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20 Tips For People in Their 30s To Better Manage Their Money

20 Tips For People in Their 30s To Better Manage Their Money

Turning thirty, the big 3-0, is probably the most crucial financial crossroad in the lives of many people today. Whether you are embarking on a new career path, planning on buying a house, or preparing for the responsibility of children, how you handle this monetary pivot in your life can very well lay out the blueprint for what the rest of your finances will look like.

However, if you are willing to keep an open mind to the possibilities of new ways of thinking, there are some practical ideas that may be all the inspiration needed to take charge of your own life and financial security.

These 20 tips will give you a different perspective on managing money, well into your 30s and beyond.

1. Be patient and delay pleasure

As you approach your 30s, it is safe to assume that you have probably spent the better part of your 20s in college, surviving on ramen noodles and fast food. Your impulse upon entering your 30s will be to jump into the nice house, the cool car and begin living the American dream. But be careful not to accumulate more liabilities than you have income or assets to pay for.

2. Your house is not an asset

Most people have been conditioned to the belief that buying a house and owning real estate is the secret to financial success. This is really only half the truth. If your home is taking money out of your pocket, (i.e. in the form of a mortgage), instead of putting money in your pocket, (i.e. in the form of rentals or home businesses), it is a liability, not an asset. As you turn 30, be sure to understand the difference between assets and liabilities before making large purchases.

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3. Cut back on your vices

Leaving your college years behind, you might have accumulated more vices than you care to admit – alcohol, cigarettes, and undoubtedly fast food, just to touch on a few. To be honest, I have had more than my fair share of those 3 am greasy Taco Bell runs after a night out with friends. As memorable as these times were, a realization dawns as you enter a new decade. Not only are those nights hard on your health, they are also hard on your wallet.

Also, do not forget that as you go from a fun college atmosphere to a stressful work environment, what started out as a fun way to pass the time can become a detrimental and financially draining addiction or coping mechanism.

4. Learn to cook

You don’t have to be a gourmet chef by any means, but If you are serious about managing money, you must at least know how to prepare some basic staples and simple meals that will cut back on how often you have to eat out. It can also be very helpful to plan out your meals for the week ahead of time. This will help create your grocery budget and eliminate random spending on unnecessary food.

5. Don’t be content simply being an employee

In this day and age of rising inflation and stagnant wages, you will probably find it very difficult to make enough money to save and invest after paying for basic survival essentials like food, clothing and shelter. This hardship is a consequence of generations of conditioning children to aspire to simply become employees. Whole generations are told to get a secure job with good benefits and work hard. If you find yourself feeling smarter than your job title, you probably are. As you turn 30, start thinking of ways to accumulate the knowledge that inspires you to create something of societal value.

6. Write out a budget

This might seem like an obvious duh, but how many people do you know who have actually taken the time to write a financial plan, let alone learn how to follow one? Unless you write out a detailed budget, you are playing chicken with your financial future.

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7. Save first, pay bills later

Set a savings goal and adjust your lifestyle to meet it. Do not set your saving goal to meet your lifestyle, you will always be broke. Ideally, you should be saving about 25 – 30 % of your income after taxes. The logic in society today is to pay bills and then save. This way of thinking is one of misplaced priorities and an attachment to stuff. If you want to get ahead financially and create true wealth, you must learn to pay yourself first.

8. Go through your debit/credit card statements

Don’t just throw away those monthly statements from the bank, actually go through them. Think of it as a statement that reflects your spending habits or behavior. If you are running out of money before the month’s end, your statement will very well show those loose purchases that add up to cost you tons of money. Go through with a highlighter so you can color code your expenses. This system will help you build your budget.

9. Your time is your most valuable form of money

Time is the one resource we all admit to not have enough of, yet it is the most wasted of all resources.

If you spend 10 – 12 hours of your day at a job you don’t particularly enjoy, do you really believe you are managing your time well? If time is money, then you should learn to invest it in things that add value and joy to your life.

10. Ditch cable

With so many tools available for entertainment – i.e. Internet, YouTube, Netflix, Redbox etc. – it makes no sense to pay $150 – $200 per month to watch reruns. You are probably never home anyway and when you are, there are more effective and creative ways to pass time. Cutting your cable bill can be a good way to, over time, invest $2,000 in your future.

