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Dave Ramsey’s 7 Baby Steps

dave ramsey baby steps

Are you trying to get out of debt? Do you want more financial stability and freedom? Are your finances one of the bigger stresses in your life right now?

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Step 1: Start an Emergency Fund
Step 2: Focus on Debts
Step 3: Complete Your Emergency Fund
Step 4: Save for Retirement
Step 5: Start a College Fund
Step 6: Pay Off Your House
Step 7: Build Wealth

If any of these sentiments apply to you then Dave Ramsey’s 7 baby steps might be just what you need to cure your money blues.

Dave Ramsey is a guy who, through personal experience, was able to get out of debt and find financial peace of mind. He is now a financial expert with courses and books to help the everyday person get in control of their finances.

The best place to start when trying to regain control over your finances and achieve a full “money makeover” is to start with his 7 step plan. This plan has 7 baby steps that you follow to reach more financial stability and get to the point where you can start building wealth.

Step 1: Start an Emergency Fund

car maintenance

The first step in Dave Ramsey’s 7 step plan is, “Save $1,000 for Your Starter Emergency Fund.”

One of the main reasons people struggle with money is because necessary emergency expenses (like medical bills, car bills, or home repairs) come out of nowhere and drag you deeper and deeper into debt. But if you are preemptively prepared for these surprise expenses then they won’t take you off guard again.

So the very first thing you should do when getting your money in line is to get an emergency fund started. Save up an emergency fund in a separate bank account, until you have at least $1,000 in the account. This will be the start of the emergency fund that will keep sudden necessary expenses from plunging you into deep debts because you weren’t prepared.

Step 2: Focus on Debts

debts

The second step in Dave Ramsey’s plan is to “Pay Off All Debt (Except the House) Using the Debt Snowball.”

The snowball method that Dave Ramsey refers to here means that you start by paying off small debts first, and work your way up to the bigger debts. Debts can include paying off your car, credit card debts, and student loans.

First, make a giant list of all your debts, every single one, except for your mortgage if you have a house. Then, put your list of debts in order from the smallest debt amount to the largest. Then you go through knocking out each debt by eliminating the smallest debts first and working your way up to the largest debt last.

Step 3: Complete Your Emergency Fund

medical bills

The third step is to “Save 3 to 6 Months of Expenses in a Fully Funded Emergency Fund.”

Now that you’ve gotten all your debts out of the way, it’s time to finish your emergency fund. You can use the same money you were using to pay off debts each month and put it toward your emergency fund until it has enough to cover 3 to 6 months’ worth of expenses and bills. Then you’ll really be prepared for anything.

Reasons to Have an Emergency Fund

  1. If you lose your job.
  2. You won’t have to worry because you’ll have enough to last you 6 months. This will give you the time you’ll need to find a new job.

  3. If your car breaks down.
  4. You’ll be able to pay for the necessary repairs, the tow truck, or even for a new car in some cases.

  5. Medical bills.
  6. Don’t let your health and necessary medical bills keep you from staying afloat financially.

  7. Home repairs.
  8. If something happens to your home you’ll be able to fix the problem rather than living with it.

Having an emergency fund is THE key to keeping you out of debt in the future. After getting yourself out of debt, an emergency fund is what will keep you from getting back into debt in the future.

Step 4: Save for Retirement

retirement

The fourth step in the Dave Ramsey plan is to, “Invest 15% of Your Household Income in Retirement.”

After your debts are gone and your emergency fund is taken care of, it’s time to start seeing to other important savings like a 401K. Dave Ramsey recommends you take 15% of your gross monthly income and put it toward a retirement fund each month. To figure out how much you should be putting into your retirement fund each month, take your monthly income and multiply that number by 0.15.

Step 5: Start a College Fund

college funds

The fifth step to Dave Ramsey’s plan is to, “Save for Your Children’s College Fund.”

Avoiding student loan debts can be one of the biggest factors in staying out debt as a young adult. If you can pay for your kids college tuition then you’ll ensure their financial security in the future, as they’ll better be able to stay out debt. Dave Ramsey recommends using either a 529 college savings plans, or an education savings accounts (ESA). Talk to your bank or credit union about setting up these accounts for these specific purposes.

Step 6: Pay Off Your House

mortgage

The next to last step in this 7 step plan is to, “Pay Off Your Home Early.”

Put all the extra monthly income you have into your mortgage so you can finish paying it off early. After this step you will officially have no debts whatsoever! All of your earnings will go to you instead of getting drained away in large debts and payments.

Step 7: Build Wealth

wealth and legacy

Finally, it is time to, “Build Wealth and Give.”

Congratulations! Once you’ve reached the 7th step in Dave Ramsey’s Baby Steps, you can start focusing on building your wealth and leaving a legacy. Don’t forget to keep and maintain those financial safety nets like a healthy emergency fund, retirement account, savings account, and college funds.

Now you are officially in charge of your money rather than it being in charge of you.

Financial freedom is possible for you! Everyone can do it and Dave Ramsey’s 7 baby steps can help you get there. Dave Ramsey also has other resources that can help you implement this plan. You can participate in Dave Ramsey’s program, books, and podcasts.

