Are You Being Smart with Your Debt?

Do you know the difference between good and bad debt? Are you able to maintain and afford the debt you take on? Many individuals are not. In fact, we’ve been reading tons of articles and studies that are finding that Americans, in particular millennials, are piling on debt during this time. Given the inflationary and high interest rate environment we are living in, talking about debt is more prudent than ever.

Are higher interest rates and prices changing your spending habits? If you are feeling the heat of inflation, re-evaluate your budget and cash flows, ensuring you are only purchasing what you can truly afford. Spending more than you make can slowly pile up your bills overtime, making it hard to pay your debt each month.

While taking on “good debt”, such as opening lines of credit to prove to creditors you are responsible with your money, is a great way to build your personal credit, taking on too much debt can eventually harm your credit score. So, obviously there is a happy medium when it comes to taking on debt and building your credit.

As we’ve discussed before, your credit score is oftentimes considered the lifeline of your financial life. Having a strong credit score allows you to not only take on more debt, but lets you do it a better price. For example, with a high credit score, lenders are more willing to approve your application and provide you with a lower interest rate. Given the high interest rate environment we are in with the Federal Reserve hiking interest rates to combat inflation, receiving a competitive and lower interest rate is huge to your financial situation.

Furthermore, with interest rates still going up, you want to make sure you are aware of the type of debt you have and are taking on, whether it’s tied to a variable interest rate or its fixed. Many individuals aren’t aware they have variable interest rate debt and understand their finaical obligation to it as rates rise. We know the difference between good and bad debt can be overwhelming to understand, which is why we recommend working with a financial professional to ensure you know everything you have, what your financial obligations actually are, and how to make the best decisions surrounding them. If you have any questions on your personal financial situation or debt, email us at

How To Prepare For The Student Loan Re-Payment in October

After a long three-year pause, student loan payments are officially back. That’s right, interest has resumed on your student loans as of September 1st, and they are set to resume payment in October. The US Department Of Education’s recent announcement on its website indicates that individuals with student loans will need to start making payments once again starting in October. Since borrowers have become so comfortable with the omitted payment for the last three years, it’s crucial for individuals with student loans to prepare themselves for the transition. So, let’s discuss some practical tips to help borrowers prepare for the resumption of payments and ways to fit the payment back in the budget.

So, you might be thinking to yourself, “How Do I Prepare for the Loan Payment to Resume?” Well, especially now that interest has begun accruing on your loans, a great starting point is to review and familiarize yourself with your loan terms and conditions. Maybe you have received an email or statement in the mail recently, or take a look at your old payment sheet to understand the interest rates, repayment plans, and any changes that may have occurred during the payment pause. Take note of the exact amount you owe and any upcoming changes that might impact your monthly payments so you can ensure that your existing repayment plan still fits within your financial capabilities.

Next you want to revisit your budget and re-assess your current financial situation. Take a close look at your current financial circumstances. Evaluate your income, expenses, and other financial obligations. Assessing your budget will help you determine how much additional savings you have each month that you can allocate towards your student loan payments without compromising your overall financial stability. If you find that currently there is no room in the budget for your student loan payment, then it’s time to make some adjustments where you can.

We know it’s hard to make theses adjustments on your own, which is why we work with individuals to tweak and set a realistic budget. With the upcoming student loan payments, it’s essential to create or update your budget to accommodate this new expense. Analyze your income and expenses, identifying areas where you can cut back or make adjustments to accommodate the loan payments. Write down your wants versus your needs to determine discretionary expenses that can be reduced temporarily.

While you’re trying prepping to begin re-payment, think about your emergency fund as well. In addition to your student loan payment bucket, try setting aside an extra portion of your income this month to build up your emergency bucket should the budget be tight once your payment resumes.

If you find yourself overwhelmed or unsure about how to proceed, seek guidance from a financial advisor or student loan counselor. We are working with borrowers to analyze their situation and provide personalized advice based on their specific circumstances. As the resumption of student loan payments approaches, it’s crucial for borrowers to proactively prepare. By reviewing loan terms, assessing your overall finances, and creating a realistic budget, you can effectively prepare and manage the transition. Remember, a financial plan and preparation are key to ensuring a smooth adjustment to the student loan repayment phase and maintaining overall financial well-being. If you have any questions, email us at or schedule a complimentary intro call here.

