When getting your first credit card, consider factors such as the card’s annual fees, interest rates, rewards or benefits, and credit limit. Choose a card that aligns with your financial goals and spending habits, and make sure to understand the terms and conditions, including the consequences of late payments or carrying a balance. Additionally, aim to use the card responsibly to build positive credit history while avoiding overspending and accumulating debt.
With so many credit cards on the market, getting your first card can be overwhelming. What type of card do you need? How often should you use the card? Is it possible to have a credit card without racking up large amounts of debt you can’t repay?
Keep reading for answers to these frequently asked questions about getting and using a credit card for the first time.
What Is a Credit Card?
A credit card is a type of revolving account that allows you to spend up to a preset limit. Every month, the issuer calculates your minimum payment due based on your recent activity.
One of the main differences between a credit card and a loan is that loans have a fixed number of payments. With a credit card, you can keep making purchases until you reach your preset spending limit, and each time you make a payment, it frees up some of your available credit. This allows you to keep using the line of credit over to purchase goods and services over and over.
Types of Credit Cards
Before you apply for your first credit card, make sure you understand the differences between secured and unsecured credit. If you want to open a secured credit card, you’ll have to make a deposit. The issuer uses that deposit to set your credit limit. For example, if you deposit $500, you should start out with a limit of $500.
One of the biggest advantages of opening a secured credit card is that you can’t overspend. If you don’t pay back the money you borrowed, the issuer can close your account and keep the deposit.
An unsecured credit card doesn’t require a deposit, so the issuer sets your spending limit based on your income and credit history. If you don’t repay what you borrowed, the company can send your account to collections or do a charge-off, both of which would have a negative impact on your credit health.
Pros and Cons of Getting a Credit Card
Like any financial product, credit cards have several pros and cons. Review them carefully before you decide to apply for your first credit card.
Advantages of Credit Cards
The main advantage of having a credit card is that it gives you extra purchasing power. For example, if you don’t have quite enough money saved for your auto insurance premium, you can use a credit card to make your payment.
Having a credit card also helps build a strong credit profile, provided you use the card wisely. Your credit score is based on several factors, such as your payment history and the number of credit accounts you have open. When you open a credit card, you have an opportunity to demonstrate responsible financial behavior, which could improve your credit.
Credit cards also have these benefits:
Fraud protection. Credit cards have several features designed to guard against fraud. Additionally, it’s easier to deal with fraudulent transactions on a credit card than on a debit card. If you use a debit card, the fraudulent transaction ties up some of your money until you can convince the bank to issue a provisional credit. When you use credit cards, you’re using the bank’s money, so none of your money is ever at risk.
Rewards. Many companies offer credit cards that give you points, miles, cash back, and other perks. Rewards credit cards let you earn valuable benefits based on your everyday spending habits. For example, if you enjoy dining out, you may want to look for a credit card that offers extra cash back on restaurant purchases.
Wide acceptance. Thousands of merchants accept credit cards, so you don’t have to worry about carrying cash or coming up with another form of payment. Carrying a credit card may even help you avoid having a hold put on your funds when you rent a car or book a hotel room.
Disadvantages of Credit Cards
One of the biggest disadvantages of using a credit card is that it’s easy to overspend, especially if you have a high limit. To reap the benefits of using a credit card without the stress of worrying about your minimum payment, charge only what you can afford to pay in full each month.
Many credit cards also have high interest rates. If you don’t pay your balance in full every month, you’ll have to pay interest on all purchases, cash advances, and balance transfers. Interest charges add up quickly, making it difficult to pay off your balance.
Although credit cards can be very beneficial, you need to use them responsibly. Late payments, missed payments, and other credit mishaps can hurt your credit for many years to come.
How to Choose Your First Credit Card
Before you apply for your first credit card, take time to check your credit score and report. If you know your credit, it will be easier to find a credit card company willing to issue a card to someone with your credit profile. If you have poor credit, you may need to open a secured card or accept a credit card with a low limit before you can qualify for better cards.
When you’re ready to apply, look for a card that fits your needs. If your goal is to build credit, search for a card with automatic credit line reviews or other features designed to help users improve their financial situations. If you travel frequently, consider getting a rewards credit card to help you earn cash back or bonus points.
Now you’re ready to apply for a card. When you fill out the application, you’ll need to provide your name, contact details, and information about your financial situation. If you aren’t approved, you’ll receive a letter explaining the reason for denial.
Tips for Using Your Credit Card Wisely
To avoid the drawbacks associated with credit cards, follow these tips:
Make on-time payments. Payment history has a big impact on your credit health. To build a strong credit profile, pay your bill on time each month.
Pay more than the minimum. If you only pay the minimum amount due, it may take several years to pay your balance in full. Avoid high interest charges by paying more than the minimum due each month.
Don’t go over your limit. Going over your limit increases your credit utilization ratio, which is a red flag to lenders. Many companies also charge over-limit fees that make exceeding your limit expensive, so try to avoid doing this.
Limit your applications: Every time you apply for a credit card, the issuer checks your credit report, resulting in a hard inquiry. Lenders see many hard inquiries in a short amount of time as a sign that you may be in financial trouble, so it’s best to limit the number of inquiries on your record.
You can visit Credit.com today to get started on your credit card journey by comparing different cards, checking your credit score and credit report card, and learning more about how to manage your finances responsibly.
Raising the minimum wage is a hot-button issue, politically speaking — and rightly so, as it has a real impact on everybody’s finances. So what are the pros and cons of raising the minimum wage?
Raising the minimum wage could have immediate effects on the lives of low-wage hourly workers by helping them to move out of poverty and keep up with inflation. Some economists argue that other pros of raising the minimum wage could include increased consumer spending, reduced government assistance (and increased tax revenue), and stronger employee retention and morale.
Alternatively, other financial experts point to the cons of raising the minimum wage, including potentially increasing the cost of living, reducing opportunities for inexperienced workers, and triggering more unemployment.
Learn more here, including:
• What is the federal minimum wage?
• What is the purpose of the minimum wage?
• What are the pros and cons of raising the minimum wage?
• What are the likely effects of raising the minimum wage?
What Is the Federal Minimum Wage in 2023?
The federal minimum wage in 2023 is $7.25 per hour. The last time that minimum wage increased was on July 24, 2009, when it grew $0.70 from $6.55 an hour. This was part of a three-phased increase enacted by Congress in 2007.
It’s worth noting that tipped employees (say, waiters) have a different rate. The current federal tipped minimum wage is $2.13, as long as the worker’s tips make up the difference between that and the standard minimum wage. Some states have their own minimum wage laws with a higher (or lower) starting wage than the federal minimum. In such states, employers must pay out the higher of the two minimum wages.
Here are some minimum wage fast facts:
• The highest current minimum wage is in Washington, D.C., where it is $16.10 — and will go up to $17.00 on July 1, 2023.
• According to a 2022 Oxfam American report, 51.9 million US workers, or a little less than a third of the workforce, make less than $15 per hour, and many are making the federal minimum wage of $7.25 per hour or less.
• While the minimum wage has been stagnant since 2009, inflation has not. The spending power of $7.25 in 2009 is equivalent to $10.11 in 2023. This means that $7.25 can buy today about 7!5 of what it could buy in 2009.
Recommended: 7 Factors That Cause Inflation
What Is the Purpose of the Minimum Wage?
So why was the minimum wage originally created? The minimum wage was an idea that gained traction during the Great Depression era. During that time, President Franklin D. Roosevelt worked with Congress to pass the Fair Labor Standards Act of 1938, which officially established the minimum wage. Even then, politicians bickered over the hourly rate and potential impacts on the economy, and the final legislation (25 cents an hour) was not what FDR originally had in mind.
Regardless of the final number that Congress landed on, FDR’s vision for this minimum wage law was to “end starvation wages and intolerable hours,” according to the Department of Labor. The Legal Information Institute of Cornell Law School paints an even clearer picture: “The minimum wage was designed to create a minimum standard of living to protect the health and well-being of employees.”
In short, early proponents of the minimum wage legislation intended for it to be a living wage. And as the Kenan Institute of Private Enterprise points out, in today’s economy, “there is a stark difference between the federal minimum wage and a living wage.”
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Benefits of Raising the Minimum Wage
Many economists point to several pros of raising the minimum wage, including the following:
Helping Families Get Out of Poverty
Even without minimum wage increases in today’s market, inflation is skyrocketing. In July 2022, it was up 9.1% year-over-year, a four-decade high. The average American family is likely trying to cut grocery costs, gas prices, and utility bills.
A nonpartisan analysis conducted by the Congressional Budget Office found that raising the federal minimum wage to $15 an hour would reduce the number of people in poverty by nearly 1 million within a decade. And that same report indicates that earnings could increase for up to 29 million workers by 2031.
While raising the minimum wage will not stop inflation (in fact, it can have the opposite effect), it can help families more easily afford basic necessities. It can also fulfill the legislation’s original intention of eliminating starvation wages and establishing a minimum standard of living.
