How to Get Out of Debt Faster in 6 Months Strategies that Work

The road to debt freedom can be tough. But remember, your future is worth the work you put in today. There are a lot of things you can do to get out of debt fast. But without the right plan, it’s hard to make progress and even harder to keep yourself from going back into debt later.

One of the quickest way to be debt-free is committing to filing bankruptcy, but you need to understand your options and the consequences that come with having a bankruptcy on your credit report. Read to the end to find out everything you need to know about bankruptcy.

Learn Budgeting

Your first step to be debt free is to build a budget to pay off  existing debts. It’s easy to lose control of debt when you’re not tracking your spending. Budgeting is a big part of staying out of debt, but it can also help you pay off debt faster.

You need to create a budget that gives you a clear idea of how you spend and save your money. If you have excess credit card debt, budgeting can give you valuable insight into where your income goes each month. Use a budgeting spreadsheet can also help track your spending habit for a month and to see where you can allocate more income toward repaying debt.

• You can try to also incorporate a 50/30/20 budget: Meaning, you split your income into three categories: 50% goes toward your needs, 30% goes toward “wants” and 20% goes toward savings and debt repayment.

• Zero-based budget: At the end of each month, your income minus your expenses should equal zero. This helps you account for every dollar earned, including debt repayment and savings.

• Envelope budget: Categorize your spending into virtual “envelopes,” such as food, utilities and housing. Allocate your budget at the beginning of the month to cut down on superfluous spending.

• Minimalist lifestyle: Cut regular but unnecessary expenses, such as eating out or gratuitous shopping trips, to maximize savings. Dedicate any remaining income to debt repayment.

You can also utilize an online debt payoff calculator to determine how much you should allocate toward your debt in order to pay it off within a certain time. This gives you a clearer image of how much you’ll pay every month and how much you’ll pay in interest in the long run. You can customize your strategy to pay off debt based on how much you can put aside each month.

You may able to reduce the cost of your borrowing, this will make repaying your debts cheaper and free up more money to pay off what you already owe.

Credit cards

You could also look at your credit card statement to see what you’re being charged in interest. Reducing the interest rate and amount owing on your credit cards will also help reduce your debt.

Improving your credit score can also help you get out of debt quick. When you have a low score, you almost always pay higher interest rates on everything from credit cards to personal loans.

If your credit score is high enough, you can make significant savings by transferring your debt onto a balance transfer card with a 0% credit period. This will enable you to focus on repaying your debt without interest charges boosting it further. You may have to pay a fee, but the savings normally outweigh this cost.

If you’ve previously missed credit card payments or have a lower credit score, you may not be eligible for a 0% balance transfer card. However, you may still be able to find a card with a lower rate than your current one.

With any balance transfer card, it’s important to remember that its purpose is debt repayment - that means you need to be disciplined and not purchase anything with the new card.

You should also look at how long your interest-free or discount period lasts and ensure you repay your debt before it runs out. Otherwise, you’ll start paying interest again, and simply paying the card’s minimum repayment is unlikely to be enough to clear your debt.

Loans

If you have a fixed rate secured or unsecured loan, you’ll probably have to pay to move to a cheaper option. However, it’s always worth checking.

Work out whether you could save money by moving your loan and then ask your lender how many monthly payments you have left and the outstanding balance. You should also check whether there are any penalties if you repay the loan early.

Increase your debt repayments

One of the easiest way to take control of your finances is to know exactly how much you owe, how much money you have coming in and, with luck, your outgoings are lower.

That means you should be ready to start focusing on your debts and using the money you have freed up to repay them.  

Pay off as much as you can each month. Not only will this speed up your debt repayment, but it will also save you money in interest too. Setting up debt repayments by direct debit can make sticking to your plan easier.

Stop taking on new debt

If you borrow money from one source to pay another, you’re shuffling debt around instead of paying it off. Sometimes this can be beneficial, like opening a new balance transfer credit card to take advantage of a 0% APR introductory period or consolidating your debt into a personal loan with a lower interest rate. 

When you are trying to pay down debt, you must stop taking on new loan. Don’t open new credit cards or apply for loans unless you have strategic reasons, and freeze all unnecessary spending.

Mortgages

A mortgage is likely to be your most considerable monthly expense, so if you can save money on your mortgage, it could make a big difference to the amount of money you have to tackle other debts.

If you’re currently on a standard variable rate mortgage, you could be paying more than you need, and remortgaging could be a simple way to reduce your monthly bills.

Remortgaging with your existing lender can be a good option because you don’t have all the costs of switching to another bank or building society.

An independent mortgage adviser will be able to explain your options and help you work out the exact cost of moving your mortgage. Remember, remortgaging is only worthwhile if it saves you money.

In all likelihood, you won’t be able to save money by remortgaging if you are on a fixed deal. This is because the penalty fees are likely to outweigh the benefits of a better rate.

However, you should still make a note in your diary so that you’re ready when your rate does run out. Then you can switch straight away and start making savings.

Make a grocery shopping list.

One of the easiest ways to save money at the grocery store  is to make a list. Whether you like to write down your grocery needs on a piece of paper or you prefer using a grocery list app. 

But here’s the thing about making a list: You have to stick to it. Especially if you're shopping with kids.

Once you’re debt-free: Learn how to stay out of debt

Becoming debt-free is a difficult task, so it’s important to build better habits going forward so you don’t find yourself in the same situation again. Stay out of debt by monitoring your budget, building your savings and working on increasing your income. 

It’s important that you don’t sacrifice your emergency savings for debt repayment. You should always be saving at least some money in an emergency fund. That way, when you’re hit with a big, unexpected expense, you don’t need to resort to taking out debt again.

