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Best Practices After Debt Relief

debt relief signDebt relief is a necessary step towards debt freedom. Of course, that is easier said than done. Although you are earning a lot of money, you cannot just dump all of that towards your debt payments. You have a lot of expenses to think about too. This is why a lot of consumers take forever to finally get rid of their credit obligations.

Depending on the amount that they owe, it takes them years and even decades to say goodbye to debt. For some, being free from debt will never be a reality. Even before they can completely pay off what they owe, some consumers continue to borrow more money. Some do it by choice, while others are forced into it. Those who are forced into it wait for a miracle to help them achieve debt relief. But miracles, when it comes to finances, are hard to come by right?

Not for the 350,000 students that will be granted debt relief by the US Secretary of Education. According to the news published on Gizmodo.com, more than $3.5 billion worth of student loans will be forgiven by the government. It is believed that the borrowers of these loans were victims of fraud. They were forced into taking huge student loans by the online schools owned by Corinthian Colleges. This for-profit college closed and filed for bankruptcy – in the midst of fraud charges. The Education Department will forgive a lot of federal loans owed by these students because of their enrollment to the schools of this college company.

We cannot really say that it was divine intervention that caused the forgiveness of this debt but one thing’s for sure, a lot of students will be feeling debt relief because of this event. It is great that these students were kept from financial demise caused by a loan that would apparently – do them no good.

Not everyone is as lucky as they are but this loan forgiveness is not the end of everything. If you want the debt relief to last, you need to maintain it. You can think of it as achieving your ideal weight after dieting so hard. Your efforts will not stop as soon as you see your target weight in the scale. You need to maintain that by eating right and continuing healthy activities like exercising.

What to do after you have paid off your debts

After debt relief, things will not be a tough anymore. But that doesn’t mean no effort will be spent. You need to exercise self control and discipline to maintain the financial state that you are currently in. For those who benefitted from loan forgiveness, the chances of going back into debt might be more likely to happen. That is because they did not work hard for their debt freedom. Those who worked hard and painstakingly saved every penny just to get out of debt would be more motivated to stay out of debt.

If you really want to turn your financial life around, you may want to follow these important activities that will keep you debt free.

Build up your emergency fund.

First and foremost, you have to make sure that you have an emergency fund. This is the money that you will put aside so you have something to spend in times of emergencies. This is a great way to stay out of debt. Usually people end up in debt because they were forced to borrow money after an unexpected expense arose. If you want to stay out of debt, you need to be prepared for these incidents. Since you no longer have debt payments, you can use the money allocated for this to grow your emergency fund.

Set up other saving goals.

Once you have enough emergency fund, you may want to set up other goals that you can save up for. If you want to buy your own house, you can save up for it. The more money you can pay towards the down payment, the lower amount is needed for your home loan. If you want to replace your car for a more fuel-efficient one, it is better for you to save up for it instead of getting a car loan. We all know that cars depreciate as soon as you drive it from the dealer. That means you will be paying way higher than the value of the car – especially if you add to that the interest that will be added to your loan amount. There are other saving goals that you need to look into like retirement or the college fund of your children. According to Bankrate.com, American families are still finding it hard to save money for a new car, college or retirement. But with some discipline, you can remove yourself from this statistic and save up for the right goals that you want to have in your life.

Invest your money.

Another task that you can do after debt relief is to invest your money. The first two are tasks that you need to do so you can protect yourself from the uncertainties of the future. This task, investing, will help you grow your personal net worth. You can choose an amount that you are comfortable risking and invest it in stocks, bonds and mutual funds. These will help grow your money better than a regular savings account will. The interest rate of investments is bigger than that of savings accounts.

Reward yourself.

Once you have taken care of the first three, you can think about rewarding yourself for freeing yourself from debt. Allow yourself to feel that debt relief is the secret to a happier life by rewarding yourself. You can buy yourself something that you have been depriving yourself for so long. Of course, you need to make sure that the reward that you will buy yourself is reasonable. And that you will pay for the reward in cash. Do not splurge too much that you will put yourself in a dangerous financial situation again. Buying a luxury car may be too much of a reward. A vacation with the family should be a great prize for what you have achieved too.

Spend smartly.

Now that you have achieved debt relief, you need to maintain it so you will no longer be burdened with debt again – at least, not unless you really have to. That means you need to spend your money wisely from now on. Be careful with your decisions. If you think that a purchase is unnecessary, do not buy it even if you know that you can afford to pay for it in cash. There are better places to put your money in – like your savings account or investment.

How to use credit without falling into a financial crisis

Truth is, although it is very hard to get debt relief, you should not be afraid of debt. Believe it or not, there are good and bad debts. According to an article published on BusinessInsider.com, a debt is categorized as good or bad depending on how it affects your credit reputation and finances. In other words, any debt that you should take from now on should be something that will improve your financial life. If it puts money in your pocket, borrowing money makes sense.

Instead of being scared of debt, you need to learn how to manage it so it works in your favor. Here are some tips that you need to follow when borrowing money.

  • Borrow so you can put more money in your pocket. This simply means you need to choose the debt that you will borrow. Credit card debt is fine but you need to consider what you are using it for. If it will be used to buy a product that will help you function better at work, then you can go ahead and use it. Just try to pay it off in full when the bill comes so you do not have to pay interest on it. Spending on updating your knowledge and skills is also a great reason to be in debt. As long as it can help increase your ability to earn money.
  • Have a plan to pay it back. With any debt that you will borrow, make sure that you have a repayment plan in place. It does not have to be detailed but you need to know where you will get the money to pay it off. If you do not know where to get the payment for the debt you will take, then do not borrow the money.
  • Include the debt payment in your budget. As soon as you know the amount that you need to pay off on a monthly basis, include it in your budget. That way, you will never forget it. This will also allow you to consider how your income will deal with this additional expense. If this expense is beyond your income, you can immediately choose another expense that you can give up so you can afford your debt payments. One of the budgeting mistakes that you can commit is failing to include debt payments. You will be charged with late penalty fees if you fail to pay on time.
  • Limit new credit until you pay your current. Lastly, you need to limit any new debt until you have paid off your existing. Even if you know that the bank will approve your loan, do not borrow money. Leave some room in your budget for your savings. It is better to pay for purchases in cash rather than credit. You can really enjoy your purchases if you know that you have paid for it in full before using it.

3 Skills To Develop To Increase Your Salary

increase in earningsDo you want to increase your salary? Of course you do! That is actually what we all want to happen in our lives. The more money that we have, the more we can enjoy a better lifestyle for ourselves and our family.

It may sound very materialistic but we have been bred to earn a higher income ever since we were kids. All those classes, training programs, seminars and college degrees were meant to help us grow our personal net worth. It may be embarrassing to admit but we use money to measure the success of a person. It is true that there are other things in life that are more valuable than money like love, family, respect, etc. But if you think about it, having enough money to live a comfortable life significantly increases our personal happiness and satisfaction.

