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Diana

Debt

4 Steps to Decide If Refinancing Your Student Loans Is for You

4 Steps to Decide If Refinancing Your Student Loans Is for YouThis post may contain affiliate links. Check out my Disclosure Policy for more information.

I have been in the process of refinancing my private student loans recently and had a ton of people reach out to me with questions about the whole process. One of the biggest ones was, “How do I know if it’s the right move for me?”

That really can only be figured out by you. After all, personal finance is personal.

However, there are some steps you can take to make this decision a little easier for you.

Do you have Federal or Private loans?

This is super important and in my opinion will immediately make your decision for you. If you only have federal loans, I would immediately say, don’t refinance. The reason I say this is because federal loans come with a lot of protections for you in the event something happens. They offer many programs for deferment, forgiveness, and are generally more willing to work with you in the event of job loss, disability, etc.

On the other hand, private loans typically offer no perks like it, most companies you can’t even die to escape them. That sounds dramatic, but I’m being serious. In the tragic event that you die with private student loans, someone is still going to be responsible to pay those things off. If you have any private loans, refinancing might be a good option for you.

Are you just starting out on your journey to pay off your student loans?

If you are, then I would suggest holding off on refinancing. The reason being that once you refinance you will most likely consolidate many small loans into one large loan. I strongly believe in using the debt avalanche method to save money, but there is major research in the debt snowball method to keep motivation high. If you refinance right away, you won’t experience any pay offs right away because you will be tackling a huge loan amount potentially.

If you have been slaying your debt for awhile and are feeling motivated to get this debt out of your life, refinancing might be for you.

Can you afford your monthly payment?

If you can afford your monthly payment, I would say refinancing may be for you. If you are someone that is struggling to afford your payment, then I would say you should not refinance. This might sound crazy, I know. But, refinancing shouldn’t be used to save you money on your monthly payment, if it will extend the life of your loan. You will only be throwing away more money in interest to these companies. Instead, you need to track your expenses, budget, and maybe even increase your income. I’m happy to help you with all of this 🙂

Do you have loans with an interest rate over 7%?

If you do, then I would say refinancing might be for you. By refinancing, you can potentially get a better interest rate. This will save you money in the long run, as long as you pay close attention to the loan details, we’ll get to that later.

Once you have answered these questions, and feel like it is worth it to look into refinancing, then you need to keep a few things in mind. Refinancing isn’t always beneficial and can actually cost you more money in the long run, if you aren’t careful.

Just because your rate is lower, doesn’t mean you are automatically saving money. A lot of companies will provide you with a lower rate and a lower monthly payment, but extend the life of your loan. This most likely will not help you save any money in the long run.

When you are looking into refinancing your student loans, it’s important to look at all the moving parts, interest rate, monthly payment, and life of the loan.

For example, I refinanced my loans with Earnest and it has been nothing but wonderful compared to my old loan provider. When I refinanced, I went with a lower rate (4.97%), lowered the life of my loan (15 years to 5 years), and increased my monthly payment ($770 to $865). This is saving me money in interest because I now have a lower rate, and less time I’ll have the loan.

Refinancing can be tricky, but it can be a great tool to use to save you money in interest. If you have any questions about refinancing don’t hesitate to contact me! I am happy to help you navigate the process. Have you refinanced your student loans? How did it help your financial freedom journey?

Money Management

The Solution to Cash Management

The Solution to Cash Management

This post may contain affiliate links. Check out my Disclosure Policy for more information.

If you’re just starting out on your financial journey, you probably feel overwhelmed and frustrated by money. I know I did when I first started. I felt that I couldn’t escape the burden of my debt and no matter what, it would always be with me.

The thing was that I was constantly living in a scarcity mindset and didn’t know how to break it. When I started making steps to change my situation, my mindset slowly started to shift. This shift is important.

It can be hard to figure it out on your own. It took me months of searching the internet and reading personal finance books to get myself to a place where I was empowered by my money, instead of controlled by it.

Recently I got the opportunity to connect with Brie Sodano, founder of From Sheep to Shark, who has created an incredible cash management webinar that teaches you how to stop bleeding money. Brie is an incredible woman that has a goal to help 1 million woman improve their money situation.

Lets be real, I love talking money and personal finance, but I enjoy the topic and have an entire blog about it. I know personal finance and managing money is a tricky concept. It can be difficult to navigate when there are so many different things at play (It’s incredible just how much of your life impacts your personal finance and your ability to manage it).

Brie’s Invisible System to stop bleeding money and start stacking cash has truly covered every aspect of cash management in an easy to follow format. She lays it right out for you and tells you in simple terms how to go about cash management.

