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A few weeks ago, a company called HealthIQ that celebrates health-conscious people with social and financial rewards, contacted me to create a quiz about millennials and life insurance. Yes, I can now add professional quiz writer to my resume! Since then, I have been reflecting on what happens to our loved ones financially when we pass on. This also came around the time a classmate of mine from high school passed away suddenly from a random heart complication leaving his fiancé and young daughter to pick up the pieces. One day you are living life and YOLOing and the next moment….well, you know how that goes. I am no longer in the headspace of thinking I am invincible, which means it is time for me to get a plan for my family in case the worst happens. Apparently, that means I’m growing up. While doing my research for my quiz, which you can take here, I realized there are several benefits to buying life insurance at an early age and right now millennials are in the best position to take advantage. While it is not a cheerful conversation to have, it is a necessary one and one that can protect those who depend on you and your income should the worst-case scenario happen. Since many millennials are delaying marriage and children, it is easy to say that there is no benefit of buying life insurance; however, that is not the case. Other dependents such as parents who cosigned a loan or business partners for the millennial entrepreneurs out there also depend on you and your income and will be left with a great financial burden of debt, your funeral expenses, and trouble covering living expenses if proper measures are not in place.
What Is Life Insurance?
If you ask my new insurance agent, he would tell you that life insurance is a “love policy”. I, however, prefer the explanation from Fidelity, which explains that, a life insurance policy as “a contract with an insurance company. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured’s death”. To bring it to terms that we can all understand, it is what GoFundMe has become when loved ones pass. I have to say this, but GoFundMe should not be your go to plan to cover the funeral expenses of a loved one or to cover the financial burden that you may leave to your family.
Do Millennials Need Life Insurance?
Yes and yes. It will be easier to understand once you break things down by life stages. Millennials make up the awesome generation of people who are born between 1982-2002 which means that older millennials could be in the home buying, marriage, and kids stage while younger millennials are in the college life and first real job stage. So do all millennials need life insurance? The answer to that will depend on whom you ask. I believe everyone should have life insurance that at least covers one’s funeral expenses. Now in terms of a larger payout, known as a death benefit, I think that depends on who relies your income. To determine if you need life insurance, financial expert and writer, Suze Orman, presents this question for you to ask yourself: “If I were to die today (or if my spouse/partner were to die today), will those I/we support be able to take care of themselves? If the answer is no, then you need life insurance”. Let’s be honest here, the subject of life insurance is morbid, boring, and a bit off-putting, but it is a necessary conversation that needs to be had by all.
5 Things Every Millennial Should Know About Life Insurance
If Your Parent Is a Cosigner On Your Student Loans. A few years back, I remembered hearing a story about a grieving father who was struggling to pay his dead son’s student loan debt. During the height of his grief and after paying for funeral expenses, debt collectors began to harass him regarding his son’s missed student loan payment. That was the first time I remember learning that your debts don’t always go away when you pass. I thought about that Dad and then I thought about my own. So what happens to your student loan debt if you pass away? If you have Federal student loans, your loans will be discharged and your family will not be responsible for your debt. Parents with Parent PLUS loan borrowers are also eligible loans to have their loans discharged in the event of the student’s death since it is also a Federal loan. To receive the discharge, the surviving cosigner must submit a copy of the death certificate to their loan provider. However, if you have private loans, your family may inherit your debt, which for the class of 2016 is an estimated $37,172 and growing. According to this article from CNBC, “Even if your spouse doesn’t co-sign for you, he or she can also be held liable for a private student loan if you borrow while married and you reside in a community property state”.
If You Are a Single Parent.
While millennials are delaying getting married, a recent poll from Gallup reveals that almost half of surveyed millennials age 34 have children although they have never been married. Because of their single status, many parents elect their minor children to receive the death benefit to financial protect their children if something were to happen. Making a minor a beneficiary will cause major problems since life insurance companies do not payouts to children under the age of 18 or their guardians. If you are a single parent, you should consider setting up a trust to benefit the child and naming that trust as the beneficiary. This way, you can avoid costly court fees and you can have things managed based on the directions you have left in your trust.
If You Have Life Insurance Through Your Employer.
