The Pros & Cons of Sharing Your Finances as a Married Couple

We’ve collected the pros and cons of combining your finances and keeping them separate so you can decide which method will work for you.

For years, the standard financial advice for couples was to combine their finances. All income, debts and expenditures belong to both parties, so why not put them together?

Combining finances makes sense for many reasons, but not everyone wants to take this direction. If you’re preparing to tie the knot, you might wonder which option is best for you. We’ve collected the pros and cons of combining your finances and keeping them separate so you can decide which method will work for you.

The Pros of Combining Your Finances

Combining your finances can be tricky, especially if both parties have their own debts, accounts and assets coming into the marriage. But it might be worth it for the following reasons:

Women May Have Greater Security

Other research shows that women have greater security when they combine finances with their spouses. That might seem counterintuitive, but remember, women are typically more prone to income interruptions, as they may take time off to start families.

It Keeps Things Simple

Splitting finances may work for some couples, but it can also lead to complicated conversations. Who pays which bills? Should you split evenly when there’s income disparity? Who should pick up the check on date night? If all the money is going into and coming out of the same pot, it may help simplify things.

It Allows for More Flexibility

When you can rely on your spouse to foot the bill while you take parental leave, go back to school or start a new business, you may be more likely to take certain career risks. And in the long run, those risks can be good for the couple if they pan out. If, on the other hand, you have to keep paying your share of the bills, you might be less likely to take the leap.

It Creates Shared Goals

When all the money comes from the same place, the couple needs to communicate. That can be a good thing, as couples can thrive on having common financial goals to work toward.

The Cons of Combining Your Finances

Combining finances may not be the solution for everyone. This strategy also has some potential downsides:

Making Debt a Bigger Issue

If one partner comes into the marriage with big financial problems — including hefty debt or terrible credit — that can turn the relationship sour. In these instances, it can sometimes be better to separate accounts while the indebted spouse works on their finances. (You can keep tabs on your finances by viewing two of your credit scores for free on Credit.com.)

You Can Feel Constrained

As an adult, it’s natural to want to spend your money however you see fit. After all, you earned it. When all the money is combined, you may not get to spend on those personal things you have in mind, especially if your spouse has a say in your spending.

It Can Cause Arguments

What if each spouse has a different idea of what financial responsibility looks like? Maybe one spouse prefers to pay down the mortgage, while the other thinks it’s wise to invest. Or maybe one spouse is frugal, while the other’s a spendthrift. In this case, combining finances requires take serious communication and the ability to compromise.

The Pros of Keeping Things Separate

There are plenty of ways to keep your finances separate. Some partners split expenses down the middle while others split them according to who earns more money. Some partners maintain a joint account for overarching expenses like housing but hold separate accounts for everything else. Regardless of how you do it, keeping separate finances can be good for a few reasons:

Keeping Spouses From One Another’s Messes

If you’re going into marriage with a lot of student loan debt or an otherwise complex financial situation, you may want to keep your money — and money problems — to yourself. This can make your spouse more comfortable and shield them from disaster in an emergency.

Giving Both Spouses More Autonomy

Perhaps the main reason couples decide not to combine finances is because they like having autonomy. Having control over your own money may cut down on fights and allow each spouse to meet their own financial goals.

The Cons of Keeping Things Separate

Here are a few reasons to avoid this option:

It Can Devalue a Spouse

Splitting household expenses by income may seem like a good idea, but it can make each spouse feel their value in the marriage is tied to their salary. However, splitting things 50-50 can make things stressful for the spouse who earns less.

It May Diminish Risk-Taking Ability

As we noted above, one of the advantages of a joint financial approach is that it allows for risk taking. When you have your spouse’s income to fall back on, you can go start a business or have a baby. The opposite may be true of couples who split their finances, unless the couple works out a system to allow for such ventures.

For many couples, the best approach to will be somewhere in between. My husband and I, for instance, combine most of our finances. But we each maintain a separate checking account for “fun money.” We can transfer a predetermined amount of money out of the joint checking account each month and spend that money however we wish. This helps us have a bit more autonomy, but ensures we’re still on the same page about our finances.

Whichever approach you choose, keep evaluating what works and what doesn’t. And don’t be afraid to discuss your feelings and change your approach if things aren’t working.

Image: PeopleImages

The post The Pros & Cons of Sharing Your Finances as a Married Couple appeared first on Credit.com.

16 Ways for Broke College Students to Cut Costs

Budgeting can be a struggle for many college students.

Every college student is familiar with the struggle of budgeting. Between tuition, housing and dining hall meal plans, college doesn’t come cheap. Unfortunately, many of these mandatory expenses make college students pressed for money the moment they step on campus. According to the National Center for Education Statistics about 85% of four-year college students receive some type of financial aid, which suggests most students on campus don’t have the financial resources to splurge whenever they feel like it.

To help you during your time at college, here are 16 tips that can help you save money, and in some cases, time or the environment.

1. Show Your Student ID While Making Purchases

College students spend a lot of money, so small business owners are very appreciative of the presence of a university. Many local businesses in college towns, and surrounding cities, give college students discounts so long as they show their university IDs.

2. Buy Things in Bulk

Toiletries, food, water, cleaning supplies, socks — you name it, college students should buy it in bulk if their living situation has enough storage space. Making bulk purchases at stores like Costco, Target or Walmart can help you save in the long run. Plus, if you end up with extra food or supplies, you can sell that inventory to friends or hall mates.

