If personal finance books make your eyes glaze over, but you can never say no to a page-turning novel, this book was written for you.
In The Latte Factor, best-selling author David Bach and co-writer, John David Mann, present a personal finance book that reads like a novel. It tells the story of Zoey, a young woman in her 20s who is perpetually struggling to make ends meet. Like many of her contemporaries, Zoey is weighed down by staggering student loan and credit card debt.
Though she’s working in New York City at her dream job, she can never seem to get ahead of her expenses. When Zoey’s boss suggests she get acquainted with Henry, the barista at the coffee shop Zoey loves, she has no idea how significantly this connection will change her life.
Henry is an elderly gentleman who is working at a relatively low-level job, but has built himself a comfortable cushion of savings. He shares his three primary principles of financial freedom with Zoey, which she immediately dismisses as nonsense. Soon, though, she comes to appreciate that small but significant changes in her daily routine can make a huge difference in her finances. She learns to adapt Henry’s principles: Pay yourself first, make savings automatic and live the life you want today. Slowly, she makes the changes she needs in her life to achieve financial freedom.
Bach draws on his decades of experience counseling clients through debt and toward a life of responsible money management to build a realistic story that is both engaging and enlightening. You have to believe he’s helped many “Zoeys” along the way.
Some readers are uncomfortable with the fact that Zoey is portrayed as a caricatured female who does not know how to handle her money and that the book is essentially badly disguised “mansplaining” in a way that talks down to women. Others, though, have found The Latte Factor to be a fun book that leaves readers with lots to think about.
Do you have to be rich to live rich? Read The Latte Factor and find out today!
Have you read The Latte Factor? What did you think about this book? Share your thoughts with us in the comments.
When Stephanie and her husband found themselves looking at a six-figure student loan debt load in 2009, they didn’t know how to start freeing themselves. Their small family’s budget was just barely making it to the end of each month. How would they possibly pay off such an overwhelming amount of debt?
Fast forward to the end of 2016 and that huge, monstrous debt was completely gone.
How did they do it? On her blog, Six Figures Under (SixFiguresUnder.com), Stephanie shares her family’s ongoing story, detailing the steps she’s taken and the changes she’s made in her family’s lifestyle for paying down their debt while continuing to live financially responsibly. She is brutally honest about her struggles and successes, sharing the mistakes she’s made along the way and the triumphs she’s celebrated. She also offers readers complete transparency into her family’s finances, posting actual numbers about the income her family earns, their fixed expenses, investments and the way they choose to spend their money on non-fixed expenses.
But Six Figures Under is not just about Stephanie’s story. Stop by the blog and you’ll find a large community of active followers joining in on a mission to pay down their debts and live a more financially conscious life.
For 2019, Six Figures Under is on a Debt Smash-athon charge. The blog’s community is invited to share the amounts of debt they’ve paid down each month. The numbers are then tallied and posted on the blog with the big wins singled out with special mentions. In March 2019, the Six Figures Under community paid down a total of $149,866.53 of debt, invested $31,202.12 toward retirement and put away $39,151.21 for big savings goals. The feeling of togetherness motivates members to boost their efforts in paying off their debts.
There’s more than numbers to Six Figures Under. Check out the blog for the following categories and topics:
Frugal Living Ideas – Here, you’ll find tips and tricks for saving money on everything from family road trips to grocery bills. Posts are always engaging and packed with actionable tips you can apply to your own life today.
Budgeting and Finance – The blog advocates living on last month’s income—and shows readers how to live this way, plus creating a manageable and realistic monthly budget.
Debt – Read up on tips for increasing your debt payments and common mistakes people make when handling their debt.
Ideas for Increasing Income – These posts cover a broad range of money-making ideas, from running a killer yard sale to starting a thriving business on Etsy.
Members of the blog get friendly monthly reminders inviting them to share their progress with the rest of the community, as well as frugal living tips and ideas delivered directly to their inbox.
The Six Figures Under blog is an inspirational, friendly place that is packed with money management tips and strategies for doubling down on your debt payments. Check it out today and join the debt-smashing fun!
Your Turn: Do you have a target date for paying down all debt? Or are you just chipping away at it, month by month? Share your debt-paying strategy with us in the comments.
This month, you’re going to organize your finances. Hold onto every receipt, bill, paystub and invoice you produce throughout the month. Sometime during the last week of May, sit down with all of your paperwork and start crunching the numbers.
When you’re through, you should have all of these questions answered:
How much is my net monthly income?
