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Does IRS Debt Show On Your Credit Report?

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Does IRS Debt Show On Your Credit Report?

<p>irs debt credit report</p>::Pexels

 

Many individuals are often concerned about how different types of debts can impact their credit scores and financial future. Among the most common queries is whether or not IRS debt shows up on a credit report. This is a valid concern, as credit reports are a reflection of one’s financial health and can influence everything from loan approvals to job applications.

 

Today, we’ll delve deep into the relationship between IRS debt and your credit report and uncover some key facts.

 

Consulting A Tax Professional Can Make A Difference

 

Navigating the intricate web of IRS debt can be daunting for many individuals. Given the complexities and potential repercussions of unresolved tax debts, seeking the counsel of a tax professional becomes not just beneficial but almost essential.

 

For example, Tax Law Advocates offers a trained eye that can spot nuances in your tax situation that you might overlook, ensuring that you’re not only compliant but also maximizing your financial strategy.

 

Tax professionals are well-versed in the multifaceted world of tax laws. Their knowledge extends far beyond mere numbers; they understand the implications of these figures, the potential pitfalls, and the best strategies to employ. They can be your guiding light in the otherwise dark maze of tax jargon, deadlines, and procedures.

 

Another advantage of consulting a tax expert is their experience in dealing directly with the IRS. Oftentimes, taxpayers can feel overwhelmed or even intimidated by the idea of communicating with this formidable agency. A seasoned tax professional, however, knows the intricacies of IRS processes, its expectations, and the best negotiation tactics. Their expertise can mean the difference between a favorable resolution and a costly mistake.

 

The Direct Impact Of IRS Debt on Your Credit Report

<p>irs debt credit report 2</p>::Pexels

 

Historically, the IRS used to report tax liens on an individual’s credit report, which could seriously damage their credit score. However, as of 2018, the three major credit bureaus, namely Equifax, Experian, and TransUnion, stopped including tax liens on credit reports. This change was initiated due to numerous errors and discrepancies associated with lien reporting.

 

Now, the IRS itself does not directly report your tax debts to these credit bureaus. That said, unresolved IRS debts can indirectly influence your credit. Opting for a loan to pay off the IRS debt will introduce a new line of credit, which will be reflected on your credit report.

 

Tax Liens Can Still Be Problematic

 

Even though tax liens no longer appear on credit reports, they still present other financial challenges. If the IRS places a tax lien against your assets due to unpaid taxes, it essentially gains a legal claim to your property.

 

This can be problematic if you’re trying to sell your assets or use them as collateral for a loan. While the lien itself won’t show up on your credit report, lenders might find out about it during their due diligence, which could influence their lending decision.

 

Potential Consequences Of Unresolved IRS Debt

 

<p>irs debt credit report 3</p>::Pexels

 

Apart from potential tax liens, not addressing your IRS debts can lead to other unfavorable outcomes:

 

  • Garnished Wages: The IRS has the authority to garnish your wages if you have unpaid taxes. This means they can directly take a portion of your earnings until the debt is settled.
  • Seized Assets: In extreme cases, the IRS can seize your assets, such as property or bank accounts, to cover the unpaid taxes.
  • Loss of Passport: For individuals with a significant tax debt (usually over a certain threshold, which may change over time), the IRS can inform the State Department, potentially leading to the denial or revocation of your passport.

 

Taking Proactive Steps Can Avoid Credit Complications

 

If you find yourself owing money to the IRS, taking proactive steps can help mitigate potential credit complications:

 

  • Installment Agreements: The IRS often allows taxpayers to set up installment agreements, enabling them to pay off their debts over time. While this agreement itself doesn’t appear on your credit report, it helps avoid further actions like wage garnishments or asset seizures.
  • Offer in Compromise: This is an arrangement where the IRS agrees to accept a lower amount than what is owed. However, it’s essential to note that not everyone qualifies for this, and it’s often recommended to consult with a tax professional before proceeding.

 

In Conclusion

While IRS debts do not directly appear on your credit report, they can still indirectly influence your financial health. Ignoring or postponing action on these debts can lead to more significant problems, such as wage garnishments, asset seizures, or travel restrictions.

Understanding how the IRS operates and taking proactive measures can make a world of difference. Whether it’s setting up installment agreements, negotiating offers in compromise, or simply staying informed about your rights, every step helps in safeguarding your financial future. Remember, when in doubt, it’s always a good idea to seek the expertise of a tax professional. They can provide insights, offer solutions, and be your advocate in navigating the intricate world of taxes.

 

 

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Financial Spring Cleaning: How to Clean Up Your Budget

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<p>Most people think about clearing out their closets when "spring cleaning" comes to mind. While I suggest everybody do that a couple of times a year, your spring cleaning routine should also apply to your finances. Here are some ways that you can spruce up your budget this season.</p>::Pexels

Most people think about clearing out their closets when “spring cleaning” comes to mind. While I suggest everybody do that a couple of times a year, your spring cleaning routine should also apply to your finances. Here are some ways that you can spruce up your budget this season.

Make Sure It’s Working

First and foremost, you need to make sure that your current budget is working for you. If it has been a while since you’ve done any financial spring cleaning, then it is likely you need to make some significant changes to your budget. You want to make sure it works for your current lifestyle. It also needs to help contribute to your larger financial goals – whatever they may be.