Congratulations, you have a real job with real benefits! I am so proud of you. Now it is time to go through and fully understand the scope of your benefits package. Many employers offer life insurance as a part of their benefits package, but is that enough? Something else, I would like you to consider is how long you plan to stay with your current company. According to a Gallup report, 21% of millennials have changed jobs within the past year. Employee life insurance is provided as a group life plan and when you leave your job, you are no longer a member of the “group”. Your former employer is no longer obligated to pay the premium; therefore, your coverage is terminated unless you convert your policy to an individual plan, often at a higher rate. Your best bet is to get an individual term policy in addition to your employer-based policy so that you will be covered.
If You Think Life Insurance is a Financial Investment.
Life insurance is NOT a financial investment. Let me say that again. Life insurance is NOT a financial investment But what about cash value life insurance, you ask?
That’s not what your agent told you, is it? The good folks over at Investopedia define cash life insurance as “a type of life insurance policy that pays out upon the policyholder’s death, and also accumulates value during the policyholder’s lifetime”. Sounds good, right?
Well not so fast… The idea of investing is appealing… even sexy to most millennials (or is that just me?) but insurance as an investment is a terrible idea that yields a very low return. If you are looking to invest your money or save your money, there are much better options out there like mutual funds, Roth IRAs, stocks, and bonds. Suze Orman maintains, “Under no circumstances do you want ‘cash-value insurance’ no matter how fabulous the agent makes it sound”. My financial guru, Dave Ramsey, agrees. Ramsey argues, “It is a horrible product that makes insurance companies the most money, which means insurance salespeople get the best commission on this trash”. I am inclined to agree with them both. Insurance is insurance and your investments are investments. Does life insurance provide financial protection for your family? Yes. Is the “investment” component of a cash life policy, also referred to as whole life, universal life, and variable life, a good investment? Absolutely not. If you have this type of policy, you should cancel it and thank me later.
If You Don’t Know Where to Start.
Many people know the importance of life insurance but have not taken the plunge. For the millennials out there, you will never be as young as you are right now in this moment. Why not take advantage of the financial benefits of buying life insurance while you are young and in presumably good health. Millennials with a clean bill of health will find qualifying for coverage easier and more affordable, think less than $300.00 for the year for a $500,000 policy. So what type of policy do you recommend? Millennials looking to buy into a life insurance policy should consider a term insurance policy because the policy length can be tailored to your needs, it’s affordable, and you can lock in your rate while you are young. The maximum term for a life insurance policy is generally 30 years. Since premiums never get cheaper, millennials can get an upper hand on their finances by locking in a lower rate for the maximum term.
I recently read something from Dave Ramsey that completely changed how I think of all of this… adulting. “The death rate for human beings is 100 percent. You are going to dies someday! None of us know when that’s going to happen, but that doesn’t mean it should catch us totally unprepared”. Yes, you can still enjoy your youth while protecting your future. That’s why I have recently jumped on the life insurance bandwagon. Last week the Mr. and I met our agent in person to talk about our options and I encourage you to do the same.
It starts with a question that leads to a ring, which ends up as a picture on Instagram, and is shared on Facebook. Yep, he asked and she said yes! Weeks later, you find a charming note in your mailbox asking you to stand beside her on the most important day of her life. You, my dear, are a chosen one… also known as a bridesmaid. Since 2010, I have been in seven weddings and I witnessed at least twenty of my girlfriends walk down the aisle toward wedded bliss. In fact, when the Mr. and I got married in 2015, we were the 13th wedding that year of our friend group. Like many of you, I have taken off work and flown clear across the country in support of LOVE. Too bad that the support of LOVE often comes at a hefty price tag.
She Said Yes, But Should You?
It is truly an honor to be asked to be in someone’s wedding, but before you say “yes”, you need to understand what you are getting yourself into before you make that commitment. Just like in a romantic relationship, money can throw a major wrench into your friendship if you are not honest with yourself and the bride about your financial situation. As a bridesmaid, I have paid for gowns, shoes, hair, mani/pedi, makeup packages, jewelry, liquor, plane tickets, hotels, car service, chipped in for engagement parties, hosted bridal showers, lingerie parties (apparently that is different from the bridal shower and the bachelorette party), oh yeah…bachelorette parties, bridal teas and even décor elements for the actual wedding. Nowadays, you have to add the matching bride tribe outfits for the bridal party photoshoot to the list of expenses you have to think about when saying yes. Did I even mention the wedding gift…eek? Once you accept the invitation to become a member of the bridal party, you are committing to this experience for richer or poorer.
