Category: Debt

Investing For New College Graduates

On June 7, 2019

In Blog, Debt, Entrepreneurship, Finance

Recent college grads are known for the massive amounts of debt they’ve taken on. They go to school for four or more years, and they hopefully have a degree to go with their nice monthly bill. Investing is usually one of the last things on the minds of recent college grads. Yet, because of the ability of money to grow into massive amounts the longer it’s invested, immediately after college is the best time to start investing. Here are a couple of great ways new college graduates can get started investing.

Smartphone Apps

It may seem like a smartphone app would be a strange place to start investing, but nothing could be further from the truth. Recent apps like Stash and Acorns allow investors to automatically save small amounts of money without much in the way of forethought. Stash allows for regular or periodic investments taken from a bank account. Both Stash and Acorns allow would-be investors to round up purchases and save the spare change in an investment account. Stash has a broader array of investments available while Acorns focuses on just a few funds that are intended to meet certain goals based upon a new grad’s risk profile.

Workplace Retirement Plans

Another great option that is open to many new grads who have jobs is a workplace retirement plan. These are great options because they offer tax-deferred savings. This means that new grads will pay less in taxes, which also means they will keep more of their money to pay off student loan debt while saving. Another great benefit of saving in a work-based retirement plan like a 401(k) is the matching funds that employers will frequently offer. Through workplace 401(k) matching funds, it’s possible to supercharge returns with no additional effort. Many employers will offer a dollar-for-dollar match up to a certain percentage of an employee’s pay. A common percentage is 6 percent. With a dollar-for-dollar match, an employee would effectively be savings 12 percent of his or her salary each year while only cutting their pay by 6 percent.

Even with student loan debt, it is not impossible to save for retirement. Through apps like Stash or Acorns and workplace retirement plans that allow for automatic savings, new grads can begin building their nest eggs. The perfect time to get started is the present.

Saving For The Future

By Tom Leydiker

On September 17, 2018

In Blog, Debt, Finance

It is important to save money at any point in your life. Life can be unpredictable, and everyone should prepare for the unexpected to some degree. Establishing a kind of financial “cushion” is a great way to help yourself from financial downfall in the unpredictable future. Saving money for future plans is essential for retirement, vacation, school, and anything else you can think of. This article will give you a few you can prepare and start saving for your future.

Establish Goals

The very first step is to establish your goals. Take a look at your current financial situation and set a realistic goal for yourself that you will be able to reach. Break down the goal into smaller digestible pieces that you can work on every day. Setting an overarching goal for yourself can be intimidating, but once it is broken down into smaller daily tasks that you can complete, the overall goal does not seem so daunting.

Spontaneity

Individuals who set financial goals for themselves find it difficult or unbearable to bind themselves to strict budgets. One aspect of your budget should be used just for spontaneous events that may come up during the week. Considering that last minute plans happen, it is a great idea to have a set amount of money that you can spend either each day or each week to help you stay on your budget. You will be less likely to falter on your budget if you have already budgeting frivolous spending!

Save First

The very first thing you should do when you get paid is to put money away towards your goal. You can decide whether you should manually put away the fixed amount or have it automatically taken out of your paycheck, so you never see the money in the first place. Whichever method you decide to choose, paying yourself first is the most important key to planning for your financial future.

Consider putting one-time payments such as tax returns, bonuses, or raises into your savings account. If you can function well with your current cash flow, then you have the opportunity to save even more with the added cash flow that comes from raises, bonuses, and tax returns.

If you are comfortable with the idea of investing your money, it is a great way to potentially earn more money for your financial goal and future. As with any investing, there is a varying amount of risk involved. Look into ways that you can intelligently invest your money to ensure the best returns!

Tips To Avoid Financial Woes

By Tom Leydiker

On March 20, 2018

In Blog, Debt, Entrepreneurship, Finance, personal

At some point in your life, you may fall under hard financial times. This happens to many people and does not mean the end of the world for your bank account or credit score. There are ways to come back from financial hardship and be prepared to avoid them in the future. This article will talk about some common financial woes and how to avoid them.

Create a Budget

Most people think they have a good understanding of where their money goes. Taking a closer look at your monthly spending may surprise you. Where your money is going may not match up to what you thought you were spending. A good way to avoid financial hardships and even dig yourself out of one is to set a budget for yourself. Take your monthly analysis of your spending and formulate a budget that will keep you in the green each month. Make sure your budget is tangible. Try not to guess at what you spend on certain items, be precise and you will be more likely to stick to your budget.

