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Should You Borrow Money To Get Married?

March 2, 2016 by Diana

Do you think it is a good idea to borrow money just so you can finance your dream wedding?

A lot of experts do not think so. In fact, financial advisers believe that this is one of the debts that you should think twice or thrice before you borrow. If you ask any expert, they would discourage you from borrowing money just so you can get married. It is better to just save up for this expense rather than force it by getting a loan to finance it.

Apparently, some people do not mind being in debt as long as they are united with the one their love. According to a press release published on PRNewsWire.com, 2.1% of loan borrowers use it to finance wedding expenses. Based on the data provided, the average loan offered is usually $11,000 and more people from the Northeast region borrow money to finance their wedding.

This goes to show that people can sometimes make irrational choices when they are going through an emotional high. The engagement, after all, is a very emotional phase in anyone’s life. That rush of love and affection for your partner can cause you to make irrational choices that could affect your future together. If you want to start your marriage right and enjoy financial bliss, you, ideally, need to start it without debt. But in case you really cannot wait another year before you say your vows, is there a way to be smart about the money that you will borrow for your wedding?

When is it okay to get a loan for your wedding?

Being smart about this loan means satisfying a couple of qualifications to justify your decision to borrow money for your wedding. Before you can apply for a loan, make sure you satisfy as much as you can from these 5 qualifications:

If you have to get married now.

Do you really have to get married now? Sometimes, couples are in a hurry to get married because the other is about to go abroad for work (or maybe a military servicemember deployed in another country). If you are trying to race against time, you can probably justify the need to get a loan just so you can get married.

If you have a good credit score.

Another qualification that you need to meet before you borrow money for your wedding is your credit score. Do you, or your fiance, have a good credit score? If you have a bad score, you might be given a high interest for your loan. This will increase the money that you will be wasting on the loan. Try to avoid this as much as possible.

If you have a stable job.

This is another qualification that will help you decide if you should get a loan or not. If your job is not stable, you might find it hard to pay off your loan. If you lose your job or you are dependent of freelancing projects, you should think twice before you borrow money. Skipping on payments might cause stress early on in your marriage. You want to avoid that as much as possible.

If you have a payment plan in place.

Before you apply for a loan, make sure you have a payment plan in place. Creating one will help you check if you have the funds to pay off the loan. If you do not know where you will get the money for the monthly contributions, that is a problem. Find where you will get the money first for the payments before you get a loan.

If you do not have other debts.

The final qualification is to not have other debts. Ideally, you want to have zero debt at all. But if you have a small amount of debt, you can probably check with your payment plan if you can really afford to add more. If it turns out that you can, then proceed with the loan.

Before you borrow money, it is very important that you understand why you are doing it. Sure, love is important but you have to be careful about the amount of debt that you will put yourself through. According to a study published on PBS.org, the more you spend on your wedding increases the odds of you getting a divorce. The study done by two economic professors from Emory University. If you think that the amount has an effect on your marriage, what more if the money was borrowed? It might make things worse.

How to plan a frugal wedding

If you think about it, you can get married without necessarily spending a lot of money. You just have to be smart about your choices. Planning a frugal wedding may be the key to help you get the wedding of your dreams without the need for debt.

But how much does it cost to get married today? According to the study done by TheKnot.com, the average cost to get married in the US is $31,213. This is already $3,000 higher compared to 2006. Take note that this is the average cost. That means there are those who spend more and those who spend less than this amount.

If you do not have the savings to pay for a grand wedding celebration, you obviously want to be part of the half that spends less than the average. To do that, you may need to adapt a frugal mindset so you can pay for your wedding without borrowing money to finance it.

Let us go through the different spending categories and discuss how you can save on each.

Venue

The best way to save money here is by narrowing your guest list. You will save on the food, invites and even the centerpiece that you will place on the table. You can also opt to get married during the off-peak season – that includes forgetting about a Saturday wedding. That way, everything will not be as expensive – and you can choose from more suppliers. You can also set both the ceremony and reception in one place. This will eliminate the need to pay for two venues. Better yet, why not get a wealthy relative to host your wedding in their backyard? If the home of your parents has a backyard that is big enough, you can also choose to get married there.

Food and drinks

Even if you have cut down the guestlist, there are other ways to save on food and drinks. If you know someone who is a great cook, you can ask them to help you out by cooking the food during the reception. Serving comfort foods like barbecued meats, corn, etc can save you a lot. You can also approach family-owned restaurants in your local community. They usually charge less than known wedding caterers. For the drinks, you can opt to buy your own beer, wine and drinks so skip the more expensive open bars. For your cake, you can choose a small two-tiered cake for the reception but have a simple yet bigger cake in the kitchen to serve to the guests. This can already be your dessert.

Gowns, suits, dresses, accessories, etc.

We all want that dream gowns and the dapper suit created by known designers. But if your budget cannot afford it, then skip it. There are dresses off the rack that look as good as any wedding dress. The bride can choose to use the wedding dress of their mother and alter it to suit their taste. For the bridesmaids – you can ask them to pay for their own dresses. That can really help cut back on the cost. The accessories can be borrowed or created to be unique. If you are creative enough, you can find a way to cut on costs.

Flowers

What is a wedding without flowers right? We are not going to have a wedding without flowers but there are ways for you to keep costs down simply by choosing the right kind to use. Roses are beautiful and not as expensive as tulips or peonies. Buying the flower that is in season when you get married will keep your from the need to borrow money for your wedding. And you can skip using flowers as the centerpiece – use candles and glasses. They are just as beautiful and romantic if done the right way.

Invites and favors

You really do not need a printed invite because you can create a digital one and send it to those you want to be with you on your special day. In case you want to be traditional about it, you can create your own invite. When it comes to the favors, you can give one per couple. That will help save you money. Of course, doing your own wedding favors can save loads of money so check out simple yet elegant favors that you can do yourself.

Photos, videos and music

If you live near a university where art and music students go, you can probably approach some of the students to ask them to cover your wedding. This is a great way for them to earn some extra cash and at the same time, give them something to put in their list of experience. If you also know a family or friend who take great photos or plays an instrument or can sing, ask them to help you out as a wedding gift.

Believe it or not, you can get the help of your family and friends when it comes to putting together your dream wedding. If they love you enough, the wouldn’t mind giving you tips or contacts to help you save so you do not have to borrow money to finance your wedding.

How to save for the wedding of your dreams

To really avoid being in debt before your wedding, you really have to save up for it. Here are some tips that will help you get the finances that you need to pay for your wedding in cash.

Plan the details. Start by planning the details of your wedding. The earlier you plan, the more you can anticipate the expenses so you can do something to make the costs go down. Besides, financial planning for genders are usually different. You can avoid disagreeing in the future if you sit down and talk to your partner about the details of your wedding.
Figure out how much each will cost. This will allow you to identify the costs that you can work on and those that you need to save up for.
Find out how you can minimize the cost. Check if you have family or friends who can lend a hand or share a talent. This can be their wedding gift to you.
Total the amount you will need. Once you have removed the things you can get for free or at a discount, you can not get the sum of what you need to save up for the wedding.
Calculate how much you should save each month. Once you have the total amount, you can calculate how much you will need to save each month. By saving money, you can avoid the need to get a loan to finance your wedding.
Earn more or spend less to meet your saving goal. If you current cash flow and expenses cannot meet your target, you may have to start earning more or spending less. A few sacrifices will make your wedding all the more worth it.

