The FAFSA Does NOT Equal Free Money

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Long before I was a personal finance writer, I developed a personal finance pet peeve. This pet peeve started during college and grew to epic proportions as I became more embroiled in the world of personal finance and particularly student loans. Want to know what it is?

The widely accepted notion that the FAFSA = free money.

I can completely understand how easily this assumption came about. I mean, “free” is literally the first word of the acronym (Free Application for Federal Student Aid). But for many, that’s where “free” stops…

Creature of Habit? How Shaking It Up Can Revitalize Your Finances

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A few miles from my house there is a sushi restaurant that I frequent – and by frequent I mean they know me by name, ask questions about my job, and can place my order without consulting with me first. Yes, I’m that person.

But I know I’m not the only one that habitually goes to the same place because the promise of familiarity sometimes trumps any other meal requirement. Let’s be honest — many of us are creatures of habit. In a world that can be highly unpredictable, it’s comforting to have a routine or a specific way of doing things, even if it’s not the best way of getting it done.

It’s no different with our finances. Spending patterns are often the result of sticking within the limiting box of our comfort zone – that warm cozy place we go because we are terrified of venturing outside the lines. But sometimes our financial health could improve ten-fold if we did.

How exactly? Here are just a few of the ways.

Years After the Great Recession, Positive Financial Habits Emerge

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The past few years have been pretty tough for many Americans’ finances. The Great Recession of ‘08 led to a drastic increase in foreclosures, job cuts for experienced professionals, and a near impossible job market for new graduates. And now, 5 years later, though many are still struggling with debt and worries about future retirement, positive signs are emerging.

As they say, what doesn’t kill us makes us stronger; and recent data shows that Americans’ finances – and financial habits – are getting stronger after years of struggle and lessons learned.

For People Tired of Overspending on School Supplies

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Summer is coming to a close which means school is almost back in session. For those with kids in school or anyone embarking on a year of schooling that means it’s time to start patrolling the aisles for schools supplies and supplementary educational material. But before you start saying goodbye to all your dollars, make sure you have a clear understanding for your school supply spending. According to a stat shared by Huffington post, the average cost for K-12 school supplies for the 2014 year has hit $634.78. That’s no small change, especially if your family is made up of more than one student! And for older students, college textbooks alone can easily reach that price tag.

So can you beat the stat? I think so. Let’s strategize a smart shopping approach for school supply needs.

Does Carrying a Balance Help or Hurt Your Credit Score?

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You might already be familiar with the fact that your credit score impacts several critical areas in your financial life. A higher credit score can help you to lock down lower interest rates, better mortgage deals, and can even help you to snag an apartment. That being said, does carrying a balance on your credit card help or hurt your credit score?

What does it mean to carry a balance?

First off, what does carrying a balance even really mean? By definition, when you carry a balance on your credit card it means that you’ve used a portion of your pre-approved credit to make purchases that you haven’t paid back yet. Essentially, that means you’ve swiped your card and in doing so borrowed money from your credit card company. Your balance can last for just a day or two if you pay it off immediately, or it can last for months (or even years) is you don’t pay it off. Additionally, if you don’t pay it within the first billing cycle, you’ll face interest charges. A balance can be any amount, from a small charge (like a $2 coffee) to a purchase that uses your entire credit limit.

Do you need to carry a balance to build credit?

What seems like a fairly simple question is one that continues to confuse consumers who are looking to build up their credit responsibly without going into credit card debt. The conundrum exists in the details: to carry a balance means to carry debt. Paying off debt can help you to build credit. But consumer debt is also the very thing that gets so many into trouble when they can’t make payments or are challenged by high interest rates.

The question is: If paying off a loan or debt can help to increase a credit score but you don’t want to take on (more) debt – are you required to carry a balance (and take on debt as a result) in order to maintain a healthy credit score?

How to Master the Art of Saying “No” for the Sake of Your Budget

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Hello readers! Before we set off on the regularly scheduled post, I wanted to extend an invitation to a party I’m throwing in a few months. It’s called Donutpalooza and it’s going to be great. A live rendition of Game of Thrones. All the cookies you could ever hope for. Puppies… so many puppies. And, of course, Stephen King will be grilling kabobs.

The price tag isn’t too bad, either! $6,000.00-ish give or take. Plus some food expenses. You in?!

