What Is High-risk Auto Insurance?  

Insurance companies determine risk when calculating rates and offering coverage. If the company determines that your accident risk is higher than average, you’ll have to purchase high-risk auto insurance. Since companies base rates on risk, you can expect to pay more for coverage if you need high-risk insurance. 

Find out why you might need high-risk insurance, how you can lower your premiums, and more. Then you’ll be ready to shop for high-risk auto insurance if necessary. 

 

Reasons for High-risk Auto Insurance

Insurance companies look at various factors when determining risk. You might need high-risk insurance if you:

  • Have lots of at-fault accidents on your record 
  • Have a large number of speeding tickets 
  • Have reckless driving or racing violations
  • Have been convicted of driving under the influence
  • Are a young, inexperienced driver, or are over 65 years old 
  • Have bad credit 
  • Use the vehicle for a ridesharing service or another high-risk activity 
  • Drive a high value or specialized car
  • Had your license suspended or revoked
  • Let your insurance lapse 

 

Lowering Your Risk

If you’ve been flagged as a high-risk driver, there are some things you can do to reduce your risk in the eyes of the insurance company. Reducing your risk can lead to lower premiums.

First, if you are high risk due to moving violations, take a defensive driving course. Speak with your insurance agent before taking a class to ensure it’s approved, though. 

Also, practice safer driving behaviors while on the road. Follow the speed limit and obey all laws. After you hit the three-year mark without any tickets, your premium should decrease.

If you’re high-risk because of a DUI conviction, speak to your insurance company about installing an interlock ignition device. While most companies will not reduce the rates, some will, so it’s worth exploring. 

Improving your credit score can also lower your premiums. Some insurance companies charge more for bad credit scores, so make your payments on time and reduce your credit-to-debt ratio.  

 

SR-22 Certificate and High-risk Insurance

If you require high-risk auto insurance because your policy lapsed, or your license was suspended or revoked, you might need an SR-22 certificate. This certificate is not insurance. Instead, it is proof that you have the required liability insurance. Your insurance company will issue the certificate and send it to the necessary state office on your behalf. 

 

High-risk Insurance Restrictions

Some high-risk policies include restrictions. For example, you might be the only person protected when driving your vehicle. If someone else drives your car, he or she won’t be covered. Also, if you are in an accident and the court assesses punitive damages, your policy might not cover it. Finally, the company might review your driving history annually and increase your rates if you have any infractions. 

Because of these restrictions and the high cost of coverage, work hard to reduce your risk, so you can get a standard policy soon. 

 

Getting High-risk Insurance

Finding high-risk auto insurance is a bit harder than purchasing a standard policy. Some major insurance providers offer high-risk coverage, so you can begin shopping there. However, you might have to use a company that specializes in these policies. When you choose such a company, you’re less likely to get turned down for insurance. 

 

Compare Quotes

As with any insurance policy, you should compare quotes before purchasing high-risk coverage. Companies use different formulas for assessing risk. One company might see you as extremely high risk, while another might view your risk at a moderate level, meaning you’ll pay less. After you compare quotes, you can purchase your policy and hit the road once again.

What Is High-risk Auto Insurance?   is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

How Gaps in Coverage Affect Auto Insurance Rates

A lapse in coverage increases your risk and your rates. It may be harder to find suitable and affordable car insurance and may mean that you need to make some sacrifices in order to keep those insurance premiums at an affordable level. But it’s not a complete disaster and is far from the worst thing you can have on your record.

What is a Gap in Coverage?

A lapse or gap in coverage is a period in which you were not insured. You owned a car during this period but you didn’t meet the state minimum insurance requirements.

In some cases, a gap in coverage can be the result of negligence on your part. You may have allowed your insurance policy to lapse without purchasing a new one or it may have been canceled because you failed to meet your payment obligations.

A lapse in auto insurance coverage can also occur when you are deployed, sent to prison or because you simply didn’t drive during that period. 

If you fall into the first group, your insurer will notify the Department of Motor Vehicles (DMV), telling them that your car insurance policy has lapsed and you are no longer insured. This will expose you to fines and a host of other problems (see our guide on the penalties imposed on uninsured drivers).

As for members of the military, they can suspend their car insurance coverage when they are on active duty, thus avoiding any rate increases and other problems. The same applies to students studying abroad, although in their case, they will need to contact their DMV first.

What Happens Following a Car Insurance Lapse?

Many states require you to have continuous insurance, which means your auto insurance policy has not lapsed for any period of time. As soon as it lapses, your license and registration may be revoked, and you will need to pay a fee to have these reinstated. These fees, as they apply in each state, are listed below, but it’s worth noting that you may also be hit with additional court fees and fines if you are found to be driving without insurance:

  • Alabama: Insurance Lapse Fee = $200 (first offense); $400 (second offense)
  • Alaska: Insurance Lapse Fee = $100
  • Arizona: Insurance Lapse Fee = $50
  • Arkansas: Insurance Lapse Fee = $50
  • California: Insurance Lapse Fee = $14
  • Colorado: Insurance Lapse Fee = $40
  • Connecticut: Insurance Lapse Fee = $200
  • Delaware: Insurance Lapse Fee = $100 + $5 a day
  • D.C.: Insurance Lapse Fee = $150 + $7 a day
  • Florida: Insurance Lapse Fee = $150 (first offense); $250 (second offense); $500 (third offense)
  • Georgia: Insurance Lapse Fee = $25
  • Hawaii: Insurance Lapse Fee = $20+
  • Idaho: Insurance Lapse Fee = $85
  • Illinois: Insurance Lapse Fee = $100
  • Indiana: Insurance Lapse Fee = $150 (first offense); $225 (second offense); $300 (third offense)
  • Iowa: Insurance Lapse Fee = N/A
  • Kansas: Insurance Lapse Fee = $100 (first offense); $300 (second offense)
  • Kentucky: Insurance Lapse Fee = $40
  • Louisiana: Insurance Lapse Fee = $125 to $525 (depending on length of gap)
  • Maine: Insurance Lapse Fee = Up to $115
  • Maryland: Insurance Lapse Fee = $150 + $7 per day
  • Massachusetts: Insurance Lapse Fee = $500
  • Michigan: Insurance Lapse Fee = $75
  • Minnesota: Insurance Lapse Fee = $30
  • Mississippi: Insurance Lapse Fee = $30
  • Missouri: Insurance Lapse Fee = $20 (first offense); $200 (second offense); $400 (third offense)
  • Montana: Insurance Lapse Fee = N/A
  • Nebraska: Insurance Lapse Fee = $500
  • Nevada: Insurance Lapse Fee = $251 to $1,000 (depending on length of gap)
  • New Hampshire: Insurance Lapse Fee = N/A
  • New Jersey: Insurance Lapse Fee = $100
  • New Mexico: Insurance Lapse Fee = $30
  • New York: Insurance Lapse Fee = $8 to $12 per day
  • North Carolina: Insurance Lapse Fee = $50 (first offense); $100 (second offense); $150 (third offense)
  • North Dakota: Insurance Lapse Fee = N/A
  • Ohio: Insurance Lapse Fee = $160 (first offense); $360 (second offense); $660 (third offense)
  • Oklahoma: Insurance Lapse Fee = $400
  • Oregon: Insurance Lapse Fee = $75
  • Pennsylvania: Insurance Lapse Fee = $88
  • Rhode Island: Insurance Lapse Fee = $30 to $50
  • South Carolina: Insurance Lapse Fee = $550 + $5 per day
  • South Dakota: Insurance Lapse Fee = $78 to $228
  • Tennessee: Insurance Lapse Fee = $115
  • Texas: Insurance Lapse Fee = $100
  • Utah: Insurance Lapse Fee = $100
  • Vermont: Insurance Lapse Fee = $71
  • Virginia: Insurance Lapse Fee = $145
  • Washington: Insurance Lapse Fee = $75
  • West Virginia: Insurance Lapse Fee = $100
  • Wisconsin: Insurance Lapse Fee = $60
  • Wyoming: Insurance Lapse Fee = $50

