The College Investor helps millennials get out of student loan debt to start investing, building passive income, and wealth for the future. Today, it's the go to resource for millennials looking for information about how to get out of student loan debt and start investing in their future. Follow this blog to get tips on Millennial Personal Finance and Investing.
Benjamin Franklin famously said, “Watch your pennies and the dollars will follow.” I certainly agree with the sentiment, but I’ve found that once I’ve determined that a purchase is within my budget, I won’t go out of my way to save money on the purchase. That’s particularly true if the purchase costs less than a hundred dollars. To put it succinctly, I don’t really watch my pennies.
This is why I’m always thankful for technological shortcuts that allow me to save money on purchases that I’m definitely going to make, without having to take extra steps. One new way that I’ve started saving pennies is the Spent App which is a cash back app (that has a few mediocre expense tracking features).
Want to get cash back on purchases you’re already making? I recommend downloading the Spent App, but before you do, here’s what you should know.
Earn cash back rewards automatically
Some expense tracking features
Doesn't allow for easy stacking with other popular programs
The best feature of the Spent App is it allows users to earn cash back, without thinking about it. You’ll simply connect a credit or debit card to the app, and you’ll qualify for rewards automatically. For example, you get 1% off Amazon, Starbucks, McDonald’s and Whole Foods purchases when you use a linked card. You can use the Spent Travel App to book hotels to earn up to 25% cash back. That can add up to some significant savings over time.
Best of all, all this cash back action happens in the background. Spent App’s parent company, Empyr, uses a payment transfer service called Dwolla to transfer money to your Paypal account. You can transfer cash back once you have at least $20 in rewards (which could take quite a while since many of the cash back offers are in the 1% range.
Features To Ignore
The Spent App also bills itself as an expense tracking app that allows you to snap photos of your receipts. Even after playing around with the app for quite a while, I couldn’t figure out how to export data from the app, which makes it largely useless for business expense reporting.
The app allows users to categorize transactions into Folders, which could be a useful tool for budgeting. Unfortunately, the lackluster in app reporting (not to mention the lack of export options) make this a feature that most users should skip.
If you’re looking for decent financial reporting in an app, consider favorites like Personal Capital, Mint.com, or You Need A Budget. Business users might also prefer Everlance which has a decent feature for tracking business expenses.
Can I Stack Cash Back Programs?
One of my favorite ways to use cash back programs is to stack them. If I can get cash back from two or three programs. This allows me to get 3-4% savings on many of my everyday purchases (when I add my credit card rewards on top of the cash back). Personally, I use the app Trim to earn cashback, and I sometimes use the website Ebates. Luckily, I can stack rewards from both of these programs with the Spent App rewards. I can also stack these with my credit card points.
Users cannot stack Spent App rewards with rewards from other Empyr programs. It took a while to figure out which programs run on Empyr, but I found that Coupons.com, Swagbucks, and Yelp’s dining rewards all count.
Additionally, users cannot stack rewards with the Rewards Network Dining programs (which are by and large dining rewards offered by airlines).
If you’re already using Swagbucks, Yelp or Coupons.com regularly (to earn cash back), I recommend passing on the Spent App. Otherwise, this should stack with your other cash back programs.
How Will Spent Use My Data?
In exchange for giving you cash back, you agree to give Spent a ton of data about you. They’ll know your spending habits, and have the ability to market deals to you (unless you opt out). Spent can also share your data with its partners including retailers.
Personally, I don’t think sharing your data with Spent is a particular risk to your security (though others would disagree). It uses bank-level security which should keep your information safe.
That said, Spent’s marketing efforts may lead to overspending. If you’re likely to overspend, Spent is probably not the right app for you right now.
Is Spent App Worth It?
To me, the Spent App is worthwhile. I expect that it will take a year or more for me to reach the $20 payout requirement, but it’s better than nothing. Since Spent stacks so easily with other rewards programs, I think it’s worthwhile. Don’t expect it to work as an expense management app, but enjoy the cash back rewards for your everyday spending.
Despite being one of the most controversial figures in the personal finance space, Dave Ramsey has probably inspired more people to pay off debt than anyone else around. His absolute hatred of debt inspires followers to become “gazelle intense” as they focus on debt repayment.
You might not like his style, but you cannot deny the effectiveness of his approach. If you have student loans, this is what you should know about Dave Ramsey’s “baby step” approach to getting out of debt.
When it comes to getting out of debt, the average American has to get two things on their side (at least according to Dave Ramsey). They need their budget and their emotions working for them.
The baby step approach is all about intense focus on a single mission. Ramsey urges listeners to become gazelle intense about the first two baby steps. “Gazelle intense” refers to working at a sprint pace rather than a marathon pace. Most people who follow the program become consumer debt-free in just two or three years, and eliminate their mortgage within seven years.
If you choose the baby step approach, I recommend pairing it with the intensity that Ramsey suggests. Letting paying off debt drag on for more than a few years is a recipe for never paying off debt.
Of course, people don’t just need emotion, they need a budget to keep their spending in line. Ramsey suggests a zero-sum budget to help keep you on track. I agree. Without a spending plan, the debt payoff plan won’t work. We have several resources on how to budget here on The College Investor. Over time, you can probably evolve to a less time intensive budget tracking method, but creating a budget is key when you’re getting started.
Baby Step One: Get a $1,000 Emergency Fund
The first step in Dave Ramsey’s plan is to get together a $1,000 emergency fund. This can simply be a $1,000 buffer in your checking account.
Most people earning a median income should be able to get a $1,000 emergency fund in place within a single month. The easiest way to get this in place is to sell some big ticket items and to cut out obvious expenses like daily lattes and eating out.