How To Adjust Your Budget For Inflation

Has inflation had a noticeable impact on your life over the last few months? Are you feeling the weight of increased gas and food prices and pretty much everything else you purchase on a day to day basis? So are we! Inflation has been rising so fast over the last few months that the Federal Reserve is rapidly raising interest rates to try to combat it, as discussed in a previous blog. They recently just raised interest rates another 25 basis points, in effort to continue to slow down inflation. 

So with increased prices and, in turn, higher interest rates, many individuals are now taking a closer look at or re-thinking some of their financial choices. 2022 was quite a rollercoaster in the economy and the stock market, leaving many uneasy about the future of their finances, making it an especially good time to create a new financial plan or alter and refresh an older one. So, as households and individuals start to think about how to adjust for this increase in their budget, let’s discuss some ways in which they can do so. 

We saw a survey that found that “as of November, 63% of Americans were living paycheck to paycheck, according to a monthly LendingClub report — up from 60% the previous month and near the 64% historic high hit in March.” We found this data quite surprising and a reinforcement that having a budget is necessary. Take this opportunity to re-visit your cash flows and make sure that your cash outflows do not exceed your inflows. If you need help creating a budget that works for you, we are here to help!

First and foremost, when thinking about adjusting your financial decisions for inflation, your first thought should be how you can reassess your budget. If you haven’t already, take a good look at your budget to account for higher costs, for example, your monthly gas and grocery spend. By using the “bucket strategy,” you can separate your spending and savings into different categories to help you differentiate your wants versus your needs. Think about using an app or financial software to help you track your spending each month along the way.  While adjusting your budget and doing some spring cleaning, go back and make sure you aren’t paying for any unused subscriptions or other fees where you might be spending money unnecessarily. 

While these are only a few things you can do to adjust your finances for inflation, getting a handle on your financial “big picture” will ease your stress and tensions as you adjust to this more expensive cost of living. If you are feeling lost and need a “start of the year financial plan” to help sort out some of these topics, email us at or schedule a complimentary intro call here.

Interest Rates Are Rising, Did You Know?

One common theme we see with many clients, friends and prospects is the lack of knowledge surrounding interest rates. Many Americans have debt, whether that be credit cards, student loans, mortgages or other financial obligations. However, while taking on debt can be beneficial to your credit score and financial health, it can be detrimental for those who are unaware of their interest rate and how to interpret it. 

Interestingly enough, a Bankrate survey  reported that “Of those who carry a balance, 40% don’t know the interest rate they’re being charged on their primary card”. Not knowing your interest rate and its terms can be very dangerous and potentially very costly to the borrower. When reviewing your financial picture, be sure to pinpoint certain debts that have higher interest rates and make sure you are staying on top of your payments and reducing that liability. 

As we’ve been discussing for quite some time now, interest rates are beginning to rise and, according to Federal Reserve’s Jerome Powell’s announcement last week, rates will continue to rise throughout the year. This is a great and timely warning to educate yourself on your interest rates as you prepare financially for 2022 and beyond.

Moving forward, make sure you know your interest rates, especially as you evaluate whether you want to take on more debt and what it may cost you. With pandemic-related economic support the past two years, interest rates may not have been on the forefront of your financial planning list, but now it’s time to take control and see how your current rates and rising rates will impact your portfolio, credit cards, mortgages, and overall financial life. 

If you need help analyzing and understanding how your interest rates will affect you, email us at or schedule a complimentary intro meeting here. 

What Happens If You Try To Spend More Than Your Credit Limit?

