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Every year presents new lessons we should incorporate on this life journey, and this one, in particular, is no exception. In a world that is ever-changing one thing that has to remain the same is our ability to pivot when necessary. Whenever life challenges arise, we often make changes and shift out of force rather than free choice. While this logic can be applied to every aspect of our lives itâs an especially crucial concept as it relates to our finances. Thereâs no need to wait until your employer needs to decrease headcount or reduce work hours to jumpstart your rediscovery process. Make the decision today that no matter what happens within the economy, you are making the strides to guarantee your earning power doesnât rest in the hands of someone else.
Set yourself apart and strengthen your skills
Often times, the number one thing you can do before executing plans of any kind is focus on strengthening your skills. Are others able to depend on you?Â If you desire to run your own business or be a high-performing, contributing employee â are you reliable? Being able to breakdown complex situations and produce viable solutions, paying special attention to detail, and asking the right questions at the right time are skills that many often have, but have yet to master. Focusing on any skills that may come naturally to you while achieving mastery, in the long run, will absolutely contribute to the opportunities you are afforded over other candidates. Itâs not about competition, because whatâs for you wonât pass you by. Itâs about actively showcasing you are indeed the best candidate with the physical results to prove it.
Seek out new opportunities and expand your skillset
People believe there are only a few ways to bring in additional income â one being a side hustle. This isnât necessarily the case. Seeking out opportunities within your current or new place of employment can be just what you need to make substantial strides in increasing your earnings as well as visibility. Make yourself familiar with the Human Resources policies for promotions and role transitions. Look into if there are side projects you can add to your workload that can increase your skillset while being introduced to a new audience of people; consider exploring that. Be sure to document the pros and cons of the newly added responsibilities while making sure it aligns with where you ultimately want to be. Donât shy away from having a conversation with your manager and making your goals known.
Ask for more (and quantify it)
Employers have mid-year and end of year reviews to go over performance goals and ensure the work youâve done over time aligns with the responsibilities of the team as well as the company. While this is protocol, as an employee you donât have to wait until this designated time to discuss career goals. Not only does this conversation create awareness between you and your manager â it allows them to understand your desire for more. Iâm sure weâve all had less than desirable bosses, coworkers, and teams. Weâve also been in situations where we know that the work required of us was so much more than the actual amount of money we were taking home. To avoid the unfortunate cycle of being overworked and underpaid that many fall into, have an open and candid conversation with management. Be sure to quantify every task and tie a metric to it if possible. This helps to build your professional story while also making sure your resume stays current for all new opportunities as they arise.
Start a side hustle
When your friends, family, or peers often ask you to complete something and you enjoy doing it; what is that âthingâ? What talents do you innately have that seem as if it doesnât require a huge amount of effort? The answers to these questions should birth the idea of your new side hustle. As daunting as it may sound, take the time to loosely create a plan. Remember, this is scalable! Go at the pace that is most comfortable for you and can transition well into your lifestyle. Solicit the help of family and friends while using your larger network to advertise your talent. Social media and word of mouth can go a very long way â use all outlets to promote yourself and your services.
Never underestimate the power of networking
We all have a comfort zone and typically stay within those walls on a regular basis unless probed. However, do you consider the opportunities that could be available to you by adding several new people to your network? Utilize employee resource groups at your place of employment, various professional networks in your local cities, and other organizations that have a virtual platform. Do a quick Google search based on your preferred industry and start the journey of expanding your network. Thereâs a very familiar phrase weâve all heard at some point, âitâs not what you know, itâs who you know.â LinkedIn is a great social media platform to engage with professionals all over the world on various subject matters and topics. Donât be afraid to put yourself out there and make the connections that could lead you to new opportunities.
Become a lifelong learner
Make a commitment to yourself that no matter what happens, you will always seek knowledge, no matter the method. Explore personal and professional learning opportunities. This may be pursuing an advanced degree to expand opportunities. For others, it can be obtaining a certification within your desired field to land a better position â resulting in a salary increase. If either of those doesnât sound appealing or fit within your current life circumstances, you can always attend conferences, listen to webinars, podcasts, and so many other cost-effective (or free) learning channels to keep your skills in top shape. This could be listening to an audible book while driving in your car or reading a new article every day related to your industry before getting your day started â learning is limitless!
