What Are the Advantages of Going Cashless: Millennial Mindset

A man scanning a QR code on mobile app

A cashless society can seem like something of the future but society is already moving in this direction. There are several powerful forces that are behind the move to a cash-free society, including large financial service companies and governments. Even the critics of a mainstream financial system also favor doing away with cash.  There are several nations that already making the push to eliminate cash with the push coming from both the government and consumers. India and Sweden are two examples of nations going cashless.

Advantages of Going Cashless

We are living in a “hi-tech” world and today money flows faster than ever. Carrying money around or to be afraid to lose your money when you travel is a past. There are many more advantages of going cashless for both an individual and a business.

Advantages of Going Cashless for Individuals

There are plenty of advantages of going cashless that individuals should be aware of.

Convenience

The ease of conducting a cashless financial transaction is one of the biggest motivators to go digital. You won’t need to worry about carrying cash around or line up for an ATM withdrawal. It can be safer if you are traveling. You also have the freedom to perform a transaction whenever and wherever you want. You don’t have to be present to pay as you would if you were handing over cash.

Track Spending

You can pay with cash without there being a record. If transactions are on the record because you are going cashless then it’s easy for people to keep track of spending. This can be useful when filing income tax returns and if someone has some additional scrutiny on how they spend money. It can also be easier for budgeting.

Better Budgeting

One of the advantages of going cashless is that it’s easy to see exactly where your money is going so that you can keep tabs on your spending. Various tools and apps will help you analyze your spending patterns and give you signs over the months. Having a better budget can open up a lot of different financial goals for you, whether that is buying a house, getting out of debt, saving for an emergency fund or retirement, or getting involved in investing.

Lower Risk

If you lose your cash, it can be impossible to get it back. However, it can be easy to block a mobile wallet or credit card remotely if you lose it. A loss of cash can cause a great inconvenience, especially when traveling. Some futuristic cards are even evolving to use biometric ID capabilities, such as eye scans and fingerprints, which are much harder to copy, so cash can be a safe option. If you cancel your card before any fraudulent transactions are made then you won’t even lose a penny. Even if there are fraudulent transactions made, the card company will usually reimburse you for purchases you didn’t make.

Build Up Your Credit

Having good credit makes it easier to get a loan and it takes a while to get a good credit score. In order to start building your credit, it is best to begin making purchases on a credit card. When you start putting purchases on your credit card today and then pay off your balance in full each month, it’s easier to make some big financial decisions in the future.

Rewards Points

Businesses may reward you for going cashless. For example, Starbucks will give you a free drink after you earn a certain number of rewards points, which you get by paying with their mobile app. Many credit cards also offer you rewards on your purchases.

It’s Cleaner

Nobody is cleaning the cash and bills and coins are covered in bacteria. With today’s payment machines, you are likely the only one touching your credit card.

Advantages of Going Cashless for Society in General

While there are plenty of advantages for individuals, there are also advantages for society in general.

Less Crime

Cash is easy to steal. Illegal transactions typically take place with cash so there isn’t a record of the transaction and the seller can be sure they are getting paid.

Paper Trails

Financial crime is much harder with a paper trail. It’s hard to evade taxes and hide income if there is a record of the payments you receive. Money laundering is harder if funds are always available.

No Cash Management

Top 10 cashless countries

It costs money to make coins and print bills. Businesses need to be able to store money or get more when they run out, as well as deposit cash when they have too much on hand. Moving money around and still protecting the large sums of cash could become a thing of the past.

International Payments

When going to a foreign country, you may need to get the local currency. Payments are easier if both nations will handle cashless transactions. Instead of having to figure out a different form of currency, a mobile device can handle everything for you.

Advantages of Going Cashless for Businesses

There are plenty of advantages of going cashless that businesses might enjoy.

Faster Service at Checkout

Using cash can slow down how fast you can serve your customers and this then increases your staff overhead. If your customer is getting out their wallet or purse to sort their bills and get change, things take longer. A credit card or contactless payment option is quicker and more efficient. Human error can be costly when it comes to making change. Giving out incorrect change adds up over time and this issue is removed when you go cashless.

Easier Financial Management

Adding up cash and then checking it against receipts and taking it to the bank adds up. You also need to collect and store change. Debit and credit card transactions are automatically reconciled and paid into the bank account. This frees up finances and reduces the administration overhead on staff.

Save Time and Money

Even though businesses do have to pay a fee for a credit card transaction, there is the fee to pay employees to count cash. These extra hours add up and by going cashless, you can actually scale up instead of spending time and money on cash management.

Reduced Risk of Theft

It may not be an issue for your business, but one of the main advantages of going cashless is that it lessens the opportunities for theft. There are plenty of stories of employees lifting a little extra money from the register, as well as criminals breaking in. A cashless transaction system reduces the chances of money loss.

Appeal to Customers That Don’t Carry Cash

Millennials and the younger generations are more attracted to digital wallets and other payment methods and aren’t likely to carry cash. By emphasizing that you appeal to these customers, you are seen as a more innovative business, which can make you more attractive to these customers as they look for products and services.

Businesses do need to be mindful of going completely cashless since it can be seen as discriminatory. It may even be illegal in some states and cities. There are common reasons why people may not have a bank account, which makes it harder to go cashless. However, if a business does want to go cashless to take advantage of the benefits then it’s still possible to accept cash while encouraging plastic and cashless payments. For example, install a cashless kiosk that can help speed up the ordering process or have one cashless location. Another tactic for the encouragement to go cashless for your customers could be to implement a rewards program for customers that pay with a card.

What Does a Cashless World Look Like?

Without cash, payments will be electronic. Instead of coins and paper money to exchange value, you then need to authorize a transfer of funds to someone else or another business. The logistics for a completely cashless society are still developing but there are already some hints on how this can evolve.

Debit and credit cards are some of the most popular cash alternatives that are being used today. Cards online aren’t enough for a fully cashless society so mobile devices are also a primary tool for payments. Online card shops and finance sites can help you choose the right card for your needs.

Electronic payment apps, such as Venmo or PayPal, are useful for P2P payments. In addition, there are some bill splitting apps that allow friends to split bills in a fair and easy manner.

Mobile payment services and mobile wallets can provide cash-free and secure payments. In developed nations that don’t use cash as often, a mobile device is usually the most common tool for payments.

Cryptocurrencies are joining the discussion. These can be used for money transfers and then introduce innovation and competition that can keep costs low. There are currently risks and different regulatory hurdles that can make them hard to use for most consumers so they aren’t ready for widespread use.

Disadvantages of Going Cashless

While it’s important to note the many advantages of going cashless, it’s hard to talk about the advantages of going cashless when there are also some disadvantages to be aware of.

Privacy

Payments electronically do mean less privacy. You could trust the organization that handles your data, and you may not have anything to hide, but payment information can turn up in ways that are hard to protect. Cash allows you to spend money and get funds anonymously so you have more privacy.

Hacking Concerns

Hackers are the bank robbers of the electronic world. In a cashless world, it can be much scarier if someone invades your account since you don’t have different ways to spend. Even if you are protected, there are still inconveniences after a breach.

Technology Issues

Outages, innocent mistakes, and glitches can cause issues and may even leave you with no ability to buy things that you need when you need them. Merchants won’t have a way to accept payments from a customer if their system malfunctions. Even something as simple as a phone battery that dies means you are penniless.

Inequality

Those who are poor can have a harder time going cashless. They won’t have expensive devices that are often used for payments and those that operate in an informal economy don’t have ways to receive aid or get paid.

Fees

If you are forced to just choose between a few payment method options then you can’t expect financial institutions to give you a good deal. Payment processors could cash in on high volumes and eliminate savings that come from less cash handling.

Overspending

When you buy something with cash, you feel the pain of every dollar you spend. With an electronic payment, it becomes easier to just swipe without noticing how much you are actually spending and you will need renewed efforts to manage spending so you don’t overspend.