Will My Car Insurance Rates Increase Following a Gap in Coverage?

In addition to the fines mentioned above, you can expect your auto insurance quotes to be a little higher than before, although this all depends on how long the gap in coverage was.

If it was less than 4 weeks, the rate increase may amount to a few extra dollars a month. If it was longer than 4 weeks, you could find yourself paying 20% to 50% more, depending on your chosen car insurance company. 

The exact rate of increase will depend on the state, high-risk status, driving record, car insurance discounts, and age of the driver. Insurance is all about measuring risk and probable claims, and an insurance company will look at everything from marital status to DUI convictions when measuring your risk and underwriting your new policy.

Bottom Line: Getting Cheap Car Insurance Quotes After a Lapse

In our research, we found that Progressive, Esurance, and State Farm offered lower rates than GEICO, even though GEICO typically tops the charts when it comes to insurance costs. You should also get much lower auto insurance rates with providers like USAA, providing you qualify.

To save even more, maintain a high credit score, aim for those good driver discounts, and try to secure bundling discounts, which are provided when you combine multiple different insurance products, such as homeowners insurance and car insurance.

The car you drive is also key. A new car will generally lead to much higher rates than a car that is a few years old, as it will be more expensive to repair and replace.

However, a car that is a few decades old will cost more to insurance than one that is a few years old, as it may lack the safety features and anti-theft features needed to keep rates low.

 

How Gaps in Coverage Affect Auto Insurance Rates is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

When Should you Drop Full Coverage on your Car?

Full coverage car insurance covers you for most eventualities, but it is also expensive. You get what you pay for, and in this case, what you pay for is liability coverage, collision coverage, and comprehensive coverage.

The question is, how essential are all of these coverage options and at what point do they become surplus to requirements?

Your insurance coverage is never set in stone. You can increase your coverage as needed and drop coverage when it is no longer needed. Staying on top of everything is just a case of making the right choices at the right time.

What is Full Coverage Auto Insurance?

There are several different types of auto insurance, each covering you for something different. The most important cover is something known as liability insurance, which spans bodily injury and property damage and covers you when you injure another driver or their property.

Liability insurance is required in nearly all states and there are minimum coverage limits in all of them. To make sure you are legal, you need to meet these limits. If you want additional liability cover to protect your personal assets, you can pay more and aim higher.

Collision coverage and comprehensive coverage are also required if you want full coverage car insurance. With collision insurance, you are protected against damage caused to your own property, whether that damage is the result of a road traffic accident or a collision with a wall or guardrail. As for comprehensive insurance, it protects you against vandalism, theft, weather damage, and most of the things not covered by collision insurance.

A full coverage policy should also include some personal injury protection (PIP) cover, whether in the form of medical payments coverage or personal injury protection coverage. Both are designed to help you with medical bills and other expenses resulting from personal injury, while PIP goes one step further and covers you for transportation costs, childcare expenses, and loss of work.

All of these options are part of a full coverage insurance policy. There are also many additional coverage options and add-ons, but these aren’t necessarily part of a full coverage policy and, in most cases, need to be added for an extra cost. These options include:

  • Uninsured/Underinsured Motorist Coverage: Minimum cover car insurance won’t protect you if you are hit by an uninsured driver. It has been estimated that as many as 13% of all drivers on US roads are not insured and, in some states, this climbs as high as 25%. With uninsured motorist coverage, you will be protected for such eventualities.
  • Gap Insurance: When you purchase a brand new car on finance, the lender will often insist on gap insurance. A car depreciates rapidly and if that depreciation drops the value below the balance of the loan, the lender stands to lose out. Gap insurance protects them against such an outcome and covers the difference to make sure they get their money back if the car is written off.
  • New Car Replacement: A new car replacement policy will do exactly what the name suggests, providing you with a new vehicle in the event your current one is written off. Depending on the insurer, there will be limits concerning the age of the vehicle and the number of miles on the clock.
  • Roadside Assistance: With roadside assistance, you will be covered for essential services if you break down by the side of the road. It typically includes tire changes, fuel delivery, towing, lost key replacement, and more.
  • Pet Injury: What happens when your pet gets injured during a road traffic accident? If you have pet insurance, they will be covered through that. If not, many providers will give you a pet injury insurance add-on.
  • Rental Car Reimbursement: If your car is stolen or getting repaired, rental car reimbursement coverage will help you to cover the costs of a short term rental. This insurance option is often fixed at a daily sum of between $50 and $100 and lasts for no more than 30 days.
  • Accidental Death: A type of life insurance that focuses on accidents, paying a death benefit to a beneficiary when a loved one dies in an accident.

When to Drop Full Car Insurance Coverage

The value of the car you drive, along with your insurance rates and your driving record, will impact whether or not you should drop full coverage auto insurance. Take a look at the following examples to discover when this might be the right option for you:

1. Your Insurance Premiums are too High

If your car insurance rates are higher than the size of a payout following an accident, it might be time to trim the fat. Insurance is a gamble, a form of protection. You pay a small sum of money in the knowledge that you’ll be covered for a large sum if something untoward happens. But if you reach a point when your premiums begin to exceed the potential payout, it’s no longer useful.

2. You Have an Old Car

The lower your car’s value, the less you need full coverage car insurance. If you’re driving around in a car that costs less than $1,000 and you’re paying $2,000 for the pleasure, you may as well be throwing your money down a wishing well.

In the event of an accident, you’ll have a deductible to pay and that deductible could be near the value of the car. In such cases, it will nearly always make more sense to stick with minimum insurance and to just scrap your car if anything serious happens.

3. You Have a Large Emergency Fund

An emergency fund is a sum of money you keep to one side to cover you for emergencies, including job issues, medical bills, broken appliances, and car troubles. If you have such a fund available, you have a few more options at your disposal and can consider dropping full coverage.

