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5 Tips for Getting Out of Debt (and Why)

5 Tips for Getting Out of Debt (and Why)

When young people are first starting out in life, either as college students or young workers, debt looks like an easy solution to the shortage of money that seems to go with this period of life. It’s only a temporary fix, however, and will set a person back in the long run. Suze Orman, in The Courage to Be Rich, points out the outrageous amount of money that is paid on interest over the years with credit cards and other debts. She and other financial experts offer some tips for getting out from under.


1. Know about your credit cards. When you get the bill, look it over until you find the APR (annual percentage rate), which is the interest rate. Credit cards sometimes list other percentages and fees, but the APR is what will get you in the end. List your cards from highest to lowest APR. For instance, put that 27% interest card first, and the 0% cards last.

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2. Work from the top down. Pay as much extra as possible on that top card each month. Make minimum payments on the others. When that highest card is paid off, start the process with the next card on the list. Carry out this procedure until all the cards are paid off.

3. Round up. For speeding up the time it takes to pay off your mortgage, simply add a few dollars each month. Those dollars are applying to the principal, and even a few dollars a month can trim years off your debt. One idea is to round the amount up to the nearest ten.

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4. Emergencies? Experts disagree about the wisdom of keeping one low interest card on hand for emergencies. Frankly I think it makes some sense, but Dave Ramsey, author of The Total Money Makeover: A Proven Plan for Financial Fitness, says No. He says you should perform “plastic surgery” on those cards and cut them up. The bottom line is how you define an “emergency.” If it’s seeing a great deal on something you’ve been wanting, like a new guitar, maybe, but you don’t have enough money to cover it right now . . . well, that’s not really an emergency!

5. Keep it empty. If you do keep one card on hand for convenience or whatever, the best policy is to always pay it completely every month. Otherwise you are actually living beyond your means. Orman describes that lifestyle as living a lie. It’s been said that many people “spend money they don’t have on things they don’t need to impress people they don’t like.” Think about that statement and see if it applies in your own situation.

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An old classic success book is Success Through a Positive Mental Attitude by Napoleon Hill and W. Clement Stone. These authors listed seventeen principles of success, of which one was what they called “O.P.M.” This acronym refers to “other people’s money.” They advised borrowing money to invest in one’s own business efforts, and then thinking positively so that money would grow. It’s an interesting idea. What do you think?

References:

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Ramsey, Dave. The Total Money Makeover: A Proven Plan for Financial Fitness

Orman, Suze. The Courage to Be Rich: Creating a Life of Material and Spiritual Abundance.

Hill, Napoleon and Stone, W. Clement. Success Through a Positive Mental Attitude

Barbara Wood is a writer and educator living with her family in the Missouri Ozarks.

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Published on July 4, 2018

Top 10 Recommendations on Money Management Apps

Top 10 Recommendations on Money Management Apps

Don’t want to overspend your budget, swipe your credit card too many times, and feel like a financial mess? Instead of beating yourself up for the bad financial decisions you’ve ever made, create a new plan!

The solution is simple, save more and spend less. But, we all know it’s easier said than done.

One problem is finding quality apps that save you time and money, and aren’t just hype.

Luckily, there’re many great money management apps available at your fingertips. Here are 10 reliable money management apps that can help you save money, and crush debt.

1. Personal Capital

    When was the last time you’ve tracked your net worth? Probably months ago or maybe never. Personal Capital allows you to easily track your net worth and plan for retirement.

    Here are some of its main features:

    • Sync many investment accounts, and expenses (mortgage, credit cards, etc.) in one place
    • Discover hidden fees and how much they’re affecting your retirement plan
    • Wealth management for investors requiring a long-term strategy

    With Personal you’re free to track your expenses and net worth.

    Available for: iOS and Android

    2. Mint

      If your smartphone could only install a few apps, Mint would be one of them. Why? Because Mint tracks all your balances and bills in one place.

      Here are some of its main features:

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      • Effortlessly track all your bills and balances in one dashboard
      • Categorized expenses to understand where you spend your money
      • Uncover hidden fees, and determine your investment style with sophisticated retirement tools.

      Feel at ease with managing your money by a reputable company that isn’t going anywhere.

      Available for: iOS and Android

      3. YNAB

        Everyone needs a budget, there’s no way around it. YNAB (You Need A Budget) is an easy to use app that will change the way you think about money. Their motto is to “give every dollar a job”, and you’ll quickly discover why.

