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The Road to Financial Literacy

Woman looking at paperFinancial literacy is one of the key components to achieve a successful financial life. Some people have the right resources and opportunities but their lack of knowledge only led to the loss of what could have been a good shot at personal wealth. Financial literacy and opportunity goes hand in hand in ensuring proper finance management.

Having the right tools to manage your finances normally leads to a path of financial freedom as well.  Debt is often the product of uninformed financial decisions that can be compounded by unfortunate life circumstances. But focusing on those that can be addressed is an important step in getting out of debt and on to a road of financial independence.

Financial literacy in the country recently rated the states in the country in terms of financial literacy. New Hampshire took the top spot by ranking number one followed closely by Utah and Virginia. New Jersey and Minnesota rounds off the top five in the study. The study shows that these five states are conscious and serious about proper financial management.

The study used metrics to measure education and knowledge as well as daily habits and planning as well. The study also revealed rankings of different states according to characteristic:

Dropout rate for high school

Education at any level is important for an individual. It works with the character and determination of a person to succeed in life. It is not the only determining factor in success but it is a very crucial tool in reaching greater heights. There are also some schools teaching your kids about finances.

The study showed that New Hampshire has the lowest dropout rate of 1.2%. This is a good factor leading in why the state is leading the pack in financial literacy. It is also a good sign of a healthy educational system.

Emergency fund

Saving up for a rainy day is important in getting over unforeseen challenges life will throw our way. Medical emergencies or losing a job could be some of the events our emergency funds can address. Without it, you can get deeper and deeper in debt as your only option is to get a loan to have the money to survive.

Arizona tops the list at 53%. More than half its population knows the value of a rainy day fund. They build on it and put it aside hoping they never get into a situation where they need to use it. But if they do, then they have something to pull out. Indiana is at the bottom of the list at 33%.


Bank accounts are essential tools in safekeeping hard earned money. Better than just letting the funds collect dust at home, they earn interest in the bank. And you also almost the same type of access to your money in the bank just as you would put it in a drawer.

New Hampshire tops the list again with just 99.1% of residents having a bank account. This means they are well on their way to ensuring their funds are kept safe. It is also important for parents to tell their kids about their finances in case of emergencies, they know the financial standing of the family. Mississippi is rounds up the list with 15.1% of residents not having a bank account.

Sustainable spending habits

Making good use of the money you earn is a good sign of sound financial literacy. Maryland residents know about this as they top the list at 14%. Most of them know the value of a dollar and uses them wisely. Mississippi is again at last place with only 22% of its population guarding their spending habits. Proper spending habits can also make you confident about personal finances.

Borrowing rate

This is a great gauge on the risk profile of state. The lower the number, the lesser the chances of default and the better the credit score. It also echoes the health of the economy in a  particular area. Excluding bank rates, New Jersey tops the list with only 16% and Oklahoma is at the bottom with 40%.

Financial literacy occurs on two levels. Looking at the macro-perspective, consumers need to understand the policies that are formed and how it relates to their finances. They need to be updated with rulings and recent news that could affect their lives. On a micro level, consumers need to be aware of personal financial traits and characteristics. This can include saving, spending and even consumption. The understanding that encompasses these two levels can greatly contribute to financial literacy.

Financial literacy month

April was financial literacy month and it was a great time to remind us that at the end of the day, we are all responsible in our financial standing. It also made us realize the importance of saving and what it brings to our future. In light of this, came out with some points on how to create our map to financial literacy.