You can take the actual course with Financial Peace University.

Dave Ramsey also has a free customized plan and assessment that you can do right now, in just 3 minutes!

Listen to the Dave Ramsey Show anywhere you listen to podcasts or radio.

 
Dave Ramsey’s 7 baby steps to financial freedom can help you with so many aspects of your life. They can help you decide when to buy a house or help you get situated for saving for a house. It’s a checklist program that can help you get rid of loans and debt (like student loans), or even help you get to where you can budget for a wedding.

Another way you can get some needed financial help is to take out an Installment Loan at Check City! Installment loans can help you stay on top of your bill payments and avoid late fees, which can really hurt your long-term financial goals.


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Browse Dave Ramsey’s online store for more great financial resources to help you on your financial journey.

Read more helpful articles on the Dave Ramsey Blog

Learn more about the debt snowball, “How the Debt Snowball Method Works.”

Read Dave Ramsey’s full article on his 7 baby steps, “What Are the Baby Steps?

Stay out of debt through college by using these tips, “How to Stay Debt Free through Grad School.”


Budgeting in 4 Easy Steps

budget

No matter your financial situation in life, everyone needs a budget. With a budget, you can plan for needed expenses and prepare for the things you want!

In fact, the most simple budget only needs a couple of lists, a calculator, and some goals. Below are the main points our post will go over to help you set up your budget:

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Budgets are an important tool in anyone’s financial arsenal. Budgets can help you organize your needed expenses, like rent and bills, prepare for emergencies and get ready for whatever your future might hold. By knowing how to budget you can learn to stop living paycheck to paycheck and start building up your savings. it can help you save up for big expenses or future life events like a wedding, starting a family, buying a car or a house or moving to a new state.

Budgeting can also help you save for retirement, something else that even younger people just starting out on their own sometimes forget to think about but should. But most of all it can grant you financial power and freedom and help you provide for your wants and needs. But for those just starting out on their own especially, it can be hard to know where to begin.

There are several key elements you’ll need to include in your budget. You need to think about all your necessary expenses and plan them out accordingly so you are aware of how much of your monthly income you need to spend each month no matter what. Then you’ll have to think about unnecessary expenses. This is where you have the most freedom to plan out the numbers and make adjustments.

budget-template

How to Budget

There are many ways to budget and there is a lot of advice out there in the financial spheres about how to do it. You can also choose to plan for certain events by making a specific wedding budget, or for major purchases like car payments. But if you’re making a simple budget for yourself, then the main thing you’ll want to decide first is whether you want to make a monthly or yearly budget. Most people like to create a yearly one to get a general big picture view of their financial goals and future plans. But, a monthly one is more helpful for everyday use. We’re going to try and condense all that down to the bare bones minimum of what every smart budget needs.

#1: List your monthly income

List out all your forms of income. This would include the paychecks from your job, but also any extra money you make from any of your side hustles. Here is also where you can decide whether you want to organize your finances for gross income or net income.

Gross income is simpler and easier to calculate. You just need to know how much you get paid and use that money for your calculations.

Net income isn’t as simple to figure out but there are advantages to using it. You figure out your net income by looking up what the income tax is in your state, and taking out that percentage from your gross income. Using net income instead of gross income is perhaps better because it more realistically reflects what you will actually receive from your paycheck.

#2: List your fixed expenses

After you have all your sources of income written down you’ll want to form another list for all your fixed expenses. Fixed expenses are the expenses you have each month that doesn’t fluctuate in amount. Everyone’s list is going to look different depending on what expenses do and don’t apply to you, but here is an example list of some fixed expenses:

  • Rent or Mortgage: A calculation you’ll want to do when looking at your housing expenses is to check that your total housing expenses aren’t over 28% of your monthly gross income.
  • Insurance
  • Debts: A calculation you’ll want to do when looking at your debts is to check that your total debts aren’t over 36% of your monthly gross income.
  • Loans
  • Student loans
  • Credit card payments
  • Streaming services like Netflix, Hulu, and Spotify
  • Phone bill
  • Medication you pay for each month
  • Child support
  • Education

After you’ve listed all your fixed expenses total the amount, subtract it from your monthly income, and that’s what you have left to spend on varied expenses . . .

#3: Set up your savings

Before we go into varied expenses though, let’s take a moment to think about your savings and retirement. Get a savings account if you don’t have one already, and set aside a portion of what’s leftover after fixed expenses. Any amount you can afford to put away into a savings account each month will set you up for success in the long term, even if it’s only 5 to 10 dollars a month.

Aside from general savings and saving for retirement, you also want to set money aside in an emergency fund. It’s recommended that you have at least 3 months’ worth of your fixed expenses put away into an emergency fund at all times.

Digit is a great app you can use to help you plan and organize all your savings.

#4: List and portion out your varied expenses

Everyone’s list of varied expenses is going to look different depending on what expenses do and don’t apply to you. Varied expenses are any expenses that are going to fluctuate in amount each month, or are considered more like luxury expenses than needed ones.

