Deflation is essentially the opposite of inflation. It occurs when the prices consumers pay for goods and services goes down. That means that consumers can purchase more with the same amount of money.
There are many factors that cause deflation, which happens when the supply of goods and services is higher than the demand for them. While deflation can have some benefits to consumers, it’s often a sign of trouble for the overall economy.
What Happens During Deflation?
In addition to knowing what inflation is, it’s important to understand how it impacts the economy. In a deflationary economy, prices gradually drop and consumers can purchase more with their money. In other words, the value of a dollar rises when deflation happens.
It’s important not to confuse deflation with disinflation. Disinflation is simply inflation decelerating. For example, the annual inflation rate may change from 5% to 3%. This variation still means that inflation is present, just at a lower rate. By contrast, deflation lowers prices. So, instead of prices increasing 3%, they may drop in value by 2%.
Although it may seem advantageous for consumer purchasing power to increase, it can accompany a recession. When prices drop, consumers may delay purchases on the assumption that they can buy something later for a lower price. However, when consumers put less money into the economy, it results in less money for the service or product creators.
The combination of these two factors can yield higher unemployment and interest rates. Historically, after the financial crises of 1890, 1893, 1907, and the early-1930s, the United States saw deflationary periods follow.
How Is Deflation Measured?
Economists measure deflation the same way they measure inflation, by first gathering price data on goods and services. The Bureau of Economic Analysis (BEA) and the Bureau of Labor Statistics (BLS) record and monitor this type of data in the United States. They collect pricing information that they then put into buckets reflecting the types of goods and services consumers generally use.
While these buckets do not include every product and service; they offer a sample of items and services consumed. In the United States, economists incorporate these prices into an indicator known as the Consumer Price Index (CPI).
Then, economists can compare the CPI to previous years to determine whether the economy is experiencing inflation or deflation. For example, if the prices decrease in a period compared to the year before, the economy is experiencing deflation. On the other hand, if prices increase compared to the previous year, the economy is experiencing inflation.
What Causes Deflation?
Deflation comes from a swing in supply and demand. Typically, when demand dwindles and supply increases, prices drop. Factors that may contribute to this shift include:
Rising Interest rates
When the economy is expanding, the Federal Reserve may increase interest rates. When rates go up, consumers are less likely to spend their money and may keep more savings to capitalize on the increase in rates.
Also, the cost of borrowing increases with the rise of interest rates, further discouraging consumers from spending on large items.
Decline in Consumer Confidence
When the country is experiencing economic turbulence, like a recession, consumers spend less money. Because consumers tend to worry about the direction of the economy, they may want to keep more of their money in savings to protect their financial well-being.
Innovations in Technology
Technological innovation and process efficiency ultimately help lower prices while increasing supply. Some companies’ increase in productivity may have a small impact on the economy. While other industries, such as oil, can have a drastic impact on the economy as a whole.
Lower Production Costs
When the cost to produce certain items, such as oil, decreases, manufacturers may increase production. If demand for the product stagnates or decreases, they may then end up with excess supply. To sell the product, companies may drop prices to encourage consumer purchases.
Why Does Deflation Matter?
Although falling prices may seem advantageous when you need to purchase something, it’s always not a good sign for the economy. Many economists prefer slow and unwavering inflation. When prices continue to rise, consumers have an incentive to make purchases sooner, which further boosts the economy.
One of the most significant impacts of deflation is that it can take a toll on business revenues. When prices fall, businesses can’t make as much money.
The drop in business profits makes it challenging for companies to support their employees, leading to layoffs or pay cuts. When incomes go down, consumers spend less money. So deflation can create a domino effect impacting the economy at many different levels, including lower wages, increased unemployment, and falling demand.
Deflation During The Great Depression
The Great Depression is a significant example of the potential economic impact of a deflationary period. While the 1929 stock market crash and recession set this economic disaster off, deflation heavily contributed to it. The rapid decrease in demand along with cautious money hoarding led to falling prices for goods and services. Many companies couldn’t recover and shut down. This caused record-high unemployment in the United States, peaking at 25%, and in several other countries as well.
During this time, the economy continued to experience the negative feedback loop associated with deflation: cash shortages, falling prices, economic stagnation, and business shutdowns. While the United States has seen small episodes of deflationary periods since the Great Depression, it hasn’t seen anything as substantial as this event.
How to Manage Deflation
So, what can the government do to help regulate inflation? For starters, the Federal Reserve can lower interest rates to stimulate financial institutions to lend money. The Fed may also purchase Treasury securities back to increase liquidity that may help financial institutions loan funds. Those initiatives can increase the circulation of the money in the economy and boost spending.
Another way to manage deflation is with changes in fiscal policy, such as lowering taxes or providing stimulus funds. Putting more money in consumers’ pockets encourages an increase in spending. This, in turn, creates a chain effect that may increase demand, increase prices, and move the economy out of a deflationary period.
The Takeaway
Deflation refers to a period that can be thought of as the opposite of inflation. It occurs when the prices consumers pay for goods and services goes down, which means that consumers can purchase more with the same amount of money.
When the economy is experiencing some turbulence, some investors may choose to keep their money in savings. On the other hand, other investors may see falling prices as an opportunity to purchase securities at a discount, either to hold or to sell when the economy recovers. Like any other investment strategy, investors must base their investment decisions on their personal preferences since there are no guaranteed results.
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The Roth IRA is a wonderful investment option that many people take advantage of every year mainly because of it’s tax free growth and because it allows you to diversify your tax situation at retirement if you also invest in some pre-tax investment types like a 401k or IRA.
While the ideal situation is to max out your contributions to your Roth IRA every year, and then not take any money out until retirement, sometimes you might find yourself in a situation where you need money now – before the usual distribution age of 59 1/2. Luckily the Roth IRA is one of the more flexible retirement account types and withdrawing your contributions (or the money you put in) can be done tax and penalty free at any time.
You do need to be careful, however, that you understand when and how you are allowed to withdraw your earnings (the interest you earn on your contributions) – before your retirement age, because if you’re not careful you could be subject to a 10% early withdrawal penalty by the IRS, and be taxed at your normal tax rate.
When Can You Make A Roth IRA Withdrawal?
Again, as mentioned above you can usually make a withdrawal of your principle contributions at any time. The earnings off of your principle can’t be withdrawn until you reach the age of 59 1/2 without paying a 10% early withdrawal penalty. No one wants to pay that. There is also one proviso on being able to withdraw your earnings after 59 1/2 – it’s called the 5 year rule.
Roth IRA 5 Year Rule
You can only withdraw your earnings from your Roth IRA at 59 1/2 and have them count as qualified distributions if it has been at least 5 years since your Roth IRA account was opened. For example, if you opened your account at 56, you would need to wait until you were 61 with withdraw any earnings on your principle.
Qualified Reasons For Roth IRA Distribution
Here are the main reasons you can receive a distribution from your Roth IRA without taxes or penalties:
You are age 59½ or older.
The distribution was made to your beneficiary after your death. (too bad for you – you’re dead!)
You are using the money to buy a home, and are a first-time homebuyer ($10,000 lifetime maximum per account)
You’re disabled.
Other Exceptions to 10% Penalty
Sometimes you may still need to take a distribution from your Roth IRA for a non-qualifying reason. You can still get around the 10% early withdrawal penalty (while still paying income taxes) if you find yourself in any of these situations:
You have un-reimbursed medical expenses that exceed 7.5% of your adjusted gross income.
You are paying medical insurance premiums after losing your job.
The distributions are not more than your qualified higher education expenses. (pay for schooling!)
The distribution is due to an IRS levy of the qualified plan.
The distribution is a qualified reservist distribution.
The distribution is a qualified disaster recovery assistance distribution.
The distribution is a qualified recovery assistance distribution.
Order Of Roth IRA Distributions
When withdrawing your money the distributions come out in this order according to IRS publication 590
Regular contributions.
Conversion and rollover contributions, on a first-in-first-out basis (generally, total conversions and rollovers from the earliest year first). Take these conversion and rollover contributions into account as follows:
Taxable portion (the amount required to be included in gross income because of the conversion or rollover) first, and then the
Nontaxable portion.
Earnings on contributions.
So as you can see the order of distributions is setup in order to help you avoid paying fees or penalties. Your contributions (tax and penalty free) come out first. Next come conversion or rollover amounts followed by earnings on your contributions – which could be assessed penalties if not a qualified distribution.
Conclusion – Don’t Withdraw Until Retirement
So as you can see there are ways that you can withdraw money from your Roth IRA without having to worry about paying taxes or penalties on your money. The question remains, however, as to whether or not it’s a good idea. The whole point of a retirement account is to have the money going in, growing tax free using the power of compound interest – and withdrawing the money short circuits that whole process. My suggestion? Do your best not to take any money out, but if you do, make sure it’s for a qualified reason.
Good luck!
Have you taken an early withdrawals from your Roth IRA? Have you had to pay any penalties or taxes on that money? Have you considered using it to buy your first home or pay for your or your children’s education? Tell us your thoughts in the comments.
As a new homeowner, I recently had to buy a homeowners insurance policy. And as a personal finance writer, I tried to take my own advice and “shop around.”
To be honest, it was a pain, and the rates I was getting on my own were way too high. Maybe it wouldn’t have been so bad if I wasn’t also trying to close on a house. In the end, I found an independent insurance agent, and she saved me hundreds of dollars and lots of headaches.
But I also learned that there were things I could do to help her keep my premium low year after year. For instance, I had planned to install an ADT security system, which I later learned would lower our premium.
So if you’re in the market for a new policy, here are six ways to make sure you’re getting the best possible rate:
1. Make sure you aren’t over-insured.
Being under-insured can be a big problem when disaster strikes. But being over-insured means you’re wasting your hard-earned moolah. So the ideal situation is to have just the right amount of coverage. So how do you do that?
Review your policy when it’s up for renewal each year. Specifically, make sure to review any floaters, which are extra insurance for items not fully covered in a standard homeowner’s policy. Examples include things like expensive electronics or equipment, valuable jewelry and artwork. If you no longer own the item or if its value has lowered, cancel or reduce the floater.
2. Reconsider your deductible.
A deductible is the amount of money you have to pay before your insurance policy kicks in and pays the claim. And the lower your deductible, the higher your insurance premium. According to the Insurance Information Institute (III), today most insurance companies recommend a deductible of $500 or more. But if you can afford to raise your deductible to $1,000, you could save as much as 25 percent. And, advises the III, don’t forget that you might have more than one kind of deductible. For instance, if you live in a disaster-prone area, like one prone to windstorms, hail or earthquakes, your insurance policy may have a separate deductible those specific types of damage.
