Monday Motivation | Cultivate Better Habits

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.  

Money Quotes from Dave Ramsey on Personal Finance Blog, She Makes Cents

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.

How Much is Student Loan Interest Really Costing You?

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.

How To Calculate Your Real Student Loan Interest from Top Millennial Finance Blogger, Danielle YB Vason of She Makes Cents

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.How To Calculate Your Real Student Loan Interest from Top Millennial Finance Blogger, Danielle YB Vason of She Makes Cents

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.

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5 Ways to Start Improving Your Credit Score TODAY

A great credit score can be the difference between being approved for that car you’ve saved for, that house you’ve looked at, and even that job that you just interviewed for that is now pulling your credit history. If you have a low score, the people who decide whether you are an “attractive” candidate hold the cards. If you, however, have a great credit score, you hold ALL the cards. I learned this when I was buying my first home just three days after my 24th birthday. In the midst of trying to prove to my parents that I was, in fact, a real and financially responsible adult by doubling up on student loan payments and keeping my credit card balance low, I was unknowingly improving my credit score. In fact, during the contract negotiation period of the home buying process, my score improved by 20 points. A great score also came in handy once I moved because the majority of my utility expenses did not need a deposit and I was offered a lower rate. No matter what your score is, it is never too late to start improving it.Credit Score Hacks from the Money, Career, & Lifestyle blog, She Makes Cents | How To Improve Your Credit Score Today

Here are 5 Easy Ways to Boost your Credit Score

  1. First and foremost, it is imperative that you know your score, that way you know where you stand. By law, all US citizens are entitled to one FREE credit history report, but depending on where you live your state may pay for one more.  Georgia residents, for example, are entitled to two FREE credit reports from each reporting agency.   This is a great time to make sure that all the information is correct and give you an overview of where your finances stand.  Related Post: How to Dispute Errors on Your Credit Report
  2. Pay your bills on time. It sounds simple, but I’m going to take a quick flashback to my college days when I was on the dance line of the marching band featured in Drumline. (insert flashback bubble here) To be early is to be ON TIME, to be “on time” is to be LATE, and to be late is UNACCEPTABLE (end flashback bubble…now). The same essentially holds true with how you pay your bills.  The earlier you pay your bill, the better. For one, you are certain that your bill will be received by your service provider way before the date. More importantly, paying your bills as soon as you get them can be a quick but subtle  increase to that credit score. I try to pay all bills within days of receiving my statements and then record the due dates and balance due in my calendar. This allows me a quick glimpse of my monthly financial trends. This is something I recommend to EVERYONE!
  3. Use only one credit card. If you have more than one card, start paying down the card with the smallest balance first by doubling the minimum payment. Once, that card is paid down, move to the card with the second lowest balance. Double the minimum balance and tack on whatever you were applying to the first card, until that card is paid down, and then so on. This, lovely people, is what is called a money snowball.  Next, choose one card to work with, preferably the one with the highest interest rate and take the other ones out of your wallet. Freeze them, cut them up, lock them away but whatever you do, do not close them. Closing a credit card can sink your credit score faster than you can say “She Makes Cents”. Don’t do it, don’t do it, do not do it…
  4. Increase your credit limit. Now that you have worked towards reducing the debt on your existing card, credit card companies should begin to see you as an “attractive” customer. Call your company and request a credit increase. Again, this is not meant for you to start increasing your spending¸ but rather it is an opportunity for you to increase your credit to debt ratio. Can anyone say credit score boost? Related Post:  How The Debt to Credit Ratio Affects Your Credit Score
  5. Pay in Cash. I have said it before and I will say it again. Paying in cash forces you to really consider whether your purchase is right you. Personally, I find that paying for things in cash acts as a visual aid and helps keep me on track with my spending. In swiping a card, I can’t “see” my funds dwindling, but watching your cash go from thick to thin is definitely a sign that you could be mindlessly spending. When you pay in cash, you don’t have to worry about interest rates and hidden charges because Cash is King  QUEEN.

      

Beginners Guide To Car Buying: Everything You Should Know BEFORE Buying a Car

How Much Should Your Car Down Payment Be? Into into Car Buying
Everything You Need to Know Before Buying A Car

Buying a car can be a stressful process with so much to think about.  Are you getting the best deal?  How much car can I afford?  Does it come with a rear view camera?  For the first time ever, I am looking to buy a car from a dealership and I am not in a position to buy the car outright.  I have never had a car note before and the idea of an additional monthly expense gives me anxiety.    So how does one make such a large purchase with confidence?  The answer is going into it well informed so that you don’t get hustled by the vision of you riding off into the sunset with sexy new wheels or hustled by a salesperson trying to make their quota.  Over the next few weeks, I will break down everything need to consider before buying a car.  Today, we will focus on two of my favorite starting points- New vs. Used and Down Payments.  So buckle up and join me on this car-buying excursion.

