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Business Insider
29-05-2025
- Business
- Business Insider
7 things smart people do now to get out of debt soon
If you're not earning a lot, getting out of debt may seem out of reach — but it's not impossible. From automating payment to deciding on a debt payoff strategy to avoiding extreme budgets, smart money moves can help you get out of debt soon, regardless of how much you earn. 1. Automate your debt payments Setting up automatic debt payments is a great first step to paying off debt. "Set up regular payments from your checking account right when you get paid to pay down your debt," says Bobbi Rebell, CFP and personal finance expert with "If the money goes to the debt first, you won't be able to spend it elsewhere." Next, work on increasing how much you can put toward debt. "Focus on freeing up more of your money so you can increase your debt payments," she continues. "Small modifications add up and can make a huge difference in not only paying down debt but preventing future debt that has a nasty habit of creeping up the minute we let our guard down." 2. Decide on a debt payoff strategy And you can't just decide to pay off debt. You need a strategy, experts say. "There are a few common approaches to paying off debt regardless of income: avalanche, snowball, and consolidation," says Sabino Vargas, CFP, Senior Financial Advisor at Vanguard. The avalanche method focuses on paying off debt with the highest interest rate first while making minimum payments on other debt, he explains. For the snowball method, you pay the debt with the smallest balance first while making minimum payments on the other debts. Once that debt is paid off, you reallocate payments to the next lowest balance, and so on. Debt consolidation might be an option for people with a significant amount of debt, and it could save on interest. "In this method, you combine multiple debts into a single loan, often with a lower interest rate, leaving you with one monthly payment to manage," Vargos says. 3. Be lazy. Yes, really! "One of the most powerful things you can do is to be lazy and do less," Rebell says. "What I mean by this is just don't motivate yourself to go out for coffee. Instead, make it at home or just skip it. Spot something you want on Instagram? Before you buy, tell yourself you will come back to it later, and you may. Or you may not." Another "lazy" tip that can help eliminate debt? Don't store your credit card numbers on your devices. "[This] will force you to make the effort to put in the numbers each time. And hopefully you will … take the lazy way out and just not bother!" Rebell says. 4. Avoid extreme budgeting Sure, sticking to a budget is one way to properly allocate money to paying down debt, but it won't work if that budget is too restrictive or extreme, which Rebell says could backfire. And that cliché about millennials not being able to afford to buy a house because of their penchant for avocado toast or fancy coffees? Not accurate, says Alex Moore, Vice President and Financial Advisor at Wealth Enhancement. "Skipping lattes or avocado toast alone isn't going to pay off your student loans," he says. "The average American spends $2,091 a year on eating out and $2,050 a year on entertainment. The math doesn't work out. "What will have an impact is tracking and being intentional with each dollar you spend. I prefer cash because it forces you to think about each purchase and decide if the spend is worth it," he says. "Sometimes you really do need a latte to get through the day, and that's OK." 5. Don't ignore the rest of your finances Even if your main focus is paying off debt, don't ignore the rest of your financial picture. First, pad your emergency fund so that next time an unexpected expense pops up, you won't be forced to put it on a credit card. "Three months of expenses is the typical number," Moore says. "Without that cushion, you'll end up accruing new debt as you pay off old debt. The emergency fund gives you some margin for error if an unexpected expense pops up, even if it's not mathematically the most effective use of the dollars. Reduce your spending and get your emergency fund set up first before you begin aggressively paying off the debt." It's also wise to balance debt payment with saving and investing. Vargos warns against forgetting about your employer-matched 401(k). "When it comes to saving and investing, continue to save toward your retirement plan so you can take advantage of your employer's match program and not leave money on the table," he notes. 6. Know your debt Assess the type of debt you have. If it's high-interest debt from credit cards or personal loans, focus on paying that off before investing or saving, since those high interest rates cause your debt balances to grow more quickly. "Take the time to understand the math of your debt. That means knowing how much you owe and the interest rate, aka the cost associated with that debt," Rebell says. And think about your debt's interest rate versus the rate of return on your investments. "If the projected rate of return is higher than the interest rate, consider allocating more money toward investments or saving in higher-yielding accounts," Vargos says. And when it comes to getting serious about paying off debt, high earners aren't immune. "When I encounter debt, it's typically with high-income, high-debt folks," Moore says. "For them, the challenge is accepting that they need to reduce their lifestyle. It's a bitter pill to swallow when your friends are going on expensive vacations and you're not. The process of paying off debt is as much psychological as it is numerical." 7. Know when it's time for professional help If you have more than $7,500 in unsecured debt (such as credit card debt, personal loans, and medical bills) and are feeling completely overwhelmed, you might consider a debt relief company. Debt relief companies provide a service called debt settlement, where they negotiate with your creditors to settle your debts for less than the amount you originally owed. Once enrolled in a debt relief program, you make one monthly deposit into a dedicated savings account where you build up funds for settlements. Each time the debt relief company negotiates a settlement with a creditor (and you've approved the terms), both the settlement amount and the debt relief company's fees are paid from your dedicated account. This process continues until all your enrolled debts are resolved, usually 24-48 months. Note that even though the debt relief company is negotiating with your creditors, it can't guarantee results. You don't pay the debt relief company fees for their services until they've negotiated a settlement and you've approved it. The process may damage your credit score — but not as much as bankruptcy.