The question is, just how much do you have to earn to be able to live a comfortable way of life?

According to an article published on CheatSheet.com, a six-figure income is required if you want to have the American Dream lifestyle. In particular, the article said that $130,357 is needed on an annual basis to live comfortably – at least, this is true for a family of four. That means you need to earn more than $10,000 each month.

The same article revealed that the average income of an American household between 2008 to 2012 is a little more than $53,000 each year. That is only around $4,400 each month. That is not even half of what the article said should be earned by the average American family. The article said that if we want to live the American Dream, it has to be in another country that offers a lower cost of living.

For most families, living on one income is not enough. You have to increase your salary if you want to improve your way of living. You actually have two options: you can ask for a raise or you can tap into another source of income (e.g. a second job or starting a part-time career).

3 skills that will help you earn more

If you think that getting longer hours from your current job is not possible, then you can try to learn a new skill that can help you start a second career. Some people have the option to capitalize on an existing hobby. Cooking and baking are some of the popular ways to earn extra. Some people cook meals for colleagues and get paid for it. Others bake goodies and sell them at work for extra cash. There are so many ways that you can earn a living if you have a talent that can be tapped into.

But if this is not an option for you, there are three skills that you can learn that can give you some serious cash flow on the side.

Learn a new language.

The first option is to learn a new language. If you think that you  gain nothing from globalization, think again. You can use your knowledge of the English language to your advantage. There are many nations that cannot understand this language. You may want to learn a new language so you can teach foreigners or serve as an interpreter or translator. People who are fluent in Chinese, Russian, Japanese, Korean, Spanish, Portuguese, German and other languages can get a part time job. According to USNews.com, the job of an interpreter or translator is very flexible. That means you can retain your day job and still find employment opportunities as a freelancer. The Bureau of Labor Statistics forecasts a 46% growth in employment for interpreters and translators. That translates to 29,000 positions. This is deemed to be faster than the average for other occupations. As the global trade becomes stronger, the need for multilingual individuals increases. The lowest paid for this occupation is $22,180 annually. The highest paid is more than $77,000 a year.

Be tech savvy.

We live in the digital age and the more tech savvy you are, the more you will have opportunities for a second career. Think about it. Online or remote work saved a lot of people who were laid off during the Great Recession. Remote work means being able to work outside the office. According to TechRepublic.com, remote work is growing. They cited a report from the US federal government that revealed how 47% of their employees are capable of working remotely – that is more than a million people. And guess what, tech savvy individuals are needed to support this growth.

Businesses are also becoming more aggressive when it comes to their online presence. That means there are a lot of careers being opened online. Programmers, app developers, online writers, web developers and designers, tech support, social media management – these are careers needed to support online businesses.

Try your hand at graphic design.

Images are quite powerful in our digital world. Graphic designers can be useful for a lot of things. You can help design campaign materials both in the natural and digital world. You can design shirts and sell your designs online. You can design websites, pages, etc. There are so many possibilities as a graphic designer. According to InnovatorsGuide.org, the growth of employment opportunities for this career is also expected to be faster than the average. The competition for jobs will also be high – but it is still a competitive career to be in. Internet advertising has a very high demand and if you have the talent and great work ethics behind you, it should be no problem to build a second career for yourself.

These skills should be a great way for you to increase your salary. The additional cash flow should help you reach your financial goals.

What to do when you get a salary increase

But when you successfully increase your monthly cash flow, you need to remember a couple of things. You have to understand that the secret to wealth is spending less than what you are earning. That being said, you need to stop yourself from upgrading your lifestyle as your income increases. Truth be told, this is a mistake that most of us are making.

While you have every right to upgrade your lifestyle to make it more comfortable, there are a couple of things that you need to do first.

  • Pay off your debts. Some people will tell you to save the extra money that you will earn. But if you think about it, paying your high interest debts will help save you more in the long run. You will not waste money paying the interest – which is actually just making your creditors rich. So if you have credit card debts and other high interest loans, you may want to pay them off first.
  • Build up your emergency fund. Another important task that you need to do is to build up your emergency fund. Make sure you have savings for the unexpected events that can come up in the future. That way, you do not have to resort to credit in order for you to get out of a tight fix.
  • Invest your extra money. After you have paid off your debts and saved for an emergency fund, you may want to invest your money. You do not have to invest everything. But you may want to invest an amount that you know you can risk. This should be a great way for you to grow your money. You can invest this and forget that you have that amount. After a few years, that amount should be bigger than what you started with.

Once you have taken cared of these three tasks, you can now start upgrading your lifestyle. Of course, you still have to implement financial management practices to make sure you will not make a mistake in your decisions.

Here is a video from the Bank of America that has tips to help you be smarter when it comes to money management.

Survey Says: Almost Half Of Workers Do Not Have Enough Emergency Funds

piggy bankWhen it comes to saving money, financial experts have always encouraged consumers to think about their emergency funds. This is the amount of money that you will put aside so you have the funds to get you out of unexpected expenses in the future. The use for this money can range between the trivial (e.g. busted transmission in your car) to the serious (e.g. medical illness) expenses.

The irony about living is you will never know what will happen in the future. No matter how careful you are, something is always bound to happen that will get you off track. Even the most careful individual could suddenly end up with an illness or without a job. It is better to be prepared for these events. Apart from being physically, mentally, and emotionally strong, you also have to be ready financially. And the only way you can do the latter is by building up emergency funds.

According the pulse survey results from Bankrate.com, 28% of their respondents will resort to credit in order to pay for unexpected expenses amounting to $500 to $1,000. 16% of the respondents said that they will borrow money from family and friends. This is a great option because these people usually do not have to worry about high interest rates. The same survey also revealed that 12% of their respondents would use credit cards to finance an unexpected expense. This is a dangerous habit because of the high interest rates that oftentimes accompany credit card debt.

If you want to be prepared for emergency expenses, it is important that you save up for it. You do not want to be caught unprepared at the wrong time.

Survey says Americans are not prepared for unexpected expenses

In a separate survey published on Principal.com, it is revealed that almost half of their respondents will find it difficult to find financial resources for an unexpected expense that amounts to $1,000. The survey was initiated by the Principal Financial Group and conducted by Harris Poll among 1,111 employees. These workers come from small to mid-sized businesses. The survey was done to gauge the financial well-being of workers.

The results of the survey revealed that 17% said that it is difficult to produce this amount, 13% said it is very difficult and 17% said it is extremely difficult. That means 47% of the respondents in this survey said that they will have a difficult time getting the resources for an emergency that will cost them $1,000. Imagine if they were faced with a bigger expense – that could very well lead them to a financial crisis.

To prevent this from happening, you need to build up emergency funds that will give you the resources to pay off unexpected financial needs. There are four important reasons why you need this savings.

Emergency funds can help you avoid a crisis.

