How To Manage Your Finances: Tips For Everyday Life

manage your finances

Overcoming financial challenges can be very difficult. Often, debt leads to more debt and it can seem impossible to meet your monthly expenses and save for the future. While a lottery lump sum payment would be welcome, you can get out of debt yourself by learning to manage your finances. Follow these tried and true principles to use your own earning power and self-discipline to transform your financial situation:

Create A Budget
A budget is key to effective financial management. Without a budget, it’s easy to forget about necessary expenses and saving. However, with the myriad of expenses and debts that the modern adult accumulates, this can mean that you’ll have no money left over to spare, or owe money at the end of the month.

A budget can help. First, calculate the money you earn in a month. Then divide it into categories: fixed costs should be the majority of your budget, then savings and guilt free spending money should comprise the rest. Adjust and add more categories for your personal situation — maybe 5% a month goes to your student loans, or 10% to investments.

Learn To Use Credit Cards — Without Going Into Debt
Credit cards are extremely useful tools, especially for people who don’t get paid every week, but in many ways they are a recipe for disaster. The average household carries $15,355 in credit card debt, which can seriously hurt your credit score and ability to save and earn if unattended to. The average home has 13 cards and the average consumer has 3.5 credit cards — often using one to pay off the other.

Before you get a credit card, educate yourself about their policies and late fees. Don’t think of a credit card as cash. If there’s an $1,000 limit on your card, remember that you’ll have to pay back that money. Stick to your budget and try to think of your credit card only as a way to build yourself better credit, and therefore more financial accountability.

Save
For those rainy days where all else fails, for big investments and expenses like school tuition for you or your kids, for big ticket items that you don’t want take out loans for — these are just some the reasons, besides retirement, why saving is important. Saving consistently also helps with the maintenance of your budget. Knowing exactly where some of your monthly money is going will help make sure the rest of it is going where you allotted it originally.

Learning ways to reduce debt, and manage your finances in many ways requires a serious change in lifestyle. Remind yourself of the freedom offered by financial independence, and embrace the mindset while you embrace your budget.

The Increasing Costs of Renting vs. Buying a House

There comes a time in one’s life when moving doesn’t just mean the flurry of a few weeks of apartment or house viewing and packing some boxes. Instead, it will elicit a much larger decision: keep on renting or decide to buy.

Owning a home offers much more autonomy and freedom than renting does — structural decisions and property management are entirely up to the owner. There is also the security of never having to worry about having a place to live, along with the pride in ownership and the value that a house will accrue over time. But before you take the plunge, it is wise to consider a cost-benefit analysis of the true costs of renting or buying, so that you can make the right decision.

In May 2015, sales of existing homes increased to their highest pace in six years, and first time buyers made up 32% of the sales, as reported by the National Association of REALTORS. But, even as the housing market continues to improve, millions of Americans remain stuck in rental housing — often unwillingly.

According to Harvard University’s Joint Center for Housing Studies, the U.S. homeownership rate has been falling for eight years. From a peak of 69% in 2004, the rate went down to 63.7% during the first quarter of 2015. Negative effects of this decline in homeownership hit the rental market particularly hard; on average, the amount of new rental households has increased 770,000 per year since 2004. The years 2004 to 2014 became the strongest decade of rental growth since the late 1980s, credited in large part to the subprime mortgage crisis that severely damaged the U.S. and world economy and caused a severe recession in 2008.

Before you assume a mortgage, it’s important to make sure you have safeties in place and a repayment plan established. Otherwise, you could be part of another housing market crash — in addition to losing your home and destroying your credit.

Indeed, owning a home is not without its challenges, financial foremost among them. Owning a home costs the average American about $1,459 a month — that’s $17,500 a year. The 2015 fair market rental data, released by the U.S. Department for Housing and Urban Development and analyzed by RealtyTrac, showed that the fair market rent for a three-bedroom property in 2015 will require an average of 27% of a median household income. A median-priced home would require an average of 25% of median income, based on median sales prices from November. Considering other costs for a family (school tuition, medical care, and groceries), the costs of a home leave little disposable income for a typical family.

Renting, on the hand, does leave a little more wiggle room when it comes to expenses. Although many of the freedoms and securities of homeownership are not available, monthly rent is predictable, and there is no need to worry about unexpected repairs. The freedom to leave when your lease is up in many ways offers more control and flexibility — you get to decided whether or not a place suits you.

Renting and homeownership are two very different approaches when it comes to one’s living situation and are suited to particular times in one’s life and financial situation. Considering all the facts, including how the nation’s housing market is doing in addition to your own needs, can help make the decision of whether or not to keep on renting or to buy a house.
buying a house

5 Ways To Reduce Personal Debt

ways to reduce debt

Consider this: the average American household is paying a total of $6, 658 in interest every year. Between the cost of owning a home, driving a car, student loan debt, and more, it’s easy to get in over your head. Worst of all, things can go even further south quickly. About 20% of credit reports are hurt by overdue medical bills.

