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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.

How To Disaster Proof Your Personal Finances

stack of cashWe’ve had tornado alerts for the eastern part of our state as well as flash flood warnings. Large parts of Texas and Oklahoma are currently underwater. And, of course, we all saw what happened to much of New Orleans when Hurricane Katrina hit it. Our state also has something in common with California – the danger of wildfires in the summer. In fact, no matter where you live there’s always the possibility you’ll be hit by some kind of a catastrophe.

Doomsday preppers

When you think of a doomsday prepper you probably think of someone preparing for the end of the world that has an underground room with several years’ worth of foodstuffs. While you might think these preppers are a touch on the paranoid side it is possible to learn lessons from them that could tide you over in the case of a flood, fire, hurricane or tornado.

The most neglected

Whether it’s being hit by a natural disaster, a pandemic or the loss of the family’s breadwinner, you’ll be glad you spent time preparing for it. Unfortunately, what most people neglect is to make financial preparations as well the physical ones. We all get busy and hassled and tend to forget the essential tasks. But if you follow these guidelines you’ll also have your personal finances prepped for a disaster.

Get organized

The first thing you need to do is get your finances organized. Divide your documents into three categories: Crucial, important and nice to have. Crucial documents would typically include the title to your home or car, your will, your power of attorney and your medical directive. Make copies of these documents and back them up digitally either on a hard drive you can remove or a flash drive. Store the originals of these documents in a very safe place like a safe deposit box. Make sure you know where your “important” documents are so you could quickly grab them and get out of the house with them in a hurry. If you have some warning about a pending disaster you might have enough time to gather up and put your “nice to have” documents someplace where you think they’d be safe.

Put away some cash

It can be very helpful to keep some cash on hand. Our society today runs on electricity, which means all your electronic devices are at risk. This also makes us very vulnerable, as there are very few things that will work if there is a big power outage. ATMs will go down and some store clerks won’t be able to run your credit cards. Make sure to keep some cash in small bills in your wallet or purse in the event you need to put gas in the car or buy some supplies And don’t forget to keep some cash stashed away at home.

The essentials

Two things that are essential to survival are food and water. This means it’s smart to have enough of these on hand to survive any Katrina-like event. According to doomsday preppers the basic survival elements are first aid, self-protection, hygiene and temperature regulation in addition to food and water. Most experts say you should have stored at least one gallon of water per day for each person in your family and each pet. You should also try to store at least a three-days’ supply of water for each person and each pet. Of course, the best thing would be to store a two-week’s supply. Make sure that you keep track of the expiration dates for any store-bought water and it’s important to replace your stored water at least every six months.

Food and first aid

It’s a good idea to keep at least one month’s worth of food on hand if you can. If you can’t do this all at once start with a small amount and then work your way up. For example, you might spend an extra $10 a week on things that store well such as canned goods and then work your way up to a month’s worth. Once you get a month’s worth of food stored up be sure to rotate some of these items into your menu periodically and then replace them so they don’t expire. A first aid kit is a must-have and even though this might be unpleasant to think about you need to consider how you would protect yourself and your family in dangerous situations. As we have all seen catastrophes such as Hurricane Katrina can bring out the worst in some of us.

Knowledge is the keyCouple Using Laptop And Discussing Household Bills Sitting On Sofa At Home

Sometimes what you know is more important than what you have. For example, do you know what to do about water purification and disinfection? After a disaster it’s likely that your water will be contaminated and not fit to drink until you treat it. You could purchase a water filter and tuck it away in a closet. But this comes with the risk that it might not work, could be damaged or just fails when you really need it. In comparison there are at least six ways to disinfect suspect water. If you know how to do this such as boiling the water or using chlorine breach, iodine or ultraviolet light to disinfect it you will know what to do in a worst-case scenario.

Another example of where knowledge is critical is that first aid kit. Just having one isn’t enough if you don’t know how to use its supplies. It’s just critically important to know how to treat injured or sick people. All the first aid supplies in the world won’t help you if you don’t know how to use them. If you don’t have the required skills you could likely take a course in first aid from at your local Red Cross chapter. Barring this there is a huge number of books available on first aid that you should read and have available close to your first aid kit. Two of the best of these are the U.S. Army First Aid Manual and the Living Ready Pocket Manual – First Aid: Fundamentals for Survival.

The thing is when you have skills and know how to do things you can always improvise and develop solutions to almost any problem.

Finally, it’s important to know when to stay put and when to get out. This means watching your TV for updates and bulletins as to what’s happening. And it’s not a bad idea to have one of those portable, hand-cranked radios available so that if your electricity were to fail you could still keep up with the news.

