5 Reasons You’re in Debt

Are you in debt and not sure how you got there? Some of these reasons may be the culprit.

1. You justify your purchases

Don’t try to rationalize unnecessary purchases. On some level, we are all guilty of this. Between “I deserve this” and “I need this,” we’re constantly making excuses for spending money. This doesn’t mean you can’t treat yourself, but do it affordably and make sure you budget for it.

2. You refuse to address your debt

The first stage of grief is denial, and dealing with debt can look very similar. Do not ignore your debt. As difficult as it is, you need to face your debt head on. Understand what you owe and create a plan of attack.

3. You are an impulse spender

With next day shipping and one-click shopping, this has never been a more prevalent issue for consumers. These purchases are beyond trying to justify, and that impulse is what is hurting your wallet. Try holding off on some purchases unless you’ve given them some thought, or saved up first.

4. You assume you are going to make more later

A great example of this is taking on student loans. Most students don’t have a choice if they want to go to college, and are now graduating with debt upward of $40,000 in hopes that they can land a job that will pay them enough to pay it back. In other cases, people are making purchases because they think they will be up for a promotion or have a raise around the corner. Even if all of these things do come to fruition, you will still be paying more in interest than if you’d waited.

5. You often dip into savings for expenses

J.P. Morgan once said, “if you have to ask how much it is, you can’t afford it.” When you look at a price tag and immediately start thinking about how to move money around, take a step back. Once that money goes into your savings, it should disappear from your thoughts. The only time you should ever spend money from savings is when there’s an emergency and you need to use your emergency fund.

Article Source: Tyler Atwell for CUinsight.com

How to Pay Off Your Holiday Credit Card Debt in 3 Months or Less

The holidays are a time for joy, family, giving … and racking up debt. More than a quarter of Americans have fallen into debt paying for holiday expenses — and it’s not a small amount of debt either. Overall, the average amount owed among those with holiday debt was more than $1,000. Of course, it’s easy to feel the pressure to spend during the holidays. But you don’t want to let overspending set you back financially in the new year. So if you ended up charging a little too much in 2018, here’s how to quickly pay off your holiday debt and start 2019 off on the right financial foot.

1. Figure Out How Much Debt You Have

To pay off your holiday debt quickly, you need to know what you’re dealing with. That means opening your credit card bills or checking your statements online. Add up all your balances to get a clear picture of how much holiday debt you have.

2. Develop the Right Debt Payoff Mindset

You might feel overwhelmed by how much you owe. But you can find the motivation to pay it off by focusing on the benefits of being debt free. Ask yourself why it is important to you to pay off your debt and what you’ll do with the extra money once your debt is paid. Having a specific goal will give you willpower to pay your debt off and not continue to charge. Maybe your goal is a vacation to Hawaii this summer. Print out a photo of your financial goal and keep it somewhere that you will be forced to look at it daily, and remind yourself that you’ll book the vacation once your holiday credit card debt is paid off and you start to save that money for your trip.

3. Create a Debt Payoff Plan

Another way to avoid feeling overwhelmed by your debt is breaking down the total you owe into manageable amounts. For example, if you have $1,000 of holiday debt and want to pay it off in three months, you’d need to make monthly payments of about $333. If you get paid twice a month, that’s about $166 per paycheck — or $11 a day. You could also make a chart showing how much you need to pay each week or month to eliminate your debt and track your progress.

4. Start as Soon as Possible

You don’t have to wait until you get your credit card bills to start making payments. The more frequently you make payments, the less interest you’ll end up paying and the more quickly you’ll be paid off. If you can, consider making weekly or biweekly payments.

5. Try Paying Off High-Rate Debt First

Focusing on your credit card or loan with the smallest balance first and making only minimum payments on other debt can help you feel a sense of accomplishment and build momentum to pay off bigger debt. However, you could actually pay off what you owe faster by prioritizing your debt with the highest interest rate.

6. Find Expenses You Can Temporarily Eliminate

To pay off your holiday debt quickly, take a look at what you might be able to live without for a few months. You could cancel some subscription services, eliminate lunches out and make coffee at home to free up extra cash for debt repayment.