3. Use Groupon or Other Online Coupon Services

Groupon currently has an offer where college students get 25% off local deals. Taking advantage of these discounts can help college students save on services like haircuts, yoga classes, manicures, fitness gyms and more.

4. Take Public Transportation

It’s true we’re living in the age of Uber and Lyft, and sure, it might be faster to drive most places, but you’ll save so much cash in college if you take public transportation. Plus, utilizing buses and trains is better for the environment.

5. Use Cash Instead of Credit

Research from NYU professor Priya Raghubir and University of Maryland professor Joydeep Srivastava shows that using physical cash makes people less likely to overspend because they “feel the outflow of money” more directly. Spending too much on a credit card can also lead to high interest charges if you don’t pay the balance in time. Cost-conscious college students may want to trade plastic for paper. (See how your credit card spending affects your finances with a free credit report snapshot on Credit.com.)

6. Find Free Food on Campus

College campuses are overflowing with student organizations and sports teams, so there’s usually something happening on campus all the time. One of the main ways clubs get people to come to their events: free food. Scoping out events with complimentary food will save you a few bucks, and you might meet new friends by checking out a performance or club meeting.

7. Buy Online or Used Textbooks

New hardback textbooks are some of the expensive required materials a professor can expect you to buy. Instead of buying an actual textbook, go for an online version, which can be much cheaper. If an online version of a textbook doesn’t exist, try to buy a used version from a friend or an online site.

8. Sell Your Textbooks at the End of the School Year

When all your books pile up after finals, don’t just take them home and let them collect dust on the shelf. Instead, sell them to underclassmen you know, or use services like bookscouter.com or half.com to sell them. Some university bookstores buy back textbooks as well.

9. Track Your Spending

College students often go wrong when they make numerous purchases but eventually lose track of them due to having so much on their minds. Utilizing an app like Mint or even a trusty pen and notebook, students can track their spending and see if they’re adhering to their budgets. If you are constantly aware of how much you’re spending, you’ll be less likely to spend money on unnecessary items.

10. Don’t Sign Up for Subscriptions You Can’t Afford

While Netflix and Hulu might seem reasonably inexpensive, those seven to ten bucks a month quickly add up! If you really need a binge-watching fix, you can always borrow DVDs from the library on campus. Other subscription services like Amazon Prime, Spotify and Pandora can also cause you to lose money over time. Canceling those services can help students avoid monthly payments that rack up.

11. Borrow Books From the Library

Along similar lines, some English or humanities classes require five or more books per semester. To save money, borrow the books from the library instead of buying new paperbacks every time.

12. Get Free Refills on Coffee & Tea

It can be super difficult to stay away from caffeine, especially when you’re a college student spending long hours in the library. To save money, head to a chain that gives out free refills on your favorite caffeinated drinks. Starbucks offers free refills of hot, or iced, brewed coffee and tea. Most McDonald’s and Panera Bread locations also provide free refills on hot drinks, and soft drinks, too.

13. Keep Snacks on You During the Day

Food at campus cafes or markets, or even in vending machines, can be overpriced. So when it’s time for an afternoon snack, make sure you’re prepared with snacks of your own. This way, you’ll save a few cents or dollars each time you get hungry, and eventually that money accumulates.

14. Go Thrift Shopping

Besides being a fun activity to do with friends, thrift shopping is a great way to save money. It’s a smart move to save money on trendy clothes you might not wear for very long, especially in college towns or cities with ever changing weather.

15. Skip the School Supplies

Instead of wasting money on pencils, notebooks and highlighters, take notes on your laptop or tablet. Not only does this trick save the environment, but also it allows you to avoid unnecessary spending on school supplies you’ll just have to repurchase for the next school year.

16. Cut Back on Buying Music

Sure, iTunes is great, but constantly buying the newest songs from your favorite artists can be a big hit to your wallet. To save, consider using a service like Spotify or Pandora to get free music whenever you want. If you really can’t stand advertisements, Spotify offers a student discount for its premium subscription that comes without ads!

Want a few more ways to save money? Here are 50 free things you can get this year

Image: gradyreese 

The post 16 Ways for Broke College Students to Cut Costs appeared first on Credit.com.

How a Spending Freeze Can Save Your Finances

Just after the 2016 holiday season passed, recent empty-nester Laura Vondra, 49, from Black Hawk, Colo., realized she was at a new financial crossroads — after struggling to make ends meet for 30 years as a single mother of three, she was finally going to learn what it felt like to have wiggle room in her budget.

To jumpstart her new financial lease on life, she decided to try a spending freeze. Spending freezes are fairly straightforward but difficult to execute: for a set period of time, you stop spending money on anything that is not essential.

For Laura, a spending freeze would allow her to take full stock of her financial picture. At the time, she had over $110,000 in debt — a combination of student loans and credit card debt.

Her goal was to start a 30-day freeze beginning January 1, 2017. When the big day arrived, the registered nurse set the ground rules: she’d spend money only on gas and food (for herself and her trio of beloved cats, Baby Girl, Matilda, and Poppy). When she wasn’t shopping for essentials, she left her debit and credit cards at home.

At the end of the month, the results were undeniable: Laura had saved roughly $3,000 — one-half of her monthly earnings. She used the funds to completely pay off one of her credit cards. “Before, I always felt like I was broke, I was poor. This month showed me ‘no, you’re not.’ I could easily live off of what I make,” she told MagnifyMoney. “[I realized] I could actually live off of half of that.”

How to Do a Spending Freeze — the Right Way

The goal of a spending freeze is to reign in all unnecessary spending and help to jumpstart your savings goals.