6 Important Pieces Of Financial Advice For Recent College Grads

student loan debtCongratulations! You’ve done it! Those four (or more) years of college are now in your rearview mirror. You’re excited and ready to start your new life. If you’re fortunate you already have a job or one lined up or maybe an internship. You’ll soon be making more money than ever before in your life. But before you charge off to start buying stuff it’s important to draft a financial plan. If you do this now you’ll have a much better chance of avoiding the common financial problems that plague many new graduates.

Following are six pieces of financial advice that can help smooth out your transition from college to the “real world.”

#1. Start saving

The first important tip in financial awdvice is to determine how you could live below your means. When you do this you will have extra money that you could set aside as an emergency fund. And trust us, you will ultimately have an emergency. This is even more crucial if you graduated owing on student loans. If so, this would at least put you in good company as roughly 69% of graduating college seniors in 2013 had student debt that averaged $28,400.

If you are now making a salary of, say, $2000 or $3000 a month your best move would be to try to live on $1000 a month and bank the rest. This would give you money you could use each month to pay off your debt. When you become debt-free you will have money you could save for retirement, to buy a house or to get a new car.

#2. Keep your spending to the minimum

It’s best to sit down, calculate your earnings and expenses and then put a limit on your spending. This is critical if you just snagged a new job. When you practice good financial habits now they will stand you in good stead the rest of your life. There are many smart phone apps available that would make it simple for you to do this. The best idea is to continue living as if you were still a broke college student. You survived on that tiny income for four years and there’s no reason why you couldn’t continue to do so for a couple more years and get a real head start on your savings or investing.

#3. Work on your money management skills

When you start your first job make sure to carefully review your employee benefits such as health insurance, retirement accounts, disability insurance and so on. You should also begin educating yourself on smart money management by reading a few books or even scheduling a one-on-one meeting with a financial planner. The important thing is to treat your finances as if they were yet another college course and do a lot of reading and research. The more you understand about personal finance the simpler and less stressful your financial life will be.

Girl looking at a laptop#4. Don’t forget those student loans

Don’t forget that if you have student loans your first payment or payments are due in October. If you fail to make a payment or if you are late in making one you will be in default and trust us that’s something you don’t want to happen. Technically you are in default on a student loan the day after you miss a payment. However, it will be 90 days before this will be reported to the credit bureaus and more than a year before your account might be turned over to a debt collection agency.

If you believe you’re going to have a tough time making your payments, go on the
U. S. Department of Education’s website and check out the repayment options available. There is one very popular plan called Graduated Repayment where your payments start low and then increase every two years. This can be an excellent choice if you have a job where you can see that your income will also increase in the years ahead. There are also three income-driven repayment plans. This is where your payments are tied directly to your income. The best of these is Pay As You Earn, which would cap your monthly payments at 15% of your adjusted earnings. This means that if you were out of work and earning nothing your monthly payments would be the same – nothing.

You should also contact your lender or loan servicer if you believe you’re not going to be able to make your payments. The sooner you make that call the sooner you will be able to get some help.

#5. Don’t fall prey to lifestyle inflation

When you get a big boost in your income it’s very tempting to go out and start buying things like a new car or to rent that two-bedroom luxury apartment. It can also be tempting to use your credit cards to pay for the furniture you’ll need for that apartment. Some people even take on credit card debt before their student loan repayments begin and then find that when they kick in they don’t even have enough money to buy groceries. This can lead to an endless cycle of default and deferment. And yes, it’s okay to upgrade your life somewhat after graduation so that you can say goodbye to those Ramen noodles but just don’t get carried away. Remember that those student loan repayments will soon come due and plan accordingly.

#6. Negotiate for a better salary

There’s nothing wrong with haggling over your salary and benefits – even when it’s your first job. For that matter, this demonstrates a sign of professionalism because even though you graduated recently you do understand how the working world works. You should, of course, express enthusiasm and appreciation for the job offer but remember that if you were able to negotiate just a small increase in your salary this will pay off in thousands of dollars over your working life. It’s also a good idea to practice your job offer conversation before you talk to that potential employer. Make sure to research your field so you will know what is a fair salary. If the salary is indeed fixed and you can’t negotiate anything better, focus on the other benefits, which can be worth as much as 33% of your salary. These are things that many first timers overlook. Make sure to ask about health care benefits, retirement accounts, vacation days, the flexibility to work at home and so forth. Just sit down, decide what’s important to you and then prepare for some professional haggling. You’ll probably find it just takes one round of negotiations.

Financial Therapist? I don’t Need No Financial Therapist

You’ve undoubtedly heard of financial counselors but did you know there are also financial therapists?Video thumbnail for youtube video Don’t Let The Ghosts Of Old Debt Hurt Your Credit Score

Unless you’re a member of that fortunate 1% you probably find yourself stressed out over money issues at least periodically. But for some people financial issues go way beyond this and become an essential psychological problem. And this is what financial therapists can help with.

