Should You Buy or Lease a Car? Here Are the Pros and Cons

While it all comes down to what works best for you, leasing a car usually works better for occasional drivers—and comes with lower payments to boot!

If you’re in the market for a new vehicle, you’re probably also faced with the decision as to whether you should buy a car outright or whether you should lease one. This isn’t a decision you should rush: Purchasing a car is a huge financial decision!

That’s why we’re here. We reached out to several automotive experts to learn the pros and cons of buying a car versus leasing one. While the final decision is up to you, their insights should help you know which option works best!


How is leasing different from buying?

The difference between buying a car and leasing one is like the difference between buying a house and renting one.

When you buy a car—unless you pay for the whole thing up front—you’re taking out a loan that you then pay off over a set term. Once the loan is paid off, you own the car free and clear.

When you lease a car, on the other hand, you are essentially renting it, making monthly payments for a set term, usually two to three years. At the end of the lease, you will be given the option to turn the car in or purchase it (more on that later).

Leases come with mileage restrictions and other conditions. If you exceed the yearly or overall mileage limit, for instance. you’ll pay extra. Plus, lessees are oftentimes responsible for extra fees and charges on “wear and tear” on the vehicle.

Whether you buy or lease a car, your credit score is going to be a factor. The better your score, the more favorable your terms.

Leases usually mean lower payments.

All other things being equal, leasing a car is going to be less expensive than buying one. According to James Houston, the Senior Director of Automotive Finance Practice at J.D. Power (@JDPower), “Retail financing payments are higher, and usually require more upfront costs like down payment or trade equity.”

In addition, leasing might mean qualifying for a better vehicle than you would be able to purchase. Automotive expert Richard Reina of CARiD.com (@carid_com) cited the fact that “Lower monthly payments [for leases] may allow consumers access to higher value vehicles or more vehicle content.”

A lease could cost more on the back end.

However, Reina also pointed out that leases carry the potential for additional charges once the lease has ended, saying that “Lessees may be subject to lease end charges for excess wear and tear, excess mileage or termination fees when their lease term is complete.”

And if you decide to purchase that vehicle once your lease is ended, you might end up finding that you’ve been taken for a ride.

“To add insult to injury, should the driver wish to purchase the vehicle at the end of the lease, they’ll find it would have been more cost effective to have financed the purchase from the beginning rather than to have leased.” warned driving expert Alex Lauderdale of EducatedDriver.org (@educated_driver).”

Finally, Reina added that prospective lessees should consider the size of their monthly payment against the total cost of the lease:

“When shopping around for leasing options, keep your long-term finance goals and credit score in mind and take interest rates into account. While a lower monthly payment on a leased Lexus might seem attractive, you could end up paying more in the long run than if you choose a lower rate.”

Leasing has gotten more affordable.

On the bright side, all those additional costs associated with leasing a car aren’t generally what they used to be. “Many of the previous stereotypes about auto leasing are no longer true, said Rob Drury, Executive Director of the Association of Christian Financial Advisors.

“Long gone are the days of lease-end balloon payments or unreasonable damage charges. A lessee can expect to turn in a reasonably maintained vehicle within the lease mileage limits without any charges.”

Luckily, if you’re thinking about leasing, a not-so-hot credit score is no longer the obstacle it used to be.

“It was once difficult to lease a vehicle without reasonably good credit standing,” said Drury. “Today, lease eligibility is extended to individuals with FICO scores below 600.”

Leases come with mileage restrictions.

Mileage limits are one of the biggest downsides to leasing a car. Or rather, it could be a downside, if you’re planning on driving your vehicle a lot. If you’re somebody who doesn’t use your car all the time or use it to drive long distances, a lease could be a better fit.

“Leasing is, or should be, a relatively straightforward transaction,” said Lauderdale. “If you don’t drive often—you work from home or only put a few thousand miles on your vehicle per year—a leasing option can definitely make sense.

“There are, however, potential land mines in the leasing option,” he added, “like penalties for additional miles driven over the lease agreement (e.g. driving 80,000 on a five-year/60,000-mile lease).”

Before making the decision to lease or drive, you should take a good long look at your driving habits and do the math. If you plan on driving a lot, then buying a vehicle is probably your best option.

Buying a car means owning a car.

Another decision you need to make before buying or leasing is whether or not you’ll be happy with not owning your vehicle outright.

“Overall, the lease versus buy decision comes down to finances,” said Reina. “With leasing, you’ll always have a monthly payment and you build up no equity. So, at the end of your lease, you have two options: Purchase the lease car or start a new lease with a new vehicle.

“On the other hand, when you choose to buy, the car is yours once it’s paid off. If you are responsible and diligent about maintenance, a modern car can typically be kept for seven to eight years and/or 100,000 miles.”

The ins and outs of car ownership might not be something you’ve thought a lot about, but you should! Houston provided a clear picture of the benefits of buying (and owning) a car versus leasing one:

  • “Retail customers have no restriction on the use of vehicle, mileage or up-keep maintenance of the vehicle.
  • “Retail customers have equity at end of the loan term and can make next vehicle purchase based on their timing.
  • “Retail customers have an asset (and hold title in most states) that can be refinanced or sold at per customers need/want.
  • “Retail customers have no payment obligations once the loan obligation has been fulfilled (lease customers must replace vehicle at end of term).
  • “Retail customers are free to trade or sell their vehicle at any time.”

On the other hand, leasing a car means that you’ll always be driving a relatively new vehicle. “Lease terms are much lower than retail terms (36 months vs 60 months) so lessees have access to newer units sooner,” said Reina, adding that, “Technology changes tend to be rapid.”

Lower payments are great, and so is always driving a new(ish) car; but being able to use your car without restrictions—including selling the car if you want —is great, too! You have to decide which option works better for you.

Buying a car comes with added risks. 

Here’s something that lessees don’t usually have to deal with: When you’re buying a car, you have to make sure that the dealer is being upfront with you. This is true even for new vehicles, but it’s especially true for used cars.

Lauderdale laid out three risks involved with car-buying, and the steps you can take to avoid them—many of which boil down to simply being a smart, cautious buyer and doing all your research pre-sale:

  • Used Car History: A viable dealership or private seller has nothing to hide, and will often provide a Carfax history report when they know a buyer is serious about a purchase.  If they don’t provide a report, I strongly suggest a buyer walk away. That said, if the car is a ‘must have’, the soon-to-be owner should take the time and money to do a little research of their own.  I strongly recommend CarFax.com when car history summaries are needed. No one wants a lemon or previously totaled vehicle.
  • Car Value: One way a dealer or private seller can take advantage of a potential buyer is to overprice the vehicle.  There is way too much information at our fingertips to let this be a reason for not getting a good deal. Sites like Autotrader.com will allow one to input the prospective car’s criteria, compare the dealer’s or private seller’s price to similar vehicles in the area, and even highlight whether it is a “good” or “great” deal.
  • Add-On Features: Dealerships will often try to push bolt-on items at the end of what you thought to be a great deal on your new or used car purchase.  These add-on products come in the form of extended warranties, car service agreements, undercoats, fabric protectant, gap insurance, etc.  Listen, we live in a time where one can easily get 200,000 miles out of a car if it is properly maintained. The cost vs. use of these extra items is often one-sided, for the good of the dealer. Additionally, if the buyer chooses to use the dealership’s captive lender, the dealer ends up making money on the up sale, and the associated interest.”

The risks involved with buying a car aren’t that different from buying a home. And those risks probably shouldn’t be the thing that dissuades you from buying. But if you are going to buy, you should be prepared to put in the legwork necessary to do it right.

Which works best for you?

In the end, the decision to buy a car versus leasing one is going to come down to what works best for you. If it helps, think less in terms of pros and cons than in terms of what you need as a driver.

“Retail financing (owning) or leasing a vehicle is an individual decision,” said Reina. “Each option has pros and cons, but those pros and cons need to be considered before entering into a transaction.  An informed and educated consumer should be able to decide based on his or her lifestyle and transportation needs.”

Ask yourself, what are your driving priorities? Let the answer guide you.

“If I want a new car every two to three years, drive limited miles, and maintain my vehicle to contractual standards, then I might be a good lease candidate,” said Houston. “If I keep my car for many years, don’t want to be restricted on the miles I drive, and don’t want to be concerned about how I maintain my vehicle, I might be more inclined to traditionally finance my vehicle.”

No matter what decision you make, first make sure that you’re as informed as possible and that you’ve explored every possible option.

“Every transaction is different, and there’s no substitute for doing one’s homework,” said Lauderdale. “Car buyers/leasers need to explore all options, getting quotes from their bank, the dealer, and any other available options. Then, do the math to find the best total cost for personal transportation.”

To learn more about how you can save money on auto and home-related expenses, check out these other posts and articles from OppLoans:

Do you have a  personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

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Contributors

Rob Drury is the Executive Director of the Association of Christian Financial Advisors, a non-profit coalition of over 3,000 advisors of various financial disciplines; financial planners, CPAs, attorneys, estate planners, mortgage brokers, and others dedicated to the financial welfare of the American public, particularly among the Christian community. Headquartered in San Antonio, TX, the ACFA offers broad financial expertise and advisory services at no cost.
As Senior Director, Automotive Finance Practice at J.D. Power (@JDPower), James Houston leads the team that brings Voice of the Customer to the auto finance industry. Automotive finance brands rely on the data-driven insights that he and his practice deliver to understand, plan and act on current market and future trends. He has a wealth of industry experience in the auto finance space, with previous positions at TD Auto Finance, Chrysler Financial, Chase Automotive Finance, and Bank of America Auto Group. Mr. Houston is a graduate of Central Michigan University.
During his nearly 20-year career, Alex Lauderdale has served in multiple Transportation Administration, Analytic, and Management positions spanning multiple companies, including 2 in the Fortune 500. At EducatedDriver.org (@educated_driver), he uses his experience and continued research to educate and broadcast information related to the current status and future of driving, driving technologies, technology TCD (total cost to driver), driver safety, and gaps in between.
Richard Reina is the Product Training Director at CARiD.com (@carid_com) and an auto enthusiast and expert with over 30 years of experience working with cars.

5 Alternatives to an Expensive Cash Advance

If you’re considering an expensive cash advance loan to cover unforeseen expenses, make sure you check out your other options, first.

When an unexpected bill rears its ugly head, you might find yourself taking out one or more high-interest cash advances in order to make ends meet. These short-term payday loans might seem like the only option you have available to you—especially if you’ve got bad credit—but they most likely are not.

Instead of simply settling for an expensive cash advance loan, make sure you explore every possible way to cover that surprise expense. These five alternatives are a good place to start.


1. Friends and family.

Easier said than done, right? And it’s true! Borrowing money from friends and family has a lot of advantages over taking out an expensive cash advance loan, but it certainly has its downsides as well.

The positives: It’s a fair bet that you’ll pay a much lower interest rate on this loan than you would on cash advance loans, which come with average APRs of 400 percent! You might even be able to borrow that money interest-free! Although that isn’t something you should count on.

