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What to do after becoming debt-free
When you’re focused on getting out of debt, it’s easy to get caught up in the process and not think about what happens afterward. But, it’s necessary to establish a plan once you’ve eliminated your debt, or else you’ll slip back into the cycle again. Below are crucial steps you should take after becoming debt-free:
Organize your finances
Preparing for your new financial future starts with organizing your finances. The easiest first step is to automate your finances. Put any recurring bills, like your cell phone, electricity, or credit card on auto-pay, so you don’t miss a due date. You can even automate your retirement account and emergency savings contributions.
Now’s also the time to organize any financial paperwork you may have neglected while paying off debt. Sift through papers and shred anything you no longer need, like old cable bills. Keep only the most recent copies of items, like account statements or insurance policies. However, one exception to this rule is tax returns, which you should keep for at least three to seven years.
Build a solid emergency fund
Having a solid emergency fund covering at least three to six months of expenses is crucial—and something you may have neglected to save for while paying off debt. Now that you’re debt-free, it’s time to get back on track towards saving for the unexpected.
You may need to revisit your goals and figure out how much you should have saved in case of an emergency—and if you don’t have a savings account for unexpected expenses, you should open one now. The bigger your savings are, the more equipped you’ll be to financially handle an emergency (and avoid falling back into debt).
After spending months (or even years) sticking to a strict budget to pay off debt, it can be exciting to have extra cash—it can also be tempting to stray from your budget. But, if you stop budgeting entirely, you may become neck-deep in debt again.
With more money on hand your monthly income has changed, which means your budget should, too. Take the time to reevaluate your budget and see how you’re spending or where you can cut expenses.
Contribute to a retirement account
The sooner you start saving for retirement, the better—but it’s never too late. If you haven’t started saving for retirement, look into an employer-sponsored plan, plus additional options like a Roth IRA. If you’re self-employed, look for a SEP IRA, a Simple IRA, or an individual 401(k).
The most important thing is to be consistent with your contributions. If your employer offers matching, try to take advantage of that. Don’t touch your retirement fund until you reach retirement age, or else you’ll face tax penalties.
Start saving for major purchases
If tackling debt was a motivator to start saving for a home or a car, you’re one step closer to achieving that dream. Establish a separate savings account to reach your goal, and start contributing—you’ll get there before you know it! If you’re a first-time homebuyer or are applying for a car loan for the first time, Georgia’s Own has options to guide you through the process.
Review insurance coverage
You may have been skating by with the bare minimum insurance coverage while trying to pay off debt. Now that you have more money, you may consider increasing your insurance coverage. For example, if you don’t have life insurance coverage, you may want to look into that. Depending on your age, you may also want to consider additional coverage, like long-term care insurance if you’re in your 40s.
Refresh your financial plan
After making sure you’re covered for any future events (both good and bad), you can start refreshing your financial plan. As previously mentioned, now that your income has changed, your financial plan should change, too—your financial plan from two or three years ago may not work anymore.
Take the time to assess your financial goals and see where you should reevaluate. Start looking at your short-term goals and decide where you are with meeting them. If you’ve met them (or are close to meeting them), you may want to adjust them to your current financial circumstances.
Now that you’re debt-free (and if you have an established emergency fund) try diversifying your investments. You can consider financial products and other investment options with a higher risk that have higher earning potential, like stocks, bonds, or mutual funds.
If you’re new to investing, consider working with a financial planner. Georgia’s Own offers investment and retirement services to help you get on track and make the right choices when it comes to your money—and you can meet with one of our financial planners at no cost and with no obligation to discuss your options.
Being debt-free is an incredible feeling, so it’s only appropriate that you celebrate! Having a healthy financial plan is knowing when to be disciplined and when it’s okay to treat yourself. Have a party or take yourself to a fancy dinner—you deserve it after putting so much work into reaching your goal of becoming debt-free.
Celebrate National Financial Awareness Day
August 14th is National Financial Awareness Day—a day dedicated to preparing for your financial future and building financial stability. It’s crucial to take the time to review your finances because sound monetary decisions can make a huge impact in the long run. Try to complete one of the five items below so you can take control of your finances, and celebrate National Financial Awareness Day.