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11. Consider the cost of having kids

Having a child is a joyous occasion. However, as you consider growing your family in your 30s, be sure to understand the cost that having a baby can add to your finances. Not to say that if you are blessed with the unexpected gift of a child you won’t be able to lead a happy and financially secure life, but it will unarguably create a few more challenges for you to overcome. The care of another’s life is a huge responsibility and should not be undertaken lightly. So in an age where birth control options are innumerable, take the responsible route and plan for the right time to add to your family.

12. Do not Cosign a loan or lend money

“The borrower is always slave to the lender.” As you get older, you may begin to have family members and friends look to you for financial assistance in getting loans. But try to remember that the bank requires a cosigner for a reason. If the borrower misses a payment, there is a good chance they will come after you. As such, be very hesitant to cosign on any loan. Not only are you risking losing your money, but you are also risking the loss of a great relationship.

13. Be careful who your teachers are and question everything

There will be lots of people, especially family and friends, wanting to give you massive amounts of financial advice as you turn 30. Remember that when it comes to money, everyone has an opinion. Most people are enthusiastically ignorant. You must take every piece of information with a grain of salt. People who may seem to be doing well financially may really be broke and living off debt. Seek not just knowledge, but understanding. Question everything and be careful not to live a different variation of somebody else’s life.

14. Your success is determined by what you do in your down time

Most wealthy people will tell you that you are only as successful as what you do during down time at your job. Marshall Mathers’s rapper counterpart “Eminem” seized every opportunity to battle in freestyle raps, even on lunch breaks at work. Those precious moments of time used turned out to be worth millions of dollars.

Remember as you approach 30 that you will be extremely busy, overwhelmed with work and bills. How you manage your down time is a good reflection on how you will probably manage money.

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15. Avoid mind numbing activities

Social media and games like Candy Crush help occupy boredom. But remember that humans are most creative when bored. Just like down time, how you treat this boredom may tell how much success you have. You are more likely to think of something productive to do if you don’t numb and distract your mind with social media and games.

16. Shop by dollar amount, not by unit price or deals

In a world of coupons, mega savers and deals, do not loose money chasing a bargain. If walk into a store with a budget of $15 for a variety of groceries and see one item on sale at 10 for $10, it may not be a deal to you to get the item as your budget does not support the purchase. You simply can’t afford the deal. Going over your planed spending amount to secure a bargain will ensure that you spend the rest of your life doing just that. Again, be patient.

17. Have an emergency fund

Financial adviser Dave Ramsey has a principle that I love and practice and it is called a G.O.K. (God only knows) fund. You have probably gone through your 20s having your financial mishaps covered by Mom and Dad. However thing are about to get real in your 30s. As Mom and Dad begin to withdraw their help, you must learn to create your own safety net, lest Visa and MasterCard catch your slack.

18. Rethink higher education

As you approach your 30s, you are probably thinking of ways to increase your income. The general advice from parents and elders is to go back to school. However, there are many other ways to do this without the debt of a Masters or MBA. The train of thought that more education equals higher pay is an old way of thinking that doesn’t really apply to this generation. While a specialized degree may be relevant in some cases, you are best served to really count the cost of your education and weigh its potential return.

19. Reaize that your savings plan and 401K may not be enough for retirement

Saving money and planning for retirement are good habits to have. However they may not be enough to sustain you and your family in the future.
So far, you have learned a few new tools to aid your financial literacy. Start looking for ways to keep income coming into your pocket even well after retirement. In your 30s, you are able to take a few well informed, calculated risks.

20. Be familiar with self-reliance and D.I.Y.

Self-reliance and learning to create or do things on your own is a big part to saving money. Fortunately, we live in an age of infinite access to information. For example, vinegar and water make a cheaper replacement for Windex. These types of tips for everyday living can be found on YouTube or Google and can really help save money.

These tips aren’t a guideline to strictly follow, by any means. But they are definitely some food for thought as you enter your 30s and seek ways to really buckle down on financial stability.