If your budget isn’t working for you anymore, don’t be afraid to scrap it and start from scratch! There is nothing better than a clean, blank slate to help you get back on track.

Consider Additional Budget Items

After you’ve considered whether or not your current budget is working for you, start thinking about things that you’d add to make your life easier. I know this isn’t necessarily what people think of when they think “spring cleaning.” Normally, you think about purging items from your home and decluttering. However, you should also consider what might make it easier to keep clean and organized throughout the rest of the year.

For instance, we added some organization products to our closet and it stays more tidy throughout the year. Similarly, with your budget, if you plan for things like vacation or allocate money to areas that make your life easier, it will work in your favor.

Get Rid of Things You Don’t Need

You shouldn’t only be adding things to your budget though. Just like cleaning out your closet, you need to get rid of things you don’t need too. Chances are, you probably don’t need all of those streaming services. You probably also don’t need a $6 coffee every single day. Look for areas where you might be able to cut/trim costs and make those changes.

Don’t Forget to Save

If you’re like me, you get a little too excited about that last step (getting rid of things). I’m addicted to throwing things out (seriously). Oftentimes, I’ll wind up tossing things I could have used or things I shouldn’t have thrown away at all. Saving is important too. It deserves a line on your budget.

Organize in a Way That Works for You

At the end of the day, your budget will look different than someone else’s. This is because it is designed to work for you. The same way you organize the pantry after cleaning it out applies to your finances. You want to make sure the things you use the most are accessible. More than that, you want to make sure it is functional. After a bit of financial spring cleaning, you should have a clear idea of your goals and budget.

 

The Best Credit Card for Everyday Spending for Families

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<p>Credit where credit's due. There are some great deals around which can really help stretch your budget. When you're juggling the expenses of a family, your plastic friend can really become one of your best friends.</p>::Pexels

Credit where credit’s due. There are some great deals around which can really help stretch your budget. When you’re juggling the expenses of a family, your plastic friend can really become one of your best friends.

There is one vital thing to be careful about though. You need to make sure you can pay off the balance every month and in full. That way you won’t incur interest and you won’t run up debt. Budget carefully and be wary of payday loans.

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Try This $10000 Biweekly 26 Week Money Challenge to Crush Your Debt

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<p>The Biweekly 26 Weeks Money Challenge is the perfect way to start your savings journey and reach your financial goals. Saving money can be overwhelming for some, but with this challenge, you'll be able to save a significant amount without feeling the pinch. If you haven't done so already, click here to check out our article on the ins and outs of the challenge.</p>::Pexels

 

The Biweekly 26 Weeks Money Challenge is the perfect way to start your savings journey and reach your financial goals. Saving money can be overwhelming for some, but with this challenge, you’ll be able to save a significant amount without feeling the pinch. If you haven’t done so already, click here to check out our article on the ins and outs of the challenge.

 

 

How to Save $10000 Using the Biweekly 26 Week Money Challenge

Saving $10000 using the biweekly 26 week money challenge is easier than you think. If you divide $10,000 by a 26, your answer is rounded to 385. So essentially, you’ll need to save $385 every two weeks to end up with $10,000 at the end of the 12-month period.

There are many different ways to approach reaching your goal of $10,000. The key parts of the 26 week savings challenge are your initial investment amount and the increments in which you add to your savings every two weeks. Use this free printable biweekly 26 week money challenge PDF to log your progress. Here are the steps to reach your goal:

Option 1:

Start with savings of $265 for the first period.

You will use increments of $10 every two weeks. So for the next 2-week period, you’ll add $275 ($265 + $10) to your savings.

The next 2-week period you’ll add $285 ($275 + $10) to your savings.

Continue this process for 26 2-week period and you’ll find yourself with $10,140 in a year.

 

Option 2:

Start with savings of $350  for the first period.

You will use increments of $3 every two weeks. So for the next 2-week period, you’ll add $353 ($350 + $3) to your savings.

The next 2-week period you’ll add $356 ($353 + $3) to your savings.

Continue this process for 26 2-week period and you’ll find yourself with $10,075 in a year.

 

How to Save $5000 Using the Biweekly 26 Week Money Challenge 

A goal of 0$10000 may be a bit much for our first time at the challenge If your salary or debt reduction plans only allow for a more conservative challenge, don’t be discouraged. Try this method to make $5000 using biweekly 26 week savings challenge.

Option 1:

Start with savings of $155 for the first period.

You will use increments of $3 every 2 weeks. So for the next 2-week period, you’ll add $158 ($155 + $3) to your savings.

The next 2-week period you’ll add $161 ($158 + $3) to your savings.

Continue this process for 26 2-week period and you’ll find yourself with an extra $5,005 in a year.

 

Option 2:

Start with savings of $93 for the first period.

You will use increments of $8 every two weeks. So for the next 2-week period, you’ll add $101 ($93 + $8) to your savings.

The next 2-week period you’ll add $109 ($101 + $8) to your savings.

Continue this process for 26 2-week period and you’ll find yourself with an extra $5,018 in a year.

