Tag Archives: debt

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I’m in Debt – What Should I Do?

While struggling with debt isn’t uncommon, getting out of it as soon as possible is important. Student loans, car loans, credit cards and other payments can lead to your pile of debt getting bigger and bigger. So, what steps should you take if you are in debt? Keep reading to find out. 

1. Clean Out Your House & Sell What You Don’t Use 

Start small and simply sell the things you don’t need. You’d be surprised how many things you have around the house that you never use. While doing this won’t erase your debt, it will give you some extra money to put towards paying it off and help you recognize some of the unnecessary purchases you’ve made. 

2. Find a Side Job 

If you have a full-time job but have weekends open, finding a part-time job to fill that time would be extremely beneficial. Working on your days off might not seem ideal, but if you’re serious about paying off your debt, it’s a great step in the right direction. Just remember these circumstances are temporary and the bigger your steps towards erasing your debt are, the quicker you can get it done. 

3. Analyze Your Spending Habits 

The best way to understand your spending habits is to write all of your payments from the last month or two down on paper. Once you see everything in front of you, try dividing that into categories – necessary expenses (like rent, utilities, groceries, etc.) and unnecessary expenses (coffee trips, clothes, video games, etc.). Now that you see how much you’ve spend on things that aren’t necessary, start rethinking the way you handle your money every day. Next time you think of buying that cute shirt, ask yourself if you need it. These small purchases add up and the money could be put towards your debt, instead! 

4. Never Spend More Than You Make 

How do people get into debt? They spend more money than they’re bringing in. If you’re trying to get rid of debt, you definitely can’t be adding more money to that pile. Trim down your budget so you know you’re making more than you’re spending. The best way to know if you’re doing this is to simply track everything you spend and everything you make. At the end of your pay period, make sure the money earned is higher than the money spent. 

Paying off the debt you owe might seem like a big job, but freedom from debt starts with taking the first step. Start by implementing these effective tips into your daily life, stay organized and keep a positive mindset. Debt is temporary if you work hard and stay motivated! 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

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How Do I Pay Off My Debt?

Extreme amounts of debt can weigh heavy on your shoulders. It has been found that extreme amounts of debt are linked to higher rates of suicide and depression. This is why it’s so important to have an understanding of good debt vs. bad debt and how you can go about paying back your debt efficiently. 

Don’t Let it Define Your Life

You, of course, want to have your debt paid off as soon as possible. However, letting it define the value of your life is counterintuitive to being able to pay off the debt. You can enjoy your life while simultaneously paying off debt. A common saying about paying off debt is to think of it as a marathon and not a sprint. You aren’t going to have all of the debt paid off at once, but consistent payments will help get you there instead of burning out from sprinting.

Be Careful Who You Surround Yourself With 

It’s hard to stick to a budget when you’re surrounding yourself with friends who want you to spend money with them. It’s difficult to say no to socializing because of the money. At the same time, you should be surrounding yourself with people who understand your financial priorities and support you in those goals. Spend time meeting with financial experts to help guide you in your investments and debt management. 

Press Pause on Credit Cards

While credit cards are a great tool when used correctly, they can be a hindrance to paying off debt. Do your best to refrain from using them until you have your debt under control. 

Utilize Extra Income

If you receive a bonus or a pay increase, place all or a portion of those funds towards your debt. You won’t notice the difference, besides seeing the decrease in your debt to income ratio!

Start a Payment Plan 

In order to keep the momentum going, you should start paying off your most expensive debts first. This typically means the highest interest. Establish a set amount that you will pay each month and work it into your budget. Your amount should be more than the minimum payment due. 

Don’t let your debt take over your life. Get control of your dues today!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

How to Get Smart with Your Credit

Today, practicing the simple credit concept of “living within your means” can be extremely difficult due to medical and housing costs growing more rapidly than income in many American households. However, this doesn’t mean you can’t manage your credit and debt responsibly.  Here are a few tips to help you get your credit on track, even when times are tough.

  1. Understand what credit is.  According to Finance Solutions Credit 101, credit is your “promise to pay in the future for purchases made today.”  You may be aware that when applying for credit with a lender, your credit report will be pulled to determine your payment history, amounts owed, credit history, new credit and types of credit, which is all taken into consideration when determining your credit limit.  Understanding the terms and fees associated with your credit will help you make more educated decisions in terms of lenders, especially if you were to become overextended.

