How to Manage Financial Stress and Anxiety

07.07.2021 by Harry // Leave a Comment

To manage financial stress and anxiety, there are several things you can do to take care of yourself and your emotions.

Using your money wisely and taking it day by day is a good start, finding ways that you can consolidate your financial burdens, and start taking care of them little by little.

It may sound easier said than done but, you’ll be back to yourself in no time.

What Causes Financial Stress?

Many things can cause financial stress. Sometimes unexpected things happen that take us by surprise and other times we just don’t make enough to make ends meet. In some cases, you may lose your job or suffer from an injury that keeps you from working.

Whatever the case, the inability to maintain your necessities can cause stress. This stress leads to anxiety, making you feel nervous and anxious. Anxiety and stress can affect everything in your life, making you feel uneasy, unconfident, and restless.

Over time, if you don’t address these issues, you’ll have bigger issues and could develop panic attacks and general anxiety disorder.

6 Ways to Combat Financial Anxiety and Stress

When you start to feel anxious about your paychecks, you may be suffering from financial stress. A good place to start is to assess your financial situation, looking for the root cause.

Getting to the bottom of what’s causing your anxiety is a good way to start taking care of it, getting your life back, and taking charge of your emotions. You can also tackle your financial stress with these 6 tips.

1. Stay Positive

First and foremost, you should stay positive. We are not perfect and sometimes things happen that are out of our control. Admitting that your finances are in turmoil, you can start taking the first steps to fix them.

Try and keep a positive mindset and realize that you just have to take things day by day. Your financial stresses won’t be around forever, and you can start working on them.

2. Start with the Most Important

When tackling a debt, start with the most important first. Whatever collects the most interest or weighs you down the most is where you should start, jumping on a payment plan when you can.

You can start by taking a look at your credit report and making phone calls if you need to ask questions about totals.

Once you have that in place, start taking steps to plan how you’re going to pay.

3. Be Real

When you have financial stress, the last thing you want to do is be unrealistic. Don’t be afraid to face the total that you owe, coming to terms with your debt. In this way, you can truly see what you have to work on and avoid thinking you owe much less than you do.

If you need to, work with an attorney, a financial advisor, or even a friend to talk it out and make sense of it all.

4. Use Your Money Wisely

Just because you’ve come to terms with the amount you owe doesn’t mean that you should start to blow your money. It means quite the opposite. Take care of your money and don’t spend it on unnecessary things.

It can help to get on a strict budget, one where you know exactly where your money is going. Try writing out your monthly income and setting aside the amount you need for essentials like food, gas, and utilities.

5. Take Small Steps to Success

When you’re trying to relieve your financial stress and anxiety, try and keep from overwhelming yourself. That means taking small steps instead of overthinking and trying to tackle too much at a time.

When you take small steps, you start to realize that you are hitting smaller milestones that get you closer to your final goal. In the end, you can use those small successes to build yourself up and put a dent in your debts to start feeling relieved fast.

6. Be Honest with Yourself

There is nothing worse than underestimating the amount of financial burden you feel. Not being honest with yourself could lead to more stress as you start to realize how far in debt you are.

Start by finding out what you owe and then, take steps to eliminate it.

How to Tackle Financial Stress

Dealing with financial stress is not easy but, with the right attitude and small steps, you can get yourself on the right road to becoming debt-free and more at ease with yourself.

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If you have financial stress, here are three things to look into.

1. Consolidation

Consolidation is one loan that you can use to combine all of your debts into one place. Most of the time, those who have debts benefit from consolidation, able to reduce the interest and pay only one payment per month.

2. Bankruptcy

Bankruptcy is another option but, it comes with a few consequences. Your credit will show bankruptcies for up to 7 years, something that could affect your ability to buy things like a house or vehicle. Before filing bankruptcy, it’s best to check all of your options and save that for last.

There’s No Better Day Than Today

Sometimes, it’s easy to put off paying for your debts. Instead of waiting, start taking control of your finances to reduce your stress and anxieties.

There is no better day than today to start taking control over your life and start living more freely. Remember to check your debts, be honest with yourself, and find options that work for you.

Help is out there and there are more options than you might think. From attorneys to credit cards, you have a number to choose from. Whether it’s contracting an attorney or creating a budget yourself, you can do it, and your start living a worry-free and debt-free life.

Image credit:[KAROLINA GRABOWSKA]

When to Refinance Student Loans

06.29.2021 by Harry //

Refinancing student loans can be a great idea, but it is not the best option for everyone. Refinancing student loans allows you to pay a lower interest rate while merging your payments into one.

