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How to Tackle Debt with a Minimum Wage Job

10.15.2021 by Harry // Leave a Comment

When you’re working for minimum wage, tackling your debts can seem almost impossible – unless you know a few strategies.

Today, we’re going to tell you about some tried and true methods that can help you to take charge of your debts. This way you can get them resolved and start building a stellar credit score.

Consider a Financial Advisor

First off, consider a financial advisor. While the movies have led most of us to believe that financial advisors are only for the ultra-rich and for buying stocks, this is not the case. You should start taking advantage now.

Even if this is your first job, a single visit with a financial advisor can open you up to a world of options.

They can help you to set up a budget.
Let you know about opportunities from your job benefits that you should be taking.
Help you set up a proper strategy for dealing with your debt.

Financial advisors are there to help you to grow your money. This is why you need to get in touch with one as soon as possible.

It’s a definite advantage to have a pro on your side. Go in for a single session and you can see for yourself what a financial advisor can do for you.

Don’t Pay Too Many Debts at Once

One common mistake that can do you more damage than good is trying to pay off too many debts at once. It’s an honest mistake.

If you’ve got a lot of debts, the phone calls from those collectors can work you up into a panic. And you end up spreading your budget too thin trying to deal with it.

Don’t do this.

Instead, take the approach that will get the job done and save you the most money in the process. You’ll need to take a closer look at all of the debts that you have to identify which ones have the highest interest rates.

These are the ones that you want to target first. If you don’t, those small payments will get eaten up in the interest and you’ll be paying forever. Find the debt with the highest interest rate out of all of them and tackle it. When you’ve got that handled, move on to the next one, and so on.

If you don’t believe us, try calculating the yearly interest and compare it to those monthly payments you are making on all of your debts at the same time. You’ll find that the high interest is going to eat up most of your overall payments, so tackle that debt now before it gets you in more trouble!

Pay a Little Extra on the Highest-Interest Debt

Now that you’ve identified the nastiest debt on the list, you want to make sure that you can wipe it out as fast as possible. The way to do this is by paying just a little bit extra every time that you get paid.

Even just a few extra dollars per paycheck is going to eat up the total. In the long run, it will reduce the number of monthly payments due. Every little bit counts and it builds up over time, so tackle the highest interest debt first and go at it with a vengeance.

Autopay Can Help to Avoid Costly Mistakes

One of the easiest mistakes to make is to set up a solid monthly payment plan on your debts and then forget – or neglect – to follow through. The reasoning behind it is simple and sounds sensible on the surface. If the payments aren’t automatic, then the money will be there when you need it.

This is a strategy that can bite you, so you need to resist the urge to do this and set up autopay. Autopay is going to make sure payments get made and reduce temptation. If you are worried about autopayments tying up your account, then there is a simple solution.

Just get a second account. With a second account specifically for your debts, you can funnel a percentage of your paycheck to that account through direct deposit and keep your debt payment separated from your main account. You’ll still be paying the same amount, but you’ll have an independent account to keep worries to a minimum.

Autopay is your friend. Yes, it’s a little scary until you get used to it, but meeting those monthly payments is what is going to get you through this debt and build your credit so you’ve got to start trusting it now!

Take Advantage of Balance Transfers

Want to reduce your monthly payments in one fell swoop? This little ‘hack’ might be just what you need. If you have more than one credit card, then you need to check the interest rates for each. The goal here is simple.

If you have debts on one credit card that are at a higher interest rate than one of your other cards, consider paying that off so that the balance you owe is transferred to the card with the lower interest rate. This is commonly referred to as a balance transfer. Many cards offer a promotional 0% APR for balance transfers and this can be a godsend.

By moving the debts to where the interest rate is the lowest, you can greatly reduce what you will have to pay and make those monthly payments much more manageable in a single shot.

Remove Your Card Information from Online Stores

Impulse buys are the worst for setting us back financially. In this mighty information age, you can go online and find just about anything that you can imagine and buy it with a single click.

With great power, unfortunately, comes great culpability and so you need to cut back on your impulse spending NOW.

One simple way to do this is to log on to those stores that you tend to use the most and REMOVE your credit card information from them. If you need to buy something, you can always re-add your information, but at least this way you know that if temptation strikes then you’ve added some extra steps to the process.

Sometimes giving yourself a few extra minutes to think is all the time you need to make the right decision. So, cut out the temptation by getting your cards offline. Trust us on this one, you’ll thank us later!

Grab Some Extra Work Online

Getting yourself a ‘side gig’ is easy and can make a huge difference. Websites like Upwork, Guru, and Fiverr can give you access to small and even larger projects that you can do in your free time to earn some extra cash independent of your full-time job.

If you have a little talent as a writer or an artist, for instance, you can easily get some work on the side. But don’t fret if that is not the case. There are also data entry gigs, voice-work, and all kinds of other jobs.

https://www.listenmoneymatters.com/how-to-get-out-of-debt/

Best of all, you’ll be working from home and making your own hours!

