Do You Need Security Apps to Bank on Your Phone?

May 13, 2016  |  No Comments  |  by Stephanie  |  Make More of Your Money

Using your phone to access bank accounts, make deposits and pay is convenient, but is it really secure? According to an analysis by IO Active Labs, the answer is…not really.  Of the apps it audited, 40% did not validate SSL certificate authenticity, and 70% did not use multi-factor validation. That makes life pretty easy for identity thieves; they only need one piece of  information, like a password, to crack into your accounts.

Assuming that doesn’t scare you off from using your mobile device to access your financial information, it does underscore the need to be personally proactive about mobile security. Here are a few hacks and suggested security apps to protect your financial data when you bank on your smartphone or tablet.

Conduct your own mobile security audit.  The threat of identity theft is kind of like death: The odds are high that it will happen to you when you least expect it, yet most of us ignore that realty until we’re staring down the barrel of the proverbial gun.

The best way to prepare yourself from being a victim of identity theft or security breach? Simulate what you will face before you’re under the threat to address your vulnerabilities. Role play exactly what would happen if you lost your mobile device:

  • Is the password security feature activated on your device? How many minutes pass before it activates when the phone isn’t in use?
  • Do you have the information you need to suspend bank and credit card accounts if when you’re near and not near a computer?
  • Do you know the phone numbers to each financial institution and credit card providers 24/7 customer service line?
  • Do you know the answers to security questions you’ll need to verify your identity with credit card issuers and financial institutions?
  • Do you know how to quickly reset account numbers and passwords from a different device, if your phone or tablet is lost or stolen?
    • If not, there are security apps that simplify the process: Checkout Lookout Security & Antivirus for Android, or 1Password for iOS.
  • What are the odds someone could crack your passwords? (Amazingly, 123456 and “password” are still commonly used).
  • If a person was able to log into your phone or tablet, what would they find in it that could be used to infiltrate your other personal information?

Don’t log in to your accounts on open Wi-Fi. By definition, WiFi hot spots are  free to the public. You cannot control who is on the network or predict whether that person has the tech skills to start a cybersecurity issue. Resist the urge to log into your bank and credit card accounts on your mobile device until you are on a private, password-protected connection.  Though many mobile banking applications use encryption technology to protect your data,it’s better to wait a few minutes to find a secure connection than take the risk.

Use mobile apps instead of browsers. Despite the security concerns associated with lots of supposedly secure apps mentioned above, you’re still better off using your financial institution’s secure mobile banking app than accessing your account info though a mobile browser. Just make sure to download it directly from your financial institution instead of the app store, to confirm you’re not duped into downloading a fake version of it.


4 Simple Financial Literacy Lessons for Kids

April 7, 2016  |  No Comments  |  by Stephanie  |  Make More of Your Money

financial literacy for kids

Most parents want their kids to have more opportunities than they did. But for all the hard work and sacrifices parents make to give their kids every possible advantage, most of us fall short when it comes to teaching kids basic financial literacy.

Regardless of your own level of knowledge or interest in money, you can instill financial literacy in your kids, simply through your words and actions. Here are four ways you can make your kids more money savvy, starting today.

Talk about money openly. Money remains one of the last taboo topics. Look at politicians. They’ll talk openly about race, religion, abortion and immigration, but get prickly when the topic of their financial lives arises. But like any issue involving shame, swiping the topic of money under the rug creates bigger long term effects. In fact, a study by T.Rowe Price revealed that 46% of kids whose parents talked about money openly felt they were savvy in the area of personal finance–even when some of those conversations were parents arguing over money. Just 14% of kids whose parents didn’t talk about money in front of them said they felt money savvy.

Give them an allowance. Kids who have the opportunity to earn money develop an inner work ethic, and sense of confidence regarding their value. Nearly 40% of kids in the T.Rowe Price survey who got an allowance said they were smart about money.

Let them make bad choices.  The temporary nature of money becomes apparent when you’re responsible for paying for your own rent, food and bills.  But if you don’t learn how to make financial choices based on the money you have, earn and owe, the stakes are high and can have lasting consequences. Let your kids choose how they’ll spend their money–even if you don’t agree. When kids are empowered to make decisions about how they will earn, spend and save, they learn lifelong lessons about the consequences of choice when it comes to money, in a low-risk environment.