If you have the financial resources to spend on an unexpected expense, you may very well be able to avoid going into a financial crisis. Instead of letting a situation get out of hand, you can immediately use the funds that you have to quickly solve a problem. Of course, you can only do this if the cause of the crisis is something that you can control. For instance, if you get sick, you will not hesitate to get treated because you know that you have the funds to spend for it. That can keep you from developing a more serious illness.

Emergency funds can help you survive a crisis.

In case you are faced with a financial crisis that you have no control over, your emergency funds will help you survive a financial crisis. An example of this is a job loss because of an economic situation.  Your emergency fund will give you the resources you will need in order to get through the tough situation that you are currently in.

Emergency funds can keep you from debts.

Another reason why you need to save for an emergency fund is to keep yourself from debts. Going back to the Bankrate survey, people who do not have savings usually resort to credit. It is okay if you can borrow money without interest. But what if you have no choice but to loan an amount with a high interest rate? You will be wasting a lot of money paying for that interest amount. You can avoid debt if you have the amount to spend from your savings in the first place.

Emergency funds can give you peace of mind.

Lastly, you need to build up your emergency funds because it will help you life a life that is free from stress. At the very least, you know that your financial situation is one thing that you do not have to worry about – regardless of what the future may bring. This is probably the most important thing that an emergency fund can give you. Even if you are already immersed in problems, you do not have to panic because you have the resources to spend in the meantime. You can concentrate on solving your problems while you continue to have the finances to spend on your needs.

Tips to build your reserve fund fast

According to an article published on NYTimes.com, more than 5 out of 10 American households have less than one month’s worth of income in their savings account. That means if something happens to their job, they can only survive for barely a month before their finances expire. You do not want this to happen so you must be prepared to build your emergency fund fast. The article mentioned that it is possible to build up your savings even if you have a limited income. The thing that you need to overcome is sometimes, psychological. People think that saving up for 6 month’s worth of income is impossible and they give up on the task even before they have started.

You need to overcome this negativity and concentrate on the target amount that you need to reach. There are rules that you need to follow when building your emergency fund and here are some of them.

  • Compute how much you need for emergency and reserve funds. Calculate the amount that you need to save for your emergency funds and your reserve funds. The emergency fund is the savings that will be spent for very serious expenses like job loss, etc. The reserve fund is for the more trivial expenses that you did not plan for. For instance, the gift that you need to buy for the wedding of your cousin, etc.
  • Review your budget plan. It is also important to review your budget plan so you can include the amount that you need to put aside for your savings. It is best to treat your savings like a bill so that you will put money into it no matter what.
  • Downsize your lifestyle. To increase the amount in your emergency funds, you may want to downsize your lifestyle so that you can lower your expenses. At least, this is true if you really want to grow your savings quickly. The more you can sacrifice from your usual expenses, the more you can put aside in your savings.
  • Increase your income. While you are saving on your expenses, you may want to boost that by increasing your income too. Try to earn more by setting up a passive income. You can also sell off some of the things that you no longer need so the profits can be added to your emergency fund.

Want To Increase Your Savings? Live On One Income

couple discussing finances

Couple calculating their budget

You would think that in order to increase your savings, you need to have at least 2 earning individuals at home. In fact, in most households, both couples are forced to have a job so they can make ends meet. Having both husband and wife earning may seem like the family will be better off financially. But did you know that it is possible to grow your savings even if only one person is earning an income?

Unless you are both career-driven, you probably have thought about quitting and staying at home to take care of the fort. If you feel like you are not getting paid what you are worth anyway, this may be a great option for you. A young couple who want to start a family would be talking about this too. Someone needs to stay at home to take care of the kids – especially while they are young. This would be a very good reason to live on one income.

But if you have dreams of buying something big in the future, you know that you need to increase your savings. And if you want to maximize what you can save, you know that the most logical thing to do is to have both you and your partner or spouse working.

According to a the daily consumer spending found at Gallup.com, Americans spend an average of $90 each day. That makes $2,700 a month. That amount does not include any payments made towards the house like mortgages, and household bills. Any expense on cars or vehicles are also not included here. So you can see that this amount is actually higher. That means the average household needs to spend at least $3,000 to $3,500 each month.

Do you think your home can afford to meet this expense with just one person earning a living? And what if you want to increase your savings? Would it be possible with this spending statistic and one income?

It will honestly not be a walk in the park but it is very much possible.

Saving benefits of having one stay-at-home parent

Believe it or not, there are saving benefits if you have a stay-at-home parent in your household. Do not frown upon those who decided to quit their job to take care of their career. They may be saving more money by staying at home instead of working for someone else. If you have the right situation, it may be more feasible to just quit your job.

There was an article that went viral a few months ago that indicated how much a stay at home mom is really worth. This was an article written by a husband with a stay-at-home wife. This article published on WeAreGlory.com gave specific figures that will give you an idea about how much a stay-at-home parent would be earning if we paid them for the work they do at home. Let us enumerate what was indicated in the article.

  • Child caring services. The author started by stating how his wife cares for their son every day. Changing diapers, feeding, playing, comforting, putting to sleep – all of these are tasks that his wife does day in and day out. If you hire a full time nanny to care for your child that way, you have to spend $705 a week or $2,820 a month. In essence, your wife (or husband), would be worth more because they care for your child 24/7.
  • Cleaning services. The one staying at home is usually the one cleaning the house too. This costs $50-$100 per visit – depending on the size of the house and how thorough you want the cleaning to go. If you have pets too – that will cost more. This is easily $100 a week – or $400 a month.
  • Personal shopper. Whenever your wife goes out to run errands like doing the groceries, buying gifts for family and friends, and going to the dry cleaners, that is a career too. The people who do this professionally are called personal shoppers. And they can cost you around $65 hour, for 4 hours a week, that is $260 a week or $1,040 a month.
  • Personal chef. Now this can be costly. A chef preparing 5 meals with 2 servings each can cost $400 or more. To be conservative, the author of the article gave an amount to $240 a week. That is $960 a month.
  • Financial assistant. Most of the time, the one staying at home is the one handling the finances because they know how much money is needed to keep the house stocked and in order. Whoever stays at home will most likely do the budgeting, paying of bills, etc. That sound like the work of a financial assistant who earns around $15 an hour. Assuming this will take around 5 hours a week to organize financial matters at home, that means $300 each month – at the very least.
  • Washer/Dryer personnel. Doing the laundry costs $25 a week. This will means it will cost you $100 a month to have all the dirty laundry in the house taken cared of.

We could go on and on because there are other things that a stay-at-home parent does around the house. But if we stop here, we are looking at a monthly salary of $5,620 or $67,440 a year. If you think about it, that is the amount that you are saving if one of you stays at home. Who would have thought that living on one income is actually a great saving tip?

If one of you earns less than this amount, then quitting your job could make sense. You would be able to increase your savings for future purchases.