I will admit, that years ago I declined the request to be in a friend’s wedding because the costs of being in the wedding would have been a strain on my finances. That bride thankfully understood. I often think, if we didn’t have that conversation and I participated in her bridal party, she could have very easily interpreted my reluctance to spend money as a lack of support and enthusiasm for her big day. Not having that conversation would have cost me more than financial security, it could have cost me our friendship.
How Much Does It Cost To Be A Bridesmaid?
Back in 2011, the Wedding Channel estimated the cost of being a bridesmaid averages around $1695.00. Based on this estimate, I could have very well spent almost $12,000.00 on other people’s weddings. Can you imagine what the average is now? It always makes me wonder how Katherine Heigl’s character in 27 Dresses could afford to be in 27 weddings, plus her own, on a personal assistant’s salary. To pay for my expenses as a bridesmaid, I used the envelope system before I even knew exactly what that meant. I set aside a certain amount of money each check for each bride.
Brides, be nice to your bridesmaids…your “chosen ones”. They are the ones who are holding you down during one of the most beautiful and possibly stressful times of your life. They do far more for you than you realize. Bridesmaids, remember that your bride is a bride only once (fingers crossed) and she has a vision for her day. If you are both honest from the beginning, then you lessen the chance of unrealistic expectations from both sides.
Disclosure: This post may contain affiliate links, meaning no additional cost to you. It helps us keep SMC going!
With a plenty of beauty hacks on the internet, it is easy to feel like a guinea pig to expensive products and extensive beauty practices. I want to have that Beyonce’ “I woke up like this” experience, especially when kicking off the workweek. So how do I do that? A good night’s sleep and a several glasses of water for starters. There are several benefits of getting a good night’s sleep but before I even make it to bed, I have to get through my bedtime routine. In the past two years, I have started to really put an emphasis on self-care and investing in oneself. As goal crushing women who are busting career barriers, making smart money moves, living the fab life, and trying to thrive in their relationships, sometimes it is hard to take a moment for oneself. I wanted to share my beauty routine that costs less than $100.00 and takes less than an hour.
Take Off Your Day. I start my wind down process by washing my face with unscented activated charcoal soap that does wonders for my eczema since it is also loaded with moisturizing oils like avocado and jojoba. The soap I use is about $8.00, but it lasts so long, especially when you cut it in fourths and use a section at a time. I then put on a rose infused face mask and let that sit while I prepare myself for my relaxing bath.
Take A Relaxing Bath. During the hustle and bustle of the week, I don’t have time to take a long relaxing bath, but on weekends, I make the time. I run a long hot bath and let 2 cups of Dr. Teals Soothe and Sleep Lavender dissolve into the water while I pull my hair into a top knot. Since Epson salt is known to relieve sore muscles and lavender is used in the treatment of anxiety, restlessness, and insomnia, all of which I experience from time to time, it is the perfect relaxing combo to add to my beauty routine. With all of the lights turned off and nothing but candlelight, I soak in the tub while watching bad reality television.
Oil Up. I have been obsessed with growing my eyelashes naturally and I started brushing my clean natural lashes with Argan oil every other night. I use an old mascara wand (that has been cleaned, of course) and carefully moisturize my lashes. After that, I drink one last glass of water and then put on the best lip balm I have ever tried. It is a citrus balm for the brand, Oh Honey and it leaves my lips feeling moisturized throughout the night for less than $4.00. After applying the balm, I usually kiss the Mr. good night so he can feel how soft the lip balm makes my lips.
Positive Vibes Only. While it may sound counterintuitive, I have to fall asleep with the television on. To increase the chances of good dreams, I try to go to sleep to something fun and lighthearted like my favorite show, Modern Family as background white noise. It is part of the process to help me fall asleep faster.
