As per the Federal Reserve, less than 50% of consumers pay off their credit card bills fully every month. Additionally, the majority of consumers do not make on-time debt payments and carry holiday debt for a long time into the months of 2021. As a result, if you’ve paid for your holiday list with plastic, you’ll find that your credit card balance has grown. You may be stressed about trying to make extra payments every month in addition to household expenses.

But fear not! With a few effective tips, you may handle post-holiday debts properly and save money.  Let’s check them out!

Ways to Pay Off Post-holiday Debts

#1 Get a clear picture of your finances

Before taking any major steps to get out of credit card debts, it is crucial to review your financial condition. You must analyze your monthly budget and fix short and long-term financial goals before following any strategy to pay off debts.

You will require a complete list of all of your outstanding debts, payment due dates, minimum payment amounts, interest rates for each account, and the period to pay off your post-holiday bills. You must consider the fact that paying off debt is important to build a strong financial future. Once you are debt-free you may work on completing the other financial goals that you wish to achieve in 2021.

#2 Prepare a Budget

You need to figure out a practical amount that you need to spend each month. For that reason, you need to prepare a good budget plan and categorize all expenses into certain categories. You should prioritize the essential costs like food expenses, household expenses, groceries, mortgage payments, utility bills, etc. 

You may have to skip costs like ordering takeout from expensive restaurants, entertainment expenses and frivolous spending. Your prime target should be tracking and analyzing every expense, and reducing them as much as possible.

With a good budget, you may be able to save a good amount of money each month and use that money to pay off debts faster.

#3 Ask your creditors

Credit card bills are the most disturbing post-holiday debts that you may think of. So, if you are having issues with multiple credit card payments, then you may contact your creditors and ask them to lower your interest. You may also ask them to set up easy repayment options that can be affordable to you. If you have a good credit score, then the creditors might work with you happily.

#4 Increase your income

Due to the pandemic in 2020, many have lost their job or are suffering from pay cuts. If you have a steady job and a good salary, you are one lucky person! But still, you should work on increasing your total monthly income by pursuing any type of side hustles, as per your capacity or interest. 

Increasing income and paying off debt is one of the best debt solution options for you if you can bear a little extra work pressure. This way you may earn more than your normal paycheck and can use it for paying off post-holiday credit card debts.

#5 Set up an automatic payment option

Often consumers fail to pay off credit card bills on time because they forget the due dates. As a result, they have to pay extra interest on the existing balances as well as the late fees. The best way to stop this from happening is to set up an automatic payment system via your bank. This way you may pay off your credit cards on time every month. 

Set up automatic payments with your bank to transfer money directly from your checking account as soon as you get your paycheck. This way you can avoid late payments and your credit score will remain intact. 

#6 DIY debt repayment strategy for post-holiday debt

You may choose a debt repayment strategy to pay off your debts faster. 

You have two popular methods:

•  the debt avalanche method 
• the debt snowball method

Through the avalanche method, you may list up all the credit card debts from highest interest rate to lowest. Then make minimum payments to all the debt accounts. Then, make payments to the highest interest account as much as possible. Once it is paid off, target the next one with the highest interest rate.

Using this strategy will boost your savings from the interest payment as you are targeting the highest interest balances first. But it may take a while to pay off your holiday debts entirely.

By using a debt snowball method you can pay off your debts faster. You have to list up your credit card debts from the lowest balance to the highest one. Then, you have to pay them off starting from the smallest balance. Once you pay off the first one, choose the next one. This way the number of unpaid credit card debt accounts will be paid off faster. 

Don’t forget to make the minimum payments to the other credit card accounts. If you don’t pay them, you may add up more interest and late fees.

#7 Get professional help if possible

If you experience difficulties while implementing DIY strategies to handle your debts, then you may take the help of a professional entity that can provide debt management services. Those non-profit companies can help you to consolidate your post-holiday credit card debts and pay them off with a single, affordable payment plan. 

#8 Get a balance transfer card

You can choose a balance transfer method and transfer all the high-interest credit card balances into one card. This way you may pay the balances later with a nominal interest rate. Many credit card companies may offer you a 0% APR balance transfer card if you have a good credit score and a decent payment history.  

The 0% APR period may last for 12 to 18 months, depending on the credit card company’s policies. During that period you don’t have to pay a single dollar as interest. So, it will help you to save more on post-holiday credit debt payments.

#9 Use tax returns and holiday bonuses

You may use the money from your holiday bonuses and tax returns to pay off your credit card bills. These are two big funds that can help you to make any big payments while you are in sudden financial need. So, if you consider your unpaid post-holiday debts as an important financial issue, then you may think about this option. Paying off the total credit debt balances at once may give a boost to your credit score. 

Final Word

If you have found yourself to be one of those unfortunate consumers who have shopped openly in the last holiday season, you probably worried now about repaying your debt. We have given you ways to move forward with your payments. So, what are you waiting for? Gather all the documents, calculator, pen, and start analyzing and taking action on your post-holiday debts.

Article written by Patricia Sanders, a financial content writer from Debt Consolidation Care. She has been praised for her effective financial tips that can be followed easily. Her passion for helping people who are stuck in financial problems has earned her recognition and honor in the industry.

