Tag Archives: NerdWallet

How I Ditched Debt: ‘Born Spender’ Goes on a Spending Fast

Posted on by
Reply

In this series, NerdWallet interviews people who have triumphed over debt using a combination of commitment, budgeting and smart financial choices. Responses have been edited for length and clarity.
and then we saved

And Then We Saved

Who: Anna Newell Jones
How much: $23,605 in 15 months

Anna Newell Jones considers herself a “born spender” whose desire for the latest fashions and gadgets landed her in debt.

When she got married in May 2009, she had a big secret — she owed nearly $24,000 in credit card debt, student loans and money that her parents borrowed for her. She was living paycheck to paycheck and felt like she had hit a bottom financially. So she shared with her husband, Aaron, a plan to cut her expenses to the bone, pay off debt and become a financial adult. And she decided to blog about her efforts to keep herself motivated and accountable.

First up was making a list of wants and needs customized to herself. Do-it-yourself hair color in a box made the “needs” list, but salon services did not. Then she did what she calls a reverse budget — she analyzed the previous three months’ spending to see where her money was going so she could determine what could be cut.

Newell Jones declared a “spending fast” in 2010: spending the bare minimum and only on necessities. The Denver resident found it freed up time previously spent shopping, returning items and worrying about the financial hole she was digging. That extra time helped her figure out how to increase her income, including photographing weddings on weekends, writing a book and creating her website at andthenwesaved.com.

» SIGN UP: Set and track your own goal to ditch debt

What was your total debt when you started? What is your debt today?

At the tail end of 2009, I [had] $23,605.10 in debt, and I managed to eliminate all of it in only 15 months! I have a mortgage now. Apart from that, I’ve been able to remain completely debt-free.

How did you end up in debt?

I’m a natural spender. I like new things. I used to live for finding that perfect shirt or decoration for my house. … Even though I owed money to others (like my parents for school), I was always able to find money when I wanted something. I was completely overwhelmed by my debt and thought I’d die with it, so in a lot of ways I decided, “Ah, screw it! Might as well at least enjoy myself!” Basically, I spent money I didn’t have on things I didn’t really need. I was reckless.

What triggered your decision to get out of debt?

I wanted my financial life to be about more than just covering my minimum balance each month or not bouncing a check. I got to the point where I was tired of feeling like crap about myself and the situation I had created for myself. I had, in a lot of ways, hit my “financial bottom.” I was desperate enough to make sacrifices and do whatever I had to to get out of debt.

What steps did you take to reduce your debt?

I made some very serious lifestyle choices … meaning I only spent money on necessities (rent, basic food, etc.) and nothing extra. I started my blog as a way to hold myself accountable. I thought that maybe if I went public about my debt and about how much it weighed on me, I’d be more likely to not immediately ditch the entire idea once things got difficult.

How has your life changed for the better since you got out of debt?

Oh man, it’s so much better! Life without debt, shame, worry and anxiety centered around money is so freeing. Before, I was stressed and worried all the time, and it showed. Now I own several businesses, have money to save for my family’s future, and have the freedom to spend more time with my husband and son.

How do you remain debt-free today?

I’m very mindful of my money and my spending. I regularly do reverse budgets [to watch for overspending issues that could crop up]. I also run a Spending Fast Bootcamp and connect with members of the bootcamp each week in Facebook Live videos. Helping them helps me stay aware and present, rather than mindlessly slipping back into my old “spender” ways.

How to tackle your own debt

Jones, who says her blog kept her accountable, wishes she had known about other people who were also battling debt and also felt ashamed and isolated. She created just such a community on her website. Support and accountability can help, she says.

  • Analyze your current spending, to see where money has been going and pinpoint expenses that can be reduced or eliminated
  • Identify your own wants and needs. Needs are non-negotiable, while wants can wait. But every person’s list will vary.
  • Save for an emergency fund. When you are trying to repay debt, watching balances go up can be discouraging. But emergencies will happen. Be prepared with money designated for just such occasions. An amount as low as $500 in reserve can insulate you from an unexpected expense and running your credit cards back up.

More From NerdWallet

Bev O’Shea is a writer at NerdWallet. Email: boshea@nerdwallet.com. Twitter: @BeverlyOShea.

The article How I Ditched Debt: ‘Born Spender’ Goes on a Spending Fast originally appeared on NerdWallet.

How to Get Out From Under Student Loans

Posted on by
2

If you’re a recent college graduate who took out student loans, you likely owe about $35,000. As eye-popping as that average debt figure is, you’re certainly not the only one wondering how you’ll possibly get out from under your loans. As with any difficult assignment, though, research and a well-thought-out plan will help you tackle even the most challenging of debt situations.

