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5 Ways to Make Huge Progress on Your Student Debt in 2020

2020 hasn’t been the year most of us had in mind – especially when it comes to finances. The economy has struggled while many have lost jobs. 

There is one big silver lining for those with student debt: interest rates have been waived through the end of the year. That’s right, in an effort to provide relief to student loan borrowers during COVID-19, interest is being set at 0% through December 31, 2020

This interest slash means that your student loan payments go directly to paying off your principal, which is enormous if you have high-interest rates or a large amount remaining. You can make a dent in your remaining debt now through the rest of the year. Here are five ways to make serious progress.

5 Ways to Make Huge Progress on Your Student Debt in 2020 - calculator and cash image
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1. Make a Plan or Follow a System

You’ve got to have a plan. It’s not rocket science – but it can be challenging to sit down and devise a strategy for paying off your student debt. You need a debt to success system.

Pull out the pen, paper, and budget and chart your path to success. Make a plan and get some accountability to stick with it. Without one, you’re likely to slide, become passive, and delay. If this has been you, let the slashed interest rate be your motivation to get started.

2. Budget Like Your Life Depends on It

Your budget is the linchpin of your success. Budget well, and you’ll be paying the maximum possible each month. Budget poorly, and you may not be paying off a cent.

There are plenty of tools out there to help. Mint, YNAB, and EveryDollar are just a few that could help you budget well.

3. Make Sacrifices

Once you’ve got your budget locked in, it’s time to make some cuts. It’s not fun to think about what expenses you can eliminate – but it’s well worth it. Take a look at your lifestyle and make a list of everything not vital to your life.

Consider cutting out TV/streaming subscriptions, eating out, unnecessary clothes, alcohol, etc.… Make some sacrifices. 

4. Find an Extra Source of Income

Making sacrifices can help you cut expenses. But perhaps the most practical way you can make progress on your student debt is to make more money. Now may not be the best time to pick up a part-time job at a restaurant or coffee shop, but thankfully you have other options.

You could deliver food or groceries while many continue to keep their distance. You could become an Uber or Lyft driver as people begin getting out more. You could even look for online freelance or gig work on sites like Fiverr or Upwork. 

5. Consider Refinancing 

Student loan rates have dropped big time for new borrowers in 2020, but unfortunately, this doesn’t apply to existing borrowers. However, existing borrowers could refinance their student loans into a private loan to take advantage of the current market’s low-interest rates.

This route can be complicated, as refinancing into a private loan means deferring any federal benefits. So it may be a better option in December than it is right now. Talk to an expert to see if this tactic might make sense for you. 

Take advantage of this interest rate situation if you can. Your future self will thank you.

Study Finds American’s Most Burning Financial Questions

The corona virus pandemic has jolted people into thinking more about how they manage their finances. Even those who still have income are asking serious financial questions and considering how to save more given the uncertainty of the future. 

A recent study researched what American have been searching for during the pandemic — and the results stuck out to us. 

Study Finds American’s Most Burning Financial Questions - man searching for financial help online
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Increase Demand for Basic Necessities

Feeding America, a network of 200 U.S. food banks, says that it projects a $1.4 billion shortfall in the next six months. This shows how much the coronavirus has impacting American’s ability to afford a basic necessity. 

And, the study backed that up with an increase of searches around how to get food stamps and where local food banks were located. Top searches included: 

  • Emergency Food Stamps: up by 130%
  • How to Apply for Food Stamps: up by 50%
  • Food Banks Near Me: up by 50% 
  • Apply for Food Stamps: up by 50%
  • Food Pantry Near Me: up by 40%

Experts don’t see the demand slowing down until the unemployment rate begins to drop. 

Americans in Pursuit of Financial Literacy

Online learning is nothing new. However, the financial impact of the coronavirus has catapulted Americans into wanting to learn more about how to manage their finances. Demand for finance-related courses is up by 200%. 

  • Online Finance Courses: up by 200%
  • Foundational Finance: up by 170%

As people have learned to accept the new normal, millions have turned to the internet to learn. There are a wealth of opportunities to learn more about investing, managing finances and entrepreneurship. 

The CEO of Skillcrush, Adda Birbir, said that she’s seen an uptick in interest in online learning since the coronavirus started, specifically from those who were working in the hospitality industry or the performing arts. And, that trend is growing. With the rise of unemployment, Americans are interested in learning new skills that can help them in their life and career. 