The post How to Increase Your Earning Potential appeared first on MintLife Blog.
Most people have a love-hate relationship with money. When youâve got cash to spend, you feel fantastic. You can do whatever you want, go wherever you like, and thereâs no worries in your mind. However, when your cash flow starts to dwindle, your entire outlook suddenly goes sour. The high of having cash can mean that you even end up spending it too quickly, so you end up putting yourself in a more difficult situation long-term. Changing your relationship with cash can be one of the first steps to ensuring that you have more of it in your future. If you can take a more positive approach to the way you handle your finances, youâll be less likely to end up in debt. So, how can you change your relationship with money?
Do Your Research
Most people struggle with their financial freedom because they donât actively pay attention to the way that theyâre spending money. You sign up for essential things like gas and electric and continue paying the same bill for months without checking whether you could be getting a better deal elsewhere. Actually doing your research and making sure that youâre not missing out on opportunities to save will ensure that you can discover some quick wins for your cash flow. You could even find that you can get out of debt a lot faster and make a huge difference to your savings account by refinancing your existing student loans and similar debts into a loan with a private lender. One small change can make a big difference.Â
Automate Your Savings
Do you find it hard to stop yourself from spending every penny you earn each month? Youâre not alone. A lot of people who have a difficult relationship with money discover that itâs difficult for them to just have cash sitting in their bank accounts. Thatâs why itâs so important to find an easier way to convince yourself to save. One good option is to open a separate savings account where you can transfer a portion of your earnings every month. You can automate this process by setting up a direct debit to ensure that the cash leaves your account at the same time that you get your wages each month. This means that the next time you check your bank balance, you wonât be tempted to save the cash that should be going to savings.Â
Finally, stop avoiding the opportunity to learn more about money and how it works. Most of us feel so uncomfortable talking about cash that we barely even look at our bank statements. However, only by examining your spending habits can you determine where the best options are for you to make some significant changes. Be willing to develop a better knowledge of how money works, and how youâre using it. Itâs also helpful to learn everything you can about things that can make you more money long-term, like investing in stocks and shares, or setting up savings accounts with extra interest.
3 Ways to Change Your Relationship with Money is a post from Pocket Your Dollars.
Your minimum monthly payment is the lowest amount that you need to pay on your credit card balance. Any less could result in a derogatory mark, any more will clear more of the principal.Â
Your monthly payment is one of the most important aspects of your credit card debt and failure to understand this could seriously impact your credit score and leave marks on your credit report that remain for up to 7 years.
With that in mind, letâs take a closer look at how these payments operate and how you can quickly clear your credit card debt.
How Minimum Payments on a Credit Card are Calculated
The minimum payment is calculated as a percentage of the total balance at the end of the month. This percentage ranges from 2% to 5%, but it has been known to go lower.Â
As an example, if you have a $5,000 credit card balance and are required to pay 5% a month, then your monthly payment will be $250. However, this only covers the principal, which is the money that you borrowed. It does not cover the interest, which is where things get a little complicated and expensive.
What Influences Your Minimum Monthly Payment?
The reason credit card interest is so high is because it compounds. This means that if you have an annual percentage rate of 20% and a debt of $20,000, that debt will climb to $24,000, at which point the next billing cycle will commence and this time youâll be charged 20% on $24,000 and not $20,000.
However, credit card interest is calculated daily, not yearly. To arrive at your daily percentage rate, simply divide your interest rate by 365 (the number of days in a year) and then multiply this by your daily balance.
For example, if we stick with that 20% interest rate, then the daily rate will be 0.00054%. If we multiply this with the daily balance, we get an interest rate of $2.7 for the first day. Multiply this by 30, for the total days in a billing cycle, and itâs $81. Thatâs your total interest for the first month.