It will save you money in the long term and if anything happens in the short term, you still have options and won’t be completely financially destitute.

Bottom Line: When It’s Needed

While there are times when full coverage is unnecessary and excessive, there are also times when it is essential. If you have a new car, for instance, you should get all of the cover you can afford, otherwise, you could be seriously out of pocket following an accident or theft.

 

When Should you Drop Full Coverage on your Car? is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

What Is Uninsured Motorist Insurance?

What is Uninsured Motorist Insurance?

If you buy or lease a car, you’ll need to arrange for insurance coverage. Not only is it the law in most states, it will also protect your bank account in the event of an accident. However, if you’re involved in an accident and the other driver doesn’t have car insurance, you could run into problems. That’s the thinking behind uninsured motorist insurance. 

Compare checking accounts here. 

Uninsured Motorist Insurance Basics

If two people who both have car insurance get in a car crash, they exchange insurance information. The other driver’s insurance company generally pays your expenses if you’re in a crash. So what happens if the other driver doesn’t have insurance? There’s no one to pay you, cover your car repair or replacement or foot your medical bills if you’re injured. Your own car insurance may cover those costs, but it depends on the plan.

That’s where uninsured motorist insurance comes in. Uninsured motorist insurance policies offer protection against property damage or personal injury resulting from a run-in with an uninsured driver. There are a lot of bad drivers out there, and plenty of people who drive regularly but can’t afford car insurance. Have a run-in with one of them and you could end up covering your own medical and car repair bills.

In 22 states and the District of Columbia, drivers are required to have uninsured motorist insurance, so if you have vehicle insurance you’re covered in the event of a crash with an uninsured driver. But if you live in a state that doesn’t require uninsured motorist coverage, your regular car insurance policy may not protect you from bills if you’re in a crash with a driver who doesn’t have car insurance.

Check out our budget calculator.

Is Uninsured Motorist Insurance Necessary?

What is Uninsured Motorist Insurance?

If you live in a state that requires uninsured motorist coverage as part of the minimum coverage requirement for all auto insurance policies, you have at least some protection from uninsured drivers. You can always call your insurance company to check on the kind of coverage you have and discuss your coverage options.

If you live in a state that doesn’t require uninsured motorist coverage, the question becomes: Should you buy uninsured motorist insurance as an add-on policy to your regular car insurance? Before you decide, it’s worth pricing it out.

First, you can call your car insurance provider and check what level of coverage you already have against uninsured motorists. Your existing plan may provide some level of protection against medical bills and/or car repair bills resulting from a crash with an uninsured motorist.

If you don’t have any coverage or if you think your coverage levels are insufficient, you can ask your insurance provider how much it would cost you to add uninsured motorist insurance to your coverage package. You can also get quotes from other car insurance companies and opt for the policy that provides the best coverage for the lowest price.

Uninsured motorist insurance can give you some extra protections, too, such as coverage in the event that a hit-and-run driver crashes into your car or in the event that you’re struck by a vehicle as a pedestrian. So even those with built-in protection against uninsured motorists through their regular car insurance may be tempted to add extra coverage.

Related Article: All About Car Loan Amortization

Bottom Line

What is Uninsured Motorist Insurance?

Just because you have car insurance that you’re paying for every month doesn’t mean you’re protected in all eventualities. If reading this article has made you nervous that you might not have enough – or any – protection against uninsured motorists, this could be a good time to get your insurance company on the phone, particularly if you live in a state with a high percentage of uninsured drivers.

Photo credit: Â©iStock.com/bowdenimages, Â©iStock.com/bowdenimages, Â©iStock.com/vm

The post What Is Uninsured Motorist Insurance? appeared first on SmartAsset Blog.

Source: smartasset.com

How I Paid Off $40,000 In Student Loans in 7 Months

Want to learn how to pay off student loans? With my student loan repayment plan, I was able to pay off $40,000 in student loan debt in 7 months!Want to learn how to pay off student loans? With my student loan repayment plan, I was able to pay off $40,000 in student loan debt in 7 months! One of the best ways to save money is to finally get rid of those pesky loans that are hurting your financial situation.

Learning how to pay off student loans can lead to many positives, such as:

  • You may finally feel less financial stress.
  • You may be able to use that money towards something more important, such as saving for retirement.
  • Getting rid of your student loans may allow you to pursue other goals in life, such as traveling more or looking for a better job.

I know these things are true because learning how to pay off my student loans is one of the best decisions that I’ve ever made.

No, it wasn’t easy to pay off my student loans that quickly, but it was definitely worth it. No longer having those monthly payments hanging over my head is a HUGE relief, and it allowed me to eventually leave my day job and travel full-time.

Related posts on how to pay off student loans:

  • 6 Ways I Saved Money On College Costs
  • How Blogging Paid Off My Student Loans
  • The Benefits Of Paying Off Student Loan Debt Early
  • 30+ Ways To Save Money Each Month
  • 12 Work From Home Jobs That Can Earn You $1,000+ Each Month
  • How Do Student Loans Work?

How to pay off student loans and create a great student loan repayment plan:

 

Total how much student loan debt you have.

The very first thing that I recommend you do if you want to learn how to pay off student loans is to add up the total amount of student loans that you have.

When you total your student loans, do not just estimate how much student loan debt you have.

You should actually pull up each student loan and tally everything, down to the penny. By doing so, you will have a much more realistic view of exactly how much you’re dealing with.

Plus, the average person has no idea how much student loan debt they have! Usually, they have far more than they originally thought.

 

Understand your student loans better.

There are many people who simply do not understand their student loans. There are many things to research so that you can create the best student loan repayment plan, and this will also help you understand your loans and interest rates.

You should understand:

  • Your interest rate. Some student loans have fixed interest rates, whereas others might have variable rates. You’ll want to figure out what the interest rate on your loans are because that may impact the student loan repayment plan you decide on. For example, you might choose to pay off your student loans that have the highest interest rates first so that you can pay less money over time.
  • What a monthly payment means. Many people believe that a monthly payment is all that you have to pay, are allowed to pay, or that by paying just the minimum monthly payment you won’t owe any interest. These three things are so incorrect! Even if you pay the minimum monthly payment, you will most likely still owe interest charges (unless your interest rate is 0% – but that is very unlikely with student loans).
  • Student loan reimbursements. Some employers will give you money to put towards your student loans, but you should always do your research when it comes to this area. Some employers require that you work for them for a certain amount of time, you have great grades, good attendance, and they might have other requirements as well. There are many employers out there who will pay your student loans back (fully or partially), so definitely look into this option.
  • Auto-payment plans. For most student loans, you can probably auto-pay them and receive a discount. Always look into this as you may be able to lower your interest rate by 0.25% on each of your student loans.

I recommend that you check out Personal Capital (a free service) if you are interested in gaining control of your financial situation. Personal Capital allows you to aggregate your financial accounts so that you can easily see your financial situation, your cash flow, detailed graphs, and more. You can also connect accounts, such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more. Plus, it’s FREE.

