When shopping for a wedding dress, I was given some sound advice: don’t try it on if you can’t afford it. Because if you fall in love with it, you will either be heartbroken when you can’t have it or you’ll blow your budget to get it.
What I love about this advice is that it is applicable to more than just wedding dress shopping.
For example, it works just as well when figuring how much rent you can afford. After all, the last thing you want to do is find your dream apartment only to discover it’s way out of your budget.
What’s Ahead:
Determine How Much Rent You Can Afford
Here are some rules of thumb to use when determining how much of your income should go to rent:
The 30% Rule
This rule is about as quick and easy as it gets when trying to decide how much you can afford to spend on rent: you should spend about 30% of your gross monthly income (before taxes) on rent.
Keep in mind the 30% rule doesn’t include utilities or any other housing expenses — it’s 30% of your gross income on rent alone.
So, if you bring home $3,000 per month, then you should aim to spend around $900 (or less) on your monthly rent ($3,000 x 0.30 = $900).
Keep in mind, this is just a general rule. The 30% rule is a good starting point, you may still need to adjust this figure based on what works best for you.
For example, if you live in a city with high rental prices, then you might be required to pay more than 30% just to find housing.
On the other hand, if you have student loan payments or other loans, then spending 30% on rent might be too high for your monthly budget.
Read more: How To Manage Student Loan Debt
The 30% rule has its origins in 1937 and the U.S. National Housing Act, which created the public housing program for low-income families. Income limits were established as eligibility for families that wanted to live in public housing. Back then, the rule was that, “a tenant’s income could not exceed five to six times the rent.”
Since then, the limit has increased. In 1961, the Housing and Urban Development Act established that the rent threshold should not exceed 25% of a family’s income. This was then raised to 30% in 1981 — a benchmark that’s since stayed the same.
The 50/30/20 Budget Rule
Another simple rule for determining how much of your income should go to rent is the 50/30/20 budget. This rule states you cam use 50% of your net income (after taxes) for your “needs.” Your needs include things like housing, utilities, car payments, and groceries.
Next, allot 30% of your monthly income for wants — things like clothing, eating out, and hobbies.
The remaining 20% should go towards saving, investing, and debt repayment.
So, if you bring home $3,000 per month after taxes, this would give you $1,500 per month to spend on your needs, $900 for wants, and $600 for saving, investing, and debt repayment:
To calculate 50% ($3,000 x 0.50 = $1,500).
To calculate 30% ($3,000 x 0.30 = $900).
To calculate 20% ($3,000 x 0.20 = $600).
Remember, the 50% is for all your needs, not just your rent alone. So make sure you have a good idea of how much you spend per month on things like food and utilities before deciding the exact amount you can put towards rent.
For help calculating your 50/30/20 budget, check out our handy 50/30/20 calculator.
The 50/30/20 rule was popularized by Senator Elizabeth Warren and her daughter Amelia Warren Tyagi in their book, “All Your Worth: The Ultimate Lifetime Money Plan.”
Other Considerations besides the Rent Price
While these rules of thumb are helpful starting points for determining how much rent you can afford, there are several other factors to consider — such as other expenses associated with renting, where you want to live, how much debt you have, and the kind of lifestyle you want.
Additional Costs Associated With Renting
Your monthly rent payment will likely be your largest housing expense, but it’s not the only expense. Often landlords require all sorts of extras. Here are some other things you’ll need to factor in:
Moving costs.
Security deposit.
Pet deposit.
Utility payments.
Renters insurance.
Parking.
Commuting costs.
Where Do You Want to Live?
If you’re looking in a high-cost-of-living city like San Francisco, where the average cost of a one-bedroom apartment is $2,995, then you might have to spend more than the recommended benchmark amount (or get four roommates).
On the other hand, if you’re looking for a place in a low-cost-of-living city and you make a high salary, you might spend less.
How Much Debt Do You Have?
You also have to consider how much debt you are carrying. If you are completely debt-free, then you might be able to pay a little more to your rent.
If you are drowning in student loans and credit card debt, then you probably need to be putting more of your income towards debt repayment.
Read more: How to Pay Off Credit Card Debt Fast
What Kind of Lifestyle Do You Want?
This is very important: don’t forget to think about the type of life you want to live. Your spending habits and other financial goals matter.
If you enjoy going out for dinner or spending extra money on hobbies, then make sure you are budgeting for these things. You don’t want to be house-poor and forced to spend all your time at home if what you enjoy most in life is being out and about.
Read more: When It’s OK to Spend Money
How To Reduce the Amount You Spend on Rent
If you want to decrease your housing expenses, there are some things you can do to reduce what you spend on rent:
Move to a city with a lower cost of living. If you can work remotely or you have the option to move to a cheaper city, consider doing it.
Move farther outside the city. Living in the city core can be expensive. If you want to reduce your rent, you can look into moving to the suburbs. This will often afford you more space for less money.
Get a roommate. Splitting housing costs with a few roommates can drastically reduce the amount you are spending on rent each month.
Negotiate with your landlord. Depending on where you live and the demand for rentals, you might be able to negotiate the cost of rent with your landlord. You can offer to prepay for a few months upfront in exchange for a discount. Or you could offer to extend the length of your lease if they are willing to reduce the monthly rent.
Offer to help your landlord. If you’re the handy type, offer your services to your landlord in exchange for reduced rent. Maybe you could paint or do minor fixes around the place for a cheaper monthly bill.
The Bottom Line
For many of us, we are spending the largest chunk of our income on rent.
While what you should spend on one month’s rent comes down to a few personal factors, like where you live and how much debt you’re carrying, simple rules like the 30% rule or the 50/30/20 budget can help set a baseline for what you can afford.
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The ripple effect of a financial mindset can be seen in every aspect of your life.
Think about it: If you are not mindful of how you spend and save money, then you will be in a constant struggle each and every month.
If you are simply someone who is struggling to make ends meet, there are many things we can do to save money. If you are trying desperately to reach financial freedom sooner, then you need these best money hacks to make it happen sooner.
Around here at Money Bliss, we spend a lot of time on our money mindset and setting goals.
Everyone is in a different season with their finances.
But, one thing is true… Most of us never learned proper money management.
Do you find yourself in a constant cycle of financial struggle? Do you feel like you are constantly trying to live up to unrealistic standards?
It is easy for people to feel that they are constantly broke, and in some cases this is true. But, it is also important to remember that there are ways in which you can make more money and start saving for your future.
Since changing money habits does not always come easy and often requires some serious changes in our mindset, we are here to support you to find the top money hacks.
Read on as we share 50+ ways you can start saving more money as well as making more money while also saving your sanity!
What are Money Hacks?
Money hacks are the ways in which people stretch their money.
These money hacks can come from a variety of sources, such as personal experience, family members or friends, and other individuals on social media.
Money hacks can come in many forms such as:
Simple money saving hacks
Ways to make money on the side
Strategies to make every dollar count
Thrifty ideas to be more frugal
Ideas to be more conscious of our waste
All in all, money hacks will help you to spend less money. Thus, saving more money.
As you will learn at Money Bliss, saving money opens up doors of opportunities
Best Money Hacks
Money hacks are ways to build long-term wealth.
Even though most of the hacks for money include quick saving wins, over the long term, you will actually start a snowball effect of more money in your bank account.
Sometimes, it can be difficult to find the motivation to save money, but these 7 best real money hacks will help you reset your financial mindset and start saving!
The best money hacks are the overarching big picture concepts that you must master for long-term success.
1. Think Big
Open up your mind.
One way to reset your financial mindset is by opening yourself up to new ways of thinking about spending and saving.
Too often, we are focused on what is directly in front of us instead of thinking about the big picture.
A great way to think big with your finances is to decide how you want to live life with intention.
2. Habit of Saving Money
Get back in the habit of saving.
If you have been beyond your means or barely scraping by, the best way to get back on track is by saving at least 20% of your income.
This may seem a little ludicrous. However, by prioritizing saving first, you will be pleasantly surprised how well you live off the rest.
In this post, there will be so many simple and easy ways to start saving today.
3. Make a Plan for Your Money
Create a spending plan (aka that dreaded word budget).
Creating an outline for what you want and need will help you to make smarter decisions about your spending.
This concept has been made too difficult over the years.
The bottom line is you want to spend less than you make. So, make a plan for that to happen today.
4. Make Money on the Side
This one is huge!
Personally, making extra money has been a priority for the last 5 years. We spent many years trying to cut our expenses and hating our inability to actually spend less as a growing family. So, we changed our focus to finding ways to make more money instead.
