7 Research-Driven Ways to Save More Money in 2018


We all know we should save money for retirement and unexpected mishaps like that broken heater in middle of winter. But, like many tasks in our lives, saving for the future is easier said than done.  

Despite historically low unemployment rates and increasing household income, Americans still aren’t the greatest savers. The average American saved just a little over 3 percent of their disposable personal income in October, according to the U.S. Bureau of Economic Analysis. That’s compared with savings rates of 19.3 percent in Japan and 5.5 percent in the United Kingdom, according to Trading Economics, a global economic data provider. 

Of course, many workers struggle to save simply because their day-to-day expenses eclipse their earnings. But sometimes, a lack of savings could be more of a psychological phenomenon than a monetary one. Research regularly shows that saving money demands a great deal of forethought, self-control and willpower — capabilities that are in direct conflict with our innate desires for pleasure and satisfaction in the here and now. 

Nobel Prize laureate and renowned behavioral economist Richard Thaler said in an interview with The Wall Street Journal that saving for retirement is “cognitively hard” and that it’s   “obviously preposterous” to assume that everybody will figure out how much they have to save and actually carry out the plan. 

The key to saving more is understanding your weaknesses and using tools and strategies that can help you do the right thing without having to think too hard about it.  

We’ve done the hard part for you and found research-backed methods that may help you save more. Follow the tips below to start saving more — and saving smarter — in  2018. 

1. Think present. Act now.  


The first step to solving your debt problem may be to understand your personality — more specifically, how you think and feel about time. That’s because time orientation, or the way we think about time in relation to our goals, plays a major role in people’s ability to save. 

In a 2014 paper published in “Psychological Science,” scholars Leona Tam and Utpal Dholakia concluded that individuals who think about savings cyclically — seeing life events as a series of repeating experiments — are estimated to save 74 percent more than those who think linearly. People with linear time -orientation view life in past, present and future terms.  

Tam and Dholakia found that those with a cyclical mentality will likely save over time because they tend to believe that their future situation will be similar to what it is now.  Rather than being overly optimistic about their savings potential in the future, which might cause them to put off saving money until later in life, these people will go ahead and start saving now. And by focusing on saving in the present, they are more likely to make it a routine. 

On the other hand, those who think about life in past and future terms may be more likely to put off savings longer because they feel they’ll be better prepared to save later in life.  

“The belief is that if you perform an action in the current cycle now, you will be more likely to perform this particular action in the next cycle,” Tam and Dholakia wrote. “But if you do not perform now, you will be less likely to perform it in the next cycle.” 

The importance of time perspective is also underlined in a 2014 study performed by renowned psychologist Philip Zimbardo in partnership with MagnifyMoney. The study looked at how people’s perception of time impacted their financial health.   

After surveying 3,049 participants in six countries, Zimbardo, co-author of “The Time Paradox,” found that individuals who make decisions based on negative past memories tend to be in good financial health. They are more conservative and likely to save for their future to avoid a repeat of previous negative experiences.  

In contrast, those future-oriented optimists are more likely to make bad financial choices and be less financially healthy.  

But out of the three time orientations — past, present, or future — the group that was in the worst financial shape was the present-minded one. These people are more likely to focus on the here and now, leading them to make impulsive decisions without considering their future. 

2. Automate your savings 


Yes, it’s just that simple. Behavioral economists have concluded that in order to save more money, you have to make saving as easy as possible and spending as difficult as possible.  

“If people have to actively think about saving, then they probably won’t do it,” Shlomo Benartzi, a behavioral economist at the University of California, Los Angeles, wrote in the “Harvard Business Review” earlier this year. Automated deposits are the most effective way to save for retirement, he argued. 

U.S. companies are increasingly changing their 401(k) enrollment policies from requiring employees to “opt-in” to participate into new ones where workers are automatically enrolled upon employment and are required to “opt-out” if they would like to avoid enrollment. Because that dropout action requires extra time and effort, fewer people would withdraw from their 401(k) plans. 

A 2005 study by William G. Gale, J. Mark Iwry, and Peter Orszag found that workers are more likely to save for retirement if they are automatically enrolled in a company 401(k) plan than if they were given the choice to opt in. 

Besides participating in your company’s retirement plan, you can also auto-save a portion of your salary to your savings account. Many employers set up automatic deposits from your paycheck into multiple checking or savings accounts. You can have a portion of your paycheck automatically transferred into a savings account so that you will be less inclined to touch that money. This might make it easier for you to resist the temptation to spend. 

3. Automate periodic savings increases 

This is auto-saving 2.0.  