So, when we calculate the 2% minimum monthly payment, weâre calculating it against $5,081, not $5,000, which means we get a total of $101.62, reducing the balance to just $479.38.
In other words, you pay over $100, but reduce the balance by a little over $20 when you make that monthly payment. If penalty fees and interest rates are added to that, it will reduce in even smaller increments.
Pros and Cons of Only Paying the Minimum Payment on your Credit Card
As discussed above, itâs imperative that you make the minimum payment, avoiding any late payment charges or credit score reductions. However, if you only make those minimum payments every month then it will take a long time to clear your balance and you may struggle to keep your head above water.
The Benefits of Paying More Than the Minimum
Many borrowers struggle to pay more than the minimum not because they donât have the money, but because they fail to see the benefits. They focus on the short-term and not the long-term, seeing an extra $100 payment as a lost $100 in the present, as opposed to a saved $500 in the future.
However, if you can get over this mindset and start paying more than the minimum, you will do your future self a huge favor, helping with all of the following:
Shorten the Term and Lessen the Interest
Every extra dollar that you add to your minimum payment can help you get out of debt quicker than if you simply stick with the minimum. This is true for all debtsâa higher monthly payment means that more money goes towards the principal, which means there is less interest to compound.
Credit card debt is like a snowball gathering momentum as it rolls, and this is exacerbated every time you miss a payment and are hit with penalty fees. By paying more than the minimum, youâre taking a giant chunk out of that snowball and slowing its progression.
Youâll Improve Your Credit Utilization
Your credit utilization ratio is one of the most important parts of your credit report, counting for 30% of your total. This ratio takes your total available credit (such as a credit limit on a credit card) and then compares it to total debt (such as the balance on that credit card). The higher the number, the more of your credit has been used and the more your credit score will suffer.
Every time you pay more of your credit card balance, youâre reducing this score and significantly boosting your credit score.
Avoid Maxing Out Your Balance
Not only will a maxed-out credit card do some serious damage to your credit utilization score, but it can also have a direct impact on your credit score on the whole. Lenders donât want to see it and credit bureaus will punish you for it. If youâre still using the card and only paying the minimum, you may be stuck in a cycle of persistent debt, but by paying more and using it less, you can prevent that.
You May Get a Better Credit Limit
Credit card issuers monitor their customerâs activities very closely. If they clear their balances every month without issue, they are more inclined to increase their credit limit, offer them rewards, and generally provide them with good opportunities. If they are accumulating large amounts of credit card debt and only meeting their minimum payments, theyâll be less inclined to do any of those things.
It always helps to get on a creditorâs good side, because you never know when you will need that improve credit limit or access to that generous rewards scheme.
What Happens if you Only Make the Minimum Payment?
If you only pay the minimum, the debt will take a long time to clear and youâll repay huge sums of interest in that time. If we go back to the previous example and assume an APR of 20%, a balance of $5,000 and a minimum payment of 2%, you will repay over 400% in interest alone and it will take you decades to repay the debt.
Thankfully, very few credit card providers will actually let you pay such a small amount on such a substantial debt. But even if we increase the minimum payment to 5%, it still looks abysmal for the borrower. It would take them about 9 years to pay the balance, requiring $250 a month and paying close to $2,500 in interest.
Although itâs more realistic, this is still a poor option, especially when you consider the card will still be active and you may still be using it, which means that every time you make a repayment, youâre adding more debt and offsetting all your hard work.
Your credit score will not suffer if you only make the minimum payment. Providing you make it on time then you will build a respectable payment history, a stable credit report, and a credit score that is sure to impress lenders. However, it wonât look great for your finances as youâre giving yourself an expensive liability that will cripple your debt-to-income ratio and your credit utilization ratio for years to come.
Are There Any Advantages to Just Paying the Minimum?
The only advantage to paying just the minimum is that you will have more money in your pocket at the end of the month, which will allow you to make additional investments and purchases that would otherwise not be available to you. However, this is a pretty narrow-minded way of looking at it, because while you will have more cash in the long-term, it comes at the expense of many additional risks and obligations, not to mention thousands of dollarsâ worth of additional interest paid over the term.