7. Minimize Costs You Can’t Eliminate

You can’t eliminate all of your monthly expenses, but there are plenty you can reduce. For example, can you call and try to cut your phone or cable bill? Every little bit helps.

8. Make Extra Money for Debt Payments

After the hustle and bustle of the holidays, take time to go through your stuff to find things you no longer need that you can sell for cash. You can sell DVDs, books, clothing, tech items and unwanted gift cards online. You also could pick up a side hustle in your free time to bring in extra money for debt repayment.

9. Make Use of Credit Card Rewards

If you have cash back or rewards credit cards, consider putting them to use to help pay off your holiday debt.

10. Stick to Cash

If you want to pay off holiday debt quickly, you have to avoid racking up more debt. Allot yourself a certain amount of cash each week. Once it’s gone, it’s gone. Not only can using cash help reduce your reliance on credit, but also it might help reduce your overall spending.

11. Create an After-Action Plan

After paying off your holiday debt, you need to take steps to avoid racking up debt again next holiday season. Create a savings plan to have enough cash for the holidays in 2019. Just as you created a plan to pay off debt by breaking down what you owed into smaller payments, you can figure out what you need to save based on 2018 holiday spending. Then, divide that amount by the number of months left in the year until the holidays to know how much you need to set aside each month.

Article Source: Cameron Huddleston for Gobankingrates.com

3 Ways to Stay Out of Debt

Your student loans are paid off, and you finally got rid of that credit card debt. It’s a great feeling to be debt free, and it only feels better when you’ve stayed that way for a while. Going forward, here are three things to be mindful of if you don’t want to slip back into debt.

Be ready for the unexpected: A car wreck could happen in an instant and you could be responsible for car repairs or medical bills. If you’re not prepared with an emergency fund, you might have to put those payments on credit, and then you’ll be right back where you started. Make sure you start saving a little bit every month, so when those unexpected bills happen – you’ll be ready.

Stick to your lists: Always make a list before you go shopping. If you like shopping with your credit card (credit rewards or cash back can be great), make sure you buy only what you intended to. A few extra bucks here and there can cause you to go over budget, and even leaving a small balance on your credit card can get you in trouble over time.

Take a long look at your subscriptions: Whether it’s a gym membership, a streaming service, magazines, or whatever else, make sure you’re really getting value out of any recurring purchase that you’re subscribed to. If you haven’t been to the gym in the last couple years, it’s probably time to stop giving them your money – even if it’s only twenty dollars a month.

Article Source: John Pettit for CUInsight.com

Debt and Dating: Can Poor Financial Habits Keep You in the Friend Zone?

It’s the month of love. And dating is all about discovery. It can be fun to open up and share a few personal details with someone we’re attracted to. In turn, learning more about the other person is a great way to spark conversations that go beyond polite formalities. But while we’re more than happy to show our highlight reels, we all have those things we’d rather not talk about. You know, things like misspelled tattoos. Failed relationships. An affinity for Nickelback. High school, in general. But what about our financial habits?

Is it possible that the way you manage money could have an impact on your relationship prospects? It’s a fair question, and a recent survey of 2,000 millennials uncovered some interesting opinions about debt and its impact on a person’s dating potential.

Does debt matter? Yes. And no.

In short, significant debt is frowned upon, but according to survey responses, it’s not viewed as negatively as being a workaholic. That’s the dating game in a nutshell, isn’t it? Don’t work too little and don’t work too much. Apparently, sensible moderation is attractive. So, what do you do if you’re interested in someone but your finances aren’t as solid as you’d like?

Before you start fumbling for the right words to confess your mountain of debt, don’t get ahead of yourself. Less than 10% of people thought that this kind of information should be shared early on. More than 87% thought it best to wait until the relationship becomes exclusive or moves to the point of sharing household expenses. So, if you’ve just started seeing someone and have more debt than you’d care to admit—relax.  You’ve got time.

To share or not to share, that is the question.