 

 

Tracking Your Progress and Staying Motivated

Tracking your progress is essential to staying motivated and accountable during the 26 Week Money Challenge. Here are a few ways to track your savings and stay on top of your progress:

 

  • Savings Tracker Apps: Use a savings tracker app to monitor your savings and track your progress. These apps often have features that allow you to set savings goals, customize your savings plan, and visualize your progress.

 

  • Paper Tracker: If you prefer a more hands-on approach, create a paper tracker. This can be as simple as a calendar where you mark off each week as you save. Seeing your progress on paper can be incredibly motivating. Use our free printable biweekly 26 week money challenge PDF

 

  • Visual Representation: Create a visual representation of your savings goal. For example, if you’re saving for a vacation, create a vision board with pictures of your dream destination. Place it somewhere visible to remind yourself of your goal.

 

Common Mistakes to Avoid During The Biweekly 26 Week Savings Challenge

While the 52 Week Money Challenge is a fantastic savings strategy, there are a few common mistakes that you should be aware of to ensure your success:

  • Carelessly Skipping Weeks or Pay Periods: Avoid skipping weeks or falling behind on your savings. Consistency is key to building momentum and reaching your savings goal.

 

  • Not Adjusting for Budget Changes: Life happens, and your budget may change throughout the year. Do your best to avoid payday loans with extremely high interest rates. Make sure to adjust your allocation if necessary to accommodate any financial changes. Pay off any debt that may be negatively affecting you credit score. Self Inc is a great tool to build your credit while creating a savings next egg.

 

  • Not Playing Catch-up: If you get off track due to budget changes or any unforeseen circumstances, make every effort to catch up with your saving and continue on your journey to $5,000 or $10,000. There are a large number of side hustle opportunities out there if you’re lookin for extra funds to add to your savings. For examples, you can get paid to write articles and blog posts or even testing apps and writing reviews.

 

  • Dipping into the Savings: Resist the temptation to dip into your savings for non-essential purchases. Remember your goals and stay committed to the challenge.

 

  • Not Celebrating Milestones: Celebrate your savings milestones along the way. Recognize and reward yourself for your progress to keep motivation high.

 

Whether you’re saving for a dream vacation, a down payment on a house, or simply want to boost your emergency fund, this challenge is a fantastic way to kickstart your savings journey. Opening a Webull account and using your savings to earn dividends on your favorite stocks is another great way to put it to use. If you need help building credit while building a savings nest egg, check out this article.

 

If you’re looking to add even more wealth in the form of interest to your 26 week savings plan, check out Raisin for single sign on access to FDIC insured institutions offering high-yield interest rates above 5%.  I like Raisin.com for its easy to use interface and access to multiple institutions to diversify your funds without creating multiple accounts across different banks. There is also no penalty for removing your funds early. Click here and enter my referral code earlm014354 to earn up to $125 in bonus cash when you sign up and meet the deposit requirements.

 

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What is the Biweekly 26 Week Money Challenge?

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<p>Looking to have more control over your finances and put away more money? The Biweekly 26 Weeks Money Challenge, or the 26 Week Savings Challenge as it is sometimes called, is an excellent way to reach your saving ambitions. In this thorough guide, we will show you how to accomplish this challenge step-by-step and monitor your savings grow. this guide is suitable for all levels of saving, from novice to experienced, and is designed to keep you on track, motivated, and make the most of investing your earned money.</p>::Pexels

 

Looking to have more control over your finances and put away more money? The Biweekly 26 Weeks Money Challenge, or the 26 Week Savings Challenge as it is sometimes called, is an excellent way to reach your saving ambitions. In this thorough guide, we will show you how to accomplish this challenge step-by-step and monitor your savings grow. this guide is suitable for all levels of saving, from novice to experienced, and is designed to keep you on track, motivated, and make the most of investing your earned money.

 

 

<p>test app</p>::Pexels

 

 

How does the Biweekly 26 Week Money Challenge Work?

A year’s worth of savings can be achieved with the 26 Weeks Money Challenge, a straightforward but powerful savings method. The idea is simple: for 52 weeks, you save a certain amount of money each two-week period. You can build up your savings in a manageable and sustainable way by starting small and gradually increasing it each week.

First, you will decide on an initial savings amount. This could be as low as $1 or as high as you like, but be realistic. The key is to pick an amount that is suitable for your financial circumstances . After determining your initial savings amount, you’ll follow a predetermined schedule that outlines how much you need to save each week.  Here’s an article on how to save 10,000 using the biweekly 26 week money challenge. 

The schedule typically follows a pattern during which you increase the savings amount incrementally every two weeks over a one year period. You may begin by saving $2 for the first two weeks, add $4 for the next two weeks, add another $6 for the third two weeks, and so on. In this case, you are incrementally adding $2 on your previously added savings amount per two-week period.

While not a Money Challenge, Self Inc offers a Credit Builder Account which allows you to build your savings and credit score at the same time by reporting your monthly deposits to the 3 big credit bureaus; Equifax, Experian, and TransUnion. The average user who make on-time payments can expect to see a credit score increase of 49 points. 

 

<p>write blog posts</p>::Pexels

 

Benefits of the 26 Week Money Challenge

There are many benefits to the biweekly 26 week savings challenge that will improve your financial situation and achieve your savings goals. Here are some advantages:

  • Builds discipline and consistency: The challenge requires you to save money consistently over a long period of time. By sticking to the schedule and saving each week, you’ll develop discipline and create a habit of saving. This can help you make smarter money decisions and keep your overall financial goals at the forefront of your mind when making purchases.