Explain price tags, and relative value. Kids who are as young as five years old can grasp the concept of comparison. Just as three apples are more than two, they can reasonably understand that an item that costs $5 requires more money than one that costs $4. When you take them shopping, explain price differences and why they matter, including the fact that sometimes packages make you think you are buying a “better” item, when it’s actually the same. Invite kids to participate decision-making processes of what you buy. If you disagree with their choices, explain why. These money lessons may add a few minutes to your grocery trip–but can make kids better critical thinkers about money for their whole lives.

As bigger ticket items like bikes, cars and college applications become part of your child’s financial reality, discuss price tags, value and choice with the same level of transparency. If your teen wants to buy a car, for example, discuss a reasonable price tag and how you expect him or her to earn the money to pay for part or all of it, including how to budget for the costs of gas, repairs, and insurance.

When kids are ready to complete college applications, compare college prices along with their choice of major or career. While money shouldn’t determine education or professional decisions entirely, viewing them the lens of financial reality can help kids understand the impact of their choices, and sacrifices those may require. To manage student loans, for example, many experts recommend not borrowing more than one can reasonably expect to earn the first year in the professional world. With that in mind, you and your child can discuss if it makes financial sense to take some general classes at a local community college, to consider various housing options, or to secure a part-time job while they’re enrolled in school.



Wills, Probate and Estate Planning: Protect Your Wealth

February 9, 2016  |  No Comments  |  by Stephanie  |  Make More of Your Money


You work hard for your money in life. Why let it get caught in probate when you die? Here are common mistakes even the financially savvy make when it comes to estate planning.

Thinking estate planning is only for the wealthy.  The term “estate” tends to have a connotation that conjures images of old money and family homes in Nantucket. But in legal terms, your “estate” is anything you own when you die. That can be personal property, like furniture, a car, or jewelry. It can be intangible property, like your retirement and bank accounts. It can be your home, or any property you have ownership interest in.

If  you don’t take steps to legally finalize your estate plan before you die, your family could temporarily lose access to any of your property (that does not include a joint owner or state a beneficiary) to probate court.

The probate process is mostly a clerical one, but it could take several months to resolve. You can take steps to avoid probate with proper estate planning.  A revocable living trust, for example, will allow survivors to bypass probate court for any of your assets that can’t be owned jointly, or allow you to specify direct beneficiaries. But you have to legally establish it before you die.

Keeping your plans secret. Once you’ve  prepared an estate plan with a lawyer, the law firm will hold a copy of the documents on file. But they might not be in business forever. The lawyer could die. You might move to several states between the time you prepare the legal documents, and die. Don’t assume you can walk away from your involvement with your estate plan just because you’ve finalized the legal aspect of it.

Once you have planned the details of your estate, let the heirs you’ve designated in your estate documents in on your plans. Ideally, you’ll provide them with a notarized copy of your estate planning documents, and the contact information for the law firm you worked with to finalize them. Some law firms charge a nominal fee to file official estate planning records with the county courthouse. But it could be money well spent, simply for peace of mind that your wishes (and money) will be handled as you intend.

Not planning for living. No one wants to think about being incapacitated or unable to care for themselves, but estate planning isn’t about happy events. It’s about minimizing the stress associated with the less than celebratory ones. Your estate plan needs to include what will happen if you or your spouse come upon the the worst of scenarios, including events that require hospitalization or long-term private medical care, or someone to make decisions about the future on your behalf.

Not making plans for life insurance payouts. Life insurance proceeds are normally included in your estate when you die. But unless you plan appropriately with a trust, that money can be subject to probate.

Five Ways to Dig Out of Your Student Loan Debt

February 5, 2016  |  No Comments  |  by Stephanie  |  Make More of Your Money

dig out of student loan debt

The average student loan debt is upwards of $30,000 for today’s college grad.  How you can possibly establish solid financial footing for the future when you’re struggling to keep your head above water in the now?

Here’s a five step plan to help you dig out from under student loan debt.

Make payments no matter what. You have to make at least your minimum monthly student loan payments in order to maintain your credit,avoid fees, and hold onto the interest rate your loan offers. American Student Assistance, a non-profit group, estimates that 60% of people with student loans miss payments and let their accounts fall into delinquency.

There may be months when missing a student loan payment feels like the easier path, but keep this in mind: You’ll  find yourself in even bigger financial trouble if you miss your student loan payment. Here’s why.