Start a side hustle. If you are not making enough to live comfortably, start a side hustle! Use your unique skill set to make extra cash.
Pick up a second job or ask for more hours.
There are plenty of ways to make money fast.
5. Invest in Stock Market
This means a way to make money or increase your net worth. AKA make your money work for you.
Too many times, the concept of investing is big and scary. The thought of starting is way too overwhelming. So you put it off until next week or next month. Then, a couple of years go by and you have not invested your money.
That is the biggest financial mistake you can make.
Start small by investing in an index fund. Each month consistently add more money.
If you want to learn to trade stocks, then you must enroll in the best investing course I have found.
Read my in-depth investing course review.
6. Pay Off Debt
Ugh… debt is the cash flow killer.
You are unable to make forward progress if you are straddled by debt.
Figure out how to pay off debt ASAP.
When calculating how long it will take to pay off high-interest debt, you should consider paying the highest interest rate first. Here is the best debt payoff app available.
7. Watch Your Spending
Be mindful of your spending.
This is a great practice that many people need to start doing again, regardless of how much money or how little money they have.
Every few months, you need to evaluate your spending to see if it matches up with your values.
As you can imagine there are many money hacks that can help you save, but the list above is the money hacks that will make the biggest difference the quickest. Below we have many more money hacks for you to explore.
Hacks for Saving Money
Money app hacks are small, quick, and easy ways to improve your finances.
They can range from things like automating your budget or creating a money jar that pays for itself, to more complex solutions like changing your tax withholding or moving money around to get a higher return.
Honestly, there are so many life hacks for saving money.
8. Automatic Savings
This is a practice of automatically transferring money from your checking account into your savings account on a regular basis.
It is best to set a transfer amount and stick to it.
Since it is easier to save your money before you spend it, you must save as much money as possible in order for this strategy to be effective.
9. Financial goals
A financial goal is a long-term, quantifiable expectation for how much money you want to have, or what you plan on doing with your money. Your goals can be as simple as saving for the down payment on a house or as involved as saving for retirement.
Our financial goals allow us to set specific, numerical targets that help us achieve our desired lifestyle in a more concrete way.
You must set smart financial goals.
10. What brings you joy?
At the end of the day, it is important to remember that life is all about finding what brings you joy.
The question is open-ended, but your money must line up with what brings you joy.
Spend a few minutes and stew on the question.
11. Build an emergency savings fund
Building an emergency savings fund is a great idea if you are in the habit of saving money and want to make sure that you have some money saved up when times get rough.
If you are struggling to save, there are a few ways you can increase your savings.
For example, you might be able to set up automatic transfers from your checking account into an investment account. You should also make sure that you have a way to save money outside of your checking account.
Saving cash in a jar or saving up coins are ideas for some people.
12. Invest spare change
If you go shopping and buy something, most stores will give you change. If you use a debit or credit card, you can do the same thing with help of a popular app!
Simple money hack: investing your spare change.
In order to invest your spare change in an account, you can open one for as little as $5. Acorns then automatically invest the money from your checking account and into a savings acorn account.
As the round-up feature continues to add upon each purchase, it is a good idea to invest in this app so that you can save more dollars!
13. Challenge Yourself to Save
If you are looking to save money, it is best to set up a budget that includes challenging yourself.
A great way to do this is with the no spend challenge.
A no-buy is when you decide to simply not make any purchases for a certain amount of time.
A no-spend is when someone decides to not spend any money in a certain period of time.
When you are struggling with spending too much money and want to reset your wallet, then give up spending money. Period.
14. Join a buy nothing group
The buy nothing groups are a growing movement that started in order to help people cut their ecological footprint, save money, and break free of consumerism.
This is a great way to find things you need as well as declutter your house.
15. Negotiate everything
The key to successful negotiation is preparation.
Research the company’s past sales, price changes, and discounts offered in order to get a better understanding of what you’re negotiating for.
Don’t be afraid to negotiate.
What is the worst thing that can happen when someone says no!?!
16. Refinance Your Mortgage
It is never too late to refinance your mortgage.
In fact, it might be a good idea if you’re in the market for a new home or refinancing your loan on an existing property.
You must weigh the costs of refinancing to how much you will save over the time period of the loan.
Ask around for mortgage broker recommendations and get at least two quotes.
17. Downsize your Home
Downsize your home is the term for reducing a residence in size. This can be done by either moving to an apartment or buying a smaller house. There are many benefits of downsizing, including living a more affordable lifestyle and having less upkeep.
Downsizers use their homes as investments and save money on rent or mortgage payments.
18. Cut the cord
With the internet becoming accessible to everyone, people have started cutting their cable and watching shows online. People can save up to $500 a year by cutting cable from their bills.
Cut the cable & stop watching TV!
19. Learn about Finances
Ask for help.
If you are struggling, there is no shame in asking for assistance from your friends or family members.
The goal is to get ahead with money and not keep digging further into a hole.
Check out any of our courses to help you.
20. Save for What You Want
Decide what you want most and work towards it with the money you have now, instead of waiting for a windfall or a large inheritance.
This may mean setting aside $200 a month.
For example, as a reminder of your long-term goal of buying a beach property, you may buy something you would hang in the new place. Every time you see it, you will be reminded of what you are saving towards.
Budget Hacks
Financial hacks are not unusual.
Since it is so easy to overspend, you must know a few budgeting hacks ahead of time.
21. Need vs Want
A want is a desire for something, while a need is something that fulfills the requirement of your body like food or shelter.
When you think about buying something, ask yourself if it is a want or a need.
By uncovering needs vs wants, you are quickly able to find ways to spend less and save more.
22. Avoid Temptation
To avoid temptation, it is important to maintain a healthy amount of physical and emotional distance from the things that tempt you.
Sometimes, spending triggers are easy to avoid but other times they’re not.
However, people should always be aware of their temptations and try to stay away from them because it will lead to unnecessary debt or stress in the long run.
23. Practice the 30-day rule
Many people wonder what’s the 30 day rule with money…
The 30-day rule is the principle that states that you should practice a new habit or stop an old habit for at least thirty days before expecting success.
When it comes to your money, it means to wait thirty days before making big purchases or changes.
24. Keep a Budget Binder
A budget binder is an important tool that helps people keep track of their finances.
The binder can help people plan out their finances by providing a place to record expenses and income.
Keeping a budget binder is an effective way to track your spending and keep yourself accountable.
By keeping it, you can easily plan for future expenses in advance as well as see what money could be saved or spent on different items over time.
25. Get a spend tracker and use it regularly
Track your spending for 30 days. It can be a good idea to track your spending for at least a month to get an idea of what you’re spending and where.
A spending tracker is a tool that helps people keep track of how much they are spending on a certain item. It is important to use this tool regularly in order to be able to see patterns in your spending.
Then, review your spending. Share it with a trusted friend or family member to come up with some goals to reduce expenses in order to save money.
26. Create a budget
Create a budget, and follow it.
When you schedule your spending, make sure to leave room for savings. This is the easiest way to ensure that you can stick to your budget.
Find more budgeting resources on our site.
27. Pay Bills on Time
This should be a simple statement that we all know. However, life can throw curveballs.
Try to pay your bills on time and in full every month, and make sure all of your bills are paid each month.
This will show lenders that you are responsible and that you are taking care of your credit. Plus you don’t rack up those pesky late fees and high interest rates.
28. Avoid Missed Payments
Don’t miss any payments, and pay off your balances each month to avoid paying high interest rates or fees on late or missed payments.
Read again… do not miss paying your bills.
29. Reconcile Your Checking Account
Balance your checkbook monthly. Okay, no one really uses a checkbook anymore, but you can still do this with pen and paper.
Even better, use Quicken as a simple way to balance your checking account. Read my Quicken review.
This is a great way to check for being charged too much or find a subscription you don’t use anymore.
30. Avoid Summer Budget Busters
Avoid spending money for the summer by just being conscious of your spending and reviewing what is different than the norm.
It is too easy to get into the trap of spending money because the weather is warm.
31. Review your Credit Card Statements
If you’re like most people, you probably review your credit card statements once every six months.
What’s the best way to go about reviewing them?
It depends on how often you use your credit card, how much debt you have, and what your credit score is. You should review your statements at least once a year if you’re carrying a balance on your credit cards.
If you use your credit card, then you should review your statements at least monthly.
32. Use the Cents Plan Formula
While the 50/30/20 budgeting rule is popular, our method of budgeting your money will be more helpful.
Learn how to divide your income into various categories.
Check out the Cents Plan Formula.
33. Use Cash
Use cash instead of credit cards to spend, which will make it easier to limit yourself to how much you can spend.