If you have exhausted all these efforts and still come up short, it may already be justified to borrow money for your wedding. At least, all these efforts will make you borrow less than the actual value of your wedding event.

3 Ways You Can Convince Your Spouse To Save Money Together

January 24, 2016 by Diana

Have you been trying to save money but your spouse or partner is not cooperating with you? That can be a tough situation to be in. It is not uncommon for couples to disagree when it comes to the management of their finances.

According to an article published on CNBC.com, the leading cause of stress among couples involves their finances. This was based on the survey done by SunTrust Bank in 2015. 3 out of 10 respondents admitted to feeling a level of stress in their relationship and money was said to be the primary cause of it. The survey even said that it caused friction among couples which usually lead them to fight about money. In the same article, another study was cited about money and stress. The American Psychological Association said that ¾ of Americans go through financial stress and ¼ of them define it as extreme stress. Among the reasons why there is financial stress is because of the different views and management beliefs that couples have when it comes to their money.

One of the things that couples usually fight about is their savings. Some people feel like it is okay to spend their money if it will be on something that will bring them happiness. However, their partner or spouse usually feel that they should save money to make their future more secure.

If you are tired of fighting with your spouse about money, you do not have to give up your financial beliefs for you to have peace at home. There are ways for you to agree when it comes to managing your finances.

3 tips to get your spouse to help you save

Trying to get your spouse to save money may seem like an impossible task especially if they are natural spenders. Sometimes, this can be a frustrating moment for savers who are married to spenders. They know that they need to save but their partners are bent on spending their money to help make the present life feel more comfortable. While there is nothing wrong with pampering yourself and enjoying your money today, it is wiser if you consider your future too. You should not spend everything today. Think about your retirement. Think about what will happen in case your primary source of income is suddenly compromised. How will you and your spouse live then? If you have kids, what will happen to them in case something bad happens to you?

An article published on Fool.com last 2015 revealed some distressing news about the state of the savings of Americans. Only 2 out of 10 workers said that they confident about the money that they have saved in retirement. Despite the fact that the majority is not confident about their retirement savings, almost 4 out of 10 workers are still not saving money. In fact, 4 out of 10 Americans do not have any retirement savings at all.

If you think about it, these statistics should convince you and your spouse to save money. At least, if you do not want to end up living in poverty once you get older.

To help you meet your saving goals, here are 3 tips that will help you encourage your spouse to save with you.

Show how saving is good for them.

This takes a bit of strategy. You need to understand your spouse well enough to know what is important to them. Think about their personality. What do you think will get them to save money? Is it the promise of travelling on a yearly basis? Is it the security of your children’s future? Is it being able to retire early? These are things that only you, as the spouse, will know. Use this knowledge to your advantage. Use it to convince your spouse to find value in saving money.

Create common goals.

Start by making financial plans together. To convince them to save money, you need to show them your financial position first. You have to show them that your finances will not be stable or will be more secure if you work on increasing your savings. Then you need to set goals together. How do you want to spend your life in the future? What do you want to possess in 5 to 10 years? Having goals will help motivate the both of you to make the necessary sacrifices that will grow your savings. Not only that, having shared goals can help strengthen your relationship with each other. Working on something that involves a future a has the two of you will bring you closer as you progress in your goals.

Get help from a third party.

If the two efforts will still not get your spouse to save money, it may be better to get someone else to talk to the both of you. Hiring a financial planner usually works. But if you have a mentor that the both of you look up to and respect, that can also help. Sometimes, hearing it from someone else will make us sit up and realize the value in saving money.

Any of these tips should be able to convince your spouse to finally, save money so you can both feel more secure about your finances. While different couples handle their household income differently, we will all benefit from increasing our savings.

Managing money as a couple is tough if you do not know how to communicate with each other well. Here is a video that provides tips on how you can talk about money without fighting with each other.

How to make saving effortless and painless for couples

The truth is, some people avoid saving money because it feels painful. To a certain level, this is true. It can be painful if you are forced to make sacrifices in order to get the extra money that will allow you to save. For instance, some of you may be forced to get a second job just so you can increase your income. Other couples may be forced to stop spending so they can put it in their savings. These are the sacrifices that make it hard to save more money.

According to another article from Fool.com, millennials have admitted that they have a negative savings rate because of their debts. This is in fact, a reasonable excuse to not save. But that does not mean it will keep your finances from being vulnerable. Your excuse will not get you closer to reaching your goals, nor will it make your finances secure. You have to find a way to save money regardless of your financial position.

Here are a couple of ideas that will help make your saving efforts less painless and effortless.

Automate your savings. Start by making your savings automatic. Commit to save $200 per payday. Have the bank get the amount and send it to an account that is dedicated to your savings. You won’t really miss it if you get it from your paycheck immediately.
Opt for cash back rewards. There is no helping it. We really need to spend. But that does not mean we should not find a way to spend little. Some companies can help you save money by giving cash back rewards. Just make sure you will put this money in your savings to make it count.
Improve your credit score. The higher the credit score, the less interest you have to worry about. The lower the interest on your credit accounts, the more money you will save.
Negotiate your interest with creditors and lenders. If you have debts, you can call your creditors and lenders and ask them to lower your interest – at least if you have a good payment behavior. This will help free up money in your debt payment fund and you can put that in your savings.
Learn to cook your meals from scratch. You can save a lot if you only use your kitchen. Not only that, you can also be assured of healthier meals for your family.
Set your insurance payments to yearly contributions. Insurance companies usually charge less if you pay your insurance premiums on a yearly basis instead of monthly, quarterly or semi-annually.
Take care of your health. Finally, taking care of yourself is literally a painless way to save money. Health care costs are rising and this is an expense that you cannot forego if there is a need. Make sure you lessen that need. Live a healthier lifestyle so you do not have to spend on expensive treatments. This is one way that saving can literally save your life.

Tips To Save Money For The Summer

January 12, 2016 by Diana

Now that the holidays are over, there is yet another season that you need to save money for – summer.

You may find this confusing – especially if you are single or childless. But if you have kids, you know how much of a big deal this really is. This is the time when the school season is out and you have a bunch of kids feeling bored at home. You can expect that they will be sleeping late for a week or two but that will not last for long. Soon, you will find them restless and begging you for money so they can do something that will keep boredom away.

According to an article published on 360FinancialLiteracy.org, 6 out of 10 Americans admitted that summer equal or even exceed the financial tension that they feel during the holidays. This data is according to the survey done by AICPA through Harris Poll. This means the expenses incurred during this season is high enough to cause them stress. It seems like having the kids at home instead of in school is more financially draining.

The key to avoid a stressful summer for the whole family is to simply save money for it ahead of time. The thought of a summer vacation away from home is a great way to encourage the whole family to save. This is a great financial lesson for your kids too.

Although the pressure is mostly on the parents, even childless adults should start to save money for this season as well. The hot summer months are perfect for travelling with your significant other, family or friends. It is the perfect time of the year to break away from your work-home grind and relax. Of course, if you will travel to relax, you need to save up some cash to spend during that time.