Recommended: Is Inflation Good or Bad?
Increasing Consumer Spending
Multiple studies over the last decade have demonstrated that low wage earners are more likely to put their income directly back into the economy. That’s because low wage workers spend a larger portion of their budget on immediate needs, like food, clothing, transportation, and shelter.
Increased consumer spending is a boon to the economy, as it is a positive economic indicator reflecting consumer confidence in the market — and brings more revenue to small businesses and corporations alike.
Increasing Federal Revenues
The CBO’s report found that federal spending would both increase and decrease if the minimum wage were raised. While those with newly raised wages might rely on government assistance less (for example, the CBO predicts reduced spending on nutrition programs like SNAP), workers who lose their jobs as a result of minimum wage increases will put an excess burden on unemployment.
However, increased tax revenue from higher wages should boost federal revenues overall, per the CBO report.
Increasing Employee Retention and Performance
The theory of efficiency wages suggests that higher-paid employees are more motivated to work harder and thus produce more goods and services faster. If that theory is true, increasing the minimum wage could help businesses become more profitable.
Further, employees are more likely to stay with a company longer if they earn good wages. The longer an employee is with a company, the more skilled that employee can become — and thus more valuable to the business.
On top of that, employee turnover is expensive. Replacing an employee with a new candidate can cost up to 150% of the worker’s salary or possibly more. In many cases, it might be cheaper for a business to pay an employee a better salary to keep them from leaving. It could be cheaper than recruiting and training a new worker to replace them after they’ve left.
Cons of Raising the Minimum Wage
There are multiple downsides to raising the minimum wage to consider when debating this policy as well:
Increasing Labor Costs and Unemployment
The largest concern with raising the minimum wage is increased labor costs. If the minimum wage increased to $15 an hour, businesses would suddenly need to give raises to everyone making less than that.
But if some employees were making $10 to $15 an hour, they might not be thrilled to hear that other workers with less tenure and experience are suddenly being paid the same. And employees who were making $15 an hour or slightly above it may also expect a raise once entry-level workers are bumped to $15.
The problem? Not all businesses can afford that. Restaurants, for example, operate at a 3% to 5% profit margin. Increasing labor costs could shrink (or eliminate) their margins, meaning they might have to let go of some staff or go out of business.
The report from the CBO supports this data; it estimates that raising the minimum wage to $15 could result in the loss of roughly 1.5 million jobs within a decade.
Another aspect of this is that if employers have to raise their wages, they might well raise their prices, passing along the increase to their customers.
Increasing Cost of Living
As businesses adjust prices to accommodate higher labor costs, consumers should expect that their dollars won’t go as far as they used to. That is, many economists argue that minimum wage is correlated with inflation. Some say that if business owners have to raise the minimum wage they pay workers, they will pay along those costs to their customers, ratcheting up their prices and contributing to inflation.
That said, other economists paint inflation as the boogeyman of the minimum wage debate. For example, Daniel Kuehn, a research associate at The Urban Institute, said that, though increasing wages will increase the cost of goods and services, it’s not really a 1:1 ratio. In other words, it won’t be “enough for consumers to really feel a burn in their wallet.”
Recommended: Compare Texas Cost of Living to California Cost of Living
Decreasing Opportunity for Inexperienced Workers
Typically, employees without specialized skills — first-time workers in high school and college, people with disabilities, and the elderly — fill some minimum wage jobs. But as employers are forced to pay workers more, some argue that companies will look for employees with more experience (or will invest in automated technology). This could make it more challenging for unskilled laborers to find work.
Recommended: What Is a Good Entry Level Salary?
Handling the Effects of Raising the Minimum Wage
Businesses may need to adjust practices to pay employees a higher hourly rate if the federal or state minimum wage increases. Here are a few ways company leaders might be able to handle the effects of increased wages:
• Raising prices: If a company’s labor costs go up, the company may need to offset those expenses with higher prices for its goods and services. Paying attention to what competitors are doing and how consumers are reacting to price hikes can be helpful in determining how much you raise prices.
• Working with independent contractors: Independent contractors might be more affordable than full-time employees for specific job duties. For instance, the employer would save on paying benefits. Before establishing an independent contractor model at your business, it’s a good idea to research the guardrails around independent contractors, as laid out by the IRS.
• Automating some positions: Technology continues to offer new ways to automate certain business functions, which may allow employers to reduce headcount, avoid future hires, or reassign existing employees to more revenue-generating work.
• Reducing hours or cutting costs: Business owners who do not want to lose any employees might be able to reduce overall hours or find other ways to cut costs instead (perhaps a less expensive benefits package, for instance).
• Getting creative: Offsetting increased labor costs can be as easy as generating more business. But then generating more business isn’t always so easy. Some creative ideas to get customers in the door could include loyalty programs or offering low-cost alternatives for budget-conscious customers.
Recommended: How Does Unemployment Work?
The Takeaway
The original intention for establishing a minimum wage was to enable workers to have a standard of living that allowed for their health and well-being. While opponents may still argue over “living wage vs. starting wage,” many signs point to today’s federal minimum wage not being enough to have a basic standard of living. Raising the minimum wage has several pros, but it’s important to remember that there are many negative effects to minimum wage increases as well. The economic solution may not be simple, but it will likely be a debate that’s in the spotlight today and in the near future.
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FAQ
How does increasing the minimum wage affect the economy?
Some economists argue that increasing the minimum wage encourages consumer spending, helps families out of poverty, and boosts tax revenue while reducing tax-funded government assistance. Other economists point out the cons of raising the minimum wage, like increased inflation and unemployment.
How does decreasing the minimum wage affect the economy?
In general, the discussion around minimum wage is about increasing it. Economists and politicians are not considering decreasing the minimum wage; doing so would send more families into poverty and decrease consumer spending.
Why are state minimum wages different?
States are able to enact their own laws that supplement or deviate from federal laws. Many states with a higher cost of living, like California and Washington, have increased their minimum wage to roughly double the federal minimum. If a state’s minimum wage differs from the federal minimum wage, employers must pay the higher of the two rates.
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It’s time to pack up and embark on your new adventure.
Making the move from an apartment to a house is a significant step in many people’s lives. It often signifies a transition to a new stage, whether it’s starting a family, advancing in your career, or simply desiring more space and freedom. While apartment living has its perks, such as convenience and lower maintenance, upsizing to a house offers numerous advantages that can greatly enhance your quality of life.
A deeper look into moving from an apartment to a house
Breaking down what upsizing truly means creates a less overwhelming experience.
More space
One of the most obvious advantages of moving from an apartment to a house is the increase in living space. Houses typically offer larger rooms, additional bedrooms, and more storage options, allowing you to spread out and enjoy more privacy. This extra space is especially beneficial for growing families or individuals who work from home and need a dedicated office space.
With more space, however, comes more stuff. Kelly Dever, founder of Your Right Hand Mom, recommends setting intention into place before you upsize. “Begin your upsizing journey by downsizing your belongings,” Dever notes. “A thorough declutter session before you pack means you only bring items that add value and joy to your new home. This not only simplifies moving but also eases the organization process in the larger space.”
Dever also notes this will create ease around filling your new space. “As you settle into your new house, systematically assign a home for every item. This practice wards off the sprawl of random clutter and cultivates an environment where order prevails.”
Ronda Bowen, of The Well Caffeinated Mom, echoes that decluttering is important when moving into more space. “If you have boxes of random things (referred to as doom boxes), go through those boxes, declutter them, and repack them where they belong,” Bowen emphasizes. “When you arrive in your new space, do your best to unpack your home within the first couple of weeks of living there to avoid new clutter.”
Decoration and personalization opportunities
Upsizing your home will allow for more space to show your creative side in design, Jamie Mitri, founder and CEO, of Moss Pure shares. “Upsizing creates the opportunity to add wall art to your wall space and do it in a unique and custom way. For example, you can own a larger, custom piece of wall art, like one by Moss Pure, instead of several smaller pieces of art,” Mitri explains.
“Moss Pure creates stunning spaces using live moss wall art that doubles as an art filter and stress relief device. The live moss stays alive in the patent-pending design indefinitely without needing watering, sunlight, or maintenance. And it’s totally customizable to your space.” Unique decoration opportunities, like Moss Pure, can transform your house into a personalized sanctuary that reflects your taste and style.
Going from small decorating and living space to almost double the space can also be challenging and overwhelming. Ana with Mrs. American Made, recommends not jumping immediately to buying a ton of new furnishings and decor. “My best advice is to decorate and organize with secondhand items,” Ana suggests. “It’s better for the environment and more eco-friendly. There are so many gently used unique, useful, and cute items out there that it doesn’t make sense to buy new and at full price.”