When you sign up for a credit card, you are often assigned a credit limit when that account is opened.  These limits typically start at $200 and go up to tens of thousands of dollars.  With so many people out of jobs and finding it hard to make ends meet these days, credit cards have become a necessary resource to pay for things that we might not have the money for right now. However, the more you charge on your cards, the closer you may come to hitting that max limit.  If you do hit that amount, you are likely to get hit with over-the-limit fees. Before you decide to use your credit card to pay for necessities, there are alternatives to going over your max before risking having your credit limit cut or incurring unnecessary fees.  

Can You Go Over Your Credit Limit?

Yes, you can go over your credit limit, but there’s no surefire way to know how much you can spend in excess of your limit. Card issuers may consider a variety of factors, such as your past payment history, when deciding the risk of approving an over-the-limit transaction. Any approved transactions above your credit limit are subject to over-the-limit (or over-limit) fees. This credit card fee is typically up to $35, but it can’t be greater than the amount you spend over your limit. So if you spend $20 over your limit, the fee can’t exceed $20.

Due to the CARD Act of 2009, over-limit fees can’t be charged without your consent. As a result of these regulations, most card issuers have done away with over-limit fees and the default for any transactions over your credit limit may be that the transaction is simply denied.

If you do consent to a one-time over-limit fee, you can change your mind and opt-out at any time. However, in doing so, your card issuer will likely decline any purchases you attempt to make over your limit. Even if you opt-in to over-limit fees, transactions exceeding your credit limit may still be denied.

Should You Go Over Your Credit Limit?

While spending over your credit limit might relieve some short-term problems, it can also cause long-term financial issues, including fees, debt and damage to your credit score. The best practice is to try to maintain a low credit utilization rate – avoid maxing out your card and spending anywhere near your credit limit.  If you do go over your limit, you should sit down and consider why it happened in the first place and review your budget. You should figure out what purchases caused you to spend more and whether you can make any changes to your spending habits.

Alternatives If Your Credit Limit Is Low

For those that may have a low credit limit or if your credit limit recently got cut, there are some options to ensure you don’t max out your spending. If you’ve had a low credit limit for a while and currently have a stable job, you may want to request a credit limit increase. This can be a good idea if you have good credit (scores 670 to 739) or excellent credit (scores 740 and greater) or if you haven’t updated your income in a while and make more money than what’s listed. Your card issuer may pull your credit report for this request, which may cause a small, temporary ding to your credit score.

However, if your credit limit was reduced, you may want to consider other options. Cardholders with good payment history and a stable job should call their card issuer and ask for reconsideration.  You should ask why your credit limit was cut, explain that your account is in good standing and that you have a stable source of income to pay off your bill. This may shed light on why your limit was lowered and potentially result in your credit limit increasing — though there is no guarantee. Rather than asking for a credit limit increase on the card that had a reduction, you may want to consider any other cards you have instead. If you have three credit cards and one got the limit cut, see if you can get an increase on one or both of the other two,

If you have a history of missed payments or maxing out your cards, you are likely not a good candidate for reconsideration and don’t want to draw attention to yourself. Therefore, if you fall into one of these categories, it’s best to not try to request a higher limit.

When To Apply For A New Credit Card

Cardholders with only one credit card and a low credit limit may want to consider opening a new credit card, but should be aware of any potential risks. For starters, if you were recently laid off or faced a reduction in income, you may not be in the best position to be approved for a new card, and there’s no sense in adding a new credit inquiry to your credit report if your chances are low. Also, if you have a history of maxing out your card, you should be aware that more credit can lead to more debt. An additional credit limit can be helpful for affording your expenses, but it can also be harmful if you overspend.

Before opening a new card, give yourself clear guidelines on how you’ll use the card and stick to keeping a low credit utilization rate. When it comes time to pay your bill, make on-time payments of at least the minimum every month for all of your cards.  If you are able to do so, pay in full so that your credit score will  improve and your debt will be minimized. When applying for a new card, check your credit score first to narrow down your options. Then consider cards based on your credit score. 