After a relaxing bath, a face mask, along with moisturized lashes and lips, I am ready to get a good night’s sleep. Although these are not the traditional beauty hacks that people usually share, these are my go tos that keep my skin supple and healthy.
As you are getting back into the groove of the work week, I want you to take a moment to think about this. Every step you take counts, no matter how big or small. When you take a step forward, you are one step closer to reaching your goals and understanding your purpose. Sometimes our actions stop reflecting our goals, and whether we recognize it or not, it becomes a step back…putting us further away from our purpose Think about everyone who talks about how they are going to get out of debt but continue to spend. They say we are the sum of what we repeatedly do, so let’s make excellence a habit…starting today!
Why is it so hard to take the first step? We let fear paralyze us. Or we tell ourselves that it’s not worth the effort until you are able to make one huge step toward your goals. We tell ourselves that our dreams and goals are too lofty. We sell ourselves the idea that it will never happen for us. The lines between one day and day one blur. If this sounds familiar, let today’s motivational post shift your mindset.
You Are Greatness in the Making
If you are comfortable with your money and career, then it is time to do something that pushes you outside your comfort zone to a level of greatness you have yet to meet. If you are saving money for something specific, push your goal date up by a few months. If you are comfortable in your career, find a way to expand your value with the company. Join a professional organization and expand your network. Whatever your goals are, do not stand still or fall behind. Some of the scariest things garner the most delicious rewards. You can do it. You are greatness in the making. You can be the woman you always wanted to be. Oprah Winfrey once said to you should “create the highest, grandest vision possible for your life because you become what you believe”. I believe I will be debt free. I believe that with hard work and consistency I can get and give everything from my dream career that I have envisioned for myself. I believe I will travel the world. I believe that I deserve financial security. I believe I have the right to change my mind. I believe I am worth it and then I add tax. I also believe these things for you.
My Baby Step to Becoming Debt Free
Every year, I challenge myself to use the money saved from the She Makes Cents BINGO Money Challenge, an easier and more lucrative version of the 52-week money challenge, to help me snowball my debt. Just recently, I have shared my experience with my inner circle in hopes that it would also inspire them to take control of their finances. For me, the She Makes Cents BINGO Money Challenge represents a step in the right direction. It is a step that is creating better saving habits for me and gets me one step closer to eliminating my student loan debt faster. It is a step that is not tiring nor leaves me feeling financially stretched to the max. If I had waited until I was in a place to throw a major lump sum amount at my debt, I might still be waiting. No matter what, every week I cross off one number on my money challenge card and I don’t judge myself if the number is low. Every dollar counts the same way that every step counts which is how I have saved an extra $1,117.00 as of the first Friday in August. The first Friday in January I took a step and started the challenge. What step will you take today? Do something today that your future self will thank you for.
Have you ever been on a group trip where everyone’s budget wasn’t aligned? For example, when one friend is suggesting a luxury villa experience when the group’s median budget for this trip is a 4-star hotel? Or when no one can agree on activities so you end up doing everything just to keep the peace? What’s that sound? Oh…it’s your credit card being swiped for something you probably can’t afford to pay for in cash and something you probably didn’t want to experience in the first place. Unlike any other type a trip you take, a couple’s trip can be one of the best ones for your budget. This is true if you and your partner are pulling your money together, have shared money goals, and agree on a budget even before planning your vacation.
Selecting Your Travel Destination
It’s time for a romantic getaway but you have no idea where to go. First, you and bae should figure out what type of experience you want. Are you looking to be adventurous? Do you want to relax and decompress under palm trees and listen to the ocean? Are you even planning to leave the room? You have to consider the experience and then pick a location accordingly. If you never plan on leaving the room, then you should consider splurging on your accommodations and try to save on getting there. Think about where your money will go the furthest to giving you the travel vibes you are seeking.