Cash Management

The reality of cash management is that there is no one size fits all fix since there are so many things that impact your money. Brie recognizes this in her Invisible System course. She shows you how to overcome these obstacles, like habits and ideas surrounding money and cash management.

In my opinion the most valuable part of Brie’s Invisible System course is that it is realistic. She considers the reality of the everyday person and all of our imperfections. This allows you to find the extra money in your budget and break the cycle of scarcity.

Cash management is one of the hardest parts of getting your finances in order I have learned from my clients. This course solves that problem for you by providing you a manageable system to use.

Saving Money

College on the Company Dime

Education on the Company Dime

This is a guest post written by Melody from Her Designed Life. Check her out for all kinds of resources related to personal finance!

What do backpacks, pencils, and lunch bags all have in common? Their location in school!

For many people going back to school can be costly. In the United States, the national college debt is over 1.5 trillion according to Forbes magazine. After I graduated with my crushing college debt of $65k with a degree equivalent to basket weaving, I decided that I needed to cut costs, live frugal, and pay off my student loans. You can check out how I paid off my debt here.

Why I’m Going to Graduate School

As a young professional I often get asked why I have decided to go to graduate school.

Many of my friends ask why I want to add extra homework onto my day after a hard day at the office. To be honest, I don’t like extra work, but I do like extra pay.

Let’s take a look at the figures.

According to the US Bureau of Labor and Statistics, the cost of weekly pay increases with each level of educational degree you complete.

Income and Education

For example, the median weekly earnings for those with a bachelor’s degree estimate at $1,137.

Let’s say that of the 52 weeks there are in a year. Hypothetically, let’s say that a worker works 48 weeks due to vacations, holidays, sick days, or personal reasons.

The annual average amount that a person could potentially bring in pre-tax without any other deductions would be $54,576. Obviously, this is just an estimate of median salary and deductions and cost of living are the real determiners of your pay.

Now, let’s compare that to the average median earnings someone might receive with a Master’s degree. The median weekly earnings for those with a Master’s degree are $1,341.

Multiply this number by 48 weeks, this equates to about $64,368.

Income and Education

That’s about a 10,000 difference in pay for only one year!  

Is Graduate School Right for Me

Before you even begin applying to graduate school, you must count the cost.

Calculate the cost of your expected income based off of a future degree or certification on one of the following websites: for general salary and experience estimates visit payscale.com and for graduate studies use this calculator. If you see that the end result of your projected income is small or only slightly more than what you currently make, re-assess the financial and career benefits of receiving your additional education.

Check out if the industry is growing fast or has high median income on the US Occupation Outlook Handbook. Most likely, if your position seems to have a high percentage of growth or an increasing median income, the investment in your education may be worth the amount of time and money spent on your program throughout your career.

Compare the tuition fees with the projected income increase. If you find that the median salary for those with your graduate level degree have a high unemployment rate or very little in income increases compared to your tuition fees, you may need to re-evaluate the type of education or professional field you are working towards.

You can create a  simple formula like this to help you determine graduate level coursework.

Your current salary

– Total Cost of the program (Total cost – scholarships, grants, and tuition reimbursement)

+ Expected  Annual Income Raise ( Expected Salary – Current Salary )

= Total Estimated Annual Salary post graduate or certification

Example:

$50,000

  • ($15,000 – $10,500) = $5,500
  • ($85,000 – $50,000) = $35,000

= $79,500 ( Total Estimated Annual Salary post graduate or certification )

* based on pre-tax and deductions

How to Qualify for Company Paid Education

Not all employers are equal, especially when it comes to paying for your graduate studies.

Here are 3 ways to get your company to pay for your ongoing education.

  1. Research your company’s policy on education assistance before you apply or accept a position. This is extremely important not only for traditional education, but also for ongoing certifications, seminars, etc. A company culture that approves of paying for education shows that they value their employees and their competency.
  2. Communicate your intentions for returning to school with your employer. If you are just starting or have been in a position with your employer for awhile, communicate to your manager your education aspirations and career goals, if they align with your current field.
  3. Prove the ROI. ROI stands for return on investment. Explain in detail to your manager or decision maker in your company the return on investment that paying for your education would have on the company. Perhaps there is a very large project that you could apply the theories, templates, or guides from your experience to an upcoming or long-term project.

Now that you’ve proved the ROI with your employer and confirmed with your HR specialist or manager that you qualify for tuition reimbursement, walk through the steps of obtaining entrance to the graduate, doctoral, professional certification, or college admissions. You can then finalize walking through the tuition reimbursement procedure.

In my current position, my company has offered me $5,250 annually in tuition reimbursements. My projected costs for the entire program are about $15k.