For those who prefer to ease their way into decorating a larger space, Shay Moné recommends starting with simply painting the walls. “Paint is the easiest way to elevate a space, and a fresh coat of any shade of white can do the trick,” Moné explains. Her top six creamy white paint colors are:
Ivory Lace / Sherwin Williams
Swiss Coffee / Benjamin Moore
Farrow’s White / Farrow and Ball
Aged White / Sherwin Williams
White Sand / Sherwin Williams
Calm / Benjamin Moore
Outdoor living
Many apartments lack outdoor space or have limited access to communal areas. Moving to a house often means gaining a backyard, patio, or garden where you can relax, entertain guests, and enjoy outdoor activities. Having your own outdoor space provides opportunities for gardening, barbecuing, or simply soaking up the sun on a lazy afternoon.
Privacy gained from moving from an apartment to a house
Houses typically offer greater privacy compared to apartment living, where you may share walls, floors, or ceilings with neighbors. With more space between you and your neighbors, you can enjoy a quieter and more peaceful environment, free from the noise and disturbances often associated with communal living.
Investment potential
Owning a house can be a smart long-term investment, as real estate tends to appreciate in value over time. Unlike renting, where your monthly payments only benefit the landlord, homeownership allows you to build equity and potentially profit from property appreciation.
While apartment complexes often foster a sense of community through shared amenities and social events, living in a house within a neighborhood offers a different type of community experience. You can get to know your neighbors, participate in local events and activities, and become involved in neighborhood associations or volunteer groups. Building relationships with your neighbors can enrich your life and provide a support network within your community.
Maintenance responsibilities
Unlike renting, where maintenance and repairs are typically handled by the landlord, homeowners are responsible for maintaining their property. This includes tasks such as lawn care, snow removal, and regular upkeep of the house’s exterior and interior. While this additional responsibility requires time and effort, it also allows homeowners to take pride in their property and ensure it remains in good condition.
Homeownership responsibilities
Upsizing to a house often comes with higher expenses compared to renting an apartment. In addition to mortgage payments, homeowners must budget for property taxes, homeowner’s insurance, utilities, and ongoing maintenance costs. It’s important to carefully evaluate your financial situation and create a realistic budget to ensure you can afford the additional expenses associated with homeownership before moving from apartment to house living.
Your upsizing journey begins here
While moving from apartment to house living or otherwise upsizing may induce stress, Megha with Crafts N Chisel reminds us of the beauty in this exciting life change. “Transitioning from an apartment to a house presents an exciting opportunity to elevate one’s design and decorating experience. A well-adorned environment fosters mental agility, with walls and tables adorned with vibrant art and uplifting themes promoting a healthy mind and body,” Megha shares. “Harmony is achieved by aligning the color scheme of artworks with that of furniture and furnishings while ensuring proportional sizing and placement. This balance enhances both the beauty of art and the space it inhabits.”
By taking the time to consider these factors and truly embrace the excitement of the upsizing adventure, you’ll be equipped to make a decision that feels right for you and your loved ones. Sure, there may be hurdles along the way, but the potential rewards of homeownership just might be worth it. From having more space to call your own to the joy of customizing every nook and cranny, owning a house can be a deeply fulfilling journey that enriches your life and creates lasting memories for you and your family.
Wesley is an Atlanta-based writer with a degree in Mass Communication from the University of South Carolina. Her background includes 6 years in non-profit communication and 4 years in editorial writing. She’s passionate about traveling, volunteering, cooking and drinking her morning iced coffee. When she’s not writing, you can find her relaxing with family or exploring Atlanta with her friends.
In the Midwest, Ohio provides residents a unique blend of urban excitement, small-town charm, and picturesque landscapes. From the lively city life of Columbus, with its thriving arts scene and diverse culinary offerings, to the quaint charm of Cincinnati, known for its historic neighborhoods and iconic skyline views along the Ohio River, Ohio has a diverse array of experiences. In this ApartmentGuide article, we’ll uncover the pros and cons of living in Ohio, so you can learn what life is like in “The Buckeye State.”
Renting in Ohio snapshot
Population
11,785,935
Avg. studio rent
$724 per month
Avg. one-bedroom rent
$933 per month
Avg. two-bedroom rent
$1,109 per month
Most affordable cities to rent in Ohio
Lorain, Elyria, Lima
Most walkable cities in Ohio
Lakewood, Norwood, Cleveland
1. Pro: Affordable cost of living
Cities like Dayton and Toledo offer residents access to affordable housing options, with median home prices and rental rates below the national average. For instance, Toledo has a median home sale price of $105,500 and an average rental rate of $784 for a one-bedroom apartment. Additionally, everyday expenses such as groceries, utilities, and healthcare are generally more affordable, allowing residents to stretch their dollars further and enjoy a higher standard of living.
2. Con: Unpredictable weather
Ohio’s weather is notoriously unpredictable, with residents experiencing a wide range of climatic conditions throughout the year. From severe thunderstorms and tornadoes in the spring to heavy snowfall and freezing temperatures in the winter, Ohioans must be prepared for rapidly changing weather patterns. Cities like Cincinnati and Cleveland often face weather-related disruptions, such as flooding and power outages, which can impact daily life.
3. Pro: Sports culture
Ohio has a rich sports culture, with passionate fans rallying behind local teams and sporting events. Cities like Cleveland and Cincinnati are home to iconic sports franchises such as the Cleveland Cavaliers, Cleveland Browns, Cincinnati Reds, and the Cincinnati Bengals. Moreover, Ohio hosts major sporting events like the Cincinnati Masters tennis tournament and the Memorial Tournament in Dublin, attracting athletes and spectators from around the world.
4. Con: Limited public transportation
Ohio’s public transportation infrastructure is relatively limited, particularly outside major urban centers like Columbus and Cleveland, which can present challenges for residents who rely on public transit. Lakewood, for example has a transit score of 41, meaning there are only a few public transportation options offered in the city.
5. Pro: Educational opportunities
Ohio offers a wealth of educational opportunities at all levels, from great universities to excellent public school systems. Institutions like The Ohio State University, Case Western Reserve University, and Miami University provide students with exceptional academic programs and research opportunities. Moreover, Ohio’s strong public school system ensures that students receive quality education from an early age.
6. Con: Infrastructure concerns
Ohio faces infrastructure concerns, including aging roads, bridges, and public utilities, which can impact residents’ quality of life. The state received a C- on its Infrastructure Report Card in 2021, which further highlights its lacking infrastructure.
7. Pro: Outdoor recreation
Ohio’s diverse landscapes offer residents ample opportunities for outdoor recreation and exploration. From hiking and biking trails in Cuyahoga Valley National Park to boating and fishing on Lake Erie, the state’s natural beauty provides endless possibilities for adventure. Columbus, one of Ohio’s largest cities, has an extensive park systems and green spaces, providing residents opportunities for picnicking, birdwatching, and outdoor sports year-round.
8. Con: High humidity
Ohio experiences high humidity levels, particularly during the summer months, which can create uncomfortable and sticky conditions for residents. The combination of heat and humidity can lead to discomfort, dehydration, and heat-related illnesses, prompting residents to seek relief indoors or in air-conditioned spaces during the hottest times of the year.
9. Pro: Central location
Ohio’s central location in the Midwest makes it an ideal base for travel and exploration throughout the region. Columbus and Cincinnati are within a day’s drive of major metropolitan areas such as Chicago, Detroit, and Pittsburgh, offering residents easy access to cultural attractions, entertainment, and dining experiences.
10. Con: Environmental concerns
Ohio faces various environmental concerns, including pollution from industrial activities, agricultural runoff, and urban development, which can impact air and water quality. Additionally, Lake Erie and the Ohio River are susceptible to pollution and algae blooms, affecting drinking water sources and aquatic ecosystems.
11. Pro: Historical landmarks
12. Con: “Brain drain”
Ohio experiences “brain drain,” where various people leave the state in search of better job opportunities and quality of life elsewhere. Factors contributing to brain drain include limited job prospects, lack of cultural amenities, and perceptions of Ohio as a less desirable place to live.
Methodology : The population data is from the United States Census Bureau, walkable cities are from Walk Score, and rental data is from ApartmentGuide.
Fort Wayne is a growing Midwestern city with a lot to offer. From one-of-a-kind festivals to innovative breweries, the city has options for anyone looking to find a home in the Fort Wayne area.
As the second-largest city in Indiana, Fort Wayne has developed a distinctive identity through its kind people and unique attractions. Whether you’re exploring its scenic parks, tasting its local flavors, or meeting the people, there’s always something memorable to discover.
Below is a list of ten of the top things that Fort Wayne is known for so you can see a whole new side of this Midwestern gem.
1. Fort Wayne Children’s Zoo
Fort Wayne Children’s Zoo is a family-friendly spot in the heart of the city. Known for its well-maintained animal exhibits and child-friendly activities, the zoo spans over 40 acres and houses hundreds of animals from around the world. It’s particularly famous for its African Safari journey where children can get up close with giraffes and zebras.