The envelope system helps you save money by only spending from one designated cash stash each month and withdrawing a set amount for different types of expenses (like groceries).
34. Spending Freeze
Implement a spending freeze, which helps you get used to not buying things for an allotted time so that when the freeze is over, it’s easier to buy what you want.
You will be surprised how much random online shopping you do.
Begin your spending freeze now.
35. Use a Budgeting App
Use your bank’s budgeting tools, like Quicken, which can help you track how much money is coming in and out of your account.
This is the simplest way to manage your money wisely.
Using a money app or a personal finance website can help you to stay organized and get more creative about your budgeting.
Check out this list of the best budgeting apps available.
Hacks to Make Money
Hacks to make money are a list of ways to generate income for yourself. Many ways to make money include blogging, affiliate marketing, or day trading. These money making hacks are great, but they can take more time and energy invested.
36. Use cash back apps
Cash back reward apps like Ibotta are a way to get extra money for your purchases.
They take some time getting used to and you only have access to partner stores that offer cash-back offers. It only takes a few seconds to make some extra cash.
Check out the best cash back apps available.
37. Ask for a Raise
A raise is an increase in pay for a job, labor, or service.
If you are concerned about asking for a raise, then you are missing out on lost money.
Your boss may be receptive to it, then try negotiating more money. Not only will this be good for your career, but also the relationship between you two can improve as well.
38. Get a side hustle
A side hustle is an additional job or career, usually, one that requires only a small amount of time and effort.
For example, someone who wants to work on the weekends might start a side hustle as a bartender.
Side hustles are a form of entrepreneurship that allows you to earn money and do little tasks. They are not difficult or time-consuming, but they can still help you make extra cash on the side.
Pick one of the best gig economy jobs.
39. Rent out a part of your home
A part of your home is often a room, which can be rented out on Airbnb.
Airbnb is the largest and most successful company in the world that lets people rent their extra space or properties. They are a well-known company that provides an easy way for people to make money from their extra space.
Use Neighbor to lend out your space in your home.
40. Declutter: sell your junk for cash
Decluttering is the act of getting rid of excess or unnecessary items.
In order to declutter, you must be willing to give up something that has been a part of your life for a long time. It is important to remember that decluttering does not have to be a quick or easy process.
Then, sell your stuff on Facebook Marketplace, Nextdoor, eBay, etc.
Learn more at Flea Market Flippers.
41. Earn Money While Watching TV
Although it is not a fast way to get rich, this can be used as a side hustle.
It’s better to use the money earned from watching TV or something else that takes up your time for other things like bills and groceries.
Survey platforms are online sites that allow people to earn money while watching TV.
The survey platform will send surveys through the mail or email, and then they can choose whether they want to take the survey for a set reward amount or if they would like cash back on their purchase.
One of these options is MyPoints, which allows users to earn points by completing tasks such as taking surveys and shopping online at specific retailers.
Others include:
42. Maximize Your Income
Find ways to increase the amount of money you bring in, whether that’s through a side hustle, increasing hours at work, or asking for a raise.
In today’s society, there are plenty of ways to make more money.
Only you put a limit on what you are capable of earning.
43. Build Your Credit
Building your credit can be a long process, but it’s worth the effort. If you’re trying to establish or improve your credit score, here are some tips that might help:
Try to keep your credit utilization rate below 30% at all times.
Do not open too many new lines of credit in a short period of time.
Pay your bills on time.
This will help you avoid damaging your credit score.
Hacks for Free Money
Hacks for free money are a form of fraud wherein the perpetrator solicits payment via PayPal, credit card, or other methods in exchange for access to what they promise will be a legitimate business opportunity.
Hacking free money is a way to make more cash, fund your financial goals, or help you pay off debt. There are lots of ways that people hack their finances and use cash back apps for some extra income.
Other options include signing up for bank bonuses or credit card bonuses.
Honestly, real free money hacks are more likely to be scams. So, beware when searching online.
Money Hacks in the Kitchen
You can save the most money by looking at what you eat.
Typically, people waste over 25% of their grocery budget and throw out food. Would you willingly throw out $250 a month? Probably not.
So, learn how to stretch your money for food.
44. Start meal planning
Meal planning is a money-saving strategy that can help in the long run. It’s also important to eat healthily and reduce food waste when meal planning.
But planning ahead will help save on the grocery budget, and it’s not too late to start now.
Start meal planning by deciding what you want to eat for each day. Then, make a list.
45. Say no to prepackaged foods
Packing your lunch for work or school can be time-consuming, especially if you have a family.
Some people prefer to buy prepackaged foods because they save time, but this is not always the best option.
A better choice is to make your own food at home and pack it for lunch, which you can then eat in peace without worrying about what other people might be saying about the food you packed.
46. Eat at home
Eating at home is a way to save money. It may be uncomfortable for those who do not enjoy cooking as it requires extra effort and time.
Instead of getting food at restaurants, consider cooking your favorite meals at home.
You can save money and time by eating the same meal over and over again.
Learn about the frugal home must haves.
47. Grow your own herbs and food
The most common methods of gardening include container gardening, hydroponics, and both indoor and outdoor gardening.
Many people are growing their own herbs and food for the satisfaction of being able to eat something that was grown with their hands.
48. Take your lunch
If you are interested in saving money, consider taking your lunch. This will save you up to $1,000 a year on work lunches and make it easier to meet the recommended daily intake of fruits and vegetables as well.
“Take your lunch” is an invitation to eat at home. There are many benefits of eating out less often, such as saving money and gaining more control over food choices.
Travel Hacks to Save Money
The following are travel hacks that can help you save money on your next trip.
Some of these hacks include traveling during weekdays, using public transportation, staying at hostels and Airbnb instead of hotels, and using a travel credit card.
49. Use foreign websites for lower prices abroad
Foreign websites are websites that have been created by people from other countries, and they sell products in the language of their country. These websites often offer lower prices on products than what is offered in the United States.
If you’re traveling abroad and need to find a place to stay, there are plenty of websites that can help. A few websites have deals on places where travelers often stay while they travel internationally.
50. Stay for free or get paid to house sit abroad
A house sitter is someone who looks after someone’s property for a certain amount of time in exchange for the promise of payment.
House sitting is typically offered by homeowners to travelers and others who are looking to stay in a particular location for an extended period of time.
The main types of house sitting include:
– full-time house sitters, who are responsible for all aspects of the house and who are typically paid a monthly salary,
– part-time house sitters, who may be responsible for taking care of one or more specific tasks such as gardening or handling the mail
51. Hide your search
To avoid being taken advantage of by airlines, it is best to open a new incognito or private window between searches.
This will make sure that you are not tricked into buying tickets that may be significantly more expensive than they need to be.
Airlines use cookies in your browser to make you believe the prices are going up and up.
Money App Hacks
Money app hacks are ways that people have figured out to make their money work for them in terms of saving and spending. These apps offer different features, such as budgeting, tracking your spending, and saving money.
If you want a simple way to save money, then any of these money apps are designed to find excessive spending.
52. Billshark
This is a legitimate way to save money on monthly bills. Billshark offers you the opportunity to save up to 25% each month (when compared with regular bill payments).
All of this can be done for you by BillShark team, and there are no fees involved!
Try Billshark for free!
53. Trim
Review your spending habits to find what you can cut out, like subscriptions.
Find other ways to save by looking for ways to reduce costly bank fees or getting a discount on your cell phone plan. By using Trim, you are saving money and improving your financial health.
Sign up with Trim now.
54. Truebill
Truebill can help you to track your spending, save money and get a clear picture of your financial life.
This helps you identify services that you are no longer using but continue to pay for. It will help save money by automatically negotiating prices with your service providers and receiving a refund of the money going to waste, which is free money.
Get started with Truebill.
Which Life Money Hacks Can You Start?
This is a lot to take in, but don’t worry.
Take the time to read through each suggestion and consider how you can implement it into your life.
The more hacks you try out, the closer you’ll get to a healthy financial mindset.
These are the life hacks to save money I have found to work for me and my family in order to reset our financial mindsets and grow our net worth.
Everyone will find their niche and what will work best for them.
Personally, you need to figure out how do I make more money. That will make the biggest impact the fastest.
What have you done with your money lately?
Know someone else that needs this, too? Then, please share!!
Life insurance is a bit of a touchy subject for many. After all, the point of the whole thing is to provide some sort of financial coverage to help you pay your final expenses and take care of your loved ones too.
The people who pursue one form of life insurance or another are those who want take care of household expenses, debts, and other burdens in the event they die. There a number of types of life insurance that can be purchased today. They include term life, whole life, and universal life.
