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6 Lessons In Kindergarten That Will Help You Develop Great Financial Habits

little girl holding moneyWe can all benefit from good financial habits. In fact, we all want to make sure that our children start learning them early. This is why it is encouraged that parents teach kids about smart money management skills. When you let your kids develop the right financial behavior at an early stage, they will most likely bring that with them as they age. When you mold them to become great money managers at an early stage, you can be assured that they will make the right financial choices as they mature. And even if they make mistakes, it is okay. They will know how to get themselves out of the mess that they put themselves in.

While you can teach your kids a lot of things about money, did you know that they can also teach you a couple of things as well? There is this poem by Robert Fulghum titled All I Really Need To Know I Learned In Kindergarten. The same author also wrote a book that expounded on the ideas on this poem. This literary piece enumerated a couple of lessons that we learned in kindergarten. These lessons are something that we can implement even as we age. It tells us of how simple things really is for a kindergarten. In fact, even something as complicated as money can be simplified if you try to look at it through the eyes of a young one.

This is why we tried to search for tips that we can use to help develop financial habits in this literary piece. If you broaden your mind, you can actually see 6 different lessons that you can use to help improve your behavior when it comes to money. Since these are supposed to be lessons in kindergarten, you can probably use this to teach your kids about the proper way to handle their finances.

6 lessons in Kindergarten that can improve your financial behavior

So what financial lessons for kids can you use as an adult? Here are the 6 lessons we got from the poem by Robert Fulghum.

When you go out into the world, watch for traffic.

Everytime you cross the street, it is important that you look both ways before you step off into the busy street. When you watch out for traffic, you will know where you are, what is coming for you and what awaits you. The same is true when it comes to money. Before you make a decision, it is important that you know the whole situation first. You need to know where you stand financially. You also have to find out what will happen when you make a particular decision. Finally, you need to know you want to go it can influence the decisions that you will make about your money.

Everything you need to know is there somewhere.

This is in relation to the previous lesson. If you want to learn something, you will always find it somewhere. If you are persistent and determined to learn, you will find a way to get the information that you need. In today’s digital age, you can easily research something over the Internet. If you do not trust what is one the web, you can always find a professional that will tell you what you need to know.

Put things back where you found them.

This is a lesson that you can use if you want to learn financial habits that you can use every time you borrow money. If you used something, it is very important that you put it back if it is not yours. The same is true for any money or object that you borrow. You need to learn how to return it. You need to pay it back. This lesson mentioned that you need to put it back where you found them. In the same way, you need to return what you borrowed in full – including interest if that is what you agreed upon when you loaned the money.

Hold hands and stick together. This is a great advice for those people who are working towards a common financial goal. You may have goals with your spouse, partner, family or friends. Whatever it is, you need to work hard to meet them together. Cooperate and remember that two heads is better than one. Even if you have set your goals on your own, it helps to find someone that you trust and respect to confide in. This person is the one who will support and encourage you as you try to reach your financial goals.

Say you’re sorry.

This is a great advice for couples handling money together. At one point, you will make mistakes when it comes to handling your money. Since you are a couple, your mistake is bound to affect the other. Learn how to apologize and work with your partner to get past the error that you made. Try not to fight about it. If your partner gets angry, do not react negatively. Be humble about it and do not add fuel to the negativity of the situation.

Share everything.

You are not really required to share everything – but you are encouraged to share. This is not really something that will improve your finances – but it will make the growth of your wealth worthwhile. It does not really matter how much you give. As long as you share with those who are less fortunate than you, then it will add to your motivation to improve your finances.

Tips to develop the right money habits

Developing the right financial habits cannot happen overnight. It is a process that you need to patiently work on. Here are a couple of things that you need to do in order to make this happen.

  • Educate yourself. This is the first step. According to the NFCC.org financial literacy survey, 3 out of 10 Americans reveal that they are not confident with their financial knowledge. If you think that you belong to this statistic, you may want to start researching about the financial concepts that will make you more confident about making decisions.
  • Observe the financial habits that you currently have. Once you have done your research or while you are doing it, observe the habits that you currently have. You need to understand your current situation before you can make improvements.
  • Identify what needs to be improved, retained or removed. Based on what you find out from the first two tips, you need to think about the habits that you need to develop. What are the current habits that you need to improve, retain or remove? And beyond that, are there any habits that you need to add? Determine what these are before you proceed.
  • Practice the habits you want to develop. After you have identified everything, it is time to implement them. In developing new habits, you need to practice them repeatedly. According to an article published on 99u.com, a habit is developed through the practice of three things: setting cues, going through the routine and earning a reward. If you do it repeatedly, you can train your brain to unconsciously do something. That is how you develop a good habit.
  • Always keep yourself informed. Lastly, you need to keep adding to what you already know. It is not enough that you develop the financial habits that you need to use to make your life better. You have to see if there are new habits that you need to form. This is why you need to continue educating yourself.

Follow these tips and you should be able to develop the financial habits that will help you improve your current financial situation.

7 Personal Finance Mistakes You Avoid Like The Plague

couple going over billsIn the not very long ago managing your personal finance was relatively simple. Just ask your parents. When they were young they probably had checking and savings accounts and that was about it. They used a combination of their checking account and cash to pay for their day-to-day expenses and whenever there was money left over they deposited into their savings account. If they had any credit cards they probably had just one and paid off their balances at the end of every month. They probably also had a mortgage, which they paid monthly by check.

But things have changed considerably. The world of personal finances has become so complicated that if you don’t manage yours very carefully you could take a big hit your financial health as well as your retirement fund.

Here are seven personal finance mistakes you should never make as they would definitely ding your finances.

Not taking advantage of online money transfers

There are two places where you will never earn much interest on your money. They are your checking and savings accounts. This is why you should have a money market account at your bank or a high-interest savings account linked to your checking account. After you have done this, you should never make a deposit directly into your checking account. Deposit everything into that higher interest account instead. Then as you need money, move it from that account into your checking account using online transfers. Move only the amount of money you need to cover whatever checks you write.

Keeping your money in a savings account at your bank

This dovetails with what we said in the above paragraph. The interest you would earn on a bank savings account today is nearly zero. This is why you should never deposit any of your money into one. If you do, the interest you’ll earn will probably be less than the rate of inflation. This means you’re actually losing money when saving money. Put whatever cash you need to have available into a bank money market account where you’ll at least earn somewhat better interest and many of these accounts come with free check-writing privileges. Don’t overlook those online banks for your cash investments. Most are FDIC insured just as is your brick-and-mortar bank.