The downsides, on the other hand, are pretty obvious. Failing to pay back this money might not end up hurting your credit score, but it could irreparably damage your relationship with a person you’re close to.

Unlike with a traditional loan, friends and family members are more likely to be flexible with your payment dates. This is a positive that can easily become a negative. If you are constantly blowing past pre-agreed upon due dates (or the two of you never set a date, to begin with), that could be the end for that relationship.

If you are able to borrow money from a friend or family member instead of taking out a cash advance loan, we recommend that you and the other party set crystal clear terms before any cash changes hands. We even have a loan agreement template that you two can use to get those terms in writing.

2. Credit cards.

One of the reasons that people turn to cash advance loans is because they don’t have a credit card or they have maxed out the ones they already have. Folks in these situations often have the kinds of low credit scores that prevent them from taking out a new card.

All that having been said, if you do have the option of putting an emergency expense on a credit card instead of a cash advance loan, it will mean lower interest rates and more manageable payments. It’s not a good option, but it’s a better bad option.

With a payday cash advance loan, you’ll have to pay the entire thing off at one—interest and principal. And while the promise of getting out of debt quickly sounds good, the reality of the situation is different. According to a study from the Pew Charitable Trusts, well over 80 percent of payday loan borrowers don’t have the money in their monthly budgets to afford their loans.

This means that many borrowers are left to either take out a new loan immediately after they pay off the old one or “roll over” the original loan—extending the due date in return for a brand new interest charge. Either way, they can soon find themselves stuck in a predatory cycle of debt.

Credit cards can also leave you stuck in a debt cycle—let’s make that clear—but they do let you pay off a larger bill more gradually, and with a much lower interest rate. You should still pay off the charge as aggressively as you can, but you’ll be given far more breathing room to do so.

Racking up massive amounts of credit card debt can be a huge problem. But when compared to cash advance loans, credit cards are a far more affordable option.

3. Installment loans.

Not all bad credit loans are of the short-term variety. Some come with longer repayment terms and an amortizing payment structure where you pay the loan off in a series of regularly scheduled payments—just like regular personal loans!

These are installment loans, and they’re worth a look. While it’s tough to make broad statements across the many different lenders, borrowers, and local regulations governing these types of loans, the right bad credit installment loan could be a much better option for you than a short-term cash advance.

The right bad credit loan will have lower rates than a payday cash advance or title loan, and it will also come with more manageably sized payments that fit your budget. And certain bad credit installment lenders, like OppLoans, also report your payment information to the credit bureaus, which means that making your payments on time could help raise your score!

If you’re considering a bad credit installment loan, take a look at whether or not the lender checks your ability to repay. While these loans are generally considered “no credit check loans”—because the lenders don’t run a hard credit check when you apply—some lenders still do their due diligence.

All things being equal, the more a lender cares about your ability to repay, the less likely you are to end up with a storefront or online loan that you simply can’t afford—and never should have been allowed to borrow in the first place.

4. Pawn shops.

In case you’re not familiar with them, here’s how pawn shops work. You bring in a valuable piece of property and you use it as collateral to secure a small-dollar loan. You then have a set amount of time to pay the loan back, which varies from state to state, and oftentimes you’ll have an option to extend). If you don’t pay the loan back (plus interest) the pawn shop is able to sell your collateral. That’s it!

Obviously, there are downsides to this: namely, the loss of your valuables! Plus, you’ll be hard-pressed to receive a loan that’s actually worth the item’s full value. But still, having the option to forfeit your collateral instead of paying the loan back is better than being forced into a predatory cycle of debt.

Like with credit cards, taking out a pawn shop loan isn’t necessarily a good option, but it’s certainly a less-bad option than taking out a high-interest cash advance loan.

5. An emergency fund.

For folks who already need to cover an unexpected expense, this option won’t do you much good. The point of an emergency fund is to already have it in place before you need that extra cash. This way, you don’t have to worry about borrowing any money at all!

But for everyone else, building and maintaining a well-stocked emergency fund is the best alternative to an expensive cash advance. The earlier you start building one, the better.

Experts generally recommend an emergency fund large enough to cover six-months living expenses. That’s a lot of money! But instead of letting yourself get overwhelmed, just start saving whatever money you can—even if it’s as little as a few dollars a week.

Not sure how exactly to start saving? No problem. Just check out these related posts and articles from OppLoans:

Do you have a personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

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How Can an Average Joe (or Jane) Reduce Their Tax Burden?

It’s easy for rich folks and large corporations to reduce their tax burdens, but regular folks can do it too!

There are lots of things you can buy if you’re rich or in charge of a big corporation. Private planes, for instance; private yachts; private limousines; pretty much any form of luxurious private travel.

But it can also allow you to, in essence, “buy” a lower tax bill. The more money you have—whether you’re just one rich person or one mega-rich corporation—the more of that money you can spend on high-end accountants who are experts are lowering their clients’ tax burdens.

But what about you? Unless you’re reading this on a private plane, you probably can’t afford too many fancy accountants, which means a large tax bill will be hitting you even harder. And with changes from last year’s tax act taking people by surprise during the 2019 tax season, you could be hit even … harder-er.

So what can you do about it? We spoke to the experts to find out!


Take advantage of an IRA or HSA.

There are methods the average person can use to lower their tax burden. Unfortunately, it may require a bit of math and time investment.

“The average Joe can take advantage of tax deductions that the wealthy may not be able to, such as a contributing to a Traditional IRA,” explained Peter G. Miles, President and Financial Advisor at St. Croix Wealth Management (@stcroixwm). “Many wealthy individuals make too much income and are unable to take advantage of Traditional IRA contributions.

“The most tax advantageous account is a Health Savings Account (HSA). If an individual or family has a high deductible health plan, they can take advantage of health savings accounts and their contributions are tax deductible. If the money is used for a qualified health need there are not taxes owed on those withdrawals.

“Pay yourself first! If you have a medical bill, make the contribution to the HSA and turn around and pay the medical bill from the HSA. By saving for education, you may receive tax benefits on your state tax return. Each state has its own benefits, so it varies state to state.”

“Most tax return software has the ability to input different scenarios to maximize your tax returns.  Also by working with a financial advisor or a tax preparer, they may be able to point you in the right direction and answer any questions on tax advantageous accounts.”

You should also research which tax credits you may be able to take advantage of.

Look for extra credits.

Depending on your specific situation, there are likely additional credits or deductions you’ll be able to take advantage of.

“A new dependent credit is here,” advised tax expert Manisha Hansraj, a marketing specialist for Rapid Filing Services (@Prior_Tax). “If you want to claim a non-dependent, (meaning someone who is not a qualifying child under age 17) you can do so and receive $500 for this credit. The non-dependent must be either a full-time student or disabled. The Child Tax Credit also (CTC) increased to $2,000 per child.

“Whether you’re thinking of buying a house or if you’re currently a homeowner, the mortgage interest deduction is for you. Under the TCJA tax reform, if you purchased or improved your home after December 14, 2017, you can deduct your mortgage debt to $750,000.

“That being said, for taxpayers who purchased their home on December 14th or earlier can deduct interest based on the old cap which was up to $1 million in debt. Although the interest on home equity loans will no longer be available in 2019, you still have a chance to take the home mortgage interest deduction.

“For the Earned Income Credit, if you have low to moderate income you are eligible to claim this credit. If you have out of pocket tuition expenses, the Education Credit is for you.”

Do you own a small business?

While small business owners won’t have access to the offshore tax havens giant corporations can use to lower their tax burden, that doesn’t mean they’re totally without options.

“A small business owner has plenty of resources at their disposal including tax books, self-help guides, IRS memos, and US Tax Court cases,” offered Thomas J. Williams, tax accountant and co-founder of Deducting the Right Way. “Mastering your bookkeeping, accounting, and tax issues won’t happen overnight—learning the ropes demands a significant investment of time and dedication.

“First, you must make peace with the fact you’ll never have the extensive knowledge gained by a licensed accountant who has spent years earning degrees and taking exams which means you will pay for consultations at one point or another.

“Second, know that you will become frustrated with the subject because it is dense and continually changing. Last, avoid free forums that often contain bad advice from just about anyone with a computer and an Internet connection; stick to websites and applications used by professionals.”

But what if you are the business?

“For self-employed taxpayers, take advantage of your business expenses even if you work from home,” Hansraj suggested. “This means that you should keep all documentation of your expenses from office supplies, client dinners, travel, rentals, licenses, and any other expenses that serve a purpose for your business.”

Use that extra money wisely

Hopefully, this advice will help during tax season. Maybe you’ll even get a nice refund! But if so, what are you going to do with that extra money? Because, while it might be tempting to splurge, you should take a hard look at your finances and see if it that money can be better applied elsewhere.

Namely, you should take a look at your debt load and your savings. Too much debt—especially higher-interest consumer debt—hurts your credit score, while meager savings will leave you vulnerable the next time a surprise bill or unexpected financial shortfall strikes.

Bad credit and no savings is how folks end up relying on predatory no credit check loans and short-term bad credit loans like payday loans, title loans, and cash advances to make ends meet during times of financial need. And while opting for an affordable installment loan would provide a better financial solution, even the best personal loans don’t compare to a well-stocked emergency fund.

Lowering your tax burden means putting more money back in your pocket. The smarter you are with how you spend that money the more likely you are to have full pockets in the future. To learn more about tax-related money issues, check out these other posts and articles from OppLoans:

Do you have a  personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

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Contributors

Manisha Hansraj is a Tax Expert, Content Creator, and Marketing Specialist for Rapid Filing Services (@Prior_Tax). She has over 3 years of experience and well versed in the tax changes as well as preparing prior and current year tax returns. RFS is an online tax preparation company to file prior and current year tax returns nationwide.
Peter G. Miles is the President and Financial Advisor at St. Croix Wealth Management (@stcroixwm), which he founded with the stated mission of helping all people navigate their financial journey. After attending Minnesota State University, Mankato, where he studied aviation, the course of Peter’s life changed following the events of September 11th, 2001. He changed careers and went back to school to earn his Uniform Combined State Law Examinations Series 66, General Securities Representatives Series 7 registration, along with the Minnesota Life and Health Insurance License. He has been helping people navigate their financial journey ever since. Peter lives in Woodbury, MN with his wife, Sarah, and their two daughters; Evelyn, age 7 and Amelia, age 5.
Thomas J. Williams, EA is a tax accountant, author, and co-founder of Deducting the Right Way℠, an online resource for small business do-it-yourselfers. He enjoys helping small business owners gain confidence to handle their business finances and has implemented his strategies for nearly 20 years with domestic and international clients.

So You’re Stuck in a Cycle of Debt … Now What?

In order to stop running on a hamster wheel of debt, you’ll need to split your focus between two major financial priorities: Paying down debt and building up your savings.

Imagine how difficult it must be to ride a unicycle across a tightrope, high above the circus crowd. Maybe you have one of those poles you can use to keep your balance or maybe you don’t. Seems pretty difficult, doesn’t it? Even terrifying?