Some of you may feel like relying on your credit cards for that future expense so you can procrastinate – think again. It is smarter for you to save money now so you can pay for your summer expenses in cash. This is especially true if you ended up with some holiday debt. Break the debt cycle by saving for your summer expenses in advance. That way, you can end your summer without worrying about where you will get the money to pay for what you just spent.

How to save up for the summer vacation

Of course, making the decision to save money is easier said than done. If you are currently burdened with holiday debt, this can be a feat that is difficult to accomplish. But with determination, you can afford to include your summer savings in your budget at the beginning of this year.

But how much should you save up for the summer vacation?

That will depend on what you plan to do. So before you can calculate the costs, you need to set a plan first. According to TravelPulse.com, the average American worker allocates ⅓ of their vacation leave for the summer season. The survey featured in the article even revealed that 30% of those employed save more than 50% of their vacation days. If the trend in the past was to go to one long vacation, that is no longer practiced by the majority. 46% of travelers admitted to taking multiple weekend trips during this season – this could indicate that they plan to go to nearby trips – making their expenses more economical than one long trip with an offshore destination.

It was not indicated in the survey if the average American planned their summer getaway, it is revealed that 60% of travelers admitted to exceeding their summer budget each year. Obviously, exceeding your budget would mean you have acquired debt during this season. You want to avoid this as much as possible and that means putting a lot of effort to save money so you can spend cash.

With all the expenses that you will face this year, how is it possible for you to put away money that will be used a couple of months from now?

Here are some tips that can help you out.

Spring clean your home. Before summer is spring time and that is usually when we go through the whole house to see what needs fixing after the winter season. This is a great time for you to look at your possessions to see which ones can be sold in a yard sale. The proceeds of this can go to your summer fund.
Save your end-of-the-day change. Every time you get a spare change in your pocket, you should put that in a jar labelled “summer funds.” Even if you are contributing a small amount each day, that does not matter. The important thing is you are saving every day. The change will soon become a significant amount.
Rethink your Internet/Cable subscription. There are a lot of bundle packages that will help you save money on subscriptions. Instead of paying a lot on two different accounts, why not put them together? Some companies offer bundles to encourage consumers to get more than one product from them.
Skip the beverage when you eat out. Opt for water instead. That way, you can save on the beverage costs. This can be around $5 off of your tab. If everyone in the family does this, that can give you a bit of savings.
Cut back on entertainment. Since we are already discussing dining out, let us go on to entertainment costs in general. If you really want to save on household expenses, you need to cut back on eating out and other entertainment expenses. If you used to spend date night in a restaurant, you can just cook at home and have an intimate dinner when the kids are asleep. This should help you save around $50 to $100. Just be creative in your entertainment options. In the end, it is not the money you spend but who you spend it with.
Get an online job. If cutting back on expenses is not enough to help you save money for the summer, you may want to get a second job. To be specific, an online job should give you the money that you need for your summer plans. It is convenient enough to do as long as you have a stable Internet connection and a laptop or desktop. You can do this in the comforts of your own home.

How to enjoy summer on a budget

Do not think that putting a budget on your summer activities will limit the fun that you and the children will have. That is not true. There are many frugal ways to enjoy your summer vacation. You just have to understand what will make everyone happy and the different options that you have.

Here are some ideas that can help you enjoy your summer season without breaking the bank.

Camp in your backyard. You do not have to go very far. You can even invite friends over and make use of what you have at home.
Organize a neighborhood summer camp. Get a group of parents together and have them take out all the kids in a fun activity once a week. You can alternate weeks and that should help the kids have fun the whole summer. According to PsychologyToday.com, a summer camp is a great venue for kids to develop a lot of coping strategies. If enrolling in a summer camp is not in your budget, then talk to the other parents in the neighborhood and come up with activities that everyone can enjoy.
Opt for staycation. Instead of travelling far, you can choose to visit a location that is only two hours (or less) from your home. That way, you do not have to spend a lot on the journey and the board and lodging. Go to the park or the nearest beach.
Know the local activities. The community usually has a couple of events lined up for the summer season. Most of these are free or will only cost you a small amount. If you opt for these activities, you do not have to save money for this season – at least, you do not have to save a lot.
Go to the library. This place is where you can rent out books and even movies. You do not have to spend a lot to entertain yourselves as long as there is a library nearby.

The activities that you can come up with will depend on what you like to do. For more tips, here is a video made by a teen that will give you ideas that your children can enjoy this summer. These are all activities that will cost $10 or less.

Surviving An Unexpected Expense Without Depleting Your Reserve Fund

January 8, 2016 by Diana

Your reserve fund is a necessary part of your savings. If you want to stay away from financial ruin, you need to make sure that you have saved enough on your emergency fund. This is the fund that you will use when an unexpected expense happens. No matter how careful you are or how meticulous you plan your life, something will happen that is not expected. It is not a matter of “if it happens” but “when it will happen.”

According to a survey done by Gallup.com, 48% of their respondents admitted that they are not prepared for unplanned expenses – at least the major ones. These include replacing appliances or furniture, fixing a car or paying for a significant home repair. It was observed that those earning lower incomes are more likely to say that they cannot afford to pay for these emergency expenses. However, there is a surprising number of respondents (16%) earning $240,000 annually who said that they also cannot pay for unexpected expenses. This goes to show that it is not the income level does not immediately make you able to pay for emergency costs.

Although almost half of the respondents said they are unable to pay for unexpected expenses, that does not mean they are in a financial crisis. 7 out of 10 said that they are able to meet their daily expenses. But if it is not within their budget, that is where they start to have problems. That means their income and expenses are almost the same. There is no room for their savings.

If there is no room for savings, that means there is no way that you can save up for a reserve fund. If that is something that you are unable to do, one unexpected expense could land you in a difficult financial situation.

The thing is, there are times when people have reserve funds but it is not enough to finance everything that they need to pay for. This is when you need to come up with a different plan to help get out of a tough and unexpected situation.

3 financial sources that can help you pay for that unexpected expense

The stress associated with an emergency situation is tiring by itself. If you add to that the problem of your lack of funds, things can escalate quickly. The situation might make you desperate and lead you to make the wrong decisions about your life. To avoid that, you need to have a backup plan in case your reserve fund ends up coming up short. Here are a couple of options that can give your emergency fund a boost.

Get a line of credit.

This is a type of debt that you borrow once and you can keep on using repeatedly. It works like a personal loan and a credit card in one. You get to enjoy a lower interest but you can use the credit like a card. If you borrow $5,000, that is considered your limit. The only time that you will pay is back is when you use it. So if one emergency only cost you $1,000, that is that amount that you will pay back. Every time you need money, you can withdraw from this line of credit and pay interest only on what you used up at that time. You do not have to keep on applying for a loan every time to need it. This type of credit in increasing in popularity nowadays. According to a study done by RealtyTrac.com, there is an increase in the use of Home Equity Lines of Credit (HELOC) – with 797,865 borrowed between July 2013 to June 2014. This increased to 20,6% compared to the previous year. If you need a boost in your reserve fund, this type of credit is worth checking out.

Sell some possessions.

