Emergency Fund, and Paying Off Debt)

You're way behind on saving for retirement

It's possible to enter your golden years with a stellar credit score but no money saved for retirement. That's because the amount of money you've socked away in an IRA or 401(k) plan is not factored into your credit score.

Don't let your strong credit score, and your easy access to loans and strong credit cards, blind you to the fact that you're not saving enough for retirement. It's nice to have a good credit score after you've left the working world, but that score won't mean much if you can't afford to pay your bills. (See also: How Much Should You Have Saved for Retirement by 30? 40? 50?)

You're struggling to pay the bills each month

You might never miss a utility bill, mortgage payment, or auto payment. But what if covering these bills each month is a constant financial struggle? What if you never have enough money left over to invest or deposit into an emergency or retirement fund? Your credit score won't suffer, but your financial health is a different story. (See also: How to Escape the Paycheck-to-Paycheck Cycle)

Again, it's easy to let a high credit score trick you into thinking you're in solid financial shape. But if paying the bills is a tightrope act each month, your high credit score is merely hiding deeper financial problems. One unexpected financial hiccup — such as a blown hot water heater or leaking roof — could suddenly set you back. And then you might not be able to cover every bill when the due dates arrive. (See also: Pay These 6 Bills First When Money Is Tight)

The key is to focus on both increasing your savings while continuing to take the steps that have led you to a solid credit score. Cut back on your optional spending to start building savings and an emergency fund. Open a 401(k) plan or an IRA to start saving for retirement. Even saving a little each month is better than doing nothing.

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Budget When You Rely on Cash Tips

Mikey Rox — Wed, 13 Sep 2017 08:30:11 +0000

If you work in the service industry, the majority of your income likely comes from tips — and that can present difficulty when trying to budget your money responsibly. But just because it's not easy doesn't mean it's impossible. You can keep your cash flow in check if you have the right tools and systems in place.

Track every dollar you make

The first step to getting on track financially — even when your tips fluctuate from shift to shift — is to account for all of the cash you make over a period of time. You won't get a good idea of what to expect from month to month from just a couple weeks' worth of income, so it's best to monitor your tips over an extended period, ideally two to three months. This sampling should provide a decent basis on what you can expect to average throughout the year given that your place of employment is relatively consistent in terms of traffic. It may be a better idea to sample a slow period so you have a real bottom line as opposed to an inflated sense of income during a rush like the holidays.

Natasha Rachel Smith, personal finance expert at TopCashBack.com, offers a suggestion to put this plan in place.

"Write down how much you make in a journal or spreadsheet after every shift for 10 weeks to get an idea of your average weekly income," she says. "Although that amount will fluctuate depending on the economy, low or high seasons, and service quality, by averaging 10 weeks' worth of pay you can get a fairly reasonable and realistic idea of your typical earnings."

Create (and stick to) a budget based on goals

Once you have an idea of how much you can expect to bring home on average per month, it's time to budget your income so all your bills are paid on time — and so you're not stressed out and trying to scrounge up cash for a car payment at the last minute. To do this effectively, says finance expert Kevin Gallegos, vice president of Phoenix operations for Freedom Financial Network, create a budget based on goals.

"Whether your goal is to save on weekly grocery bills, have time to train for a marathon, save for retirement, or take a vacation to China, write down the goals and build your budget with the goals in mind."

In the budget, be sure to include a line item for savings in the "expenses" area, and treat it as a mandatory item to be paid. But, it can also be a variable expense — establish a percentage of your take-home pay that you'd like to put toward your goal after every shift.

"Ten percent or more is ideal," Gallegos says, "but if it's less than that, choose the number and stick to it."

Start a system for envelope budgeting

An easy way to delegate your funds to the bills you need to pay — especially if you don't want to make daily deposits to your checking account (which I don't recommend anyway because the only agency who will benefit from that paper trail is the IRS) — is to start a system of envelope budgeting. With this system, you add the regular cash you earn to envelopes designated for specific expenses, like rent, groceries, and student loans. By divvying up your cash after each shift, you can see in real-time how much you've saved and how much you still need to contribute to cover your general life expenses. This is also a good way to cut back on your "extra" expenses because live tracking will keep you informed on whether you can spare the money or not.