What Happens if you Canât Pay the Minimum Payment?
If there is a late payment or a missed payment, your creditor may charge you a penalty fee or a penalty rate. If your payment is due for more than 30-days they may also report you to the credit bureaus, at which point a derogatory mark will appear on your credit report and your credit score will drop.
This can happen even with a single missed payment, which is why you should never simply skip a payment on the basis that youâll just double-up next time around.
Instead, contact your creditor, explain your situation, and see if there is anything they can do to help you. They may say no, but it doesnât hurt to ask, and, in most cases, they will offer you some kind of reprieve. After all, they want their money, and if they can increase their chances of getting paid by providing you with some leeway, theyâll often be more than happy to do it.
Some people believe that you can simply pay a few dollars and it will count as a minimum payment and not show on your credit report. This is a myth. Technically, any payment that doesnât meet the full minimum requirement can be classed as a late payment and can lead to fees and derogatory marks.
Resources to Lower Minimum Payments on a Credit Card
Itâs important to keep a close eye on your credit card statement and activity at all times. Monitor your spending, making sure it doesnât go overboard, and if you find yourself struggling to make payments at any time, checkout the following resources and options to get the help you need:
- Credit Counselors: Speak with a trained expert who has helped many individuals in a similar position. They will discuss your finances and your debts and will help you to find a solution.
- Debt Management: A debt management plan can help when youâre struggling to meet your debt obligations and have a huge debt-to-income ratio. They will provide assistance and help you swap multiple debts for a single consolidation loan.
- Debt Settlement: An option that works best for individuals with multiple debts and missed payments. Itâs one of the cheapest ways to clear personal loan and credit card debt, as well as other forms of unsecured debt.
- Debt Consolidation: Another consolidation loan option, this time with a long term, ensuring that you pay less per month but more over the term. This is a good option if youâre stuck in a tricky spot right now and need to reduce your outgoings.
In all the above cases, you can use the NMLS Consumer Access site to find a legitimate and reputable company or professional working within the financial sector. You can also use resources like the Better Business Bureau as well as the many guides, reviews, and help files right here on the Pocket Your Dollars website.
How to Reduce the Balance on a Credit Card Debt
One of the best ways to reduce your balance is to initiate a balance transfer. As the name suggests, this entails moving your balance from one card to another. Balance transfer cards entice you by offering a 0% APR on all transfers and this lasts for up to 18% with the best providers.Â
In that time, you wonât pay any interest on your balance, which means all your monthly payment will go towards the principal and you can reduce your debt in huge leaps as opposed to small steps.
These cards are not without their issues, however. You will need a good credit score to get a card that has a good APR and balance transfer offer. If you donât, and you fail to clear the balance during that introductory period, you may be paying more interest than you were before.
In most cases, though, these cards will be just what you need to ease the burden of mounting credit card debts and get back into the black. Take a look at our guide to the best balance transfer cards to learn more and discover how you can move your current balance to a card that has more preferable terms, in the short-term at least.
The Bottom Line: Clear that Balance
A minimum payment is the least amount you need to commit to a credit card balance. If credit card debt was a house party, the minimum payment would be the equivalent of showing up, saying your introductions, and then hiding in the corner for the rest of the night. If you really want to make an impact, you need to be proactive.
It doesnât have to be twice or thrice the size of your minimum payment. It doesnât have to be a consistent sum that you pay every month, but it does have to be something. Donât worry if itâs only 1% or 2% of the balance, because every additional payment helps. Just pay whatever you can afford, whenever you can afford it. A small amount of money today can save you a huge sum of money in the future.
Minimum Payments on a Credit Card is a post from Pocket Your Dollars.
Financial gurus are telling you how to get out of debt, and what to do with your money and investments. The question is, should you follow their advice?
The post Should You Listen To Financial Gurus? appeared first on Bible Money Matters and was written by Peter Anderson. Copyright Â© Bible Money Matters – please visit biblemoneymatters.com for more great content.