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The Short-List To Repaying Student Loans

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repaying student loans

The reality of your looming student loans can be a downer if you think about it too much. Because this isn’t a pleasant thought, naturally many recent graduates decide to push off dealing with loans for a later time, like they did as students.

But, as days turn into weeks that turn into months, the moment comes when your first student loan repayment is due. That moment happens to be this month—November.

With no more time to procrastinate, you’ll best help yourself by knowing your way around repaying student loans. The more understanding and actions you do up front, the less scary and painful your debt becomes.

Use This List To Effectively Pay Off Your Student Loans

1. Know the total amount of how much you owe and when your first payment is scheduled. You can do this by checking your email for the information about how to sign-in to your student loan servicer’s website.

2. Based on your monthly income, determine how much you’re going to pay toward student loans each month and how that will affect your other expenses and savings. Obviously, an incentive to save more is you will have more money to pay back your loans and shorten the last payment due date.

3. Set up automatic payments that come directly from your bank account. Many times, student loan servicers will give you an incentive for setting up automatic payments, such as a small reduction in your debt or decrease the interest rate. And going automatic will give you peace of mind that you won’t be penalized for missing a payment.

4. Whenever you get a bonus or extra windfall of cash, don’t spend this money to increase your standard of living. Instead, use this extra income to knock off more of your student loans than the regular scheduled payment. Your future self will be absolutely thankful you did this.

5. Schedule fifteen minutes each month, I recommend setting up a phone reminder for the first Sunday of every month, to check the status of your loans. Use this time to verify your loans are successfully going through, to get an updated figure of how much you owe, and to remind yourself of your mission to knock this debt to zero.

6. Check options for refinancing your student loans. This is a relatively new process, and I wanted to update this post to let you all know about it. Just like refinancing your mortgage or auto loan, when you refinance a student loan, your new lender will pay off your old loans and give you a new one with a lower interest rate or monthly payment. I found this post to be especially helpful.

7. If you are ineligible for student loan refinancing and are struggling to make payments, consider switching to an income-driven repayment plan. These limit your monthly payments to a portion of your income – usually between 10 and 20 percent of your discretionary income. Here is an article that explains the different plans pretty well.

Financial Discipline Is Key

The difference between paying off your loans in five years or 20 years all comes down to financial discipline. This discipline requires sacrifices, but I assure you it’s worth it. Some sacrifices needed to reduce your loans at a quicker rate is to save 10-20% of your income, make sure you never miss a payment, and work towards paying more than the monthly requirement.    

To make this hard work easier, get inspired by imagining the weight off your shoulders once you make your last repayment. Or think of what you’re going to do with all the excess cash each month that used to go to your student loans.

As you start small and gain momentum in reducing your debt, you’ll slowly but surely begin to see the finish line in the distance. And if graduate school debt is in the picture on top of undergrad debt, you’re going to need to read this: How To Fund Graduate School.

Readers, how do you feel about repaying student loans? Are you worried about these student loan repayments? What is your plan to knock down this debt?

 

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9 Reasons Young Adults Are Insane Not To Invest In The Stock Market

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Nearly 80% of millennials are not invested in the stock market. That’s scary! And it means a world of financial regret is on the horizon.

That statistic comes from a 2016 Harris poll which surveyed 500 American young adults (ages 18 to 34) and found the main reasons why they don’t own stock is:

  • 40% don’t feel they have enough money to invest
  • 34% don’t feel educated about it to know how
  • 13% said student debt was the reason they haven’t invested

On one hand, some of these people have a point.

For example, it’s impossible to invest when you have close to $0 in your bank account after bills at the end of the month. And it goes against logic to expect someone to invest when they don’t know how to in the first place.

But I see some excuses at the bottom of this.

For the millennials who say they don’t have enough money, I’d ask them, “What have you done to solve this problem?”

They need to pick up another job, work on the weekend, stop wasting money on clothes and eating out, and save their money so they can invest.