Now imagine that cycle was made of debt. Did that somehow make it even more terrifying? Or do you have no idea what we’re talking about? Because, honestly, we’ve kind of lost track of the metaphor here a little bit.

Regardless, getting stuck in a debt cycle can keep you from getting a proper financial foothold and accomplishing your goals. A massive debt load will drain your savings and tank your credit score, possibly forcing you to rely on predatory no credit check loans like payday loans, title loans, and cash advances when you have an unforeseen expense.

And if you find yourself stuck in one, you’ll have put in some hard work to pull yourself out. So slide your feet into the pedals and let’s get going!


What is the debt cycle?

The debt cycle is more or less what it sounds like. It’s a cycle of personal loans, credit cards, and other financial products that leads you further and further into debt. In other words, if you have to spend more than you’re taking in, you aren’t going to be able to pay off your debt and it’ll keep accumulating.

“The debt cycle is the continuous process of borrowing that increases debt and can eventually lead to default,” warned Leslie H. Tayne Esq. (@LeslieHTayneEsq), Founder and Head Attorney at Tayne Law Group (@taynelawgroup).

“When you spend beyond your means, your debt becomes unmanageable, and your interest begins to build up at a rate you can no longer keep up with. You may then consider taking out a personal loan to pay off debt, which is essentially going into debt to pay off your debt.”

And trying to pay off your debt without a proper plan can sometimes make the debt cycle even worse.

“Rushing to get out of debt is a major cause of the debt cycle,” cautioned Brie Sodano, founder of From Sheep to Shark (@sheeptoshark). “The common financial ‘wisdom’ says to save $1,000 and put all the extra cash toward debt repayment. This plan fails when an unexpected expense happens, and there is no savings to pay for it. Then the debtor perpetuates the cycle by using debt to pay for the emergency.”

“The way the debt cycle was explained to me was best summed up in this analogy,” explained Josh Hastings, founder of Money Life Wax (@moneylifewax). “Your car’s speedometer says it can go 150. And sure, it might be able to top out at 150, but revving the engine and constantly going from point A to point B at max speed will hurt the shelf life of that car.

“The same can be said for the economy, your personal banking habits, and the ‘debt cycle.’ Leveraging credit over and over again can become burdensome, stressful, and eventually more problematic. Just like the car going 150, leveraging credit and being in debt can be mentally draining or worrisome.”

Okay, so if you currently find yourself spinning away on that great hamster wheel of debt, what can you do get out of it?

You’ll need to build your savings.

We recently wrote about how you should choose between prioritizing saving or paying off your debt. Check it out and then get back to us.

Welcome back! As you’ll realize if you read that post … or have had to manage your finances in general, it’s tough to both build up your savings and pay down your debt. But if you want to break out of the debt cycle, it’ll be a big help to have some sort of savings so an unexpected expense doesn’t undo all of your progress.

“In order to break the cycle of debt, you have to start saving,” urged Adrienne Ross, Chartered Financial Consultant and Accredited Financial Counselor. “Even if you are only able to save $5.00 a week, you must start saving. Building up a cash reserve is a crucial part of your journey to debt freedom. Without a cash reserve, every unexpected life event will land you right back in debt.

“This has been proven true time and time again, but one story stands out in my mind. I was working with a single mother who was struggling to manage her money and get out of debt. Saving even $5.00 a week was a challenge, so we started with just having her save her coins.

“She would use cash to buy her groceries and gas. At the end of each week, she would take all of her change and put it in a jar. Every time she earned extra money, it went into the jar. All along, she kept making payments on her debts and working to stick to her budget. The jar was there as her ‘just in case’ money.

“After one year, she took the jar to the bank and discovered she had saved over $500. That $500 was just the beginning and provided the financial stability she needed to break free from the debt that was stifling her life.”

Now, it’s time to make a plan.

Make a budget and a debt repayment plan.

When it comes to actually paying off your debt, you’re going to want a plan—and a budget—that you can stick to.

“A great way to get out of it is to first do a budget,” suggested certified financial planner Luis F. Rosa (@luis_f_rosa). “Sit down and take a look at the last three months’ bank statements so that you can get a good idea of how much money you actually spend. Then write down all of your debts, their minimum payments, APRs, and balances. Once you have that you can use a few different methods to tackle that debt.”

And what are some of those methods?

“One option is debt consolidation,” offered Rosa. “Another can be the snowball method, where you pay the minimum to all creditors except for one, sending the excess amount that you can afford beyond the minimum payments to the account with the lower balance. The avalanche method is similar, but instead, you pay the account with the highest APR first. You can use free websites like PowerPay.org to see which method works for you.”

And here are a couple more suggestion from Tayne:

“Put your credit cards away. Another important step in breaking the debt cycle is to stop using your credit cards. Using them will only compound the issue. With your adjusted budget, you should be working to pay all your monthly expenses without taking your credit cards out of your wallet.

“Frequently, getting into debt is the result of a cash flow problem. If you’re worried about making ends meet, you may want to consider taking on a side job to bring in some more income. However, be aware of how you’re spending the extra money you’re bringing in. Getting out of debt should be a top priority.”

Much like riding a bike, we hope you won’t forget these tips to get out of your debt cycle. Ride on! To learn more about leaving bad credit loans behind and building yourself a better financial future, check out these related posts and articles from OppLoans:

Do you have a  personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

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Contributors

Josh Hastings is a former High School Athletic Director at the secondary level who shifted his focus in 2016 to focus more effort on his entrepreneur endeavors. In 2017 he founded Money Life Wax (@moneylifewax), a personal finance site dedicated to helping millennials with student loans. With an emphasis on money and finance behavior, Josh started Money Life Wax to help millennials realize there are other ways to make money and be happy in the 21st century.
Luis F. Rosa (@luis_f_rosa) focuses on working with young up and coming professionals who are looking to better position themselves for a successful financial future. Luis is a Certified Financial Planner™ and is enrolled to practice before the IRS. This diverse industry knowledge allows him to best serve his clients by understanding how one financial decision affects the other, allowing him to better guide them toward achieving their goals.
Adrienne Ross is a Personal Financial Counselor who specializes in helping families in transition organize and manage their financial lives. Over the last 10 years, Adrienne has put her expertise in personal finance to work helping individuals and families eliminate debt and build the life of their dreams. Currently, Adrienne holds multiple certifications including CFP®, AFC®, and ChFC®.
Brie Sodano is the Founder of From Sheep to Shark (@sheeptoshark). Her goal is to help one million women improve their money situation and to give 100 million dollars away in the process.
Leslie H. Tayne, Esq. (@LeslieHTayneEsq) has nearly 20 years’ experience in the practice area of consumer and business financial debt-related services. Leslie is the founder and head attorney at Tayne Law Group (@taynelawgroup), which specializes in debt relief.

How Do Cash Advances Work Online?

If you need physical cash, then an online cash advance probably isn’t your best option … one of many reasons you should be wary of these short-term no credit check loans.

Wait, how exactly do cash advances work when they’re online? It’s right there in the name: cash advance. The internet is great at a lot of things, but handing over cold hard currency is not one of them.

With that in mind, here’s everything you need to know about online cash advances work, and how they differ from the store-bought kind.


What is a cash advance?

Cash advances are a type of short-term, small-dollar no credit check loan. Okay, so what does that mean? Let’s break it down:

  • Short-term: These loans are meant to be repaid in a matter of days or weeks, not months or years. The average repayment term for a cash advance loan is only 14 days.
  • Small-dollar: Typically, these loans are under $1,000—and often well under. The amount you can borrow with a cash advance will vary depending on the local laws in your state of residence.
  • No credit check: Cash advance lenders almost never check a borrower’s credit score before they apply. Some don’t even verify a borrower’s income or that they have any way to repay the loan at all.

If that sounds a lot like payday loans to you, then you’re correct. Payday loans and cash advance loans are basically the same things.

These loans are aimed at people with bad credit scores who can’t borrow from traditional lenders. They are intended as “bridge financing,” which means they help plug up financial shortfalls.

They’re unsecured loans, which means they don’t involve collateral—unlike title loans, which are secured by the borrower’s vehicle.

How much does a cash advance cost?

Like all loans, cash advance loans come with interest charges. But unlike traditional installment loans, which accrue interest over time, cash advances and payday loans charge interest as a single flat fee.

The charge for a specific cash advance will vary from lender to lender, and they can also be different depending on where you live—as certain states and cities permit higher interest rates than others.

Still, the average interest rate for a cash advance loan is $15 per $100. Does that sound reasonable to you? Why wouldn’t it?! 15 percent interest for an unsecured loan isn’t that bad.

But let’s look at it another way. Namely, let’s look at that cash advance’s annual percentage rate (APR), which is 391 percent. Yowza!

How do you get a cash advance online?

For many years, the best place to get a cash advance loan was at your local payday lender or check-cashing storefront. You would walk into the store, and either make out a post-dated check for the total amount due (principal plus interest) or sign an automatic debit agreement.

Once the loan agreement is signed, the storefront employee hands you your cash and you are on your way!

But many cash advance borrowers now borrow their money online. The process is mostly the same, except for the part where the cash is placed in their hand. The internet hasn’t figured that one out yet.

Instead, borrowers typically receive their funds via direct deposit. For this, they need a bank account that is capable of receiving electronic transfers. Typically, these funds will arrive within one to two business days, but some lenders offer same-day funding. Really, how quickly your loan will arrive depends on a number of factors.

For borrowers who don’t have a bank account, some lenders will also load their funds onto the borrower’s prepaid debit card. If you need actual cash and you need it now, then an online cash advance or loan probably isn’t going to work for you.

On the other hand, if all you need is funds in your bank account, online loans should work fine for you—so long as they can deposit those funds in a timely fashion.

Okay, but should you get a cash advance online?

If you’re considering taking out a cash advance online (or in the store, for that matter), you should seriously consider all your other options. Cash advances certainly are convenient, but they come with some major downsides.

As we mentioned earlier, the interest rates for cash advances tower over the rates for regular personal loans. Even if you have bad credit and you need a loan, you should be trying to shop around for the best rate—and there are many bad credit loans out there which offer lower rates than cash advances.

And while one of the perks of a payday cash advance is that you can pay it off quickly, that might be less of a feature and more of a bug. That single lump-sum payment means paying hundreds of dollars all at once, which could blow yet another hole in your budget.

In fact, according to a study from The Pew Charitable Trusts, that’s exactly what happens to a majority of payday loan borrowers. They found that well over 80 percent of borrowers didn’t have enough funds in their monthly budget to cover their payday loan payments.

And if you can’t afford your payments, you might find yourself with no other choice but to roll over or reborrow your cash advance, which will increase both your cost of borrowing and your total days spent in debt.

Reborrowing a cash advance is simple: You simply pay the original loan off and the immediately borrow a new one to cover your other bills and expenses.

Rolling over a cash advance is a little different. Instead of paying the loan off, you extend the loan’s due date in return for a nominal payment and a new interest charge. The first time you roll over a cash advance, your cost of borrowing effectively doubles.

