5 Numbers More Important Than Your Income

We love talking about numbers, and tend to fixate on them — particularly when it comes to how much we earn. “I’m a six-figure freelance designer,” or, “If I take this job, I’ll earn Sh. 100,000 more.”

We oftentimes measure our worth based on how much money we rake in. It can be easy to feel like you’re behind, or a grade-A underachiever when your cousin or bestie or partner makes more than you. Sure, your income is important, but there are other numbers that deserve a closer look than how much cash you earn. When it comes to financial wellness, here are five metrics that trump your income.

1. Cost of Living Index

Bottom line: the salary you earn living  in one part of the county might not stretch as far living in another part of the country. How much you make is relative to a number of things — one being the cost of living in your stomping grounds. So the next time someone says they’re making Sh. 120,000 but live in Nairobi, chances are they aren’t enjoying the same standard of living as those in less-expensive parts of the country.

2. Compensation Package

When it comes to your work salary, it’s also important to look at the entire kit-and-caboodle for your benefits package. Your employee benefits can make up to one-third of total compensation costs. That includes health benefits and an employer-sponsored retirement package.

If your workplace offers an employer match for retirement savings, that boosts your total compensation. You might also get discounts on gym memberships, and group rates on health insurance, life insurance, and even financial and legal advice.

Besides your take-home pay, you’ll want to factor in the full suite of benefits that your employer offers. In turn, that makes a difference as to how much you have to work with each month.

3. Happiness Report

Yes, happiness is a difficult thing to pinpoint. But in recent years metrics have been developed to gauge how happy nations are as a whole, giving us a good idea of well-being and work-life balance.

The U.N.’s World Happiness Report uses data from the Gallup World Poll, which surveys citizens in 156 countries on how happy they feel — to determine the overall well-being of a country’s citizens. The Cantril Ladder, or Cantril’s Self-Anchoring Ladder of Life Satisfaction, is made up of 10 rungs. The bottom of the ladder equals 0, and represents the worst possible life for you. The top of the ladder equals 10, and equates to the best possible life for you.

Per the Gallup World Poll, Finland, Norway, and Denmark, respectively,  ranked highest for happiness. The bottom three countries were Afghanistan, Central African Republic, and South Sudan. Where does the Kenya fall? 121 out of the 156.

Consider doing your own happiness assessment using the Cantril Ladder. Are you living your best life? What does it exactly mean for you to be living your best life? What steps can you make in the right direction to boost your well-being?

4. Net Worth 

Remember: Your income isn’t a measure of your wealth. Your net worth is. To figure out your net worth, tally up your assets — this includes your investments, how much you have sitting in your savings, and any  property, like your home or car. Next, tally up your debt. Subtract your debt from your assets and property and you have your net worth.

Net worth gives a full picture because it factors in how much money you make, how much debt you owe and how quickly you’re paying it off. It’s what you have left at the end of the day that’s for Future You. Having a positive net worth shows that you’re financially healthy.

YOU MAY ALSO LIKE: 14 WAYS TO INVEST SH. 10,000

5. How You Spend Your Money

Are you putting your paycheck toward paying off debt, helping your family, or are you squandering it? Not only does how you spend your money affect your progress toward net worth, but it’s ultimately an indicator of what you value.

For instance, while I am typically pretty frugal when it comes to clothes, I spend more on high-quality, nutritious foods. That’s because my health, especially as I get older, becomes more important. I recently splurged on some fancy cookware because I’ve been preparing more meals at home. I also pay for weekly yoga classes at a nearby studio. Because my physical health is important, I’m willing to spend more on food and exercise.

There you have it. Five metrics that are more important than your income. As you can see, while your take-home pay does play a key role in your financial well-being, there are other ways to measure your financial success.

This article was originally published at HiCharlie

How Can You Use Debt To Build Wealth?

Is Debt Bad?

Generally, people think of debt as something to avoid. Debt usually means “bad” and no debt means you are better off financially. So the idea of using debt to build wealth can seem a bit dubious. Can you really build wealth using debt?

 

In order to answer this question, we first need to know that there are two kinds of debt. There is good debt and bad debt. And though the thought of debt being “good” seems counter-intuitive, the fact remains that some debt is actually good.

What is Good Debt?

Good debt is a debt that will increase your finances over time. So something like a small business loan is good debt because you use the money you borrowed to build up your business, thus, bulking up your finances in the long run. Good debt also has a smaller interest. So while you are expanding your business with your small business loan, you aren’t paying an exorbitant amount in interests. This type of debt also allows you ample time to pay back your debt.

What About Bad Debt?

Bad debt is the exact opposite. This kind of debt has astonishingly high-interest rates and usually involves some form of collateral. There is also a very short turnaround time for you to pay your debt, plus interest, back. Some examples of bad debt are credit card debts, car title loans, and payday loans. A loan of Sh. 10,000 will have you paying back nearly the same amount in interests alone. Bad debt will sink you financially faster than a boat riddled with holes.