How to transition into a one income household

According to the PewSocialTrends.org, there are more stay at home moms in 2012. In 1999, 23% of moms do not work outside. In 2012, that percentage went up to 29%. A lot of those who chose to stay at home are married and thus have husbands who are financially supporting them. These are the women who have consciously decided to stop working to care for their kids. Most of the single or unmarried mothers who are staying at home have done so because they could not find a job – and not because they decided to.

Of course, you have to deal with having a low monthly budget when only one of you is earning at home. While it may seem like a difficult task, it is possible to be happy while in a low income household. You just have to know how to transition to it properly.

  • Visualize how your budget will be like with one income. Before you go ahead and quit your job, create a budget and see how the household will fare with only one income. That way, you can discuss with your spouse if it is feasible or not. Here is a video that you can watch for some tips when creating a budget for a one income household.

  • Make sure you have an emergency fund. Increase your savings first before you quit your job. That way, any unexpected expense will not cripple your budget immediately.
  • Identify the expenses that you can get rid of. Definitely, you need to lower your expenses so you can increase your savings despite a lower monthly cash flow. Try not to sacrifice your savings. You need to have savings so try to sacrifice your expenses instead of your emergency fund. If you have to downsize your lifestyle, that could be arranged. Selling some of your stuff could help increase your emergency fund.
  • Have a plan for your debt. In case you have debts, you need to get rid of them before you live on one income. When you get rid of debt, it is one way to increase your savings too. You are wasting money on the interest amount that you pay towards your debts. Eliminate that and living on one income will be easier.
  • Try to find part-time work that you can do at home. Of course, staying at home does not really mean no income can be generated. There are so many work from home careers out there. You may be able to generate some income by becoming an online freelancer.

With some great financial management skills, it is possible to increase your savings even if you are living on one income in your household. Once you get the trick of budgeting and smart spending, it should all come easily. Not only will you be financially smarter, you have a better chance at creating a high quality home for you and your kids.

FTC Wants To Help You Battle Identity Theft

identity theft sign

identity theft sign illustration design over white

Identity theft continues to be a problem in our society today. This crime happens when someone uses your identity without authorization so they can buy something in credit under your name. That is how they rob from you.

When you become a victim of identity fraud, that is a clear sign that you need to implement financial management. If you are a good manager of your personal finances, it would be very hard to rob you. Thieves will find it hard to get your personal information so they can rob from you.

Some people are in deep financial trouble not because they were irresponsible with their money. Some of them had the misfortune of becoming victims of identity theft. Although they were careful with their purchases, they were unaware that someone already got their information and were opening new credit accounts under their name. When the time came for these victims to borrow money, they are surprised to find out that they are disapproved because someone loaned an amount under their name and did not pay it back. If the victim cannot prove they are innocent, they will end up paying for the money and all the penalties and interest charges associated with it.

According to a press release published on FTC.gov, identity theft was the top consumer complaint in 2014 – at least those filed with the Federal Trade Commission. This was revealed in  the 2014 Consumer Sentinel Network Data Book. It was 13% of the overall complaints filed for the whole year.

Given this information and the seemingly growing threat of this crime prompted the FTC to create a tool that will educate consumers in case they face this in their life.

FTC released a tool to help victims of fraud

The tool that was launched recently is at IdentityTheft.gov. This website shows the step by step instructions for those who are already victims of identity theft. Although you can protect yourself from this type of crime, there are thieves who are just too smart and good at what they do. In the event that you do end up becoming a victim of this crime, your next steps will determine the extent of the damage that will be done to your finances.

This is what the website wishes to solve. Based on the site, these are the things that you need to do.

What To Do Right Away

As soon as you find out that someone took your identity and is using it to steal from you, it is important to inform the company involved. For instance, if your credit card was stolen, you need to get in touch with the credit card company immediately. Let them know that any transaction done after the time the crime was committed should be taken with caution. You can ask them to freeze the accounts and ask for more identification before any transaction is to be completed. You also have to change any passwords, PIN or other security questions associated with your account.

The credit bureaus should also be alerted after. You need to raise a fraud alert on the stolen account. You only have to get in touch with one of the three credit bureaus (Equifax, TransUnion and Experian). The one you will call will tell the other two on your behalf. This fraud alert will be raised so that everytime someone uses your account, they will be asked for extra identification. That means only you can use it.

The identity theft incident should also be reported to the FTC so you can get an FTC Identity Theft Affidavit. This is one of the documents that you need to submit to the local authorities when you report the crime.

What To Do Next.

Once you have accomplished the reports needed, you need to start repairing the damage – if there is any. Check if there are any new accounts opened under your name. You need to close these. Just call the companies involved and tell them that you were a victim of identity theft and that you want to close the new accounts. The company should send you a letter confirming that the fraudulent account was closed. Make sure you keep this document in case a transaction appears in your credit report in the future.

You should also check your existing accounts in case there are charges that you did not make. You need to dispute these transactions so they will be removed from your credit report. Again, make sure the companies will send you a letter proving that the charges have been removed.

The actions that you will do is to help you correct any information in your credit report.

This website is a great way for you to know what to do about identity theft should you become a victim. Again, this crime is only destructive if you fail to act on it immediately. If you can raise the fraud alert or freeze your accounts immediately, the perpetrator will be unable to do harm to your finances or credit report.

This site also has information that you can follow in case you are a victim of specific identity theft like your tax identification, Social Security, etc. For child or medical identity theft, there are certain things that you need to do so it pays to take a look at this site. Regardless if you are a victim or not, check out this site and try to memorize what has to be done so you will know what to do in case you become a victim of identity theft.

Tips to keep yourself from being a victim of identity fraud

According to a study published on Equifax.com, there is a new victim of identity theft every two seconds. This study was done by Javelin Strategy and Research. According to the published report, victims of this crime does not only bear the financial damages. There are also emotional effects after becoming a victim of identity fraud. There is an emotional roller coaster to be dealt with while you are trying to solve the crime. And of course, the paranoia will never really leave you – even years after the incident.

This should give you more motivation to make sure that this will not happen to you. There are critical things that you need to know about identity theft so you can avoid it. Here are some tips that you need to implement in your life.

  • Always check your credit report. You are entitled to three free reports each year – one from the three major credit bureaus. All you have to do is to download a copy from the Free Annual Credit Report website. You can get one copy every four months so you do not have to spend to look at your credit report.
  • Be cautious when entering your personal and financial details online. Make sure that the website you are accessing is secure. There are logos to look at to make sure it is a trustworthy site.
  • Avoid accessing your financial records or entering your PIN or password using a public wifi. It is very easy to intercept your information if you access it through a public wifi.
  • Keep the antivirus program of your computer, laptop and other devices updated. Malwares can steal your information. Make sure your electronic devices are protected at all times. If you have to invest in a software, then do just that.
  • Stay informed. Lastly, you need to always keep yourself informed. Try to find out the new scams and techniques of criminals to get your information. Also, be aware of what you need to do in case you become a victim of identity theft.