Paying your bills too quickly

One thing you want to do for sure is hang on to your money as long as you can so that it’s earning interest. The way you do this is by setting up a system to pay your bills just before or on the day they’re due. If your bank doesn’t offer a system for paying bills online, you will need to go to your creditors as most of them do. Of course, you don’t want to pay them late as this would hurt your credit standing. And you definitely don’t want to make late payments on your credit card bills because of the oppressive interest rate that you will be required to pay.

man looking frustratedFailing to shop for better interest rates

Thanks to bank deregulation banking has become very competitive. Whether you’re paying or receiving interest it’s important to shop around. You will likely find wildly different interest rates and bank charges. When you find something better than what your current bank is offering, jump on it. Don’t stick with the bank just because you’ve been with it for “forever” if it isn’t competitive.

Overdrawing your account

One of the ways that banks are trying to increase their revenues is by making you pay a big penalty for a small error. As an example of this, let’s suppose you have $300 in your checking account and you write three checks. You write the first one for $20, the second for $30 and the third for $290. Did you know that some banks process checks in order of size and not in order received? In this case, that $290 check might be processed first so that all three checks would end up bouncing. You would then be hit with three overdraft charges that could add up to as much as $105. This is because some banks are actually charging, believe it or not, $35 for each check you overdraw.

Not managing cash flow with the help of your computer

You should definitely let your computer takeover every aspect of your personal finances including your investments. Software products such as Quicken® and Money® are now much easier to use than they were just a few years ago and they can help you gain the greatest advantage in your personal finances. These programs will produce reports at the touch of a button that can show you exactly where you stand financially and what you need to do to maximize things. There is also a wealth of apps available for both iPhones and android phones that make it much simpler for you to manage your money. The most popular of these is probably Mint.com, which will track your spending and help with your budgeting as well as monitoring your investments and credit cards. If it finds a better product than what you’re currently using it will even alert you by email.

Staying with the wrong bank

Have you noticed the “merger mania” that’s been going on in the world of banking? This is why you could wake up one day and find that the bank with which you’ve been doing business for so many years is no longer around as it has been merged into a strange new bank that now holds your accounts. It’s likely that this new bank will be one of the new megabanks, which brings up the question of will it treat you better? The answer to this is forget about it. Many of these megabanks are just raising inefficiency to a new level as well as dumbing down their customer service. The good news is that you can solve this problem very easily. Just look for the smallest bank in your neighborhood that’s FDIC insured and move your business to it. You’ll get more personal attention from a small bank then you ever will at one of those megabanks and you’ll have exactly the same insurance protection. Plus, there’s just something nice about being able to walk into your bank and be recognized, not just as another 10-digit number but as an actual, real live person.

How To Rebuild Your Reserve Fund After An Emergency

red crisis fund boxYour reserve fund is meant to be used for emergencies. Let us assume that after you have spent months saving up for your emergency fund, you have finally reached your target amount. This is a great feat because saving can keep your finances from flying apart. Whatever amount you have in this fund can help you get out of another tight spot.

But that is the challenge here. How can you build up your emergency fund once you have spent it for an unexpected event?

When you have an emergency fund, you are actually better than 62% of Americans. Bankrate.com, asked survey respondents what they would do if they are faced with an unexpected emergency that will cost them $500 to $1,000. It is revealed that 57% of the respondents will not use their savings. To be specific, 26% will reduce their spending on other things, 16% will borrow from other people, 12% will use credit cards, and 3% will think of something. $1,000 seems like a very low target for a reserve fund and it appears like a lot of Americans do not even have this amount in their savings.

If you have just spent your emergency fund – you may be in better shape than all these people. Of course, you are no longer as secure as you once were because you blew out your savings. This is why you need to work as fast as you can in rebuilding your reserve fund.

How to build up your emergency fund after spending it

There are a couple of things that you can do in order to get back the amount that you spent in your last emergency. You may be feeling relieved because you had that money saved up when you needed it the most. Imagine what would have happened if you didn’t?

Well to give you an idea, here is a video from Forbes that discusses what it can cost you if you do not have a reserve fund to get you out of tight spots.

We all know that it is difficult to not have the money to get out of tight spots. What you learned from the video should give you some motivation to build it up quickly.

Here are some tips that we have for you.

Revisit your budget.

The first thing that you need to do is to look at your budget plan. If you have to save up for something fast, you need to make sure that it is aligned with your budget. The good thing about putting your saving goals in your budget plan is you can ensure that your allocation will be there each month. If you put it in your priority list, you will be reminded that you have to put aside money for your reserve fund.

Now revisiting your budget would help you identify if you have enough income to set aside to rebuild your emergency fund. If not, you can figure out your next steps in order to reach your saving goal.

Be a smart spender.

The next step on your to do list is to take a look at your spending and to improve it. Since you have to continue spending in order to survive, you should learn how to be a smart spender. Take note that our definition of smart spending is not only saying no to expenses that you cannot afford. That is already a given. If you really want to be smart when it comes to your expenses, you need to learn how to say no – even when you can afford to pay for something. You need to stick to the expenses that are necessary at present. The rest should be invested in your future. Your reserve fund is one of the investments that you can make. Remember the video we shared earlier? Think about what it will cost you if you did not have the emergency fund to spend on unexpected expenses. If you eliminate the unnecessary spending, you can increase the amount that you can save.

Increase your income.

To help you put more money in your emergency fund, you should also look for ways to increase your income. In case your income is not enough to help you build up your funds immediately, you can look for ways to boost your monthly cash flow. If your intention is to simply rebuild your reserve fund, this increase can only be temporary. You do not really have to get a second job or something. But if you can set up a source of passive income that you can make permanent, then that would really help your finances in the long run. However, if you can only set up a temporary financial boost, then that is alright. Among the things that you can do is to declutter your home and sell off things that you do not need. The profit that you will earn can be sent towards your reserve fund.

These three should be enough to help you rebuild your emergency fund as fast as possible. As you work diligently in saving, just pray and hope that no unexpected expense will happen in the near future.

How much money should you put aside for emergencies

After the emergency that you had to go through, you may want to ensure that the next unexpected expense will no longer wipe out your savings. If this means you have to increase your reserve fund target, then that is what you should do.

However, this is something that you need to be careful with. You need to set a reasonable emergency fund target – but at the same time, you do not want to overdo it.