Thaler and Benartzi carried out their well-known “Save More Tomorrow” study from the late 1990s to early 2000s, following more than 21,000 workers at three different companies.  

In one portion of the three-part study, the researchers followed 315 workers at an unnamed manufacturing company. About 160 workers elected to increase their 401(k) contributions each year for four years and 32 of them opted out over the years.  

In the end, they found the majority of the people who agreed to the annual contribution increases nearly quadrupled their saving rates. 

The success of the program shows the power of inertia — the tendency for objects or people to continue moving in a certain direction unless they take action to change it. Once their savings strategy was set —  increasing annually with their raises — very few people ever got around to changing their savings allocations again once they enrolled.  

You can mimic these results on your own as well. If you are comfortable enough to start saving more, try adding 1 percent more to your retirement fund every six months. Some retirement plans even offer automatic step-up contributions, where your contributions are automatically increased by 1 or 2 percent each year.  

Larry Heller, a New York-based certified financial planner and president of Heller Wealth Management, suggested that you increase your contribution amount for the next three pay periods and repeat until you hit your maximum.   

“You will be surprised that many people can adjust with a little extra taken out of their paycheck,” Heller told MagnifyMoney.    

4. Set an actionable plan with negative consequences  

One of the big reasons why people fail to save more is a lack of motivation. Dean Karlan, an economics professor at Yale University, created the “commitment contract” theory,   arguing that establishing the economic penalty for failure of saving helps people hit their savings goal. 

Here is how the commitment contract works: It allows people to set a positive goal, for instance, to save more money or to set a New Year’s resolution. If they fail to accomplish the goal, they may be subjected to some form of penalty per the terms of their contract. 

The idea is that your motivation to save money is enhanced by a contract where negative consequences are imposed if conditions are not met. 

For example, a die-hard animal rights activist might develop a commitment contract to save $2,000 in five months for an international trip, with the stipulation that if this person violates the contract, he or she must buy a $70 ticket to a SeaWorld theme park. 

There doesn’t appear to be a savings app that will implement economic punishments if you didn’t hit your savings goal. But you can: join a like-minded accountability group on social media, or ask a friend or family member to be your accountability partner. They could play the “bad cop” for you while you are saving toward a goal. The hope is that you will feel the pressure to carry out your plan under supervision, in addition to the contract you have committed to. And if you miss the target, this partner would ruthlessly urge you to pay your penalty. 

5. Focus on smaller goals first


Now you know you need to establish a savings goal, but it might be daunting to even think about achieving that goal.  

Experts found that breaking down the goal into manageable pieces spurs confidence, even though the ultimate amount of money that would be saved is exactly the same.  

Benartzi and his colleagues at UCLA asked a group of participants if they would like to save $5 every day, and another group if they wanted to save $35 a week, and the third group whether they thought they could save $150 a month. The results were astonishing: Nearly 30 percent of the participants said they could save $5 a day, while just 7 percent elected to save $150 a month.  

Bloggers have popularized the $5 savings challenge as well, where people were encouraged to save every $5 bill they come across in their wallet instead of spending it. One woman claimed she saved $40,000 over 13 years just by socking away her $5 bills.  

Let’s say you want to make it easier to save for an iPhone X (about $1,000) in seven months. Instead of telling yourself you’ll save $150 per month, break it down even further by committing to save $5 per day. You might achieve that by cutting back on your daily dining-out budget. Just take it one baby step at a time. 

And you don’t have to literally take the money out of your wallet. You could use an app that helps you save in small amounts over time as well.  

Digit connects to your checking account and tries to find spare money in your account to transfer to your Digit savings account. You can command the app via text messaging to save more, deposit money into savings, or transfer money back to your checking account. Note: the app is free to use for the first 100 days. After that, it charges $2.99 per month. 

There is also Acorns, a microsavings app that automatically invests a small amount of money daily, weekly or monthly for you. One of Acorn’s interesting features is it rounds up your purchases to the nearest full dollar amount and makes the change available for you to invest. Let’s say you used a credit card to buy a cup of coffee for $2.75. You can choose to invest the 25 cents on the app, or Acorn will invest the change for you if you elected automatic roundups investment. It’s free to open an Acorns account. The app charges $1 per month if your balance is under $5,000, or 0.25 percent per year if your balance is $5,000 or more. 

We’ve reviewed microsavings apps, including Acorns. Read more about their features here. 

6. Save that big windfall 

Scholars Peter Tufano and Daniel Schneider wrote in a 2008 paper that it’s relatively easier for people to save lump-sum distributions because they perceive those funds differently from their regular income. An annual tax refund, inheritance, performance bonus, or graduation or wedding gifts are seen more like an unexpected surplus of money. 