Negative Interest Rates

When money is electronic, the government charges banks a negative interest rate. They may pass this on to customers in the form of a fee, but there is then no longer any cash to pull from. Dropping the interest rate is usually a move to stimulate the economy but this means there is less purchasing power.

How to Start Going Cashless for Individuals

With so many advantages of going cashless, you may begin to wonder how you should start to go cashless.

Have Different Options

You want to make sure that you have multiple options, such as credit cards or debit cards, in order to make your purchases. It also helps to have cards from different credit card companies in case a store doesn’t accept Visa or American Express. Some stores don’t accept certain brands because the processing costs are higher.

Choose a Bank with a Good Mobile App

You want a bank that has a great online service. This will make it easier for you to check your balance or even make purchases using your app. The better the technology, the more options you have to manage your money. You also want to be prepared with payment apps, such as PayPal and Venmo. These apps help you pay family and friends and you can even use them at some businesses that don’t accept cards.

Be Prepared to Be Turned Down for Certain Purchases

Some vendors or stores will still only accept cash. Others may not accept card payments for purchases that are less than a certain dollar amount. There could be a fee to use a credit or debit card instead of paying with cash.

Consider Carrying Some Cash for Backup

Even if the goal is to go cashless, in today’s world you still may need to consider carrying some cash. Your child’s teacher may not accept a credit card to pay that bill so your child can go on a field trip. Having access to a debit card or ATM should give you some options to get the cash you need in a pinch.

Consider Your Budget

The cash/envelope budget is a popular way to get started on a budget and to better keep track of your money. This doesn’t mean that you can’t have a successful budget without using cash. If you have been using this budget and want to move toward being completely cashless then you need a system that works for you. If you don’t already have a paper and pen or electronic budgeting system in place, now is the time to start.

Going Cashless for Businesses

Before businesses should go cashless, one of the most important things to know is the customer and if they would be comfortable with this change. By going cashless, it’s possible to lose the elderly or low-income customers whose only form of payment is cash. Some businesses have been able to go cashless successfully, while others have received boycotts and complaints. It’s best to have some workarounds for customers if all they have is cash so you don’t need to lose them as a customer. Businesses should begin preparing for a cashless society and start to take debit and credit card payments, which has never been easier.

Ways to Go Cashless

There are different ways to go cashless.

  • Mobile Banking: You can use your smartphone to access your bank anytime from anywhere. When you use the app to check your balances, you can also make credit card payments on the go. Mobile apps don’t store your account information so it is secure and safe to use
  • Debit and Credit Cards: These are probably the easiest ways to go cashless. There are built-in safety features that make them safe to use
  • Mobile Wallet: A mobile wallet on your phone is an app that you use to pay retailers, service providers, and e-commerce sites
  • Online Payment Services: Online payment services offer one-stop solutions for different types of payments. For example, you can pay your taxes, credit card bills, or other bills
  • Online Banking: Checks are not the only way to pay through your bank account. Online banking services give you several options to send money

In Conclusion

Going cashless can be seen as the future and there are plenty of advantages of going cashless. Not only are there advantages for individuals but there are also advantages for businesses and society as a whole. While there are plenty of advantages of going cashless, it still helps to be aware of the disadvantages of going cashless and what can be done to make it much safer.

Smart Shopping: How to Save on a Major Purchase

If you are like me, big purchases are stressful for you. It does not matter if I have the money saved for the purchase, I still find it stressful. Spending a large sum of money is not easy for me. I would imagine that it is not easy for most people. You either see your bank account balance drop, or you see your credit card balance increase dramatically. I do not like either of those options. However, I realize big purchases have to happen. We need to buy items such as cars, houses, appliances, just to name a few. Before you start to think the worst, you should know that it is possible to save on a major purchase.

But, if you are interested in getting a personal loan for any sort of purchase, you can use Loanry! Our partner Fiona can send you offers in minutes based on the information you provide us with in the form below. Don’t waste your time on doing all the research yourself when you can use our free services. It costs you nothing!

You can continue reading to find out how to save money on some important life events. You may even be surprised at some of the ways you can save money.

What Is Considered a Major Purchase?

We all make purchases throughout our lives. Some of us love to shop and do it often. Others of us hate it and do as little shopping as possible. There is online shopping, which has made shopping much more convenient. There are also the people who coupon shop. Some use a coupon here and there while others have made it into an art form. Personally, I do not understand how to coupon but I have not take the time to learn. I know people who save a ton of money couponing, but it seems to me, they are buying a ton of items they do not need. However, it does not negate the fact that there is a huge savings and it is possible to save on a major purchase.

This may still leave you asking, “what is a major purchase?” A major purchase is considered something that is a big ticket item, such as a house, car, appliances, furnishing for the home, and electronics. Some even consider sports equipments and trips to be large purchases. According to Forbes magazine, almost 45 percent of people who answered their survey have a difficult time completing a sale for a big purchase item.

Weddings Can Suck The Money Out Of You

I do not want you to think that I am against weddings. I am not, at all. However, I do think there is a ton of money wasted on weddings for the wrong reasons. Getting married is a big deal and an emotional time. Many play on those emotions and entice people to spend large sums of money on items that are not really that important. That being said, I would like to talk about ways to save on a major purchase, like a wedding. One easy way for saving money when it comes to a wedding, is to plan ahead.

When you plan ahead and begin to save the money you need, it helps guide your decisions. You should create a list of the items you must have at your wedding. These items are non-negotiable. Then you can determine how much they cost and begin to save for them. You can create another list of items you would like to have. Same thing here, you find out how much they cost and determine which ones mean more to you and save for those.

When you create these lists, it gives you a good idea of what you really want at your wedding. This makes it easier when you feel the emotional pull to purchase something. You can look at your lists and determine if it is on either one of them. Perhaps it is something you did not consider and you are willing to remove an item from your must have list and replace it with something different. Budgeting is incredibly important when it comes to a wedding. If you can, try to save money for at least a year to pay for the wedding. This puts you in a better position as you begin to start your life as a married couple. And you don’t have to think about how to get out of debt later.

Some More Ways To Save On That Special Day

There are some other ways you can save on a major purchase, such as your wedding. There may be some things you did not consider when it comes to wedding day savings. Before you have your heart set on one particular item or way to do something, consider these tips. Believe it or not, there are ways to save money on just about every aspect of your wedding.

Date – If you do not have a specific date in mind, be flexible. If you plan your wedding for an off time that is not typically considered wedding season, you can spend less money. Typically, June is prime time wedding season, so choosing a different month can save you a ton of money. Also, choose a Friday night or Sunday afternoon to get married and you can save up to 50 percent of the cost. Saturday is the day most people choose to get married and they pay for it.

Dress – Wedding dresses are expensive and you only wear them one time. You can get a second hand dress and save a lot of money. You may be surprised at how well people take care of their wedding dresses. Do not think just because it has been worn, that it is second rate. At least take the time to look at some resale dress shops to see what is available to you.

Food – The food and drinks at a wedding are incredibly expensive. You can make the bar a cash bar so that your guests have to pay for whatever they drink. Many people do not like to do that, so there are other ways to decrease the cost of alcohol. Some venues allow you to provide your own alcohol, so you buy it and bring it and they will serve it. This cuts the cost tremendously. You can also choose to have only beer and wine. These are cheaper options than liquor.

You can also forego a wedding cake and have various desserts instead. A wedding cake can cost close to a thousand dollars and most of them do not taste great anyway. You can have several other types of desserts that your guests may like better.

Moving Without Breaking The Bank

Moving is a stressful time before you even think about the cost of it. It can be incredibly expensive for you to move. If you have to move, or you have determined that moving is the best thing for you right now, then you should arm yourself with some tips to help you save on a major purchase associated with moving. One of the best ways to save money on a move is to do everything yourself. If you can enlist your friends to help with the promise of pizza and beer, you really can see a lot of savings.

There are many different moving services that you can use, but they all come at a cost. There are some items associated with a move that you cannot change the cost. For example, you might need a deposit and first months rent for a new place. You may buy a house and need the closing costs. These costs typically cannot be changed and you have to accept them.