2. Johnny Appleseed Festival
Each year, Fort Wayne pays homage to John Chapman, better known as Johnny Appleseed, with a festival that transports visitors back to the 1800s. The Johnny Appleseed Festival features period crafts, food, and music, celebrating the legendary figure who planted apple trees across the United States. This event has historical reenactments that offer a glimpse into the pioneer life.
3. Fort Wayne TinCaps
The Fort Wayne TinCaps, a Minor League Baseball team affiliated with the San Diego Padres, play their games at the modern Parkview Field. This ballpark is a centerpiece of downtown Fort Wayne and has a fantastic family-friendly atmosphere. The name “TinCaps” references the tin pot that Johnny Appleseed famously wore on his head, linking the team to local lore.
4. Fort Wayne’s Famous Coney Island
Since opening its doors in 1914, Fort Wayne’s Famous Coney Island has been a landmark for classic American cuisine. Known for its coney dogs, the nostalgia-inducing diner transports patrons back in time with its vintage décor.
5. Science Central
Science Central is a hands-on science museum located in a former power plant. It has over 200 exhibits ranging from a high-rail bike to a giant slide that teaches physics through play. Science Central is instrumental in providing STEM education in a fun environment, making it a must-visit for families and school groups looking to ignite a passion for science.
6. Mad Anthony Brewing Company
Named after the fiery General “Mad” Anthony Wayne, whom the city is also named after, Mad Anthony Brewing Company is a cornerstone of Fort Wayne’s craft beer scene. This brewery is famed for its unique selection of beers and a vibrant atmosphere. Whether you’re trying the seasonal specialties or the year-round favorites, Mad Anthony’s embodies the spirit of innovation and community in every pint.
7. The Embassy Theatre
The historic Embassy Theatre is a beautifully restored vaudeville house that is now one of Fort Wayne’s prime venues for performing arts. Hosting a range of events from Broadway shows to concerts and films, the Embassy Theatre remains a true hub for the arts in Indiana.
8. Allen County Public Library
The Allen County Public Library houses one of the largest genealogy collections in the nation. Its expansive archives attract researchers from all over the country, making it a center for historical study. The library’s commitment to community enrichment through educational programs and resources makes it a pillar of Fort Wayne society.
9. Lakeside Park & Rose Garden
Lakeside Park & Rose Garden is one of Fort Wayne’s most picturesque places. With beautifully landscaped gardens, a reflective pond, and a massive display of over 2,000 roses, it’s a real hotspot for photographers.
10. DeBrand Fine Chocolates
DeBrand Fine Chocolates is a luxurious chocolate company based in Fort Wayne, known for its high-quality confections and beautiful presentation. A tour of DeBrand offers insights into the chocolate-making process and ends with a tasting of their exquisite creations. This chocolatier is a favorite for locals and visitors looking for a sweet treat or a gourmet gift.
Inside: Learn what 27 an hour is how much a year, month, and day. Plus tips to budget your money. Don’t miss the ways to increase your income.
You’re probably wondering if I made $27 a year, how much do I truly make? What will that add up to over the course of the year when working? Is $27 an hour good?
Is this wage something that I can actually live on? Or do I need to find ways that I can increase my hourly wage? How much more is $27.50 an hour annually?
When you finally start earning $27 an hour, you are happy with your progress as an hourly employee. Typically, this is when many hourly employees start to become salaried workers.
In this post, we’re going to detail exactly what $27 an hour is how much a year. Also, we are going to break it down to know how much is made per month, bi-weekly, per week, and daily.
That will help you immensely with how you spend your money. Because too many times the hard-earned cash is brought home, but there is no actual plan for how to spend that money.
By taking a step ahead and making a plan for the money, you are better able to decide how you want to live, make sure that you put your money goals first, and not just living paycheck to paycheck struggling to survive.
The ultimate goal with money success is to be wise with how you spend your money.
If that is something you want too, then keep reading. You are in the right place.
$27 an Hour is How Much a Year?
When we ran all of our numbers to figure out how much is $27 per hour is as an annual salary, we used the average working day of 40 hours a week.
40 hours x 52 weeks x $27 = $56,160
$56,160 is the gross annual salary with a $27 per hour wage.
As of June 2023, the average hourly wage is $33.58 (source).
Breakdown Of 27 Dollars An Hour Is How Much A Year
Typically, the average workweek is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, multiply the hourly salary of $27 times 2,080 working hours, and the result is $56,160.
That number is the gross income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
That is just above the $56000 salary threshold, which is desired for a recent college graduate.
Work Part Time?
But you may think, oh wait, I’m only working part-time. So if you’re working part-time, the assumption is working 20 hours a week at $27 an hour.
Only 20 hours per week. Then, take 20 hours times 52 weeks and that equals 1,040 working hours. Then, multiply the hourly salary of $27 times 1,040 working hours and the result is $28,080.
How Much is $27 Per Month?
On average, the monthly amount would average $4,680.
Annual Amount of $56,160 ÷ 12 months = $4,680 per month
Since some months have more days and fewer days like February, you can expect months with more days to have a bigger paycheck. Also, this can be heavily influenced by how often you are paid and on which days you get paid.
Plus by increasing your wage from $25 an hour, you average an extra $347 per month. So, yes a few more dollars an hour add up!
Work Part Time?
Only 20 hours per week. Then, the monthly amount would average $2,340.
How Much is $27 per Hour Per Week
This is a great number to know! How much do I make each week? When I roll out of bed and do my job, what can I expect to make at the end of the week?
Once again, the assumption is 40 hours worked.
40 hours x $27 = $1,080 per week.
Work Part Time?
Only 20 hours per week. Then, the weekly amount would be $540.
How Much is $27 per Hour Bi-Weekly
For this calculation, take the average weekly pay of $1,080 and double it.
$1,080 per week x 2 = $2,160
Also, the other way to calculate this is:
40 hours x 2 weeks x $27 an hour = $2,160
Work Part Time?
Only 20 hours per week. Then, the bi-weekly amount would be $1,080.
How Much is $27 Per Hour Per Day
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour workday.
8 hours x $27 per hour = $216 per day.
If you work 10 hours a day for four days, then you would make $270 per day. (10 hours x $27 per hour)
Work Part Time?
Only 4 hours per day. Then, the daily amount would be $108.
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$27 Per Hour is…
$27 per Hour – Full Time
Total Income
Yearly Salary (52 weeks)
$56,160
Yearly Wage (50 weeks)
$55,000
Monthly Salary (173 hours)
$4,680
Weekly Wage (40 Hours)
$1,080
Bi-Weekly Wage (80 Hours)
$2,160
Daily Wage (8 Hours)
$216
Net Estimated Monthly Income
$3,573
**These are assumptions based on simple scenarios.
Paid Time Off Earning 27 Dollars an Hour
Does your employer offer paid time off?
As an hourly employee, you may or may not get paid time off.
So, here are the scenarios for both cases.
For general purposes, we are going to assume you work 40 hours per week over the course of the year.
Case # 1 – With Paid Time Off
Most hourly employees get two weeks of paid time off which is equivalent to 2 weeks of paid time off.
In this case, you would make $56,160 per year.
This is the same as the example above for an annual salary making $27 per hour.
Case #2 – No Paid Time Off
Unfortunately, not all employers offer paid time off to their hourly employees. While that is unfortunate, it is best to plan for less income.
Life happens. There will be times you need to take time off for numerous reasons – sick time, handling an emergency, or even vacation.
So, let’s assume you take 2 weeks off without paid time off.
That means you would only work 50 weeks of the year instead of all 52 weeks. Take 40 hours times 50 weeks and that equals 2,000 working hours. Then, multiply the hourly salary of $27 times 2,000 working hours, and the result is $55,000.
40 hours x 50 weeks x $27 = $54,000
You would average $208 per working day and nothing when you don’t work.
$27 an Hour is How Much a year After Taxes
Let’s be honest… Taxes can take up a big chunk of your paycheck. Thus, you need to know how taxes can affect your hourly wage.
Also, every single person’s tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
Gross Annual Salary: $56,160
Federal Taxes of 12%: $6,739
State Taxes of 4%: $2,246
Social Security and Medicare of 7.65%: $4,296
$27 an Hour per Year after Taxes: $42,878
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$42,878 ÷ 2,080 hours = $20.61 per hour
After estimated taxes and FICA, you are netting $20.61 an hour. That is $6.39 an hour less than what you thought you were paid.
This is a very highlighted example and can vary greatly depending on your personal situation. Therefore, here is a great tool to help you figure out how much your net paycheck would be.
Plus budgeting on a just over $20 an hour wage is much different.
$27 An Hour Salary Calculator
Now, you get to figure out how much you make based on your hours worked or if you make a wage between $27.01-27.99.
This is super helpful if you make $27.30, $27.40, or $27.88.
$27 an Hour Budget – Example
You are probably wondering can I live on my own making 27 dollars an hour? How much rent or mortgage payment can you afford on 27 an hour?