Being uneducated about investing can only be an excuse for so long, too. Start educating yourself with a tool called the internet. It’s free!

And student debt is a big money sucker, but again—make more money, save more, and spend less so you can afford to both pay down student debt and invest in the stock market.

What I’m really advising is for these young adults to stop being soft and start hustling for their future so they can invest.

People miss out big time if they don’t own stocks. Here’s why.

9 Reasons To Invest In The Stock Market

reasons-to-own-stocks

Although many of these benefits can come from investing in the stock market in general, I’m specifically referring to investing in low-cost index funds that mimic the S&P 500, for example.

1) History shows you’re going to make life-changing money.

I don’t throw around the phrase “make life-changing money” lightly. It’s 100% true.

Investing in an S&P 500 Index fund, where you buy a tiny ownership of America’s top 500 public companies (give or take), is a great deal for your future.

If you invest in the stock market in your early twenties, there’s often a jackpot at the end of the tunnel. It’s literally like winning the lottery because you’ll end up with millions if you invest your money wisely.

Look at the graph below to see just the growth from 1980 until now. Better news is the graph remains pretty constant on average if you go back 100 years from now—up and to the right.

s&p-500-index-fund-performance-1980

It’s no wonder Warren Buffett said this,

By periodically investing in an index fund, the know-nothing investor can actually out-perform most investment professionals.

If you don’t have faith in putting your money in the hands of the best public companies in America, who are you going to trust with your money?

Where can you find a better option that history backs up?

Exactly, that’s my point.

P.S. I’m not your financial adviser, but look at the graph one more time and make the only sound conclusion! History often repeats itself.

2) No active work is required to profit big.

Like the video above explains, when you set up automatic contributions (through your employer or own brokerage account) then all you have to do is sit back and let your index fund do the work.

How reassuring is that!? Maybe the greatest quality of investing in the stock market is it’s 100% hands off and doesn’t need your time to produce wealth.

It’s get even better when you do a simple comparison of all the time that’s required to build wealth in other areas.

Real estate: Renting out real estate is a pain in the butt if you’re renters aren’t angels (news flash: most people aren’t angels). You can expect property damage, late payments, missed payments, broken rules, and other nightmares that will really second guess your decision to be a landlord.

And even owning property is a headache because of the crazy expensive closing costs, taxes, property fees, HOA fees, and not to mention the monthly maintenance when the sink or shower breaks. It’s never fun to be nickled and dimed to death, which is a usually a regular occurrence in real estate.

Owning a business: If you’re not willing to be obsessed and let your personal desires die for the good of the company, your company isn’t going to generate significant profits compared to the hundreds of thousands and millions of dollars that investing in the market can.

You can work 80 to 100 hour weeks to build your company and hope it brings you wealth. Or invest in companies like Facebook and Amazon where other people are putting in insane work weeks to churn shareholders like you a profit while you relax on the weekend, and take steps toward financial freedom.

Working as an employee:  The problem with working as an employee is you’re going to have to do some serious corporate ladder climbing to get salary raises and generate some kind of wealth. Even then, odds are you’re not getting a 7% to 10% salary increase every year like the stock market provides on average.

The stock market is the most reliable avenue towards wealth.

3) Incredibly higher rate of return than real estate.

You want to put your money where it can grow and produce more money for you, right? Then go with the stock market. And, don’t buy a home!

According to James Altucher, the commonly shared belief that buying a home is an investment is all too wrong. He points out that from 1890 to 2004, housing returned 0.4% per year. Yikes that’s criminal!

The list of reasons for a house’s poor return include all of the above like upfront closing costs, title insurance, moving costs. And then ongoing expenses like home maintenance when something breaks, property taxes, and the inability to easily move for a better paying job.

If you own stocks instead, you can kiss all of those annoyances goodbye. And not to mention, most importantly, come home with an average return on investment of 7% to 10% if you buy a S&P 500 Index fund.