Of course, with each type there are certain advantages and disadvantages. Life insurance is something that can be tailored to fit your particular needs and circumstances. One of the aspects that will be discussed here is the concept of permanent life insurance rates. If you want to know more then you need to learn something about universal life insurance.
In fact, universal life is known as a permanent life insurance option. The biggest advantage of this form of coverage is that it has a remarkable level of flexibility when it comes to how payments are paid, the costs of the premiums over time, and the short-term interest rates can be reset each year. Additionally, the rates are normally much lower than other types.
Permanent Structure
The rates for universal life insurance policies are guaranteed to never increase no matter how much the rates paid by insurance companies fluctuate. The structure of the typical universal life policy is arranged based on the idea of permanent coverage. Features of both universal and term-life are included to broaden the range of coverage. This means that not only do you get permanent rates but you also can benefit from investing premiums in order to get cash value. This cash value benefit can be useful for several different reasons. One of the least common ways is that it can be used to provide a loan if you ever need it in the future. This last aspect is a great way to plan for your family’s well being in the event of your death.
The policy rates also function as a form of investment for the policyholder since a portion of the premium you pay goes towards the costs of the insurance while other pats go to a separate account that accrues interest in a tax-deferred structure. This money will be paid out to a beneficiary when you, the policyholder pass away.
Permanent Insurance Options
It should be noted that universal life insurance policy rates come with three payment options. They are fixed premium, flexible premium, and single premium. The first option requires the rate remain the same for a set period of time and you only pay the premium once. Other factors deal with the behavior of the cash value account and how they determine whether you pay additional premiums. The second, the flexible premium, let the policyholder choose when to pay a premium as well as how much. The last option, the single premium, lets you pay a lump sum that deducts the monthly payment costs from the cash value on the account. As you learn more about universal life insurance rates, you’ll find out how a permanent rate can be a good thing.
Deciding which plans works best for you
As we mentioned early, each type of policy has different advantages and disadvantages. There is no “one-size-fits-all” plan that works for every applicant. Take the time to weigh each plan and see which ones fits your needs the best. Our agents can help you decide based on your wishes and what matters most to you
Why you need life insurance
If you’re like the majority of Americans, you would leave behind a mountain of debt if you were to pass away. When you die, what’s going to happen to that debt? They will be passed on to your family.
Every year there are thousands and thousands of families that go through the pain of losing someone close to them, and then on top of that, they find themselves struggling to pay for mortgage payments, car loans, and credit card bills.
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How much life insurance do you need?
Based on what you choose to buy (think term or permanent life), you need to make sure that you get a large enough policy. Not having enough coverage can leave your family struggling to pay for final expenses. So, how do you know if you have enough life insurance or if you should purchase more? There are a few questions that you can ask yourself.
How much debt do I have today? As we mentioned earlier, one of the main goals of life insurance is to help your family pay off any unpaid expenses that would be given to them if you passed away. It will also help them pay for funeral expenses that can be as much as $10,000. Sit down and look at all of the debt and unpaid expenses that you have. Make sure that your life insurance policy is large enough to pay all of those off.
Does your spouse and children use your salary to pay for basic expenses? Would they be able to survive off other incomes sources without yours? If you have several people that rely on your income, then life insurance can give them the funds they need to find a way to replace that lose income.
Getting the lowest rates possible
Regardless of the type of policy, you’ll want to get the lowest rates possible for the best coverage. There are millions of people that are buying more than they need. The number one method to saving is using a broker or independent agent who can serve quotes from lots of companies.
If you have any health complications or pre-existing conditions, it’s important that you find an insurance company or agent that has experience working with high-risk applicants.
Some companies look more favorably at applicants with conditions like diabetes or cardiovascular complications, and if you have any health problems, it’s vital that you find one of these companies to get the best rates available.
Now that I’m no longer semi-anonymous with my finance blogging, I tend to have a lot of friends and random people asking me finance questions.
I have people pouring what seems like their heart and soul to me because they really want to change and improve their situation.
This is something that I love about being a personal finance blogger – the fact that I can (hopefully) help someone change their life and teach them how to manage their money better.
Many of the questions I receive involve debt and what they can do to change their situation.
Someone told me they had over $200,000 in student loan debt, another person recently told me they had over $100,000 in credit card debt, some are hiding their finance problems from their families, some have told me that they are beyond house poor and they don’t know what to do.
The list goes on and on about the stories that I have heard.
I think the first thing a person needs to do when it comes to eliminating their debt is to realize WHY they are in debt in the first place (the next step is to actively reduce your debt – read How To Eliminate Your Debt). If you don’t know what your problem is, then it would be hard to make a positive change.
Yes, it is great to just start attacking your debt, but you also don’t want to fall into a vicious cycle of going into debt over and over again.
Here are some of the many reasons for why you may be in debt.
You think you have plenty of time to pay off your debt.
When I was in the middle of paying off my $40,000 worth of student loan debt, I remember being asked why I wanted to get rid of my student loan debt so quickly.
You know the saying about how there is no such thing as a stupid question?
Well, I thought that question was extremely stupid. I thought (and still think) it was probably the most stupid question I have ever been asked or heard.
I can’t remember the conversation exactly, but I remember them saying something about how I’m young and I should enjoy my money more and that I can worry about my student loans later.
UMM WHAT?!
Why not just pay off your debt more? Would you really rather have than 100th pair of jeans instead of putting more towards your debt? I know for a fact that I will probably completely forget about an article of clothing (even though I love clothes!) and I will appreciate my debt being paid off more.
I still enjoyed my life while I was paying off my debt, and I definitely do not think I was suffering at all.
It’s been around seven months since I completely paid off my student loans, and I couldn’t be happier!
You also never know what may happen. If you wait to pay off your debt and instead spend your money on things that you don’t need, you may fall into a bad situation. What would happen if you lost your job, came across high medical bills, or something else?
Wouldn’t you have wanted your debt to be gone?
You treat your credit card as income.
Your credit card is not a new income source. If you treat your credit card this way, then you should cancel your credit card.
Oh well if closing your account means that you will be lowering your credit score, you are probably doing worse damage anyways by racking up large credit card bills that you can’t pay.
If you are using a credit card, then you should be working to pay off your balance completely each month.
So-and-so has debt, so it’s fine if you do too.
Many people compare their debt amounts to others in hopes that they will feel more “normal” about their debt and not feel as bad. An example would be if you are 30 and the average 30-year-old has $10,000 worth of credit card debt (I completely just made that number up). You then use this number as a “guide” to yourself so that you can feel more comfortable about your debt.
However, WHO CARES about how much debt another person has? How exactly does knowing what the average amount of debt a random 30-year-old has affect you?
Is that person you?
NO!
So, why would another person’s amount of debt even matter to you? That makes no sense!
Just because someone else has $10,000 worth of credit card debt from buying too much clothing does not mean that you should too. You never know, this amount may be breaking them on the inside even if they aren’t showing it.
You believe you deserve the items you buy.
Yes, you may be awesome and think you deserve it, but should you really be buying it? Just because someone else just bought a 100 inch 3D TV (or a mansion, nice car, gadgets, a crazy-expensive wedding, etc.) doesn’t mean that you should as well.
You might think “oh well they have a comparable job to mine, so, if they can afford, then I can too.”
However, you have no idea how this person is paying for it. Maybe they saved for years, or maybe they are just putting everything on their credit card.
I recently talked to someone who has over $100,000 in credit card debt and I could tell they were in panic mode. They bought way too much house, way too much car, way too much everything. They thought they deserved it all since others were buying something similar.
You don’t need to keep up with the Joneses!
There are many ways to cut down your spending. Below is a quick list:
Lower your cell phone bill. Instead of paying the $150 or more that you spend on your cell phone bill, there are companies out there like Republic Wireless that offer cell phone service starting at $10. YES, I SAID $10! If you use my Republic Wireless affiliate link, you can change your life and start saving thousands of dollars a year on your cell phone service. I created a full review on Republic Wireless as well if you are interested in hearing more. I’ve been using them for over a year and they are great.
ATM fees. Why do people do this to themselves?
TV. Cut your cable, satellite, etc. Even go as far to go without Netflix or Hulu. Buy a digital antenna (this is the one we have) and enjoy free TV.
Sign up for a website like Ebates where you can earn CASH BACK for just spending like how you normally would online. The service is free too! Plus, when you sign up through my link, you also receive a free $10 gift card bonus to Macys, Walmart, Target, or Kohls!