 

  • Help boost your savings by a large amount: Over the course of the challenge, the savings amount gradually increases, allowing you to accumulate a substantial sum of money if you’re consistent. By the end of the 26 week period, you’ll have boosted your emergency fund, savings account, or any other financial goal you have in mind.

 

  • Encourages financial awareness: The Biweekly 26 Weeks Savings Challenge requires you to track your progress and stay engaged with your finances. This increased awareness can help you identify areas where you can cut back on expenses, find opportunities to save more, and make better financial decisions overall.

 

 

 

Variations of the 26 Week Savings Challenge

The beauty of the 26 Week Money Challenge is that it can be customized to suit your preferences and financial situation. If you cannot adhere to the rules of the basic 26-week challenge method doesn’t resonate with your personality or budgeting goals at the time, there are other variations you can try. Here some of the more popular ones:

  • Simple 26 Week Money Challenge: This method uses 26 weeks or 6 months rather than a full year. Good for working towards a short-term goal or for individuals who are paid on a weekly basis and able to contribute more often.

 

  • Reverse 26 Week Money Challenge: In this variation, you start with the highest savings amount and gradually decrease it each week. This can be a great option if you want to front-load your savings or if you anticipate having more financial flexibility in the earlier weeks.

 

  • Double-Up Challenge: If you’re up for a more aggressive savings approach, you can double the savings amount each week. While this requires a higher level of commitment, it can result in significant savings by the end of the challenge.

 

  • Customized Challenge: Feel free to create your own version of the challenge that aligns with your specific goals and financial capabilities. You can modify the savings amounts, duration, or even add personal milestones along the way. The key is to make it work for you.

 

 

Tracking your progress during the 26 Week Money Challenge

Keeping track of your progress is essential to stay motivated and accountable throughout the 26 Weeks Money Challenge. Here are some effective ways to track your savings journey:

  • Use a savings tracker: Create a visual representation of your progress by using a savings tracker. This can be as simple as a spreadsheet or a dedicated savings tracking app. Update it each week to see how much you’ve saved and how close you are to reaching your goal. A clean copy of the free printable 26 Week Money Challenge PDF worksheet  can be downloaded here.

 

  • Celebrate milestones: Break down the challenge into smaller milestones and celebrate each one. For example, after saving for 10 weeks, treat yourself to a small reward or indulge in a favorite activity. Celebrating milestones can help maintain motivation and make the challenge more enjoyable.

 

  • Share your progress: Consider sharing your progress with friends, family, or even on social media. This can create a sense of accountability and support. You might even inspire others to take on their own savings challenges.

 

<p>write blog posts</p>::Pexels

Ways to stay motivated during the 26 Week Money Challenge

Staying motivated throughout the 26 Weeks Money Challenge is crucial for success. Here are some strategies to help you stay on track:

 

  • Visualize your goals: Create a visual representation of your savings goals. This could be a vision board, a picture of something you want to save for, or simply a written statement of what you hope to achieve. Keep it somewhere visible as a constant reminder of why you’re taking on the challenge.

 

  • Track your progress visually: As mentioned earlier, use a savings tracker to visually track your progress. Seeing your savings grow week by week can be incredibly motivating and reinforce your commitment to the challenge.

 

  • Find someone to keep you accountable: Share your goals and progress with a trusted friend or family member. Having someone to hold you accountable and provide support can make a significant difference in staying motivated. You can check in with each other regularly to share updates and offer encouragement.

 

  • Reward yourself: Set up rewards for reaching milestones or achieving specific savings targets. Treat yourself to something you enjoy or have been wanting as a way to celebrate your progress. Just make sure the rewards align with your overall financial goals and don’t derail your savings efforts.

 

 

<p>test app</p>::Pexels

 

 

Conclusion

Remember, the key to success in setting realistic goals, staying disciplined and consistent, and finding ways to stay motivated throughout the journey. With the right mindset and the tips, strategies, and resources provided, you’ll be well-equipped to make the most of the 26 Weeks Money Challenge and transform your financial future. The challenge is just one tool in your financial arsenal. Continue to build upon this success by setting new goals, exploring other savings strategies, and making smart financial decisions that align with your long-term objectives.

 

 

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Debt Free: Inspirational Money Quotes That Will Motivate You

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<p>Oftentimes, it is easy to get bogged down about what isn't going right with your finances. Maybe you've gone over budget and feel like you'll never get be debt free. In times like this, you need to find the motivation to keep pushing forward towards your financial goals. Here are the debt free quotes I turn to for inspiration to get back on track.</p>::Pexels

 

Oftentimes, it is easy to get bogged down about what isn’t going right with your finances. Maybe you’ve gone over budget and feel like you’ll never get be debt free. In times like this, you need to find the motivation to keep pushing forward towards your financial goals. Here are the debt free quotes I turn to for inspiration to get back on track.

 

10 Inspirational Debt Free Quotes

Whether you are looking for inspiration to get back on track or the motivation to get started, each of these money quotes has inspired me on my debt free journey.