How much are my monthly fixed expenses?
How much are my monthly non-fixed expenses?
Now that you have the numbers in front of you, work on creating a budget. Designate the necessary funds for your fixed expenses. Then, with the remaining money, determine how much you will spend in each non-fixed expense category; like groceries, clothing, entertainment, etc.
Put your minimum debt payments in the fixed-expenses category, with another category for extra debt payments in your column of non-fixed expenses.
What was the most challenging part of creating your monthly budget?
Q: Spring is here! I’ve cleaned out my house and now I’m ready to take on my finances. I’d love to give them a thorough cleaning, too. Where do I start?
A: It’s wonderful that you’ve decided to clean up your finances. Springtime is months after the holiday squeeze and still a while away from the pricey summer season, making it a prime time for whipping your finances into shape.
So, let’s get cleaning!
1. Dust Off Your New Year’s Resolutions We get it: New Year’s resolutions get stale as soon as the calendar hits February. But this was the year you were really fired up and ready to conquer the world. Why sell yourself short when your goals are actually within reach?
Use the fresh energy and renewal of spring to revisit the list of resolutions you penned back at the end of 2018. What were your budgeting goals? What were your savings dreams? Have you achieved any of those goals? If not, what’s holding you back?
Take stock of where you are financially and get back on track, moving forward and toward those goals. It’s not too late to make it happen this year!
Do it today: Dig out that paper with your New Year’s resolutions and go through your financial goals one at a time. Did you overreach? Were you irresponsible? Tweak and adjust as necessary, create a new tracking system if the existing one isn’t working, and then get out there and own those goals!
2. Sweep Out Your Monthly Budget
Now that you’ve taken stock of your resolutions, take a good look at your monthly budget.
Review your spending habits of the last few months. What are your weak spots? Where can you cut back? Have you been alotting too much money for one category and not enough for another? It’s time to take stock!
Do it today: Review your monthly budget and choose one area to trim. Create concrete and realistic steps to make that happen. For instance, try the money envelope system to keep you on track, or stick to cash-only so you don’t slip up. Your budget will thank you!
3. Freshen Up Your W-4 You might be celebrating a generous tax return this year, but that only means the government has been handling some of your money all year long instead of it earning more for you. It’s almost like giving the government an interest-free loan! You could have used those funds to start investing, add to an existing emergency fund, launch a business or to save for your dream summer getaway.
Take a closer look at your W-4 so you don’t overpay in taxes again this year.
Do it today: Spend some time researching your best withholding options or ask your accountant to help you work out the numbers. Adjust your W-4 accordingly and submit it to the payroll specialists at your workplace.
4. Pile Up Your Savings Once you’re cutting down on your spending habits and taking home a larger check each payday, why not use the extra money to bump up your savings? You can add to an existing fund, build a new one, open a Savings Certificate or start investing. You have many great options!
Speak to an Advantage One employee today to find out about our fantastic savings options.
Do it today: After choosing a savings option, stop by [credit union] to set up a direct deposit. Each month, your money will be automatically transferred from your checking account to your new account. It’s the ultimate in set-it-and-forget-it!
5. Toss Your Debt This spring, while you try on old, scratchy sweaters and make piles of junk to toss in the trash or sell for cash, why not get rid of your debt, too?
Debt is ugly on you. It holds you back from moving forward, keeps you in a spending trap that only gets stronger with time and clings to you like caked-on mud. Wash it all off this spring with an actionable plan to get rid of that debt for good!
Do it today: We know that paying down debt is easier said than done. But, you can do it! All you need is a plan. Review your debts and pick one to pay off first. It can be the debt with the smallest amount of total owed or the one with the steepest interest rate. Find a way to double down on your payments toward that debt. You can do it by taking on a side hustle, seeking a promotion at work or trimming existing expenses. After you’ve paid down this debt, move onto the next one. Accelerate its payoff by applying the total payment amount from your first debt to the new one – in addition to the regular payment you were making on it. Keep going until they’re all gone. It might take until next spring, but eventually, you’ll kick all of your debt to the curb!
Spring is here—it’s time to freshen up your finances so they’ll be in tip-top shape for summer!
Your Turn: How do you clean out your finances in the spring? Share your best tips with us in the comments.
1. You’re carrying a credit card balance from month-to-month
If you have a high credit card balance and you’re paying just the minimum each month, you can end up carrying this balance for years while paying a lot in interest. You might also be tempted to make more purchases on this card since it already has a balance.