A new field

As you might guess, this is a comparatively new field. According to the APA (American Psychological Association) money is the number one cause of stress in people’s lives. Given this it’s relatively surprising that the Financial Therapy Association didn’t come into existence until 2010. It currently has 250 members while there are 1100 accredited financial counselors.

What’s the difference between therapists and counselors?

The biggest difference between a financial counselor and a therapist is that the therapist focuses entirely on money. And while financial counselors are accredited financial therapists aren’t.

Why financial therapists?

People generally tend to seek out a counselor when they are having a financial emergency such as bankruptcy or a serious dispute between partners or spouses. In comparison, financial therapists are trained to help people – whether they are big spenders or thrift obsessive – develop financial well-being through an understanding of the cognitive, behavioral and emotional aspects of their financial problems.

In some cases, a financial therapist and counselor will work together in tandem to give a client a more holistic approach.

We know it but we don’t do

You already know you should be saving more money and spending less. However, the odds are that you aren’t. What financial therapists say is that reading more information about how you should spend your money is not going to help and that what needs to be addressed are the emotional issues underlying your problem.

man looking tired with workCommon money disorders

Financial therapists have identified five common money disorders. They are frugality, enabling, denial, dependency and rejection. How could you know if you’re suffering from one or more of these disorders? Here are the major red flags that say you might benefit from working with a financial therapist.

1. You’re avoiding your financial problems

There are times when we all feel reluctant about opening a bill. However, if you let your bills just pile up on your desk or a table this could mean you’re suffering from financial denial. Almost all of us have a low level of anxiety over money but for “deniers” the anxiety is so overwhelming that they just basically check out.

Here are the warning signs that you might be a denier.

  • You borrow money constantly or are always getting new credit cards
  • You have no idea how much you’re in debt
  • You either can’t open your bills or just check out the minimum payments.
  • You continue to hold onto the idea that somehow things will just work out.
  • You either avoid talking about money with your spouse or partner or just tell her or him that everything is okay.

2. You’re obsessed with the idea of being frugal?

Of course, it’s good to be careful about how you spend your money but frugality can get out of hand. If you are chronically “underspending” and neglecting your needs it might be because it’s just too hard for you to part with the money. People who are severe underspenders tend to neglect basic taking care of themselves. For example, they won’t go to a doctor or dentist because they simply don’t want to spend the money. The warning signs that you may be frugal excessive are:

  • You just can’t bring yourself to pay for basic necessities like home repairs or the dentist
  • You have a healthy savings account and a minimal amount of debt but are still constantly worried about money
  • You avoid going to the doctor so that you won’t have to make small co-pay
  • You refuse to invest any of your money even in a low-risk option such as a CD.
  • You’re willing to take advantage of other people if it means you would be getting something free or saving money.

3. You enable an adult child

If you are a financial enabler you’re sharing your money in a way that keeps your child from taking responsibility or becoming independent. Financial therapists see this most often with the parents of adult children. And yes, it’s okay to provide some assistance to an adult child but too much can create problems for both the giver and the receiver. If this is true of you, you might think you’re being altruistic and helping your child but what you’re really doing is satisfying your own needs. Here are the red flags that you may be a financial enabler.

  • You give your child money even though you can’t really afford it
  • You have provided so much financial assistance to your child that he or she has stopped trying to be independent
  • You find yourself struggling with your finances but then watch your adult child go on a shopping spree – on your money
  • You feel resentful when your child asks for money but you just can’t imagine saying “no.”

4. Do you totally rely on someone else to handle your finances?

You could be a stay-at-home mom that lets your spouse or partner handle all of the family’s finances. However, there are situations where people become too dependent on that partner or spouse and much of this probably has to do with gender role problems. One therapist has reported that people who totally rely on someone else to handle their finances often have issues with drugs and alcohol or end up in abusive relationships. When a person has everything given to him or her and another person is managing the money, that person can end up with no self-esteem or a sense of self-worth. Here are the danger signs that you have become too dependent on your spouse or partner.

  • You’ve never supported yourself on your own
  • You resent the feeling that the money you’re given comes with strings attached
  • You have no basic financial knowledge
  • While your relationship is an unhappy one you’re scared of the idea of leaving and having to support yourself
  • You have little or no self-esteem
  • You have absolutely no idea as to how much debt or how much money you have

5. You are uncomfortable with the idea of accumulating money

If you have a serious aversion to the idea of accumulating wealth this can signal a serious disorder called financial rejection. This sometimes happens to people who’ve won a lottery or received a lot of money due from a settlement. Some people actually feel that earning big money is a sign that you’re either a bad person or exploiting others. The warning signs of this are:

  • You don’t feel entitled to money so you give it away
  • You turn down opportunities to increase your financial security or to get a promotion
  • You earn less money than you should given your skills and education
  • You either under charge for your services or work free
  • You feel virtuous about not having much money.