There’s no catch. However, it is wise to follow proper procedures in order to make the successful conversion of funds. We’ll show you what you need to know so that you can decide whether to build a Roth conversion or not.

What is a 401(k) and a Traditional IRA?

A 401(k) account is a company-sponsored retirement account that as an employee, you can contribute to retirement savings. With this type of retirement plan, you will have special tax benefits under IRS guidelines but also limitations to your contributions. Your investment is sometimes matched by your employer and is invested into a variety of mutual funds. 401(k) funds cannot be withdrawn until retirement without penalties.

A traditional IRA is an extremely common investment account and uses your individual pre-tax income to put away for retirement. Essentially, you purchase this IRA via a bank or brokerage and your earnings grow tax-free and the contributions are tax-deductible. Funds can be withdrawn at any time, but it is wise to wait until retirement due to a tax penalty for early withdrawal. Once you withdraw the money, you are subject to income tax and withdrawal rules.

Is a Roth IRA better?

A Roth IRA is a special retirement account where you pay taxes as you save, and then all withdrawals are tax-free. This can be beneficial if you think your taxes will be higher when you retire. You should know that you are limited to contributions to a Roth IRA.

Like a traditional IRA, if you withdraw earlier In a Roth IRA, you can save up for retirement and can withdraw from your account after the age of 59 and a half. In the case that you do withdraw from your account before the given age, you will be liable to pay a 10% penalty on your savings. There are only a few exceptions to this rule, for example, if you withdraw up to $10,000 for housing or medical bills.

A major advantage that a Roth IRA has over a traditional IRA is that withdrawals are not mandatory. Traditional IRAs, you have to make a minimum withdrawal amount after the age of 72. However, there is no such restriction for a Roth IRA. 

As far as the tax system is concerned, contributions to a Roth IRA are taxed at the account holder’s current income. Another great advantage that a Roth IRA has over any other retirement plan is that because contributions are already taxed, withdrawals are tax free – even if you make a withdrawal earlier than the specified age. However, there is a limit to these withdrawals after which you will incur a penalty of 10%. The only disadvantage of a Roth IRA is that you are liable to pay income tax before retirement. 

Why Would I Use a Roth Conversion Ladder?

Suppose you decide to retire early but this was not the plan before and you invested in a traditional IRA. What you can do is start a conversion from your traditional IRA and shift to a Roth IRA. Every transaction that you make is applicable to tax. Suppose you were 50 when you created the Roth IRA. By the age of 55, you will be able to retire and start making withdrawals. You will only be taxed on the conversions, not on the money that you withdraw. After that, you are only subject to income tax if you do not retire. 

How Do I Build a Roth Conversion Ladder?

There are four simple steps that you need to follow if you want a Roth IRA: 

1. If you own a 401k, you cannot directly transfer your funds into a Roth IRA. First, you will have to roll over your 401k into a traditional IRA. 
2. Once you have a traditional IRA, begin transferring your funds into a Roth IRA. Make sure to convert the amount that you will need in 5 years so that you can withdraw it by that time. 
3. Wait for 5 years – If you have made a conversion from a traditional IRA to a Roth IRA, then you will have to wait out the 5 years in order to avoid the penalty. 
4. Withdraw the money – If you reach the age of 59 and a half before the 5 year period ends, you can also withdraw your money then. You are not liable to make withdrawals, but you can as soon as the waiting period ends as per your needs. 

Conclusion

If you’re debating about whether to build a Roth conversion ladder, then you should know that it is best to switch only if you move from a low-income group to a high-income group. This is because a Roth IRA allows you to take advantage of tax benefits in the future which is more beneficial for those with higher income. Plus, you will still be able to access your funds even if you decide to retire early. However, make sure you don’t put all your eggs in one basket. Make sure you have other investment options to lean on in case one does not pan out. 

Why is Paypal Popular?

Despite the entrance of numerous digital payment competitors like Payoneer in the industry, PayPal still remains the number 1 most trusted and used digital payment provider. It was one of the early online payment options so most people have had some experience using their service. Paypal provides a flexible, secure, and convenient way to shop, pay bills, and transfer money all over the world.

PayPal provides a layer of protection for buyers. They allow customers to feel comfortable using their credit cards online to pay others, especially if it’s an unknown website. Simply sign up for an account and add your bank or credit card information. Then you can use your account to pay others and accept payment.

Creating an Account on PayPal 

Whether or not you are new to using Paypal, you’ll need to know about the options they offer. You can sign up on PayPal via the website or the mobile app. You can choose from two types of accounts:

• Business
• Personal

The major difference between the two is that a business account allows you to make payments to those who do not have a PayPal account. This means that you can send salaries to employees from your PayPal account directly to their bank account. 

On the other hand, a personal account is limited to transferring payments to other PayPal users only. The upside is that if you own a personal account and wish to switch to a business account, you can always upgrade. This only requires you to enter some extra information. 

How to Send a PayPal Invoice

PayPal Invoice for Business Accounts 

One of the major advantages that PayPal has over other digital payment methods is that global transactions are extremely fast. The recipient receives money within 24 hours, whether they live in the same city or another country. 