When you get that big year-end bonus or your tax check in the 2018 tax season, you may want to save the large portion of the refund while putting a smaller amount in your checkings account. You will feel good saving for durable items, such as household appliances, a car, or a down payment but leaving a little room for the occasional self-indulgence. 

7. Track your spending


You thought you knew how much you spent in Starbucks each month, but you might be surprised by the actual dollar amount going into coffee once you start tracking your expenses. 

Benartzi and fellow researcher Yaron Levi reported that those who used a mobile app that tracked spending and investment performance cut back on their spending by 15.7 percent. 

Their findings align with results from a 2016 Federal Reserve study: About 62 percent of consumers with access to mobile banking checked their account balance on their phone before making a big purchase, and half of them decided not to buy that item because they were informed of their real-time account balance and credit limit. 

It’s time to download a budgeting app that aggregates all your financial accounts — debit and credit cards, retirement accounts, brokerage accounts, and so on. Once you get an accurate sense of your finances, you may think twice before buying that $1,000 Canada Goose parka. 

We’ve ranked popular budgeting apps. Check out the reviews here. 

The post 7 Research-Driven Ways to Save More Money in 2018 appeared first on MagnifyMoney.

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How Does Student Loan Forgiveness Work?

It's important you understand your student loans, and that starts with learning the meaning of the terms you're likely to encounter in the student-loan worl

The student loan forgiveness process can be murky at best.

Which loans are eligible for forgiveness—federal loans or private loans? And when are they eligible? Should you hire a lawyer to help you with the process of reducing or eliminating your student debt? Can all of your debt be forgiven or just some of it?

These are just a few of the questions faced by those who have mountains of student debt. And just to complicate matters further, there’s a lot of myths and misinformation out there about student debt forgiveness.

To help clear things up, we asked financial experts to walk us through the student loan forgiveness process—and answer some of the most common questions student loan holders have.

What Kind of Loan Do I Have?

When it comes to student loan forgiveness, the first challenge is often determining the source of your loan. It’s not unusual for people to be unsure about whether they have private loans, federal loans, or some combination of both.

Michelle Waymire, a financial advisor and founder of Young + Scrappy, has some advice for people in this situation: analyze your records.

“Most people need to go back and figure out what type of loans they have because a lot of people don’t know the difference,” she says. “And it isn’t necessarily easy to find out because loan servicing companies don’t have a lot of incentive to help you figure out how to get your loan forgiven.”

The easiest place to start is the National Student Loan Data System, which is a database of all federal student loans. This is where you can obtain a list of all the federal student loans you may have, Waymire explains.

If your loans aren’t listed here, they are likely private loans and not federal ones. If you’re seeking loan forgiveness, you should know that according to the experts, the overwhelming majority of student loan forgiveness applies to federal loans.

How Can My Credit Report Help?

After exploring the National Student Loan Data System, the next step is to pull your credit report, says Waymire.

This will allow you to identify any private student loans you may hold. Many sites or services will charge you for a credit report, but you can obtain a free credit report at Credit.com.

Does My Job Make a Difference?

There are two main approaches to loan forgiveness, depending on whether you’re employed in the private or public sector.

As a private sector worker, the road to loan forgiveness is longer and harder. You’ll need to make at least two decades of on-time payments through an income-driven repayment plan before you’re eligible for forgiveness of the remaining debt. However, according to Waymire, “if you still have anything you owe at the end of that period, the balance is forgiven.”

So if you work in the private sector, and you eventually want to apply for loan forgiveness, an income-driven repayment plan is the first step.

What Is Income-Driven Repayment?

There are four types of income-driven repayment plans offered by the federal government. Each is designed to offer some student loan relief during the repayment process.

These include the Revised Pay as You Earn Repayment Plan (REPAYE Plan); the Pay as You Earn Repayment Plan (PAYE Plan); the Income-Based Repayment Plan (IBR Plan); and finally, the Income-Contingent Repayment Plan (ICR Plan).

“Each of these has different characteristics and time horizons for forgiveness,” Waymire explains, but the bottom line is that all of these plans are designed to help those with federal loans whose payments are too high compared to their income. Most federal student loans are eligible for one of the four plans.

Am I Eligible for Income-Driven Repayment?

It’s also important to note that once you’ve participated in an income-based repayment plan for two decades or more, and you can apply for forgiveness, there are no restrictions on the type of job you hold in order to qualify for relief of the remaining debt.