Varied expenses are a big reason to do a budget in the first place so that your varied expenses each month don’t overtake your more important fixed expenses and your savings. Here are some examples of varied expenses you might need to consider:

  • Groceries
  • Eating out
  • Entertainment
  • Gas and transportation
  • Recreation
  • Clothes
  • College textbooks

Another way to figure out the reality of what you’re spending on varied expenses is to look at your transaction history for the month and see 1) How much in total you were spending on varied expenses that month, and 2) What those varied expenses were on. Do this for a couple of months back to get a more realistic idea of what you are spending on varied expenses each month.

Organizing your varied expenses is where you have the most control over your budget. Whatever is left over after your fixed expenses and your monthly payments to your savings account is what you have to spend on all your other spending for the month.

Here is where you will list out what all those varied expenses might be and portion what you have left in the budget into them. Remember that you don’t necessarily want to portion out 100% of what’s left into these categories so that you can accumulate a comfortable cushion in not just your savings account but your checking account as well.

Budgeting Tips

Invest

Making investments is a great way to beef up your financial portfolio. There are probably a trillion ways to invest, but the idea behind investments is that you put money into something that will give you more money in return later. This is called compounding interest.

interest-rate

A helpful tip to remember when going into any investment is the rule of 72. This rule means that if you take 72 divided by the interest rate you’ll figure out the estimated number of years it will take for your interest to double your initial investment.

Personal Capital and Acorns are some of the most helpful investing apps you can use to step up your investment game.

Where should I put my budget?

Figuring out where to even put your budget can get complicated. You can use excel or make your own table in Word or Google Docs or any note-taking program of your choice. There are also many free budget templates online that you can print out and use. Budget tools are all around if you take the time to look and decide on which ones best suit your needs.

Click here for a free budget worksheet from the Federal Trade Commission.

You can also use budgeting apps to keep track of all your bills, expenses, plans, and goals. Some of these apps even allow you to connect your budget to your financial accounts.

Control your spending

Sometimes it can be difficult to control your varied expenses throughout the month and track your spending. You can make controlling how much you spend each month easier by using a prepaid debit card. With a prepaid debit card, you put money on it like a gift card to yourself almost. You can also use a similar method of spending control by just taking money out and only using that cash for your varied expenses each week.

PocketGuard is an app that can help you track your purchases.

Get a Side Gig

Getting an extra source of income can really come in handy. There are a million different kinds of side hustles any ambitious person these days can get into. You can babysit, drive for uber, or sell your own products. The possibilities are endless and it never hurts to have a little extra money each month.

Plan to Decrease Debts

Debt can be a real financial weight on your shoulders, but it can also be a necessary evil in order to get a house, get a car, get through college, and much more. Decreasing the amount of debts you owe can still help alleviate some of that weight and provide more financial comfort and peace of mind.

So it’s important to budget with paying down your debts in mind. You can pay down debts quicker by planning to spend more on that fixed/necessary expenses each month, by spending less on varied expenses, or by getting another job to provide more income to put into your debts each month.

Budgeting doesn’t have to be hard. All you really need is 4 lists and a calculator! Everyone should practice using a budget now so that you can control your finances instead of your finances controlling you.

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Check out some of other Check City articles on budgeting:
Budgeting for Dummies

What is a Budget?

Budgeting Tips You May Not Have Thought of Before

3 Simple Tips to Building a Budget

Ways to Keep Track of Your Spending


How to Pay Off Credit Card Debt Fast

credit-card-debt

When people are carrying around a substantial amount of credit card debt, they sometimes have difficulty just getting started paying off that debt.

Being in a lot of debt is not fun. One form of debt that can really sting is credit card debt. When you have a lot of debt to get rid of, it can be easy to get frustrated quickly, but feeling overly anxious about your debt isn’t going to help you pay it off any faster. So what is the best approach to eliminating your credit card debt?

A quick Google search of “how to pay off credit card debt” will give you over a hundred different answers. The truth is that different methods work better for different people. You need to understand your own personality and spending habits in order to choose the best option for you.

Are You a Compulsive Buyer?

compulsive shopping

Many people combat feelings of stress and anxiety by shopping compulsively. If you are a compulsive buyer than you might also have a lot of credit card debt. The only problem is, you’ll need to tackle your compulsive buying habits before you can bring down debts. If you can admit to yourself that you’re a compulsive shopper, then you can craft your debt strategy with this in mind.

Step 1: Cut Up Your Credit Cards

To ensure you don’t keep adding to your debt, you can start by cutting up your credit cards. If you don’t have any credit cards in your wallet, then you won’t be able to spend that available balance and rack up your credit card bills even higher.

Step 2: Tackle the Compulsive Shopping Urge

Another trick is to come up with an activity that you can turn to whenever you feel the urge to spend compulsively. It could be anything! Maybe you can turn to gardening, reading a book, or going for a walk whenever you feel stressed or sad. The point is to teach yourself to do healthier things when you feel stressed or want to have fun instead of spending money.

Other Pastimes to Replace Shopping:

  • Gardening
  • Reading
  • Walks
  • Hikes
  • Biking
  • Swimming
  • Cooking or baking
  • Volunteer
  • Sewing, Knitting, crocheting
  • Do puzzles
  • and so much more!