3. Clean up your credit report.
Like it or not, when it comes to insurance, your credit report is up for grabs. The Fair Credit Reporting Act (FCRA), states that insurance companies have a “permissible purpose” to look at your credit information without your permission. And since insurers have found that credit history is a reliable predictor of how risky someone is to insure, they use that information to determine whether or not to offer you a policy, as well as how much to charge for your premium.
So besides all the other important reasons to monitor your credit report, doing so can also yield you a lower premium on your home insurance, or at least prevent your premium from going up. And be sure to order copies of your credit reports once per year, since you can be sure insurers are checking it before you renew. For instance, a 2007 report by the Arkansas Insurance Department found that in 2006, a total of 457,982 policies in the state were written or renewed that involved the use of credit as one of the factors weighed in determining the premium. Of those, 32.3 percent resulted in the premium being decreased, and 9.2 percent resulted in the premium being increased. In the remaining 58.5 percent, credit was a neutral factor.
According to the III, in most states the insurance company has to advise you that they’re raising your premium because of red flags on your credit report. But it’s best to just check your credit on a regular basis and correct errors quickly to make sure your record is always accurate.
4. Make your home Fire Marshall Bill-proof.
Fire Marshall Bill was a Jim Carrey character on the sketch show In Living Color, and his safety lessons, which he demoed on himself, resulted in fires, explosions, and loss of limb.
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You probably know better than to toss lighter fluid on a burning pipe, but you might not know about less ridiculous safety measures that could lower your insurance premium. Talk to your insurance agent or rep to find out if you can save money by doing things like:
Making your home more windstorm-resistant, such as adding storm shutters.
Updating your plumbing and electrical systems to reduce the risk of water and fire damage.
Increasing your home security with smoke detectors, burglar alarms or dead-bolt locks.
These aren’t cheap updates, so make sure they’ll lower your premium enough to make it worthwhile and that your updates will qualify for the discount. For instance, an insurer might have a list of qualifying alarm systems. Realistically, expensive updates like these aren’t usually done solely to save crazy money on insurance premiums. They’re typically things you want to do to make your home safer, or as Fire Marshall Bill would say, less “Dtuhhh-dthuhhh…DEADLY!”
5. Shop around every year.
We talked about this earlier, but really and seriously, you have to shop around if you want to make sure you’re getting a great rate. Ask your network for recommendations, and check out the National Association of Insurance Commissioners (www.naic.org) for help finding an insurer in your area. Pay special attention to the consumer complaint information, since price isn’t the only thing you want to consider when deciding on an insurer.
Or find an independent insurance agent, who shops around for you. Before finding my agent, my auto and home insurance quotes were in the $1,000-$1,300 range. Then I employed her services and she found a great policy from a reputable company for just $700. That’s some serious savings.
And speaking of auto and home insurance…
6. Consolidate to save more.
Some companies that sell multiple types of insurance, such as homeowners, auto and liability, will knock a percentage off your premium if you buy two or more policies from them. It can save you anywhere from 5 to 15 percent, according to the III. Just make sure the combined price with a discount is actually lower than buying separate policies from different companies.
Readers, can you add anything to this list? How have you saved money on your home insurance policy?
Whenever you invest, you are taking on a certain amount of risk. There is always the chance that you could lose money. There is no way to completely get rid of investment risk. However, there are things you can do to improve the chances of seeing more gains than losses, and mistakes to avoid.
Here are 5 investing mistakes that could destroy your portfolio:
1. Heavy Reliance on Company Stock
If you invest in a tax-advantaged retirement plan offered by your company, there is a chance that you are heavily invested in company stock. You may not have read over your options carefully when signing up, or you might have accepted some stock as payment or a bonus. While some company stock isn’t a bad thing, you should be careful not to rely too heavily on a portfolio with a lot of company stock. What happens with the company goes down? Your retirement account could be severely damaged.
2. Not Enough Diversity
It’s also important to ensure that you have enough diversity in your portfolio. Anytime you rely too heavily on one type of investment, you add extra risk to your portfolio. Too much diversity can dilute the effectiveness of your portfolio. But you you should consider diversity across sectors and asset classes, as well as geographic location. Consider your own investing goals and choose a mix that is appropriate for you.
3. Not Understanding Your Risk Tolerance
You should know yourself and your investing needs. You should be aware of your risk tolerance. This is how much risk you can bear, in terms of your financial situation and your emotional ability to handle the realities of the market. You have to understand your risk tolerance in order to make better decisions about your investments. Know what you can afford to lose, and recognize when your emotions are getting in the way of better decisions.
4. Refusing to Change Your Position
Sometimes, it’s time to make changes to your portfolio. When you have a more passive investing strategy, along the lines of buy and hold or investing for retirement, this might take the form of re-balancing at regular intervals. In more active strategies, you might need to cut your losses and sell a loser. Or, you might have a winner that keeps climbing and climbing in a short period of time. It might be wise to take profits while you still have that chance, rather than trying to run up bigger profits. It’s important to re-assess the contents of your portfolio regularly, and consider making changes as appropriate.
5. Investing in Something You Don’t Understand
Warren Buffett famously suggested that you should understand what you’re investing in. Before you add something to your portfolio, you should understand how it works. Stocks, bonds, funds, commodities, real estate, currencies and other investments are traded in different ways, and are affected by different economic conditions and market perceptions. One of the reasons we ended up with such a disaster in 2008 was due to complex financial instruments that few people understood when they were investing in them. Learn about what you are investing in, know where to research investments, and how it might affect your portfolio.
Tom Drake is the head writer at MapleMoney, covering everything from universal topics like budgeting and investing to Canadian topics like RRSPs and the the TFSA.
With the never-ending changes and challenges affecting the U.S. financial landscape, multiple community development entities are helping to counter some of their adverse effects by fostering community development initiatives.
Some examples include Community Development Financial Institutions (CDFIs) and Community Development (CD) Banks. These play a significant role in promoting economic growth and inclusion for underserved communities.
This article thoroughly explores CDFIs and the institutions that support CDFIs, outlining their significance, objectives, and how they meet capacity building initiative requirements. We also highlight the federal government’s involvement, explaining its role evolution and the numerous related economic development activities available to those who need them.
What is a Community Development Financial Institution (CDFI)?
Community Development Financial Institutions (CDFIs) are a type of financial institution that provides products and services to financially disadvantaged communities for economic development purposes.
They are essential and critical in promoting inclusion and economic growth to marginalized communities in urban and rural communities countrywide. Legislations like the Community Reinvestment Act help encourage these programs. However, the Community Reinvestment Act is not the only reason for their existence.
CDFI Certification
To become a CDFI, a financial institution must apply for a CDFI certification. This certification ensures that the institution can receive the right federal assistance resources and allows people to benefit from the CDFI fund’s programs.
How did the concept of CDFIs start?
The roots of Community Development Financial Institutions (CDFIs) extend to the 1880s, when minority-owned banks began serving economically disadvantaged communities. These organizations provided essential financial services to areas that mainstream financial institutions neglected or could not reach.
As the years progressed, new types of mission-driven financial institutions emerged. For example, the development of credit unions in the 1930s and 1940s offered alternatives to the traditional community bank that had limited services.
Moreover, new community development corporations emerged in the 1960s and 1970s, providing additional resources and support for underserved areas. These institutions gradually paved the way for the rise of nonprofit loan funds in the 1980s, establishing the groundwork for today’s modern CDFI model.
The Riegle Community Development and Regulatory Improvement Act of 1994 recognized the need to support the growing community development finance sector. With that in mind, it established the Community Development Financial Institutions Fund (CDFI Fund). This fund aimed to promote economic revitalization and community development in low-income areas by investing in and providing assistance to CDFIs.
Since its inception, the CDFI Fund played a substantial role in the growth and impact of CDFIs, enabling them to serve the financial needs of economically disadvantaged communities and contribute to their overall development and prosperity.
Types of CDFIs
Currently, multiple types of Community Development Financial Institutions (CDFIs) exist, each catering to the unique needs and challenges economically disadvantaged communities face. We explore their types and roles below.
Community Development Banks
Community Development Banks are for-profit, federal government supported and regulated financial institutions. These institutions have a board of directors that includes community representatives. CD banks provide affordable banking services, loans, and other financial products to economically distressed and underserved communities.
Operating in these communities creates jobs, improves infrastructure, and promotes economic growth. They also help increase access to capital for small businesses, including affordable housing projects and community service facilities.
Community Development Credit Unions
Community Development Credit Unions (CDCUs) are nonprofit financial cooperatives owned and controlled by their members. As is the case with traditional credit unions, they provide financial services such as savings accounts, checking accounts, and loans.
CDCUs only cater to low-income and underserved communities, offering affordable rates and financial education programs to promote inclusion and help people build credit and assets. The National Credit Union Administration (NCUA), an independent federal agency, regulates these credit unions.
Community Development Loan Funds
Community Development Loan Funds, or CDLFs, are nonprofit entities that finance community development projects by offering loans and technical assistance to marginalized communities. They facilitate access to affordable housing, promote small businesses, and help establish community service facilities to sustain growth. They also serve as an alternative source of capital for those who cannot access traditional bank financing services by offering flexible terms and underwriting criteria.
Community Development Venture Capital Funds
Community Development Venture Capital Funds offer equity and debt-with-equity investments to small and medium-sized businesses in economically distressed areas. They can be for-profit corporations or nonprofit entities.
By offering long-term capital, they help businesses grow, create jobs, and foster innovation. They also provide technical assistance, mentoring, and business development support to maintain the long-term success of their portfolio companies.
Microenterprise Development Loan Funds
Microenterprise Development Loan Funds are loan funds that provide small-scale loans, or microloans, to entrepreneurs and small businesses that might not qualify for traditional financing. They offer small capital amounts that range from hundreds to a few thousand. These loan funds help low-income people, women, and minority entrepreneurs who need smaller loan amounts and more flexible terms.
Community Development Financial Institution (CDFI) Consortia
CDFI Consortia are collaborative networks of CDFIs that pool resources, experience, and capital to increase their impact on community development services. They can access larger funding opportunities and share best practices to serve their target communities by working together. They can also provide joint technical assistance and support services, helping to strengthen individual CDFIs that are part of the network.
