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HomeBlog Personal FinanceThe 6 Harsh Money Truths You Need to Learn Before Turning 30
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The 6 Harsh Money Truths You Need to Learn Before Turning 30

February 15, 2017 by National Debt Relief

Young-coupleYour 20s can be a complicated time. For the first time, you may be on your own financially and it’s likely that you’ve never been taught the basics of good money management. If you’re struggling just to pay your bills, and feel lost when it comes to saving money, there is good news. Managing your finances doesn’t have to be complicated and time-consuming. We would like to provide you with six harsh truths about money you need to accept, which should relieve so me of your anxiety over managing your finances.

1. You won’t save money without a plan

Last time you wanted to take a trip did you spend a serious amount of time agonizing over your options? Did you worry about whether you should take a plane, a car, or a train, without first determining where you were going?

Just as, you first need to decide where you’re going on a trip, you first need to decide where you’re going with your money. You have to set financial goals for yourself.

Start by writing them down, and then prioritize them in terms of how important they are to you. Your first goal might be something short term like paying off a credit card debt, so you could then move on to something even more long term like saving for retirement.

2. Debt doesn’t just disappear

The worst thing you can do with debts is ignore them. Whether you have credit card bills, student loan debts, or medical bills, they just won’t disappear. Thanks to compounding interest, the longer you wait to pay down those debts, the more you’ll owe. Here’s an example of how wicked compound interest can be. Let’s say you owe $6,000 at 18% interest, and make just the minimum monthly payments of $120. Put this information into a credit card repayment calculator, and what you’ll learn is that it will take you 94 months to pay off the debt and cost you $5173 in interest!

The financial expert, Dave Ramsey, recommends what he calls the “snowball method” to repay debts. This is where you rank them in order of their size, and then focus all your efforts on paying off the one with the smallest balance. The idea behind this is that every time you pay off one of your debts, you’ll build momentum that will help you tackle the one with the next lowest balance, and so on.

Of course, the best plan is to stay out of debt. Here’s a video where Omaha billionaire, Warren Buffett, explains how to do this.

3. It’s unlikely you’ll ever beat the market

It’s possible you could become the next Warren Buffett, but it’s improbable. Even people who spend eight or 10 hours a day, five days a week, studying the market, don’t beat it on a regular basis. There are just too many variables. No matter how deeply you peer into your crystal ball, it’s just impossible to know how individual stocks, or even mutual funds, will perform over 30 or more years.

Low-cost index funds are broadly diversified as they hold many stocks. For example, there’s the Vanguard Total Stock Market Index Fund. It includes a mix of small-, mid-, and large-cap growth and value stocks, and that has an expense ratio that Vanguard says is 75% lower than funds with similar holdings.

Investing in an index fund won’t make you wealthy overnight, but you won’t lose a lot of money. Plus, it’s almost certain that you’ll see your investment grow over the long term.

4. You will have an unexpected financial emergency

Regardless of what you might think, you will eventually have an unexpected financial emergency. The transmission could fall out of your car, a tree could fall on your house, or you could suffer a big medical emergency.

The only way to prepare for these unexpected expenses is to have an emergency fund. If at all possible, you should have enough tucked away to cover at least three months of your living expenses. If you don’t think that’s possible, try for at least $1000. If you are unable to build an emergency fund, you’ll have to check out other options like a low interest, online loan.

5. You may have to spend more now to save money in the future

If you’re trying to be frugal, it can be tempting to buy almost everything at Walmart. However, in many cases it’s best to spend the extra money to buy stuff that will last, and you can have for a long time. This will save you money over the long haul, and should help you become a more conscious spender and maybe even think twice before you swipe that credit card.

young woman using her credit card6. It’s easy to overspend on payday

Getting paid is very exciting. However, if you’re not careful, it can trigger overspending. What you need to do is pay yourself first. You should try to save at least 10% of your gross income into a retirement account. If your employer offers a 401(k) plan, deposit your money into it – especially if it provides matching funds. If not, open either a traditional or Roth IRA and deposit the money into it. The easiest way to save is to have the money taken out of your paycheck automatically and deposited straight into your retirement account.

The net/net

If you learn and remember these six harsh money truths in your 20s, you should find it much easier to get your finances under control. You’ll then be on track for your 30s, when there’ll be bigger issues to deal with like buying a house or starting a family.

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National Debt Relief is one of the largest and best-rated debt settlement companies in the country. In addition to providing excellent, 5-star services to our clients, we also focus on educating consumers across America on how to best manage their money. Our posts cover topics around personal finance, saving tips, and much more. We’ve served thousands of clients, settled over $1 billion in consumer debt, and our services have been featured on sites like NerdWallet, Mashable, HuffPost, and Glamour.

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Easy National Debt Relief Caller: Austin Transcribed WE 1/17/2021 Austin: Our call may be recorded. What led you to National Debt Relief and why did you choose National Debt Relief over a different company? CARA: Honestly, it was just kind of on a whim. I just saw a commercial, I think, and then looked it up. And we were just tired of living paycheck to paycheck and not feeling like we were getting anywhere with our debt. Austin: What were your thoughts and was wondering as far as like the enrollment process, what process or where are you at this point in the process? CARA: We are almost done. Well, they've paid off almost everything or we've paid off almost everything. We're working on our last credit card. So I think our last payment will be in December, so nearing the end. Austin: Do you remember the name of the negotiator? I'm sure you've probably worked with a couple of people, but what's the name of the negotiator that you worked with? CARA: Well, I didn't really, I guess really work one on one with like one negotiator. I don't think. We just got email saying, "This is where we're at with this. Do you agree?" you know, type situation. Austin: Do you feel that there's anything that maybe the negotiator did well or anything that they could have improved? CARA: No, I don't think so. Nope, I don't think so. We've been happy with everything so far. Austin: Have you seen any positive impacts from working with National Debt Relief, just to kind of notice any changes to your life? CARA: I mean, definitely less stress, and then we've just been able to be better about our spending and our budget and everything. It helped get us on track. Austin: How would you rate your experience with National Debt Relief on a scale of one to five, where five means you would recommend to friends and one means very dissatisfied? CARA: I'd say 5. Austin: Would it be okay if we shared your comments as a review on our public site with a first name and city only, they're for National Debt Relief and to help other consumers make good choices? CARA: Probably not. I live in a smaller area. If anybody were to hop on and say Cara from Beddington, they would probably know. Austin: We can definitely remove that 'cause we very much respect your privacy. So we can either remove the name and just do a ‘C’ or completely remove the city and just do like ‘Cara from the USA’ whatever -- mainly comments than identifying you, I guess would be important. CARA: Yeah, I don't care if you use like my name and just put USA. I just don't -- where I live, it's not a very big area. Austin: I can totally respect that. Not a problem at all. CARA: Yes, we are a little bit of ashamed of having to go this route, but it was what was best for our family at the time. Austin: Would you like us to email you a link to that review whenever it's published? CARA: Yeah, that'd be great. Austin: Our call may have been recorded.

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