 

Determine if refinancing your student loans is right for you.

Student loan refinancing is when you apply for a new loan that is then used to pay off your other student loans. This may be a good option if your credit history or credit score is better than when you originally took out your student loans.

By refinancing your student loans, you may qualify for better repayment terms, a lower interest rate, and more. This is great because it may help you pay off your student loans quicker.

The positives of refinancing student loans include:

  • One monthly payment to simplify your finances.
  • Lower monthly payments.
  • Lower interest rates, and more.

Some companies, like Credible, allow you to refinance your federal student loans as well as your private student loans into one. On average, refinancing can save you thousands of dollars on your loan, which is amazing!

However, before refinancing a federal student loan, you will want to think about different federal benefits that you may be giving up. You may give up income-based repayment plans and loan forgiveness for those who have certain public service jobs (such as jobs at public schools, the military, Peace Corps, and more). By refinancing federal student loans, you are giving up any future option to these.

Read further at: Consolidating And Refinancing Student Loans – What You Should Know.

Related tip on how to pay off student loans: I highly recommend Credible for student loan refinancing. They are the top student loan refinancing company and have great customer service! You can significantly lower the interest rate on your student loans which may help you shave thousands off your student loan bill over time. Through Credible, you may be able to refinance your student loans at a rate as low as 2.14%! Plus, it’s free to apply and Credible is giving Making Sense of Cents readers a $100 bonus when they refinance.

 

Reduce your interest rate for your student loan repayment plan.

As I stated earlier, if you automatically pay your student loans each month or consolidate them, then sometimes you can get an interest rate reduction.

With Sallie Mae, I believe the reduction is 0.25%.

That may not seem significant, but it is something! Remember, every little bit counts when it comes to having a good student loan repayment plan.

 

Create the best budget.

If you don’t have one already, then you should create a budget immediately. This will help you learn how to pay off student loans as you’ll learn how to manage your money better.

Budgets are great, because they keep you mindful of your income and expenses. With a budget, you will know exactly how much you can spend in a category each month, how much you have to work with, what spending areas need to be evaluated, among other things.

Learn more at How To Create a Budget That Works.

 

Look for more ways to earn money.

Making extra money can allow you to pay off your students loans quickly because there is no limit to how much money you can make.

Finding ways to make extra money is how I was able to pay off my student loans so quickly!

And trust me, you probably do have time in your day to make extra money.

Just think about it: The average person watches 35 hours of TV a week and spends around 15 hours a week on social media. If you could use that time better and make more money with those extra hours, you’ll be able to pay off your student loans in no time!

Here are some ways to make more money so that you can learn how to pay off student loans:

  • Start a blog. Blogging is how I make a living and just a few years ago I never thought it would be possible. I earn around $100,000 a month through blogging. You can create your own blog here with my easy-to-use tutorial. You can start your blog for as low as $2.95 per month, plus you get a free domain if you sign-up through my tutorial.
  • Start a business. There are many business ideas that you could start in order to make extra money.
  • Sell your stuff. There are many things you can do to make money by selling items. We all have extra things laying around that can be sold, or you can even search for items that can be bought and resold for a profit.
  • Rent an extra room in your home. If you have extra space in your house, then you may want to rent it out. Read A Complete Guide To Renting A Room For Extra Money.
  • Answer surveys. Survey companies I recommend include Swagbucks, Survey Junkie, Pinecone Research, Opinion Outpost, Prize Rebel, and Harris Poll Online. They’re free to join and free to use! You get paid to answer surveys and to test products. It’s best to sign up for as many as you can as that way you can receive the most surveys and make the most money.
  • Become an Uber or Lyft driver. Driving others around in your spare time can be a great money maker. Read more about this in my post – How To Become An Uber Or Lyft Driver. Click here to join Uber and start making money ASAP.
  • Find a part-time job. There are many part-time jobs that you may be able to find. You can find a job on sites such as Snagajob, Craigslist (yes, I’ve found a legitimate job through there before), Monster, and so on.

Related articles that will help you learn how to pay off student loans:

  • 75+ Ways To Make Extra Money
  • 8 Things To Sell To Make Money
  • 10 Ways To Make Money Online From The Comfort of Your Home
  • 10 Things I’ve Done To Make Extra Money
  • Ways To Make An Extra $1,000 A Month

 

How to pay off your student loans – Find ways to reduce your expenses.

The next step is to cut your budget so that you can have a faster student loan repayment plan. Even though you may have a budget, you should go through it line by line and see what you really do not need to be spending money on.

There’s probably something that you’re wasting your money on.

Until you write it down in your budget, you may not realize how much money you are wasting on things you don’t need. And, remember, it’s never too late to start trimming your budget and to put your money towards important things like paying off student loans!

Even if all you can cut is $100 each month, that is better than nothing. That’s $1,200 a year right there!

Some expenses you may be able to cut include:

  • Lower your cell phone bill. Instead of paying the $150 or more that you currently spend on your cell phone bill, there are companies out there like Republic Wireless that offer cell phone service starting at $15. YES, I SAID $15! If you use my Republic Wireless affiliate link, you can change your life and start saving thousands of dollars a year on your cell phone service. If you are interested in hearing more, I created a full review on Republic Wireless. I’ve been using them for over a year and they are great.
  • ATM fees. You don’t need to pay ATM fees, but for some reason so many people do!
  • Sign up for a website like Ebates where you can earn CASH BACK for spending how you normally would online. The service is free too! Plus, when you sign up through my link, you also receive a free $10 cash back!
  • Pay bills on time. This way you can avoid late fees.
  • Shop around for insurance. This includes health insurance, car insurance, life insurance, home insurance, and so on. Insurance pricing can vary significantly from one company to the next. The last time we were shopping for car insurance, we found that our old company wanted something like $205 to insure one car for one month, whereas the company we have now charges $50 a month for the same exact coverage. INSANE!
  • Save money on food. I recently joined $5 Meal Plan in order to help me eat at home more and cut my food spending. It’s only $5 a month (the first four weeks are free) and they send meal plans straight to you along with the exact shopping list you need in order to create the meals. Each meal costs around $2 or less per person. This allows you to save time because you won’t have to meal plan anymore, and it will save you money as well!
  • Fuel savings. Combine your car trips, drive more efficiently, get a fuel efficient car, etc.
  • Trade in your car for a cheaper one. For us, we are car people. Cars are one of our splurges. However, if you only have a nice car to keep up with the Joneses, then you might want to get rid of it and get something that makes more sense.
  • Live in a cheaper home. I’m not saying that you need to live in a box, but if you live in a McMansion, then you may want to think about a smaller home. This way you can save money on utility bills and your mortgage payment.
  • Learn to have more frugal fun. We don’t spend anywhere near the same amount of money on entertainment as we used to. There are plenty of ways to have frugal fun.
  • Look for coupon codes. I search for coupon codes for everything. Today, I have two for you. I have a $20 Airbnb coupon code and a free taxi ride with Uber. Both are great services that I have personally used.