Identify Wants and Needs

wants and needs

Another part of what makes you unique is that you have your very own wants and needs. Your list of wants and needs is going to look different from another person’s wants and needs. For example, if you work in fashion then buying new clothes might be one of your needs while for most people that would be a want.

Step 1: List Wants and Needs

First, make a 2 columned list of all your basic wants and needs. It’s ok to have unconventional wants and needs so long as you can identify them. You need to be self-aware of your own wants and needs because you won’t get out of debt unless you avoid unnecessary spending on things you don’t need.

Step 2: Compare Past Spending with the List

Take a close look at your spending statements for the month and compare it to your list of wants and needs. How much was spent on wants? I bet you’ll discover that you have plenty of room to cut out unnecessary spending. If you understand what your needs are, then you won’t feel bad about spending money on them. On the other hand, you need self-control to avoid spending too much on wants.

Focus on High Interest Rate Debts First

credit card debt

The trick to paying off credit cards fast is to first pay off the card with the highest interest rate. This won’t necessarily be the card with the biggest balance. Dave Ramsey suggests you pay off smaller debts first and work your way up to the bigger ones. But focusing on high-interest debts first is also a wise choice so you can avoid spending as much on the accumulated interest.

By paying off the cards with higher interest rates first, you will lower the amount you pay to the credit card companies in interest, ultimately reducing the overall amount you’ll wind up paying. So your debt will be paid off faster and at a lower cost. Keep all other payments at the minimum, and once you’ve paid off the worst offender, move on to the next-highest interest rate.

Don’t Give Up

People make mistakes, and if you slip up along the way don’t give up on your overall goal. If you stumble then pick yourself up and continue on the path to financial stability.

“There is no failure except in no longer trying.”

―Elbert Hubbard

Ultimately, you only fail if you stop trying. Debt can really weigh borrowers down. Sometimes it takes years to pay off debts. But if you stick to the best financial plan for you, you can begin to see the light at the end of the tunnel and turn your finances around for good.


Establishing and Developing Your Credit Score Effectively

Your credit score can be a great inhibitor or it can open up financial doors for you. Cultivating a good credit score is not impossible and by paying attention and taking responsibility for your finances you can be sure that your credit score is where you want it to be. Building a good credit score can start early and if you are in college or you are a young adult, take control of your finances and of your credit score.

Start by understanding that you are going to need to be as responsible as possible with your checking or savings account and your debit and credit cards. Keeping up with your financial obligations may be difficult, but committing yourself to financial responsibility will ensure that your credit score will continue to grow higher.

If You Don’t Have Credit, Start Here

If you do not have any credit, start by getting yourself a credit card. Get a credit card that fits your needs and make your payments in a timely manner. You should try to pay off the credit card in full each month to ensure that you are not wasting too much money on interest payments. Although it can be tempting to spend money that you do not have, try to refrain from purchasing big items on your credit card when you know you do not have the money for them.

Stay Disciplined With Your Credit Cards

Using your credit for day to day expenses and then paying off the credit card at the end of the month is a great way to ensure that your credit card has a positive effect on your credit score. While you are using the credit card, you should understand that you will have ample opportunity to do damage to your credit score. It is important that you do not miss a payment. As you are applying for cards, make sure that you only apply for one card at one time. Applying for a high number of credit cards can be damaging to your credit.

After you have your credit card, you should only use anywhere from ten to thirty percent of the credit that you are allotted. Keeping your balance low and making regular payments will ensure that you are exhibiting responsible behavior with your credit card.

Diversify Your Credit

When you have had a credit card and you have established healthy and beneficial spending habits with your credit card, you may want to get another form of credit. Having more than one form of credit will help your score. Taking out an auto loan, a personal loan, a school loan or even a short term loan like a cash advance that you can pay off quickly is a great way to establish another line of credit.

When you are working on developing better credit it is also important that you are on top of it with your bills. You should be paying all of your bills on time. Although paying on time won’t do a whole lot to help increase your credit score, if your bill is sent to collections, you will see a negative effect on your score almost immediately.

Not staying current on your bills can be detrimental, but you may find that there are times when you just do not have enough money to pay your bills. If you should find yourself in this situation, do not be afraid to take out a payday loan. This loan will give you the money that you need to pay your bill quickly and then when you get paid you can pay back the loan. If you are going to pay back the loan quickly, you will be able to ensure that there is no negative effect on your credit.

A payday loan, when paid back quickly, can be your saving grace. You can avoid late fees, higher interest or even having a service cut off to your home by simply getting the payday loan and paying your bill on time. Taking advantage of this service when you are in need will ensure that you are able to keep your credit score in a desirable range.

Taking control of your finances and increasing your credit score can open up a lot of doors in your future. Do not be afraid to sit down and assess your financial situation so you can figure out how to make it better. With a little tweaking, you may find that you are able to make great leaps and bounds to ensure that you are going to have a credit score that is beneficial for you for years to come.

How to Fix Bad Credit

If you are one of the many individuals in America who is suffering from bad credit, do not be afraid. There is hope for you.