There are other ways to save money on a move. You can do all of your own packing. You can get some friends you trust and ask them to help. Make sure that you label all of your boxes with the room name and the box contents. This is helpful when you are unpacking. You can rent a U haul and literally haul your stuff yourself. You and your friends can load up all your items into the truck and drive them to the new location. Once there, you and your friends can move the items from the truck. This is really only an option if you are moving locally. If you are moving someone that requires a plane trip, you may have to have your items shipped and that causes a huge expense.

No matter where you are moving, you should take this opportunity to down size. Now is the time to get rid of all those items that you no longer use or need. I am sure you have items that are sitting in a corner of your house collecting dust. If so, it is time to get rid of them. If you have items that you have not used in the past year, donate or trash them.

Will A Moving Company Save Me Money?

What if you really need a moving company? What do you do then? If you have decided that for various reasons, you need to use the services of a moving company, there are ways to save on a major purchase. The first thing you should do is compare moving companies. While you might want to pay attention to the final number the company gives you, do not be so quick to do that. Make sure you understand how the determined the total. You should also verify if that total is an estimate, or an actual figure. Some companies will quote you an hourly rate and you are subject to paying for how long they take to pack and unpack your items. While the figure may seem like it is a lower cost initially, it may cost you more money in the long run.

Make sure whichever company you use, they perform background checks on their employees and insure all of their moves. First, remove all the clutter from your home and make sure that the items you are packing are items you really want. The worst thing for you to do is pack and pay to move items that you are going to throw away in your new home. Make sure that you really want all the items you are taking with you.

Travel On A Budget

We all want to take time away from the stress of everyday life. Many of us cannot travel because it is too expensive. While traveling can be an investment, there are ways to save on a major purchase such as traveling. The most important way to travel without blowing your budget out of the water is to plan. You should determine where you want to travel and when. When you have an idea of the location, you can begin to look for deals. Perhaps, you do not have a specific place in mind, then you can look for deals online.

I would caution you when looking online, many of these deals must be purchased and used quickly. There is not often a lot of time before the deal expires. You should be prepared to spend the money and travel soon. And you should also read all the fine print and make sure that you know all the details associated with the deal.

Consider traveling during off peak times. Depending on the location, off peak may be different times for different locations. For example, August is usually considered off peak for a hot location. You can save a significant amount of money just by changing your travel plans by a few weeks.

Can I Really Travel Without Spending A Fortune?

Yes, it really is possible to save on a major purchase, such as traveling. You may, however, have to be willing to make some compromises. So, you can choose to stay at a hotel that is one less star and may cost less money per night. You should do a lot of research about the area in which you want to travel. The more information you know about a location, then the more money you can save. While you are there, eat at local places instead of fancy restaurants. Many times, these places have better food and cost way less money. Find out where the locals eat and go there. You will probably get a better meal. Walk to all the places that you can instead of spending money on a car, taxi, or Uber. This can be a significant savings for you.

When you are deciding on the excursions in which you want to participate, find as many free ones as you can. You can do many things for free, you just have to look for them. Instead of paying for a tour, take in the sights on your own. Often times you can get a book or an audio version of a tour for free or a nominal cost and move through the tour at your own pace. Do not spend a lot of money on souvenirs. Many of these items are priced higher than normal and you forget about them or throw them away after a year.

Medical Bills

Medical bills are often something that many of us have to pay. The cost of medical care is increasing and insurance (if you have it) never pays enough. Medical bills add up quickly and before you know it, you have a bill that is thousands of dollars. While this may seem overwhelming and daunting, take a breath and know that there are ways to save on a major purchase, such as medical bills. Yes, I am putting medical bills in the major purchase category because they are. Typically, the medical treatment is something you need to have and you have no choice but to pay the bill.

One of the key points to remember when it comes to medical bills is that most medical providers understand. They understand that health care is expensive and insurance does not cover much. They know the cost of prescriptions is outrageous and they are usually willing to work with you.

Tops Ways To Decrease Medical Bills

I know you probably do not like that I am referring to medical procedures and health care as a major purchase, but it truly is. So, I am going to continue to refer to it as such. There are some ways to save on a major purchase like medical bills.

The first thing to remember is to be honest with the provider. Call them and talk to them about what you can and cannot afford to pay. Many times they will work with you on a payment plan. They may even be willing to take a partial payment. Some providers are willing to cut as much as half of the bill if you can pay that amount right away. They know it is better to take a partial payment up front instead of getting small payments for months, or years.

Another point to consider is talking to the medical provider prior to the treatment. If you are honest with the doctor or provider, they may be able to modify the treatment so that it fits into your budget. The provider may be able to find a study or trial in which you can participate that allows you to receive free treatment. Medical providers deals with insurance companies all the time and often the insurance company wants a request worded in a specific way to approve the treatment or care plan. If your provider is aware of your situation from the start then he or she may be able to work with your insurance company to ensure approval.

Can A Personal Loan Help Me?

If you need money quickly for a large purchase, you might immediately think of a personal loan, or personal cash loans. Does it make sense to get a personal loan to save on a major purchase? One way a personal loan may benefit you is it gets you money fast when you need to make a large purchase. If you need car repairs, or even a new car, or if a major appliance needs to be replaced, a personal loan is a great way to get money. If you have good credit, you may be able to obtain a personal loan with a low interest rate.

Paying the interest rate may be better than not having a car that you need, or having medical treatment that you need. When you obtain a personal loan, it may reduce the stress you feel about needing the money. Trying to find the money for a large purchase may cause a difficult situation to be even more stressful. When you know that you will have the money you need due to a personal loan, it can help decrease your stress. This may make the interest you pay worth it to you.

One thing to keep in mind is pay attention to the interest rate tied to your loan increases your monthly payment. You may want to do some rate shopping to find the best rate for your loan. The ultimate goal should always be to keep yourself out of debt. In some cases, a personal loan may be in your best interest.

Get Yourself On A Budget

This is one of my favorite topics. I know it probably is not one of your favorites, though. Yes, a budget is important. Yes, a budget is necessary. And finally, yes, you need a budget. If you do not currently have a budget, you should create one. If you feel like it is some form of forced control that prevents you from doing and buying the items you want, stop now. Stop thinking that way. Change the way you think about a budget and understand all the benefits. A budget helps put you in control of your money and your spending.

There are many apps and websites available to help you create a budget. These websites make it simple by providing you a form to list your expenses on one side and income on the other side. Once you see in writing how much you are spending and what you have left each month, that gives you an idea of what you can save on a major purchase. This list shows you where you are spending money each month. I bet you are spending money that you do not even realize. You probably spend more money in ways that you do not even think about each month. For example, how much money are you spending on coffee shops or convenience stores? Those are places that suck up a lot of money quickly and you probably do not even consider it spending money.

Save More, Spend Less

The best way to save on a major purchase is to save the money you need. Once you created a budget as defined above, it gives you a clear picture of who you spend your money. Once you know that, you can determine where you can make spending cuts. First, you should determine your goals. What do you want to do with your budget? Do you want to become debt free? And do you want to save on a major purchase? Do you want to secure savings for your retirement? It is helpful if you have a goal in mind to help you reach that goal. When you set a reasonable goal for yourself that is true to what you really want, it helps you reach those goals.

You should cut out unnecessary spending on items such as that gym membership that you do not use. If you have not been to the gym in months, cancel it now. You are wasting this money. You should also look at other subscriptions that you may have. Make sure that you really want and need those subscriptions services. If you do not, cancel them right now. If you do, change the rate as which you are receiving the items, or change it so that you request the items when you need them. This way you control when the items come and how much you are paying.

Conclusion

I have provided a lot of information on how to save on a major purchase. We all have to make major purchases at some point in our lives. Even if we have the money to pay for them, it is still nice to be able to save on a major purchase. As with any purchase, It is important that you ensure that you need the item and not make an impulsive purchase. Once you are sure of the purchase you want to make, you can begin to save for it. There are many ways you can save money on these items. You can also do research and find the item at the best price. Many large purchases are events, such as a wedding or a new home.