4) Investing into index funds protects your money against inflation.

Inflation is an ugly beast. It robs you of your hard-earned money, well the true worth and purchasing power of that money, over time. And the worst part is it’s unstoppable, in a sense.

For example, if you keep your money as cash then it’s unstoppable and your dollars will always be worth less as the years pile up.

But there’s a solution. Can you guess the hero of the story?

Investing in the stock market, specifically a S&P 500 Index fund, protects your money from inflation eating away at it.

Reason being is the S&P 500 beats inflation the majority of the time and these types of assets are immune to inflation.

Plus, many companies can pass on the costs to their customers. So if you own shares of these companies, then you’ll get the profits as an investor (even if you take a small hit as a consumer).

This is just another example of why it pays to be an investor and not a consumer.

5) Buying stock is a liquid investment you can sell at any moment.

Run into a tight squeeze where you need immediate money?

Or do you ignore the sound advice to build an emergency savings fund and it bites you in the butt as your car breaks down or you lose your job?

While it’s never a good idea to sell an asset early and get in your own way of bringing in more profits, the fact that stocks are liquid investments can be a life-saver for some.

At any moment of any day, I can sell shares of my individual stocks or index fund and get cash in my checking account as soon as the transfer completes—usually two to three days.

The opposite is true with real estate and other types of investments.

Once that money is taken out of your bank account for a down payment or mortgage payment, then you have no chance of getting that money back on your real estate investment property in the immediate future.

Instead of selling your investment immediately and receiving the money in two to three days with stocks, you may have to wait two to three years to sell your asset if it’s real estate.

Liquid assets like stocks are even more valuable given the quality that you can sell them at any time.

6) Easy to diversity where your money is invested.

Assuming your name isn’t Richie Rich, the odds of you owning 25 different startup companies or 17 penthouse properties across the globe are slim to none.

Though you can own a sliver of 500 different companies or even thousands if you buy index funds listed in the stock market. For example, you can buy a car, technology, food, retail, shoe, farm product, defense, and more companies than you can possibly remember to stay diverse.

Reason I bring that up is diversity is key for the average investor who is scared of losing all of their money or loses sleep when their investments are volatile.

A well-diversified investment portfolio protects against volatility and too much risk, which is hard to come by in other asset types.

7) Get taxed lower for long-term capital gains.

Investing in the stock market doesn’t mean the taxes on your returns completely go away. (Wouldn’t that be a blessing?)

But the taxes you pay on long-term capital gains (stocks you own for longer than 12 months) are significantly decreased compared to getting taxed on regular income.

Add this to the list of reasons it’s in your best interest to invest. If the government incentivizes investing with these tax policies and you still don’t do it, something is wrong with you.

Just don’t buy and sell your stock earlier than a year of holding it or else you’ll be taxed higher since it’d be a short-term capital gains tax (any stock sold before you’ve had it for at least 12 months).

Oh, that’s not it. If your investments lose money, you can also lower your tax bill using those losses. The goal of investing is not to lose money, but if it happens then reducing your tax bill is a decent compromise.

A wealth growing vehicle that also reduces my taxes is a slam dunk investment. This opportunity is yours for the taking as well.

8) It’s the only way to own a percentage of the products and services you regularly buy.

Eat at McDonald’s every day (like my dad does)? You can own a piece of them buy buying MCD.

Are you a big texter and talker on the phone? You can buy shares in Verizon (VZ).

Always enjoy a nice Disney movie to take you back to your childhood? Buy shares in ticker symbol DIS.

The ability to purchases ownership of a company you use all the time is another thing investing in stocks has going for it.

Now would I put all of my money in only products or services I buy? No, but it is a nice mental exercise to purchase ownership of a company that you use all of the time.

Because, in a way, you’re kind of buying from yourself and profiting from yourself. That’s legit!