  • Private student loan missed payments could be reported to credit bureaus once the payment is 30 days late.
  • Late Federal student loans may be reported to credit bureaus once they’re past 90 days due.
  • Late payments bring your credit score down (though how much depends on what your credit score was before you missed the payment).
  • Late payments on your credit history (especially recent ones) make it tough to get approved for other credit products, including a mortgage, auto loan or credit card.
  • If you do get approved for a loan with a history of missed payments, don’t expect to borrow at a low interest rate.
  • Many private student loans charge higher interest rate once you miss a payment.

Know your loan options. If you don’t know whether your student loan interest rates are competitive, do some research to understand if you should consider refinancing student loans.  Betsy Mayotte, director of regulatory compliance for the ASA says to add up exactly what you owe, and to whom so you can look into potential repayment leniency programs. Federal student loans offer lots of repayment options based on your income, along with some repayment plans designed for teachers, attorneys,health care workers, and professionals who work for non-profits. Marketplace lenders like SoFi and Lending Club also offer lending options that may help borrow for less than what you currently pay  in interest for your student loans.

Use leverage to your benefit.  You want to get rid of your student loan debt quickly, but make sure it’s your most costly burden. If your student loan rates are  4% but you have credit card debt that costs you 12% interest, for example, you’ll fare better by making the minimum payment on the student loan and being more aggressive with the credit card debt. Simply put, the credit card debt costs you more to carry–even if it’s just $5,000 and your student loan debt is $20,000.

Additionally, some of your student loan interest rate payments may be tax deductible; interest you pay on your credit card debt is not. Once you pay your credit card debt off, you’ll have free up more money to pay down student loans. Then, start using cash so you don’t charge your way back into debt.

Focus on improving cash flow. You can improve cash flow if you’re willing to work for it. There are a lot of ways to come up with more cash: Take on a second job, minimize your costs of living, and/or pay off costly debts.

Start small; identify a fixed number of additional cash you can realistically come up with each month. Let’s say it’s $200. Each month, you can choose to save it, or put it towards your most costly debt. Either way, you’re investing in your future: The emergency savings fund reduces the risk that you’ll have to charge an unexpected expense on a credit card, which could end up costing you even more when you factor in credit card interest charges. Paying down the debt gets you one step closer to reducing what you owe.

Invest in your retirement. Why would you invest in your retirement account when you need money to pay down your student loans? Three reasons: Compounding interest and the power of time, and the tax benefits associated with retirement contributions. You can put up to $18,000 a year into your 401(K) plan, or $5,500 a year into a ROTH or IRA. Both should help to lower your adjusted gross income (AGI), which could reduce how much tax you owe. Plus, whether your student loan interest payments are tax deductible is based on your income. If you’re single, you’ll have to report less than $80,000 to taxable income to claim it.

As far as the power of compounding interest, the little bit you put away each month into your retirement–especially if you invest into stocks or low cost mutual funds should grow over several years. Yes, it may take years to resolve your student loan debt. But once you do, you’ll be glad that you invested simultaneously, so you have a nice chunk of cash waiting for you.


Use Stock Market Dips to Get Out of (or Avoid) Debt

January 25, 2016  |  No Comments  |  by Stephanie  |  Make More of Your Money

stock market dips to get out of debt

None of us like to lose money in a stock market dip. But you can use market downturns to deal with–or avoid–debt.

In fact, the degree of panic you feel when you see that your retirement account balance has decreased is one of the most honest gut checks there is about the state of your financial life.

When a major event we can’t control happens—whether it’s stock market volatility, a divorce, a medical scare, or job loss– we feel vulnerable. Then we realize that maybe we could have protected ourselves a little more—by paying off debt, by preparing for the unknown, or spending a little less.

Consider these questions to get a gut check of current financial state. If it turns out you could benefit from getting out of debt, or managing spending a little better to avoid it, wouldn’t you rather know now?

1. Would your bank account last six months without income?

More than half of us have nothing saved to carry us through an emergency, according to data reported by MarketWatch.

 There’s no question saving is hard when you’re living paycheck to paycheck, or drowning in a heap of debt. But it becomes impossible if you delay putting money aside until a financial emergency strikes.

You will have to turn to credit cards. Or you will withdraw cash early from a retirement account. Or you’ll take out a personal loan with a crazy high interest rate. None of those are good scenarios. In fact, they all cost you so much in the long run that you may never find your financial footing again.

