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May 19, 2022

Can I Afford to Have a Hot Girl Summer?

Save more, spend smarter, and make your money go further

After a year spent indoors, everyone wants to have a hot girl summer in 2021. But when your financial situation is still recovering from the pandemic, can you really afford to?

Whether you’re struggling to get by or just looking to save a few bucks, use these tips to go big this summer – without going over budget.

Cash in rewards points

Millions of Americans stocked up on toilet paper, hand sanitizer, and disinfectants during the pandemic. But many consumers inadvertently hoarded another item: credit card rewards points.

If you’re planning to reunite with high school friends or travel to a bachelorette party, cash in your points and miles to save on the trip. If you had to cancel a vacation due to the pandemic, redeem any remaining travel credit.

If you have more rewards points than you need, you may be able to redeem them for cash or as a statement credit on your card, which you can then use toward your trip.

Don’t have any rewards cards? Now may be a good time to sign up. Chase is currently offering a 100,000-point bonus for new cardholders who apply for the Chase Sapphire Preferred card, or a 60,000-point bonus for the Chase Sapphire Reserve card. Depending on where you’re going, that’s enough for a couple of flights or hotel stays.

Invite friends over for a swap

My new favorite tradition with friends is to host a swap. Everyone brings items they no longer need, and we take turns picking new-to-us items. Last time I got three dresses, a pair of Madewell overalls, a curling iron, and a dog bed.

You’re not limited to clothes at a swap. I encourage my friends to bring anything, including books, kitchenware, makeup and home decor. It’s a free way to get new items, and it encourages you to declutter your house.

Drink like a college student

Back in college, most people would have a couple drinks at home before venturing to the bars. If you’re going out with friends, consider starting with a drink or two at home.

Another money-saving trick is to eat a full meal before you go out, so you’re not tempted to grab pricey appetizers. If you’re getting drinks with your friends, limit yourself to basic cocktails instead of specialty cocktails, or stick to the draft list instead of buying a fancy bottle.

Create rules for yourself

Now that the world is opening up, it’s tempting to throw your budget away and treat yourself to everything you missed during the pandemic. Before doing that, set up some ground rules to keep yourself from going overboard.

For example, make a rule that if you’re getting dinner or brunch with friends, you won’t get take-out that week. These basic rules will help you spend less without having to give up what really matters.

Use a cash budget

Instead of bringing your credit card with you on a night out, only take the amount of cash you want to spend. You can still use your phone to order an Uber or Lyft, but you won’t have the temptation of a credit card. Decide how much you’re comfortable spending and only bring that amount.

Join a sports league

Group sports leagues like softball, soccer, or kickball are one of the most affordable ways to hang out with friends and get some exercise at the same time.

Most group leagues cost between $50 and $75 a person, depending on the sport, and usually last around six weeks. Sometimes you’ll even get a discount at a local bar where you can hang out afterwards.

Plan a budget-friendly trip

For the past few years, my college friends and I have met up every summer at my in-law’s lake house. The house is located near a small town in Indiana, only a few hour’s drive for most of us.

Instead of picking a more exotic locale, we prioritize saving money. It’s free to stay there, and we split the cost of groceries. I usually spend about $100 on gas, food, and drinks for a three-day trip.

If you’re considering a getaway with friends, get creative. Don’t automatically book a trip to Vegas or Miami. Pick a spot that’s close enough to drive, or near a popular airport where flights will be less expensive.

If you’re not lucky enough to have access to a family vacation home, look on Airbnb and VRBO for affordable destinations. Find a house with a stocked kitchen so you can cook most of your meals.

Pro tip: Use Mint’s free travel budget calculator to help you plan your next adventure.

Budget for it

When the world shut down last year, most of us got used to spending less on gas, bars, and new clothes. But as things start to open up, you may find your spending ramping back up.

Use this time to revise your budget and allocate money toward restaurants, rideshare services, and new outfits. As things return to normal, you may have to change your budget a few times before finding a happy balance. Give yourself some grace, as circumstances may change rapidly.

If you find budgeting for one month at a time difficult, give yourself a weekly allowance to use for non-essential purchases. Redirect some of your pandemic habits, like ordering take-out a few times a week, to your rediscovered social habits, like getting dinner with your friends.

Talk to your friends

While some consumers survived the pandemic without getting laid off, millions of Americans lost their jobs and remained unemployed for months. So while your friends may be ready to party, you might be focused on rebuilding your savings.

If you suffered financially during the pandemic, you may not be able to keep up with your friends this summer. Even though it may seem awkward to discuss your money problems openly, it’s better than making excuses.

If you lie about why you can’t hang out, your friends will think you’re avoiding them. But if you’re honest, they may accommodate you by suggesting budget-friendly activities. Give them the chance to understand, even if it means having an uncomfortable conversation. Who knows – one of them might be struggling as well, but too afraid to speak up.

Save more, spend smarter, and make your money go further

Zina Kumok is a freelance writer specializing in personal finance. A former reporter, she has covered murder trials, the Final Four and everything in between. She has been featured in Lifehacker, DailyWorth and Time. Read about how she paid off $28,000 worth of student loans in three years at Conscious Coins. More from Zina Kumok

Source: mint.intuit.com

May 18, 2022

Is Inflation Eating Your Budget? 13 Ways to Stretch Your Money

Follow these 13 actionable tips to stretch your money!

Whether you own or rent, there’s no doubt your budget has been feeling the effects of recent inflation. And while you’re powerless to improve the current economic changes, that doesn’t mean you can’t take action to combat higher prices. High inflation decreases your purchasing power, forcing you to spend more and get less in return. As a result, higher prices make it difficult to save money and reach your financial goals. Perhaps you’re not ready to take drastic measures like moving to a smaller apartment or taking public transportation. Instead, start with minor changes that will stretch your money so you get more bang for your buck.

1. Set financial goals

Goal setting is an important — yet often overlooked — step when trying to make progress with your finances. Don’t worry if it feels premature based on your current affairs. Setting goals and executing a plan to achieve them is powerful.

Keeping a specific goal in mind makes you more intentional with your working, saving and spending. In addition, focusing on your financial goals will give you the necessary clarity to make sound money decisions and the motivation to push forward.

2. Live on a budget

Getting good at making your money go further requires a certain level of financial awareness. Once your paycheck hits your bank account, do you have a plan for how you’ll spend your money, or do you go with the flow?

Having a plan is crucial, and a budget is a spending plan. The act of creating a budget is simply making a plan for how you’ll spend your money. Learning to live on a budget means you consistently create a spending plan and take steps to stick to that plan throughout the budget period.

Budgeting is a marathon

The first step to successful budgeting is to expect a learning curve. Becoming a budgeting master is a valuable skill that takes time to develop. So, commit to pushing through the tough months even when it feels like you’re doing it all wrong.

Budget your way

A quick Google search on “how to budget” will display many budgeting types and options — don’t get overwhelmed. As your budgeting prowess grows, you’ll begin to learn what methods do and do not work for you.

Approach budgeting as one-size-fits-some rather than one-size-fits-all. There are many different ways to budget. And, when used consistently, each of them will move you closer to reaching your goals. You may realize you prefer to manage your money with digital tools or use a budget binder to organize a more traditional paper budget.

Humans have a pesky habit of overcomplicating things, but budgeting doesn’t require anything elaborate or complicated. If you’ve tried percentage-based budgeting and it was an epic fail, there are simpler options to help you stretch your money further.

We’ve discovered that many folks gain more control over their finances when they manage their money using a zero-based (or zero-sum) budget.

In its simplest form, a zero-based budget looks like INCOME – EXPENSES = 0.

Assign every dollar of your income to carry out a specific financial “job.” Each dollar must serve a purpose, and it’s up to you to decide whether that purpose — spend, save, invest or give. Once you’ve given each of your dollars their assignments and your total income minus your total expenses equals zero, you have implemented a proper zero-based budget.

3. Track your spending

If you often wonder where your money went, it’s time to track your spending. While you may have a general idea of where your money goes each month, how clear are you on the specifics? For example, do you know how much money you actually spent on groceries, fuel and dining out last month?

Get clear on exactly how much you’re spending in each budget category. Having a better grasp on your spending is especially important when deciding how much rent or car payment you can afford each month.

Grab your phone or a notebook and add an entry each time you spend money. Exclude fixed expenses as you’ll be tracking those in your actual budget. Instead, focus on logging your Target trips, grocery runs and coffee pitstops.