Many, many people struggle with the negative effects of bad credit. It is nothing to be ashamed of.
Once you realize that you have bad credit, however, it is important that you take steps in order to try to improve your credit score. If you just sit around and complain about how your score is bad, nothing is going to change and your score will not improve.

You have to try to improve your credit score and then hopefully you will see results. Fortunately, there are people who have gone before who have staked out what to do if you find yourself with bad credit.

Get a Credit Card to Improve Your Credit?

One of the first things you can do is to get a credit card if you don’t already have one. This may seem counter intuitive, but it can actually be helpful.

Many people have said that you have to have a good balance to have good scores, but this is purely a myth. But having and using a credit card wisely can definitely help you improve your scores.

If you don’t qualify for a regular credit card, you can usually obtain a secured credit card. A secured credit card is different than a prepaid credit card because a secured credit card is where the bank gives you credit to match the amount you deposit in the bank.

This may seem annoying and frustrating, but it is actually in your best interest to not have unlimited credit. If you have a bad credit score, then you probably haven’t been very wise with your credit in the past.

This secured credit card will help you get your spending under control. Another thing you can do to improve your credit score is to take out an installment loan.

Loans Can Help Build Credit

A good way to improve your credit score is to prove that you can handle loans and credit again. Installment loans include personal loans, car loans, mortgages, and student loans.

If you don’t need to have any of these loans, you could consider just taking out a small personal loan. This will help prove that you can handle paying back a loan.

However, it is important to remember that paying back your credit cards will help your credit score more than paying back your loans will. Therefore, paying back your credit card debt should be top priority when trying to improve your credit score.

Try to always have the goal of trying to completely pay off your credit card debt. It may seem impossible, but it is possible if you are determined and make a plan to pay it off.

It May Be Worth Hiring a Professional

You could even consider hiring a professional to help give you advice about how to better manage your finances and credit score. Although meeting with this professional will probably cost you money, the benefits will probably greatly outweigh the costs.

Try to get your balance below 30% of your credit limit. Getting your balance below 10% of your credit limit is ideal.

If you can get your balance to this place, then credit lenders will see that you can handle your credit card appropriately. It is a good idea to pay off the credit card that has a balance that is closest to its limit.
It may seem obvious, but throughout this whole process, it is important to try to minimize spending on your cards as much as possible. The less you spend, the better your score will be.

Lower Those Limits

Another thing you can do to try to improve your credit score is to decreasing your card limits to 30% of the current limit. If you can reduce it to 10% of the current limit, that is even more ideal.

Make sure to always know what your credit card limits are. Sometimes credit card lenders do not update credit card limits online, and so your score could go down if they’ve posted the incorrect limit.

Some credit cards do not have a preset limit, and so the lenders do not have to post a limit because technically a limit does not exist. This can be good and bad.

It is good because you virtually do not have a limit on your spending. It is bad because there really is a limit to your spending.

It is also bad because your credit score will definitely be affected negatively. Throughout this process of trying to decrease your credit score, it is important to not become discouraged.
It may seem like an impossible situation, but you can get help.

8 Proven Tools to Help You Get Out of Debt

get out of debt

A mountain of debt is nothing to scoff at. It’s a huge financial burden to have a 30-year mortgage, car payments, and loans demanding your attention every month.

 
If there was ever anything that made you feel like you never see your paycheck, it’s paying off debts.
 
For that reason, many people are looking to dig themselves out of their mountain of debt so they can breathe again. The following are 7 proven tools you can use to get yourself out of debt and start a new debt-free life.
 

#1: Pay More Than the Minimum Payment Each Month

If you can afford it, pay more than the minimum payment each month on your debts. Every extra penny you put toward paying off your loans brings the end of your debt a little closer.
 
For a short-term loan, you can decrease the term of the loan by a month or two by making larger monthly payments. For a mortgage, you could reduce the term by a year or two.
 
Increasing your monthly payments can take considerable effort and budget planning, but if you work through the following tips, you could make it happen.

#2: Make More Money

Easier said than done right?
 
Digging out of a sticky situation is never easy though. It requires effort.
 
The best thing about this tip though is that increasing your monthly income will improve your overall financial situation for when you do dig yourself out.
 
You can make more money by seeking a raise, promotion, a second job, or starting your own business. There are lots of side job opportunities out there, like driving for Uber or Lyft. You could also take up freelance work, an evening delivery job, or find some contracted work you can do on the weekends.

#3: Spend Less Money

Figure out how to spend less in your day-to-day life.
 
Reduce your food expenses by cooking at home instead of eating out. Reduce your grocery bills by planning meals around coupons. Cut down on your vehicle maintenance payments with carpooling, public transportation, or selling your second car if you can manage to live without it. Sharing gas, using public vehicles, or getting rid of an extra car each come with significant financial gains to your budget. You spend more every month on driving yourself to work every day than you’d expect.
 

“The safest way to double your money is to fold it over and put it in your pocket.”

—Kin Hubbard

Almost every budget has categories that can be diminished to save more money and spend more on debt payments. Find those parts of your budget where you can save extra money, replace expensive parts of your budget for cheaper alternatives, or save all the money from that part of the budget by cutting something out completely. You’ll save a ton of money that you could put toward debt payments this way.