Many professionals advise that you have between three and six months’ worth of expenses saved up in case of emergency. If that seems like a lot, start small; create your emergency fund by saving up one week’s worth of expenses, then one month, and build from there. Here are a few traps to avoid as you step your way to debt freedom:

1. Debt Consolidation

You’ve probably heard of it. And maybe you’ve even fallen prey to it. But hear us out: Debt consolidation is a bad idea.

With consolidation, combining your debts for a lower interest rate will make you feel like you’ve done something to help your situation. In reality, though, it’s only going to keep you in debt longer—because debt consolidation often means a longer repayment term.

The only form of debt consolidation we can get behind is for student loans. And that’s only if you consolidate your student loans the right way.

2. Credit Card Balance Transfers

Just like debt consolidation, credit card balance transfers will only offer you a temporary solution. Sure, it might give you a little extra breathing room in your paycheck, but it’ll keep you in debt for longer.

Why? Because you’ll be tempted to spend those “extra” dollars on something other than your debt. Remember, the only way to get out of debt fast is by throwing everything you have at it—until it’s gone.

3. Filing for Bankruptcy

When you don’t have enough money to pay the light bill or buy food, it’s beyond terrifying. But bankruptcy is rarely the answer. If you feel like bankruptcy is your only option, it’s time to slow down, take a deep breath, and remember there’s hope.

Bankruptcy is the last thing you should consider. Before you go there, do everything you can to avoid it. If you’re feeling like you have no other choice, please talk with a Ramsey Preferred Coach first. They can offer hope by walking you through other options.

Conclusion 

If you  are a low income earner, getting out of debt doesn’t have to be far-fetched. Follow these strategies will help in your journey of become a debt-free by eliminating those pesky balances. You could consider a debt consolidation loan if you have several debts with high interest rates to help you get out of debt faster. 

Taking action sooner than later will help you improve your credit score and get one step closer to attaining financial freedom.

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10 Basic Principles of Financial Management You Need to Know

Whether you do all the work yourself, there are some basic money principles to be adhered to. It is also necessary to have answers to the following questions. What do you know about money? Do you understand money? Do you have a philosophy about how you use your money?

Experts say many people have little understanding about money; consequently, their finance are never in order regardless of how much money they have. Below are simple money rules that you need to know.

Differentiate between needs and want: Many people end up spending their fortunes on things they do not need. According to experts, everything that people really need revolves around foods, shelter and clothing. They stress that a key aspect of financial planning is the ability to differentiate between needs and wants. 

Unfortunately, they say many people fail to do so. While it is true that in today’s world many items, besides basic needs, are necessary, the decision to have your house fitted with classic painting by great artists at great expense definitely falls under wants. And they are many more examples like that. 

Even when people go for their needs, their decision is often informed by their want. For instance, while you need a bed to sleep in, you do not need one that has gold engravings or fitting all over. Many people spend money that way, on the things they want, believing that they are getting things they need and this can be a costly mistake because it amounts to money going to waste. To spend money wisely, always distinguish between wants and needs then go for the needs and ignore the wants.

Do not spending all your earnings: While this is self-explanation, many people find it impossible to spend less than they earn. But for you to keep your finances in order and to avoid getting into debt or running out of cash before the next pay day, if you do not spend all that you earn each month, you will have some cash to either pay off your debts or save. Now, the benefits of having some form of saving are numerous. Saving can allow you to invest, resolve emergencies and ease the financial pressure you feel when you run out of cash before the next earnings. Of course, the economic situation in the country has left some people with barley enough to feed, but many people have risen above such a challenge by adopting drastic saving tips.

More money may not be enough: For many people, the solution to their financial challenge is more money. While some of these people may genuinely need more money, experts say some others have enough nut mismanage it because they are financial illiterate. They do not differentiate between their wants and needs; they adopt a lifestyle that results in spending more than they earn, etc. Take time out to determine which category of money user you belong to, and if you believe that more money is what you need, then you need to know that there will be a time when you will realise that you did not need all those gadgets, cars or personal houses. When that time come, more money will hold no appeal.

Plan for the unexpected: Despite your best efforts, you’ll face some unforeseen emergencies along the way. Morris urges, “Save enough money and stock up on insurance to be able to weather extended unemployment, accidents, catastrophic medical care, large car or house repairs, and natural disasters.” Increasing the amount of money you save when times are good can help you manage the cost impact of bumps in the road, making sure unexpected financial exposure does not derail your long-term goals and your family’s financial security.

Money decisions have costs: It is important to note that every money decision you make, there is a cost attached. This means that by deciding to purchase one item, you are giving up another. By bearing this in mind and weighing both options critically, you are more likely to avoid making a mistake. For example, if you have N1m and you are to choose between the car, you need to know that the car did not just cost you N1m, it also cost you a plot of land.

Organize your finances: Organizing your finances is the first step to creating wealth. Credit cards, bank accounts, personal loans, brokerage accounts, mortgages, car loans, and retirement accounts — track everything. Budgeting software can provide complete solutions to track all such accounts, make on-time payments, and more. Jeff Morris, a certified public accountant in Bethesda, Maryland, points out: “Once you enter your accounts and balances into budgeting software, you will be able to spend less time getting organized and more time making sense of your situation.”

Budgeting: This is another simple but highly important principle; however, it’s one that a lot of people underestimate its importance. Budgeting provides a pathway to the first tip mentioned of spending less than your earnings. With budgeting, you also have control of your day-to-day finances, prioritise expenses, plan better for your basic needs and even unexpected needs and also act as a check to spending unnecessarily. Never underestimate the power of budgeting.