Is $1,000 Enough?
A lot of people criticize the $1,000 emergency fund saying it's not big enough. The fact of the matter is that half of Americans can’t come up with $400 without selling something or tapping into credit cards.
$1,000 is enough money to get you through a car repair or a minor health problem. Plus, the number is small enough to get in place within a few weeks. It’s good to have a quick win right off the bat.
What If I Expect a Big Bill in the Future?
The one caveat to the $1,000 emergency fund is if you’re expecting a big bill in the near future. For example, if you’re having a baby, you’ll probably pay several thousand dollars in medical costs. If you expect a layoff, you don’t want to be caught without some savings.
Do what you can to be sure you have enough to cover upcoming expenses without taking on more debt.
Baby Step Two: Pay Off Your Debts in Order of Smallest to Largest
Once you have $1,000 banked, it’s time to start the debt repayment plan. Ramsey advises paying off your debts from smallest balance to largest using the debt snowball.
Using the debt snowball, you’ll make minimum payments on all your debts except the debt with the smallest balance. Every extra dollar you have in the budget will go toward the smallest debt. When you pay off the smallest debt, you take the minimum payment from that debt and put it toward the next debt. This goes on until you’ve paid off all your debts (except a mortgage).
This method doesn’t take into account interest rates, bankruptcy, or loan consolidation options, but in many cases, that doesn’t matter. The goal is to get rid of debt so fast that the interest rate doesn’t matter much. If you have a very high debt-to-income ratio, this plan might not work for you.
Should I Get on an Income-Driven Repayment Plan?
One of the common questions about student loan repayment is whether to get on an income-driven repayment plan. Dave Ramsey generally doesn’t like the plans because they scare people into earning less money.
My take is that you should get on an income-driven repayment plan, but use it as a crutch only as long as you need it. Your top priority in debt repayment needs to be increasing your income, so you have more money to throw at debt. Income-driven repayment plans will help you with cash flow while you work on the income side of the equation.
What About Student Loan Forgiveness?
Public Service Loan Forgiveness is another one of Ramsey’s constant punching bags. He hates it and discourages listeners from relying on it, even if they have several years of service under their belts. Personally, I’ve seen several friends use PSLF and other loan forgiveness programs to get rid of debts.
I can’t say with 100% confidence that the programs will be around in 10 years, but I think if they get disbanded they will have a phaseout period. If you plan to qualify for PSLF, enroll in the program, and don’t aggressively repay your student loan debts. Instead, put as little as you can toward the debts and as much as you can toward your investments. If PSLF doesn’t work out, you can hopefully liquidate investments to pay off the loans. If it does work out, then you did the right thing.
Should I Consolidate?
Consolidating student loans is often a helpful option for people looking to extend repayment time or to simplify their lives. Unfortunately, consolidating student loans means you no longer have a smallest and largest balance loan. That means you lose the satisfaction of little wins along the way.
For most people, I would avoid consolidating student loans except if you can refinance to a lower interest rate (with no origination fees).
What If I'm Facing Bankruptcy?
If you’re facing bankruptcy, the baby step plan probably isn’t working out for you. I would recommend continuing to make minimum payments on your student loans as those will probably survive the bankruptcy. Stop making payments on all unsecured debts such as credit cards or personal loans.
Remaining Baby Steps
Once you’ve eliminated all your debts, it’s time to move on to Dave Ramsey’s other steps. Here they are in order.
Baby Step Three: Build an Emergency Fund of Three to Six Months of Expenses
Once you’re debt free, you should use your money to build up cash reserves. At this point, Dave Ramsey still advises skipping on investing (even up to your employer match). Accumulating three to six months of expenses in an emergency fund can take up to a year to build, so I tend to temper this advice a bit. Invest up to an employer match while focusing the rest of your funds to a cash reserve.
Baby Step Three (Part B): Buy a House with a 20% Down Payment
A lot of people on Dave Ramsey’s plan already own houses once they start paying off debt. However, if you don’t own, Ramsey recommends putting 20% down on the house. He also recommends waiting until you have a solid emergency fund in place before you buy a house.
Baby Step Four: Put 15% Toward Retirement
Once you have your emergency fund in place, Ramsey finally recommends starting to invest. His starting place is 15% towards retirement in a diversified portfolio of mutual funds. If you’re able to put more than 15% toward a savings goal, Ramsey advises to put excess funds toward steps five and six.
Baby Step Five: Save for Kids' College
If you have kids and you’re contributing at least 15% of your income toward retirement, it’s time to start saving for kids' college expenses. Hopefully, you can use the middle and high school years to help your kids prepare for college financially, so they can avoid loans themselves.
Baby Step Six: Pay Off House Early
If you have extra money (after 15% toward the house, and money toward college), it’s time to pay off the house. Amazingly, even with other goals, most people who follow Dave Ramsey’s plan manage to pay off their house in seven years. My sister and her husband have used this plan, and they are now on track to eliminate their mortgage before their sons finish high school.
Baby Step Seven: Build Wealth and Give Generously
The last baby step is sort of a generic catch-all for do whatever you want. Once you’ve laid the foundations of the first six baby steps, you’re probably in a great position to start some more interesting forms of investing such as real estate investing or starting a personal business. It’s also a reminder to give to others as you have opportunity.
Is the Dave Ramsey Plan Right for Your Student Loans?