  • Commit to financial change. Financial literacy starts with a commitment. It starts with the individual wanting to change and a commitment to stick to a lifestyle of sound financial decisions.
  • Check your financial standing. Doing an audit of your situation financially can get your started in the right track. It is important to know where you are coming from in order to prepare on where you want to be. Financial literacy starts with an honest assessment of one’s self.
  • Credit report clean-up. Making sure that your credit report is accurate will help you open numerous financial opportunities down the line. Check the accuracy of your report and if there are any problem, report them right away so they can be fixed.
  • Priority setting. It is crucial to lay out your priorities to reach your goal. Knowing where to start with and what to aim for first can guide you in the right direction. This can also help remind you of what financial journey you are on.
  • Set goals. Classifying your goals as short, medium and long term can help you prioritize even more. This can give you a clear direction on where to start and when you should end on a specific goal. It allows as well to put a time frame to your goals to push you even more.
  • Debt payments. It is quite a challenge to pursue financial dreams with a ton of debt breathing down your neck everyday. Paying down and paying off your debt should be on top of your list. Clearing up income payments that go to debt payments and channeling them over to your goals will help achieve them faster.
  • Emergency fund. As with everything, we need to expect things will not always turn out the way we want. There will be bumps along the way that could steer us off-course. The way to remedy this is to prepare for the unexpected. Build an emergency fund to help you through rough times and prevent them from getting rougher.
  • Retirement fund. You are only young once so save up for those winter days. Tackling retirement early will help you retire when you want not when you need to.
  • Track your expenses. Keeping tabs on where your money is spent is a good practice on financial literacy. It is easy to remember the big ticket items but those small repetitive ones are quite hard to tally up. By tracking them, you will see just how much you are spending on unnecessary items and can help you save up precious dollars.

Technology Makes Saving Easier

Man counting moneySaving up for a rainy day has always been a challenge to do. But there are a lot of tips in saving and plenty pieces of advice out there that should make it easier to undertake. Putting aside a part of our earnings so we have something to pull-out of our pockets in times of need is the basic idea. This serves as a safety cushion during emergencies.

It is a challenge for a lot of people mostly because of the attitude more than the amount. Putting aside savings could start with any amount just to get started. You should get used to the routine to be successful in saving. It also helps that you already have a goal in mind on why you are saving. It could be increasing your retirement fund, padding up your emergency fund or even saving for a mobile device.

Saving through technology

Aside from physically putting aside money in a bank, technology has allowed us to save up on a few areas as well. Advances in technology has paved the way for smarter use of the dollar. There are existing inventions and modern applications that can help us increase our savings. shared some ways to use technology for our advantage. There are opportunities out there to maximize technology in order for us to increase our savings.


It is the day and age of mobile devices. Gone are the days when we idly sit by the phone waiting for a phone call from a friend to know where to meet up. It also used to be a tedious task to tell 20 people where the party is if you had to make phone calls to each one of them.

Mobile phones has disconnected us from our landlines and gave us mobility. It served not only as a calling device but taken on the communication and socialization to a different level. It is no longer just a passive receiver and dispatcher of our calls. Technology has brought us smartphones.

Communicating with 20 people is easier now with just a text message. Talking to more than one people is easier as well with conference call. But all these are paid services. Whenever you send out an sms message or make a call, it reflects on your bill and they easily pile up because of the convenience of using the service.

There are Voice over Internet Protocol (VoIP) services we can use to lower down our monthly bill. Using internet connection with which most smartphones comes equip with, we can use skype or viber or other applications to call and send a message for free. As long as the receiving party has the same application, you can communicate for free.

Using internet enabled smartphone, you can freely talk and message your friends and it will not add up to your bill

Internet capability

As most devices are dependent on internet connection, you do not have to apply for a connection for each device. Let’s say you have a mobile phone, a tablet and a laptop – you do not need to have 3 internet connection for each device. You can tether the internet of one device to share the connection with the other gadgets. Tethering is the ability to convert the internet connection of one device and share it through a wifi connection for the others.

This saves you precious dollars in applying for a connection or even buying internet cards. Saving the money that was supposed to be used for internet connection can now be part of your savings account.

File storage

We used to have photo albums and cassette tapes of our precious photos and music interest. Now, there are digital files of all these saved up either in our mobile phones, tablets or desktops. As months go by, we add on to those files increasing the need for storage space. This is similar to having a lot of photo albums to store actual photos.

The problem sometimes is that one photo is in one device and another photo is in the other device. We then buy a hard disk to store all our files in one central location. This is useful as a back-up but bulky to carry. This is where online file storage and sharing comes in.