Keeping records: This is another money principle that’s highly important, but the lazy man sees this as stressful and unnecessary. Keeping records of your financial transactions gives you better knowledge of your financial life, and that in itself is a financial victory.

Keeping records of your financial transactions would enable you know how effective or ineffective your budgeting is and how to correct the loopholes. It would also give you a clue on what’s actually consuming a gulp of your money and how to minimise it. Basically, you understand your financial position better when you keep records, and it’s even dire that some business people don’t see the need for record keeping.

Develop yourself: For you to get the most out of your money, experts say it is important that you spend some to develop yourself, you need to spend money to improve knowledge and to acquire self-management and communication or networking skills, which will not only help you to grow but enable you to manage yourself, your health and finances better.

Don’t try to impress others: When you try to impress other people, you are likely to cause financial problems for yourself. Because not only is such a move capable of making you to live above your means, it is also likely to make you invest in items you do not need. For example, there are people who have gone out of their way to purchase cars, only to find out that they cannot maintain them. Some of them are forced to sell the cars at a loss. The advice is that you live beneath your means, and develop a saving habit and in the future, perhaps when you are in your late 30s, you might be better off financially.

Also, avoid borrowing money. Of course it is easier said than done, but by debt-free, you stand a better chance to taking control of your finances and planning for the future. According to experts, if you can just live within your means for some years, you will be able to achieve a high level of stability.

Understand risk: The key to understanding return on investments is that the more you risk, the better the return should be. This is called a risk-return trade-off.

Investments like stocks and bonds that have a higher rate of return often have a higher risk of losing the principal that you invested. Investments like certificates of deposit or money market accounts with a lower rate of return have a lower risk of losing principal. Since no one knows the future, you cannot be 100 percent sure any investment will do well. Morris explains, “If you diversify your investments, one can go sour without severe impact to your overall portfolio.”

Diversification is not just for investments: Find creative ways to diversify your income. Everyone has a talent or special skill. “Turn your talents into a money-making opportunity. Investigate ways to make money from home and launch a home-based business,” Morris says. The extra income can supplement your full-time income or even result in an exciting career change. Good financial management software can show you how even a slight improvement in income can positively change your financial profile.

With these money principles, you would be sure to have a better guide to making better financial decisions and living a healthier financial life.

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How To Build Wealth: 5 Simple Ways To Build Your Fortune

Wealth-building is a process that generally takes time. Although the idea of becoming an overnight millionaire is appealing for many, the only real way to get rich overnight is via speculation, an inheritance or a lottery win.

Ironically, the best way to build wealth “fast” is to chart out a prudent path toward long-term gains. The quicker you can save and invest, the faster your money will compound, which is the true magic behind building wealth. Here are 10 ways you can grow your net worth as rapidly as possible without taking on undue risk.

Successful people invest time, energy, and money in improving themselves. A man told me once, "The best way you can help people in need is to not be someone in need." Help yourself out so you are in a position to help someone else out. This means investing in yourself to become great at something.

I invested in sales training when I was 23. That made my income-producing ability skyrocket. Investing in yourself is the best investment you can make.

1. Find a job in the right vehicle: The rich are able to get in with the right company where there is opportunity for growth. My VP of sales Jarrod Glandt started working for me over seven years ago for $2,500 a month. He wasn't making anything but he was in the right vehicle. He grew his skill set and was able to multiply his monthly income many times over because he knew I was looking to expand.

Too many people just look for a job. You need a job, but you need the right vehicle. All companies live from this thing called revenue. Get commissions rather than just a salary and you will finally be in control of how much you earn.

2. Get great at what you do: Commit to being great, not just average. Any industry can be a painful profession for average and bottom performers, but massively rewarding for those that are great. Those that live, breathe, and eat their profession, those that are obsessed, become great.

I have never met a great who wasn't all in and completely consumed by their trade. Have you? The fact is, if you aren't great, you are average. The rich get great.

3. Get multiple, connected income streams flowing: You won't get rich without multiple flows of income. That starts with the income you currently have. Increase that income and start adding multiple flows.

You want what are called symbiotic flows. Do not just add disconnected flows. Instead, find other ways you can add income to the job you already have. My video guy does advertising for me — and after proving himself, he started making advertisements for those connected to me. He didn't start a doughnut shop.

Too many people go from one flow to a second flow, resulting in two flows that do nothing. Your flows should always be connected.

4. Hit $100K, then invest the rest: First, try to save $100,000. Why? You need to prove to yourself that you can go out and get money. If you have only $10,000 saved, your only priority should be increasing your income so that you can save more.

Saving $100,000 shows that you have an ability to make money and then to keep it. Most people can't do either of those things.

5. Buy a Rental Property

One of the key ways to build wealth fast — and over the long term — is to earn passive income. And one of the best ways to generate passive income is to own one (or several) rental properties. With a well-managed rental property, you’ll receive a steady stream of income every month, with little additional effort required on your part. 

While you’ll have to find tenants to move in and will have to deal with occasional maintenance issues, your income will essentially be on auto pilot. Unlike your mortgage payment, your rents will continue to rise over time, meaning your tenants will be paying some or all of your mortgage while you watch your properties appreciate in value.

Run Side Hustles

Even if you have a job, you don’t have to only rely on your paycheck. You can run a successful side hustle to increase your income. You can turn your talent or hobby into monetary value during your free time.

There are many lucrative side hustles you can run online as long as you have internet access. These include:

• Working as a virtual assistant
• Freelance writing and editing
• Copywriting
• Online tutor, coach, consultant
• Web design, app development, coding, etc.