The fix: Try to make double payments and stop using the card until the debt is paid off.
2. You stress about bills
Monthly bills should be fixed into your budget. You should be able to pay them easily without any stress.
The fix: Take a look at your monthly budget and find ways to cut back.
3. You can’t save 5% of your monthly income
If you can’t put away at least 5% of your monthly income into savings, you’re living beyond your means.
The fix: Again, trim your expenses and restructure your budget to include at least 5% for savings.
4. You don’t have emergency and rainy-day funds
Ideally, you should have an emergency fund to cover major unexpected expenses, and a rainy-day fund for small expenses you can anticipate.
The fix: Start building your funds now by putting away as much as you possibly can each month.
5. Your mortgage payment eats up more than 30% of your monthly income
Most financial experts agree that your monthly mortgage payment should not exceed 30% of your take-home pay.
The fix: You have two choices here:
1.) Find ways to boost income. Seek a raise at your current job, freelance for hire or find another side hustle for extra cash.
2.) Scale back your mortgage payments. Consider a refinance. Speak to a mortgage expert at Advantage One to see if this is right for you. If your mortgage is crippling your budget, consider downsizing to a smaller and cheaper place.
6. You lease a car you can’t afford to buy or finance
Can you afford to pay for or finance your car? If the answer is no, you’re in financial trouble.
The fix: Downgrade your vehicle to one you can actually afford.
7. Your financial decisions are influenced by your friends’ spending habits
Thanks to the hyper-sharing culture of social media, the pressure to keep up with the Joneses is stronger than ever. If you find yourself making financial decisions based on your friends’ choices, you’re likely spending more than you can afford.
The fix: Stop looking over your shoulder and keep your eyes on your own life and your own wallet.
If you’re in over your head, Advantage One wants to help! Stop by today and our financial services partners will be happy to guide you out of any financial mess.
What’s your personal red flag that your spending has gotten out of control? Share it with us in the comments.
Using a personal loan to refinance your existing debt can make your debt more manageable. You’ll have one monthly payment at one interest rate instead of many smaller bills due on different days of the month.
Will personal loans work for you?
1.) Have I fixed the debt problem?
Think about why you’re in debt. If a medical bill, job loss or some other temporary hardship describes your situation, the fact that you have a job or have paid the medical bill means you’ve solved the problem that caused the debt in the first place.
If, on the other hand, you accumulated debt by overspending on credit cards, a debt consolidation loan may not be the answer just yet. First make a budget you can stick to, learn how to save and gain responsibility in your use of credit. Getting a debt consolidation loan without doing those things first is a temporary solution that can make matters worse.
2.) Can I commit to a repayment plan?
If you’re struggling to make minimum monthly payments on bills, a debt consolidation loan can only do so much. It’s possible that the lower interest rate will make repayment easier, but bundling all of that debt together could result in a higher monthly payment over a shorter period of time. Before you speak to a loan officer, figure out how much you can afford to put toward getting out of debt. Your loan officer can work backward from there to figure out terms, interest rate and total amount borrowed.
If you’re relying on a fluctuating stream of income to repay debt, it may be difficult to commit to a strict repayment plan that’s as aggressive as you like. You can still make extra principal payments on a personal loan, so your strategy of making intermittent payments will still help. You just can’t figure them into your monthly payment calculation.
3.) Is my interest rate the problem?
For some people, the biggest chunk of their debt is a student loan. These loans receive fairly generous terms, since a college degree should generally result in a higher-paying job. Debt consolidation for student loans, especially subsidized PLUS loans, may not make a great deal of sense. You’re better off negotiating the repayment structure with your lender if the monthly payments are unrealistic.
On the other hand, if you’re dealing with credit card debt, interest rate is definitely part of the problem. Credit card debt interest regularly runs in the 20% range, more than twice the average rate of personal loans. Refinancing this debt with a personal loan can save you plenty over making minimum credit card payments.
4.) Will a personal loan cover all my debts?
The average American household has nearly $15,000 in credit card debt.
If you have more than $50,000 in credit card debt, it’s going to be difficult to put together a personal loan that can finance the entire amount. It’s worth prioritizing the highest interest cards and consolidating those instead of trying to divide your refinancing evenly between accounts. Get the biggest problems out of the way, so you can focus your efforts on picking up the pieces.
Debt consolidation doesn’t work for everyone, but it can do wonders for many people. The ability to eliminate high-interest debt and simplify monthly expenses into one payment for debt servicing can change a family’s whole financial picture. Gather your account statements and your paycheck stubs, and head to [CREDIT UNION] today!
