All posts by CouponMom

Pay Stationed: How to properly pay off credit card debt

The thought of paying off credit card debt seems daunting and runs parallel with the total amount of debt you have, and the general thought is to simply pay as much as you can on what you owe, when you can.

But that method is a bit haphazard in that you could potentially be allocating your funds better and taking other factors in mind when paying off debt. While some financial and money experts agree on one way to tackle credit card debt, others differ wholeheartedly and implement a plan of attack that is far removed from their equally savvy counterparts.

So, is there really a proper or right way to pay off debt?

For starters, when considering debt, you have to take into account your budget and how much you are putting toward unsecured credit card debt specifically by factoring in your minimum monthly payments.

The best method to pay off debt is to focus on your smallest debt and begin paying as much as you can toward it to pay it down and ultimately off as quickly as possible, while still maintaining the minimum payments on all your other debt. This method works two fold: not only are you eliminating debt by focusing from small to large credit card balances but you’re also seeing much needed progress in the face of what can be described as difficult, as far as paying off debt or dealing with credit card payments.

The trick is once you pay off that first (and smallest balance) then you take that amount of money you’ve been paying and put it toward the next highest balance you have, plus the minimum payment (because you’ve already been paying that too, and have it budgeted).

For example, if you pay $300 toward your smallest account and the next highest balance you have carries a minimum payment of $150, that means once the first account is done, you’ll have budgeted $450 toward that next credit card debt payment, so that $150 minimum payment goes up to $450 and then you’ll begin to see how this domino affect and increased payments lead to higher balances falling by the wayside as well.

Some would argue that interest rates should play into this equation, but they don’t. That isn’t to suggest that if you have a 30 percent rate on one card and nine on the other, that you can’t rethink the process, but what is important with the smallest to largest theory is you actually see a dent being made what was originally thought to be an insurmountable amount of debt.

You can’t underestimate just how great that feels in the long run of getting debt free for good.

Goal Oriented:  Why saving money has to have reasonable tone

What if someone told you that you had to save $10,000 in six months?

For the majority of people that goal is unreasonable at best and nearly impossible at worst. And a lot of that sort of goal oriented chatter, while seemingly smart and important on the surface, actually can prove to dissuade the masses from being able to save.

Now, why would setting a goal like the aforementioned one be a bad thing?

The truth is, when it comes to money, is we typically and routinely set ourselves up to fail because we set unrealistic expectations and goals and thus begin to slowly fade when that $10,000 goal, for example, looks more like $500 in that same time period.

Think of it in terms of weight loss.

If you have to lose 50 pounds and you put a three month time frame on it, but only lose a couple of pounds instead, what may happen? You’ll probably throw in the towel (literally or figuratively) and assume that because you didn’t hit 50 pounds in 90 days that you feel far too defeated to continue.

At least not at the moment or right away.

The tiered approach to saving money often is the best way to get from point A to point B, while setting goals that are small and then building from there. If you want to save a $1,000 over the course of 12 months, then so be it. But the most advisable way to look at saving money on a smaller scale that turns into smart money habits would be more of a short term time frame with a money number in mind.

So take that $1,000 and make it four or five months, rather than stretching it out. The longer goal time frame could lead to procrastination on some level. Once you hit that target, then reset it and do it again or simply make a loftier goal. Any setback is just an opportunity to try again, like the cliched but accurate falling off the bike and getting back up and trying to ride one more time, over and over if necessary.

None of this is going to happen without a budget and also paying attention to your spending and adjusting it accordingly in order to make sure you even have an opportunity to save. The bottom line is if your expenses or spending outweigh your income, then nothing is going to change, especially setting, achieving and maintaining any goal.

Questionable Behavior: Why do we continually misuse credit cards?

Saving money isn’t just about calculating expenses versus income but rather can focus on any number of financial decisions you’ve made and how you manage money overall beyond just simple subtraction.

What about how you use credit cards, specifically misuse them?

Everyone has succumbed to using a credit card for something at one time or another, but the manner in which you use it could be costing you thousands. If you have $5,000 in debt and pay upward of 20 percent interest and only make the minimum payment, you might end up paying back in the neighborhood of four or five times as much as the original balance shows, thanks to interest.

So how did you get into that position to begin with?

Chances are you used a credit card for all the wrong reasons, and decided to carry a balance even after a low introductory rate seduced you into securing a card or perhaps buying something that you can’t afford but convinced yourself that you needed anyway.

Being smart with credit cards is, however, hard and easier said than done. Credit cards have always been about convenience and a simple, blind way to fulfill wants.