My projected income increase with a master’s degree starts at $15k annually.

Add on about 2-3 years of additional experience and my expected income will be much higher.

In conclusion, going to graduate school is a time and money investment. However it’s a great way to not only increase your knowledge, but increase your salary and career opportunities.

Melody Johnson runs the website herdesignedlife.org to help women achieve financial independence by paying off debt, planning for life events, and reaching their financial goals. She is a Certified Financial Educator by the National Financial Educator’s Council in the Metro Detroit area.

Be sure to check out Melody on her social pages.

Saving Money

How to Cut Expenses

How to Cut Expenses in 3 Easy Steps

If you’re just starting out your journey to financial freedom, you’re probably feeling a bit overwhelmed. You might feel like there is nothing to cut from your expenses and have no idea how you’ll ever get ahead.

I promise you, there is a way. You have to do the work, but there is a way to get ahead, stay ahead, and start building wealth.

First, start with beginning to change your mindset around money. Make your budget and track your expenses to see where in the world your money is going each month. You can subscribe to my newsletter to get a free template to help you do this.

Once you have done your budget and are tracking your expenses, then you need to follow these 3 steps to cut expenses from your budget.

First Step to Cut Expenses

Once you have budgeted your money and tracked your expenses, you need to determine where all of your money is going each month.

See what areas you can easily cut out to free up some money in your budget. Do you buy coffee out every single day? Try bringing your coffee instead. It seems small, but a common problem is when small purchases add up over the course of the month turning a small daily expense into a large monthly expense.

Once you go through and find easy areas to trim out quickly, continue on with your month as normal. You don’t want to cut expenses all out at once because you will be forcing this change rather than settling into it.

Remember, you want to create new habits to make a life long change, not cut expenses to bare minimum and see how long you can go. There is a time and a place for that, like when you you’re challenging yourself to a no spend month.

Second Step to Cut Expenses

Once you have cut expenses that are easy, start thinking about what your priorities are. What do you find value in?

The best part about budgeting is that you get to tell your money where you want it to go. Have it go to what you value the most.

You’ll start realizing that some purchases you don’t find much value in and you no longer want to spend the money. Cut those expenses that aren’t valuable to you or bring you joy.

By cutting these expenses, it will allow you to free up money in your budget to go where you want it to.

Third Step to Cut Expenses

This can be challenging and requires another change in mindset, which is why it’s the last step I include. This can potentially be the hardest part, especially if you’re just beginning.

This also could be the easiest part for someone, it all depends on where you are in your mindset and how willing you are to change your lifestyle. .

Look at the expenses that you have to make each month and think about creative ways to make these areas more affordable.

Personally, I don’t find much value in where I live. Give me a bed, bathroom, kitchen, and somewhere to store my clothes and I’m good to go.

This is why I decided to move back home in order to pay off my $200k in student loans. The amount of money I can put towards my debt, about 75% of my income, while still investing and saving, makes it worth it.

Another area would be groceries, we need to eat, we can’t cut groceries from our budget unfortunately. But, we can choose healthy, budget friendly foods instead to lower our expenses.

Ultimately, this all comes down to finding what you value and what you don’t value in your life. by following these steps to eliminate the low value expenses, you will find more money in your budget to put towards the things you value and are important to you. What has helped you to cut expenses?

 

 

Financial Freedom

Change Your Money Mindset

Money Mindset

We focus a lot on the logistics of tackling our money goals. How much debt, how much saved, what’s the game plan to tackle this as fast as possible?

But, there is one step that seems to be overlooked and it is arguably the most important step to make long term changes.

We can fuss about the plan and the numbers all day long, but if we have the same money mindset and habits, those won’t really matter.

Initial Money Mindset

A lot of people that are working towards financial freedom start with similar mindsets around money. They most likely feel like they have no control over their money and don’t know how to make it work for them.

They usually fall into the cheap mindset because they are in a never ending cycle of scarcity. You don’t have the tools you need to help yourself out of this mindset.

You are constantly thinking about what you can’t do or can’t afford because you don’t think you have the money to.

Usually, you are only thinking about day to day, week to week, month to month. You don’t have any long term money goals because your money has the power currently.

An example of this is being anxious about making it to pay day because you don’t know if you will have enough money to get you there.

Money Mindset Change

As you begin and move through your journey to financial freedom it’s important to do the work. Don’t try to skip steps by taking short cuts.

Sit down and track your transactions, make your budget (get my free templates by subscribing to my newsletter) and see where your money is going each month. If you try to skip doing the work, you’re not changing your habits and you’re not gaining the power over your money.

Take control of your finances and tell your money where you want it to go by using a budget. Once you have this power, you start thinking about money differently.