 

See if your employer will reimburse your student loan debt.

Some companies will pay your student loans quickly if you work for them. I even know of someone who receives a $2 bonus for each hour that she works to put towards her student loans.

$2 may not seem like a lot, but if you work full-time, then that’s over $300 a month. $300 a month for student loans is a good amount! And, because it’s free money, it can all be put towards paying off your student loans quickly.

 

Create a plan to pay off your student loans.

After you have completed the steps above, you’ll want to put it all together and create a plan.

Without a plan, you would just be all over the place, making it difficult to reach your goal of learning how to pay off student loans.

You should create a plan that details the steps you need in order to pay off your student loans, what will happen as you reach each step, when and how you will track your progress, and more.

Being detailed with your plan will help you reach your goal and become successful.

 

Stay motivated with your student loan repayment plan.

Finding motivation can be a hard task for anyone. Motivation is important because it can help you keep your eye on the goal even when you want to quit. Motivation will help you continue to work hard towards your goal, even when it seems impossible. Motivation is what keeps you going so that you do not quit.

Yes, student loan repayment can seem very stressful when you think about it. Many people owe thousands and thousands in student loans.

And, no matter how young or old you are, learning how to pay off student loans can seem difficult or even near impossible. However, think about your goal and how good life will be once all of your student loan debt is gone.

Please try to not let your student loans get you down. Think positively and attack that debt so that you can pay off your student loans fast!

Trust me, once you finally pay off those pesky student loans, you’ll be happier than ever!

Related post on how to pay off student loans: 8 Ways To Get Motivated And Reach Your Goals

 

Pay more than the minimum if you want to learn how to pay off student loans!

The point of what I’ve written above is to help you pay off your student loans. However, you can always go a little bit further and pay off your student loans more quickly.

The key to speeding up your student loan repayment process is that you will need to pay more than the minimum each month.

It may sound hard, but it really doesn’t have to be. Whatever extra you can afford, you should think about putting it towards your student loans. You may be able to shave years off your student loans!

What other ways can a person learn how to pay off student loans? What’s your student loan repayment plan?

The post How I Paid Off $40,000 In Student Loans in 7 Months appeared first on Making Sense Of Cents.

Source: makingsenseofcents.com

The Magical Third Paycheck: 5 Budgeting Hacks If You’re Paid Biweekly

If you get paid every two weeks, you’ve probably noticed extra money coming your way certain months. Maybe you even thought your company’s payroll made a mistake! But it’s no mistake. You get two magical months like this a year: when you suddenly have a third paycheck and—the best part is—your monthly bills stay the same. Yes, it’s appropriate to jump for joy—provided you have a plan for that extra income.

Why does this happen in the first place? If you’re paid biweekly, you get 26 paychecks throughout the 52-week year. That means two months out of the year, you end up getting three paychecks instead of your regular two.

Those two extra paychecks can go a long way. But without a plan in mind, they can also disappear. Fast. The first budgeting trick to saving two paychecks is to find out when they will hit your account. Grab a calendar and write down your paydays for every month in a given year and highlight the two extras. Maybe even put calendar reminders in your phone so you can track when the additional funds will hit your account. The extra paychecks will fall on different days every year, so tracking them in advance is key.

Samuel Deane, a founding partner of New York City-based wealth management firm Deane Financial, says there isn’t one correct way to budget with an extra paycheck, but that it should depend on your personal situation and financial goals. You could decide to give yourself some extra room in your budget throughout the year, for example, or use the extra money for something specific.

There are a few different ways to budget with an extra paycheck.

How can I budget for an extra paycheck? Consider these 5 budgeting hacks if you’re paid biweekly:

1. Pay down (mainly) high-interest debt

Once you’re done jumping for joy at the realization of the third paycheck, consider how your budget with an extra paycheck could help you pay down debt. “The first thing I usually tell my clients is to get rid of high-rate debt, which is usually credit card debt,” Deane says.

Before paying off debt with your new budget with an extra paycheck, make a list of all of your debts organized by balance and annual percentage rate (APR). Paying off the debt with the highest APR could save you the most money because you’re paying the most to carry a balance. Paying down a few low-APR, low-balance debts can also help you gain momentum and bring other financial benefits. For instance, if you owe close to your credit limit on a credit card, the high credit utilization—or card balance to credit limit ratio—could negatively impact your credit score.

If your budget with an extra paycheck includes debt repayment, you’ll start to owe less and have less interest accruing each month, freeing up even more cash from subsequent paychecks.

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“The first thing I usually tell my clients is to get rid of high-rate debt, which is usually credit card debt.”

– Samuel Deane, a founding partner of wealth management firm Deane Financial

2. Build an emergency fund

Paying down debt isn’t the only way to budget with an extra paycheck. “Taking a look at whether you have a sufficient emergency fund is pretty important,” says Dan Stous, director of financial planning at Flagstone Financial Management.

An emergency fund of three to six months of your regular expenses can help you weather financial setbacks, such as a lost job or medical emergency, without having to take on new debt. Keeping these funds separate from your regular checking and savings accounts can help you keep them earmarked for the unexpected (and reduce the temptation to dip into them for non-emergency expenses). Places to keep your emergency fund include a high-yield savings account, certificate of deposit or money market account.

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If creating an emergency fund or adding to an existing one is on your to-do list, a budgeting trick to save two paychecks is to automatically transfer your extra paychecks into your emergency fund account.

3. Save for a big goal

If you want to save for a goal like a new car or home, or contribute to tax-advantaged retirement accounts, contributing two full paychecks out of 26 can be a good start. “If a client is debt-free and doing well, they might be able to focus on other goals,” Deane says. If you’ve got a financial goal in mind, a budgeting hack if you’re paid biweekly is to transfer your two extra paychecks from your checking account to a savings or retirement account right away.

Using your extra paycheck to save for a goal, like a new home or new car, is a smart budgeting hack if you're paid biweekly.

If you have a 401(k) through an employer and already contribute enough to get your maximum annual match, Deane says you may want to consider a Roth IRA. A Roth IRA is for retirement, but it also allows first-time homebuyers who have held their account for at least five years to withdraw up to $10,000 to buy a home, Deane says. Your budget with an extra paycheck could then go to either major goal.

Even loftier, “you could put aside money to start a business,” Deane says. If you plan on starting a business someday you could put away the paychecks annually and let those savings build as start-up capital.

4. Get ahead on bills

If you already have an emergency fund, are currently debt-free and are making good progress on your savings goals, try this budgeting hack if you’re paid biweekly and get a third paycheck: Pay certain monthly bills ahead of time.

“If you have the ability to prepay some of your bills, it can ease anxiety in the coming months,” Deane says.