If you or your family woke up one day in debt, and want to get out, don’t lose hope. You can consult a debt specialist, an expert who knows how to reduce debt. But if you are looking to start small, here are a few small changes in your life to slowly lift yourself out of debt.

1.Reduce spending
This seems like a no-brainer, but you’d be surprised at the amount of people who don’t change their lifestyles despite being in massive debt. By spending a little less and paying off a little more each month, your debt will decrease steadily every year. Every little bit adds up. Some ideas include: canceling magazine subscriptions, packing lunches from home, buying in bulk, skipping expensive outings like movies or shows, and programming the thermostat for timed heating or cooling when you’re not home. Make sure you use the money you save to pay off biggest loans with the highest interest rates.

2.Clean out your house
Having a massive garage sale will leave you a little more flush, and feeling better about the state of your home. Reevaluate what you really need and why you’re holding onto certain items. Ask yourself if you would you rather own a particular item or be in debt, and then act accordingly. Using this bit of extra income for daily expenses can help save money and ultimately reduce debt.

3. Refinance
Look into lower interest rates on your mortgage or car loan by refinancing. Bad interest rates can increase the burden of a loan, and can force people to pay several times more than the premium over the loan’s lifetime. Believe it or not, the average household pays $950 in interest every year! Remain on the lookout for opportunities to reduce your interest rate — boost moral by doing some before and after calculations to see how much you ended up saving.

4. Shop around for insurance
Whether it’s auto, home, or life insurance, you may miss out on special deals and lower prices if you switch to a different provider. Most people don’t think twice about insurance once they have it, and even though it’s necessary, it could be one of many ways to reduce debt for you and your family.

5. Invest your money
Overcoming financial challenges takes time, and while it seems counter intuitive to spend money when you have looming loans, investing in your future is likely to pay off big time later on. Consider getting trained for a certain field, going back to school, or investing your money in a business or fund.

There are countless other ways to reduce debt, but taking small steps is a surefire way to improve both your lifestyle and pay back loans without making huge changes.

If You Have Too Much Debt, Selling Your Annuity Might Be the Best Option

annuity

If you happen to one of the many Americans hoping to sell structured settlement or annuity payments, then chances are you didn’t even really know what the settlement or annuity process would entail. Naturally, many find the inability to use their money when they want to frustrating. This can be a big problem if dealing with a lot of debt.

If you feel like you’re the only one struggling to pay bills on time, don’t worry. You definitely aren’t. Almost one in every five Americans considers themselves to be buried in debt at any given time, and one in four adults says that they have trouble paying their bills on time every single month.

Believe it or not, the average American household has around 13 payment cards, including credit, debit, and bank cards. Knowing that, it makes a little more sense that the average household has around $15,355 in credit card debt. Add in mortgage payments, car payments, and student loan payments, and you’re looking at about $129,579 worth of outstanding debts in the average American household.

Selling your structured structured settlement, annuity settlement, or lottery annuity won’t solve all of your debt issues immediately. You’ll still have to consider things like debt repayment plans, financial management skills, and possibly even investment options. This will make sure that you’re handling your influx of cash wisely.

Selling your annuity can help you take down your debt, providing you with the foundation you need to start building up better credit. This is exactly why so many people choose to sell their settlements or annuities.

Of course, there are plenty of other reasons why you might be considering selling your annuity! We’d love to hear about your experiences dealing with an annuity or settlement plan, and also what’s motivating you to consider selling.

The Hard Facts About Debt

financial challenges

One of the most common burdens and experiences that Americans share is that of being in debt. Altogether, Americans owe more than $11.9 trillion and nearly one in five Americans would qualify themselves as being in “debt hardship.” Not everyone will receive lottery winnings or surprise inheritances that can lift them out of what can often become crippling debt, which is why it’s important to know hard and fast truths about how owing money could affect you.

Some things you might not know about the financial challenges of today:

In an average household…
The average American household is paying about $6,600 in interest on loans per year. Even though they hold 13 payment cards, they aren’t earning fast enough to get ahead on loans, inevitably creating hardship in the face of already existing financial challenges.

It’s hard to recover…
Even though Americans’ household incomes have grown by 26% in the past 12 years, inflation has also set in, and the cost of living has increased by 29% in the same period. Over 40% of families spend more than what they earn, and with some necessary costs like food and housing, it is impossible to reduce spending past a certain point.

There is a stigma…
Most Americans agree that there is a greater stigma surrounding credit card debt than any other type. Being socially discriminated against for sinking into an often unavoidable situation could have a role in perpetuating the debt cycle. The social consequences can pull individuals deeper into hopelessness when it comes to getting out of debt, often making the situation worse. Denial resulting from humiliation could prevent people from seeking professional debt help.

No one in debt is alone…
If you or someone you know is struggling to pay off your debts, it might be strangely encouraging to hear that the average adult owes $3,761 in revolving credit to lenders. Consider communicating with friends or family — at least some of whom are bound to be in similar situation — and asking for job search help or advice.

All hope is not lost…
By seeking help from a professional debt specialist, declaring bankruptcy, or deciding to get cash for a structured settlement (among other options) you are taking steps to get out of debt and overcome financial challenges.