Separate your singles if you can afford it

If you can afford it, and provided you aren't only paid in this denomination, tuck away all one-dollar bills into a jar or container instead of spending them.

"Dollar bills will accumulate faster than change and it will give you a jar-fund to use when low on money or for the small, fun things in life," Smith says.

Look for patterns to keep your finances balanced

After a while, you'll be able to observe patterns in your income — a slump during the winter months or an uptick around a holiday, for instance — as well as determine a typical monthly minimum income level. By minding these patterns and building your budget around them, your finances should stay fairly balanced throughout the year so you're not stuck in the lurch because you were naive to expectation.

Gallegos suggests holding on to receipts and keeping a spending log.

"Many people find it eye-opening to see how much they spend each day," he says. "It's very similar to writing down everything you eat when trying to lose weight. Review carefully on a weekly basis to spot areas where you can cut back, and to become more familiar with your spending patterns."

Establish a "floating fund"

Another idea of Gallegos' that you may not have heard is the "floating fund," which establishes an absolute baseline of sufficient savings to cover expenses such as quarterly estimated self-employment taxes and an emergency fund.

"Common wisdom suggests keeping six to nine months' living expenses in an emergency fund at all times," he explains. "This fund then can also serve as a 'floating' fund to pull from during leaner times, for replenishment as income increases. It's key to think of the funds in this way — not just to pull from, but to replenish."

You will need to train yourself to pull from — and replenish (the hard part!) — these funds on a regular basis to make this work.

Send financial windfalls directly to savings

When you earn or receive extra money — from a large event you work, a gift, or even a yard sale that you host — get in the habit of saving rather than spending that extra money. If you make this standard protocol whenever you come into unexpected cash, your savings will increase quicker.

Don't make any major financial commitments

The last thing you want to do if your income fluctuates is overextend yourself unnecessarily. Business can decline unexpectedly or you could lose your job altogether. These unfortunate circumstances can put you in a precarious predicament financially — perhaps even driving you into a deep debt situation that could impair your life for many years into the future.

"Stay away from accruing debts or taking out loans if you're living on a tip-based income," Smith advises. "This is because your earnings are unpredictable and you could find one bad week creates a financial avalanche, simply because you didn't make enough money to cover a car payment or a credit card's minimum repayment."

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This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

4 Questions to Ask Before Getting a Credit Increase

Dan Rafter — Wed, 15 Mar 2017 10:00:11 +0000

Feeling penned in by the low credit limits on your credit card? You might be able to boost your credit limit to a higher amount. Often, all it takes is a single call to your card provider. The bigger question, though, is whether you're financially prepared for a higher limit.

Your credit card providers will always set a credit limit on your cards, the maximum amount you can borrow. If you have a short credit history or a low FICO credit score, your credit limits might be low ones, sometimes under $1,000. If you have a long credit history and high scores, your limit might be $10,000, $20,000, or more.

How do know if you're ready for the financial responsibility of a higher credit limit? Here are some questions to ask yourself.

Do You Pay Your Credit Card Bill Late?

Do you pay your credit card bills by their due dates every single month? Or have you missed payments in the past? If it's the latter, you might want to hold off on requesting a higher credit limit.

Paying your credit cards 30 days or more late will cause your FICO score to drop by 100 points or more. Your credit card provider will also charge you a penalty, and your card's interest rate might soar. If you have a higher credit limit and a high balance, an interest rate spike could cost you quite a bit in extra interest payments.

Having a history of late payments will also give your credit card provider pause; the financial institution might not want to boost your limit if you don't always pay your bill on time.

Do You Carry a Balance on Your Card?

The smart way to use a credit card is to pay off your balance in full each month. This way, you boost your credit score by making on-time payments, and you won't get hit by the high interest that is often attached to credit card debt.

But what if you never pay your balance off in full? What if you roll your credit card debt over from month to month, watching it grow each 30 days as you do so?