Another way to get more money for an emergency expense is to sell some of your possessions. It is probably time for you to declutter your life anyway. Taking the time to look at your possessions so you can evaluate what can stay or should be sold may be therapeutic for you. It will allow you to take your mind off your worries and put some order into your life. The items that you think can be sold may be able to help you get the extra income that you need for your emergency situation.

Ask a relative for help.

When the line of credit and the extra income is not enough, you can turn to your loved ones for help. After all, when an emergency strikes, it is our family that can usually help us until we are able to stand on our own two feet. Ask them for a loan or aid – whatever they can afford to give you. Show them that you tried your best by spending your reserve fund, borrowing money and selling some of your possessions. Let them know that your efforts still came up short and ask for help. Sometimes, all you have to do is ask and help will come soon enough.

These three sources can help you get over an emergency situation but make sure that you are careful and smart about how you will use them all. This is especially true for the line of credit that you will borrow. Make sure that you will only use it as intended. And once you get past your emergency situation, work on rebuilding your reserve fund. You will never know when another catastrophe will strike. It is best to be prepared before that happens.

How to build up your emergency fund despite a low income

Of course, building your emergency fund is easier said than done. This can be more difficult if you have a low income. To be able to grow your reserve fund, you need to spend lower than your income. That way, the extra money can be used to build up your savings.

According to the December Financial Security Index of Bankrate.com, 29% of their respondents are not comfortable with the savings that they have for the past 12 months. These are probably the people who are not able to pay for unexpected expenses in case they happen. It can be a dangerous financial position and you need to do something if you are one of those who are uncomfortable with the money that you have in your savings account.

Although it can be challenging, it is not impossible. If you know what is at stake, you will work hard to grow your emergency fund. Here are some tips that you can use to help you along.

Create a frugal budget. This is one of the best ways that you can lower your expenses so you can free up money to go to your reserve fund. This simply means you have to spend only on your priority expenses and nothing more. This will help you avoid unnecessary expenses so you can maximize your emergency savings.
Set a goal. Another thing that you need to do is to set a goal. Computing your emergency fund target is not that easy because you have a lot of factors to consider. But it is still important for you to state an amount that you will save up for and put it in a visible place. This will help you remember what you need to save up for and it can even motivate you to stick to your plans of building a reserve fund.
Get a support system. This can be a friend or the whole family. You want to tell someone of your plans to build up your savings to add pressure. It will motivate you to save up even if it is just to save yourself from the embarrassment of failing.
Put aside every spare change. Put a jar or coin bank in a visible area and put your spare change at the end of the day. It may seem like a small amount but it will add up soon enough. This can be added to your reserve fund.

If you are having trouble building up your emergency fund, here are some tips from a video created by the Credit Cards website.

How To Trick Yourself To Save More Money, And Not Use It

November 23, 2015 by Diana

If you want to be motivated to save more money, you need to understand how it can save your life. Your savings can come in handy if you are in the midst of an emergency. When your source of income is compromised, the money that you stashed away will also help you pay for your basic necessities. There are so many things that saving can help you with but unfortunately, not all Americans are able to save as diligently as they should.

Americans love to spend. That is a fact. President George W. Bush even encouraged everyone to spend because 70% of the American economy is driven by consumer spending. While we all know that we need to spend for our basic necessities, it is important for you to know that spending is the number one cause of our inability to save.

According to the real-time clock from Retale.com, $60,882 is being spent every second. That means $3.6 million ($3,652,920) is being spent every minute. In an hour, $219 million ($219,175,200) is being spent. that makes the daily spending a whopping $5.2 billion ($5,260,204,800).

On one side, this spending is good for the economy. When people spend, it means they are confident about their finances. Businesses will profit from this and the employees will all be compensated well. Everyone’s happy, right?

The truth is, spending is not all that bad. We do need to spend for our basic necessities after all. But too much spending becomes dangerous if it keeps you from being able to save more money to reach your goals.

Think about it. If something happens that is similar to the 2008 market crash, your lack of savings could put you in another compromising position. And even if the economy holds steady, you are not immune to personal setbacks. You might end up with a very expensive emergency. One trip to the emergency room or a broken heater in the middle of the winter can cost you a couple of hundred or even thousands in one go. If you do not have any savings, you need to consider how you can build it up so you can prepare for these emergencies. One of the consequences of not having adequate savings is incurring a huge amount of debt. That can compromise your financial position.

4 ways you can trick yourself to increase your savings

Although it may be hard to save more money because of all the spending that we need to do, there are ways that you can trick yourself into doing it. If you are part of the 50% of Americans who do not even have $100 in their emergency fund (according to the statistics from CreditDonkey.com), you need to reassess the security of your finances. If you cannot even cover an emergency expense that is $100 or less, you know that you are in serious trouble.

But as mentioned, saving is easier said than done. There is just too much temptation to spend. Everywhere you turn, the billboards and advertisements are telling you to spend, spend, spend! That is just how this consumerist society is set up. What could have been put in your savings account can easily be diverted into that cup of coffee or a new accessory.

Fortunately for you, there are techniques that will help you save. Of course, the usual advice about following a budget and having a spending list is still effective. But beyond that, there are 4 other tips that you can follow to help you boost your savings and not think twice about doing it.

Save the change.

The first tip that will help you save more money is to keep all your change. Ideally, you can set a budget for yourself each day. For instance, when you leave the house, put $50 in your wallet. When you come back home, anything left of that $50 should be put aside for your savings. Regardless if that is $5 or $20, put it in your savings account.

Automate your savings.

Technology can help make saving easier. If you find it hard to put aside the change that you have in your pocket each day, you may want to consider automating it. Set it up with your bank or employer so a portion of your income will go to your savings account. When your money is wired to your account, the system will automatically get a portion of the money to send it to your savings account. This is a great way to save more money without realizing it. If what you see in your paycheck is the amount less your savings, you will not really feel the loss of the money you are saving.

Keep your eye on the prize.

We mean this literally. Post a picture of your motivation to save. Most of us have a saving goal. It can be your retirement, sending your children to a good school in college, or that vacation – print out a photo of these goals. Put the photos in your wallet, in your workstation or any place where it is highly visible. This will serve as your reminder to save. When you have a saving goal, it gets easier to put aside the money that will help you reach your goal.

Set a daily saving amount.

This can actually be a weekly or monthly saving goal. You need to set this amount and stick to it – no matter what. For instance, you can commit and save $200 every paycheck – which is twice a month. Just like in your automated savings, as soon as you get your paycheck, you will get $200 and put it in your savings account. Whatever is left – that is the amount you will spend until your next paycheck comes in. When you no longer have cash, you will stop spending. Unless it is a life or death situation, you will not deviate from your goal to save more money.

How to keep your savings intact?

One thing that people fail to realize is that putting aside the money is only half of the battle. You will only win if you succeed in not spending what you saved. Some people save but when they reach a certain amount, they feel so good about their saving accomplishment that they end up spending it.

You need to learn how to say no because it can help you keep your savings intact. Here are three things that you can do to keep yourself from spending your savings prematurely.

Make sure you have an emergency fund.

First of all, you need to separate your savings from your emergency fund. Some people combine their emergency fund with the money they are putting aside for their saving goals. When something bad happens, they end up dipping into their emergency funds. You need to keep these two separate. That way, you will not compromise the success of your saving goals.