Take an honest look at your savings account balance. If it wouldn’t carry you through six months without a paycheck, you need to find a way to start saving.

Consider the idea this millionaire posed to Inc:

Pay yourself first. Then find a way to pay your bills.

That doesn’t mean you skip on your bills.It forces you to eliminate and minimize the expenses that you can, so you don’t keep giving yourself the short end of the stick. It puts you in control.

2. Do you vacation now, pay later?

Charge your vacations to earn credit card reward points. But don’t charge any trip you can’t pay off in full by the statement close date.

That’s typically three weeks before the statement due date, and is the only way to ensure that your balances paid in full are reflected on your credit report. (If you wait to get your statement, you already missed the date).

 That doesn’t mean you stop taking a vacation. But it does mean you’ll need to allow plenty of time to save for the cost of your trip.

If that means you skip a vacation this year to afford one the next, so be it. A staycation never killed anyone.

3. Do you consider your car’s cost in monthly payments only?

You may be able to afford a $300 car payment. But have you calculated how much you can afford if you consider the total purchase price of the car, divided by the number of payments you’ll have to make until you own it outright?

This math is not completely correct, but for the sake of a simple example, picture this:

The car’s stick price is $25,000.

You can afford to pay $500 a month for the car.

You’ll have to pay $500 a month for 50 months to own the car outright. That’s a little more than four years.

(Remember that does not consider any repairs/maintenance).

Not willing to pay that much for more than four years for a car? Shop around for one with a lower ticket price.

4. Do you know when you’ll be out of credit card debt?

Credit card debt is one of the worst expenses to have, because it’s completely unavoidable. It also grows into a terrible beast until you take control of it.

To do that, you have to know how long it will take you to get out of debt with your current strategy. Plug the numbers on each of your credit card statements into a free credit card debt payoff calculator and know where you stand.

Tiny adjustments—like adding an extra $50 payment to your highest interest credit card each month—can put a huge dent in your debt. The more you do that, the more cash you free up to pay even more. (The same practice applies to student loans, too).

You may not have your credit card debt paid off for years. But you will have a plan. That’s your power.

Only then can you reduce the kind of vulnerability you’ll face when an unexpected financial event happens.

How the Right Friends Can Make You Rich

January 13, 2016  |  No Comments  |  by Stephanie  |  Make More of Your Money


There’s a belief that you become a blended version of the five people you interact with most. But did you know there’s scientific proof that having the right friends can make you rich? Here are some subtle ways the company keep can either build or bust your bank account.

Surface friends can cause you to overspend. In a study called “Social Exclusion Causes People to Use Money Strategically in the Service of Affiliation” published in the Journal of Consumer Research researchers found that people who feel they belong make the same financial choices in a group setting as they do alone.

The study confirmed what most of us know about peer pressure. If you don’t feel accepted with people you hang out with, you’re more likely to take on their tendencies to fit in. So that pricey dinner you can’t really afford or designer bag most people in the group own is more likely to end up on your credit card statement when you don’t feel you’re among real friends. It’s a basic desire to belong. But it can bust your budget if you’ve got spendy surface friends.

If you’re trying to dig out of debt or be a little more selective with where you spend, now’s probably not the time to get together with people you just met (unless they manage their money in a way you aspire to do).

Friends with interest and hobbies are better for your wallet. If you can choose between a friend who loves to shop, or loves to run, pick the runner. Not because hobbies and activities don’t involve costs. Because people who fill their time in ways that don’t inherently involve spending have a positive impact on your sense of happiness and fulfillment. In turn, you’re less likely to spend to fill a void. (If you don’t believe me, feel free to read how I got out of a heap of debt training for my first marathon).

Broke buddies keep you broke.  It’s easier to change your behavior when you’re surrounded by like-minded people. But people don’t have to be physically close to you to have influence–good, and bad.

Back in 2007, The New England Journal of Medicine reported that obesity was “contagious” among friends–including those who interacted only on social media. Researchers determined it’s because social acceptance of any kind helps us justify choices. So if you have a network that approves of your bad behavior (even Facebook friends you haven’t seen in two decades) the less likely you’ll be to change.