What’s your secret weapon in the battle against debt? Any tips and tricks that helped you get a handle on what you owe? Let us know!
If you’re like many of us, you’ve been trying to stick to a budget for a while, but by the time each month is over, you’ve busted your budget – again.
Because of this recurring pattern, you’re probably wondering if there’s a better way. Fortunately, the answer is yes!
The money envelope system has been around for years, and it’s an incredibly motivating and powerful way to keep spending in check.
Advantage One is proud to bring you this handy guide to understanding and implementing the money envelope system in your household.
Note: If you already have a workable monthly budget, you can skip to step 2.
1. Determine your monthly income and expenses
For the next few months, track all of your expenses. Hold onto every receipt or record each purchase you make, being sure to indicate which category of expense it falls under. Hold onto every pay stub, too. When a three-month period has passed, you’ll sit down to figure out exactly how much discretionary income you’re left with each month. This will not include fixed amounts, like insurance premiums, mortgage payments, savings and investments.
2. Create a budget for every expense category
Now, divide your discretionary income into different categories. The categories you need and the amounts you’ll set aside for each will depend on your individual lifestyle and habits, but you’ll likely need categories for food, gas, entertainment, transportation and clothing costs.
Review the way you’ve been spending your money in the last few months for an idea of how much you’ll need to set aside for each category. If you see you’ve been overspending in a certain area, this is a great time to resolve to cut back.
3. Create your envelopes
This is where the money envelope system differs from a regular budget. Instead of having money set aside for each category in your head, or even scribbled on a paper somewhere, take one envelope for each expense category and mark it clearly. Now, put the exact amount of cash for this month in the envelope for each category.
Do this with every expense category, and voila! You’ve created your new budgeting system!
4. Stick to your budget
As in any budget, following through on a plan is the hardest part. With the envelope system though, it’s a whole lot easier.
Say you need to make a grocery run. You’ll peek inside your “groceries” envelope, take note of how much cash is inside, and figure out how much you can afford to spend. Take that amount of money to the store with you, and only use that cash. No cheating! There’s absolutely no card-swiping allowed and no sneaking money from another envelope to beef up a skimpy cash supply in another. You need to work with what you have.
Instead of walking out of the store with a dozen items in hand that weren’t on your list, you’ll be forced to stick to your budget. And, if you find yourself running low on grocery money one month, you’ll have to make do. You can take the pantry challenge and dream up a menu created around the ingredients you have on hand, or you can shop the sales and cook according to what’s cheapest this week.
Do whatever it takes – but no cheating!
5. Reward yourself!
If you find yourself with extra money in any category at the end of the month, it’s OK to celebrate. Dave Ramsey recommends rewarding yourself with a dinner out or an expensive drink. Alternatively, you can treat that money as “rollover cash” and use it to enjoy a roomier budget next month.
Tips and tricks
Here are some variations and different approaches to this ingenious system:
Use a small accordion file folder instead of individual envelopes. It’ll be easier to keep track of your envelopes when they’re all in one place, and it’s sturdier than paper envelopes.
Go cashless! Love the idea but hate the thought of only using cash? You can still use the envelope system with some minor adjustments. There are apps designed to create virtual envelopes for you to use, such as Mvelopes. You can also use a cost-free budgeting app that allows you to divide and track your spending into different categories, such as Mint, Quicken and Monefy.
Trim your fixed expenses. If you’re finding it difficult to stick to your self-created budget, try to cut back on your non-discretionary spending. Search for a cheaper auto insurance plan.
Ditch your cable. Find ways to trim your electric bill and gas expenses. Use the money you save to add to the envelopes that never seem to have enough to get you through the month.
Create an emergency envelope. Set aside $20 or $50 to use in case another envelope runs out of money.
Congratulations! You’ve got the money envelope system down pat! Here’s hoping it helps you on your journey toward financial wellness.
Your Turn: Have you tried the money envelope system? Has it worked for you? Why, or why not?
529 college savings plans are only eligible for spending on certain expenses
The cost of attendance at American universities is skyrocketing year after year, with a college education now costing up to six figures. 529 college savings plans offer a tax-free way to save money for your education. However, there are a few conditions since the money is tax-free, including what you can spend that money on. Here are a few of the qualified expenses included in the plan.
