How Much Extra Should I Be Paying on My Student Loans?

This is a fun question because when I start digging deeper into your finances as a coach and I tell you how much you can afford on paper - the jaws drop! We have been trained to think that if we are making our minimum payments we deserve a pat on the back - because we did it! Right? We didn't have an adjusted payment, we aren't in forbearance, we made the payment. Well, sorry, but no. 

That minimum payment will cost you tens of THOUSANDS of dollars in interest that frankly, you can't afford. Nobody can! In most situations you should be able to pay double (at least!) on your loan to get rid of it! There are a lot of financial calculators online, I like Unbury.me, that help you play around with various extra payment amounts to find out just how long it will take you to pay off your debt. 

Give it a shot, it's really motivating to see if you pay just a little extra each month, the number of years you can knock off the term of your loan!

Keep Paying Your Federal Student Loans While They Suspended, Here’s Why

Right now you are not required to may a payment on your federal student loan, sounds great right? Wrong! If you are still employed, or your household can afford to make your monthly loan payment, you should continue to do so. And, this may sound crazy but, pay extra!

Think about it this way, normally you have interest tacked onto your loan each month. So when you make your payment, some goes to the loan and some goes to interest. 

Right now, with your payments, 100% of it is going directly to the principle! That means that every penny you are sending to your lender is paying down your debt.

Of course, if you are worried about making rent or buying groceries you should hold off. But, if you are one of the lucky ones, hit it hard!

How to Calculate How Much Money Should Be in Your Emergency Fund

Any good emergency fund consists of expenses that continue on during an emergency. While there are a few different scenarios in determining when we can tap into this savings, there is only one way to calculate it and it is pretty simple.

1. Housing - rent or mortgage, it also includes electricity, trash, water and those sort of bills. Netflix is not here, and if times are tough, neither is WiFi.

2. Food - groceries. Don't put your restaurant spending money or brewery adventures in your emergency fund calculations. This is how much money you need to put food on the table for your family. And if members of the house are still working, this includes packing a lunch (no going out to eat at work either).

3. Transportation - let's be realistic, even in a crisis you will need gas to go buy your groceries or to pick up kids from school. Maybe you take the bus, include your bus passes here instead. You aren't accounting for saving for a car in this fund or a repair that you want to get done in the future.

A proper emergency fund consists of 6 months of savings for the above items. Add up expenses for each month, times it by six and there you go! This money should live in a savings account that you have quick and easy access to. You are not trying to gain interest on this money, you are getting prepared for an unfortunate time in your life.

Reader Question: What Is the Best Thing to Do With Savings? Invest? What Kind of Account Is Best to Have It In?

A: This is a great question and it depends on the type of savings you are referring to! Let's assume you have no debt for this example. Your emergency fund should be in a separate account from your primary checking and it should be accessible. The point of this money is to get it when you need it so make sure it's in an account that doesn't require minimum balances or a specific amount of time that it has to be in the account. The purpose of this money shouldn't be to be making money so don't worry about the interest rate. You may see better rates with online banks, be sure you have a card to access the money.

With all of that, additional savings should be going into a Roth IRA. Personal finance coaches don't give investing advice so I would recommend you speak with a financial adviser on other account types. I would avoid single stock options if it was me.

If you don't have an emergency fund or you have debt, this should be your priority. Set aside $1,000 for each person in your household first. After that, work to pay off all your debt. Once your debt is paid, save six months worth of living expenses for your emergency fund. And that brings us back to the top!

Hope that helps!

What to Do With Your COVID Stimulus Check

So, this stimulus check. What about it? 

First off, check out this link to see the details on how much you may be receiving. Amounts vary but are up to $1,200 for individuals and $2,400 for those filing jointly (with $500 per child also in the mix). If you are behind on child support you won't be seeing a check. You will receive this money via direct deposit or a check in the mail, depending on your last filing method.

What should you be doing with this money? I can tell most of you that the answer here won't be to spend it. There are a few easy scenarios to cover but if you think your situation is a little more unique you can always reach out. 

If your job is stable, you are not worried about lay-offs or reduced hours, this money should go towards any debt you may have. Let's say you don't have debt, then it should go towards your savings. If you have a five month emergency fund you can always invest or, my personal favorite, make a donation to an organization that is doing some good right now. 

If you are at all questioning your employment then it should go towards your necessities and any leftover funds should go straight to savings. What are necessities? Rent/mortgage, gas for your car, food and utilities. Netflix? Nope. It's only $8.99/mo - nope. Getting food to go because you can't stand to cook anymore? Nope. Birthday gifts for friends because you feel bad they are stuck at home? Nope. Nope. Nope. You lost all or some of your income, it's time to save every penny you can. 

Be safe and be smart out there!

This Is What Debt You Should Pay off First!

Debt, a lot of people have it but no debt is good debt. Hear me now, I will say it again. YOU DON'T WANT DEBT.

Ok, now that we got that out of the way, if you do have debt and you are trying to get rid of what, where do you start? Reminder, no judgement, I was there too with a scary amount of student loans, but I am here to help.

Ok first, we want to list all debts from largest to smallest. I also like to put the interest rates next to them because it might effect things.

After we list all our debts, we are most likely going to pay the smallest debts first. This is snowball method, you can also use the avalanche method which is where you pay off the highest interest rates first. Back to paying off the smallest, this helps with creating easy wins as you pay them off. If it takes you a year to pay off one debt (let's say it's your largest), a year is a long time before you get a win in your journey. Too long and it's hard to keep up momentum. 

With that, if you have a $300 credit card bill that is at 25%, we gonna get rid of that.

Back to the plan, once you pay off your first debt, that money then rolls into your payment for your next debt, and so on. And that's it! Easy right? Stay on track, remember your why and life will be grand on the other side.

What Is Debt?

This is a fun topic because I am about to blow some of your minds. What exactly counts as debt is something that can go one of two ways in conversations. You have the deniers that think a car payment is the American way and student loans are "good debt". Then you have the people that don't want it but haven't taken the steps to get rid of it for one reason or another.

So what is debt? Debt is anything you owe to anyone for anything. Anything.

• Credit cards

• Car loans (or boat loans, rv loans, you name it!)

• Student loans

• Home mortgage (this debt is more acceptable by the debt free community but a 15-year mortgage is a must)

• Outstanding medical bill

• Payday loans

• Personal loans

The list can go on but we will stop there. If someone can take it away because you don't make a payment, it's not yours. That is why I am here, preaching what I preach, to get YOU to own your stuff and to stop owing people for things.

What Is a Budget and How Do I Get One?

The Budgeting Worksheet - Buy Now

A simple product to get you started and on track!

A budget is key to being successful with your money. While you may think of a budget as something restrictive, it is actually something that allows you to spend. If you have money in a category in your budget, you are free to spend every penny and not feel bad about it.

There are a few ways to create a budget, I always recommend the zero-based budget. Zero-based budgeting is where your income minus your expenses equals zero. That doesn’t mean your bank account is empty, it means that every dollar you have handles something very specific. The types of things that this money is assigned to ranges from monthly bills, living expenses, savings, travel funds, 401k contributions, etc. 

The best part about budgeting is that it can change every month. Take 5 minutes a day to look at your budget and categorize your spending, it saves you time in the end. 

That's it, now go make a budget!