Other side hustles that don’t need internet access include:

• Part-time professor at a local college
• Part-time gym instructor
• Freelance bookkeeping, tax preparation, tutoring
• Becoming a shopper
• Part-time driver for a ride-sharing or delivery service

Once you can earn and save, then you can start building wealth. I'd recommend multi-family real estate if you are conservative like me. I never looked to get rich quick, but I did look to get rich.

6. Create a budget

Creating a budget and sticking to it is crucial if you want to know how to build wealth from nothing. 

Using that regular income source we just spoke of, now you need to create a budget to take control of how you are spending your money, usually set on a monthly basis.

A budget is a financial plan for a defined period that contains estimated income and expenditures for that period.

Every household and/or individual needs to create at least a monthly budget to identify your expected income and estimated expenditure. Living without a proper budget is like sailing without a compass, and you can guarantee that you’ll get lost in the seas of financial missteps. 

A popular budgeting technique is the 50:30:20 rule. In this technique, you can formulate a budget where 50% of income goes to essential expenses (rent, mortgage, food, healthcare), 30% to non-essentials like shopping, vacation, entertainment, and 20% to savings and investments.

Why is budgeting important? 

One main reason is that by understanding how you spend your money, it’s easier to identify the things that can be cut: the lower your expenses, the more you can add to your savings and investments. 

By identifying and cutting unnecessary and avoidable costs, you can build wealth faster. It’s that simple.

7. Build an emergency fund

Now that you have learned how to save a significant part of your income, the next course of action to build wealth from nothing is to create an emergency fund. 

An emergency fund is like self-funded insurance. It’s money you set aside for unexpected expenses like car repairs and unforeseen circumstances like job loss or pandemic-induced lockdowns.  

When unexpected expenses and unforeseen circumstances arise, there are ways to make matters worse: incur debt and/or sell your investment(s). 

You pay interest on debt, and when you sell your investment(s), you lose both the amount you sold and the interest from the market exposure it could have earned if you didn’t sell.  

Therefore, to avoid those two scenarios, we recommend you learn how to start an emergency fund right away. An emergency fund should hold between three to six months of your monthly expenses. Also, ensure those funds are in a savings account where you can easily access them when the need arises. 

Like insurance, an emergency fund won’t make you wealthy, but it will prevent you from selling your investments or incurring debt during emergencies. 

Live Within Your Means

You’ll never generate any wealth at all if you spend more than you earn. To set yourself up for a lifetime of prosperity, it’s important to create a strict budget and stick to it. Make sure that in addition to all of your unavoidable expenses, you’ve got a significant line item for saving and investments. Every month that you can come in under budget, you’re adding to your pool of lifetime wealth.

Don’t Be Too Conservative

Although being too speculative is a sure-fire way to risk all the savings you’ve worked for, being too conservative can be equally damaging in terms of limiting your wealth. Taking some risks in your financial life — from investing a bit more aggressively to starting your own business — is a necessary component if you want to generate outsized levels of wealth. 

If you put all of your money into Treasury bills, for example, you’ll actually generate a negative real return after taking taxes and inflation into account. Owning some stocks, real estate, your own business or even some cryptocurrency are ways to gain exposure to higher potential returns on your investments. Just understand that while speculation has a role in generating wealth, it also brings additional risk to the table.

Building wealth is not a rocket science process. With dedication and discipline, you can grow your wealth fast. Before starting on this journey, it’s important to equip yourself with financial education. That alone should catapult you through the other steps seamlessly and eventually build wealth.

Many people overlook retirement accounts when it comes to building wealth. You’ll not only save for retirement but also grow your wealth over time.

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Professional Tips on How to Save $4000 in a Year and Grow your Savings

Do you live from paycheck to paycheck, use credit cards to keep up with your bills, and feel that you cannot afford to buy anything you want?

Feeling that you don’t make enough money to save anything is a sign that you would benefit from taking a proactive approach to saving. Having a savings account will bring you peace of mind and help you manage your finances more efficiently.

It will also help you spend less money on your living expenses because, when a financial emergency arises, you won’t have to borrow the funds to cover the crisis and then pay them back with interest.

Saving money could also allow you to take a well-deserved vacation, put together a down payment for your dream home, or buy a new car.

Regardless of what you need money for, you can save up enough if you make a few changes to the way you handle your finances. You might think that the only way to save up money is to make sacrifices.

Not even close! Saving money doesn’t have to be hard. You can still have an enjoyable lifestyle when you’re putting money away. The key to saving money is to be smart about your finances.

In this action guide, you’ll discover how to save a few dollars each day. The changes may look insignificant, but small savings add up!

Following these tips will help you save $4,000 in a year. Sooner than you think, you’ll have a hefty savings account and find even more ways to save money as you get the hang of it!

Step 1: Take Control!

Budgeting and money management don’t have to be complicated. You just have to find a system that works for you, and these tools will make managing your finances a lot easier.

Track Your Habits

Tracking your spending habits can take a while because you’ll want to see where your money goes for at least a month.

The immediate benefit of tracking your spending is to identify the recurring expenses that you could easily avoid.

You could save from $3 to $15 a day depending on your habits:

1. Do you pick up a cup of coffee on the way to work?

Make coffee at home and buy a travel mug.

You could easily save $3 or $4 a day.

2. Do you only read a few articles from each daily newspaper or magazine you purchase?

Look up the free versions of these publications online and save $4 or $5 a day.

3. Do you buy fast food every day for lunch or to feed your family?

Feeding a family of four at McDonald’s costs at least $10 to $15 if you choose the most affordable menu items.

You could easily save this money by buying groceries and cooking meals in advance.