Pay bills on time. This way you can avoid late fees.
Shop around for insurance. This includes health insurance, car insurance, life insurance, home insurance and so on. Insurance pricing can vary significantly from one company to the next. When we were shopping for car insurance last, we found that our old company wanted something like $205 to insure one car for one month, whereas the new company we have now charges $50 a month for the same exact coverage. INSANE!
Save money on food. I recently joined $5 Meal Plan in order to help me eat at home more and cut my food spending. It’s only $5 a month (the first four weeks are free too) and you get meal plans sent straight to you along with the exact shopping list you need in order to create the meals. Each meal costs around $2 per person or less. This allows you to save time because you won’t have to meal plan anymore, and it will save you money as well!
Fuel savings. Combine your car trips, drive more efficiently, get a fuel efficient car, etc.
Trade in your car for a cheaper one. For us, we are car people. Cars are one of our splurges. However, if you only have a nice car to keep up with the Joneses, then you might want to get rid of it and get something that makes more sense.
Live in a cheaper home. I’m not saying you need to go live in a box, but if you live in a McMansion then you may want to think about a smaller home. This way you can save money on utility bills and your mortgage payment.
Use a programmable thermostat so that you can heat and cool your home efficiently and more affordably.
Learn to have more frugal fun. We don’t spend anywhere near the same amount of money on entertainment as we used to. There are plenty of ways to have frugal fun.
Check out my recommendations page for a full list on money-saving websites.
Some ways to make extra money are below, but check out the related articles below to see many, many more:
Start a blog. Blogging is how I make a living and just a few years ago I never thought it would be possible. I made over $320,000 last year by blogging and I’m hoping to double that in 2016. You can create your own blog here with my easy-to-use tutorial. You can start your blog for as low as $3.49 per month plus you get a free domain if you sign-up through my tutorial.
Sell your stuff. There are many things you can do to make money by selling items. We all have extra things laying around that can be sold, or you can even search for items that can be bought and resold for a profit.
Rent an extra room in your home. If you have extra space in your home, then you may want to rent it out. Read A Complete Guide To Renting A Room For Extra Money.
Answer surveys. Survey companies I recommend include VIP Voice, Earning Station, American Consumer Opinion, ProOpinion, YouGov, Pinecone Research, Opinion Outpost, Survey Spot, and Harris Poll Online. They’re free to join and free to use! You get paid to answer surveys and to test products. It’s best to sign up for as many as you can as that way you can receive the most surveys and make the most money.
Use Swagbucks for your online searches. Swagbucks is something I don’t use as much, but I do occasionally earn Amazon gift cards with very little work. Swagbucks is just like using Google to do your online searches, except you get rewarded “Swagbucks” for the things you do through their website. Then, when you have enough Swagbucks, you can redeem them for cash, gift cards, and more. You’ll receive a free $5 bonus just for signing up today!
Try InboxDollars. InboxDollars is an online rewards website I recommend. You can earn cash by taking surveys, playing games, shopping online, searching the web, redeeming grocery coupons, and more. Also, by signing up through my link, you will receive $5.00 for free just for signing up!
Find a part-time job. There are many part-time jobs that you may be able to find. You can find a job on sites such as Snagajob, Craigslist (yes, I’ve found a legitimate job through there before), Monster, and so on.
Related articles:
Why are you in debt? What reasons have you caught yourself using?
If you’re feeling extra brave, please share how much debt you have (house, car, student loans, credit cards, etc.).
With the economy in a slump, more and more people are finding it difficult to afford insurance. It is certainly no help that so many factors affect insurance premiums, or if one is even eligible for insurance.
Since insurance companies are precise about who is given coverage and what their premium will be, even people who have a clean bill of health may be denied coverage. This is because even the family history of the person applying for coverage will affect whether or not that person receives coverage.
In fact, family history could be one of the biggest factors that the insurance company looks at when you apply for a life insurance policy. Things such as a family history of cardiovascular diseases, death by cancer, or family history of high blood pressure and diabetes will result in higher premiums or no coverage at all.
Your family’s health history can haunt you
When applying for an insurance policy, the applicant is asked questions about their family’s medical history. These questions are limited to parents and siblings. The applicant is asked whether family members under age sixty have suffered from certain diseases or medical conditions. It is customary that family members over the age of sixty will not be taken into account.
However, if the applicant has a family member or family members that have died from cardiovascular related illnesses, smoking related illnesses or cancer before the age of sixty, then this will negatively affect the applicant. The same goes for any family history of stroke, kidney disease, heart disease, Alzheimer’s disease, mental illness, and Parkinson’s disease, just to name a few.
The applicant could be in perfect health and have never experienced any of these themselves, but having a family history of these health problems will always be taken into account by all of the top life insurance companies.
Family medical history affects medical insurance rates because in the case of hereditary diseases, it is more likely that the applicant will succumb to those diseases as well. When configuring insurance rate premiums, the insurance writer will calculate the applicant’s life expectancy. It may sound cruel, but the insurance industry is a complex industry. It is easier to determine premiums based not only on one’s health, but also on the future possibility of the deterioration of one’s health. Family medical history affects insurance rates in this way. Being at greater risk for dying early means having to pay a higher premium, or worse, not getting coverage at all.
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How family medical history affects medical insurance rates varies by the insurer
For example, if the applicant only has one family member who suffered from diabetes, then that may not have such a great effect on the premium. However, if there are several family members in the applicant’s family history that suffered from heart disease, for instance, that will have a greater effect on the premium rate. It does vary depending on the insurer, so some insurers may raise premiums based on just one family member’s illness, while others may ignore that completely.
If your family history is littered with health problems and disease, don’t worry, there is still a great chance that you’ll be able to get a life insurance policy. Even if you’ve been denied coverage because of your family’s health history, there are still plenty of insurance options that you can choose from multiple insurance companies.
Conversely, an insurer may just not cover the particular illness or illnesses, and cover all of the others. When looking for coverage, it is best to compare rates of different companies to see which one offers the best plan.
Why it matters
There are millions of people that simply skip getting a life insurance policy for whatever reason, but that is one of the worst mistakes that you can make for you and your family. Life insurance provides peace of mind knowing that if anything were to happen to you, your family would have the funds they need to get through that difficult time in their lives.
Losing a loved one is never easy, but it becomes even more difficult if you left behind thousands of dollars in debt. If you were to pass away, how much debt would you leave your loved ones? Would they be responsible for mortgage payments, car loans, and credit card bills? For a grieving family, all of those bills piling up can make the whole process a nightmare. This is where life insurance comes in. Having a large enough policy will give your family the money they need to pay off all of those debts without adding any financial stress.
Because each company is different, they are all going to look at an application differently. It’s important to find a company that will work with you to get the policy that you want at the cheapest rate for term life insurance. If you have a family history of health complications, you need to find a company that will look more favorably at your specific situation.
You could spend hours on the phone talking with different agents and it could take you months of research to find the perfect company, or you can let us do all of that for you. Our agents are well versed in the health insurance market and can find the perfect company to get the policy that fits you the best.
Getting approved for a life insurance policy
There is nothing that you can do about your family history, but there are a lot of things that you can do about YOUR health. One of the best ways to get approved, even if you have an awful family history, is to be in excellent health. Being in great shape will help you get approved and secure excellent monthly rates that will save you money. If you’re looking to increase your chances of being approved for a policy, there are a couple of changes that you need to make.
Put down the cigarettes. This is one of the best things that you can do for your insurance premiums. Smoking cigarettes or using tobacco is going to drastically decrease your chances of getting approved for your plan, and if you do get approved, it’s going to cause your premiums to double or triple.
Aside from quitting smoking, losing weight can also give you a much better chance of being approved for your policy. Being overweight or obese increases your risk of having severe health complications later in life, which means that you are a bigger risk to the life insurance company. Getting to a healthy weight through regular exercise and a diet is a great way to ensure that you get the life insurance coverage that you and your family deserve.
What you need to know
The first thing that you need to know is, be honest with the agent. Lying about your family history or about anything else on the applications, is an awful idea that could have drastic consequences.
If there is something that you weren’t fully honest about, and you were to die from that complication or a related complication, there is a chance that the insurance company can rule your policy null and void, which means that your family wouldn’t get the payout from the policy.
Now that you know what you’re looking for, the next step is figuring out what you can afford. A review of your income, savings, monthly expenses, and debt will be necessary.
Early on in the process, you’ll want to get pre-qualified for a mortgage loan, which helps determine how much you can afford. It enables you to move swiftly when you find the right home, especially when there are other interested buyers. It also indicates to the seller that you are serious and can afford to buy the property.