As you probably guessed, the above invite is for an impossible party. Please forgive me for misleading you. Believe me, if I could hire Stephen Kind to host a barbecue on the beach … I would. And you’d all be invited. That being said, I intro’d with a fake party invite because I wanted to give you the opportunity to practice saying turning down an opportunity to spend. ”No” is a word that can give you a lot of power in your financial future but it’s often difficult to express. It takes some practice. So start here.

Imagine your most epic party, or vacation, or get together. When someone invites you to do something that sounds amazing and all your friends are going – it’s really, really, reallllly hard to say no. Who wants to say no to having fun? But (and isn’t there always a “but”) there’s also a very real argument for being mindful of how you dole out your yes’s and no’s. The truth is, sometimes you just have to say no in order to meet your financial goals. Doing so with intent can help you to stay on track with your goals.

Topics We’re Talking About: Family Matters

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Happy Friday and happy September, readers! This week we’re talking about money and family matters.

I didn’t have much of a financial philosophy instilled in me when I grew up. The extent of my family’s financial wisdom was something akin to “everything will be alright” and “everything will even out in the end.” Though both are powerful mantras to touch base with, these sayings also aren’t the most actionable pieces of advice. Were I to tell my student loan servicer I plan to stop making payments because I’m confident it’ll all work out in the end… well, I think we all know how that would go.

Despite my light interaction with finances growing up, I’ve come to recognize that the way I was raised had a serious impact on the way that I approach certain situations. Including, of course, how I approach money situations.

Whether you had a financially minded upbringing or not, we’re all a product of our upbringing to some degree. Maybe your family didn’t talk about money, so you used cues from the actions of your parents or siblings. Or maybe you did talk about money and could recite current interest rates by memory by the time you were two. Regardless, your family’s interaction with money minded topics likely had an impact on how you think about finance. That’s why it’s important to distinguish where your money beliefs come from so you can take action (or control) as you set your own financial future!

Whether it’s in how people naturally split a check or how they approach their entire financial strategy… family matters when it comes to money.

CFPB Warns Against “True Cost” of Credit Card Promotions

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It’s no secret at the ReadyForZero office that math isn’t my strongest subject (though I’m on a mission to never say “I’m bad at math” again). I’m fine with basic math and budgeting, but as soon as I have to start calculating deferred interest, compound interest, and the like, my brain wants to shut down. That’s how just a few years ago I almost got into trouble with a balance transfer credit card…

Here’s What No One Will Tell You About Paying for College (But Should)

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Do you ever notice that there’s a lot of after-the-fact advice revolving around the topic of student loan debt? Whether it’s on television or in articles, I’ve lost track of the amount of times someone has asked for advice on paying off college, only to be told:

“You shouldn’t have taken on so much student loan debt in the first place!”

Well. That’s not very helpful. Arguing whether any amount of student loan debt is justified or not is a moot point for those in the midst of a repayment plan. New students? Yes, the conversation of how much student loan debt is reasonable should definitely be had – and early. But for people already in repayment mode, it’s time to switch the topic to how they can pay that debt off for good.

If this sounds like you, then grab a notepad and get ready. We’re sharing real world advice for you to finally pay off that debt – judgement-free. No matter the amount you have to repay, the time to act is now. You CAN take back your life from student loan debt!

A Guide To Charitable Giving While in Debt (Hint: It’s Not Always About Money)

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This is a guest post by Heather Andrews.

Today I come to you with an outrageous idea: giving to others.

“But Heather,” you’re thinking. “I’ve still got like eight years worth of debt to pay off! Why would I give my precious, hard-earned money to someone besides debtors? And for nothing in return! You’re crazy.”

Arguably I am a little crazy—after all, I have worked with non-profit organizations since I was in high school. We’re all here at ReadyForZero because we want financial freedom, so it may not make a lot of sense that I’m here talking about giving… yet.

Perhaps you don’t realize that donating cash is just one form of charitable giving! And even if your budget is jeggings-tight at the moment, it’s good to be equipped with knowledge about charitable giving that could serve you now and in the future.

Shall we begin?

The good news is that plenty of people give to charitable organizations. According to the National Philanthropic Trust, 95% of households give to charity. In 2012, 75% of people ages 20-35 reported giving to charity. Given the challenges young people face with high student loan debt and unemployment, I’d say 75% is a pretty good number.

Regardless of your age though, it’s worth making charitable giving a regular part of your life.