Debt is a major problem for Americans. The average American household has over $16,000 in debt. If you’re tired of being one of those people with a mountain of debt, we understand. Here are some tips to help you avoid getting into trouble in 2024.
This post focuses on empowering yourself with practical strategies to break free from the debt trap and secure a more promising financial future.
—Pricelesstay
Make a budget.
If you’ve already fallen into the trap of overspending and debt, don’t worry. It’s never too late to get back on track with your finances. The first step is to make a list of all your income and expenses—and be honest about what it costs to live in your city or town. Once you have that information, create a plan for getting out of debt by setting aside money each month for paying off loans and credit cards. Next comes creating an emergency fund: Put at least three months’ worth of living expenses in an easily accessible account so that if something happens (like losing your job), you won’t have any trouble paying the bills. Finally, start planning for retirement by making regular contributions toward 401(k)s or IRAs through automatic deductions from either paychecks or bank accounts whenever possible without affecting other essential bills like rent/mortgage payments
Save money in an emergency fund.
Saving money is the best way to get out of debt, but it’s also important for anyone who wants to live without financial stress. When you have a rainy day fund, you can rest assured that no matter what happens in life—a job loss or medical emergency—you’ll have the resources necessary to handle it.
There are two ways to save: You can either set aside a specific amount of cash every month or put money into an account that earns interest over time (more on these options below). Either way, the key is consistency so that your savings don’t dwindle away with inflation. To determine how much you should save each month, consider how big an emergency would be if you didn’t have any money at all and multiply that number by six months; this will give you the minimum amount of cash needed for emergencies and retirement planning purposes (calculate this figure based on your current expenses). If possible, aim higher than this goal so that your savings fund has some padding in case something unexpected happens down the line.
Tackle your debt.
Begin the process by figuring out exactly how much you owe and in what order you should pay back your debts. You can use a debt repayment calculator to figure this out, which will help show you the best way to go about paying off your debts.
Once you know how much money each debt is costing you each month, work on paying off the smallest one first. This will help build momentum in reducing your overall debt burden and make it easier for you to stick with an ongoing plan of attack (and avoid falling behind). Once that one is paid off, focus on the next smallest until all of them are gone!
To make sure that those payments can actually be made every month without causing trouble for other aspects of your life (like rent or groceries), focus on making extra payments beyond what’s required by law—this means going above and beyond just making minimum payments on each loan. If possible, make sure these extra payments are being sent directly into one specific account where they’ll accumulate toward paying off another account over time rather than simply being applied toward interest accrual on the current balance owed; this ensures that no matter what happens along the way (such as a job loss or medical emergency), those funds won’t end up being used elsewhere first before beginning their journey towards helping reduce overall debt totals down over time.
Pay off credit cards every month.
One of the most effective ways to avoid falling into debt is by paying off your credit cards in full every month. This can be especially helpful if you have multiple credit cards, as it is usually a good idea to prioritize paying off the one with the highest interest rate first. Additionally, it is a good idea to avoid using credit cards for everyday purchases that you could easily pay for in cash, such as groceries, gas, and other essentials. This can help you to stay on top of your finances and keep your debts in check.
Start investing.
If you’re putting off investing, for now, that’s okay. It’s a good idea to save up at least six months’ worth of expenses before committing to any kind of investment. But once you’ve got your emergency fund in place, it’s time to start thinking about investments.
Investing is an essential part of the financial planning process—and with good reason: It allows you to earn money without actually working for it right away. Unlike saving cash or paying down debt (which both require regular effort), investing involves letting money sit while other people do all the work for you until they give back their earnings through dividends or capital gains (the selling price). The best part? You can start small and grow over time; in fact, even starting with $50 per month could make a big difference when compounded over years!
If there’s one thing that new investors should avoid doing though, it’s investing too much money at once—it’ll make things harder on yourself if something goes wrong later down the line. Instead, invest slowly at first and then increase your contributions as needed until eventually reaching whatever amount feels comfortable enough for where your finances stand today
📰 In the news
Federal bank regulators warned the institutions under their purview this week of the risks associated with crypto and stablecoins, pointing to recent incidents, including an alleged money-laundering scheme involving QuadrigaCX and this week’s collapse of a crypto exchange.
Federal bank regulators warned the institutions under their purview this week of the risks associated with crypto and stablecoins, pointing to recent incidents, including an alleged money-laundering scheme involving QuadrigaCX and this week’s collapse of a crypto exchange.
In a letter, the Federal Reserve Board and Office of the Comptroller of the Currency listed recent incidents, including an alleged money-laundering scheme involving QuadrigaCX and this week’s collapse of a crypto exchange. The regulators said that banks need to be aware of all the risks involved with custody services and take a risk-based approach to cryptocurrency custody as they do in other industries such as commodities or futures trading, Reuters reported Friday morning.
The letter, signed by the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (FRB) and Federal Deposit Insurance Company (FDIC), came after FTX CEO Sam Bankman-Fried revealed Wednesday that he had inadvertently sent $2 billion in Bitcoin to an address that had no private key.