#4: Don’t Get Into More Debt

Avoid replacing your debt with more debt.
 
Taking out a second loan to pay off your first one just puts you in a deeper financial hole. More debt is not a long term solution for the debts you have, though this solution could be tempting to some. Deny the temptation and use other solutions instead, like selling something, or finding a weekend job.
 
Working 2 jobs might seem like an awful idea, but it would only be for a little while until you’re able to get your debts under control.

#5: Refinance Your Loans

When possible, you can try refinancing your loan.
 
After a long period of good behavior, you can approach your lender for some leniency. They can take a look at your loan again to reevaluate the situation. If you meet their requirements, you can get your interest rate reduced.
 
In terms of a mortgage, that could mean you’ll owe the bank several thousand dollars less. Every scoop your lender can dig off for you is a win. So seek a refinance when it’s possible.

#6: Build Your Savings Account

Even though you’re paying down debts, it’s still important to put a little away every month into a savings account.
 
Even $20 a month will go a long way in a year. Every little bit helps. Put away money as a buffer for upcoming payments and as a safeguard for you or your family.
 
For instance, if you lose your job, a savings account will allow you to continue making on-time payments for your debts while you work on getting your next job.
 
When you have lots of debt payments to make each month, it can also be difficult for your budget to have room for unexpected or emergency expenses. A savings account will provide the funds you need when monetary needs outside your budget come up.

#7: Make a Budget

If you have a budget already, reevaluate it.
 
Once you have a budget, don’t spend a penny more than what you have planned and outlined in your budget. Your budget should be a law that you live by.
 
If you do this, you can keep your spending to a predictable amount, allowing you to save more money to pay off your bills.

#8: Consolidate Multiple Debts

If you have multiple debts or loans, you can possibly consolidate them into one loan.
 
By putting all your debts into one loan, you can lower your interest rate and pay less extra money on the loan in the long run. Having just one single payment each month can also help simplify your budget to include fewer variables.

 

As you apply these seven principles, you’ll be able to chip away a bit more at your mountain of debt. Become proactive in your debt management. The sooner you do, the sooner you can declare yourself financially independent. Once you reach that point, you can finally reap the benefits of a healthy paycheck.


Choosing the Right Credit Card

In this day and age, credit cards can seem to be a bit of a necessary evil. Everyone seems to hear horror stories of people getting stuck in unreal amounts of credit card debt and not being able to find their way out. However, to be able to make big purchases like a car or a home you need to have built up credit and the easiest way to do that is responsibly using and paying off credit cards. In this post we’ll cover several tips that you can follow to choose which credit card is best for you.

As you begin your search for a new credit card it’s important to keep in mind that just like payday loans or cash advances, credit cards can be a great tool if they’re used correctly but unfortunately, many people use credit cards to buy things that they do not currently have the money for. When that happens, they are using the money that a financial institution lends them to buy something that they want right now.

While this idea makes sense in theory, in practice it is often detrimental. People think that they can buy whatever they want because they do not have to pay for it at the time of purchase.

They do not think realistically about time and so they predict that they will just pay off their debt “later.” Later always rolls around eventually, and many times people do not have the money to pay off their debts.

This is when things get hairy. If credit card payments are not paid by the time they are supposed to, fees are incurred.

Fees can stack up, which just creates more fees. Now it is clear how people who use credit cards can get themselves into loads of financial trouble.

It is important that people who are about to get a credit card realize the risks and hazards of getting a credit card. Many people decide not to get a credit card because they do not trust themselves with one.
They can predict that they will not use it wisely, and so they do not obtain one. Other people, however, trust that they will be able to handle and manage a credit and so they go ahead and get one.

People sometimes do not know which credit card to get. Here are a few tips on how you can get the right credit card for your needs.

Find the Best Card For Your Current Credit Score

One of the most important things you’ll need to know before you get a credit card is what state your credit score is in. Your credit score basically reflects how good you are at paying your credit card bills on time.
If you are bad at paying your credit card bills on time, your credit score is going to be lower. This tells the credit card companies and other financial institutions that you have a history of not being great at paying off your bills.

Credit card companies and financial institutions want to know this information so they can know if you are a safe customer to lend to. If you are not going to pay your payments on time, the credit card company is more likely to decline your business because they could lose money by accepting you onto their plan.

If your credit score is lower, you will have to accept that this is very likely to happen when you try to apply for a credit card. This is the reason that credit card companies and financial institutions require you to apply for a credit card.

With your application, they will be able to check your credit score and see if you are customer that they want to have. A good credit score is usually a score of 720 or above.

If you have good credit, the sky is the limit. You will most likely be accepted for any type of credit card you want.

Find a Card With Rewards That Best Suit You

There are many different types of credit cards. You can apply for credit cards that are very specific to your hobbies and passions.

For example, you can get credit cards for places like airlines, hotels, and gas stations. Many of these rewards cards will give you cash back.

If you have mediocre credit, you will most likely just have to apply for a regular credit card. This type of credit card will probably not have an annual fee.