How Can You Use Debt To Build Wealth?

So now that you know the two types of debt, you can probably guess which one you can use to build wealth. The question now is “how”.

 

A good way is the example stated above. Use debt to expand your business. If you do not have a business, use debt to invest. It could be in property or in various investment funds. Whatever you decide to invest in, it is important to know your risk tolerance and how much you are willing to invest.

 

The principle of leverage can help you out as well. Say for example you are investing 100 dollars of your own with an expected return rate of 10%. This will earn you a return of $10. If you borrowed money with an interest rate of less than 10%, you can add to your initial $100 investment and still earn from it despite having to pay off the debt you used to invest. You can diversify your financial portfolio using this strategy as well; borrow to invest in different institutions and different kinds of investments.

 

There are a few to consider when using debt to invest. Think of your tolerance for debt. Can you realistically pay off your monthly payments? Can you pay off that debt within the time frame or do you need more time? Consider your cash flow as well. You need to make sure that you have enough income to pay off your debt.

To learn about the available investment options, click https://bismart.co.ke/blog/14-ways-to-invest-ksh-10000/

 

So the answer to the question can debt be used to build wealth is yes, you can. You just need to choose the right kind of debt, invest in the right things, and keep in mind your debt tolerance.

This article was originally published by Uncapped Mortgage.

 

10 Ways to Save on Insurance

Having insurance is great when the universe decides it’s time to give you a major (or even minor) problem. However, when you can get a policy for practically anything, it’s easy to spend more on protecting your life than living it. No need to worry, though. We can help you keep these expenses under control while actively ensuring that you save on insurance.

Here are ten ways to get sufficient cover for less:

1. Assess Your Needs

Rather than buying coverage simply because you think you should, it’s important to consider your specific situation. Your life today and your future plans should dictate what insurance policies you need and how much coverage is appropriate.

Although there are lots of factors to consider for each type of insurance, you should think about the following to determine your needs:

  • Your assets: More assets (cash, investments, businesses, property, etc.) may mean more insurance
  • Your family: Having dependents typically requires more coverage
  • Your health: Poor health could necessitate a more robust medical policy or more life insurance

2. Shop Around

Before committing to any policy, compare pricing from multiple companies.  Just visit this page to start comparing. Additionally, you can compare benefits as well. You may be surprised at how much variation you see. However — don’t just set it and forget it. It pays to do this before every policy renewal.

A screenshot of Bismart's home page. You can save money on insurance by comparing insurance prices from different insurance companies in Kenya at https://bismart.co.ke. Compare benefits as well. Please note: Expensive does not mean more benefits.

3. Bundle Policies

As you get quotes for coverage, ask each company for a bundle price on the types of insurance that you need. You could score big savings and simplify your bill paying process.

4. Get a Discount by Association

Sure, you can likely get a deal on health, life, and disability insurance through your employer. But did you know that you may be eligible for discounted group rates on home and auto policies, too? Check with your HR department!

5. Raise the Deductible

Increasing your policy’s deductible could be an easy way to save some cash each month. However, be sure that you can cover the higher deductible if you ever need to make a claim.

6. Keep Your Credit Report Clean

A poor credit history could cost you. Insurers may assign you an insurance score (similar to a credit score), with lower scores resulting in higher premiums. They believe, right or wrong, that a low score indicates irresponsibility and therefore more risk.

7. Save on Car Insurance

If you want to own a car in Kenya, you need car insurance. The good news, however, is that you can defray the expense with tons of different discounts. You may be able to save cash for being a student, taking a defensive driving course, driving a car with low miles, and more. Additionally, if your car is older and paid off, you may not need as much insurance. Remember: carry sufficient liability coverage to protect your assets.

 

8. Save on Homeowners/Renters Insurance

If you have a mortgage, you’re probably required to have homeowner’s insurance. To make this expense more budget-friendly, ask your insurer if they offer price breaks for having smoke detectors, a home security system, modern plumbing and electrical systems, etc. Many of the same discounts are available to renters, too.

Bonus read: Check out this article on determining how much coverage you could need.

9. Save on Life Insurance

If you have a family to protect or want to leave loved ones a little something when you’re gone, you may want to purchase life insurance. There are a few different types, each with their own pros and cons, but generally, the most affordable type is term life insurance. Term life insurance will pay your beneficiaries a specified amount if you die within a certain time frame (usually 10-30 years). There are a number of ways to save on life insurance such as paying the entire year’s worth of premiums upfront or getting a volume discount (aka getting more insurance for less money!).

