Pay Off Your Debt for Good

“There are two ways to enslave a nation. One is by the sword. The other is by debt.” There is an ongoing debate on the internet about whether or not that quote was first said by John Adams. Regardless, the quote is very powerful with its meaning. Debt is slavery. With debt you are controlled by the person in which you owe. If you don’t believe me, stop paying your monthly payments on your house, car, or other loans. The bank or other creditor will come along and seize that asset from you or other assets that have been used as collateral. Debt is very powerful and can take a massive financial and psychological toll on us. Paying off our debt can lead to previously unfathomed levels of financial freedom and happiness. I’ve started Young and Wealthy Living to help others realize this dream.

Today, we will observe multiple methods that can be used to pay off different types of debt faster by taking various steps.

Pay Off Your DebtThe Debt Portfolio

If you’re like most people, you have many different forms of debt. These could be a credit card balance, mortgage, student loans, car payments, or personal loans. If you are looking to make more than just your monthly payments on these loans, I commend you, this is the first step to finally becoming debt free. But you may be wondering, which loans should I put the extra payments toward? To answer this we will use the debt stacking method, as I strongly believe that this is the best way to attack debt. It’s very simple and straightforward. Put extra payments to the debt with the highest interest rate and pay the minimum payments on the rest of the debts. The reason this method works is that over time you will be able to accelerate how quickly all of your debt will be paid off since more and more of your payments will be going towards the principle instead of the interest. Using the debt stacking method you will pay less in total interest and you will have all of your debts paid off faster than if you just used the shotgun approach on your debt.

Student Loans

If you’re like me, you graduated with student loans consisting of private and federal loans. My student loans ranged from 3% interest to 6.8% interest. If you plan on taking the full ten years to pay off your student loans, you could be paying thousands of dollars in interest alone over this time period. If I had only been making the minimum payments on my loans I would have paid over $10,000 in interest alone. To help lower your monthly payments and literally save yourself potentially thousands of dollars in interest, you can consolidate all of your loans into one loan. Yes, you read that correctly. Not only does this give you only one loan to have to keep track of and remember to pay, but it would most likely lower your interest rate and save you money. A couple of good resources for this are Sofi and Earnest. You can also check with local credit unions as many of them offer this service as well. There are a couple things to note, however. First, many services will require that you be employed or have an offer of employment and some might require that you have an emergency fund setup. Continue to make the larger payments you had before consolidating and you will have your student loans paid off ahead of time!

Credit Cards

The average credit card debt for American adults with a credit card is $5,047 according to creditcards.com. Unfortunately, credit card debt is usually the most painful because it typically carries the highest interest rate of debts people are likely to have. It is not unlikely to see credit cards with an APR of 15% to 24%. If you are carrying a large balance on your credit card you can expect to pay thousands of dollars in interest before your card is paid off and have it take years to do. The key to lowering your payments on the credit card debt is to lower your interest rate. This will allow you to pay off that debt faster and potentially saving you thousands in interest payments.

The first method here if you have a high credit card balance and are struggling to make your payments is to transfer your balance to a new card that offers an introductory offer of 0% interest on balance transfers. A couple of great cards for this are the Chase Slate and Discover It cards. This introductory rate is only good for a period of time however, typically 12 to 21 months, before it increases to the typical 15% – 24%, so you should be paying as much as possible during this time as 100% of your payments would be going towards the principle. Again, there are a couple things to note here. Sometimes there is a fee to transfer a balance, oftentimes of 3% – 5% and you will need good to excellent credit to qualify for the best offers.

Another method you should try if you have not already: simply ask. Just call up the credit card company, be very polite, and explain to them that you would love to pay off your credit card debt but the current interest rate makes it very difficult for you to make extra payments. Then ask them if they could lower your interest rate for you. You may initially get a ‘no’ but it is very likely that you will need to go through several people in the company before you reach someone that has the authority to negotiate this. Just remember to be polite to the person on the other end of the phone and they will be willing to pass you along to someone who can help.

You may think the credit card company doesn’t care about you and if you can make your payments or not. But the truth is they absolutely want you to make your payments and have a payment plan you can afford. They would much rather work with you and have you pay off your debt than to sell your debt to a collections company for pennies on the dollar.

Of course, these are not the only methods you can use to decrease payments and pay debt off faster but we all have our favorites and those we believe to be the most effective. Recognize how debt has the ability to control you and make a plan to attack it and you will be well on your way to wiping out your debt and becoming debt free! Feel free to share your debt elimination plans and stories with me by emailing me at nic@youngandwealthyliving.com. Together we can conquer our debt and be on the path to financial freedom!

Our Cross Country Move: One Year Later

Almost one year ago, our family made the move from Chicago to Tucson, Arizona.  Honestly, I wasn’t that excited to be moving so far away from my family in the Midwest, but we thought the move would only be for two or three years.  The move was a smart choice for my husband’s career (something we still believe), so I tried to make the best out of it.

