Financial Self-Care

Financial self-care is the practice of developing habits that set you up for financial success, allowing you to reach your goals and find financial freedom, on your terms. Creating a budget and sticking to it, managing debt, contributing to your savings each month are all ways to practice financial self-care.

 

Why It Matters

When other aspects of self-care are neglected, stress increases. If you neglect your physical health, your immune system weakens and you catch a cold. When mental health is neglected, you can experience sleep disturbances and mood changes. Your financial self-care is no different. Overspending results in overwhelm and stress. Ignoring financial issues can result in anxiety, shame and guilt and overall life dissatisfaction. When your finances are in order, stress is lowered and a healthy sense of security is experienced.

 

By creating and pursuing financial goals, you can regain control and create a well-rounded and balanced life.

 

Address The Issues

If you’ve been ignoring financial issues or hiding money woes from your loved ones, it’s time to have an honest conversation about the budget and your financial health. It’s also time to get real with yourself and be honest about the issues at play that are contributing to your financial dis-ease. Take the judgement out of the equation and look at the facts only. You will struggle to change when shame and guilt are dominating your thoughts.

 

Set Goals

Set financial goals that are specific, measurable, attainable, relevant and time-based. Set benchmark dates to reassess your goals and complete a financial check-up.

 

Reward Yourself

By incentivizing your goals and setting your sights on a reward, you will be more apt to stick with the plan and hit your benchmarks.

 

Find A Buddy

Having a financial accountability buddy can help you reach your goals and push you outside of your comfort zone. If secrecy was an issue in your financial stress, having a buddy will keep you honest and open about your habits.

 

Daily Tracking

As you build new financial habits, keep track of your spending and saving daily. Use an app, use a notebook and pencil, use an excel spreadsheet. Use what will work best for you. If you’re an impulsive spender, use your tracking method to also track your emotions before and after spending so you can become more aware of your habits and mitigate spending sprees by addressing the issues before they bubble up.

 

Deal With Debt Now

Begin addressing debts as soon as possible. Depending on the type of debt, your credit score can take a major hit as the debts and interest rates accrue. Start with your smallest debts and use the debt snowball method to wipe out your debt within in the next year or 3.

 

Start practicing financial self-care and eliminate the biggest stressor you face. Take care of yourself and be kind to yourself as you learn new habits.

Credit Building

At some point in your life you will likely need a loan. To get a loan, for school, for a home or for a car, you need a solid credit score. Credit scores affect approval and interest rates. Credit can also affect your ability to obtain certain jobs, approval for rent applications and even setting up utilities for your home. Building credit is a necessary process for ensuring your economic stability. Now, this may sound like a daunting process, but in reality it only takes a bit of diligence and minimal organization skills to start building your credit today.

 

Secured Credit Card

A secured credit card is one of the easiest ways to build credit in a low-risk manner. Secured credit cards work like debit cards. Most secured credit cards will ask for a minimum balance before issuing your card in exchange for a limited credit line. If a secured credit card has a deposit of $150, they may cap you at a $200 credit line. Over time you can put more money on the card for an increased credit line. When you apply for a secured credit card, make sure that you understand the terms and know when and how much you need to pay each month to keep growing your credit. Use your secured credit card to pay for one or two reoccurring bills each month, just like you would with your checking account. This will help to steadily build your credit over time.

 

Pay On Time

If you have any kind of loan, prioritize payment immediately and pay on time every month. Late payments can add up and become derogatory marks on your credit history. This can dramatically lower your credit score if you’ve already got a thin credit history. If you know you will be behind on a payment, reach out to the creditor to make arrangements to get back on track as soon as possible. Late payment history can stay on your credit history for up to 7 years.

 

Make Micropayments

By making more frequent payments throughout the month, you can keep your credit card balances down and improve your credit score.

 

Become An Authorized User

By becoming an authorized user on the account of someone who has a great credit history, you can improve your own scores. This person will generally be a relative or spouse. They do not need to give you your own card, you do not need to have any access to the account or ever use it to be an authorized user. This will fatten up a thin credit history quickly.

 

Request Higher Credit Limits

By raising your credit limit while keeping your balance the same, you can lower your credit use and increase your score without making any big changes to your budget. Make sure you’re maintaining the same credit -building and positive personal finance habits.