Everything You Need to Know Before Buying A Car

The New New

There is this character in the 2006 movie ATL whose nickname was “New New”.  New New got her name because she was known to have the latest and greatest of everything.  If she were looking for a car in the year 2017, she would be considering a 2018 because the 17 model just wasn’t new enough for her.  Even though New New is a character in a movie, many people out there share the same mindset.  The thing is she places her money in items that depreciate in value at an accelerated rate.  In fact, just by driving your new car for the first time as a new owner decreases its value by 11%.  The $30,000 car you just drove off the lot is now worth $26,700 by the time you get to the highway.  Instead, consider a used car that is between two and three years old.  They are often still under warranty, they offer many of the same features, and comes with a lower price point.

Cash Is Queen

I understand that most people cannot afford to pay cash for a car.  I did it by dealing directly with private sellers on Craigslist, buying older models, and going into the process with a set amount to spend.  It worked for me and I did it at a time when the cars on Craigslist were good deals for both buyers and private sellers.  I am a regular person who found a way to make the money work for me.  Financial guru, Dave Ramsey, reflects on people who give him push back that regular people cannot afford to pay cash for a car in his book Complete Guide to Money (a must read, click the here for a FREE download with the app).  According to Ramsey, “people don’t buy with cash because they are rich; they’re rich because they buy cars with cash”.  I must agree with his statement.  I am in a better financial position today because I decided I couldn’t afford to have a monthly car note.

Assuming you can’t buy the entire car with cash, consider how much you can pay for up front to keep the overall price of the car as low as possible.  Whenever you finance a car, you are paying interest on that auto loan.  Instead of financing the entire amount, you should aim to have 20% or more as a down payment to avoid wasting thousands of your hard-earned money on interest.  Additionally, taxes and extra fees should not be considered when calculating your 20% down payment because you should NEVER finance taxes and fees.  Before you even set foot in a car dealership you need to ask yourself, can you actually afford the car you have been researching?  Rich people ask “how much?”  Broke people ask “how much down and how much per month?”  A salesperson will tell you the lowest down payment to get you to sign on the dotted line but going into negotiations well equipped with the knowledge of best down payment to make, you know you can do better…and if you can’t, that means you cannot afford that car. Ramsey explains, “When a rich person says she can afford it, she means she can actually afford the car.  When a broke person says she can afford it, she means she can probably make the monthly payments as long as there are no emergencies and she doesn’t lose her job”.    Think about it, could you afford your monthly car payment if you were out of work for a month?  How about 3 months?  These are all things to think about before you buy a car.  Stay tuned next week for Part II as we discuss  Every Thing You Need to Know About Leasing and Financing a Car!

How Lifestyle Inflation Is Keeping You From Getting Rich

lifestyle-inflation

Rapper Notorious B.I.G. wasn’t lying when he said “mo money, mo problems”.  That because of something called Lifestyle Inflation where your “lifestyle” needs increase as your income increases; thus, keeping you in the same financial situation.  This reality creeps up when people have debt, don’t save, don’t invest.  They don’t keep up with the Joneses, they are the Joneses.  By no means do I believe that one doesn’t deserve nice things.  In fact, I believe no one should have to sacrifice a quality lifestyle because of lack of resources.   A quality lifestyle comes at a price but let’s try to not dig ourselves into a money pit to experience the finer things in life.

CONFESSION OF A  LIFESTYLE INFLATING MILLENNIAL

I remember being at my job out of college and making around an entry level salary. I owned my car outright, had my student loans paid a year in advance, and was on my way to buying my first house. Back then, you couldn’t tell me I wasn’t living a rich life. I wasn’t rich from a financial standpoint but it was the first time where I was “adulting” and was able to fund my lifestyle by myself.  This was a big deal considering a year and a half before that, I was a senior at Spelman College eating pizza at 1:00 am while pulling all-nighters.   As time passed, income changed, and lifestyle needs matured, I found myself “needing” more.  I had to get another car after mine was totaled in an accident but I couldn’t bear the idea of not driving a luxury German car (thanks Dad for that addiction).  I spent money on home decor so I could have a  “magazine ready” home.  I upgraded my wardrobe.  I was making a little money and working with people whose hourly rate was a luxury car note.  I wanted to show my family and friends that I had it all together….that I belonged in my new life.  That all changed when I left a promising career in one field to follow other dreams for another field.  It was in the transition that I started to place a serious effort in saving money and making smarter financial moves.  I had to.  It was my new reality, we were in a recession, and I was no longer constantly surrounded by the Joneses.  I took the time to invest in my own financial literacy so I could better understand how to stretch my money.  This was also around the time she makes cents was born.