 

10. Save on Health Insurance

It’s no secret — medical care is crazy expensive. However, adequate health insurance can save your wallet from a beating if you become seriously ill or injured.  If you’re in good health, don’t go to the doctor frequently, and have a cash reserve, consider saving money on your monthly premiums by choosing a plan with a high-deductible. You’ll pay the full tab if you go to urgent care with the flu or a sprained ankle. However, you’ll (hopefully) pay less overall each year due to premium savings. Additionally, you can also save money by using in-network providers and practicing healthy habits — like eating right, getting those steps in, and going easy at happy hour.

Final Thoughts

Insurance can be a significant line item on your budget, but there are many ways to minimize the expense. While this article isn’t an exhaustive list of ways to save, it gives you a good start to getting a comprehensive cover affordably.

This article was originally published at https://www.hicharlie.com

4 Money Lessons From Game of Thrones

GAME OF THRONES! THIS SHOULD BE FUN

Anyone here a mega-fan of Game of Thrones? *raises hand*

Unless you’ve been hiding under a rock, this series has been taking the world by storm and many of us are both excited and sad about the last season.

While you can marvel at the awesome costumes, cry when Daenerys Targaryen’s baby (aka dragon) Viserion was killed. Maybe you wince when skulls get crushed (too many to name here). Truth is, Game of Thrones has a lot to teach us about money. If you pay close attention, the dialogue and symbolic imagery weaved throughout the series can show you a thing or two about how to handle your money the right way.

Let’s take a stroll through the Seven Kingdoms, shall we?

THE LESSONS

Always Be Prepared

Spoiler alert: By the end of season seven the White Walkers are on the brink of breaking through the Wall and heading into Westeros.  While the Night’s Watch has done a decent job, they’re kind of helpless at this point. And White Walkers are super scary. Have you seen the Night King lately? He even has his own dragon of the dead now.

What can we learn from the dire situation in Westeros? There will always be circumstances out of your control when it comes to finances. A tree could suddenly fall on your roof (by the way, get a home insurance cover) or you could find out you need to replace the battery in your car. What you can control is how you react to ambiguous situations. Just like Jon Snow is actively trying to find solutions and  make weapons out of dragonglass, you too can arm yourself with things like an emergency fund. That way, when the unexpected happens, you’re well prepared for battle.

“THE IRON BANK WILL HAVE ITS DUE”

Pay What You Owe

As the Braavosi say, “The Iron Bank will have its due.” When Cersei Lannister took over the Iron Throne she inherited a debt to the Bank from those who sat before her of six million gold dragons. Fun, right?

No matter what kind of debt — whether it’s student loans, credit card debt, or your mortgage payment — you have to pay it back. Imagine how much freer you’ll feel seeing your debt balance inch closer towards zero. Paying off debt also means you’ll avoid serious damage down the line, like a super low credit score or possibly being sued for your debts.

While you don’t want to pull a Cersei and wipe out a whole family to take their money (RIP Tyrell family),  you’re smart enough to find a good solution to your debt repayment journey. Try to make more than the minimum payments — working overtime or starting a side hustle. Whatever it is, keep your eye on the debt repayment prize.

THERE’S MORE..

Create a Nest Egg

You know Daenerys Targaryen? The shy girl who ended up commanding a massive army and becoming mother to three dragons? Yes, her.  Daenerys Targaryen — Lady of Dragonstone, Protector of the Seven Kingdoms, The Unburnt.

When we first got to know her, Daenerys  was a shy girl about to be married off, given three dragons eggs as a wedding present. After her fortunes fall — aka her husband dies and she loses the support of those around her — the eggs hatch. Multiple times people offered to buy the eggs from her (tempting!) but she resisted, waited, and it paid off.

Now that her dragons are well-known and frankly, feared, she’s probably glad she kept those eggs. As as the dragons continue to grow, the more power she’ll have. She’s treated her dragons  like children, and in return she can leverage their powers.

Now you may not literally have eggs (probably wouldn’t be that helpful for you TBH), but you can build a nest egg. It could be as simple as setting aside $25 every paycheck and increasing your savings or building an emergency fund. Consider putting your nest egg into a high interest savings account or build your retirement savings with a 401k or Roth IRA such as your employer’s 401k.

THE IMPORTANT THING?

The important thing is to start making your money work for you. As your nest egg grows, you can feel safe knowing you can leverage it in times of need. Imagine that you’ve been saving diligently for a house and you have a sizeable amount set aside. The perfect house comes to market and you want to put in an offer. The 20 percent down payment you have helps avoid paying mortgage insurance. Additionally, it lowers how much you need to borrow, and gets you started on the right financial foot.

Knowledge is Key

There’s a reason why so many financial experts want to teach you about money: financial literacy is the stepping stone to improving your finances.