A pre-approval, a simple calculation done by a mortgage lender, will tell you the amount you’ll be able to finance through a loan and what your monthly payment will be. When you find a home to buy, a pre-approval also reassures the seller that you have the financial means to purchase his or her home.
Knowing what you can afford is the first rule of home buying, and that depends on how much income and how much debt you have. It pays to check with several lenders before you start searching for a home.
The price you can afford to pay for a home will depend on several factors, such as:
Gross income (the funds you have available for the down payment)
Life has its unexpected turns. You never know what’s going to happen tomorrow. You can’t predict the future, but you can plan for the worst.
Sometimes these are great, beneficial changes, but all too often, that is not the case. When this change is the sudden death of a loved one, the stress and sorrow attached can be major.
This goes even further than emotional, too, because of the high medical and funeral expenses, as well as the regular day to day costs that are now lacking because your primary breadwinner is longer here.
Everything together can lead some families to make decisions they did not want to make, like using funds initially reserved for their kids college or cutting back on basic expenses.
To stop these stresses and worries before they happen, many families need to consider short term life insurance.
This is a great way to be insured for a short period, pay smaller amounts, and still have all of the life insurance coverage needed to keep the family safe.
Why Consider Short Term Life Insurance
Having life insurance, in general, is very important but, if you fear something in the near future or want to spend less for shorter coverage, short term might be the way to go.
This gives you the opportunity to protect your family in case your life is taken too soon so that they can remain financially stable.
Of course, it is important to remember that short term life insurance is exactly as it sounds, short term, so you may not have it forever. Once its time comes to a close, you can renew it if you want to have it for a longer time.
The coverage for short term life insurance is dependent upon the life insurance company providing it.
If you want to be insured for either natural or accidental death, make sure the one you choose covers it. Look into exactly what the specific plan offers and how it can benefit you and your family in the case of your death.
If you were to pass away tomorrow, how much debt would you leave behind to your loved ones? Would they be left with a mortgage payment and car loans? For a grieving family, these bills can seem impossible to cover. Having a life insurance policy is the best way to make sure that your family has the funds they need to pay for any debts.
The other goal of life insurance is to replace your salary as we mentioned earlier. While there is no exact number on how much you should get, it’s important that you family will have the money they need to get through this difficult time without wondering how they will pay for basic expenses.
These short-term policies are a great way to cover your family. It most cases these policies are much more affordable than most applicants think. The biggest disadvantage to these plans is obvious, it’s short-term. As we mentioned, once this plan expires, you’ll have to reapply for another type of life insurance policy. When you have to reapply, your rates are going to be higher because you’re older. In some cases, it makes more sense to go ahead a find a longer policy term and save money in the long run. If the short term of the policy works for you and fits your needs, they are a perfect option
The Cost of Short Term Insurance
As far as actual price, requirements, and other similar things you must know, you have to figure those out from your specific provider. There are some out there for which you may not quality, making it important that you learn these things quickly.
Understand the requirements, costs, and facts about each before going in, lest you waste your time for something that will never happen.
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The best way to get the lowest rates is to compare quotes with dozens of different companies before you choose one. Because there are thousands and thousands of life insurance companies, it’s important to find the one that offers quality insurance at an affordable price.
You could spend hours researching different companies and getting rates from each of them. We know your time is valuable, so let us do all of that work instead.
If you’re looking to save money, comparing quotes isn’t the whole way to save money. There are also several other ways that you can get lower rates and get quality insurance that won’t break your bank every month.
One great way is to quit smoking. If you’re listed as a smoker on your application. If you want to get the lowest monthly premiums on your short term insurance policy, quit smoking or other tobacco products and you’ll cut your premiums in half at least. If you don’t want to kick the habit, it’s important that you find a company that gives lower rates to smokers or tobacco users.
Our agents have an expansive knowledge of the life insurance field and they know which companies will give you the best rates. We can save you hours of frustration and questions. Simply fill out the quote form and the best rates will come to you.
No matter what you choose or where you go, making the decision to have short term life insurance is a big, and very important, step to take. This keeps your family safe and secure in the event of your sudden death, taking the financial burden off them. With its lower costs and the fact that it is only around for a short period of time, you have few worries about committing to something large and expensive. Every year there are countless families that unexpectedly (or sometimes expectedly) lose a loved one or family member. Not only do they have to deal with all the emotional pain, but they also have to deal with financial stress that is placed on their budget. For most people, purchasing a life insurance plan will eliminate these stresses and bring peace of mind knowing that your family will be taken care of after such an event.
This is a plan that can work for you and fit your life, all while protecting your family in the case that is lost. If this is what you feel you need, begin looking into the companies and plans available. Understand what you need, what is offered, and all of the information available to you so that you can choose the best one.
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Have you ever wondered what it would be like to have a million dollars?
The first thing that comes to mind might be the ability to purchase whatever you want, whenever you want. But do not let your imagination run wild just yet! There are many things beyond material goods that come with this kind of money.
We will dive into the life experiences that come with being independently wealthy. Plus, everyone will have a different number to be classified as independently wealthy.
You have probably heard that it is impossible to be rich and independent. While others truly believe they are capable of being wealthy.
Becoming financially independent might sound like an impossible goal, but with a little bit of hard work and determination, you are capable of reaching your dreams.
Independent wealth is a life state that you can have and maintain without having to rely on your job or family.
This post will help newbies become financially independent, so you will be able to live their best lives without any external pressures.
In the last few years, many people have taken up the idea of becoming wealthy on their own, without relying on a company or organization to make money. There are numerous ways in which one can become wealthy, but oftentimes it requires a great deal of time, effort, and dedication.
Let’s make sure you enjoy a life of independent wealth with these tips for success.
What Is Independently Wealthy?
Independent wealth is a term often used to describe people who are wealthy enough that their personal finances are not impacted by the economy.
These individuals have a certain level of financial independence, which can be accomplished in a variety of ways, including through saving, investing, or business ownership.
Financial Independence vs. Independently Wealthy
Financial Independence is when you are able to live a life of your choosing (with or without a job) and not need any support from external sources.
Independently wealthy is when individuals do not have to work another day and do not need financial support from any external sources.
Either way, you are in complete control of your money and not living paycheck to paycheck. It is possible to be financially independent without being independently wealthy.
To become independently wealthy, you need to have assets that generate income whether or not you are working.
The benefits of being independently wealthy
Many people believe that becoming independently wealthy is not just a pipe dream but is possible. There are many benefits to being rich, like being able to do anything you want with your money or help others in need.
The benefits of being independently wealthy are clear.
It is possible to achieve financial wealth, and the time and patience it takes to create such wealth are well worth it. Not only that, but those who amass great wealth can also create a powerful financial legacy for their loved ones.
Here are the benefits to enjoy the most:
You can freely pursue your passions without fear of having to conform to a certain type of lifestyle or do certain things in order to be successful.
Your mental and physical health will improve. There is less stress and more time to dedicate to your health.
You have a clear vision for the future. You know it is possible to reach your full potential.
You can experience time freedom.
There are very hardly any downsides to pursuing independent wealth. More often than not, you are the one blocking your path.
Misconceptions About Being Independently Wealthy
There are some misconceptions about what it means to be independently wealthy.
Though some may think that independently wealthy people must look a certain way or act in a certain way, this is not always the case. In fact, many of these people blend in with everyday society and go about their lives just like everyone else.
Furthermore, they are still human and have feelings; they simply have more money than most.
An independently wealthy person typically lives a comfortable life but nothing too showy. They drive nice cars that most people drive, that are reliable and affordable. They work hard and put their savings first always, so they can maintain their wealth over time.
You Don’t Need Millions
You don’t need to be born into a wealthy family or have millions of dollars to be financially independent.
It is possible to build your own wealth with consistency and time.
The amount you need depends on your current expenses and the number of people in your household.
Have All The Luxuries In Life
Wealth is relative and means different things to different people. People often think of flashy things when they think of rich people, but that is not always the case.
A person can be wealthy without having a lot of material possessions.
Money gives you options in life.
Signs You are Independently Wealthy
If you are able to support yourself with a portfolio of investments that pay for your lifestyle without having to work, you are considered to be independently wealthy. This typically means having a solid net worth and not needing to rely on a day job.
What qualifies as independently wealthy? Here are many signs that you may be independently wealthy including:
More free time
No bills to pay
No mortgage
Money saved in the bank
Practice random acts of kindness
You quit your day job.
More than anything, you have built yourself a nice cushion (AKA liquid net worth) and you are able to live off your savings.
You understand how to FI.