 

  1. Maintain healthy debt.  Maintaining healthy debt is all about making good choices when it comes to debt.  This means developing a happy medium in terms of credit history, exercising timely bill payments and managing a variety of credit accounts.

A good example of this is the attractive additional 25% off at your favorite store in exchange for signing up for their store credit card at the moment of purchase.  Doing this once or twice is harmless enough, but if you are maintaining credit cards for a variety of stores, this can negatively affect your credit score by repeated hard inquiries and hidden terms not discussed in the rushed sign up process.  Overall, the potential damage to your credit may not be worth the immediate savings.

 

  1. Stay out of the credit danger zone.  Similar to points made in the previous two tips, you need to make good choices when it comes to purchasing on credit.  Watch your accounts carefully to avoid overextending yourself, keep your balances low and always pay your bills on time.

If you are in a position where you can’t pay your bill on time, communicate with your lender to make them aware of the situation and determine an alternate rate of payment.  And we get it, emergency expenses come up, but the best way to handle these is to do your best to prepare for them.  If you don’t have an emergency savings fund built up, start one today and prepare yourself for the unexpected to avoid unplanned credit charges.

Managing your credit responsibly can be extremely difficult, and due to unforeseen circumstances you may already be in over your head.  Reach out to us to discuss your financial management needs today.  We are here to help you get on track!

 

 

Money Magic Tricks

Money Management

Magic is one type of entertainment that will never go out of style. Whether it’s David Blaine and his shocking stunts, or newly famous films such as Now You See Me, this classic art has proved to truly stand the test of time. While Peoples Bank & Trust may not be the best at sleight of hand, we do have a few savings tricks up our sleeves! See if you can understand the steps to these financial stunts and make your fiscal success appear out of thin air.

Make your money disappear (into your savings!)

Before you’re tempted to spend those hard earned dollars, we’ll show you how to make them vanish, and then reappear! By logging into your online banking, you can set-up recurring monthly transfers for a set amount from your checking to your savings. This way, your funds will get tucked away before you even knew they were there! The extra money saved can contribute to your retirement, education, or even an exciting getaway.

Cut your debt in two.

Tired of paying pesky credit card debt, a mortgage, or student loans? This helpful hack can show you how to saw that number in half, and potentially make it disappear. Financial talk show host Dave Ramsey has a proven method called Snowballing Your Debt. By continuing your monthly minimum payments, and using extra funds to “attack” one debt at a time, you can then rollover extra money from the fully paid loans into paying off the next biggest debt and then the next. Before you know it you’ll be debt free, and looking for another financial trick to master!

See double dollars on your retirement plan.

If you’re like most Americans and need to play a little catch-up on your personal retirement savings, this trick is sure to impress! To really maximize your saved dollars, we recommend diversifying your retirement accounts, by allowing one to be maintained by your employer (401k) and creating a separate account for you to contribute to on your own (IRA.) By automatically withdrawing money from your paycheck through your 401k, you can potentially invest MORE while having it managed through your employer. In addition to this, creating a dedicated IRA to store personal savings dollars in allows you to explicitly manage the growth of your continued contributions. Know what’s better than one retirement savings account? Two!

Pull extra money out of a hat.

Just like magicians, a good budget can help you find things you never knew were there – like money! Whether you’re using traditional methods like the envelope system, or more digital options like the YNAB, the end goal is still the same. To help you save even faster, you can couple your budget with additional savings tips and tricks on common recurring expenditures such as groceries, and you’ll see the savings in no time!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

5 Financially Savvy Ways to Use Your Tax Refund

Personal Finances

Getting your taxes done early not only takes one more thing off your to-do list but further allows you to start planning for the future. Working with your tax professional, determine how much your family may receive this year from a tax refund. No matter the amount, we recommend putting it towards your financial goals for the year. Here are some great strategies we’ve tried to get the best bang for our buck:

  1. Max out your 401(k) or Traditional IRA contributions. If you aren’t taking advantage of one of these two accounts, we highly suggest opening one soon! These tax-beneficial accounts help holders accumulate and grow their funds without the burden of tax at the time of deposit. Each account, however, is limited by how much you can contribute. By allocating funds into these account types it may not only help you save for retirement but also allow your money mature throughout the years, with no additional effort.
  2. Make an extra payment on your mortgage or student loan. Paying down your loan is always a great option when selecting financial goals. In the case of a mortgage, you earn more equity as you pay, while with student loans, you gain more momentum towards financial freedom. Instead of adding money to each monthly installment, we recommend creating one lump payment. By doing this you can you create a single but large decrease in your principal amount owed, drastically reducing your associated interest as well.
  3. Save for the 2017 holiday season. While holiday events, family gatherings, and memories are held dear, the burden of the season can pose potential problems for your personal finances. If you struggled saving last year, now is the perfect time to set aside funds for the holidays. Determine how much you need to pay for each aspect of your seasonal activities, and save as much as possible in a separate account from your tax refund. If additional funds are needed, automate your savings to transfer a specific dollar amount to this account each month.
  4. Pay off outstanding credit card debt. With one of the highest interest rates, credit cards are notorious for taking years to pay off. If you want to make a dent in your debt, we recommend tackling one card at a time.  Using your tax refund, see if you can eliminate smaller debts first. Then with the remaining funds, begin paying down each additional credit card. By paying off the card with the least amount of debt first, you can begin to snowball your way to financial freedom!
  5. Start saving for a vacation. Whether it’s a spring break, a summer adventure, or a fall festival, it’s never too early to start saving. Once you have determined a destination, then create a rough budget of the expected expense. Depending on your refund you may be able to pay for the whole trip outright, or you may need to couple the funds with some additional monthly savings. No matter how you choose to save, we recommend keeping your vacation funds in a separate deposit account so you’re not tempted to use them throughout the year.

If you still have questions on how to best use your tax refund, our personal bankers would love to help. At Peoples Bank & Trust, we can assist you in using all your savings options to help make the most of your money. Stop in and see us today!

 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

Taking Baby Steps to Eliminate Your Debt

Eliminating Debt

As of 2015, the average American with credit card debt owes $15,762 – and that’s just credit. Auto loans, student loans, and mortgages add thousands of dollars and years of repayment to your personal finances. However, debt doesn’t have to be a life sentence. Once you and your partner have made the commitment to work towards financial freedom, follow these steps from Peoples Bank & Trust to begin eliminating debts:

  1. Establish an emergency fund immediately. Unexpected events can take a harder hit on your savings than unbudgeted spending habits ever could. Even if you’re juggling a current debt or two, work to set aside $1,000 as soon as you can in a separate emergency checking account. As you chip away at remaining debt, this cushion can protect repayment plans from being flattened by a faulty car battery or flooded basement.
  2. Adopt the Debt Snowball method. Instead of listing them highest to lowest by interest rates, arrange debts from smallest to largest. Paying off a handful of small debts in the same time it’d take to chip away at a large one eases burdens, yields immediate results, and provides motivation to continue saving.
  3. Reduce your rates. Refinancing your mortgage and negotiating lower interest rates on credit cards can make a huge impact. Reevaluating your health, life, and auto insurance policies may reveal services you don’t need, or it can spur you to shop around for providers with lower rates.
  4. Chop extraneous expenses. Create a list of unavoidable monthly expenses – rent, utilities, gas, food, etc. Then create a second list of leisure expenses – gym memberships, cable, eating out, clothing. After budgeting for the necessities, pick a few discretionary categories you’d like to keep with reduced spending, but cut the rest. Putting your spending on a diet is easier when you allow yourself a few modest outlets.
  5. Evaluate progress monthly. Creating a multi-year financial plan for eliminating debt is the first step, not the only one. Perform a monthly check-up on your plan to continue spending within your budget. It can also provide a boost of encouragement when you see progress, and you might spot ways in your new financial routine to make your budget even more cost-effective.

It may be a long road to eliminate debt, but it’s within your ability to travel it. Don’t go it alone – contact Peoples Bank & Trust Co. today to help you create and stick to your financial plan.

 

Peoples Bank & Trust Co.

Equal Housing Lender

Member FDIC