Understanding Community Development Financial Institutions
The main goal of CDFI fund programs is to provide affordable loans, community development banking services, financial help, and technical assistance to low-income communities. They foster economic development and empower small business owners, minorities, and marginalized communities by offering access to investment capital and other resources with fewer demands than traditional finance institutions.
CDFIs differ from traditional financial institutions because they focus on community development and serving minority communities. They also collaborate with religious institutions, community service organizations, and rely on federal funding and agencies to address the needs of their target populations.
What’s the federal government’s role in CDFIs?
The Federal Reserve Bank supports CDFIs through various initiatives, tax credits, and programs. One such program is the CDFI Fund, which the U.S. Department of the Treasury administers. The CDFI Fund provides financial, technical, and other resources to CDFIs, casting a wider net to help low income people and communities access their services.
In addition to the CDFI Fund, the Federal Reserve Bank supports CDFIs through programs and training initiatives such as:
Bank Enterprise Award Program
Capital Magnet Fund
CDFI Bond Guarantee Program
CDFI Equitable Recovery Program
CDFI Program
Rapid Response Program
Native Initiatives
New Markets Tax Credit Program
Small Dollar Loan Program
These initiatives by the Federal Reserve Bank provide financial incentives and resources for CDFIs and community development entities to invest in eligible community projects, promote economic growth, and create jobs.
How has that federal role changed over time?
The federal government’s role in supporting the CDFI industry changes over time to respond to the changing needs of disadvantaged communities and the growing recognition of the importance of financial inclusion.
Early efforts, for example, provided seed capital and technical assistance to establish and grow CDFIs. With the maturation and evolution of the industry, the government started focusing on building capacity, collaboration, and supporting innovative endeavors.
Recent changes emphasize leveraging private sector investments, regulatory relief, and encouraging partnerships between the CDFI industry and other financial institutions. Examples include minority depository institutions (MDIs) and mainstream banks.
CDFIs’ Role in Financial Inclusion
Financial inclusion is an essential part of CDFI initiatives. Access to affordable financial products and services helps bridge the gap between poor communities and mainstream financial institutions. CDFIs also promote financial knowledge, support small businesses, finance affordable housing activities, and facilitate economic development initiatives.
CDFIs also ensure that economically distressed communities can access essential community services facilities like healthcare centers, schools, and childcare. Their work helps contribute to these communities’ overall well-being and stability. It creates a solid foundation for long-term economic growth.
Business Model
CDFI business models are unique in combining traditional financial services with a strong emphasis on developing and positively impacting the communities they cater to.
They generate revenue by collecting interest and fees on loans, investments, and other financial products. However, they also rely on grants, donations, and especially government funding like the CDFI fund to support their operations.
CDFIs collaborate with organizations like government agencies, nonprofits, and private sector partners to attain their goals. Additionally, they leverage tax credits, guarantees, and other financial tools to attract more investment capital and support their lending activities.
CDFIs Provide Opportunity for All
CDFIs provide real opportunities by addressing the financial needs of underserved communities to help them succeed and promote their economic growth. To do this, they offer access to affordable financial products and services to communities that experienced systematic lockouts from these programs.
By emphasizing their needs and giving them more accessible and affordable ways to prosper, low-income individuals and businesses have access to essential financial tools. These tools were traditionally out of reach for mainstream financial institutions.
Moreover, CDFIs support small businesses owned by women, minorities, and individuals in economically distressed communities. By offering tailored financing solutions, technical assistance, and business planning resources, CDFIs help these entrepreneurs overcome barriers to entry, create jobs, and contribute to local economies.
Another significant aspect of CDFIs’ work is their focus on affordable housing and community development projects. They finance the construction and rehabilitation of affordable housing units and invest in community facilities like schools, healthcare facilities, and childcare. These are essential to the well-being and stability of low-income communities and help them worry less about factors beyond their control or that are too expensive to access otherwise.
CDFIs also promote financial education and empowerment by providing resources and training to help people develop financial literacy skills, manage their finances, and build assets. These initiatives contribute to breaking the cycle of poverty and promoting economic self-sufficiency.
By partnering with various stakeholders, such as government agencies, nonprofit organizations, and private sector partners, CDFIs leverage resources and expertise to maximize their impact. This creates a ripple effect that extends beyond the immediate recipients, fostering inclusive and resilient communities.
Types of CDFIs
Many community development financial institutions focus on addressing the needs of economically disadvantaged communities. These include community development banks, credit unions, loan funds, and venture capital funds.
Federal agencies like the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) regulate community development banks and credit unions. They offer various banking services, from deposit accounts to loans, catering to low-income communities.
Loan funds make affordable housing possible, support small businesses, and help community facilities. On the other hand, venture capital funds offer equity investments that support small businesses and startups in underserved communities.
“Newer” CDFI Resources
As community development financial institutions evolve, multiple resources and programs are emerging to support their growth and impact. Examples include:
CDFIs as Capital Plus Institutions
Sometimes, community development financial institutions are called “Capital Plus” institutions. This is because they provide investment capital, development services, technical assistance, and financial education to support the long-term success of their clients.
This approach allows community development financial institutions to significantly impact low-income and economically distressed communities, promoting economic opportunity and inclusion.
Emergency Capital Investment Program (ECIP)
The Emergency Capital Investment Program (ECIP) is a federal initiative that provides capital to CDFIs and MDIs to support their lending activities after the economic challenges caused by COVID-19. This program helps ensure that these institutions have the resources to continue providing essential financial services to underserved communities, small businesses, and minority-owned businesses during times of crisis.
Paycheck Protection Program Liquidity Facility (PPPLF)
The Paycheck Protection Program Liquidity Facility (PPPLF) is another federal initiative that supports the lending activities of CDFIs and other financial institutions participating in the Small Business Administration (SBA) Paycheck Protection Program (PPP). By providing liquidity to these institutions, the PPPLF enables them to continue offering loans to small businesses needing financial assistance during challenging economic times.
CDFI Rapid Response Program
The Rapid Response Program from the CDFI Fund provides immediate financial assistance during crises or natural disasters. CDFIs can quickly access funds for disaster recovery, emergency relief efforts, and other needs, serving as “financial first responders” for the communities they support.
These newer resources and programs demonstrate how the federal government, private sector, and other stakeholders support the work of CDFIs and promote financial inclusion and economic opportunity. By leveraging these resources, CDFIs can better address the needs of low-income communities nationwide and foster economic development in urban and rural communities.
Is love enough for a healthy and happy relationship, especially when it comes to financial troubles? What if your partner was hiding a secret account or was lying about their spending? Are those issues you could work past?
Unfortunately, negative issues with money and relationships are incredibly common. I actually receive lots and lots of emails from readers who are struggling with some of these exact issues. Hardly a day goes by when I don’t get a question or comment from a reader who has concerns about the bad spending or savings habits of their partner.
Here are a few of the situations I’ve been asked about:
My partner earns $50,000 a year and wants to buy a $900,000 house, and we have NO savings. How do I explain why this won’t work?
My partner has the mistaken idea that if he has a coupon for Best Buy, Bed Bath and Beyond, etc. that he must absolutely buy something because he’s “losing money if I don’t use the coupon.” He is a hoarder and spends all of his money on stuff that he will never use. How do I help him work past his issues before it’s too late for us?
My partner spends over $1,000 a month on entertainment but we have a lot of debt. How should I approach them about it?
My partner is hiding her spending from me and I know it’s happening. How do we work through this?
My partner isn’t trying to find a job but we desperately need the money. What should we do?
If these situations sound familiar, you’re not alone. In fact, 35% of Americans named money as the number one thing causing friction in their marriage. CNBC reported on a money and relationships study done by SunTrust Bank, and here are a few more findings:
In 2 out of every 5 couples, someone lies about money.
31% said that they have a secret credit card or bank account.
75% said that financial deception has hurt their marriage.
It’s no surprise that money issues are one of the leading causes of divorce.
And, according to a recent story on NPR, even couples who managed their money well together in the beginning can still struggle with financial infidelity. This is especially true if one partner earns significantly more than the other, if one spouse is laid off, etc.
Related content to money and relationships:
Now, if you’re in a relationship with someone whose financial beliefs and practices oppose your own, does that mean you’re doomed and should end it all?
Not necessarily.
There are ways you can work towards resolving your financial differences and improving the behaviors that affect your money and relationships. Before calling it quits due to financial stress, you should:
Be honest and stop keeping money secrets from your partner.
Stop ignoring the problem.
Make a budget and start following it.
Make money conversations a priority, even if they have been difficult in the past.
Me and my husband have been together for over 12 years, and we are always trying to work at our financial situation as a team. We’ve had a lot of major changes in the past few years, like selling our house and moving onto an RV and now sailboat, and because each of these changes had a lot to do with money, we’ve had to share a lot of our feelings with one another.
And, every couple is going to handle money and relationships a little differently. We all have different spending habits, and in a marriage it’s important to come together to see how your behaviors affect your shared life.
Working together is key for a happy relationship, especially when you want to meet your financial goals.
If your relationship is struggling because of financial differences, here are some steps that you may want to take.
Here is my advice for handling money and relationships
Have regular money check ins.
A relationship that has regular money talks and budget meetings is more likely to be financially successful and happier than a relationship that doesn’t. That’s because regularly communicating about money is an important step for healthy relationships.
Being open about your money situation can help prevent any surprises, it will ensure that both people in the relationship are aware of what’s going on, and so on.
Here are some of the ways for these check ins to help you with your marriage and finances:
You can work together and succeed.If you are both putting effort towards your financial goals, you can tackle them as a team and are much more likely to have a positive outcome. You can motivate one another, troubleshoot together, and brainstorm for ways to work towards your goals.
Knowing your financial situation will help you keep a budget. Understanding your financial situation means you can create and keep a budget that works for the both of you. You will know more about the amount of money you are spending, whether you are living paycheck to paycheck, and more.
Being aware may prevent everything from falling on one person. Both you and your partner should be aware of your financial situation. It’s not fair for one person to manage it all, and you would be in for a rude awakening if something were to happen to that person. You both should know how much money you make, how much debt you have, when bills need to be paid, etc.
Being involved can help you with your family’s goals.It would be quite difficult for a person to work towards their family’s financial goals if they weren’t aware of their financial situation. Being involved will keep everyone motivated and working in the same direction.