There is an article published on GetRichSlowly.org that tells us something about putting too much money in your savings. This article hinted that you could waste money if you put too much in your emergency fund. This is money that you usually put in your savings account because you want to be able to access it immediately when you need to. The problem with savings accounts is that it only gains you a small interest. If your retirement or children’s college fund earns 23% (as was stated in the article), you might feel bad about the money you have in your reserve fund.

So here is another challenge, how much money should you put aside for your reserve fund?

The answer to that will depend on your personal situation. Your emergency savings will depend on what you need to spend on. According to an article published on BusinessInsider.com.

You need 3 months worth of monthly expenses if…

  • You are a healthy individual.
  • You do not have dependents.
  • You can live well within your means.

You need 6 months worth of monthly expenses if…

  • You have a dual-income family.
  • You have dependents.
  • You rely on variable or commission-based income.

You need 8 months or more worth of monthly expenses if…

  • You have a single-income family.
  • You have or one of your dependents have a health problem.
  • You are old or retired.

This is something that you need to consider if you want to be able to save just the right amount of money in your reserve fund. It helps to just start with your budget. Analyze what you need to do and be very honest with what you need in your financial life. By doing that, you can set up a fund that is enough for what you may require if an emergency happens.

9 Ways You’re Wasting Money You May Not Even Be Aware Of

Woman looking depressed over her credit card billsWe’re pretty sure you want to retire when you hit 60 or 65 because who doesn’t? But if this is your goal then how you spend your money today and whether or not you live frugally could make the difference between retiring then and having to work until you basically too sick to work anymore. The problem is that it only takes a few bad habits to stop you from achieving financial independence and a nice retirement and here are nine of those habits that may be robbing you of money you’re not even be aware of.

Eating out

At the end of the day you’re tired and stressed out and cooking is hard work. So, what you do? You either eat out or get takeout food. In either case, if you forgo this habit you could save hundreds or maybe even thousands of dollars a year. Just consider this. If you eat out three times a week and spend just $20 each time that’s $60 a week, $240 a month and $2880 a year. If you were to put that money away for 20 years then, not even including compounding interest, you would save $57,600. When you add in the interest you would earn you’d probably have more than $70,000, which would certainly help you enjoy those golden years.

Changing the oil in your cars every 3000 miles

You know what the automakers and all those quick oil change companies tell you which is that you should change your oil every 3000 miles. Do this and theoretically your car would last much longer. However, you could save a fair amount of money if you change your oil less frequently. The California state government even says, “The old standard of 3,000 miles is woefully out of date and no longer applies to most cars. Many cars, even older models, can be driven up to 5,000, 7,500, 10,000, and even 15,000 miles before needing an oil change”.

Buying only brand names

Manufacturers want us to believe that brand-name products are better than generic products. And there are cases when this might be true. For example, if you spend $100 on a pair of Nike athletic shoes they’ll probably last longer and fit better than if were to buy some knockoff brand at $30. But this is often not the case and is especially true when it comes to grocery items. Generic or store brands usually taste as good as brand-name products and cost anywhere from 30% to 40% less. So if you’re in the habit of buying only brand-name products you’re wasting money you’re not even aware of.

Drinking bottled water

If you get your water exclusively from a bottle you could be wasting as much as $1000 or more per year. In comparison, if you drink healthy tap water it should cost you about $.50 per year. Just think that you could save $999.50 a year just by changing this one habit. And if you’ve been drinking bottled water because your tap water has too much of a chlorine taste, just fill up a bottle from your faucet and then put it in the refrigerator overnight. Problem solved!

Young woman drinking coffee in urban cafe

Buying expensive gourmet coffee

Do you spend a few dollars every day at your local coffee bar or doing drive-throughs at your nearest Starbucks? Here’s another area where you’re wasting hundreds of dollars a year that you could save just by brewing your coffee at home. If you go to a Starbucks or a local coffee shop just three times a week and spend three dollars each time, which is typical, you’re basically wasting $9 a week or more than $450 a year.

Paying fees to use ATMs

We know how convenient it is to just pull into the nearest ATM and withdraw some cash. But if you’re using ATMs that are not in your bank’s network you’re wasting money, especially if you do this several times a week. If your bank doesn’t have ATMs near where you live or work, think about changing banks. Or just suck it up and drive those few extra miles to your bank’s nearest in-network ATM.

Not haggling

Do you think you can’t haggle over prices or that there’s something wrong with this? Then think again. There’s nothing wrong and nothing to lose by asking for a lower price. All the merchant can do is say “no”. And, of course, there are some things that are non-negotiable such as groceries, cable and utility bills. However, there are other instances where you could save money by haggling. This can be especially true with jewelers and small shops. These merchants often have high enough profit margins that they’ll give somewhat on price in order to get the sale.

Buying stuff new

Do you always buy everything new? There’s no law that says you need to do this. When you buy things that are brand-new you may be paying as much as double the price then if you were buy them used. That beautiful, all-wool sweater in its original packaging costs $50. But if you were to go to one of those stores that specialize in gently used clothing you might be able to buy the equivalent of that sweater for $30 or less. There’s also absolutely no reason to buy a new car anymore. You should be able to get a great car that’s just two or three years old – and coming off lease – for substantially less than you would pay for it new.

Making impulse infomercial purchases

The Electronic Retailers Association says that the infomercial industry brings in more than $400 billion a year. When you fall for one of those infomercials featuring a product you believe you just couldn’t live without and that’s “not available in any store,” you could end up with a shoddy piece of merchandise that you’ll never use or use only frequently. Regardless of how tempting that product might seem, take a deep breath and, in the words of that old anti-drug commercial, “just say no” to yourself. The odds are that you can find something comparable in a store near where you live and for much less than what you’d pay for that infomercial product.

Having A Baby Can Ruin Your Credit Score: Here’s How

baby holding moneyCan you believe that having a baby can ruin your credit score? It seems unlikely right? How can your bundle of joy ruin anything in your life?

It is difficult to blame babies when it comes to your finances but if you think about, there is some truth to the statement. Having a baby changes a lot about your life. As unfortunate as it may sound, your baby will ruin your sleep. They will ruin your social life. They will ruin even your moment of intimacy with your spouse. In fact, they can ruin every waking moment of your life. Everything changes once the little one is brought home from the hospital.

Of course, we do not mind all the things that babies ruin. We love them that much! But even if that is true, we can take control of certain things that they are bound to change.

Take for instance our finances. This is a major concern for a lot of people – starting with the hospital bills. WomensHealthMag.com compiled accounts from several women about their experience after giving birth. As they struggled with the coming of a new baby, they had to deal with the medical bills that started to pour in shortly after. If you look at the real stories provided, you will see how even those with health insurance are forced to pay huge sums after giving birth. It is surprising to see that those with similar procedures done had to deal with different costs. These differences were sometimes caused by varying health practitioners and insurance coverages.