9 Ways To Earn Extra Money to Pay Down Debt You’ve Never Thought Of

College student catching money in the airWhen you think about earning extra money to pay down debt, what do you think of? Most people would think about things such as having a garage sale, selling stuff on eBay or horror of horrors, getting a second job. The problem with options like garage or estate sales or selling stuff on eBay is that you probably have a limited number of items available to sell. So what would you do when you run out of that stuff?

Getting a second job is one of the best ways to earn extra money to pay down debt but it just doesn’t work for everyone. We live pretty much in a 24/7 world now and the hours you’re working at your primary job just might preclude you from getting a second gig. For example, we know of tech support people that work shifts like 10 AM to 6 PM or even 10 PM to 6 AM. It’s just not possible for people like that to take on second jobs. Even if you have a traditional 8 AM to 5 PM job you might find that there are many days of the week when the job just doesn’t end at 5 PM.

So if you fall into one of these categories what could do to earn extra money?

#1. Put your car to work

If you own your car you could put it to work earning money for you. In today’s sharing economy there are numerous people looking to rent other people’s cars instead of purchasing their own. There are sites such as RelayRides and GetAround where you could connect with people that might be interested in renting your car by the day or even a week. If you’re not in a position where you could rent your car you could pick up extra money through Lyft or Uber where it’s possible to earn up to $35 an hour by taxiing people around. Plus, you get to set your own hours.

#2. Do mystery shopping

Here’s another part-time gig you could do where you get to choose your own hours. If you’re not familiar with mystery shopping it’s where you go into restaurants, stores and other places of business and then report on your experiences to help the companies determine how well they’re doing in customer service. You not only make your own schedule as a mystery shopper but you could take on as many or as few assignments as you chose. Some people who do mystery shopping take just a few assignments a week and make maybe $100. If you were to treat mystery shopping more like a full-time job you could earn up to $500 a week.

#3. Become an eBay drop shipper

If you don’t have stuff of your own to sell on eBay you could become a drop shipper or middleman. This can be a great gig because you don’t even have to ship stuff yourself. You find companies that are willing to use drop shippers and then list their products on eBay along with some good sales copy. When you make a sale, you notify the company that has the product and it ships it to your buyer for you. There is an online wholesale directory called SaleHoo that has listings for more than 8000 prescreened suppliers including companies like Playskool and Gap. Sign up for some of these companies and you would then become a storefront selling their products. The money you earn would be the difference between their wholesale prices and what ever it is you sell the merchandise for.

#4. Do affiliate marketing

Many different companies including well-known ones such as Amazon and Starbucks are looking for new customers and are willing to pay to get them. The way affiliate marketing works is that you promote a company’s’ products or services using a unique URL. When a person uses that link to buy the company’s products, you get a commission. Sites such as Share a Sale and Rakuten Affiliate Network are affiliate consolidators where you can find many different companies willing to pay you a commission to help sell their products or services. If you’d like to know more about affiliate marketing, go to the website Affilorama where you’ll find training information that could help you be successful.

#5. Become a direct seller

Thousands of people make extra money by direct selling for companies such as Avon and Mary Kay. Direct selling has earned a sort of poor reputation but does offer the opportunity to make an enviable amount of money while still working a full-time job. Direct selling isn’t just about cosmetics, either. You could earn a nice extra piece of change selling wellness products like Advocare, pet products, Tupperware or accessories.

#6. Join focus groups

Companies that would like to improve their marketing and advertising periodically conduct focus groups consisting of potential customers to help them understand what’s working and what’s not working. If you have the time necessary to participate it’s a good way to earn extra money. There are many companies that are actually anxious to pay you for your insights as a consumer and in some cases they’ll even come to your home. One company recently held a focus group that lasted two hours and consisted of talking with just several people about snack foods and tasting some cookies. The person hosting this group earned $250. The website FindFocusGroups.com has listings of companies looking for people that would like to participate in focus groups. Alternately you might search Craigslist using keywords like “paid study,” “market research” or “surveys.”

#7. Become a consultant

Many small companies need help but can’t afford to work with one of the big, well-known consulting groups. Instead, they look for individuals like maybe you where they can get the same skills cheaper and on an ala Carte basis. For example, HourlyNerd connects well-educated professionals with small companies that need consulting help. If you have skills in areas such as marketing, social networking, search engine optimization or program management you could pick up a nice bit of change by consulting with companies that need these types of skills.

#8. Be an online jurist

There are trial attorneys that look for people to judge cases that haven’t gone to court yet. They use online jurors to help figure out what an average group of people might think about the merits of their cases or how they might respond to the attorney’s concepts or tactics. Companies such as Online Verdict enable attorneys to access regular people to serve as online jurors. If you meet the criteria to sit on one of these juries you would likely earn between $10 and $60 for your time.