These outcomes aren’t just something that happens on paper; they reflect the reality of payday loans and cash advances in America. A study from the Consumer Financial Protection Bureau (CFPB) found that the average payday loan borrower spends almost 200 days per year in debt and takes out 10 such loans annually.

Lastly, if you pay off a cash advance on time, it’s not going to help you build the kind of positive payment history that you want to be reflected in your credit score. This is because most cash advance lenders don’t report payment information the credit bureaus.

The best way to handle emergency expenses is to maintain a well-stocked emergency fund, hands down. And while taking out an online cash advance could certainly work out well for you, there is a very large chance that it ends up as more of a problem than a solution.

Another great way to avoid payday cash advances is to improve your credit score. To learn more about how you can fix your credit, check out these related posts and articles from OppLoans:

Do you have a personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

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Save More Money With These 40 Expert Tips

Whether you’re using multiple savings accounts or a simple change jar, there are plenty of ways you can save more money and protect yourself from financial uncertainty.

Saving money isn’t easy, especially if you don’t have a solid strategy. That’s why we reached out to a whole bunch of personal finance experts and came away with these 40 great tips with us to help you save more by saving smarter.


1. Create a budget.

Matt Dworetsky, President of Dworetsky Financial in Wall Township, New Jersey:

“Creating a budget is one of the first steps a person should take to save money. If you don’t know what you’re spending your money on, it’s harder to save. Creating a spending plan allows you to see how much money you have coming in and plan how and where you will spend it. Following your budget will guarantee that you are able to pay your bills each month and have enough left over to go towards savings or repaying debt.”

2. Track your spending.

Stephanie Hammell, MBA, an investment advisor with LPL Financial:

“Start with a money tracker like Mint: Money, Bill Pay, Credit Score & Investing that will help track your historical habits with money and spending, which can help lead to better planning for the future.

“The main goal will be to identify what you need to be focusing on. Then plan to deploy assets, resources, and energy to get to where you want to be. Determine where you are willing to make sacrifices in your purchases for gains in other objectives. ”

3. Set a goal.

Keina Newell, founder of Wealth Over Now (@wealthovernow) financial coaching and education:

“Define how much you want to save and what you’re saving for and how soon you want to save the specific amount.  For example, I want to save $1000 in the next 12 months to start an emergency fund.

“Now, do the math to see how much you would need to save monthly (1000/12=83) Now you know you need to save $83 a month or about $21 a week.  Making a goal that is specific and time-bound provides you with increased clarity and confidence.”

4. Cut out any unnecessary spending.

Hanna Horvath, personal finance reporter at Policygenius (@policygenius):

“Once you’ve outlined your spending in your budgeting sheet, you’ll be able to see where you can cut back. For example, you might see you’re paying for cable when you only use online streaming services or you keep paying for that gym membership you never really use.

“Perhaps you’re still getting hit with a charge for an online magazine subscription you stopped reading months ago. Canceling these services will help you cut back on your spending and, ultimately, boosting your savings.”

5. Pay yourself first.

Logan Allec, CPA (@moneydoneright), owner of personal finance website Money Done Right:

“Too many people simply spend any extra money they get. When they do this, they are not paying themselves first and making themselves rich; they are paying the stores they shop at and making these stores rich!

“So commit to depositing a certain percentage of what you earn into a savings or investment account before giving your money to anybody else.”

Mercedes Forrest, personal finance coach, and Certified Financial Education at BottomLineFinances.com (@bottomlinefinances):

“Before you pay any bills, pay yourself first. So, what does this mean? It means as soon as any income hits your bank account, you put some money aside for savings. Start small and build your way up, even if you start with only $50 per paycheck. Paying yourself first puts this money out of sight and out of mind. Soon enough you’ll get used to not having this money to spend.”

6. Start with the change jar technique.

Todd R. Christensen, author, Accredited Financial Counselor®, and education manager at Money Fit by DRS, Inc. (@MoneyFitbyDRS):

“Get a big, clear water cooler bottle (big body, small neck) and dump all change into it as you walk in the door. As you see it growing, you will realize you can save and feel very little pain from doing so. Once you catch the savings fever, you can move to additional savings options.”

7. Set up a savings account.

Mercedes Forrest:

“If you want to successfully save then you should separate your savings from your bills and spending money by putting it in a separate account. If you don’t separate this money, then you will be more inclined to spend it whether by accident on purpose.

“There are multiple options for savings accounts, but you should consider an online savings that yields a slightly higher interest rate than a traditional savings account. Online savings accounts also provide more limitations to easily accessing your savings.  Thus, minimizing savings dipping.”

Hanna Horvath:

“Interest rates generally fall between 0.01 percent and two percent for a basic account, which is better than nothing. You could also consider a high-yield savings account if that feels right for your budget.”

Andy Misek, digital marketing specialist at personal finance comparison site Finance Guru:

“The only downfall to having a savings account is that you’re limited in how many transfers you have each month. If you use too many transfers, the account can automatically be changed to a checking account and you’ll no longer reap the benefits of the interest.”

8. Use multiple bank accounts.

Ronit Enos (@ronitenossalonsprofits), business strategist and ideation coach:

“If you want to thrive and understand money and spending, follow this tip: Have clarity on your financial goals such as: what kind of home and vacation you want, amount you want to spend on health and wellness, the amount of saving you need to put aside (life insurance, college fund, personal development, retirement) and annual taxes.

“Then, open five bank accounts named for each category and deposit money into them every month, even if it’s a small amount:

  • Income: for deposits only, whatever comes from your income.
  • Saving Allocation: 10 percent if you are 2 2-32, 20 percent if you are 32-55 (for IRA, college, personal development emergencies).
  • Household Musts: transportation, rent, utilities, mortgage.
  • Health and Wellness: the gym, yoga, meditation, supper food.
  • Travel and Leisure: need but not must, vacation entertainment fun.”

“Plan a financial meeting on the 10th and the 25th of every month, for not more than one hour, and every 3months celebrate your wins!”

9. Build the habit.

Keina Newell:

“It’s important that we start saving early and often. The habit of saving, even if it’s only five dollars a month or $25 month is most important.  Commit to saving a set amount each paycheck.”

10. Start your emergency fund.

Matt Dworetsky:

“We all know we should have one for life’s unexpected events, but not many people actually take the time to open an emergency account and set up automatic deposits. Creating an emergency fund will give you peace of mind and help out in the case of job loss, car troubles or medical expenses.”

Stephanie Hammell:

“Put aside at least three-to-six months’ worth of living expenses as a rainy day fund. There will always be something that comes up unexpectedly such as car maintenance, hospital expenses, or layoffs at work, so this will help save you the stress of having to worry about how to pay those off.

“This should be a priority as a financial security measure. If your paychecks are inconsistent, then you’ll want to put aside even more so you can feel confident you are prepared for that rainy day (which will come at some point).”

11. Take advantage of 401(k) matching.

Andy Misek:

“There are many ways to put money aside and have it work for you. One of the most common ways people put money aside is through their company’s 401(k). A 401(k) is a retirement fund that many companies offer.

“Not only is it a great way to save for your retirement, but your company may also match a certain percentage contribution. For instance, if you put five percent of your pre-taxed income into your 401(k), your company will match that contribution. That’s free money put towards your retirement!”

12. Invest in your future goals.

Stephanie Hammell:

“Open up an investment account, such as an IRA or 401(k) with tax advantages. Diversify your assets among various asset classes of stocks, bonds or mutual funds. The allocation apportioned to each of these will really depend on the amount of risk that the individual is willing and able to take on to sleep at night!

“Roth IRA’s can be a great choice because they offer post-tax investment growth, which means that your contributions are taxed upon entry, allowing your assets to grow tax-free leading to tax-free income in retirement. You can withdraw up to $10,000 without penalty from this type of account for a first-time home purchase too. You can also withdraw contributions you make to your Roth tax and penalty free anytime.”

13. Define your “why.” 

Ahna Holloran, personal finance coach with Fika Finance (@fikafinance):

“Saving money is an important step towards financial success. Many of us know we should do, but we’re unclear as to why and how.

“Defining the ‘why’ is key. If you don’t why you are saving, or what you are saving for, then it will be much harder to delay pleasure in other areas of your life in order to save.

“A why could be ‘to be able to pay for an emergency (such as a car repair or medical cost) out of pocket and not be afraid for my family’s health and safety,’ or ‘to save for a house and have a safe and comfortable place to live,’ or something similar.

“Define your ‘why,’ and then take actions to put it into practice. When you have defined your ‘why’ and gotten a clear picture of your money, the physical act of saving becomes a lot easier and more enjoyable!”

14. Minimize your utility bills.

Andy Misek:

“You also need to be conscientious about your utility bills as well.. Turn off your lights and tv, take shorter showers, don’t run your dishwasher. While all of these things seem trivial, they all make a huge difference in the cost of your energy bill. While gas, electricity, and water are all essential, you’re in control over how much you pay for all of those.”

Doug Keller, marketing manager at Payless Power (@paylesspower):

Turn Down the Water Heater: As the second largest expense within our homes, the water heater is responsible for supplying the sinks, shower, dishwasher, and laundry machine with hot water. Frequently, the default temperature for the tanked heater is set to 140 degrees Fahrenheit but that is higher than necessary as it could enable water to reach scalding levels. By dialing things back to 120 degrees, you can still get the hot water you desire and save a lot of energy in the process, which will save you money each month.

Change your Light Bulbs: While you can wait for your light bulbs to burn out, taking an active approach and purchasing energy efficient bulbs like LEDs and CFLs to replace the use of incandescent bulbs will pay off. Incandescents only convert around 10-20 percent of the energy they’re supplied with to light, meaning they waste a lot unnecessarily. In comparison, energy efficient bulbs can convert 80-90 percent of their energy into light. They also have longer lifespans than incandescents, ensuring a long-run benefit.

Unplug Electronics: Even after they have been powered off, electronic devices have the ability to consume electricity if they are left plugged in. This is known as vampire energy and it can make up roughly 20 percent of the monthly electricity costs incurred within households. As a result, once you are done using electronics be sure to unplug them. It’s simple but could save you a couple hundred dollars a year.”

15. Automate your savings:

Keina Newell:

“Set up an auto draft from your checking account to a savings account that is not linked to your checking account. I always suggest that clients use a high-interest bearing account (e.g., Ally, Discover) they get the perks of earning interest on their money, and it’s not attached to their regular account.”

Mercedes Forrest:

“Eliminate the thought process of saving by automating the process. Time the automation so that as soon as your income hits your bank account your savings is automatically transferred to a savings account.”

16. Manage your debt.

Stephanie Hammell:

“If you feel you are living paycheck to paycheck, you may be paying high interest rates on too much debt. Before you can maximize on what assets you currently have, you’ll need to get your debt under control. Making it a habit to fully pay off your credit card bill in the month you get it is one factor that can help manage that.”

17. Be careful with credit cards.

Andy Misek:

“One way many people end up not saving money is by using their credit card too frequently. It’s so easy to use your credit card—you get what you want and you aren’t using any money in your account. However, you’ll have to pay that money back at the end of the month.