Using our Cents Plan Formula, this is the best-case scenario on how to budget your $27 per hour paycheck.
When using these percentages, it is best to use net income because taxes must be paid.
In this example, above we calculated that $27 an hour was $20.61 after taxes. That would average $3573 per month.
According to the Cents Plan Formula, here is the high-level view of a $27 per hour budget:
Basic Expenses of 50% = $1787
Save Money of 20% = $715
Give Money of 10% = $357
Fun Spending of 20% = $715
Debt of 0% = $0
Obviously, that is not doable for everyone. Even though you would expect your money to go further when you are making double the minimum wage. So, you have to be strategic in ways to decrease your basic expenses and debt. Then, it will allow you more money to save and fun spending.
To further break down an example budget of $27 per hour, then using the ideal household percentages is extremely helpful.
recommended budget percentages based on $27 per hour wage:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$468
Savings
15-25%
$936
Housing
20-30%
$1,076
Utilities
4-7%
$140
Groceries
5-12%
$311
Clothing
1-4%
$19
Transportation
4-10%
$164
Medical
5-12%
$234
Life Insurance
1%
$14
Education
1-4%
$23
Personal
2-7%
$70
Recreation / Entertainment
3-8%
$117
Debts
0% – Goal
$0
Government Tax (including Income Taxes, Social Security & Medicare)
15-25%
$1,107
Total Gross Income
$4,680
**In this budget, prioritization was given to basic expenses. Thus, some categories like giving and saving were less.
Can I Live off $27 Per Hour?
At this $27 hourly wage, you are more than likely double the minimum wage. Things should be easy to live off this $27 hourly salary.
However, it is still slightly above the $55,000 salary. That means it can still be a tough situation.
Is it doable? Absolutely.
In fact, $27 an hour is higher than the median hourly wage of $19.33 (source). That seems backward, but typically salaried workers earn more per hour than hourly workers.
Can you truly live off $27 an hour annually?
You just have to have the desire to spend less than your income. Plus consistently save.
If you are constantly struggling to keep up with bills and expenses, then you need to break that constant cycle. It is possible to be smart with money.
You need to do is change your money mindset.
This is what you say to yourself… Okay, I have aspirations and goals to increase how much I make. This is the time to start diversifying my income into multiple streams and start investing. I am going to stretch my 27 dollars per hour.
In the next section, we will dig into ways to increase your income, but for now, is it possible to live on $27 an hour.
Yes, you can do it, and as you can see it is possible with the sample budget of $27 per hour.
Living in a higher cost of living area would be more difficult. So, you may have to get a little creative. For example, you might have to have a roommate. Move to a lower cost of living area where rent is cheaper.
Also, you must evaluate your “fun spending” items. Many of those expenses are not mandatory and will break your budget. You can find plenty of free things to do without spending money.
5 Ways to Increase Your Hourly Wage
This right here is the most important section of this post.
You need to figure out ways to increase your hourly income because I’m going to tell you…you deserve more. You do a good job and your value is higher than what your employers pay you.
Even an increase of 50 cents to $27.50 will add up over the year. An increase to $28 an hour is even better!
1. Ask for a Raise
The first thing to do is ask for a raise. Walk right in and ask for a raise because you never know what the answer will be until you ask.
If you want the best tips on how specifically to ask for a raise and what the average wage is for somebody doing your job, then check out this book. In this book, the author gives you the exact way to increase your income. The purchase is worth it or go down to the library and check that book out.
2. Look for A New Job
Another way to increase your hourly wage is to look for a new job. Maybe a completely new industry.
It might be a total change for you, but many times, if you want to change your financial situation, then that starts with a career change. Maybe you’re stressed out at work.
Making $27 an hour is too much for you and you’re not able to enjoy life, maybe changing jobs and finding another job may increase your pay, but it will also increase your quality of life.
3. Find a New Career
Because of student loans, too many employees feel like they are stuck in the career field they chose. They feel sucked into the job that they don’t like or have the potential they thought it would.
For many years, I was in the same situation until I decided to do a complete career change. I am glad I did. I have the flexibility that I needed in my life to do what I wanted when I needed to do it. Plus I am able to enjoy my entrepreneurial spirit.
4. Find Alternative Ways to Make Money
In today’s society, you need to find ways to make more money. Period.
There is no way to get around it. You need to find additional income outside a traditional nine-to-five position or typical 40 hour a week job. You will reach a point where you are maxed on what you can make in your current position or title. There may be some advancement to move forward, but in many cases, there just is not much room for growth.
So, you need to find a side hustle – another way to make money.
Do something that you enjoy, turn your hobby into a way to make money, turn something that you naturally do, and help others into a service business. In today’s society, the sky is the limit on how you can earn a freelancing income.
Must Read: 20 Genius Ways on How to Make Money Fast
5. Earn Passive Income
The last way to increase your hourly wage is to start earning passive income.
This can be from a variety of ways including the stock market, real estate, online courses, book sales, etc. This is where the differentiation between struggling financially and becoming financially sound.
By earning money passively, you are able to do the things that you enjoy doing and not be loaded down, with having a job that you need to work, and a place that you have to go to. And you still make money doing nothing.
Here is an example:
You can start a brokerage account and start trading stocks for $50. You need to learn and take the one and only investing class I recommend. Learn how the market works, watch videos, and practice in a simulator before you start using your own money.
One gentleman started with $5,000 in his trading account and now has well over $36,000 in a year. Just from practice and being consistent, he has learned that passive income is the way for him to increase his income and also not be a slave to his job.
Watch his inspiring story!
Tips to Live on $27 an Hour
In this last section, grasp these tips on how to live on $27 an hour or just above $55k yearly salary. On our site, you can find lots of money saving tips to help stretch your income further.
Here are the most important tips to live on $27 an hour. More importantly stretch how much you make, in case you are in the “I don’t want to work anymore” mindset. Highlight these!
1. Spend Less Than you Make
First, you must learn to spend less than you make.
If not you will be caught in the debt cycle and that is not where you want to be. You will be consistently living paycheck to paycheck.
In order to break that dreadful cycle, it means your expenses must be less than your income.
And when I say income, it’s not the $27 an hour. As we talked about earlier in the post, there are taxes. The amount of taxes taken out of your paycheck is called your net income which is $27 an hour minus all the taxes, FICA, Social Security, and Medicare are taken out. That is your net income.
So, your net income has to be less than your net income.
2. Living Below Your Means
You need to be happy. And living on less can actually make you happier. Studies prove that less is better.
Finding contentment in life is one thing that is a struggle for most.
We are driven to want the new shiny toy, the thing next door, the stuff your friend or family member got. Our society has trained you that you need these things as well.
Have you ever taken a step back and looked at what you really need?
Once you are able to find contentment with life, then you are going to be set for the long term with your finances.
Here is our story on owning less stuff. We have been happier since.
3. Make Saving Money Fun
You need to make saving money fun. If you’re good, since you must keep your expenses low, you have to find ways to make your savings fun!
It could be participating in a no spend challenge for the month.
It could be challenging friends not to go to Target for a week.
Maybe changing your habits and not picking up takeout and planning meals.
Start to save 5000 in a year.
Whatever it is challenge yourself.
Find new ways of saving money and have fun with it.
Even better, get your family and kids involved in the challenge to save money. Tell them the reason why you are saving money and this is what you are doing.
Here are 101 things to do with no money. Free activities without costing you a dime. That is an amazing resource for you and you will never be bored.
And you will learn a lot of things in life you can do for free. Personally, some of the best ones are getting outside and enjoying some fresh air.
4. Make More Money
If you want if you do not settle for less, then find ways to make more money. If you want more out of life, then increase your income.
You need to be an advocate for yourself.
Find ways to make more money.
It could be a side hustle, a second job, asking for a raise, going to school to change careers, or picking up extra hours.
Whatever path you take, that’s fine. Just find ways to make more money. Period.
5. No State Taxes
Paying taxes is one option to increase what you take home in each paycheck.
These are the states that don’t pay state income taxes on wages:
Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming
It is very interesting if you take into account the amount of state taxes paid compared to a state with income taxes.
Also, if you live in one of the higher taxed states, then you may want to reconsider moving to a lower cost of living area. The higher taxes income tax states include California, Hawaii, New Jersey, Oregon, Minnesota, the District of Columbia, New York, Vermont, Iowa, and Wisconsin. These states tax income somewhere between 7.65% – 13.3%.
6. Stick to a Budget
You need to learn how to start a budget. We have tons of budgeting resources for you.
While creating a budget is great, you need to learn how to use one.
You do not have to budget down to every last penny.
You need to make sure your expenses are less than your income and that you are creating sinking funds for those irregular expenses.
Budget Help:
7. Pay Off Debt Quickly
The amount that you pay interest on debt is absolutely absurd.
Unfortunately, that is how many of these companies make their money from the interest you pay on debt.