Uncertainty Around Affording Housing

The study found that a majority of searches around mortgages were related to how to afford paying it including terms like “deferment,” “forbearance,” and “assistance.” This was a category that had the most increase in searches month-over-month with “rent and mortgage cancellation act” up by 5,000%. The top trending search terms were: 

  • Rent and Mortgage Cancellation Act: up by 5,000% 
  • Forbearance on Mortgage: up by 500% 
  • Mortgage Deferment: up by 300% 

Overall, the study on what Americans are searching for during the pandemic reveals their most important financial questions and tells us that people are more interested than ever on how to save, manage and make money. 

Sarah ArcherSarah is a writer at Money Crashers who covers money management tips and the financial impact of the pandemic. When she’s not investigating personal finance strategies, you’ll most likely find her outdoors hiking, biking or running.

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Personal Finance Tips for Business Owners

Being a business owner means balancing your business’s finances and your personal finances. As well as making sure your business is bringing in enough money, you need to keep your own finances healthy. If you’re not personally doing well financially, it will make it difficult for you to continue running your business. Entrepreneurs can face some unique challenges because they take on a lot of risk, and they don’t have any support from an employer. If you’re trying to run a business while also fulfilling your own financial goals, there are a few key moves that you can make.

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Have an Emergency Fund

An emergency fund is the savings that you can rely on when you have unexpected expenses. Everyone should have one to help cover costs, such as home repairs or medical expenses. It’s even more important for entrepreneurs to have an emergency fund if they rely on income from their business. If your business has a slow month or anything starts to go wrong, you might be unable to pay yourself your usual salary. An emergency fund will help to keep you afloat. Building a fund worth at least three to six months’ expenses will give you a strong safety net.

Be Careful with Credit

It’s important to manage your business credit, but you also have to pay attention to your personal credit. It’s best to stay out of debt if you can and to balance any credit that you do have to make sure you’re not borrowing too much. Keeping your credit utilization ratio below 30% is smart. You should try to maintain a clean and solid credit record, so keep up with any payments and avoid missing any, even if you can only pay the minimum payment. This will help you if you want to secure any long-term debt, such as a mortgage, which can be tricky if you’re a business owner.

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Prepare for Your Future

Many entrepreneurs don’t think enough about their financial future. They might feel they can’t afford to save for the future or simply don’t consider it because they don’t have the benefits they might get from an employer. But by accessing some advice on retirement planning for entrepreneurs, you can start getting set up for your future. You can still be prepared for your future and ensure you will be able to retire, even if you don’t have help from an employer.

Give Yourself a Pay Raise

As your business grows, you can consider whether you can afford to pay yourself more. At certain times, it could be the right moment to give yourself a pay raise. Of course, you don’t want to do this too soon, when it’s also important to have money to invest back into your business. However, as your business grows, make sure that you are rewarding yourself for your hard work too. You deserve to benefit from the growth of your company.

Although you need to spend a lot of time working on your business, don’t forget about your personal finances. It’s important to pay attention to them too.

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Worried About Missing A Credit Card Payment?

Forty-six million Americans (almost 1 in 5 adults) think they will miss at least one credit card payment due date in 2020, according to a new WalletHub credit cards survey released today. This indicates that cracks in the foundation of consumers’ finances are beginning to show, under the strain of mounting debt. The average American household already owes a near-record $8,700 to credit card companies. In light of that, WalletHub’s survey examined people’s experiences with late payments and their attitudes regarding the likelihood of future encounters.

Worried About Missing A Credit Card Payment? - money worries image

Why do so many people expect to miss credit card due dates in 2020?

“The reason that roughly 46 million people expect to miss at least one credit card due date in 2020, according to WalletHub’s latest credit card survey, is that we’re stretched too thin – in terms of both time and money,” said WalletHub CEO Odysseas Papadimitriou. “U.S. credit card users started 2020 with more than $1 trillion in credit card debt. Up until this point, we’ve managed to keep our accounts in good standing at historical rates. However, expecting to miss due dates is a sign of cracks in the foundation. And not only do 18% of people expect to miss at least one credit card due date in 2020, but 30% us say that not having enough money is the reason we’re most likely to be late.”