“If you can’t you start accruing interest and this is where the problem comes in. You’re paying more money than the original purchase is worth.”

18. Lower your interest rates.

Matt Dworetsky:

“If you have good credit, you may be able to negotiate lower interest rates on credit card debts. Before calling, evaluate the terms of your credit card and look for competing offers, this will make your case stronger while negotiating. Be polite to the representative on your phone, and if they say no, continue to pay off your debts and try again in a few months.”

19. Increase your income.

Marc Andre, personal finance blogger at VitalDollar.com (@vital_dollar):

“One of the most effective ways to build up savings is actually to focus on increasing your income. The more money that you make, the more money you’ll have to save (assuming your expenses don’t increase as well).

“Making more money may sound difficult, but today there are countless ways to make some extra money in your spare time. You can drive for Uber, walk dogs, clean houses, mow lawns, sell crafts on Etsy, take online surveys, rent out a room in your house, or offer any number of different services as a freelancer. Those are just a few of the ideas.

“It’s very realistic to make a few hundred dollars per month with a side hustle, and that can have a huge impact on your savings.”

Mike Pearson, founder of personal finance website Credit Takeoff

“The best way to boost your savings is to increase your income. The more money you have coming in, the more you can save.  Easier said than done? With today’s gig economy, there are endless options for someone to make an extra $50 per week if you’re creative and willing enough.

“They can:

  • “Drive for Uber or Lyft.
  • “Deliver for PostMates.
  • “Mow lawns or shovel snow.
  • “Rent a spare room on Airbnb.
  • “Walk dogs.
  • “Do mystery shopping.”

“I could go on and on. The point is that there are so many ways to make an extra buck, either on the weekends or at night. You might only have to put in 5-10 hours of work per week to get an extra $200 a month in cash. Then, with that extra cash in hand, you can start to strategize how to build your savings.”

20. Buy used whenever you can.

Logan Allec:

“Being willing to purchase high-quality used items can save you hundreds if not thousands of dollars a year. This thinking can be applied to minor purchases such as clothing and small appliances, of course, but the larger the purchase, the bigger the savings you will enjoy.

“Consider a vehicle purchase.  According to Carfax, the value of a new car can drop by up to 20 percent … just in the first year of ownership! Why not take advantage of the depreciation inherent in new car purchases by buying used?”

21. Don’t forget your inner college student.

Matthias Alleckna, energy analyst for energy rate comparison website EnergyRates.ca:

“Some people tell you to never lose your inner child. When it comes to personal finances, I’d suggest you not to lose your inner college student. I’m not saying you should live in a dorm or eat junk food every day but think of the good old days when you didn’t need a car, a three-bedroom apartment or even cable.

“As adults, sometimes we caught ourselves paying for things we don’t really need in the name of comfort. The truth is that you can live a comfortable life and still let go of some ‘superficial’ things. Even on a budget, if you look around you will notice you pay for things you don’t need or use frequently. Don’t be afraid of changes and get rid of those things.”

22. Do your grocery shopping online.

Jenna Coleman, consumer behavior expert in the grocery industry at ParticularPantry.com (@particularpantry):

“While it may sound counterintuitive, ordering groceries online can really help save money. Many online stores are becoming more competitive with in-store pricing, Walmart matches everything but the coupons, and shoppers aren’t tempted into impulse buys that blow their budget.

“Buying groceries online also allows the shopper to see the running total of their groceries so they can be more deliberate about which items they need in order to stay on budget.”

23. Pack your own lunch and make your own coffee.

Matt Dworetsky:

“We all like to indulge now and then, but getting in the habit of buying lunch and coffee every day adds up quickly. Take a few minutes in the morning to pack your own lunch and brew your own coffee. Put all the money your saving towards something that will last longer than your lunch break.”

24. Take food savings one step further.

Hanna Horvath:

“Sure, you’ve probably heard about how you’ll save more by not going out to eat, but even if you always do meal prep, there are plenty of additional ways to save when grocery shopping. We have a list of 50 ways to save on groceries that can really help you cut back on food expenses.”

25. Use cash-back apps.

McKinzie Bean, blogger and entrepreneur at Moms Make Cents (@momsmakecents):

“There are a number of things that you can do to save money, but some of my favorites are tightening your grocery budget and using cash-back apps. When these two strategies are stacked it can make a big impact on your budget.

“Before going to the grocery store look up the weekly ad for a few places in your area. Pay the most attention the items they have listed on the first page. These are called “loss leaders” and are generally priced extra low as an incentive to get you to come into their store. Meal plan around the items that are marked down that week. That will save you money on your groceries every week.

“To stack the savings download a cash-back app like Ibotta or Drop and you can earn cash back on qualifying purchases. When you stack that with the already low prices when you are shopping the savings can add up quickly!”

26. Stash extra windfalls to boost your savings!

Keina Newell:

“I know it sounds funny but when you get unexpected income (e.g., tax refunds, pay raise, bonus, gifts) use a percentage of that to boost your savings.”

Mercedes Forrest:

“Don’t use a bonus or a pay raise as an opportunity to ball out of control. Yes, you can treat yourself to a little something, however, you should use a bonus or extra bit of monthly cash from a raise as an opportunity to save more.”

27. Put your money where you can’t get it.

Todd R. Christensen:

“Trick yourself by either direct depositing or automatically transferring savings to an account at a bank or credit union that is separate from where you keep your checking account. Do NOT get an ATM card and try to find a financial institution with no evening or weekend hours and no drive through. Make it inconvenient to get your money out of your savings.”

28. Lower your rent.

Justin Pogue, real estate consultant, financial advisor, and author of Rental Secrets:

“Those with lower incomes are seeing rent consume an ever larger percentage of their income. Affordable housing and other assistance programs do exist. But, there are far too many people competing for far too few openings leaving most to deal with the traditional rental market. Learning market-based strategies to slow the growth of rent cost or reducing rent can greatly enhance their ability to save.

“These strategies include learning to rent when the lowest rents of the year are available, and to obtain free rent by working for landlords who own smaller properties. As my book Rental Secrets points out, landlords have problems. Landlords pay renters who solve their problems in the form of lower rent.

“A great majority of people are looking to get their housing in place before school starts. This is why there’s such a frenzy for housing in the late summer. However, there are still vacancies that landlords need to fill in the late fall and winter. But, the number of people looking has dropped dramatically. This puts renters in a position to obtain rent discounts approaching 6 percent just based on timing, as verified by a study performed by Renthop.com.

“Another strategy from my book is to work as the landlord’s on-site representative for a smaller property. Some landlords simply recognize the benefit of having such a person available, while others are legally required to do so. In exchange, these representatives receive drastically reduced rent or even free rent for their services.”

29. Review your credit card statements.

Matt Dworetsky:

“Far too many of us neglect to review our credit card statement each month, which could be a costly mistake.  It is always a good idea to double check that the charges are correct, that your payments are being made on time and that no fraudulent activity occurred. It’s also possible that you’ll catch some subscription fees you forgot you were paying.”

30. Create a shopping list … and stick to it.

Logan Allec:

“One of the biggest budget (and time) killers is wandering aimlessly through major retailers such as Target or Walmart with the intention of only buying one or two items but walking out hours later having spent an extra $20, $50, or even $100 more than you thought you would.

“To kick this habit, create a shopping list of exactly what you need to purchase and then stick to this list once you get into the store. Don’t even go to any unnecessary aisles!  Just go straight to the items you need, purchase them, and leave the premises.”

31. Meal-plan.

Jenna Coleman:

“Even though the average American family spends 10 percent of their budget on groceries, very few have a set grocery budget or thought out meal plans. Even fewer are educated about all of their grocery shopping choices.

“As a consumer behavior expert in the grocery industry, I find that the most effective thing a family can do is spend time every week to create a meal plan and then compare the prices between a few stores to make sure they are saving the most money.”

32. “Blindly” contribute to your future.

Stephanie Hammell:

“Just like the accomplished feeling you get after a workout to improve your wellbeing, you rarely regret saving for your own future—you know you will need that money one day!

“Once you open up your investment account, plan to set up automatic payments from your checking account to that investment account bi-weekly or monthly right when your paycheck hits your account.

“This way, you will not see the money leaving your checking account and it won’t hurt as much to see it go- it will have been as if it wasn’t even there in the first place! In the process, however, you will be saving yourself a better future.

“Whether its $1,000, $500, $100, $50 to $20 a month, there is always a certain amount that someone could put aside for that, even if it requires just buying one less lunch or dinner out a week.

“Most importantly, the time to start is never tomorrow, it is always now. As they say, it’s not about timing the market, but time in the market, so start as early as you can and make that money work for you!”

33. Make it a family matter.

Keina Newell:

“Teach your children the power of saving, have money conversations.  When your child gets money for birthdays or chores or performing a job encourage them to split their funds into three buckets (giving, saving, spending).

“Take it a step further and make them use the money they’ve set aside for spending to fund their lifestyle while also teaching them the importance of saving.”

34. Get fixed-price deals on regular expenses.

Matthias Alleckna:

“When you’re on a budget, cost certainty is even more significant. Any small change to your budget could impact your finances significantly, so you need to make sure you avoid surprises the most you can.

“One of the best ways of reaching financial predictability is getting as many fixed-price deals as you can. From the electricity bill to your phone plan, do what you can to make sure you pay predictable bills every month. Such a measure will allow increasing your financial stability and protect you from negative surprises.”

35. Use the library.

Doug Keller:

“As a home for thousands of books and internet access, the library is a great place to go regularly to cut the energy use within your home for a time while still having access to the things you need. And with a library card, you can check out books and even DVDs possibly for free, which will reduce your entertainment expenses.”

36. Stay home once in a while

Andy Misek:

“One thing many younger people have a problem with is going out too often. It’s easy to get a group of friends together, go out and get some food. However, that adds up VERY quickly. You need to limit how often you go out and have people over at your house. You’ll end up saving a ton of money.”

37. Re-shop your insurance policies.

Hanna Horvath:

“One of the best ways to save on an expense you have to have—insurance—is to periodically re-shop existing policies. A Policygenius survey found that one in three Americans have never re-shopped their home or auto insurance. But by not doing this, you could be leaving money on the table.”

38. Freeze your credit.

Matt Dworetsky:

“As of last year, everyone is able to freeze their credit with the three major credit bureaus for free. This feature is offered online and is very quick and easy. Identity theft is very prevalent, and scammers who open fraudulent cards in your name can destroy your credit score.

“Freezing your credit takes ten minutes and puts you in control of your finances. If you have a child under the age of 18, you can also freeze their credit for them.”

39. Don’t focus on the amounts, focus on the actions.

Robyn, creator of the personal finance blog A Dime Saved, (@adimesaved) for financial newbies:

“My advice would be: Don’t focus on the amounts, focus on the actions. Don’t worry if you can’t save more than five dollars a month. The important thing is that you are saving.”