Track your spending for a solid month, if possible. If you can’t swing a month, aim for at least two full weeks. At the end of your tracking period, enter your spending data on a spreadsheet or grab a few highlighters to color-code your spending.

Total each category to see exactly how much you’ve spent and compare it to your budget. The information you’ll gather from this exercise is invaluable and helpful when you want to stretch your money in a more balanced way. Your total spend numbers will point to where most of your spending is.

Your spending should reflect your values and priorities. If you discover this is not the case for you, what adjustments you need to make will be clear.

4. Avoid overspending

Overspending can creep up on you. What may feel like $10 swipes of your card a few times a week can quickly amount to high credit card balances or going over budget.

Consider these simple changes to reduce overall spending:

Order groceries online to avoid impulse purchases
Reduce online shopping frequency (e.g., order from Amazon only once per month)
Keep a running “wishlist” of items you want or need. When you come across a great deal, check your list — if the thing is on your list, buy it. If it’s not, move on.
Unsubscribe from retail emails that tempt you to spend
Add a personal spending category to your budget. Allocating a specific amount of money to spend in any way you see fit, guilt-free.

It’s not about money

Overspending is often misleading. The reality is overspending is rarely about the actual spending and is almost always caused by an emotional trigger. Therefore, the key to curbing overspending is identifying your trigger(s) and avoiding it (them).

Think back to the last time you felt shame or guilt for overspending. Then, go deeper to understand the underlying emotion that drove your spending? Were you tired? Did you have a bad day at work? Did you fight with your partner?

Retail therapy may feel helpful because we get a boost of adrenaline when we spend. However, you only perpetuate the problem when you avoid dealing with the emotions driving your spending habits. Instead, pay attention to exactly how you’re feeling the next time you experience the urge to spend money.

Once you’ve identified your spending triggers, create a plan to avoid them and break your pattern of overspending.

5. Negotiate your bills

A great way to stretch your dollar is to negotiate your bills each year. You’ll be shocked by how many of your service providers are willing to lower your rates with a simple request.

Review your monthly expenses and make a list of providers to contact. You can call the company or use their live chat feature if they have one. Explain to the representative that you want to reduce your monthly payment and inquire about their best deal. Expect a few “nos” and many a “yes,” especially if you’re kind and polite when requesting a discount.

This strategy is perfect for saving money on your:

Utility bills
Cell phone bill
Cable bill
Car insurance bill
Credit card and bank fees
Other insurance premiums
Rent

Regarding medical expenses, your best bet is to contact the billing department and offer to pay them a percentage of the total balance. Often, the provider is willing to accept a fraction of the amount owed to settle the account.

6. Pay off debt

Debt payments, especially those with high-interest rates, can eat up your income quickly. Creating a debt payoff plan will give you a road map to paying off your debt and keeping the money you previously sent to your debtors each month.

In addition, if you have a good payment history, contact your credit card servicers and request a lower interest rate. Refinancing is also an excellent option for securing a lower mortgage payment or reducing your minimum payment on personal loans or federal student loans.

Avoid future debt

As you work to get out of debt, it’s good practice to avoid taking on future debts. Trading old debt for new debt is counterproductive and will keep you stuck in a perpetual debt cycle.

7. Plan ahead

Planning into the next quarter, or even an entire year, can help you maximize your savings. In addition, saving a full three to six months of living expenses as an emergency fund will prepare you for any emergencies you experience.

Maintaining an emergency fund will protect your finances against increased expenses in the future, possible sickness, accidents or loss of income.

Forecast your upcoming expenses for the next 6-12 months and determine which you can begin saving for now. Items, such as Christmas gifts, birthdays, tuition, vacations, annual bills, etc., are all expenses you can save for, using sinking funds.

Save a small amount each month (or paycheck) until you save enough money to cover the expenses in full. Keep your sinking funds in a separate savings account to avoid accidental spending.

8. Try a savings challenge to stretch your money

Challenges and competitions are very motivating. And when otherwise unpleasant activities feel like a game, even adults can find enjoyment. Get started with a simple challenge, such as saving each five-dollar bill you receive or tossing your loose change into a jar for a predetermined time.

Are you competitive by nature? Ask some close friends or family members to join you. You’ll all benefit from holding each other accountable and boosting the competition factor.

9. Plan your meals

More than any other suggestion on this list, meal planning has the potential to stretch your money further. You’ve likely noticed your grocery bill increasing month after month. Plan out your meals and use that plan to create a shopping list.

Making a mental note of meals you’re hungry for while grocery shopping does not constitute meal planning. More often than not, heading to the grocery store without an intentional plan will cause you to go over budget.

Food waste accounts for 30-40 percent of the food supply in the United States (as of 2021). Shopping for groceries without planning often leads to a fridge full of unused fresh fruit and produce at the end of the week. If your food budget is $1,000 per month, that means $300-$400 of that budget will probably be wasted, if you’re not planning.

10. Stretch your money by ditching your cable

One of the easiest ways to maximize your money is to cancel your cable service. Today, 56 percent of U.S. homes no longer rely on cable or satellite boxes for content.

We’re fortunate to have the unique opportunity to stop paying for dozens of channels we don’t watch and customize our viewing experience. In addition, the number of available streaming services has exploded in recent years, with live sports and bundles finally being an option without cable packages.

Have an attachment to traditional cable and refuse to go without it? Keep your subscription but use tip No. 5 to negotiate a better deal.

11. Get a programmable thermostat

Unfortunately, energy costs are on the rise, too. Depending on your location, you’ll experience increased costs throughout the summer months (even if you’re trying to stretch your money). However, an Energy Star Certified programmable thermostat can cut your utility costs by up to 8 percent per year (around $50/year).

Not only will a programmable thermostat save you money but buying a “smart” model that works with Amazon’s Alexa or Google’s Home systems will also offer the convenience of allowing you to control the temperature with your voice.

Double your savings

Some programmable thermostats can cost upwards of $200, but more affordable options are available. In addition, many natural gas and electricity providers offer rebates for switching to a programmable thermostat.

In some instances, the rebate amount may even exceed the thermostat price. Contact your providers before purchasing your thermostat to determine which models qualify for rebates in your area.

12. Use an app

Looking for more convenient ways to stretch your money? There’s an app for that! Using mobile apps to save money or earn cashback on purchases are easy ways to combat higher prices.

Apps are available to save money on groceries, household items and even fuel. Other apps offer cashback when shopping online and in-store with your favorite retailers. There are even apps that will reward you for exercising.

Keep in mind that using cashback apps won’t make you rich. But using them consistently will help you save money on your everyday purchases, plus earn cashback rewards you can redeem for gift cards or cash.

13. Get a side hustle

There’s no doubt that cutting costs and saving money is a solid strategy to help stretch your money. But, focusing on increasing your income at the same time will boost your finances into overdrive. Plus, finding new, creative ways to earn small amounts of money in your free time will diversify your income and put you on the fast track to reaching your financial goals.

Monetize your passion

Here’s the good news: we live in an era where you can make money in countless unique, exciting ways. You no longer have to work overtime at a job you hate to make your rent payments each month.

People are turning their passions into full-time incomes from side hustles, such as pet-sitting, baking and even posting on social media. Brainstorm a list of your favorite hobbies and different ideas to monetize them.

The bottom line

Rest assured, if you’re feeling increased financial pressure, you’re not alone. Understand that maintaining financial stability in these uncertain economic times is still possible. Lowering your expenses and making a margin in your budget will allow you to spend your money on the things that matter most.

Source: rent.com

May 17, 2022

Brace Yourself: The Price Tag on Cars is About to Go UP!

Save more, spend smarter, and make your money go further

If you’ve done any car shopping lately, this will come as no surprise: automobile prices are going through the roof. Unfortunately, that trend doesn’t appear to be slowing down any time soon.

We’ll walk you through the factors driving this sharp increase, and give you some tips on how to avoid blowing up your budget when buying a car.

How Car Prices are Changing

Research from CarGurus.com found that used car prices are up more than 30% from June 2020. Prices have been steadily rising since the Covid-19 pandemic, and numbers have never been this high.

Not all brands are increasing at the same rate. For example, Tesla has only increased by 6% in the past year while Ram trucks have increased 40.5%. You can find a complete list of car manufacturers and their year-over-year increases here.

Why Car Prices are Going Up

Global supply chains were disrupted during the pandemic last year, and many car manufacturers did not produce as many vehicles as they normally would. The influx of stimulus checks and mass avoidance of public transit caused more people to buy cars, further limiting the available car supply.