In these tough times, we need to be responsible when it comes to spending and not see going over your credit limit as a choice. If you do need to use your credit cards to pay for utilities, groceries and other necessities right now, make sure you are aware of your max and other options you might be able to work out with the credit card companies before going over your limit. When you do receive those credit card statements, make sure to pay at least the minimum amount each month to maintain a positive credit score. And, make sure you are paying the bills on time to ensure you won’t incur any late fees either.  If you have any questions about credit, credit cards or other issues concerning your finances, please contact us.  We are all in this together and we’re here to help! 

How To Determine Your Debt Tolerance

Debt can be tricky. While on one hand it can help you achieve your goals and build your wealth, it can also be a downfall if you do not know how to use it properly. Sometimes, it seems like taking on debt is a good idea for raising net worth and building credit. However, building up debt can be a slippery slope and quickly turn negative, if you are over-spending and taking on too much. 

We know that finding the right balance can be tricky, so determining your debt tolerance might be an easy way to start tracking it. Today we want to point out a few key factors to consider if you are trying to figure out if you can afford more debt.

Calculate your debt-to-income ratio

Whats a DTI? Lenders use a standardized calculation called debt-to-income ratio (DTI) to decide whether you can take on a loan. DTI is calculated by dividing your monthly expenses by your gross monthly income before taxes. 

Watch out for your credit utilization 

If you are making a big purchase, take a second and think about your credit utilization rate. Buying a big expensive item may seem like a good idea, but it may temporarily drop your credit score and raise your CUR.  However, once you pay the balance off, your score will improve. A typical rule of thumb is to not spend too much over 30% of your CUR. 

Add up at the total cost of the debt

The more money you borrow, the more you’ll have to pay back in interest and other fees. Always do your research on the types of loans you will be applying to before taking it on. Think about using tools such as interest calculators to see how much you are really paying when you take on a loan.  

Putting aside the financials, you also want think about your personal financial situation. Make sure you are comfortable with your debt tolerance and know what you are doing before taking out more and more debt. If you have any questions about your personal situation or about debt, please email us at or schedule a 30-minute consultation here

How to Take Advantage of the Student Loan Relief Extension

Are you stressed about your federal student loan bill? Well, you’re in luck. The government has allowed another federal student loan extension through Sept. 30 The original pause for federal student loan payments had originally been set to end Jan. 31 for more than 42 million borrowers. This extension means that interest rates for student loans remains at 0% for almost another year. However, remember to keep in mind that this relief does not apply towards all student loans, especially private ones. 

This loan deferral gives you and your family a chance to slow down and catch up on your other bills and expenses. Or, if you are in the position to do so, you can use this relief as a way to keep building up your emergency fund. Also make sure to use this time to think about your future repayment plan as this relief will not continue forever.

Moving forward, Biden has said he is forgiving up to $10,000 in federal student loans for borrowers. But borrowers have no guarantees that such a change will take place or when. So, right now it’s important to take a realistic look at your overall financial situation and try to use the next eight months to your advantage. There is pending legislation to forgive student loans, so make sure to stay tuned for updates to come. If you have any questions related to your student loans and your strategy to repay them, please contact us at or schedule a complimentary 30-minute consultation here

The American Consumer Is Flush With Cash After Paying Down Debt

Almost a year into the pandemic, and we’re seeing American’s in pretty good shape financially. This may seem like a surprising statement given the current climate and widespread of lockdowns earlier in the year, but it’s true statistically. We know this doesn’t apply to all families in the same way, but it shows how strong the US economy is recovering from such a year year.  

During this time we saw very low mortgage rates, that may have had something to do with the Fed policy, but we also saw that more and more Americans are holding onto extra cash, which is something we wouldn’t think to be true. 

“Despite the surge in Covid-19 cases, economists project a 4% annualized rate of U.S. economic growth this quarter, though down from the prior period’s record gain”, according to a Bloomberg survey. The survey also showed that the pandemic has been financially challenging for working class families more than wealth ones, but they all seem to have been stockpiling cash. One reason savings and cash has remained flush could contribute to the fact that due to the pandemic, many people have not been spending on activities such as dining, leisure, and travel.