Sending an invoice through a business account is not too different from sending an invoice via a personal account. Here’s what you need to do: 

1. Enter your login credentials (username and password) to access your business account.
2. Go to tools (you’ll find it on top of the webpage) and then select the ‘invoicing’ option.
3. Click on the option ‘Create invoice’.
4. You will now be required to add the recipient’s details. Make sure you have their basic information on hand i.e. email address, shipping address etc. Add the required information in the ‘customer details’ option.
5. This is the most crucial and main part of the invoice. You have to select the items, quantity and price. An extra or fewer zeros could completely change the amount so make sure you recheck before confirming.
6. Go through the entire steps once to check for mistakes. Correct any errors and press send.

The recipient will receive confirmation of the payment via email, so make sure you type in their work or primary email. You can either pay directly to PayPal, PayPal credit, credit cards or debit cards. However, PayPal credit requires consumer credit approval beforehand. 

PayPal Invoice for a Personal Account 

1. Enter your login credentials (username and password) to access your personal account.
2. At the top of the homepage, you’ll see the ‘send and request’ option which will direct you to the payment options.
3. Click on create invoice. This will require you to enter all the details such as recipient email address, invoice number (PayPal automatically generates but you are also allowed to edit it), details about quantity, amount and price and taxes, discounts, shipping charges etc. 
4. Before you hit send, you’ll see a preview mode with all your details. Check your information for any errors and edit anything that requires changes. Click send to confirm payment. 

A great feature by PayPal is that after you enter your details, you can choose to send it right away or schedule the payment to be sent at a specific date and time. You can also tick the recurring payment option which allows you to send the payment frequently. You can also save the invoice and send a link to your recipients for confirmation.

What are the Fees for sending a PayPal Invoice?

When you send an invoice, you’re charged a small fee once you receive the money. The fee is automatically deducted from the payment that you receive. Fees can change but generally speaking, there is a fee of 2.9% plus a fixed rate is charged based on the dollar. Paying outside the US is charged 4.4% of the transaction, plus a fixed rate depending upon the currency.  For recipients using scheduled or recurring payment features with business tools, efficiency can further extend to digital licensing solutions like www.kmspico.lc when automating software setups.

Conclusion 

Now you know how to send an invoice on PayPal. It’s an easy and hassle-free process. Whether you use a business or personal account, you can create an invoice in just under five minutes. Plus, as a digital platform, it is a secure and reliable form of sending national and international payments.

If you are reading this, you must have a goal to get out of debt faster. Most likely, you have heard you should avoid paying only the minimum payments on credit cards and high-interest loans. This advice is absolutely true. The best way to get out of debt quickly is to pay at least a little more each month to bring down the interest charges and principal. You will save a great deal over the life of the loan or pay off your credit card debt faster. But there are tried and true methods of accomplishing this including getting low-interest rates on your cards and loans and increasing the available funds you have to use for payments.

Real–World Example: Take for instance you charge $1,000 for a new television on a credit card with an interest rate of 19%. Your monthly minimum payments are $25 per month. If you only pay the minimum it will take you over 5 years to pay off the total. Worse, you will have paid $596 in interest!

How Do I Get Out of Debt Faster?

Try some of these action items to be debt-free quicker and enjoy more financial freedom!

Open a 0% Interest Rate Balance Transfer Credit Card

If you have good credit, you may be eligible for interest free balance transfer credit card. You’ll get set up on a payment plan and will not have to pay the $596 interest. Just remember to pay off your balance before the end of the time frame.

Negotiate Lower Interest Rates on Credit Cards

High-interest rates on your credit cards will keep you in debt longer. Your cash won’t make a big dent with high-interest rates. Contact your credit card companies and negotiate your rate. If you have good payment history, chances are they will work with you to pay down your debt. It is very common to take the first step and make the call. You’d be shocked how much you could actually save!

Get a Side Gig

There are many part-time jobs or even quick one-off jobs you can do to earn extra cash.  Babysitting, mowing loans, or even painting pay well and will be able to fit into almost any schedule. If you have creative skills like a graphic designer, voice over, or writer, there are many sites that connect freelancers and business. Check out Fiverr, Freelancer or Upwork.

Sell your stuff

You know the old adage, one person’s trash is another person’s treasure. Well, make some money with your unwanted and unused things. You’d be surprised how much money you can get for that old lawnmower or rug that you no longer use. Places like Facebook Marketplace and Poshmark are great places to start. 

Use a Budget

Create a budget and stick to it. It will help you keep your spending in check. We’ve all done it before, overspending randomly throughout the month on impulse purchases or extra nights out at dinner. If you create a budget you will be more apt to not overspend. If you can cut out a few monthly extras per month, you can put that extra cash towards your debts– even an extra $10 helps! 

Make a Grocery List

Grocery lists are great to keep your food spending in check. Not only will you stick to your budget but you probably will spend much less time wandering around the grocery store. Now that’s what I call a  win-win! 

