Evan Vitale

How to Properly Manage Your Money

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Some people grow up never knowing how to properly manage their money. They’re always broke and live paycheck to paycheck and are always wondering why they have no money. Yet they are out there living way beyond their means and still struggle each month to pay their bills. The way you manage, invest and manage your money can really impact your life and future and it’s sad that many schools fail to adequately teach students how to properly manage their money. For those having a hard time managing their money, here are some golden rules of personal finance:

Spend Less

At the heart of personal finance is spending less than you earn. Just because you bring home a certain amount of money each month, doesn’t mean you have to blow it all. This includes using credit cards to act as cash that you don’t have. You don’t want to live beyond your means, so spending less will help you figure out what’s important in your life, while also helping you save for the future. Create an expense sheet for your cash flow for a month and see what’s necessary and what’s not so that you can cut things out that you don’t need.

Save for the Future

A big part of your financial life should be saving for the future. This could be for when you’re old or for a rainy day when an emergency hits and you need funds fast. You should always factor in your savings when coming out with a monthly expense plan. And it should be listed as a necessity.

Invest Your Money

Make your money work for you by investing it. Properly investing your money will help your financial future. Invest in things that will earn you money over time and don’t always stash your money away in a low-interest savings account.

Get Out Of Debt

Debt can really weight you down, so make it a point to get out of debt over time. Focus on certain credit cards with high-interest rates and pay those off first.

Four Things to Know About Old Debt

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Sometimes an old bill will come out from hiding and haunt you. Maybe you totally forgot about it after mail getting lost or simply lost track of the bill? Whatever it is, your old debt will come back and haunt you as creditors start calling and bugging you to collect on what you owe. Although you’ll want to make sure to pay off old debt, there are certain things you should know about it:

Collections have time limits

Each state has its only limits on how long creditors can try and collect on old debt. Some are for five years, while others are 15, depending on the type of debt you owe. Once that time ends, the creditor doesn’t have any legal recourse to make you pay, which means you can’t be sued, have your bank account seized or be subject to any wage garnishment. But that doesn’t mean that you don’t have to pay it. The only way to make it not reflect on your credit score is to get rid of it by filing for bankruptcy.

Old debt and your credit score

The longer you don’t pay a bill, the more it will impact your credit score negatively. And if you go 90 days or more without a single payment, the creditor can charge off your account, which will have a bigger hit to your credit score. Negative marks on your credit score will show up for seven years and can impact whether you get approved for a house or any new loans. Paying off old debt won’t necessarily get your credit score in positive territory and still takes time to clear before it gets any better.

Not paying old debt

If you decide not to pay an old debt in full, know that you will get harassed by creditors and they will call day and night to get their money. There are even some collectors that will bother you 10 to 20 years after because they specialize in buying old debts for cheap and then hound customers until they eventually pay. And if you acknowledge that you actually owe the money over the phone, the clock restarts and now those collectors have even more time to buy you. When you are dealing with collectors, say as little as you can, especially if that collection window is almost closed. Instead, ask for written validation of such debt and then keep a traditional paper trail of your communications so that you protect your rights.

How paying off debt can work to your advantage

Paying off old debt can sometimes work in your favor, especially if you are planning on refinancing your home, buy a new car or get a mortgage loan. Even though your credit score won’t be great, the lender will at least see that you are trying to get your finances in order and are serious about it.

How To Get Out Of Debt Without Filing For Bankruptcy

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Are you in debt and feel that you have no other option but to file for bankruptcy? Many people struggling with debt often consider bankruptcy as a way to escape the bills that keep pilling up. However, there are other things besides bankruptcy you can do to kill your debt. Read on to find out how:

Set up a plan

Bankruptcy will only fix a symptom of your problem. And without fixing the problem at its core, it’ll come back again in a year or two and you’ll be back where you started. It’s a debt cycle that will never end unless you have a plan in place. Fixing the problem with your debt starts with making a good plan and following it as closely as possible.

Know your finances

To set up a plan, you’ll have to know how much you make and exactly how you are spending that money each month. Once you see where your money is going, you’ll be able to make the necessary changes to get rid of outstanding debt that is hurting you financially. Keep track of everything you spend your money on for one month, even if it’s as petty as buying coffee at the gas station. Once you do this, you’ll be able to see where you’re spending and where you could potentially be saving.

Trim expenses

Once you know where your money goes, you can now trim any expenses you have to get your debt under control. You might be spending too much on eating out or buying things you don’t need.

Add extra income

Besides your paycheck, see if you can make extra money by working overtime at your work, selling things you don’t use or need anymore online or possibly taking easy part-time work. Any little bit will help!

Commit to paying off debt

Once you have a plan in place, you can see where you can give extra to pay off your debt faster. Start loans that have high interest rates and then work down the list. Also consider putting some money away into savings for emergencies.

Why You Should Never Raid Your 401(k)

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Your 401(k) is supposed to be used in retirement and not one day before, thus making it a bad choice for those looking for a loan. You should never take out of your 401(k) unless it’s your last resort and you have nowhere else to turn for cash. Although your 401(k) might look like a good alternative for funds when you’re strapped for cash, face long-term unemployment or have an unforeseen emergency and need cash right away, it’s not and will hurt you in the long-term. Here are a few reasons why you should never raid your 401(k):

Quick repayment

If you leave your job after you’ve taken out money from your 401(k), you only have 60 days to repay that loan – whatever the amount is. That can be quite hard if you’ve taken out a large amount and don’t have the savings to replace it. And if you stay at your job and still take out money from your 401(k), you have to repay it in five years, so these aren’t great for really large ticket items since you’ll still have a high monthly payment.

Early withdraw penalty

If you’re under the age of 59.5 year and take out any money, you will be hit with a 10% early withdrawal penalty on your outstanding loan amount. And that’s not even factoring in any federal and state income tax on that money. (There are some exceptions to this, which include people who are disabled or pay for medical expenses that are over 10% of your adjusted gross income.

Employer-sponsored rules

All of employer-sponsored 401(k)s have their own set of rules that you must follow. Although some of them allow you to take out loans from your retirement fund, other companies do not. Usually, the rules are you can take out a loan on your 401(k) if you are in some type of financial hardship or are a first-time homebuyer.

Can’t get that money back

If you make a withdrawal instead of taking out a loan on your 401(k), you can’t get that money back. And that means less money for your retirement.