11 Important Tips to Reach Your Financial Goals

Finances tend to be a topic about which many people do not want to talk. It is often a stressful conversation and people want to avoid it. No matter how uncomfortable the topic makes you, you should not avoid it. While it may seem overwhelming, if you follow a few simple steps, you can quickly have a plan to help you reach your financial goals. It is important for everyone to take control of their finances, no matter how much money you have. If you implement some changes, you could have more money. Continue reading to find out how to get rid of debt and increase your financial wellness.

What Is Financial Planning?

Dave Ramsey tells us that financial planning includes three important pieces. Those pieces are knowing where you are financially and determining where you want to be. Then you create a plan to reach those financial goals. You could reach out to a financial planner to help you plan your financial future. There is a cost to hiring someone to help you. I encourage you to do as much of it as you can on your own. It takes a little bit of knowledge and a deep understanding of your own goals.

Financial planning puts you in control of your money. It allows you to take control of how you spend your money. It is important that you create goals for you. Do not take on someone else’s goals. You have to do what works for you. Working towards a secure financial future takes consistent work. It often takes compromise. If you are not doing it for the right reasons, you may not be able to get the rough moments. When thinking about your financial plan, you should think about goals, short term and long term. It is much easier if you break your goals down into small manageable pieces. The tips below are a great place to start.

Tip #1 – Know Your Goals

I am going to start with an obvious statement here. The first place to start when you want to achieve your financial goals is to create your goals. You should start with the end in mind. You cannot put yourself on a path if you do not know where it is going. Think about what you want your end result to be. It can be anything from paying off debt, saving for retirement, or creating an emergency savings account. Perhaps it is all three of those things. Start by writing down your goals, no matter how many you have. Once you have done that, you can prioritize your goals. When you complete those steps, you have taken key steps to achieving your goals.

The goals you set today do not have to be the same goals you have next year. You may want to create a long term goal of saving for retirement. That is a goal that you continue to work towards. Then you have several short term goals. They may be pay off your debt and create an emergency savings fund. You can work towards both of those goals at the same time, or you can focus on one at a time and check them off when complete. Once you achieve your short term goals, you can create more short term goals. You may decide to create many short term goals and put them in priority order and work towards them one at a time.

You should also pull your credit report and take a look at it. This allows you to look at your credit card score and your credit history. You can see if there are any errors on the report. If there are errors, you should fix them immediately. Making sure you have the best credit score possible can only help you with your financial plans.

Tip #2 – Negotiate Your Bills

When considering your financial goals, decreasing your debt may have been one of yours. When it comes to debt, it often seems like a mountain that you just cannot climb. While it may seem that way, it is possible to decrease debt. It does not happen overnight. You need to dedicate yourself to the task over the long term. One way that you can decrease your debt is to negotiate your existing bills.

One large source of debt for many people are medical bills. They are often a bill that you are able to negotiate fairly easily. They may be willing to take a partial payment if you can pay it immediately. Some creditors would rather take less money today but guarantee they are getting the money, instead of hoping you make regular payments for however long that takes.

There are some tips to approaching negotiating all bills, not just medical bills. You should wait a short time after you receive your bill before you make contact with the creditor. Do not wait too long. You do not want your bill to go to collections. Give the creditors a little bit of time, then contact them about reducing the amount you have to pay. Make sure you call the creditor in the morning because most people are more agreeable in the morning. When you are on the phone, do not allow your emotions to take over. This is not a personal conversation, it is about reducing your bills. Remain pleasant, but ask for a supervisor if you are not able to get anywhere with the person on the phone.

Tip #3 – Investments

One of the best ways to reach your financial goals of saving for your future, is to invest in it. Your investment goals may depend on some factors. Your age and how soon you want to retire may drive how aggressive you want to invest. An easy way to invest your money is consider your employer’s 401K plan. If your employer offers this type of plan, you should consider investing that way, if you are not already doing so. A 401K can help you save more money than you would with a traditional savings account. Typically, your employer matches a certain amount of the money you put into your 401K. You should find out how much your employer matches and put that much in your account. This is a fast way to double your investment.

You can start by putting a small amount of money into your account with each paycheck to determine how it impacts the amount of money you take home. The good news is the money is taken out of your paycheck before you pay taxes. This decreases your tax liability, which means you pay less taxes and bring home more than you think. You can slowly increase the amount of money you put in your 401K. If you do not have access to a 401K, you can create an IRA. Once you set up an IRA, set a goal of how much money you want to save per month. Another way you can invest is to purchase real estate by purchasing a house, if you do not already have one. When you purchase a house it becomes an asset that becomes a tax benefit.

Tip #4 – Pay Off Mortgage

If you are serious about reaching your financial goals, and you own a home, it may be in your best interest to pay off your mortgage. There are differences of opinion as to whether or not paying off your mortgage is a good idea. Everyone has good ideas and mortgage tips for you. For purposes of this discussion, I am only going to focus on the benefits to paying off a mortgage. You should understand that there are positives and negatives to doing so. You should consider both sides if you decide to pay off your mortgage. When you pay off your mortgage, it frees up the money you are paying on your mortgage to be used in other ways.

If you have other debts, you can use that money to pay off those debts. If you do not have other debts, or you only want to use half of the money for debts, you can use the rest to invest. There are many options in which you can invest, such as securities and bank certificates. You can also invest your money into stock, especially if you are looking for long term investments. The potential return on your investment is greater than you were paying on your mortgage.

If you are considering making more aggressive investments, you should considering consulting a professional to help you with your investments. You do not want to lose all the money you could be saving. If you do not want to risk losing your money, you could save it in a regular savings account. You will not get as high a return on your investment, but you will save money.

Tip #5 – Create A Budget

One of the best tools to help you reach your financial goals, no matter what they are, is to create a budget. There are many reasons why it is a good idea for you to create a budget. I can understand why you do not want to. It is not something that most people want to consider, but it is something you must do. We know it can be stressful to think about money and how you are spending it. It does not matter what type of financial goals you have. None of them can start without having a budget in place. Without a budget, you do not have a clear understanding of how much money you earn or spend.

You may not be able to change how much money you make with each paycheck, but you can control how much you spend. Even when you think you cannot control it, believe me, you can. It may take some hard work and sacrifice, but it is possible to save money. Here are many budgeting apps and websites available to you for free. You should consider one of these to help you create a budget. They are simple and easy to use. They have predefined sections for you to fill in the appropriate information. This makes it easy to see how much money you are spending and in which areas of your life.

Tip #6 – Cut Spending

Once you create a budget and you see where you are spending money, it gives you a good idea of where you can make changes. Keep your financial goals in mind. This helps to keep you in check when you no longer want to follow your own budget. It can also help you in weak moments when you want to splurge on something. This gives you a reason to pause and decide how badly you want that item. You may decide that you really want it and splurge on it. That is ok as long as it does not happen frequently and you understand how this impacts your financial goals.

For now, I want to focus on other ways you can cut spending. Start with the simple things, such as that gym membership you do not use. If you have one that you are not using, cancel it. You should drop everything and cancel it right away. If you have other subscriptions that automatically charge you each month, take a look at them and determine if you actually use them. And if you do not, cancel them. If you do use them, check the frequency and make sure it is appropriate to your needs. And if you think you should keep the same frequency, make sure it helps keep you in alignment with your financial goals.

Tip #7 – Insurance

Paying for insurance is one of those necessary things that you really should do, but it can be expensive. There are some ways to save money on insurance. If you can save a decent amount of money you can take steps towards reaching your financial goals. There are many apps available that allow you to look at several different insurance companies to see who can give you the best rate. You can compare the prices without any real impact on you.

Some other ways to save on insurance is to see if you can remove parts of your current policy. If you have complete coverage, you may want to consider to decrease it to liability only. This is a good option if you have an older car because you may pay more in insurance premiums than the car is worth. You should also check to see if you are paying for double coverage. For example, if you have roadside assistance through some other means and you have it through your insurance, you are paying for it twice. You should cancel one of them to save money.