Regular money talks can lead to less fighting. When you are open about money in your relationship, you are less likely to have financial surprises and money fights. This is because conducting regular money talks and budget meetings means you will both be aware of what’s going on.
Recommended reading: Family Budget Meetings – Yes, You Need To Have Them
Be open about money.
Talking about money is seen as taboo, even among married couples. But, according to money and relationship studies reported by Policy Genius, nearly 30% of couples don’t know each other’s salaries.
I have personally met spouses who had no idea what their monthly mortgage payment was, how much student loan debt they had, and so on and so on. For some reason, it is the “norm” for one spouse to be completely clueless about their financial situation, while the other spouse handles the finances. However, this is definitely something that should change.
To become better with this money and relationships issues, you and your partner should sit down on a regular basis, like once and week or once a month, and be honest about where you are currently at. You could even use this time to pay your bills together, discuss future purchases, and more.
But, to make the most out of these money meetings you will have to go in with an open mind and be willing to share where you are at. You money meetings should include:
Your financial goals, money values, and more.
How the two of you are doing financially.
What changes may need to be made.
Any financial problems, and so on.
The key here is that both of you are up-to-date on what is going on with your marriage and finances so that everyone can work together on your family’s financial goals.
Always be honest about money in relationships.
In a money and relationships article on CNBC, it was reported that only 52% of people in relationships believe their partner is being completely honest about money. And, only 61% of people say that they are totally honest with their partner about money.
What I see there is that in many, many relationships, there are some serious trust issues when it comes to talking about money.
The problem with financial infidelity is that it can lead to even bigger financial problems (like debt piling up beyond what’s imaginable), stress, unhappiness, it may start impacting other areas of a your life (such as work), and it may even lead to divorce.
Unfortunately, it’s possible that you may already be a victim of financial infidelity without even knowing it. Here’s how to recognize the signs of financial infidelity:
You haven’t noticed any bills in the mail. This could be a sign that someone is hiding the bills.
You are getting calls from debt collectors. These may actually be legitimate calls!
Your credit cards are being declined. This could be a sign that someone is overspending without your knowledge.
Your partner no longer wants to talk about money. This could be a sign that your partner is too afraid to talk about money with you because they fear that you will uncover the truth.
Lying about money and relationships is very serious, but it’s important to realize that it’s an issue that both partners should work towards improving. While being honest with your partner is important, you should also make sure that your partner feels comfortable telling you when they are struggling.
Set spending limits for each other.
Spending limits shouldn’t be looked as limitations or rules – think about them as guidelines that help you work towards larger goals. That’s because spending limits are really just there to help you stay on track with your budget.
You can set limits however you would like, and some couples tell each other about every single purchase they make, whether they buy something for $1 or if they buy something for $1,000.
Others only tell their spouse if they reach a certain amount, such as $100.
Whatever you decide, it’s a good idea to sit down with your spouse and determine what kind of limits you should set for your specific situation.
Doing this can help keep the communication lines open with your marriage and finances so there are fewer arguments about money.
Learn how to improve your financial situation.
For anyone needing help with money and relationships, one of the best things you can do is learn how to improve your financial situation. It can be an empowering thing for you to work towards with your partner and it can bring you both closer together.
If you want to improve your financial situation, here are some of the things you may want to do:
Read financial blogs. Reading financial blogs can help you see what other people like yourself may be doing to improve their financial habits. While it may not always be perfect and/or applicable, it can be helpful to see real life examples.
Listen to financial podcasts. You can learn a lot about money and relationships by listening to others talk about their own situations and topics relevant to your life. And, there are so many amazing financial podcasts out there ‒ take your pick!
Read financial books. 17 Personal Finance Books That Will Change Your Life is a great read if you are looking for financial books to help you with money and relationships. That list shows books that will help you to pay off debt, find side hustles, manage your money better, figure out retirement, and more.
Attend money workshops. There are in-person workshops on the topic of personal finance, huge conferences, money meet-ups, and more.
Join money-related Facebook groups. I have a free Facebook community that you can find here, and another favorite of mine is ChooseFI.
The key here with this and any other money and relationships advice is to do it together. I think learning more about money can usually help get a person more motivated about improving their financial situation, so if your spouse is having a hard time managing money, this can be a good way to get them more involved.
Reevaluate your situation.
Should money break a relationship?
Some will say no, and others will say yes.
For me, I do believe that money can break a relationship. However, that doesn’t mean that divorce or separation should be the first place you go when you are struggling with financial infidelity or other issues affecting money and relationships. You will need to work on your issues together before deciding that it’s time to call it quits.
Being on the same page is so very important, and if your partner is the complete opposite of you, you may be fighting constantly, you may both be unhappy, and more. If that’s where you are at, then reevaluating your relationship may be an important next step.
Only you can determine what goes on in this step, as it’s a very personal decision and no one knows the exact issues you’ve been through and how they’ve affected your relationship.
What money and relationships advice do you have to share? What would you do with a partner who was bad with money?
Confession time: Despite a financial and business education more comprehensive than most, I never invested. I grew up poor and just couldn’t wait for my first “serious” job and those big bucks. It was so bad, I decided to drop out of college in my senior year. “None of this ivory-tower crap is going to make me any more money,” I told everyone who would listen. Fortunately, both of them were able to talk me off the ledge. One of them was my future wife, bless her little gizzard.
After graduation, my illusions were shattered: There are no high-paying jobs in a recession for someone with just a bachelor’s degree. There are hardly any jobs at all. Carol Burnett came up with the formula: Comedy = Tragedy + Time. That explains why I’ve been able to entertain so many guests after dinner with the now-humorous details of my early career. Bottom line: It took several years to set up a household on entry-level wages. My big break came when, in the final year of my MBA, I landed a job that tripled my income. (No matter what all the critics say, no single degree makes you as much money as an MBA.)
Finally, we were rolling in it. The top restaurateurs in town knew us by name. You would think that someone with such a solid education (in accounting and finance, no less) would realize the time had come to start investing. You would be wrong. We had accumulated us some Joneses along the way, up with which we had to keep, and we did some serious “keeping” for the next few years.
Of course, we told ourselves we were “investing.” (All big spenders do that.) You could call that spectacular wooded plot in the Cape (Town, not Cod) for our next dream custom-built home an investment. We did. You can call anything you spend money on “an investment” — nice cars (they will be collectible one day, you know), good wines (more valuable when aged), jewelry, and any number of other wanna-haves — investments, one and all.
Deluding yourself that what you’re doing is smart is not hard. Wise readers know where that journey ended: Our debt tripped us up in our 40s, and we got wiped out in yet another recession.
That’s when I got mad.
And that’s when I got smart. I discovered the more you make, the more you spend. And it’s true what they say: Money can’t buy you happiness. Lack of money, though, doesn’t bring you barrels of fun, either. I haven’t heard too many people say that, because it sounds materialistic; but take it from someone who’s lived on both sides of that railroad track. There is more peace in the house when the finances are in order.
This post was started in response to a question from a reader, who asked: How do you get started investing? Penny stocks, maybe? In response, I wrote a nice, sterile post with the five-point plan to get started. But after reading it over, I did the electronic equivalent of crumpling it up and tossing it in the wastepaper basket.
Why? Because I’ve heard that all before and it never got me to start when I should have started. Why, then, would it help the non-investing reader?
Everybody has heard the message that you’ve got to invest. And if I have a dollar for every “get-started” plan written, I’d be one of the sharks on “Shark Tank.” And yet, it is equally well documented how Americans are headed for retirement disaster because they don’t invest.
Why not?
1. Passion
Because none of those articles, lectures, books, posts, speeches, or admonitions addresses the starting point: passion.
Until you get mad, you’re not going to change. That’s true for any lifestyle improvement: losing weight, quitting smoking, getting fit… or investing.
So, Step One is making a passionate decision. It doesn’t matter if it’s fear, anger, humiliation, or even (dare I say it?) greed. Investing is a long, long grind. Along the way, you’ll face thousands of temptations to derail you, and very few to keep you on track. In the face of that barrage, you’ll only stay the course if you have a steely resolve, and we human beings are wired in such a way that pretty much the only way to maintain that steely resolve is to have it fueled with a long-term fire in your belly. Nothing but that passion will neutralize the onslaught of temptations coming at you day after day… after day.
Once you’ve made that resolve, pretty much anything you invest in can work. My father-in-law only invested in a savings account. You could argue with him all you want (“C’mon, Dad, you can double your earnings with any other investment!”) but a savings account was the only investment he felt passionate about. He made it work. With passion, you can make anything work.
2. Foreground
I started (late, to be sure) with a savings account. I wanted to open a brokerage account, but back then you needed a couple thousand or some huge number like that to open a new account. Along the way, I discovered a nice thing about a savings account: there’s no minimum to start, or to deposit. When we got a $15 refund for something, I could deposit that into the savings account and nobody would frown. It became a game: how high can we make it grow this month? Saving became a foreground activity, not a background activity as so many people think it ought to be.
And that, I think, is Step Two: Make your investing an intentional, “foreground” part of your life. Facing my mid-40s with nothing forced me to admit that my lifestyle was proof that I’m not a natural saver/investor. And so, just like a recovering alcoholic, I need to be very deliberate in staying off the spending wagon. No more fancy cars, no more fancy nothing… and no more Joneses.
I began measuring my worth in things other people couldn’t see.
We were surprised to see how quickly our savings grew when it became an endeavor of passion. So we signed up for 401(k) plans where we worked, and went for the maximum deductions, matching or no matching.
Mechanically, I think it’s important to start with safe investments, like a savings account, a 401(k) plan at work, stock market index funds — stuff like that. For the first four or five years, the lion’s share of your investment value will be your contributions, not your returns. You can always change your investments along the way.
The important thing is picking a safe investment you’ll feel the most passion for. Then learn as much as you can. You’ll find out soon enough what generates the most passion. Then study that for a few years and you’ll be good.
3. Opportunities
There’s something else very few people talk about, and that’s opportunity. J.D. wrote about it recently, but he’s one of very few. I discovered this a few short years into my now-passionate investing career: Once you make investing a foreground part of your life (i.e., you think about it a lot) it’s natural to want to learn more. As you do that, you become aware of things that passed over your head before. And one of those things is… opportunities.
Life brings everyone a string of opportunities. Until I became conscious of investing and made it a priority, I was totally oblivious to them. When someone would mention something that sounded like an investment opportunity, I’d cut them off with a put-down like, “Oh, that’s just a scam. Nothing could be that good. What a waste of time. Wall Street’s just a casino!” And then I’d continue debating whether this great chef’s new restaurant would be as good as his previous one.