Dropbox is one perfect example of such technology that can help us in our saving endeavors. It virtually gives us a space where we can put in all our files without having to carry a hard disk around. What is even more better is that you can access the files with any of your devices saving you time and energy in saving, filing and locating the files.

CLF lightbulbs

Compact fluorescent lights or CLF is better than using a standard incandescent light bulb. It might seem like a small part but it is actually a thrifty money saving tip. The idea behind using CLFs is the fact that it can outlast a standard bulb ten times over and using about 30% less energy. This can be a significant amount in the future.

Saving to build wealth

Technological advances are making our lives easier by the minute. It is connecting us much faster and quicker than ever before. It allow us as well to find creative ways to save up and build up our wealth. As shares, there are some habits that will make wealth building a lot easier.

  • Anonymous Rich Person. As most people would associate the wealthy with big yachts and shiny cars, most millionaires live a frugal lifestyle. As much as saving can save your life down the line when you need the money the most, frugality is a nice option as well.
  • Pay Yourself First. Reverse the attitude of paying the bills first before saving up money. Reward yourself by putting money into the savings first before anything else. This forces you to save up on expenses rather than cutting down on your savings.
  • Goal Setting. Having a target makes your efforts quantifiable. This allows you to check your progress and see how far you have gone or how far along you still need to go. This is helpful in setting your eyes on the ball and making sure you succeed in your goal.
  • Increase Earnings. There are ways to maximize your current income to suit your lifestyle. But one approach to saving and building your wealth much faster is adding extra sources of income. Some would take on a second job while others explore a side business. The latter usually works when you venture into something you love doing. Think of a hobby you can turn into a business venture.
  • Tracking Money. Not a lot of people practices this attitude. As important as it is to increase your earnings, you need to track as well the expenses. You can be earning a lot but spending a lot more and this will get you in debt. Having a method to track your income and expenses will guide you in knowing where you can make adjustments to increase your savings.
  • Debt Payment. Though regular payment on debt shows a positive effect on your credit score, it is better to have more money for saving purposes rather than debt payments. Pay off your debt and use the money to put into your savings. One advantage of this is preventing the cycle of paying down debt so you can borrow for life emergencies resulting in paying more debt. This gets you deeper in a financial bind.

Combining the positive uses of technology and simple tips in building wealth proves beneficial in saving for the future. It is better to have money in the bank for your use in the future rather than borrowing money from the bank.

How To Pay Off Debt If You Are Not Paid Enough For A Job You Love

telemarketerHow’s this for a difficult scenario. You spent months after graduation stressed out about getting a job despite a tough job market. When you finally found a job opening, you are ecstatic to learn that it is a job that you know you will love to do for decades. But here’s the catch – it will not pay you enough for the type of lifestyle that you want to lead. How will you decide between your dream job and having the finances to support your dream lifestyle?

Most people will actually choose the latter. They will sacrifice their sense of personal fulfillment and happiness with work just so they can earn more money. And guess what the main reason is: to pay off debt. They will lean towards the practicality of being able to pay for their debts instead of pursuing the career that they know they love to do.

But there is some logic to pursuing the job that you love despite not giving you enough money to pay off debt. It may seem impractical but we have some sound reasoning that could help you decide. The work that you will do will take up at least 40 hours of your time every week. Imagine feeling miserable for 40 hours each week. If you think that the lifestyle you can afford will make you happy, think again. In most cases, people who come home from a bad day at work will bring that negativity with them. It will be felt by the people they live with.

But if you pursue a job that you love to do, your sense of personal fulfillment and happiness will be greater compared to the other scenario. And even if you start out with a low paying job that you are passionate about, you will most likely be more productive because of the happiness level that you have towards it.

Do not be too quick to shut out the jobs that you love to do just because it will not pay you well. There are two options for you to make ends meet so you can afford to pay off debt accounts that you owe. You can either earn more or spend less during a debt crisis.

Lower your expenses if you want to increase debt payments

The first option is for you to cut back on your expenses. If you are a new graduate, this may be easier for you. People who are older and have families will usually have a harder time changing their lifestyle to fit their low income. The longer you have grown accustomed to an affluent life, the more difficult it will be for you to make the change. But if you concentrate on the priceless benefit of doing a job that you love, it should be a sacrifice worth making.