If you look at the article, you will realize that having a baby can be very expensive. Take note that this is just the beginning. You still have a lot of expenses before you. From the baby equipment, clothing, vaccinations, check-ups, and the toys – all of these expenses can add up. If you factor in the child-care costs, you will feel a bit overwhelmed with the financial burden of raising a child.

It is quite a lot to take in – that is true. But even after all of these changes and responsibilities, you are probably still wondering – how does your credit score fit into all of these?

Different ways that your credit can be ruined after you have a baby

Believe it or not, your credit score is in danger after you have a baby. While your little one is not directly to blame, the changes in your situation can lead to certain mistakes that can cost you a good credit score.

Here are some of the things that you need to look out for because they can increase the chances of you getting a bad credit record.

Setting unrealistic baby costs

It is understandable that you have no idea how much your baby costs would take. However, it is your responsibility to find out. If you fail to consider the amount that baby expenses would cost, you might find yourself using your credit card a lot and failing to pay it off in time. Set realistic baby costs and include it in your budget so you can allot funds for it. This is how you avoid using your credit card on these expenses. According to BabyCenter.com, among the expenses that you need to consider includes the following:

  • Formula (up to $100 per month). You can save a lot by breastfeeding as long as you can.
  • Diaper (up to $85 per month). You can save by using cloth diapers instead. It is messier but a lot cheaper. Or you can buy diapers in bulk.
  • Childcare (up to $1,000 per month). This will depend on what you will choose. Babysitters cost less but is not as reliable as daycare centres – which will cost up to $1,000 a month. It is difficult to save on this especially if you really need to work. If you live near a relative, it may be possible to ask them to look after your child.
  • Baby gear (varies). You can save by opting for second hand gear – as long as these are not broken and you clean them very well.
  • Clothes (up to $50 per month). This is another purchase that you need to buy second hand. Babies grow out of their clothes so fast that buying them new will waste your money.
  • Food (up to $100 per month). This is an expense that you have to deal with after a few months. To save, you may want to make your own baby food. That will be cheaper.
  • Toys, books and DVDS (up to $40 per month). This can also be bought second hand. As long as it is not broken, clean and safe to use – buy them used.

Failing to pay bills on time.

Another way that your baby can make you ruin your credit score is by keeping you too busy! This is expected because babies do need a lot of care and attention – especially during the first year. Your lack of sleep, feeding, bathing and other baby needs that has to be met every now and then will really take its toll on you. This will make you forget a couple of things – including bills payments. When you forget to pay the bills, your credit score will suffer in return. Set up reminders to make sure this will not happen.

Being overcome by medical bills.

As mentioned earlier, your hospital bills will be a major concern months after you gave birth. This can be overwhelming at times. Although recent developments made medical bills less of a problem, it is not something that you should put in stride. With a few tips, you can probably keep your hospital bills from becoming too much of a burden. For instance, you need to double check with your insurance company the details of your coverage. You should also double check what is written on your bill. According to the Women’s Health article, 30% to 40% of medical bills usually contain errors. So take a look at yours. Do not be afraid to ask questions if there are things that you need to clarify. Even if they insist and you believe that there are entries that should not be there – dispute your bill. Do not pay for something that was not given to you.

Eating out all the time.

It is a given that expenses usually bloat when a baby gets in the picture. But some of the expenses does not have to happen. One of the bloated expenses involve food because new parents usually develop a habit of eating fast-food instead of cooking at home. There are two reasons why you need to stop this habit. First is the cost. It is more expensive. The second reason is it is unhealthy. Meals cooked from scratch at home will always be the better option. But we all know that the baby usually takes most of your time – that means you cannot cook as much as you used to. This bloated expense could wreak havoc in your finances that could end up compromising your credit score too. This does not have to be a problem if you implement some time management skills. There is this show – Rachael Ray’s Week In A Day, that teaches you how to make meals for the whole week in just one day. When your spouse or partner is at home, you can allocate this time to make your meals for the rest of the week and then store it in the freezer. It just takes a bit of time management for this to happen.

How to keep your child-related costs from destroying your finances

Raising a child is a lot of hard work and it is expensive but the rewards that it will bring to your life is so great that you wouldn’t really mind. However, that does not mean you should let it turn for the worse. You need to learn how to disaster proof your personal finances so you can build a better future for your kids.

This is the reason why couples are warned against being unprepared for parenthood. You may feel like you are physically and emotionally ready for a child. However, if you are not prepared for it financially, then you might end up ruining what you have built so far.

According to the USDA Center for Nutrition Policy and Promotion (CNPP), a couple is expected to spend a quarter of a million to raise a child – at least until they reach the age of 18. What is surprising is that this amount does not even include college expenses. An infographic published on USDA.gov revealed that the $245,340 worth of expenses are divided into the following:

  • 30% housing
  • 18% child care and education (excluding college)
  • 16% food
  • 14% transportation
  • 8% health
  • 6% clothing
  • 8% miscellaneous

With college costs averaging at $18,390 (public) and $40,920 (private), you need to be prepared to spend up to $300,000 for each child.

Obviously, this is a very big amount. You don’t have to save up for it before you have a baby. But it is evident that you need to implement some serious financial management skills to keep your child from ruining your finances and in effect, your credit score. Here are some tips that you need to implement:

  • Follow a budget plan. This will help you keep your expenses from being more than your income.
  • Setup saving goals. These goals should be for both short term and long term. You need to think about what you child will need in 5, 10 or 15 years. Anticipate what expenses you will have and if possible, start saving up for them.
  • Invest for your children. This is obviously referring to their college education plans. When you start early, you do not have to save too much for them.
  • Build up your emergency fund. If you think that you can forego a medical treatment because you do not have the money, this might be a difficult option if it is your kid who is sick. Eliminate the possible instances that you will borrow money. Save for emergencies so your kids will not have to suffer.
  • Get a life insurance. This is very important. Life is fleeting. One moment you are here enjoying your baby and the next, life plays a cruel joke on your family. Make sure that any unexpected passing will not leave the whole family wanting. Insure yourself so your kids will be financially taken care of.

All of these will help you overcome a lot of difficulties while you are raising your child. Of course, practicing the right financial habits will not only do your personal finances some good. It will also allow you to set a good example for your children.

How To Manage Your Finances If You Are Financially Supporting A Loved One

elderly couple with family in the backgroundLearning how to manage your finances is sometimes, not just for your own benefit. It is also for others who are depending on you.