The baby steps make a ton of sense for average student loan borrowers. While the baby steps aren’t the financially smartest (for example, forgoing a 401(k) match during debt repayment makes no sense), they are emotionally appealing. If you don’t have a plan to pay off your debt, start with Dave Ramsey’s baby steps. You might find something better, but the Dave Ramsey plan will get you excited and moving in the right direction.
There has been a lot of talk lately about the mega backdoor Roth IRA. For a long time, it was an unspoken secret used by retirement planners. However, the IRS released guidance that specifically addressed both backdoor Roth IRA conversions, and the so-called Mega Backdoor Roth IRA. As a result, it has gained even more popularity and interest.
So what is the Mega Backdoor Roth IRA? The Mega Backdoor Roth IRA allows you to contribute an additional $35,000 into an Roth IRA by leveraging the fact that some employer 401k plans allow after-tax contributions up to the current limit of $53,000.
I think it's important to first have a discussion on why this even matters. Because, for some people, it doesn't matter.
Who This Article Doesn't Apply To:
If you don't max out your 401k contributions and your IRA contributions currently (this means putting in $18,500 pre-tax to your 401k, and $5,500 to your IRA)
If you don't meet the income limitations to have a deductible IRA (if you can deduct your IRA contributions, do that)
If your employer doesn't offer after-tax 401k contributions (you might still want to read this and be in the know, but it won't help you and I'm sorry your employer sucks)
Why Bother With A Roth vs. A Traditional IRA vs. A 401k
Without dragging on a long conversation here, we have an amazing article on when to contribute to a Roth IRA vs. a Traditional IRA. It's a long one, but it goes into detail about the tax consequences of each. I highly recommend you leverage that article as a basis for this.
But honestly, tax diversification is one of the biggest reasons to consider this strategy. It can be benefit to be able to take advantage of both taxable and tax-free accounts in retirement. It *might* also be a benefit to pay any potential taxes today to enjoy tax-free retirement later. It really depends on your tax situation, but if you're already reading this far, you likely know that already.
Background: A Regular Backdoor Roth IRA Conversion
The Backdoor Roth IRA Conversion is an indirect way to contribute to a Roth IRA when you are not eligible to contribute directly due to high income.
Remember, to be able to fully contribute to a Roth IRA, you have to meet the following income limits (as of 2018):
Roth IRA Contribution Income Limits 2018
Married Filing Jointly
Phase Out Starts
Ineligible To Contribute
If you make more than the income limits, and have earned income, you can still contribute to a non-deductible traditional IRA. The Backdoor Roth IRA uses this tactic to then convert the non-deductible traditional IRA contribution into a Roth account.
Here's briefly how it works in three steps.
Step 1 - Ensure You Don't Have Any Other Pre-Tax IRA Accounts
To avoid many complexities and potential problems, you should eliminate any traditional IRAs, SEP IRAs, or SIMPLE IRAs, unless you are looking to convert those into Roth IRAs. You can eliminate them by rolling them over into an employer sponsored plan, such as a 401k, 403, or 457. This is called a reverse IRA to 401k rollover. You will then be leveraging this employer sponsored plan for the Mega Backdoor Roth IRA.
Remember, you can also only rollover pre-tax money, so any previous non-deductible contributions are not eligible for this.
Step 2 - Make A Non-Deductible IRA Contribution
Once you've eliminated all your traditional IRA accounts, it's time to actually start contributing to your Backdoor Roth IRA. This is the easy part.
Simply open a Traditional IRA Account and a Roth IRA Account at the same firm (you might already have this). Then, contribute $5,500 (the 2018 limit) as a non-deductible contribution to your Traditional IRA.
Step 3 - Convert The Traditional IRA To The Roth IRA
This step is also pretty easy, but there are some caveats. First, you should wait at least one day after the money clears the deposit into your Traditional IRA before converting it. The IRA has no guidelines on this, but it's good to show a clear step-by-step process of how you converted.
For many online brokerage firms make this step pretty easy, but it can be scary. At most firms, you simply transfer the balance from the Traditional IRA to the Roth IRA. That's it. Others might make you sign a form. Almost all will warn you about the tax implications of this, which is the "scary" part of the transaction.
Okay, now that you've had the refresher on the Backdoor Roth IRA, how does the Mega Backdoor Roth IRA work? Well, it takes advantage of the fact the after-tax contributions to a 401k plan are treated just like a Traditional IRA in the above example of the Backdoor Roth.
It honestly just adds one more step to the process. But it requires that you have an employer 401k that allows after-tax contributions. We're not talking Roth contributions, but after-tax contributions.
A note on after-tax 401k contributions. Remember, the IRS limits on total 401k contributions is $55,000 in 2018. That means that you can contribute $18,500 pre-tax, and your employer typically contributes something. Some 401k plans then allow employees to contribute the remaining amount in after-tax contributions.
For example, let's say your employer matches you $6,000 into your 401k. You can contribute $18,500 pre-tax, your employer puts in $6,000, and that leaves you $28,500 that you can potentially contribute after-tax if your employer allows it.
Your 401k Plan Must Meet Specific Criteria To Do A Mega Backdoor Roth IRA
In order to do a Mega Backdoor Roth IRA, your 401k plan needs to offer:
After-Tax Contributions Above and Beyond the $18,500 Pre-Tax Contribution Limits
In Service Distributions Or Non-Hardship Withdrawals
If your 401k plan doesn't offer non-hardship in service withdrawals, you might still be able to accomplish the same thing if you're leaving your company soon.
You can then max out your 401k with after-tax contributions up to the contribution limit each year. You can then withdraw that money into a Traditional IRA, and do the same process as a Backdoor Roth IRA.