If that describes you, don't worry about increasing your credit limit. Instead, focus on paying off your credit card debt in full. It's easy to let this debt get out of control because it tends to grow so quickly. You don't want to waste your money paying off interest each month.

If you think you need a higher credit limit to manage your bills, the better thing to do is to stop and assess your situation. A higher credit limit might save you for a few months, but you'll end up even worse off due to the high interest debt that you're accruing while your financial situation continues to spiral out of control. Make the tough cuts in your spending and create your debt payment plan.

Have You Maxed Out the Limits on Your Cards?

You never want to hit the maximum credit limit on your credit cards. If you've already done this on other credit cards, it's a sign that you need to get your spending under control, even if your credit card limits are relatively low ones.

Asking for more credit is not the right solution to maxing out your credit cards. The better move is to stop charging and start paying down those balances. Don't even think about asking for more credit until you pay off your credit card debt in full.

If instead you find you're bumping into your maximum even though you're able to pay it off each month (for example, you're trying to put your regular expenses on your card that you've been paying with cash or debit but there isn't enough credit available), that would be a good case for you to make in asking for a higher limit.

Do You Miss Other Bill Payments?

Are you constantly struggling to pay your auto, mortgage, or student loans on time? If so, you might consider higher credit limits to be a solution. After all, if you can charge more purchases each month, you might free up more cash to put toward those other bills.

This, though, is flawed thinking. If you're struggling to pay your monthly bills, you either don't make enough money, or you're spending too much. The better solution is to draft a realistic household budget showing how much money you're spending each month and how much you're earning. Armed with these numbers, you can then change your spending habits, make the move to a more affordable house or apartment, or search for a side job to bring in more income. (See also: 15 Ways to Make Money Outside Your Day Job)

Simply asking for more wiggle room on your credit cards is not addressing your money struggles. That's trying to avoid them.

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

12 Everyday Money Tasks You've Been Doing Wrong

Dr Penny Pincher — Fri, 23 Sep 2016 09:00:05 +0000

You handle a lot of routine money tasks, and like most people, you probably haven't thought much about that routine. But these "routine" tasks are repeated over and over and can result in a lot of wasted money if not done efficiently. Here are some everyday money tasks that might be tripping you up:

1. You Pay Your Bills Before You Pay You

What's wrong with paying your bills first? If you pay your bills first, you only get to keep whatever is left for yourself — which may be little or nothing. If you pay yourself first, you can ensure that you save and invest enough meet your goals, and then pay everyone else. What's the difference? First of all, putting money in savings first means it's a priority, and that's a powerful reminder that you are in control of your financial destiny. Second, leaving the money that doesn't go toward bills in easily accessible accounts let's you feel as if you have "extra" funds in your budget to spend on small purchases. When you save it first, you don't see it, so you won't spend it. Out of sight, out of mind works for saving instead of spending, too.

2. You Are a Rebel Without a List

If you go shopping without a list, you are likely to forget to buy things you need, and you're also likely to buy things you don't need based on what is on sale or what looks good at the time. A shopping list is especially helpful for groceries so you can buy all of the ingredients for meals you plan to make during the week. Using a list saves extra trips to the store, or dining out when you find you don't have anything to eat at home.

3. You Check Your Balance to See if You Can "Afford" Something

Checking to see how much money you have in your checking account — or even worse, your available credit card balance — to see if you can afford to buy something is a recipe for disaster. You are almost certain to spend more than you can really afford. Using a budget to plan expenses is the right way to see if you can afford something. If you can't afford something right now, you can set up a budget to allow you to save up.

4. You Do the Minimum

Making minimum payments on credit cards and other loans is expensive. You will end up paying a lot of interest that provides no benefit to you. For example, making minimum payments on a $3,000 credit card debt could take you 16 years to pay off and cost over $3,600 in interest alone! Paying more than the minimum will allow you to wipe out credit card debt much faster and save you lots of money on interest that you can use to get ahead.

5. You Self Medicate With Retail Therapy

Some people go shopping as a fun activity or to help deal with depression or stress. "Retail therapy" is a very expensive way to achieve a short-term impact. Plus buying things you don't really need wastes the resources it took to manufacture and distribute the items, and the items take up space in your house. There are lots of constructive activities that are less expensive and avoid the problems that come with recreational shopping.