While a spending freeze requires you to not do something, not spending money isn’t always the easy choice in our consumer-driven culture. Here are a few tips to steel your resolve when faced with the inevitable ad for something you really, really, really need want.

Set a time limit and stick to it.

Committing to a certain time frame will help you remember that your frugal period is only temporary, and prevent you from binge-spending when you get weary of sticking to your budget.

Everyone has a different frugality threshold. The spending freeze can help you test your limit. Start off with a shorter freeze, for maybe about a week, then extend it if it feels tolerable, and learn new financial habits along the way. Eventually you’ll be able to handle a no-spend month or even a year or two like some extreme budgeters have done.

Clemson, N.C., couple Jen and Jordan Harmon have gone on a 30-day spending freeze every January since 2014. For the parents of three, it began as a way to recover from holiday season spending.

“Christmas was awful [that year], and we had spent so much money. We were just miserable,” says Jen. Her father had passed away in early December 2013, and on top of those costs, the family had spent money on holiday gifts and fast food during the chaotic month.

Make a list of things that really matter.

Laura says her spending freeze was a way to take stock of what she really needed to spend money on — and what she didn’t. She began “spending [her] money on things that matter and on things that last, not just a dinner out or to get [her] nails done.”

She’s since focused on taking care of some things she didn’t think she would have been able to afford without going on the freeze, like eliminating her debt.

Set yourself up for success.

The more you plan ahead for your spending freeze, the easier it will be for you.

Laura, for example, planned ahead by brewing her own tea at home and bringing tea bags to the office to replace her daily $25 Starbucks habit.

The Harmons prepared lunches in advance so that Jordan wouldn’t feel pressured to spend money for food on his lunch break.

“It’s the convenience that really gets you,” says Jordan. “Once you break that habit, you realize going out to lunch may only be $5 a day, but it adds up.”

Tell EVERYONE and get them to join you

Telling your friends and family about your spending freeze is a great way to garner support for your no-spend trial as well as help you stay accountable.

When the Harmons announced their freeze on Facebook by making a spending-freeze group their friends could join, Jen said she was a little nervous, thinking, “What are people going to think?”

“I was surprised at the general positivity from friends. I thought one or two would sign up. It was like 20 people in the final group, which was more than I thought it would be,” says Jen.

You can also join groups like The Epic Spending Freeze Challenge and Bells Budget Spending Freeze on Facebook for support. Or, invite a friend or family member to join you. If your debt situation is complicated or you think you may need stronger debt support, groups like Financial Peace University and Debtors Anonymous can be good resources.

Laura joined a couple of spending-freeze groups on Facebook to keep herself motivated throughout the freeze.

“I remember talking a picture of my breakfast one morning, thinking ‘this is my last egg, I won’t have another egg until the end of January,’” she says. She says the image received several comments in the group from others who shared their final mid-month rations too.

Don’t be too rigid.

While social events can often come with a host of unexpected costs, you don’t have to avoid them altogether to have a successful freeze. Sometimes it just takes getting a little creative. You can look for free events in your area or plan nights in with your family or significant others.

Also, remember it’s your freeze, so you can bend the rules slightly for your sanity. When Laura received invites to hang out with friends at a local bar, she compromised — she ate a meal at home and purchased only drinks at the bar.

“I didn’t want to stay all month at home and be antisocial,” she says.

She made one more break for social life. In the final week of her freeze, Laura let her boyfriend — who was otherwise forbidden to spend money on her during the freeze — take her out to dinner using a buy-one-get-one-free coupon, so her meal was free.

Set a purpose for the money you’ll save.

You should be able to get a good idea of the amount of money you’ll save over the period when you first go over your spending-freeze budget. Give it a purpose. At the end of the freeze reward yourself with that thing you always wanted but could never find room in your budget for.

The Harmons said they are able to save a couple of hundred dollars each freeze, helping to boost their savings, and they’ve gotten into the habit of adding in the occasional no-spend week when necessary. So much so, that they were able to start saving to pay cash for a new family car. In 2016, the freeze helped boost their savings to buy a Prius that February. They say they would have financed the vehicle had it not been for what they learned practicing the spending freeze.

Hide the money (from yourself).

If you think you’ll have serious trouble keeping your hands off of your money, you could try hiding it from yourself to get that “out of sight, out of mind” effect. Transfer all of the money you won’t need to cover the essentials (or an emergency) to an online savings account or one-month CD with another bank.

When you check your main checking account and don’t see much money there to spend on impulse buys, you might be prevented from spending. On top of that, if you need the money, you’ll have to wait or work to get access to it since it will likely take a day or so for the funds to transfer. The wait may give you the time you need to think about the purchase before you buy.

A final word

Generally speaking, just about anyone can benefit from a spending freeze or no-spend period. The challenging spending break can help you develop a better mindset about how you use money and have lasting results on your day-to-day spending habits.

For example, Laura hasn’t tried another no-spend month, but now she’s found the money in her budget to pay $500 toward her credit card debt each month. She says once she eliminates $9,000 in credit debt, she’ll start making headway on about $100,000 in student loan debt.

She says the freeze helped her learn to spend her money on things that matter, not just on lifestyle perks like going out to dinner or getting her nails done. Building that mindset is the whole point of going on a spending freeze.

The post How a Spending Freeze Can Save Your Finances appeared first on MagnifyMoney.

6 Money Questions to Ask Before Having a Baby

Almost nothing else in life will have as much of a financial impact, so make sure you get on the same page before baby comes.