Try these tools to get an idea of where your money goes and to easily identify expenses that you can avoid:

1. Mint is a free app that tracks what you earn and spend.

This app organizes your expenses into different categories so you can get an idea of how much you spend on groceries, clothes, entertainment, and more.

2. BudgetSimple is another free tool that tracks your expenses.

This tool is especially useful because it automatically generates suggestions to show you where you could cut down on spending.

Establish a Budget

Once you’ve tracked your spending to see where your money goes, you can create a customized budget that works well for you.

The key to creating a budget that works for you is to find a method you like using. There are many online tools designed to create a budget that corresponds to your needs. These apps require you to enter your income and link your bank accounts to automatically track your expenses for you:

1. You Need A Budget, also known as YNAB, is one of the most popular budgeting apps.

This free tool organizes your expenses by categories, helps you put money aside, and generates a budget based on your current expenses.

Then You Need A Budget website reports that people using this tool started saving an additional $200 a month on average.

2. Pocket Expense and BudgetSimple are tools similar to YNAB.

The main features are the same but you might find that the interfaces of these tools are more convenient.

If you’re not a fan of tools that automatically create budgets for you, there are some apps you can use to manually allocate where your money goes.

This approach is inspired by the old practice of placing cash in different envelopes. GoodBudget and Mvelopes are two good online apps that make it easy to create a budget in this way. Budgeting is definitely worth it, and these 21st-century tools make budgeting easier than it has ever been.

Sticking to Your Budget

Establishing a budget is the easy part. Spending accordingly can be more difficult.

Following these three rules will help you stick to your budget and save $200 a month or more:

1. Assess how much you need to cover all your recurring expenses.

Put enough money aside as soon as you receive your paycheck.

An app like Mvelopes or other online tools can help you allocate these funds.

Your bank may even provide a tool in their online banking app.

2. The money that is left after you cover all your expenses is not for splurging!

Spend a reasonable amount on things you love because you worked hard and deserve a reward, but it’s important to make saving some of this money a priority.

3. Use Level Money or a similar app to keep your spending under control on a daily basis. This app shows you how much money you can spend over the month, week, or day.

Get into the habit of checking this app whenever you feel like buying something you don’t really need to decide whether or not you can afford to splurge.

Sticking to a budget requires discipline, but you can still live comfortably even while living frugally.

Follow these rules to ensure you pay important bills and avoid spending too much on impulse purchases. Establishing a budget that works for you and sticking to it could help you save $200 a month, or $2,400 a year!

Step 2: Don’t Let Financial Institutions Charge You For Their Services 

Avoiding Banking Fees

How much do you spend on banking fees?

Banking fees can seem trivial, but these expenses add up over time.

There is no need to pay for these fees when free options are available.

If your bank is currently charging a monthly fee for their services, find out why.

In most cases, banks will charge you a monthly fee only if your average balance is under a certain number if you don’t make enough transactions or don’t receive enough via direct deposit to qualify for a free account.

The average monthly cost of a checking account is $7 at a bank and $2 at a credit union.

Opting for a free alternative could help you save $84 or $24 a year.

If you cannot avoid a monthly fee at your bank, get a free checking account elsewhere. Some banks will even offer a signup bonus when you open a new account!

If you cannot find a free account that corresponds to your needs or would rather not open a new bank account, a good option is a service offered by American Express called Bluebird.

Bluebird gives you the possibility to receive direct deposits and use the money to pay bills, withdraw money from an ATM, or write checks without paying any fees.

Overdraft protection is the only service you should be paying for if your bank doesn’t offer free overdraft protection.

Did you know that the average American spends an average of $225 a year in overdraft fees?

This money could be easily saved by taking a few minutes to sign up for this service.

Avoiding Payment Processing Fees

How do you pay your utilities and other bills? Depending on the payment method you use, you might be wasting money on payment processing fees.

Even if these fees are only $2 or $3 for each transaction, this is money you could be saving. On a yearly basis, you could be paying around $100 a year in such fees. Follow these tips to avoid payment processing fees:

1. Use online banking to schedule automated payments directly from your bank account.

This way, you can avoid paying the fee most utility and insurance companies charge you when you pay with a card. Automated payments are also a good way to avoid paying late fees.

2. Always compare your payment options and ask about fees.

Scheduling automated payments from your bank might not be the best solution for all your bills.

For example, insurance companies often charge a monthly fee to process your payment regardless of how you pay your premiums.

Consider paying your insurance premiums in one lump sum on a yearly basis to avoid paying this fee.

Avoiding Credit Card Interest and Late Fees

Do you use credit cards for bills or daily expenses?

Take a look at your account to get an idea of how much you spend on interest and other fees. If you feel that your credit cards are costing you too much, contact the company and ask them to reduce your fees, or shop around for a better option.

Transferring your balance to a different card can be a good option if you qualify for a lower APR or for a card that doesn’t compound your interest on a daily basis.

It’s important to understand how interest is calculated on your credit card accounts. Most cards compound interest daily and use your average daily balance.

This means carrying a higher balance will result in higher fees.

You can easily avoid this by making a higher payment than usual if you make a large purchase with your credit card.

Use these strategies to reduce the amount of money you spend on credit card fees:

1. Always pay more than the minimum monthly payment.

Each payment goes towards the interest first, then towards the balance on the account. If you only make the minimum payment, your payment will cover the interest, but will not lower your balance by much.

Making larger payments will help you pay off your balance more quickly and eliminate having to pay as much interest.

The best method to avoid interest is to pay your entire balance each month. So whatever you charge in a month, pay it off that same month.