Those wishing to apply for an income-driven repayment plan must complete an application with the Federal Student Aid office of US Department of Education.

Am I Eligible for the Public Service Loan Forgiveness Program (PSLF)?

Public Service Loan Forgiveness is designed for public service workers, or those who work for government organizations at any level (federal, state, or local), as well as those working for 501(c)(3) non-profit organizations. Those employed in the public sector can qualify for the Public Service Loan Forgiveness Program.

However, for your payments to qualify, you must meet certain conditions. This often involves the following:

  • Making payments in an income-driven repayment plan (ICR, IBR, PAYE, or REPAYE)
  • Having only Federal Direct Loans —Perkins loans obtained through your school and older FFEL loans do not qualify.
  • Working full time at a paying job for either the government or a nonprofit

How Can the PSLF Program Help Me?

The advantage of the PSLF program is that with it, loan forgiveness takes far less time for public service workers than it does for private sector workers. In fact, according to Waymire, “You just have to repeat the qualifying payments 120 times, but they don’t have to be consecutive.”

In other words, if for some reason you lose your qualifying government or nonprofit job and eventually you find another qualifying position, the gap in acceptable employment will not count against you. The key is to reach 120 payments total while working at any qualifying job, whether it is one consistent position or various ones throughout the course of your career.

What Kind of Payments Qualify for PSLF?

To get credit for qualifying payments, you must submit documents annually to the Department of Education verifying your income, family size, and employment, says Waymire.

If you want to qualify for this program now or in the future, you must submit an employment certification form as soon as possible. Too often, people wait to complete this form, only to learn the payments they’ve been making on their loans were not qualifying payments.

Qualifying payments, for example, must be on time (or no later than 15 days after the due date) and must be for the full amount shown on the monthly bill, not a percentage or portion of the total. In addition, payments made while your loan is in a grace period, deferment, or forbearance will not count as qualifying.

What Are My Options for Private Student Loan Forgiveness?

If you have private student loans, not federal student loans, then your options are more limited. But according to Joe DePaulo, CEO and co-founder of College Ave Student Loans, “some private loans do include forgiveness,” such as “if the student borrower dies or suffers a permanent disability after taking on the loan.”

However, he adds, complete forgiveness isn’t the only answer for those struggling with repayment. If you’re having difficulty repaying your loans, don’t ignore the problem or assume there are no options. Instead, DePaulo suggests reaching out to loan servicers to discuss your situation and develop a plan to get back on track.

Should I Get a Lawyer?

Unfortunately, most experts agree that an attorney can do little to help with the federal student loan forgiveness process.

“If it’s a federal loan, a lawyer might be able to help you understand the process,” says Galen Bargerstock, founder of Government & Civil Employee Services, “but they’re not going to be able to negotiate with federal government.”

Are Refinanced and Consolidated Loans Eligible for Forgiveness?

Another perplexing hurdle student loan holders often face is the lingering effect of consolidation and refinancing.

If you’ve consolidated student loans in the past, you may not be eligible for loan forgiveness in the future, but it depends on exactly what you consolidated and refinanced and with whom. Those who have refinanced student loans with a private lender, and in the process consolidated or bundled both federal and private loans, lose the ability to later seek forgiveness of the federal loans or even income-driven repayment plans.

Waymire says that “for this reason, it’s best to only refinance if you have high interest rates or you aren’t otherwise eligible for the benefits that federal loans provide.”

Can I Be Taxed on My Forgiven Loans?

If your student loans are successfully forgiven, be aware that your eliminated debt is typically considered taxable income—meaning you’ll owe more in taxes than you otherwise would.

“For example, if your salary is $45,000 per year and you get $35,000 in student loans forgiven, then you’re required to pay income tax on $80,000 rather than on your usual salary,” explains Waymire. “Many people don’t see this coming, aren’t prepared, and end up in debt with the IRS.”

The one caveat here is that for public employee student loan forgiveness, the eliminated debt is not considered income by the IRS, so it will not be taxed.

The big takeaway? If you’re planning on seeking student loan forgiveness, and you’re a private sector worker, it’s worth it to hire a tax professional who can conduct a financial analysis to determine how much money you should set aside for the eventual tax bill.

What Are My Next Steps?

If you’re feeling overwhelmed with your student loans, and you’re interested in student loan forgiveness, you can get started with a free credit report at Credit.com. You can also find more information on student loan forgiveness, including how loan forgiveness may impact your credit score, and some other loan forgiveness programs you may not know about.

Image: shironosov 

The post How Does Student Loan Forgiveness Work? appeared first on Credit.com.