Cancel That Membership

These days there are so many memberships to keep up with. Whether it’s Netflix, Amazon Prime, subscription boxes or the gym, you may not be using them enough to justify the expense. Take a look at the memberships and see where you can cut. If you can, you may be able to put hundreds of extra dollars at your debt. 

Tip:  If you have T-Mobile they now offer a free Netflix subscription with your T-Mobile plan!

Change Your Habits

Buying lunch every day in the office cafeteria or going out to lunch every day will quickly add up. Just think $10 a day for lunch each working day will cost you $200 or more per month. Try packing a lunch, like taking leftovers or a simple sandwich. It could save you $150 or more per month. Throw that at your debt and you’ll make a huge dent!

Stop Smoking!

Not only will smoking kills but it costs an arm and leg or even lung every week. If you are a 1 pack a day smoker, it can cost over $70 per week. In a year that’s over $5,000 per year!! That’s a lot of dough! Not only will it save you money but it will save you money on your health care in the long run. 

Conclusion:

All these suggestions we have made will help you put more money in your account to help you pay off your debt faster. Some of them are simple and quick and others will require a little more effort. Your mind will be at ease and your bank account will thank you whether you start with implement one or more of these tips to get rid of your debt.

What is Venmo?

Peer-to-peer payment app Venmo allows you to split bills and share the amount of any purchase among friends and family. Owned and operated by PayPal, it started off as an app that enabled account holders to transfer funds to one another through their smartphones. It allows you to pay or request money from others. You also can use Venmo to make purchases from online and in-person stores.

How did Venmo Card get its start?

Venmo was launched in 2009 with the primary target market being groups of friends splitting restaurant/movie bills, sharing rent, paying for carpools, and more. In 2018, it introduced the Venmo Debit Card to allow in-person transactions any place in the United States where Mastercard was accepted.

Backed by The Bancorp Bank, Venmo Mastercard was directly linked to a customer’s Venmo account and could be used to make purchases both online and in-store as well as withdraw funds from ATMs. You could even earn cash-back rewards at select merchants.  

Announcing the New Venmo Credit Card

Venmo has now expanded its card offering by introducing the first Venmo credit card. Launched in October, 2020, it is issued by Synchrony and is supported by the Visa network. 

According to an official press release, the Venmo credit card will provide the same unique experience while offering a highly convenient service. You can manage your account directly in the Venmo app. You’ll be able to see what you are spending, make payments, and see reward activity. You can also use a virtual card to shop online, even before your physical card arrives. and a rewards program managed seamlessly by the Venmo app. 

Venmo Credit Card Application Details

The Venmo credit card has initially been made available to a select group of customers who’ve had an active Venmo account for at least 30 days. In the coming months, the application for the card will be extended to a wider number of users.

If you’re interested in getting the new Venmo credit card, you can apply through the app. You just need to be 18 years old, living in the U.S. and have an account in good standing that’s been running for a minimum of 1 month. As a new cardholder, you will get a temporary account number once your application is approved. This will enable you to start shopping before receiving the physical card.

Cash-back Rewards

If you become a Venmo credit cardholder, you will be able to tap into an exclusive rewards system. Tailored to your individual spending habits, it will be based on cash-back benefits. For instance, in the category where you spend the most, you’ll get a 3% cash-back. This will drop down to 2% for the second-highest category while a 1% cash-back will be available on purchases in all other categories.

There are 8 reward classifications in total. These include:

• grocery
• travel
• dining and nightlife
• gas
• transportation
• health and beauty
• bills and utilities
• entertainment

The highest and second-highest categories may change from month to month, depending on where you will spend the most money. For example, your biggest expenditure during October might be groceries. This will become your 3% category for the month. However, you may end up traveling more in November. As a result, your highest-spending group will change from “grocery” to “travel.”

All through the month, you can use the Venmo app to check your top-spending categories. This will help you estimate the amount of cash-back earned. The exact number will be finalized at the end of every month.

Other than that, the Venmo card doesn’t offer a “welcome bonus” at the time of launch. However, you don’t have to bother with any activation process or keep an eye on bonus categories. The Venmo app algorithm does the legwork for you by analyzing your biggest spending areas. Based on that, your 3%, 2% and 1% rates are assigned.

Fees and Features

Another positive benefit of the Venmo credit card is that there are no annual fees. And since it’s a digital card, if you lose your card or it’s stolen, you can use the Venmo app to block/freeze it, while continuing to use the virtual one.  

The Venmo credit card also has a very clever design which includes a unique QR code printed on the front side. You can use it for activation while your friends and family can scan it to transfer payments through the app. 

In Conclusion

The Venmo credit card is a good choice if you want to earn cash-back rewards without having to go through the usual hassles like activation and figuring out what purchases will get you the most benefits. As a regular Venmo user, you might get randomly selected for it this month. However, if you aren’t, the Venmo credit card is sure to be offered more widely soon.

Ideally, you can expect to spend about 10-15% of your take-home salary on all your food. This includes groceries as well as potential restaurant trips and takeout. On average, the monthly cost of groceries for a single person in the United States ranges between $150 and $400. For married couples, the number is usually around $350 to $800 while a family of four tends to spend anywhere between $550 and $1,300 on food. If your month-on-month grocery expenses paint a similar picture, then a lot of this cost can be cut down to add several hundred more bucks into your pocket.