“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” -Ayn Rand

<p>“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” -Ayn Rand</p>::Pexels

 

“Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.” – Johann Wolfgang von Goethe

<p>“Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.” – Johann Wolfgang von Goethe</p>::Pexels

 

“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.” – Dave Ramsey

<p>“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.” – Dave Ramsey</p>::Pexels

 

“A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.” – Suze Orman

<p>“A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.” – Suze Orman</p>::Pexels

 

“When you know the impact of little expenses, you will realize that there is nothing little in this world.” – Manoj Arora

<p>“When you know the impact of little expenses, you will realize that there is nothing little in this world.” – Manoj Arora</p>::Pexels

 

Click Here for 40 Funny Debt Free Quotes With a Twist to Keep You in Good Spirits

 

“It doesn’t matter how slowly you go, as long as you do not stop.” – Confucius

<p>“It doesn’t matter how slowly you go, as long as you do not stop.” – Confucius</p>::Pexels

 

“The journey of a thousand miles begins with one step.” – Lao Tzu

<p>“The journey of a thousand miles begins with one step.” – Lao Tzu</p>::Pexels

 

“It always seems impossible until it’s done.” – Nelson Mandela

<p>“It always seems impossible until it’s done.” – Nelson Mandelas</p>::Pexels

 

“Start where you are. Use what you have. Do what you can.” – Arthur Ashe

<p>“Start where you are. Use what you have. Do what you can.” – Arthur Ashe</p>::Pexels

 

“The secret of getting ahead is getting started.” – Mark Twain

<p>“The secret of getting ahead is getting started.” – Mark Twain</p>::Pexels

If I am having an especially rough day and find myself getting bogged down with what isn’t going right, I take a look at these. I hope these debt free quotes above are able to help you on your journey as well.

 

Snowball vs Avalanche: Which Method is Best at Managing Debt Reduction

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debt snowball vs avalanche -which method is better

 

What is Snowball vs Avalanche?

Snowball and avalanche are two of the most popular debt reduction strategies. As you become more informed on these strategies, you will realize that their popularity is more due to simplicity rather than anything else.

One method is centered around paying off the smaller debts first, while the other method is focused on paying off the debt with the highest interest rates first.

Both methods have their very own situational advantages, and your level or discipline and make a make difference in which method works best for your debt reduction journey.

Here you can find a free Debt Snowball vs Avalanche calculator.

<p>Here you can find a free Debt Snowball vs Avalanche calculator.</p>::Pexels

 

Debt Snowball Method

The debt snowball requires listing all debts from lowest to highest amount owned. You set as much money aside for paying debts as possible. You want to have enough to pay greater than the minimum on one debt.

Let’s say your total minimum payments equal $550. You must then find $10-50 extra in your budget. Where can it come from?

Make coffee at home instead of buying it. Doing this twice a week could save 15 per month.

Buy less expensive food at the store. This doesn’t mean skimping on quality, wait for things to go on sale and buy them then. You can also buy things you need for the month in bulk. If it saves you an extra $20, you are set.

Once you have found the extra, apply it to the debt with the lowest balance. Once you pay that debt off, add the amount you were paying on it to the next balance on the list.

Do not spread it out across the remaining balances, it all goes to the new lowest balance. Keep working your way up the list, throwing more and more money at each successive debt.

 

Debt Avalanche Method

The debt avalanche takes a similar approach, but it can result in saving more money. You line up your debts in a list, but the priority goes to highest interest rates.

Interest rates cost you the most when you only pay the minimum. On the debt with the highest interest rate, you want to commit all your extra funds. Extra payments go to the principal amount and reduce your interest costs long-term.

You still roll entire amounts over to the next item on the list. And you still throw any extra money at debts each month.

 

Snowball Pros and Cons

The snowball method has strong psychological benefits. You get an early victory and victory inspires you to continue working.

Plus, as relationship work goes, quick victories build a stronger bond with your mate.

At the end of the day, the biggest pro here is motivation.

But there can be downsides to the snowball method. As stated above, the earlier payments may not hit the highest interest rate first. And interest may cost you a lot of money in the long run.

 

Avalanche Pros and Cons

In some cases, the avalanche method will pay off the debt faster in the long term. Further, if you have debts with very high interest, you save money.

But this depends greatly upon your situation and your personal debt.

Many don’t recommend this method because it doesn’t motivate at the beginning. And you need the most motivation at the start.

If your highest interest rate somehow has the highest amount due, watch out. You might wait a year or more before you manage to pay off the first debt.

 

How to Choose between Snowball vs Avalanche

Your situation may need debt consolidation to help find which method is better for debt reduction.

Your situation, goals and personal motivation will govern the choice of snowball, avalanche or consolidation.

Let’s say you have two dozen pieces of debt ranging from  $100 – $800. That crushing weight needs some relief.

To begin, stop using anything that will increase debt until everything has been paid off. Then begin your snowball with the lowest amount. By next month you will be suffocating under one less bill.

The next one may take more time than that, but not much. Because you will be throwing an extra hundred at it each month. In a year’s time, maybe you are down 5-6 bills.

That situation rings of desperation and needs a boost of freedom. In this case, choose the snowball.

What if you have a ton of motivation and just need direction? You have 8 credit card or loan payments. Some with very high interest and some with very low.