Be like Petyr Baelish, who has used his knowledge and smarts to move up the ranks (but maybe he shouldn’t be your role model (we all know what happens there). Or surround yourself with maesters— aka financial professionals — who you can provide professional guidance. Or channel your inner Tyrion Lannister who seems to thrive using his smarts.

Sure, ignorance is bliss, but it can also lead you down a dark path with your finances. You want to arm yourself with the basics of personal finance first, then continue to educate yourself before you make any huge financial decisions. Prepare yourself with the right tools to weather the storms when winter does come.

This article was originally published at https://www.hicharlie.com

Here Are 8 Ways to Stop Impulse Shopping

Impulse Shopping: We Are All Victims

Have you found yourself impulse shopping? Raise your hand if you’ve gone into a supermarket just to buy a pack of toilet paper and left with a full basket of stuff.

Hey, we’ve all been there. It’s fine to make light of it all, but when it comes time to look at your bank account, it’s probably not going to be fun.

Impulse shopping happens to the best of people, but it can lead to blowing your budget. Furthermore, it could lead you into missing financial goals, and even going into debt. Worst of all, you may regret purchases, leading to those pesky emotions known as shame and guilt.

Before you go hiding under a rock, vowing never to come out again — please don’t, the world needs your awesomeness — keep reading to find out what you can do to curb impulse shopping.

Forgive Yourself

We all make mistakes. It’s not helpful to dwell on them and beat ourselves up on the past.

The more negative self-talk you engage in, the more you’re going to shop impulsively again. If you feel like you can’t escape the desire of impulse shopping, you’ll end up blindly going into the store and tossing unnecessary items into your cart.

If you end up overspending, take some time to tell yourself it was a mistake and that you can become better with your money. One step at a time.

Notice Your Urges

… Shopping urges that is.

When you feel the need to shop — and it’s not because you ran out of toilet paper — take note. You can even go as far as marking it down in your note-taking app or a journal. The idea is to draw attention to it so that you can stop and think about why you feel the need to shop.

In most cases, the reasons are emotional. Maybe you’re going through a stressful time and want to do some retail therapy. Or you’re feeling a bit insecure at your new job and want to impress your coworkers. It could even be as simple as you celebrating your birthday, leading you to buy things you weren’t planning on purchasing.

The photo of a shopping cart full of Christmas shopping

 

Avoid Temptation

  • Here are some simple tricks to avoid the urge to buy things in store or online you don’t need: Block websites of your favorite retailers
  • If you need to purchase something, see if they have a pickup service, so you’re less tempted to be swayed by shiny displays
  • Don’t go to the mall
  • Give yourself a time limit when you do need to buy something, like 5 days to see if you actually want it
  • Take a different route to work if there are any stores you’ll see that may lead you to impulsively shop
  • Have hours where you’re not allowed to browse online (like past midnight, when you might not be thinking straight…)

Stick to a List

A lot of people end up making impulse purchase because they don’t have a plan. Of course, sticking to a list isn’t going to be 100 percent effective. It could, however, help deter you by having something you can reference.

Sticking to a list will require you do some advance planning on your part. For example, if you go grocery shopping, check your pantry to see what you items you need. Or if you’re buying new clothes, write down the types of styles, color and clothing item before you go try stuff on.

Try a 30-Day Challenge

Gamifying your finances can be a fun way to work towards a better financial future. Call it a “shopping ban,” “spending fast,” or something more fun. Whatever you do, see if you can challenge yourself to stop impulse purchases for 30 days.

If you do, make sure you get as specific as possible. Maybe you’ll only purchase necessities, but nothing outside of groceries, bills, etc.. Or you want to stop clothes shopping for the next 30 days. Consider making some rules or guidelines on what you can and can’t purchase during the challenge.

When the challenge is over, see how you feel. What did you learn about yourself??

You may also like: 14 ways to invest Sh. 10,000.

Have an Accountability Partner

Sometimes having an outside force can help you to stick to your goals. If you have a friend who you can chat all things money with and trust, challenge each other to stop impulse purchases.

This plan will have a higher chance of success if you make specific goals. Think about keeping each other accountable throughout a 30-day challenge (as mentioned above) . You could even have a weekly chat to talk about your thoughts around spending money.

The win-win here is that you can work towards a better financial future and help a friend out at the same time!

Bring Cash

You can’t spend money you don’t have, right? If you need to head into a store to make a purchase, bring only the cash you need and that’s it. That way you’re not tempted to buy anymore because you won’t be able to purchase it.

If you hate the thought of carrying around cash, consider using a prepaid debit or credit card so you can still limit the amount you spend.

Understand Your Why

Sounds super cheesy, but you can’t maintain a habit without understanding why you’re doing it in the first place. Sure, it’s a good idea to stop impulse shopping, but why is it important to you specifically? Do you want to save more money so you can replace your old laptop? Or do you have a bunch of credit card debt you want gone by the end of the month?

