Quick Tip: Debt Warning Signs

Destroying your debt doesn’t have to take hours. Watch our 15 second tips and then be on your merry way. These tips also air on KAKE-TV’s (ABC, Wichita, KS) regularly.

View all our quick tips.  Follow along on social media at #moneypossible.

Debt Warning Signs


While it may seem that your debt crept up on you, there are warning signs like revolving balances on your credit cards, no emergency fund or relying on payday loans to cover monthly bills.

20 Things Kids Should Know About Finances

dollars and coinsWe ran across two great posts about what you can teach your kids about money. Remember, they watch you and many times your habits become their habits, and you want them to become super star money managers, right?

Our friends at Go Girl Finances wrote 10 Things You Should Teach Your Kids About Money, and 10 More Things You Should Teach Your Kids About Money.

These aren’t the tired “have your kids save earnings in a piggy bank” or “create a budget with your child.”

These are better, and quite frankly, more relevant in today’s society.

Things like

  • Very Few Things in Life Are Free
  • Credit Cards Are Not Play Money
  • If It Sounds Too Good to Be True, It Probably Is
  • Money Cannot Buy Happiness (or Friends)
  • Advertising Is Not the Same as News
  • Uncle Sam Demands His Share

Head on over to the posts to read them in their entirety.

10 Things You Should Teach Your Kids About Money
10 More Things You Should Teach Your Kids About Money

 

Quick Tip: Wasteful Spending

Destroying your debt doesn’t have to take hours. Watch our 15 second tips and then be on your merry way. These tips also air on KAKE-TV’s (ABC, Wichita, KS) regularly.

View all our quick tips.  Follow along on social media at #moneypossible.

Wasteful Spending

Wasteful spending is something that most people don’t think about. Things like buying name brand instead of a “just as good” generic brand or missing bill payments and paying late fees can add up.

The Good (Debt), The Bad (Debt) and The Ugly

Good debt vs. bad debtWe’ve been saying that “debt” is a four-letter word.

We’ve been preaching about paying down your debt. We’ve been scolding you for being IN debt. And we’ve been teaching our students they don’t WANT debt.

We lied. Only SOME debt is bad.

Like an episode from Ripley’s Believe It or Not, some debt actually helps your credit score.

But first, the 15 second rundown: What’s a credit score/credit report?

  • A credit report includes your credit score and states when and where you applied for credit, who you borrowed money from, and who you owe money to.
  • Creditors and employers use credit reports to evaluate your applications for credit, insurance and employment.
  • Good credit is essential for things like qualifying for a loan.
  • Bad credit can hinder your ability to borrow money.

(There’s more about credit reports on page 20 of the Money Possible workbook.)

Got it? On to our favorite four-letter word.

Bad debt.
Equifax said it best: Bad debt funds a lifestyle you can’t afford.

In other words, live within in your means. (Fredica has learned to do this…Go Fredica!)

Bad debt is using a high interest credit card and failing to pay it off IN FULL each month. Bad debt is owning store credit cards because you just can’t help yourself in Pottery Barn or Restoration Hardware. Bad debt is falling behind in your payments.

Good debt.
Good debt is investments that create value for you, like school loans and mortgages. Your home’s value will probably increase over time, and your education will likely land you a better job.

(Think your Pottery Barn apothecary cabinet “creates value” for you? It doesn’t, and you need to read “Needs vs. Wants.”)

Since most people can’t pay for hefty tuitions or buy a house with cash, they borrow money, and make monthly payments to pay off the loan. Good debt is debt you pay back ON TIME each month.

One thing to remember: Good debt comes after you have enough cushion in your savings.

The ugly: How does good debt and bad debt affect your credit report?
Your borrowing history, including the type of debt and pay back history, is listed in your credit report and impacts your credit score. In fact, 35 percent of your score is based on your payment history alone.

What does this mean?