Set rules about spending your savings.

If you have to use your savings for something other than your intended goal, you need to define the rules before you use it. According to an article on GetRichSlowly.org, the challenge in using money is knowing when to use or save it. The author of the article gave two hints to help you decide when to use your savings and when to keep your hands off it. The first question is to think about the original intention for the savings. After considering that, you need to think about what is more important, the current situation or reaching your saving goal? This is how you can determine the rules surrounding the use of your savings.

Store it somewhere it is difficult to get.

The final tip that will keep you from spending your savings is to store it where you will have a hard time getting it. Make sure that it is only difficult – and not impossible. For instance, relying on your house as your savings is not the same as putting it in stocks or bonds. If you have to use your savings, it is too complicated to sell your house so you can use the money for your current emergency. At least, this is true if you compare it to liquidating your stock investments. Of course, you do not want to make it too easy – like withdrawing from an ATM card. If you make it too easy to get your savings, you might give in to the temptation to use it up.

If you think that you need a big income to save more money, think again. Here is a video from a woman named Melissa Alexandria. In the video, she is describing how she saved over $30,000 while earning only $2,500 a month. If she can do it, then you definitely can make the sacrifices to save more. Look at the video to see how she did it.

Be A Millionaire: How To Grow Your Personal Net Worth

June 20, 2015 by Diana

If you want to be super rich, you need to be focused on growing your personal net worth. Take note that this is not just about the amount of cash that you have. It involves your overall value. When computing your net worth, you need to consider your cash, investments, assets and other factors in your life that add to your value.

Some Americans think that their lives never really improved after the Great Recession happened. But if you look at the statistics, you will realize that there is a rise in the number of millionaires all over the world. According to the website WorldWealthReport.com, there are 14.6 million millionaires around the world as of 2014. In North America, there are 4.68 million millionaires – up by 8.3% from 2013. The most number of millionaires can be found in the Asia-Pacific region with 4.69 million of them. The number of millionaires in this regions increased by 8.5% compared to 2013. The region that comes in third when it comes to millionaires is Europe with 3.99 million millionaires, up by 4%. Even Middle East (0.61 million) and Africa (0.15 million) have more millionaires now with a growth of 7.7% and 5.2% respectively. Only Latin America have less millionaires now at 0.53 million – a 2.1% decrease.

You see, regardless of the economic conditions, some people just know how to manage their resources so it will grow and make them millionaires.

3 steps to grow your net worth

You will find a lot of tips and steps and techniques all over the Internet that will teach you how to become a millionaire. The truth is, there is no one-formula to getting rich. People like Warren Buffet, Donald Trump, Robert Kiyosaki and all the other successful individuals out there have different get-rich methods. What works for one may not necessarily work for you. This is why you need to be careful when you are looking for tips to improve your financial situation.

If you think about it, becoming rich begins and ends with financial management. You will never be a millionaire unless you know how to manage your money well. Not only that, you cannot stay a millionaire if you fail in money management as well. But apart from financial management, there are three steps that will help you grow your personal net worth.

Step 1: Get rid of too much debt.

The first step is to lower your liabilities. When it comes to financial liabilities, the first thing that comes into mind is credit. The truth is, debt is not all bad. Millionaires believe that there is such a thing as a good debt and they know how to use it to their advantage. But you need to know which debt is sucking the life out of your finances. You need to find them and end their association with your money. They will only bring your personal net worth down. High interest credit card debts are on top of the list. You can continue to use credit cards for a more convenient shopping experience but make sure that you can afford to pay it in full when the bill comes. The idea is to keep the high interest rate from touching your balance. That is how you are wasting money when you let credit card debt get out of hand.

If you lower your debt balance, you will also raise your credit score. This will open up a lot of financial opportunities for you – like a low interest rate on a loan that will help you finance investments.

Step 2: Secure your future.

There is a simple way that you can secure your future and that is to save. You need to save up for your emergency fund. You need to start contributing towards your retirement fund. You also have to think about the college fund of your kids so you can help them stay out of student loans. The last fund can also be for your own education so you can qualify for a higher compensation at work. All of these funds should be considered if you want to grow your personal net worth. Those who start contributing to their retirement fund while in their 20s will most likely be a millionaire by the time they retire. That is the beauty of compound interest.

When it comes to your emergency fund, this will secure your future – especially against debt. If you borrow money because of an unexpected event, that cannot be considered a good debt. In most cases, debts borne out of emergencies are done out of desperation and that usually means you are on the losing end. Good debts are those that are well planned. To make sure that you will never go into any unplanned debt, just build up your emergency fund.

Step3: Invest your money.

The most proactive way to grow your personal net worth is by investing your money. Putting your money in a savings account is not really considered an investment because of its pitiful interest rate. You need to literally invest your money in stocks, bond and mutual funds to help make it grow as the economy of the country continues to recover. According to an article published on CapGemini.com, High Net Worth Individuals invest their money in different ways. The survey known as Global High Net Worth Survey , revealed that the net worth of HNW individuals are divided into 5 categories: Equity (27%), Cash (26%), Real Estate (20%), Fixed Income (16%) and Alternative Investments (10%). As you can see, most of their wealth is kept in equities. This is because it has the best chance of growing there.

Learn about investing because this is a great way for you to increase your personal net worth. There are both low-risk and high-risk investments that you can dabble in. The rule is, the higher the risk, the higher the potential for growth is.

The millionaire mindset will help improve your wealth

Take note that completing the three steps discussed above does not guarantee that you will become a millionaire. It will help improve your personal net worth but whether or not it will make you a millionaire is still uncertain. That will depend on how you will manage your money after you have invested it. You still need to practice the right financial management skills and at the same time, apply the millionaire mindset.

In the website RichHabits.net, Thomas C. Corley revealed the 5 habits that help make people rich. The author spent 5 years studying 233 millionaires to determine the reasons why they are currently successful. Mind you, these are not millionaires who were born rich. These are self-made millionaires. They worked hard to be where they are and if you want to be like them, you need to implement the following habits.

Create multiple sources of income. The first habit is to diversify your streams of income. Do not depend on just one because if something happens to that source, you will be left with nothing. According to the studies done by Mr. Corley, 65% of these self-made millionaires have three or more sources of income. These include rental incomes, stock market investments, side businesses, royalties, etc.
Dream before you set a goal. Before you define your goals, make sure you identify your dream first. Your dream will point you to the general direction that you want your life to take. Once you know where you want to go, you can set the smaller goals that will take you there. You can begin by writing down where you want to be in 5, 10, 15 and 20 years time. Be specific about the details like where you want to live, how much your personal net worth should be, etc. When you have these written down, it should be easier to identify what you need to do in order to reach them. Setting your goals around these dreams will make it easier to take action because you have your motivation through your dream.
Avoid wasting your time. The article also revealed that millionaires try not to waste their time. There is great value in time and once you waste it, you cannot bring it back. So make sure that every moment spent in your life will count.
Find a mentor. Go and find someone that you want to emulate and learn from them. Most of the millionaires in the world attributed their improved personal net worth to their mentors. It could be your parents, a friend, a boss, or a teacher. Find someone that you respect and you know will have a positive influence in your life.
Do not quit on a dream. The last habit pointed out by Mr. Corley is to never quit on a dream. An admirable trait of self made millionaires is they are very persistent. When you find an obstacle blocking your way, you either go through it or you go around it. You never stop just because things get a bit too hard. If you fall, you stand up to try again. That persistence will help you grow your personal net worth until you become a self-made millionaire yourself.