A Step By Step Process For Doing A Mega Backdoor Roth IRA Conversion
The process for doing a Mega Backdoor Roth IRA Conversion is essentially the same as the Backdoor Roth IRA Conversion, with just two additional steps.
Mega Step 1 - Maximize Your After-Tax 401k Contributions
The first additional step for the Mega Backdoor Roth IRA is that you need to figure out how much to contribute to maximize your after-tax 401k contributions.
This means understanding your employer's plan, and then making the additional contributions. This can be a challenge because many plans require you to specify a percentage of your paycheck, versus a set amount. You also want to make sure that these contributions are AFTER-TAX, NOT Roth 401k contributions.
Mega Step 2 - Withdraw The After-Tax Portion To A Traditional IRA
Once you've maxed out your after-tax contribution, you can withdraw that portion to a Traditional IRA if your employer allows in-service non-hardship withdrawals. Otherwise you need to wait until termination, and you can rollover the after-tax portion into a Traditional IRA.
Once the funds are in the Traditional IRA, the process works the same as the Backdoor Roth IRA Conversion. You just have a lot more money to work with beyond the typical $5,500 annual contribution.
The Mega Backdoor Roth IRA is another potential tool to maximize tax savings IF you have more bandwidth for savings. This strategy is really for people who are maximizing their savings in other avenues first: 401k, IRA, HSAs, 529s.
If you still need or want more tax sheltered savings, then this is potentially a great strategy if your employer allows it.
If you're looking to get a better interest rate on your savings, you need to consider opening a money market account. Money market accounts operate extremely similar to savings accounts, and they are available at most banks. However, you're typically going to find the best money market accounts at online banks.
A money market account can be a great place to park your savings, your emergency fund, your downpayment for your house, or any other large sum of cash.
We break down our favorite money market accounts, as well as provide a list of the best money market accounts everyday in our table that updates daily. Given that interest rates change daily, make sure you check the table to get the best rates.
If you just want our pick for the best money market account, we recommend CIT Bank. They currently offer one of the best interest rates available in a money market account. Check out CIT Bank here.
We evaluate money market accounts based on their annual percentage rate (the interest you receive), the minimum balance requirements, and the terms and conditions of having the account. Based on that, here are our recommendations of the best money market accounts.
1. CIT Bank
The CIT Bank Money Market Account is one of our top money market picks because they consistently have one of the highest interest rates offered to consumers. Also, their platform in incredibly easy to use, with the ability to sign up and get started in minutes.
There are no gimmicks with CIT Bank - you earn interest on your entire balance, and you have a low minimum to get started. Read our full CIT Bank review here.
The BBVA Compass Bank Money Market Account is another of our favorites because they also consistently have a top rate, low minimum to get started, and a great mobile banking platform. BBVA also allows you to earn the full annual percentage rate (APY) on your entire balance, no matter how much is in your account.
Right now, they are offering a flat APY structure, but sometimes they do offer a tiered structure that rewards higher account balances.
UFB Direct is a relative unknown on this list, but they offer a great money market account. This account is a very traditional money market - it has a higher minimum balance requirement, and monthly fees if that minimum balance isn't met.
However, it does typically pay a great APY, and you earn the APY on the entire account balance. UFP Direct also gives a Visa debit card with your account, although you are limited to just 6 transactions per month.
Ally Bank is a well known online bank that is known for great customer service and easy access (even though it's online). Their money market account doesn't offer the highest yields, but if you want to keep all your banking under one roof, it can be a great alternative to a regular savings account.
Ally also doesn't nickel and dime it's customers - there are no minimum deposit requirements and no monthly fees associated with the account.
Synchrony is one of the most advertised banks online, but one of the most unknown in general. Formerly GE Capital, Synchrony is the world leader in private label credit cards (think Walmart, etc.). Synchrony Bank offers a money market account that's highly competitive.
It doesn't typically have the highest interest rates, but it does have a $0 minimum account, which can be great for low balances.
Barclays Bank has a fairly standard online savings account that's highly comparable to other money market accounts on this list.
Unlike others on this list, there is no minimum balance required to open an account with Barclays. They are about as traditional a bank as you get. Plus, they also don't charge any monthly fees as well.
Discover Bank has been around for a long time online, but not many people realize they have a bank beyond their credit cards. While discover does have many of the same products as the others, they do have one of the highest minimums of the others.
They do often pay a higher interest rate on balances over $100,000 as well - so they operate much like a traditional money market account.
Capital One 360 Money Market Account is another online bank that has been around for a long time. This one is more recognizable for being a bank, but they are still very well known for their credit cards.
They have a good yield on their account, and they also are offering bonuses for opening a new account. With no monthly fees, this is a solid choice.
Just like it sounds, Bank of Internet is an online bank that offers decent rates on money market accounts. For being an online bank, we're slightly disappointed by the lower rates this bank offers compared to others on this list.
However, there are no minimums and no monthly fees, so it's essentially free. Check them out here.
Everbank is another online bank that has been around for a long time. They originally made a name for themselves because they allow you to keep your deposits in different currencies if you wanted to. One of their pledges is that they will keep your yield (interest rate) in the top 5% of all online accounts - which is a cool pledge.
They do have a minimum to open, but no monthly fees.
The Difference Between A Savings Account And A Money Market Account
It's important to note that there is very little difference between a savings account and a money market account. Both accounts are FDIC insured, both have limits on how many checks and transfers you can do, and both are offered by banks, credit unions, and investment firms.
The big difference is that a money market account typically pays a little bit higher interest, but it also typically requires a slightly higher minimum balance. That's not always the case, thought.