“When you budget for savings (no matter how small) you are creating good financial habits that will get you in the habit of saving, especially when you do eventually have a bigger income. Also, even this small amount is better than nothing!”

“Don’t think that just because you can only save small amounts it’s not worthwhile to save what you can. Every dime counts!”

40. Make it fun!

Mercedes Forrest:

“Set a savings goal, give yourself a due date and reward yourself along the way for hitting your savings target. For example, if your savings target is $500 then celebrate by giving yourself a reward when you reach $250 and then again when you reach $500.”

What will you do with that money?

Will you spend it? We don’t really recommend you do that. In fact, one of the best things you can do with that money is simply hanging onto it. Even if you’re not investing that money and letting it grow, maintaining a well-stocked emergency fund will help keep your financial situation stable.

When folks don’t have an emergency fund—or any money in savings at all—an unexpected bill or emergency expense could end up knocking their wallet for a loop. This is how people end up taking out high-cost no credit check loans like payday loans, title loans, and cash advances just to get by.

Relying on the wrong bad credit loan could leave you trapped in a cycle of debt for months or even years to come! That’s why you should use the money you save to help build a brighter, more stable financial future instead. To learn more, check out these other posts and articles from OppLoans:

Do you have a  personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

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Contributors

Logan Allec (@moneydoneright) is a CPA and owner of the personal finance website Money Done Right.  After spending his twenties grinding it out in the corporate world and paying off over $35,000 in student loans, he dropped everything and launched Money Done Right in 2017.  His mission is to help everybody—from college students to retirees—make, save, and invest more money.  Logan resides in the Los Angeles area with his wife Caroline.
Matthias Alleckna has worked in the energy industry for a number of years. He is currently an energy analyst at EnergyRates.ca, a leading energy rate comparison website that helps consumers find low-cost rates for electricity and gas. From personal finances to everything energy, Matthias writes weekly content for the EnergyRates.ca blog and has contributed to many media outlets such as HuffPost, Yahoo! and Forbes.
Marc Andre is a personal finance blogger at VitalDollar.com (@vital_dollar), where he writes about saving money, managing money, and ways to make more money. His goal with Vital Dollar is to help individuals and families get the most out of the money they have and to reach their full financial potential. He lives in Pennsylvania with his wife and their two kids(a son and a daughter).
McKinzie Bean (@momsmakecents) is a mother of two and personal finance junkie. She loves teaching other moms how to save money, make money and take control of their financial situation. She has degrees in behavioral science and financial planning and has been featured in major publications like Forbes, The Penny Hoarder, Tailwind and more.
Author and Accredited Financial Counselor®, Todd R. Christensen, MIM, MA, is Education Manager at Money Fit by DRS, Inc. (@MoneyFitbyDRS), a nationwide nonprofit financial wellness and credit counseling agency. Todd develops educational programs and produces materials that teach personal financial skills and responsibilities to all ages. Having facilitated nearly two thousand workshops since 2004 on the fundamentals of effective money management, he based his first book, Everyday Money for Everyday People (2014), on the discussions, tips, stories and ideas shared by the tens of thousands of individuals and couples in attendance.
Jenna Coleman (@particularpantry) is a consumer behavior expert in the grocery industry who believes that finding the right food for your family should be easier. She is a firm believer that everyone can be an educated consumer and she’s on a mission to bring unbiased transparency to your choices of food and modes of shopping so that you can make deliberate choices for your particular life.
Matt Dworetsky, president of Dworetsky Financial, helps clients maximize their retirement by creating personalized plans for their goals. Whether you are a federal employee, small business owner or any person looking to set up your retirement the right way, Matt will help create a legacy and plan for retirement pitfalls.
Ronit Enos (@ronitenossalonsprofits) is an award-winning business strategist and ideation coach practicing innovative approaches that allow entrepreneurs to achieve optimal freedom and success. Salon Cadence is her unique program that teaches business owners how to manage cash flow, and gain clarity and confidence on how to run their businesses.  Her philosophy allows owners to reduce time spent on minutia and focus approximately 85 percent of their efforts on business development to achieve financial freedom and success.
Mercedes Forrest (@bottomlinefinances) is a Personal Finance Educator who navigates professional women in the spirited pursuit of using their finances to create financial freedom and a fuller life. In the spirited pursuit of creating her own financial freedom, she paid off $100K in student loan debt, built a five-figure emergency savings account in addition to creating a fund which allowed her to take a four-month unpaid sabbatical to travel.
Stephanie Hammell is an Investment Advisor through LPL Financial, the largest independent broker-dealer in the nation. She is also the founder of the Health and Wealth Society, a 5-star rated organization dedicated to help improve the physical, mental and spiritual wellbeing of the community through fulfilling experiences. According to a LinkedIn study done by J.P. Morgan Asset Management, Stephanie was ranked #1 as the most endorsed person at LPL Financial for Financial Planning (data provided by #instats).
Creator and financial coach at Fika Finance (@fikafinance), Ahna Holloran is devoted to empowering you in your financial journey. She’ll guide you away from stress and anxiety, giving you tools to take control of your finances and forge a healthy relationship with money.
Hanna Horvath (@Hanna__Horvath) is a personal finance reporter at Policygenius Magazine (@policygenius) in New York City. She previously wrote for KNBC in Los Angeles and has a journalism degree, with an emphasis on public health, from Syracuse University.
Douglas Keller has been a financial expert for 20 years, helping people reach financial stability. He works for Payless Power (@paylesspower) where he continues to help people save money on their bills every month.
Andy Misek is the Digital Marketing Specialist at Finance Guru, a comparison website for loans, credit cards, insurance, banks, and home utilities.
Keina Newell (@wealthovernow) is the founder and financial coach at Wealth Over Now. She was her first client. She came out of school with $75,000 in debt, making $33,000 so she started having money dates with herself to align her income with her goals. By the age of 28, she bought her first home and paid off her student loans a few years later. She now empowers single young professional women to gain clarity and confidence with their money.
Mike Pearson is the founder of Credit Takeoff, a research-driven personal finance site for people looking to improve their credit. A proud member of the 800 Credit Club, Mike writes about practical steps that everyday consumers can take to increase their credit scores. His advice on credit repair and credit scores has appeared in QuickBooks, Go Banking Rates, and MortgageLoan.com.
Justin Pogue currently works as a real estate consultant based in San Jose, CA.  His services are sought after by property management companies, investors, and real estate consulting companies alike.  Since 2003, he has developed and managed apartments, rental homes and student housing across the United States.  Justin holds a degree in Economics from The Wharton School at the University of Pennsylvania, and an MBA from The Darden School at the University of Virginia.
Robyn is a mother and someone who feels passionately about helping people with their finances. She has taken her personal experience, advice she was given, things she has learned on her own and in her MBA studies and tries to share what she feels is important financially on her blog, A Dime Saved (@adimesaved).

5 Tips for Paying Off a Cash Advance

If you’re not careful, taking out a cash advance to bridge a short-term financial gap could leave you in a long-term financial bind.

One of the biggest selling points for cash advances is their simplicity: You borrow a couple hundred bucks, and a few weeks later you pay it back plus interest. That’s it!

Actually, no. That’s not it. If you’re not careful, that cash advance could land you in an ever deeper financial hole than the one you started in—even if you pay it off on time.


Here’s how cash advances work.

Are you familiar with payday loans? Because cash advances and payday loans are basically the same things. They are the “flammable” and “inflammable” of the short-term lending world.

Payday cash advances are short-term, small-dollar no credit check loans that are intended to help “tide borrowers over” until the next paycheck. Well, at least that’s how they’re supposed to work. The truth is a little more complicated.

These types of bad credit loans usually come with an average loan amount of only a few hundred dollars—although the total amount you can borrow will vary depending on what state you live in. They also charge interest as a flat fee, with an average interest charge of 15 percent.

The enticing thing about a cash advance loan is that it lets you get out of debt quickly—but that doesn’t mean that paying one off is easy. In fact, taking out a cash advance loan could easily land you in debt for hundreds of days instead of a mere dozen.

1. Plan ahead.

Unlike installment loans, which are paid off in a series of regular payments over time, cash advance loans are repaid in a single lump sum, often only a few weeks after the loan is issued. Payment is usually made via a post-dated check or an automatic debit agreement.

Given all this, it might seem like repayment is something you don’t have to worry about. But that’s not the case. If you don’t plan ahead, that payment could end up landing you in a predatory cycle of debt. (More on that later.)

Your payment for this cash advance loan shouldn’t be a “set it and forget it” kind of thing. Look at your monthly budget and make sure that you not only have the money in your account to cover the payment but that you’ll also have enough money in your account afterward to cover the rest of your bills.

If you’ve already taken out the loan but find that your payment will blow yet another hole in your budget, then see where you can cut back in order to patch it up. The more on top of your finances you are—even when dealing with a small-dollar cash advance loan—the less likely you are to get burned.

2. Save money.

When you take out a cash advance, the due date is probably going to be set for your next payday. So you don’t have to worry, right? Those funds will just come out of your next paycheck and you’ll be good to go.

Not so fast. It’s all too easy for this mindset to lead you down a dangerous path that ends in the jaws of a predatory debt trap. With those lump sum repayments that withdraw hundreds of dollars from your account at once, you might find yourself facing another budget shortfall sooner rather than later.

So instead, save whatever money you can in advance of your loan’s due date. The more money you can save, the bigger the financial cushion you’ll have once those funds are withdrawn from your account. That way, you won’t need to take out a second cash advance loan to cover paying off your first one.

3. Don’t pay late—or early.

With any loan, making your payment on-time is a good rule to follow. Late payments mean extra fees and charges; and with many loans, it could end up negatively impacting your credit score.

Even though most cash advance lenders don’t report payment information—meaning your score won’t be affected—an extra charge on top of the interest you already owe is the last thing you need.

But here’s where cash advances are a little different: Paying them off early won’t save you any money either.

With standard personal loans and credit cards, interest is accrued slowly over time. The longer the loan or card is outstanding, the more interest the borrower owes; and the earlier that the borrower can pay it off, the more money they’ll save overall.

Not so with cash advances. Since they charge interest as a flat fee, the amount you owe will be the same on the day the loan is issued as it will be on the day the loan is due. This means that paying off your cash advance loan ahead of schedule carries few financial benefits—if any.

4. Don’t roll it over.

One of the main reasons steps one and two on this list are important is because they’ll help you out with this step. Rolling over a cash advance loan is one of the best ways possible to end up trapped in an ongoing cycle of debt.

Rolling over a cash advance is pretty simple: You have to pay a portion of what you owe—oftentimes just the interest that’s due—and in return, you get a brand new loan term. Instead of paying off the loan now, you can pay it off two weeks from now!

But here’s the problem: That new loan term doesn’t just mean a new due date, it also means a new interest charge. This effectively doubles the cost of your loan in a single sitting. If you were paying $45 to borrow a $300 online loan, now you’re paying $90, without actually borrowing any additional money.