#9. Rent out a room or your househouse with cash in it

If you have a spare room in your house why not rent it out using a site like Airbnb that connects travelers with people that are willing to rent out a room or an entire house. There are also sites such as the VRBO (Vacation Rentals by Owner) and HomeAway where you could rent your house to paying guests when you’re away from home. In the event you have a friend that would let you sleep on his or her couch you could rent your house for a period of time without even leaving town.

The Things You Should And Shouldn’t Put On A Credit Card

A credit card just might be the ultimate frenemy. Depending on how you use it, that little piece of plastic could be a good friend or an awful enemy. There are really only two secrets to keeping that credit card a good friend. The first is to use it sensibly. The second is knowing what and what not to put on it.

Using a credit card sensiblyman holding multiple credit cards

This is relatively easy. If you want to use that credit card sensibly you need to keep the balance low and pay it off at the end of every month. What’s a low balance? That’s pretty simple, too. It’s whatever amount of money you have to pay off your card when you get your statement. How much is that? This is question that only you can answer, which means doing a little budgeting. Sit down with a spreadsheet program or a pencil and a piece of paper and list all of your expenses – both fixed and variable. Your fixed expenses would be things like your rent or mortgage payment, car payment and insurance. Your utility bill, transportation costs, clothing and entertainment would be variable expenses. When you finish your list add up everything and subtract this number from your monthly take-home pay. If you have money left over, which we hope you do, you should save some of it and then budget the rest for your credit card. Let’s say, for the sake of the example, that after you subtract your fixed and variable expenses and the money you’ve earmarked for saving you have $100 left over. This then is the balance you could afford to carry on a credit card because you would know you would be able to pay it off at the end of the month.

The danger of carrying balances forward

Why you don’t want to carry a balance forward from month-to-month is because of the power of compounding interest. This is something else that can be either a friend or an enemy. It can be your friend when you’re saving money but an enemy when you create debt. The way it works with a credit card is that once you carry a balance forward you’ll be charged interest on it, which will be carried forward to the next month where you will again be charged interest. This means you are now paying interest on interest. That’s compounding. And it can get ugly. If you were to run up a $5000 balance on your credit card at 15% and made only a minimum payment of $112.50 it would take you 266 months to be rid of that debt and would cost you $5,729.21 in interest – or more than that original balance.

What to put on a credit card

You’ve already seen the real answer to that question, which is to put no more on that credit card than you can pay off when you get your statement. So long as you know what that number is you can put anything on that card and you should probably charge as much as possible as this then becomes a record of your spending, which you could use in your budgeting.

The one exception

The one exception to this rule of charging only what you can afford is major purchases like a washer-dryer or refrigerator. If you need to buy one of these big-ticket items and don’t have the cash available it could be okay to put it on a credit card. Just keep in mind that you will need to pay back the money, which means budgeting for it. If you were to put a $1000 item on that credit card you should budget an extra $100 or $200 a month to pay it off as quickly as possible and keep from falling victim to that old devil of compound interest.

What not to put on a credit cardWoman depressed over bills

It’s important to remember that credit card debt is unsecured debt. Many experts believe that it’s the worst way to borrow money because it typically carries a very high interest rate – much higher than a car or home loan. Plus, credit card debt is never tax deductible as is the interest you pay on a home mortgage or student loan. Given this, there are five things you should never put on a credit card.

The first is college tuition. There are literally millions of American adults who are still paying for their college educations years after they left school. In many cases they haven’t even been able to find work in their fields of study – leaving them members of what’s now called the “underemployed.”

There are two big reasons why you should never put college tuition on a credit card. The first is the aforementioned compounding interest. The second is that it’s better to fund your education with low-interest student loans, grants, part-time jobs and scholarships as this would save you thousands of dollars over the long term.

Second, don’t put your income taxes on a credit card. Even if you find yourself hit with a big tax liability, don’t charge it. While the IRS makes it easy to make your payments with a credit card there are several reasons to not do this. First, the payment processing company will assess a fee of 1.88% to 2.35% and this will only add to the burden you’re already facing. In addition, the IRS will let you set up a payment plan with a much better interest rate. As of this writing its underpayment interest rate charge for each quarter is just 3%, which is much better than you would get with any credit card.

A third thing you shouldn’t put on a credit card is a vacation. While getting away from the stress of everyday life can feel really good don’t finance that trip with a credit card. If you do this you’ll only be coming home to the problems caused by that debt. A better solution is to plan a vacation that fits within your means such as camping, staying at hostels or visiting friends and family members. You say that’s not your idea of a dream vacation? Then set up a vacation fund, contribute to it every month and you will eventually have the money in hand to finance your dream vacation.