Since 2020, there has been a global chip shortage causing massive delays for automakers. The average car can have hundreds of these chips, which explains why automobile production has slowed down even as other industries have begun to ramp back up.

How to Budget for Higher Car Prices

If you need to buy a car right now, prepare to pay higher prices than you might have paid a year or two ago.

Here’s how to plan ahead:

Look at your overall budget

Whether you’re planning to buy a car in cash or take out a loan, you should look at your budget to see how much you can afford to pay.

Because prices for other goods are also rising, it’s important to allow some flexibility in your budget. Don’t buy the most expensive car you can afford, and don’t raid your savings to pay for it. While the economy seems to be rebounding, you should still keep a sizable emergency fund in case of future layoffs or furloughs.

Compare interest rates

According to Bankrate.com, interest rates for auto loans are the lowest they’ve been since 2015. If you’re getting a car loan, one of the most important factors is the interest rate and APR. The interest rate affects your monthly payments and the total amount of interest paid over the life of the loan.

Start by getting quotes from your current bank, and then get outside quotes from other banks, credit unions, and auto lenders. Compare the APR and not just the interest rate. The APR is the more comprehensive number, reflecting both the interest rate and any fees.

Get the most for your trade-in

Because used car prices are going up, you will likely earn more for your trade-in than you would have in the past. Look up your car’s value on Kelley Blue Book and Edmunds.com to see what it’s worth.

Then, maximize your trade-in value by getting multiple quotes from dealerships and listing your car for sale on sites like eBay, Craigslist, and Cars.com. You’ll earn more from a private seller but may have to deal with flaky buyers. If you’re selling a car to an individual, you’ll also need to verify that the check or cash you receive is legitimate.

When selling to a dealership, try to leverage quotes from multiple dealers against each other to create a bidding war. Remember that inventory for used cars is low, so many companies are willing to pay more than you might expect for a used car.

Get a longer-term loan

If you can’t afford to pay for the car in cash, a car loan is your next best option. Car loan terms range from 24 to 84 months, and interest rates generally increase as the term gets longer. Because car prices are higher right now, you may need a longer loan term to end up with monthly payments you can comfortably afford. Use a car loan calculator and play around with the numbers to find your upper loan limit.

Here’s how the monthly payments can change depending on the term. Let’s say you receive two quotes from an auto lender for a $20,000 car. The first option is a three-year term with a 5% interest rate and a $582 monthly payment. The second option is a six-year term with a 6% interest rate and a $331 monthly payment.

You review your budget and determine that the maximum amount you can afford each month is $350. In this case, you would be better off choosing the six-year term with the higher interest rate.

It’s better to have a payment you can easily make every month than a lower interest rate and less wiggle room in your budget. You can always make extra payments on the car loan to pay it off faster if your income increases. Most auto lenders don’t charge a prepayment penalty, so there’s no extra fee if you repay the loan ahead of schedule.

Budget for car insurance

If you’re about to buy a new car, call your car insurance provider and ask them what the new monthly premium will be. In most cases, buying a newer car will increase your premiums because it will cost more to replace if there’s an accident.

But if your new car has additional safety features that could reduce the chances of an accident, then your premiums may not change as much. Still, it’s better to find out now what the premium will be instead of after you’ve bought the car.

Bottom Line

It’s impossible to predict where prices may be in the future. If you don’t need to buy a car right now, you might be better off waiting a few months to see if prices cool off.

Save more, spend smarter, and make your money go further

Source: mint.intuit.com

May 17, 2022

Understanding the Parent Plus Loan Forgiveness Program

Parent PLUS loan forgiveness provides financial relief to parents who borrowed money to cover the cost of their children’s college or career school. It isn’t always a quick fix, but there are certain federal and private programs that might offer the financial assistance needed to help them get on track.

To receive federal relief for Parent PLUS loans, parent borrowers have a few options.

They can consolidate the loan in order to enroll in an Income-Contingent Repayment plan after 25 years, pursue Public Service Loan Forgiveness after 10 years, or choose from a number of private student loan assistance programs or refinancing options.

Keep reading to learn more about what the available student loan forgiveness possibilities are for Parent PLUS loans.

Will Parent Plus Loans Be Included in Student Loan Forgiveness?

Parent PLUS loans are eligible for several of the same student loan forgiveness programs as federal student loans for students, including:

• Borrower Defense Loan Discharge

• Total and Permanent Disability (TPD) Discharge

• Public Service Loan Forgiveness (PSLF)

That said, Parent PLUS loans generally have fewer repayment options in the first place and the eligibility requirements for these forgiveness programs can be strict and may require borrowers to consolidate their PLUS loan, such as with PSLF. This can make it tricky for borrowers to navigate how to use these federal relief programs to their advantage.

Refinancing is another option for Parent PLUS loan borrowers — applying for a new private student loan with an, ideally, lower interest rate. That said, some lenders offer less flexibility for repayment and the fine print can be lengthy, so there’s an inherent risk associated with refinancing Parent PLUS loans. It’s also worth noting that refinancing a PLUS loan will eliminate it from any federal repayment plans or forgiveness options.

Recommended: What Is a Parent PLUS Loan?

Parent Student Loan Forgiveness Program

When it comes to student loan forgiveness, the programs aren’t just available for the students. Parents who are on the hook for student loan debt can also qualify for student loan forgiveness.

As previously mentioned, a Parent PLUS loan may be eligible for Parent Student Loan Forgiveness through two specific federal programs:

• Income-Contingent Repayment

• The Public Service Loan Forgiveness (PSLF) Program

There are also a few private student loan forgiveness options, which we’ll get into below.

Income-Contingent Repayment (ICR)

An Income-Contingent Repayment plan, or ICR plan, is the only income-driven repayment plan that’s available for Parent PLUS borrowers. In order to qualify, parent borrowers must first consolidate their loans into a Direct Consolidation Loan, then repay that loan under the ICR plan.

• A Parent PLUS loan that’s included in a Direct Consolidation Loan could be eligible for Income-Contingent Repayment, but only if the borrower entered their repayment period on or after July 1, 2006.

• A Parent PLUS loan that’s included in the Federal Direct Loan Program or the Federal Family Education Loan Program (FFELP) is also eligible for ICR if it’s included in the Federal Direct Consolidation Loan.

ICR determines a borrower’s monthly payment based on 20% of their discretionary income or the amount by which their AGI exceeds 100% of the poverty line. After a 25-year repayment term, or 300 payments, the remaining loan balance will be forgiven.

Typically, the IRS considers canceled debt a form of taxable income, but the American Rescue Plan Act of 2021 made all student loan forgiveness tax-free through 2025.

Public Service Loan Forgiveness (PSLF)

Borrowers with Parent PLUS loans may be eligible for Public Service Loan Forgiveness Program, but in order to pursue that option must first consolidate the Parent PLUS loan into a Direct Consolidation Loan.

Then, after they’ve made 120 qualifying payments (ten year’s worth), borrowers become eligible for the Public Service Loan Forgiveness Program (PSLF). The parent borrower (not the student) must be employed full-time in a qualifying public service job. PSLF also has strict requirements such as certifying employment so it’s important to follow instructions closely if pursuing this option.

The Temporary Expanded Public Service Loan Forgiveness (TEPSLF) is another option for Parent PLUS borrowers if some or all of their 120 qualifying payments were made under either a graduated repayment plan or an extended repayment plan. The catch here is that the last year of their payments must have been at least as much as they would if they had paid under an ICR plan.

Refinance Parent Plus Loans

Refinancing a Parent PLUS loan is another option that could provide some financial relief.

For borrowers who don’t qualify for any of the loan forgiveness options above, it may be possible to lower their monthly payments by refinancing Parent PLUS student loans with a private lender.

In doing so, you’ll lose the government benefits associated with your federal loans, as briefly mentioned above, such as:

• Student loan forgiveness

• Forbearance options or options to defer your student loans

• Choice of repayment options

Refinancing a Parent PLUS loan into the dependent’s name is another option, which some borrowers opt for once their child has graduated and started working. Not all loan servicers are willing to offer this type of refinancing option, though.

Transfer Parent Plus Student Loan to Student

Transferring Parent PLUS loans to a student can be complicated. There isn’t a federal loan program available that will conduct this exchange, and, as mentioned above, some private lenders won’t offer this option.

That said, some private lenders, like SoFi, allow dependents to take out a refinanced student loan and use it to pay off the PLUS loan of their parent.