Impulse Buying

A common mistake among consumers is to purchase something on impulse. If you come across an item and immediately think “I need to have this!” Take a step back and evaluate the reasoning behind the purchase. Is this going to get me to my financial goals? Is this item necessary for me to buy? These questions will help control your impulses and ultimately keep you connected with your budget. If after a month you are still yearning for that item then save up enough money to get it for yourself.

Alternatives To Spending

Instead of going out to a fancy bar or restaurant, aim for a day packed with homemade sandwiches and a hike near your local trail. Any alternative you can find to spending money on miscellaneous things like a bar or restaurant should be pursued to help you save money and maybe even find your new favorite activity.

Medical Insurance

Nothing can help you dampen the blow of a medical emergency like medical insurance can. Without insurance, you are at risk of paying high fees for medical procedures that can plunge you into financial hardship for a long time. Medical emergencies are unpredictable, and it is better to be insured no matter your financial situation to avoid destroying your financial credibility for good.

Avoid These Things That Can Harm Your Credit Score

By Tom Leydiker

On February 26, 2018

In Blog, Debt, Finance

Your credit score is incredibly important when it comes to making any big purchases. If you are thinking about purchasing a car or your first home, then banks are going to look into your credit score to determine what kind of loan you will receive. There is plenty of information on how to keep a good credit score, but it is equally as important to know what will drive your credit score down.

Missing Payments

Your payment history accounts for thirty-five percent of your credit score. Missing a payment over thirty days could drop your credit score one hundred points. Credit card companies may not report a late payment until sixty days after it is due. By the sixty day mark, your credit score may have suffered severe damage. Set reminders for yourself about when payments are due on your credit card. Never miss a payment, and your credit score will be just fine.

Cancelling Credit Cards

If you have a credit card that you do not use anymore, do not cancel it. Cancelling a credit card with a zero balance eliminates all the credit history you have associated with that card. Say you have had a credit card for four years and then cancel it one day. Those four years of purchasing items on that credit card disappear, making your credit history seem shorter than it actually is. Keep your old credit cards open to showcase your extensive credit history!

Collections

When a payment is overdue for an extended period of time, credit card companies will either sell or hire a third party to collect the payment. A collection usually occurs after six months of no payments. A collection can drastically reduce your credit score by one hundred points, sometimes more. A collection can stay in your credit history for up to seven years, affecting any future purchases or loans you apply for.

Settling Debt

If you settle a debt with a creditor and it is less than the amount you originally owed this can dramatically affect your credit score. People who have settles a debt with a creditor saw drops in their score ranging from forty-five to one hundred points.

Bankruptcy

Declaring bankruptcy has the most detrimental effect on your credit score. Filing for bankruptcy can stay on your credit report for almost ten years. A credit score can suffer up to a two hundred and forty point reduction from declaring bankruptcy.

Telltale Signs When It’s Okay To Borrow Money

By Tom Leydiker

On October 18, 2017

In Blog, Debt, Finance

tom leydiker telltale signs blog header

If you have ever consulted with a financial advisor, you know that borrowing money is one of the last things you should do, especially if you are trying to build up a strong credit history or investment portfolio.

However, there are certain exceptions to this rule. If you encounter a drastic or detrimental life event, are responsible for aiding your extended family in times of trouble, or suddenly find yourself inundated with bills, you should not feel as though you have no options or means of receiving help.

With that in mind, let us take a look at some telltale signs of when it is okay to borrow money:

When you cannot afford moving costs.

If you recently purchased a home, you may be faced with a plethora of expenses you had not even taken into consideration (i.e., storage, transportation, sudden repairs or renovations, etc.). Borrowing money in this scenario can give you great peace of mind while you are getting moved and settled into your new space.

When you are hit with large medical bills.

Unfortunately, no matter how young or healthy you are, facing medical expenses is an inevitability. Thankfully, there are ways to ease the burden of big medical expenses.

Now, credit bureaus allow patients 180 days to address their medical expenses prior to putting them on their credit reports. This gives individuals enough time to sort through their options and make the most educated decision possible – all without feeling rushed or uncertain of their financial standing.

When your car requires major repairs.