1. Check your savings
Take a look at your savings account—in the event of an emergency, do you have enough funds to get you through? If not, use today to set goals to ensure you’re saving for the future. Calculate your monthly expenses and develop a plan of action to ensure you have the recommended three to six months’ worth of savings. Don’t have a savings account? Georgia’s Own offers various savings accounts to safely store your money.
2. Reevaluate your budget
Have you found yourself not sticking to your budget lately? Take the time to reevaluate your spending and make changes where you see fit. Periodically reviewing your budget is a crucial step that is overlooked. Make it a habit to frequently assess your budget and see what should be adjusted.
3. Brush up on your financial literacy
Financial literacy is key to being confident in the monetary decisions you make, and it can be easy to forget the basics. Take the time today to brush up on your financial literacy. There are dozens of free tools to help, like ACHIEVE, a free financial literacy program from Georgia’s Own. ACHIEVE offers various topics and videos on essentials like owning a home, financial caregiving, planning for retirement, and more.
4. Take steps to improve your credit
Your credit score is a critical representation of your financial past, present, and future. You need good credit for just about anything, like owning a home, applying for an auto loan, or applying for a credit card—your credit score can even determine the price of your auto insurance. Look at your credit score and see where you can improve. If you don’t know your score, visit the federally authorized site annualcreditreport.com to receive a free copy of your credit report.
5. Get a head start on taxes
It’s never too early to get a head start on taxes. Begin gathering necessary documents, like receipts, expense records, and donations, then put them in an organized folder, so you have them prepared for when you’re ready to file. Preparing paperwork beforehand will save you time—and sanity—when tax season begins. If you want to take it a step further, you can even organize your tax records from the past few years, so you have those prepared if the IRS ever needs to conduct an audit.
We hope these tips help you take control over your financial future. Georgia’s Own is always available to help every day of the year—even when it’s not National Financial Awareness Day. Click here to find more resources to help you make smart money-related decisions.
Saving money with cellphones: how to get the best deal
Cellphones: we love them, we hate them, we can’t live without them. Choosing a new phone or carrier is about as fun as a trip to the dentist after you spend time haggling over price points and service levels. But soon that will all be a distant memory, because we have some great ideas on ways you can get the best deal for your cellphone—frustration and screaming are now totally optional.
Purchase an older cellphone model
We’d all love to have the latest iPhone, but have you ever compared the iPhone 11 to the iPhone 13? The truth is, they aren’t all that different. You can certainly expect some small changes from model to model, and even more so when those models are years apart. But since so many companies are churning out new models every year, you can go with an older option that doesn’t sacrifice function. That means you can safely choose the Galaxy 20 without worrying that it will be obsolete in minutes—and that means you can save a little money right up front.
Consider the auto-payment plan
Did you know that a lot of mobile carriers offer auto-payments that are often less money per month? This is a great way to get savings that stay around for a while. Ask your carrier what switching to automatic payments would do for your monthly bill. Of course, it’s important to remember when the payment will hit your bank account so you can budget accordingly. But with just a small amount of extra planning, you can reap the benefits of lower costs without giving up great service.
Don’t just look at big names
While there is nothing wrong with the bigger cellphone competitors of the world, you might consider looking at a smaller company that can meet your needs, like Cricket Wireless or Republic Wireless. These companies are usually able to offer you a better deal, both on your phone and your service costs. It’s important to note that lower costs mean you may not always have the service you want—not all companies have equal coverage. But if you just need the basics for your daily life, these lesser-known providers can be a game-changer.
Split it up
Many cellphone companies offer discounts for multiple lines. If you are single or your kids aren’t old enough for a phone, this may seem like a silly idea. But splitting a plan with even just one or two more people could make a big difference in your monthly bill. Talk to your extended family or some close friends about the types of phones and service you all need—if you can make it work, it’s worth the time and effort of adding multiple lines to one plan and splitting the cost between you.
Switch it up, too
We know; change is the worst. But a lot of cellphone companies offer discounts for switching to their service, which means you can cash-in just by changing your carrier. While hopping back and forth between different providers may seem like a confusing way to live, it may also make a huge difference to your bottom line each month. Be smart about it—you want to ensure that your potential new carrier can still meet all of your needs, like service areas and data streaming. But if you find a good deal that works for you, we recommend making the switch.