For example, our favorite pick of CIT Bank does only have a $100 minimum, which isn't much.
A Money Market Account vs. A CD
Money markets also have the advantage over certificates of deposit because they are liquid - you can get a higher interest rate on your money but you don't have to worry about tying your money up for a long period of time.
While there are some CDs that earn higher rates than you'll find in a money market account, those CDs typically have 5-10 year time frames. And if you sell before your expiration date, you typically face large penalties.
You can get a glimpse of the best CD rates here, but if you need liquid savings, you're better off going with a savings account or money market account.
A money market account can be a great way to save your money. You typically earn higher interest rates, but there are some restrictions above and beyond what you usually find for savings accounts.
Just like any account, make sure you're opening the best money market account for your needs so you can reap the rewards.
Ron Popeil, founder of Ronco and the inventor of the Showtime Rotisserie famously taught his customers to, “Set it and forget it” and at least 8 million people loved him for it. Popeil harnessed the power of automation way before it was the cool thing to do.
Recently, behavioral economists have jumped onto the “set it and forget it” train. The result? Recommendations to automate bill paying, automate saving, automated investing and more. By and large, automation will help you improve your finances, “but wait there’s more.”
Automation has a dark underbelly. Service companies, financial companies (and increasingly product based companies) rely on automation to charge their customers for unneeded services, and to sneak in ridiculous charges.
If you were to scan all your credit card and debit card statements, you would probably find at least one subscription you aren’t using. You might also find a couple of late fees or financial fees that you’ve long since forgotten. When you’ve automated bad habits, it’s tough to break them. To break my own bad habits, I started using a software called Trim.
Trim bills itself as a virtual assistant that saves you money.
Its core competency is cancelling subscriptions that you aren’t using. Trim uses an algorithm to identify recurring charges, and it communicates with users via Text or Facebook Messenger.
To identify recurring charges, Trim has to look at your bank accounts. That means that you have to connect your accounts to the app. Trim uses an encryption service called Plaid to keep your data safe.
Plaid makes sure that Trim does not have access to your login information, and they have read only access to your accounts. Trim uses encryption for their website and database, and it requires 2 factor authentication for users. Your information is as safe as it would be at any banking institution.
After Trim identifies recurring charges, Trim will text (or Facebook Message) you to ask you if you want to cancel them.
If you reply, “Cancel ________.” Trim will do the cancellation for you. Trim doesn’t charge a fee for this service.
Unfortunately, the service isn’t perfect. I asked Trim to cancel an identity theft protection service I no longer wanted. It wasn’t able to, so I made the call myself. At least Trim brought the subscription to my attention.
On the whole, Trim seems to have great success cancelling gym memberships, box subscriptions, media subscriptions, and notoriously difficult cable TV contracts
How Trim Works To Save You Money
Trim's founders noticed that many online chats used the same texts and scripts to get results. So, they created a bot that allows Trim to communicate with customer service reps over chat - and it's probably a forceful customer to be reckoned with because there is no emotion involved.
Trim reports a 70% success rate in lowering customer's bills.
Trim Success Story
Tana Williams from Debt Free Forties was able to save $240 on her Spectrum Internet bill in about 5 minutes using Trim.
While tightening down on her budget, she thought she had cut her Internet cost as much as possible by asking for any discounts that Spectrum had available. Since she works at home, she needed to keep a decent Internet speed. Spectrum was kind enough to provide a discount for the following year, but it only worked out to about $6 a month.
After researching additional ways to cut her budget, she figured she'd give Trim a try. It's free, and they only get paid if they're able to save you something. Since she was already on StraightTalk for her phones and had a discount through Spectrum on her Internet, she figured it was a long shot.
She was surprised when she received a text and email confirming an additional savings for $20 a month on her Internet. No changing plans or speeds - just a discount thanks to Trim negotiating on her behalf with Spectrum. She spent 5 minutes adding her account information to the Trim website, and Trim did the heavy lifting by saving her $240 a year!
Trim has worked out a fascinating relationship with Visa. Every month, they offer 3-4 ways to earn a dollar or two in cash back. This month, spending more than $5 at the grocery store and $5 at a restaurant yielded a dollar cash back each. I was skeptical about this, but it’s legit.
You can find out about the monthly offers by looking at the messages that Trim sends you through Facebook Messenger. You can opt out of these at any time.
This is a little less secure than the subscription cancellation service. To qualify for “Trim Savings” you have to enter your Visa card into Trim’s database. They won’t use your Visa information for any reason outside of Trim Savings.
However, Trim shares offers via Facebook Messenger. That means Facebook knows that you’re using Trim. Is that a big deal? It wasn’t for me, but you need to be the judge of that.
Set Up Alerts
You can also use Trim to set up text message alerts. You can prompt a low balance alert (for example when your checking account falls below $1000), a late fee alert, and others.
These are great for getting you to pay attention to your finances when you’re falling behind. I set up a number of alerts that will help me keep my finances on track.
Lower Your Bills
Trim also offers a few ways to save money on common bills. For example, Trim has a partnership with an Auto Insurance Broker that can help you save money. I’m the queen of deal shopping insurance, so I was shocked to see that the rate Trim quoted matched my current auto insurance rate. I’ll check back in six months to see if they beat it.
Another cool way that Trim saves money is by watching prices on Amazon. Amazon used to have a 7-day price guarantee. If the price of an item you purchased dropped within 7 days of your purchase, you could ask Amazon for a price adjustment.
Amazon no longer guarantees that you’ll get a price adjustment, but that doesn’t stop Trim from asking. If Trim manages to secure Amazon savings for you, they’ll send you a check for 75% of the savings. You get to keep the remaining 25%.