You no longer think, “I can’t afford this,” but, “How can I afford this?” You have control over your money and you tell it where to go.

You’ll notice that you no longer think about pay day as much because you know where your money is, where your money is going, and where it will go once pay day arrives. The anxiety around money has been lifted.

An Abundance Money Mindset

Once you have moved to an abundance mindset, you will find that you feel complete control over your money. Money turns into a tool, instead of something that causes fear, stress, and anxiety.

Taking the time to work through the hard parts is so important to changing your own money mindset. Without changing your habits and your mindset, you will be stuck in the same place you always were.

Financial Freedom

Being Cheap vs. Being Frugal

Being Cheap vs. Being Frugal

This post may contain affiliate links. Check out my Disclosure Policy for more information.

There is a huge difference between being cheap, and being frugal. These two words get used interchangeably, when they really are completely different. Yes, there are some things that will cross lines, but for the most part they are very different.

Being Cheap

Cheap means that you never spend any money and watch your money very closely. When you are cheap you spend the least amount of money.

When shopping, you simply are looking for the cheapest cost. When in reality there are many other pieces in play when determining “cost.”

Being cheap is usually driven from a place of scarcity or necessity. You don’t feel in control of your money, so you feel you must hold onto it.

Being Frugal

Being frugal comes from a place of abundance. You have power over your money and know exactly where it is going.

Instead of thinking solely about price, you take into consideration multiple value points. You think about cost, you think about how it helps others, you think about how long it will last.

These are just a few points, but you get the idea. Being frugal is being wise with your money and consciously choosing to be frugal with it.

Being Frugal vs. Being Cheap

An example of the difference between being cheap vs. being frugal that I experienced was bringing water to work. I would buy the cheapest water bottles I could find to refill when I was on the go in graduate school.

I was busy. I worked 8-3 and then had class from 4-7 every single day. I was working full time and attending school full time and making a measly $1,000/month on average.

What I found was that I was needing to buy new ones regularly because they were constantly breaking. I was living in a scarcity mindset because I didn’t have any extra cash each month.

Once I graduated, got my teaching job, and got my finances in order, I was able to move towards an abundance mindset. I no longer needed to live in this scarcity area.

I was able to see the other value points once I moved to an abundance mindset. My low cost water bottles I realized didn’t have much value because they were constantly breaking.

I took this into consideration, along with that they were always made from plastic, and researched higher value water bottles. Now, I’ve had mine for 3 years and it has dents and scratches, but it still serves the purpose of holding water.

This is just one example, but it serves as a reminder that there is a difference between being cheap and being frugal. It is all about the mindset you are currently living from. What are your thoughts about being cheap vs. being frugal?

 

Money Management

Why You Need to Start Cash Flowing

Why You Need to Start Cash Flowing

There are so many terms when it comes to personal finance and so many ways of doing things out there. I mean with a simple search on the Internet you will find endless resources for personal finance and how to go about getting your finances together. The most important is absolutely getting a budget together, cutting expenses, and increasing your income, but it’s also super important to create sinking funds and cash flowing larger expenses.

What is Cash Flowing?

This is one of those terms that is thrown around the personal finance world a lot and it makes sense, it’s super important. Cash flowing is when you have a larger expense and you delay the purchase until you have enough cash saved up for the expense. This tool is used when it is something you didn’t necessarily see coming (unlike a sinking fund that is for known expenses in the future). For example, I am cash flowing a new to me car instead of financing it. Of course, I could go out right now and get a car and finance it, but that would increase my debt. Something I am not interested in doing because I want to live a life of financial independence.

How to Start Cash Flowing.

You’re obviously not going to always use cash flowing, there is a time and a place. If it is a known expense that is happening in the future, like an oil change or yearly membership fee, you should have a sinking fund for it. If it’s something that you need to purchase and have time to save, then cash flow it. I’ll use my example of a new to me car. This isn’t an emergency and I have time to save for it. So, I’m adding money each month to a car fund I created. You need to decide where your priorities are and how quickly you want to cash flow the purchase. For me, I want to have it cash flowed by October, so I am sending a lot of my extra income from side hustles to this fund each month while still sending extra to my debts. Once you have made your decision, you can tweak your budget to find the cash for your purchase. Remember, a budget is not meant to restrict you, but to allow you to make the purchases you want.

Cash flowing has been a total game changer for me and my budget. Just by delaying a purchase until you have the cash to afford it, you can avoid putting yourself into debt. As I said earlier in this post, in order to obtain financial freedom, you can’t be burdened by debt and having to pay companies for past purchases with interest. Have you ever cash flowed a purchase?