2. Schedule automated monthly payments to avoid late fees.

Most credit card providers also provide you with an online tool you can use to check your balance and make payments.

You could save roughly $350 a year by avoiding banking fees, overdraft fees, and payment processing fees!

Step 3: Become a Smart Shopper

The best approach to smart shopping depends on how you and your family live, how much time you can spend on shopping and cooking, and on what you enjoy.

Try different strategies to figure out what works for you and your family. Adopt these simple habits to save on groceries and other household expenses:

1. Use coupons and discounts to save on items you would usually buy.

You’ve probably seen couponing TV shows or websites where people save hundreds of dollars each week with coupons.

The truth is that this type of extreme couponing is incredibly time-consuming and tedious. Follow these tips to save money with coupons without any hard work:

The golden rule of couponing is to never purchase an item just because you have a coupon.

Rather than saving a few dollars or cents, you’re spending to buy an item you would otherwise not buy.

Subscribe to the newsletter, mailing list, or download the app of the grocery stores where you usually shop. Check these sources on a weekly basis to look for items on sale and clip coupons for items you usually buy.

Avoid spending hours looking for online coupons or going through hundreds of paper ads.

Download apps to automatically look for coupons instead.

Grocery IQ is an excellent choice if you use a grocery list since this app will automatically look for coupons for the items you intend to buy anyway.

You can also use The Coupons App to scan barcodes on products and look for coupons or to find all the deals offered at any nearby stores.

2. Plan your meals ahead of time and make grocery lists.

These simple habits will help you stick to a budget every time you go to the grocery store and could also help you adopt a healthier lifestyle.

Apps like Pepperplate, Ziplist, or Plan to Eat helps you find new recipes, save the ones you like, plan your meals for the entire week, and automatically create grocery lists for you. Use Supercook.com to find simple recipes based on the ingredients you have at home.

This could become your go-to solution whenever you’re about to take your family to a fast food restaurant because you’re low on groceries. If you’re short on time to cook during the week, set aside some time during the weekends to make large 
quantities of your family’s favorite foods and freeze meal-size portions.

This works great for chili, casseroles, and other dishes. You’ll have easy lunches and dinners to just heat and eat throughout the week. Eating out is fun! You don’t have to completely eliminate this expense.

Determine a reasonable budget for taking your family to their favorite restaurant once a week.

3. Shop at several locations.

Try different grocery stores to determine which one has the best prices or selection.

Find several alternatives for your regular household items.

Go to the grocery store once a week to buy items such as fresh produce, dairy products, meat, and nonperishable items. Look at the per-unit price or check the quantities or weight to determine which products are the best values.

Stock up on discounted items only if you will use them in your meal plans. Visit the dollar store once a month.

Stock up on dish soap, cleaning products, sponges, shampoo, soap, toothbrushes, toothpaste, glassware, school supplies, and wrapping paper.

You would normally pay between $2 and $4 for these different items at a grocery store, so going to a dollar store for some bulk shopping is worth it.

Shop online for household items and nonperishable items.

You will get access to a wider selection and have the option of buying large quantities at discounted prices.

Consider getting an Amazon Prime membership to get free shipping and lower prices on some household items.

Buy used items from online auctions, online consignment stores, or local thrift shops. This is a great way to save on clothes, toys, electronics, and décor items for your home.

You can even find used furniture on sites like Craigslist. Shopping for clothes at eBay, Goodwill, or online consignment stores could help you cut your clothing budget in half!

If you have children, this strategy could save you a lot of money. Plan in advance before making big purchases such as a new TV, computer, or video game console. This will give you time to put money aside and compare your options.

You might want to wait for Black Friday or Cyber Monday to get low prices on these items if you don’t want to buy them used.

Gas is another recurring expense.

Gas prices vary a lot and it’s difficult to determine the best time to gas up. Try using an app called GasBuddy to track and compare gas prices at different gas stations in your area.

The amount you can save by being a smart shopper really depends on your needs, how many people you’re shopping for, and how much time you can afford to spend on comparison shopping.

Step 4: Get Rid of Unnecessary Expenses and Spend More on Things That Matter

You could save a lot by eliminating some unnecessary expenses. Consider these examples:

1. Reduce your cell phone bill.

Try these tips:

Shop for a family plan if you need more than one line.

Cancel your contract and switch to a service that will bill you only for what you use. This could help you cut down your phone bill to $20 or $30 a month if you don’t use it a lot.

You may have a landline bundled with your internet service. Use this line, instead of your cell phone, whenever you’re at home.

Wait until you are home and can use your own Wifi network if you need to go online and don’t have unlimited data on your phone.

Shop around for an affordable Smartphone. Your own provider might not have the best price.

2. Cut down your cable bill.

There are more affordable options to watch TV. The downside is that you’ll get fewer channels or shows to choose from.

Buy an antenna to watch TV for free over VHF and UHF signals and try different online streaming services to determine if these could be a good alternative for you. Exploring alternatives is worth it since the average monthly cable bill is $64.

3. Save on your entertainment costs.

You can save a lot by taking your family for a bike ride or by organizing a football game in the backyard instead of taking them to the movies or the arcade.

There are plenty of free things to do that will help everyone get more exercise and have a great time!

4. Avoid anything that is individually packaged.

Buy food items in bulk and make your own snacks and to-go meals instead of stopping at a fast-food restaurant, gas station, or coffee shop.

5. Think twice about buying a name brand.

Spending more to get a name-brand product is worth it if the product meets high-quality standards and will last longer or work better. However, spending more to get name-brand items that are not any different from cheaper options is a waste of money.

On the other hand, there might be some things you are not spending enough on, which results in more expenses in the long-term.