Before using this budgeting hack if you’re paid biweekly, check with your providers to confirm that you will not be met with a prepayment penalty, and get up to speed on any prepayment limitations. Some providers may even offer a discount or incentive if you pay something like a car insurance bill all at once. You could also explore whether or not prepaying your bills makes sense for utilities, your cellphone or rent.

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5. Fund much-needed rewards

If you’re looking for budgeting hacks if you’re paid biweekly, consider that managing money isn’t only about dollars and cents. Emotions often play an important part in personal finance, and they’re often the root cause of people’s decisions. Accepting this fact could be an important part of successfully managing your money.

“From an emotional and behavioral standpoint, people should reward themselves for being responsible,” Stous says. “Basically, treat yourself.”

Perhaps you need a vacation from the daily grind, want to enrich or educate yourself or your family or simply want to get a date night at your favorite restaurant on the calendar. A budgeting trick to save two paychecks could be supplemented with some spending on yourself.

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“If you have an extra paycheck and a debt reduction goal, then maybe you apply the whole thing toward that goal. On the other hand, maybe you have a goal to retire in 10 years and you’re off track. Then, it’d be wise to put that money, or at least a portion of it, toward that goal.”

– Dan Stous, director of financial planning at Flagstone Financial Management

There’s no one-size-fits-all budgeting trick to save two paychecks

When you’re deciding how to budget with an extra paycheck, you might find yourself going back and forth between options.

“If you have an extra paycheck and a debt-reduction goal, then maybe you apply the whole thing toward that goal,” Stous says. “On the other hand, maybe you have a goal to retire in 10 years and you’re off track. Then, it’d be wise to put that money, or at least a portion of it, toward that goal.”

Even though budgeting solutions are not the same for everyone, being disciplined and proactive about the savings opportunity of a third paycheck can help you form a strong foundation for your financial future.

The post The Magical Third Paycheck: 5 Budgeting Hacks If You’re Paid Biweekly appeared first on Discover Bank – Banking Topics Blog.

Source: discover.com

How COVID-19 is Affecting Auto Loans

COVID-19 is having a massive impact on the global economy and very few industries have been untouched by it. If your business relies on employees working in a physical space and profits only when people are willing to shop and spend, there’s no escaping it. 

It’s no surprise, therefore, that the auto industry has been so negatively affected. In a recent guide, we looked at the many auto loan relief options that manufacturers offering in light of the coronavirus. In this guide, we’ll highlight the ways this industry has been stung by the pandemic and look at what it means for the future of the US automobile and car financing sectors.

How is the Coronavirus Affecting Car Sales?

The automobile manufacturing industry experienced a minor surge at the beginning of 2020 but COVID-19 began to impact sales heavily in March. Many companies, Fiat Chrysler and General Motors included, began the year with strong momentum behind them, but March hit them hard and negated all the gains made during the first two months.

Both of these companies recorded losses for the first quarter of 2020, with Fiat Chrysler losing 10% in total.

Toyota, one of America’s biggest manufacturers, also recorded massive losses for March, with daily sales dropping by nearly a third during this month.

All of this is to be expected. The US has yet to announce the sort of national lockdowns we have seen in countries like the United Kingdom, Italy, Spain, and Greece, but many citizens are in self-isolation, countless businesses have shut their doors, and there are fewer cars on the road as a result.

Combine this with the fact that people are losing their jobs and worrying about their futures, and it’s easy to see why car sales have been affected so severely. 

What are Manufacturers Doing About It?

Automobile manufacturers have moved quickly to stem the rising tide of financial devastation caused by COVID-19. Fiat Chrysler, for instance, is offering improved auto loan conditions to convince consumers to make sizeable purchases and keep the wheels turning. It has also made it easier to purchase a car for those in self-isolation or lockdown.

You can now buy a Fiat Chrysler online, with options for trade-ins, auto loans, and pretty much everything else you would get when buying in person.

They’re making it easier for you to buy because they need you to make that commitment. At the same time, the production of many new vehicles has been halted.

While some plants and showrooms are still open in the United States, Europe has experienced an almost continent-wide shutdown, leading to a decreased demand. 

Manufacturers are also anticipating that things will get worse, as many experts predict that the USA will experience a spread similar to that of Spain and Italy.

How Has COVID-19 Hurt the Automobile Industry?

We have already touched upon some of the ways that COVID-19 has impacted the automobile industry, but the problem goes far beyond people not being able to make it to their local showrooms. Furthermore, if events in Europe are anything to go by, the problems will only get worse and it could be several years before the automobile sector recovers.

Here are a few reasons the industry has been hit hard:

Uncertainty

There is a genuine fear that the COVID-19 pandemic will remain for all of 2020 and even beyond that. It seems unlikely that it will last for that long, but if the country doesn’t go into lockdown and a vaccine isn’t produced, it’s possible. 

With this in mind, many consumers are putting off buying new cars out of fear that they simply won’t need them. New cars depreciate rapidly and can lose 20% in the first year. What’s the point of spending $30,000 on a new car if it will be worth $24,000 by the time you actually get behind the wheel?

Struggling Stock Markets

The stock market doesn’t just impact big companies and investors. It also affects average American families who have their money tied into savings accounts, stocks, and pensions. Savers have lost a lot of money and are worried that they’ll lose even more in the near future, making buying a $30,000+ vehicle incredibly reckless. 

Price of Gas

One of the few things that the automobile industry has on its side is the price of fuel, which has plummeted in the past few weeks. The problem is, no one cares about the price of fuel when they’re stuck inside the house worrying about their health and their jobs.

Closed Plants

Automotive plants can’t simply shut down for a few weeks and then start up again when everything has cleared up. Many plants were already struggling to keep things together and once production stops and their profits disappear, they may close down entirely, taking hundreds, if not thousands of jobs with them. 

Bottom Line: Car Sales After COVID-19

It’s highly likely that the hard times will continue for the manufacturing industry. As the coronavirus continues to spread across the country, manufacturing plants will struggle to retain employees, showrooms will shut, and fewer Americans will be willing to pay the $30,000+ required for a new vehicle.

Whether this impacts the future price and availability of automobiles remains to be seen, but it’s highly likely that we’ll see some massive changes in this industry. America’s best-loved manufacturers will lose millions and could be sent to the brink of financial destruction, while many salespersons and mechanics will likely lose their jobs as demand drops and garages/showrooms close down. 

 

How COVID-19 is Affecting Auto Loans is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

States With the Worst Drivers – 2016 Edition

States With the Worst Drivers

It is common occurrence on American highways for near-accidents to occur. It is also a common occurrence on American highways for people in near-accidents, to look at the license plate of the near-accident-causer and think to themselves, “Oh, well of course they’re from Massachusetts.” Or some other state. It seems like almost every state has a reputation for having terrible drivers. Thanks to data from the National Highway Traffic Safety Administration we can confirm some of those myths and dispel others.

Looking to move? Check out mortgage rates in your new area here.