You should not refinance your loans if you need to take advantage of federal student loan protections.

It may be a good idea to refinance student loans if you are a private student loan borrower, but it is generally not a good idea if you are a federal borrower.

This article describes refinancing student loans, when it is a good idea, and the pros and cons of refinancing student loans.

What Does It Mean to Refinance Student Loans?

To refinance student loans is to take out a new loan that replaces an old loan (or more than one loan).

By taking out a new loan, your old loans will be paid off, but you still have to make payments towards your new loans.

The new loan will give you new terms, a new lender (sometimes), and most importantly, a new interest rate.

Should I Refinance My Student Loans?

When deciding whether or not to refinance student loans, take into account the following factors:

Your current loan interest rate. High-interest private student loans can be a challenge to pay off. If you want to lower your interest rates, and thus lower your monthly payments and your total loan amount, you should consider refinancing.
How much money you would save. You should only refinance if it allows you to save money on your interest rate, monthly payments, and overall loan payment.
Your credit score. A solid credit score will make you more eligible for student loan refinancing. It should at least be above 670. The higher your credit score, the more likely lenders will work with you and offer you lower rates. You also need a solid credit score because new credit applications will trigger a hard credit inquiry, which will limit your ability to apply for other types of credit such as credit cards, auto loans, and mortgages.
If you need a co-signer. Some lenders will allow you to have a co-signer. Having a co-signer can help you qualify for student loan refinancing. It is a good idea to opt for a loan that will release the co-signer after a certain number of on-time payments.
Your payment history. Lenders will look at your payment history. This is the determining factor in your credit score. Lenders may not allow you to take out a new loan if you are having trouble affording your current student loans.

Who Qualifies to Refinance Student Loans?

To qualify to refinance your student loans, you must have a good credit score. A credit score is the determining factor to get approved for student loan refinancing.

Lenders need to know how likely you are to repay your loans, and they get this information from your credit score.

You also need a steady income to refinance student loans. When you take out a loan, you must prove you earn enough money to repay it. If you have a reliable income, you are showing that you will eventually repay your loan and that you won’t fall behind on payments, even if financial emergencies happen.

To qualify for student loan refinancing, you must also have a low debt-to-income ratio.

A debt-to-income ratio represents how much debt you have compared to how much money you earn. You want this ratio to be low, so lenders trust that you can comfortably pay off the loan.

Private Student Loans vs. Federal Student Loans

The majority of borrowers are federal student loan borrowers – about 92% of borrowers. Private student loan borrowers make up the rest.

When it comes to refinancing your student loans, which type of borrower you are will determine whether or not it is a good idea.

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Student Loan Refinancing Guide

Both federal and private student loan borrowers can refinance their loans, but federal loan borrowers have payments on freeze right now because of the pandemic. Federal loan borrowers would lose this benefit if they refinanced.

Until September 2021, federal student loan borrowers are not charged monthly payments and their interest rate is set to zero. Since the only reason to refinance is to get lower interest rates, it is not a good idea for federal borrowers to refinance at this time.

Federal loans also come with other benefits such as income-driven repayment plans that can lower monthly payments and Public Service Loan Forgiveness for working at non-profits, government agencies, etc.

If you refinance federal loans, you lose these benefits. Even when payments resume for federal loans, you should only refinance federal loans if you don’t think you will ever use the other benefits offered.

If you believe your income will be stable throughout your loan payments and you won’t qualify to be forgiven, then you can refinance your federal student loans.

Another aspect to consider when refinancing federal loans is President Biden’s plan to cancel student loan debt.

While no plan has been passed yet, federal student loans could be forgiven at least in part. If you refinance your loans, you will no longer be eligible for forgiveness.

On the other side, it is a good idea for private loan borrowers to refinance right now to take advantage of low interest rates. If you have taken out private student loans and are paying too high of an interest rate, it may be a good time to take advantage of low interest rates from private lenders.

Private student loan borrowers who want to refinance should choose a lender that offers fixed APRs. This will lock in your low interest rate.

Refinancing student loans may help you get a lower interest rate and reduce your monthly payments. However, it may not be the best way to get out of debt. Refinancing is not the best idea for every borrower.

WHEN TO REFINANCE YOUR STUDENT LOANS:

You should refinance if you want to pay off your loan sooner. You can pay off your loans quicker by lowering your interest rates.

You should consider refinancing if you are not making progress in paying off your loans. If you are struggling to keep up with monthly payments and interest, refinancing can help you start to make more progress each month.

You should only refinance your student loans if your income and credit are good. These factors are necessary to qualify for student loan refinancing and will help you qualify for lower interest rates.