Alternatives to Student Loan Forgiveness Parent Plus

When it comes to Parent PLUS loans, there are a few ways to get out of student loan debt legally, including the scenarios outlined below.

Student Loan Forgiveness Death of Parent

Federal student loans qualify for loan discharge when the borrower passes away. In the case of Parent PLUS loans, they are also discharged if the student who received the borrowed funds passes away.

In order to qualify for federal loan discharge due to death, borrowers must provide a copy of a death certificate to either the U.S. Department of Education or the loan servicer.

Recommended: Can Student Loans Be Discharged?

State Parent PLUS Student Loan Forgiveness Programs

Many individual states offer some sort of student loan repayment assistance or student loan forgiveness programs for Parent PLUS loan borrowers.

For an overview of options available in different states, you can take a look at The College Investor’s State-by-State Guide to Student Loan Forgiveness . For information on student loan and aid available take a look at the SoFi guide on state-by-state student aid available for borrowers.

Disability

In the event of the borrower becoming totally and permanently disabled, a Parent PLUS loan may be discharged. To qualify for a Total and Permanent Disability (TPD) discharge , borrowers must complete and submit a TPD discharge application, as well as documentation showing that they meet the requirements for being considered totally and permanently disabled. Note that in order to qualify for TPD, the parent borrower must be considered disabled. This type of forgiveness does not apply to Parent PLUS loans in the event that the student becomes disabled.

Bankruptcy

If a borrower can demonstrate undue financial hardship upon repaying the student loan, they might be able to discharge their Parent PLUS loan. Note having student loans discharged in bankruptcy is extremely rare. Proving “undue hardship” varies depending on the court that’s granting it, but most rulings abide by the Brunner test, which requires the debtor to meet all three of these criteria in order to discharge the student loan:

• Poverty – Maintaining a minimal standard of living for the borrower and their dependents is deemed impossible if they’re forced to repay their student loans.

• Persistence – The borrower’s current financial situation will likely continue for the majority of the repayment period.

• Good faith – The borrower has made a “good faith” effort to repay their student loans.

Closed School Discharge

For parent borrowers whose children attended a school that closed while they were enrolled or who withdrew from the school during a “lookback period” of 120 days before its closure, a Closed School Discharge is another available form of student loan forgiveness.

In some circumstances, the government may extend the lookback period even further. For example, The Department of Education has changed the lookback period to 180 days for loans that were issued after July 1, 2020.

Borrower Defense

Borrower Defense Loan Discharge is available to Parent PLUS borrowers whose children were misled by their college or university or whose college or university engaged in certain forms of misconduct or violation of state laws.

To make a case for borrower defense, the Parent PLUS borrower must be able to demonstrate that their school violated a state law directly related to their federal student loan.

Explore Private Student Loan Options for Parents

Banks, credit unions, state loan agencies and other lenders typically offer private student loans for parents who want to help their children pay for college and refinancing options for parents and students.

Refinancing options will vary by lenders and some may be willing to refinance a Parent PLUS loan into a private refinanced loan in the student’s name. In addition to competitive interest rates and member benefits, SoFi does allow students to take over their parent’s loan during the refinancing process. Interest rates and terms may vary based on individual criteria such as income, credit score, and history.

If you decide refinancing a Parent PLUS loan makes sense for you, SoFi makes it simple. The application process is entirely online and SoFi offers flexible repayment options to help you land a loan that fits your budget. You can find your rate in a few minutes and checking if you prequalify won’t affect your credit score.^*

The Takeaway

Parent PLUS Loan forgiveness offers financial relief to parents who borrowed money to help their child pay for college.

To receive federal relief for Parent PLUS loans, parent borrowers can enroll in an Income-Contingent Repayment plan, pursue Public Service Loan Forgiveness, transfer their student loan to another student, take advantage of a state Parent PLUS student loan forgiveness program, or opt for private student loan assistance or refinancing.

Learn more about refinancing a Parent PLUS loan with SoFi.

^*Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.
SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL SEPTEMBER 1, 2022 DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’swebsite .
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third-Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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.

Photo credit: iStock/DragonImages
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Source: sofi.com

May 16, 2022

8 Things You Can Do Today to Stop Stressing About Money

Save more, spend smarter, and make your money go further

A little stress is a good thing. It keeps us on our toes, challenges us to improve and can even lead to healthier brain function. A life without any stress at all would be pretty boring.

But when it comes to money, most people are dealing with more than just a little bit of stress. On this end of the spectrum, the upsides of stress are replaced with even more downsides – poor sleep, increased anxiety, decreased immunity and more. Just about everyone could benefit from stressing less about money.

That might be easier said than done, but there are some tried and true strategies we can recommend. Here are some of our favorites.

Adjust Your Withholding

Emily Guy Birken, author of “End Financial Stress Now,” said one of the fastest ways to add more money in your budget is to adjust your tax withholding at work. If you’re used to getting a large tax refund, you can change your tax withholding status to make your regular paycheck larger.

Talk to your HR department about how to change your tax withholding and use the IRS tax withholding calculator to see what you specifically need to change. Depending on when your employer implements the changes, they could come into effect during your next paycheck or the one after.

“The only caveat you need to remember is that you’ll get a smaller or no refund in April,” Guy Birken said.

Start a Money Journal

Research has shown that journaling about your problems can lead to reduced stress and anxiety. If you’re worried about money, take a notebook and start writing down what you’re worried about. Consider it a brain dump exercise; just start writing and don’t worry about having all the information perfectly laid out.

Once you’re done, go through the entries and prioritize your stressors. Are you more worried about saving for retirement or establishing an emergency fund? Are you more worried about your student loans or your credit card balance? Try to list items in order from most important to least important.

After prioritizing the items, start a new list and break down the steps you need to take. Then, you can start tackling those tasks and reduce your stress.

Call Your Credit Card Provider

If you have a credit card balance, try calling your provider and asking for a lower interest rate. Remind them that you’ve been a long-time customer and that you’ve never missed a payment. A lower interest rate will prevent more interest from accruing and help you pay off the balance faster, which should help alleviate some financial stress.

Switch to a Lower Student Loan Payment

Lowering your monthly student loan payment can provide some breathing room in your budget. If you have federal student loans, you can switch to an income-driven repayment (IDR) plan which may result in a lower payment. IDR plans also offer loan forgiveness after 20 or 25 years, depending on the plan and type of loan.

Here’s how much of a difference you might see every month. Let’s say you owe $50,000 in federal student loans with a 5.28% interest rate and a 10-year term. If you switch to one of the IDR plans, your monthly payment would be $256 compared to $537 on the standard 10-year plan.

The main downside of an IDR plan is that your repayment term is extended, and you may owe taxes on the forgiven amount when the term is over. But it’s a good temporary fix if you need a lower payment. You can always switch back to the standard plan if you want to repay your loans faster.

Lower your Bills

If you need more breathing room in your budget, try negotiating with your internet, cable and cell phone providers. You may also be able to lower any outstanding medical bills if you call the billing department and ask for a discount.

“Internet and cable service is an easy place to start because they’re used to be negotiated with,” Guy Birken said.

Some tenants have had luck negotiating their rent during the pandemic, especially if they live in a city where people have moved out in droves.

Examine your Transactions

A 2020 Mint survey found that 65% of Americans don’t know how much they spent last month. While ignorance may feel like bliss, the anxiety that comes with being unaware of your spending feels more like misery.

Print out or download your credit card and bank statements from the past month and parse through them. You may discover that you’re still paying for a makeup subscription box or gym membership you thought you canceled. You may also find transactions you don’t recognize, which could be evidence of fraud.

Cancel any subscriptions you no longer use and ask for a refund if the expense has gone through within the past month. Be persistent about canceling. Sometimes it can take weeks for the request to go through, so set a calendar reminder to double-check that the subscription has been canceled.

Start a Budget

If you discover that you’re spending more than you earn, you need to make some radical changes. Start by making a budget, which can help you track spending and free up money to save, pay off debt and meet your other financial goals.

You can use Mint to create a budget. Mint will suggest categories based on your current spending and show how much you spend on average. You can then decrease or increase the amounts depending on your goals. When you’re close to exceeding the budget, you’ll get an email notification.

If you’re new to budgeting, don’t be surprised if you keep going over budget in certain categories. It takes time to change your financial habits, so be patient with yourself.

Close Old Accounts

A common stressor is having to manage multiple accounts. You can forget about one and end up with an overdrawn bank account or some fraudulent activity. If you have several accounts you don’t need or use regularly, consider consolidating them. After you do that, set up your bills, credit cards and loans on autopay so you don’t have to worry bout missing a due date.

