Category Archives: Articles

How Your Tax Refund Can Help Your Financial Goals

Average tax refund last year: $2,700Nobody likes taxes. Have you seen the new commercial for tax software or tax preparers? They make it sound all fun and easy…like some kind of party: ”You did so much crazy, awesome stuff. So, we’re pretty sure you can answer questions about those things and file your taxes on your own.” Another claims: “Get Your Billion Back!”

Well, for one thing, you won’t get a billion dollars back, and did you really do some crazy, awesome stuff?

Maybe you used to…and are thankful every day that phones with cameras and social media did not exist back then…but last year? Not so much.

Worrying about taxes is an adult thing, and definitely not a party. Taxes are that dreadful thing that rears its ugly head. Every. Single. Year.

Some people can’t wait to get that tax refund. In fact, many count on it. According to a Fidelity survey, most Americans (75% of you) will get a refund…to the tune of $2,700 (See? Definitely not a billion dollars).

The good news is that most people say they will save or pay down debt with their tax refund.

Wait…save it? Pay off some debt? Psshhh…that’s not fun at all. Sounds like something Sandra Dee would do.

In fact, 33% said they intend to pay off debts and 46% plan to use the money for some kind of savings (retirement, college, etc). Such a responsible bunch…you know the type…Teacher’s pet. Goody-two shoes. Responsible citizen.

Yes, people want to be responsible financially…no one wants to be debt. These statistics are the light at the end of the tunnel. Individuals and families want control of their financial situation. They want financial health.

Start the ball rolling with your tax refund. According to creditcard.com, the average credit card debt per U.S. adult is $4,878. With your $2,700, you could cut away good chunk of that debt…and be on your way to that billion dollars…all on your own.

Pay Down Debt With These Four Letter Words

Oops. Are we not supposed to talk about four letter words?

No, not those four letter words. These are words you can say out loud and on regular television, and they won’t get you a trip to the principal’s office. Words like debt, more, high and time. See? Innocent four letter words.

Let’s start with DEBT:

$15,270.

It’s the price of a 1.13 carat round brilliant flawless finish diamond or a used 2008 Nissan Pathfinder.

It’s also how much the average American household owes in credit card debt (according to NerdWallet.com).

Seem like a lot? Yeah, well, swipe and spend is as American as burgers and fries.

Do you know how long it will take for you to pay down a $15,000 credit card debt?

We didn’t think so, which is why we did it for you using this handy-dandy calculator. This graph shows $15,000 debt, at 18% APR and only paying the minimum payment. In this instance, the minimum payment is calculated at 4% of the balance, which comes to $600 for the first payment. As debt is paid down, the minimum payment is reduced as well.
$15,000 credit card debt paying minimum payment
Wait…that said 14 YEARS. Yes, my friend, it did.

Now, let’s add $25 to the minimum payment, which means you are paying $625 per month, and we’ll continue paying $625 until the debt is gone.
$15,000 credit card debt paying $25 more than minimum balance

I don’t know about you, but two years sounds a whole heckavu lot better than 14 years. Fourteen years is twice as long as the average marriage in America. It’s also about how long a kid has been in school by the time he or she graduates from high school. You remember how long THAT was, right?

Oh, and did you happen to notice how much you’ll save in interest just by paying $25 more per month? (About $5,000, if you are wondering).

One more thing: These amounts are based on the fact that you aren’t ADDING to the debt.

So, let’s nip this in the bud. The above shows that by paying a little bit MORE toward your credit card DEBT can be extremely beneficial. Those are the first of your four-letter words!

Here’s the rest:

HIGH: Got a card with a high interest rate? Pay off that card first, even if other credit cards have larger debt. And in case you didn’t get it the first time, the more you pay, the quicker the debt goes away.

TIME: This is a no brainer. Make your payments on time. Making a late payment could result in a fee. And being 60 days overdue could result in a late penalty fee, which increases your interest rate on that card, and possibly your other cards too! That’s blasphemy! I know, right? But it’s true. Pay on time, people.

Debt, more, high and time. Four letter words that can actually get you out of (financial) trouble.

New Year’s Resolutions Focus on Finances

The ball has dropped, the party hats worn, and the champagne bottle is empty. Bid farewell to 2013, and wave hello to 2014.