Your situation hasn’t made you desperate or suffocated you. But you want to do away with all the extra interest you are paying. Your situation needs an avalanche.

You don’t need to start fast. You need to feel like you are hitting your debt as hard as you can. And you want to be thrifty about it.

You’re a defensive end with a clear shot to sack the quarterback, your debt. Yeah, it may be the first quarter, but you want to make an impact that on the whole game.

Avalanche will do that for you. You will only need keep playing every minute no matter what.

Examine, Plan, Execute

Before you make any decision about your debt, look at all of it. Arrange it in whatever manner you choose. But once you pick snowball vs avalanche, stick to it.

Once you have it arranged in your preferred method, find the money needed. You can find tips on making extra money with side jobs here. Sometimes an extra ten hours a week makes all the difference.

 

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How Often Should You Review Your Budget?

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Budgeting can be a huge pain, especially if it seems like you are constantly revisiting it. I feel like we are constantly examining our budget for places to trim and save more money. Even if you’re not in the midst of a financial crisis, you should review your budget on a regular basis to make sure you’re accounting for changes and saving as much as possible. So, how often should you review your budget?

<p>Budgeting can be a huge pain, especially if it seems like you are constantly revisiting it. I feel like we are constantly examining our budget for places to trim and save more money. Even if you're not in the midst of a financial crisis, you should review your budget on a regular basis to make sure you're accounting for changes and saving as much as possible. So, how often should you review your budget?</p>::Pexels

1. When There’s a Major Shift in the Overall Economy

Before we get into the periodicity of budget review, the most important time to review your budget is when there are uncontrollable economic changes that will affect your spending power. We are in unprecedented financial times where inflation can eat away at your income without notice. If you’re waiting for your periodic budget review to catch the impact of economic changes, you may be heading for increased debt.

 

2. When There’s a Change in Your Finances

You should absolutely take a look at your budget whenever there is a major change in your personal financial situation. So, you’ll want to review your budget when you’ve gotten a raise, lost income, or paid off debt. If there’s a major change in cash flow, you’ll likely need to make major changes to your budget which may be for the better. For individuals with a bit more disposable income, you’ll want to increase your savings and retirement investments. Consider opening a Webull account where you can invest for free. They even offer an IRA options and a wide variety of research tools to for beginners to reduce risk.

If you have lost income due to a pay cut, working less hours, or encountered a period of unemployment, you’ll want to trim unnecessary costs immediately in order to save money. Having liquid savings is crucial in debt reduction as it prevents us from falling into the hands of predatory lenders. First comes debt, and then goes your credit. The latter leads to even more debt.

 

3. Monthly

We are currently looking at our budget on a monthly basis because we need to identify places to trim constantly. Many others take a look at their budget on a monthly basis as well, especially if they are attempting to pay off debt. The best time to do this is generally at the end of the month. Take a look at the previous month’s budget and determine how well it worked for you and your family. Adjust certain aspects of your budget as needed. Here are 3 printable debt free charts to help track your budget.

4. Quarterly

Another great way to review your budget is quarterly. Many of us make financial goals at the beginning of the year. Revisiting those goals, and your budget, every three months can help you stay on track. It can also help you review where you may be able to trim costs on a larger scale. For instance, if you notice you’re spending a lot on entertainment the first quarter of the year, you can make a concentrated effort to scale back in the second quarter.

 

5. Biannually or Midyear

You should always take a look at your budget at the 6-month mark of the year. Did you make financial promises to yourself as a New Year’s resolution? Budgeting and better financial management are on the country’s the top 10 list of New Year’s resolutions. You’re at the halfway mark and this is the time to see how well you’ve been budgeting for the first half of the year. Another benefit to a midyear budget review is acknowledging the incoming heavy spending periods; summer vacation, back-to-school, Thanksgiving, and Christmas. If you have never conducted a personal midyear budget review, here is a great article on how to conduct a midyear budget review.

 

5. Annually

Some people thrive on an annual budget and only review it throughout the year if there is a major change in their finances. For me, this simply wouldn’t work, but if you are already debt-free and have a great savings plan in place, an annual budget review may work for you. Consider investing in dividend paying stocks.  However, keep in my that even the most profitable companies in the world conduct at least quarterly budget reviews. A lot can happen in the span of 12 months. You may be missing out on opportunities if you fail to identify budget challenges or additional savings and investment potential early on.

 

6. Conclusion

If you’ve ever asked yourself how often should you review your budget, you’re not alone. It is a question I’ve struggled with occasionally. Keeping constant tabs on your finances can be exhausting but the financial freedom it can lead to is motivating! Budgeting is never a once size fits all situation so I suggest you try starting with a monthly budget review then decrease the frequency depending on your budget spending and income variations.

Readers, how often do you review your budget? 

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Why You Need A Personal Mid-Year Budget Review and 5 Steps to Take Now

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<p>The Mid-Year Financial Checkup: Do You Need One for Your Budget?</p>::Pexels

 

The Mid-Year Financial Checkup: Do You Need One for Your Budget?

Congratulations, you’ve made it to the halfway mark of 2023. From multiple claims of UFO sightings to the OceanGate tragedy being the biggest news story of the year so far, 2023 was certainly off to a wild and unpredictable start. Home prices are still through the roof, knock on hardwood, and the average cost of a new car is edging towards $50,000. We were told by the experts to expect lower interest rates and lower prices in 2023, but here we are.

