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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.
Newsweek
23-05-2025
- Business
- Newsweek
Americans Have a 'Magic Number' They Need for Retirement
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Americans believe they need a "magic number" to retire comfortably, far beyond what many have been able to save. According to a study from Northwestern Mutual that polled more than 4,600 adults in January, Americans think they need $1.26 million to comfortably retire. For those aiming to retire in 30 years, the financial math to reach this goal is sobering. To attain the $1.26 million retirement goal based on a 7 percent annual return in investments, a person would need to put away approximately $1,035 each month, which amounts to $12,420 annually. If they're saving 15 percent of their income—a commonly recommended target for retirement savings—this would require an annual salary of around $82,800, more than $20,000 more than the national median salary of $61,984. However, the study reveals that 25 percent of Americans have saved only one year or less of their current annual income for retirement, and over half fear they will outlive their savings. Gen Xers, who are next in line to retire after baby boomers, are particularly concerned, with 54 percent believing they will not be financially prepared when the time comes. Why Is Retiring Getting Harder? While commonly touted as the "golden years" of life, a comfortable retirement is becoming out of reach for plenty of Americans. In an era where the cost of living continues to outpace wages and traditional retirement structures have all but vanished, saving for retirement has transformed from a long-term financial goal into a daily struggle for many Americans. Bobbi Rebell, CFP and personal finance expert at frames the situation starkly. "The recent market downturn, despite its recovery, was a big reminder that retirement funding is fragile," she told Newsweek. "It has never been easy but it has been something that Americans did not have to think about as directly in the past because many had pensions as well as family support systems in place to help control the variables." That foundation has steadily eroded. Gone are the days when defined benefit pensions formed a safety net for retirees. Today, most workers rely on self-directed savings plans—if they're lucky enough to have access to them at all, Rebell explained. "Not only have defined benefit plans like pensions become rare," Rebell notes, "but self-directed defined contribution plans, like 401(k)s, are not available for many people who work in the gig economy. It is no wonder people feel vulnerable and are lowering their expectations when it comes to their retirement nest egg." Composite image created by Newsweek. Composite image created by Newsweek. Newsweek Illustration / Canva Ashley Morgan, a debt and bankruptcy lawyer and owner at Ashley F Morgan Law, echoes the difficulty facing workers, especially in a volatile housing market. "Cost of living has been steadily on the rise. Saving for retirement is difficult for many with living costs rising and retirement costs being stagnant," she told Newsweek. She adds that one of the most common retirement strategies—building home equity over time—is increasingly out of reach. "Now, since younger generations are not buying properties or house prices are so high that mortgage payments are substantial, saving for retirement is not possible when you have a mortgage." Renters, in particular, are at a disadvantage, often facing rising housing expenses that eat into any potential savings. "With increasing rent," Morgan explains, "it means increases in income are automatically offset, at least to a certain degree." Another significant challenge is the shift in employment patterns. "Many people work for smaller companies or perform contracting jobs like gig work," says Morgan. These jobs typically don't offer retirement benefits, and the lack of employer matching makes it less appealing to contribute independently. Frequently changing your job also makes it difficult to accumulate long-term savings. Then there are student loans—a burden that can linger well into what should be peak retirement savings years. While some of these borrowers have recently been protected by pandemic-era rules that stopped the collection of unpaid education debts, the Trump administration has now ordered the Department of Education to begin resuming forced collections, which can result in wage and Social Security garnishment. "I unfortunately see people in their 60s still paying student loans, some for their own educations and some for their children," Morgan said. "These student loans often are paid at the expense of saving for retirement." These compounding factors, which have made saving more difficult, also mean many are working later in life than previous generations. A 2023 report from the Pew Research Center revealed that about one in five Americans aged 65 and older were still working, almost double the proportion from 35 years ago. According to the Bureau of Labor Statistics, 8.2 million people over 65 were employed in February 2015. By February 2025, that number had grown to 11.1 million, marking a 35 percent increase. A recent study by Transamerica Center for Retirement Studies found that more than half of current workers—52 percent—plan to work at least part-time in retirement. While acknowledging these challenges, Rebell does see a silver lining in the growing trend of older workers. "The growing trend of older workers is not necessarily a bad thing. Working gives purpose and can provide an extra layer of financial security," she said. "As people live healthier for longer lives, staying in the workforce longer makes a lot of sense." But for millions of Americans, working longer may not be a choice, but a necessity. With financial pressures mounting and support systems weakened, the modern retirement landscape is less a peaceful reward for years of work and more a shifting target that is becoming harder and harder to attain.