Yahoo
23-05-2025
- Business
- Yahoo
5 Steps To Overcome Financial Overwhelm and Boost Your Confidence
Rising prices and financial pressure are pushing many to the brink. Across the country, people are juggling credit card debt, rising living costs and a nonstop stream of advice about what to do with their money. The result is growing confusion, mounting stress and falling financial confidence. A recent study by found that 90% of Americans report gaps in financial knowledge, and 52% feel overwhelmed by the sheer volume of advice. The issue isn't that people don't want to learn, it's overload. Erica Sandberg, consumer finance expert at pointed out that language is part of the problem, with terms like 'financial literacy' feeling inaccessible to many. 'Not knowing how to manage money or use credit effectively doesn't mean you're illiterate,' she said. 'Just that you don't have the information or tools yet.' Read More: Find Out: The study backs this up, with 60% of respondents saying they would engage more with programs using 'financial confidence' over 'financial literacy,' favoring simpler, more actionable language. For people who feel overwhelmed and unsure where to start, here are five ways to help build financial clarity and confidence. Instead of trying to tackle everything at once, start with the area that causes the most stress — whether that's credit card debt, budgeting or saving — to reduce the pressure. Breaking down the bigger picture into smaller, manageable chunks makes it easier to make a start and then stay focused. Forty-nine percent of Americans turn to family or friends for financial guidance, with only 37% consulting financial professionals, per While it can definitely be useful to get support and advice from loved ones, expert guidance can add clarity to complex financial situations. Read Next: 'Everyone makes mistakes,' said Sandberg. 'So don't be too hard on yourself when you make them — just assess what you did and make a commitment to change.' What matters most is what happens after something goes wrong. Recognizing the issue, understanding what led to it and using that insight to move forward with a clearer plan is what builds lasting financial confidence. One of the fastest ways to reduce financial stress is taking control of debt with a consistent, realistic plan. U.S. household debt rose by 167 billion to $18.20 trillion in Q1 2025, according to the Federal Reserve of New York, and for many, it's a major source of anxiety. Rather than switching between conflicting advice or chasing quick fixes, it helps to commit to a strategy that fits the current financial situation. Progress may be gradual, but consistency builds momentum and relieves stress over time. Financial education shouldn't start in crisis mode, and starting early helps build habits major decisions come up. For those already managing debt or struggling, it's not too late; they can start with practical, everyday skills and expand from there. 'You really do have power over your money, not the other way around,' Sandberg explained. 'Earning, saving, spending, investing, borrowing and repaying are all under your control.' More From GOBankingRates Surprising Items People Are Stocking Up On Before Tariff Pains Hit: Is It Smart? The Most Expensive Disney Merchandise Ever Sold -- and Who's Buying It Mark Cuban Says Trump's Executive Order To Lower Medication Costs Has a 'Real Shot' -- Here's Why Sources 'Why 90% of Americans Feel Financially Lost–And a Simple Fix That Could Help.' 'Erica Sandberg.' Federal Reserve Bank of New York, 'Household Debt and Credit Report (Q1 2025).' This article originally appeared on 5 Steps To Overcome Financial Overwhelm and Boost Your Confidence
Yahoo
12-04-2025
- Business
- Yahoo
Americans Are Ditching the 50/30/20 Budget: How They Actually Split Their Paychecks
The 50/30/20 budgeting rule has long been the gold standard. According to this budgeting rule of thumb, you should devote 50% of your after-tax income to needs, 30% to wants and 20% to savings. Check Out: Learn More: However, many Americans do not actually stick to this rule. A recent Talker Research and EarnIn survey of Americans who earn $75,000 a year or less found that the average respondent put 64% of their income toward needs, 16% toward wants and 16% toward savings. Here's why Americans are ditching the 50/30/20 budgeting rule — and why this might be a mistake. While the 50/30/20 budget may be a helpful guide, it won't work for everyone's budget. 'At the end of the day, you don't have to stick to any particular budgeting rules like the 50/30/20 rule, as long as you find a way of creating and managing a budget that works for you,' said Erika Kullberg, personal finance expert and founder of 'While that study shows some budgeters follow a similar, but different method than the 50/30/20, they could benefit from focusing more on saving and less on wants.' The biggest issue, however, is that many Americans are having to devote too much of their budgets to 'needs.' 'The key here is to lower those ongoing expenses that can weigh down your budget each month,' Kullberg said. 'Small things like shopping around for new car insurance quotes and canceling the bulk of your entertainment subscriptions can add up. You need to find ways to lower your essential spending so more money can go toward savings goals or paying off debt each month.' Bobbi Rebell, CFP and personal finance expert at agrees that devoting 64% of income to needs and less than 20% to savings is not ideal. 'The question for each person is: How do you define needs?' she said. 'It might make sense to go through and think about how they might redefine needs if they lost their job — would everything still stay in that 'needs' bucket? Could they pull just 4% into the savings bucket? If not, could they aim to do 1% more each month until they get to 20%?' However, Rebell acknowledges that the 50/30/20 budget may simply not be feasible for everyone. 