Say goodbye to your old cellphone
You can bring that final bill cost down even further by turning in your old phone to the same people who sell you your new one. This is a win-win—cell phone companies can resell your old phone, and you get a better deal on a new phone. Don’t worry about your contacts, photos, and even your messages and apps, because your cell phone provider should be able to port those right over to your new phone. You don’t lose anything but a little bit of time for the transfer, and, of course, your outdated phone.
Much like buying a car, purchasing a new phone or service is all about the negotiation. Often team members of cellphone providers have a little wiggle room on what deals they can offer you, so be sure to ask for the lowest rate they have. This might mean you name an outrageously low rate that they can’t meet but that they can work towards with you. Do be wary of scams—if the deal sounds way too good to be true, it probably is, so read all of the fine print and take your time before signing your contract.
Look for special discounts
While we’re on the negotiation train, this is a great time to mention discounts that may apply to your unique situation. People who serve or who have served in the military, for instance, may be entitled to discounts that others can’t ask for. Your job might also get you some discount points, because first responders, teachers, and others can often find discounts with various providers. If you’re not sure, ask—the worst that happens is you are told no to a discount, but the best that happens is you do qualify and now get to enjoy a lighter cellphone bill each month.
The possibilities for cellphones and service providers may seem endless, but you can find a method that works for the madness. Figure out what you need from your cellphone, look for the best deals and special discounts, and remember that a smartphone that’s only two years old is still pretty smart.
With all that money you saved, it’s important to have a place to store that cash. A savings account with Georgia’s Own is a smart, secure way to store your hard-earned money. From basic savings accounts to CDs and money market accounts, there’s no shortage of ways to make your money grow. Click here to open a savings account today!
5 checking account mistakes you don’t want to make
For most people, their checking account is the heart of their personal finances. It’s where they deposit their paycheck, how they pay their monthly bills, and where they go to withdraw cash for the weekend. And, since their monthly statement details every financial move, it’s an efficient and easy way to keep track of spending and saving.
Although most checking account activity is processed electronically, it’s critical not to employ the out of sight, out of mind mentality. Check out these common checking account mistakes and how to avoid them:
1. You’re loyal to a fault
According to a survey conducted by Bankrate and MONEY, the average adult has had the same primary checking account for about 16 years. Why so long? People stay for convenience and quality customer service, which are important. But what about making sure they’re getting a good deal?
If you’ve been loyal to the same bank since you were a tween or a teen, it’s time to do a little comparison shopping. Checking accounts come in all shapes and sizes, and they’re all not created equal.
They have different features, expenses, and rates of return. In today’s competitive market, many financial institutions are wooing consumers with lower fees, more conveniences, and quality services, all of which are important to consider. Sticking with the same bank out of loyalty sounds honorable, but it doesn’t do much for your account balance.
2. You disregard the minimum balance rule
Many banks or credit unions offer no-fee checking accounts—as long as you maintain a minimum balance. Others require you to use your debit card a specific number of times per month or receive direct deposits into your account. Heck, sometimes you might even earn a tiny bit of interest. But, if you don’t comply with the requirements, BOOM! Your no-fee just jumped to high-fee and you’re out more than a few hard-earned bucks.
These checking accounts can be a smart choice for some consumers, but it’s critical that you keep track of your activity and always meet the requirements. We’re all not detail people, so if that’s too much for you to manage, move to another option. There’s nothing worse than watching your money fly out the window every single month, especially when you can avoid it.
3. You maintain a higher than necessary balance
First it’s not enough money, now it’s too much? Yep, the art of managing your money is all about striking the optimum balance.
Not all checking accounts are interest-bearing, but if they are, they traditionally offer the lowest rates. As such, you should keep enough money in your account to pay your monthly bills and cover your spending, plus a little more that can serve as a buffer. Put the rest in a higher-yielding savings account so you maximize your interest earnings.
Be sure to monitor your balance, and if you’re running low, initiate a transfer. Because most banking is done online, it’s quick and easy to move funds from your savings account to your checking account when needed.
4. You use any nearby ATM
Regardless of which banking institution you use, there are ways to avoid the notorious ATM fees. Some have large networks so an ATM is always nearby. Use your bank’s app to locate other branches or free ATMs so you don’t incur the most dreaded of all account fees. If you’re using an online bank, they’ll likely have a smaller network of ATMs, but many will offer a monthly ATM fee refund.