When you’re thinking of buying a Honda, what do you see? Hondas all around you. Same with investment opportunities. It’s a well-known trait of the human brain that once you’re conscious of something, you notice much more of it. Every person has a few outstanding investment opportunities that come their way. So I’d say Step Three is to keep your eyes open for all investment opportunities that come along. Be prepared to pass on 90 percent of them, but be ready to pounce on a good one when it comes along. Being prepared comes naturally with anything you’re passionate about because you love to read about it, talk about it, and think about it.
The nutshell
As I said, it doesn’t really matter which particular investment vehicle you pick to get started, as long as it’s not too risky. Success in the long run will come from:
Passion
Putting investing in the foreground of your mind
Preparing yourself to take advantage of unique opportunities which will, almost inevitably, cross your path. Preparing includes learning how to distinguish between get-rich scams and real opportunities.
No two of the people I know who succeeded in their investing followed the same path to success, or invested in the same things. But all of them were passionate about it, thought about it a lot and took advantage of at least one good opportunity which gave them that boost you can never plan for.
It’s easy to talk yourself out of anything and find fault with any option. Those who succeeded didn’t talk; they acted. To misquote my good friend Vern: thinkers think and doers do. Until thinkers do and doers think, investing is just another word in the overburdened vocabulary of broke Americans.
Looking for a greener Christmas? Re-think your gift wrap. According to Stanford University:
If every U.S. family wrapped three gifts in repurposed materials, the gift wrap saved would cover 45,000 football fields.
If every family reused two feet of holiday ribbon per year, the ribbon saved could tie a bow around Earth.
Feeling like a planet-despoiling bastard yet? Don’t beat yourself up too badly. I use some holiday paper myself. But I obtain/use it in very specific ways:
Buying during post-holiday clearance sales — they’re practically giving the stuff away
Re-using wrap when possible
Using non-traditional wrap
Getting paper and gift bags in non-traditional ways
You can frame the “to wrap or not to wrap” question in three ways: frugal or eco-friendly, or both.
A lot of people are seriously concerned about the amount of paper we produce and quickly discard. The weeks between Thanksgiving and New Year’s Day see an extra 25 million tons of garbage in the United States. How much of that waste is Pokemon wrapping paper, holographic gift bags, and curly ribbon that will still be curly (and recognizably ribbon) after 50 years in a landfill?
That bothers me. But like companies that use environmental mitigation to offset the effects of development, I’m as eco-friendly as I can be while still indulging in a certain amount of despoilation. All year long I recycle, cook from scratch, buy clothes from thrift stores, walk or take the bus, and do other things to limit my impact on the Earth.
But I also take a lot of plane trips, which apparently have a major environmental impact. I choose to eat meat. I don’t purchase strictly organic foods or green goods. And every few years I buy holiday gift wrap.
Why only every few years? Because I make it last, that’s why. That’s where the frugal part comes in.
Go paperless The first and most obvious alternative: Don’t wrap at all. If you’ve got friends/family/a partner who also feel that gift wrap is an eco-disaster, agree to put the presents out completely nekkid.
Yes, it spoils the excitement of wondering what you got for Christmas. The knowledge that you’ve kept a bunch of wrapping paper out of the landfill will have to substitute for that holiday frisson.
Or try temporary camouflage: Burrito-up gift items in bath towels or sheets. House smaller presents in old sour-cream containers and larger ones in pillowcases, or in cardboard boxes you got free from local stores. Rubber-band them shut if you can, to save on strapping tape, or tie them closed with the shoelaces you’ve taken from worn-out shoes.
(You do take them out, don’t you? And cut the buttons off shirts you’ve worn to shreds, before you cut them up to use for cleaning rags? If not, hand me your Frugal Hacker badge right now. You can have it back once you’ve earned it.)
Tip: Liquor stores discard tons of boxes, especially during the holidays, which drive us to entertain or to drink (or both). If you’re required to separate the recyclables, plan to flatten those booze boxes one or two per week for a while. Otherwise your neighbors will discuss an intervention.
You can also repurpose a cigar or shoe box. Erin Huffstetler opens the side seam of cereal boxes, turns them inside-out and re-tapes them to house shirts and other gifts. “Let your kids stamp or paint on designs,” says Huffstetler, who writes the Frugal Living Guide for About.com.
I think that’s clever. But if an empty Rice Krispies box just isn’t festive enough, how about a tin? I end up with these every year because they’re sent to me full of homemade treats. I also find them at rummage sales for practically nothing and, occasionally, in the “free” boxes at yard sales. If you don’t want your gift sliding around you can wedge it in place with crumpled-up newspaper.
Bag it Decorative gift sacks are increasingly popular. My theory is that a lot of people are as bad as I am at wrapping packages but are too classy to give lumpy presents. (My gifts look positively glandular.) Gift bags would seem to be the perfect solution. But unless they have handles that can be tied shut, you need to add tissue paper to cover up the presents.
Fiendishly clever of the gift-wrap companies, isn’t it, selling an easy-to-use item that requires a corollary purchase?
A close relative of mine uses gift bags made of super-strong paper, versus the flimsier, single-use varieties. Since she gives only to people she’s known a long time, they’ve accepted that it’s one of her idiosyncrasies to ask for the bags back. Pick the right gift sack (and the right recipients) and you won’t have to buy wrapping supplies for years.
If you’ve got a sewing machine, you could make simple cloth bags to cover the goods. (Hand-stitching is possible, obviously, but more time-consuming.) Look for fabric remnants at thrift shops. You might even luck into a holiday-themed pattern; how often do people plan to make gifts but wind up donating that holly-printed flannel? Watch for old sheets or Christmas-y dish towels, too. But not Christmas guest towels, because it’s a known fact that these should never be used.
The bags don’t have to include a drawstring or Velcro unless you want to show off. Just tie it closed with a piece of ribbon, string, or raffia.
Tip: Did you buy rolls of ribbon at that post-holiday clearance sale? Cut a single long piece into 1/8th-inch-wide slivers. Each will hold bags closed just as well as a wide ribbon would. The ends may even become curly, and you can pretend that you did it that way on purpose.
Or how about putting gifts in reusable shopping bags? It’s possible to ask for these bags back, too, unless you want to make them part of your gifts. You’re looking for environmental mitigation, remember? Encouraging others to eschew plastic bags counts.
More than one way to wrap I haven’t bought clearance holiday wrap for at least two years yet my supply is still pretty ample. In part that’s because whenever possible I save the paper from gifts I receive and use it the following year to wrap items of similar size. If there are marks where tape or ribbon was removed, I cut down the paper to fit smaller items.
I’ve heard of people using a warm iron on the opposite side of gift wrap, to make it nicer for reuse. Since I barely iron my clothing, I’m unlikely to press paper. If you do this, please don’t cause any house fires.
(Speaking of which: Don’t throw commercial gift papers into a fireplace or wood stove. They burn so fast and so hot that they could create a flash fire. Besides, the inks could contain metallic materials and heavy-metal compounds, according to Consumer Reports.)
You don’t necessarily need to buy paper designed specifically for presents. Some other possibilities:
Newspaper end rolls. If there’s a newspaper or printing company in your area, ask if you can buy an almost-finished roll. These still contain a ton of paper that can be used as-is or customized any way you want. Rubber-stamp it. Flick a loaded paintbrush at it. Let your kids draw holiday pictures on it. Or do the messy-but-fun activity of dipping their li’l hands into water-based acrylic paint and making hand prints on the paper. (And if your recipient is a “CSI” fan? Have them leave only their fingerprints.)
Secondhand finds. Sometimes I find gift wrap at thrift stores or yard sales. But I’ve also seen rolls of butcher paper or brown at thrift shops; these can be decorated as noted above.
Grocery bags. Cut open paper ones and use the non-logo sides for wrapping. Let your kids decorate them with bright paint.
The Sunday funnies. These make great gift wrap year-round. Don’t subscribe? Harvest them at coffeehouses on Mondays. Tip: Discarded wrapping paper of any type can be crumpled up for use as packing material.
Old maps. Doctors Without Borders sends me several huge maps of the world every year. Maps also end up in the free box at yard sales, and may be given free of charge at visitors’ centers.
Periodicals. Small gifts can be wrapped in pages from magazines, calendars, catalogs or even comic books. You may luck into these in the “free” bin at yard sales.
Foreign-language newspapers. Weeklies written in Chinese, Korean and Spanish can be found in my neighborhood. The interesting typefaces could be a hit with someone who knows or is trying to learn those languages.
Dumpster paper. A whole lot of gift-wrap items will be tossed after Dec. 25. I’ve pulled gift bags, colorful tissue, ribbons, and large pieces of wrapping paper out of the recycle bin. Note: You don’t necessarily have to get down and dirty. I’m more of a dumpster wader than a dumpster diver, myself. A few years ago I found a large, still-shrink-wrapped roll of Christmas paper outside the dumpster. Still slowly making my way through it because of its design — not everyone appreciates the delicacy of Batman holiday wrap.
Frugal and/or reusable finishing touches
Raffia
Strips of tulle
Fabric “ribbons” cut with pinking shears
Shoelaces (come on, everybody needs an extra pair — and some are really cool-looking)
Strings of beads
Hemp twine
Which brings me to a fairly obvious point: These solutions might not work for everyone. Your fastidious Great-Aunt Mildred might not care for a repurposed grocery bag tied with wild grapevine you gleaned from the woods behind your house.
In fact, I wouldn’t do offbeat wrapping for anyone I didn’t know well. For example, your new sweetheart’s parents may look at gifts hidden inside old cottage-cheese containers and think not “eco-warrior” but rather “illegitimus frugalis.”
As always, do what works for you. But no matter how you wrap or don’t wrap your presents, the same rule applies: Every time someone opens a present early, Santa Claus kills a puppy.
2021 VA Home Loan Limit: $0 down up to $5,000,000* (Subject to lender limits) /2 open VA loans at one time $548,250* (Call 888-573-4496 for details).
How to Apply for a VA Home Loan?
This is a quick look at how to apply for a VA home loan in Plumas County. For a more detailed overview of the VA home loan process, check out our complete guide on how to apply for a VA home loan. Here, we’ll go over the general steps to getting a VA home loan and point out some things to pay attention to in Plumas County. If you have any questions, you can call us at VA HLC and we’ll help you get started.