“It made it easier to maintain the financial aspect of our lives because we didn’t have a sprawling mess to manage and many of the ‘day to day’ activities were on autopilot,” said Jim Wang of Wallet Hacks.

Save more, spend smarter, and make your money go further

Source: mint.intuit.com

May 15, 2022

Dear Penny: Is Using Retirement Money So My Daughter Can Graduate a Mistake?

Dear Penny,
A big advantage of Parent PLUS loans is that you can qualify for something called income-contingent repayment. Basically, your payment is capped at 20% of your disposable income. You’re planning to retire soon, so I’m assuming your income will drop soon as well. That means you could qualify for an extremely low payment once your daughter graduates.
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She is a good kid with some special problems that she overcomes daily. I want her to have this degree and a chance in life. She worked very hard to overcome all of the physical and mental challenges in her life, BUT expenses are starting to affect my retirement. Any advice?
Sometimes I get antsy when parents talk about spending retirement money on their child’s education. But we’re talking about one year of college, not four. I think you’d deeply regret not giving your daughter the financial support she needs to make it through this final year.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].
Contact the financial aid office for your daughter’s school if you haven’t already done so. The Free Application for Federal Student Aid, or FAFSA, bases financial aid on income from two years earlier. For example, aid for the 2022-23 school year will be based on 2020 income. But some schools offer a process called professional judgment where administrators can adjust FAFSA information based on major life changes, like a parent’s retirement, on a case-by-case basis.
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Your daughter has no doubt overcome her challenges thanks to her own grit, but also because of your love and support as a parent. You’re making a sacrifice to pay for her last year of school because you believe in her. Once she graduates, paying off any debt you’ve incurred will be another challenge you’ll need to conquer together.
-J.
Keep in mind, a Parent PLUS loan is only an option if your daughter is considered a dependent student. For example, if she’s 24 or older or she has dependent children of her own, unfortunately, you wouldn’t be eligible.
Ready to stop worrying about money?
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Dear J.,
With private student loans — whether you take them out in your name or co-sign for your daughter — you’re at the mercy of your lender if you’re struggling with payments. So I’d vote in favor of a Parent PLUS loan, even if you find a private loan with a lower interest rate.
If you can’t get a Parent PLUS loan, I’d suggest splitting taking half from your retirement funds and a private loan for the other half. Neither is an ideal option, but sometimes life forces us to choose between less-than-perfect options.
What makes me nervous about using retirement money is that virtually everyone’s investments have taken a hit in recent months. You want to limit your withdrawals as much as possible right now so that your money can recover. But at least since you’re 67, you won’t pay an early withdrawal penalty.
Now let’s address your daughter’s role. I don’t know if she currently has a job. If she is able to work some to help defray costs without jeopardizing her studies, that should be on the table.
My daughter is in her last year of college. I don’t have any more money to pay for it. So for her last year, should I take from retirement monies or get a loan?
If financial aid can’t make up the shortfall, a Parent PLUS loan is a good solution. A Parent PLUS loan is a federal student loan that you, as the parent, are responsible for repaying.
Source: thepennyhoarder.com

But I want her to focus on her studies so that she can actually complete her final year of coursework in a year. Stretching out the timeline further could pose a greater risk to your retirement. So I wouldn’t ask your daughter to get a job if she’s not already working or work more hours if she has a job.

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By taking half from your retirement and half as a loan, you can minimize the damage to your nest egg while taking less debt into retirement. If you’re able to work just a bit longer to pay some of these expenses in cash, even better.

May 14, 2022

American Women Quarters Program

Save more, spend smarter, and make your money go further

While a handful of women have appeared on coins and special-edition bills throughout the years – Susan B. Anthony, Sacagawea and Helen Keller, for example – the number of women featured on U.S. currency is about to be significantly expanded.

Beginning in 2022 and continuing through 2025, the U.S. Mint will issue up to five new quarter designs each year featuring historically prominent women. Here are the women being honored in 2022.

Maya Angelou

Celebrated author and poet Maya Angelou is most well-known for her autobiography, “I Know Why the Caged Bird Sings.” The book was named as one of TIME Magazine’s 100 best and most influential non-fiction books.

A recipient of the Presidential Medal of Freedom, Angelou also worked with Dr. Martin Luther King as a coordinator for his organization, the Southern Christian Leadership Conference. She was also the first African-American woman to read an original poem at a presidential inauguration.

Dr. Sally Ride

The first American woman in space, astronaut Dr. Sally Ride inspired generations of girls to pursue careers in science and technology. Ride flew on the Space Shuttle Challenger in 1983 and 1984.

In 2013, President Barack Obama awarded her a posthumous Presidential Medal of Freedom. After her death, it was revealed that Ride was a lesbian, making her the first LGBTQ person to appear on a US quarter.

Wilma Mankiller

As the Principal Chief of the Cherokee, Wilma Mankiller is the first woman ever elected chief of a major Native American tribe. She oversaw the growth of the Cherokee nation from 68,000 members to 170,000.

Ms. Magazine named Wilma Woman of the year in 1987, President Bill Clinton awarded her the Presidential Medal of Freedom in 1998.

Nina Otero-Warren

One of the few Hispanic suffragists in history, Nina Otero-Warren helped publish suffragist literature in Spanish, encouraging Hispanic women to vote. She also served as chairman for the Board of Health in New Mexico, was a board member for the American Red Cross and was the Inspector of Indian Schools for Santa Fe County, overseeing the schools for Native American children.

Anna May Wong

As the first Chinese-American movie star in Hollywood, Anna May Wong paved the way for countless other Asian actors. She acted in Broadway plays and both American and European films. Anna was also a fashion icon and was once named the world’s best-dressed woman.

She appeared in movies and plays with acting legends like Laurence Olivier, Douglas Fairbanks and Marlene Dietrich. Though Hollywood remained a hostile environment for people of color during her time, Wong stood up against Chinese stereotypes and advocated for fairer portrayals.

Save more, spend smarter, and make your money go further

Source: mint.intuit.com

May 14, 2022

Guide to Refinancing Your Student Loans After Marriage

After getting married, you’ll start to merge your life, your home, and possibly your finances with your partner. As you plan for the future, it’s helpful to consider the implications of student loans and marriage—which can affect your credit, your ability to get a home mortgage, and even the repayment of your student debt.

Consolidating your federal loans or refinancing student loans after marriage may be options to consider as you begin handling finances in your marriage and working together to reach your financial goals

Student Loans and Marriage

There are currently over 45 million borrowers in the U.S. and the total amount of student loan debt is $1.7 trillion. So the odds are high that either you or your partner may have student loans. As you begin planning for your financial future together, it’s helpful to look at how marriage can affect student loan payments.

Recommended: What is the Average Student Loan Debt?

What Happens to Student Loans When You Get Married?

If you haven’t already had a conversation about student loans and marriage before tying the knot, you and your partner should sit down and discuss your individual student loan debt: how much you have, whether you have federal or private student loans, as well as what your balances, payment status, and monthly payments are. It’s important to share this information since getting married may change your debt repayment plans.

If someone has federal student loans and is on an income-based repayment (IBR) plan when they get married, for example, their monthly payments may increase post-marriage as income-based repayment plans are determined by household income and size. Depending on how a couple chooses to file their taxes, the government may take a new spouse’s salary into account when determining what the borrower’s monthly payments should be.

Because federal student loan borrowers on an income-based repayment plan have to recertify each year, the current year’s income is taken into account which may be higher after marriage if both spouses work. If the borrower’s new spouse doesn’t earn income then they may actually see their monthly payment requirements drop as their household size went up, but their household income remained the same.

Household income also affects how much student loan interest a borrower can deduct on their federal taxes. It’s worth consulting an accountant if a newly married couple needs help figuring out where they stand financially post-marriage.

It’s also important to be aware of how marriage affects your credit score as how someone manages their student loan debt is a factor. Since spouses don’t share credit reports, marrying someone with bad credit won’t hurt your credit score. That said, when it comes time to apply for a loan together, a bad credit score can make getting approved harder—which is another reason it’s key to get on the same page about repaying any debt on time.

Recommended: Types of Federal Student Loans

Refinancing Student Loans After Marriage

Refinancing student loans gives borrowers the chance to take out a new student loan with ideally better interest rates and terms than their original student loan or loans. Some borrowers may choose to consolidate multiple student loans into one newly refinanced loan to streamline their debt repayment process.