Using an out of network ATM should be your last resort. You’ll be charged twice—once from each bank. And, with ATM fees at a record high, it could easily cost you between $5 and $10. That’s especially painful when you’re only withdrawing a few bucks at a time.
When you’re in a pinch, you might want to be a little more creative and avoid the ATMs altogether. You can pay for your purchase with your debit card and choose the cash back option, withdraw cash less frequently, but in higher amounts, or even arrange for a friend to pay and use a money-sending app like Venmo to repay them.
5. You don’t fully understand the checking account overdraft protection plan
In 2017, Americans paid more than $34 million in overdraft fees. Today’s average overdraft fee is more than $33 per transaction, and it’s on the rise.
While an overdraft protection plan can be a benefit, it can also be a detriment. Without it, any charge or check that would cause your account balance to fall below $0 would be declined or returned. If you’re enrolled in the plan, you’re home free, right? If you’ve mistakenly swiped your debit card for more than what’s in your account, you’ll be covered and you can breathe a sigh of relief. Until, of course, you see the overdraft fee—or maybe it’s fees.
Once the first transaction crosses the $0 threshold, every transaction that follows also incurs an overdraft fee. It’s especially unfortunate when a large charge hits your account before three smaller transactions, for example. In that case, you would incur four overdraft penalties at roughly $33 each. If the three smaller transactions hit first, you would only incur one fee.
Overdraft protection will help you avoid returned check fees and maybe a little embarrassment when your card is declined, but you can rack up some hefty fees pretty quickly. If you opt for this feature, be sure to read the fine print. Some banks will offer you a grace period that allows you time to make a deposit and avoid the fees, but others may not. Be sure you thoroughly understand the overdraft plan feature before you decide whether or not to opt-in. Otherwise, it could be a costly mistake.
Biggest money mistakes people make
Everyone makes mistakes—even financially. You’re not alone if you have money regrets. But, it’s necessary to understand how money mistakes can affect the rest of your life. The habits you form now will shape your financial future, and getting ahead of any past mistakes will help tremendously. Are you curious if your financial habits are harmful? Below are the biggest money mistakes people make:
Avoiding a budget
You probably hear this constantly, but having a budget is crucial—even if you think you don’t need one. Watching your money disappear isn’t fun. However, you need to know where your money is going, and long gone are the days of tracking your spending on a spreadsheet. There are tons of free budgeting apps, like Mint and Honeydue (perfect for couples!), that allow you to see where you may be overspending.
Getting behind on payments
Falling behind on your mortgage, car payment, or credit card bill creates a tough cycle to break. You pay more in interest and late fees and also severely damage your credit score. You need to determine a strategy to pay off debt—and analyze your spending to figure out why you’re falling behind.
If your goal is to pay off debt and avoid accumulating interest, the avalanche method is your best bet. Start by paying off your debts with the highest interest rate first, then work your way down. Your overall debt load is reduced faster, and you pay less interest.
Using credit cards for everyday expenses
Credit cards aren’t evil if you use them correctly. However, many people use their credit cards for daily purchases—which come at a high price. If you can’t pay your statement balance in full, you should reserve your credit card for emergencies or other appropriate situations, like recurring payments. With double-digit interest rates, you’ll wind up paying more for items that are probably consumed before you receive your credit card statement.
Spending more than you earn
Spending more than you earn goes hand-in-hand with using your credit card for everyday expenses. Charging your credit card here and there may not seem like much, but when you’re not seeing the money disappear from your account in real time, it’s easy to spend hundreds (or thousands) of dollars.
If you’re trying to control your spending, use your debit card instead. It’s much easier to track your spending when using a debit card, as you more than likely know how much is in your account and how much you can afford to spend. Using a debit card also reduces the habit of impulse buying.
Missing out on employer matching contributions
If your employer offers a 401(k)-matching program, contribute at least up to that percentage to take full advantage of the benefit. If your employer matches 401(k) contributions up to 6%, you should at least contribute 6% of your pre-tax income. By not contributing, you’re leaving money on the table.
You can also contribute more than what your employee matches. Most people think that contributing 100% of their employee match will max their 401(k) contribution, but that’s not the case. You can contribute up to $20,500 in 2022, and anyone over 50 has an additional allowance of $6,500.