Another thing to consider is the season. Sure, that Groupon vacation deal to the Caribbean looks great in October. You think to yourself how great it would be to have one last beach vacay before the end of the year. Well, the Caribbean is super cheap in the fall because it’s hurricane season and their bookings are sparse. You may be getting a great deal, but if you are planning to lounge on the beach and soak up some sun, you will be there in the wrong season. Moral of the story- do your research before settling on a location. It will save you money, time, and frustrations. Another thing to consider when traveling the world is to consider the regional and religious seasons of your destination. Channeling your inner Carrie Bradshaw and tripping to the UAE for a luxury vacay will not give you the same experience if you travel during the religious season of Ramadan. Learn your seasons and travel accordingly.
Finally, while you are doing your research, take a moment to learn about the culture. Want to frolic around in a sexy bikini on the beaches of Dubai? Well, good luck with that. While women aren’t expected to wear a hijab, you are expected to respect their culture and cover up. Your sexy bikini just turned into a one-piece swimsuit…and not those high French cut ones that the Kardashians have been rocking lately.
Getting There. Drive or Fly
Driving: I like a good road trip, especially when the Mr. and I let the top down, have a great playlist going, and only are traveling to a destination that we can get to in 4 hours or less. Apparently, for road trips, 4 hours is the magic number. According to personal finance site Mint, car drives that are four hours or under in length are usually more cost-effective than flying. If you are ever trying to figure out which option is best for your budget, try googling “Fly or Drive Calculators”. There you will find a few options that will help you determine how you will get there for the least amount of money. Related Post: Lyft Riders Earn Free Skymiles
Flying: A few years back we researched the best day to buy plane tickets and that information still rings true. Every time we buy plane tickets, I stalk Delta and watch the rates for about 2 weeks. The Mr. and I rarely will fly other airlines, because our goal is to bank as many Skymiles as possible so that when the time is right, we can use Skymiles to pay for our tickets. A few years ago when we were dating, I flew roundtrip FREE because my ticket was paid for entirely out of his Skymiles. Last month, I was able to fly to from Atlanta to St. Lucia by combining both of our Skymiles to get one FREE roundtrip ticket to our international destination.
I was in the middle of writing a post to tell you all about the car that I bought last week when my doorbell rang. Oh well, you will have to wait to hear that story. I left my office and peeked out the door. You see, I normally will not open the door when I am not expecting clients nor guests during daytime hours. For whatever reason, I did and what happened after that inspired today’s motivational post to you.
I opened the door to see a woman carrying an apple and a back of books. She told me that she left a domestic violence situation today and that she would appreciate any help she could get. Instead of standing on a corner begging, she thought it would be safer to go door to door and ask people for a little help. I could barely hear her as she was sharing her story, over the loud barks of my rumbustious four legged office assistants. Apparently, neighbors of mine, many of whom also work from home, sent her on her way with fruit, granola bars, and change to help her eat later that evening. The woman said while she appreciated the kindness of people to share food from their own home, she was hoping to have enough money to eat at a place of her own choosing. I asked her where she would go if she had enough money. Her answer- McDonald’s. I asked her to hold on a second, closed the door, and prayed that I had one last blessing bag left.
What is a blessing bag?
Last year, with the help of a few friends, I went out and bought a collection of personal care items that I hand out to Atlanta’s homeless community. Last year’s bag included a toothbrush, toothbrush holder, toothpaste, tissue, mini hand sanitizer, deodorant, lip balm, a $5.00 McDonald’s gift card, and other items like a hat and hand warmers for the colder months.
You can call it luck or a God send, but I did have one more bag left. I usually keep them in my car but because I just got a new car, the very last bag was sitting in my living room waiting to go into my new car. In addition to the personal care items, I went to my pantry and added an apple and a bottled water. I then went to my linen closet and loaded her up on travel size face wash, shampoo, conditioner, and most importantly feminine hygiene products. Can you imagine not being able to afford personal care items when you are on your cycle? It took me a couple of minutes to upgrade her bag, but I knew it would be worth the wait for her. She was just hoping for a bottled water or some change…like she actually asked if I had pennies I could spare. When she saw what I put together for her, she started to tear up.
One Bag, Many Blessings
I know there are pessimists out there who would say that it was probably a con but if so, I don’t care. For whatever reason, a series of events caused me to have one last bag, be in my home office today, and actually open the door to show compassion to a total stranger. Imagine what kind of world we could live in if more people had more compassion for others. How can I, who talks constantly about empowering women not stop to help a fellow woman who is humbly asking for help?