A lack of reliable transportation puts a major wrench in your plan to consistently earn and save money. However, if you are in a financial bind and require assistance to get your car back in working order, borrowing money is likely your best option. This will ensure you are still able to work and will even allow you to pay off your expenses at your own pace – a definite win-win scenario.

Regardless of your reason for borrowing money, it is imperative that you remember the importance of paying off your debt in a timely manner. Otherwise, you may end up paying more due to accrued interest than you would have if you budgeted your finances to make the largest payments you could manage – within the realm of feasibility, of course.

How Collections Can Affect Your Credit

By Tom Leydiker

On August 25, 2017

In Blog, Debt, Finance

tom leydiker how collections blog header

Debt collectors, according to both the Federal Trade Commission and Consumer Financial Protection Bureau, are one of the most complained-about businesses. When you hear about “debt collectors,” the first image to come to mind is an aggressive loan shark. Even a “nice” debt collector can be a pain – yet they aren’t going anywhere anytime soon.

A debt collection is a type of financial account that’s been sent to a third-party debt collector. Hiring a debt collector is usually more cost-effective for a company than to keep spending their resources pursuing payment. Most credit card accounts get sent to a collection agency after six months of non-payment, while other businesses send them out even sooner – it varies business by business.

Debt collectors will call you and your friends, send letters, and even show up at your home to collect money – all of which is perfectly legal. If a debt collector doesn’t have your phone number or correct address, however, you may never receive notice of the debt until you see it listed on your credit report.

How does this all affect your credit?

Whenever an account is sent to a collection agency, the original creditor or the collector updates the account on your credit report. A debt collection is one of the worst types of credit report accounts. It reveals that you have become seriously delinquent on an account. This will cause your credit score to plummet, causing you to be denied for credit cards and loans in the future, particularly if it’s recent or remains unpaid.

These accounts can stay on your credit report for as long as seven years, meaning that their negative effects can haunt you for a long time. One of the best ways to lessen the harm of a collection account is to pay off the debt so that it will affect your collection less over time. Another way is to continue to pay all of your additional bills on time.

4 Steps Towards A Debt-Free Life

By Tom Leydiker

On May 4, 2017

In Debt

tom leydiker -4 steps- blog header

For some, being in debt is something that resulted from careless spending. Frivolously making purchases for unnecessary commodities with credit cards with the mindset that you will pay it off later by making the minimum monthly payments is the quickest way that Americans get themselves into debt.

For others, debt comes more unexpectedly, perhaps through an unpredicted emergency you were not financially prepared for. Maybe your car broke down and you either had to pay an expensive garage bill or the garage deemed your car unfixable so you are now forced to purchase a new vehicle.

Whatever the cause of your debt is, it’s important that you start developing better money habits as soon possible to get out of debt and prevent additional debt – a very easy cycle to fall into and a difficult one to get out of. It is being estimated that, on average, 50 percent of households currently have debt ranging around $14,000.

Here are some ways you can prevent future debt while also implementing strategies that will help you to work towards managing your current debt:

Step #1: Create a list of all of your debts, including their interest rates.

Don’t skip over this step! Before you can start tackling your debt, it’s important to be aware of exactly how much you have. Write it down in a notebook or start making a list in a spreadsheet so that you have everything contained in one area for future reference. The three most important things you will want to take down: the total amounts you owe, the annual percentage rates (or interest rates), and the monthly minimum payments.

Step #2: Set goals as you work towards paying off your debt.

It will be beneficial for both your stress and your action plan if you can break apart your debt into more manageable portions. Find out how much money you can dedicate to paying off your debt every month and, then, you can do a rough estimate of how many months or years it will take you to pay off the total amount. Set milestones for yourself as you start contributing more money to your debt, whether it be every $1,000 you pay off or every $5,000 you pay off.

Step #3: Focus on the payments with the highest annual percentage rates first.

This is where that list you created at the beginning of the process will come in handy. As you begin paying off your debt, focus on the balances that have the highest interest rates first. Work to eliminate those first by dedicating as much money to them as you can while still being able to pay the monthly minimum payments on your other balances.

Step #4: Find additional ways to bring in income.

If you bring in additional income, that is money that you can be dedicating right to your debt. The thought of working a second job may not seem appealing, but it will only be temporary until you are debt-free again, and this will make paying off your debt go by more quickly.