There are plenty of times when discussing finances with our significant others is a good idea. Before moving in together or getting married, or before a big move or a new job, are all good examples.

Another important time to talk about finances is before you have a baby. Almost nothing else in life will have as much of a financial impact, so making sure you’re on the same page before baby comes is a smart move. If you’re stumped on where to start, consider asking your partner the following questions.

1. Who Will Stay Home With Baby? 

Perhaps the biggest financial conversation you’ll have with your significant other is whether one of you will stay home with baby, even if only for a limited time. According to recent statistics from Childcare Aware of America, “the cost of child care in every state rivals families’ annual expenditures on housing, transportation and the cost of tuition at a four-year, public university.” Plus, the study added, “in 38 states, the cost of infant care exceeds 10% of the state’s median income for a two-parent family.”

Childcare is expensive, but quitting to stay home with a baby means potentially losing healthcare options, access to retirement accounts and matches, paid vacation and sick days, not to mention the mental stimulation and social advantages many get from their jobs. These are all important things to discuss.

2. How Will Our Lifestyle Change? 

People make life with a baby work in many scenarios, and what you’re comfortable with will be up to you, but it should be discussed. If you’re in a one-bedroom city apartment and think you can make it work, try it. If an upgrade is in the near future, or you’d like to start putting away money to purchase a house, that’s a conversation to have.

3. Will We Save for Our Child’s Education? 

Not everyone can afford to save for their child’s college, and that’s fine. But if it’s something you’d like to consider, start discussing it now. Because of compound interest, the earlier you start saving for your goal, the more you’ll have for your child when they turn 18.

It’s not just whether you’ll save but how much you want to save that should be discussed. Will you save enough money to cover the full cost of tuition at a private college? How about at an Ivy League school? Whatever your thoughts, be sure to chat with your partner so you can figure out what additional monthly savings would mean for your monthly budget. (Chatting with a financial adviser about your financial picture might be smart as well. Remember, experts say not to save for your child’s education if it means having to curb your retirement savings.)

4. Do We Need a Bigger Car or a Second One? 

My husband and I managed to live together for eight years before we bought a second car. (In fact, for six of those years we had no car, since we lived in Manhattan and didn’t need one.) We realized, however, that with a baby on the way it was important for us to be able to hop in a car at a moment’s notice, so we decided to lease one. Whether to lease or buy was a big discussion, as was how much car we could afford and what safety features were most important to us, particularly in rugged Colorado.

If you and your significant other have two cars, it’s worth discussing their safety and if it might be time to upgrade now that you’ll be driving a little one around.

5. How Much Can We Budget for Baby? 

For many young families, most of the basics are supplied by loving friends and family at a baby shower. Soon, however, your child will grow, and when she does, you’ll need lots of new stuff.

Before baby arrives, sit down and have an overall budget chat so you can determine what wiggle room you have to devote to baby. Even if you don’t end up spending that cash in the first couple of months, try putting it in a special savings account labeled “For Baby” so you have a cushion to fall back on once those new expenses start piling up. (Not sure where your finances stand? You can view two of your credit scores for free on Credit.com.)

6. Are the Proper Insurance Policies in Place?

With baby on the way, it might be a good time to start thinking about certain policies to put in place. Short-term disability, for example, is important, should one of you become unable to work for a period of time. (Be sure to check with your employer to find out your options.) Creating a will and naming guardians is important as well, and you’ll want to set up a life insurance policy for both parents.

Image: Pekic

The post 6 Money Questions to Ask Before Having a Baby appeared first on Credit.com.

11 Reasons Why Cash Is Still King

Here are 11 reasons why you might want to pay with cash — or at least keep some on hand.

All I wanted was some cilantro and onions, and I didn’t have the money. Correction: I had the money, but it was in my bank account, not in my pocket. The corner fruit market I go to when I need a couple of quick ingredients only accepts cash for small transactions. My plastic wasn’t going to help me.

My wallet was empty, but my husband had a couple bucks in his pocket, so dinner was saved. But the experience made me remember sometimes it pays to have old-fashioned currency on hand.

Not all Americans agree cash is still king. About a third of people in the U.S. never or rarely carry cash, and 34% said they would go completely cashless if they could, a 2017 ING International survey found.

These days, you can use cards or mobile payments for everything, from taxis to paying the babysitter, meaning it’s easier than ever to live without cash. At some stores — such as Amazon’s brick-and-mortar bookshops — paying with cash isn’t an option. But a fully cashless society isn’t here yet, and there are still good excuses for keeping a few bills tucked in your wallet.

Here are 11 reasons why you might want to pay with cash — or at least keep some on hand.

1. It’s Accepted (Almost) Everywhere

Unlike your American Express or Discover Card, cash is accepted almost everywhere. Most merchants in the U.S. happily take greenbacks for payments, even as they refuse to run your credit or debit cards for smaller purchases. Of course, the flip side of the cash-only (or cash-preferred) business is the one that requires you to pay with a card. That’s a perfectly legal practice, and one common in certain industries. So it’s smart to carry both cash and plastic. (Here are the best low-interest cards to consider.)

2. It’s Useful in Emergencies

Credit cards are convenient, until they don’t work or aren’t available. If the power goes out or your wallet is stolen, you’ll be happy you have some paper money tucked in a cookie jar. In fact, the government includes cash on its disaster supplies list, along with essentials such as food, water and prescription medications. Although you shouldn’t hide your life savings under your mattress, $100 or $200 will buy gas or food if the unexpected happens.