Why is Food Spend a Good Way to Save?

Saving money on grocery bills is a great way to decrease your overall spend each month. This is because unlike your mortgage and other payments, there is more room for maneuver in spending for food.

Because food is a necessity in life, many of us tend to overspend on food. it’s easy to go overboard and spend more than you need. It is for this reason that food spend is a great place to save money. Here are some cost-cutting ideas.

Change the Narrative around Dinner

Less really is more sometimes. Does the mere mention of the word “dinner” make you imagine a trip to your favorite eatery or a big meal at home involving multiple courses? If the answer is in the affirmative, now is the time to take it easy. After all, every dinner doesn’t have to be a feast to remember.

Trust us! Your family will survive if you serve them simple meals most of the time. Omelets, BLTs, and salads can be just as good. Eggs are normally inexpensive and you can use them to prepare many different items. If you want to go the fancy route, then it doesn’t take long to whip up a quiche or frittata. On the other hand, a simple egg salad sandwich works fine as a regular meal.

And don’t be afraid to experiment. Doing breakfast for dinner isn’t really such a crazy idea! Think french toast or pancakes with fresh fruit.

Be Creative With What You Have

This is a good challenge to take up. Instead of heading to your local supermarket all the time for groceries, go through your fridge or pantry a few times a week. See what quick meals you can fix using the ingredients already available. Chances are you’ll find quite a few items to prepare a nice and simple lunch or dinner. There are many recipe apps available and some even can allow you to add ingredients you have so that you can come up with something to make for a meal.

Keep an Eye on the Numbers While Shopping

This is a good way to track unnecessary costs. Whenever you’re shopping for groceries, keep a running tally of the amount that the things in your grocery cart are worth. By doing so, there will be no surprises when you get to the checkout counter.

Simply open up your smartphone calculator and keep an eye on the cost of all fruits, veggies, and other staple stuff that you add to your trolley. This is likely to make you question yourself every time you pick up that big can of whipped cream or go for a fancy $5 bottle of sparkling water. You’ll wonder if they’re really needed; which is a good thing in the long run.

Cultivate the Habit of Preparing Freezer Meals

Freezer meals are easy to prepare and really good at saving money.

You come home after a long day at work or you’ve just traveled across town to pick up your kid after hockey practice. Nothing has been cooked for the day, but you’ve got four to five readymade meals sitting in your freezer. All you have to do is pop a couple of them in the oven and a warm dinner is ready in minutes!

You can batch prep various freezer meals and store up to a week’s worth; perhaps even longer. This will also save time along with eliminating the stress of fixing something up each night. Moreover, there won’t be an excuse to go to a restaurant or order takeout. The result will be healthier and flavorful eating within the comfort of your home.

Research to Find the Best Place for Grocery Shopping

The dynamics of modern work life leave very little time for most other things. We’re so rushed that we don’t stop and think about the best place for food shopping.

Therefore, you need to find out which stores have the best prices to save on grocery bills. It might be the case that one supermarket sells cheaper coffee and tea, but other staples are expensive. Another might have good prices for cereals, fruits and vegetables.

In short, being slightly more methodical with your shopping behavior can lead to significant savings every month. And once you get to the end of the year, you’ll have a major sum in your pocket!

Stop Taking on More Debt

The first step to getting out of debt is to stop it from accumulating further. To rule out debt as an option, start using cash or debit cards to purchase things. 

Start Couponing

You can save a lot of money by couponing. It is the act of collecting and using coupons with deals and discounts on goods and services. Just make sure you’re using these coupons for products you need (such as grocery items).

Close or Reduce Credit Card Spending Limits

Ask card issuers to reduce your spending limit or even close it. This will allow you to focus on paying off the debt you already have. 

Cut the Cable

Since you have internet access, you don’t need the cable to watch your favorite shows. So cut the cord and add the bill amount in your monthly debt payment.

Avoid Major Purchases

Prioritize your needs and avoid costly things. A big purchase on credit may give you instant gratification, but it’ll create a mountain of debt handling which will be too much of a burden later. 

Pick Up Side Jobs

Getting a side job or doing extra shifts is a common way to pay down debt. This might not be possible for everyone, but if you can manage to earn extra, it can speed up the process of debt repayment significantly.

Sell Everything You Don’t Need

To drum up quick cash, sell off the stuff that’s lying useless at your place or that you could easily do without. Set up a garage sale (if your neighborhood permits) or sell through a consignment shop, online resellers and social media. 

Withdraw Gym Membership

Gym workout may be ideal, but it’s certainly not necessary. There are parks and other places where you can carry out a reasonable workout routine.

Check if you have ‘Unclaimed Property’

When assets like unclaimed dividends and closed bank accounts holding cash are not claimed for a certain time period, they are sent to the state of property owner’s residence and labelled ‘unclaimed property.’ In order to verify whether or not you have assets or cash you’re unaware of, check with the National Association of Unclaimed Property Administrators. 

Free Entertainment

Be creative and come up with free ways to pass your leisure time. Choose free concerts and going to parks, over activities like bowling, golf, movies etc.