Yahoo
09-05-2025
- Business
- Yahoo
New formula for N.Y. State education aid turns out to be bad news for NYC
A revised formula doling out $26.4 billion to New York school districts that public education advocates had been lobbying for will, as it turns out, deliver hundreds of millions less to New York City than had the old formula remained intact. The new plan, passed Thursday by state lawmakers, was supposed to be a welcome development, as the past two schools chancellors and their backers had long been pushing for reforms to the state's per-pupil funding, known as Foundation Aid. But in a twist, the deal reached between Gov. Hochul and the Legislature will leave a gaping hole between what the city expected and what it ultimately receives. An earlier estimate projected the difference at about $350 million. All in all, though, the budget agreement still results in an overall Foundation Aid increase of about 5% for the city's public schools, according to the governor's office. 'While an overhaul of the outdated formula is sorely needed, the limited changes make matters worse — shortchanging NYC students as a result,' Kim Sweet, executive director of Advocates for Children, said in a statement. The budget bill updated the formula's poverty weight by replacing decades-old census data with a new metric known as Small Area Income and Poverty Estimates, or 'SAIPE.' It also substitutes school lunch eligibility with a broader category of 'economically disadvantaged' students. 'We're not using the old data that was used before because it was leading to unfair outcomes,' Hochul said at a media gathering earlier this week. 'We're going to be using the most up-to-date poverty estimates. That'll be the major change.' Both changes were first proposed by the governor in January. But the Adams administration warned of the $350 million gap, in part because the federal guidelines for poverty do not account for the local cost of living. City Hall and the Education Department did not return a request for comment on Thursday afternoon. 'I'm not going to argue for the old way of counting [poverty], because it was based on the 2000 census. So yes, we should do away with relying on data from the 2000 census,' said Michael Rebell, executive director of the Center for Educational Equity at Columbia University Teachers College, who was an attorney in the landmark school funding lawsuit that prompted the Foundation Aid formula. Rebell added that an index that better accounts for the regional costs in New York City could have helped offset the difference. But ultimately, lawmakers only updated the measure for Westchester County. 'That's why I say do the whole formula. You don't do it piecemeal,' Rebell said. The plan also expands the weight for students learning the English language, restoring an estimated $30 million — though that is far short of the $350 million and a recent proposal by the Assembly, according to estimates by Advocates for Children. 'You're going to have people who see the glass as half full and as half empty. On the one hand, it's a significant amount less than what New York City schools would've received under the old Foundation Aid,' said Sen. John Liu (D-Queens), chairman of the Education Committee. 'On the other hand, it is about $540 million more than last year.' Asked which camp he falls in, Liu said: 'I'm happy that we were able to get a substantial amount more money for New York City public schools.' Rebell and Liu both agree that more changes are needed. Rebell is working on a new funding formula, while Liu is pushing for further reforms: 'We all understood that the Foundation Aid formula, which is almost 20 years old, at this point requires updates and possible overhauls. I think the executive budget and enacted budget did not go far enough in truly updating the formula,' the senator said. Apart from Foundation Aid, the budget also finalized changes to the educational standards for religious schools, such as yeshivas, including pushing back the timeline of real consequences for not providing basic instruction in subjects such as reading and math. It also signed into law a new school cell phone ban, with a $13.5 million state investment to assist with implementation.
New York Post
30-04-2025
- Business
- New York Post
This simple ‘1% rule' could save you hundreds of dollars — and curb your dangerous impulse spending
Think twice before dropping that cash — your future self will thank you. A budgeting hack known as the '1% rule' is gaining traction for helping people pump the brakes on pricey, impulsive purchases — and it's so simple, even your most shop-happy friend could use it. If you're eyeing a non-essential splurge — say, Gen Z-coveted front-row concert tickets, a high-end espresso machine, a weekend getaway at a fancy resort, or a new gaming console — and it costs more than 1% of your annual income, hit the brakes. Advertisement 4 If you're considering a non-essential purchase — like a designer kitchen appliance, a premium bicycle, a luxury fitness tracker, or a spa retreat — and it costs more than 1% of your annual income, it's time to pause. Yingyaipumi – Give yourself 24 hours to think it over before swiping your card. If you earn $50,000 a year, anything over $500 should trigger a 'cool-off' period. Originally shared by Glen James of My Millennial Money via CNBC, the 1% rule helps put a mental speed bump between you and your next shopping spree — without requiring you to give up treats entirely. Advertisement 4 While $500 might seem significant, it's easy to rationalize such purchases, particularly when you're scrolling through flash sales or tempted by a 'limited edition!' notification on your go-to shopping site. Antonioguillem – 'It isn't anything 'official' that you need to stick to,' Bobbi Rebell, CFP and personal finance expert at CardRates, recently told Bustle. 'The 1% rule is also a good way to keep things in perspective and get a sense of whether it's going to derail your finances.' Advertisement And while $500 may feel like a lot, that kind of purchase can become dangerously easy to justify — especially when you're doom-scrolling through sales or seduced by a 'last one left!' tag on your favorite shopping app. 'This rule reminds you to stop and think the purchase through,' said Rebell. 'If you'll actually use the purchase, that's fine … but if it's just a heat-of-the-moment urge, that's when the 1% rule might help pass up the item — and ultimately save big.' The strategy even works in reverse. Instead of spending that chunk of change, stash it away. That way, 'you intentionally put the money into savings instead,' Rebell said. Advertisement 'Think of it as a gift to your future self!' she said. But fair warning: this isn't a license to 1% your way into debt. 4 Repeatedly applying the 1% rule can quickly lead to significant spending, experts say, but it's not meant to be used frequently; experts advise using it sparingly for maximum effectiveness. Antonioguillem – 'If you apply the 1% rule over and over, you can end up spending a tremendous amount of money,' she cautioned. 'It's not a rinse and repeat kind of thing. It has to be used very sparingly.' Of course, spending discipline doesn't stop at handbags. Even your grocery cart could probably use a budget-friendly makeover. Enter Chef Will Coleman, who recently went viral for his '6-to-1 grocery shopping method' — a simple hack designed to help families save hundreds on food each month. Advertisement 'Whenever you go grocery shopping … use the '6-to-1' method,' Coleman explained in a TikTok viewed nearly a million times. 'You grab six veggies, five fruits, four proteins, three starches, two sauces or spreads and one fun thing for yourself.' 4 The '1%' rule and '6-to-1' hack encourage you to pause and evaluate your purchases. Monkey Business – Advertisement He created the formula after realizing his shopping habits were draining his wallet — and wasting food. 'This makes grocery shopping way easier, way cheaper, and you get in and out, so you're not there all day long,' Coleman added.
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