 

Keep Credit Cards Open

When you pay off a big credit card debt, your instinct may be to close the credit card to avoid getting into debt again. This is counterproductive to credit building and can have a negative effect on your credit. Keep the credit line open, put one reoccurring bill on the credit card to keep raising your credit score.

 

Building or repairing credit can seem overwhelming, but with a few small changes and the right mindset, you can make a big impact on your credit score relatively quickly.

Building Credit

The American economy runs on credit. You need good credit to get a car loan, a mortgage, or any other big- ticket purchase. Your credit score will affect your interest rates as well. Unless you’re a trust fund kid, it’s likely you will need to take out a loan at some point in your life. Credit also factors into your ability to rent a home, get certain jobs, and how you set up utilities. Whether you’re just starting out with no credit or attempting to fix a poor credit history, these basic steps will set you up for success.

 

Secured Credit Card

A secured credit card is a great way to begin building credit with minimal risk. Secured credit cards work similarly to debit cards. Most secured credit cards will ask for a minimum of $200 balance before issuing your card, though some have lower minimums, in exchange for a limited credit line. If a secured credit card has a deposit of $200, they may cap you at a $200 credit line. Over time you may put more money on the card for an increased credit line. When applying for a secured credit card, ensure that you understand the terms and know when and how much you need to pay each month to keep growing your positive credit. Use your secured credit card to pay for one or two reoccurring bills each month, just as you would with an automated payment from your checking account. This will help to steadily build your credit over time.

 

Pay On Time

If you have student loans, a car loan or any other loans, prioritize them immediately and pay them on time each and every month. Late payments can add up and will become derogatory marks on your credit score. If you know you will be behind on a payment, reach out to the creditor to make arrangements to get back on track as soon as possible. Late payment history can stay on your credit history for up to 7 years.

 

Make Micropayments

By making more frequent payments throughout the month, you are able to keep your credit card balances down and will improve your credit score.

 

Request Higher Credit Limits

By raising your credit limit, but keeping your balance the same, you can lower your credit utilization and increase your score without making major changes to your budget or lifestyle. Make sure you’re maintaining the same healthy credit habits. Do not use higher limits as a way of living above your means. This is how people end up with overwhelming credit card debt and even poorer credit scores.

 

Become An Authorized User

By becoming an authorized user on the account of someone who has stellar credit, you can improve your own scores. This person will generally be a relative or spouse. They do not need to give you your own card, you do not need to have any access to the account or ever use it to be an authorized user. This will fatten up a meager credit history quickly.

 

Keep Credit Cards Open

If you’ve paid off large credit card debt, you may want to wash your hands of it and close the credit card. This can actually have a negative effect on your credit. Keep the credit line open, put one reoccurring bill on the credit card to keep building your credit.

 

Building or repairing credit can seem daunting, but with a few small changes and the right mindset, you can make a big impact on your credit score.

Student Loan Forbearance and What It means For You

His first day on the job, President Joe Biden signed an executive order that directed the Education Department to extend its freeze on payments and interest rates for federally held student loans through September 30,2021.

What Does The Forbearance Entail?

The executive order extends the administrative order originating in the CARES Act of 2020. Interest rates will continue to be set at 0%. All payments will remain suspended until the order ends on September 30, 2021.

What It Means For You

 If you have a student loan owned by the US Department of Education, including Direct Loans, subsidized and unsubsidized Safford loans, Parent and Graduate Plus loans or consolidation loans, you do not need to make student loan payments until the forbearance ends. You will not be penalized for non-payment, you will not accrue interest during this time.

If your Federal Family Education Loan (FFEL) or Perkins loan is held by the government, you are also included in the forbearance. NOTE: The majority of FFEL and Perkins loans are commercially held. Commercially held loans are not included in the forbearance. Know who holds your loan so that you are not hit with late fees and interest if your loan is not covered by the forbearance. If your loan does not fall under the umbrella of the executive order, you are still responsible for paying your monthly student loan payment.

Under the executive order, collections on defaulted loans has been halted until September 30, 2021. If you receive calls from collections, ensure your loan is covered by the executive order and inform them of their mistake and end the call.