Making use of the following strategies will help you dig your way out of student debt. Here’s a look at where to get started.

Know what you owe

First things first: Figure out what your monthly payments should be. To do that, use one of a handful of repayment calculators. These tools let you plug in the total amount that you owe along with your loans’ interest rates and term lengths. You’ll get a better sense of how much you should be paying each month if you want to take care of your debt within a certain amount of time.

Adjust your monthly budget accordingly

Knowing how much money you’ll need to put toward eliminating your student debt each month will help you adjust your budget. That may mean making tough decisions like cutting back on nonessential expenses.

Remember: Every extra dollar you put toward your debt reduces the total amount of interest you’ll end up paying over the life of your loan, so it’s well worth the effort.

Consider automatic payments

To ensure that you make your monthly payments on time, set up automatic deductions from your checking account. The way it works is easy: Your student loan servicer simply subtracts what you owe from your account whenever your payment is due. Your lender may even offer you a discount if you choose this option, which can be much more convenient than writing and sending a check every month. Just be sure that there’s enough money in your checking account so that you aren’t hit with overdraft fees.

Switch up your repayment plan

If you’re still struggling to put money toward your student debt, consider changing your repayment plan on federal loans, which you can do whenever you want. You may, for example, opt to switch from standard repayments —which have you contributing a set amount each month over a period of about 10 years — to graduated repayment, which is when your payments start out lower and increase over time.

Extended repayments, on the other hand, give you additional time to pay back your loans, sometimes up to 25 years, if your debt is more than $30,000 and you meet certain other requirements. Other plans, aimed at borrowers whose federal student loan debt is high relative to their income and family size, are income-based. If you qualify, the payments you owe are based on how much you earn every year. Although any of these plans can ease your monthly payment, you’ll end up paying more for your loan over time than you would if you had stuck with the standard 10-year plan.

Private lenders typically have stricter policies, but it’s still worth checking to see whether there’s any way to adjust your repayment plan with them.

Final word

If you’re a teacher or a public servant, you may qualify for student loan forgiveness. Otherwise, your last resort may be opting for forbearance, which means you can stop or reduce payments for a month or two. However, because interest continues to accrue, this course of action is better avoided.

With all that said, what you definitely don’t want to do is default on your loans. When you do that, the entire unpaid balance of your loan is due immediately, and you also lose the right to defer or change your repayment plan.

Breaking down the repayment process into smaller steps will make your student debt feel less overwhelming. Although it may take several years to wipe it out completely, a carefully crafted plan will set you up for success down the road.

© Copyright 2016 NerdWallet, Inc. All Rights Reserved

Saving for Retirement at Every Age: Your Twenties

Posted on by
Reply

Retirement piggy

This week we are talking retirement. Every day we will post retirement advice from NerdWallet on the various stages of life. Today, we are starting off with the younger set. If you are in your twenties or have a child in this age group, listen up! Retirement may seem far away but this is the ideal time to start preparing.

There’s one truism about retirement that has stood the test of time: It’s never too late, or too early, to start saving. Whether fresh out of school or winding down in a career, there are things you can do to successfully prepare your nest egg, as well as places where it’s easy to stumble. Financial institutions such as Vinton County National Bank can help you set up a retirement account and personalized plan. But it’s up to you to do the heavy lifting throughout the decades.

By Cait Klein, NerdWallet

Albert Einstein once declared, “The most powerful force in the universe is compound interest.” But you can capitalize on the magic only if you start early and stay consistent. The earlier you begin, the more time there is to maximize returns, giving the account time to grow into a significant sum. Here’s an example. Assuming a four percent return, if you were to fund $5,000 a year in a Roth individual retirement account starting at the age of 20, by 65 you’d have a nest egg of approximately $660,000 from an investment of $230,000. But if you put it off until age 30, it would require annual savings of $8,400 to get the same end amount. And you can usually withdraw the earnings tax-free when retirement rolls around.

Habits are hard to break for better or for worse, so make sure the financial ones you develop early on are good. After having a great decade of fun and splurging, it can be hard to change your behavior and start saving. Get used to putting away a steady stream of funds in your youthful years, so that doing so for the rest of your life won’t be so hard.

NerdWallet
“When it comes to credit cards, insurance, loans or expenses like hospital costs, consumers make almost all their decisions in the dark. NerdWallet is changing that by building accessible online tools and providing research and experts that can’t be found anywhere else, all to help consumers take back control of their choices in a marketing-driven, trillion-dollar industry. Find out more at www.nerdwallet.com.”