3. It Can Save You Money & Hassle When Traveling

You need cash if you’re on the road, especially if you’re venturing abroad. Not only are cards not accepted everywhere, but pockets get picked, ATMs eat debit cards and other misadventures can befall you. Cold, hard cash can get you out of a jam almost anywhere. It’s best to carry a small traveler’s emergency fund on you separate from your main wallet and leave the rest of your cash and a backup credit card in the hotel safe.

4. Your Server Will Love You

You can add your tip to your credit card receipt when you pay the bill for dinner, or you could make your server smile and leave the cash on the table. Your waiter or waitress will be able to collect their earnings right away, rather than waiting for your tip to show up on their paycheck. Plus, restaurant managers sometimes take credit card fees out of tips that show up on cards, which means less for your hard-working server.

Cash is also useful for other tipping situations. The maid or bellhop at the hotel isn’t carrying a Square reader in their pocket, and if you want to tip your Uber driver, you’ll need bills because there’s no way to tip in the app.

5. You Might Get a Discount

Card issuers charge businesses a small fee for processing transactions. Some businesses pass the charge on to customers in the form of an extra fee. Others, especially in states where such surcharges aren’t allowed, offer cash-payment discounts. For consumers, the difference is one of semantics, but the point is sometimes cash will save you money. Cash discounts are especially common at gas stations in certain areas, where you’ll usually save 5 to 10 cents a gallon if you pay with paper rather than a card.

Gas stations aren’t the only ones cutting prices for those with greenbacks. Doctors might slash bills for uninsured patients if they can pay their bill in cash. Jewelry stores might also offer cash discounts.

6. You’ll Spend Less

Do you really spend more when you pay with plastic instead of cash? Studies say yes. Researchers at MIT found people who were told to use a credit card instead of cash were willing to pay more for purchases. Another study found people paying with cash were more likely to focus on an item’s cost, rather than its benefits. In a third study, consumers who were urged to pay cash for small purchases had less debt after six months than those who didn’t receive the same advice.

7. You’ll Enjoy Your Purchases More

Not only will you spend less when you pay with cash, you’ll also get more enjoyment out of what you buy. We have greater emotional attachment to purchases we make with cash than those we put on credit, a study published in the Journal of Consumer research found.

8. You Won’t Run up Debt

If you’re one of the many Americans who have trouble using credit responsibly, going cash-only has a significant benefit: You won’t be able to run up more debt on your cards. Give yourself a cash budget for the week and stick to it. If the money isn’t in your wallet, you can’t spend it.

9. It’s Perfect for Certain Types of Budgeting

Some people give themselves a cash budget to control discretionary spending, but they still use cards for other purchases. Others go all-in with cash, switching over to what’s commonly called the “envelope system.” Popularized by author Dave Ramsey, this approach to budgeting involves dividing all your money for a month into different envelopes — say, $400 for groceries, $200 for gas and $100 for lunches at work.

You only use money from the grocery envelope to pay for groceries, and when it’s gone, it’s gone. The rigidity of the envelope system doesn’t appeal to everyone, but for those trying to live within a strict budget, it works.

10. Your Bad Credit Won’t Be an Issue

So reckless credit card use or other financial problems have tanked your credit score. That means you’ll pay a premium in the form of higher interest next time you need to borrow money. But if you can pay cash instead, you can minimize or avoid the bad-credit penalty. (Not sure where your credit stands? You can view two of your credit scores for free on Credit.com.)

Use hard currency for your next used car and you won’t have to deal with crummy loan terms. At the furniture store, you might not qualify for the special financing, but showing up with a wallet full of $100 bills could earn you an even better deal: a cash discount.

11. Your Purchases Stay Private

There’s a reason criminals like to do business in cash: It’s hard to trace. But even law-abiding citizens who value their privacy appreciate the anonymity of cash transactions.

Aside from the possibility of identity theft, credit card companies and retail stores sell your purchase data, which marketers then use to try to sell you more stuff. In one infamous case, a teen’s purchases at Target clued the store in to the fact she was pregnant. The chain then sent the mom-to-be some coupons for baby stuff, much to the surprise of her parents.

The Cons of Paying With Cash

Cash has advantages, but there’s a reason most of us don’t rely on it exclusively. For one, it’s difficult or impossible to use it in certain situations. If you want to pay cash for your plane ticket, you’ll need to make a special trip to the airport, and renting a car without plastic is difficult.

There are drawbacks to cash that go beyond inconvenience. Cash can be lost or destroyed. You won’t get perks, such as purchase protection, that you get with some credit cards. Rewards points are nonexistent, and some people find it harder to keep track of cash purchases than those on cards. The disadvantages of sticking strictly to cash are enough to make a hybrid solution — cards for some purchases, cash for others — the right choice for most people.

This article originally appeared on The Cheat Sheet.  

Image: LarsZahnerPhotography 

The post 11 Reasons Why Cash Is Still King appeared first on Credit.com.

How to Take a Vacation When You’re Juggling Student Loan Debt

With a little discipline and money management, you can travel responsibly.

Are your student loans keeping you from taking a much-needed vacation? While many put off planning a trip to pay down their loans, others find ways to do both. Student loans don’t need to feel like handcuffs restricting you from the excitement of traveling to a new or favorite destination. With a little discipline and money management, you can travel responsibly. Here’s how.

1. Live Within Your Means

While it’s always advisable to live within your means, taking on an extra-frugal mentality will not only help you save money for your vacation but also help you put more money toward your student loan debt. Living within your means starts with creating a budget.