You should also never put a big wedding on a credit card. You might be tempted to have a really lavish event but just as with a vacation, you need to plan a wedding that will fit within your means and avoid creating credit card debt. We know that this will be a very special day for the two of you but it’s not worth it if you have to begin your lives together laboring underneath a huge pile of debt.

Last but not least, don’t put medical bills on a credit card. These bills can be staggering but if you talk with your healthcare providers you should be able to get payment plans that have little or no interest and payments you could actually afford. It’s possible that you could also tap into a charitable organization for financial help. But once you put those bills on a credit card that’s it. You ‘re stuck with that debt and with a big monthly payment probably for years to come.

How To Rebuild Your Credit After Divorce

man jumping with a chart behind himGetting divorced can be one of the most stressful things you’ll ever have to endure. If you have children there’ll be the issues of who has custody and maybe visiting rights. You or your attorneys will need to determine how to split your finances as well as your furniture and personal possessions. And, of course, the more stuff you have and the more you and your spouse earn, the more complicated things will be. But there is one piece that’s easy to overlook and that’s your credit score.

Why your credit score will take a hit

Despite what many people think a divorce per se will not damage your credit score. This is because your credit score and your spouse’s credit score are different. It’s not like you had a joint credit score and getting divorced will cut your score by 50%. However, there are several reasons why a divorce will damage your credit score. First, your expenses will likely go up since you’re no longer splitting them. This will make it more difficult for you to keep up with your bills. Second, it’s likely that you and your spouse had some debts when you divorced. If they are not paid off immediately they will end up being the responsibility of one of you. If that person doesn’t pay them off then both your credit reports and ultimately your credit scores will be damaged. And third, the harsh truth is that there can be identity theft. It’s unfortunately very common for one spouse to “borrow” the ex’s personal information to get new utility services, new credit cards, an auto loan, etc.

Divorce can lead to bankruptcy

It’s also sad but true that a divorce can lead to bankruptcy. If this happens to you it might be because your finances just got stretched over the limit, as you’re now required to pay for new expenses such as alimony or childcare. But some people are actually pushed into filing for bankruptcy by his or her former spouse. As an example of this let’s suppose that you owned a house with your ex spouse but you can’t sell it because it’s upside down. Your ex agrees to pay the mortgage but then doesn’t do so. If you want to keep the house you could end up having to file for bankruptcy in order to save it. Or just to get rid of the responsibility of having to pay on it.

Making your credit score a priority

There are numerous things that need to be taken care of as the result of a divorce. This could make it easy for you to miss paying a bill. And believe it or not just one late or missed payment could cause what would otherwise be your excellent credit score to fall by 50, 75 points or more. After your divorce you will need good credit to get a place to live and to get new utility service without having to make a deposit. Plus, the stain on your credit report of having missed a payment can come back to haunt you as it will stay in your credit reports for seven years.

Get your credit reportsmagnifying glass on credit report

One of the most important things you should do post-divorce is to get your credit reports. They are available free from the three credit reporting bureaus – Experian, TransUnion and Equifax. They are also available free on the website www.annualcreditreport.com. While this site makes it possible to get all three of your credit reports simultaneously most financial experts say it’s better to get them one at a time every four months. This becomes a way to monitor your credit year round without having to pay a credit monitoring service.

There are several reasons why you should be getting your credit reports. First, it’s so you can see all your debts. Any debts that were the joint responsibility of the two of you should be paid off as quickly as possible. This is because you are legally responsible for paying off any joint debts and getting divorced doesn’t change that.

It’s also possible that there are errors in your credit reports that are dragging down your credit score. When you review your credit reports look for purchases you don’t remember making or companies you don’t remember having done business with. If you find errors be sure to dispute them with the appropriate credit bureau. You should do this in writing so that you will have a paper trail. If you are able to get erroneous items removed from your credit reports your credit score should get a nice bounce.

Rebuilding your credit

If your credit was damaged due to the divorce, take heart. While you can’t change the past, you can make sure that you pay all your bills on time going forward. Recent information about how you handle your credit tends to have a greater impact on your score then older information. This means that paying your bills on time should ultimately lead to a significant improvement in your credit score. If you lost your credit cards for some reason or just don’t have one then get a new, secured credit card. This is where you deposit money at a bank or credit union and then can use the card so long as you have a balance. If you do get one of these cards make sure that if you use it sensibly this will be reported to the three credit bureaus, as you need this in order to rebuild your credit score. You might also be able to get a personal line of credit secured by a savings account. This would be yet another step in rebuilding your credit.

If your financial circumstances are really bad

If you have a 401(k) and are in dire financial circumstances you could borrow from it to clear up your debts and get a jump in your credit score. While this is never an ideal solution it’s better than cashing in your retirement account early, which would mean having to pay taxes and penalties. There is also a relatively new way to borrow money that could help. It’s called peer-to-peer lending. Two of the most popular sites that offer these loans are Lending Club and Prosper. The way this works is that you fill out and submit an application with your name, Social Security number, address and the amount of money you need and why you need it. Once your application has been verified, your request will be put online for lenders to review. If you write a good enough “pitch” or reason why you need the money a lender or group of lenders might decide to take a chance on you and fund your loan even though you have a poor credit score.