Tip #8 – Decrease Utilities

Another great way to reach your financial goals is to save money on your monthly utility bills. You are probably thinking, the utilities are what they are so there is no way I can save money. That is not true. There are always ways to save money. There are some simple ways to save money, so I will start there. You should change all the lightbulbs in your house to more efficient energy saving bulbs. This can save you hundreds of dollars a year. You should make sure you  unplug all appliances when you are not using them. This can also save you hundreds of dollars. Sometimes turning off the appliances are not enough because they are still drawing energy and you pay for that.

Another way to save hundreds of dollars per year is to adjust your thermostat. If you set your thermostat two or three degrees higher in the summer and two or three degrees lower in the winter, you will be amazed at the savings. That small temperature changes is not that noticeable. You can wrap up in a blanket to stay a little warmer in the winter. And you can keep your blinds and shades closed in the summer to keep out the heat. You may also want to consider ceiling fans to help keep the air moving in the summer time so that it does not get stuffy in your house. And you may not even notice the slight change in temperature. You will definitely notice it in your bill.

So, you are probably spending a ridiculous amount of money on television and internet services. The first thing you should consider is do you really need television? If the answer is yes, then do you really need all the channels you have? Could you go with streaming options and save a lot of money? Yes, you have to put out the initial investment to buy the device, but that probably does not cost as much as a month of television.

If you cannot live without your digital cable provider, you could consider a less expensive package. At a minimum you could call your provider to see if they are offering any specials that may decrease your monthly payment. You will not know until you ask. If you have not considered streaming television, you really should. It is a huge cost savings and you get just as many, if not more, options. Even better, you will pay about a fourth of your current cost.

Tip #9 – Save, Save, Save

No matter what financial goals you have, saving money should always be in the plan. You should have long term savings and short term savings. Long term savings is something that you do not want to touch. You just want to sit back and watch it grow until you are retired and then use it to supplement where you need. Your short term savings should be an emergency type of account. This account should have enough money in it to pay for three months worth of expenses in case something happens. This can be the fund you draw upon when there is a large expense that you do not have the money to pay.

Just keep in mind, any money that you take out of your emergency fund must be replaced. If you only take the money out and never replace it, you no longer have an in case of emergency option. The best way to save money is to have it come directly out of your paycheck before it ever hits your bank account. That way it is like it is not even an option. Not only does it not become money available to spend, but when it happens automatically, you do not have to be responsible for moving the money. There is not temptation on your part to spend it instead of save it.

In addition to saving  money in a bank account, you should look at other ways you can save money in your spending. A quick way to do that is stop eating out. This means all types of eating out, including quick stops at the coffee shop. Cut it all out and see how much money you save. You probably do not even realize how much money you are spending per month. You can pack your lunch and take that to work instead of going out to eat.

Not only is the healthy for your bank account, but it is better for your overall health. You can make coffee at home instead of stopping at the coffee shop. If you spend $5 per day on coffee 5 days a week, that is $25 per week and $100 per month. Over the course of a year, that is a savings of $1200. I am sure you can find much better ways to use $1200 than at the coffee shop.

Tip #10 – Estate Planning

If one of your financial goals is estate planning, you should begin to think about that now. If you really want to leave an estate to your children or those close to you, you have to have a plan. Anything can happen to you at any time. It does not matter if you are not considered elderly, things happen every day. You need to be prepared. So you can go online and create your own will with a form. You can always visit an expert in estate planning to help you. As you age and your assets change, you should revisit your will. You also should consider who is going to care for you when you are older. You should begin to think about things like medical directives and the like.

Tip #11 – Reduce Debt

One of your top financial goals should be to decrease your debt. If you have any type of debt that is not useful to you, such as a mortgage, you should work to reduce it. Most debt does not do anything for you but cause stress and anxiety. We live in a world where it is difficult to have no debt, but you can work hard at keeping it as minimal as possible. If you have a high debt to income ratio right now, you should work hard to reduce it. If you allow your debt to grow, you pay more money in the long run.

You should devote all extra money you have to paying down your debt and reducing it as quickly as you can. It does take time to reduce debt, so you must remain focused and consistent. When you are deciding to purchase something, you need to ask yourself, what I rather have this item right here? Or would I rather get out of debt faster? No matter which one you choose, as long as you understand the consequences of your decision, you are in control. It is important to remain in control of your spending to pay off debt sooner. Debt can become a vicious cycle, so it is important to decrease it to a manageable level.

Conclusion

Your financial goals are important. However, it is important that you truly understand them. Working toward any goal is challenging, but if you keep your goals in mind, it is easier to stay the course. However, when those goals are not yours and they are what someone else tell you they should be, it is really hard to stay on track. Paying off debt, staying on a budget, and saving money are challenging. When it gets hard, you need a reason to stay on track. If you are not fully invested in working towards the goals, you will not be able to stay on track when it matter. Focus on what you really want and work hard to get there.

Where Can I Find a Loan Payment Calculator?

There are many situations that happen that are outside of our control. These situations may require you to need a loan due to unexpected expenses. You could face high medical bills or a car that needs expensive repairs. If you are considering a personal loan, you probably have a lot of emotions about it. You probably feel nervous and worried about taking on more debt. And you may be uncertain if a personal loan is right for you. You should not enter into a loan without giving it a lot of thought. If you obtain a loan without thinking it through, you could put yourself in a financial bind. Fortunately, there are tools to help you determine if a loan is right for you. You can use a loan payment calculator to assist you to determine if you can afford a loan.

What Is A Personal Loan?

Infographic about the types of personal loans

Before you can even consider using a loan payment calculator, you should understand more about personal loans. You should have as much information as you can about personal loans before you decide to obtain one. A personal loan is when a lender allows you to borrow money. The lender adds interest to the loan as a fee for allowing you to borrow money. That ‘fee’, or interest, is based on your credit score. The lender has some freedom to decide how much interest to charge you.

A lender can be a bank, traditional or online, a credit union, and even family or friends. Anyone that lets you borrow money is a lender. In return, you promise to repay the loan by making regular monthly payments for a set period of time. That period of time can be three to five years. The amount you pay each month is typically a set amount as long as you have a fixed interest rate. I go into a little more details about interest rates later in this article.

A credit card is not a personal loan. That is considered revolving debt. You have a set amount on your credit card. You can only use that much credit. Once you pay any amount of it off, you can use that amount again. That is why it is called revolving. A personal loan does not replenish. You are given a set amount and you pay it back every month. Once you have paid back all of the money, the loan ends. To get more money, you have to apply for another loan.

What Is A Loan Payment Calculator?

A loan payment calculator is a tool that is available online that shows you how much you may have to per month to repay a loan. You have to enter some information into the calculator such as the amount you want to borrow. You also must enter the length of the loan and the interest rate to receive an accurate monthly amount. This article is for personal loans, but a loan payment calculator is used for auto loans, mortgages, and many other fixed loans.

Some loan calculators allow you to enter your credit score, which means in addition to giving you an idea of how much you must repay each month for your loan, the calculator helps your determine which is the right loan for you. It can show you the different loan options for your comparison. You can also see how varying interest rates changes your monthly payment.

Where Can I Find One?

You can find a loan payment calculator on various websites, including bank websites. These types of calculators can be a loan checker for you. They can give you various pieces of information. In the section above, I talked about payment calculators producing monthly payment amounts. It shows you that the monthly payment amount decreases the longer the term of the loan. The calculator shows you the total principal of the loan. This is the full amount of the money you want to borrow that does not include the interest. The better credit you have means you can obtain a higher loan amount. You also learn the total amount of interest you pay for the whole life of the loan. When you have bad credit, you receive a higher interest rate. This means you pay more money in interest over the life of the loan.

Are There Different Types of Interest Rates?

Yes, there are a few different types of interest rates. The first thing you should understand about loan interest rates is they are based on your credit. I go into more detail about interest rates later in this article. For now, you should know that the lower your credit, they higher interest you pay. A loan payment calculator can help you determine how much interest you might pay with your credit score.