Many dislike the word budget, or think it’s an impossible task. However, you may be surprised how much cash you free up when you limit your expenses to a set amount and cut unnecessary spending. When you have an idea of where your money is going, you see where you can make cutbacks. (Here are 50 things to stop wasting your money on.) Even a few cutbacks can free up enough cash for your vacation.

2. Start a Vacation Fund

If you don’t plan on traveling anytime soon, you may want to open a vacation fund where you put money aside each month. If you’re in a position to set money aside, even a small contribution a month will add up in no time. You may want to consider making automatic transfers so you’re not tempted to spend the money elsewhere. Just remember, saving money in an emergency fund (and for retirement) should take precedent.

3. Spread Out Purchases

For those looking to book flight and hotel accommodations with their credit cards, you may want to consider spreading out these purchases. Typically, flights and hotels will be the costlier part of your vacation. When you book these together, you’re making it difficult to pay back in full — add in your student loans and monthly bills, and this may break your budget. By planning ahead and spreading out these large vacation expenses, you’ll make your monthly credit card and loan payments a bit easier.

4. ‘There’s an App for That!’

If your travel and hotel accommodations eat up too much of your vacation budget, you may want to consider other options. Sites such as Airbnb let you rent out homes, apartments or even rooms, often for a lower price than a hotel. When traveling by air, consider downloading helpful apps like Hopper. The Hopper app predicts when flights to a specific location will be cheapest and notifies travelers when they should consider purchasing tickets.

5. Pick Up a Side Gig

A side hustle can be a great way to help supplement your current income. This extra cash can help pay for your vacation while helping you keep up with student loan payments. Between babysitting, tutoring, freelance writing or shifts at your local gym, there are endless possibilities. Consider finding something that interests you so it doesn’t feel too much like extra work.

6. Opt for a Staycation

While a staycation may not sound as appealing as an actual vacation, sometimes a trip around your own region can end up being surprisingly relaxing or adventurous. Consider researching what your own area has to offer. Between beaches, hiking trails and museums, you may find a staycation is just what you need to forget about those student loans.

Image: Rawpixel 

The post How to Take a Vacation When You’re Juggling Student Loan Debt appeared first on Credit.com.

6 Common Money Traps That Are Draining Your Wallet

Perhaps you, too, have fallen victim to one of these money traps.

Sometimes, when I look back on the way I handled money in my 20s, I want to smack myself. During that time, I built up a lot of debt — so much it led me to declare bankruptcy. My poor money management almost ruined my life.

When I really think about my attitudes toward money in my 20s versus my 30s and now my 40s, they are so different. My 20s were about spending, my 30s were focused on building up my finances and now in my 40s I’m busy enjoying them. As I look back, I noticed that I fell into some pretty common money traps.

Perhaps you, too, have fallen victim to one of these money traps. Here, I’ll share the most common ones to avoid before it’s too late.

1. Instant Gratification

We often decide we want things because they work in the moment. Look at dinner out. If you don’t feel like cooking, you go out to dinner. But the convenience of letting someone else cook for you is a trap.

To learn your own money traps, you need to create a spending plan. A spending plan can help you identify where you every cent of your money is going. Once you’ve learned how you spend, you can better determine what to cut back. (Here are 50 things to stop wasting your money on.)

2. Not Having (Or Ignoring) Your Budget

Some buy into the myth that if you have a budget, you won’t get to spend your money as you’d like. Don’t fall for this trap. Your budget is your money road map, and you get to plan your route every payday. That means you can determine the exits and detours your money will take. If you want to go out to dinner this week, no problem — just include it in your budget.

However, a budget is never “one and done” — it should be evaluated every month. The reason to look at your budget is that your spending and circumstances may change. Perhaps the cost of food went up or you received a raise. That will affect how well your budget is working.

Once a month, try to set aside time to go through your budget and make sure it still works. Update the bills and your income as needed. Make sure you still account for every single penny. If your salary has gone up, now is the time to increase your debt payments or your savings account. (Here are some quick ways to boost your emergency cash cushion.)

3. Falling for Sales Gimmicks

You see something on sale and feel you should get it. After all, it’s on sale, so you’ll be saving money. Right?

Not so fast. When you purchase something simply because it’s on sale, you’re often spending money you would not have otherwise. Before you buy the item, ask yourself if it’s something you’ll need in the next three to four weeks. If not, it might be best to pass.

While you’re at it, avoid store sales tactics such as two-for-one offers, purchase limits and quantity discounts, which encourage you to spend more.

4. You Love the Word Free

Free is one of those words that many find hard to ignore. It makes you feel as if you are getting something special. However, free does not always mean free.

For example, stores often offer free financing offers. These are tempting because you can either make no payments on your new furniture for six months or get your new television set interest-free for 12 months. The truth is, for most, that “free” period will cost more than they realize. Let’s look at both scenarios.

If you purchase something with no payments for any period, you can make the purchase and not have to worry about your budget. But what you may not realize is that you will still accrue interest on that outstanding balance.

Let’s say your loan is $500 and the interest rate is 18%. The store offers no payments for a year. Each month, you will add at least $7 to your outstanding balance. That means your $500 item will now cost you nearly $600. Not such a good deal, is it?

The same is true with 0% financing. Even though you pay no interest, your interest will still accumulate. So, if you have a 0% interest rate for 24 months, you better make sure to pay it in full before the end of the term. Otherwise, the store may revert back to the original balance and calculate your interest based on the outstanding balance, which can make the loan cost even more.