In the end, vigilance is the best way to be protect yourself from the threat of identity theft. Although you need to trust others, it is important to know whom you should put your trust to.

How To Spring Clean Your Personal Finances

dollars hanging out to dryDid you know that spring cleaning is not only applicable to your home but also to your personal finances?

March is here and everyone is getting ready to do some spring cleaning. Once the snow has melted, it is time to check out homes to see how it can be cleaned and maintained for the coming year. While you are at it, why not look into ways that you can clean out and make changes in your financial management efforts?

What you need to realize is that your finances require constant checking. It is actually not something that you do only once a year. You do not set up a budget and then leave it at that. A lot of changes happen in your life that directly affects your personal finances. When you get an increase in salary, when you open a monthly subscription, when you use your credit card – these require you to revisit your financial situation to make sure that your decisions will not cause your financial demise.

According to MarketWatch.com, there will be a lot of improvements in the economy this coming 2015. One of them is the increase of employment. In 2014 alone, 3 million jobs were created for the unemployed. This is predicted to continue this year. With additional news about gas prices and possible stagnant inflation rate, you want to make sure that your finances is positioned in such a way that will make your net worth grow this year. Ideally, you want to do a monthly checkup to make sure that your finances are in good condition. But if what you will do is something as thorough as spring cleaning, then it can be done once a year.

5 ways you can clean out your financial life

There are three important reasons why you need to clean out your finances.

First, it allows you to organize your financial files. When things are organized make you more efficient as you complete financial tasks like paying your debts and bills. But more than that, it gives you a clearer picture of what your current financial situation is like. It allows you to make better decisions because you are aware of what your finances can afford. Finally, cleaning out your finances will help protect you from the dreaded loss of data or identity theft. These will not only rob you of money, it can also ruin your financial prospects. It can ruin any opportunity that you may have to improve your financial position.

So now that you know why it is important to spring clean your personal finances, the next question is, how are your going to do it? Here are 5 things that you can do.

  1. Revisit your budget plan. Your current budget is a reflection of your financial priorities. In most cases, your financial priorities are aligned with your current goals. As we age, our goals change over time. When we experience changes like marriage or parenthood, we find that what used to be important is no longer valuable and we look into things that we never thought would mean so much to us. Since these changes are constant in our lives, it is also important that we revisit our budget every now and then. That is the only way we can make sure that it is still aligned with what we currently prioritize in our lives.
  2. Simplify your financial tasks. You may also want to revise any payment terms that you may have – especially if it involves debt. If you have a lot of credit obligations, you may want to change your payment term to grab a lower interest rate or to help you save more in the long run. For instance, if you received a salary increase, you may want to put in more money into your debt payments. That way, you can pay the balance off a lot faster. In terms of managing your finances, you may want to look into the latest apps that can help you stay on top of your money.
  3. Try to get better deals. We all have monthly payments to take care of. As you are spring cleaning your personal finances, you may want to take this time to review your payments and to see if there is some way that you can get a better deal. If that means calling your service providers to negotiate a better offer or going to a new one, maybe that is what you should do. As long as it will help you get a better value for your money, the change should be worth it.
  4. Take a peek at your credit report. One of the things that you need to do as a good money manager is to check your credit report every now and then. Each year, you are entitled to get one free copy of your credit report from each of the three major credit bureaus. You might want to pick one of the bureaus and get your free copy to see if everything is in order. You can see if you had been a victim of identity theft or not. You can also check how much money you owe your creditors. If there are any errors on your report (like a debt that is already paid or a credit account you did not open, you need to have this fixed immediately. According to an article published on the NYTimes.com, all three major credit bureaus, Equifax, TransUnion and Experian have promised to improve their dispute resolution process. Now is a great time to do just that if you find any errors in your report. You do not want any mistake or wrong entry haunting you.
  5. Physically clean out your wallet and financial files. Lastly, you may want to take a look at your wallet and your financial files. If there are bills that are already paid or receipts that you no longer need, you may want to dispose of them. And you can also review the important documents and receipts that you need to keep for a very long time. Make sure these are kept in a secure location.

These 5 tips should help you make a thorough spring cleaning on your personal finances.

How to take your financial situation to the next level

Now that you have cleaned out your finances and have put everything in order, it is now time for you to consider the steps that will take your financial situation to the next level. After all, you do not want a stagnant financial life. You want it to keep on improving because it will really benefit your future.

Here are a couple of things that you can do.

  • Pay off your debts. If you really want to improve your net worth, you should consider erasing all your debts. You are wasting money through the interest that you are paying your creditors. Instead of investing that money, you are just making them rich. So if you have the extra cash, just pay off what you owe so you can work on growing your money.
  • Boost your emergency fund. According to an article published on Bankrate.com, a lot of Americans, although they keep budgets, do not have enough cash to deal with emergency situations. 6 out of 10 do not have the cash outside of their budget to help with any significant emergency expense. This could lead you to debt so make sure your reserve fund is sufficient.
  • Increase your retirement contributions. If you want to directly invest in your financial future, you need to increase the contributions that you are making towards your retirement account. This is especially true if your employer is matching whatever you are contributing. It will increase the free money that you are practically getting and make yourself more secure when you retire.
  • Add to your investments. Speaking of investments, you may want to start investing in something. It does not have to be in stocks or bonds – at least, if that is something that you do not really understand. But you can at least invest in something that grows in value over time – like gold or your own home. It will help increase your personal net worth. In truth, it does not have to be a lot. You can invest on a pauper’s budget if that is all you can afford. As long as you start with something, even if it is small, it will grow soon enough.
  • Set up financial goals. Lastly, you may want to set up some realistic goals that you can reach. If you have goals, you have something to focus on. Here is a video that will help you set financial goals – at least, those that you can commit to and succeed in achieving.

How To Improve Your Personal Wealth This 2015

piggy bank with moneyDo you think that you experienced any genuine financial improvement last year? As we start 2015, you may want to look back a little to figure out the right and wrong decisions that you made about your money. This is important if you want to improve your personal wealth by the end of this year.

In truth, improving one’s finances is not as hard as it used to be thanks to our rising economy. According to an article published on Bloomberg.com the US economy improved last year. The household net worth is actually $1.3. trillion higher than the peak before the recession – which was at $67.9 trillion in the second quarter of 2007. This is caused in part by the improving real estate market that grew by 4.9% by September of 2014. Not only that, the improving job market is also a factor in improving the net worth of Americans.

It was not all good news though. There was a damper in the household wealth improvement caused by a drop in the stock indexes. However, this should be easy to recover as long as consumers take extra care of how they manage their investments. Another thing that may be slowing the growth of household wealth is the rising consumer debt. Obviously, the growth in our personal wealth is making us confident when it comes to taking in more credit.

3 steps to improve your finances this year

If you want to take your wealth to the next level, you need to start planning how you can do that. As early as now, you should have plans in place that you can follow periodically this year. Without a strategy, you will just go around blindly, hoping that you will hit the jackpot. Obviously, this is not the best way to improve your personal finances this year.