A Secured Card Might Be Your Best Option

And if you have bad credit, you will probably have to get a secured credit card. Secured credit cards have a bad reputation, but they are not always bad.

The reason why they are called secured is because those who plan to use them must give the company a deposit right away that serves as collateral in case they go against the credit limit. The credit card company does this so they can be protected in case the person with bad credit is not wise with their card.

Always Read Through The Terms and Conditions

Another key thing to remember when trying to decide on a card is the terms and conditions of the credit card agreement. Reading the fine print of an application is advised.

It will probably not be a very exciting read, but it is crucial that you read it so you know what you are getting yourself into. Do your best to understand credit cards before you apply for one.

How to Reduce Your Credit Card Debt

When you know that you need to reduce your credit card debt, you should understand the importance of learning about your debt. This may sound strange, but you want to be familiar with the fine print and with the details of your credit card debt. Start by understanding the interest rate associated with each of your credit cards. When you know how much interest you are paying on each of your credit cards you will want to start by paying off your card with the highest interest rate. In addition to paying off your credit cards with the highest interest rates, it’s also important to get any short term loans or cash advances paid off as soon as possible.

Pay Off Your Highest Interest Loans First

While you are paying off your highest interest rate, you should be well aware of the necessity of paying much more than the minimum payment. The minimum payment will be a very small fraction of the actual debt that you owe. Allocate as much of your resources towards your highest interest rate as you can. To do this, you may want to find other areas of your financial life that you can cut. Finding ways to save money in other areas of your life will ensure that you are out of debt as quickly as possible.

As you are working on making those payments, you should understand the importance of being on time. Being in a lot of debt can have a negative effect on your credit score and making late payments can make your credit score even worse. You will want to make sure that you make your payments on time and that you are doing all that you can to pay off your high interest rates quickly.

After you have paid off the card with the highest interest rate, you will then want to move to the card with the next highest interest rate. Continue paying off your cards so you can be sure that you are minimizing your interest rates as quickly as possible.

Once You’ve Paid Off Your Cards, Adjust Your Spending

Once you have paid off your credit cards, you will then want to make sure that you can adjust your spending habits to keep yourself in a great financial position. There are many people that struggle keeping their spending habits under control when they see the extra money in their bank accounts.

After you have paid off your debt, you will want to create a saving and spending plan for yourself. The saving and spending plan that you create will ensure that you are going to save the money that can help you and also be able to provide for yourself. Working with a financial advisor is a great way to ensure that you are going to have a reasonable budget for yourself. The budget that you create should allow you the opportunity to save money and spend it.

Reward Yourself

Splurging on yourself and spending money on things that you want can be a great way to help you achieve your goals. Working to achieve your financial goals may take time. Long term goals can be frustrating in the beginning, but will be well worth it in the long run.

Mastering your finances may take time but it is important that you are patient with yourself. There are a lot of people that give up on mastering their finances simply because it is too overwhelming in the beginning. While you are working on achieving your goals, you should ensure that your goals are achievable.

Make the goals something that you can track to ensure that you are going to know when you are making progress. As you continue to track your progress you may want to set up some mini rewards for yourself throughout the time that you are working on accomplishing your main goal. These rewards can help you stay motivated toward your main goal.

Financial freedom is something that is well worth the time and effort that you are putting into your goals. When you are not in debt, you will have all of the money that you are earning to be able to save and spend accordingly. Take the time that you need to set up a plan for yourself or with a professional to set up your plan. Getting yourself out of debt and ensuring that you know how you are going to keep yourself out of debt will be your best option.

Seek out Help If Necessary

Finally, don’t be afraid to reach out for help when it comes to your finances. When your finances start to feel overwhelming, you should do all that you can to get yourself out of debt. Work with a professional, work with a trusted advisor or even with a family member to ensure that you are out of debt as soon as possible.

What is the Best Way to Get Out of Debt?

As you can tell from our previous posts about budgeting and getting out of debt as well as our responsible lending statement we here at Check City are huge proponents of making wise decisions with your personal finances. Whether it’s how you use a cash advance or how you control your credit card spending it’s always important to not take on any debt that you can’t afford to pay back.

When you are in a lot of debt, it can be hard to understand how it is going to be feasible to get back to financial freedom. There are a lot of people that struggle understanding how they are going to slowly but surely climb out of their debt. As you are working on getting out of debt, you will want to create a plan. The plan that you create can ensure that you will be on your way to financial freedom as quickly as possible.

As you are starting to pay off your debt you will want to do all that you can to pay more than the minimum payment. More than likely the minimum payment on your card is going to be about two to three percent of your outstanding balance. When you are only paying your minimum payment, you will find that you end up paying a lot more in interest. Each month your interest will accrue and you will end up paying more the longer you are in debt.

It Starts With Cutting Costs

To ensure that you are able to pay more than your minimum payment you may need to cut costs in other areas of your life. As you are cutting costs in other areas of your life you will end up saving money in the long run. If you have more than one credit card that you need to pay off, it is important that you know which card has the highest interest rate.