Fixed interest is when a rate is set. When a lender offers you a loan with a fixed interest of 12 percent, your interest rate remains at 12 percent for the life of the loan. This is the easiest interest rate because your monthly payments remain the same amount each month and do not change. A fixed rate is typically the prime rate with some additional percentage points added on by the lender. The prime rate that lenders use is typically based off the Federal Reserve’s prime rate. Rarely do lenders offer the prime rate to customers seeking a loan. They do offer it, but only to those with the best credit.

Variable interest means that the interest rate most likely will change. When the interest is variable, it is tied to the prime rate. When the prime rate changes, so does the interest rate. The prime rate goes up and down, so a variable rate may benefit you as a borrower if it goes down. That means the interest you are paying goes down. Be cautious when agreeing to a variable rate. It does not always work out in your favor. When the economy is in a good place, the prime rate is usually low and stays low. When the economy is not doing well, the prime rate rises.

How Do I Know If A Personal Loan Is Right For Me?

I mentioned above most people feel stress when they need a personal loan. In most cases, you need money quickly to cover some expensive you cannot afford. Many times these events are outside of our control. Even so, you should not obtain a personal loan without giving it a lot of thought. You may feel like you do not have any other options, but you might. You should consider all of your options, not just a personal loan.

While considering all of your options, you also need to determine if you can afford a personal loan. You are the only one that can decide if a personal loan is right for you. If you cannot afford to make the monthly payment, you are putting yourself in a bad financial position. You should consider why you want a personal loan.

You should think about the purpose of the loan and determine if it is a necessity. If you want to obtain a loan for a television, or new furniture, it may not be a good idea to get a loan. However, if you need a loan for medical expenses, you may need a loan. Again, you should only consider a loan if you can afford to make the monthly payments. One of the ways to easily determine if you can afford a personal loan, you can use a loan payment calculator.

It’s important that you go to the right lender when taking out a loan. Loanry can help you to make sure you’re on the right path. Put in your information below and if you meet any lender’s criteria, you may get an offer:


Does My Budget Really Matter?

Yes, your budget always matters. It is important to understand the money you have coming in every month in the form of income. It is just as important to understand the amount of money you have going out each month as expenses. The difference between the two is how much money you have left each month after all your bills are paid. Hopefully, that amount is not a negative number. If it is negative, then most likely you are not even paying your bills. Unfortunately, everything you want to do is drive by how much money you earn. That is why it is important for you to understand how much money you earn. Then you know how much money you can spend.

The good news is there are many tools available to you to help you. One of the best tools available is the internet. There are so many websites with an abundance of information. One thing you will find is a budget worksheet and calculator. These tools help you list out all of the money you are spending and look at ways to cut spending when needed. Once you know how much money you have left over each month, you can use a loan payment calculator.

This will help you find a loan that fits into your budget. Once you know how much money you have to spend, it is important that you do not agree to a loan higher than that amount. If your budget tells you that you have $150 each month, you cannot get a loan with a repayment amount of $200 per month. You are already setting yourself up for failure and a worse financial position.

How Do I Create A Budget?

Creating a budget is easier than you think. The real issue is that no one wants to take the time to sit down and work through it. It is always much harder when you look at the real numbers on paper. Even though you probably have some idea of your budget, it is not real until you see it in black and white. As a result, no one wants to create a budget. It is important to keep in mind that creating a budget puts you in control of your money, spending, and saving. If you have any goals that require money, you should start with a budget. Once you understand your budget, then a loan payment calculator helps you understand your loan possibilities.

But first, let us look at how you create a budget. You must remain realistic in your budget creation. This is something you want to maintain, so it has to be something you can continue doing. If you set unrealistic goals, or do not give yourself enough money to do the things you really want, your budget falls apart. The first step is to gather all of your expenses. Do not skip any of them. You must include everything or this process will not work.

Once you list all of your expenses, you put them into categories. You have the items that are essentials, such as rent, food, and clothes. Then you have a categories for must have items, such as utilities and car, if you need it because you do not have access to public transportation. Then you create a category of non essential items, such as television, phone, eating out, and other miscellaneous items.

What If I Have Really Low Income?

In all budget scenarios, it is important to understand what is in the categories you created. When you are creating a budget on a low income, it is even more important. You may have to make some difficult decisions. And you also need to keep your end goal in mind. You should decide how important your end goal is to you. One thing that you may not consider to be an essential bill is your credit card payments. It is important to pay them on time and pay as much as you can. You should always strive to pay the balance in full, but if you cannot, pay more than the minimum balance. This helps to protect your credit and reduces the amount of debt you have. Even when you have low income, you cannot let those bills fall behind.

Once you have put all your bills into categories, you should take a look at each category and see where you can save money. You should do this even with your essential category. Yes, you need food, but are you shopping at the most expensive grocery stores? Are you purchasing items when they are on sale? Are you purchasing only the items you need? You should take a hard look at all the items you are buying and find cost savings.

It may seem like a daunting task but you can save hundreds of dollars per month. Once you get the hang of it, it becomes much easier. Another fast way to save money is by cutting the number of times you eat out per month. If you tend to eat out, and that includes trips to your local coffee shop, often, cut that back to once or twice a week. You will see incredible and fast savings.

If as a result of your budgeting, you may find that you have a large amount of bills you must pay down. You may also realize that you cannot get ahead of them by paying only the minimum payment per month. In these cases, you may want to consider a personal loan. If paying off all of your bills at one time frees up enough money to make a monthly loan payment, it may be a good option. You can determine how much a loan may cost per month with a loan payment calculator. It is important to make sure that you have enough money to pay the loan each month or you will put yourself in a worse position.

Does My Credit Matter?

Yes, your credit always matters. Your credit makes a difference in just about everything you do. It does not matter if you want to buy a house, rent an apartment, buy a car, or get insurance, your credit makes a difference. So, it is incredibly important to protect your credit at all costs. It is hard to bring your credit up once it starts to decline. First, let us talk a little bit about what is credit.

Your credit score is an indicator to lenders how much of a risk you are. The lower your credit score, the more risky it is for them to loan you money. Your credit score is a three digit number that appears on your credit report that indicates how well you use your credit. If you have a low credit score, it is often because you have missed payments or late payments. A typical credit score ranges from 350 to 850. Most have a credit score somewhere between 600 to 750. Good credit ranges from 670 to 800. Anything below 570 is usually considered bad credit.

When you have bad credit, it is much harder to get a good interest rate. You may find it is difficult to be approved for a loan. If you are concerned about your credit score and how it impacts your ability to obtain a loan, you can use a loan payment calculator. This tool shows you what type of interest you can with your credit score. It also shows you how much your monthly payment is based on the interest charges.

What If I Have Bad Credit?

You already know you have bad credit, so what does that mean for you? It means that you are going to have a higher interest rate for your loan. Also, it means that you are going to pay more per month to pay back the loan. It may mean that you have a difficult time getting approved for a loan. It also means that you must do some research to find a loan that fits your needs and budget. The good news to all of this is thanks to the internet, that research is easier.

There are many tools available to you to help you in your search. One of those tools is a loan payment calculator. You can enter your credit score and it provides you banks and the interest rates they most likely will offer you. While you may find that the loan repayment amount is higher than you want to pay, you know immediately what options are available to you.

The more you know, the better positioned you are to make good decisions moving forward. A loan payment calculator can assist you with that. Fortunately, you can find them quickly just by doing an internet search. Many bank websites offer them as one of their financial tools. It may seem surprising to you, but lender want to help you help yourself when it comes to lending. They want you to find the answers you need so when you come to them, you are prepared. Not only does it benefit you, but it helps them, too. Before you decide on a specific lender, you should see what types of tools they can offer you on their website and in the bank.

Can I Repair My Credit?

The good news is yes, you absolutely can repair your credit. The bad news is it is not a quick fix. It takes time and consistency to improve your credit score. It goes down fairly quickly but does not come up as fast. The first thing to do is to pull your credit report. You are able to get one free one per year and you should take advantage of it. Your credit report shows your entire credit history. Review it and look for errors.