But that same social influence can help you make positive changes, too. If you’re trying to save more money or want to get serious about investing, join an online community of personal finance enthusiasts, or a money club.  You’ll have positive role models that will help you stick to your goals, and you’ll pick up new knowledge. That can make you feel more empowered to tackle money woes head on.

Pretend you’re the poor friend to build wealth.  What it means to be rich” or “poor” is subjective, and fluid. What made you feel wealthy in your teens is totally different than what makes you wealthy when you’re 40. But no matter your age or life stage, you’re likely to gauge wealth or poverty based on the company you keep and where you stand financially relative to them.

There’s a theory called “the house money effect” that explains why people make riskier choices when they’re playing with money they perceive as “fun money”. (Hence, the term house money). Its why gamblers keep betting, even when the odds indicate it’s wiser to walk away. It’s why people who make money in the stock market start to take on more risk, or spend more lavishly. It’s also why you spend more when you make more money.

To that effect, if you perceive yourself as one of the richer people you know, it’s also likely that you’ll throw money around more foolishly. Relative to them, you’ve got play money (even if you really don’t).

By all means, strive to be the richest person you know. Just pretend you’re not.

Having a Baby? Here’s How You’ll Start Saving

January 12, 2016  |  No Comments  |  by Stephanie  |  Make More of Your Money

having a baby

Having a baby is an experience you’ll never forget. But learning you’ll  add a new member to your family also tends to bring to the surface important questions that aren’t so easy to answer.

You’ll wonder if you or your spouse can you afford to take unpaid maternity or paternity leave. You’ll start to research child care costs for day cares, in home providers and private nannies. (Then you’ll wonder how you’ll cover that cost).

As pregnancy progresses, you’ll build a collection of toys, clothes, pack and plays, cribs and playmats. Eventually, you’ll wonder if you even have room to bring a baby on board.

There’s also that question of healthcare costs. How will you budget for the new bills you’ll receive throughout your pregnancy, for child birth, and after baby is born?

All legitimate questions. But all ones you can prepare for, and answer.

Here are some budgeting tips to help manage the financial concerns you may face upon hearing the news that you’re having a baby.

Confirm your workplace maternity and paternity leave policy.  Not all employers offer paid maternity or paternity leave. Not all promise to hold your job because you’ve taken time off after having a baby. And not all required to.

Under the Family Leave and Medical Act, full-time employees are entitled to take up to 12 weeks unpaid leave with job protection, including spouses in same-sex marriages. But, there’s a caveat. If you work part-time, you may not be entitled to FMLA. If you are self-employed, ditto. If you have worked for your employer for less or than a year, or work for a company with fewer than 50 employees, FMLA doesn’t apply either.

Unfortunately, no FMLA coverage and/or no paid maternity leave leaves you with few options. You can:

  1. Prepare not to take any maternity leave. (Which is probably not realistic)
  2. Negotiate leave options with your employer, which may include putting in extra hours now, or using accrued vacation time towards your leave
  3. Start saving aggressively now to cover the time you won’t get paid, so you have the option to take off when baby comes.

One important word of warning for my self-employed friends having a baby, or trying to conceive: You cannot use short-term disability insurance as a sort of paid maternity leave. But you’ve read in many credible places that you can? Me too. Then I personally researched the facts.

According to all the insurance agents I spoke with, pregnancy is considered a pre-planned event, even when you secure short term disability coverage before you’re pregnant. Pre-planned events aren’t covered under short term disability insurance. “If I could sell disability plans to cover pregnancy and maternity leave, I’d have retired years ago,” said one agent.

 Calculate where you have to spend, and what you can change. To budget for having a baby, you need to know what you spend each month and on what, relative to your monthly take home pay. As soon as you know you’re having a baby, sit down with your spouse or partner and start tracking your money.

  • Add the total monthly cost of your basic expenses that aren’t likely to change. (Costs like housing, auto loans, credit card and student debt, and utilities).
  • Subtract your total monthly take home pay from the number above.

What remains is the amount of money you  “theoretically” have to set aside for your maternity leave and new baby savings each month. Why theoretically? Because you likely spend money on plenty of non-essential expenses each month. A gym membership, a cell phone bill, meals at restaurants, trip to hair stylists, etc. You may not be willing to slash all these costs, but in theory, you could.

Consider what non-essential expenses you’re willing to eliminate, or at least minimize, so you can increase how much you can save for your new baby.