Now, a year later, I’ve found that a cross country move can evoke a wide range of positives and negatives.

The Positives

Cross Country MoveKeeping in touch with relatives is easy, thanks to technology.  My mom has made the trip out to Tucson three times in the year we’ve been here, so we’ve been lucky to see her so frequently.  Because of the cost of taking our family of five such a distance, we only expect to be able to travel to see her once a year.  She’ll likely cut her trips down to once or twice a year to see us from now on.  However, thanks to Skype, keeping in touch is easier than ever.  Whenever the kids miss grandma, we just Skype with her.

Having a back yard is priceless.  In the Chicago suburbs where we lived, we just had a tiny patch of yard.  Since we were renting, we couldn’t do anything with it.  Now, we have a full back yard for the kids to play in and we have three garden beds (though we’re still learning how to grow anything in this crazy desert).

A cheaper cost of living rocks.  No surprise, Chicago was expensive.  We could never own a house because property taxes alone were $12,000+ a year, and starter homes in less than ideal conditions were easily $350,000 as a starting price.  In Tucson, we’re able to own our own home, and the property taxes are a fifth or less of what they were in Chicago.

The Negatives

All health insurance policies are not the same.  My husband’s health insurance policy in Chicago was generous, but we always found it very annoying that medical bills were not paid until 9 to 12 months AFTER the appointment.  (Illinois’ tight budget was the reason.)  When we moved here, I was impressed that our bills were paid within a few weeks.  However, we pay more to insure our family here, and fewer expenses are covered.  We did not estimate just how deeply medical bills would impact our bottom line, and right now we’re recovering financially from the nearly $5,000 we had to pay out of pocket for the first four months of medical expenses in 2015.  (These expense would have likely been much less with our Illinois insurance.)

Moving is SO expensive.  We originally hoped to only be out here for two to three years, but moving cross country is so expensive.  Now I find myself hoping we stay here five years so we don’t have to spend so much money to relocate so quickly after relocating here.  We need time to recoup our expenses.

Moving cross country has been an experience, but despite the expenses, we’re still glad we did it.

Have you made a large move?  What did you learn a year or so into relocating?  Would you do it again if you had the choice?

Frugal Multi-Cultural 4th of July Party Suggestions

The 4th of July is just around the corner, and with it, the official launch of summer.  A favorite American pastime, a barbeque 4th of July party offers you the chance to enjoy the weather and the company of friends while enjoying tasty foods.  If you don’t have much money to devote to entertaining, consider moving beyond the traditional favorites of hamburgers and hot dogs and trying some of these unique, cultural party food ideas.

Main Meals

Frugal 4th of JulyFajitas on the grill.  Buy some lower cost steak, chicken breasts and shrimp.  Season them, grill them, and then mix them together so each fajita contains a mix of the three meats.  Grill some onions and peppers on the grill, slice them, and make a fajita bar complete with tortillas, shredded lettuce, guacamole, onions, peppers and meats.  Of course, you can choose to use only one or two meats depending on what is on sale at the grocery store the week of your party.

Taco bar.  Prepare a few different taco fillings with homemade seasoning including ground beef, chicken, and a vegetarian option such as black beans.  If you have a bit more money to spend, buy some lower cost steak and also offer steak tacos.  For variety, offer flour and corn tortillas.  Then let your guests choose their main fillings, type of tortilla and their toppings.  (Perhaps choose from shredded lettuce, cheese, refried beans, tomatoes, onions, guacamole, etc.)  If you want to be even more creative, consider making your own pico de gallo.

Pulled pork.  Be your own pit master and search the web for the myriad of homemade bbq sauce recipes.  Create your own bbq sauce and delight your guests with delicious, homemade pulled pork.

Side Dishes

Having spent the majority of your money on the main meal, consider these low cost side dishes.  Choose the ones that best match what you are serving as the main meal.

Deviled eggs.  Even in today’s economy, eggs average 10 to 15 cents a piece, making for a very low cost side dish.

Japanese potato salad.  Potatoes can also be very cheap.  If you want a new, creamy twist on potato salad, consider making Japanese potato salad.  Your guests will most likely enjoy this newer version of an old classic.

Corn on the cob.  At some road side stands and farmers’ markets, you can find corn on the cob for 10 to 15 cents an ear.  Consider going beyond the traditional and instead making some Mexican corn on the cob popular at food stands.  Either add olive oil and red pepper, or add a blend of butter, mayonnaise and cheese.  Again, search a site like food.com to find a variety of recipes.

If you have a small entertainment budget, consider some of these meal ideas.  Most of them will require less meat per person than the traditional hamburger, and your guests will love the variety.

photo credit: Signe Karin