What are some tips for credit card users concerned about late payments?

“The easiest way to avoid late payments, and the fees and credit score damage that can accompany them, is to set up automatic monthly bill payments from a checking account for at least the minimum amount due each month. This will at least remove forgetfulness as a potential cause,” said WalletHub CEO Odysseas Papadimitriou. “Automated payments won’t do much good if you don’t have enough money in your bank account, however. So careful budgeting and saving are key, too.”

Is it worth asking credit card companies to waive late fees?

“Credit card users who almost always pay their monthly bills on time but fail to do so once in a blue moon should definitely try to ask their credit card company to waive any associated late fee. It really can’t hurt, and 9 in 10 people who’ve tried in the past say they’ve been successful at least once, according to WalletHub’s new credit card survey,” said WalletHub CEO Odysseas Papadimitriou. “This is actually one reason why credit cards that emphasize ‘no late fees’ as a feature are sometimes overrated. You might get that on other cards, anyway, just by asking. Plus, ‘no late fee’ often actually means no fee the first time you miss a due date. After that, all bets are off.”

Key Survey Findings

Credit card issuers are forgiving…if you ask nicely.

Nearly 9 in 10 people who have tried to get a credit card late fee waived were successful. Women are 18 percent more likely to have tried to get a fee waived than men but are also 2 percent less likely to have been successful.

Payment priorities change with age.

People aged 18 to 44 are most worried about missing credit card payments. The 45-59 demographic is most concerned about their mortgage, while those over 59 put tax payments as their biggest worry.

Luxury can lead to lapses.

People with high income are almost twice as likely to miss a credit card payment due to forgetfulness as people with low income.

Men and women react differently to fees.

When asked about their attitudes toward getting a late fee, women are 39% more likely than men to feel “punished.” Men are twice as likely to feel “indifferent.”

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Money Myths That Can Cost You Dearly

We’re all doing our best to drive down the cost of living and make our money work harder for us. In an uncertain economic climate, it can seem like no matter how hard we work or how much overtime we put in we never have enough to go round. The good news is that there’s a lot of advice out there which can help you right the ship that is your household finances, both from online sources and from friends and family. The bad news is that for every piece of knowledgeable and insightful information, there’s half a dozen myths based either on economic principles that just don’t hold water in this day and age or simple wrong-headedness. Here we’ll look at some money myths which will not only hinder the growth of your capital… they can actually wind up costing you dearly…

Money Myths That Can Cost You Dearly - female with twenty pound notes
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Service providers will reward your loyalty

A healthy household budget is the key driver of your financial health. And that means accounting for all the household’s costs and doing what you can to keep them manageable. However, when it comes to services like your car insurance, home insurance, utilities, phone and broadband, don’t make the mistake of assuming that service providers will reward your loyalty. In fact, they’re likely to reserve the best deals for new customers and charge you inflated prices for rolling over. 

Why? Because acquiring new customers costs them more, and they’re counting on you to do nothing. Don’t reward their greed!

Bad credit = bad options

The old maxim “neither a lender nor a borrower be” is hard to live by in the 2020s. And while there are occasions when borrowing credit is unavoidable, it can quickly become a slippery slope. If you find yourself needing to borrow more than you can realistically pay off, you may find yourself with a less than stellar credit score

Still, don’t make the mistake of assuming that having bad credit only means you have bad options. Whether you’re looking for car credit or payday loans, it pays to do your homework and compare the offerings of different providers. Don’t assume that bad credit means you only have bad options.  

Investment is better than saving

Saving is the most risk-free way to build your wealth… but it’s also undoubtedly the slowest. Especially if you’ve had the same savings account from your high street bank since you were a kid. Those lured in by the promise of fast and sizable returns can certainly see appeal in the world of investment. But with the potential for great gains comes risk. And unless you know exactly what you’re doing, the value of your investments can plummet overnight. It may be better to move to a better savings account with a healthier rate of interest than ditch savings altogether for investments.

Renting is dead money

Finally, it’s time to put the economic fallacy to bed that rending is dead money. Firstly, a roof over your head is always worth paying for. Secondly, with property ownership comes a level of responsibility that not all households are ready for. Carrying out household repairs and maintenance can create a huge burden on your household’s finances. At least when you’re renting, all that stuff is your landlord’s responsibility.

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