The result? One convenient monthly payment to make with the same interest rate and the same loan servicer instead of multiple ones.

As tempting as it may be to combine debt with a spouse and work toward paying it off together, married couples typically cannot refinance their loans together and each spouse would need to refinance their student loans separately. But even though a couple can’t refinance their student loan debt together, they’ll still want to be aware of what’s going on with their partner’s student loans.

Recommended: Top 5 Tips for Refinancing Student Loans in 2022

How to Refinance Student Loans After Marriage

Refinancing student loans after marriage looks the same as it does before marriage and is pretty straightforward. The student loan borrower will take out a new loan, which is used to repay the original student loan.

Ideally, this results in a better interest rate which will help borrowers save money on interest payments, but this isn’t a guarantee. Before refinancing, it’s important that borrowers shop around to find the best rates possible as factors like their credit score and income can qualify them for different rates.

Borrowers have the option of refinancing both federal and private student loans, but it’s worth noting that refinancing a federal student loan into a private one removes access to valuable federal benefits like income-driven repayment plans and loan forgiveness for public service employees.

Refinancing vs. Consolidating Student Loans After Marriage

Borrowers can choose to refinance or consolidate their student loans before or after marriage.

If a borrower has multiple federal student loans, then they can choose to consolidate their different loans into one Direct Consolidation Loan. This type of loan only applies to federal student loans and is offered through the U.S. Department of Education.

This type of loan takes a weighted average of all of the loans consolidated to determine the new interest rate, so generally this is an option designed to simplify debt repayment, not to save money. If a borrower chooses to consolidate through a private lender, they will be issued new rates and terms, which may be more financially beneficial.

Consolidating through a private lender is a form of refinancing that allows borrowers to take out one new loan that covers all of their different sources of student loan debt. While some private lenders will only refinance private student loans, there are plenty of private lenders that refinance both private and federal loans. As mentioned earlier, refinancing a federal loan means losing access to federal protections and benefits.

Refinancing can be advantageous if the borrower is in a better financial place than they were when they originally took out private student loans. If they’ve improved their credit score, paid down debt, and taken other steps to improve their financial picture, they may qualify for a better interest rate that can save them a lot of money over the life of their loan.

Another option in refinancing student loans after marriage is co-signing a partner’s loan. Doing so may mean that you can leverage greater earning power and possibly better credit, but it also means both partners are responsible for the loan, and can put one partner at risk in the event of death or divorce.

Student Loan Refinancing With SoFi

SoFi refinances both federal and private student loans, which can help borrowers save because of our flexible terms and low fixed or variable rates. Borrowers won’t ever have to worry about any fees and can apply quickly online today.

Learn more about refinancing student loans with SoFi.

FAQ

What happens when you marry someone with student loan debt?

If someone’s new spouse has student loan debt, this indirectly affects them. While the debt won’t be under their name or affect their credit score when it comes time to apply for credit products with their spouse (such as a mortgage loan) their credit score and current sources of debt will likely be taken into account.

Is one spouse responsible for the other’s student loans?

No one spouse is directly responsible for their spouse’s student loans, but it’s important to work together to pay off student loan debt. Again, once it comes time to apply for a joint loan, any student loan debt can have an effect on eligibility.

Does getting married affect student loan repayment?

Getting married can affect student loan repayment if a borrower is on an income-based repayment plan for their federal student loans. This type of repayment plan takes household size and income into account when determining what the borrower’s monthly payment should be. If their spouse brings in an income they may find their monthly payments are higher, but if their spouse doesn’t have an income their payments may become smaller.

Photo credit: iStock/South_agency

SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL SEPTEMBER 1, 2022 DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
SOSL0122005

Source: sofi.com

May 14, 2022

23 Better Money Habits You Need to Start Doing in 2022

Save more, spend smarter, and make your money go further

Working on your finances can be a long process, but taking it one step at a time and developing better money habits can help you get ahold of your finances and start building a better future for yourself.

If you struggle with setting money aside for the future or feel like you’re living paycheck to paycheck, it could be a result of bad money habits. Lucky for you, we’ve gathered some candid advice from Mint Financial Coaches on breaking bad money habits and ushering in good ones in the new year, compiling it all into a list of 23 better money habits to start doing in 2022. Spend less, save more, and budget on!

What Are Better Money Habits?

Better money habits are practical lifestyle changes and practices to achieve your financial goals and have a better relationship with money. Developing good money habits can help you live more comfortably, stress less about your finances, and be prepared for the future.

Creating better money habits starts by getting rid of your bad money habits, such as impulse buying, and swapping it for a good money habit, such as only purchasing in order to satisfy a real need.

23 Better Money Habits to Start According to Experts

If you don’t know how to start developing better money habits, follow our Mint Financial Coaches provided tips for how to start implementing good money habits in your day-to-day life. You’ll be surprised to learn that you can ditch your coffee shop trips and invest in your coffee-making skills to save over $900 a year.

1. Build Your Credit Score

Having a good credit score is not only important for qualifying for better interest rates when getting a loan — it also shows you have good money habits. Working on building and increasing your credit score can qualify you for lower interest rates on your credit card and finance charges and get you better rates on insurance

You can still use your credit card if you use it wisely. Making sure to pay your bills in full on time, and billing fixed expenses to your credit card can help you build your credit score and get rewards.

2. Reduce Credit Card Debt

According to Mint Financial Coach Joe Dike, CPA/PFS, CFP, a good money habit reduces your debt or yields a return. Together with building your credit score, lowering your credit card debt will also help lower interest fees paid each month.

Credit card debt can easily get out of hand when you’re using your credit card for most purchases, especially considering when you add incurred interest and finance charges.

3. Prioritize Your Student Loan Repayment

If you have student loans and you want to start building better money habits in the new year, it can be a good idea to start focusing on repaying those loans to avoid paying large amounts of interest and have peace of mind as an added bonus.

Having student loans is nothing to be ashamed of, but take only what’s necessary. Mint Financial Coach Jared Smout, CPA, mentioned that one of his biggest financial mistakes was taking out more student loans than he needed. “It was easy to justify because I had a young family I needed to take care of,” he said, “but we could have found more ways to sacrifice instead of having an extra debt load.”

4. Keep Track of Your Net Worth

Your net worth is everything you own minus your debts. Staying updated with it, and understanding what it means can help you keep track of your progress and spending, and learn how to be better with money. Routinely looking at your liabilities (your debts) and making sure they don’t exceed your assets (money in your checking account, 401(k) and investments, owned cars, etc.) is a good money habit to start if you want to become more financially savvy.

“Good money habits tend to have a positive effect on net worth by reducing liabilities or increasing the value of assets.” — Joe Dike, CPA/PFS, CFP, Mint Financial Coach

5. Review — And Cut Back On — Your Regular Expenses

Many of us might be scared to look at our expenses at the end of the month. But building a habit of reviewing your expenses can help you cut back on unnecessary spending and build savings.

Mint Financial Coach Om Mandhana, CFP, provided some tips on how to cut back on regular expenses:

Coffee: Start drinking black coffee when visiting a coffee shop, since it tends to be cheaper. Or make your coffee at home and reduce the number of times you go out to buy coffee.
Phone: Switch to a mobile virtual network operator (MVNO) or downsize your plan and data allowance.
Fitness: Instead of spending money on gym memberships and personal trainers, consider free physical fitness activities, such as free online videos, running, walking, and hiking — or even cartwheeling. If you still feel the need to go to the gym, plan to spend no more than 2 percent of your income on a membership.
Food: Eating at home and eating healthier can get you more bang for your buck. Consider meal prepping food at home and having packed lunches for the whole week.

6. Start a Savings Plan

If you want to start building better money habits, Mint Financial Coach Anthony Castella, CPA, stresses the importance of saving regularly. He mentions that it’s important to try to set aside an amount for savings from each paycheck. To make the process easier, Castella recommends having money automatically taken directly from your paycheck and directed to savings and investment accounts.

Now, if you already have a savings plan but want to increase it, Dike recommends systematic savings. In order to do that, he plans savings goals and establishes deadlines, then calculates the weekly or monthly amount needed to satisfy that goal and sets it on autopilot.

7. Allocate Time for Your Finances

Allocating time for your finances during the week will set you up for success when you’re trying to practice good money habits. Set time aside one day per week to look at your finances and figure out what needs to be improved.

Mint Financial Coach Ralph Schule, CPA, allocates time for his finances by using the bottom-up approach. In this approach, you take into account how much money is leftover every week after expenses and savings, and, except for emergencies, never spend more than the leftover amount.