Before you make any large purchase, make sure you can really afford it. A deal is only a deal if it doesn’t cost you more than the ticket price.

5. You Can’t Walk Away

Sometimes it’s best to give up. If you have a vehicle costing you money in repairs every month or two, it might be more cost effective to get rid of it and put that money toward something newer and more reliable.

It might also be the right time to upgrade (or even downsize) your home. If you have added two kids to the family and now live on top of one another, is it worth trying to find ways to add more space? Are you paying to rent a storage unit because you can’t fit everything into your home? It might be better to move or even sell items you can’t use.

You might be trying to keep up with your friends and family. As much fun as it is to take vacations, go shopping every weekend and have the latest electronic gadgets, it may not be feasible, given your budget. Your envy could be forcing you into debt. (Debt can also be rough on your credit. You can see how by viewing two of your credit scores for free on Credit.com.)

Changing your lifestyle is not easy. However, it is a change you must make to get out from spending more than you should.

6. You Don’t Track Your Purchases

When I ask people why they don’t use cash, they usually say it’s because it’s too easy to spend. But the real reason is because they’re probably not tracking their spending. They don’t see where their money goes, so they spend without thinking about it.

Look at the $1 to $5 purchases you make. They don’t seem like much in the moment. But what if you make seven $3 purchases a week? That’s $21. And it’s not just $21, but $21 for which you can’t account.

When you start to keep track of every penny you spend, you force yourself to be more accountable. You become more aware of where you spend and how you spend it. Once you do that, you’ll begin to think twice before buying a second latte.

Money traps don’t have to trip you up while you’re working to achieve your financial goals. Recognize them and do what you can to avoid falling for them.

Image: shapecharge

The post 6 Common Money Traps That Are Draining Your Wallet appeared first on Credit.com.

How to Really Budget for a Staycation

Just because you're staying at or near home doesn't mean you won't accidentally overspend. Here's how to avoid digging a fiscal hole.

Whether you’re dreaming of an hour-long massage or lazy days lounging under the summer sun, you’ll want to budget wisely for your staycation. After all, you’ve worked hard for this well-deserved treat, and the last thing you want is for your savings account to plummet just when you’ve begun to relax. (Overspending can also tank your credit. You can see how your spending is impacting your credit by viewing two of your scores for free on Credit.com.)

To avoid a staggering credit card bill, here’s how to budget for your staycation, no matter what you’ve got in mind.

Be Realistic 

A whimsical tour through New York City, with stops on Broadway, in SoHo and at Bloomingdale’s, probably isn’t in the cards on a waiter’s budget. Be realistic and do your research so you have a solid idea of what you can afford.

Draft a Budget

Just because you’re staying home doesn’t mean you won’t spend money. So it’s a good idea to figure out how much you can comfortably set aside after you’ve covered your monthly expenses. Is it $500? $1,000? More? Whatever it is, remember monthly payments like rent and utilities are a necessity, while your staycation budget isn’t.

Make a Plan 

More than anything, the secret to drafting a great budget is knowing what it will cover. If you’re planning to play tourist, checking out concerts and staying nearby, research those individual costs and factor them into your budget. Go online, see what’s exciting and make a list of what you’d like to do. Once you’ve narrowed it down, you can decide what makes the most sense based on your budget.

Set a Daily Cash Allowance 

Once you’ve narrowed down how much money you can spend, it can be helpful to set a daily allowance for meals, snacks and planned-out activities. Experts recommend inflating the number just a bit to account for unforeseen costs like impulse purchases and emergencies. As your staycation draws closer and your plans change, rework your budget accordingly. (As an aside, now might be a good time to see how you’re doing on the emergency savings front. Here are some ways to build a bigger cash cushion now.)

Get Creative 

Sometimes, meeting your vacation goals takes a bit of creativity. To that end, find ways to cut back your regular spending, even if you haven’t given it much thought before. Holding off on those lattes or 3 p.m. snacks may just be the thing that allows you to visit the fancy restaurant you’ve been dying to try.

Image: AzmanL

The post How to Really Budget for a Staycation appeared first on Credit.com.

How to Save Money to Start Your Own Business

When saving up to make the self-employment switch, don't sell yourself short.

Starting a business almost always takes money. When saving up to make the self-employment switch, financial expert Edward Kohlhepp, CFP from Doylestown, Pennsylvania, recommends that you don’t sell yourself short.

“Don’t stop when you have enough to just buy the business,” he says. “You’ll need money for operating expenses such as taxes, rent and payroll, plus you should have six-to-12 months of personal living expenses saved to tide you over until the business begins generating reliable income.”

Here is a four-step plan to help you start cutting costs and save money so you can get your business up and running as soon as possible.

1. Start Budgeting

Budgeting is an important part of any business, so if you haven’t started a budget yet, this is the time. There are several ways you can do this, from an old-school pen and paper system to using budgeting software that lets you manage your household costs in addition to your business finances, so you can keep tabs on your various sources of income all in one place. (Disclosure: I write for Quicken, who produces these types of products.) You can also use a combination of the two or other methods that work for you, so long as you start a budget and stick with it. Remember: Budgets can be fluid, so feel free to adjust as you go.