Not much has changes in the overall economy, so now is the time to ensure that our budget goals are still on track considering the current financial climate. The earlier you catch areas in your budget that are primed for improvement, the better. We are now looking towards back-to-school season, Thanksgiving, and Christmas. It is likely that your carefully devised budget plan that got you through the first half of the year will not be feasible going forward. Here are 5 budget and debt reduction actions you should take to finish the year strong.

 

1. Celebrate Your Budget Wins

Start with these funny debt free quotes. Whether you started out with a new year’s resolution or circumstances forced you into a slightly unfavorable penny-pinching situation, it is imperative that you identify, and bask in the glory of your progress. Going out less? It’s a win! Stop opening those “60% Off Everything” emails from your favorite online store? Certainly a win. If you’re having trouble identifying a tangible financial win, take this opportunity to pat yourself on the back for taking the first step in seeking out a better approach in managing your finances. After all, it is not about being perfect, it’s about being better than you were yesterday.

 

 

 

2. Identify New Challenges

There are some elements in life that are just beyond our control. Monitoring your budget variations over time is as important as the execution. Recognizing and categorizing new challenges early on can prevent budget overruns and headaches from backtracking to figure out why your goals aren’t being met. For example; a new upcoming toll road will be part of your daily commute starting in a few months. Are you close to the end of the lease on your residence? There is a high chance that your landlord will raise the rent under the premise that they’re experiencing the challenges of inflation as well. Snow tires? The list goes on. Costs such as daycare, insurance, gas, and general inflationary increases are challenges that should be monitored and accounted for when implementing a preemptive approach in managing your budget.

 

3. Reallocate Funds As Necessary

One of the most important elements of budget management is reallocating or moving your funds around to stay within your budget lines. Let’s somewhat apply the theory that for every action there is an equal and opposite reaction. If one of your budget categories are seeing frequent overruns, see where that value can be recovered in another category. If you are unable to stay within budget, there is a high chance that one or two items on your list may be the culprit. Use a printable debt free chart or a budget management excel spreadsheet to give a clear visual of how your spending is being allocated. Color code the items that are close to, or beyond the budget limit. Another option is to use our free printable debt free charts. Cutting back or completely giving up on the items you love will certainly be a challenge, but no one said this would be easy.

 

 

 

4. Reassess Your Budget Goals

Are your budget and debt reduction goals still realistic? Maybe the frugal budget plan you implemented is leaving you with a bit more spending power than expected at the end of the month. Now is the time to pivot and adjust accordingly. If you aren’t meeting your saving or spending goals, don’t be hard on yourself if you can prove that you did the best you could with your current financial resources. Sometimes the numbers just don’t work. However, this is not an excuse to ignore opportunities for improvement. The greatest stories of financial freedom often start with a period of sacrifice, so stay focused as there is light at the end of the tunnel.

If the budget you created is providing great results, and your hard work is paying off in the form of additional funds being available for use, the last thing you should do is reallocate your leftover capital to more spending. Yes, it can be tempting, but keep your eyes on the prize – financial freedom. Think long-term, separate the needs from the wants, and find ways to let your money work for you.

Webull offers transparent and commission-free trading coupled with a wide variety of trading tools for beginners and experienced trader alike. They also offer fractional shares which allows budget-friendly traders to own fractions or small pieces of their favorite high prices companies. Another option is investing in dividend paying stocks. One of the few consumer benefits to higher interest rates is financial institutions offering higher yields on savings, checking, and certificate of deposits (CD). If you’re not comfortable with investing in the rollercoaster of a stock market, today you can safely find more banks offering 4%+ interest rates on savings accounts, and higher than usual rates on checking accounts.

 

<p>budget review debt reduction</p>::Pexels

 

5. Renew Your Commitment To Yourself And Loved Ones

This may be a permanent lifestyle change, or a plan to get out debt. Maybe you’re saving for a big purchase, or to start a business. Whatever the case, take this time to reflect and remind yourself why its important that you weather the storm and continue on your journey to financial freedom. Write down your plan if you need to, and place it in area where its highly visible. Sometimes we can be our biggest critic, so get your biggest cheerleader friends involved to keep your grounded and motivated. Here are 4 daily habits to keep you motivated and put a dent in your debt.

It’s one thing to try and budget when you’re on your own, but it’s a more complicated challenge when you’re the head of household or the one managing the finances for the family. Communication is key here. Gather everyone around to discuss the family’s financial goals, and how you plan to achieve them as a team. Do not make it a lecture. Avoid the “back in my days” stories, and never present it in a way that will have your family feeling as if they’re being punished. Use this time to educate the young ones on the value of money and the importance of budgeting so they will have the tools necessary to succeed in the future.