        Here are some of its main features:

        • Easily sync all bank accounts in one place
        • Visually see your debt paying progress with eye-catching charts and notifications
        • Customized categories setting saving goals

        The best part about YNAB is the community that comes along with it. You can hop on the YNAB forum to receive support, listen to the YNAB Podcast or stay tuned for their weekly videos.

        Available for: iOS and Android

        4. Wealthfront

          Albert Einstein once said “compound interest is the eight wonder in the world”, and for a very good reason. The problem is, most people are scared or unwilling to learn the basics of investing. This is why Wealthfront is the perfect solution for the hands-off investors.

          Here are some of its main features:

          • Variety of investment account options including IRA, Roth IRA, and more
          • Your portfolio composed of 7 different asset classes
          • Automatically rebalanced portfolio
          • Daily tax loss harvesting

          Wealthfront is perfect for people requiring investment guidance, or prefer a hands-off solution.

          Available for: iOS and Android

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          5. Clarity Money

            If you’re staying on top of your budget but want to take your finances to the next level, Clarity Money can help you. Clarity Money helps you stay under budget and build a personalized savings plan.

            Here are some of its main features:

            • Easily cancel subscriptions with one click
            • Synchronize bank accounts fast
            • Transfer money effortlessly between different accounts

            Clarity Money isn’t an app that does it all. But, it does make transferring money and canceling subscriptions fast and efficient.

            Available for: iOS and Android

            6. Acorns

              What if there was a way to quickly gain confidence in investing your money, without too much risk? There is, and Acorns is your solution. With Acorns’s technology, you’re able to make investments as small as $5.

              Here are some of its main features:

              • Automatic contribution option
              • Customized portfolio tailored to your needs
              • Low management fees ranging from $1-$2 per month

              Stop wasting dollars on expensive coffee. Instead, invest them towards a brighter financial future.

              Available for: iOS and Android

              7. Albert

                Do you budget by only subtracting your expenses from your income? If so, how would you discover any overpayments or extra money you could save? This is where Albert shines, and it does it all free.

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                Here are some of its main features:

                • Receive notifications for overpayments, hidden fees, and low balances
                • An Automatic budget that’s built around your spending and income
                • Easily track debt and set new financial goals

                While Albert does offer a paid option, most of its core features are FREE. So, what better option to save?

                Available for: iOS

                8. Prism

                  Have you recently forgot to pay a bill because life got in the way? Prism automatically tracks your bills and syncs your bank accounts in one place.

                  Here are some of its main features:

                  • View all your account balances in one glance
                  • Bill due dates are automatically pulled and tracked
                  • Receive early reminders for upcoming bills

                  If your budget is on “fleek” but can’t seem to stay on top of your bills, Prism is your go-to app.

                  Available for: iOS, Android, Windows, Amazon

                  9. Mvelopes

                    Remember hearing about people using envelopes to budget their money? Well, Mvelopes is the new envelope system for this generation. Easily create monthly budgets and track your saving goals.

                    Here are some of its main features:

                    • Connect unlimited bank accounts
                    • Real-time budgeting with auto transaction syncing
                    • Low monthly $4 fee or $40 annual

                    Mvelopes can help you crush debt, save more, and help you stop overspending. With its low monthly fee, it’s worth a try.

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                    Available for: iOS and Android

                    10. Wallaby

                      Most people don’t have time to track their credit card’s changing rewards and interest rates. Because of this, you need help reaping the most of your credit card’s rewards. Wallaby is the app that will help you do just that.

                      Here are some of its main features:

                      • Automatic recommendations for the best credit card to use for each transaction
                      • A friendly user interface, displaying credit cards with their corresponding images
                      • Free to use

                      If you’re using the same credit card to make your purchases, you may be leaving money on the table. Give Wallaby a try if you’re ready to maximize your credit card’s rewards.

                      Available for: iOS and Android

                      Take control of your finances and experience financial freedom

                      Picture yourself staying on budget and saving more money than you’d ever imagined.

                      It took hard work and dedication but you’d finally learned how to manage your money. You have to start taking control of your spending and saving habits.

                      You now have a list of reliable apps that can help you build better money habits, what are you waiting for?

                      Featured photo credit: Pexels via pexels.com

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