If you really want to revolutionize how your money is spent, think about these three steps that you can work on this 2015.

Pay off your debts

The first thing that you should do is to pay off your debts. According to a speech delivered by William C. Dudley at the Bernard M. Baruch College in New York, when debt goes down, the net worth goes up. The speech titled “The 2015 Economic Outlook and the Implications for Monetary Policy” was published on FRB.org. While discussing how consumers are in better financial shape, the speaker revealed that the household liabilities have gone down by roughly $500 billion as compared to the peak debt amount in 2008. This is helped by the lower interest rates – which is a factor in increasing debt loads. With this decrease in debt, the household net worth was able to recover and increase – thanks to a higher asset value.

It seems to correlate with each other. The less debt you have, the more you have in your personal wealth. Even if you own a home that is valued at $500,000, if you still owe $400,000 in your mortgage, you only have $100,000 in your personal assets. The more you pay towards your mortgage, the more equity you own in your home. This concept can be applied to all your debts – whether it is credit card debt, auto loans or student loans. What you are paying towards your debts can be used to grow your savings or increase your investments.

Another way that paying off debts can improve your wealth is the money that you will save on interest. This is only making your creditors and lenders rich. Pay off what you owe as soon as possible to lower the money you waste on interest payments.

Increase your savings

Once you have paid off your debts or at least implemented a repayment plan, it is time for you to focus on your savings. Increasing your savings is the direct way for you to improve your personal wealth. When you spend, you are distributing what you earned and putting them in the pocket of other people. When you save your money, you are putting it in your pocket. Whether it is to be spent on something that will increase your net worth or saved for the rainy day, the bottom line is it will be an addition to your assets.

According to an article published on EquitableGrowth.org, wealth comes from two sources – your income and your savings. While wealth can be inherited, that is something that is beyond your control. Your income and savings, on the other hand, is something that you have full control over – more so with savings. Your income will still depend on your employer but the amount you save will entirely be based on your own discretion. So grow your savings and it will directly affect your wealth.

Map out your financial goals

After working on your debts and savings, the third step that you need to work on is mapping out your financial goals. In some cases, this should be the first on your list. But considering how debt is rising and savings are decreasing, it may be more prudent to work on the first two before adding more financial goals.

So what goals can you work on? That will depend on you. It can be a new home, a car, your child’s college fund, retirement, or a business. The important thing is to have a goal. When you have a goal, it gives you focus. It gives you motivation. It gives you something to reach for. In essence, it gives you something to live for in the future. Not only will it do all that, it can also grow your personal net worth – at least, if you choose the right financial goal.

Tips to make your wealth last long

Growing your personal wealth is only the first phase in achieving financial success. Make sure that after growing your wealth, you know how to make it last long. You may end up with a huge amount but if you do not know how to manage it, this will not last.

Here are some tips that can help you make your money last long.

  • Live below your means. One of the fastest way to deplete your wealth is by living beyond your means. This simply means you are spending more than what you are earning. Some people think that living within your means is the best way to go. While it will keep you in debt, it will only preserve your finances and keep you in the same financial state. The best way to make your wealth last long and increase it at the same time is to live below your means. This way, you can take care of all your expenses while having extra money to set aside for savings.
  • Think before you spend. Regardless of how much wealth you have, smart spending will always be important. Even if you can afford it, that does not mean you should buy it. Ideally, you want to buy things that are aligned to your financial goals. If not, then think carefully before you make the purchase.
  • Make investments. Like savings, this investing is another way to grow your personal wealth. think about where you can place your money and consider the risks that you will face. Without a little risk, growing your money will not be as rewarding as it should be. Investing the extra money you have is one of the best ways to make your finances work for you.
  • Be aware and educate yourself at all times. In the end, you can make better financial decisions if you are aware of your options. Always make time to educate yourself about something. Read about rules, laws and various techniques to manage your money. While hiring financial experts will work, it will serve you better if you know what is going on with your personal wealth.

3 Ways You Can Outlive Your Retirement Money

seniors sitting on coinsDo you think that your retirement money can outlive you? Surprisingly, this question is causing a lot of people some great deal of retirement stress.

The ideal scenario is for your funds to outlive you. That way, you can be assured that  you have more than enough money to spend until the very end. Running out of funds just when you need it the most – especially for health reasons, can be a real nightmare. Your options will be to rely helplessly on your loved ones, be in debt, or suffer in silence. You do not deserve any of these options especially when you have worked very hard in your youth to live a high quality lifestyle.

Although we have seen a lot of improvements after the Great Recession, an article published on USNews.com believes that the retirement crisis is still upon us. The article revealed data from a recent government study that showed how a little over half of the workforce is involved in a retirement plan. The US Bureau of Labor Statistics also revealed that of those working in the private industry, only 48% is putting aside money for their retirement.

Given these statistics, you can see that a lot of us may be forced to make do with insufficient retirement money. If you are still young, you still have the time to correct your mistake by creating a retirement plan and making bigger contributions toward your account.

But what if you are in your pre-retirement years or already about to retire? How can you ensure that your retirement fund will last longer than you?

Here are three things that you can do.

Move to a country that will help you stretch your retirement fund

For some of you, this might be going to the extreme. Moving to a new country may be intimidating but it can help you stretch the limited funds that you have in retirement. Think about it for a minute.

In a recent article, InternationalLiving.com released a list of the top retirement destinations in 2015. Each year, this site ranks countries from around the world that provides retirees with the best life possible. This year, the top country that you can live in is Ecuador.

Now how can living in Ecuador help you stretch your retirement money? Here are some interesting facts about this country.

  • Low cost of living. Can you believe that you can live comfortably in this country for less than $1,000 a month? Even if you live in the big cities like Guayaquil, Quito or Cuenca, it is possible to build a high standard of living for $1,500 to $2,000 a month. That is a far cry from living in places like New York where the rental price of a 2 bedroom apartment can cost your more than $3,000 a month. The budget of $2,000 or less in Ecuador is already inclusive of your home, utilities, food, clothing, entertainment expenses and even transportation.
  • High quality and low cost health care. We are always complaining about the high cost of healthcare in the country. When you retire, you can expect that most of your retirement money will go to your health care needs. This is where Ecuador will sound much more appealing to you. Their medical professionals and facilities can rival even those from developed countries and they will not cost as much. In fact, the prices are only around 20% to 40% of what it will cost you to get medical care in the US. The same is true for dental care.
  • Low real estate prices. Living in your own home is a real treat for retirees. Regardless if you are in the US or in Ecuador, it will always be a growing asset. While the prices have gone up in recent years, the price of real estate in Ecuador is still relatively low. You can get a beachfront property for $150,000. An apartment in one of the big cities in the country will only cost you less than $200,000. This country will allow you to invest in real estate without depleting much of your retirement money.

These are the main financial reasons why retiring abroad will benefit you when it comes to your retirement funds.