I signed up for the service because it never hurts to try, but I don’t want to waste my own energy on negotiating price adjustments with Amazon.
Finally, Trim has a pilot program where they are trying to lower bills by negotiating with Comcast. On average, they’ve saved their customers $10 per month on cable and internet services. I’m not a Comcast customer, so I didn’t enroll in this program.
Before you opt into it, you should note that Trim will take 25% of their projected annual savings. That means if they lower your bill by $20 per month, they will charge your credit card $60. It’s a fair rate to charge, but you get hit with the charge before you reap the savings.
I’m Trimming. Will you?
Trim is an amazing tool if you’re looking to keep bad habits out of your financial automation. It was easy to setup, and it is easy to save money and earn a little cash back. I think that most people will benefit from Trim, even if they opt out of the cash back savings and bill lowering options. Check it out, save some cash, and enjoy a fuller bank account.
All month long, your social media feed will be filled with high school graduations. And middle school graduations. Even kindergarten graduations are now a thing.
College graduation, however, is very different from graduating from middle school or high school. By the time you're done with college, everyone expects you to be an adult who has their wits about them.
But what if you don’t know what in the world you want to do after college?
If you find yourself saying, “I don’t know what to do after college,” you are not alone.
Even if continuing on to grad school or some form of post-baccalaureate education is not in your immediate future, and a job is not exactly what you are looking for, there are ways to live life after college that will still make you a productive member of society.
In this post, I will share eight of them with you.
The United States Peace Corps started in 1961 as a way for Americans to experience other cultures while helping in different parts of the world.
If you don’t have your own money to travel and you derive a lot of joy from helping other people, the Peace Corps will allow you to travel to places you didn't even know existed and fulfill that inner need to be of service to the world.
As a Peace Corps Volunteer, you can serve in one of several areas: education, health, agriculture, economic development, youth development, or environmental preservation.
Applications and openings to 60 countries where Peace Corps Volunteers are posted, are open year-round.
AmeriCorps is like the Peace Corps when it comes to volunteering. Unlike the Peace Corps however, you will be serving local American communities.
Joining the military as a college graduate usually will put you at a higher ranking (better pay and benefits) than if you join right out of high school.
The great thing about the military is that it has several arms you can enlist in: Air Force, Navy/Marine Corps, Army, and Coast Guard.
Each of these arms of the military will have physical and age requirements that most college grads meet and so you are more likely to be able to join.
There are some educational benefits that also come with joining the military. So, if later on you decided to go to medical school for instance, you could receive help for that.
Volunteer with Your City
You don’t need to travel outside your city to volunteer and make a difference. Right within your city, there are several opportunities to volunteer.
Organizations you can volunteer with within your city include:
Meals on Wheels
American Red Cross
Boys & Girls Clubs of America
Local city government
Habitat for Humanity
You can also use websites like LinkedIn, Taproot+, and Idealist to find more volunteer opportunities around you.
Now of course, these are volunteer opportunities which pay little or nothing at all. So you would still need to have some financial support while serving in these volunteer roles.
Start Your Own Business
Having a source of income does not always have to involve a job. On this blog, there are several posts on starting your own side hustle or full-on business.
Most of the time, people think of starting a business as a Herculean task that will involve them coming up with some groundbreaking idea and getting rounds of funding from angel investors.
That is one way of starting a business.
There is the another way of starting a business where you provide a service people need and get paid for it. Freelancing as a writer, web designer, or graphic designer are legitimate ways people make a living.
What exactly defines a successful day trader? Despite a large number of traders having access to online trading platforms, not everyone will succeed in making money. Therefore, a successful day trader is one that can make more profit than losses, in simple terms.
However, we don't recommend anyone become a day trader. Day trading is NOT investing – it's effectively employment. You need to separate the two when you think about how you manage your money.
You should also only commit capital to day trading that you can lose – just like you would when starting a business. With that being said, let's talk about what makes a successful day trader.
What is a Day Trader?
A day trader will buy and sell securities throughout the period of a day. By definition, any open positions they hold will not be brought forward to the next day. Any buy or sell positions, therefore, will be settled prior to the closing of the market on any given trading day.
When it comes to day trading, any investor looking to enter into this form of investing will need to become fluent in the practice of trading within these parameters. Therefore, when it comes to how to day trade, an investor who is not used to making quick decisions or having the time to afford to day trading, will be at a disadvantage to others that do.
Becoming a Day Trader
There will be a few things to consider before moving into day trading. An investor must be in a position where they can be honest with how much they can allow to day trading. Without the time to commit for long periods of time and pay close attention to the markets, it is unlikely that success will follow.
Aside from simply having the time to commit, in order to become a day trader, investors will be required to:
Devise a structured trading plan – Without an adequate trading plan, there is no direction. A plan will provide a set of principles to adhere to in order to make a considerable profit and protect against rash moves.
Have ample capital – Profits are far from guaranteed. Swallowing losses are a part of the role, so having enough capital to make background and keep themselves in the game.
Understand how the markets work – Without knowledge of the markets and how they function, a trader is effectively operating without any direction. Profits are unlikely to just fall into an investor’s lap without knowing how to operate.
Know how and what to trade – There is a notable difference in how stocks, options, EFT’s, mutual funds, and more trade. This compounds the requirement for a trading plan and strategy. Without any idea of not just how these operate, but how they can impact trading capital, is a bad idea.
Learn how to manage capital and plan for any unforeseen events – This, once again, requires astute knowledge of what to expect. The psychological aspect of trading is very important and day trading is no different.