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Look Back at the Financial Market this Year

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Americans with Holiday Debt Added an Average of $1,054, a 5% Increase from 2016

Consumers who said they went into debt over the holiday season racked up an average of $1,054 of debt, according to an annual survey conducted by MagnifyMoney. That’s not only an increase of 5% over last year, but we also found more shoppers put that debt on high-interest plastic.

As in previous years, most shoppers who took on holiday debt put their purchases on credit cards. But the percentage of consumers who pulled out the plastic for holiday gifts and other seasonal spending was significantly higher in 2017. When asked where the holiday debt came from, 68% of shoppers said that credit cards were responsible, up 8 percentage points from 2016. Store cards were the reason for 17% of shoppers, and 9% used a personal loan.

Nor were the amounts of debt accumulated trivial. Many consumers accumulated significant amounts of debt this season: 44% of shoppers racked up more than $1,000 in holiday debt, and 5% accumulated more than $5,000 in balances. Meanwhile, half of consumers admit it will take more than three months to pay off that spending.

Strong retail holiday sales – with a statement to match

Early indications from industry sources show that retail sales rose nearly 5% versus last year, according to a sales report by Mastercard. The MagnifyMoney survey appears to validate that finding: among shoppers surveyed who said they went into debt, the average amount spent this season exceeded 2016 spending by $51, or roughly 5%.

For most shoppers, going into debt wasn’t the plan. According to the survey, 64% of those who have holiday-related debt didn’t plan to incur it. And lack of planning, whether it’s for holiday spending or other types of debt, can lead to financial problems down the road.

Much of that spending won’t melt away anytime soon

Only half of those surveyed said that they expected to pay off their spending in three months or less. Of the remaining half, 29% said they’ll need five months or longer to pay off holiday debt, in most cases accruing additional interest.

An additional 10 percent of people who took on holiday debt said they would only make minimum payments. Assuming that shopper spent the average of $1,054, and paid a minimum payment of $25 each month, he or she would be paying down that balance until 2023. That is nearly as painful as the $500 in interest fees they would pay over that time, assuming an annual percentage rate (APR) of 15.9%. You can enter your own rates and balances to find out how much interest you’ll pay on credit card debt using the MagnifyMoney Credit Card Payoff Calculator.

Zero Percent APR Gotchas

Interestingly, nearly half of respondents indicated they’re paying less than a 10% APR on their balances. Although the survey didn’t ask the source of those low rates, some of these “rates” could be  special financing offers from store cards from retailers – a source of financing for 17% of holiday shoppers surveyed who said they took on debt this year.

The holiday season is prime time for special in-store financing offers, but once you read the fine print they may cost much more than they help shoppers save.  Many of store cards come with  deferred interest clauses, where the consumer pays no interest for a fixed period – often 6 months. If the consumer pays off those types of purchases within the period, he or she does indeed pay no interest.  But after that period ends, any balance that hasn’t yet been paid in full will be charged interest retroactively, often at rates much higher than most bank-issued credit cards (APRs of 25% or greater are typical).

Less use of unconventional financing

Although more shoppers resorted to credit cards for holiday shopping this year, fewer used loans like payday or title loans – usually the most costly form of borrowing for consumers. Only 4% of shoppers said they used payday or title loans to finance holiday shopping, down from 6% in 2016. Similarly, only 2% said they used home equity for financing. Although home equity may provide more favorable borrowing terms, there may be additional fees you’ll incur, and in the worst case, your home is the ultimate collateral on these loans.

Getting back on track

By understanding where your finances are now, you’ll likely do a better job with managing your debt and spending in the future. For instance, just tracking your spending, whether or not it’s holiday-related spending, will help clarify which expenses might be able to be reduced or eliminated.

Finding out your what’s in your credit reports (available for free at AnnualCreditReport.com) will confirm there aren’t any unexpected surprises waiting for you should you consider refinancing with a lower-rate personal loan or zero percent balance transfer offer from a new or existing credit card offer.  Other tactics, like automated payment plans and budgeting, can be found in The MagnifyMoney Debt Guide e-book.

2017 Post-Holiday Debt Survey Questions

Methodology: MagnifyMoney surveyed 676 U.S. adults who reported they added debt over the holidays via Google Consumer Surveys from December 21 – 26, 2017.

Average Debt Among Shoppers Who Said They Went into Debt Over the Holidays

2017: $1,054

2016: $1,003

If you went into debt, did you plan to go into debt this holiday season?

Yes: 36%

No: 64%

How much debt did you take on over the holidays?