Get your Certificate of Eligibility (COE)
Give us a call at (877) 432-5626 and we’ll get your COE for you.
Are you applying for a refinance loan? Check out our complete guide to VA Refinancing.
Get pre-approved, to get pre-approved for a loan, you’ll need:
Previous two years of W2s
Most recent 30 days paystubs or LES (active duty)
Most recent 60 days bank statements
Landlord and HR/Payroll Department contact info
Find a home
We can help you check whether the home is in one of the Plumas County flood zones
Get the necessary inspections
Termite inspection: required
Well or septic inspections needed, if applicable
Get the home appraised
We can help you find a VA-Certified appraiser in Plumas County and schedule the process
Construction loan note: Construction permit/appraisal info
Building permit
Elevation certificate
Lock in your interest rates
Wait until the appraisal lock in your loan rates. If it turns out you need to make repairs, it can push your closing back. Then you can get stuck paying rate extension fees.
Close the deal and get packing!
You’re ready to go.
What is the Median Home Price?
As of March 31st, 2021, the median home value for Plumas County is $294,510. In addition, the median household income for residents of the county is $55,359.
How much are the VA Appraisal Fees?
Single-Family: $600.
Individual Condo: $600.
Manufactured Homes: $600.
2-4 Unit Multi-Family: $850.
Appraisal Turnaround Times: 7 days.
Do I need Flood Insurance?
The VA requires properties are required to have flood insurance if they are in a Special Flood Hazard Area.
In Plumas County, rivers like the Middle Fork Feather River and Wolf Creek have flood hazard areas around them. However, the city of Quincy can see significant flooding around Spanish Creek which crosses through the north.
How do I learn about Property Taxes?
Charles W. Leonhardt is the Plumas county tax assessor. His office can be reached at 1 Crescent Street Quincy, California 95971. In addition, his office can also be reached by calling (530) 283-6380.
The state of California offers incentive programs that expand statewide for new, growing, and relocating businesses. Two of these programs are the California Competes Tax Credit which offers qualifying businesses with a tax credit, and the New employment Credit which offers a tax credit for taxpayers who hire full-time employees. Furthermore, the state offers several other programs to further diversify the state’s economy.
What is the Population?
The county’s population of 18,807 is 83% White, 9% Hispanic, and 3% American Indian.
Most county residents are between 18 and 65 years old, with 17% under 18 years old and 28% older than 65.
In total, the county has about 8,047 households, with an average of two people per household.
What are the major cities?
The county has one city and 46 census-designated places, including Quincy, which serves as the county seat.
About Plumas County
Plumas County is full of beautiful streams, rivers, and forests covering about 70% of the county. However, the most significant employment industries in the county are health care, retail trade, and construction. Hence the most common types of employment are administrative support, food preparation, and construction.
In addition to its existing industries, the county is also taking an active role in helping small businesses within the county grow. The county has a partnership with the U.S. Small Business Administration, which provides free business counseling, SBA guaranteed business loans, home & business disaster loans, and federal government contracting.
When it comes to education, the county is home to the Plumas Unified School District, which has eleven schools that serve about 2,147 students annually. In addition, higher education opportunities are also available in the county with the Feather River Community College District, which offers 4-year degree bachelor programs.
Finally, the county is also a perfect place for people who enjoy the outdoors, with places like Bald Eagle Mountain, Dixie Mountain, and Lake Almanor. Furthermore, both visitors and residents can enjoy the county’s many trails, camping grounds, and water-based recreational activities for the whole family to enjoy.
Veteran Information
The county is currently home to 1,852 veterans.
Plumas County is home to one VFW post:
Post 3825 Kenneth M. Hayes – 292 Lawrence Street, Quincy, CA 95971.
County Veteran Assistance Info.
Plumas County Veterans Services Office – 270 County Hospital Road, Suite 206, Quincy, CA 95971.
Apply for a VA Home Loan
For more information about VA Home Loans and how to apply, click here.
If you meet the VA’s eligibility requirements, you will be able to enjoy some of the best government-guaranteed home loans available.
VA loans can finance the construction of a property. However, the property must be owned and prepared for construction as the VA cannot ensure vacant land loans.
VA Approved Condos
There are no VA-approved condos available in Plumas County. Although if you’re still interested in getting a condo through the approval process, call us at (877) 432-5626.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
When you are trying to tighten down the hatches on your spending, you are doing everything possible to stick to your budget.
You are determined to stick to your budget this time around. But, you always hear that budgeting can be hard.
Well, here are some quick budgeting tips that will make sure to stick to your budget.
As most new budgeters learn, they struggle to stick to a budget for their monthly expenses. It is a natural process everyone goes through.
Budget, if you are looking for an easy button, then learn which payment type is best if you are trying to stick to a budget.
Especially if you spend a lot of time on social media, studies have shown you are more likely to overspend. So, you must learn which payment type will have you stick to a budget.
Then, you may be wondering and wanting help deciding which payment type is best for you.
The Optimal Solution Payment Type Solution
The most efficient payment type is something that is instantaneous and there are no fees associated with the transaction.
Cash is the most efficient payment type: Cash payments are usually the most efficient and convenient way to pay for goods or services.
Credit cards can be a less favorable option: Credit cards tend to have high-interest rates and can lead to financial disaster if used irresponsibly.
Debit cards are a great way to keep your spending within your budget: Debit cards should be considered a top priority for budgeting because they keep you within your spending limits.
Developing a budget will help you avoid financial disaster: A budget helps you stay organized and make informed decisions about which payment method works best for you.
Today, there are so many options on which payment type to use in today’s online world.
1. Cash
Cash is a payment type that can be used to reduce debt spending. It is versatile and can be used for a variety of expenses, such as groceries, medical bills, and gym memberships.
Cash is an excellent choice for people just starting to budget and save.
It is more restrained than credit or debit cards. The envelope method of cash budgeting can be used to train your brain to reduce spending. Cash is the most traditional payment method and has the fewest drawbacks. However, you need a safe place to store your cash, and some stores may not accept it.
Benefits of Cash:
Cash is an excellent payment type when your financial goals are to reduce debt spending.
Cash is a finite payment method that prevents you from overspending.
You have a set amount of money to spend each month, so there’s no chance of overspending.
Easy to track with the envelope method: Utilizing the envelope method ensures that you are tracking your spending (i.e groceries, gas, medical bills) and making sure that you aren’t overspending.
Cash is a quick and easy way to pay for goods and services.
No Fees. No maintenance fees or interest rates as credit cards. Cash is just plain cash – printed paper of currency.
You can avoid high fees associated with card transactions: There are no associated fees when paying with cash, making it the cheapest option overall.
Cash discounts may be available. Since you are paying with cash many small businesses offer a cash discount of 2-5%.
You can use cash at any store: No need to carry around extra cards or checks.
It’s easy to get cash: You can easily get cash and make extra cash.
There’s no need for bank account details: No need for bank account details means you’re free from identity theft risks and other inconveniences that come with having a bank account.
Cash allows you to skirt some financial regulations: Because cash payments don’t fall under the purview of many financial regulations, businesses can take advantage of loopholes in the law that allow them to charge higher interest rates on loans or engage in shady business practices. (highly recommended to stay above book)
Cons of Cash:
Possibility of losing or stolen cash: Keep your cash in a safe place!
You need a safe place to store your money: Another disadvantage of using cash is that you may need a safe place in which to keep it – some stores don’t accept it as a payment method.
Why Choose Cash?
Total control over your money, so there’s little chance of unexpectedly running out of funds.
Cash is a great way to stay on budget, as you can easily track your spending and see where you need to cut back.
Unpleasant to spend money with cash, which can help train your brain to reduce spending.
Cash is a quick and easy way to pay: Using cash eliminates the need for banks, credit cards, or other forms of payment.
Verdict: Paying with cash is the best method for budgeting and saving.
Overall, cash is a great payment type when it comes to budgeting. You can immediately see how much money you’ve spent and what needs to be cut back.
You can’t make impulsive buying decisions with debit cards or credit cards.
With a finite amount you can spend, cash is an excellent choice to prevent overspending. According to research, paying with cash can feel unpleasant, which can train your brain to reduce spending as much as possible.
2. Credit cards
Credit cards offer a number of benefits, including convenience, cash back, and the ability to make large purchases or pay bills in case of emergency. However, credit cards also come with credit card debt and can lead to overspending and financial problems if not used carefully.
For many, credit cards are the easiest way to blow your budget because you don’t have control over how much money you spend.
It is possible to overspend with credit cards if you are not mindful of what you charge.
On the flip side, this is a preferred method as many credit cards also offer rewards programs that give you cash back or points for purchases. If you make the conscious decision to use credit cards, you must make payments on time to avoid penalties.
Benefits of Credit Cards
Credit cards are convenient: Convenient to use and don’t have to worry about losing cash.
Use a credit card if you are disciplined and have strict spending habits: If you are disciplined and have strict spending habits, then using a credit card can work well for budgeting purposes.
Flexibility on larger purchases: Some benefits that come with having a credit card include more cash flow as well as being able to make larger purchases.
Credit cards provide support in times of crisis: Many credit cards offer extended services that can help like 24-hour fraud protection, lost wallet services, traveler’s insurance, and many other benefits – check each issuer for details.
$0 Liability on Unauthorized charges: Your credit card company will not be held responsible for any charges that were not authorized by you. This means that if you did not authorize a charge in person, online, or otherwise, you will not be responsible for it.
Fraud protection: Check your credit card issuer, but many offer fraud protection.
New card introductory APR is helpful to pay down debt: The introductory APR for the new card may not last long.
Payments on balance transfer should be manageable: Make sure that the payments on your balance transfer are manageable.
Points: You can accrue points along with your spending which can be a great perk.
Credit card interest rates are significantly lower than payday loans: Interest rates on credit cards are usually much lower than payday loans.
Due Date is After your statement closes. Since your bill cycle is at least another 21 days between the closing date for your statement and the due date, it gives you flexibility. Personally, I still account for the credit card bill in the same month that it was accrued.
Cons of Credit Cards
Potential for credit card debt: When using a credit card, be aware of your credit limit and the interest rate that you will have to pay on your debt. Also one of the categories of debt.
Credit limit often leads people to spend money: The credit limit often leads people to spend money by giving them a false sense of security, when they should stick to a budget and pay attention to their credit card statement and the billing cycle.