8. Buy Only What You Need

If you find yourself spending money on unnecessary things, start a habit of taking some time to think before you buy and only buy what you need. Mint Financial Coach Karen Layfield, CPA, always remembers her mother’s advice before buying anything: “It’s not a bargain if you don’t need it.” With that said, do your research and ask yourself if it’s something you actually need, or if it’s something you want.

However, if it happens that you need to buy something, it can be a good idea to look for secondhand items. Keep in mind that you don’t have to go after the latest technology or clothes, and there are many secondhand options that can be as good for the environment as they can be for your wallet.

“In terms of spending on things, I was taught to ‘Use it up. Wear it out. Make it do or do without.’” — Jared Smout, CPA, Mint Financial Coach

9. Plan Your Retirement

Preparing for your future starts when you’re young. If your company offers a 401(k) plan, take advantage of it, especially if they match it. To start preparing for the future and develop better money habits, every bit of help is beneficial. A portion of your paycheck will be going toward this investment account — a retirement account that you can withdraw from in the future.

10. Learn From Your Financial Mistakes

When trying to build better money habits, you will likely make mistakes. But if you want to have a better relationship with money, it’s important to learn from your errors. Even Mint Financial Coaches have made mistakes in the past, and shared their learnings with us.

As an example, Mandhana learned his lesson after losing $5,000 while currency trading on margin. He now stopped margin investing and became a buy-and-hold investor, which has been serving him well.

11. Learn More About Money

One good money habit Dike has is to never stop learning. Learning about money can help you understand what you can do better and get you closer to becoming financially savvy. If you want to start learning more about money and how you can build better money habits, here’s how the Mint Financial Coaches keep themselves updated with the financial world:

“Knowledge applied, not just accumulated, can make you healthy and wealthy!” — Joe Dike, CPA/PFS, CFP, Mint Financial Coach

12. Start Budgeting

Budgeting is key for developing better money habits. To avoid spending money beyond your budget — which Mandhana considers a bad money habit — it’s important to set boundaries, such as having a spending limit for your groceries, and keep track of your finances.

There are many ways you can start budgeting your money, whether that’s through an app or trying out money-saving challenges, staying committed and finding what fits your lifestyle the best are the most important steps.

13. Use Coupons and Discounts

When it comes time to buy something, Mandhana suggests using discount coupons. Doing your research and finding what fits your budget is another good money habit to start. Mandhana adds a tip for grocery shopping: “Buy items only when in season with plenty available and on sale. If you have time and space, store and preserve products during off-season.”

“Buy items only when in season with plenty available and on sale. If you have time and space, store and preserve products during off season.” — Om Mandhana, CFP, Mint Financial Coach

14. Cut Down on Living Expenses

You can also develop better money habits at home. Evaluate your utility bills and find ways to save, such as conserving more water and energy, or negotiate medical bills if possible. Get into the habit of making a grocery shopping list, meal planning to avoid wasting food, and price checking to avoid overspending. And if you feel like you’re spending too much on entertainment, find free activities for the family and cut down on subscription services that are not often used.

Grocery Budget Calculator

15. Avoid Emotional Spending

“A bad money habit enables instant gratification and tends to satisfy temporary urges,” says Dike. Curb your emotional spending by avoiding going out when feeling stressed or sad, deleting shopping apps, and keeping your credit card at home. If you have the temptation to buy something, take a few days to think about it and assess your budget.

“Impulsive spending motivated by immediate gratification without regard to need or emergency is a bad money habit.” — Ralph Schule, CPA, Mint Financial Coach

16. Find Someone to Hold You Accountable

If you’re struggling with staying motivated to work toward your goals, find someone who can hold you accountable. That person could be a close friend who can give you some tough love or even a financial coach.

Schedule a Coaching Session

15. Avoid Emotional Spending

17. Sign Up for a Budgeting App

If you struggle with budgeting, there are many budgeting tools available to help you keep track of your finances. Signing up for a budgeting app, such as the Mint app, can help you get closer to your financial goals and start building better money habits. Routinely updating your budget on an app will help you evaluate your expenses better and make you think twice before spending.

habit of creating a physical list of financial goals you want to achieve. This can help give you a clear understanding of what you need to be doing and plan how you can achieve your goals.

“Good money habits are the ones that are helpful to you in achieving your financial goals.” — Om Mandhana, CFP, Mint Financial Coach

19. Pay Yourself First

Developing better money habits doesn’t mean you can’t buy things you like anymore. With enough planning, you can still find ways to enjoy yourself while saving money. Smout says: “Pay yourself and your debts first before you pay for your wants. It’s OK to spend money on the things we like, but not at the expense of our future by not saving or trying to run from the past by not paying our debts.”

By evaluating your budget and saving money regularly, you are paying yourself so you can have a better future, enjoy things you like, and take care of loved ones

“It’s OK to spend money on the things we like, but not at the expense of our future by not saving or trying to run from the past by not paying our debts.” — Jared Smout, CPA, Mint Financial Coach

20. Reevaluate Your Role Models

If you find yourself trying to keep up with celebrity and other friends’ lifestyles that are not necessarily within your budget, it might be time to reevaluate your role models. Start a social media cleanse to avoid shopping temptations and surround yourself with people who will motivate you to start building better money habits

21. Be Smart About Investing

Investing can open the doors to financial freedom, but if done poorly, it can take a toll on your finances. Mandhana advises that you shouldn’t invest in anything until you fully understand it. Take time to study investing and evaluate your budget before making that commitment. Whether you want to invest long-term or in cryptocurrency, make sure you’re in good financial standing and understand what you’re doing.

22. Live Within Your Means

“Living within your means” spending less than the amount of money you bring in each month. ”Whenever possible, you should try to spend less than your income,” Castella says. “If it is not possible and money is tight, you should try to reduce non-essential spending so that you don’t take on too much debt.”

Avoiding speculative decision-making can also help you live within your means. Smout agrees, “We all need hope that things will get better, but the worst money habit is to live beyond your means — spending more than you make on the faulty thinking that things are already better. Never base your current decisions on desired future outcomes — wait until they have actually happened”

“Whenever possible, you should try to spend less than your income. If it is not possible and money is tight, you should try to reduce nonessential spending so that you don’t take on too much debt.” — Anthony Castella, CPA, Mint Financial Coach

23. Plan for Emergencies

Emergencies can happen at any time and place, so being prepared ahead of time will make sure not to put a strain on your finances. Add to your emergency fund on a regular basis and reserve a chunk of your paycheck each month for your savings. Mandhana advises to always have adequate life insurance to cover your living expenses for 10 years, kids’ education, your mortgage, and other loan balances.

Our experts understand that life can be complicated and unexpected — that’s why it’s a good habit to plan ahead for an emergency. Schule, for instance, suggests: “Try to forecast unexpected needs of relatives, such as parents and siblings. You might have to say no, but it feels a lot better to say yes.”

“As much as possible, try to forecast unexpected needs of relatives, such as parents and siblings. You might have to say no [to helping relatives], but it feels a lot better to say yes.” — Ralph Schule, CPA, Mint Financial Coach

The Bottom Line

The good thing is you have already overcome the hardest step of developing better money habits by finding out how you can start. Whether you start slow by applying only one of these tips, or decide to try out a couple, implementing these into your spending and saving routine can help you get used to budgeting and create a better future for yourself.

Save more, spend smarter, and make your money go further

Mint is passionate about helping you to achieve financial goals through education and with powerful tools, personalized insights, and much more. More from Mint

Source: mint.intuit.com

May 14, 2022

What Is a FICO Score? FICO Score vs Credit Score

A credit score is one factor used in a lender’s assessment of your creditworthiness when you apply for a lending product, e.g., a loan, line of credit, or credit card. It can also be a factor in lease approval, new utilities setup, and insurance rates. You can have more than one credit score, depending on what credit scoring model a lender uses.

One type of credit scoring model is the FICO® Score, which is used in 90% of lending decisions in the U.S. Since it’s such a widely used determiner, consumers are wise to pay close attention to their own score.

What Is a FICO Score?

The FICO Score is a trademark of the Fair Isaac Corporation. It was the first widely used, commercially available score of its type. FICO Scores essentially compress a person’s credit history into one algorithmically determined score.

Because FICO scores (and other credit scores like it) are based on analytics rather than human biases, the intention is to make it easier for lenders to make fair lending decisions.

What Is the FICO Score Range?

