Live Debt Free

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How To Get Out of Debt Depression

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Debt can be a heavy burden; for some, it can cause depression. However, if you are facing a mountain of debt that never seems to get any smaller and feeling overwhelmed to the point of discouragement, there are ways you can get out from under it while also improving your overall mood.

  • Start by listing everyone who expects money from you
  • Create a repayment plan. Even if the amount transferred to each account is small, establishing automatic payments will give you peace of mind. Not having to worry about missing payments will relieve some of the burdens
  • You may also wish to consider government-backed loan consolidation or deferment programs and private debt counseling services
  • Consider using extra money from overtime or side employment to pay down debts faster; seeing regular progress would likely raise one’s emotions by providing them hope for a future beyond debt servitude

There is nothing quite like being in control of one’s finances. Set goals and stay committed; you will reach the other side soon enough. Debt depression does not have to control your life.

Acknowledge That You Are In Debt and That It Is A Problem

Debt can be incredibly stressful, and the best way to start dealing with the strain it can cause is to accept that you are in debt and recognize it as a problem that needs solving.

Refusing to confront your debt issues or sweeping them under the rug will only lead to more stress and anxiety.

The sooner you face reality, the faster you can move forward and take control of your finances. Though it may not always be easy, acknowledging our debt is essential for getting back toward better financial and mental health.

Make a Budget

Making a budget can be overwhelming, but it is necessary to manage debt. It can help you identify which areas of spending need to be adjusted to use your available funds to pay off bills and reduce debt.

It takes work to create an effective budget, but if done correctly, it will provide a plan to follow and the motivation needed to reach your financial goals. If you do a lot of research, plan carefully, and stick to your budget, you will be on your way to becoming financially stable.

Cut Back on Your Spending

When it comes to getting out of debt, cutting back on spending is crucial. It may seem complicated and inconvenient initially, but the long-term rewards for your financial health will be worth it. To make this task manageable, focus on small changes that can significantly impact your life.

Try buying store brands instead of name brands when grocery shopping, ride-sharing, or using public transportation whenever possible, and cut down on eating out or going to the movies with friends. These user-friendly adjustments might not seem like much, but they can save you money in the long run and get you closer to debt-free.

Increase your Income

One of the best ways to get out of debt is to increase your income. While this may sound difficult, you can take a few simple steps to do it successfully.

First, consider getting a better paying job if one aligns with your skills and interests. Doing so will make a considerable dent in your debt and give you the freedom of financial independence. Secondly, consider starting a side hustle.

This could be anything from tutoring others in school subjects to blogging or selling homemade products online. You’ll have fun developing new skills while increasing your income with each task completed. Finally, look for other ways to bring in additional income, such as investing in the stock market or taking advantage of free money offers from credit card companies.

https://www.verywellmind.com/ask-a-therapist-how-do-i-tackle-my-debt-and-my-anxiety-5112715

Make a Plan for Repaying Your Debts

Once you have increased your income, the next step is to make a plan for paying off all of your debts. An intelligent approach is to tackle any debt with high-interest rates first and then gradually decrease the balance on the remaining debts. Alternatively, consider consolidating payments into one monthly payment if you want to simplify the process and reduce financial stress.

This strategy can help keep track of progress more effectively and ensure that each debt is paid off on time.

Before embarking on your repayment strategies, it is essential to research ways to use budgeting and other innovative financial strategies to inform your decisions. Keeping a payment schedule will motivate you, make you responsible, and lead you to a life without debt.

Stay Motivated

To stay motivated throughout the process of paying off your debts, make sure to remember why you are doing this. Keeping the end goal of being debt-free in mind is essential to staying determined to get there.

Celebrate every successful small step along the way, such as paying off a large credit card amount, that gets you closer to achieving financial freedom.

Sometimes, remembering how far you have come can provide enough motivation during those tricky moments when you feel like giving up. Staying focused and motivated on becoming debt-free is possible; just be sure to never lose sight of why it is so important and what it will mean for your long-term financial security.

Seek Professional Help if Necessary

If you feel that you are struggling to take control of your debt situation and put yourself in a better financial position, seeking assistance from a professional can help. A financial advisor or credit counselor can look at your situation and help you figure out what you can do.

They can draft a comprehensive plan to help you reduce debt, build savings, prioritize payments according to interest rates, and protect your credit score. With their expertise and guidance, you can learn about budgeting and money-saving strategies that work for short- and long-term goals.

Having a professional help you through this process can make you feel less stressed and give you more power to make smart financial decisions.

Wrapping Up

Debt depression is genuine, and it can be difficult to break out of its hold. The most important thing is to not just focus on the negative feelings but to start actively working towards a debt-free future. In addition, it can help to prioritize debts, starting with the highest interest rate first and then working down from there.