Here is a video with 17 tips that will help you get a millionaire mindset. These were created by T. Harv Eker.

8 Simple Tips To Save Money Around The House

February 21, 2015 by Diana

A lot of people are trying out different ways to save money and some of them go to the extremes just to make it happen. Some would try to live off on noodles for months just to get some savings into the account. There are some who will walk miles and miles to and from work just to save on transportation cost.

For those with houses of their own, they also try and look for ways to save up some money the best way they know how. As Statisticbrain.com shares that about 65% of American consumers own a house in 2013, there are a lot of people have to meet big mortgage payments while simultaneously trying to save some funds despite their limited resources.

This is quite a challenge because the mortgage payment every month can easily be the biggest expense in the household budget. Regardless if it is a fixed interest rate, the payments can still change every month. For those that makes escrow payment every month, the taxes and insurance payments can go up and down year on year changing the house payments.

With this expense combined with all other living expenses, there are a good number of homeowners who are having a hard time looking for smart ways to save money. This becomes a lot harder when there are kids involved because the costs at home significantly increases with every child added into the family.

The reason why it is very difficult to put aside money is simply because it is really expensive to maintain a home. Your expenses would include repairs, utilities, and other items that would make your home not just livable, but also comfortable. Saving on car expenses is different because it is smaller and requires little compared to what your house will take from you. The tips to lower car costs becomes easier to follow.

Save funds with simple tweaks in the house

But despite the obvious difficulty, it does not mean you cannot save money through your home. Homeowners need not fret because there are a lot of ways to stop overspending at home. Here are some tips to consider when you are trying to save money at home.

Upgrade your appliances. This might sound a little bit counter productive to what you you are trying to accomplish. If you are trying to save some funds in the budget, the last thing you need is to spend money buying new equipments at home. But there is good reason behind this. The older appliances has the tendency to use up more electricity. Newer appliances can be more energy efficient and can actually help you get the job done (like laundry or baking) at a lower cost. You reap the benefits when you see the bills at the end of the month.
Do not compete with neighbors. This is one area in your life that you have complete control over but you sometimes choose to look the other way to one up your neighbors. If you see them pulling up the latest SUV model in their garage, you decide to go the the dealers the next day and get something more expensive just to show people that you have made it. If you see them renovating a new room, you suddenly hire contractors to put up another level in your house. Stop competing with the people around you and save money instead if increasing your lifestyle.
Monitor heating and cooling in the house. If you are out of the house, there is no need to heat up the house unless kids at home. Try to adjust the temperature accordingly with the time of the day and the number of people inside the house. This can benefit your electricity bills greatly and save you some funds for the rainy day. There are self regulating temperature controls that you may want to invest in. It could save you a lot in the long run.
Check your water use. This is again one of the simple tweaks that people tend to forget and end up paying a lot for water bills. If you do the laundry, try to do it once or twice a week when you already have a lot of clothes to wash. Loading up a full dishwasher rather than making several loads can also save you water which can lower your bills at the end of the month.
Fix for prevention. When you see areas in the house that needs a quick fix, do it! Do not wait for it to get bigger and require experts to fix. You can basically address small house repairs like a broken hinge, busted lightbulb or a leaking hose. Bring out the DIY persona out of you and repair small problems at home. It helps you save money by not having to call professionals when you can no longer fix the problem.
Cleaning can save you money. More than prolonging the life expectancy of some household equipments, it can also keep you and your family from getting sick. Make it a habit to clean around the house and you can even get your kids to help you out. Make it a family affair to get them used to cleaning their surroundings. Financial fitness can start from a healthy body.
Declutter and minimalism is a plus. Letting go of old items that you do not need anymore can help you declutter and even earn a little from the sale. It can also help you save space in the house is one great mental practice for relieving mental stress. Investopedia.com even explains that minimalism is gaining traction as a popular lifestyle with Amercian consumers with the goal of living back to basics.
Unplugging can save money and lives. When you are not watching the television, unplug it and not just turn it off. Do you see that little red light on the panel? It means that it is on standby and still consuming energy. Not a lot but still adding to your electric bill at the end of the month. Making this a habit can help you save electricity and even help prevent the risk of short circuiting the appliances which is a leading cause of fire.

What to do with the money that you saved?

Now that you have been able to save money with a few simple tips at home, what do you do with it? Do you paint the town red or set up a dinner date with your friends in that fancy new restaurant that just opened up? Here are some ideas how you can put that money into better use.

Add to your reserve funds. This refers to your emergency fund and rainy day fund – both of which helps you face financial problems in the future. The bigger your reserve funds are, the longer it can fuel your budget even with an impacted income.
Add to your retirement fund. The sooner you start building up your retirement fund, the more proactive it becomes with the help of compound interest. You also get the chance to retire at a date that you want rather than need.
Pay down credit card debt. Credit cards usually have the highest interest rate among all financial credit instruments. The sooner you pay off your debts, the more you can save on interest payments.
Put in a college fund. Bloomberg.com shares a report that the student loan payment delinquency increased in the lat quarter of 2014 from 11.1% to 11.3%. This might look like a small increase but it actually represents millions of loan holders in repayment trouble. You can actually help your children attend and graduate higher education debt free by building up their college fund early on.

When you are able to save money, you get the chance to use that amount to better your financial standing. Saving funds from an already tight household budget might sound hard and challenging but it is definitely not impossible.

Tough Saving Times For Millennials: What Can We Do About It?

December 9, 2014 by Diana

If you want to keep your finances from flying apart, you need to seriously consider your savings. At this point in time, you should already believe that saving will help you get out of most financial problems. There are times when you are in abundance and most people tend to increase their spending instead of putting more money into their savings. This is not the best way to go about it. When you are in abundance, you should always think about your savings first.

We are all receiving reports that the economy is steadily growing. That means more and more people are getting jobs and have the means to support themselves financially. With more people able to support their financial needs, there should be more money going to their savings account right?

If this is the case, then why are we also receiving reports that Millennials are not saving as much as their parents (Gen X) or grandparents (Baby Boomers) when they were the same age?

According to an article published on Slate.com, Millennials may be putting aside a few dollars a month but it is not enough to really give them financial security. They are said to be burning more cash than they should be putting away. At least, if you consider the percentage of their savings and spending as compared to how much they are earning. This article cited a report from Wall Street Journal that revealed how the savings rate of Americans under the age of 35 is down by -1.8%. This is probably why a lot of young adults have a lower median net worth after the recession happened.

The question is, why is saving such a difficult task for these young adults? Does it really go to show that they do not prioritize savings as much as they should?

What keeps Millennials from increasing their savings?

If you look at the whole picture, you will probably understand why putting aside money is hard for this generation.

According to TheAtlantic.com, we should not immediately conclude that Millennials have the worse financial behavior when it comes to savings. Citing data from the Census Current Population Survey, the article said that wages may be to blame for the lack of savings of this generation. The rise of wages is quite dismal compared to the increase in health care, housing and education costs. In fact, the article calls it a stagnant wage growth. Across all industries, only health care wages have gone up. The rest have fallen by more than 10% from 2007.