Target Your Highest Interest Loans First

Focus as many resources as you can toward your highest interest rate. As soon as you pay off that card, you will then want to focus all of your energy on the card that has the next highest interest rate. While you are focusing the majority of your resources on one card, you will also need to be paying the minimum payments on the rest of your cards.

As you are working on paying out your credit cards, you may want to call your creditor. When you call your creditor, you may be able to renegotiate the terms of your debt. When you are working on the terms of your debt with your creditor, you may be able to lower your interest rate. There are a lot of creditors that will lower your interest rate if you simply ask. Give your creditor a call and talk about what you can do to pay your debt off quickly.

Plan Ahead to Avoid Future Debt

When you are deciding what the best way to get out of debt is, you should also understand how to keep yourself out of debt. When you have paid off all of your credit cards, you should realize how important it is to keep yourself out of debt. As you are keeping yourself out of debt, you will need to change your spending habits considerably.

Creating a budget for yourself is a great way to ensure that you are going to spend less than you make. While you are working out a budget for yourself you have to understand how you are going to keep your budget reasonable. Although you want to save money, you have to be able to provide for yourself adequately. You want to be sure that you have enough money to provide for your living costs.

Finally, you should understand that you may need to file bankruptcy. Filing bankruptcy is often not the most sought after option, but it is important to understand that there are instances when filing bankruptcy makes the most sense. Talking with a financial advisor to ensure that you are able to make this decision wisely will probably be your best option.

If you should decide to file bankruptcy, you will want to work with a trusted financial advisor. By doing this, you can navigate the bankruptcy waters without any problem. It can be scary to file bankruptcy, but by having someone to help you through the process you can be sure that your questions are answered and that it isn’t too scary.

Getting yourself out of debt can be frustrating and difficult, but it is important that you make this a priority in your financial life. Paying of your debt quickly is your best financial option and it is important that you get started paying off your debt quickly. Make a plan for yourself today to ensure that you are able to start paying off your debt as quickly and as efficiently as you possibly can.

Common Credit Card Mistakes to Avoid

It seems almost everyone has a credit card these days, whether it’s a prepaid credit card or the highly sought after American Express Centurion card the benefits to having a credit card of some sort are numerous. Whether it’s an easier way to pay the bills, track your expenses or pay for something you might not have the money for right now, credit cards can help out in a number of ways, as long as you are disciplined about using them correctly.

How Credit Cards Work

Credit cards can sometimes be confusing, so here is a quick explanation of how they work. You buy items with your credit card, but you don’t actually pay for the items with the card right there.
Later, you get the bill in the mail for the items you bought with the credit card. You have to pay off this bill within a certain amount of time, or you will get charged a late payment.

Late payments are the most common downfall of credit card users. People get in over their heads and cannot make the payments on their cards, getting further and further in debt.

Consequences from not making your payments on time can also include late fees, higher interest rates, and even a lower credit score. It is important that you read the fine print on the card you are using to make sure you understand what happens when you miss a payment.

Is a Credit Card Right For You?

Some people do not realize the damage that late payments can do to your credit score. If your late payment is more than 30 days overdue, this is when the payment begins to do the most serious damage to your credit score.
The lesson to be learned from this warning is that you should pay your bills on time every single time you receive a bill. If you cannot do this, then perhaps you should not be using a credit card or you should look into using a prepaid credit or prepaid debit card.

Credit card companies are required to send out bills at least 21 days before the payment is due. This protects the consumer so that they have sufficient time to pay the bill and get it returned to their lender.
Many companies offer the chance for people to pay their credit card bills online, which can be very efficient for some people. You should look into whether or not your credit card company offers the option to pay online, because many people have chosen to pay this way.

Card Hopping Can Be Dangerous

Another common mistake that people with credit cards make is trying to switch between different plans. This can sometimes be a good idea, and sometimes not.

Most people try to transfer their debt from a high-interest-rate card to a card with a low introductory rate. This means that, on the new card, you won’t have to pay as much back on your debt.

This seems all well and good, but what happens is that people switch over to the new card, and then they are not able to pay back their debt within the time period of the introductory phase. They usually end up paying back more in total than their original debt.

Switching to a different card with a different rate is only a good idea if you think you can pay back your debt within the short introductory period that only lasts for a certain period of time. If you want to see if you should switch over to a different card, you should look into exactly how long the introductory period lasts.
Don’t fall for the gimmicky sales pitch of a salesperson. They are just trying to get you to switch to a card that will help them make more money.

Make sure that you make decisions about your finances based on your needs, not a salesperson’s needs. As mentioned earlier, salespeople more often than not do not have your personal interests in mind.

When you are trying to decide whether you should switch cards, make sure you know if there are any transfer fees that will apply when you do end up switching cards. There are very few cards that offer a completely free transfer fee.

Watch Out For Minimum Payments

Another pitfall comes when people decide they are only going to pay the minimum payments required on their credit card bill. While this may make sense, and you will have extra money left over to buy clothes or shoes, this will probably not be the best choice for you in the long run.

If you only pay the minimum amount that you have to every month, you will rack up quite a bit of money in interest that you hadn’t planned on paying before. Pay more each month and you will pay more overall.

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