Giving a reason for changing your behavior will help keep you motivated during the tough times. And when you get through to the other side, you’ll be thankful you took the time to understand the why behind your finances.

This article was originally published at https://www.hicharlie.com

Pay off Debt and Save Money. But How Can You Do Both?

How To Pay off Debt and Save Money

How can you effectively pay off debt and save money?

You have debt that you want gone. But you also have other important financial goals, like saving money, that need your attention. These competing priorities can make you feel like you’re trapped in a chicken or the egg conundrum. If you pay down your credit card debt, you’ll have more wiggle room in your budget and can save that extra cash. But, if you save more money, you won’t have to whip out your credit card next time an unplanned expense pops up. So do you pay off debt or save? The truth is, you can do both.

Here’s your plan of attack to slay debt and grow your bank account:

Divide and Conquer

To work pay off debt and save money simultaneously, you’ll have to split your available resources between these two goals. But, you need a clear plan to ensure that you allocate your money in the most effective way.

Keep These in Mind

To get started, prioritize your debts and savings goals, keeping these things in mind:

  • High-interest debt will sink you. If you only make the minimum payments on your credit cards, you’ll be in the hole for years and pay potentially thousands extra in interest. Get rid of this debt first.
  • Lower interest debt isn’t as urgent. While you definitely want to pay off all of your obligations, “good” debt like student loans (HELB) and your mortgage do less damage to your financial health.
  • Paying extra on installment loans doesn’t help your budget now. If you sock extra cash at your mortgage or student loans, you’ll reduce the total time you’re paying them. But — it doesn’t change your required monthly payment amount.
  • An emergency fund will save you in a pinch. A cash reserve will keep you from going further in the hole when something breaks or you lose your job.
  • Start saving for time-sensitive goals ASAP. The holidays, your sister’s destination wedding, and your car insurance renewal are all known events. Squirrel away a little bit here and there in the months leading up, and you’ll pay for them in cash with ease. You can renew your car insurance cover at  https://bismart.co.ke/getquotes.
  • Don’t ignore retirement. It may seem like a million years away, but delaying saving for retirement will have long term negative effects. You’ll miss out on the compounding interest that actually works in your favor. If you can afford it, contribute at least enough to your retirement account to get your employer’s full match. You can save for retirement in a money market account. Contact us today to open a money market account.

Choose the Right Mix

Once you’ve got your priorities in order, you need to divvy up your funds in a way that makes the most sense for you. For example, from your discretionary income, you could put 6% into retirement, 50% toward your credit card debt, and 44% toward your savings goals. As you pay off debt and your goals are completed or change, be sure to adjust your mix accordingly.

Remember: While there are some good guiding rules of thumb, how you manage your money is up to you. Personal finance is personal!

Find the Money

To make faster progress toward your financial goals, try freeing up more of your existing resources, increasing your cash flow, or both. Here are some steps you can take today:

  • Review your spending. Is there anything you can scale back on or completely stop spending money on?
  • Negotiate your bills. You may be able to get a lower rate on things like car insurance or cell phone service just by calling your provider.
  • Buy smarter. It doesn’t matter if you’re getting groceriesclothing, or shopping online, there are countless ways to get what you need and come in under budget.
  • Earn more dough. Consider picking up extra shifts at work, getting a second job, taking on freelance clients, or selling some of your unwanted stuff.

Remember: While it’s tempting, be sure to use your budget wins and side income for your debt pay off and savings goals, not for brunch and a new pair of shoes.

Final Thoughts

The best way to overcome financial strain is to pay off debt and save money.

But…

You can be overwhelmed when trying to pay off debt and save money. This is because you have  to juggle multiple, seemingly-competing financial goals. But if you proactively map out what you need your money to do, you can strike a balance that allows you to save money and pay off debt. And live your best life!

This article was originally published at HiCharlie.com

 

Money: How To Keep Enough for Tough Financial Times

How Much Money Have You Set Aside for Tough Times?

Life’s usually pretty amazing. But when it throws an emergency at you, can your wallet handle it? What would you do if you lost your job today? How many days/weeks/months/years would you be able to get by without a job? Would you have to beg people for money to survive? How long would you survive on other people;s charity?

To be adequately prepared for such an unfortunate situation, you need to build and maintain a healthy emergency fund. What’s that? It’s a pool of money that only gets used when life throws you a major curveball. That way, when your car breaks down or you lose your job, you’ll have the cash stashed away to deal with it instead of taking on more debt.

Follow the steps below and you’ll be well on your way to dealing with the unexpected with ease.

Determine Your Needs

Since everyone’s situation is different, there is no hard and fast rule about how much you need to have in your emergency fund. However, the collective personal finance mind says that you should strive to save 3-6 months of living expenses. If you’re the breadwinner for your family or your income fluctuates, it doesn’t hurt to pad that number a bit.