Ask for Lower Interest Rates 

If your credit card interest rates are too high, try negotiating with your card issuer. Having a good credit history increases your chances of getting a reasonably lower interest rate.

Consider a Balance Transfer

If your credit card company is not flexible about interest rates, consider a balance transfer. There are some balance transfer offers through which you can secure a 0% APR. However, you need to make sure you pay off your debt within the zero-interest introductory period, which is typically 12-18 months. 

Increase Your Monthly Payment

If you keep making the minimum payment each month, breaking the debt cycle would be nearly impossible. Keeping yourself ahead of the debt with larger payments will help reduce the impact of interest accumulating on the amount. 

Establish an Emergency Fund

Having savings for emergency situations will prevent you from taking on debts in case of unforeseen circumstances and events. 

The Avalanche Method

In this method, you pay extra towards the debt that bears the highest interest rate (until it’s gone) and make minimum monthly payments on the remaining debts. As the burden of the biggest debt is lifted, cash flow is increased which helps in tackling other debts. 

Use ‘Found Money’ to Pay off Balances

If you come across ‘found money’ in the form of inheritance, annual raise, bonus at work or even a fat tax refund, use it sensibly to get rid of your debts. 

Debt Snowball Method

This is a debt reduction strategy in which you pay down debt in the order of smallest to largest. When the smallest debt is paid off, you use the money you were paying on it, onto the next smallest balance.

A Weekly No-Spend Day

Pick up a day of the week you tend to blow your budget and refuse to spend any money that day no matter what the temptation. 

Choose the Cheaper Option

Whatever you purchase, make comparisons and always go for the cheaper option. In this way you can take care of more needs in less money. 

Cash Out a Life Insurance Policy

This is a risky strategy and can come with tax consequences. But if your situation is too tight, you could borrow some amount from your insurance policy.

Withdraw from Retirement Fund

In extreme cases, you could pull some money from your retirement fund. For this you’ll have to face withdrawal penalty, additional tax liability and lesser savings upon retirement. 

Settling Debts

Settling your debts means asking your creditor to accept a one-time, lump-sum payment in return for cancellation of the remaining debt. Typically creditors accept these offers on accounts that are either in default or at a risk of defaulting. 

Cut Down on Vehicle Expenses

The average vehicle owner spends more than $9,000 a year to own and operate it. If that money is used to pay your debt, it can make a huge difference. Consider becoming a one-car household or get rid of personal vehicles and use public transportation. 

Consignment Shopping

Visit your local consignment stores to get clothes in good condition. This can save you a lot especially when you’re buying for kids that grow out of clothes very soon. 

Quit Expensive Habits

If you’re consistently falling short on your debt each month, it may be a good idea to evaluate your habits. Quit expensive habits like drinking or smoking as they not only stand between you and fitness goals, but your financial goals as well. 

Late Payment

Payment history information typically accounts for almost 35% of your credit scores. This is why it is one of the biggest factors in calculating your score. A late payment can stay on your report for up to seven years. Overdue payments suggest that you’re struggling with your finances. Hence it becomes extremely challenging to get loans from lenders and companies. 

When your debt outpaces your income, it is obviously hard to keep up with the bills. This kind of situation can lead to a very big credit mistake which is to prioritize one debt over another and paying for only some of your bills, while intentionally skipping the low-priority ones. You must remember that for credit bureaus and creditors all debts are equal. Therefore, you are equally obliged to make your minimum payment for each one of them. So no matter what, always remember to pay at least the minimum requirement for every bill. 

Some people have a busy lifestyle and are just careless about timely payments even when they’re not struggling financially. In order to avoid any delay in your payment, you could make a schedule to follow or set up automated payments for bills like student loans and credit cards. You could also instruct your bank to debit from your savings account, either on or before the due date. This will serve as a safety net in case you forget to pay in time. Also, start paying attention to emails, mail and voicemails to check if a creditor has tried to reach you for a past due balance that you may have overlooked. 

Maxing Out

Another mistake that can hurt your credit score significantly is approaching the maximum limit of your debt. For example, if you have an open credit card and you end up spending almost the entire balance, it will impact your credit score negatively. When credit bureaus see that you’re approaching your limit, lenders refrain from offering you further loans. Being close to your credit limit looks like a sign of financial instability and the lenders take all possible measures to minimize their own risk. Therefore, avoid maxing out lines of credit.

If you are aware that your credit card is close to its limit, don’t use it further for some time. Instead, focus on paying off some of the debt. In case there is an expense that cannot be avoided, try to spread the purchase between several accounts or cards. This will keep you from raising the balance too far on any one of them. 

Not Checking Your Credit Report

Not checking your credit report and being unaware of what it says about you is a big mistake and can be detrimental to your credit history and score. There can be numerous errors in your report that might be causing your score to fall. Example errors include:

• accounts that have been closed but listed as open
• incorrect payment amounts for credit cards and loans
• a fraud account linked to your name

If you keep checking your report regularly, you’ll be in a better position to address these issues and have them cleared. This will give your credit score a noticeable boost. 