9) It’s easy to get your feet wet with a small amount of money.

Want to be an angel investor to invest in a hot new startup company? Can’t happen unless you have an annual income of over $200,000 and a net worth of $1 million. Poor people not invited.

Want to invest in Grant Cardone’s real estate fund? Sorry, tough luck. You also need to be an accredited investor.

Want to buy your own multi-family real estate property and rent it out? Good luck collecting that $100,000 down payment to secure the property on top of the mortgage payments every month.

The system blocks out the little investors who can’t make any moves to grow their wealth.

However, it’s easy to start small when buying stocks.

You don’t need to be an accredited investor to invest in companies like Facebook, Amazon, Netflix, and other giant companies like GE.

So if you only have $600 to invest, perfect. Buy $600 worth of shares into a Vanguard index fund and slowly increase your position over time by buying more shares going forward.

Heck there are even new apps out there that will automatically help you invest spare change from purchases like Acorns.

Where buying other assets like real estate and startup investing limit everyone but the rich from participating, anyone can get started investing with as little as a $100 give or take.

And for any parents out there, it’s wise to put your kid’s birthday money into an index fund to get them off on the right start. A little money invested now can likely snowball into millions.

You Reap What You Sow

Two different financial realities await you.

The good news is you’re in control of your financial future. You get to decide the plot line.

If you desire to retire early, have millions in the bank to spend during your golden years, and live a comfortable retirement with your family, all you need to do is start investing.

The bad news is you’re also in control. Meaning you can make the wrong money decisions, not invest in the stock market, and be left with the staggering consequences.

Retirement isn’t fun if you have no money to afford to do anything entertaining. Then post-work life becomes the biggest drag of your life. Some people stop living to such a degree that they wish for death.

So from one young adult to another, make the right choice.

Have a long-term view about life. Buy some shares in a S&P 500 Index fund. And get the financial markets working for your money, not against your money.

Then you’ll give yourself a great opportunity for a happy ending: reaching financial freedom.

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Potential High Reward Investments For The Budding Entrepreneur

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3d-printer-investment

3d printing machine

Running a business can be hard and difficult. This is so self-evident as a phrase that it might be considered the fundamental dictum of opening a firm.

For the budding entrepreneur willing to take the risk, this challenge is what makes it all worthwhile. However, at the same time, some people feel that there must be better ways around investing their money without risking it all on a startup.

If you have money to spend either personally or through a firm that you have already been a part of, and are looking to invest that money wisely, you may not know where to turn.

Financial risk is a large part of the decision making process you will have, and making unwise choices will put you in a difficult position which you’d do well to avoid.

Luckily, there are so many ‘rising star’ industries available to nest your money into nowadays that you may feel like a child in a candy shop just waiting to begin.

Here are some of the best, most innovative and most stable places you’d be wise to invest your money as a firm or personal financier.

Property

We must top the list with property, as it is always the most reliable place to invest money. People will always need shelter, and people will always want better shelter. As a result, foreign investment in properties and property development is at an all time high.

Catering to the luxury holiday crowd abroad could be one of the most lucrative investments to make, as popular locations are always bringing in visitors and their money year-round, and the demand will remain constant.

Investing in penthouse properties abroad will give you the luxurious room for renting, subletting or even renovating and selling foreign accommodation.

In foreign countries, the price of admission will be much more competitive than pursuing the same endeavour in the area you are domestically.

This means it can serve as a wonderful first investment on the property ladder, giving you a solid range of experience as to how best operate in those circumstances if you do decide to continue and expand in the future.

3D Printing

3D Printing has become a force to be reckoned with in recent years. Provided the ingredients for construction are there, developing any product is looking more and more reasonable.

And it seems every month there is a new innovative revolution in 3D Printing.

For some industries, such as home furnishings, it offers to completely revolutionize the way their manufacturing process works. It also provides the potential ability to completely rewrite factory product lines.