To gauge your essential monthly expenses, take a look at your budget (or create one) and add up all of your must-haves like shelter, food, transportation, utilities, medicine, minimum debt payments, etc.

Remember, since some of your expenses can vary month to month, be sure to give yourself some wiggle room. Next, multiply your monthly budget by the number of months that you want to cover. The total is your emergency fund savings goal.

Tip: If you want some extra help, check out this emergency fund calculator, or this one.

Open an Account

Your emergency fund should have its own account that you can tap into when needed, but that you won’t see or touch regularly. This will make it tougher to spend the money on other, less dire situations. And, although it may be tempting, avoid putting the funds into risky investments like stocks because you could lose money if the market declines. To get the best results, consider putting this cash into a money market account. You can contact us to help you get a good company for the money market account. It will be safe, separate from your day to day finances, and will actually grow due to interest.

Stockpile the Cash

The first two steps are quick and easy to complete. However, depending on your needs and your means, you could be in this phase for the long haul. Saving thousands (maybe even tens of thousands) of shillings might be a daunting prospect.

Don’t be discouraged! Start small and initially aim to get a few hundred in the bank. Then, work your way up and celebrate each milestone. What you’re doing isn’t easy. But when life inevitably throws a tantrum, it will be worth it.

Here are several ways that you can expedite the stockpiling process:

  • Cut expenses and bank the savings. Tight budget? Check out these tips.
  • Automate your savings. Set up a regular transfer from your checking account to your emergency fund.
  • Earn more cash. Think about starting a side hustle, working overtime, or selling your unused stuff.
  • Put windfalls to good use. Gifts, bonuses, and tax refunds can make your emergency fund balance soar.

Remember: Don’t stick your hand in the cookie jar unless it’s a true emergency. (Getting a last minute invite to go on a tour doesn’t count!)

Tip: While building an emergency fund needs to be a priority, it’s OK to juggle more than one financial goal. For example, if you have high-interest credit card debt, it’s a good idea to get that paid off ASAP. It’s important to find the right mix of saving and debt pay off for your situation.

Move on to the Next

While congratulations are in order, you can’t sit on your laurels for too long. You’re in a great position to ramp up (or start) saving for retirement, put money aside for planned home repairs or upgrades, or open an account to fund the vacation of your dreams. You can also put more money toward your mortgage, student loans, or other debts. Of course, if you take money from the emergency fund, you should replenish it as soon as possible.

Conclusion

Building a solid emergency fund doesn’t happen overnight. Just like with retirement, it takes discipline and patience to save a large amount of money for “someday.” But having that well-inflated cushion will allow you to rest easy and fully focus on living your best life.

Article by Charlie at https://www.hicharlie.com

 

 

Tips On How To Deal With Debt Hangover

How to deal with a debt hangover…

Yup, the holidays are the time when you can get overboard (in every sense of the word). Who can resist shiny bobbles, Christmas markets and an adorable pair of shoes you’ll wear to a holiday party?

Next thing you know, you’ve swiped your credit card too many times and gone into debt. AKA a debt hangover — when you have trouble sleeping, aversion to checking credit card statements, and even snapping at your loved ones.

It’s not exactly a fun topic, but it’s an important one. Instead of saying bad things about yourself (none of that around here!), grab a cup of hot chocolate, curl up on your couch, and read on to find out what you can do to fix the situation and prevent it from happening again.

What is a Debt Hangover?

Let’s say you go out with a bunch of friends to celebrate the fact you got a fancy new job promotion — you have a new office overlooking the city! You’re so elated you end up buying a round of drinks for your friends, then they return the favor. The next morning, you’re a bit sick and wondering what the heck happened last night.

A debt hangover is much like the story above, except that you spent too much money instead of going overboard on drinks. What typically happens is that you’re so caught up in holiday cheer (or another big moment) you go spend-crazy. We’re talking about presents, travel, activities, and food.

It doesn’t stop there. After Christmas shops are notorious for tantalizing deals and sales. Besides, if you received gift cards, you may spend more than the amount on the gift card. New Year’s resolutions can also make you swipe that card more than you should. Like declaring you’ll implement an exercise routine, so you buy new outfits or a yoga mat. Or you’ll eat healthier, so you go and buy a blender to make smoothies.

Come January, your financial ends up suffering. The credit card bills reveal the consequences of your actions, and it may not be pretty.

But you’re not alone. Trust me, we all go through this hangover (yes we, even me!). The important thing  to do is to keep such hangovers at a minimum, until we can completely eliminate them. If you would like to know how to do that, keep reading.