As you might be able to tell, the interest rates for cash advance loans seem reasonable at first. But they add up fast. In fact, the annual percentage rate (APR) for a two-week cash advance with a 15 percent interest charge is a staggering 391 percent!

If you get into the habit of rolling over your cash advance loans, you’re basically throwing money away. What’s worse, those regular payments you’re making to extend the due date are making it harder and harder to save up the money you need to pay the loan off altogether!

That’s how a cycle of debt works. And it should come as no surprise that loan rollover is actually banned in many states for exactly this reason.

5. Build an emergency fund.

Okay, this one is cheating slightly. Building up a well-stocked emergency fund won’t help you pay off a cash advance, but it will help you escape the need for any additional cash advances in the future.

Unlike money that you have saved for retirement, an emergency fund is there to help you during, well, emergencies! It’s often kept in cash somewhere that you can easily access it.

While many experts recommend having an emergency fund big enough to cover six month’s worth of expenses, that’s probably a long way down the line. If you’re just starting your first emergency fund, aim for $1,000. That should help cover many surprise bills or budget shortfalls you might encounter. Goodbye cash advance, hello financial stability!

Think about your emergency fund like it’s your own personal lender. You get the money you need when times are tough, then you pay the money back when times are good. The best part: You don’t have to pay any interest at all!

To learn more about budgeting, saving money, and earning extra income, check out these related posts and articles from OppLoans:

Do you have a personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

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Is Entrepreneurship Right for You?

Starting your own business can be massively rewarding, but that doesn’t mean that being an entrepreneur is right for everyone.

The legend of the self-made business person looms large across American history. But starting a business isn’t for everyone; it comes with its own challenges and advantages.

So is it the right choice for you? We spoke to the experts to find out what factors you should consider if you think you might want to become an entrepreneur.


The upsides.

While owning your own business may not be an ideal goal for everyone, or even most people, it does come with certain advantages. That’s why some people choose to go into entrepreneurship in the first place, after all.

“Being an entrepreneur is challenging but also very rewarding,” explained Leslie H. Tayne Esq. (@LeslieHTayneEsq), founder and head attorney at Tayne Law Group (@taynelawgroup). “When you’re first starting out, there’s a lot of sacrifices involved and a lot of difficult decisions to make. You’re going to face a lot of obstacles and have to figure out the best answers.

“But getting your business up and running and achieving all of the milestones, both big and small, along the way feels incredible and makes all of the work worth it. In addition, you’re in control of your own destiny and your own livelihood. That can be a scary thought, especially when success isn’t guaranteed, but that makes the success even sweeter.”

Dave Munson, founder and CEO of Saddleback Leather (@saddlebackbags), listed what he sees as the rewards of entrepreneurship:

  1. “Knowing that you tried something bold and courageous. Not many people do that.
  2. “You taught your kids to step out and to take risks and not be afraid of failing.
  3. “You grow in your understanding and wisdom and so become a better person.
  4. “It will bolster your resume because of what you learned that you didn’t know about before. You’ll be able to talk shop with any other business owner because you’ll see the business as a whole rather than just a department of a business.”

The downsides.

If starting a business was a magic ticket to as much money as you wanted, everyone would be doing it. But there are many drawbacks. What are they?

“There is no easy path to success in entrepreneurship,” warned George Kuhn (@gwkuhn3), president of Drive Research. “It takes work and a lot of it.”

“In order to be successful, it takes a lot of sacrifices. Sacrificing a steady paycheck. Sacrificing time with friends. Sacrificing time with family. Sacrificing your nights and weekends. It boils down to commitment and the willingness to put in the time and effort.”

You’ll also have to have things to sacrifice if you’re looking to make sacrifices. If you don’t have the resources to start a business or the credit necessary to get the resources to start a business, you won’t be able to start a business.

So is it right for you?

Aside from whether you actually have the means to start a business, there are other factors about yourself to consider.

“When deciding if entrepreneurship is right for you, a lot of things should be taken into consideration,” advised Anja Smith (@AnjalogAnja), educator and writer with TradebizToolbox.com. “For instance, are you comfortable making decisions without all of the information? Entrepreneurs make judgment calls all day long.

“Are you good at asking for help and delegating? A lot of people think they want to own their own business because they like being in charge. But you can’t do it all—a good entrepreneur is resourceful but also knows how to ask for help and hand off tasks that they can.

“Of course, risk is a part of entrepreneurship. In that vein, one must consider personal discipline and motivation. The risk of opening a business is much less if you are capable of staying organized and self-motivated. No one is going to tell you to get out of bed but you!”

How to prepare.

Have you gotten this far and decided you’re still onboard? Then we’ll leave you with some more advice to help you get started.

“The number one thing I’d recommend for potential entrepreneurs is to take the time to understand the business you’re considering, especially if it’s a new business model,” James McGrath, co-founder of the NYC real estate brokerage Yoreevo (@yoreevo), told us.

“If you’re opening a bakery, that’s pretty straightforward – you can tally up rent, equipment costs, ingredients, etc and estimate how much you can sell your product for to understand how much business you’ll need to do in order to make money. Of course you want to make sure you have the best information possible when making those estimates but the information is generally available.

“If you’re thinking about doing something new, you should think about how it will work but more importantly, also what could go wrong. That was most of our homework before we started Yoreevo. We needed to understand how property listings are distributed, how to participate in that system, what the requirements are, how we could be excluded, etc because if anything went awry there, nothing else matters.

“You should spend a significant amount of time understanding both your business and the industry before starting a company. If anyone decided to become an entrepreneur overnight, they have not done enough homework.”

Beyond research, there are other reasons not to immediately jump into the entrepreneurship pool headfirst.

“One of the most effective ways to lower the risk of beginning an entrepreneurial venture is to ensure that you continue in your present working capacity to continue to earn a steady income until your entrepreneurial venture is sustainable,” recommended Nick H. Kamboj (@nkamboj), CEO of Aston & James, LLC .

“Furthermore, you can further minimize entrepreneurial risks by initially budgeting for approximately no sales for a period of 6 months and to have enough funds to cover the operating costs. Hence through financial prudence, an entrepreneur can have a considerable amount of confidence knowing that they have a solid financial foundation and thus can focus on the creative aspect of their endeavor.”

And be certain to have all of your bases covered.

“Get insurance,” urged Tayne. “Make sure your business is insured. If it’s not, you could be in a major financial disaster if a crisis occurs. You don’t want to be at risk of losing everything for both your business and yourself.”

Now if you do decide to go into business, you’ll be a bit more prepared. Perhaps we’ll be reading your content blog one day! To learn more about how you can jumpstart your career and up your earning potential, check out these other posts and articles from OppLoans:

Do you have a  personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

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Contributors

Nick H. Kamboj (@nkamboj) is the CEO of Aston & James, LLC an academically focused consultancy and is also the CEO of Aston & James Publishing. He is the author of 6 books and has also previously held leadership and executive positions at Microsoft, Xerox, and Accenture respectively. Nick is the recipient of the Microsoft Most Valuable Player Award, Microsoft CPE Award, Microsoft Pinnacle Award, Employee of the Year Award (LANAC), Chandler Case Award (Booth), Bright Idea Award (LANAC), Implementation Award (LANAC), Global Awareness Award (Booth), and two Illinois Governor commendations.
George Kuhn (@gwkuhn3) is the Owner & President of Drive Research, a Syracuse-based market research company. In under three years, his company has grown to 10 employees and works with organizations across the globe.
James McGrath is a co-founder of Yoreevo (@yoreevo), the tech-driven NYC real estate brokerage dramatically lowering transaction costs for buyers and sellers. Prior to founding Yoreevo, James worked in finance, most recently at Citadel where he researched the housing market.
Dave Munson is the founder and CEO of Saddleback Leather (@saddlebackbags) and their factory in Mexico, Old Mexico Manufacturing. He is passionate about using his business to impact lives and is also passionate about spreading the quality message. He lives in the country outside of Fort Worth, Texas in African Safari tents with his wife, Suzette and two kids and three Labradors.
Anja Smith (@AnjalogAnja) is a plumber’s daughter and advocate for small business sanity. She is a speaker, author, and entrepreneur at TradebizToolbox.com.
Leslie H. Tayne, Esq. (@LeslieHTayneEsq) has nearly 20 years’ experience in the practice area of consumer and business financial debt-related services. Leslie is the founder and head attorney at Tayne Law Group (@taynelawgroup), which specializes in debt relief.

Building Savings or Paying off Debt: Which Should You Prioritize?

Building up savings and paying down high-interest consumer debt are both critical financial cornerstones, but which one you should you put first?

There are many endless debates that have resonated throughout all of human history. Ketchup versus mustard. Fries versus onion rings. Dogs versus cats. Scots versus Scots versus other Simpsons references.

But perhaps no debate has baffled humanity quite like the one between savings and debt. If you’ve got enough income to contribute a healthy amount to building up both your savings and your debt, then bully for you—but unfortunately, most people will have to make some hard choices.

And given that building your savings and paying off your debt are both crucial financial cornerstones, it can be tough to know which you should consider more important.

There’s not necessarily one answer that will fit everyone’s situation. That’s why we spoke to the experts to find out what you should consider when considering your financial priorities.


The case for building your savings:

While paying off your debt is undoubtedly important, if you don’t have any savings, you’ll be at risk for any number of unseen events that leave you relying on high-interest no credit check loans like payday loans and cash advances to make ends meet—driving you further into debt.

“Whether paying off debt or prioritizing savings is a better idea depends on your particular situation,” Associate Financial Planner Anna Keisler explained.

“Let’s start with your current situation. If you have extra cash to either save or put towards debt, look at your current savings amount. While it may be appealing to put all of your extra income towards your debt, it may not be the best idea.

If you don’t have three to six months worth of expenses saved up in an emergency fund, you should focus on building up the emergency fund and just paying minimum debt payments until you have an adequate reserve set aside.

“Remember, life happens whether you’re ready or not. It doesn’t help to spend $2,000 paying down debt, only to have a $2,000 car repair that you have to take out debt to pay for.”

The case for paying off your debt:

As Keisler said, what you should prioritize will always depend on your situation. Which is what all of our experts generally agreed on. Though just as Keisler leaned towards savings, others leaned a bit more towards paying down your debt.

“When choosing between building up savings or paying off debt, my advice is to pay off any existing debt as quickly as possible,” suggested Deborah Sweeney (@deborahsweeney), CEO of MyCorporation.com (@mycorporation).

“From credit cards to student loans, pay off the debt that has the highest interest rate first and then work your way through debt with lower interest rates. Doing this improves your credit score and makes you a more attractive candidate for other financial opportunities later on.”

The debt repayment method that Sweeney’s referring to is called the Debt Avalanche. Check out this post to learn more.

Josh Hastings, the founder of Money Life Wax (@moneylifewax), got into some of the different types of debt and how that should impact your priorities:

“High-interest consumer debt and student loans should be priorities before investing. Improving your debt to income ratio is important and freeing up your cash flow by paying off your debt allows you to throw more into investing down the road.