BALLIN’ & BROKE

As you vibrate higher so will your expectations of people, experiences,  and things around you. The good thing is there are ways around lifestyle inflation where you can enhance your life without feeling broke. Lifestyle inflation keeps you in a constant state of financial paralysis because your need for “things” is keeping pace with your increasing lifestyle.  That’s how a millennial couple with no kids can feel financially stretched in a $100,000+ income household. Stay tuned as we dive deeper into the topics of lifestyle inflating from a millennial perspective and explore opportunities to elevate your life without the elevated price tag.shemakescents-com-1

Major Milestone | She Makes Cents 6th Year Anniversary!

blogiversarySix years ago shemakescents started as a way for me to share my financial journey with the world… and by that I mean my dad and my cousin Dot because they were the only two people reading my stuff in the early days.  I kept writing because I wanted to share my story and connect with others.  I knew my financial journey felt different from my other twenty-something friends because they would come to me with their questions about buying a house and how to get ahead of student loan debt during a recession. Soon, other people joined my dad and cousin in subscribing to the blog and that was the first time I really felt like I wasn’t talking to myself.  In the past 6 years, I have been so surprised by the people who take a moment out of their busy day to tell me how much they enjoy reading shemakescents.  You have been with me when I paid off my credit card, bought a car off Craigslist and got married.  To the 1.3 MILLION visitors to she makes cents…. thank you for joining me for the past 6 years.  Stay tuned, 2017 has the potential to be our best year yet!

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How The Debt to Credit Ratio Affects Your Credit Score

debt-to-credit-ratio-credit-score-she-makes-centsLast year, one of my girlfriends and I decided that we were going to pay off our credit cards at the same time.  I was paying down debt to start my snowball and get me one step closer to Dave Ramsey’s Baby Step Three.  She was knocking down her revolving debt before she purchased her first home.  In the process of us paying down our credit cards, we were both offered limit increases from our perspective credit card companies.  I accepted the increase and she declined. Her rationale to decline was that she was trying to get rid of her monthly credit card payments because a limit increase would only entice her to spend.  For me, accepting the almost $5,000.00 increase meant that I was lowering my debt to credit ratio.

What is A Debt to Credit Ratio?

A debt to credit ratio or a credit utilization ratio is just as it sounds….It’s the ratio of how much money you owe a particular debt as compared to the credit limit.  If you have $4,000.00 balance on $10,000.00 credit limit, your debt represents 40% of your credit limit.  The lower the ratio or percentage the better impact one’s credit score.

How The Debt to Credit Ratio Affects Your Credit Score

Outside of your payment history, your “amount owed” or debt to credit ratio, is the second highest factor in calculating an estimated 30% your credit score.  Keep your balance under the 30% mark and you stay on the lower side of the debt to credit ratio, which is where most personal finance gurus would urge you to stay if you have to carry a balance.

At the same time that my credit card limit jumped up $5,000.00, my balance was quickly decreasing and I had a credit score of 786.   The next month it moved up six points and stayed that way for three months.   In July, the month I paid off my credit card, it jumped to 806 for about two months.  I started using my credit card just a little bit carrying a small balance and it went back down to an 800 for about three months.  I was on a high when I saw my score increasing so to see the decrease was disappointing…even if it was only a 6 point drop.  I vowed then to do whatever I could to not let my credit card balance roll over to the next month ever again.   I am happy to report that I currently have an 810 credit score.  Moral of the story… lower your debt to credit ratio and it will have a positive impact on your credit score.  You can do this by making on time payments to lower your debt balances and if you are offered a limit increase, take it only if you can continue to be responsible with your financial goals.shemakescents-com

Dave Ramsey’s 7 Baby Steps Explained

Hey #SMCmoneytribe!  Yesterday I took a little time out of my day to create an infographic for you that provides a quick overview into Dave Ramsey’s Baby Steps.  I wanted to do this for you because I reference these steps in a lot of my writing because they have become the meat and potatoes of my financial plan.  If you are a long time reader of She Makes Cents, you might remember when I was so excited to get to the second part of Baby Step 2 that I tried a risky financial move of playing financial Russian Roulette.  Let’s just say the outcome was not what I expected when my car broke down one week later and I only had half of an emergency fund to help me out.  (P.S. According to Ramsey, car maintenance is not an emergency and rather something that should be budgeted for).she makes cents