As a family, we usually try to be there for each other. We try to be there for emotional and moral support, physical assistance, and even financial help. It is nice to know that when you are in deep trouble, you can count on your family to bail you out or at the very least, give you that little push towards the right direction.

It seems that relying on our loved ones became more popular after the Great Recession. Take for instance the new graduates. In the past, young adults who graduated would move out of their parents and live on their own. They will pursue their own life and take care of their own needs. In recent years, this practice is steadily decreasing. While it is not done by the majority, a lot of Millennials are moving back in with their parents. According to the data gathered by PEWSocialTrends.org, the rate of young adults living with their parents is up to 26% in 2015 – a 2% increase since 2010. The age bracket of this group is currently 18 to 34 years old. Only 67% of them are living independently – a 2% decrease since 2010.

You may think that these young adults are moving back in because they have failed at financial management. That may seem like the case but a new study shows that it is not entirely true. At least, not anymore. Apparently, some of these young adults are actually at home because they have opted to financially support their aging parents.

Dealing with the financial issues when you are providing financial support

A recent study released by TC Ameritrade revealed that more Americans are supporting their loved ones than before. For some, they support their aging parents. Others support their adult children. There are also others who are supporting both.

Now when you intend to financially support someone else, you need to learn how to manage your finances so you can take care of both of your needs. It is not something to be taken lightly. Even if your financial resources are going well, you need to keep yourself from splurging. Instead, you have to ensure that you will prepare for the times when your resources become limited. In case something happens to your finances, you will not be the only one that will be affected. Even the loved one depending on you financially will also suffer the consequences.

According to the study published on AMTD.com, one out of 5 Americans serve as financial supporters of a loved one. On an average, they spend $12,000 in the past 12 months. Surprisingly, Millennials have spent more – averaging at $18,000 in the past 12 months. It is revealed that in most cases, mothers receive the most financial support from their children. These financial supporters also take on the burden, usually, because they were asked to. Based on the survey done, these supporters are happy with what they are doing. But when it comes to choosing between an aging parent or an adult child, most of them would choose to support their parents and leave their adult children to financially fend for themselves.

Of course, you know that helping out financially has its limits. This is why you need to manage your finances well because if not, you will be forced to make some sacrifices that can cost you a secure future. While your intentions are noble, you do not want to become a burden yourself when you retire. The respondents admitted that they had to make the following sacrifices:

  • Delaying life milestones. Since they have to put their extra money into helping their loved one, a lot of the financial supporters delayed major milestones. These milestones included buying a home, retirement, getting married and having kids.
  • Borrowing more money. Because the financial load is greater, some of the financial supporters end up owing a lot of debt. The average debt that they owe amount to $100,000 – including mortgage. In terms of credit card debt, they owe an average of $22,000.
  • Living a frugal lifestyle. Another sacrifice – that may or may not be one, is to live a frugal lifestyle. If you have the right perspective, you can actually look at this as a blessing in disguise. There are many advantages to living frugally and you may be able to learn a lot as you are forced into this lifestyle.
  • Using up their savings. The last sacrifice that they admitted to making is to use up the savings that they have put aside all this time. It is bad enough that they cannot save for their future. Having to dry up their existing savings is a really great sacrifice to make.

To avoid these sacrifices from ruining your future, you may want to manage your finances well so you can maximize what limited resources you have.

Financial management practices to help you support a loved one financially

There are couple of things that you can do in order to help in your money management efforts. That way, you can continue to help your loved one without making it too hard for your finances to carry. Here are some tips you should implement.

  • Use a budget plan. This is always a big help regardless of your financial situation. This plan will help you understand your income and expenses. It will give you more control so you can decide what your financial priorities are and you can ensure that they will always be met.
  • Track your spending. Another tip that you need to implement is to track your spending. This should be an easy task if you have a budget plan. This will help make you a smart spender because you are more cautious of what you are spending on each month. You can cut back on the expenses that you think is unnecessary.
  • Lower expenses. Once you have tracked your spending, you should be able to identify those that you can live without. There are various ways to slash your expenses so you leave more room in your budget for the unexpected expenses.
  • Plan for your future. Although your finances are tied up at the moment, that does not mean you should stop planning from your future. If anything, this is the right time for you to do that. You need to manage your finances not just for the present expenses, but for your future too. If you think that it is hard to financially support someone, you do not want to be on the other end when you retire. After all, you cannot be sure that someone would be selfless enough to make the same sacrifices that you are doing right now.
  • Save up for retirement. As you plan for your future, the most important task that you need to do is to save for your retirement. There are a lot of retirement plans out there that you can tap into. Choose a plan that your budget can afford.
  • Research benefits you can get as a financial supporter. When you are supporting other people, you need to research certain benefits that you can avail because of that financial responsibility. You can look into Medicare and Medicaid to see if you can get health assistance. You can also visit sites like ElderCare.gov to find out where you can get help.

These should help you manage your finances so you can create a more secure financial position for yourself and those relying on you.

Tips To Help Keep Your Medical Debt From Crippling You Further

hand holding a stethoscope on moneyAccording to an article published on NYTimes.com, one out of 5 Americans have overdue medical debt in their credit report. Not only that, more than half of the collectibles in credit reports are usually health related debt. This is based on the latest federal report.

The article discussed that this type of debt is different from the rest. This is because it is a debt that you usually have no choice but to make. Health is something that you cannot forego or delay. If you need to pay for a medical treatment and you need it now, there is nothing that you can do but to borrow money for it. If not, you could make things worse and end up developing an illness that can endanger your life. When you are faced with medical debt, you cannot think twice. It is not like home loans, student loans or even credit card debt. These three can be delayed if you want it to and it will not cost your life. But when it involves your health, you know that you cannot gamble with it. You will plunge through the deepest debt pit if it means saving a life.

But here’s where it gets ironic. If you do make yourself better by borrowing money, your debt troubles could make you sick once more. It is an unfortunate cycle that may very well keep you in debt for a very long time.

Tips that will help you manage your medical bills

Like any other debt, it is possible for you to manage your medical debt – as long as you know the rules. You need to understand and implement the right practices so you can keep the big medical bills from ruining your financial life.

Here are a couple of tips that you can use.

Go for where it is cheap as much as you can.