Tuition and education fees
Of course, the most obvious college expense is tuition. Any of your 529 savings money can be applied toward basic tuition. Many colleges charge mandatory fees such as application fees and additional course fees, and your savings plan can be used on those as well.
Keep in mind that your savings plan can only contribute to mandatory fees. Writer for Washington’s Top News, Nina Mitchell, warns against the use of 529 savings funds for fraternity and sorority membership dues or club and activity fees. “These are considered extracurricular and are not eligible,” says Mitchell.
Textbooks, computers and school supplies
Alongside the rise of tuition prices, textbook prices are also increasing each year. According to Brian Boswell, contributor at Forbes.com, your savings plan can be applied toward textbook rentals and purchases each year. You can also put your savings money toward school supplies, including items like pencils, pens, backpacks and notebooks.
Modern-day education often requires students to have their own personal computers or laptops. With advancing technology, laptops are more expensive than ever. Laptops and desktop computers can be purchased through your 529 savings plan, says Boswell, easing the burden of buying new, up-to-date technology. Printers are also covered under the plan.
Room and board Your housing costs as a student are covered under your 529 savings plan as well. Whether you live in a campus dorm and are paying for student housing, or if you pay rent off-campus, your savings money can be used for your rent and utilities. While you’re a student, your savings money can also be applied to your dining plan and grocery costs.
However, Boswell explains there is a catch to off-campus living, “To be considered qualified, [off-campus living] costs must be less than or equal to the room and board allowance from the college’s cost of attendance figures. If the total cost living off-campus exceeds the school’s allowance, the student would have to pay the difference using funds from another source.”
If your university charges a fee for internet usage, or if you live off campus and have to purchase an internet package yourself, you can pay those expenses out of your 529 savings plan. Additional software deemed necessary for your education is also covered.
Disability equipment If you have a disability that requires medical or mobility equipment, you can purchase those items with the money in your 529 savings plan, says Boswell. These items include wheelchairs, prosthetics and transportation costs.
Saving and paying for college tuition alone can be stressful enough, but having to worry about additional school-related expenses just adds to the frustration. Luckily, these expenses are all covered under your 529 savings plan. Consult your tax advisor regarding your personal situation and the possible impacts and benefits of this type of program.
Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.
Here are the best tips on how to get the best loan for your new car
Purchasing a vehicle is one of the largest and most important financial investments that any individual will ever make during their lifetime, excluding the purchase of a home. But the process of acquiring loans for a vehicle can often be confusing. There are many questions to ask leading up to the purchase of a new vehicle and customers need to determine whether they want to buy new or used, whether they want to buy outright or lease and which type of vehicle that they wish to purchase.
However, before any of these decisions can be made, customers need to determine how they will pay for the vehicle. While paying in cash is an option for a select group of new car buyers, most people will have to rely on an auto loan. Determining from where this money will come from can be the trickiest part of the process. Fortunately, there are ways to make the search for the best loan a little bit easier.
Loan pros and cons While automotive loans can carry several benefits, they are not without their drawbacks. The most obvious benefit is that by using a loan, customers don’t have to pay for their new vehicle in its entirety, all at once. Another benefit is that automotive loans can help build credit. While you need good credit to qualify for most loans, paying for those loans will only improve your credit score. Auto loans, of course, do add another monthly payment to your pile of bills. Keeping up with those payments will be a necessity for many months ahead.
Who provides loans? Automotive loans are offered to customers through a number of financial institutions. According to Consumer Reports, banks and credit unions are often the most common sources. If you have a good credit standing, then you will be able to attain some of the best loan rates from these institutions. But if your credit score is less than desirable, you may not qualify. Another very common source for auto loans is the dealerships themselves.
Determining which loan is best Once you determine where you want to apply for a loan, the next step is looking for the best rates across the board. It’s important to pay careful attention, as some loans may look good on the surface, but could spell financial trouble in the future. As vehicle prices increase with each passing year, longer loans become available. However, Herb Weisbaum at CNBC suggests that drivers choose the shortest loan that they can afford. Not only will longer loans cost drivers more in the long run, but paying off a loan sooner removes one more payment each month.
If you happen to find the loan that works best for you before you are ready to purchase your vehicle, then this can be used to your advantage. The DMV says that getting pre-approved for a loan can carry several benefits. If you are pre-approved, this removes a lot of uncertainty during the entire financing process when it comes time to pick up your next set of wheels.
There is no such thing as a perfect automotive loan, as each driver has specific wants and needs. Still, there are processes and guidelines set in place to help you find the right loan for you.
Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.