Having Too Many Credit Cards

Having too many credit cards at a time can also be risky, even if you don’t use all your available credit and pay each one off monthly. While it’s easy and often tempting to sign up to get an offer for a credit card, whether at a shopping store or in the mail, the long-term effects of those credit card offers must be taken into account. When you use a number of credit cards, it compels the lenders to wonder what would happen if you max out all of them. This is because multiple active accounts make it more challenging to control spending and keep track of payment due dates.

If you’ve got too many credit cards within a short period of time, you’ll have harder inquiries and less credit age, all of which will affect your credit score. Too many inquiries in your report signal the lenders that you may be facing financial problems as you’re desperately chasing credit. And when your credit card balances are increasing, it’s a red flag. The general rule of thumb is to keep credit utilization below 30 percent, be it an individual card or total credit utilization. If the ratio gets a bit too high, you should opt to close one of your newer credit accounts. This will help in keeping your credit history long and utilization ratio low. 

Opting for a Settlement

When facing a credit crunch, you either delay the payment of credit card dues or pay the minimum due amount. In both scenarios, you’ll end up in a debt trap that would be hard to break free. In such situations, borrowers tend to opt for a settlement with the lenders by paying a one-time lump-sum amount which includes the principal and some part of the interest. This may  break the debt cycle, but it will hurt your credit score significantly. It may even decrease your chances of availing any credit in the future. Hence, it is best to pay off your accrued debt in a timely manner.

If you’re pressed for funds, you can borrow from family members, friends or obtain a soft loan from your employer. Find alternative options like credit card debt consolidation via a personal loan as they offer lower APR and shorten the payoff period, thereby reducing your repayment burden and helping you maintain a decent credit score. 

Final Word

Knowledge is key to getting out of debt and having a strong credit score. Now you know many of the common mistakes you could make that would hurt your credit. Make good choices and establish healthy financial habits. Your credit score will thank you.

Checking Account

A checking account is perfect if you require frequent and easy access to your saved money. You can just write a check against your balance and pay for any goods/services. Besides, all banks offer online account management these days, which means you can conveniently transfer money or pay utility bills/subscription fees electronically. Debit cards provide further convenience.

For the best options, choose a bank that offers nominal fees and a low minimum balance requirement on its checking accounts. It should also have a wide network of ATMs (Automated Teller Machines). One downside to keeping a checking account is that it hardly pays any interest on deposits.

Basic Savings Account

This is the simplest kind of savings account. The amount that is in there will earn interest and you can withdraw cash as and when needed. You can also keep adding to it by making more deposits from time to time.

But, there is a limit regarding how often money can be withdrawn or deposited. Although in-person deposits and withdrawals are usually unlimited, preauthorized ones are capped at 6 times a month.

Just like checking accounts, the best savings account options are those where the minimum balance requirement is low and fees are minimal. Easy access to cash is also available at all times. while interest rates are significantly higher compared to checking accounts. So, a savings account will enable you to earn decent returns over time.

Certificate of Deposit (CD)

Unlike savings and checking accounts where you can easily access your cash pretty much whenever you want, a Certificate of Deposit (CD) is more of a long-term plan. In other words, you cannot use the money deposited for quite a while.

With a CD, you deposit an amount and then decide on a length of time for that stash to grow. This is normally between 3 months and 10 years. You receive a fixed rate of return during this time. The longer your money stays in a CD, the higher your return will be.

As stated earlier, the biggest downside to investing in a Certificate of Deposit is not being able to access the money at your discretion. You can incur a penalty if you decide to cash out your CD sooner than the decided time. You can, however, avail CD loan facility. Through it, you can borrow money against the amount on your CD.

Furthermore, most banks keep the minimum deposit requirement for a CD at $1,000. This tends to create an entry barrier, particularly for new savers that don’t have this kind of money lying around in savings. One more upside is the high rate of interest. This is greater than almost any other savings account or low-risk investment.

Money Market Account

A money market account provides a collection of benefits usually found in different savings accounts. The return is also considerably higher. Like a CD, you have to put in at least $1,000 or more to get started.

However, unlike a Certificate of Deposit, your money won’t be inaccessible for any predetermined time frame. You can utilize debit card and checkbook facilities for easy access to the money. Making emergency withdrawals is possible too.

That being said, federal regulations limit the number of “convenience withdrawals” that you can have. Similar to a savings account, you cannot take cash out more than 6 times a month. Before starting, you should also confirm with your bank if the withdrawals would incur any fees.

Individual Retirement Account (IRA)

An IRA enables you to save money for retirement on a deferred tax basis. It has the following categories.

Traditional IRA

In a traditional IRA, you can deposit money deducted from your tax returns. Any earnings on this amount will be tax-deferred till the time you withdraw it after retirement. In other words, you will be in a lower tax bracket post-retirement and the money will be taxed at a lower rate.

Roth IRA

You can transfer your after-tax income into a Roth IRA where it can then grow tax-free. Moreover, subject to the fulfillment of certain requirements, you can also avail tax-free withdrawals on this money after retirement.