According to the National Highway Traffic Safety Administration around 32,000 people were killed in vehicle-related incidents in 2014. Of course some incidents are genuinely accidents, while some are clearly the fault of one driver, like in the event of drunk driving. But deaths and DUIs are not the only metrics to measure bad driving, people who receive speeding tickets or do not have automobile insurance can also be considered negligent drivers.

To find the states with the worst drivers SmartAsset looked at number of drivers, DUI arrests, people killed, google trends in speeding tickets and percentage of people who have auto insurance. To find out how we put all these numbers together to create our index please read the full methodology below.

Key Findings

No Massachusetts. Boston drivers usually have a reputation as bad drivers but the numbers we analyzed don’t bear that out. Massachusetts ranks 48 on our list. While we have no data on non-fatal accidents, the fact that they lead the nation in insured rate is a positive sign.

Be careful when driving in the southeast. Maybe it’s the heat causing road rage, but four out of the top ten states in our study are located in the southeast.

States with the Worst Drivers

1. Florida

Florida is often plagued with a reputation for bad drivers. The numbers seem to show that this might, in fact, be true. Floridians google “speeding tickets” and “traffic tickets” more than any other state. They also have the second lowest number of insured drivers in the nation.

2. Mississippi

Another southern state and another state in which one ought to be extra careful when driving through. Mississippi had the 5th highest deaths resulting from vehicular incidents. One area where Mississippi can improve is in DUIs. Mississippi had the 12th highest rate of DUI arrests per driver in the country. Like Florida relatively few people are insured. They rank 3rd worst in that category with only 77% insured.

Buying car insurance? Avoid these 6 mistakes.

3. Oklahoma

Continuing on the theme of states with low insured driver rates, Oklahoma has the least. Only 74% of drivers in Oklahoma are insured. It does not get much better for the state in the other categories we looked at. They have one of the 15 worst scores in DUIs per thousand drivers (7.74), number of people killed per thousand drivers in vehicular incidents (.21) and rate of googling parking and traffic tickets (52.13).

4. New Jersey

The Garden State has the infamy of being the state with the second most deaths per driver at 0.62. New Jersey drivers are more likely to be insured than some of the other states on our list. New Jersey drivers are insured at a rate of almost 90%, coming in 22nd on our list.

5. Delaware

New Jerseys neighbor and rival for worst drivers in the northeast, Delaware is unfortunately the only state with more deaths per driver than New Jersey. One curious statistic is that while Delaware has the lowest DUI rate per driver, 40% of deaths occurred when the driver was above the legal limit for drinking, which is the 4th highest rate in the country.

6. Alabama

Another southern state and a similar story to the others with pretty bad scores all around. One bright spot – Alabama has the 4th best score with only 1.42 DUI arrests per thousand drivers. Like Delaware, though, that statistic does not tell the whole story, 33% of deaths in Alabama resulted from a driver being over the legal alcohol limit.

7. Vermont

Vermont leads the nation in DUIs per driver with 50 per thousand drivers. However, they also have the lowest percentage of deaths resulting from drunk driving, at 20%.

8. Tennessee

Tennessee is one of the least insured states in the country, with 20% of people not having car insurance. Tennessee also has the 18th highest number of deaths per thousand drivers. One positive is that they are in the better half of the country for DUI per thousand drivers at 5.7.

9. Texas

Tragically for Texas it has the highest percentage of deaths coming from drunk drivers at 40% and yet it is in the better half of states for DUI arrests. Recent news that Uber and Lyft will both be leaving Austin may have an impact. According to MyStatesman, Austin only has permits for 756 legal taxis and is hoping to increase that to 1,161. But for a tech hot-spot with a population of 850,000 even this may not be enough.

10. Nevada

Nevada is the 3rd worst state for traffic and speeding tickets (when comparing googling trends) as well as being the 17th worst state for DUIs. The good news is that 88% of Nevada drivers are insured.

States with the Worst Drivers

Data and Methodology

In order to find out which state had the worst drivers SmartAsset collected data across 4 metrics.

Percentage insured. Data is taken from the Insurance Research Council.

DUI per thousand drivers. Number of drivers is taken from the Federal Highway Administration. Number of DUIs is taken from the State Justice Department.

Deaths per thousand drivers. Data is taken from the Fatality Analysis Reporting System, which is part of the National Highway Traffic Safety Administration.

Google trends on driving tickets. This data is the average of the scores each state got in google trends for the 8 phrases: speeding ticket, “speeding ticket,” speeding tickets, “speeding tickets,” traffic ticket, “traffic ticket,” traffic tickets and “traffic tickets.”

We then indexed each factor for every state giving equal weighting and then finding the average score per state to create the final index.

Questions about our study? Contact us at blog@smartasset.com.

Photo credit: Â©iStock.com/Ben Harding

The post States With the Worst Drivers – 2016 Edition appeared first on SmartAsset Blog.

Source: smartasset.com

3 Things Rideshare and Delivery Drivers Should Know About Car Insurance

A woman drives her car.

Food delivery and ridesharing are great ways to earn extra income. The market for food delivery has increased as restaurants have had to adapt to COVID-19 precautions, and just about everyone could use some extra income as we continue to navigate life during a pandemic.

If you’re considering joining a food delivery or rideshare company as a driver, you need to be sure you have the right insurance coverage. If you’re in an accident, you want to be able to replace your car or fix it so you can keep working.

As you review your car insurance, here’s what you need to know:

You have a coverage gap

Rideshare and delivery companies offer some insurance coverage while you are on your way to pick up passengers or food and while you are transporting passengers or food. However, when you have your app on and are waiting to accept a delivery, neither your personal car insurance or your rideshare company offers coverage. 

If you are in an accident while you’re waiting to accept a job, you won’t have any insurance coverage. You’ll be on your own for covering the resulting costs and may have to deal with other issues.

Look for an insurance policy to cover the gaps

To protect yourself and cover this gap, you’ll want to purchase an additional policy or a policy that adds rideshare coverage to your personal policy. These policies and riders are commonly called rideshare insurance. However, they are commercial auto coverage policies that offer insurance coverage when you use your car for business.

Choose a reliable and highly rated insurer for your policy. Check the insurer’s financial strength to gauge the company’s financial stability and ability to make claims payments. Reading customer reviews can give you a sense of the customer experience with the insurer, which can also help you find a good company.

As you shop for policies or riders that can be added to your personal auto coverage, you can use companies like Policygenius to compare policies across multiple insurers. The ability to compare quotes and policies quickly and efficiently makes it easier to find a good deal. This can also be beneficial if you’re also shopping for personal auto insurance coverage.

Before you buy a policy, understand how it works:

  • What is the deductible? This is the amount you’ll pay before the insurer starts to pay for covered damage.
  • How much is the premium? This is the monthly fee you pay for insurance coverage.
  • Does the policy have a benefit maximum? This is the most an insurer will pay. Once this limit is reached, the rest of the expenses are your responsibility.
  • What coverage is offered—collision, liability, comprehensive, medical payments, income loss, etc.? Car insurance policies are highly customizable because you can choose how much and what kind of coverage to buy.

