Month: December 2015

Savings v. Paying Off Credit Card Debt: What’s the Right Move?‏

 

Shared via Suze Orman’s Newsletter
Suze Orman
One of the hardest challenges managing your financial life is figuring out how best to juggle multiple goals. And one of the most vexing decisions is what to do if you have credit card debt and you have money sitting in your emergency savings fund.

From a purely financial standpoint, it makes plenty of sense to pay off the credit card debt. The average interest rate these days is around 15%. Meanwhile, money you have in a savings account at a federally insured bank or credit union is likely not earning even 1%. So using the low-earning savings to pay off the high cost credit card debt is a smart financial move.

But you and I both know that money decisions are never purely financial. Emotions play a big role. And I am totally on board that for many of you, knowing you have money set aside in an emergency fund to handle life’s “what ifs” is what helps you sleep at night.

That said, if you have credit card debt, you need to make it your top priority to get it paid off ASAP. Here’s how:

  1. Look into transferring your credit card balance to a new card that charges no interest for at least a year. Some cards offer a zero rate for 21 months; that gives you a lot of time to pay off the debt while not owing interest. Search online for transfer deals that do not charge a fee on the amount of the transfer (some cards will charge you 3% of the amount you transfer) and that also do not charge an annual fee.
  2. You are not to charge a penny on this new card that you don’t intend to pay off in full each month. Read the fine print of your new card deal. While the amount you transfer gets the great zero interest rate, that’s not the case with any new charges you don’t pay off each month.
  3. Use an online credit card payback calculator to figure out how much you need to pay each month on your new card to have the balance paid off before the zero rate expires. That’s your new goal.
  4. I challenge you to scour your current monthly spending to come up with the money you will need each month to be on schedule to pay off the credit card debt during the zero-rate period. If you are truly serious about getting rid of the credit card debt you will find ways to scale back on your spending. Instead of looking for one big-ticket expense you can drastically cut or eliminate, consider this strategy: Look for at least a dozen monthly expenses that you can cut by at least 10%. Once you add up all those savings you may be very close to what you need to pay each month on the credit card balance.
  5. If you are still coming up short, I want you to consider dipping into your emergency fund each month to make up the difference. I realize that may make you somewhat uncomfortable, but I am not suggesting you empty out your savings in one big withdrawal. This way you will still have some money in savings, while you are working fast and furious to get rid of the credit card balance while the interest rate is at zero. Once you’ve got that polished off, use the money you were sending in each month to pay off the credit card bill to replenish your emergency savings fund. Trust me, the ultimate sense of security will come when you are free of credit card debt and you have an emergency savings fund.
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2016 Game Of Loans

Private-student-loansThat special day is finally around the corner. Graduating is a thrilling experience and is filled with excitement and joy. Some students are fortunate enough to graduate without student debt compared to the students that have to focus on paying back their loans.

Paying off student loans can be stressful whether you are a college student or a recent graduate. When working through college, we all have those times where we would rather spend the money we earn on what we want or even need at the time rather than focusing on paying off our debt. Doing this, we put the loans that we are accumulating on the back burner. After all, being poor college students searching for innovative ways to cook our ramen in order to save money, why would paying off our debt be at the top of our priority lists?

Accumulating a mass amount of student loans can be stressful. We need to start living frugally before we graduate from college and shave off some of the stress about loans we might feel in the future. Just think of how wonderful it will feel to graduate  with a low amount of debt! Now, you are probably thinking that this is a great thought, right, but HOW can we achieve this goal? Here are a few tips listed below of how to start focusing on paying off your student loans today:

1.     Set a realistic goal when you want to finish paying off your student loans

2.     Focus on paying off the unsubsidized loans first since the interest rates start once you take out the loan and once paid off, focus on the subsidized loans

3.     Calculate the percentage you would like to pay towards your student loans from each paycheck

4.     Calculate and incorporate the amount you will have to pay each month into your budget in order to reach your goal

5.    Even though you are not required to pay back the loans while in school, treat your loans like a monthly bill that you are required to pay each month

6.       In order to reach your goal, be realistic in terms of your standards of living while paying off your loan

Whether you are contributing only $100.00 or $600.00 towards paying down your loans, the amount slowly adds up and lowers the amount of debt you owe before graduating. Take the challenge and start today!

The 10% Shift

Local First Utah | Locally Owned and Independent Businesses‘Tis the season for shopping and we all know what that means: over the river and through the woods to the shopping mall we go. The holiday season brings extraordinary levels of profit for big businesses, especially for the retail industry. In 2014, the retail stores raked in 616.1 billion dollars in November and December alone (nrf.com). That number is expected to increase to 79.4 billion dollars this year, a 13.9% increase (statista.com). These numbers are amazing, to say the least, but it leaves one wondering where does all that spent money go? Who really is reaping the profit?

According to a study done in Utah by Local First Utah, not much of the money earned by national chain retailers makes it back to local economies. Conversely, independent business return to local economies much more. The study showed that “in Salt Lake City, Ogden, and Wayne County… locally owned retailers return 55.3% of their revenue to the local economy.” It compares that to national chain retailers who “return just 13.6% of revenue. That means every dollar spent at a locally owned, independent business returns more than four times more to the local economy than a dollar spent at a national chain retail” (localfirst.org). Shopping locally boosts our local economy. Daniel Houston from Civic Economics puts it this way: “The extra dollars in the local economy produce more jobs for residents, extra tax revenues for local governments, more investment in commercial and residential districts, and enhanced support for local nonprofits. In short, local businesses create better places” (localfirst.org).
So who’s going to reap the profit this holiday season? Of course it will be a time of booming sales for national retail chains, but we can also help boost our local economy by shifting more of our purchases to locally owned retailers and restaurants. The Local First Utah study concluded that “shifting just 10% of purchases from national chains to locally owned retailers and restaurants would keep $1.3 billion in the Utah economy” (localfirst.org).

Check out http://localfirst.org/buy-local/find-a-business for a list of local Utah businesses!!