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Last Updated on July 10, 2020

The Definitive Guide to Get out of Debt Fast (and Forever)

The Definitive Guide to Get out of Debt Fast (and Forever)

Debt can feel crushing, like a weight that is always weighing you down. Looking at those numbers, it can feel as if you’ll never get out from under it. However, if you really want to learn how to get out of debt, it is possible with a great deal of focus and self-control.

Getting out of debt isn’t impossible. Like any big goal, all that it takes is an action plan to identify where you are and creating a plan to zero out your debt.

Identifying All of Your Debts

The first part of paying off your debt is getting a complete picture of what you owe. When you have everything written out in front of you, it makes it much easier to create an action plan. Depending on how much you owe, it might also help you realize it’s not as bad you might have originally thought.

Here’s how you can get started identifying your debts:

1. Own Your Debt

Before you start identifying all of your debts, take a moment to process that you have debt but want to get out of it.

Forgive yourself for any past mistakes, missed payments, or overspending. It might be painful to accept how much debt you have at first, but you must own it.

2. Make a Debt Tracker

It’s astonishing how few people ever created a tracker to understand their total debts. Most likely, it comes from not wanting to accept the guilt of having debt, but, if avoided, it can make it nearly impossible to get out of debt.

Open up a new Google or Microsoft Excel sheet and list out all of your debts. Start with the name of the creditor, interest rates, total balance, loan term length (if any), and the minimum amount due each payment. This will include student loans, credit cards, and any other type of debt owed.

3. Get Your Debt Number

Once you’ve made your debt tracker and taken the other steps, identify your total payoff number. This is crucial, as you will have a starting point and a clear goal that you are trying to achieve.

Prioritizing Your Debts

All debt is not created equal. It’s imperative to understand that there are different types of debt.

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1. Understand Bad and Good Debts

Bad debts are usually paying for things you want instead of always need. While there might be some emergencies that max out your credit cards, often times it’s excessive spending[1].

There are three main types of bad debt:

  • Credit Card Debt: The average American household owes over $16,000 in credit card debt!
  • Auto Loan Debt: According to CNBC , the average auto loan in the US is $30,032!
  • Consumer Loan Debt: Consumer loan debt isn’t as common as credit card and auto loan debt, but it’s still considered bad as interest rates are usually between 10-28%.

Good debt is identified as investments in your future. Here are three common types of good debt:

  • Student Loan Debt
  • Mortgage Loan
  • Business Loans

2. Decide Which Debt to Pay off First

Once you know each type of debt and their interest rates, you can begin to pay off debt quickly.

Focus on paying off bad debt first, regardless of if it is a credit card or auto loan. Start by paying off the loan with the highest interest rate first.

If you have several credit cards with different interest rates, you want to focus on the one with a higher APR. You will actually save more money by eliminating the card with the highest interest rate.

3. Don’t Pay the Minimum Amount

Paying the minimum amount digs you into a hole as interest rates will offset your payment. Even a small amount more than the minimum can help you pay off debt much faster.

Removing Obstacles to Pay off Debt Quickly

Creating a debt tracker and prioritizing a plan is simple, but avoiding temptation can be difficult.

1. Set a Reminder to Track Your Debt

“If you can’t measure it you can’t manage it.” -Peter Drucker

It’s so important to track your debt to ensure that you get it paid off quickly. Similar to working out and measuring your results, you need to track your debt constantly. Start with a weekly reminder, where you sign on and log your updated number. Did you increase, decrease, or stay the same?

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Regularly tracking your student loan balance can be incredibly motivating, as well. You will get a huge confidence boost each time you see your total debt amount decreases.

Set weekly and monthly goals so you can have short term wins and keep the momentum going.

2. Hide Your Credit Cards

If your biggest debt is credit cards, you need to eliminate temptation and remove them from your wallet.

Some people have gone to extreme measures by freezing their credit cards. Why? This would create an ice block around your card, which would require you to chip away at it slowly. This will give you time to think if it’s the best idea to buy that thing you’re about to buy.

3. Automate Everything

Willpower can be a huge downfall to paying off your debt. By automating your bills each month, you will ensure that willpower isn’t involved.

4. Plan Ahead

Getting out of debt will require some sacrifices, but with enough planning, you can make it work.