Car insurance requirements vary by state. Liability coverage for property damage and physical injury is most commonly required. Some states require additional coverage for uninsured or underinsured motorist insurance or Personal Injury Protection (PIP). PIP coverage offers coverage for lost wages according to your policy’s terms.

Making a claim for lost wages will depend on whether your state is an at-fault or no-fault state. You may need to file a claim with the other driver’s insurance, use your uninsured or underinsured motorist insurance, or PIP coverage.

Keep in mind that you typically have to have the same level of coverage on your personal insurance as you do with your rideshare coverage. Knowing the cost and kind of protection offered by your policy will help you find one and choose coverage that will meet your needs.

Communicate with your personal car insurance carrier

If you’re driving for hire and do not communicate that to your car insurance company, you could lose your coverage. Insurers can end your policy and no longer offer you coverage if you don’t communicate clearly about your car usage. 

While communicating and getting commercial auto coverage added to your policy can cost more, you’ll be better protected if you have the right coverage and won’t have to worry about your insurer rescinding the policy. Communicating with your car insurance company about how you’re using your car will ensure that you have the coverage you need, which will give you peace of mind and benefit you in the long run.

Set yourself up for success

Before you sign up with a food delivery or rideshare service, understand what coverage your company offers and where the coverage gap is. This will help you know what to look for as you evaluate rideshare or commercial auto insurance policies.

If you’re happy with your current auto insurance provider, start by asking them what they offer. You can also compare what your current insurer provides with what other insurers are offering to check that your company is competitive.

Purchasing insurance to cover the gap will give you peace of mind and financial protection if you’re in an accident. It will also protect your car, which is essential to your ability to work as a rideshare or food delivery driver.

The post 3 Things Rideshare and Delivery Drivers Should Know About Car Insurance appeared first on Credit.com.

Source: credit.com

The 5 Best Financial New Year’s Resolutions

Change has to start somewhere, and for many people that change is easier to make if the starting point has some meaning. It can be a birthday, an anniversary, or any other date with some symbolic weight. Most commonly, people choose the beginning of the new year.

If you’re looking for some New Year’s resolutions that will truly change your life, consider adjusting your financial strategy. Here are five things you can do in 2021 to take your money game to the next level.

Refinance Loans

Interest rates are at near-historic lows, which makes this the perfect time to refinance your debt. Refinancing means switching your loans from your current lender to a new lender in order to take advantage of a lower interest rate. Refinancing can save you thousands of dollars, depending on the original interest rate and total balance.

 For example, let’s say you have a $200,000 30-year mortgage with a 5% interest rate, and you refinance to a 3% interest rate. Your monthly payment will be $244 lower, and you’ll save $31,173 in total interest over the life of the loan. 

You can refinance auto loans, personal loans, and even student loans. However, if you have federal student loans, you may want to hold off on refinancing. Refinancing a federal student loan converts it into a private student loan. This means you’ll give up extra perks and benefits like income-driven repayment plans and deferment and forbearance options.

Transfer Credit Card Debt

If you have credit card debt, you can pay less interest by transferring the balance to a new card with 0% APR on balance transfers. These special discounts usually last between 12 to 18 months, during which time you won’t be charged interest on the credit card balance.

For instance, let’s say you have a $5,000 balance on a card with a 17% APR. If you only make the minimum payments, you’ll pay $1,223.61 in total interest. If you transfer that balance to a card with 0% APR for 12 months and repay the balance in that time, you won’t pay any interest.

There is often a small fee associated with balance transfers, around 3% of balance transfers. For example, if you transfer $5,000, you’ll pay a $150 fee. That still leaves a net savings of $1,073.61 in the scenario outlined above.

Decrease Your Fixed Expenses

One of the best things to do for your budget in 2021 is to decrease fixed expenses like your car insurance, internet, cable, and cell phone. Call those providers and try to negotiate a lower rate.

 Go through your transactions for the past few months and write down all the recurring subscriptions like Netflix, Amazon Prime, and DoorDash. Then, group them into categories like “frequently use,” “sporadically use” and “rarely use”. Consider canceling anything you rarely use.

 See if you can get a better deal on your most popular subscriptions. For example, if you and your significant other both pay for Spotify Premium, get a Spotify Duo account instead, and save yourself $83.88 a year.

Open a Better Bank Account

Most people are missing out on an easy way to earn money through your bank account. You could be leaving hundreds of dollars on the table if you still have a traditional savings account.

According to the FDIC, the current average interest rate on a savings account is 0.05%. Many high-yield savings accounts offer rates between .40% and .60%. 

Let’s say you have $10,000 in a savings account with .05% interest. After one year, you’ll have earned $5.04 in interest. If you moved that amount to a high-yield savings account with .5% interest, you would earn $49.92 in interest over that same time period.

Start Investing

If you’re not investing for retirement yet, this might be the most important financial resolution you can make. Thanks to the power of compound interest, you can start investing now and see huge growth by the time you’re ready to retire.

IRAs and 401(k)s are the two main retirement accounts. Anyone can open an IRA, while only those who have access to an employer-sponsored 401(k) can open one.

 If you’re not sure how to invest in your retirement account, consider hiring a qualified financial planner through the National Association of Personal Financial Advisors (NAPFA).

If you’re not ready to work with a financial planner, you can use a robo advisor like Betterment or Wealthfront, which will create a portfolio based on your age, income, and expected retirement age. Robo advisors have low fees and are designed to help beginner investors.

How to Keep Financial Resolutions

First, start small. Pick one habit to change at a time. If you try to accomplish five goals at once, you’ll burn out quickly and give up. 

When you decide on a resolution, break it up into smaller, more manageable tasks. For example, if your goal is to talk to a financial planner about investing, break it down into the following steps:

1) Research financial planners through NAPFA

2) Send introductory emails to three financial planners

3) Choose the one that seems like the best fit

4) Schedule a consultation

Give yourself a deadline to accomplish each of these tasks, and ask a friend to hold you accountable.

Another tip is to tie your resolutions to a bigger goal. Like dieting or starting a new exercise plan, changing your financial habits is hard. If you’re used to grabbing lunch with your co-workers every day, bringing leftovers from home instead will seem like a huge change.

The key is to imagine the future version of yourself who will benefit from the changes you make today. If your goal is to open and contribute to a retirement account, imagine yourself as a senior citizen living comfortably.

When you’re tempted to skip this month’s retirement contribution to buy concert tickets, think about your future self, what you’d want for them and how they would appreciate your sacrifice. It can also help to remember some of the financial mistakes you’ve made in the past, and how much easier your life would be right now if you had made a different choice.

The post The 5 Best Financial New Year’s Resolutions appeared first on MintLife Blog.

Source: mint.intuit.com