$0-999: 56%

$1,000-1,999: 26%

$2,000-2,999: 9%

$3,000-3,999: 3%

$4,000-4,999: 1%

$5,000-5,999: 4%

$6,000+: 1%

Where did your holiday debt come from?

Credit cards: 68%

Store cards: 17%

Personal loan: 9%

Payday / title loan: 4%

Home equity loan: 2%

When will you pay the debt off?

1 month: 19%

2 months: 16%

3 months: 14%

4 months: 11%

5 months+: 30%

I’m only making minimum payments: 10%

Will you try to consolidate your debt or shop around for a good balance transfer rate?

Yes: 12%

No – Don’t want to deal with another bank: 27%

No – Too many traps: 20%

No – Rate is already low: 23%

No: – Don’t know enough about it: 10%

No – Wouldn’t qualify: 8%

How stressed are you about your holiday debt?

Stressed: 29%

Not Stressed: 71%

What interest rate are you paying on your debt?

Less than 10%: 49%

10-19%: 33%

20-29%: 16%

The post Americans with Holiday Debt Added an Average of $1,054, a 5% Increase from 2016 appeared first on MagnifyMoney.

3 Warning Signs Your Student Debt Is an Emergency

For the first time since 2014, the interest rates on federal student loans are going up.

The average monthly student loan payment is more than $350. This can be a strain on anyone’s budget, but for some, it’s unsustainable and things can go downhill—fast.

If this sounds like an all-too-familiar struggle, you may have a student loan emergency on your hands. Here’s how to know for sure and what you can do to fix it.

3 Red Flags of a Student Debt Emergency

When your debt has become too much of a burden, you should prioritize paying off your student loan early. If you see any of the warning signs below, it may be time to take action.

1. You’re Uncomfortable with Your Balance

Douglas A. Boneparth, the president of Bone Fide Wealth and co-author of The Millennial Money Fix, emphasizes the fact that the numbers themselves, while important, aren’t the only part of the equation that matters.

In other words, it’s not just the balance you carry, but the way you feel about the balance. Some student loan borrowers, Boneparth continues, deal with high student loan balances but refuse to de-prioritize other goals. For example, even though Boneparth and his wife had six-figure debt, they also wanted to start a family—and that meant buying a home so they could get established in the right community for the next phase of their lives.

If you have a high balance but also other financial priorities, it’s okay to stick to your current payment plan so you can manage both. But if your balance makes you uncomfortable and even too scared to think about other priorities, then that’s something you should examine inwardly.

No one can tell you if your debt load is too high. It’s up to you to decide if you’re comfortable with your balance and repayment plan or if you want to accelerate your debt payoff.

2. Your Interest Rates Are in the Double Digits

Sometimes, the problem with student loans lies with the interest rate, not the balance. And if your interest rate is high, then it’s time to either get a lower rate or work on paying it off faster.

High interest rates are a game changer because they keep your monthly payments expensive and increase the total cost of your debt. The sooner you can lower your interest rate or pay the debt off, the more you can mitigate the problem.

If you refinance your student loans, you can reduce your interest rate and your monthly payments. In fact, the purpose of refinancing is to achieve a lower interest rate—and you’ll get new repayment terms at the same time.

When you choose your new terms, you can opt for lower monthly payments or a shorter repayment plan. So you can either take advantage of the flexibility of lower payments or use the shorter repayment plan as an impetus to get out of debt faster.

One thing to remember, though, is that refinancing federal student loans means buying them out with private student loans. You’ll no longer have access to benefits such as income-driven repayment plans, which could make it more difficult to meet your payments—bringing me to the next red flag.

3. You Can Barely Manage to Make Your Monthly Payments

Student loan debt might not be a problem if the bill is manageable, but if you have to choose between food and student loans, then it’s an emergency.

People with federal student loans can get help with an income-driven repayment plan, which caps your monthly payment at a certain percentage of your income. If that’s not enough, you can also turn to deferment or forbearance to temporarily stop or reduce your payments—options that are also sometimes available on private student loans.

If you decide to briefly pause or lower your payments, look for ways to improve your overall financial situation during the break. Deferment or forbearance can certainly help you when you’re running behind, but they can also keep you in debt for longer.

To increase your cash flow, consider taking on a roommate, working a side gig, or putting in a few extra hours of work when you can. If possible, consider making the switch to a more lucrative position in your field, in which case deferment or forbearance can offer you a little breathing room when you’re between jobs. And if you’re simply new to your career and know your income will grow as your experience does, then deferment or forbearance can give you some reprieve until your next pay raise.

There’s a Bright Side to Student Loan Debt

If you stay current on your loan payments, student debt can have its positives. For example, student debt can help your credit score when you consistently pay on time.