  • Pay your bills on time and borrow wisely. Period.
  • Missing just one payment or paying late can turn your credit score ugly real fast.
  • Don’t add a bunch of new debt before paying down old debt. That’s making a mountain out of a molehill.
  • Be responsible and show creditors “I got this” by applying for credit only when necessary.

Long story short…not all debt can get you into trouble. Think about why you have debt and use your borrowing power wisely. And just like everything else…it takes time to improve your credit if it’s bad, but it’s doable. Budgeting, saving and living within your means are the keys to a great credit score.

Quick Tip: On Time Payments

Destroying your debt doesn’t have to take hours. Watch our 15 second tips and then be on your merry way. These tips also air on KAKE-TV’s (ABC, Wichita, KS) regularly.

View all our quick tips.  Follow along on social media at #moneypossible.

On Time Payments

By making credit card payments on time, you can save $30-35 per month in late fees which could free up an extra $500 a year.

The Freshman $30,000

We took an informal poll last month regarding your grade in financial literacy. The majority of US adults give themselves a C or lower in money smarts. Either smart people took our poll or you think you manage your money better than you do, because the majority of the respondents gave themselves a B. See the poll results.

Education SavingsIn light of this being the graduation season, and the fact that we ran across a survey that said students wished they learned more financial management in school, this post will be about how kids (or their parents) can become be money smart at school.

Forget the “Freshman 15.” We need to worry about the “Freshman $30,000.” The average student graduates with close to $30,000 in debt. That’s a lot of financial weight.

Students are screaming for education in how to manage their money. Some states require a class in financial education to graduate, but many do not. And just ONE class? We all know it takes more than that to get through to a teenager!

This is where parents need to step up and teach their kids. Or find somewhere that can…like a credit union or consumer credit counseling service.

Here’s why: First-year college students required to take a financial literacy course in high school are more financially responsible than those students who didn’t take the class, a recent study found. This means they were more likely to pay credit card bills on time and less likely to go over their credit limit. Both of those add up to less debt. But just 17 states require a course. And ongoing education is critical.

Our friends at A Smarter Choice have some good tips to get students started on the right foot. Here is a scaled down version of their blog post Get Started on the Right Financial Footing.

Stay frugal. Be mindful of what you’re spending. Check with your gym, and cellphone and cable providers, to make sure you’re getting the best rates. Pack lunches from home. Have friends over for dinner and movies instead of going out.

Negotiate your pay. Starting out with a higher salary will mean higher earnings over the course of your career.

Build an emergency fund. Prepare for the unexpected by setting up an emergency savings account and have your paycheck directly deposited into that account. You should have three to six months of living expenses saved. For real.

Start saving for retirement now. If your job offers a 401(k) or similar retirement savings accounts, put money into it! Even better is if your employer offers to match a percentage of your contributions. Your 50 year-old-self will think you were super smart for doing that.

Pay down student loan debt. Know what you owe and contact your lender immediately–before the due date–if you’re going to miss a payment. Pay extra if you can.

Use credit appropriately. A strong credit history will pay off when you want to buy a house or purchase other big-ticket items (the new iPhone 6 doesn’t count). Here’s the biggest piece of advice that you don’t really want to hear: Don’t charge more than you can afford to pay off monthly! And please, pay your bill on time. Spending too much and having late payments can get you in a heap of trouble…and fast.

College students are smarter, but have more on their plate than in years past. Make financial education a requirement for them, and maybe as an adult, they’ll be shedding that $30,000 before swimsuit season.

Quick Tip: Track Your Spending

Destroying your debt doesn’t have to take hours. Watch our 15 second tips and then be on your merry way. These tips also air on KAKE-TV’s (ABC, Wichita, KS) regularly.

View all our quick tips.  Follow along on social media at #moneypossible.

Planning & Setting Goals

You can’t save money, or pay down your debt, if you don’t know what you’re spending. Download an app or go old-school with paper, pencil and a worksheet.