If your employer offers paid maternity leave of some kind, you may not need to slash expenses as aggressively. If you’ve already saved at least six months of take home pay and have little to no debt, you may have some wiggle room too. But, if you’ll take three months of unpaid leave that your employer won’t pay, you need to save to replace that income in advance.

 Know exactly what you need, and where you stand. Research shows that savers are more successful when they identify exactly how much they need to save. (In total, and each month). They’re also more likely to stick to their plan when they track their progress. Approach how you’ll budget and save for your new baby in the same way.

Keep your money out of reach. When you know how much you need to save each month, establish automatic savings transfers into a savings account that pays some kind of interest, and requires no minimum account balance. You should be able to get to it within a matter of days, but not so easily that you’ll dip into it on a whim.

Use the value of your time. Time is a scarce resource once baby is born. If you have little room to save based on what you currently make and spend, try to find ways to make extra money in your spare time when you’ve still got it. Simple jobs like house sitting or pet sitting give you some extra money to set aside, with little effort and no long-term commitment.

Plan for medical costs. Pregnancy means medical bills–even if you have a completely healthy and run of the mill pregnancy, delivery and baby. Research your health insurance coverage to ensure you know exactly what services are covered, and what your out of pocket responsibility entails.

If your employer offers pretax savings plans for dependent care and you’ll use a child care provider you’ll claim on taxes, take advantage of the pretax savings.

Using a Debt Calculator to Pay off Post-Holiday Debt

January 4, 2016  |  No Comments  |  by Stephanie  |  Make More of Your Money

debt calculator


If you used a credit card to finance your holiday purchases and don’t have the cash to pay your balances in full, now’s the time to form a plan for how you’ll dig out of holiday debt. (Or any debt you’re ready to shed, for that matter).

Despite the many apps and budgeting software tools that now exist, a debt calculator is one of the most effective tools you have at your disposal. With it, you can plan your debt payoff strategy based on what you owe, and what it costs you. Plus, it’s completely free, and requires almost no financial literacy on your part.

Here’s a step by step guide to using a debt calculator to pay off your debt.

Gather the hard numbers. Compile all of your credit card statements and take note of two key pieces of  information on each statement: The total balance owed, and the interest rate each card charges. Create a five column list that includes:

  • The name of the creditor (ie, Chase Freedom card)
  • The minimum payment due
  • Total balance owed
  • Interest rate associated with the card
  • Payment due date.

Sort the list so that the card with the highest interest rate is on top. The credit card with the second highest interest rate should follow, then the third highest, etc.

Total the sum of what you owe.  Add the total amount of your debt. It may not be what you want to see and quite frankly, it may give you anxiety. But you need to know exactly where you stand, in order to plan your way out of debt.

Figure out what you can afford to pay.  Check in with your budget to calculate your monthly take home pay.  Write down all of your fixed costs. These are essentially those that are unlikely to change significantly, in the short term. (Think utilities, car, house, and student loan payments). Then, create a list of monthly expenses that could be eliminated or reduced fairly easily (assuming you are willing to make some lifestyle adjustments). This will usually include costs like phone/internet, cable, gas, groceries,  gym memberships and miscellaneous expenses like entertainment, and travel.

Play around with some different payoff scenarios to see just how long it will take you to get out of debt, based on how aggressively you plan to pay your balances down. Subtract your monthly take home pay from your fixed expenses. In theory, this is how much you could pay to debt each month, if you were willing to eliminate many unnecessary expenses. Using that number, subtract your unfixed expenses total. This is what you currently have left to pay towards debt, assuming you do nothing to change your current budget and spending.

Consider the difference in the two numbers. Are you motivated enough by the thought that you could have a lot more money to pay off debt than you realized (which ultimately becomes cash flow), if you make some changes to your budget?

Plug the numbers into a debt calculator (CNN offers a free version that’s easy to use). You’ll get a sense for how long you’ll be in debt, based on what you pay each month. Like knowing the sum total of your debt, understanding about how long it will take you to get out of it based on what you pay can be a depressing view. But it’s the first step to financial freedom. Only when you know where you stand can you can decide how and when you’ll get out of debt.