If you have to borrow money in order to get medical help, make sure that you get the cheapest option. Of course, you do not want to sacrifice the quality of health care that you will get. However, there are options that will not cost as much but will give you the health care and treatment that you will need. For instance, if your doctor can operate on you in a local hospital, you may be able to save on the cost of using the facilities. Or if you can opt for an outpatient procedure, then that is what you should look into. Ask your physician if they can give you the cheapest brand of medicine, then that will help you afford your medications. Just make sure that anything that you can save will benefit your out-of-pocket costs.

Check your medical bill thoroughly.

This is very important. Sometimes, your bill will contain costs that you did not benefit from. It can include services or treatments that you did not get. Sometimes, the people making the bill make mistakes too. You need to check every detail of your bill and dispute anything that you know was not done to you – including the quantity of what was given to you. Feel free to call the billing department of the hospital or healthcare facility to ask questions.

Do not negotiate your medical bill immediately.

Another thing that you need to remember is to wait a few weeks after you receive your bill before you call about it. In most cases, the medical service provider will not negotiate if the bill was just sent to you. You can wait a couple of weeks and not do any harm to your credit report. Just make sure that your medical bill will not reach the collections stage. Otherwise, it would be more difficult to negotiate. According to a published report from ConsumerFinance.gov, debt collection is a top complaint from consumers since 2013. There is an estimate of 43 million consumers with medical debt problems that are already in collections. Try not to add yourself to this statistic.

Be polite when calling about your medical bill.

If you want to ask for a lower price, remember that politeness will get you further than being right. Try to keep a level head and be courteous at all times. You are asking a favor after all. You need to get on the good side of the people at the other end of the line. That way, they will be more willing to help you out. You may be able to get them to waive some of the fees or at least, give you better payment terms so it will not be too heavy on your budget.

Inquire if you can get a discount if you will pay in cash.

If you have the capabilities to pay in cash, then make sure you can get something out of it. This is what you will use as leverage. Of course, you will not give this immediately. You will not tell them that you have some cash to use as payment. Negotiate first and when you have haggled back and forth, inquire if you can get a discount in case you can pay in cash. Let them know that you will do your best to acquire the finances – you just want to know if it will be worth your while. Sometimes, they do not want to go through all the trouble of collecting installments that they will agree to your cash payment – even if it is with a discount.

These tips should help you lower the total medical debt that you need to pay for.

How health related debts can ruin your life

All of your effort to lower the amount that you have to pay for your medical bill will help you in the long run. Even if you have a health insurance, you need to be meticulous when it comes to what you will pay for your medical treatments. Here is a video that shows you the devastating effects of medical debt.

Evidently, there are so many negative things that can happen if you do not take care of your health-related debt. Here are some of them.

Ruined credit report

An article published on TheGuardian.com revealed that your medical bills will not be as destructive to your credit score as it used to. This is thanks to the efforts of New York attorney general Eric Schneiderman. New policies have been enforced to make sure that unpaid medical bills will not be placed in consumer credit reports until after 180 days of being delinquent. This is to help consumers who are waiting for their reimbursement from their insurance companies. But despite this, you need to be careful. It can still ruin your credit history if you do not act fast. If you have to reimburse bills from your insurance company, then make sure they comply immediately to avoid going into default. Stay on top of things even if your health insurance is comprehensive.

Inability to get future medical treatments

When you currently have unpaid medical bills, you may have trouble getting treatments in the future. Some may refuse you additional treatments until you pay off what you owe before. Or if you owe another hospital, you may personally be hesitant to go to the doctor because you know that it can result in more medical debt for you and your family.

Consistent emotional stress

Like any other debt, when you have unpaid medical bills, you will feel some form of emotional stress. You cannot sleep well because the worry that you will feel as you fail to make payments will be a burden to you. Not only that, you will feel embarrassed that you are unable to pay your dues. It will be difficult for you to enjoy your life especially when the collection calls start coming in. Try to keep yourself from this stress by managing your medical debt.

Unless you take care of this debt, you might suffer the consequences for a long time. The list is actually beyond these three. So be wise when it comes to your medical bills and get help if you think it is difficult to do this on your own.

Want To Avoid Financial Mistakes? Stop Being Too Complacent

money trapWe all make financial mistakes. Despite the negative repercussions, we owe a lot to these mistakes. The wrong turns that we make allows us to appreciate every financial success. Our errors also bring the most significant lessons. Everyone who is considered financially successful have gone through their own set of mistakes. The key is how we choose to rise from the errors that we have made in the past.

While we should never belittle the role of these mistakes in our lives, that does not mean we should not do our best to avoid them. We always need to be careful when dealing with our finances. We should learn the signs that we are headed towards another error so we can correct our mistakes before everything is too late.

But what if we are blinded by something that keeps us from seeing these signs? And what if that thing that blinds us, is our own complacency?

Financial confidence is not really a bad thing. This is what we need to help us take the necessary risks that will improve our financial position. However, too much complacency brought about by financial confidence might be destructive after all.

Your confidence is affected by two factors in your life: your income and expenses. When you have a high income and low expenses, that is when your confidence spikes. According to an article published in Forbes.com, the financial confidence of a person follows a pattern that is tied to their age. The article discussed the report from LearnVest that detailed this pattern. Based on that study, people in their 20s reach the height of their confidence level. It sinks as they reach their 30s and bottoms during their 40s. From there, the confidence level rises.

Now this is an important piece of information because it will help you condition yourself as you reach certain ages. You see, the higher your confidence level, the more complacent you become. The more complacent you are, the more chances that you can commit certain financial mistakes.

Being complacent can lead you to commit 4 money mistakes

Complacency is not a bad state to be in. However, it can lead you to commit mistakes because this is the time when you usually let your guard down. When you are not vigilant, that is when you are not as careful as you should be. Every time you are not careful, you are more likely to make mistakes.

But what are the financial mistakes that you can commit when you are too complacent? We can identify 4 of them.

Acquiring too much debt.

When you are too complacent with your financial resources, the tendency is for you to borrow too much. This confidence leads you to feel like you are invincible and that you can borrow as much money as you can because you are confident that you can pay it off. Well here is the truth. Regardless of how much money you are earning, you have tread with debt carefully. It does not matter if you are earning a six-figure income. You should never use it as your basis to borrow more money. Live within or below your means. Do not make your future self pay for what you are enjoying today.

Failing to check your credit report.