However, if you think that moving to a new country is an extreme that you cannot do, then simply relocating to a city that costs less than your current may do the trick. Just like the video below about a retired couple. They used to live in New York but they decided to live in Florida to cut back on costs. Here is the full video.

Be meticulous about your expenses when you retire

The next thing that you can do to help you outlive your retirement money is to cut spending. How can you do that? By being meticulous about where your money is going. The thing about being retired is you have a lot of time in your hands. If you worked 40 hours a week, what do you think you will do with the free time once you are retired? Surely monitoring your finances will not take up that much time so you might as well start being more concerned about where your money is going.

There are a couple of habits that may take up your time but will definitely help you lower your spending.

  • Be cautious of points. Whether it is credit card points, rewards programs or airline miles, you need to pay attention to the points you are generating from your usual spending. For sure, there will come a time for you to get something for free without necessarily increasing your spending. You can even add more means for you to get points and freebies – as long as you are monitoring it well and you will really use whatever you are purchasing.
  • Clip coupons. A great way to lower your spending is to use coupons whenever you buy something. These coupons usually come for free – you do not have to buy them. You can opt to browse online for coupons or you can buy the Sunday paper for the weekly collection of coupons. Just make sure that you will really use these coupons and the products they represent.
  • Browse for promos and discounts. The last tip is to take the time to look for promos and discounts. Since you have all the time in your hands now that you are retired, you can spend an hour or two comparing prices before you purchase anything. It is ideal for you to create your grocery shopping list ahead of time so you have a reference for your research. Not only will you save on your retirement money, you can also save your time and energy in shopping because you can plan where you will buy the stuff that you need.

Engage in low cost activities for retirees

The last tip that we can share with you is to engage in low cost activities. As mentioned, retirees have lot of time in their hands. Naturally, you will develop a couple of hobbies to pass the time. You may begin to engage in sports, a new skill, or even travelling.

While it is your decision what to do with your time, make sure that it will be something that will not compromise your retirement funds.

An article from Time.com, discussed how retired individuals will no longer spend as much as they need to when they retire. In most cases, their children would have moved out of their home. Not only that, you do not have to spend as much as you used to to commute everyday – since you have stopped working of course. You will also stop contributing to a lot of payments like Social Security and retirement. What will increase is probably your health care and entertainment expenses but even that will not bring you back to what you were spending before – at least if you follow these two tips.

  • Opt to enjoy off-peak activities. Whether it is going to the beach, enjoying a particular sport or any other travel, you may want to enjoy these activities during the off peak season. That way, they will be cheaper to avail.
  • Be aware of the time when the prices are low. For instance, if you want to watch a movie, opt to watch the matinee show so it is cheaper. The same is true for retail stores. Sometimes, early or late shoppers get the best deals.

These are only some of the things that you can do to help stretch your retirement money. It all comes down to how you will manage your finances so you can use it properly.

5 Steps To Achieve Financial Freedom

dollar sign at the end of the roadDo you want to be confident about your personal finances? Well you need to work on your financial freedom. This is not really an indication that you will be filthy rich. That is different. But being in this financial state will help you weather any financial storms that may come your way. It is will not stop the problems, it will put you in a position where you have a higher chance of surviving.

RichDad.com defines being financial free as a situation that goes beyond just having more money. It is literally being free to do what you want it life. It is a state wherein you can follow and satisfy what you want to happen in your own life.

According to the article in that site, financial freedom will most likely involve a lot of changes in your life. It is a process that you have to go through. It will be difficult at times – implementing the changes that you have to make. That is because if your current lifestyle works, you should already be free from the burden of your finances. You should be enjoying the fruits of your labors without hesitation. If you are not, then obviously something has to change.

The rewards of being financially free is numerous. On top of the list is a happier and more successful individual. You will have growth, improvement and satisfaction that you have never known before. It is beyond how much you earn but more of how that particular income allows you to feel good about your life.

5 step plan to be free from financial problems

We have mentioned that the road to financial freedom is a process. There is actually 5 simple steps to help you achieve this financial state.

  1. Boost your extra money. By extra money, we mean you have to increase the money that is left over after you have paid off your usual expenses and payments. Most people will interpret this as earning more money. That is true, but is it not the whole picture. We have said that being financially free is more than just increasing your income. But that does not mean it is not part of the process. It is one half of what you can do. But boosting your extra money also means decreasing your usual expenses to free more money in your budget. It is your choice. This might be a bit difficult considering your current situation in life. Your life’s situation will help you determine if you need to increase you income or decrease your expenses.
  2. Create additional sources of income that are passive. You want to earn more but you want to do it in such a way that will not compromise your other obligations in life. Some people sacrifice their time with family and personal relaxation just for the sake of earning some extra money. A survey done by the University of Massachusetts mentioned how the earning capabilities of people change when they have children. The results of the survey published in BusinessInsider.com said that men increased their earning by 6% while women experience a decrease by 4%. This is probably because men are expected to boost their income to help finance the extra needs of their kids. Women, on the other hand, are obviously unable to earn more because they are usually the designated caretakers of the children. While these are understandable, you need to find out how you can earn passive income without compromising your time with your kids. It can actually work. Men do not have to sacrifice their time with family and women do not have to deal with a lower income to take care of their kids. All it takes is a stable passive income sources – take note that you need more than one to achieve financial freedom.
  3. Pay cash for your expenses. If you have to use credit cards for the rewards, you need to make sure you have the cash on hand to pay it back in full. This way, you do not waste money paying any interest. When you pay for things in cash, you get to limit just how much you will spend. If you do not have cash, you will stop spending. It is as easy as that. Controlling your expenses will be more effective this way.
  4. Contribute more towards your future. Anything extra that you have right now should be invested in your future. This could mean your retirement money. Invest your extra finances so it can grow separately and secure your future. That should help you feel more secure about what lies ahead. Not only will you be secure, you will be prepared for any financial need in the future because you have saved up for it. Just make sure you know where to put your money so it is somewhere it can grow best.
  5. Give yourself funds to enjoy your life. Your present happiness is still important. Never lose sight of that while you are pursuing financial freedom. Do not work yourself to death and then lose the chance of enjoy today. You simply have to budget how much you will spend on the things that will make you happy today.

If you notice, the steps towards financial freedom involves financial management: budgeting, saving and smart spending. These are the key to keep your finances from flying apart.

Things you might have to give up to be financially free

Part of having financial freedom is actually changing a lot about your lifestyle. In most cases, you will have to cut spending on a lot of things. It is not so much about restricting your lifestyle but more of concentrating only on what is essential. You will not deprive yourself. You will just identify what is excessive and cut them off.

According an article published on TheAtlantic.com, Americans have a love affair with houses and cars – big ones! In fact, the article mentioned that one third of the household budget usually goes to the house alone. The percentage is higher as the household income gets lower. Not only that, transportation takes up 17% to 18% of the household budget too. This is too excessive considering there are many alternate options to travel that are much cheaper.