6. You Are Stuck With Checks

Writing checks is an inefficient way to pay for things. It takes time to write out a check, and you can make mistakes such as making it out to the wrong payee, misdating the check, or writing illegibly and having it rejected. Plus, you have to manually balance your checking account to keep track of checks you have written but have not yet cleared. Instead, use autoplay, electronic payments, and credit cards to make payments whenever possible.

When I receive a check as payment, I use an electronic banking app on my phone to take a photograph of the check and deposit it instantly. This eliminates the possibility of losing the check and I avoid making a special trip to the bank.

7. You Don't Use Coupons Right

Some people think coupons are too much work and don't bother to use them at all. I take a low-impact approach to get the most benefit from coupons with the least time and effort. I hang on to coupons that will work on things I buy anyway. Coupons only work if you have them with you when you go shopping, so I put the good coupons in my wallet or in a small organizer that I keep in my car. You can get more impact from coupons by stacking them — use both a store coupon and a manufacturer's coupon on the same item to save even more.

8. You Are Overpaying

Lots of people overpay for things they buy every day. Buying snacks and drinks at a convenience store or vending machine is likely to be about twice as expensive as buying the same items at a grocery store. Buying coffee at a coffee shop instead of brewing it yourself costs about three times as much. With a little planning and effort, you can have the same items for much less money.

9. You Don't Match

I get this comment about my clothes a lot, but in this case I am talking about 401K matching funds. Many employers offer matching retirement investment funds. This means that for every dollar you put in, your employer will put in a dollar for free. If you are not getting the maximum company match, you are leaving free money on the table every payday.

10. You Aren't Bargaining Hard

There are a lot of situations where a little bit of bargaining can go a long way. When purchasing vehicles or used items, there is often a lot of room to bring the price down if you are willing to risk having your offer rejected. Sometimes even prices at retail stores be negotiated— I have talked my way into using expired coupons or getting an additional discount if there is something that looks wrong with an item I am interested in. I have also taken items back to get a price adjustment after an item has gone on sale.

11. You Buy Stuff You Want

I guess buying stuff you want is better than buying stuff you don't want, but you should really focus on buying stuff you need. There are lots of things I have wanted to buy but avoided. For example, in recent years I really wanted to buy a recumbent bike, a new computer, and a stool for my wood shop. I decided to ride my old bike, keep using my old computer, and I found a free stool for my shop. These were all things I wanted but didn't need, and I saved a lot of money by not buying stuff I wanted.

12. You Are Buying Your Broker a Big Yacht

You may not realize that you are paying your stockbroker or investment company every day to manage your retirement funds and other investments. Over the years, the difference between a 1% annual fee for an actively managed fund vs. a 0.1% annual fee for an index fund adds up to a lot of money. Check the fees you are paying on your investment accounts and move to less expensive options that have significantly lower fees.

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This article is from Dr Penny Pincher of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Student Loan Debt in Collections? Try These 5 Steps

Shannah Game — Mon, 12 Sep 2016 10:00:12 +0000

We are all too familiar with the stats when it comes to student loan debt. American borrowers owe more than 1.2 trillion in student loan debt, and more than 70% of U.S. college graduates have student loans of some sort. This staggering amount of student loans has far surpassed credit card debt, which now stands firmly in second place behind mortgage debt as the largest source of U.S. debt.

But the less-mentioned student loan debt problem is the rising default rate. According to the National Student Loan Data System, 12% of subsidized loans, and 25% of Family Federal Education Loans (FFEL), were in default in 2015.

If you're in this situation, and your student loan is on the brink of default, here are five steps to handle student loan debt in collections.

1. Check Your Credit

If you haven't bothered to open up your student loan statement recently, it might be time to check your credit report. Many people don't realize that their student loans are actually in default and spend years thinking the loan must've magically disappeared, or the student loan fairy came and paid off the debt.