Getting in early and investing in the most promising 3D printing firm is likely to reward you big in future, as well as giving you a head start on arguably one of the most exciting technologies to rear its head in recent years.

Virtual Reality

Virtual reality is one of the most interesting new developments in the technological and gaming markets.

The Oculus Rift and HTC Vive are both competing for the top spot in the VR world, but even Sony are expanding in the industry well with their very own PlaystationVR.

However, it’s not only the big boys that you should be interested in. A huge amount of small indie development teams are bringing VR experiences to the mainstream, with software packages that aren’t solely dedicated to people who enjoy video games.

Art gallery replicants, social spaces and even painting utilities all exist to make Virtual Reality a real contender which will likely revolutionize the way we all interact with our home entertainment systems, and even computing  communications for years to come.

Getting in now to support the most promising software studios will help you surely ride the most exciting crest of the innovative wave here.

Healthcare

It is clearer than ever in recent years that many pharmaceutical drugs are leading to an addiction epidemic, particularly among the opiate painkillers prescribed universally after surgeries or any form of injury repair.

This has gained a large amount of controversy, and is the largest challenge to the pharmaceutical industry right now. The market is crying out for alternate means of pain removal.

Some states which have legalised marijuana are benefiting hugely from purpose bred concoctions which are less to help people get ‘high,’ and more to help people overcome the most insidious addictions they feel. These include products such as CBD oil or vapour rubs.

Other new and less researched substances such as Kratom are getting widespread popularity, to the point where medical research is being officially sanctioned and is starting to look promising.

If looking to invest in the healthcare industry, these could be the most promising places to start, as they potentially offer millions in untapped revenue.

Renewable Energy

You probably expected to see this on this list, and for good reason. Renewable energy is set to become one of the most exciting ways in which investing in positive world change can be beneficial to your wallet.

The renewable energy workforce is already larger than those working in methods of fossil fuel acquisition, and this is only set to increase.

Harvesting energy from the wind and solar farms is becoming more and more viable, and now even full nations are finding themselves more able to run off of pure, clean energy alone.

Luckily, the energy market does not need to be limited to simply one subset of that industry. It can crop up in many places, such as Tesla’s automotive interests in making solar powered, driverless cars.

Finding the most important and hottest avenues to invest regarding solar energy is easier than ever, and this is where some of the most exciting methods of innovation lie.

AI

Artificial intelligence is something that people often shudder when they think of, but it’s becoming less of a sci-fi fantasy and more of a practical, daily reality the further we move into it.

It’s likely your smartphone has a rudimentary voice chat option such as Siri, or Amazon’s Alexa in the new devices they sell, which learn your vocal, usage and purchasing habits and help tailor the experience you get based on those parameters.

As AI gets more refined, and it is becoming more refined, you should expect to see this cropping up in even the most unexpected of areas in the future.

The days aren’t far off from where smart homes speak to you as they used to in the movies.

AI is going to revolutionize the way we think, act and behave around the products we use on a daily basis, and as a result investing in the right avenues may net you untold fortunes.

Streaming

For those interested in investing in media platforms, look no further than YouTube Live, Mixer or Twitch.

These used to be more encouraging to those who play video games, but the audience has exploded in recent months and now massive creative communities have spawned.

If you’re looking for solid marketing investment, sponsoring those with large followings and social media gatherings can be the perfect way to invest in what could be considered an outsourced brand, bringing your operation to the eyes of many who are entertained and willing to listen to the endorsements of their favorite content creators.

The rise of influencers is real.

You may be able to craft a good supporting relationship which is much more likely to gain you the favor of their fans and potentially secure purchases or direct affiliate traffic where you deem fit.

This is a burgeoning and new industry which is just waiting to be taken advantage of.

These tips can help you experience a boom in your investment opportunity. Good luck!