FICO’s base range is 300 to 850: The higher the score, the lower the lending risk a lender might consider you to be.

• Exceptional: 800 to 850

• Very Good: 740 to 799

• Good: 670 to 739

• Fair: 580 to 669

• Poor: 300 to 579

Want to find out what your credit score is?
Check out SoFi’s credit score monitoring
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How Is a FICO Score Calculated?

There are five main components of your base score , each having a different weight in the calculation.

• Payment history: 35%

• Amounts owed: 30%

• Length of credit history: 15%

• Credit mix: 10%

• New credit: 10%

About two-thirds of your base FICO score depends on managing the amount of debt you have and making your monthly payments on time. Each of the three major credit bureaus — Equifax®, Experian®, and TransUnion® — supply information for the calculation of your credit score, so it can vary slightly even if your creditworthiness doesn’t fluctuate.

The base FICO Score range may not be the range used in all credit and lending decisions. There are also industry-specific scores , such as one specifically for auto loans (FICO® Auto Scores), others for credit card applications (FICO® Bankcard Scores), and multiple FICO scores used by mortgage lenders.

Industry-specific FICO scores range from 250 to 900, compared to the 300 to 850 range for base scores.

What Is a Good FICO Score?

Strictly referencing the base FICO Score range, a “good” score is between 670 and 739 on the overall scale of 300 to 850.

But what’s considered acceptable for credit approval might vary from lender to lender. Each lender has its own requirements for credit approval, interest rates, and loan terms, and may assign its own acceptable ranges. Lenders may also use factors other than a credit score to determine these things.

Why Is a FICO Score Important? What Is a FICO Score Used For?

As mentioned above, the FICO Score is used in 90% of lending decisions in the U.S. When a consumer applies for a loan or other type of credit, the lender will look at their credit report and credit score. If there are negative entries on the credit report, which may be reflected in a decreased FICO Score, the applicant may not have a chance to explain those to the lender. Especially in mortgage lending decisions, the lender may have a firm FICO Score requirement, and even one point below the acceptable number could result in a denial.

But what if you’re not applying for credit in the traditional sense? Your FICO Score is still an important number to pay attention to because it’s used in other financial decisions.

• Renting an apartment. Landlords and leasing agents generally run a credit check during a lease application process. They may or may not look at the applicant’s actual credit score — landlords have a lot of flexibility in how they make leasing decisions — but they do tend to look at the applicant’s credit history and how much debt they have in relation to their income, factors that go into a FICO score calculation. A few late payments here and there may not affect your ability to rent an apartment, but a high debt-to-income ratio may. If you have a lot of income going toward debt payments, the landlord may be concerned that you won’t have enough income to pay your rent.

• Insurance. One of the industry-specific FICO Scores is formulated for the insurance industry — auto insurance and property insurance. Insurers will typically look at more than just a person’s FICO Insurance Score , but it is one factor that goes in determining qualification for insurance and at what rate. The assumption is that a person who is financially responsible will also take more care when it comes to their home and car.

• Utilities. You may not think of a utility bill as a debt, but since utilities like gas, electric, and phone are billed in arrears, they technically are a form of debt. “Billed in arrears” means that you are billed for services you have already used. Utility companies want to make sure that you will be able to pay your monthly bill, so they may run a credit check, which may or may not include looking at your FICO Score.

What Affects Your FICO Score?

We briefly touched on how a FICO Score is calculated, but what goes into those different categories? Let’s look at those in more detail.

Payment history (35%)

Do you tend to pay your bills on time or do you have a history of late or missed payments? Your payment history is the most important factor in the calculation of your FICO Score. Perfection isn’t necessary, but a solid track record of regular, on-time payments is important. Lenders like to be assured that a borrower will make their payments, and a past payment history tends to be a good predictor of future payment habits.

Both installment (personal loans, mortgage loans, and student loans, for example) and revolving credit such as credit cards can affect your payment history. Since it’s such an important factor, how can you make sure it’s a positive one for you?

• Making payments on time, every time, is the best way to make sure your payment history is a positive one. Having a regular routine for paying bills is a good way to accomplish this.

• Automating your payments may help you make at least the minimum payment on credit accounts.

• Checking your credit report regularly for errors or discrepancies can help catch things that might have a negative effect on your FICO Score if left uncorrected. You can get a free credit report from each of the three credit bureaus once per year at AnnualCreditReport.com .

Amounts owed (30%)

The amount of debt you owe in relation to the amount of debt available to you is called your credit utilization ratio, and it’s the second most important factor in the calculation of your FICO Score. Having debt isn’t at issue in this factor, but using most of your available debt is seen as relying on credit to meet your financial obligations.

Credit utilization is based on revolving debt, not installment debt. If you’re keeping your credit card balance well below your credit limit, it’s a good indicator that you’re not overspending. If you have more than one credit card, consider the percentage of available credit you’re using on each of them. If one has a higher credit utilization than the others, it might be a good idea to use that one less often if you’re trying to increase your FICO Score.

Length of credit history (15%)

The percentage of this factor may not be as high as the previous two, but its importance to lenders should not be underestimated. As with payment history, lenders tend to look at a person’s credit history as predictive of their credit future. If there is no credit history or a short credit history, a lender doesn’t have much information on which to base a lending decision.

Since the amount you owe is such an important factor in your FICO Score, you might think that paying off and closing credit accounts would have a positive effect on your score. But that might not be the best strategy.

• Revolving accounts like credit cards can be a useful tool in your financial toolbox if used responsibly. A credit card account with a low balance and good payment history that has been part of your credit report for many years can be an indicator that you are able to maintain credit in a responsible manner.

• Installment loans like personal loans are meant to be paid off in a certain amount of time. The account will remain on your credit report for 10 years after it’s paid off. Paying off a personal loan is certainly a positive thing, but paying off a personal loan early could cause the account to stop having that positive effect earlier than it otherwise would.

Recommended: How to Build Credit Over Time

Credit mix (10%)

Having multiple types of credit can have a positive effect on your FICO Score. Being responsible with both revolving and installment credit accounts shows lenders that you can successfully manage your debts.

• Revolving accounts are those that are open-ended, such as a credit card. You can borrow money up to your credit limit, repay it, and borrow it again. As long as you’re conforming to the terms of the credit agreement, the account is likely to have a positive effect on your credit report and, therefore, your FICO Score.

• Installment accounts are closed-ended. There is a certain amount of credit extended to you and you receive that money in a lump sum. It’s repaid in regular installments over a set period of time. If you need additional funds, you must take out another loan. A personal loan is one example of an installment loan.

Credit mix won’t make or break your ability to qualify for a loan, but having a good mix of different types of debt indicates to lenders that you’re likely to be a good lending risk.

New credit (10%)

Though lenders like to see that a person has been extended credit in the past, too much new credit in a short amount of time can be a red flag to lenders.

When you apply for a loan or other type of credit, the lender will typically look at your credit report. This is called a credit inquiry and can be a hard inquiry or a soft inquiry. A soft inquiry may be made by a lender to pre-qualify someone for credit or by a landlord for a lease approval, for example.

During a formal application process, a lender might make a hard inquiry into your credit report, which can affect your credit score. FICO Scores take into account hard inquiries from the last 12 months in your credit score calculation, but a hard inquiry will remain on your credit report for two years.

FICO Score vs Credit Score

These two terms — FICO Scores and credit scores — are often used interchangeably. More accurately, though, is that a FICO Score is one type of credit score, the one most often used by lenders when making their decisions. There are multiple types of credit scores, each of them using analytics to create a rating that illustrates a person’s creditworthiness.

The Takeaway

Your FICO Score is affected by how you manage your personal finances, whether that’s a personal loan, line of credit, credit card, or other type of credit product. Although it’s not the only credit score lenders use, it is the one used in the majority of lending decisions in the U.S.

A SoFi Personal Loan is one financial tool that can be used to add some variety to your credit mix. If managed responsibly with regular, on-time payments, your FICO Score could be positively affected by having an installment loan like this in the mix. With fixed, competitive rates and no fees, a personal loan from SoFi could be the right choice for your unique financial situation.

Check your rate on a SoFi Personal Loan

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third-Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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Source: sofi.com

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Plan a budget-friendly trip

Budget for it

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6. Pay off debt

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7. Plan ahead

8. Try a savings challenge to stretch your money

9. Plan your meals

10. Stretch your money by ditching your cable

11. Get a programmable thermostat

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12. Use an app

13. Get a side hustle

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FAQ

What happens when you marry someone with student loan debt?

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