Once your loan goes into default, it is handed over to a collection agency. An account in collection significantly affects your credit score. While this might not matter to you now, if you're thinking about buying a house or a car or applying for a credit card, you might find yourself out of luck with a low credit score.

It's easier than ever to check your credit fast and easy. There are loads of apps you can use, like Credit Karma and Credit Sesame, that will show your credit score and give you tips on how to better your score. You can also check your credit for free at AnnualCreditReport.com — you'll receive your credit report, but will need to pay a small fee if you want to get your actual score.

Also, many credit card companies now include your credit score on your monthly statement with some detail about your score.

2. Rehab Your Loan

The next step is to get your loan in a rehabilitation program. Contact the collection agency handling your loan and ask them how to enter the rehabilitation program.

Rehabbing a loan is critical because once your student loan is in collections, there are many adverse consequences that extend beyond your credit score. Some collection agencies will garnish your wages to recoup the balance that is owed. Not only can your paychecks be tapped, but also your highly-coveted tax return money.

Rehabbing a student loan is just like any other form of rehab — you've got to get super committed to the process to see results. Rehab brings your loan safely out of default, which will help repair your credit score. It's a process, so make sure you understand exactly what you need to do with each collection agency to bring your loan back to life.

3. Always Pay on Time

Once your loan is in rehab, paying on time will be your best ally in winning the war against student loan default. Rehab offers you a chance to get right with your loan, often through small monthly payments based on your income.

The key to loan rehab is to make nine consecutive monthly payments on-time while in the program before your loan can be taken out of collections and sent to a new loan servicing company. At that point, your default status will be removed, and you'll also have access to programs like deferment and forbearance.

4. Get It in Writing

As with most things in life, getting something in writing is your best defense. The same goes for student loan rehabilitation. Once you've made your nine monthly on-time payments and your loan rehab is complete, kindly ask the collection agency for a nice letter stating that all related negative marks from your student loan record have vanished.

Now, this is the tricky part. Collection agencies aren't known for their excitement over supplying a letter in writing, which again is why you need to ask in your nicest voice and use a lot of "pretty pleases."

This letter is worth its weight in gold to you, though. It is what you will send to the three main credit bureaus — Experian, TransUnion, and Equifax — to ensure that the marks are removed. Make sure that the letter includes your name, the name of the collection agency, the account number that the letter is referencing, and the date the loan rehabilitation process was completed.

5. Stay on Track

The last step may seem like an obvious one, but staying on track is the best way to keep your student loans out of collections. Once you've gone through all the work of rehabbing your loan, the last thing you want to do is undo that process by neglecting your student loan.

Here are a few steps to stay on track:

Select a new payment plan that works with your budget. There are countless payment plan options like Pay As You Earn, which adjusts with your salary.
Put your new student loan payments on auto-debit each month so that you make sure it's getting paid.
Create a new monthly budget that includes your student loan payment and scrub through your bank statements to find ways to save money each month. There are lots of mobile apps to help you.
Regularly check your credit score to ensure that you're not missing any payments and that your credit score is improving.

If your student loan debt is in collections, it's not the end of the world. It happens to thousands of people each year, so you're not alone. However, you'll want to make sure that you follow these steps, rehab your student loan, and find ways to make your student loan payments work in your budget.

How are you doing with your student loans?

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10 Money Moves to Make Before the Leaves Change

Mikey Rox — Mon, 22 Aug 2016 09:00:07 +0000

As yet another fun summer season winds down, there's no better time than the start of autumn to take a look at our finances to see where we can make adjustments. Consider these 10 money moves to make before the leaves change.

1. Get Back to Budget Reality

Summer activities can put budgeting on the back burner as we spend more and save less over vacation. A little splurging or a savings vacation isn't the end of the world, as long as it isn't a permanent getaway that drains your accounts. With autumn right around the corner, however, now's the time to get back to basics and rein in spending. Summer can be expensive, but you can regain control of your money by coming up with a spending plan that helps you curb impulse buys and save more of your income for a rainy day.

2. Start a Holiday Fund

The beginning of fall means the holiday season is only three months away. As you revamp your budget, start putting money aside for the end of the year. Whether your plans include taking an end-of-the-year vacation or buying gifts for loved ones, early planning can ensure enough cash so that you don't have to rely on credit cards.