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Avoid Bad Credit With These 5 Action Steps

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Everyone starts out their financial lives with a clean slate, but over time you can accumulate bad credit that affects your future finances, loans, and stress.

Now that credit cards are so readily available, people are more likely to acquire bad credit than ever before. Let’s be clear, it’s not the credit cards fault people go into debt and build bad credit, it’s the people’s.

Though if you already find yourself saddled with bad credit, there are services that can help you with this including fixmy.credit.

And if you still have a clean financial record or are committed to rebuild one, here are five of the best ways to avoid bad credit.

5 Ways To Avoid Bad Credit

credit-card-debt

1) Pay your bills on time

This first one couldn’t be more obvious when talking credit score. As you might have already guessed, paying your bills on time every month is the number one thing you can do from preventing any damages to your credit record.

This can be particularly damaging if you miss payments by 30 days or more, so keeping on top of this task should be one of your main priorities.

Remember, even small overdue charges can have a negative impact. Always bear this in mind before making new purchases and receiving a bill.

2) Always start with credit-impacting bills

If you’re in one of those month where it seems everything financially that could go wrong does, you may not have enough money to pay all of your bills. In this situation it always helps to know which bills are the ones which can directly affect your credit score straight away.

That is not to say that you should entirely ignore the other bills, but you can prioritize the crucial bills—credit card, mortgage, loans etc.— to start off with.

Then do whatever you can (save more, spend less, eat peanut butter and jelly for a week) to pay off the bills you couldn’t the month before.

3) Avoid taking on unnecessary debt

As we mentioned at the start, more and more people are taking on debt with these days in order to finance their lifestyles (aka “Keeping up with the Joneses”). But debt doesn’t go away on its own, it needs to be properly managed and paid for.

If you have too much debt which is spread around all over the place, you are much more likely to start missing payments because you don’t have enough money to pay them or you forget about them which will lead you getting into bigger problems.

And your credit score is both influenced by the level of debt that you have overall and also your monthly credit card balance in comparison to your credit limit. Keep that monthly balance as low as you reasonably can which should open up extra savings to put toward debt.

4) Practice managing your money

People manage money in different ways, but you want to make sure you avoid getting in over your head as much as possible.

So, before you decide to take on any new expenses, make sure you stop to think how this could affect you.

You will get the fullest picture of this by creating a monthly budget in which you weigh up your monthly salary versus your expenses. Identify what is essential and nonessential so you know what can be cut if you need to.

5) Save for unexpected emergencies

Though bank balances aren’t factored into your credit score, having some reserves of cash put aside can ensure that you are in a position to deal with any negative financial events which may come your way.

After all, you never know when a financial emergency could put your current lifestyle under threat, so always being properly prepared is certainly the best policy to maintain. And having an emergency account to deploy cash protects you from going deeper into debt if that’s your reality.

Choose Good Credit

Avoiding bad credit is a good financial practice throughout your entire life, so use these five methods as a way to achieve some financial confidence.

Then you can rest easier at night knowing at least your finances are in order, even if the rest of your world is not.

And please remember, every financial decision you make from here on out (and really the day you received your first credit card, but we can’t go back in time) pushes you towards good credit or bad credit.

Paying your bills on time, not taking on significant and unnecessary debt, keeping a budget, and saving for emergencies is how you gift yourself a high credit score. That causes lenders like banks and businesses to want to lend to you and give you a friendlier loan and interest rate because you’re not a high-risk applicant.

Not only are you rewarded with receiving the loan then, if it’s a big purchase like a house or car then the interest rate will often save you thousands of dollars. Winning!

However, making credit card or bill mistakes results in bad credit, lender’s less likely to lend to you, and if they do it’s at a much higher cost. The cards are stacked against you if you continue to build bad credit. And, in most cases, it’s no one’s fault but yours.

So help yourself by moving towards good credit. The future you will be extremely appreciative, and be in a much better off financial place.

This article was written by an outside contributor.

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