“By focusing on debt payoff you also develop good financial behavior habits that teach you to focus on priorities instead of variable spending. Once those good financial habits are established and the debt is paid off you will be more committed to investing/saving.”

And he wasn’t the only one to explain how different kinds of debt might require different levels of urgency.

“Prioritize paying off debt before building up savings,” recommended Katie Ross, Education and Development Manager at American Consumer Credit Counseling (@TalkCentsBlog). “The longer you hold your debt, the more you will pay in interest in the long run.

“Focusing on paying off your debt allows you to reduce the amount paid to debtors, thus enabling you to more effectively save in the long run.

“However, prioritizing debts like mortgage payments are an exception. Mortgages are installment loans, and while paying extra can help you repay your loan faster, as long as you can make your monthly payments, growing your savings may take the priority to paying extra.”

The case for … both:

Of course, the best thing you can do, if it’s financially feasible, is finding a balance between paying down your debt and building up your savings.

“While it’s important to pay off debt, you also want to ensure that you have savings for the future, emergencies, and to avoid going into more debt into the future,” urged Ross.

“Create a budget and make a debt repayment plan. Decide how much you are going to pay towards each debt every month. Then, based on how much money you have left over, choose a percentage to put towards savings each week or month.”

At the end of the day, whether you prioritize savings or debt will depend on your specific situation, as all of our experts made clear. You’ll need healthy savings and as little consumer debt as possible to keep your finances on steady ground and keep bad credit loans like payday or title loans away from you.

Want to learn more about saving money and getting out of debt? Check out these other posts and articles from OppLoans:

Do you have a  personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

Visit OppLoans on YouTube | Facebook | Twitter | LinkedIN | Instagram


Contributors

Josh Hastings is a former High School Athletic Director at the secondary level who shifted his focus in 2016 to focus more effort on his entrepreneur endeavors. In 2017 he founded Money Life Wax (@moneylifewax), a personal finance site dedicated to helping millennials with student loans. With an emphasis on money and finance behavior, Josh started Money Life Wax to help millennials realize there are other ways to make money and be happy in the 21st century.
Anna Keisler is a Financial Planning Associate with SG Financial Advisors in the Atlanta, GA area.  When not assisting with financial planning, you can find her at the gym or trying new restaurants. She currently resides in the metro Atlanta area with her husband and two cats.
Katie Ross joined the American Consumer Credit Counseling (@TalkCentsBlog) management team in 2002 and is currently responsible for organizing and implementing high-performance development initiatives designed to increase consumer financial awareness. Ms. Ross’s main focus is to conceptualize the creative strategic programming for ACCC’s client base and national base to ensure a maximum level of educational programs that support and cultivate ACCC’s organization.
Deborah Sweeney (@deborahsweeney) is the CEO of MyCorporation.com (@mycorporation). MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best.

How to Budget and Save Money When You’re Making Minimum Wage

Finding extra money to put aside isn’t easy when you’re working a minimum wage job, but that doesn’t mean you can do it!

If you’re having a tough time living off minimum wage, you’re not alone. Adjusting for inflation, the federal minimum wage hit its high point in 1968. The $1.60 minimum wage of that era would be worth around $10.69 today, much higher than the current minimum wage of $7.25.

Unfortunately, while the minimum wage has not risen with inflation, the cost of rent, food, education, medical care, and pretty much everything else has.

And it’s not like teenagers are the only ones working minimum wage jobs, either. In fact, it’s just the opposite. As recently as 2015, less than half of those working for the federal minimum wage were between the ages of 16 to 24.

If you’re relying on the minimum-level wages to get by, odds are good that your finances are pretty tight. Maybe you’re relying on high-cost cash advances and payday loans to get you through till your next paycheck—and that’s putting you even further behind!

The best way to protect yourself from those predatory no credit check loans is to build up your savings, but saving money when you’re working for minimum wage isn’t easy! That’s why we asked some financial experts for their advice …


Spot your expenses.

The first part of getting any budget in order is knowing how much money you currently have coming in and how much you’ve got going out. As long as you’re keeping track of your paychecks, you know what you’ve got going in. But it can be easy for anyone to miss how much they’re spending if they aren’t paying close attention.

“Many of us have no idea what our expenses add up to every month,” advised Carla Dearing, CEO of online financial wellness service Sum180 (@mysum180). “When you know where your money goes, you are in control and can be thoughtful about aligning spending with priorities.

“Use an online money tracking service, like Mint or Quicken, to see all your financial accounts in one place and even create your first budget. Doing this, you will always know where you stand financially.

“Mint, for example, gives you complete access to your data through the website and your mobile device, whether you use iOS or Android. Better yet, Mint keeps an eye on your money for you. It even sends alerts to remind you to pay your bills or when you go over budget.”

And you’ll want to be extra careful to make sure you don’t miss anything.

“Audit your spending to eliminate hidden expenses,” Dearing suggested. “It’s one thing to identify and eliminate the expenses you know about, but what about the ones you don’t know about or notice?”

She offered two examples of hidden expenses that could be secretly sucking your bank account dry:

“If you haven’t done a serious credit card review in a while, you may be surprised to see how many charges are automatically showing up on your credit card every month and every year. They’re not necessarily fraudulent; they may be charges you legitimately signed up for long ago, and then never thought about again.

“Netflix; a gym membership from an old address; subscriptions to professional publications … You may not notice right away, but automatic charges like these all add up, especially over time. The expenses may be fine if you truly need and can afford them, but often it’s a case of out of sight, out of mind.”

Start cutting out expenses.

Once you’ve identified where your money is going, it’s time to start figuring out where you can make some cuts, if possible.

“You probably hear it everywhere but it is such a necessary step in your financial plan,” said Michael Outar, Savebly (@savebly) founder, of cutting down on your spending.

“First look at your ‘wants’ column you created, where can you cut costs here? Maybe it’s eating out, your Netflix subscription, Amazon Prime, new clothes, etc … These are all things you don’t need but want.

“To improve your financial situation you need to practice delayed gratification. Cut down on wants now so you can pay off your debts/expenses and save money for a rainy day.

“Next, find ways to cut down on those necessary expenses. For example, you have a credit card with high interest, of course, you have to pay it off, but try negotiating with the credit card company to lower the interest rate. Another example is car insurance: shop around to find a better deal.”

Dearing also gave us her take on cutting down: “Identify two or three regular monthly expenses that you can do without—then delete them. For one person, the eliminated expense may be premium cable and a too-generous data plan. For another, it may be online shopping and extra spending on eating out.

“Be creative so you don’t feel deprived. If you love to eat out, challenge yourself to make delicious meals at home six nights a week. Your one restaurant meal per week will feel more special and you’ll save a ton of money.”

And we don’t need to tell you how much of your paycheck goes to rent, but it’s worth bringing up anyway.

“Live with roommates and split costs when possible,” recommended Chad Rixse, founder of Far North Capital (@farnorthcapital) in Anchorage Alaska. “Keep rent costs in a favorable place by living with roommates and reduce everyday costs on food and household items by splitting the costs with them.”

Plan ahead.

It isn’t easy to plan for the future when you’re living paycheck to paycheck. But even just a little planning can make a difference.

“Schedule due dates for financial obligations around paydays,” Rixse told us. “While rent typically has little flexibility in when it can be paid, most other monthly financial obligations will allow you to change the date they’re due. Try to schedule as much of these around paydays to ease cash flow and minimize potential cash crunches.”

Rixse also explained the benefits of short-term planning when it comes to restocking on food:

“Plan ahead for the grocery store: If you’re buying groceries on the fly, it’s much harder to stick to a specific budget, and much easier to overspend. Plan your meals for the week ahead of time and have a list prepared before heading to the grocery store. Buy in bulk and go for frozen foods when possible without sacrificing quality.”

Quoth the saving.

How are you supposed to even think about saving when you’re barely getting by? Well, it’s not easy, but the less you’re getting paid, the more important it is to have savings. It’s an unfair contradiction.

“If you are earning a low wage, don’t let it discourage you from saving,” urged Money Elevation Coach Roslyn Lash (@RosLash). “Temporarily ignore the suggestions about saving a minimum of 20 percent. It is more important that you save something, and no amount is too small.

“When I was in college I received a $7.50 stipend per week. I saved .50 per week. It wasn’t a lot of money nor was it an uncomfortable amount to set aside, but those cents accumulated and it helped to develop a habit of saving. It gave me a sense of pride.”

Try to get get the numbers up

Getting a new job isn’t the easiest thing in the world—especially when you’re working a minimum wage job with inflexible hours that make your job search even harder. But if you’re really struggling, it’s worth looking into all your possible options to bring your income up.

“Saving money is great but when you are making minimum wage there is only so many ways to cut costs,” suggested Outar. “You need to find ways to make more money, ask for a raise at your job, get a new job, take on some gigs for more income, etc … Also, make simple changes like opening a high-yield saving account to get some interest on your money.”

Living on minimum wage is difficult, even before you start considering all of the unexpected occurrences that could happen. But if you can start getting a handle on your budget, you can hopefully get a good upward spiral going—and kiss those predatory bad credit loans goodbye!

If you’re looking to earn more money—either through a side hustle or by getting a better job—check out these other posts and articles from OppLoans:

Do you have a  personal finance question you’d like us to answer? Let us know! You can find us on Facebook and Twitter.

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Contributors

Carla Dearing is CEO of Sum180 (@mysum180), an online financial wellness service designed to be simple and affordable. She is also CEO and Managing Director of IMC, a marketing services agency. Previously, Carla held senior executive positions with at the University of Louisville, Community Foundations of America and Investors Capital Services. Earlier, she worked at Morgan Stanley and American National Bank & Trust Company. She holds an MBA from The University of Chicago Booth School of Business and a BA from the University of Michigan, Phi Beta Kappa.
Roslyn Lash (@RosLash), the Money Elevation Coach, is an Accredited Financial CounselorⓇ, Real Estate Investor, and the Author of The 7 Fruits of Budgeting. She works virtually with single women helping them to gain clarity around their finances, reduce debt, and increase their net worth so that they can live a more abundant life. Her advice has been featured in national publications such as USA Today, Forbes, TIME, Huffington Post, Los Angeles Times, and a host of other media outlets.
Michael Outar is the founder of Savebly (@savebly), a blog about personal finance and personal development. He took control of his money and paid off $24,000 in student loans before 24 years old! Michael believes that if you make simple lifestyle changes you can drastically improve your financial life and he wants to show you how.
Chad Rixse was born and raised in Anchorage, Alaska until the age of 18. He then spent the next 11 years in Seattle where he graduated from the University of Washington and got his start in the financial services industry. Chad has since moved back to Anchorage to found Far North Capital (@farnorthcapital) and continue pursuing his lifelong passion for helping others. He finds the positive difference he’s able to make in people’s lives the most rewarding aspect of his work. Outside of work, Chad loves enjoying all that Alaska has to offer. In the summer, he loves to camp, hike, fish, and golf. In the winter, he downhill skis and gets to the rock gym a few times per week. Chad is also active in the Anchorage Chamber of Commerce’s Young Professionals Group.