'The split reflects the tough reality for many Americans in what is a very expensive inflationary environment,' she said. 'In other words, given the circumstances, this is just how it is for so many Americans who are trying so hard to make ends meet. 'It is also important to note that 16% in savings isn't that far off from a goal of 20%,' Rebell continued. 'The 'wants' is where this theoretical person is really cutting back, and it would be tough to ask them to cut back even more.' Read Next: If your goal is to get as close as possible to the 50/30/20 guidelines, there are some steps you can take to get there. 'There are two basic ways to approach it — redefine what goes in each bucket or increase income, because the 'wants' bucket is already below optimal,' Rebell said. 'It [might] make sense to reframe some needs. A good example might be a gym membership. We might define it as a 'need' because we want to stay in shape, but in reality we can exercise for free. 'The other way to move the needle is to increase income and dedicate that additional revenue to boosting savings first, and then increasing the amount dedicated to wants.' More From GOBankingRates 6 Used Luxury SUVs That Are a Good Investment for RetireesHow Far $750K Plus Social Security Goes in Retirement in Every US Region7 Overpriced Grocery Items Frugal People Should Quit Buying in 202525 Places To Buy a Home If You Want It To Gain Value This article originally appeared on Americans Are Ditching the 50/30/20 Budget: How They Actually Split Their Paychecks
Yahoo
12-04-2025
- Business
- Yahoo
Most Americans Making $75K or Less Have Overdue Bills: 2 Ways This Wrecks Your Finances
Keeping up with bills is challenging, and many Americans are falling behind. A recent Talker Research and EarnIn survey of Americans who earn $75,000 or less a year found that 55% have between one and four overdue bills during any given month. Find Out: Read Next: While having overdue bills may be the norm, this behavior has both short- and long-term consequences. Before skipping a payment, here's what you need to know about how this can affect your finances. Missing a bill payment can add to the amount of money that you owe in the form of added fees and additional interest. 'In the short term, you are going to be wasting money that you could be saving by paying late fees and potentially interest on those overdue bills,' said Bobbi Rebell, CFP and personal finance expert at 'In fact, some credit card companies increase your interest rate with a late bill.' It can also impact your mental health. 'Having constant overdue bills and feeling like you are playing catch-up takes a huge toll on mental health and may literally keep you up at night,' Rebell said. 'That's a terrible way to live.' Check Out: Having consistent overdue bills can negatively impact your credit score. 'Over the long term, not only can it severely impact your credit score, it can also drag down your ability to accomplish your financial goals,' Rebell said. 'Once a bill is more than 30 days overdue it can be reported to the credit agencies. That lower score will hurt your ability to get loans — including mortgages — and if you do get approved, it can mean you are getting less favorable terms.' When you have overdue bills, it can feel impossible to catch up, but with proper planning it's possible to get back on track. The first step is determining which bills to pay first. 'Understand that not all bills are of equal importance,' Rebell said. 'Take the time to go through them and understand the consequences of paying each of them late. For example, some bills do not have any financial consequences for 30, 60 and even 90 days. 'Some, like credit cards, have serious financial consequences in that if you don't pay on time, you not only get hit with late fees, you also will pay interest on the overdue amount, and usually on any current charges as well,' she continued. 'That's an expensive delay!' You also need to consider the impact of each unpaid bill. 'For example, paying a utility late could result in a loss of service at some point,' Rebell said. 'Use this information to prioritize which bills to pay if you have to make that decision.' Next, call your lender or providers and see if there is any room for negotiation. 'In some cases, for example with some medical bills, you can negotiate a lower balance or a deferred payment schedule,' Rebell said. 'Credit card companies will sometimes let you adjust the payment date, so be sure to ask. Also with some bills, such as mortgages, the due date may be the first of the month, but there is no penalty as long as you pay it by the 15th.' If you are consistently struggling with overdue bills, you may need to reassess your overall budget. 'That might mean cutting back on anything you can, even if it is just until you clear your bills,' Rebell said. 'It also might mean asking for a raise, if that is possible, or taking on some side hustle work to boost your income. At the end of the day, you have to make the math work by changing the numbers rather than just trying to keep up in an exhausting effort to pay unaffordable bills.' More From GOBankingRates 6 Used Luxury SUVs That Are a Good Investment for RetireesHow Far $750K Plus Social Security Goes in Retirement in Every US Region7 Overpriced Grocery Items Frugal People Should Quit Buying in 202525 Places To Buy a Home If You Want It To Gain Value This article originally appeared on Most Americans Making $75K or Less Have Overdue Bills: 2 Ways This Wrecks Your Finances
Yahoo
25-03-2025
- Business
- Yahoo
Here's The Most You Should Be Spending on Groceries. Where Do You Fall?