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How To Win on the She Makes Cents Money Challenge

Happy 1st Friday of 2017 everyone and welcome to the 2017 version of the She Makes Cents Money Challenge!  Need a quick overview of the She Makes Cents Money Challenge?… click hereIf you know me, you know I LOVE Fridays.  It’s the day I eat tacos and drink margaritas with a sugar rim, it kicks off the weekend, and it’s the day I make smart money moves on the She Makes Cents Bingo Money Challenge!bingo-money-challenge

The Benefits

They say you should do something today that your future self will thank you for and that is what this money challenge is for me and the #SMCmoneytribe.  As a part of the #SMCmoneytribe you will take this financial journey with the best accountability partners….other readers like you.  Last year I paid off my credit card completely and I am still carrying a zero balance (insert angels singing…seriously can you hear them?).  While I have used the money from this challenge to help pay down debt, other members of the tribe have used their savings to go on vacations, pay for professional certifications, holiday gifts for family, and to ramp up their emergency funds.  By accepting this challenge, you will gain more than the financial payout… you will gain a new sense of discipline, determination, and better money habits overall.

Should you get off track, you can always catch up or start over, we just ask that you don’t give up on this challenge, your goals, or yourself.  YOU can do it and you have an entire TRIBE of people cheering you on!

Double the Fundanielle-yb-vason-and-michael-vason

This year I have talked the Mr. into participating…sort of like a dollar for dollar matching.  For every number I cross off and save, he will match it.  If we decided to “double of fun” last year, we would have saved almost $4,000.00 together.  I’m doing this with the hubby because we have a shared travel goals and an invested goal to reduce my student loan debt.  The cool thing is that you don’t need a spouse to double your savings, you can do this with anyone who you know and trust who shares your goal.  Saving for a girl’s trip, why not combine efforts with your bestie(s)?

If you share your progress on social media (which I highly recommend), please make sure you use the hashtags #SMCmoneytribe so the tribe can cheer you on!

How to Join the Challenge

Want to join the #SMCmoneytribe to get access to a tribe of goal minded accountability partners who are invested in your success and your FREE bingo money guide?  Click here, fill in your info, and we will do the rest.  

smcmoneytribe

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{2016 Money Recap} She Makes Cents Money Challenge Success!!

Hello #SMCmoneytribe!  It’s the last Friday of the year and I am so happy to hear from you all who are completing the She Makes Cents  52 Week BINGO Money Challenge  today and tomorrow. I officially finished mine today!  In the past three years I have attempted to complete this challenge, I would accomplish a short term goal and just stop.  This year, however, I have made it all the way to the end thanks to my accountability partners in the #SMCmoneytribe, as well as, my will to stay focus on my goals of zero credit card debt (mission accomplished) and snowballing my student loans (current goal in progress).2016-52-week-money-challenge

She Makes Cents Money Challenge vs. the 52 Week Money Challenge

The She Makes Cents Money Challenge is a variation of the traditional 52 Week Money Challenge.  In the traditional version, participants save a specific dollar amount based on the corresponding week.  For example on week one you save $1.00 and on week 52 you save $52.00.  Doing it this way would have you shelling out the bigger bucks in the weeks leading up to the holidays.  No Bueno.  Also, doing the traditional version only leaves you with $1378.00, which is not bad for money that you would normally spend unintentionally, but it could be better.  With the She Makes Cents BINGO Money Challenge, you have the same time period, 52 weeks, but you empowered to decide how much you save on a weekly basis.  You control your own money and have the ability to cross of boxes that correspond to your current financial situation at any given time, which is how is should always be.  Plus with the bonus boxes you can save $1900.00+.

The Breakdown of Money

This past year,  I found myself keeping track of the weekly and monthly savings and comparing the amounts during my frequent progress reports.  I saved the most money in the month of January with $286.00  and the least amount of money during the month of September with $76.00.  Below is my breakdown of the monthly savings that reflect my grand total savings for 2016… an even $1900.00!!!!2016-money-challenge-yearly-report

Join the #SMCmoneytribe

Thank you to everyone who did this challenge this past year.  It was so much fun.  We all cultivated the habit of saving and you might have made a new friend in the process like I did, hi Alysa!  Want to join the #SMCmoneytribe to get  access to a tribe of goal minded accountability partners who are invested in your success and your FREE money guide?  Click here, fill in your info, and we will do the rest.  Mark your calender’s for the next round of the challenge starting January 7th!

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