As we all know, your income affects your ability to save more. If you earn less, you get to have less to save too.

After the Great Recession, a lot of businesses suffered financial setbacks. This made them financially unable to raise wages. Not only that, it also forced them to let go of a lot of employees. With businesses trying to reduce overhead costs and a lot of people trying to get a job, new graduates have to deal with a very competitive job market. The result? They have to settle for less when it comes to their income.

There are degree holders sweating it out on jobs that do not require a college degree in the first place. Having a smaller income is definitely preferable to having none at all. With the growing student loans, it is no wonder that new graduates are willing to compromise what could have been a high-paying career.

With incomes compromised, you can see why it is unfair to blame the financial behavior of Millennials for their lack of savings.

Why Millennials really need to save

But despite this difficulty, it does not erase that fact that Millennials still have to improve their savings. There are three important reasons why this generation specifically has to work harder to save up for their future.

Student Loans

The first reason why you have to think about saving is because of your student loans. Most young adults get out of college with this type of debt. Not only is it a hefty amount to pay off, it is also a scary debt to default on. But if you have savings, you do not have to worry about defaulting on this loan.

Saving can complete your debt solution. It works in two ways. If you ever come upon a financial situation that leave you unable to pay off your monthly payments, your savings can come to literally save the day. You do not have to miss out on a payment. You also do not have to bother with any late payment charges.

The second way that it can help is by keeping you from debt. If you need to spend on something unexpectedly, you no longer have to borrow money for that expense. All you need to do is to withdraw the amount that you need from your savings account. You do not have to add to the already burdensome student loans that you currently owe.

Financial Investments

Savings are also important because it allows you to invest your money so it can grow your personal wealth. The only way you can invest is when you have the extra money to put in there. It is tough to invest the money that you need to spend on your monthly expenses. That will only lead to debt. Investments, although it is rewarding is still risky. You need to invest money that you can afford to lose. Because if you lose that investment, it could lead to a financial crisis. You still need to invest since it will help you grow your wealth – but it should ideally be done with your savings to lessen the risk that you are taking.

Prepare for the Future

Finally, you need to save for your future. This does not only refer to your retirement. It also refers to your future plans of buying a home, a new car, and other purchases that you want to make. It can also refer to life milestones like marriage or parenthood. These will need money and your savings will help you go through these changes and improvements in your life. Instead of borrowing money, you can spend on these expenses. Or if you cannot save up for the whole amount, like the amount needed to buy a home, you can at least limit the debt that you have to borrow.

How can you save money when you earn so little?

While we know how important it is to save more money, the question is, how can we make this possible? According to Forbes.com, Millennials are showing optimism when it comes to their finances but data shows that a lot of them are living from paycheck to paycheck. That translates to them having just enough for their expenses. The article states that more than half of the young adults are in this financial condition. In fact, 35% of them are still receiving financial aid from their families. How can you start improving your savings if you practically have just enough money to spend?

Definitely, the government needs to help make the job market more stable – something that they say they are doing. With the improvements in employment, you can safely say that they are doing their job. But relying on their actions is not enough. You need to exert effort to improve your own savings.

It is important that you treat your savings like a bill. This will keep you from forgetting about it. Prioritize your savings and do not focus too much on how much you are earning. The truth is, a minimum wage increase is not the answer to your financial difficulties. Here are some tips that you need to consider.

Change your lifestyle. Remember that less is more if your income is not sufficient to meet both your spending and saving needs. If you cannot do something about your income, then do something about your expenses. Change your lifestyle if you have to and downsize to spend less each month. Some MIllennials moved back in with their parents to help increase their savings.
Plan what you spend. Planning always works. It helps you reach your goals and that includes your saving targets. If you can plan your spending, it should be easy to put aside money to increase your savings.
Be wise about debt. You do not have to turn your back on debt because there are investments like a home or business loan that you cannot avoid if you want to improve your financial situation. But make sure you are smart about it. Borrow money if you are sure that you can pay it back. Not only that, the debt that you should take on must increase your personal net worth.
Focus on the future. Lastly, always focus on the future. While it is important to live in the present, it is also a must that you prepare for your future. This mindset will help you put aside more money into your savings.

Here is a testimony from a blogger known as the Frugal Girl. Find out how she practices frugal living to help her family survive cheerfully despite a small budget.

5 Questions To Ask Before You Use Savings To Pay Off Debt

November 11, 2014 by Diana

Did you know that your savings can keep your finances from flying apart? In fact, you can use savings to pay off debt. These are only a few of the reasons why this is such an important part of your financial life. In fact, some experts are saying that you cannot be a financial success unless you have some form of savings to your name.

While we are all aware of the importance of savings, sadly, this is a difficult goal for a lot of Americans to reach. According to an article published on Mint.com, the ideal saving rate is 10% to 20% of consumer’s income. However, a report from the Federal Reserve Bank of St. Louis reveal that the current savings rate in the country is actually 4.2% only. That is not even half of what the saving rate should be. The article also mentioned why it is so difficult for consumers to save. It is because they have too much debt.

But if you think about it, that is not the only issue that we have about savings. While it makes sense to get rid of debt first, a lot of people are actually struggling to decide if it is a good idea to use savings to pay off debt. After all, this is already money that you have. Some experts will frown at the idea but if you do the math, you will be losing more if you keep your savings intact and your debt accumulating. Looking at the interest rate alone, debt has a higher rate compared to your savings account. It makes more sense to pay off debt first because you will be saving more in terms of the interest amount that you are paying.

However, that decision is harder to make than you think. Some people need the security of a savings – that is why they opt to keep it intact. But if you find yourself right in the middle of saving or paying off debt, there are a couple of questions that you can ask yourself to help you decide.

Ask yourself these questions before you pay your debts with savings

If you are torn between using your stashed cash to get rid of your debts, there are 5 simple questions that you can ask yourself.

Where will you get the savings from?

There are a lot of savings that you can use to finance your debt payments. According to WashingtonPost.com, debt has a high effect on our retirement savings. In fact, a study done by the Employee Benefit Research Institute revealed that 74.8% of their respondents cashed out their retirement savings after leaving their jobs to pay off debt. Whether you are leaving your job or not, it is never a good idea to use your retirement savings for anything other than your retirement expenses.

Do you have sufficient emergency savings?

Unless you have your emergency fund intact, you should never use savings to pay off debt. This is one of the requirements that you need to have. In case you do not have this yet, you need to save up for sufficient emergency savings. Anything in excess can be used for your debts. This emergency fund can actually help you sustain your debt payments. In case something happens, your reserve fund will allow you to continue paying off what you owe while taking care of that additional unexpected expense.

How much is your debt and the respective interest rate?

In case of multiple debts, list all of them down and take note of each interest rate. In case the interest rate is more than 7%, then you will end up saving more money if you pay off your debts first with your savings. But if you mostly have mortgage or student loans that have less than 7% of your debts, then to use savings to pay off debt is not really that beneficial. The best scenario to finance debt payments through your savings is when you have mostly credit card debt – a debt that can reach up to 36% of interest rate.

Are you expecting any extra money in the near future?