So, if you want to get an edge in dealing with your debt, consider the good old-fashioned method of having an extra job on the side. You can deal with your debt faster and start back off with a clean slate.

In Review

Today, we’ve talked about how to tackle debt with a minimum wage job. As you can see, you’ve got a lot of options for getting the job done!

And for your records, here is the too-long-didn’t-ready summary:

Consider a financial advisor and avoid the mistake of paying off too many debts at once.
A better strategy is to tackle the high interest rates first and to pay a little extra on them now. This will help to avoid paying a LOT extra later.
Autopay can keep you on track and balance transfers can lower your overall interest, just be sure to take your credit information away from retail stores so that you can stick to the plan.
Finally, consider a side-gig for now until you can get a better handle on things.

Paying off your debt is an uphill climb. But if you use the tips that you’ve learned today then you’re going to be just fine. Set up a debt-payment strategy using what you’ve learned today and you can see for yourself what a difference it can make.

Stop worrying… You’ve got this!

Image credit:[KAROLINA GRABOWSKA]

6 Tips for Sticking to Your Budget

10.11.2021 by Harry // Leave a Comment

Reaping the benefits of a well-balanced budget is a game of stamina and determination. You really have to be committed to your goals and be in it for the long haul!

Sticking to a budget can be a real challenge, particularly if you aren’t used to restricting yourself in any way. We all are at different levels of self-control and discipline, both practices that take time to master. But never fear, we have organized the top 6 tips that are tested and true to help you stick to your budget!

Make It Fun

We live in a world where we strive for immediate satisfaction from everything we do. Engaging in activities that are restrictive and don’t show immediate results are demoralizing to many (that’s the pitfall of dieting also!).

Budgeting can be a downer, especially if you are taking away some of life’s pleasures. But this modern world has also made a way to make almost anything fun!

There is such a wealth of resources for budgeting these days that it should be an absolute breeze. Mobile apps enable you to “gamify” your budgeting and get pleasure out of boring budgeting tasks.

Find out what motivates you to have fun with your budget and ingrain it into your daily routines. Do you like games, lists, or rewards? There’s something out there for everyone!

Reduce Temptation

It sounds pretty simple, and I’m sure you’ve heard it many times before, but it cannot go unmentioned.

Your brain responds so strongly to the things it likes. And if spending money is one of those things, whether it be shopping, eating out, then seeing the items you want will send strong signals to the brain.

So it’s simple, don’t look at those things. Don’t walk into the shops “just to have a look” and remove the bookmarks for your favorite online stores.

When shopping for food, go in with a list and a plan, and don’t even think about going down the aisles you don’t need to. Have set days that you visit the grocery store. Make your supplies last until the next visit. Frequent stops add more opportunities for you to succumb to the confectionery aisle.

Be Realistic

This tip is a run-on of the previous tip. It is all well and good to reduce temptation and practicing self-discipline, but you should not starve yourself of things you enjoy either!

Completely taking away the things you enjoy simply is not healthy, nor is it sustainable in the long term. While it might work great for a start, you are likely to fall hard. And you may end up feeling demoralized with budgeting altogether.

Life is full of unexpected scenarios. No matter how well you plan, things are bound to pop up. Your budget should have wiggle room so that you can deal with unexpected events or emergencies.

Without emergency money, each time you make progress, you find something that will knock you back to square one, over and over again.

Budgets only work if you approach them earnestly and realistically. While a budget template can offer you some good starting guidelines, you must personalize your budget for your lifestyle.

Create a budget that is realistic to your income and expenditure with a spending clause and wiggle room with those unexpected expenses.

Treat Yourself

When looking at your budget, you must fit in some spending money. When things are tight, this can feel like it won’t be helpful. But, trust me, in the long term, it is!

Restriction always ends in temptations, which leads to indulgence.

Setting aside a portion of your budget for your things like eating out, shopping and entertainment, will mean you will hardly feel restricted by your budget at all.

Stay Connected to Your Motivation

When you set your initial budget, make sure you have some real “oomph” behind it. Set your budget with intention—do you want to be debt-free? Do you want to be prepared for emergencies? Saving for college? Buying a house?

Discover your motivation and the drive behind your goals. Keep them in your mind and heart always. Continually reconnect to your intentions to stay motivated when things seem tough, or you feel your budget starting to become unstable.

An Ideal Morning Routine for Staying Energized Throughout the Workday

Track your spending every day and incorporate reviewing your budget as part of your daily routine. For some, it helps to visualize your goals and progress by plastering reminders around the home.

You can also utilize an accountability partner or a “budget buddy” to help you stay connected to your motivation. Talking about your progress with someone who shares your same goals offers a sense of camaraderie that boosts motivation.

Plan Ahead

Sometimes the budget is blown by the “unexpected.” Other times, it is blown by the expected! Don’t let special events sneak up on you. Make sure your budget is flexible. You can change it around as needed depending on how your calendar looks.

Consider a flexible budget that will morph to fit your events and calendars, or create a separate account that is added to every budget that is especially for these extra special events.