The reason why it is difficult to make this transition is because Americans are spenders. That is according to an article published on The article even cited a statement by former President George W. Bush back in 2006. Apparently, he said that the best help that Americans can give their country is if they went shopping.

In this country, everything around us encourages us to spend. But that is a lifestyle that we can no longer follow. You need to pay off debt by lowering your expenses. That will free up more money from your limited income.

To start, you need to simply concentrate on your priority expenses. According to the latest consumer expenditure data published on the Bureau of Labor Statistics website (, the average expense per consumer in 2012 is $51,442. It is noted to have increased by 3.5% from the previous year, 2011. Here are the top expenses that people usually spend on.

  • Housing: $16,887 (32%)

  • Transportation: $8,998 (17%)

  • Food: $6,599 (13%) (at home $3,921; away from home $2,678)

  • Personal insurance/pension: $5,591 (11%)

  • Healthcare: $3,556 (7%)

  • Entertainment: $2,605 (5%)

  • Cash Contributions: $1,913 (4%)

  • Apparel and services: $1,736 (3%)

  • Other expenses: $3,557 (7%)

If you notice, the food expense is high and that is alright. But we are wasting a lot of money on eating out. You can cut back on expenses if you only opt to cook and eat more at home. Not only that, transportation costs can find more room for savings. You can carpool with colleagues or opt to bike to work – if the distance can make it possible. There are so many ways that you can cut back on your expenses at home. And if you cannot afford, it simply opt not to spend on it. Prioritize what is important like the funds you will use to pay off debt.

Increase income to grow your credit contributions

The second option to make your low income job work for you is to set up side jobs that will earn you more income. In fact, this is common for Americans.

An article published on revealed that Americans hold multiple jobs to help supplement their primary source of income. The article said that 4.9% of working adults hold more than one career. Half of them have one full time job and a part time job. They are called the moonlighters.

A lot of people have opted to increase their income through a second career but we encourage you to set up a passive income source to avoid burning yourself out. The article mentioned that people seek to get payment for the amount of time that they spend working on their hobbies and interest. They will spend some time doing handyman repairs, some will tutor or work on computers in their spare time. Any skill or interest that you have can be capitalized on so you can earn money on side to pay off debt without feeling too burnt out.

Here are some of your options to earn more money.

  • Freelancing. This is when you use your skill to earn money and get paid on an output basis or based on the time that you spend working on a job.

  • Passive income. There are so many options to earn a passive income. You can use a spare room in your home and rent it out. You can let other people rent out your extra vehicle. You can also convert your garage into a storage space for other people to rent out. These are options that will help you earn without necessarily having to work for it all the time. Writing a book and earning off it’s sales is also an option.

  • Earn from a hobby. If you love to garden, offer to plant and take care of the garden of your neighbors. Not only will you be going something that you are good at, you can help your neighbors cut costs on food. You can also offer to cook for colleagues and brown bag their lunch. That will help you earn extra through the lunch payment they will give you. Babysitting is also one way to earn more.

  • Teach a skill. If you are good at playing instruments, you can opt to take on student and teach them what you know. Cooking and baking classes will also work. If you love sports, this is also something that you can coach every summer.

Of course, you can always opt to simply ask for an increase from your boss. Given that it is something that you love to do, you will find the motivation to be as productive as you can be and improve your skill. That can be a leverage in negotiating for an increase.

Debt relief options for low income households

While you work on your options to increase the money that you can allocate to pay off debt, you need to choose a debt relief program to further improve your chances of achieving a debt free life. You have three options to help you out.

  • Income based repayment for student loans. This option will help you set a monthly payment on your student loans depending on the amount that you earn every month.

  • Loan forgiveness for those working in public service. This is mostly for student loans too. You may be qualified for a loan forgiveness if you work in the military or another career in public service.