Rollover IRA

A rollover IRA is the transfer of assets from former employer-sponsored retirement plans such as the 401(k), 403(b), etc into a traditional IRA. The reason to do so, is to maintain the tax-deferred status of those assets.

In the end, your decision of picking a savings account should be based on factors like how much money you can deposit right away, how frequently you are likely to need it, what rate of return would be most suitable for you, etc.

Final Word

Saving money is important regardless of debt. Make your hard-earned money work for you by using one or more of our saving options. You’ll have a nice cushion for unexpected expenses, future opportunities and vacations, and more.

Teaching kids about the importance of money in life is crucial. Parents can help develop their kids’ financial habits beginning from a young age by turning everyday activities into learning experiences. As your kids grow and learn, you’ll want to change up the lessons. We make it easy for you by showing you examples of what you can do with your children through the years.

(Age 3- 5)

Introduce Kids to Money

From as young as age 3, introduce kids to simple financial concepts like saving and spending. At this point, you are already teaching them counting, so you can slip in the concept of money too. Play pretend shopkeeper with paper money and teach kids the basics of commerce in a fun way. A piggy bank is also a good idea. Try to get a glass jar so that your child can see the money multiplying. It will be far more effective, if you get three jars. Label them as “Savings,” “Spending” and “Sharing.” This will teach your children how, when and where to use money. Money from the spending jar can be used for getting small stuff like candies. Savings should be kept for something precious, whereas money from the sharing jar should be used for a cause or to help someone. 

(Age 4- 8)

Set Small Goals

Teaching your kids about money can be fun for them. Say your kid wants to get a toy. Teach them how to save up. Tell your child how expensive it is and how much is needed to buy it. Set simple, achievable goals so that your child can enjoy the little triumphs. Many things will come into play in this activity. Your child will learn that every penny counts. The exercise will give a sense of achievement to the kid and your child will learn to work patiently towards a goal.

Set Healthy Examples 

Money habits in children develop by age 7, but these habits take root way before. Children grow up watching parents and learn by observation faster. If you argue about money, it won’t escape them. If you don’t give a second thought to how the money is spent, they will also take it for granted. 

(Age 6-10)

Engage Kids in Financial Decisions

Teach kids how money must be spent. They should understand that money is finite and once you use it, it is gone for good. A fruitful experiment would be to take them shopping. When you buy stuff give the reason behind why you are getting it. Talk to them about your choices and explain that you are picking a certain thing because it tastes the same, but is cheaper so it makes a wise decision. Ask them if you should buy an item and whether it will be useful. This will keep them engaged and get the thinking clock ticking.

(Age 11-13)

Long-term Goals

Introduce complex money concepts because kids begin to develop a sense of reason at this age. They can make smart choices and weigh decisions regarding money matters. Now is the time to train them for long-term goals like getting something they really need other than toys.

Make Them Earn

Instead of giving monthly allowance or along with it, you can give money to them when they do chores. In other words, give them a commission. They will learn how money is earned with hard work and thus will be more mindful of where they spend it. 

Concept of Giving

At this stage, your child should not only understand the concept, but should be practically doing it. Help them pick a charity organization or to donate to a cause close to their heart. Discuss the cause, the worth of donating and how it can make an impact. This will help inculcate a sense of social responsibility in them.

(Age 13-15)

Make them Understand about Compound Interest

Get them a head start on smart investment by making the concept of compound interest familiar. Explain if they invest a certain amount how much interest they will get in a particular time span. Describe it to them in terms of numbers to give an accurate picture.

(Teenagers)

Introduce them to Bank Accounts

Set them a bank account. Encourage them to make regular deposits. Many banks offer this and for children, you do not need a minimum balance or have to pay a fee. This way your child will become accustomed to the workings of a bank and it will enhance their money management skills..

Discuss Wants Versus Needs

Your child must learn where to draw the line. There might be many things they want, but discuss what is important and worth having. Do not give them a free hand to buy whatever they want from their own budget. Priorities should be set right and they must learn to follow them. This will encourage a debt-free life.

(Age 15-18)

Make Your Teenagers Save for College

Now is the right time to make them think about college education expenses and how to make it more affordable. Get them to save a portion for their higher education, so they do not have to take student loans. Discuss how to go about paying the college fee, what can be done in this regard and work out an approximate budget, so your child is prepared for the financial demands of higher studies.

Credit Card Knowledge

This is very crucial, because as soon as one turns the right age, all kinds of credit card offers pour in and it is easy to get lured by them. Do not let your child get burdened with debt at a young age. Teach them all the ins and outs of credit card usage, so they do not become a credit card victim.

Teach Them How to Make Money

Prepare them for the real world by teaching kids about money. The best way to learn how to handle money is to make your own. Guide your kids how they can earn with little jobs or by doing something they love. A college-going child must be into part-time jobs. But make sure your kid doesn’t overdo it and it doesn’t interfere with their studies. Once your child has knowledge of how personal finance works, it will make them more confident about their future financial moves and will set them up for success. 

Conclusion

Teaching kids about money is not that hard. It can start in bits and pieces, sometimes with fun activities and at times with practical experiences. With proper guidance, your kids can be smart consumers and investors, who understand the value of money and use it wisely.