Credit card overspending can lead to debt: Consider the purchase if it is essential or delay it if possible.
Ability to easily purchase something you cannot afford. Buying something that you don’t have the money saved up for will cost you interest fees associated and maybe even with a credit card balance transfer.
There are a number of fees associated with a balance transfer: Transfer fee, interest on new purchases charged to the card.
Your introductory APR may not be valid if you make too many payments late: If you fall more than 60 days behind on payments your introductory APR might be canceled and you may face higher interest rates.
Credit score can suffer from debt: When you carry a credit card balance or don’t pay your monthly bills on time, you will lower your credit score.
Avoid carrying a balance: Pay your statement in full each month to avoid paying interest and maximize your grace period.
Key Takeaways on Credit Cards
Make sure to pay attention to the dates: Don’t spend more than you can afford, and make sure you’re making your minimum monthly payments on time so that your debt doesn’t increase over time.
A credit card can be used for budgeting only if you’re very disciplined: If you know that overspending is NOT an issue and you pay the credit card’s monthly balance in full, then using a credit card is fine.
Credit card transactions usually take several days to register in the feedback system: Something to look out for!
You can step back into debit cards or cash if needed: If credit cards are not for you, there are other options available such as debit cards or cash
3. Debit cards
Debit cards are a good option if you want to stick to a budget because the predetermined amount of funds can help you stay within your means. Additionally, debit cards are more convenient than cash and just as accepted as credit cards in most places.
A debit card works more similarly to cash than to credit cards.
They provide an easier way to track your spending and avoid having to carry a lot of cash.
Pros of Debit Cards:
No Need to Carry Cash: A debit card is better than cash because you don’t have to carry a lot of paper money and change around, and they’re also safer.
Debit cards are faster and easier to use: Debit cards work just like credit cards – withdrawing cash, making purchases, and paying bills – but they are linked directly to your bank account, so there is no need to carry around a separate cash envelope wallet or purse for them.
A debit card is a good option if you want to stick to a budget: Debit cards come with a predetermined amount of funds that you can spend from your bank account just like cash.
Tracking payments is easy with debit cards: Your debit payments will appear on your issuer’s dashboard, which you can monitor anytime from any location.
Convenience: Debit cards are more convenient to use and faster than needing to write a check or carry around cash. Plus they don’t add to your debt.
Shopping online is easy. You can use your debit card to make online purchases with your bank account, and digital banking tools make tracking your spending easy.
Points: Some debit cardholders can earn points for spending on their cards, which can be redeemable for rewards such as cash back or gift cards. This is new to compete with credit cards.
Fraud protection is typically offered for free with most debit cards—meaning if your card is stolen or used without your permission, you can get your money back.
No impact on your credit report. When you use a debit card, the funds are actually withdrawn from checking or savings accounts so there is no credit reporting occurring.
Cons of Debit Cards:
An overdraft on a debit card can happen when a purchase exceeds the amount of money in the checking account, leading to overdraft fees.
Funds on hold with fraudulent charges. If your account gets hacked, your losses will be limited since most banks protect their users against fraudulent charges and online purchases with their accounts. However, those funds will be held while they investigate and you may be liable for $50.
No chance to improve your credit score. Since you are not borrowing money, you are unable to improve your credit score.
Debit cards are a great way to keep your spending within your budget and avoid overspending which can lead to many detrimental issues.
Regardless of the overdraft fee, debit cards are still better than cash because they’re safer and easier to carry around.
4. Checks
Checks… do people still write checks? Why yes they do!
Checks offer a few benefits as a payment method, even though they are slowly being replaced by more modern options.
This can help you keep track of your spending and make sure you do not overspend. Additionally, if you ever need to dispute a charge, having a check can be helpful in proving what you paid for.
What is a check?
A check is a written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer from the check writer’s account. The date is usually written in month/day/year format. The signature of the check writer is usually on the line below “Pay to the order of.”
There are three main types of checks:
A cashier’s check is a check guaranteed by a bank, drawn on the bank’s own funds, and signed by a cashier.
A certified check is a personal check for which the bank has verified that there are sufficient funds to cover the payment.
A personal check is one that you write yourself and that is not guaranteed by the bank.
Pros of Checks
Checks are still a payment option: Checks are one of the traditional payment methods, but it is slowly dying out because of modernization.
Physical written record. It can be helpful to have physical copies of checks in addition to digital records through the bank.
You need to make both digital and physical copies of the check: Save check stubs but also transfer the information to a budgeting system.
Cons of Checks
Saving check stubs is helpful, but you still need to transfer the information to a budgeting system: Useful for tracking spending, but you’ll likely want more detailed records than just check stubs.
Not as convenient as credit or debit cards.
5. Apple Pay or Apple Cash
Apple Pay is easy to use and convenient since you only need to connect your smartphone to your cards and bank accounts via the app.
It is easy to use since you just hold your phone up to the reader and wait for the payment screen to appear.
You can even get cash back with apple pay.
Pros of Apple Pay:
Apple Pay is easy to use and convenient: You only need to connect your iPhone to your cards and bank accounts via the app.
You don’t need to carry any extra cards or cash: No need for additional cards or cash when you’re out and about
You can use Apple Pay on different devices: You can use Apple Pay on your iPhone, iPad, and Mac.
Transactions are secure: Your transactions are secured with Touch ID or a passcode.
Set up Spending Limits for each user. This way you can make sure you (or others with authorized access) are not spending more than you intended. Learn how.
Protection of Data during transactions. Your actual credit card number is changed to a different digital number, which allows limits your card number’s exposure.
Cons of Apple Pay:
Not widely accepted (yet). This method of payment is 100 percent guaranteed. While many stores offer apple pay, not all do quite yet.
The same rules apply if you load apple pay with a debit or credit card drawbacks include late fees, interest rates, and overspending: Keep that in mind when choosing Apple Pay as your payment method.
6. Mobile wallets like Google Pay, Samsung Pay, Venmo, or Zelle
Mobile wallets are digital payment systems that allow you to pay for items with your smartphone. Many people find mobile wallets are very convenient and becoming a traditional method of payment (such as credit cards).
With mobile wallets, you are making digital payments without having to carry around cash or cards using just your smartphone.
Mobile wallets are easy to use and provide instant payment convenience, making them perfect for shopping online.
Pros of Mobile Wallets:
Mobile wallets use credit cards and debit cards: Connect your smartphone to your bank accounts and use it for digital payments.
Mobile wallets are easy to use and convenient: Instant payment convenience makes them perfect for shopping online as well.
No need for cash or cards: No need for cash or cards.
Strong secuirity features provide privacy and security features that ensure your personal information is safe from data breaches and unwanted charges.
You can make purchases without having to show your identification: You can make purchases without having to show your identification.
Additional Layer of Security. Additionally, mobile wallet data is protected with verification, such as fingerprints.
Cons of Mobile Wallets:
With Zelle and Venmo, it is easy to send money to the wrong person or add an extra zero and send more money from planned. More often than not, it is difficult to recover your money.
You need to be disciplined when using a mobile wallet: Pay attention to late fees and interest rates, as well as the amount you spend in a month.
7. Prepaid Cards or Gift Cards
A prepaid card or a gift card could be right for you. The advantage of these is the mere fact that you reached the limit is enough to deter overspending.
It can make you think twice about whether you need to purchase an item or not.
Pros of Prepaid Cards and Gift Cards
Easy to use: Prepaid and gift cards are easy to use and manage your finances with.
The mere fact that you reached the limit is enough to deter overspending: It can make you think twice about whether you need to purchase an item or not.
No strings attached: No need to worry about any fees associated with the prepaid card once activated.
Privacy: The prepaid card does not track your spending or use any personally identifiable information.
Credit Score Doesn’t Matter: Your credit score does not matter when obtaining a prepaid card.
Cons of Prepaid Cards or Gift Cards
Losing a prepaid card is not a fun experience. Contact the prepaid card issuer right away to protect the funds on the prepaid card.
Fraud protection: Consider whether your prepaid card issuer offers any theft or fraud protection, as not all providers offer this feature.
Prepaid cards have limits on how much money you can load onto them, which can be frustrating if you need to make a large purchase.
8. PayPal
PayPal is a very convenient way to pay for items online or in person. It is widely accepted and used by many people.
PayPal is a digital payment service that offers convenience and ease of use. You can use them to send money to people or pay for online purchases.
However, because these services can only be used online, they should not be relied on as your sole method of budgeting and tracking expenses. Instead, consider Paypal in combination with another budgeting tool, like a spreadsheet or app, to get a fuller picture of your spending.
Pros of PayPal:
PayPal is one of the most popular online payment methods: Widely accepted and used by many people.
You can use them to send money to people or pay for online purchases: Help you review your spending prior to purchase.
Cons of Paypal:
EasyTarget for phishing scams. A phishing scam is when someone tries to trick you into giving them your personal information, like your password or credit card number. They might do this by sending you an email that looks like it’s from PayPal, but it’s not. Or they might create a fake website that looks like PayPal. If you enter your information on these sites, the scammers can then use your account to make purchases or send money to themselves.
Reputation for poor customer service. This is evident in their customer service ratings, which are some of the lowest in the industry. The majority of complaints against PayPal revolve around poor service received when asking for assistance with fund freezes and account holds.
9. Cryptocurrency (ie: Bitcoin)
Cryptocurrencies offer a new and innovative way of handling payments. They’re not yet widely accepted, so there’s potential for businesses to get in on the ground floor with this new technology.
However, because cryptocurrencies are so new, it’s uncertain if they will be regulated or not. This could pose a challenge for businesses down the road.
Pros of Crypto
Not subject to the same regulations as traditional currency, which makes them appealing to those who want to avoid government intervention.
The valuation of Crypto changes rapidly. If you are smart with crtyple this is a great way to spend your crypto coins.
Cons of Crypto
Cryptocurrencies are not accepted everywhere: Cryptocurrencies are not accepted by most organizations yet, which it makes it difficult to use them in day-to-day life.
It’s unclear if cryptocurrencies will be regulated: It’s uncertain if cryptocurrencies will be strictly regulated or not. This poses a challenge for those who want to use them as a payment method.
Bitcoin and other cryptocurrencies are still in their infancy: Bitcoin and other cryptocurrencies have only been around for a few years, so they may still face challenges in the future.
Here are the most popular budget apps today:
Other Payment Methods:
ACH payments
ACH Payments is an excellent way to pay bills and other financial obligations: You can easily set up a billing cycle for recurring payments, making it safe and convenient.