If you have buy gifts, and you don’t have the money, the credit card solution fits the bill. If you have a major emergency at home, and don’t have enough money to help the cause, you can turn toward credit cards at a moment’s notice. Or what about that vacation you have booked or honeymoon, and you’re just a little short on cash? How about using a credit card?

Sadly, only one of those situations would warrant even a thought about a credit card and that’s the emergency scenario. Otherwise, you should think twice about using credit and thus paying interest.

And that really is what destroys our financial prowess is our inability to not use credit cards for the wrong, mindless reasons. A credit card is not cash on hand, and should not be used unless it is a last resort. And if you have an emergency and can’t pay for it, don’t rely on credit cards. That should be a huge wake up call to rework your budget and start cutting expenses, rather than living at or beyond your means and using credit cards to help fill in those very expensive gaps.

This isn’t to say credit cards don’t have their perks, such as points, travel miles and other discounts when you use them. You actually can save thousands, for example, when you buy clothing at a department store at use your credit card over the course of a calendar year. But if you’re not prepared to get the discount and pay it off the next month, you’re spinning your wheels with debt and won’t be able to get out of park and help your financial standing any time soon.

Fund Times: How to save smart without waste

The two words most people fear in terms of money is “emergency fund,” perhaps even more so than “savings account,” since the former is more fearful given that not many have one.

An emergency fund is quite simply money set aside in the event something unexpected happens. Given that the average saving account for about half the population is around $1,000 or less, the idea of an emergency fund is quite laughable.

But why don’t we have money saved? Why is our emergency fund more prepared for a few months worth of grocery bills rather than a new roof, transmission for the car or braces for the kids?

The fact remains there are two main reasons we can’t save: we don’t spend correctly, and we live far beyond our means. In both instances, you need a budget, you have to track your spending, and by doing so you’ll flush out the bad spending and keep the good (i.e. necessities).

Living beyond your means is more about borrowing money and trying to have what you want or keeping up with certain trends even though your income won’t support it. Having a budget keeps you accountable, and if you’re overspending and you write it all out on a piece of paper and can actually see you’re in the negative that could sharply change your spending habits.

Spending correctly isn’t just about paying your bills and paying them on time, but also our innate ability as a society to waste money on anything from lottery tickets to cigarettes. While some might not consider those purchases a waste of money, consider what not buying those could mean in the long run. if you spend just $3 per day on the lottery over the course of 10 years, you’ll have spent $10,000 and have nothing to show for it. And if the average lottery player spends $5 per day, that number is going to be nearly double.

And wasting money isn’t just about lottery tickets or addictive habits, but also can be something as simple as take out food on a weekly basis consistently. If you spend $10 per day on lunch, and another $10 on coffee and drinks that are just part of your day to day routine, you’re spending about $7,000 per year on one meal and a quenching your thirst daily.

What about your need to refill more than just a cup at lunchtime?

Your focus should be on tracking spending, increasing income (if possible) and budgeting what you have not what you don’t. Being wasteful is just an added negative to this entire process, one that can easily be fixed but by your hand only.

Sign Language: How to admit to signs you have money woes

As much as you stare at your bank account, your expenses and income, and realize that money is a problem, you simply cannot admit it.

For whatever reason, the majority of people who struggle with money have a hard time coming to grips with the fact that they aren’t very good at managing it, saving it or anything else that would be considered positive.

The irony of that is that if you’re having money woes and you can admit it and tackle the problem head on, you’re very much likely to fix the issue and have better money managing habits moving forward.

Getting to that admission phase, however, can be a difficult path for most.

For most of us, you can see the signs quite clearly that money is an issue, most notably if you’re missing payments left and right or simply not paying debt or loans back.

Perhaps even more discouraging are those individuals who believe they’re planning perfectly how they spend their money and yet check their bank accounts or statements and can’t understand where exactly there money goes. Chances are in that instance, you have a leaky budget, holes throughout meaning that you simply have forgotten about expenses as part of your budgeting process.

You’d be surprised how overlooking a propensity to each lunch out at a restaurant every day with throw off how much you believe you’ll have left over at the end of each month when it comes to budgeting and knowing what you have to not only spend but more importantly save.

Budgeting is supposed to be an all encompassing task that should include all expenses when possible that you’re making on a regular basis, whether it’s a bottle of water every day out of your pocket or pack of cigarettes. Money adds up and no incidental expenses should be overlooked.

Also what can’t be overlooked is arguably the worst money habit you can have in your spending arsenal and that is the penchant to spend money on what you don’t need and keep bills that need to be paid on the back burner. If you’re trying to save money for holiday gifts, for example, and you want to pay your mortgage late as a result, you’re exhibiting a money habit that has no place in your financial playbook.