While the list above is far from exhaustive, it does outline many of the key principles which day trading requires from an investor. Without planning and understanding, a trader will effectively leave themselves open to a myriad of problems which could have a drastic effect on their ability to trade.
Taking these fundamental but necessary steps are a sure-fire way to preparing yourself for life as a day trader.
Would knowing that you have more debt than your peers motivate you to pay off the debt faster? Would seeing your income as a top 10% income motivate you to save more or to work even harder to reach the top 5%?
That’s the premise behind Status. It’s an app that tracks your income, spending, net worth and debt, and the app shows you how you compare to the national average (and your peer group).
Will knowing how you compare to other people help you improve? For a limited number of people, I think it might work.
Here’s what you need to know about Status before you download it.
Free Personal Finance App
See How You Compare To Your Peer Group Financially
Status is a financial app that really aims to give you a snapshot of your entire financial life in one app. It’s got features like spending trackers (which automatically categorize your transactions), interest rate analyzers that show you whether you’ve got competitive interest rates on your debts, checking and savings accounts. The app helps you track your net worth, and it even has a predictive component that tells you when you’re likely to overspend.
Of course, with each feature, you’ll actually get information on how you compare to the national average and to your peer group. As shallow as it sounds, Status gives you a fair idea of what your financial status is compared to your peer group.
How Do You React To New Information?
As far as I know, Status is the only app that allows you to compare your personal financial status with the statuses of others (while maintaining anonymity).
At first, I thought this was pretty cool to see how I ranked, but in time I got really annoyed. For example, the debt section showed that 100% of my debt is credit card debt, compared to a lower percentage of my peers. It also claimed that I had an uncompetitive interest rate. Thankfully, I’m fine with both of those, because I pay my credit cards in full each month. I focus on using a rewards credit card for everything to maximize points!
The spending tracker, which at first seemed interesting and even motivating, started to annoy me when I saw spending categories where I “overspent” my peers.
The more time I spent with the app, the more I realized that I’m initially fairly defensive when it comes to new information. Knowing where I stand relative to my peers is unlikely to motivate me in a positive way.
However, not everyone needs to react to Status the same way I did. I could certainly see someone using the information to get motivated to pay off debt, to cut restaurant spending, or to increase their income.
At the end of the day, I think Status will be helpful for some people, but it will put others in a bad headspace. It’s all about how you personally react to information that compares you to other people.
How Does Status Make Money?
Since Status is a free app to download, it’s important to understand how the company makes money.
As with many personal finance apps, Status serves up personalized ads from their partners. For example, if you’ve got a weak interest rate at a bank account, you’ll probably get an offer for an online savings account. If you have a high interest rate on your credit card, count on a 0% APR credit card.
In a lot of cases, these ads will have ideal products for your situation, but be sure to think before applying. I like to read reviews before I open up a new financial product, and I recommend that you do the same.
Also, you may find better deals on financial products by using financial comparison engines like LendingTree (for most debt products), Credible (for student loans) or CardRatings for credit card comparisons.
Status is a cool app. It’s fun to see how your finances compare to the finances of others. I don’t think the app is particularly actionable (although it does let you set a budget), but it could be motivating for the right person.
Since Status is free, I recommend giving it a download if you’re curious about other people’s money. If you hate it, delete it. If you love it, use it for your own good.
Increasingly, tuition continues to rise, saddling millions of students with large amounts of student loan debt. In fact, the average student is carrying $37,172 in student loan debt, according to CNBC. That’s slightly more than a Tesla Model 3 or even a wedding. Without students loans, many people would not even be able to attend college.
For most anyone heading to college, student loans will become a fact of life. But where do student loans come from, how much can you borrow, and what is the true cost? In this article, you’ll learn all about how student loans work.
Student loans are available for undergraduate and graduate students alike. They are based on need, of which income is only one component. Students loans are issued by the government. Although, private loans are also available. The amount issued to a student will depend on the student’s financial situation. The final decision is up to the school.
Financial aid packages are the first step in receiving a student loan. The financial aid package is made up of gift aid (such as grants and scholarships), loans, and work-study programs.
How to Apply for a Student Loan
The FAFSA, or Free Application for Federal Student Aid, must be filled out each year to receive financial aid. FAFSA deadlines change each year. You can check their status here. Be sure your FAFSA is submitted on time. Otherwise, a late FAFSA will certainly complicate your financial situation and leave you scrambling to pay for school.
To get an idea of how much financial aid you might be awarded, check the FAFSA4caster website.
Upon being awarded financial aid, you’ll receive amounts for gift aid and loans. There should also be a breakdown of your school’s cost. Schools display cost information in different ways and the true cost can be off by a wide margin. Depending on what is shown, you may need to ask the school for cost on:
Fees (labs, etc.)
Add in any other known cost. It’s better to overestimate rather than underestimate. Many students find that they are short on money, even after receiving their financial aid. This is due to many costs that are not accounted for.
How Much Should You Borrow?
Once you have an annual cost for school, subtract out gift aid and any money your parents may have saved up for college. If you have saved up money for college, subtract it out as well. The number you’re left with is not only direct school cost (tuition & housing) but cost needed to live while you’re in school. If you have a job, factor in how much of the above cost it will cover. You should have a final number on cost at this point.
That final number is the amount needed for school loans. The less money in school loans you have to take, the better. As you can see, the amount of loans isn’t just about tuition and books. It should factor in all costs that are associated with being a student.