If there are errors on your report, you should correct them immediately. This can help your credit score increase. After you have corrected all the errors, now you must start making payments on time and in full. As I mentioned above, one of the top reasons for a decreased credit score is late payments. Now, you should make sure you pay everything on time. Even if you can only pay the minimum amount, pay that on time.

Sometimes a personal loan is the best way to improve your credit. It allows you to make regular monthly payments on time which can boost your credit score. You can use a loan payment calculator to determine what that payment amount may be. Keep in mind, if you have bad credit, you have a higher interest rate, which means you have to pay more per month. You have to determine if taking out a loan is something you can afford to repay. Using a loan payment calculator can assist you when making that decision.

Are There Loan Alternatives?

You may have alternative options to obtaining a loan. Unfortunately, most of them are not fast. So, if you need cash right away, they may not be able to meet your needs. You can borrow money from family and friends. Usually, they do not charge you interest or do not charge you as much interest as a traditional lender. You can work hard to reduce your spending significantly which frees up money to pay the bills that are essential. You can get a part time job to bring in some extra money to pay the essential bills.

Many of us want instant results and when it comes to money, few results are instant. It takes time to build credit. Likewise, it takes time to improve credit. It takes to pay off debt and save money. You must start with the end in mind. Is your goal to get out of debt? Or is your goal to save more money? Is your goal to pay for an emergency repair? Determine that first and then work from there. If you decide to obtain a loan, use a loan payment calculator first to get an idea of how much that costs you per month.

Conclusion

I talked a lot about finding a loan payment calculator online. They really are easy to find with a quick search. You can use more than one to see if you get the same results. Once you have found out the numbers from a loan payment calculator, it is time to really think about is this the right move for you. Once you create your budget and determine how much money you have each month, you know how much you can afford to pay. It is fairly easy to tell if you can afford a loan. If you cannot afford to repay the loan, do not get one.

It is really that simple. It may not be what you want to hear, but it is the truth. If you cannot repay it, you will miss payments or make them late. This impacts your credit. Your credit declines and collection calls might start. It puts you in a bad place financially and that really is not where you want to be. Make smart decisions about obtaining a loan. If the numbers tell you that you cannot afford one, do not pursue it. You should find other ways to bring in more money.

7 Careful Steps To Consolidate Debt Without Tripping

Finding yourself in more debt than you can handle is a scary place. I am sure many of you reading this post can relate to the feeling of complete despair when it comes to your bills. You have more bills coming in than you have money to pay them. When you get to this place, you feel lost. You feel like you have no where to turn.

I am here to tell you that you have options. There is something you can do to take control of your debt. Not only am I going to explain how to get out of debt, but I will list the steps to consolidate debt. The key is for you to take control of your finances. Recognizing that you are at a point where you feel like you have no control is an important step to gaining control. Continue reading to find out how to get a consolidation loan.

Debt Consolidation Explained

I have found that the best way to feel comfortable with something is to fully understand it. I want to define debt consolidation for you. That way, we’ll make sure you know what it means. Then as you move through this post, you will read the steps to consolidate debt. USA.gov considers debt consolidation to be a strategic way to address your finances.

It is you taking control of what is happening with your money. Prior to debt consolidation, you may feel out of control. This is the opportunity for you to regain control. During debt consolidation, you merge many different bills into one debt that you pay off with one monthly payment. You can do this by applying for a loan to get out of debt or using a debt management company. You should know that a debt management company charges fees for their services. It’s important to know you can do this on your own without their extra fees!

Debt consolidation works well for credit cards with high interest. When it comes to high interest credit cards, you often find yourself in a terrible cycle of only paying the minimum. Consider this, you owe $5,000 on your credit card. It has a 20 percent interest rate. You can only pay the minimum amount on your card, which is probably around $300, give or take.

That only brings your balance down to $4,700 which is hit with another finance charge. If this cycle continues, you are only making a small dent in the money you owe. Now, imagine this is happening with multiple credit cards. You are never truly able to get in front of the debt. You are always feeling behind. Sound familiar?

Step 1 – Know Your Goal

“Winning at money is 80 percent behavior and 20 percent head knowledge. What to do isn’t the problem; doing it is. Most of us know what to do, but we just don’t do it. If I can control the guy in the mirror, I can be skinny and rich.”
― Dave Ramsey, The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness

When you begin to consider consolidation, there are some things that you should do. There are smart steps to consolidate debt. The first step is to understand your goals. The most obvious goal may be to get out of debt. Or, maybe you will say to stop making so many payments that do not get you anywhere. Now is the time to really understand your financial goals.

You should create long-range and short-range goals. A long term goal may be to save towards retirement so that you are able to retire someday. Another long term goal may be to have a specific amount of money saved in ten years. A short term goal may be to begin saving money. Another short term goal may be to save for a vacation you have always wanted to take. In addition to pulling yourself out of debt, there are probably other things you would like to do, too.

Consolidating your debt can give you the freedom to begin to think about these goals. You also want to make sure that consolidating your debt will not stand in the way of your other goals. Make sure that any debt consolidation program you enter does not freeze your credit cards, or any of your assets. You might need access to them. If any of those are frozen, be sure to know how long before you are able to use them. Some programs freeze your credit cards until you are able to pay off the balance. Make sure you know all the details of any debt consolidation you consider.

Step 2 – Gather All Your Debts

As part of your steps to consolidate debt, you must gather all the information about your debts. Until you gather all of this information, you probably do not know the gravity of the situation. You cannot begin to solve your debt problem until you know how deep it is. You should contact your credit card companies and any loans you owe to get the pay off amount. That amount may not be what you think, so you should always check.

Depending on your interest rate and when you make your last payment, the pay off amount is changeable. You should make sure you are working with the most accurate numbers. Be aware of the current interest rates on loans. This could significantly impact how much money you are going to pay while in the process of paying off your debt. If you know the current interest that you are paying, then you can work to get a smilier or lower interest rate. You can use a debt consolidation calculator to help you determine these numbers.

Do not stop paying on your current debts just because you are considering debt consolidation. You still need to continue to pay your debts until you know they have been paid off by another party. If you choose to stop paying your debts, you can be hit with fees and penalties. This also negatively impacts your credit score. You should also make sure that none of your existing debtors charge a penalty, or fee, for paying off the debt early. If all of your debtors charge this fee, that can get pretty high for all of your debts.

Step 3 – Take A Look At Your Assets

One of the steps to consolidate debt that many people overlook is reviewing your assets. Your assets could be your home and any vehicles you have. You may have other valuables that could be considered an asset. All of your savings, investments and retirement plans are also considered assets. Make sure you list them when looking at your assets.

When you are considering which debt relief strategy to use, applying for a loan or a debt management company, your assets may make a difference. Some debt management companies may encourage you to use your assets to pay off your debts. You could sell some of them to make the money to pay your debts. This is not always the best idea. Keep in mind that paying off your debt is a short term goal, but saving for retirement is a long term goal. Protecting your assets may be a good way to protect your financial future.

Step 4 – Understand Your Credit Rating

It is always important to understand your credit score before you take steps to consolidate debt. The reason is your credit score can impact the interest rate you receive on any type of loan that you want. A low credit score will cause a higher interest rate. You may ultimately pay more to pay off your debts. To illustrate my point, I will give you an example.

If you have a good credit score of 650 or higher, you can get an interest rate of around 15 to 16 percent. Once your credit score begins to drop to 640, which is only a 10 point difference, the interest rate goes up to 20 percent. That is a huge jump! Say you have a debt of $5,000 and interest of 15 percent, you end up paying $750 in interest. When that percentage jumps up to 20 percent, you are now paying $1,000 in interest. That is a large increase and it feels like it takes forever to pay off that amount of debt.

Once you are in this position, your debt has already been impacted and it is hard to correct quickly. You can make positive impacts by reducing your debt as much as possible and making regular monthly payments on time. It takes consistent work, but it is possible.