Creating a budget and tracking spending can help identify necessary changes to eliminate debt. In addition, setting small goals and celebrating even the most minor successes will help maintain motivation to reach larger goals along the way.

Finally, finding support from a friend or family member who is also interested in achieving financial freedom could provide both accountability and an emotional boost when things get rough. With understanding, dedication, and persistence, anyone can break out of debt depression and onto a happier path toward financial freedom.

Image Credit: [Doucefleur]

Understanding Risk Tolerance and Your Finances

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How do you feel when you hear the word “risk” used about your finances?

Do you see a chance for excellent returns?

Are you able to picture the “adrenaline rush” of investing?

Do you ever worry that you won’t have anything left?

Do you consider the risk only a necessary step in the investment process?

An investor’s risk tolerance is the amount of risk they are prepared to take. But it might be challenging to determine your level of risk appetite. The risk may also offer opportunity, thrill, or the chance to make significant gains—a “you need to be in it to win it” mentality.

But how can a private investor assess their level of risk tolerance? What benefits may investors derive from grasping this idea regarding portfolio diversification?

Risk tolerance: What is it?

The amount of risk an investor is willing to take is called their risk tolerance. Nevertheless, figuring out your degree of risk tolerance may be difficult. A “you have to be in it to win it” approach may be associated with the risk and the opportunity, thrill, or potential for substantial rewards. 

But taking a risk means that you are willing to lose money, that you can handle market changes, and that you can’t predict the future.

In reality, behavioral experts assert that “loss aversion,” or that fear of losing something may influence decisions more than the expectation of profits, might affect how you see risk. As risk tolerance is based on how comfortable you are with uncertainty, and you might only know how willing you are to take risks once you face a possible loss.

Is it risk tolerance or risk capacity?

While sharing a name, your risk capacity and risk tolerance often operate independently.

Your unique financial condition determines your risk capacity, or the number of potential losses you can accept.

Contrary to risk tolerance, which may not alter throughout your life, risk capacity is more malleable and adapts to your financial and personal goals and the timeframe for reaching them.

Given your income requirements, you might be less likely to conveniently ride out a bear market if you have a mortgage, your own business, children close to graduating from college, or aging parents who depend on you financially. But, again, this contrasts with someone who is single and has no significant financial commitments.

A financial shock such as a job loss, an accident with high medical costs, or even a windfall may also impact your investing choices by changing the level of risk you can bear.

What are your financial goals?

Your investing goals must also be considered when determining how much risk may be accepted. For example, how much risk do you wish to take with the money you invest for your retirement or your children’s college tuition?

On the other hand, if you are utilizing natural risk capital or available cash to try to make more money, greater risk could be accepted.

Interestingly, some people are fine with trading higher-risk securities with their retirement assets. Make sure you understand what you are doing if you only use this to protect your transactions from tax exposure, such as when you trade futures in an IRA.

If you are an experienced futures trader, only use a small amount of your IRA money, and don’t depend on one deal to decide whether you can retire, this could be a good plan.

You might reconsider engaging in this much risk, though, if you are using your whole IRA to trade futures, have little to no net wealth, and are only seeking to minimize tax exposure for that deal you consider a “sure thing.”

Futures already enjoy a more favorable capital gains treatment than other types of income; the lesser of the two capital gains rates will be applied to 60% of your earnings in the future.

Given this, why would someone with a low net worth need to put their retirement funds at such risk? In other words, you should only sometimes do something simply because you can.

https://www.businessinsider.com/personal-finance/risk-tolerance-vs-risk-capacity

What is your investment experience?

Your degree of investment experience must also be considered when figuring out your risk tolerance. Are you a novice trader or investor? Do you already have some experience in this field but want to expand into something else, like selling options? Trading and investing are no different from other new endeavors because it is wise to start cautiously.

Before making a significant financial commitment, gain some experience. Always aim for the “protection of capital” and keep in mind the classic saying. Only if the worst-case outcome will allow you to survive to fight one more day does it make sense to take on the right amount of risk for your circumstances.

How do you make your risk tolerance into a financial plan?

Plenty of online questionnaires can give you a starting point for risk tolerance and how to turn that into an investment strategy. Since you want your suggested portfolio’s asset allocation mix to represent your risk tolerance most closely, being honest is undoubtedly the best action in this situation.

The next stage is to familiarize yourself with the standard performance information for your portfolio once you have determined where you lie on the risk spectrum. Again, the less likely you will respond emotionally when things are complex, the more you will know about what to anticipate.

Savvy investors take both risk and reward into account. Stocks and other investments with higher projected returns (and more volatility) tend to be riskier than more conservative portfolios made primarily of bonds and cash, which have lower volatility.

However, owing to constantly shifting market circumstances, even the most cautious portfolio might suffer short-term losses. This is why having a diverse portfolio with a wide range of investment possibilities is crucial.