No Shame in This Game

If you’re in debt, there is no shame around it. It’s understandable you got caught up in the moment. There’s something about holiday displays, delicious food, and lifetime holiday movies that can turn anyone into a credit card swiping monster.

The important thing is how you deal with the situation. Allow yourself to feel whatever it is you need to feel, then start working on an action plan. If you got yourself into some hot water with your money, there is a solution to get yourself out of it. The first step is to recognize you have debt and refusing to ignore it.

How to Cure Your Debt Hangover

No matter how much holiday-related debt you picked up, acknowledge how much debt and make a plan. As in, tally up all your credit card statements and see how much you owe. It’s OK, take a breath if you’re shocked by the number.

Now you’re ready to take some action:

Start Paying Your Credit Cards

It’s pretty obvious you should pay down your debt (duh!). It’s important to remember that you need to make at least the minimum payments on those credit bills, more if you can. Paying the minimum payments gets you out of trouble with your creditors and paying more will get you out of debt faster.

It’s also a good idea to figure out a debt-free date. The beginning of the year is also a pretty lucky time — you may get year-end bonuses, cash gifts, and tax refunds. (We’re not telling what to do, but you may want to take the extra cash to tackle your holiday debt!)

Enlist Help

We get it. Debt can be overwhelming. Instead of doing it by yourself, see if you can seek support — friends or personal finance tools — that can offer you suggestions to cut out unnecessary costs. Your budget may have seen better days, but now’s the time to see where you may be able to cut back to help pay off that debt.

Think of simple actions you can do, like canceling subscriptions you never use or negotiating down bills. You’d be surprised at how a simple 15-minute call can save you hundreds of dollars.

A photo of a red button with the word "HELP" on it. Seeking help will also help you to deal with and eliminate debt hangover in your life.

Take on a Side Hustle

If you don’t have enough money to pay down your debt, consider taking on a side job to earn more… There are lots of options — think grocery delivery services to online part-time gigs— all you have to do is find one that works around your schedule. You can also join our affiliate program at https://bismart.co.ke/blog/affiliate and earn commissions referring customers to compare insurance quotes and buy from our website.

How to Prevent Future Debt Hangovers

As the saying goes: an ounce of prevention is worth a pound of cure. Take it as a lesson learned in that it pays to be prepared. It’s never too early to open a savings account to start your holiday spending fund for the upcoming year. And oh yeah, set a budget!

And when you do, make sure to take as much as you can into consideration. Think gifts, wrapping paper, and transportation costs — everything adds up!

It’s not sexy to think about preventing debt, but your future self will thank you when you leave the holiday unscathed and hangover-free.

Article by Charlie at hicharlie.com

 

 

 

What to Do When You Miss a Salary: Don’t Panic, Read On

When You Miss A Salary, What Should You Do?

It’s that time of the month. You’ve finally got a handle on your budgeting and then the unexpected happens… your salary is late. What should you do when you miss a salary?

If the thought is already sending you into a downward spiral, hold up. Yes, missing a salary is a less than ideal situation, but you need to have an action plan in place before it happens.

Don’t feel like you have to take out a personal loan or grab your credit card. Go through the following steps first to see what makes sense for your individual situation.

 

Engage in a Little Distraction Activity

When you miss a salary, engage in a little fun activity that will get your mind off the stress. A good example is dancing. No really. If you’re not a dancer (but c’mon we know you can move it move it) choose another little activity that will dissipate any nasty emotions.

When you panic, you might make a knee-jerk reaction you’ll regret. Yes, you need money to survive, but if you do something like yelling at your employer or borrow money with a high-interest loan, you may be dealing with those consequences years down the line.

Instead, take a few deep breaths and try to relax. The goal is to look at your situation objectively. Once you feel more in control, move onto the next step.

 

Look at Your Bank Accounts

Seeing where you stand financially will help you set a plan. No matter how you feel (you got this!), looking at the numbers gives you an objective picture of what is going on.

  • Look at all your bills (including debt) and see what you owe and their due date
  • Look at how much money you have in your checking and savings accounts

Once you have those numbers,  you can create an emergency budget to get you through the red.

 

Tap Into Your Emergency Fund

If you have savings set aside for emergencies, now’s the time to use it. That being said, it’s still a good idea to cut your budget down to the bare necessities just in case. When you start receiving your salary again, then you can factor in a line item on your budget to replenish your emergency fund.

For those who don’t have emergency funds, now’s not the time to feel shame around it. Take this as a reminder that an emergency fund is there to help you when times are tough. Once your situation is back to normal and you’re receiving a regular paycheck, consider setting aside money in case an emergency fund happens.

As for how much to aim for, most experts agree that Sh.100,000 is a good amount to strive for. Once you’ve reached that milestone, then aim for more — three to six months of your expenses.