This comes after FTX CEO Sam Bankman-Fried revealed Wednesday that he had inadvertently sent $2 billion in Bitcoin to an address that had no private key.
The letter, signed by the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (FRB) and Federal Deposit Insurance Company (FDIC), came after FTX CEO Sam Bankman-Fried revealed Wednesday that he had inadvertently sent $2 billion in Bitcoin to an address that had no private key.
The letter touched on the ‘liquidity risk’ caused by large cryptocurrency transactions, as well as ‘fraud and scams’ involving cryptocurrencies, noting how customers may believe their funds are safe from theft or loss due to insurance, which is not always the case.
The regulators also said they were concerned about how banks handled fraud-related complaints brought by consumers who lost money through crypto-related activities. They encouraged banks to take a risk-based approach to cryptocurrency custody and warned them not to engage in activities they cannot handle.
Cryptocurrency is a new risk area for banks that needs to be approached cautiously. The regulators stressed the need for banks to understand that cryptocurrency can be a good thing but also warned them not to engage in activities they cannot handle.
The agencies encouraged banks to take a risk-based approach to cryptocurrency custody, which involves determining how much exposure they want or need in this area and then making sure they have the right policies, procedures, and controls in place. The agencies highlighted several areas where significant risks exist:
- Fraud/scams involving crypto exchanges;
- Crypto exchange hacks;
- Lack of protection from cyberattackers;
Banks need to understand that cryptocurrency can be a good thing, but they also have to be aware of all the risks involved.
Crypto is a new asset class that banks need to understand and be able to mitigate these risks. Banks should work with regulators on how they are going to handle crypto as an asset class, especially since it can be used for fraud and scams, which still exist in the space even though they are trying hard not to let it happen again by adopting strict KYC (know your customer) policies.
What does this mean for crypto investors?
As the FTX scandal continues to unfold, crypto investors should be aware of risks associated with unregulated crypto exchanges and large cryptocurrency transactions. These risks include fraud, scams, hacks, and theft by insiders. Investors should also be mindful of the potential for market manipulation when dealing with unregulated exchanges or large cryptocurrency transactions.
Conclusion
The regulators are right about the risks associated with cryptocurrencies, but their warning is unnecessary. The cryptocurrency market has matured over time, and even though some issues still need to be addressed, banks can easily avoid them by following the regulations set forth by regulators.
❓ Ask the Expert
“I’m 16, an aspiring entrepreneur and motivational speaker, and I also want to be a multi-millionaire by 20. What would you do if you were in my position and what would be your advice to someone like me?”
As an aspiring entrepreneur and motivational speaker, it’s great that you have big goals and ambitions! It’s important to remember that building a successful business or career takes time and hard work, and it’s okay to have short-term and long-term goals to help guide you along the way.
Here are a few pieces of advice that might be helpful for someone in your position:
- Focus on developing your skills and knowledge: As a young entrepreneur, you will likely face many challenges and obstacles. To increase your chances of success, it’s important to focus on developing your skills and knowledge. This could include taking classes, attending workshops or seminars, or simply staying up-to-date on industry trends and best practices.
- Network and build relationships: Building relationships with others in your industry can be extremely valuable. Networking events, trade shows, and online communities can all be great places to connect with others and learn from their experiences.
- Stay organized and manage your time effectively: Managing your time effectively is crucial for any successful entrepreneur. This could include creating a schedule, setting aside dedicated time for work and personal activities, and staying organized.
- Seek out mentors and advisors: Finding a mentor or advisor who has experience in your industry can be extremely helpful as you navigate the challenges of building a business. Look for someone who can provide guidance, support, and advice as you work towards your goals.
- Be persistent and don’t give up: Building a successful business or career often requires perseverance and the ability to bounce back from setbacks. Don’t be discouraged by setbacks or failures – instead, use them as opportunities to learn and grow.
At your age, I was working so much. I’d work on projects where I was so focused on meeting goals and delivering a high-quality products that I completely lost sight of the importance of taking care of myself. I was working long hours every day, skipping meals and exercise, and neglecting my relationships with loved ones.
Since then, I’ve learned the hard way that it’s important to work hard, but it’s equally important to take breaks, relax, and spend time with loved ones. It’s okay to take time for yourself, and in fact, it’s necessary in order to maintain your physical and mental health. Without proper self-care, it’s easy to become burnt out and lose sight of what’s truly important in life.
There’s a saying a ran into in a book, “Jets need time to refuel before they have a successful flight. You are no different.” That struck gold for me, and I hope it has that much of an impact on you too.
So, my advice to you is to work hard and strive for success, but don’t forget to take care of yourself and make time for the things and people that matter most to you. It’s okay to take breaks and relax – in fact, it’s necessary in order to be your best self and achieve your long-term goals.
Your friend,
Taylor xx
Ask your question here!
📎Links we love!
Be a priceless friend and share the newsletter! 💜