If you are paying 5% to even 20-21% or higher, you need to find ways to lower that debt quickly.
Here’s a debt calculator to help you. Figure out your debt-free date.
Make that paying off debt fast is your target and main focus. I can tell you from personal experience, that it was not until we paid off our debt that we finally rounded the corner financially. Once our debt was paid off, we could finally be able to save money. Set money aside in separate bank accounts and pay for cash for things.
It took us working hard to pay off debt. We needed persistence and patience while we had setbacks in our debt-free journey.
Jobs that Pay $27 an Hour
You can find jobs that pay $27 per hour. Polish up that resume, cover letter, and interview skills.
Job Search Hint: Always send a written follow-up thank you note for your interview. That will help you get noticed and remembered.
First, look at the cities that require a minimum wage in their cities. That is the best place to start to find jobs that are going to pay higher than the federal minimum wage rate. Many of the cities are moving towards this model so, target and look for jobs in those areas.
Possible Ideas:
Virtual Assistant – Get free training NOW!
Freelance writer
Class A Truck Driver
Managers
Entry Level Marketing Jobs
Data Entry Clerks
Customer service managers
Bank tellers
Maintenance workers
Freight broker – Learn how easy it is to start!
Administrative assistants
Athletic Trainers
Event Planners
Day trader
Security guard
Movers
Warehouse workers
Electrician
Licensed Practical Nurse (LPN)
Companies that pay more than $27 per hour: Wells Fargo, Disney World, Disney Land, Bank of America, Cigna, Aetna, etc
$27 Per Hour Annual Salary
In this post, we detailed 27 an hour is how much a year. Plus all of the variables that can impact your net income. This is something that you can live off.
How much is 27 dollars an hour annually…
$56,160
This is right between $56000 per year and $57k a year.
In this post, we highlighted ways to increase your income as well as tips for living off your wage.
Use the sample budget as a starting point with your expenses.
You will have to be savvy and wise with your hard-earned income. But, with a plan, anything is possible!
Still thinking I don’t want to work anymore, you aren’t alone and need to start to plan for your early retirement.
Learn exactly how much do I make per year…
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
The idea of a four-day workweek is so popular with some workers that they’d be willing to take a pay cut to make it happen, according to a new survey.
The survey, which included 1,250 people who work full time, was conducted in April by Resume Builder, a career services company. It found that 8 in 10 workers would be excited to work 32 hours a week instead of 40 because they believe it would help them achieve better work-life balance, improve their health, mitigate burnout, be more productive and reduce commuting costs.
The survey results suggest some workers feel pretty desperate for that better work experience. Even though nearly all the survey participants (94%) said they could do the same amount of work in fewer hours, about 21% said they would take a pay cut if it meant they could work the equivalent of one less day per week.
In addition, 83% of respondents said they would prefer a four-day, 40-hour workweek to the current standard of 40 hours in five days.
“I think people value time now more than they ever have — especially younger generations,” says Julia Toothacre, resume and career strategist with Resume Builder.
Idea of a four-day workweek is catching on
The four-day workweek is still a long way from becoming the norm in the U.S., Toothacre says. But the idea has picked up steam in recent years because it’s seen as a way to address the impact of work stress and long hours.
Roughly 3 out of 4 workers said they experienced work-related stress in the last month, according to the 2023 Work in America Survey by the American Psychological Association. More than half said that stress resulted in an array of negative effects, including emotional exhaustion, lack of motivation, a desire to quit, lower productivity and irritability.
There’s some interest in making the four-day workweek a national policy. In March, Sen. Bernie Sanders, I-Vt., introduced a bill that would standardize a 32-hour workweek without cutting workers’ pay or benefits. But it’s not expected to go anywhere.
Pilot programs show promising results
Instead, the four-day workweek has gained the most traction through companies’ participation in pilot programs. Organizations around the world have tested it out, and the results are pretty positive. In 2022, a pilot program that included 33 U.S. companies found that most of them wanted to continue with the 32-hour schedule after the trial period ended.
The companies involved in this pilot didn’t make any changes to workers’ pay. And it turns out that’s for good reason: The companies reported that productivity was positively affected by the new schedule. Workers at the participating companies said their job performance improved during the course of the trial.
In the trial, companies got rid of meetings and other unnecessary activities to free up workers’ time, according to Boston College researchers who evaluated the results. Wen Fan, a sociology professor, said in a December 2022 news release that the program worked as expected. “Hours reduced, well-being improved, and key organizational bottom-lines sustained — all of these happened without the need for workers to intensify their work demands.”
The most surefire way to get out of debt is to create a detailed budget, prioritize paying off debts with the highest interest rates first while making minimum payments on others, and consistently allocate extra funds toward debt repayment until all balances are cleared. Additionally, consider seeking professional financial advice to explore options like debt consolidation or settlement if necessary.
In the fourth quarter of 2023, the amount of household debt in the United States increased to $17.5 trillion. Although credit cards, mortgages, and loans have several benefits, some consumers have trouble repaying what they borrowed. If you’ve been struggling to get your finances on track, learn how to get out of debt by creating a budget, earning extra money, and adjusting your spending habits.
1. Identify Your “Why”
Everyone needs a little motivation from time to time. Before you start your debt-free journey, it’s important to identify your “why,” or your main reason for getting out of debt. Here are a few ideas to get you started:
You don’t want the stress of making minimum payments every month.
You’re tired of being behind on your bills.
You’d rather put extra money in your savings account than spend it on debt payments.
You want to create a strong financial future for your family.
You need to set aside funds to care for a child with special needs.
You’re tired of arguing with your spouse or partner about money.
You don’t want your kids to have to take out thousands of dollars in loans to pay for college.
You want to travel around the world while you’re healthy enough to enjoy it.
2. Assess Your Current Situation
Before you start making extra payments, review your bank and credit card statements to determine how much you’ve been spending each month. Be sure to include every expense, no matter how small, from snacks to streaming subscriptions.
Once you have a handle on your expenses, make a list of credit cards, loans, and other debts. For each debt, note the creditor’s name, the balance due, and the minimum monthly payment. At the bottom of the page, add up your balances to determine the total amount of debt you have.
3. Review Your Spending Habits
Next, look at the list of expenses from the previous step. Ask yourself these questions:
Are there any duplicate expenses, such as two charges for the same subscription?
Can you eliminate any of the items on your list?
Are you spending more than you earn each month?
The answers to these questions will help you determine how to get out of debt faster. For example, if you’re spending more than you earn each month, your priority should be to increase your income or reduce your expenses to eliminate the shortfall.
As you review your expenses, see if you can identify any spending triggers, which are things that cause you to spend money impulsively. Limited-time discounts, negative emotions, envy, and boredom are examples of triggers that may lead to increased spending.
Once you identify your triggers, work to eliminate them. For example, if you notice you buy something every time you receive a weekly email from your favorite retailer, consider unsubscribing from the retailer’s email list.
4. Make a Budget
If you think budgeting is only for people with lower incomes, think again. Having a budget makes it easier to get your finances on track, regardless of whether you earn $40,000 or $400,000 per year. To create a personal budget, follow these steps:
Calculate your net income from all sources. Your net income is the amount of money remaining after taxes, health insurance premiums, and other deductions are taken from your paycheck.
Add up your monthly expenses.
Subtract your expenses from your net income. If the result is positive, you have some money left over each month. A negative result indicates you’re spending more than you earn.
Here’s an example to help you understand the process:
Cassandra nets $2,247 per month from her full-time job and $325 per month from her side hustle. Her net income is $2,572.
Cassandra shares a two-bedroom apartment with a friend from college, so she pays just $750 per month in rent. She also spends $350 per month on groceries, $218 per month on student loan payments, $150 per month on utilities, $175 per month on public transportation, and $829 per month on clothing, toiletries, entertainment, and other personal expenses. Her expenses add up to $2,472 per month.
After subtracting $2,472 in expenses from $2,572 in net income, Cassandra has $100 left over.
If you have trouble keeping track of your income and expenses, use this monthly budgeting sheet.
5. Find Ways to Increase Your Income
Slashing your expenses is a great start, but if you have a significant amount of debt, you’ll also want to increase your income. The more income you have, the easier it is to pay off debt quickly.
To maximize your earning potential, do at least one of the following:
Apply for a part-time job.
Start a service-based business in your neighborhood.
Sell clothing, accessories, and household items via online marketplaces.
Deliver for DoorDash, Instacart, Grubhub, or Uber Eats.
Become a driver for Uber or Lyft.
If you start your own business or work as an independent contractor, you’ll have to pay self-employment taxes on your net income. To avoid having a large tax bill on April 15, it’s wise to make estimated quarterly payments.
6. Focus on One Thing at a Time
You have a finite amount of resources, so rather than trying to tackle multiple goals at one time, pick a goal and stick with it. For example, if you have three credit cards, focus on paying one of them in full. You can worry about the other credit cards later.
