Category Archives: Guest Posts

Next Steps to Take After Paying Down Student Debt

When you have finished paying off student loans, it is time to start building your wealth. It’s also time to achieve some of life’s most important milestones.

But first, I want to talk about the negative effects that student loans can have on your future.

There are many people that go to the bank to buy a home with tens of thousands of dollars of student debt on their shoulders. The loan officer looks at the debt and you can almost see the look of disappointment in their eyes because they are going to have to tell you that the student loans are driving up your debt-to-income ratio.

If you say, “but my loans are deferred” or “my loans are in forbearance,” the loan officer is going to look at you and tell you that it doesn’t matter because the debt has to be paid back eventually. At some point, while owning a home or car, the repayments may begin on your loans. That consumes part of your income. The bank doesn’t want to take the risk of you not having enough income to make your payments to them.

It is devastating, and it happens every day.

To keep this from happening to you, it is best to pay down your student loans as fast as you can so you can enjoy buying a home or new car without receiving bad news while sitting at the loan officer’s desk.

Think About Retirement

Another milestone that student loans can interfere with is investing. When you’re dealing with student loan payments, it’s difficult to put money into anything else. Of course, you can increase your income with a second job or find side gigs like I did. However, I still didn’t have a lot of room for investing until the student debt was gone.

Investing can take many forms. You can invest in stocks, bonds, or mutual funds. You can even invest in real estate, the mortgage market, or business ventures. There are many things that you can do with your money when you have the funds to do it. Think about being able to retire early or just retirement in general.

The last thing you want to do is retire and find that you don’t have enough income. There are many senior citizens filing bankruptcy because of pensions that fall short, social security that isn’t enough, and medical benefits that are still too expensive.

Think About Your Family 

With student debt gone, it is also easier to expand your family on the financial end of things. When you don’t bring children into debt, you’re able to focus more on the financial needs of your child.

It is difficult to bring a child into a debt situation because so much of your income has to be put into debt while meeting the needs of your family. Of course, it can be done. But do you want to go through that struggle if you don’t have to?

Of course not!

Regardless of what phase of your life you are in, it is important to pay off your student loans quickly. Those high balances are holding you back in more ways than one. Many good people who went to college to do something meaningful and make a good income are plagued with debt for a while after graduation. They make their minimum payments but still pay the collateral consequences of having the debt.

It can be heart-wrenching to struggle or be told “no” by a bank when all you’re doing is what you’re supposed to do.

The fact is that you need to go above and beyond what you’re supposed to do to get ahead as soon as you possibly can.

Even if you already have a family, a strict budget and some discipline can help you pay down the student debt so you can start working on other milestones in life. It’s best to pay off debt as soon as you can, but don’t ever think you are too late. People thinking that they are too late causes them to not be aggressive with their debt when being aggressive can be one of the best things they ever do for themselves and their family.

Jacob runs Dollar Diligence where he blogs about debt repayment, saving money, and side hustles. For more advice and content, follow him on Twitter.

 

Traveling with debt with a smile: 5 Rules you must follow

Can you travel when you have credit card debts?

Some individuals will say this is a bad financial move. You should think about saving money instead of planning a vacation. You need to think about the ways to pay off debt. But is it true? Let’s find out.

I don’t feel that it’s irresponsible to travel when you have credit card debts. You can travel and pay off debt simultaneously. You just need to be cautious and financially responsible. Plus it’s not practically possible to deprive yourself of fun throughout the loan repayment term. Suppose, you have student loan debt. Usually, the loan repayment terms of student loan debt stretch for a long time. So does this mean that you won’t travel for 10-20 years? It’s totally unrealistic and impossible. You can control yourself for a short term-period. But it’s impossible to stop yourself from having fun all the time.

Smart budgets can help you have fun even with debt. You can dine out, shop and travel. Basically, you can do a lot of things. All you need to do is plan carefully and follow your budget.

Rules you need to follow to travel with debt 

Here are a few rules you need to follow to travel with debt. 

  1. Don’t incur fresh debts: Have a look at your savings account before planning your vacation. Do you have enough money in your savings account? If ‘no’, then you can postpone your trip. Save enough money to enjoy a trip comfortably.

It isn’t that you have to pay cash for every transaction. Just make sure you have sufficient cash in your savings account. If you’re planning to use a credit card for covering expenses, then pay off the outstanding balance as soon as possible.

  1. Create 2 separate accounts: Set up a separate savings account and save money there to pay for your trip. You can have 2 separate savings accounts – (i) saving travel money (ii) saving debt repayment money. This will help you track your savings. You can figure out how much you have saved for traveling and how much you saved for paying off your debts. This will help you plan your vacation comfortably.
  1. Make your monthly payments: Have you enrolled in a debt relief program to pay back your creditors? If so, then make sure you have money to make the required monthly payments. If you pay $250 every month, then keep doing that even when you’re traveling. If you can’t pay this money, then don’t have a vacation right now.

Don’t travel if you don’t have a debt repayment plan. Calculate how much you owe on your debts and then formulate a plan to pay off them. Ask yourself how long it will take to pay back your creditors and the amount you need to pay every month. This is your debt payoff plan. Use it wisely.