 

 

 

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5 Motivational Hacks to Pay Off Debt

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<p>When you decide to take your debt journey seriously, you might feel a burst of energy and motivation. You’re ready to slay your debt. Unfortunately, that motivation doesn’t last long. I know, because I paid off debt for many years. Over the course of nine years, I paid off $81,000 in student loans. I only got serious about it after graduating from New York University, when I still had $68,000 — which I paid off in 4.5 years. In order to do that, I had to make four-figure payments for years. When you can’t pay off debt quickly because your balance is so large, debt fatigue can creep in. Here are five motivational hacks to help you pay off debt. </p>::Pexels

When you decide to take your debt journey seriously, you might feel a burst of energy and motivation. You’re ready to slay your debt. Unfortunately, that motivation doesn’t last long. I know, because I paid off debt for many years. Over the course of nine years, I paid off $81,000 in student loans. I only got serious about it after graduating from New York University, when I still had $68,000 — which I paid off in 4.5 years. In order to do that, I had to make four-figure payments for years. When you can’t pay off debt quickly because your balance is so large, debt fatigue can creep in. Here are five motivational hacks to help you pay off debt. 

1. Write your debt number on a post-it

Paying off debt requires you to shift your behavior as well as your mindset. In order to do that, you need to keep your debt top of mind. You can’t just rely on willpower or motivation. You need to rely on discipline as well as gentle reminders. 

One hack that worked for me was to put my debt balance on a post-it. I took that post-it and put it on my credit card. So every time I wanted to spend money, I’d see the balance looking back at me. At that moment, I had to ask myself if the purchase was really worth it. This hack kept me from making mindless purchases and kept me going because I was so determined to see that number go down! 

2. Make a debt-free dream list

Debt fatigue is difficult to deal with because you’re so overpaying off debt. One thing that kept me going when I wanted to give up was creating a “debt-free dream list”. On that list, I wrote down all of my dreams and the things I wanted in my debt-free life. 

I wrote down that I wanted to be self-employed, move back to LA, get cats, and take my mom to Italy. At the time, I was living in Portland, Oregon and the weather didn’t agree with me but I knew I needed to stay to take advantage of the low cost of living. 

I was also desperate for my own cats and to have more adventures. But I went back to being disciplined and knew that a little bit of hard work now would mean an easier life later when I was older. 

Do you want to be a younger person in debt or an older person in debt? I think you know the answer. So for me, I sacrificed and hustled for years and kept in mind all of the things I would have and pursue once I was debt-free and had a positive net worth. 

You can create your own debt-free dream list by thinking about all the things you will do or items you will buy once your debt is completely gone. 

3. Use Pinterest/Instagram to motivate you

Writing down your debt-free dream list is one way to state what you want. But to take it to the next level, you can use Pinterest to motivate you. Create a board that showcases images and articles that keep you going.  Check out these funny debt free quotes.

You can also use Instagram and other social media outlets for motivation. Only follow accounts related to your dream. Use the ‘save post’ function to create a gallery of images that support your debt-free dream list. Instead of using social media to be tempted by ads or getting FOMO, you can curate your own feed to help you reach your debt-free dream list and keep going when times are hard and motivation is lacking. 

4. Make yourself accountable

I started my blog DearDebt.com to write about my journey of paying off debt. Every month, I’d write a recap on the side hustles I did as well as how much I paid off in debt that month. The blog was a wonderful accountability tool that helped me pay off debt. 

You can make yourself accountable by starting a blog. Think that’s too much? Create a microblog on Instagram and search #debtfreecommunity. You can also find a friend you can connect with who also wants to pay off debt and set up regular intervals to check-in. You can get paid to write articles and blog posts or even testing apps and writing reviews.

Having external accountability can help you maintain progress. You want to show up, not disappoint the other person, and cheer each other on. Find what works for you while striving to be consistent. 

Read our article on why you need to conduct a midyear budget review and the steps in getting one done today.

5. Try these different methods to pay off debt 

If you research ways to pay off debt, it’s likely you’ll come across two common methods of doing so. 

  1. Debt Avalanche Method
  2. Debt Snowball Method

Both require you to pay the minimum on all of your loans but states you should put your extra money toward the highest interest rate (avalanche) or the lowest balance (snowball). The snowball method is very popular and can be a good option as it boosts motivation as you pay down small balances. The avalanche method can save you money on interest, which could mean paying off debt even faster. This article shows a more detailed comparison of both methods. 

You can use this FREE tool from Undebt.it. They provide a mobile-friendly snowball/avalanche calculator app to help you live debt-free. The payment is easy to follow so you can finally eliminate your debt! <p>You can use this FREE tool from Undebt.it. They provide a mobile-friendly snowball/avalanche calculator app to help you live debt-free. The payment is easy to follow so you can finally eliminate your debt!</p>::Pexels

 

Two other options that I shared in my book Dear Debt, are about engaging your emotions to help you pay off debt. One option is to pay off the debt that makes you angry. Maybe you have debt from a divorce or getting scammed by a friend and it makes you mad. Anger is typically not a great emotion and doesn’t help move you forward. But if you channel that into debt repayment, it could fuel your journey. 

The other option is to pay off the debt that will offer the most peace of mind. If you have a loan from a family member that is causing tension or a credit card bill that keeps you up at night, preventing you from having good sleep, pay that off first. 

Paying off debt is an emotional process and these are two ways to hack your emotions in your favor rather than fall in despair. 

Pay off debt now 

Paying off debt is never easy. It takes a toll on your emotional and financial life and maybe even your relationships, too. That’s why it’s important to do whatever you can to get out of debt ASAP and hack your motivation so you can keep going. 

 

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