True Or False – You Should Auto Pay All Your Bills?

If your goal is to simplify your finances one thing the experts tell you to auto pay all your bills. That way you’ll never have to remember your payment due dates, never have to mail a check and never have to remember whether you paid that utility bill or not. If you have online banking then putting your bills on auto pay should be a real snap. You might even be able to have your statements sent to you electronically so you would never again have to worry about filing them or ultimately shredding them. Putting your bills on auto pay would certainly help simplify your finances but should you really put all of them on auto pay?Manager working diligently on the computer

The pros

The biggest pro of putting your bills on auto pay is, of course, convenience. As noted above when your bills are on auto pay you’ll never have to wonder whether or not you’re late on a payment or when your bills are due. When you fully automate your bill paying you’ll had made sure that your bills will be paid when they’re due and in full – assuming, of course, that you have a sufficient amount of money in your checking account to cover them.

You might also earn some nice incentives by signing up for auto pay. This is because there are companies that will reward you for paying them automatically. As an example of this, Nelnet will cut the interest rate on your loans by 0.25% when you agree to pay it automatically. This may not seem like a lot but could actually add up to many thousands of dollars over the life of your loan.

Third, paying your bills automatically can help your credit score because it should mean you never miss a payment. And missed payments can hurt your credit score fairly seriously. In fact, missing a single payment could ding your credit score by 60 points. Miss two and your credit score could be reduced by 120 points, which could drop you from having a good credit score to a poor score. In either event this would ultimately cost you money because you’d end up paying higher interest rates. This might even increase the cost of your auto insurance premiums.

The cons

There’s no question but that automatic bill pay can make your financial life simpler. However, there are times when it might not make good sense.

One of these is if you need tight control over your monthly spending. If you’re living from paycheck to paycheck then paying your bills manually could make better sense as this would give you greater control over how you allocate your funds and keep you from going into overdraft in a tough month. This would also help you keep money available for crucial expenses such as food and rent.

A second type of bill you might not want to put on auto pay is one that varies monthly. An example of this might be your utility bill, which could vary considerably between winter and summer – especially if you have air conditioning. If you were to put it on auto pay and had a very hot June or July this could substantially mess up your monthly finances. On the other hand, if you have bills such as a cell phone bill or your rent that remain the same from month-to-month they would be great candidates for auto pay.

A third consideration is that if you’re not careful you could end up paying for things you didn’t intend to buy. For example, it’s never a good idea to set up auto pay for temporary services or memberships. There are instances where if you were to try to cancel or change the service you could end up in customer service hell. Suppose you were to sign up to try Amazon’s Prime Service free for a month. If you forget to cancel you could find yourself hit with an unpleasant surprise – a $99 yearly fee.

Some other things to consider

When you sign up with a company for auto-pay this tells your bank to automatically approve requests to withdraw money for that company. The Federal Trade Commission says that you should only do this with those companies you trust and know. If not, you could wind up paying for stuff you didn’t want. It’s also possible that automatically paying your bills would make you more susceptible to having your identity stolen. While this may or may not be true it’s always a good idea to carefully read the company’s privacy policy and make sure that it will encrypt all of your transactions digitally.

As we have seen from the data breaches that recently hit Anthem Blue Cross/Blue Shield and Target there is no such thing as a totally safe website. However, automatic bill payment is usually much safer than mailing your payments physically. This is due to the fact that the postal system is more vulnerable to tampering and interception.

Video thumbnail for youtube video 6 Tips For Simplifying Your Financial LifeThe net/net

Automatic bill payment may not be for everybody but it is a very convenient way to pay bills for many consumers – making sure their bills are paid in full and on time. It can save money as well as time. But most banks now allow you to set up your bills to be paid online but not automatically. While this puts the burden of paying your bills back on your shoulders it does provide the convenience of paying your bills electronically but allows you to keep control of how much money goes out of your of your account each month. We have a number of bills that vary from month to month. We have it set up with our bank so that we can pay them online. When one of these bills arrives in the mail we note its due date and then immediately go online to our checking account and arrange to pay the bill on that date. This eliminates the need for us to remember to make the payment as well as the annoyances of having to find a stamp and to get the bill in the mail in enough time for it to make its due date. We view this as sort of the best of both worlds.

Automate your saving, too

In addition to putting your bills on auto pay it’s also a good idea to automate your saving. This short video explains how to do this and why it makes really good sense.