 

Make Sure The Necessities Are Taken Care Of

Now is the time to focus on the essentials, literally. Right now, your essentials are shelter, food, utilities, and transportation AKA the items you need to ensure you still have a place to live and food on the table. If your last resort is eating at home with your parents for a week, you do what you gotta do.

The last step is essentially to list out all of your bills and debt. Go ahead and include expenses and list them in order of importance. Once you have that, look at your emergency budget to see if you’ve allocated money towards the essentials. If not, adjust your budget accordingly.

Let’s say you have Sh.50,000 in your checking account. Take a good, hard look at what you need to purchase until the next salary comes in.. For example, you tend to buy groceries once a month, but you notice that your pretty well stocked on grocery. Can you get creative and make meals based on what you already have? Or can you buy grocery items to resell them for a profit?

 

Slash and Burn Unnecessary Items

Remember — this is temporary. Once your paycheck arrives you can get your subscription services back if it makes sense. It sucks to think about giving up on things like Netflix and meal delivery kits. However, cutting back will help provide some relief when money is tight.

If there are services you can suspend or cancel temporarily, great. If canceling them means paying a hefty fine (like many cable subscription packages), see if you can negotiate with the company to see if there’s anything they can do.

Same goes for any necessary expenses. Call up your mortgage provider and explain your situation. Some companies —  though not all — may help provide some relief by allowing you to defer your payments.

A laptop showing an online shopping cart with a box in it and the word 'BUY' next to it. The topic: What to do when you miss a salary
Don’t buy items that you don’t need.

Sell Your Stuff

If cash is really tight, consider selling some of your unwanted items. Go through all your goods to see what you can sell — think baby clothes, designer items, books, CDs and even jewelry. There are plenty of people that will take those items off your hands and pay you cash right away.

You can also consider selling your time and skills, like offering to mow your neighbors’ lawns, walk some dogs, or tutor kids in the evenings. There are tons of ways to put a few extra shillings in your pockets. Get creative and you may be surprised at what you’ll find!

To gain some extra cash, you may also like to check out 14 ways to invest Sh. 10,000. These are things you can do to make some cash that can come in handy when you miss a salary.

 

Talk to Your Employer

Now’s the time to approach your employer to ask what’s going on and when you can expect to receive your next pay. Don’t be afraid, don’t overthink it; just do it. What’s the worst that could happen? On the bright side, you’ll be updated on what’s going on and it might provide some relief.

If you do miss a salary, remember that it’s not the end of the world. Breathe, try to relax and look at your financial situation objectively. There are solutions. And if you need to ask for help from friends, family or in the form of a loan, so be it.

You’ve got this.

Article by Charlie Santos at https://www.hicharlie.com

 

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6 Steps to Ditching Your Debt

Not sure where to start? Here are Charlie’s 6 steps to ditching your debt:

Stop the Bleeding

Unless it’s completely unavoidable (like that student loan for next semester), don’t take on any more debt. Avoid new credit cards, lock up/cut up the ones that you have, and consider freezing your credit. It’s important to take control.

Assess the Damage

Now, it’s time to see what you’re up against. Make a list of all of your debts to include who you owe, how much you owe, the minimum monthly payment, and the interest rate. Then, brace yourself and determine the grand total.  (It’s OK to have a glass of wine, a chocolate cake, or a bubble bath after this step!)

Choose Your Strategy

There are two main ways to tackle debt: the snowball method or the avalanche method. With the snowball method, you pay your debts off from smallest to largest amount owed. This is great for momentum building — you’ll feel like you’re #winning pretty quickly. With the avalanche method, you pay off your debts from highest to lowest interest rate. Ultimately, the math works out in your favor here because you’ll pay less in interest overall. If you’re paying off debt, ignore any haters, because it’s a victory regardless of how you do it!

Tighten Your Purse Strings

Trimming your budget may be painful at first, but crushing your debt will feel amazing. There are some easy places to cut spending first: eating out, shopping, travel, entertainment, etc. If there are things you can’t cut completely, find hacks to spend less. Use gift cards, skip the expensive cocktail at dinner, or shop thrift stores. If you can’t cut these categories any further, consider going more extreme. Get a roommate, sell your car, or move back home. These strategies are hard, and may not be possible for you (or you’re already doing them!), but every dollar helps.

Hustle for Extra Cash

In addition to cutting your spending, try earning some extra money specifically to go toward your debt. Look for side gigs, sell your stuff, or offer freelance services.

Track Your Progress

Ditching your debt is hard work. It takes commitment and willpower. This process could take a long time, so it’s important to track how far you’ve come to keep your motivation level high. Be sure to reward yourself (in a budget-friendly way!) as each account balance hits zero.

Article by Charlie at https://www.hicharlie.com/blog

YOU MAY ALSO LIKE: 14 Ways to Invest Sh. 10,000