I shared this as today’s motivational post to charge you to be a blessing and do something kind for someone else today. That could include calling someone to tell them you love them, visiting an elderly relative or neighbor, or encouraging someone who is unsure about their path. The beautiful thing about it is your options for blessing someone else are endless. I felt energized and she left feeling hopeful and I can’t think of anything more fabulous. Today’s interaction has inspired me to do another round of blessing bags. In fact, I think I will add that to my goals for next month…aka my birthday month!
If you would like to help or want ideas on how you can make your own version of a blessing bag, please leave a comment below.
An affirmation is a strong, positive statement that something is already so. It is a way of “making firm” that which you are imagining. So I ask you this, when you think about your goals and desires for yourself, is it a negative or positive experience for you? If you visualize your goals in a positive way, you affirm the presence of positivity in that area of your life. For you, that change is already in motion because you are attracting that abundant energy into your life. The same can be said for negative thoughts. According to personal development author, Shakti Gawain, “When we create something, we always create it first in thought form. A thought or idea always precedes manifestation”. Think about what greatness we can bring to our goals and desires if we affirmed them in success. In this post, Money Affirmations to Attract Financial Abundance I shared some techniques that will help you release your negative mindset with money so you can approach your finances from a mental state of confidence, pride, and positivity. Today I am here to share some new financial affirmations that can help you take back control over your financial goals.
Money Affirmations To Attract Wealth
When we form positive associations with money we give ourselves permission to prepare ourselves to receive it. We no longer fear it or fear what it would be like to not have it. I invite you to start in inspiration pinboard and pin the below affirmations them there. Then print them, share them, and/or place them in various places so that you can have reminders of the desires you are affirming for yourself. Add them to your vision board, your bathroom mirror, your refrigerator, your Instagram account (seriously, think about how often you check your IG account in a day), or your desk. Speak them aloud and add your own name to give it more power. Instead of saying, “I attract wealth and abundance” try saying “[Insert your name] attracts wealth and abundance”. Why, you ask? Well studies show that the adult brain activates, when one hears, their own name. Below are some of the newer affirmations I have added to my practice and I hope you add them to yours to attract a more positive experience with money.
There are times when you are working toward a goal and it is hard to see the progress of your work. This, my friends, is not one of those stories. Since January of this year, the #SMCmoneytribe and I have used the 52 Week BINGO Money Challenge that I created to save towards each of our money goals. Many members of the SMC Money Tribe are saving for a dream vacation and it makes me proud that because of their planning and saving, their dream to see the world can happen without disrupting their long-term money goals. I, on the other hand, am saving money to use as extra payments toward my student loan debt. This process is known as a debt snowball. Snowballing your debts helps you pay them off much faster and can save thousands of dollars in interest. In my case, my student loans are keeping me from progressing to Baby Step 3 from financial guru Dave Ramsey because they are the last of my debts, not including my mortgage.
Last month was the first time I can remember actually seeing progress to reduce my student debt and this month blew last month’s money recap out of the water. For the month of June, I saved more money than any of the previous months and the last four months combined. I sent two major snowballs to my student loan provider to pay down the balance instead of pushing back my next due date. This lets your money work for you and not the other way around. I also saved $326.00 for the month and hit the $700.00 YTD mark for this challenge. With a contribution from the Mr., we have saved a combined $1,575.00 that we could have easily spent on frivolous things. Thanks, babe! Teamwork makes the dream work.
MONEY GOAL TRACKING
At the beginning of the year, I wrote out my money goals and one of them were to pay off my credit card debt, which I did. The second one was to have my student loans at or under $15,000.00 by the end of the year. Around April of this year, I upped that goal date to October and then again, in May, I thought I would push myself further and make it a goal to have the balance at $15,000.00 by the end of my birthday month, August. I did this because a goal date of the end of the year ensured that I would hit the goal, but with such a long time to work toward the goal, it took away the hustle for it. By pushing the date up to August, it really forces me to review how I am spending and saving money and keeps me motivated to the short-term goal at hand.