One of the financial mistakes that you can commit because of complacency involves your credit report. When you are too complacent with your credit security, you do not feel the need to check your credit report. The danger in that is your inability to detect if you were a victim of identity theft. According to the data published by CreditDonkey.com, fraudsters are getting better at stealing identities. The number 1 complaint filed in the Consumer Sentinel Network Data Book of the FTC (Federal Trade Commission) was identity theft. The cases are clearly increasing so you need to stay vigilant to keep it from happening to you. While constantly checking your credit report will not keep the crime from happening to you, it will give you early detection. As soon as you spot an unauthorized transaction reported in your credit history, you need to alert the major credit bureaus and the credit or lending company involved. File a dispute against that record so they will investigate and help clear your name of that particular debt. If you fail to spot and dispute this in time, you might end up paying for a debt that you did not make.

Saving too late for retirement.

When you are too complacent that your current financial position will not change, your tendency is to skip preparing for your future. It is the same sentiment as when you acquire too much debt. You feel like you can always start saving in the future and you hold on to that thought. That complacency is dangerous because your finances could change in an instant. If you fail to save for retirement as early as possible, you could face a lot of financial difficulties when you retire. You should not let the strength of your current financial position distract you from the urgency of saving for retirement.

Choosing the wrong debt solution.

There are many options to get out of debt. Sometimes people opt for solutions that are too good to be true and fail to explore the other options that are more suited to their financial situation. You need to understand that there are debt relief options for different financial situations. Do not feel complacent after you have researched one debt solution. Read about the others before you decide what you will use to get yourself out of debt. Choosing the right option will efficiently get you out of debt and will even save you money in the long run.

Best practices to stay financially vigilant

While complacency is a great feeling to have, you should not dwell too much into it that you lose sight of what is happening around you. Enjoy it but stay vigilant – always. Things will not always stay as it is even when you think that you are having all the luck in the world. This vigilance will help you avoid financial mistakes that can affect your future.

Here are a couple of tips that you can do to be vigilant about your finances.

  • Create a plan for everything. Financial success begins with planning. Unfortunately, this is not something that everyone does. According to CNBC.com, 34% of Americans do not have any form of financial plans. 58% create plans, but they believe that it needs improvement. Do not make this mistake. Create realistic plans that will help secure your future. You have budget plans, spending plans, debt repayment plans, retirement plans and college education plans. Think about the plans that you need so you will never forget about your goals regardless of your current financial position.
  • Set up reminders. Another way that you can be vigilant is by setting up reminders. If there are payments to be made, financial milestones to be met – these should have reminders to ensure that you will not forget to meet them.
  • SImplify your financial transactions. Sometimes, we make financial mistakes because we complicate things too much. The truth is, you can simplify your financial transactions. For instance, if you have a lot of credit accounts, you can consolidate debt them so you will not be too confused. Sometimes, your confusion increases the chances of you making a mistake.
  • Keep yourself informed. Finally, you need to keep yourself informed about what is happening all the time. Have the initiative to learn something new that will improve your financial situation. When you keep yourself informed, you can act on things and grab opportunities as they happen.

The key to keep complacency from leading you to commit financial mistakes is to be observant and open minded. Here is a video that lists some of the scariest money mistakes that you need to avoid at all cost.

Why Medical Data Breaches Are The Absolute Worst

Man looking frustratedYou probably read about the huge data breach that happened at Anthem where the records of nearly 80,000,000 people were stolen. The even more dismal news is that it took Anthem more than six weeks to discover that its IT system had been hacked. Community Health Systems had a breach of 5.4 million records. And UCLA Health System recently announced a data breach that affected 4.5 million of its customers. Apparently, this hack went undetected since October of last year. This means the thieves had more than seven months to do whatever they wanted with the data – totally undetected.

Why this is so scary

The reason why medical data breaches are much worse than those suffered by companies such as Target and Chase is because of the nature of the information that gets stolen. It generally consists mostly of names, addresses and credit card and bank account numbers. In comparison, comprised health data represents a huge amount of personal information for identity thieves as it typically includes medical records, ID numbers and Social Security numbers as well as names and addresses.

Not just your financial information is threatened

It is very bad if your information was stolen from Chase or Target but this is just your financial information. A medical data breach means that the thieves get your medical records, which could end up getting mixed with the thieves’ medical records. When this happens, you could end up being given a drug that will harm you or, even worse, a surgical procedure you didn’t need.

What compounds the problem

What makes this problem even worse is that it’s extremely difficult or sometimes even impossible to remove the medical information of the identity thief from your medical records even after you’ve found the problem. This is due to certain oddities in the laws regarding medical privacy.

 It’s only getting worse

One of the best things about credit cards is that they usually limit your liability to $50 in the event of identity theft – assuming you notify your credit card providers pretty quickly. In fact, some will even waive the $50. But most of the people that had been victimized by the theft of their medical identity ended up paying an average of $13,500 to fix things. Ponemon Institute’s Fifth Annual Study on Medical Identity Theft found that “in many cases, victims struggle to reach resolution following a medical identity theft incident. In our research only 10% of respondents reported achieving a completely satisfactory conclusion of the incident.”

As a consequence of this many people may have errors in their health care records that could endanger their diagnoses and treatments. It was further reported in this study that people who were able to fix the crime spent an average of over 200 hours with their insurer and healthcare providers to ensure that their personal medical records are now secure and can no longer be utilized by a thief.

young woman looking at credit cardWhat you could do to protect yourself

It’s alarming that healthcare data breaches have accounted for 42.5% of all the breaches that occurred over the past three years. And, even worse, 91% of all healthcare organizations reported at least one breach over the past two years. So the big question is what can we do to prevent ourselves from falling prey to medical identity theft or what we could do to at least limit the amount of damage.

Limit the information

The first thing that you should do is limit the information you give your healthcare provider. The key to identity theft is your Social Security number. All a thief needs is this one bit of information to get your identity information and make your life a living hell. While healthcare providers usually want your Social Security number, there’s no reason for them to get it. Take a line from that old anti-drug commercial and, “just say no.” Give healthcare providers your driver’s license number or some other number that` would identify you.

Read your Explanation of Benefits — very carefully

Another thing you should definitely do to prevent problems is read carefully the Explanation of Benefits that your health insurance company provides you. Unfortunately, these documents are often written in confusing gobbledygook. They’re supposed to detail the use of your health insurance but often don’t explain anything very clearly. As a result many people never take the time to read and understand them. The problem is if you don’t read your Explanation of Benefits carefully, you might miss language having to do with your insurance and identify theft.

What else you could do

If you were a customer of Anthem, Chase or some other company that suffered a data breach and believe that someone has misused your financial information, you could place a fraud alert on your credit report. This is free. Once you do this it makes it harder for the thief to open any more accounts in your name. When you have one of these alerts on your report a business must verify your identity before it issues any credit. In fact it might actually contact you. This alert will remain on your report for at least 90 days. You could then renew it.