7. Set Short-Term and Long-Term Goals
Learning how to get out of debt doesn’t happen overnight. If you have multiple accounts, it may take several years to pay them all in full. It’s easy to get discouraged if you have to wait years to celebrate an accomplishment.
To stay motivated, choose a mix of short-term and long-term goals. If your long-term goal is to pay off your credit card debt, a good short-term goal might be to pay off one credit card with a $500 balance. Paying off a small debt gives you a sense of accomplishment, helping you stay motivated.
8. Choose a Debt Payoff Method
Once you have your goals in mind, you need to choose a debt payoff method. You can use the debt snowball or the debt avalanche:
Debt snowball: With the snowball method, you pay off your debts in order of smallest balance to largest balance. For example, if you have debts of $500, $750, and $1,000, you’d pay them off in that order. Each time you pay off a debt, you free up more money to tackle the other accounts.
Debt avalanche: To use the debt avalanche method, list your debts according to their interest rates, with the highest rates at the top of the list and the lowest rates at the bottom. For example, if you have a $3,000 loan with an interest rate of 19% and a $1,500 credit card balance with an interest rate of 28%, you’d pay off the credit card debt first, even though the loan balance is higher.
The snowball method gives you a psychological boost every time you pay a balance in full, so some people find it easier to follow than the avalanche method. However, you may end up paying more in interest if you don’t pay off high-interest balances quickly.
With the debt avalanche method, the opposite is true. You pay less in interest, but it also takes longer to pay off each account, which may leave you struggling to stay motivated.
9. Set Up Automatic Payments
Make things easy on yourself by setting up automatic payments for the minimum balance on each debt. If you have extra money, you can always make a second payment later in the month. Automatic payments eliminate the need to remember your due date, reducing the risk of late or missed payments, which can have a drastic impact on your credit.
10. Apply for a Balance Transfer Credit Card With 0% Interest
If you have a good credit score, consider applying for a balance transfer card with a 0% APR. The promotional APR lasts for a limited amount of time, but it could help you pay off high-interest debt much faster.
For example, if you have a $1,000 balance on a high-interest credit card, you can move it to a balance-transfer card with 0% interest for 12 months. Just make sure you pay off the balance transfer before the promotional period expires.
If you don’t have the credit needed to qualify for a balance transfer card, sign up for credit monitoring to help you determine when your credit has improved enough to apply for a new account.
You can learn more about managing debt and other financial topics at Credit.com.
Credit card debt forgiveness, also known as debt settlement, involves negotiating with creditors to reduce the amount owed on your credit card balances. While it can provide relief from overwhelming debt, it may have significant consequences, including damage to your credit score, tax implications, and potential legal actions from creditors. It’s crucial to fully understand the terms and consequences before pursuing debt forgiveness and to explore other options such as debt management or consolidation.
By the end of 2023, American consumers had more than $1.13 trillion in credit card debt. If you have credit card debt and you’ve been struggling to repay your creditors, don’t panic—you may qualify for some type of credit card debt forgiveness. Here’s what you need to know about this option for managing your finances.
What Is Debt Forgiveness?
Debt forgiveness is when a lender reduces or eliminates the amount you owe. For example, a credit card company may agree to forgive $400 of a $1,000 balance. Credit card debt forgiveness makes it a little easier to manage your finances, as it wipes away some of your debt, leaving you with more money for debt repayment or household expenses.
Debt forgiveness has the following benefits:
When you reduce a credit card balance, you only pay interest on the remaining amount due. As a result, debt forgiveness may help you save hundreds or even thousands of dollars, depending on how much you owe and how long it takes to pay the account in full.
If a creditor forgives your entire debt, you can use the minimum monthly payment to catch up on bills or pay off your other debts faster.
You don’t have to stress about paying back the original balances on your cards.
Ways to Have Your Debt Forgiven
If you’re struggling to make your credit cards on time, you may qualify for one of the following types of debt forgiveness.
Negotiate With Creditors
The easiest way to reduce your account balances is to negotiate with creditors. Depending on how much you owe and how long it’s been since your last payment, a credit card company may be willing to accept a settlement for less than the amount owed. For example, it’s possible to negotiate a settlement of $250 on a balance of $500.
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Before you contact a creditor, calculate how much you can afford to pay. If you only have $300 available, you know you can’t accept a settlement for any more than that. When you’re ready to call, follow these steps:
Explain your financial situation. The information you provide may affect the creditor’s willingness to forgive your debt. For example, if you’re unemployed, a representative may be willing to settle for a lower amount because they know you don’t have any income.
Let the creditor know how much you can afford to pay. Offer a little less than you have available. If the creditor agrees, you’ll have a little cash left over to tackle another debt.
If the creditor agrees to your proposed settlement, ask the company to email you a copy of the agreement. The document should state that the creditor is willing to accept the settlement amount as payment in full.
Pay the agreed-upon amount. If possible, mail a money order so the creditor can’t access your bank account information. Each money order also comes with a detachable receipt, making it easy to keep track of who and how much you’ve paid.
Participate in a Debt Relief Program
If you’re too busy to negotiate or you just don’t feel confident doing it on your own, consider signing up for a debt relief program. This type of program helps reduce the amount of debt you owe, giving you a little more breathing room.
Once you sign up, a program representative contacts each of your creditors and attempts to negotiate a settlement. Just like when you try to negotiate settlements on your own, there’s no guarantee every credit card company will agree to reduce your balance.
Some debt relief providers advise their clients to stop making minimum monthly payments on their credit cards. The reason for this recommendation is that some creditors are more willing to negotiate if you’re already several months behind. However, if you stop making payments, your credit will likely take a hit, as your payment history accounts for 35% of your FICO® scores.
Debt relief may not be the best approach if you want to preserve your credit scores, but if you’re already behind on your credit cards, there’s no additional penalty for signing up.
File for Bankruptcy
Bankruptcy is a legal process that allows you to eliminate some or all of your debts. In a Chapter 7 bankruptcy, also known as a liquidation bankruptcy, a trustee sells some of your assets and uses the proceeds to repay as much of your debt as possible.
To qualify for a Chapter 7 bankruptcy, you must meet one of the following requirements:
Your current monthly income is less than the median income for your state.
You pass a means test designed to determine if an individual is abusing the bankruptcy system.
Under the Chapter 7 bankruptcy rules, you can exempt some of your personal property from the process. For example, there’s a federal exemption of $4,450 for a motor vehicle. If you exempt an asset, the trustee doesn’t sell it.
Chapter 13 is for debtors who don’t meet the requirements to qualify for Chapter 7 relief. If you have regular monthly income, a Chapter 13 bankruptcy allows you to set up a debt repayment plan. The plan lasts three to five years, depending on how much income you earn. Once you complete the payment plan, any remaining debts are discharged.
Filing for bankruptcy has several pros and cons. The biggest advantage is that it gives you a fresh start. Filing triggers an automatic stay, which means creditors must stop their collection attempts while your case is pending.
Bankruptcy also allows you to avoid wage garnishment in the future. Once a debt is discharged, it’s gone forever. The creditor can’t get a judgment against you or start deducting payments from your wages.
The biggest drawback is that filing for bankruptcy hurts your credit. It can also stay on your credit reports for up to seven to 10 years, depending on the type of bankruptcy you file. When you have a bankruptcy on file, it’s more difficult to qualify for loans, credit cards and other types of credit.
Potential Tax Implications of Credit Card Debt Forgiveness
Debt discharged through bankruptcy isn’t considered taxable income. However, if you negotiate a settlement or have a debt relief company negotiate on your behalf, you may owe income tax on the forgiven amount. For example, if a creditor accepts $400 as payment in full for a balance of $1,000, you may have to pay tax on the $600 difference.
You may be able to avoid the federal tax on forgiven debt if you’re insolvent, which is when your total liabilities exceed your total assets. Someone with debts totaling $25,000 and assets totaling $20,000 meets the definition of insolvency.
If you’re insolvent, seek advice from a qualified tax professional. You may need to file Form 982 with your federal tax return. Your state may also impose income tax on forgiven debt.
Alternatives to Debt Forgiveness
Credit card debt forgiveness isn’t right for everyone, but there are a few alternatives.
Debt Consolidation
Debt consolidation allows you to combine several debts into a single loan, making it easier to manage your finances. For example, if you have credit cards with balances of $500, $2,500, and $5,000, you may be able to consolidate them into a loan for $8,000.
Consolidation loans typically have fixed interest rates, so you don’t have to worry about your rate changing from month to month. Additionally, getting a consolidation loan allows you to make just one payment per month, eliminating the need to juggle multiple accounts.
Budgeting
If you don’t have much debt, budgeting may help you pay it off without having to negotiate settlements or sign up for a debt relief program. A budget estimates your monthly income and expenses, making it easier to identify opportunities to save and pay off debt.
Once you create a budget, you may need to reduce your expenses or increase your income. The more you earn and the less you spend, the more money you’ll have available for credit card payments.