Not too long ago I read this quote from the top financial expert, Dave Ramsey, and I knew it was too good not to share. “You can’t get out of debt while keeping the same lifestyle”. Often times we want results for our lives that’s different from our current situation. The thing is, you have got to change your habits if you desire a different outcome. If your goal is to upgrade your financial situation, you have to upgrade the effort you put into your goals to see the results. Increase your income + reduce your spending = the start to a great plan. Last Friday, I had a three-week profit from our BINGO Money Challenge of $383.00 that could have easily paid for a pair of shoes. Instead of living the lifestyle that is keeping me in a stagnant financial situation, I snowballed that $383.00 and threw it directly at my student loans. The gratification I get from a new pair of shoes is nothing compared to the natural high I get from getting closer to my debt free goal.
Today, I encourage you to use this week as a week of self-reflection. What habits do you want to cultivate? What habits do you want to quit? We know what each of our end goals are but we often are blind to the things we do to ourselves that sabotage those goals Start thinking about the things you do every day and how they affect your money goals. Yes, you can upgrade your financial situation, but you have to upgrade your actions first because your actions become habits… good or bad.
The rising student loan debt is one of the greatest financial problems plaguing millennials, especially millennial women. As of 2014, women account for 55 % of students enrolled in four-year colleges in the United States, according to the Federal Education Department and the figures continue to lean in favor of higher educated women. With the average student loan debt at a little over $30,000 and growing, how are we ever going to eliminate student loan debt at all? The answer lies first in understanding the numbers.
By definition, a loan is something that is borrowed that is expected to be paid back with interest. The operative word in that definition is “interest”. When you borrowed money from the government or your loan provider, you were given this money with the expectation that they will get their money back from you. In fact, they expect you to take your take, defer, and get off track because their business is in the interest and not the actual repayment of the original loan. Let me say that again for you. They make their money on the interest because you are expected to pay back what you originally borrowed. Student loan interest accrues daily once you are in your repayment period, which usually begins 6 months after your graduation date. So what does that mean exactly?
How Does Student Loan Interest Add Up?
I will use my student loan numbers to help you visualize why interest will keep you in debt if you don’t start to get aggressive. The exact math on this chilling realization is why millennials have a record amount of debt and a lower amount of home ownership. I have two loans that were consolidated for a collective original loan amount of $24,422.77 back in 2007. As of today, I have paid $21,189.89, which means that if this were an interest-free loan, I would only be $3232.88 away from having the loan paid off completely. However, because of interest, I still owe $16,738.90. How’s that you ask? Well, in the 10 years that have had this loan, interest has accrued daily. If you have studied your loan, you will notice that your daily accrual rate will change over the life of the loan. If you are paying down your debt, your daily rate will eventually reduce as a result of the reducing current balance. However, if you are one of those out of sight out of mind people who knows you have student loan debt that you have ignored, paying a reduced payment when you really can afford to pay more, or continually delaying your payment period, your daily rate is increasing…well, daily.
How To Beat Your Student Loan Debt
Currently, my student loan interest in accumulating at $3.09 per day/ $1127.85 per year, which is the lowest it has ever been. To beat the system, you must pay your debt down at a faster rate than it is growing. At $3.09 per day/ $92.70 per month, my snowball must be more than the monthly interest to make a difference. Now that you have seen my numbers, it is time to look at yours. To calculate your daily interest rate you must have the following numbers ready: your current balance and your interest rate.
In the past two months, I have watched my current balance drop at a faster rate than usual. That is because I have started making my regular monthly payment as well as an extra payment of money saved from the 52 Week BINGO money challenge. I was motivated to get a little more aggressive with paying down this loan when I set a micro goal for myself to have my loan under the $15,000 mark by the end of my birthday month (August). Coming up with a plan to beat your student loan debt first starts with the numbers. If you don’t already know your numbers, I urge you to look up your current balance and interest rate, calculate much your interest accrues daily, and as soon as you can, start making an extra payment above your monthly interest rate to get your debt moving in the right direction. Instead of focusing on just how much you have left to pay, pat yourself on the back for how far you have come on this debt journey. You can do it! You have to do it so you may as well do it as quickly as possible so you can put that money saved toward your next baby step toward financial freedom.