An ounce of prevention

There are also precautions you can take to prevent identity theft. One of the most important of these is to shred your financial documents or any other documents that include your personal information. You should also monitor your credit reports and bank accounts periodically. If you spot any suspicious activity contact your bank immediately to report it.

Finally, you might consider purchasing one of those identity theft detection products such as LifelockPrivacyGuard or IDFreeze. Make sure that it does include identity restoration if you are the victim of identity theft. While these services cannot prevent your personal information from being stolen they will notify you very quickly in the event of identify theft and you should be able to utilize the company’s certified specialists to help restore your identity.

Do Not Let Your Debt Problems Keep You From Buying A New Home

house and calculator on a mortgage applicationWe all know how debt problems can keep you from improving your finances. It can keep you from investing your money so you can grow your personal net worth. Well this particular fact can be proven by the recent statistics from Credit.com.

According to an article published on the site, 52% of Millennials admitted that their debts are keeping them from buying their first house. This data came from a survey conducted by TD Bank. Their debt obligations are keeping them from saving up for a down payment – or at least, 70% of them are saying this. It makes a lot of sense because there are several news reports that say how Millennials are so deep in student loan debt.

But despite this obvious difficulty, 5 out of 10 Millennials think that they can buy their own house in 5 years. In fact, majority of them believe they can buy a home in the next 2 years.

Although your debt problems will make it difficult to buy a new home, it is not impossible to do it. If all the Americans treat their debts as a hindrance to buy a home, then nobody will become a homeowner. The consumer debt problem in the country seems like something that will never be solved – or at least, eliminated. We will always have some form of debt to our name. The key is to learn how to manage your debt situation so it can never keep you from reaching financial goals like buying your own house.

How to buy a home despite your debt situation

Truth be told, majority of homeowners were probably in debt before they bought a house. Some of them probably had student loans like the MIllennials. Others have credit card debts. There are homebuyers who have existing personal loans before they applied for a mortgage.

This is a certainty because mortgage lenders look at the credit score of buyers before granting approval for the home loan. A credit score is a number that indicates how creditworthy a person is. This is computed based on their credit report – which is a record of their credit behavior. If you do not use credit before buying a home, it will be very difficult for you to get approval for a home loan. After all, this is a huge amount to borrow. Lenders will not easily trust a person with a low credit score because they are considered to be high risk borrowers. That being said, being in debt before buying a new home is the best way for you to do it.

Of course, there are certain rules that you need to follow because debt problems can be a tricky financial situation to be in. Too much debt amount will get you disapproved of your home loan too – thus keeping you from buying a house. So what should you do in order to keep your debt situation from ruining your chances of living in your dream house? Here are a few tips that you can use.

  • Fix your credit score first. If you consider your credit situation as a problem, it means you have more debts than you can handle. It may be because you are having a hard time paying it off. In case this is true and you have already missed a couple of payments, that would mean your credit score is quite low. According to the statistics provided through CreditCards.com, Millennials have the lowest Vantage Score average at 628. If this is your score, you need to take your time before you buy a house. Get your credit score up first so you can be approved of a low interest rate home loan. That should help make your debt payments easier to commit to.
  • Save as much as you can for a down payment. While you are fixing your credit score, you can also work on saving for your down payment. The higher you can pay upfront, the less amount you need to borrow. This strategy will save you a lot of money in the long run. So be patient and set aside an amount each month so you can pay at least 20% of the sale price as your down payment.
  • Know how much you can afford. It is also very important that you be honest with how much you can afford to buy. If your finances can only afford to buy a 2 bedroom apartment, do not try to buy a bigger 3 bedroom home if it will cost more. You can forego having that extra room if it will give you bigger debt problems in the long run. Do not try to buy a home in posh neighborhoods if you cannot afford it. As long as the community is safe and secure, you can go for the cheaper properties.
  • Choose the right home to buy. There are a lot of questions that you need to ask yourself before buying a house. One of them is about what you are looking for in a home. Do not force a 4 bedroom house if you only have one child and you do not have plans of having another. The more bedrooms there are, the higher you have to pay for it. Find a house that will also compliment the lifestyle that you wish to lead.
  • Time when you will buy your home. It is very important to time when you intend to buy your house. Look at the housing market to get tips from there. Most experts would say that you should buy a house when the market is down so you can purchase the property at a lower amount. However, there is one real estate investor who claims that you can buy a home anytime you wish – as long as you have the plan and strategy in place to make it worth your while. Here is a video that explains how you can know when it is the best time to buy a property. In the video is Kris Krohn, a real estate investor with hundreds of real estate property investments in the country.

Two ways you can own a home without making debt a burden

The truth is, there are two ways that you can be a homeowner without adding to your debt problems.

Own a tiny house

Tiny homes started to gain momentum when the housing market crashed during the Great Recession. A lot of consumers lost their homes to foreclosure when they failed to pay off their mortgage because of job loss. Some of them could not profit from their homes because of the lower value at that time. But that did not erase the dream of Americans to live in their own homes. The answer to that was building tiny homes. These houses are literally small – a cross between a cottage and an RV. It is actually like a small cottage on wheels and the designs are quite attractive. If you are living solo or as a couple, you can live in these for a couple of years. There are even designs that small families can live in. These tiny homes are inexpensive (some as low as $22,000) and you can build one on your own. A news article even featured a high school student building his own tiny house to void the problem of mortgages. If you want your own place but you do not have at least a hundred thousand dollars (and you cannot qualify for a home loan), then tiny homes should be good enough for you. At least, for the meantime.

Buy a home that you can rent out.

Another option to keep homeownership from adding to your debt problems is to buy a home with a garage or basement that you can rent out. In REInvestorTV.com, real estate investor Kris Krohn mentions how he started building his empire of properties all over the country. He said that his mentor taught him to do a couple of things: have at least 2 years of work experience, build up his credit score and save up for his down payment. He waited for 14 months to save $3,000 – something that he will use as the down payment for the first house he will buy. During that waiting period, he established a good credit reputation and together with his work history, he was able to get a loan to finance a $110,000 house in the market. Now this house was then worth $150,000 – which gave him an immediate $40,000 equity. So how did this strategy keep him from debt problems? This first house had a basement that he could rent out. So he lived in the main house and found a tenant that paid him enough to cover his monthly amortizations. If you think about it, he owned the house that he lived in and he only spent $3,000 in cash.

These two strategies can help you own your house without putting additional strain in your debt problems. Think about your options and analyze how you can benefit from it.

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