It contributes to your payment history to build, maintain, or repair your credit. So as long as you pay on time, there’s a bright side: you’re building a positive credit history as you go.

But whatever you do, don’t turn away from your debt because it scares you. It’s never fun to see a large balance or count the years left on a repayment plan, but ignoring the debt won’t make it go away. In fact, ignoring it and neglecting your payments can cause far greater problems if the loan goes into default, which can completely wreck your credit score.

As you chip away at your student loans, keep an eye on your credit score for free at Credit.com. You can also sign up for a detailed credit report card at no cost to you.

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10 Ways to Get a Jump Start on Your Taxes


Tax season is fast approaching, with everyone’s employer due to send their W-2s by the end of January. Even though we’re still in the middle of the holiday season, it’s never too early to start getting ready to file your taxes.

It’s helpful to be mindful of your taxes throughout the year, which will help you stay organized and avoid scrambling every year when tax season rolls around. Here are 10 ways to get a jump start on your taxes now, or anytime of year:

Figure out which forms you’ll need

Since everyone’s financial situation is different, there are many different tax forms that suit these different situations. If you’re unsure which tax form to use, visit the IRS’s website or consult a professional.

Keep all receipts in the same place

If you’re someone who itemizes deductions instead of standard ones, you you already know how important it is to store all of your receipts together in the same place. If you lose any, it could cost you. Sort and store them throughout the year to avoid a last-minute scramble.

Store all tax returns together 

Since we often have to reference the previous year’s return when preparing the current one, it’s a good idea to make sure you store them all in the same place, whether it’s a desk drawer, filing cabinet, or even a shoebox under your bed.

Consider filing an extension

It might seem counterintuitive to suggest an extension in a list about being prepared. However, if you file an extension and wait until later in the year, accountants will be less busy and you’ll end up filing in less time. This is also helpful for anyone experiencing any kind of stressful life event, such as those who were involved in any of the hurricanes in Texas, Florida, or Puerto Rico this year.

Review/revise your W-4

If you’ve experienced any life changes from the previous year (adding or losing any family members), ask your employer if you can review your W-4. The IRS actually recommends doing this every year.

Do your research

Are you going to prepare your taxes yourself, or are you going to hire an accountant or tax-preparation service? If you plan to do them on your own, make sure you educate yourself about the deductions you’re entitled to. If you plan to hire someone, check around and make sure they’re reputable.

Save your money

Unless you fill out the 1040EZ form and mail it in yourself, it’s going to cost you money to file your taxes. Some people are happy to pay this to ensure that they’ve done it correctly. You may also still owe taxes in addition to what you’ve already paid in. If you’ve saved for it, it shouldn’t be a problem.

Check your deductions

If you’ve had any major life events this year (bought a house, gotten married, had a child, etc.) you may be entitled to some sizable deductions. It’s a good idea to research all possible deductions to avoid overpaying your taxes.

Choose between itemized and standard deductions

Depending on what type of work you do and your financial situation, you may need to do itemized deductions, where you get credits for everything you’ve spent, rather than taking the standard deduction as dictated by your filing status. If you need to know more, consult a professional.

Track all charitable donations

Charitable donations are tax deductible, so if you have any monthly or one-off donations, make sure to keep track so that you can deduct these expenses from your taxes.

If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated each month.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.


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6 Ways to Make Your Family Harder to Hack 2018


While there are a thousand resolution-worthy action items out there, the time is always now for the things that need to change in our lives. Never were truer words spoken when it comes to our potential vulnerability to hackers.

The number of breaches and the granular nature of the data exposed in those attacks over the past year are both unprecedented. The Equifax breach alone included everything (and then some) that a scammer needs in order to buy a house or a car, pay for college or medical procedures, steal a tax refund or any other transaction.

But that’s not the only reason you should be on high alert. Technology is the friend of the hacker. Cybercriminals make a living being up-to-date on the latest security protocols and protections. They are also the most common spur for innovation, discovering the latest “eureka” moment in cybersecurity while reverse-engineering existing ones to steal data.

Side by side with the general threat is a “pre-set” attitude prevalent among consumers. Breaches and the identity theft that flows from them have become the third certainty in life, right behind death and taxes. The attitude tends to be, “There’s nothing I can do about it,” or “If it happens, it happens.”

I get it. I own a company that among other things, helps consumers resolve the fallout of identity theft. But working on the front lines of what amounts to a war of attrition against the bad guys, I can tell you that consumers can, and should, be doing more.