Consider investing $10,000 in one of the three fictitious asset-allocation strategies shown below at the start of 1970. And through the end of 2016, you recalibrated your portfolio annually to ensure the appropriate mix of stocks, bonds, and cash was still present.

As a result, the riskiest portfolio would have increased to $892,028, the most intermediate portfolio to $676,126, and the most conservative investment to $389,519. 

Final thoughts

What is your risk tolerance? It seems like a simple question, but numerous factors must be considered. For example, your experience, age, net value, risk capital, and the specific investment or transaction being evaluated will all affect the response.

After giving this some thought, you can use this information to develop a well-rounded and diversified trading and investment program.

Image credit: [Wutzkoh]

Where Can You Find Extra Money for the Holidays

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The holiday season is a time for joy and giving. This can be difficult for people living on a budget or living paycheck to paycheck. So, what are some ways you can save extra money for the holidays? 

With a little effort and extra work, you can find extra money to help you get through the holiday season. From bartering for the things you need, picking up things for free, or even working a new job in your free time, having the best holiday is possible with some planning. 

Frugal Grocery Shopping

Looking for items on sale or using coupons when grocery shopping may not seem like significant savings, but it can add up over time.

Clipping coupons and having a plan before you go to the grocery store can help you reduce your weekly food budget. Plan your meals and utilize the week’s current sales to stretch your grocery budget and keep more money in your pocket.   

Reduce and Reuse

We tend to throw away a lot of items. If you are trying to save money, consider what you are throwing away and see if there are any items you can reuse. For example, it may seem frugal to reuse sandwich bags, but the cost savings, compared to buying new ones, may be worth the extra effort. 

And Recycle

Saving your aluminum cans rather than throwing them away can net you a significant amount of money if you turn them into a scrap metal recycling facility yourself. This will not only put a few extra dollars in your pocket for the holiday season, but if you do not have a recycling program, it can also help the environment. That is a win-win situation. 

Buy and Sell Used Goods

It would help if you also considered buying used when you are looking to purchase something. There are numerous online sites to buy, sell, and trade used goods.

Places like eBay, Mercari, and even Facebook will allow you to buy used goods, giving you significant savings over new items.  

You can also use them to sell off any items you are not using. For example, old clothes, sporting equipment, and even furniture can be sold, providing you with extra holiday money.

This will also allow you to declutter your home before the holidays. 

The Work at Home Woman has more great saving tips.

Reduce Your Spending

Saving for the holidays will allow you to look at your spending habits and reduce any frivolous or unneeded spending.

You can cancel any unused subscriptions or reduce or quit any expensive habits you may have that are putting a drain on your bank account. You can use this opportunity not only as a money-saving venture but also to improve yourself for the future. 

Free Events

Saving money doesn’t mean staying at home and not enjoying yourself. Find free events in your area to attend to give yourself a night out without spending all the money you have saved during the week.

Many places have free concerts, outdoor movies, and nature walks. You can also visit your local library and attend parades, art shows, or even sporting events, all for free. 

Check your local listings to see what events are available in your area and spend some time enjoying the effort you put into saving for the holidays.  

Hobbies

Your hobbies during your downtime can also help you save money. For example, gardening activities will be enjoyable and help reduce your monthly grocery bill. On the other hand, camping and birdwatching may not save you significantly but can replace activities that would cost money, such as shopping or other events. 

Learning a new skill, such as embroidery or painting, can also save you money or even become a source of income when you can produce goods and services from these hobbies in the future.

Cooking at Home

Eating takeout or sitting down at a restaurant can take up a significant portion of someone’s budget. However, reducing the times you order takeout and cook meals at home can add up to significant savings. 

Planning and preparing extra food when cooking meals to take for lunch instead of purchasing food each day can save you a considerable amount of money and put you on the right track to saving the money you will need for the holidays.

Extra Income

If you do not have any money saved for the holidays, the best way to prepare is to earn extra income. There are many services you can provide during your free time to provide you with the extra money you need for the holiday season. In addition, taking an additional part-time job will provide you with the income you need to prepare for the holiday. 

Delivering groceries, driving Uber or Lyft, or delivering takeout are all services you can do during your free time to increase your income before the holidays. They are easy to set up and start, and do not have set hours, so you can adjust them to fit your schedule. 

Conclusion

By looking at your habits, you can reduce your spending to save for the holidays. Reducing things you need and reusing products can keep money in your pocket. Taking lunch to work and reducing your takeout orders will also keep your budget in check. Lastly, finding and attending free events in your town will ensure you can still have a social life while maintaining your budget. 

The best way to increase your holiday savings is to earn more income. Working additional jobs such as Uber and Lyft and delivering food or groceries are easy to start up and provide flexible hours to work when you have free time. They can add a significant amount to your income and build your savings so you and your family can enjoy a happy holiday season. 

Image Credit: [LawrenceSawyer]