3. Ask About Flat-Rate Billing

If your gas or electric bills trigger heart palpitations, talk to your utility company about flat-rate billing. The company looks at your past electricity or gas usage and uses this information to estimate your expected usage over the next year. Based on this estimation, you're charged a flat rate for the next 12 months. Flat-rate billing protects against higher utility bills during the winter and summer months, and as a result, budgeting is easier because you know exactly what you'll owe each month and there are no surprises.

4. Review Your TV Habits

Fall signifies that start of the new prime time television schedule — one of my favorite parts of the change of seasons. This is an excellent time to evaluate your TV viewing habits to see if you can do without cable, downgrade your package, or otherwise modify your home-entertainment budget to better suit your needs. With so many options these days, you can likely stream many of your favorite shows at a price that's far less than cable.

5. Pay Off Summer Debt

Carrying credit card debt from month-to-month is expensive. If your credit cards took a beating over the summer, come up with a plan to eliminate this debt. Give your credit cards a break and pay for everything with cash, and then cut back on unnecessary spending to free up cash in your budget. Use the savings to double or triple your minimum payments and pay off balances sooner. (See also: 5 Day Debt Reduction Plan)

6. Prepare for Colder Days

Temperatures cool down around September and October, so to trim your heating bill, take steps early in the season to keep the heat in and the cold out. This includes replacing missing insulation in the attic, weatherstripping your doors and windows, sealing any cracks around windows and electrical outlets, installing a storm door, hanging heavy drapes, getting a programmable thermostat, and closing your fireplace flue.

7. Check Your Savings Contributions

If summer fun threw off your savings goals, you can play catch-up by taking advantage of your company's retirement plan, or increasing your contributions if you already have a 401K.

"An employer may offer to match a percentage or all of your contributions to a retirement account," says Jim Poolman, retirement expert and executive director of the lndexed Annuity Leadership Council. "Some employers may even contribute to your retirement account each year whether you save or not." Any employer retirement contribution is considered "free money" and can maximize your savings at any age.

8. Balance Your Portfolio

In addition to contributing or increasing contributions to your company's retirement plan, you should get serious about balancing your portfolio to protect against market shifts. It isn't enough to have a 401K. Poolman suggests adding more conservative, low-risk products, such as fixed indexed annuities (FIAs) to balance your retirement portfolio.

This is important as you become older, because a savings strategy that worked in your 20s might not be the right fit in your 30s or 40s.

"Assessing your investment mix at different stages in your life is key," Poolman warns. "When you're young, a higher-risk investment strategy may be more effective, whereas the closer you are to retirement, the more important a low-risk portfolio may be."

9. Have a Money Talk With Your Partner

It's also important to sit down with your partner and/or a financial planner to review your overall financial picture and determine where you can improve. For example, when was the last time you reviewed your life insurance policy? If you've recently tied the knot, had a baby, or purchased a home, can you increase your coverage? Or if you're self-employed, could you increase contributions and max out your IRA, which can grow your money and help you save on taxes? A yearly review can ensure a firm financial foundation and help you hit your goals.

10. Make Doctor's Appointments

A flexible spending account (FSA) lets you set aside a percentage of your pretax pay for eligible out-of-pocket medical expenses. These accounts effectively reduce health care costs for doctor appointments, prescription medications, vision care, and dental care. You can withdraw funds to pay for covered expenses. The catch, however, is that funds in a flexible spending account must be used in the plan year. Some employers don't allow funds to carry over into the next year, or they only allow employees to carry over $500. If you don't use the money, you lose it. So with three months left in the year, schedule your doctor, dental, and vision appointments to avoid forfeiting your unused balance.

What steps are you taking to prep your finances for fall?

This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Put Your Spouse on a Budget Without Ruining Your Marriage

Ashley Eneriz — Tue, 09 Aug 2016 09:00:09 +0000

The quickest way to sour a marriage is to nag your spouse about money and try to control every cent they spend. However, keeping mum about your finances can lead you and your spouse into a lot of debt or overall poor finances. Here are ways to get your spouse on a budget, without ruining your marriage.