Not having an emergency fund
If the past two years have taught us anything, it’s that an emergency fund is critical—and something most people don’t have. 56% of Americans can’t cover an unexpected $1,000 bill with savings. Instead of drawing money from an emergency fund, many would have to go into debt. In a perfect world, emergencies wouldn’t exist—but we know they can happen whenever. Having at least $1,000 in a rainy day fund will go a long way in an unexpected situation.
Not knowing where to start may seem overwhelming, but you can make it happen. Use an app to start saving or have a monthly goal. You should also review your budget to see where you can eliminate unnecessary funds and put that into your savings. Don’t have a savings account? Now’s your chance to open one. Georgia’s Own offers various savings accounts that work for your needs and keep your hard-earned money safe.
Not monitoring credit score and reports
Monitoring your credit score and credit report is something you should do regularly. Checking your credit score and report will help you understand your credit history, inform you of any changes to your score, and keep your credit in good shape. Checking your credit report will also alert you to fraud or identity theft.
Various services allow you to check your credit score and report for free. You’re entitled to a free credit report annually through the Annual Credit Report service, which provides reports from the three major credit bureaus. Georgia residents can get two additional reports for free each year. You can also check your credit score regularly through Credit Karma. Aside from the free options just mentioned, you should avoid running your credit too often. Hard credit pulls, like applying for a credit card, can lower your credit rating.
If you’ve made (or are currently making) these money mistakes, don’t beat yourself up—we’ve all made these missteps at one point. But, knowledge is power, and now that you know what mistakes can be harming your financial future, it’s possible to get ahead. We hope you’ll learn from these mistakes and be equipped during your financial journey.
5 steps to achieve financial independence
Financial independence is a beautiful thing. But while many of us desire financial independence, fewer of us know which steps to take to actually achieve it. That’s why we’re here—we want to give you the industry tips and tricks you may not know to help you work toward your dream. Read on to learn about five steps you can follow to gain the financial independence you’ve always wanted.
1. Take stock of your current situation
Every good plan has a starting point—and this one is no exception. Take some time to review your current financial portfolio. How much debt do you have? Which bills are you paying on a monthly basis?
Knowing where you are is a key step in getting where you’re going, so give a thorough and honest look at your finances. You can even speak with a financial advisor to get some professional insight into your monetary needs. And while you’re talking to them, ask them to help you set a goal: what does financial freedom look like for you?
2. Start those savings
After you have reviewed the state of your finances, you can begin to plan. To be financially independent, you’re going to need a way to save money. Start by looking at those expenses you don’t really need—there may be expenses you didn’t even realize you had.
Rework your budget to spend less and save more as much as possible and commit to keeping those savings set aside in your question for financial independence. Remember, you may not be able to save what you want to in the beginning. But as you work to decrease your debt and increase your savings, the path to financial independence will become much easier to travel. You’ll also need somewhere to store those savings. Find a savings account that works best for you, so you can keep your hard-earned money safe.
3. Talk to the pros
We already mentioned reviewing your finances with a professional, but it’s a good idea to ask them to help you with the rest of your plan, too. An accountant or tax professional can give you invaluable insight on ways you can be saving even more money, whether it’s through the right type of bank account or through diversifying your portfolio. Having someone guide you through the process also means less stress for you. Ask some friends and family who they trust to take care of their own finances and get to work.
4. Work out your debt
Life happens. Sometimes we deal with unexpected medical issues or find ourselves paying for braces this year instead of next year. But you have the opportunity to rid yourself of that debt as part of your journey to financial freedom. Start with the smallest debts first—as you pay those off, you’ll find more and more room in the budget for some of your larger debts. It’s also a good idea to reach out to your debtors. You might be able to work out a payment plan that works better with your budget, creating the ultimate win-win situation.
5. Prepare to handle your money
When you achieve financial freedom, it may seem like the hard work is over. But just like you don’t stop going to the gym when you get the muscles you want, you don’t stop managing your finances when you achieve the wealth you want.
In order to maintain that wealth, you will need to be diligent about spending your money the right way. This is another chance to talk to a financial expert who can give you some direction on how to keep your wealth from slipping away. You made it this far—don’t stop before you reach home plate!
Gaining financial independence may seem impossible—but it can be done! Figure out your ultimate goal and then take a planned approach to achieve it. This type of independence may not happen overnight, but it can still happen for you. Find some expert help and start working on your plan to financial freedom today.