  • Do extensive research: Before traveling, do extensive research on your desired destination. Calculate the average cost of food and accommodation. Know about the fun activities you can do in that place. Ask your friends about the the local foods you can eat and the free activities you can do. Just post a message on Facebook. You’ll get lots of suggestions.

 Postpone your debt repayments: If it is possible, then postpone your debt repayments without being charged an additional interest. You can transfer your balance to another credit card with 0% interest rate. Some credit cards charge 0% interest rate for 12-18 months. You can transfer the balance to one such card. Just remember you have to pay off the balance within the introductory period. If you can’t, then be ready to pay higher interest rate.

Conclusion 

You can take a job abroad to pay off your debts and travel simultaneously. Obviously, this option is not a suitable one if you’re thinking about making a short trip. You’ll be out of station for several months. Plus, you have to get a job at your destination before leaving home. There are other factors you need to consider too. For instance, you have to think about the relocation expenses and the cost of living. If the cost of living is too high and your expected monthly income is less, you’ll be in trouble. It’ll be difficult for you to live there. So make sure you get a job that will help to cover your monthly expenses and debt repayments. Otherwise, it’ll be a wrong financial move to relocate.

The best option is to think about a few ways to make money when traveling. First, you can ask your employer to arrange a free accommodation for you. This will help you save a lot of money. You can.

This post is contributed by Patricia Sanders from wiki.debtcc.com.

Investing in Your 20s – It’s the Chance of Your Lifetime

No matter how old you are, it is never too early to start investing. Whether you are in high school, college or just finished school, now is the time to start putting money toward securing your financial future. The good news is that it is easy to start investing no matter how much you have to invest, what your risk tolerance is or what your goals may be.

How Do You Start Investing?

The first step to becoming an investor is to find a broker to trade with. Most brokers allow you to make your own trades online in a matter of seconds. They will also have access to charts, analysis and news to help you make informed trading decisions.

Some brokers also offer training courses that help new investors learn the basics of investing as well as how to use the charts and tools that they offer. The broker that you choose depends partially on how much help that you want or need making investment decisions as well as how much that you have to invest at the moment.

How Much Do You Need to Start Investing?

Some brokers such as Charles Schwab will allow you to start investing with no minimum balance. Therefore, you can start contributing to an index fund with as little as $1 if that is all you had to invest or all that you wanted to put in for now.

Newer brokers such as Betterment or Motif require anywhere from $100 to $300 to get started whereas some mobile investing apps have no limits. If you invest with Fidelity, Vanguard or similar brokers, expect to need at least $1,000 to gain access to their stock or mutual fund offerings.

Why Should I Start Investing Today?

Compound interest is one of the most exciting concepts that you will ever learn. It is also the reason why you need to start putting money into the market today no matter how much or how little you have to get started with.

Let’s say that you bought stock worth $100 at age 30 and earned the historical average return of 11 percent per year. When you were 60, that $100 would be worth $2,289. However, if you put that $100 into the market when you were 20, you would have $6,500 by age 60 assuming an average 11 percent return.

What Should I Know About Broker Fees and Capital Gains Taxes ?

It is important that you account for taxes and fees whenever you make an investment decision. When you first start investing, you will likely look to buy and hold a stock or index fund for many years. This is because most brokers charge a fee of $5 to $8 for each trade that you make. If you only have $100 in an account, that $8 may represent your return for an entire year.

When it comes to taxes, it is important to note that you only pay tax on the profit that is made on a given investment. Your profit is any gains above your cost basis, which is the price of the security plus any fees paid to buy or sell it. Therefore, if you bought a stock for $10 and paid $5 to buy it, your cost basis is $15. If you sold the stock for $20, you would pay capital gains taxes on $5.

If you are in the 10 percent tax bracket, you pay nothing in federal capital gains taxes. However, you may be required to pay state taxes on all capital gains. If the money is held in a traditional IRA, you don’t pay capital gains taxes while securities are in your account. Instead, you pay ordinary income taxes on any money that you withdraw when the withdrawal takes place.

Should I Open a Roth IRA or 401k Instead of a Traditional?

When you invest in a traditional IRA or 401k, you get a tax deduction in the year that the contribution is made. However, if you choose to open a Roth account, you use after-tax dollars to contribute to your account.

The benefit is that the money in your account grows free from capital gains taxes. Furthermore, it is not subject to income taxes when it is withdrawn because the money was already taxed.

Ideally, a person will invest in both a traditional and Roth IRA or 401k to reduce their tax burden both today and in the future. As a Roth IRA is subject to income limits, it may be best to contribute to a Roth 401k as there are no income limits and contribution limits are higher. A 401k is a retirement account provided by an employer, and those who are self-employed may open one on their own.

If you are serious about securing your financial future, you should start investing as soon as you have a few extra dollars to do so. Those who aren’t sure what their financial goals or timelines are may benefit from speaking with a financial adviser. This person may be able to help you create short and long-term goals as well as different investment strategies to make it easier to meet them.

Post content provided by slickbucks.com.

Please remember to check with a financial professional before you ever buy an investment and to read my Disclaimer Page.