Another great reason to refinance is that market interest rates are at a historic low. Private student loan borrowers can take advantage of low market interest rates by refinancing

Image credit:[KAROLINA GRABOWSKA]

What to Do After My Emergency Fund Is Fully Funded?

06.11.2021 by Harry //

An emergency fund is a very important part of being financially secure. It is a savings account that you access only in the case of emergencies.

So, deciding to build up an emergency fund is a great way of not having to worry so much about these unexpected little blips in life. The fund can also save you from having to take out a loan in these cases, meaning that it will also save you money in the long run.

What Would I Need an Emergency Fund for?

The whole point of an emergency fund is that you do not know what it is going to be used for. The only thing that you know is that it can save you financially (and perhaps mentally as well).

However, we will include some examples of what the fund should be used for to give you a rough idea. Frivolous things such as buying a new TV are not ’emergencies’ and so should not be treated as such. Emergencies can include:

Losing your job
Becoming ill
Car repairs (or having to buy a new car)
Funeral costs
If you have to take time off of work for any reason
House repairs (not aesthetic)

Any of these examples are things that can be very expensive and need to be solved as quickly as possible.

Where Should I Keep My Emergency Fund?

It is very common to simply keep your emergency in a current account. However, unfortunately, this means that your savings will decrease in value in line with inflation. So, by the time that you need to use your emergency fund (which is hopefully never), you may have a lot less money than you initially did.

Instead, once you have accrued the desired amount of money you should consider placing it somewhere where it can gain in value. Even simply placing your money into a high-yielding savings account is a better option. Whereas normally a bank account will give you 0.1%, this type of account can offer you much more.

If you are up for taking a bit more of a risk then you can even consider enlisting the help of a financial advisor to aid you with investing your money. This way it will not lose its value simply sitting in the bank.

What to Do After My Emergency Fund Is Fully Funded?

If you are fortunate enough to be in the position that you have a fully-funded emergency fund, you may be wondering what to do next. Luckily, we have made the process simple for you.

There are still many things in life to save for, so even though you may have covered yourself in the case of an emergency, there are still more things to work toward. We will detail these below.

Save Up for a House

Typically, market prices increase year on year. So, one of the best things that you can start to do after you have fully funded your emergency fund is to start saving up for a house.

The amount of money that you will need for a deposit will depend on the value of the house that you want to buy and the percentage of that sum that the mortgage lender requires.

However, this can be a very large expense so it may be best to decide to save a certain percentage of your income every month. That way you will know exactly how long it will take you to save up the amount needed to put down your deposit.

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The more money that you can put down as a deposit the better off your monthly expenditure will be after this. That way you can then start saving up for other expenses down the line, such as retirement.

Save for Retirement

Nobody wants to work forever. In fact, for most people the earlier they can retire the better! Remember that other expenses, such as buying a house, paying off any debt, or buying a car will typically come first. You should prioritize them before saving for retirement so as not to financially burden yourself later on in life.

Save for Your Child’s Expenses

If you have children, another thing to consider saving for is their expenses. This can include anything from money for school trips, a gap year, and even college tuition.

All of these things can be very expensive and may even be impromptu decisions. So, having some money squirreled away for them is a great idea.

College fees and textbooks can be incredibly expensive and so the more money that you can put upfront the less that you will need to borrow in loans.

Even if your child decides that college is not the right option for them and their life then you could always help them financially toward buying a house, a car, or even a wedding. The idea is that your savings can help them financially too by reducing the amount of money that they will need to borrow in the future. This effect can then snowball over generations.

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Enjoy Your Money

At the end of the day, you work so that you can have money to enjoy your life. So, as long as you have all of the basics covered and you can afford your lifestyle then put some money aside for little treats, holidays, and days out as a family. This way you can be both practical and happy with your earnings.

Conclusion

Having an emergency fund is a great way to make yourself financially secure. You will no longer need to worry about finding the money to fix your car or the roof.

Instead, you can be safe in the knowledge that you have that covered. If you have achieved the sum of money that you wanted to save as an emergency fund then you have several options.

You can start saving for other large expenses, making your future more financially secure, for example, putting money towards a deposit on a house, paying off debts, savings for your children (for future children), and then eventually for retirement.

As long as you are able to cover your basic costs of living then budget the excess income. That way you can set financial goals and continue working towards them whilst also allowing yourself a little bit of play money to save up for things such as holidays and material possessions.

By knowing that you have a fully-funded emergency fund to fall back on you can begin saving for the big concrete purchases in life.

Image by Karolina Grabowska