3 Tips to Keep Debt Away

Sometimes we build up debt due to emergencies or situations that are beyond our control. Sometimes we just buy too many things we don’t really need. Here are three things to think about when it comes to your finances and how you can avoid debt as much as possible.

Set financial goals: Goal-setting is very important when it comes to your money. Your budget should be an easily attainable financial goal for you. If you’re having trouble staying within a budget, it’s probably a good idea to take a closer look at it. When it comes to saving money, have a defined purpose. Every time you get paid, set up your direct deposit to put money into retirement and an emergency fund automatically. This way you won’t physically be transferring the money and convincing yourself that you can do without putting anything into savings this month. If there is a large purchase you want to make or a vacation you want to go on, open a savings account for that wish list.

Have more self-control: It’s easy to buy something impulsively (especially when it’s inexpensive), but those small purchases can really add up if you’re making them all the time. You need to start saying no to yourself and be really disciplined if you want to be free of debt. Having new things is great and exciting, but are those items worth going into debt over?

Ignore pay raises: If you budget your paycheck as if you’re making less than you do, it’ll be easier to save for the things you want in the future. Plus, you won’t have to put yourself in debt to get them. It may not always be easy to cut back, especially if you have a big family, but every little bit helps. And when pay raises come, redirect those additional funds to your savings account and forget all about them!

Article Source: John Pettit for CUInsight.com

3 Ways to Consolidate Debt

Debt can be overwhelming, but there are definitely ways you can consolidate. The idea of putting all of your debt in one place, with one simple monthly payment can be a big relief.  So, what are your best options for consolidating your debt? Here are three to consider, that you may not have thought of.

A balance transfer credit card: If you’re looking at this option, you’ll want to first make sure that you find a card that will have a high enough limit to contain all of the debt you want to consolidate. If you can find a card with a zero percent introductory rate, this is ideal for paying off debt. If you have $3,600 in debt, and zero percent interest for 18 months – you can pay $200 a month for 18 months, and be completely debt free without paying a cent of interest. However, be advised that if you continue to use this card and rack up even more debt and you don’t pay it off in time – that interest rate could potentially sky rocket at the end of 18 months, and you could really dig yourself into a hole (which is what you were trying to get out of in the first place). This option only works if you stick to your plan, don’t use this card, and continue to pay off your debt during the introductory period.

You also want to transfer your existing balance(s) to a credit card that doesn’t have a balance transfer fee. First Financial has 3 great Visa Credit Card options that have no balance transfer fees and no annual fee either!* Learn more here.

A home equity loan: After the introductory rate on a balance transfer credit card ends, the interest rate can be pretty high – as mentioned above. A home equity loan uses your home’s appraised value and what is still owed on your mortgage, and will provide you with a lump sum that you will agree to pay back over a set fixed rate term (this type of loan is also called a second mortgage). The main benefit of a home equity loan, is that the interest rate will be much lower. You will want to be careful if you go this route – if you default on the loan, you could put your home at risk.

To learn more about First Financial’s home equity loans and lines of credit options, and apply online 24/7 – click here.**

A personal loan: If you don’t like the idea of risking your home (or any other form of collateral), perhaps a personal loan might be the best option for you. If you have a good credit score, you’ll receive a favorable interest rate that is often lower than a credit card’s. If you think this may be a good option for you, ask your local credit union about any debt consolidation loans they have available.

First Financial’s personal loans have a fixed monthly payment, flexible terms, and are a great way to save money instead of opting for the high cost of retail financing.+ Get started here.

*APR varies up to 18% when you open your account based on your credit worthiness. These APRs are for purchases, balance transfers, and cash advances and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fees. Other fees that apply: Cash advance fee of 1% of advance ($5 minimum and $25 maximum), Late Payment Fee of up to $25, Foreign Transaction Fee of 1% plus foreign exchange rate of transaction amount, $5 Card Replacement Fee, and Returned Payment Fee of up to $25. A First Financial membership is required to obtain a VISA Credit Card and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties.

**First Financial will waive closing costs at inception of loan. If loan is terminated within the first 2 years of opening, closing cost waiver is revoked and the borrower(s) will be required to pay back closing costs in full to FFFCU. A First Financial membership is required to obtain a home equity loan, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. See FFFCU for details or visit firstffcu.com for all current rates. Nationwide Mortgage licensing System & Registry ID # 685814

+APR = Annual Percentage Rate. Actual rate will vary based on creditworthiness and loan term. Subject to credit approval. A First Financial Federal Credit Union membership is required to obtain a Personal Loan, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan.

Article Source: John Pettit for CUInsight.com

3 Obstacles You’ll Encounter While Paying Off Debt

Debt can feel like a mountain that can take years to climb. The only thing you can do is take it one day at a time. There are some obstacles you may encounter on your way however, so here are three to keep an eye out for – and to make sure you don’t continue to fall victim to your debt and get yourself offtrack.

The unexpected: When you’re trying to pay down debt, you may be tempted to push your budget to the limit along the way. While it’s great to be more frugal, never forget that unexpected expenses can come out of nowhere. Your car may be great today, but tomorrow your transmission might call it quits. If your emergency fund isn’t in great shape, make sure you’re still setting aside a little extra cash each month for any expenses that might pop up.

The good life: It’s nice to have a budget that allows you to treat yourself every now and again, but if you’re serious about paying down your debt, you may need to take a closer look at your budget and reassess. There may be some areas of your budget that will have to be cut while you’re attacking your debt mountain. Need a budget guide? Check out this one.

The hole in the boat: If you’re not careful, paying down debt can sometimes be a little like bailing water out of a sinking boat. You’re on your way, your debt is decreasing a little each month, and then suddenly you find a reason to justify a purchase that puts you back to where you were a few months ago. If credit cards are the cause of your debt, you need to either cut them up or put them away until you’re ready to begin a new, healthy relationship with them. When you’re making a plan to tackle your debt, make sure that you and your significant other are also communicating so that you’ll be on the same page about spending habits.

Be sure to check out our debt payment financial calculators here. The most important thing to remember is to stay the course and don’t fall into any traps that will set you further back. Be strict with your spending and stick to a budget!

Article Source: John Pettit for CUInsight.com

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