Maximize the Value of Your Debt Payments.  Despite what debt consolidation services promise, there are but three ways to get out of debt:

  1. Reduce expenses so you can put money towards your monthly debt.
  2. Make more money
  3. Maximize the value of every dollar you put towards your debt balances by tackling the most expensive debt first. Revisit the list you created in step one. If you pay as much as you can towards the first creditor on your list, regardless of the balance owed, you’re tackling your priciest debt first. Though you’re still making the minimum payment due on your other cards, this is the quickest way to put a dent in the debt, because you’re eliminating that which costs you the most.

Learn how to use credit cards responsibly. Cutting up your credit cards will not make debt go away. Freezing credit cards doesn’t remove spending temptation (especially now that you can store your credit cards in a website, or pay using your mobile wallet). Closing credit card accounts won’t help your credit score; it can actually lower your credit score.

So what does help manage credit card spending? You. More specifically, your behavior, and your financial attitude.  Just as a dieter who successfully loses weight will gain it back if they fall into their old habits of mindless eating and not exercising, so will a person who pays down credit card debt but doesn’t change their financial lifestyle.

Consider the personal “triggers” that got you into debt in the first place. Do you tend to avoid thinking about money because it makes you feel vulnerable? Do you spend to resolve stress? Do you live beyond your means to keep up with social pressure? These are all common reasons for spending. But all can be resolved if you understand what leads you to spend. When you can be aware of the factors that lure you into bad spending decisions, you can proactively take control of your financial life.

Money Moves to Make Before Year End

December 22, 2015  |  No Comments  |  by Stephanie  |  Make More of Your Money

year end money moves

Before you go into holiday mode, set a aside an hour to check in with your financial accounts to see if you could benefit from any of these simple financial moves before year end.

Give strategically.  You can minimize your 2015 tax burden by being mindful of how you make charitable donations–but you must act before year end. If you want to donate money to charity, consider gifting stocks. Those you’ve owned for at least a year that have appreciated will be recognized at fair market value when you gift them to charity, but neither you or the non-profit you will be on the hook for capital gains taxes associated with the stock’s appreciation and sale.

If you’re ready to throw in the towel on stocks that have lost value in 2015, you can also benefit by selling them, and donating the proceeds of the sale to charity before year end. When you file your 2015 taxes, you can claim both the capital loss, and the charitable contribution.

Before you choose a charity to gift your stock, check to confirm the organization is officially considered a public charity. (Otherwise, you won’t get the tax benefits of gifting appreciated stock).

Revisit asset allocations. The markets turned more volatile in 2015 than they have in previous years. While ups and downs in the market are never an indicator that you should panic and sell, they do signal the need to revisit asset allocations to ensure you’re still invested in the right products to help you reach your long-term investment goals, and manage risk. If you determine you need to sell some assets, doing so before year end can work to your advantage when you file taxes–but only if you sell strategically.

  • Focus on assets you’ve held the longest. Investments that you’ve owned for one year or longer usually mean lower capital gains tax rates. Start there–even if selling means losing money. You may be able to carry losses from stock sales forward into a future tax year, if you exceed the capital gains loss you can claim for the 2015 tax year.

 Get your financial house in order.  Time off work during the holidays is an opportunity to catch up on the financial tasks that often get pushed to the back burner.

  • If you still have  401(k) accounts from previous employers, move the funds into a rollover IRA with a financial institution you can easily access.
  • Check in with your workplace retirement contributions to confirm that you’ve come as close as possible to your $18,000 contribution limit for the 2015 tax year. Don’t think you can afford to contribute? Failing to maximize your retirement contributions can cost you more than you realize. Maxing out your pretax retirement contributions at $18,000 could amount to saving more than $6,000 in federal and state income taxes each year.
  • If you have a ROTH IRA or traditional IRA account, you may be eligible to contribute to one or both of those accounts as well, based on your adjusted gross income (AGI).






Take Charge of Your Own Debt Consolidation

October 14, 2015  |  No Comments  |  by Stephanie  |  Make More of Your Money

debt consolidation

Debt consolidation loans might sound like an easy way to get out of debt. But there’s no need to pay someone to lower your debt, when you’ve got all the tools you need to do it on your own, starting now. (Plus, let’s be honest. The money they’d charge you to consolidate debt could go to alot more useful things–like paying if off).

Here are four no “bs”  ways to kick start your own debt consolidation. Whether you make a goal to tackle one of these a day, a week or a month, I guarantee you will emerge at least one step closer to being debt-free.