Counseling Is Okay!

Many couples make the mistake in thinking that marriage counseling is only for marriages that are in trouble. However, counseling can be a helpful tool even when your marriage is healthy. Having a mediator help you navigate financial woes can even be desirable, so that both you and your spouse feel like they are heard.

To seek out counseling for your finances within marriage, you can talk with a financial adviser that has your best interest in mind, a marriage and family therapist, a pastor, or even an older couple who you consider wise and financially stable. It might seem embarrassing to reach out for help, but it could be the wisest step to keeping your marriage and finances strong.

Set Up Budget Dates

Just as you would set up regular date nights, set up monthly budget dates. Treat your spouse to their favorite coffee drink and discuss the numbers for the month, as well as goals for the next month.

Budget dates should not be a time where you point the finger. It should be a time for mutual discussion and growth. Depending on which financial area your spouse is in charge of, ask for their feedback. For example, if your spouse does the grocery shopping, did they feel like they had enough money that month or was it too tight? If your spouse is requesting more money for the grocery budget, you can decide together what to cut to accommodate.

Sometimes it is a good idea to invite your children to these meetings, especially if they are older than 10. Kids need to see the "why" behind the reasons they can't go to camp all summer long or get everything they want. Also, allowing your kids see and experience how you budget successfully only sets them up for budgeting success later on.

Find What Inspires Them

Sometimes it can be hard to scrimp and sacrifice just for the sake of saving money. We all need a purpose to have the motivation to work at something. Whether it's for the dream vacation or just finally being able to live debt-free, find the goals that both of you want to achieve and set the budget that will make it happen. Show that if you both tighten up your spending and stay the course, the reward will be waiting at the finish line.

Keep Things Fun

Find ways to lighten things up and make staying on budget fun, so it doesn't get tedious or simply boring. You don't have to wait until you've saved enough for the dream vacation to enjoy a reward for your hard work. Add milestones along the way that allow the two of you to celebrate. Turn it into a game to see who can find the best deals or other challenges that keep both of you interested. Don't forget about creative ways to make extra money, too. Perhaps you two can do something together that will earn extra cash.

Practical Tips to Get Your Spouse on a Budget

So far, the marriage budgeting tips have been about the mentality behind savings. Once you get your spouse on board with your budget, then use these practical tips to stay successful.

Budget for you and your spouse to have "mad money" each month. This can be $25 or $500, depending on your budget. However, this money can be spent however your spouse wants. This allows both of you to spend on yourselves without guilt.
Use an easy-to-use budgeting app that connects to your accounts and syncs with each of your phones. Encourage your spouse to look at it and track spending daily.
Have savings taken out automatically. If you wait until the end of the month to put money into savings, you might find you end up short each month. Make savings a priority or take advantage of debit cards that round up purchases and deposit the extra into your savings account.
Stop using credit cards if they are too hard to control. Taking them away for a few months can help you get back on track.

Separate Accounts

Separate accounts can be useful for managing expenses and ensuring there's no opportunity to overdraw for a budget. If you split the financial responsibilities of a household, it makes sense to manage your own accounts for your assigned budgets. Just make sure there's accountability and transparency.

Marriage is hard, and budgeting is just as difficult. Put them both together, and you could have a recipe for disaster. It's important to be open and honest so that you don't end up in a financial disaster.

How do you and your spouse stay on a budget?

This article is from Ashley Eneriz of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Support Your Broke Parents

Mikey Rox — Fri, 29 Jul 2016 09:00:17 +0000

It's hard enough to support yourself nowadays, so what happens when you're faced with the prospect of supporting your parents? It can create stress in your life — not to mention put a strain on other relationships, especially between you and your spouse — but it doesn't have to go down like that. If your parents are teetering on tapped out, and looking to you for help, here's how to make the best of it for everybody involved.