Consider these examples:

1. Health insurance.

Purchasing more coverage could help you save in the long-term.

Raising your premiums to get a lower deductible and co-pay is worth it if your family visits the doctor a lot.

2. Car maintenance.

Repairs and preventative maintenance can go a long way towards lengthening the longevity of your vehicle.

Learn how to do an oil change and perform other simple maintenance and repair tasks to save money.

3. Home maintenance.

Investing in new window panes, better insulation panels, and newer appliances could lower what you spend on utilities.

If you’re renting, talk to your landlord about making a few improvements to help lower your bills.

4. Quality products.

Some products such as tools, razors, cookware, or furniture will last longer if you purchase slightly more expensive products from well-known brands.

5. Organization products.

Keeping your pantry and household supplies organized will prevent you from purchasing items you already have.

Spending money on items that will help you get rid of an expensive bad habit or that will help you track your finances can save you lots of money.

You could save $64 a month by ditching cable and at least $20 a month by looking for a more affordable phone service provider, which roughly translates to $1,000 a year!

Step 5: Trick Yourself Into Saving

All the tips you have read so far will help you reduce expenses.

However, you will not actually save money until you transfer it into a savings account. Saving is a lot easier if you make it a habit and set up automatic savings systems. Follow these tips to put money aside without any stress:

1. Try an app like Digit.

This tool automatically takes money from your bank account and puts it aside.

You choose the amount you would like to save each week.

This is perfect if you’re busy and don’t even want to think about putting money into a savings account.

2. Schedule automated transfers from your bank account to a savings account.

If you would rather not trust a tool like Digit with your information, you can always use your bank’s online platform to schedule an automated weekly

transfer to your savings account.

3. Identify your two or three most expensive habits and get rid of them.

This could be smoking, going to Starbucks, buying some snacks, or spending money to get extra lives in Candy Crush Saga.

Put the money you would normally spend on these things into a savings account.

4. Make saving money a game!

Set some weekly or monthly goals and reward yourself when you reach these goals. Using Digit or another system to put $5 aside every week means you would end up with $260 in a savings account by the end of the year!

As we mentioned earlier, it can be helpful to have a specific goal in mind when you’re setting up a plan to save money fast. Sometimes this goal can be as big as getting married or buying a house; other times, it can be smaller in scope.

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What Does Financing a Car Mean and How Does It Work

Financing a car means taking out a car loan that you repay over time or it means you are taking out a loan from a financial institution or vehicle dealership that you pay back at a given interest rate over time. When you take out a car loan, you agree to pay back the amount you borrowed, plus interest and any fees, within a set period of time. Shopping around and comparing loan offers could save you significant money in interest and fees.

Sometimes it seems like buying a car is a Catch-22 situation: You need money to buy a car but you need a car to get to work so you can earn money to buy one.

That’s why financing a car taking out a loan to pay for a car is common. You can think of a car loan as its own separate purchase it comes with a cost, which you pay through any interest and fees the lender may charge.

In this article, we’ll define what financing a car means, how it works, the smartest way to go about it, and whether vehicle financing is a good idea. The options for getting financing for a car along with any requirements will also be discussed. We’ve researched and compiled the top auto loan companies so you can compare vehicle financing options should you decide to get one.

Let’s take a look at how car financing works, how your credit can affect your loan terms and what to think about when trying to decide if financing a car is a good idea for you.

How Does Financing a Car Work?

“Financing a car” involves buying a vehicle with a loan rather than paying the full cost upfront. Over an agreed amount of time, you pay back the principal or the value of the car through monthly installments along with any fees and interest. Together the interest and fees you pay when financing a car make up the finance charge, which is the cost of taking out the loan.

The amount you pay monthly is determined by the value of your vehicle minus the money you put down, the given APR, and the loan term. Your APR makes up the interest payments and fees and is the main contributing factor to the price of your loan. Primarily your credit score influences the interest rate you get but other factors such as the age of the vehicle also help determine this.

If you plan to finance a car, you’ll need to shop and apply for a car loan. If you’re approved, you’ll make monthly payments until the loan is paid off. Each payment you make will be split into the following two parts: The principal payment, which goes toward paying back your loan balance
The interest payment, which pays interest due

Part of your payment may also go toward certain loan fees, like late payment fees.

Once you repay the loan in full, your lender will usually send a lien release document (depending on your state) to the state transportation agency. The car’s title will then be updated and transferred to you.

How Long Can You Finance a Car?

Terms for financing a car range from 12-94 months depending on whether you are financing a new or used vehicle. However, in most cases, the terms for most purchase loans for vehicles are around 72 months. It is also important to note that some lenders may not offer the longest and shortest-term options in this range.

Financing a car could be a way to take advantage of dealership incentives and car manufacturer specials, such as 0% financing or rebates. But keep in mind that you’ll typically need to get a car loan through the automaker’s finance company to qualify for these offers.

When you’re financing a car you can trade it in at any time to a dealer, but you still have to pay off the balance of the loan. Usually, the amount left over is covered by the trade-in value of the vehicle, but this depends on the age of the car and its condition among other factors.

If you need a set of wheels and don’t have the cash in hand to pay for it, financing may be your only option. Be sure to pay attention to how much you finance versus the value of the car you’re buying. If you don’t make a down payment and finance the entire cost of the car, you could find yourself owing more than your car is worth within a year or two.

Options for Financing a Car

Getting financing for a car is usually straightforward and can be done through various vehicle dealerships, online lenders, credit unions, and banks.