Another question to ask yourself is this: will there be any extra money in your near future? This should be something guaranteed like a commission that is already being processed, a confirmed holiday bonus or your tax refund. If you have this extra money, you can go ahead and use your savings and just replace it with the money that is coming your way.

Is it in line with your financial goals?

The last question that you should ask yourself is whether this move is in line with your financial goals. Smart money management requires you to set goals and that also means your decisions should be aligned with your goals. If you are saving up for a downpayment of a new home, then it might not be a good idea to use your stashed money to lower your debt. But if you need to lower your debt level to have better chances at a low interest home loan, then go ahead and use savings to pay off debt.

Other options to pay back your debts without touching your savings

In case the answer to the 5 questions point you towards not using your savings to pay off your debts, then that is okay. There are other means for you to eliminate debt without touching your savings.

PIOnline.com published a survey that revealed how more than half of Americans set saving goals. But when it comes to retirement, less than half are able to save through their employer’s saving plans. The current survey revealed that the number of Americans saving is basically slipping – that is why you may want to opt not to use savings to pay off debt. Use other options that will allow you to get out of debt while still adding to your savings.

Here are some of your options:

Debt Consolidation Loan. This debt relief program involves you borrowing a bigger loan that can help you pay off all or most of your existing debts. What will happen is you will consolidate your old debts under one low interest loan. That should make things easier to pay off.
Debt Management. This is also a form of consolidation – but this time, you get the help of a credit counselor. For a maximum fee of $50 a month, you can enjoy their service that includes a careful analysis of your debts and the creation of a Debt Management Plan or DMP. This plan contains your proposed lower monthly payment plan that stretches it over a longer period. That means you get a lower monthly payment requirement.
Debt Settlement. In case you are in need of debt reduction, this is a debt solution that can work for you. The whole idea is to convince your creditor or lender that you are in a financial crisis. Then, you will offer them a lump sum money that can pay for a percentage of your debt. You will ask them to accept this lump sum and have the rest of the debt forgiven (at least anything that this big payment cannot cover).

These are only a few of the debt relief programs that you can use to achieve debt freedom. If you do not want to use savings to pay off debt, then make sure you know your other options.

How To Be Responsible When Using Your Emergency Fund

September 9, 2014 by Diana

There are many reasons why you need an emergency fund. It is not enough that you make the right spending choices. It is not enough that you spend within your means. You need to prepare for any unexpected situation because it can cause you to fall into debt so easily.

A lot of people have gone through life without debt. They have made the right choices when it came to spending and have used credit wisely. They have invested in their home and made smart choices about how much they can afford to borrow. However, these acts will not exempt these people from falling into a financial problem. One sickness that requires thousands of dollars in payment or one tragic accident or job loss can quickly pull you under. All because you do not have an emergency fund.

According to a survey done by Bankrate.com last June 2014, 50% of their survey respondents have less than 3 months worth of expenses in their reserve fund. More than half of that (or 26% of the respondents) do not have a single cent tucked away for emergencies. The survey revealed that some consumers failed to save for emergencies because they did not plan for it. They pay off the usual expenses like utilities, rent/mortgage, etc and will only save what is left after everything is paid off. But guess what? In most cases, there nothing left to save.

Some people say that they find it hard to save because they have other priority expenses. They put their emergency fund last on the list. For instance, some people choose to save up for a new car or the down payment of a new home instead of saving on their emergency fund. Some people choose to pay off debt first.

While these expenses are important, you have to know that preparing for emergencies is also very important. It should be comforting to know that although they are not the majority, 40% of the Bankrate survey participants, have three months worth of expenses or more in their emergency accounts. 23% said that they have 6 months or more in in case of emergencies.

3 ways to use your emergency savings

Although there is a lot of room for improvement when it comes to building our emergency finances, it is also important to consider how you will use the money you have saved. You may have the emergency fund all saved up but you need to commit to how that money should be used in the first place. Some people blow up their reserve fund because they did not clearly define what an emergency is. When the more devastating disaster strikes, they are left with nothing.

One of the emergency fund best practices that you should learn is how you can learn to use this fund correctly. To help you decide, here are 3 important uses for an emergency fund that you should not hesitate to push through.

After an unexpected job loss.

Obviously, this is an emergency. When you do not have any income to get your funds from, then you need to dip your hand into your emergency savings. The only other alternative is to rely on your credit cards – which will put you in debt. That is not really a good idea because you will just make your financial situation worse. Just use your emergency fund frugally while you are in the midst of looking for an alternative source of income.

After a natural disaster.

Another good reason to use your emergency resources is to help you survive a natural disaster. This is another one of the unexpected disasters that you are saving up for. According to an article published on FinalDaysSurvival.com, preparing for a natural disaster is not only about protecting what you have as the disaster is happening. It is also about recovering from the aftermath. And when it comes to recovery, we all know that it usually requires money. If your house was flooded or totally wrecked, there are government financial aids but you can act on rebuilding your life if you have your own emergency savings.

During a health emergency.

Lastly, you need to use your emergency fund for your health. This is one of the unexpected expenses that you should not hesitate to pay off – especially if it is a matter of life and death. With the high cost of getting health care, it is common for some people to deplete their reserve fund just to pay this off. This is okay as long as you make a plan to rebuild your emergency fund. Dave Ramsey, in one of his shows, encountered a caller who had this dilemma. His medical bill threatens to deplete their emergency savings and he was hesitating to do it. Watch the video to hear what Dave Ramsey had to say about it.

3 ways you need to think twice before using your reserve fund

Of course, the use of emergency funds go beyond the three that we have listed above. But the other uses of this reserve fund will have to be done carefully and smartly. While they are smart uses of your money, it does not always mean that you should use your emergency money on them. You need to analyze the situation first before you go ahead and use it.

Here are the three examples of the emergency fund uses that you need to think twice before spending on them.

When there is a financial opportunity.

There is an interesting article in Investopedia.com about emergency savings being a bad idea. The author said that putting your money in a savings account will restrict its growth. This is probably the reason why some people tend to use their emergency fund to help them fund a financial opportunity. While investing to grow your money is okay, make sure that you put your funds somewhere it can be easily liquidated. That way, if an emergency strikes, you can easily take the money and use it to survive a disaster.

When you have unexpected home and car repairs.

Most people will think it is okay to use your emergency fund for home and car repairs. But here’s the thing – these are not unexpected expenses. If you know that your car’s transmission needs replacement, this is something that you can monitor and prepare for. The same is true for any repair or maintenance expenses that your home requires.

When you need to buy basic necessities.

Unless you lost your job, never use your emergency fund to buy basic necessities. If you find yourself in a situation wherein your money cannot afford to spend on basic commodities, then you should know that there is something wrong with your budget. Buying your everyday needs should not be an emergency. It should be something that your finances can easily accommodate. There might be an area in your finances that requires you to spend more than you should. Or maybe your lifestyle is beyond what you can afford. This may be a sign that your finances is not being used correctly.

It is true that saving can literally save your life but only when it is available when you need it the most. Make sure you decide on what is the right way to use your emergency fund. Just because you run short of money, that is enough reason to tap into your emergency resources. Be strict and develop self control. That is how you can hope to have a secure financial future ahead.

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