For example, if you know that you have a friend’s birthday or family dinner coming up, plan ahead for the costs. Whether you need to cut back on spending the week before, pick up a side job, or meet them after dinner, do what is needed.

5. Live Cheaply

The only way to get out of debt is to make some sacrifices on your spending habits. Find ways to save money each month so you can apply that amount to your outstanding debts. Here are some ways to save money each month:

  • Live with roommates
  • Cook dinners and prepare lunches for work instead of eating out
  • Cut cable and choose Netflix or Amazon Prime
  • Take public transit or bike to work

Finding the Lowest Interest Rates

The higher your interest rates, the harder (and longer) it will take you to pay off any debt.

If possible, you want to find ways to lower your interest rates to help get out of debt quickly. Here’s how you can get started:

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1. Maintain a High Credit Score

Your credit score will have a large impact on your ability to refinance your loans and receive a lower interest rate. If you have a low credit score, it’s unlikely you will be able to refinance your loans. Use these credit tips to increase and maintain an excellent score:

  • Never miss a payment
  • Don’t exceed 30% of your credit limit
  • Don’t sign up for more than one card at once
  • Limit hard inquires, like auto-loans and new credit cards
  • Monitor frequently with free credit-tracking software

2. Find Balance Transfer Offers

Start by opening a free account on credit.com. Credit.com offers you the chance to open a free account and see what type of balance transfer offers you can receive. Some of your existing credit cards might already have 0% or lower APR balance transfer offers available.

Contact each of your credit card providers to ask about lowering your rate for a one-time balance transfer offer[2].

If you do take advantage of this option, make sure that you use a balance transfer and not a cash advance. Cash advances have a ton of high interest fees (15-25%, depending on your credit card) and will only compound your debt problem.

How to Get Rid of Debt Forever

Setting up a plan, removing temptations, and getting the lowest interest rates is the first step to get out of debt.

1. Keep Monitoring and Adjusting

Once you have a plan, don’t get comfortable. Track your debt payoff plan and make the necessary adjustments when needed.

Monitor your credit scores with a free site like CreditKarma. The higher your credit score climbs, the more likely you will be to secure a new, lower-interest loan.

2. Earn More Money

There are only so many ways to save money. Instead of clipping another coupon or making sacrifices for your morning coffee, find ways to earn more money!

Think about it…it is much easier to find ways to earn an extra $1,000 per month than find $1,000 to cut from your budget.

Here are some examples of ways to earn more money:

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Talk to Your Boss

Have a conversation with your boss about current salary and/or commission rates. If you’re not satisfied or want a change, don’t be afraid to look around at other positions. Some of them might even have a student loan debt reimbursement plan!

Start a Side Hustle

This could be coaching students on the weekends, driving for Uber, or taking paid online surveys. There are tons of ways to make money outside your 9-5. Now that you have a clear plan to pay off your debts, you’ll be more motivated than ever to figure out creative new ways to earn money.

Build an Online Business

There are so many websites and blogs that earn money from ads, affiliates, and other online products. Find your niche and get started.

3. Celebrate Your Wins

As you progress in your debt payoff journey, don’t forget to celebrate your wins. You need to always reward yourself for the hard work and discipline that is required to get out of debt.

While you shouldn’t celebrate so big that it increases debt, make sure to factor in little rewards to keep you motivated.

4. Set New Financial Goals

Eventually, with a plan and these steps, you can rid yourself of your debt. Once you do, make sure to celebrate your monumental achievement, but don’t stop there.

Now, you can focus on acquiring wealth and increasing your net worth. Set new financial goals so you have a new target to aim toward. Here’s how to set financial goals and actually meet them.

These could be anything now that you are debt free! Think about where you want to travel, buying your first home, or saving for your future retirement. Just like before, make sure that your goals are specific, measurable, and achievable.

Conclusion

Congrats, you can now set a plan in motion to finally pay off your debt quickly (and hopefully forever)!

Remember, if you want to get out of debt quickly, it’s not always easy. Just like any big goal, there will be sacrifices, challenges, and problems to overcome.

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Featured photo credit: Pepi Stojanovski via unsplash.com

Reference

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