Do you feel like your grocery bill is taking a disproportionate bite out of your paycheck? You're not alone. A recent study by found that many Americans use more than half of their pay to buy food. Read More: Find Out: For many people, especially those earning minimum wage, working more than twenty hours a week just to afford food leaves little room in the budget for other necessary expenses. Financial experts suggest that you only spend four to six times your hourly wage on groceries. Therefore, if you make $15 an hour, your grocery budget 'should' be between $60 and $90 each week. However, with rising food costs, spending just $240 to $360 for food each month is pretty much impossible. Your hourly wage's purchase potential depends on where you live, the minimum and median wages in that area, and the cost of living (and therefore the cost of food) there. The best place to buy groceries, for both minimum-wage and median-wage earners, is the District of Columbia. However, workers in D.C. must still spend over eight hours of work each week to afford groceries. That is double the standard budget recommendation, showing how impossible that old standard is to reach nowadays. Discover Next: If you're making minimum wage, putting food on the table can be a real challenge. The federal minimum wage has stagnated at $7.25 since 2009, while grocery prices have shot up by about 47%. In Mississippi, for example, workers have to spend over 65% of their weekly paycheck just to buy groceries. That means they might need to work 26 hours a week just to afford food, leaving little room for anything else. Other states, like North Carolina, Georgia, Louisiana, and South Carolina also require between 22 to 27 hours of minimum-wage income per week to afford groceries. That's more than half of a paycheck just for food, which leaves little left for rent and other necessities. On the brighter side, states like Washington and Oregon have higher minimum wages, which means workers there can spend much less of their income on groceries — sometimes just 10 hours a week. Northeastern states like Maine, Vermont, and Rhode Island also clock in at between 8 and 10 hours per week of minimum-wage work to afford groceries. This gives residents in these states a bit more breathing room for other expenses. It's not just minimum-wage earners who feel the pinch. Many middle-income families also struggle with grocery costs. In expensive states like California and Massachusetts, grocery bills can take up to 30% of a median-income worker's paycheck. Even in places with a lower cost of living, like New Hampshire and Minnesota, families may still spend about 6 to 7 hours of their week just working to afford groceries. However, there are several states where median-income earners can follow the financial guideline of spending four to six times their hourly wage on groceries. These locations match higher median incomes with lower costs of living and include places like Washington D.C., Minnesota, New Hampshire, Wisconsin, and Maine. This budgeting doesn't account for any luxury spending though, and is still very much a bare-minimum guideline. If you're feeling the squeeze at the grocery store, don't worry. There are plenty of ways to save money without sacrificing the quality of your meals. Take some time each week to plan your meals. By knowing what you need to buy, you can stick to a shopping list, shop less often, and avoid impulse buys that add up quickly. Stocking up on non-perishable items like rice, pasta, and canned goods can save you money in the long run. Buy one or two extra when they're on sale to stretch your budget further. Look for coupons in newspapers or online, and consider using cashback apps to earn money back on your grocery purchases. Most grocery stores have loyalty programs that offer discounts too. Buying fruits and vegetables that are in season can be cheaper and fresher than exotic, out-of-season veggies. Check out local farmer's markets for great deals and to support your community. If you're struggling to afford food on top of your other basic expenses, check out community resources like your local food bank or food pantry. These resources exist to make sure that people in tough financial straits don't go hungry, and they are excellent for supplementing a limited food budget. More From GOBankingRates 11 Best New Costco Arrivals for Your Money in March 9 Aldi Items Retirees Need To Buy Ahead of Spring Warren Buffett: 10 Things Poor People Waste Money On 3 Reasons Retired Boomers Shouldn't Give Their Kids a Living Inheritance This article originally appeared on Here's The Most You Should Be Spending on Groceries. Where Do You Fall? Sign in to access your portfolio