Fewer people are aware of your transactions when using ACH payments, reducing the chances of fraud or theft.
Key Facts:
Fewer people know about your transactions when using ACH payments, reducing the chances of fraud or theft.
Your checking account information is not shared or accessed by the system in any way.
You can quickly pay bills and other expenses with ACH payment: Financial institutions offer this as part of their deals.
When setting up recurring bills with ACH payment, you are aying your bills on time is important for maintaining a good credit score.
Pay attention to your check account balances: Make sure you have enough funds in your check account to avoid paying overdraft fees.
Money orders
A money order is a document that orders the payment of a specified amount of money. Money orders are convenient because they can be bought at many locations, including post offices, banks, and convenience stores.
To get a money order, you will need to fill out a form with the payee’s name, the amount of the payment, and your contact information. You will then need to purchase the money order with cash or a debit card.
To cash a money order, you will need to take it to a bank or post office. You will need to show identification and sign the back of the money order. The teller will then give you the cash for the payment.
More secure than cash: Money orders are more secure than cash because they don’t require a bank to make the transaction.
Less convenient: money orders are less convenient because you must purchase them in person.
Able to trace. They are also more secure than cash because they can be traced if lost or stolen.
Wire Transfers
Wire transfers are a more secure way to transfer money than traditional methods like checks and cash. These are sent through the banking system and are usually processed within two business days.
Typically, wire transfers are used when sending and receiving large sums of money (over $10000).
More secure than cash: Wire transfers are more secure than cash as the bank verifies there is enough money to make the wire transfer.
Fees involved with using a wire transfer. Most institutions charge for handling a wire transfer.
What method of payment is best?
Cash is the most widely accepted form of payment, but debit and credit cards are very popular.
The payment method that is best for you depends on which one helps you to stick to your budget and spend less money. The goal is to be financially stable.
What method is best for sticking to a budget?
There are several different types of budgeting methods that people use in order to manage their finances. Many people focus on using the 50/30/20 method, in which each percent corresponds to a different category of expenses.
There are plenty of budgeting tools available today to make sure you stick to your budget.
You need to find what works best for you. At the end of the month, you want to spend less than you make. That is the winning combo!
1. Budgeting App
There are many budgeting tools available online, which can be helpful as it can be easier to track your progress and budget over time.
You can use various popular budgeting apps like Quicken, Qube Money, or Simplifi.
These apps can help you track your spending, set goals, and stay on track with your budget.
2. Paper and Pen or Simple Spreadsheet
Some people find that they prefer using a simple spreadsheet or paper budget. This may be due to personal preference or because they find it easier to understand and use.
Additionally, using a paper budget may help you stay more organized as you can physically see where your money is going.
Options to get you started include our own budgeting spreadsheets or using an automated system like Tiller.
3. Envelope budgeting method
The cash envelope system is a good way to stick to a budget because it is rigid and based on envelopes and cash. You can’t get more money until your cash payday. So, this system helps you track your spending and budget better.
However, using only cash can have drawbacks as having large amounts of cash on hand can be risky.
The envelope method gives you a sense of control over your spending and makes it more tedious to write down your transactions. If you find writing down your transactions tedious, the envelope method may be too much for you.
4. Know Your Budget Categories and Track expenses
Tracking expenses is essential to move ahead financially: Knowing what you have spent in each category will help you make better financial decisions.
Be specific with your budgeting categories. Don’t make it too complicated. Always remember to include household items, clothing, and groceries when tracking expenses.
5. Prioritize your Budget Plan
A budget can provide a realistic picture of your finances, help reduce stress related to money matters, and guide you toward achieving your goals.
Creating a budget can help ensure that you are able to meet your financial obligations and still have money left over for savings and other goals. A budget can also help you track your spending so that you can make adjustments if necessary.
Make a budget plan: This will help you stay on track and make sure that you are spending your money wisely.
You decide where to spend money: A budget helps you set future goals and achieve your financial goals.
Creating a budget can help reduce stress: If you tend to get stressed about money matters, creating a budget can give you peace of mind.
A budget has other benefits beyond financial ones: If you want to achieve something in life, creating a budget can help guide you in the right direction.
See where to cut back spending. You can also look at your past spending habits to see where you can cut back. Sometimes it may be necessary to save more in order to achieve long-term goals, like buying a house or having a wedding. Always be mindful of your budget when making payments and spending money.
It’s a three-step process that involves basic math: Making a budget is simple and requires only basic math skills.
Stay on track: Making a budget plan will help you stay organized and keep track of your expenses.
A budget plan will help you stay on track and make sure that you are using the best payment type for your budget.
Making a budget is an easy way to save money. By following a few simple steps, you can keep track of your expenses and make sure that you are spending your money wisely.
Which type of payment is best for sticking to a budget?
One of the main pros of using cash as a method of payment is that it is the most efficient way to keep track of your finances. This is because it is very easy to budget when you are only dealing with cash.
However, many people prefer debit or credit cards are the best type of payment. They are more convenient than cash and can help you keep track of your spending. However, if you have a bad credit history or a low credit score, credit cards may not be the best option for you.
Cash payments are the most efficient: Most convenient and easiest to keep track with cash envelopes.
Credit cards allow you to accrue points along with your spending: These are a great benefit and one that can be a perk if handled well as part of your budgeting process. As long as pay them off in full each month to avoid credit card debt, high-interest rates, and other negative consequences.
Debit cards are also a good option for sticking to a budget. They can be used like credit cards but with less risk of debt.
Cash-based payments are a newer option and are more reliable: May not have as many negative consequences as other payment methods such as credit cards or loans.
What Not to Use when you are Trying to Stick to a Budget
You need to steer clear of these types of payments if you want to be financially stable person.
Personal loans
Personal loans are a risky way to budget. However, if you need the money for an emergency or unexpected expense, a personal loan can be a lifesaver.
There are many risks to consider and other ways to lower your spending before resorting to a personal loan.
Loans can cause budgeting problems: Loans can mess up your budget and make it difficult to stick to spending plans.
Taking out a personal loan just for the sake of having money can disrupt your budgeting: Consumers often borrow money in order to pretend they’re doing better financially than they really are.
Borrowing money is usually not a good idea: When you borrow money, you may find that you cannot handle seeing low checking account balance, which can lead to deeper debt problems.
Payday Loans
Payday loans are a bad option for someone looking for a long-term solution. They are expensive, and there is a high chance that the person will not be able to pay back the loan.
The interest that is charged is also high, and it can add up quickly.
Write bullet points about what happens with a payday loan
Payday loans can trap people in a cycle of debt, as they are often unable to pay back the loan in full on the due date.
When someone takes out a payday loan, they are borrowing money from a lender in a short amount of time, usually two or three days.
Payday loans are often expensive, with interest rates that can be above 300%.
Debt Consolidation Loans
Debt consolidation can be a good way to manage your debt because it can result in a lower monthly payment and extended payments may impact your financial plan. You can use a debt consolidation calculator to estimate how much debt you can afford before taking out a consolidation loan.
Debt consolidation loans also provide convenience because they have lower interest rates than payday loans. However, be careful when consolidating your debt because it is possible to overspend and lose your introductory APR.
You may be able to pay off your debt with one monthly payment: A consolidation loan often results in a much lower monthly payment than all of your previous monthly payments combined.
Extended payments may impact your financial plan: Take a look at how these extended payments will impact your financial planning.
You can estimate how much debt you can comfortably afford: use this tool – Tally .
It is possible to overspend with debt consolidation: If you spend more money than you planned on your day-to-day expenses, this could increase your debt. Consider if the purchase is necessary or if it can be delayed.
You may lose your introductory APR: If you fall more than 60 days behind on payments, you will likely lose your introductory APR and may even trigger a penalty interest rate.
You need to be careful when transferring a balance: Transferring a balance can also forfeit your grace period and you’ll need to pay interest on new purchases charged to the new card.
What type of payment method is best for sticking to a budget?
There are a variety of payment methods available, and each has its own benefits and drawbacks. It’s important to choose the payment method that’s best suited for your business and budget.
A payment method that allows you to stick to a budget is the best option.
FAQs
There are three main types of payment methods: cash, debit cards, credit cards, and cash-based payments.
The envelope budgeting method is a simple way to create a budget. You will need envelopes and divide your money up into the different categories that you spend money on. You will then put the corresponding amount of money into each envelope. This method can be helpful if you have a hard time sticking to a budget.
The zero-based budgeting method is a more methodical way to create a budget. With this method, you track every penny that you earn and spend. This can help you to see where your money is going and make adjustments accordingly.
A debit card is a plastic card that is linked to a checking account. Customers can spend money by drawing on funds they have already deposited. An overdraft on a debit card can lead to overdraft fees, which have high-interest rates.
A credit card is a plastic card that allows customers to borrow money up to a certain limit in order to purchase items or withdraw cash. Using a credit card can help build credit or improve your credit score.
There are a few different ways to use a credit card. You can use it to check your balance and review your spending history, which can be helpful in staying accountable.
Credit cards also offer online tools which make the analysis of your spending easier which can be helpful in tracking your budget.
Finally, you can use a credit card to rebuild your credit score by using it responsibly and paying off the balance in full each month.
Which payment type can help you stick to a budget?
When it comes to choosing a payment type that will help you stick to a budget, there is no one-size-fits-all solution.
The best payment method for you will depend on your specific needs and preferences.
When you are creating a budget, it is important to consider which payment type will help you stay on budget. Different payment types work better for different people, so it is important to experiment and find the one that works best for you.
As I stated for me, I have learned how to use credit cards to maximize cash back. But, I learned how to budget with cash when first starting.
Please pay attention to your budget and how it changes over time, as different payment types may work better at different stages of your life.
Consequently, I hope that this guide has given you a better understanding of the different payment types available and helped you narrow down your options. There are a variety of payment types that can help you stick to a budget, so it’s important to research each one carefully.
I highly recommend using an app to track your expenses and know where you spend your money. By developing a budget and choosing the right payment type, you can stick to your financial goals.
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A lot of people are seriously concerned about the amount of paper we produce and quickly discard. The weeks between Thanksgiving and New Year’s Day see an extra 25 million tons of garbage in the United States. How much of that waste is Pokemon wrapping paper, holographic gift bags, and curly ribbon that will still be curly (and recognizably ribbon) after 50 years in a landfill?