This extension of this executive order is a much-needed reprieve for the millions of Americans who have been impacted economically this past year. With more financial wiggle room, you can budget accordingly!

What You Need To Know About Stimulus Checks

Though the details of the relief package are still being hammered out in Washington, D.C., there are some key details available that will help you prepare for the future.

 

Are stimulus checks taxable?

The stimulus checks from 2020, as well as the one potentially coming your way in 2021, are not taxable. They will not be counted as income, they will not affect your refund either.

 

Will eligibility change?

The criteria for receiving a check may change, as Democrats have proposed sending $1400 to individuals earning $50,000 or less and $2800 to couples earning $100,00 or less, with an additional $1400 per child. Head of Household earning up to $75,000 would also qualify. Checks will likely be based off of adjusted gross income, as the previous checks were. Lawmakers are exploring basing eligibility for the stimulus on 2020 earnings rather than 2019 earnings, which means more relief for many families that have been economically impacted during 2020.

 

What about partial payouts?

If you earn slightly above the cap, you can still apply for a partial payment.

 

Who benefits?

Approximately %71 of Americans would get the full benefits and %17 would receive partial benefits.

 

What about children and dependents?

Democrats are pushing a separate child tax benefit that would provide $3,600 over the course of a year for children under age 6, $3,000 for children age 6-17.  Adults who can be claimed as dependents, such as college students were excluded in the last stimulus efforts and may be excluded this time around as well, though it is not a foregone conclusion. Lawmakers are still negotiating the scope of the package.

 

When will checks be sent out?

Payments will not be released until Congress passes the broad relief package. Democratic leaders have indicated they will move quickly to complete this process and aim to finalize legislation by mid-March, when millions of unemployed Americans would lose unemployment benefits.

How To Fix A Failing Budget

Budgets fail for a multitude of reasons. Maybe you’re not hitting your savings goal, or falling short on debt repayment. Perhaps you’ve been trying to budget for a while and realize that you’re constantly short at the end of the month and paycheck-to-paycheck just isn’t cutting it anymore. Regardless of why your budget is failing, it’s time for a change. Here’s our tips on how to make effective changes to make it through the month and set money aside for life’s curve balls!

 

  1. Prioritize

Not many people enjoy the idea of sitting down and budgeting. But ignoring the process won’t get you out of the hole. Set aside time weekly. Schedule it in. Figure out what tools you want to use to budget. Whether it’s an app or an Excel spread sheet, or a good old notebook and paper, dedicate time and space to start working out what’s gone wrong so you can get back on track.

  1. Reassess

If your budget goals are unrealistic, you won’t be able to stick to it and you won’t get ahead. Reassess everything. Get back to basics and spend a month tracking your spending habits, bills, everything. Figure out where you’re falling short and sit with it for a minute. It’s a good idea to keep up this habit monthly, as money won’t go unaccounted for and you’ll be more aware of where it’s going and how much you actually have.

  1. Redefine Your Needs and Wants

If your needs are met, shift your ideas about what you want. If the money you’ve allotted to savings is being spent on take-out instead, determine if you need to reduce your savings goal or if you would rather reduce the frequency you pick up dinner on the way home. Readjust accordingly. There’s no shame in wanting to indulge, as long as your needs are covered. Make savings a need rather than a want.

  1. Live Within Your Means

If you’re putting yourself into debt each month to keep up with The Jones’, it’s time to stop hanging out with The Jones’. Cut back and live below your means to ensure you’re able meet your goals. A little sacrifice now may save you the risk of bankruptcy when something unexpected pops up in life.

  1. Change With The Times

If a household member has lost hours or lost a job entirely, or gained hours or a new job, you need to rework your budget. When gas and food prices fluctuate, you need to be aware of it and adjust the budget accordingly. If you’re working from home full time now, budget up the money you’re saving now that you’ve no longer got an hour-long commute. Make room for these changes and keep up on what’s going on in the world so you don’t find yourself slack-jawed with sticker shock.

A failing budget isn’t the end of the world as long as you don’t ignore it. Make changes, try out the new budget and review it at the end of the month to make sure the changes are working for you. If not, go through the process again. You’ll figure out what works and what doesn’t for your circumstances and you’ll feel less stressed out by being proactive about it!