How to Become Independently Wealthy
There is no one-size-fits-all answer when it comes to becoming independently wealthy, but there are a few basic principles that hold true for most people.
The first is that money is a tool to be used, and should not be hoarded or worshipped.
Next, realizing wealth accumulation takes time and effort.
Lastly, it’s important to remember that financial independence is about more than just money – it’s about having the freedom to do what you want with your life.
Now, let’s dig into the steps to take to be independently wealthy.
#1 – Set Goals
Goal setting is a powerful tool that can be used to achieve anything you want in life.
By setting a specific date to achieve your goal, writing down what you need to do to achieve the goal, and taking action, you are well on your way to reaching your goals!
If you do not know where you want to go, then how can you use money as a tool to get you there.
Learn: How to set SMART financial goals.
#2 – Pay Yourself First
Pay yourself first is a financial concept that suggests you should save and invest most of your income before paying personal, living expenses. If you pay yourself first and don’t overspend, the money you save will be available for future use.
People find it difficult to save money because they tend to pay everybody else first, including bills, rent, and other necessities. By committing to “paying yourself first,” you make it a priority to put money away in savings or investments so you can cover your own costs down the road.
To become independently wealthy, you should start by saving at least 15% of your income.
Choose: one of our money saving challenges to kickstart your savings journey.
#3 – Increase Your Income
Increase your income in a few steps and move your life ahead. You can do this in one of three ways: find a higher paying job, start a side hustle, or create passive income.
Most people, look to increase their income as the best way to make money. This is definitely the fastest way to make more money. You can ask for a pay raise or look for another job that pays more.
Another option is starting a side hustle, which can be anything that doesn’t take up too much time and can be monetized. A simple way to bring in more money each week.
Passive income streams are income that does not require any effort from the individual who creates it. Passive income is generated by assets such as rental properties, stocks, or investments that produce a cash flow that is higher than the person’s expenses. This is a great way to diversity and increases your income at the same time.
Learn: how to make more money fast.
#4- Know Your Net Worth
Your new worth is a financial snapshot of your personal finances.
It will tell simply calculate your assets minus your liabilities to find your net worth.
Knowing your net worth is important, even if it’s negative. This number will give you an idea of how much debt you have and what assets you own. It can help you make better financial decisions in the future.
Knowing your net worth is important because it measures how wise with money you are. As you pay off debt and invest money into solid assets, your net worth will grow over time- so make sure you’re keeping track!
Figure out your net worth with Empower!
Empower Personal Wealth, LLC (“EPW”) compensates Money Bliss for new leads. Money Bliss is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.
#5 – Invest your Money
Investing in retirement and non-retirement funds is a way to finance your future. Though the investment strategy differs, both are considered to be asset investments because they provide you with a return on your money.
For way too many people, they shy away from investing which means they will never be able to become independently wealthy.
When it comes to investing for retirement, there are a variety of different options available. One popular option is to invest in a mutual fund. Mutual funds are collections of stocks, bonds, and other securities that are managed by a professional investment company. They offer investors the opportunity to buy into a diversified portfolio without having to purchase individual securities.
Another common retirement investment option is purchasing individual stocks or bonds. While this can be riskier than investing in mutual funds, it can also provide greater returns if done correctly.
Regardless of which option you choose, it’s important to start investing as early as possible. Compounding interest can make building wealth over time much easier.
Learn: how to invest in stocks for beginners
#6 – Educate Yourself on Personal Finance Topics
A great way to understand the complexities of personal finance is to educate yourself on how money works.
This can include learning about the following topics:
Budgeting/Finance Budgeting
Debt Management/Paying Off Debt
Investing
Retiring Early
Taxes
Income and Employment
Estate Planning (Wills, Trusts, and Estates)
Financial Freedom
This is one of the most important personal finance tips that I can give you. If you want to become a millionaire, you need to learn how money works. Period.
Check out: one of the top finance books.
#7- Stay Out of Debt
It might seem like common sense, but it is important to stay out of debt. In today’s world where credit cards are easily accessible and loans can be taken out without much thought, it is easy to find yourself in debt, and it can be difficult to get out of.
You have to make a plan to get out of debt and stay out of debt.
Until you have your debt paid in full, you will always be shackled by interest payments and unable to get much further ahead.
Learn: how to get out of debt.
#8 – Live Below Your Means
One of the most important things to understand is you must spend less than you make.
Live below your means is a phrase that was coined in the United States during the Great Depression and describes how it is possible to live on less than you earn. Live below your means refers to living on less than you make.
Living below your means is a great way to become independently wealthy.
You should spend money on the things that make your life more comfortable and enjoyable, rather than frivolous things that you don’t need.
Find out: how to live below your means.
#9 – Minimize Lifestyle Creep
Lifestyle creep can often be a subtle and dangerous thing.
As your income goes up, you may find yourself spending more money in other areas like vacations or entertainment. Most people do not even recognize it until it is too late.
Minimize lifestyle creep by setting specific boundaries and sticking to them.
However, it’s important to remember that you don’t need to completely avoid lifestyle creep and live on the same budget forever – you just want to make sure that your expenses are rising much slower than your income is rising. This will give you the best chance of reaching your long-term goals.
Learn: the signs to watch for lifestyle creep.
#10 – Think Long Term
The key to wealth is thinking long-term. When you have a clear vision for the future and are able to plan accordingly, you set yourself up for success both financially and in other areas of your life.
If you want to be successful in the long term, you must study and learn as much as you can.
Furthermore, if you’re looking to amass wealth over a period of years or decades, playing the long game is your best bet.
There will be ups and downs along the way, but with patience and perseverance, you can achieve great things.
Understand: the difference between rich and wealthy
How to Know if You’re Independently Wealthy?
The first step to knowing if you are independently wealthy is to determine your net worth.
There are a few signs that can help you determine if you are independently wealthy.
For one, you have enough money to cover all of your expenses without having to rely on anyone else. Additionally, being independently wealthy means that you can afford anything and everything you want without needing to rely on any type of income – whether it be passive or active.
You can go out and buy something just because you want to and not worry about the price tag.
Reasons to Strive for Becoming Independently Wealthy
There are many reasons to strive for independent wealth.
Achieving independent wealth is not impossible. Though it takes time, hard work, and patience, any person can do it by following a plan and taking specific steps.
Reason #1 – Enjoy Time Freedom
It’s a very rewarding feeling to be financially independent and know you’ll never have to work again.
You’ll gain more control of your life and finances, which will allow you more freedom to do what you want when you want.
This is something very few people actually get to enjoy.
Reason #2 – Less Stress
One of the main reasons people want to become independently wealthy is to avoid the stress that comes with full-time jobs.
Wealth can provide a sense of freedom and control that reduces stress and allows people to live happier lives.
Financial independence is a goal that many people strive for and when they achieve it, they find that the stresses of money-related problems are no longer a part of their lives. While achieving financial independence doesn’t mean all stress goes away, it does help with the stresses of not having enough money
Reason #3 – More Control
When you become financially independent, you gain a sense of control over your life and your finances. You are no longer at the mercy of others to provide for you or make decisions about your money. There are many ways to gain control over your finances, including creating a budget, investing in yourself, and automating your finances.
There are a lot of benefits to having more control over your finances.
One of the most important is that you can set money aside for emergencies without having to rely on credit cards. This means you won’t have as much stress if something unexpected comes up, and you’ll be less likely to fall into debt.
In fact, check out these billionaire morning routines to find quick success.
How Much Do You Need to Become Independently Wealthy?
It is difficult to determine how much money you would need to become independently wealthy because the amount of wealth that different people have requires an estimate.
For example, someone who earns $50,000 per year and has $100,000 in savings would be considered financially independent. However, they would need investable assets to cover their living expenses to be independently wealthy. Many experts say 20x your income, so approximately a million dollars.
There is no exact amount of how much money should someone have to be considered wealthy.
Everyone’s situation will be unique to them. Thus, your number will be different than mine as well as everyone around you.
Becoming independently wealthy does not happen overnight. It takes work, dedication, and a lot of patience. The first step to becoming an independent millionaire is by saving money in the bank account; this is the most important step in becoming an independent millionaire.
How to Become Wealthy in 5 Years?
Independent wealth means having the freedom to make choices based on what you want, not what you need. And that’s a goal worth striving for.
This is something you can achieve in 5 years or even 10 years.
In order to become wealthy in five years, the first step is to get a good education in personal finance.
In addition, one must work hard and avoid making dumb decisions. In order to become wealthy, you should be able to prioritize your goals and work towards them instead of wasting time on distractions.