Negotiating Interest Rates
Some credit cards come with high interest rates, making it more difficult to pay off the balances. To reduce the amount of interest applied to your balance, contact your credit card companies and ask for lower rates. There’s no guarantee they’ll agree, but it doesn’t hurt to ask.
Balance Transfers
If you have a strong credit history, transferring high-interest credit card debt to a balance transfer card can help you pay off debt faster. Once you transfer your balances, interest doesn’t start accumulating until the promotional period expires, so you can make payments without worrying about how much interest is building up every month.
The no-interest period may expire within as little as six months, so be sure to pay off the balance before the regular APR kicks in.
If you want to make a plan to improve your financial health, get started with your free credit score and credit report card from Credit.com today.
Maybe you’ve recently spoken to a broker or financial adviser about investments, and they suggested exchange-traded funds (ETFs) as a way to diversify your portfolio and boost your earnings.
But, you don’t know how they work or how to go about adding them to your arsenal of investments. Or perhaps you’re just starting out and want to learn more before making an investment decision?
Either way, we’ve got you covered. Read on to learn more.
Key Takeaways
Exchange-traded funds (ETFs) are diversified investment vehicles that allow investors to buy shares in a collection of assets, ranging from stocks and bonds to commodities and currencies, functioning similarly to mutual funds, but trading like stocks on exchanges.
ETFs offer various types, including those focused on specific industries, commodities, or strategies like inverse or leveraged ETFs, catering to a wide range of investment objectives and risk tolerances.
The benefits of ETFs include lower administrative costs compared to mutual funds, flexibility in trading throughout the trading day, tax efficiency in capital gains, and the transparency of holding disclosure, making them an attractive option for both novice and experienced investors.
What are ETFs?
In a nutshell, an exchange-traded fund (ETF) is a basket of assets that can include a medley of the following:
Exchange-traded funds are ideal for individual investors because they allow you to diversify your holdings without purchasing individual shares of each asset. And the profits are generated by the performance of the overall ETF and not individual shares.
Furthermore, ETFs trade like stocks and are easily bought and sold on the stock exchange, making it simple for investors to buy and sell.
How do ETFs work?
Before exchange-traded funds hit the exchange for trading, they must be created by authorized participants or specialized investors. They conduct extensive research and choose the assets that they deem as most suitable for the portfolio.
The pool of assets is then divided into ETF shares and traded on a major stock exchange, like the NYSE or NASDAQ, or through a brokerage firm.
Each exchange-traded fund has a ticker symbol like a stock and intraday price that can be tracked throughout the day. But unlike mutual funds or index funds, prices are constantly fluctuating because ETF shares are issued and redeemed throughout the day.
Mutual funds are priced at the end of the trading day, so all buyers and sellers receive the same price. This is referred to as the NAV (net asset value.)
Individual investors can purchase ETFs, but the way returns are generated differs from what you’d see with stocks or bonds. Profits are not tied to the actual assets in the ETF, but a sum of the profits generated from interest and dividends from the overall ETF. The return is collectively based on your proportion of ownership in the ETF.
Types of ETFs
There’s no shortage of exchange-traded funds as offerings are designed to track various sectors, markets, and indexes both here in the U.S. and abroad. The types of ETFs that are most popular among investors include:
Actively managed ETFs: ETFs that are managed by a professional fund manager and traded on a stock exchange. They aim to outperform a specific benchmark or index by actively selecting and trading the securities in the fund’s portfolio.
Bond ETFs: ETFs that track a basket of bond securities, such as corporate bonds, government bonds, or municipal bonds.
Commodity ETFs: These ETFs track the price of a specific commodity, such as gold, silver, oil, or agricultural products.
Currency ETFs: ETFs that track the value of a specific currency, such as the US dollar, Euro, or Japanese yen.
Foreign market ETFs: The main objective for these ETFs is to track the performance of a specific foreign market, such as a specific country or region.
Inverse ETFs: A type of ETF that aims to produce the opposite return of a specific benchmark or index.
Leveraged ETFs: These ETFs use financial instruments, such as futures contracts and options, to amplify the returns of a specific benchmark or index.
Market ETFs: The main objective is to track a specific index. These include DIA (tracks the Dow Jones Industrial Average), Spider or SPDR (tracks the S&P 500 Index), and QQQ (tracks the Nasdaq 100).
Sector or Industry ETFs: The main objective is to track a sector or industry. Common sector ETFs include XLF (financial companies), OIH (oil companies), FONE (smartphones), and XLE (energy companies).
Stock ETFs: ETFs that track a basket of stocks, such as those in a specific index, sector, or country.
Benefits of ETFs
Diversified Asset Pool
With ETFs, you can invest with minimal effort to fit your taste in securities, risk tolerance, and investment goals. This also means you can choose from various market segments. Furthermore, poor-performing assets can offset those that are performing well.
Hands-off Management
Professional fund managers do all the work for you according to your investment objectives. They also continuously monitor the performance of the ETF. But since these investments are generally passive and track an index, your fund manager won’t have to spend a bulk of their time day in and day out managing the ETF to stay ahead of the curve.
Quick note: The exception to this rule applies when you’re dealing with an actively managed ETF that is designed to beat an index.
Flexible Purchase and Selling Window
Unlike mutual funds, ETFs are available for purchase at any time of the day. There’s also flexibility with orders as you can choose from margin, limit, or stop-loss orders. Even better, there are no minimum holding periods, like you’ll see with some mutual funds, so you’re free to sell at any point after you purchase ETF shares.
This added flexibility is also beneficial to investors because it minimizes the level of risk they’ll have to absorb if the market takes an unexpected turn for the worse. ETFs are much easier to unload in a shorter window than mutual funds, that sometimes have a 30-day holding period before they can be sold.
Tax Efficient
With taxable mutual funds, you must pay taxes on distributions, regardless of whether you keep the cash or use it to invest in more mutual fund shares. However, you will only pay capital gains on ETFs when your investment is sold.
Transparency
As mentioned earlier, the performance of a particular ETF can be tracked throughout the day using the ticker. And the end of each day, the ETF’s holdings are shared with the public. But mutual funds only disclose this information on a monthly or quarterly basis.
Lower Administrative Costs
Unless the ETF is actively managed, your administrative costs will be substantially lower than what you’d find with a portfolio that must have oversight at all times, like a mutual fund. On average, the expense ratio for most ETFs is lower than .20 per year, compared to the 1% or more per year in administrative costs that accompany actively managed mutual funds, according to Nasdaq.
But keep in mind that expense ratios aren’t the same across the board. So, it’s best to speak with the ETF issuer to get a better idea of what you’d expect to pay in administrative costs should you decide to invest in their ETFs.
Drawbacks of ETFs
Before you invest in ETFs, there are some drawbacks you should be mindful of.
Price Fluctuations
Prices often change, so you could be at a disadvantage if you like to buy in small increments. And it’s not always possible to buy low and sell high if the ETF is a slow mover.
Fees from Commissions
Looking to buy ETFs through an online broker? If you select an ETF that’s outside the scope of what they offer, you could incur substantial fees from brokerage commissions.
Sudden Death
If the ETF underperforms and is forced to shut down abruptly, you have no control over the hit you may take, either through a loss on your investment or tax obligation.
Settlement Window
When you sell ETFs, there’s a two-day settlement window that must pass before you can access your cash. This could be to your disadvantage if you need the funds right away to invest in another asset.
How to Invest in ETFs
To invest in exchange-traded funds (ETFs), you’ll need to follow these steps:
Choose a brokerage: First, select a brokerage firm where you will place your trades. Reputable options include well-known online brokers such as Charles Schwab, E*TRADE, Robinhood, and Fidelity. Be sure to compare fees, trading platforms, and other features before making your decision.
Open an account: Once you’ve chosen a brokerage, you’ll need to open a brokerage account and complete any required paperwork. This may include providing personal and financial information, as well as completing any necessary identity verification steps.
Fund your account: To buy ETFs, you’ll have to deposit money into your brokerage account. This can typically be done by linking a bank account or using a credit or debit card.
Select your ETFs: Once your account is funded, you’ll be able to browse and select the ETFs you’d like to purchase. Most brokerage firms offer a wide range of ETFs to choose from, including those that track specific indexes, sectors, or countries.
Place your trade: Once you’ve selected the ETFs you’d like to purchase, you can place your trade by specifying the quantity and price. Your brokerage firm will handle the rest of the process, including executing the trade and holding the ETF shares in your account.
Keep in mind that investing in ETFs carries risks, and it’s important to do your own research and consider your own financial goals and risk tolerance before making any investment decisions. It’s also a good idea to consult a financial professional for personalized advice.
Bottom Line
It’s easy to buy or sell ETFs and make them part of your investment strategy. By gaining a thorough understanding of how they work and working with a broker to analyze how they will impact your investment portfolio, you’ll have the best chance of maximizing your returns.