1. Recognize Their Hardship and Provide Emotional Support

It's not easy to ask anyone for money, especially when you're a self-sufficient adult. But sometimes things don't always work out financially. If your parents are experiencing a serious financial downturn — like, they're broke — the first thing you need to do is recognize their plight and offer emotional support. Even if they haven't always been the most responsible people financially, the last thing they need right now is your judgment. Let them know that you're there for them to talk to, vent, cry, or whatever they need to do to get over the initial blow of being bone dry. Assure them that you'll be there for them as a pillar of emotional support whenever they need it.

2. Help Them Navigate the Road to Government Assistance

If your parents qualify for government assistance — and if they're truly dried up financially, they will — help them navigate the red tape of getting what they need to survive. There will be agencies to visit and plenty of forms to fill out in order qualify, and if they're of a certain age, they may require your capabilities to expedite the process.

3. Introduce Them to New Ways to Make Extra Money

What's so great about the American marketplace today is that there are so many (relatively) easy ways to make extra cash. Depending on how mobile and motivated your parents are (if they're broke, they should be plenty motivated!), they could bring in a decent amount of dough by becoming drivers for Uber or Lyft; watching people's pets by signing up with DogVacay or Rover; or hosting travelers by offering guests accommodations in their home via Airbnb, VRBO, or Roomorama. My own parents have been financially strapped at times over the past few years, and they've converted part of their home into rental efficiencies to bring in extra money. These are just a few of the more popular ways to earn income without a grueling schedule or backbreaking work, but you'll find other viable options with a little research into the "gig economy."

4. Tap Into Your Own Contacts for Potential Job Opportunities

You've made a ton of contacts over the years to help yourself financially, so maybe you can tap into those resources to help out Mom and Dad. There's absolutely no shame in that game. You probably shouldn't hit up somebody you've just met to ask if they have extra work for your parents, and your parents definitely shouldn't expect an executive position out of this deal, but maybe one of your long-standing contacts with whom you have a good rapport and mutual respect has some office or light cleaning work they can throw your way. There's no harm in asking around.

5. Consider Paying "Out of Sight, Out of Mind" Recurring Bills

If your parents' money situation (or lack thereof) has really hit the skids, you might need to open your own wallet to alleviate some of their financial pain. That doesn't necessarily mean that you need to take over all their bills — you have plenty of your own to pay, remember, and your own wellbeing is your first priority — but there may be areas where you can help, however nominally.

My friend Maria is a small-business owner, and she recently told me about how she helps her parents who are currently in a financial conundrum.

"My parents are broke, mainly because they never pursued an education and have worked hourly jobs their entire life," she said. "I suggest people help their parents by taking care of recurring bills that you can just charge on a monthly basis without having to have a constant dialogue about expenses. Parents usually tend to feel bad asking for help, so it could be a bit humiliating for them to constantly have to ask for money. I help my parents by paying their health insurance and utility bills."

6. Offer to Help Them Downsize and Restructure Their Life

If your parents are broke, but they have assets that can reduce their debt load, now is the time to downsize. Maybe it's moving into a smaller home, or maybe it's selling off some long-held prized possessions. These prospects aren't exactly attractive, granted, but this situation that they're in is exactly why people make investments in the first place — to provide financial padding in times of strife. Material possessions are hard to part with — especially when you've worked so hard to earn them — but food, water, and shelter are more important than an old coin collection or a garage full of valuable treasures. In addition, help them restructure their life and rearrange their priorities so they're living in the most efficient manner possible once they get back on track.

7. Evaluate Your Own Life to See How They Can Fit In

Worst-case scenario, your parents need to become your dependents and move in with you and your family. It may not be the most ideal solution, but most of us would take our parents in, especially if they can still care for themselves, before letting them lose everything to debt and be faced with homelessness. If that's your reality, it's not the end of the world. Take a deep breath, schedule a family meeting, and sit down to discuss how to best make this work for everyone. Who knows, you might find that it's not so bad after all. The kids will have Grandma and Grandpa around more often, you'll have a little extra help around the house (hopefully), and you now have a round-the-clock babysitter so you can sneak out for a cold one — because God knows you deserve it.

Are your parents broke? How are you helping them weather the storm? Let's chat in the comments below.

This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: