Saving Money & Paying Off Debt Shouldn't Be Complicated

Disclosure: I am not a financial advisor and this should not be considered personal finance or investment advice. You should seek appropriate counsel for your own situation. All information found here, is my own opinion. This post contains referral links, which means I may receive a Reward if you click a link and download the apps that I have recommended. While clicking these links won't cost you any extra money, they will help Me keep the Content and Events Coming! Please check out My Privacy policy for more details. Thank you for your support! 

In reflecting on my upbringing, I learned many of my spending habits from my mother. For instance, I learned how to use store credit cards to "maximize savings"— I use quotations because you actually need to pay off your balance for this to work. Thankfully, my mom taught me that too. However, one lesson that I did not learn until later in life is how opening too many credit cards can be damaging to your credit score. I learned this lesson in college when my mom talked to me after I opened up my first store credit card at Express. 

Recently, my favorite minimalists Roe and E of Brown Kids started a 10-day challenge #DebtDiary2018. While adulting, Roe had to unlearn many unhealthy financial habits that were taught to her by her mother. Similar to many of us, Roe grew up with her mother expressing self-care through shopping habits— "I take care of myself. I have my own money. I buy what I want." "Buy the shoes, because I deserve them." Sounds familiar?

Let's take it one step further, maybe you grew up witnessing your mom, grandma, aunt, whoever raised you, putting away one credit card that is declined, and then another just to purchase that fancy dress just because "I deserve to treat myself."

Yep, Roe experienced that too— you are not alone.

Reflecting on financial lessons, subconsciously and intentionally, passed down from my mother to me, my mom spoke on how a mother's need to provide for her family may lead to a similar situation of credit card roulette just to provide nourishment, clothing, and shelter.

Not all of the financial lessons we learn from our mothers are from a place of "I deserve" but sometimes from a place of "I need". 

In Roe's interview with Deun Ivory and Lauren Ash of Black Girl in Om, Roe discusses how through her shopping and spending habits, she was inflicting emotional and financial violence on her life. While living in San Francisco Bay Area and only earning $20,000 a year, she found herself burdened with $11,000 in credit card debt. When she decided to embrace intentional living, what she called (and still prefers to call) her new-found philosophy before learning of the word minimalism, Roe knew that her journey would have to start with her shopping habit. Starting in February 2015, Roe began to work on getting out of debt and was able to dig herself out of debt in less than two years. 

 
 

So, what does this have to do with you? In 2018, you probably have some financial goals that you want to meet. I know I do! Bring that goal to the forefront of your mind! If you don't, get one! Seriously! 

Building your financial health is one step you need to take to live freely.

If creating a financial goal seems absurd or overwhelming to you, here are a few suggestions for meaningful financial goals:

  • Save up a 3-months in an emergency fund— if that is too demanding, start with 1  or 2 months.
  • Pay off one student loan account or credit card— it doesn't matter if it is your smallest balance either, just make it meaningful.
  • Increase investment in retirement fund from 5% to 10% of your paycheck— trust me, you won't notice the difference with gradual increases throughout the year.

Now that you have your financial goal for 2018 in mind, here are a few actionable steps that you can take to achieve your goal!

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Looking to Pay Off Debt

  • Learn about Snowball and Avalanche Methods to pay off debt— and choose one!

There are two popular methods to paying off debt smartly. The debt snowball: paying off the smaller accounts first, building up momentum as you continue to pay off the larger accounts. The debt avalanche: paying off higher interest accounts first, cascading towards lower interest accounts in the future. Regardless of the methods, you will put as much as you can towards the balance of the target account and pay the minimum on all remaining accounts.

>>You can read about the pros and cons of both methods here in Student Loan Hero and here in Forbes.

  • Join Roe's 10-day #DebtDiary2018 Challenge on Instagram!

We can all use a little accountability when it comes to meeting our goals. What I absolutely love about Roe is that she wore the shoes that many of us are still wearing. This challenge is more than just putting money towards your debt. Each day, Roe will share more about her debt to freedom journey and provide you journaling prompts so that you can get to the root of the issue— aka what being debt free really means to you and how you plan to get there.

>>You can join Roe's challenge here on Instagram. Listen to Roe's interview on Black Girl in Om here on BGIO website.

the challenge is archived on her Instagram highlights and the workbook is still available via the link in her bio.

Wanting to Save (or Earn) Extra Cash

  • Open a High Interest Savings Account Online!

There are many perks to having an online personal bank. The most obvious perk being that you generally have access to use boundless ATMs without incurring ATM fees, which can sometimes be more than $5— talk about price gouging! However, what you may be overlooking when it comes to online banks is the superior customer service and high interest savings account. Although saving accounts are not the best way to save towards your future, saving accounts are necessary to access cash and to access cash QUICKLY! This is why saving accounts are the best way to prepare for emergencies as well as meet other short term financial goals such as saving for a summer vacation or the holiday shopping season. What makes a high interest saving account special is that the interest rates are typically hovering somewhere between 1.25 to 1.5% APY. My husband and I personally use Ally Bank and Barclays. However, there are many options available to make your money work for you, not just for the banks!

>>View a list of banks that offer high interest saving accounts here in Magnify Money.

  • Sign Up for DOSH a cash back app that finds you cash without the hassle!

I polled a few of you recently asking about the content you wanted to see more of in 2018. Many of you stated that you wanted to see more app recommendations and reviews. Well, I have one for you right now. It's called DOSH. DOSH is an app that makes earning cash back from your purchases a no-brainer, automated process. All you do is link your debit or credit cards and you will earn cash back automatically from participating vendors such as Macy's, WalMart, restaurants, movies, hotels and more. No more remembering to log into cash back websites or apps! You can even earn extra cash by booking hotels through DOSH app.

>>You can learn more about DOSH app and download the app here on DOSH website.

Needing to Invest towards Your Future

  • Sign Up for Acorns an investment app that lets you automatically invest spare change.

Acorns is an investment app that lets you automatically invest your spare change from debit and credit card purchases. Acorns is better than your traditional spare change apps or banking services because with those services your spare change sits in a savings account. With low interest rates on traditional banking accounts, your investments will not benefit much from compound interest over your working life. Acorns makes it simple to invest wisely in stocks and bonds. When you sign up for Acorns you will answer basic questions about your investment goals (e.g. are you saving for a house) and risk preferences, which determine where your change goes. In less than one year, more than 650,000 Acorns members saved a combined $25 million since the app launched in August 2014.

>>You can learn more about Acorns and download the app here on Acorns website.

  • Increase your retirement contribution each quarter by 1-3% from each paycheck until you reach 10%.

According to a study commissioned by Earnest.com, 69% of millennials are not saving for retirement. Yikes! You can read the full survey results here in Earnest. Financial planners agree that as a rule of thumb, if you save 10% of your income in your 20s, you should be able to live a relatively comfortable retirement life when you are 65 years of age. The easiest way to save while mitigating the burden you may feel when saving is to adopt a "you can't spend, what you can't see" mentality. What I mean by this is to automate your contributions from your paycheck. This is straightforward while working for most employers, and can be done with some groundwork if you're self-employed. Don't forget to match your employer's maximum contribution! Never leave FREE money on the table! 

>>To learn more about your retirement options, read this digestible guide here in The New York Times.

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