2. Focus on the Essentials

As you create a personal budget, keep a record of your daily expenses. If an expense isn’t essential, cut it. For example, it may be part of your morning routine to grab a coffee for the commute. But bringing your own java in a travel mug compared to buying a latte every day will save you serious cash after several work weeks. Review your monthly expenses and eliminate those you don’t really need. Some other considerations:

  • Will a Netflix or Hulu subscription allow you to cancel your premium cable service?
  • Do you use your gym membership often enough to justify the cost?
  • How much can you save by buying staple items in bulk?
  • Would using public transportation, cabs or services like Uber be cheaper than owning two cars?

If you find that your excess expenses most often happen while you’re on the road, take your budget with you. Budgeting apps can help you track personal and business expenses on the go from wherever you are.

3. Negotiate for Savings

Only half of all consumers bargain over prices when making a purchase. Yet 89% of those who did were able to get a deal at least once in the past year, according to the Consumer Reports National Research Center.

Even if you find a great price online, services like Amazon and eBay often allow you to negotiate on the price with some sellers.
When shopping for items in person, always keep an eye out for a way to get a deal. Negotiating often works best when you can see the person face-to-face. Here are some strategies:

  • Ask if there is a discount when you pay with cash.
  • Point out a flaw or defect in an item you want, like a loose button on a jacket, then ask if there could be a discount because of it.
  • Ask for a discount when buying in bulk.

4. Eliminate High-Interest Debt

Carrying high-interest debt is an extra financial burden you don’t need when you’re ready to start your business. Calculate how much loan interest is costing you each year and compare that to the interest you’re earning on any investments you may have. If the difference is substantial, it may be wise to pay off those debts immediately. High-interest debt can also impact your credit. You can see how by viewing two of your credit scores for free on Credit.com.

When saving for your business, always consider what your needs may be in the future. For example, if you don’t cancel your credit cards after paying them off, you will have available credit to fall back on should your business suffer a setback.

Image: JohnnyGreig

The post How to Save Money to Start Your Own Business appeared first on Credit.com.

7 Steps to Get Rid of Your Financial Stress Once & For All

Everyone experiences financial stress around money. Here's how to make the worst of it go away.

Financial stress and anxiety affect millions of people. No matter how much, or how little, money you make, you have probably felt financial stress at some point in your life. It doesn’t matter how well you think you’ve planned (or haven’t), things can happen that cause you stress or anxiety.

Chances are you’ve had to deal with one of these situations:

  • Your income dropped and now you can’t pay your bills.
  • There was an unexpected expense that drained your savings.
  • The debts keep building up and you can’t pay them down.
  • You have had a medical issue and insurance did not cover it.

If you’ve dealt with one or all of these scenarios, you’re not alone. Thousands of Americans are in the same situation. They move from one stressful financial situation to another — or juggle many of them at the same time.

The reasons for financial stress differ for all of us, but the way to overcome it is the same.

1. Talk About It

The No. 1 mistake people make when they stress about anything is to avoid it. There is this belief that if you don’t talk about or address it, then it is not true. If you do this, though, the situation will get worse.

You need to look directly at the financial situation causing you stress. It can help to write it down, along with ideas that might make it better. If you are in a relationship, talk to your spouse or partner about it.

Whatever you do, don’t ignore it. It won’t go away on its own.

2. Review Your Budget

If you have a budget, refer to it to see what can be changed. Is there a spending category you can eliminate? Maybe you can reduce your spending until you address your financial situation.

If you do not have a budget, start there. Even if you are broke, you still need a budget. Your budget is a financial road map. It guides you to make the right spending choices and to see where your money goes.

Reviewing your budget helps identify what works and what doesn’t. You should check your budget at least once a month so you always know where you are going, and where you’ve been.

3. Make More Money

Your stress may mean it is time to change careers or jobs, or that you need to find ways to bring in more money. There are many ways you can work from home and make more money. You just have to find the right niche.

4. Comparison Shop

If you need to make a major purchase, don’t run down the street to the closest store to make your purchase. Research the item you want. Read reviews and check prices.

Once you know which item you want, visit your store to buy it. You might be able to price match to get the best deal or even negotiate the price, especially if you use cash.

5. Get Rid of Your Debt

Debt is one of the main reasons people have financial stress. Whether your debt is the result of overspending or life tossing obstacles your way it can be easy to get in over your head.

Taking steps to get out of debt can improve your financial stress. It will not be easy. I know this, because I’ve been in your shoes. However, if you can put together a plan and begin making progress toward your goals, you will find your financial stress is reduced, or possibly eliminated. (Remember, keeping your debt under control can also improve your credit standing, which can save you thousands over your life time. Find out where your credit stands by getting your two free credit scores right here on Credit.com.)

6. Seek Professional Help

If your financial situation is really bad, it may be time to seek professional help. You may want to consult a financial planner if you stress over saving for college or retirement.

Asking for help does not make you weak. It shows you are smart. If you needed surgery, you would not perform it on yourself. You would find a surgeon. The same is true with your finances.

7. Set Goals

Decide what you want from your finances. Make a vision board, or post an image of your goal where you will see it every day. When you can visualize your goals, and see them in front of you, they become real. They are no longer a thought in the back of your mind. Seeing your goals in front of you can keep you focused.

For example, when my husband and I were working on paying off our debt, I had a paper on the refrigerator with a total amount owed on it. As we made payments, I updated it. It was in front of my face every day. I could see how much we owed, but more than that, I was able to see our progress as I watched the balance drop.

No matter what causes you financial stress and anxiety, there are things you can do to overcome it. You need to first take ownership and then take the necessary steps forward.

Image: kieferpix

The post 7 Steps to Get Rid of Your Financial Stress Once & For All appeared first on Credit.com.