Step 5 – Look At Your Budget

Now that you have an understanding of your debt, the next steps to consolidate debt are to understand your budget. It is great that you know how much you have to pay in debt. It is just an important to understand how much money you have to pay that debt. If you cannot pay all of your debt before debt consolidation, you may not be able to pay the debt consolidation amount. It is important to look at what you can afford to pay.

For the moment, you should put all of debts aside that you plan to consolidate and look at all of your other expenses. Make sure you use a budget application to track all of them.

Smart Money Tip!

After you have listed all of your debts, you should then list all of your income. You should also be clear about the source of your income and if it is a regular source of income. If you are self employed, you may not have regular income and that is important to note. You should also list any savings that you have. It is important to know if you are willing to dip into your savings accounts to pay off your debts.

Step 6 – Understand Your Options

When you are taking steps to consolidate debt, there are a few consolidation options available to you. Even though some of these options may not make the most sense for you, it is important to know they are available to you. As a result, I am going to briefly outline them for you.

There is a debt consolidation loan, which is an unsecured loan that you borrow from a lender to pay off all of your debts. You would determine the pay off amount of all of your debts and apply for a loan for that amount. When you are approved, the lender gives you the money. You are responsible for sending the payments to the debtors to pay off those loans. You then have one debt that you pay every month. This amount does not change providing you have a fixed interest loan.

If you own a home, a home equity loan may also be an option for you. This is a secured loan, because your home is collateral. These loans tend to be at a lower interest rate. You are, however, risking your home. If you do not pay back the loan, you could risk losing your house. You want to make sure if you go this route that you can pay back the loan timely. You do not want to risk losing your home.

A balance transfer may also be an option for you, particularly if you have a lower amount of debt. This does require you to open a new credit card. You can transfer the balances of other credit cards to that card and pay it off at 0 percent interest. Ultimately, this allows you to pay less money in the long term. You want to ensure the credit card allows you to transfer balances and has 0 percent interest on balance transfers. You also should verify that you can transfer your existing balances to the new card.

Some cards have limitations on what you can transfer, so you want to ensure you can transfer the old balances. Another thing to consider is there is usually a time limit for paying off the balance transfer. You may have 18 months to pay off the balance at 0 percent interest. Be aware that if you have no paid off the balance within the 18 months, you will be charged interest all the way back to the date of transfer. Make sure you read the fine print and understand the terms to which you are agreeing.

Another major option available to you is a debt settlement company. This includes an expert in debt consolidation to help you. You receive a debt counselor to create a debt management plan with you. This debt counselor helps you to put together a plan that is specific to you and helping you in your particular situation. The credit counselor takes on the burden of paying off all your debts. They will contact all of the companies and ensure all of your debts are paid, so you do not have to handle that on your own. You want to make sure you pick a company in which you feel comfortable working. Keep in mind that debt management companies charge fees to handle your debt management plan. You want to make sure that you are aware of the fees up front before you agree to working with the company.

Step 7 – Decide If You Need A Debt Manager

 

Using a debt settlement company or manager may sound like a great way to do. They handle many of the steps to consolidate debt for you. You do not have to reach out to your creditors because they do it all for you. If you are sure that you do not want to get a personal loan and you feel you could benefit from credit counseling, then debt consolidation may be for you. If you do not mind paying the fees, then it could be the proper route. In reality, you must decide if a debt manager is the best decision for you based on your individual circumstances. Maybe the thought of dealing with all of those lenders gives you anxiety. Then paying the fee is worth it to you because it takes away that burden.

Is Loan to Consolidate Debt Right For Me?

I know you are not going to like this answer, but it depends. Taking steps to consolidate debt may be the right think for you if you are drowning in debt that has no end in sight. If you feel like you cannot get your bills paid per month because all you can afford is the minimum payment, then you should consider consolidation. If you just do not feel like dealing with three different payments per month and you want a simplified way to handle your bills, maybe you should not consider consolidating.

You have to decide for yourself if taking steps to consolidate debt is right for you. There are many different ways to address debt consolidation, so maybe if you should consolidate your debt is not the right question. Maybe you really are asking how should you consolidate your debt. Arming yourself with all of the information is the best way to answer this question. When you know all of the options available to you, you are better able to answer that question.

Pros To Debt Consolidation

One of the benefits to taking steps to consolidate debt is you finally can stop drowning in bills. You merge everything into one monthly bill. You do not have to apply for a loan. There are other ways to consolidate debt without needing a loan. The biggest advantage to debt consolidation is probably the most obvious, it allows you to merge all of your debts together into one larger debt. This gives you the opportunity to focus on one debt and one payment instead of multiple ones.

One payment is so much easier to manage than multiple different ones. It is easy to be in control. It is easy for your brain to wrap around one payment and the total amount getting smaller. Debt consolidation can improve your credit as you begin to work away at it. As long as you are making consistent monthly payments, you are decreasing your debt with every payment. This also decreases your debt to income ratio. This is the amount of debt you have compared to your income.

Debt consolidation can help you to feel empowered since you are taking control. You are able to make more than just the minimum payment. Your payment amount will not change because you have used your credit card. This is a static payment, so you always know how much you need to pay. This also may be room for you to make more payments in one month.

Cons To Debt Consolidation

As with anything, there can also be some negatives to taking steps to consolidate debt. I want you to have all the information, so I am going to share the potential downside to consolidating your debt. The biggest negative is the interest rate. You may end up with a high interest rate on any loan you get.

This is especially true if you have poor credit. However, once you have locked in an interest rate, as long as you have a fixed rate loan, that amount will not change. It is still going to take you a long time to pay off your debt. Consolidating your debt does not shorten the repayment in any way. However, with each payment, you are decreasing your debt. This may not be true prior to consolidation.

Unless you close your credit card accounts, they are still available for you to use. There is a high chance you may increase your credit card debt again while still paying the consolidation loan. This is a dangerous place to be. You are just piling debt on top of debt. You have to change your habits for this not to occur again. This means you have to truly take control of your spending. Credit counseling may be a good idea so that you can gain an understanding of how credit works.

Will Debt Consolidation Hurt My Credit?

Chances are if you are considering debt consolidation, you credit is not in the best shape. I am going to guess that you have a lot of debt that you are having a difficult time paying. The higher your amount of debt, the greater the impact is on your credit. Your debt to income ratio is most likely high, which is also harmful to your credit score. Typically, consolidating your debt MAY ultimately improve your credit. You may seem a slight dip in your credit score as you are in the process of obtaining a loan, or working through consolidation. Chances are, your credit score is already low enough that a slight dip does not make much impact.

On the other hand, taking steps to consolidate debt may improve your credit score. Essentially, you are paying off all of your debts and creating one larger debt for yourself. This gets those other debts paid off quickly, which can improve your credit rating. By focusing on just one payment, you are be positioned to pay it on time. Making timely payments and not missing any months can help improve your credit score.

Conclusion

After reading all of the information above about steps to consolidate debt, if you still are not sure, maybe you should talk to a financial advisor. Taking on more debt, even to pay off other debts, is not something that should be taken lightly. If you are not sure if this is right for you, you should not rush into it. I have outlined all the steps to consolidate debt. You need to make sure you can afford the consolidated payment amount.

It is reasonable to think that combining all your bills into one debt decreases the amount you pay each month. But, that is not always the case. You need to first understand your budget and how much money you can afford to pay each month. You must then understand how much your total debt is. Then you can take a look at what kind of interest rate you can get for a loan in the amount you need. Can you afford to pay the every month for the length of the loan?

Will a lender give you the money you need to pay off all your debts? If the answer is no to either of those questions, this process is not for you. Paying off only a portion of your debt is dangerous because you now have a higher monthly payment for the consolidated debt plus all the leftover debt. If you cannot afford to pay back the loan or the interest is higher…DO NOT DO IT. You will just put yourself in a worse financial position by obtaining a loan you cannot afford. That will be more stressful and negatively impact your credit. Take all of your options into serious consideration before moving forward.