One caveat about student loans: students will often take the full awarded amount, even if it isn’t needed. If you don’t need the full amount, you can take only what is needed. Taking more loan money than what is needed will cost more in interest and increase your monthly loan payments.
Paying Back Your Student Loans
The government offers a number of loan features that are not available with non-government loans. These include:
Forbearance: You don’t have to start paying on student loans until after you graduate.
Hardship: While in repayment, you can push back payments until your finances improve.
Low interest: Most loans will have interest rates in the single digits.
Low origination fees: Fees for disbursed loans are ~1% of the loan value.
If you are enrolled at least half-time, you don’t have to begin making payments on government loans until six months after graduating. Additionally, interest will not accrue until after graduation.
If you fall below half-time, interest will begin accruing. At this point, it would be best to make payments above the minimum payment, which will decrease the amount of interest that accumulates.
According to the Federal Reserve, the average monthly payment is $393, with a median monthly payment of $222. How much you pay will depend on the repayment plan and interest rate. Note that graduate loans will usually have higher interest rates than undergraduate loans.
A Necessity for Most Students
With tuition continuing to skyrocket, student loans have become a necessity for virtually any student wanting to attend college. While student loans can be a large source of financing for college, planning for cost and taking only the amount needed will help to avoid being overly saddled with unneeded debt.
You’ve thought about it before: creating several streams of passive income to live off. But it just sounds too good to be true. And I'm not just talking about the passive income that requires work - I'm talking about residual income streams that work all the time, even when you're sleeping.
I mean, how can a regular person like you create residual income?
Obviously you know it can be done or people wouldn’t be buzzing about it all over the internet. Or are those people lying?
Luckily for you they’re not. There are countless ways to earn residual income, but they all do require work or investment up front
In fact, here are 7 super smart ways to build residual income.
Real estate has always been high up on my investment list and for good reason: real estate is one of the longest standing, proven investments.
In fact my grandmother had several rental units. Her husband plans on the rentals funding his retirement. Since they’re now paid for all the money that comes in on a monthly basis provides a great income.
But the biggest thing holding most people back is money - it used to take a lot of money to buy a rental property. That's all changed with recent legislation and multiple online companies that have entered the space to make real estate investing affordable.
If you're looking to get started in real estate, look at a crowd funding solution like RealtyShares. It works similar to LendingClub - you commit as little as $5,000 towards a property. When the property is fully funded, you become an owner, and will receive your share of the earnings and appreciation in the property. Check out RealtyShares to learn more. Earn a $100 bonus when you make your first investment using promo code Partner100.
Another option, with a lower minimum, is FundRise. FundRise is a little different, in that you invest via a REIT, but the concept is the same. And it allows you to invest for as little as $500. Check out FundRise here.
Finally, if you're looking for single family rentals, check out Roofstock. With Roofstock, you can buy cash flow positive single family homes online easily! Check out Roofstock here.
Rent Out Your Spare Room
Don’t have money for a rental? That’s okay, you can rent out a room in your house.
Look for a quality tenant who you’d be okay living with (a friend or family member would be ideal) and rent out your spare bedroom.
You can sign up on AirBNB and start renting out your rooms and house today. Heck, you can even list your backyard for people to camp in!
Invest In The Stock Market
Investing in the stock market opens up a wide area of opportunity.
For easy investing you could choose to invest in a couple of index funds or if you like to pick investments yourself you can hand pick a group of stocks. Whether you invest in a personal investment account or a retirement account you’ll still be making your money work for you.
The good thing about investing in the stock market is that it’s fairly easy to do. The con, however, is that you’ll have to put up a lot of your own money before you see any substantial benefits.
I choose to invest in an index fund for retirement and dividend stocks within my personal investing account.
Don't know where to invest? Start by checking out these companies that offer amazing deals just to get started:
Lately I’ve been captured by the many authors who are making it big on the Kindle Market. The potential is enormous.
With this method you have to put in a lot of work upfront but the benefits can be outstanding. Take Steve Scott for instance, who made more than $100,000 last quarter from a handful of Kindle eBooks.
Even though Scott puts out eBooks on a consistent basis once they’re published they’ll continue bringing in money for months or even years.
Create An App
I was watching the news last week when I saw a story featuring a mother who had just developed a successful app. Sick of her children not answering her phone calls she decided to come up with a solution to the problem.
She had an app built that would prevent her children from using their phones until they called her back or answered her phone calls. She had the app built and is now available for purchase.
While I’m not sure about the numbers yet I can only guess that this app will be wildly popular among parents. (I know I’d use it!)
You don’t have to possess technical skills to make money from apps. Simply come up with a great idea, hire somebody to build your app, and then market it like crazy.
Make A Video Course
We all have something we can teach. It can be anything – career related, weight loss, sleep habits, or even education on technical subjects.
If you’re comfortable sharing your knowledge on video you can make and sell a course on Udemy. The beauty of this system is that you create your course once and you’re done.
You can then go on and make a second and third course or you can move to a completely different passive income model.
Since you now have the ability to lend people money you get to bank on the interest rates. Plus, most of the P2P companies allow you to spread your investment through several borrowers therefore mitigating your risk.
We're big fans of Lending Club. You can get started as an investor at Lending Club for just $100, and if you open an account of at least $5,000, you can get a $150 bonus. Check out Lending Club here.
A Word Of Warning
Before you get all hyped up on a passive income buzz I’ve got to be honest with you: Building a passive income is not easy by any means.
In order to make a significant amount of money you need to either put a large amount of money into interest producing investments or put a ton of time and hard work into the other residual income ideas.
While it’s completely possible to build up multiple streams of income it’s going to require some initial blood, sweat, and tears.