  • Debt consolidation. For all the other debts that you owe, you can opt to use debt consolidation. This type of debt solution will help you restructure your payment plan so you can make lower monthly contributions towards your debts without being penalized for it. Here is a video that discusses your different options to consolidate debt.

Sacrificing a high paying job to do something that you love is rewarding. Do not worry about how you will pay off debt because you have so many options to help make it a less of a burden.

6 Debt Payment Ideas That Do More Harm Than Good

woman drowning in debtThere is no one formula to get out of debt. You actually have a lot of choices before you. However, that does not mean that all of them are effective. Believe it or not, there are options that may seem like a good idea, but are actually not.

This is why you have to take time to research the different debt payment options that you have before you make a choice. There are debt solutions that will only make you feel better now but they are actually not helping you solve the root cause of your problems. When you are deep in debt, there are many issues lurking beneath the surface. The most evident is the debt that you have to pay off. However, you need to stop and consider if the debt payment option that you will use can also help you solve the reason why you landed in debt in the first place.

6 payment options that will harm your finances more than it will help with debt

There are 6 debt payment options that people should consider carefully before using them. Most of these are doing you more harm than good. If you are not careful, you could end up paying more than the debt that you really owe.

  • Sticking to the minimum payments. There is no one happier with you doing this than the creditor. While it will keep you from incurring late penalties, it will also keep you in debt for a very long time. If you want to see how long, you can use the minimum payment calculator from Feel free to alter the monthly payment and see how long it will take for you to completely pay off your dues. You will also see how much you will end up paying on interest.

  • Credit card cash advance. The cash advance that you will get from credit cards are more destructive than you thought it would be because of the high interest rate that is imposed on it. Not only that, there is no grace period. So as soon as you take this out to help pay for your other debts, you are already accruing interest.

  • Direct deposit advance. This other type of advance can also end up crippling you because of the high interest rate. This is an arrangement that you will make with your bank. They will agree to give you a loan but they will take your paycheck when it is directly deposited in the bank. It may solve your payment problems now but what about for the next month? Not to mention the money you wasted on the interest rate.

  • Getting money from your 401(k). Some people use their retirement money to help pay off their debts. This is usually a bad idea. If you are near your retirement age and you are tempted to use the money you have set aside – don’t do it. You will lose in terms of your taxes. The money you put in your 401(k) is before taxes. If you withdraw from your 401(k), you need to pay it back with interest from your income after taxes. And when you retire and you withdraw the same money, that will also be taxed.

  • Title loans. This will give you a loan but you have to put your car’s title on the line. The interest rate is high and you have to endanger your car from being taken by the lender in case you cannot pay off your debts.

  • Payday loan. The last debt payment option that is not advisable is using payday loans. These also have high interest rates and short payment terms. If you are using this to make ends meet month on month, you are not solving your debt problems – you are making it worse.

Better payment plans for your debt

Instead of using these options to help finance your debt payments, we strongly suggest that you go for a debt relief program that will work within your budget. Most of the loans that we mentioned above involve getting a high interest loan to help pay off the expenses of today. You are not addressing the high amount of expenses that goes beyond your income capabilities. Well here are two options that will help you keep up with your debt payments while sticking to your budget.

Debt consolidation. This option will help you get a lower monthly debt payment plan. That should help loosen the restrictions in your budget. Also, this debt relief program will allow you to consolidate your debt payments into one. That should make it easier for you to monitor your debt contributions. In most cases, you are also given a lower interest rate on your debts. It has to be said, though, that this will not lower the balance that you owe. Your current debt is stretched over a longer payment period – that is what makes the lower monthly payments possible. You have three options for this: debt consolidation loan, debt management and balance transfer.

Debt reduction. If your income cannot pay for a significant part of your debts, you may need to reduce your balance. This is where debt settlement or bankruptcy can help. By proving to the creditor or bankruptcy court that you are in a financial crisis, you will be granted debt forgiveness.

To help you choose between the debt payment options, we encourage you to use the debt calculator from the National Debt Relief site. Or you can use the consumer options calculator from the site. These will help you understand which of the debt payment plans can actually help your unique financial situation.

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