That has got to stop. If you want financial freedom, you need to lower your lifestyle to suit your financial goals. Here are a couple of things that you may have to give up.

  • That big house. We all want that white picket fence surrounding a big home but if your finances cannot afford it, do not force it. We are not saying you should live in the slums. What we want you to do is to choose a modest home that fits your family perfectly and comfortably without the excess rooms that you do not really need. These extra rooms merely give you space to accumulate junk.
  • That new car. Granted that you need a car because you have kids. But that does not mean you need a new one. Pick a sturdy, reliable and good condition second hand car. It will serve its purpose without costing you too much.
  • That expensive annual vacation. You do not need a trip abroad to relax. There are so many places to visit in the country that will help you relax. If you’ve never heard of staycation, it is the option to go on a vacation close to home so it will not cost you a lot of money. The important thing is to spend them with the ones you love.
  • Those trendy clothes, accessories and gadgets. These trends, as attractive as they are, can really ruin your budget if you are not careful. You may want to think twice before replacing your phone or your clothes. Unless it is really necessary, keep yourself from spending unnecessarily on what would eventually become junk.
  • Those expensive entertainment activities. We encourage you to spend on your entertainment to keep you happy and motivated. But you should keep yourself from spending too much on it. Check how you can enjoy your hobbies without costing you a lot of money.

On a last note, it is important for you to realize that financial freedom is not a one time achievement. Once you have reached this stage, you should work hard to maintain it. Otherwise, you could lose what you sacrificed for so long to reach.

4 Ways You Can Stop Living Paycheck To Paycheck

walking paycheck to paycheckDo you want to quit living paycheck to paycheck? Of course you do! Who wants to live a life wherein your income just passes through your hands? This is the life of a person who lives from paycheck to paycheck. These are the people who always have to stretch their salaries to the last penny. They have budgeted their money so that everything goes to a particular expense.

While this seems organized, it is highly stressful. People who just get by on their salaries are those who do not have the extra money to contribute towards their savings. The most scary fact is, these are the households that are usually one emergency away from a financial crisis.

An article published on CNN.com revealed that 25 million household belonging to the middle-class are living paycheck to paycheck. These are the families that are not unemployed. They have stable jobs, own their homes and drive a car. But why are they living this way?

The article mentioned that one-third of American households spend all of their salaries at the end of the month. 66% of these come from the middle-class. These are the families that have $41,000 as their median income. The data came from a study conducted by Brookings Institution.

This is a scary data to look into and it further shows how the middle class is really losing ground in our society. While they may appear to be more affluent, their financial situation is not much different compared to poor households – those with an annual income of $21,000 (and no assets). This means that having a higher income does not really guarantee that you can move on to a better financial position.

4 tips that can help you stretch your limited resources

So what can you do to stretch your limited resources and get out of a life of living paycheck to paycheck? Here are 4 tips that we have for you. Most of these moves should give you the extra money in your budget to help you save or invest – two of the most proactive ways you can improve your financial situation.

  1. Opt for a cheaper home. One of the biggest expense in a household is spent on their home. Regardless if you own your home or you are renting, this is the biggest percentage that eats into your income. Sometimes, owning your own home makes it even more stressful. Some homeowner regrets emerged once their home loan payments start getting compromised. And the housing expenses does not end with the monthly mortgage or the rental cost. It also includes the utilities, home repairs and even the occasional purchases for broken furniture, appliances and equipments. One of the ways that you can effectively get out of living paycheck to paycheck is to lower this biggest expense in your budget. Rent in a smaller home if you have to. Sell your home and buy a smaller one. This will lower your monthly payments on the home. Not only that, you will have lower utility bills too. After all, maintaining, heating and cooling a smaller unit is cheaper.
  2. Seek out financial aid. Analyze your financial situation and see if you can qualify for any government aid. It may be food stamps, a health care coverage, or even a straight out cash assistance. You can also explore the benefits that your employer is offering. You might be eligible to receive some benefit from them. You can even look into your tax refund. Maybe you are allowed to get a higher refund on your taxes. These will help you get extra money.
  3. Lower your grocery expenses. While this is not your biggest expense each month, this is the biggest discretionary expense that you can cut back on. It may be a bit tough considering the fact that food prices are going up nowadays. USAToday.com reported some statistics from the Bureau of Labor Statistics that revealed a 0.4% increase in food prices in February this year. Although you are battling with the rising commodity prices, you can find ways to still cut back on your grocery expenses. If your weekly budget is $50, try to slash it down to $30. Use coupons, utilize leftovers, grow your own herbs, make your own cleaning products, shop in bulk – there are so many things that you can do. It will take a bit of getting used to but this is possible if you really want to stop living paycheck to paycheck.
  4. Increase your cashflow. Lastly, you want to think about how you can increase your monthly income. If that means getting another job or putting up a freelancing side gig, it all depends on what you think you can accommodate in your busy schedule. It will involve sacrifices – both on your physical body and your time for yourself and your family. But you do not have to do this for a long time. You can give yourself a few months or even just a year – just enough time for you to build up your savings. We suggest that you look for a passive income business that will not eat up most of your time and yet can provide you with continuous income.

These four tips should be able to help you move away from living paycheck to paycheck.

Reason why your income is never more than enough

Apart from increasing your extra money so you can build up your savings and invest your money, you might want to identify why you are using up your salary the way you do.

Well we have one solid guess: you base your spending on your income.

We have this habit of upgrading our lifestyle whenever we get an increase. When you get a promotion, you buy a house. When another promotion comes in, you scout for a second home. When yet another promotion is lined up, you buy a luxury car. While this may seem normal, how we buy these things lead to our destruction. Instead of saving the money from the salary increase that comes with the promotion, we dedicate it to pay off mortgages and car loans.

It is apparent that there is something wrong with how we spend our money. According to an article published on BusinessInsider.com, 20% of Americans admitted to spending more on their cellphones than their groceries. While having a cellphone is convenient, it is not a necessity – at least the expensive ones are not.

Basing your spending on your income is what keep you living paycheck to paycheck. It is true that it can help us be sure we will not be spending more than we should.  But you should keep yourself from basing your expenses from it.

That simply means if you earn $40,000 a year, you will also set up a lifestyle that requires that much money to support. So what should you do instead?

You have to learn how to base your spending on a comfortable lifestyle – not necessarily your dream lifestyle. At least, not yet. Most of our dream lifestyles involve really extravagant spending. Given that you want to get out of living paycheck to paycheck, you may want to establish a lifestyle budget that is just right. That means you are provided with everything that you need to survive comfortably. It is not affluent or extravagant – but just right.

Once you have done this, you can live debt free on a $30,000 a year income – easy! If you have decided on living at $30,000 a year (that is $2,500 a month), you can earn $40,000 and put aside any extra into your savings. You can also invest that money so it can earn you money even while you are doing nothing.

That is how you really stop living paycheck to paycheck.

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