With the new year comes a fresh start. A new page. New resolutions.

According to a survey by GoBanking.com, saving money and paying down debt were the most popular financially related New Year’s resolutions. And according to a Dec. 30 Forbes post, the resolution to pay down debt has tripled since 2010.

Go Banking Top Financial Goals
What’s interesting is that when the responses are broken down by income level, both the lowest income bracket ($0-$24,000) and one of the highest ($100,000-$149,000) reported the highest response rate to both saving money and paying down debt.

This reveals that financial issues affect all income levels, and not just those on the lower end of the income ladder.

Saving Money
The 52 Week Money Challenge seems to be a popular and simple way to save money over a year. Each week, put away the designated amount of money. Easy peasy lemon squeezy!
52 Week Challendge
Paying Down Debt
To jump-start your effort to pay down debt, try paying just $20 more on your credit card bills, loan payments or medical bills. You will be amazed at how fast this little bit adds up.

For example, if you owe $3,300 on a credit card at a 14.96% interest rate, it will take almost 20 YEARS to pay off the debt if you only pay the minimum balance. And it will cost you $7,600! That’s more than double the amount of the debt. By paying just $20 more than the minimum amount, you pay off that card in four and half years, plus you will save about $3,000 in interest fees.

Already Over Budget For the Holidays?

Control Holiday SpendingThe holidays are upon us, and so is the season of overeating and overspending. Although the average person only gains two to five pounds during the holidays, that same person may pile on 40 percent more debt on their credit cards during that same time.

And here’s another statistic: the average consumer will spend $786 on holiday gifts this year, and 30% will spend more than $1000. Do you have an extra $700 laying around this month?

It’s a bit late to do anything about this year’s holiday spending, but let’s talk about what you can do next year. How about a Christmas Club account at your local credit union? If you start your 2014 holiday saving next month, you can save for the holidays a little at a time, which is way better than racking up your credit cards the last month of the year.

According to this article in The Wichita Eagle, Christmas Club accounts (and layaway options at retails stores) used to be popular avenues to keep holiday spending under control.

“More than four decades ago, layaway was a common method used by consumers to pay for holiday gifts. So, too, were Christmas Club savings accounts, which allowed consumers to routinely set aside a certain amount of money and, at the end of a 12-month period, withdraw the amount they had saved plus interest, then use that to pay for Christmas.”

So, to keep you in the black for next holidays season, determine your budget for the holidays, and start setting aside money monthly in January. These funds should be in addition to your regular savings goals and budget requirements.

Yes, we know it’s hard, especially when those holidays bills start rolling in. Keep in mind you may need to cut back on your spending for a few months to get yourself back on track…just like you’ll need to cut back on those holiday sweets so you can quit wearing those sweatpants.

By starting your holiday saving now, you won’t put yourself into holiday debt then and the holidays might be more enjoyable for you.

As for the overeating…well, we can’t help you with that!

2013 Debt Statistics

More than two million Americans sought the help of a financial counselor in 2013.

Here’s why: According to this cool infographic (from our friends at Advantage Credit Counseling Service), the average client seeking help had $43,000 in debt.

2013 Debt Statistics for US Consumers

Explore more infographics like this one on the web’s largest information design community – Visually.

Millennials Carrying Less Debt, But Have Trouble Paying Bills

Although Millennials have fewer credit cards than older generations, and a lower credit card balance than the national average, they are struggling to pay bills.

According to this Wall Street Journal article, here is a breakdown of number of credit cards (on average) by generation:

  • Millennials: (ages 19 to 29): 1.5 credit cards
  • Gen X (ages 30 to 46): 2 credit cards
  • Baby Boomers (ages 47-65): 2.7 cards of Baby Boomers

Millennials: also carry less less debt:

  • Millennials: $2,700
  • National average: $4,500
  • Gen X and Baby Boomers (ages 30-65) $5,300

According to the article, Millennials appear to struggle with paying their bills (and it doesn’t matter if it’s credit cards, auto loans, or student loans). Millennials also have “the worst credit habits.”

Read more:
Wall Street Journal: Millennials Wary of Borrowing, Struggle With Debt Management