1. Laser focus your effort on reducing your most expensive debt first.  Your most expensive debt is the loan that has the highest interest rate, not the one with the highest total amount owed.

I repeat: The highest interest loan you have is the one you focus on as your top priority to get out of debt. Have an extra $20 because a friend paid you back? Got an extra $50 for watching your neighbor’s cat? Put it toward the debt that costs you the most.

This example is admittedly not a perfect mathematical calculation, but it’s an idea we can all grasp quickly, so humor me: If you’re paying your credit card a 15% interest rate to carry a balance and you pay an extra $70 this month to it, you just got a 15% return back on that money.

Put in meaningful terms: If you’re willing to charge items on your credit card to earn a measly 1% in rewards or apply for a store credit card to save 10% on a $50 purchase, why would you forego a chance to get 15% back on your money?

2. Investigate how you might reduce your debt. If you carry higher interest credit card debt but have a good credit history overall, you may be able to pay off debt sooner by transferring a higher interest credit card balances to a low or no interest credit cards.

You might also be able to score a lower interest rate by calling the credit card company and requesting a lower rate, especially if you’ve been a customer in good standing for several years. You may qualify for a low interest loan through a peer to peer marketplace lender like Lending Club, or Prosper that gives you cash you can leverage to pay off the debt that costs you more.  If you’re drowning in student loan debt, you may be able to secure a better interest rate through an alternative lender like SoFi. Or you may qualify for a repayment plan that’s offered through the Federal government, for some student loans.

3. Find some way to make more money. There are two ways to make more money: Spend less to free up cash you can use to pay off debt, or make more money. In a perfect world, you’ll do both.

Let’s get the excuses out of the way first: I’t’s not easy to make more money when you’re stuck in a fixed salary job or when you work full-time, or when you’re divorced or you have kids who cost you money in order to even leave the house and work to make money.

But rest assured, when there is a will to get out of debt, there is a way.

Cruise right past your mental excuses and give yourself the financial freedom you deserve–even if that means taking it on the chin for a hot minute if need be. Personally, I walked dogs on my lunch break from my full time job for two years for $10 a bucks a pop to get out of $15,000 in debt when I was in my twenties. I love animals and I love exercise, but let’s be real. I didn’t do it for the love of either. I just wanted to get out of debt that badly! (I was also going to grad school and training for a marathon at the time. I was busy, but I made the time because getting out of debt and feeling financially stuck was something I so desperately wanted).

On days that I was ready to lose it and accept that it was my destiny to be poor, I kept myself focused on the goal at hand. The second I paid off that last credit card bill with all the extra money I generated, I stopped dog walking. But those two dog walking years remain one of the smartest things I ever did.

There are tons of ways to make money online now and if you find a gig that works for your life and pays you well enough, go for it. But with the online marketplace being so flooded with people calling themselves freelancers and consultants, I’ve personally found that most of the “virtual gig” sites pay so poorly you’re better off to find a  side gig the old fashioned way.

Do not over complicate the issue. You don’t need to spend money on a website, you don’t need to take meetings with clients. You really don’t even need to do research. Figure out something that gives you complete control in the sense of when you do the work, where, for how much, and for how often. What could do with your time that will cost you little to nothing in effort and gas money? Go do it.

We all have skills someone is willing to pay for whether it’s watching a cat, cleaning an office space a couple of nights a week, or picking up someone’s dry cleaning. It’s not your passion and it’s not a long-term career. It’s a means to get out of debt!

4. Stop filling the wrong need. When you’re desperate to get out of debt, that’s what you need. You do not need a new shirt, no matter how little it costs. You may not need to take taxis or your car when you could walk or take the bus. You don’t need a new smartphone. You may not need to watch cable when you could stream that same show on your computer for free. Or maybe you do.  What you need is for you to decide–but you have to make choices and concessions somewhere to get out of debt. If you continue to spend a strategy and discipline for how you separate needs and wants, the best debt consolidation plan–whether managed yourself, or with the help of a financial professional–won’t work.

Whatever path you choose, debt consolidation is nothing more than a basic barter and trade. As long as you’re disciplined enough to put the money you make or save–either by earning it, finding a lower interest loan or cutting expenses–and put it immediately to your debt, you will save money and make progress.

It’s not easy, but it’s really that simple. You do not need to be a financial guru (or hire someone who claims to be) in order to consolidate your debt.