Each of these options fits into two different categories which include:Dealership Finance: Financing through a dealership involves signing a contract and getting a loan through their network of loan providers. It is often considered the easiest option and can save you money through their manufacturer car-buying programs. However, these often come with varying credit requirements and terms so you may be unable to take advantage.

Direct Lenders: This form of vehicle financing is done directly through banks, credit unions, and online lenders. Getting offers directly from loan providers allows you to compare offer terms and get preapproved. It can also give you leverage to negotiate when looking for a car at dealerships.What

Credit Score do you Need to Finance a Car?

There is no specific credit score needed to qualify for financing a vehicle, but some lenders have minimum requirements. While some loan providers may not have credit score requirements some may instead have income minimums. Each loan company has different ways of calculating whether you should get a loan and factors like income, credit, and vehicle type may be weighed differently in the process.

It’s generally a good idea to take some time to build your credit before applying for car financing — if you’re able to wait. If your credit scores are low, you may receive fewer offers than someone with good credit. And if you’re approved for a loan, you’ll likely get a higher interest rate than someone with a better credit score.

People with credit scores over 780 paid an average interest rate of 4.01% on their new-car loans, while those with credit scores of 500 or less paid an average rate of 14.3%, according to Experian’s report. This could translate to a major difference in how much interest you pay over the life of your loan.

Let’s say you got a five-year $20,000 car loan. Here’s how your credit could affect how much you pay in interest.

You’d pay more than $8,000 in interest on your loan with the 14.3% interest rate. That means your $20,000 vehicle would actually cost you more than $28,000.

Get Together The Required Paperwork

When financing a car there are four main requirements:

Proof of Identity: You will need to verify your identity with a government-issued ID which can include your passport, driver’s license, and birth certificate.

Proof of Income: In order to ensure you can make payments on time, documents like recent pay stubs, current bank statements, a recent W-2 form, or other statements. If you are self-employed, the last two years of your tax returns can also be used for proof of income.

Proof of Insurance: Like all auto loans or vehicle financing ventures you will need proof of the minimum required car insurance in your state. Getting this is typically easy, and you can call your car insurance company to get a binder to show you have the proper coverage.

Proof of Residence: To show proof of residence, you may provide your driver’s license, utility bill statements, insurance bills, mortgage or lease statements, and bank or credit card statements.

In some situations, you may need additional information such as your social security number or vehicle purchase documents in order to finance a car. If you are financing a used car you’ll need the original title document before you can move forward with an auto loan.

Get Rates From Auto Lenders

Lenders may not offer the same APRs and loan terms when you’re financing a car, so compare rates from auto loan providers. There are plenty of vehicle financing options, from dealerships and banks to companies that specialize in auto loans.

When getting quotes from auto loan providers you must know the differences between being prequalified and preapproved when financing a car. Prequalification offers an estimate of your rate, but because potential lenders only do a soft credit check, the rate could change after you apply for a loan. Preapproval comes after a hard credit check and almost guarantees financing at the terms outlined in the preapproval offer.

Preapproval can lead to a slight decrease in your credit score, but it allows a serious shopper to calculate the monthly car payments for the life of the loan. FICO counts all hard credit checks relating to your car loan as a single inquiry for up to 45 days, so rate shopping won’t impact your credit more than once.

Pick The Best Auto Lender For You

Everyone has different needs when it comes to financing a car. While some may avoid auto lenders with higher interest rates, others would be satisfied with any provider that’s willing to finance their vehicle.

When choosing an auto lender, keep the following factors in mind:APR: The lower the APR listed in your contract’s disclosures, the less you’ll pay to borrow money.

Term length: Your loan term can vary considerably in length. Having a long-term loan typically means you’ll pay less per month but more over the full amount of time.

Down payment: Making a significant down payment can save you money on interest when financing a car. The minimum down payment–if any–is determined by each auto lender. You may be able to use the trade-in value of your old vehicle toward the down payment on a new vehicle.

Tips for Financing a Car

Below are some tips to keep in mind if you decide to finance a car through a purchase loan:Get preapproved: Getting preapproval for an auto loan gives you leverage and a better understanding of what you can afford. What you are offered helps you find out what to rates and terms to expect from a dealer and gives you perspective on what is a good deal for your financial situation.

Put down a sizable down payment: Conventional wisdom suggests that putting down at least 20% of the vehicle’s value is a good idea. The higher your down payment is, the lower your monthly payments and interest rates will be.

Don’t buy vehicle add-ons immediately: Dealerships will try to sell you a number of things including gap insurance and extended warranties at extremely high prices. While these can be good investments, there is no need to buy them as soon as you get a loan and it is better to take your time and compare options.

Get a shorter loan term: If you can afford it, getting financing a car with a shorter loan term length allows you to have lower rates and pay less in the long term.

Finance a car you can afford: Generally it is recommended by financial experts to not pay more than 10-15% of your take home pay on car payments. Also, considering purchasing a used car can save you a lot of money as well.

Just as you might shop around for a car, you’ll want to shop around for a car loan. The interest rate and loan term you’re offered may vary by lender — shopping around could help you find the best rate and terms for your budget.

Applying for prequalification with different lenders and getting prequalified can help you see estimated loan rates and terms without a hard inquiry appearing on your credit reports. But remember that getting prequalified isn’t a guarantee of loan approval — your loan terms may change after you submit your loan application and the lender runs a hard credit inquiry.

As you consider each loan offer, don’t just focus on your monthly payment. Look at the total cost of financing, too. For example, it may be tempting to choose a longer loan term to lower your car payments, but you could end up paying much more in interest over the life of the loan. Finding the best financing for your needs can take some strategy and time. But in return, you could save hundreds or even thousands of dollars.

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