Admitting that you’re not good with money is a difficult comment, but being able to assess your weakness and know how to pinpoint where you’re losing money and ultimately fix it can send you on a path to financial freedom rather than repeating the same money saving mistakes over and over again.


Bumpy Rogue: How to get off the path of wasting money

No one is going to argue that saving money isn’t hard. But does it really have to be perceived as next to impossible?

The fact remains is that debt is a real issue, one that isn’t going away any time soon, and you can look at the cruel, crude numbers of the average amount of debt (unsecured) at around $25,000 and also pay close attention to the average amount of money a person keeps in their savings account, around a paltry $1,000.

That is a huge disconnect and distance between those two figures, and with that, you can see why people assume that saving money is a dream, and nothing more.

But the fact remains is that you can break away from that mentality if you avoid some simple ways that you’re wasting money. Even more, you might not even realize that you’re doing it.

The most obvious is two fold: you don’t have a budget and you’re living beyond your means. Those two go hand in hand with one another, good or bad. If you’re having trouble saving money, chances are both of these things are working against you. And, for example, if you have a budget and it’s iron clad (more on that in a minute), you still can overspend or live well beyond your means, which essentially renders your budget useless.

As for the budgeting process, you can’t just focus on the obvious. You have to take into consideration little elements of spending, such as a gym membership or a simple bottle of water every day for 365 days of the year. The small, so called inconsequential things add up quickly and can’t be overlooked.

Another huge missteps when it comes to why you can’t save money is a propensity to ignore your income and only add expenses as you go through life. Successful people who pay attention to money know that they’ll always continue to look for ways to earn more, even if you’re going to be a part time driver or work from home as a typist. They’ll always try to sell things they aren’t using or look for ways to save any way they can, whether that is their cable television bill or cell phone plan. Those individuals don’t add expenses; they find a way to minimize them and work that total number spent down.

Being successful at saving money does take work, but you can argue just how hard it is. The word “hard” should be replaced with attention to detail as the driving force behind financial prosperity.

Bad Advice: Financial input is only as good as source

Who hasn’t tried to dish out financial advice to you as if they’re Suze Orman? How about friends or family members that tell you when it comes to money, they’ve “been there and done that” and have all the answers?
Then, you have that nosey co worker or overbearing boss that is all too eager to give you as much information about saving money as you can handle, and perhaps they’ll even throw in a little bit of so called knowledge about retiring as well.

What’s a person to do? Who should we be listening to?

For starters, you should be all too willing to weed out the people who are giving you advice about saving money who are worse off than you. If your close friend is barely making it from one paycheck to the next, but he’s going to tell you how to spend money or give you an impromptu seminar on budgeting while you’re in line at the grocery store, you should think more than just twice about taking that bait.

The real informed individuals are those who have been successful spending, saving and budgeting. The best source, however, has to be someone who manages money and finances for a chosen professional, such as a financial planner or retirement specialist. Even searching out someone at your bank would easily trump listening to someone who you’re not quite sure has a clue about money or financial responsibility.

But be careful just which financial advisor you choose, since they’re not all as prominent or experienced as you might assume. You want to be certain to not only research them once you’ve found a particular person but also make sure their training and expertise was formal.

Just because someone says they’re certified, doesn’t make that a true statement. When it comes to your money, a little research goes a long way.

One missteps we often make when it come sot searching out a professional is the propensity to believe in referrals, but in actuality you want to make sure that person fits your financial needs, wants and goals and also comes highly recommended by someone other than who you know.

As much as the advice you receive from others is driven by trying to be helpful, you still have to remember one key piece: it’s still your money.

And what you do with it should be your decision and not overly influenced by those who might not be quite as much of a resource as initial thought.

Limited Engagement: How to save money on small budget

 What’s the first thing that comes to mind when mention “budgeting?”

For most, that word is negative. It reminds the masses that budgeting is directly related to not having what you want, scraping along to just “get by” because you’ve limited yourself to what you can spend, based on a variety of factors led by income and expenses.

The income factor is quite paramount, but what is someone supposed to do when they’re trying to save money when they don’t make a whole lot, and that aforementioned budget doesn’t stretch very far.

In that situation, budgeting does take on quite the negative connotation, but it doesn’t have to be that way. The first and most natural reaction is to cut spending and expenses, being that feeling of depriving yourself is going to stand out more so than anything else. Cutting expenses is the easiest path realistically but it comes at the expense of peace of mind, furthering the thought that you’re only working to pay bills, and you’ll never have the funds to actually have fun.

Granted, if saving money is a priority and you don’t have a huge income, having fun might need to go on the back burner, but there may be other ways save money first.