Image by: [KAROLINA GRABOWSKA]

Wonder Why You Are Broke? Look in the Driveway

10.07.2021 by Harry // Leave a Comment

Owning a car is part of modern part life. Once we become old enough to drive, it’s one of our first significant purchases. It allows teenagers to have freedom. And it begins the cycle of needing a vehicle to get around to work, school, and recreational activities.

However, as we age and become attached to having a car, it can lead to poor financial choices to maintain that level of freedom. If you find yourself with a broken-down vehicle, you may consider heading to your nearest dealership and getting a shiny, brand-new vehicle to drive.

Many people opt into a financing or leasing situation for their vehicle because they don’t have the cash to purchase a new one outright. Perhaps they feel there’s no harm in adding a monthly payment into the mix.

Even if a car payment fits into your budget just fine, is it really the best financial decision? Here’s why an auto loan is a bad financial choice.

Why Are Auto Loans the Wrong Financial Choice?

Cars immediately go down in value. The minute you drive them off the lot, you’re saying goodbye to thousands of dollars worth of resale value.

Cars also lose about 70% of their value in the first four years of owning them.

When you opt for a 60-month loan on a brand new vehicle, you’re paying a lot of interest on something that loses its value well before the loan has finished being paid. Many people get caught in a cycle of car loans, having to purchase a new vehicle as soon as their loan has finished.

Suppose you paid off your car loan, but your family’s second vehicle needs replacing. Most people would finance a new vehicle because they have room in their budget for that same car payment.

Opting for the most extended term and dealership interest rates mean you’re paying for a vehicle that is not worth much for almost half of the term.

What Can You Do Instead of Opting for an Auto Loan?

There are a few different things you can do before choosing to get an auto loan.

Pay with Cash

The best possible way to get the vehicle you want without paying a monthly payment is to pay with cash. While it does take a lot of determination and strict budgeting to save up thousands of dollars for a vehicle, it is much better than paying monthly payments on a vehicle that will lose value fast.

Even with a significant amount in savings, most people opt for an auto loan because it’s so easy and common.

The fact of the matter is, it doesn’t make financial sense to pay 5% or 6% interest on a car loan for the duration of the term, especially when your vehicle immediately loses value.

If you’re already in the middle of a loan term and you won’t get penalized for paying it off quickly, a great option would be throwing all of your extra cash onto the loan to end your car payments sooner.

Adding a car payment and other expenses to your budget means you’re left with less cash for other things. Between the payment itself, gas, insurance, registration, maintenance, and other costs, you might not be left with enough money for emergencies.

If your car breaks down and you can’t afford the thousands of dollars it will cost to repair it right away, you’re still on the hook for monthly payments while not being able to use your vehicle.

The best decision for your financial health is to pay for your car in cash or pay your car loan off as quickly as possible.

Lower the Price of the Car

Cars that come with a lower price tag often don’t cost as much to maintain. The average oil change and parts cost a lot less with an economical vehicle.

The price of the car also helps to determine your insurance rates. You’ll find that your monthly premiums will be way higher for a $60,000 vehicle versus a $10,000 vehicle.

A habit of people who are more fiscally responsible is their ability to negotiate for a better price. If you’re at a dealership, even to purchase a used vehicle, you can chat with the sales team to get the car for a lower price.

Purchasing a used vehicle has more financial benefits if you can find a car in good condition that doesn’t become a money-suck. Do your due diligence to lower the price of your new vehicle as much as possible.

Change Your Priorities

We are consistently shown advertisements about the latest and greatest technology and how these beautiful vehicles will make us look like we are the epitome of success. However, what it’s actually doing is putting us in financial distress.

Finding a more fiscally responsible vehicle will force you to reevaluate your priorities as long as you can pay cash for it. You don’t necessarily need a brand new vehicle, but you may want one.

If you’re not in the best place financially, a new car is likely something you can’t afford. Life changes all the time, and we don’t know what our situation will be at the end of a 60-month car loan.

Tips to Know Before Purchasing Your Next Vehicle

Drive Something that You Care About

When you purchase a fancy luxury vehicle that you can’t particularly afford, it looks like you’re participating in conspicuous consumption. Don’t purchase a vehicle because you want to look cool or successful to other people.

Find a reliable vehicle that you care about. Purchasing one that you enjoy and doesn’t break the bank should be your top priority.

Compare the Cost of Your Car to Your Annual Income

Many families that have one or two vehicles should not exceed half their annual income in the cost of cars. Suppose you make $40,000 a year.

Having a vehicle (or vehicles) worth $20,000 is not a responsible choice. If this is the case for you, you’re losing more money with your vehicles than you’re making.

The Bottom Line

Many of us are guilty of showing off with the toys we can afford. After all, it’s never been easier to walk into a dealership or bank and get approved for a loan well above our means. Habits like this, however, only make our financial situations worse.

Many of us consider a car loan as a necessary evil of life. We need our vehicles to get to work, visit family and friends, and everywhere in between. Despite this, our choice of a vehicle can make or break our financial stability. Car loans can become a cycle that feels impossible to break, so avoid them for the sake of your financial health.

Image by Karolina Grabowska