Maybe all this talk about debt and dating has you wondering whether you’d be willing to share your most intimate financial details with a potential partner. The survey designers wondered the same and posed an interesting question: Would you rather tell your partner about your large debt or a pre-existing medical condition? Not surprisingly, the majority of respondents said they’d rather spill the beans about bloated borrowing. But it’s worth noting that more than 39% said they’d find it easier to divulge their most personal medical details.

If almost 40% of people would rather reveal their personal medical history instead of discussing monetary struggles with a potential partner, it’s safe to say debt-related anxiety can impact us emotionally as well as financially. If there’s a takeaway from this survey, maybe it’s the fact that debt and relationships have something in common: Neither improves when ignored.

Three tips for navigating the debt discussion

  • Understand your debt. Rather than lumping everything you owe into one negative category, it’s important to remember not all debt is bad. Home mortgages and student loans are traditionally viewed as desirable, while credit card debt and payday loans can be roadblocks to financial success. Knowing the details of your debt is essential to managing it effectively. (It can also help you sound smarter if, and when, the topic comes up on a date).
  • Eliminate bad debt ASAP. High-interest credit cards, auto loans, and title loans can throw you into a tailspin of making minimum payments that never pay down the principle balance. Whether you cut frivolous spending or pick up a side job, find ways to pay off the accounts with the highest interest rates first.
  • Get a good wingman. When it comes to your finances, there’s no shame in admitting you need help. With debt management tools ranging from credit counseling to low-interest consolidation loans, your credit union can play a pivotal role in your financial success. And judging from many of the survey responses, a solid financial foundation may improve more than just your credit rating.

Need a little help managing your debt and want to sit down with a First Financial representative to help with debt management strategies? Stop into your nearest branch location, email marketingbd@firstffcu.com, or call 732-312-1500 to schedule an appointment. We’ll help you get back on track!

Learn to manage your credit and reduce debt with our easy guide.

Article Source – Survey Data

How to Eliminate Debt Using the Snowball Method

The snowball method is a simple debt elimination strategy that can be employed by anyone of any income level to quickly pay off debt.

Begin by making a chart of all outstanding debt and list your monthly payment.

Then, organize your debt in order of highest monthly payment to lowest monthly payment.

Each month, pay the minimum payment on all debt except the lowest.

For the lowest debt, pay the minimum plus any extra you can. Ideally, pay double (or more if possible) to quickly pay off this loan.

After the lowest debt is paid off, roll what you were paying on it into the next lowest debt. It will be the next loan you pay off.

This accumulation method, like a snowball effect, works because it’s clear and concise.

By tackling the smallest debt first, it’s easier not to be overwhelmed. Once it’s paid off, you’ll feel more empowered to tackle debt after debt till there’s none left!

Article Source: Jennifer Reynolds for CUInsight.com

4 Reasons You’re in Debt

Status.

We’ve all heard of “Keeping up with the Joneses.” It’s that desire to have the things others have that may be too extravagant for your budget. If you go around thinking about the things you feel like you’re missing out on, you’re probably going to put yourself in a financial hole. Take a pause when you feel an impulse-buy coming on, and save yourself a headache later.

Credit cards.

Don’t let your credit cards be in charge (no pun intended). Take hold of your finances and don’t spend money you don’t have. Sure, there are benefits to using credit cards, but they can also be your worst enemy if you’re not careful. Use credit cards to build good credit but once you start racking up debt, it can take a long time to get out from underneath it.

Unforeseen expenses.

Sometimes expenses come out of nowhere. You may feel like you’re doing good, but then your engine fails and you need a new car. Be prepared. Make sure you’re building up an emergency fund, because if you don’t have it when you need it, you’ll end up putting yourself in a deep hole in the blink of an eye.

Life is expensive.

You may think your budget is mapped out and solid (and it may be), but then your best friend gets engaged. The next thing you know, you’re hitting up an ATM machine. Sometimes, you need to spend money celebrating, but plan ahead and you’ll be doing yourself a favor down the road.

Get yourself on track financially with our budgeting guidebook! Need help creating a budget you can stick to? Attend one of our free budgeting seminars during the year or make an appointment with a representative at your local First Financial branch.

Article Source: John Pettit for CUInsight.com