You might want to take the time and start price matching or shopping around for better rates on anything from electricity to car insurance. That also includes online and print coupons, something maybe you didn’t take the time to do previously because you felt it wouldn’t make much difference. The fact remains is that price matching works, and coupons are all the rage if you actually sit down and dedicate yourself to getting the process down pat.

And if you’re not always trying to find a cheaper car insurance quote or a homeowners policy, then you’re accepting the potential that the status quo is quite expensive versus making the most of businesses that are fighting for yours.

If you’re someone who has a little bit of money saved, you might want to look at your credit and debt specifically. Sometimes if you pay off a credit card completely, you’ll save hundreds per year on interest and yet still have a little money left in your savings account. If you don’t have an emergency fund, that should take precedence over spending and your budgeting prowess should reflect that in terms of making sure you pay yourself, and then pay your bills. The paying yourself part is just another way to save money, but makes some feel as though they’re actually a priority in the process.

No matter how much you make, there’s always room to live within your means and save money, with the focus being on the former: spending what you have based on income, and nothing more.

Hail Monitoring: How your credit score can instantly be improved

If you’re not familiar with your credit score, you should be.

If you’re not familiar with your credit score, that’s part of a bigger problem that centers on you not paying close enough attention to your money and how it is being managed.

Your credit score lets lenders know how much of a risk versus reward proposition you are, if you’re going to pay them back based on your history and if loaning you money is ultimately a good idea.

But as much as you believe your credit score is arbitrary and really doesn’t matter as much as say your income or lack of debt, chances are you’re underestimating just how much more paramount those three digits are when it comes to how you’re perceived and just how easily you’ll be able to finance things like a car or home.

What most don’t realize is that raising or “fixing” your credit score isn’t as difficult as you’d think and can be achieved with very little headache on your part, other than just focusing more on your finances overall.

For starters, you should put some sort of plan or schedule in place so that you don’t miss any payments. Missed payments hurt your score tremendously, and yet are the easiest things to fix. Even if you just pay the minimum, that’s better than not paying at all, even if with interest that minimum payment is going to actually be more of a break even as far as the overall balance is concerned.

Planning, too, plays into your success as far as raising that score. Planning can be defined in both paying on time but also getting a better idea of what exactly your debt looks like and focusing on the highest interest rates or using the opposite mentality: start with the small debt first and pay it off so that you can see real progress. No matter which end of the debt spectrum you start from, make sure you pay down credit cards or debt that is near your debt ceiling, meaning if you have a credit card, for example, with a certain maximum amount you can spend and your balance is flirting with that number, you need to focus on that card first.

What you never want to do is look at at a sub 600 credit score and assume all hope is lost. Instead, you should level set and understand wholeheartedly that getting your score out of the doldrums isn’t quite as daunting as originally thought.


Life Aligned: Budgeting starts with asking for help

Not too many people like to admit they’re wrong or don’t know what they’re doing, no matter what the project or endeavor is. Money certainly is no different.

The hardest part for most as far as saving money goes is the ability to budget, understand their credit and score, and to know what kind of debt they have and come up with a plan to get rid of it.

The fact remains is that the average individual has about $20,000 in credit card debt, another $50,000 in school loans, along with the average home purchase at around $170,000 and cars sitting at around $30,000.

If that sounds like a lot to manage, you’re right. The house and car aren’t as much of a concern since that is more about business as usual when it comes to debt, rather than having unsecured money that has nothing to show for it (credit cards).

The education number is high but also understood due to its nature and the fact that most student loans are protected by a very low interest rate.

The focus of this is more about asking for help when it comes to credit card debt and your credit score, specifically the amount of debt you’re carrying and your debt to income ratio. Realistically, the debt to income ratio should be about 60 to 40 in favor of the income, obviously. Some suggest a 70 to 30 split, which is wonderful but hard to achieve.

Asking for help doesn’t always have to a professional endeavor, either. You don’t necessarily have to seek out the help of a financial planner or credit advocate in the form of a lawyer or even a credit consolidation company.

Those avenues certainly are perfectly fine, but they might not be that necessary when it comes to your situation. If it is, so be it. Those individuals or agencies might be more helpful, but if you know what you should be doing and have a decent to above average salary, you might want to consider a spouse, sibling or parent to make you accountable for your plan and how you spend and budget.

Some have gone as far as saying that they give those individuals or ones of that nature money to save for them or ask them to keep an eye on them, for example, when they’re out to eat or shopping at the mall.

You shouldn’t feel defeated for asking for help but rather a sense of relief that you’re on the right path to crushing your debt, raising your credit score and finding that financial stability that has eluded you.