Here are my suggestions: 

  1. Avoid Account Takeover with Better Password Tactics

According to a recent survey, more than 80% of people 18 and older re-use the same password across multiple accounts—a practice called daisy-chaining.

Here’s the scary part: You will almost certainly be able to guess the most popular password used by consumers in 2016. (It was “123456.”) Consider, there are affordable machines on the market today that can hit a website’s authentication system with billions of passwords per second. “Password” isn’t going to do much in the way of keeping you from getting got.

Even if your personal email address hasn’t been exposed in a data breach—you can check on Haveibeenpwned.com—you need to take extra precautions.

Here’s why: If a scammer gets control of your personal email, they can commandeer many, if not all, of your accounts—retail, financial and beyond. For this reason, whenever possible, do not use your name or email address for login purposes. Rather, treat it like another password (but bear in mind, many sites will not allow you to do this).

If that seems like a hassle (remember, security and convenience aren’t always compatible) there’s an automated solution offered by a start-up called Joinesty that offers a Chrome extension that randomizes the email addresses used for login on various accounts thereby rendering your personal email address useless to a hacker.

  1. Use 2-Factor Authentication

Do you use 2-factor authentication on all your accounts that offer it? It’s a relatively seamless process whereby every account login requires both a password and a six-digit code that is emailed or sent to your smartphone via SMS.

It is not failsafe. If a criminal has control of your personal email account or possession of your phone—and your password—they can beat 2-factor authentication. That said, you are a much less attractive a target—the predator equivalent of a spiny hedgehog waddling down the road with an excessively plump piglet. Which one would you rather be? 

  1. Turn Off Location Services, and Don’t Overshare

Remember the bumbling duo in the holiday classic “Home Alone?” It used to be that burglars cased a neighborhood. With oversharing on social media, including location data posted in photographs that permit geotagging technology and-or volunteered by way of preference settings, we are constantly “casing” ourselves for the would-be thief.

An added layer of complication here is that even if your social sharing doesn’t include location data, other members of your family might be sharing it. Remember, you are only as secure as your most insecure family member.

The conversation about cybersecurity should be ongoing with those closest to you, because increasingly we’re all connected in ways that can get people robbed. 

  1. Have Nothing to Ransom

Ransomware is going to continue to plague consumers in 2018.

Ransomware is a form of malware that occupies a victim’s computer and then encrypts every file on its hard drive. There are few things scarier than a ransomware attack, especially when the victim has no idea what just happened.

First rule of thumb: never make a payment to get files back (or stop someone from sharing embarrassing files—another prevalent scam). Contact a resolution expert first.

Second rule: Back up your files daily.

If you want to be one-hundred percent unaffected by ransomware, back up your hard drive on an encrypted, long-and-strong password-protected external drive and store a mirror backup on a cloud server. Then when your would-be extortionist demands cryptocurrency (which if you own any, should also be stored on an external wallet), you can say: “No,” and go on with your day.

  1. Enroll in Transaction Alerts and Identity Monitoring

There is no better way to calm fears of account takeover than transaction alerts. All banks and credit card companies offer them for free. They make fraud a momentary crisis that’s easily contained, since the moment a fraudulent charge occurs, or a scammer attempts to open a new line of credit, the consumer is notified.

Think of it as an under-age keg party that gets shut down by the police—a quick burst of annoying nothing, and then everything is back to normal.

There is an added benefit to transaction alerts: Every charge you make pops up on your phone or in your email, detailing the purchase, which can help you curb spending since there is a constant—albeit instant—reminder of how much money is going to be due at the end of your billing period.

  1. Practice the 3 Ms

  1. Minimize your exposure. Don’t authenticate yourself to anyone unless you are in control of the interaction, don’t over-share on social media, be a good steward of your passwords, safeguard any documents that can be used to hijack your identity, and freeze your credit.
  1. Monitor your accounts. Check your credit report religiously, keep track of your credit score, review major accounts daily if possible. (You can check two of your credit scores for free every month on Credit.com.) If you prefer a more laidback approach, see No. 5 above.
  1. Manage the damage. Make sure you get on top of any incursion into your identity quickly and/or enroll in a program where professionals help you navigate and resolve identity compromises–oftentimes available for free, or at minimal cost, through insurance companies, financial services institutions and employers.

The New Year offers the opportunity to turn a now-old threat into new peace of mind.

The dangers out there are manifold, but if you are prepared, even the worst attacks are survivable. The above suggestions aren’t resolutions. They are common sense. At their best, New Year’s resolutions are an arbitrary deadline to change your habits in one way or another. When it comes to hack-proofing your life, were way past midnight.


If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated each month.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.


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