Simple Tricks For Cutting Costs And Fattening Up Your Piggy Bank

woman with a full grocery shopping bagWe’ve always find it ironic that when the government reports that the cost of living or Consumer Price Index has increased only +0.4% (Feb 2015) that this does not include the cost of gas or food. And while the cost of gas has dropped recently, the cost of food continues to increase every month. If yours is a typical family you’ve probably also seen increases in the cost of your cable or satellite service and your utilities. It’s tough these days to just stay even let alone save money. Fortunately there are some simple tricks that you could use to cut your everyday costs and fatten up your piggy bank.

Let’s work on that grocery bill

If you grow pale and faint when you see the total amount you’ve just spent on a week’s groceries, take heart. There are some simple things you could do to cut down the cost of your groceries. It begins with making a grocery list. The simple fact is that you should never go to the grocery store without a list. This accomplishes two things. First, it ensures that you’ll get everything you need, which will cut down on those trips you have to make to get the stuff you forgot. Second, having a grocery list will keep you from spending money on all those tempting things you see at those aisle-and displays.

Next, become an avid coupon clipper. You’ll find them in your newspaper – probably on Wednesday — as this is normally food day. If you don’t get a newspaper go online and sign up for your favorite supermarket’s newsletter. There are also tons of websites that offer coupons, many of which are printable. Some of the best include Shopathome.com, Thecrazycouponlady.com and, of course, Coupons.com. Always look for stores that offer double coupons on the stuff you need and for coupons that align with sales that are going on at your supermarket. And, finally, try to buy as many store brand items as you can, as this should save you up to 25% vs. brand name items.

Small changes can mean a lot

As an example of this the stuff that you drink can really add up. If you’re using bottled water, stop it. Those bottles are not only costing you money but they’re not good for the environment. Buy one of those bottles that filters water and then just fill it up with tap water. Believe it or not this can save you hundreds of dollars over the course of a year. Also, stop buying those lattes and brew your coffee at home. This alone could save you more than $700 a year. If you eat out a lot you can save big money by not doing it. Half of the average American’s budget goes to eating meals out of the home. If that’s typical of you just think how much you could do in cutting costs simply by eating at home instead of going to restaurants or getting takeout.

money and measuring tape

Slash your cable bill

Did you know that the average American spends $86 a month on cable or $1032 a year? If you have a digital TV you could buy an antenna for $30 or less which would get you all your local channels free. If your TV is analog all you would need to do is buy a cheap converter. We have a small antenna next to one of our digital TVs and we get more than 30 local channels. Not all of these are ones you would watch on a regular basis but we were surprised at what’s available and you might be, too.

If you do decide to ditch cable or satellite TV you could get movies through a subscription service such as Netflix or at one of those kiosks at your supermarket. You say you just can’t give up cable entirely? Then call your cable company and see if you couldn’t negotiate a better deal. Most of these companies will offer you a nice discount if you bundle, which means getting television, Internet and phone service all together. Or go online and check to see what packages your cable provider has available, as you might be able to save money by downgrading to fewer channels.

You can also save money by changing your movie going habits. Matinees and early shows always cost less than if you were to go to the same film at night. And the same holds true of restaurant meals. When there’s a hot new restaurant in town that you would like to sample, have lunch there instead of dinner.

Chop down that energy bill

If you’re like the average family you spend $1900 a year on energy. You could knock that down a few dollars simply by shutting off the lights in rooms you’re not using. If you don’t have a programmable thermostat you should certainly get one. It shouldn’t cost you more than $60 and will pay for itself in just a few months by automatically turning down the temperature during those times of the day that you’re not there. You might also do a home energy audit. The Environmental Protection Agency has a free calculator that would help you see where you could achieve some savings. It’s available at EnergyStar.gov.

For that matter, this short video show how you could actually cut your electric bill in half and just think how much that could save you …

Do you commute to work?

Another great way to save money if you commute to work is by getting into or forming a carpool or by taking public transportation. This would not only cut your gas costs but also the wear and tear on your car.

The big stuff

There are some changes you could make that would result in some really big savings. If you have a mortgage, think about refinancing your home. Last week we heard that one of our local mortgage brokers was offering fixed rate mortgages at less than 4%. If you have a mortgage at 5% or higher and you were to refinance you could put a couple hundred dollars a month in your pocket. If you rent try negotiating with your landlord for a cheaper rent when you next sign a lease or offer to sign a longer one in return for a discount.

Get creative

If you stop to think about it there are probably dozens of other ways you could cut your spending. Just get creative. And be sure to get your entire family involved. We know of families that have a meeting once a month where everyone contributes their ideas for saving money with a prize to the person that comes up with the best suggestion. Be sure to make a budget so that you can keep track of your spending, as you might be amazed at how little changes along the way have helped fatten up your piggy bank. And when it gets right down to it, what’s better than a fat, happy piggy bank?

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