In all, it seems as though many American’s may have entered the pandemic in a strong financial position, which has helped them get through it. It’s surprising and great to see how after all this turmoil,  households are still remaining strong. It’s important to take advantage of situations listed above, especially refinancing, to help lower payments and in turn pile up your cash account. If you have any questions or want to discuss your portfolio or finances, please reach out to us at or schedule a complimentary 30-minute meeting here.

New Fed Strategy Means Cheaper Loans For A Long time — Here’s How You Can Benefit

As we’ve all been waiting to hear about the outcome and policy changes from the Jackson Hole symposium, there’ve been some updates that you should know. The Federal Reserve has said that it will let inflation run “hotter than normal” to help the economy bounce back from the coronavirus crisis, according to a CNBC article. According to some commentary, it seems as though this policy change is meant as a stimulus, to get people to spend more. 

Since the central bank lowered its benchmark rate to near zero in March, credit card rates have hit a low of 16.03%, on average, according to The average interest rate on personal loans is currently about 12.07% and home equity lines of credit are as low as 4.79%, according to Bankrate, both notably less than the APR on a credit card.

On the flipside, “Low inflation has helped suppress mortgage rates,” said Tendayi Kapfidze, chief economist at LendingTree, an online loan marketplace. “If you let inflation go up, mortgage rates will also go higher.”

Given this new economic data, and with these cheaper loans for a longer period of time, it’s important to take a look at where you can lock in those lower rates, such as through credit card balance transfers or refinancing your mortgage. If you have any questions about this new policy, and want to see how this could be an advantage for your portfolio, please reach out to us at and we would be happy to discuss with you. 

Here’s How to Prepare your Finances

With the additional $600 per week unemployment benefits coming to an end this week, it is important to think about the ways in which you can prepare your finances for the months ahead. Many Americans are currently jobless and have been relying on these additional COVID-19 related unemployment benefits. There is much uncertainty as we navigate through the pandemic the best we can, but there is great value in coming up with a plan to start saving and getting your finances in order as your benefits may decrease in the coming months. 

Here are some key ways to be prepared for your future and what you should expect as any additional unemployment relief comes to an end. 

Adjust your Budget 

A great place to start in uncertain times is with your budget. Sit down and attempt to cut out all unnecessary expenses along with looking into other options that may be cheaper. It’s important to think of all your essential monthly costs and see where you can save a buck or two. For example, take a look at your housing, food, utilities, and car payments to see if there are places you can cut down.  

Contact your Creditors 

If you have not already called your creditors, you should consider reaching out to them and discussing your options moving forward. If you are only able to pay the minimum payment on your credit card bill, make sure to let your creditors know so they can figure out a plan and help you out. Many creditors may be able to offer you “financial hardship assistance” so that you can keep your credit in good standing even if you can’t pay more than a certain amount each month.

Build an Emergency Fund Even if You Don’t Think You Can 

We all know it’s important to have a cash cushion, especially in times of economic crisis. However, it can be difficult to think about how to build one when you are already strapped on cash. But, it’s never too late to start saving. The first step is to start reducing any debt. You should also try to put yourself into a “saving mindset” by incrementally setting aside a small stash of cash every month. You can contact your bank to set up auto payments to your savings account each month, which will help you get consistent with your saving habits. 

Expect a Drop in Your Credit Score 

While it’s important to maintain a strong credit score, in times of financial crisis it is okay to expect a drop in your score. As mentioned above, make sure to give your creditors a call to keep them in the loop about your situation. Also, if you are unable to pay your credit card balance in full, at least pay the minimum amount to keep your credit stable. 

Understand Your Costs

When you are strapped for cash, it is important to know which bills you should be prioritizing, for example, housing payments. While the additional unemployment relief is ending, so are the eviction moratoriums. Make sure to do some research and have a conversation with your creditors, landlords, and banks to fully understand the regulations and rules associated with your payments.  

Ask your friends and family for advice and we encourage you to seek out a financial advisor for guidance and clarify on your financial situation. If you have any questions or are uncertain about the future of your financial life, we are happy to help you in any way and help you figure out your financial future. Please contact us to schedule a free 30 minute consultation.