There are many ways to become independently wealthy, but it takes time and patience to build up your assets.
You are in control of your destiny, so you must be willing to save more money and spend less money.
We gave you tips to make it happen. You must take action to make it a reality.
Know someone else that needs this, too? Then, please share!!
An estimated 14 million Americans have at least $10,000 in credit card debt.
Five-figure credit card debt, and the interest that accrues along with it, can feel overwhelming. It’s the kind of debt that keeps people up at night, and prevents them from pursuing their other financial goals.
But, that debt doesn’t have to stick around forever. With a strategy, chipping away at a $10,000 in credit card debt is achievable. Here are some options for how to pay off $10,000 in credit card debt.
Tips for Paying Off $10,000 in Credit Card Debt
Paying down $10,000 in credit card debt takes discipline and time. These tips and tools could help speed up the journey toward debt freedom.
Consider a Side Hustle
If your budget doesn’t have much wiggle room to make extra payments toward credit card debt, you might consider finding ways to generate more income. Starting a side hustle could be a powerful way to pay down a $10,000 credit card debt faster. Whether it’s grabbing a job in the gig economy or taking a catering job on the weekends, you can put those paychecks toward your credit card debt.
Ask for a Raise
If time is limited for a side hustle, think of how you could make more money in your current role. Is it time to ask for a raise, for instance?
Similarly, switching jobs may land you a higher salary. Nearly half of all Americans who switched roles last year saw an increase in salary. Just make sure that extra income goes toward debt payoff, and not lifestyle creep.
Switch to Cash
When you’re paying down $10,000 in credit card debt, it’s important to avoid accruing a higher balance. Adding more debt can not only feel discouraging, it can extend your payoff timeline.
As you tackle paying down debt, consider avoiding any further spending on credit cards. That can take the form of paying for things in cash, or using a debit card where you can only spend what you actually have. Making a switch to cash means you’re less likely to add to your burden of debt.
Debt Management Plans
While tips and tricks may help you pay down $10,000 in credit card debt, you may have to consider a larger overall strategy to move you towards payoff. Having a debt management plan in place can take some of the pressure away and could put you on a track toward paying off debt faster.
Two popular methods to accelerate debt repayment include the snowball and avalanche method.
The snowball method prioritizes paying off small debts first and working your way up. Here’s how:
1. Make the minimum monthly payments on all debts.
2. Take inventory of all your debts and order them from lowest outstanding balance to highest.
3. Put any extra cash toward the smallest balance debt.
4. Repeat this until the lowest debt is paid off.
5. Next, move onto the next lowest debt, adding the surplus cash from step 2 to this card’s monthly payments.
6. Continue to repeat this process, scaling up to the high-balance debts once you pay off the lower ones.
While this method can seem counterintuitive because of the interest that high balances can generate, starting off with small wins has psychological benefits for some. Having those wins early on may motivate you to move forward.
If you tend to be more disciplined and don’t mind playing the long game, you might prefer the debt avalanche method to pay off $10,000 in debt. Here’s how to deploy the avalanche method:
1. Make minimum payments on all debts.
2. Compile all your debt, and order it by interest rate from highest to lowest.
3. Put any extra cash toward the debt with the highest interest rate.
4. Repeat until the highest-interest debt it paid off.
5. Move onto the debt with the next-highest interest rate. Put any extra cash toward this balance until it’s paid off.
6. Continue this process, prioritizing the highest interest debt first, until all balances are settled.
Typically, the debt avalanche saves more money in interest payments in the long run. However, it can take time to see a win with this method, as opposed to debt snowball.
Credit Card Debt Forgiveness
Credit card debt forgiveness is not as simple as waving a magic wand at your balances and watching them disappear. Forgiveness does not mean the debt’s completely erased, and it comes with its own drawbacks.
Credit card debt forgiveness only becomes an option when a cardholder stops paying their debt and the credit card company sells the outstanding balance to a debt collector. From there, you can negotiate with the debt collector as to how much debt to repay.
Debt collectors buy debts for pennies on the dollar, and thus are willing to recuperate just a portion of the initial amount owed. For example, if you owe $10,000 in credit card debt and it goes to collections, you may be able to negotiate to settle the debt for just $5,000. That payment may be a lump sum or small payments over time.
While credit card debt forgiveness means paying less than the total owed, it has a fair share of drawbacks. Neglecting credit card debt can wreak havoc on a person’s credit score, and you’ll still need to pay some portion of the debt.
Additional Options for Paying Off Debt
Credit card debt forgiveness isn’t the only route toward paying off $10,000 in credit card debt. Depending on your situation, one of the following solutions may work.
Balance Transfers
Some credit card companies allow cardholders to make credit card balance transfers. That means you transfer the outstanding balance from one credit card to another, often with an introductory low interest rate or no interest.
Balance transfers do come with fees, but depending on how much you owe and how much you could save on interest, it could be worth it in the long run. However, keep in mind the interest rate the balance transfer offers may be for a limited time. You’ll want to pay off the remaining balance before the rate rises, or you could owe more than you did before the transfer.
Personal Loans
There are a number of common uses for personal loans, including paying off credit card debt. Often, a personal loan will have a lower interest rate than credit cards, which could help you pay down your debt faster and save on interest. If you’re struggling to figure out how to pay off $10,000 in credit card debt, consolidating multiple balances into a single loan also may streamline the process.
Your credit score can impact if you get approved for a personal loan, as well as what interest rate you receive. If you have a less than stellar credit score, you may not get approved. Using a personal loan calculator can help you determine if this strategy will net you savings and, if so, how much.
Recommended: Types of Personal Loans
The Takeaway
Paying down $10,000 in debt might not be easy, but with the right strategies, it is possible. This could mean adopting an aggressive payoff method or looking for additional options to pay down the debt, like personal loans.
If a personal loan sounds like the right fit for you, consider SoFi personal loans. SoFi has a simple online application and offers easy-to-use tools. You can view your rate in just 60 seconds, and get your loan funds as soon as the day your loan is approved.
SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.
Photo credit: iStock/ArtistGNDphotography
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender. SOPL0223005
Last Updated: May 27, 2023 BY Michelle Schroeder-Gardner – 55 Comments
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Personal finance comes up a lot in my life.
Once someone finds out that I write about personal finance for a living, the conversations about a person’s financial situation never seem to stop coming.
That’s no problem, though, as I love talking about financial topics and helping others.
However, one thing that comes up often is that many are somewhat clueless about their financial situation.
There have been many times when someone has told me that they had no idea what their monthly mortgage or rent payment is, they don’t know how much they are putting towards retirement, they are unaware about how much debt they have, and so on.
More shockingly, some can’t even give me an estimate and have no clue whatsoever about what the amount would be. Or, when they do give me a number, their significant other chimes in about how they are extremely wrong.
This is a problem.
Everyone should be aware of their financial situation. I believe a person should know what their:
Mortgage or rent payment is;
How much debt they have;
How much savings and retirement they have;
What their financial goals are; and more!
I understand that sometimes a person is not aware because they are not the person who manages their family’s finances. However, I believe there are many benefits of understanding your family’s financial situation.
Below are some of the many reasons for why you should be aware of your financial situation.
Knowing your financial situation will help you keep a budget.
It would be very hard to create and keep a realistic budget if you had no clue about your financial situation. By being aware, you will understand what you are working towards with your budget.
Knowing your financial situation can help you when it comes to creating a budget, keeping track of expenses, lowering costs, saving more, and so on. It would be very hard to do any of this if you had no clue what was going on.
Being aware may prevent everything from falling on one person.
What problems would arise if something happened to the person who is in charge of your family’s finances?
By not taking part in the finances of your family, you may be in for a rude awakening. You would already have enough on your plate if something happens to a loved one so it is much better to stay aware now than having to worry about the little things later.
Plus, what if the person who is in charge of your financial situation wants YOU to be aware as well? Maybe they want some help every now and then so that the family’s finances are not always weighing them down.
It is not a healthy situation for one person to have to deal with all of the stress from an unwanted financial situation.
Related: Do You Have A Financial Emergency List?
Knowing may stop financial infidelity.
No one wants to be a victim of financial infidelity. However, if a person is unaware of their financial situation then the other person may be able to keep big financial secrets quite easily.
It’s best to always know your financial situation so that you have open communication.
Being aware can help you with your goals.
If someone in your family has no clue what the family’s financial situation is, how would they really know and understand what the family’s financial goals are?
They most likely wouldn’t have the same financial motivation as someone who is aware, which may be holding you back from completing your goals.
Are you aware of your financial situation? Do you think others should be aware?