Budgeting basics to get you more money

Making sure you're protected from the summer sun starts with a good sunscreen. But how do you know which sunscreen is best, how much to use or when to reapply? In this episode from Short Wave, NPR health correspondent Allison Aubrey shares the six common mistakes people make with sunscreen — and how to level up your sunscreen game.

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Trying to read more can be a hard habit to stick to. If you want to read more, try setting a goal to get you motivated. To make a goal that works for you — consider setting a genre or page count goal rather than just counting the number of books you read.

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Do you have "screen apnea?" Former Microsoft executive Linda Stone coined this term in 2007 after noticing she'd developed an unhealthy habit while answering emails: She held her breath. Body Electric host Manoush Zomorodi talks to Stone about this phenomenon — and gets insight from James Nestor, author of "Breath," on how to reset our breath and relieve screen time stress. Binge the whole Body Electric series here. Sign up for the Body Electric Challenge and their newsletter here.

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It's hard to find time for anything with a newborn at home. And in the months after having a baby, intimacy with your partner may fall to the wayside. But sex and relationship experts say that maintaining your intimate relationship with your partner is a worthwhile challenge. In this episode we'll talk strategies for reconnecting with your partner, exploring your desires, and expanding your ideas of sex and intimacy.

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For decades, health experts have relied on body mass index (BMI), a ratio of weight to height, to classify people as underweight, normal weight, overweight or obese. But sometimes, you need more than two numbers to understand your health. For example, BMI can't tell you how much of your weight is fat versus muscle. That's why a growing number of researchers and physicians prefer other metrics instead. NPR health correspondent Allison Aubrey breaks down the history and shortcomings of BMI, and shares other methods to get a fuller picture of your body.

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There are a lot of misconceptions about sleep. Sleep scientist Rebecca Robbins and her colleagues looked into common myths about sleep to help everyone get a better night's rest. This episode originally published Janaury 9, 2024.

Want better sleep? Sign up Life Kit's Guide to Better Sleep, our special newsletter series. When you sign up, you'll receive a series of emails over one week with tips you can try that very night to prioritize and improve your sleep. Sign up at npr.org/sleepweek.

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The summer's first major heat wave has arrived. Our bodies do have natural ways to dissipate heat, but when temperatures get extreme, sometimes they just can't keep up. In this episode of Life Kit, learn how to keep cool, hydrated and safe in extreme heat.

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Intimidated by grilling? Cooking over an open flame can do that. In this episode, learn the basics from which type of grill to choose, to how to maintain a fire and create different temperature zones, to tips on tools and safety. This episode originally published May 24, 2022.

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Should you merge your finances with a significant other? Keep them separate? Or something in between? Financial therapist Lindsay Bryan Podvin breaks down different ways to handle your finances with a partner and how to keep communication open and honest no matter what financial plan you pick.

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Be on the lookout for Season 3 of The Thought Card Podcast with brand new episodes starting Thursday, March 5th.

Goals are important because they allow you to create your future today. Although a lot of people set financial goals every year, most people don't actually end up sticking to them because they get distracted along the way. So how do you set financial goals that you will achieve?

In this episode, I share easy ways to set yourself up for financial success by setting financial goals that are a good fit for your life right now. For additional goal setting tips, join my Setting Financial Goals Workshop where you'll get access to a 1-hour video and workbook for brainstorming your goal ideas. 

If you need additional help organizing your finances and budgeting, sign up for my Back to Budgeting Basics course. 

Today’s episode of Financially Naked: Stories from The Financial Gym, two of our Certified Financial Trainers, Myriam and Kadri, sit down to talk about 8 strategies for paying down debt. Whether it’s consumer debt, student loans, medical debt, personal loans, or some combination of these, it can be overwhelming to know where to start. Myriam and Kadri talk about concrete action steps you can take to tackle debt and break the cycle.

 

Podcast Notes

• STOP USING YOUR CARDS - The most important step of getting out of credit card debt is to stop adding more debt. 
  Kadri often talks to his clients about credit card psychology. Using debit cards while on a debt payoff journey will help you reduce spending. When you spend on a credit card, that balance increases. When numbers go up, we get a good feeling. We only have to pay the bill one time at the end of the month, instead of feeling the money leave with each transaction.
  
  It can be a challenge, but here are some tips to make the transition easier: 
• • Take them out of your wallet if you can.
  • Forget chasing credit card points - it isn’t worth the interest and the larger minimum payment 
  • Unlink cards to convenience apps like Uber and DoorDash
  • • Chase Sapphire Preferred gives you DashPass, the membership program to DoorDash. While this may help you reduce fees, remember that if you are ultimately going to pay interest then any deal can’t offset that!
      
      
  • There are cases where you have to use your credit card. Maybe you don’t have an emergency fund and putting something on your cards will be the difference between caring for a sick family member or not.
  • If you truly want to break the cycle, you need to also work towards an emergency fund
    
    
• FOCUS ON BUILDING AN EMERGENCY FUND BEFORE AGGRESSIVELY PAYING DOWN DEBT 
• • This is the best way to break the debt cycle 
  • If you’ve heard the phrase “pay yourself first,” this is an example of that.
  • If you are constantly using your spare cash exclusively towards debt and something major comes up, you’ll have to rely on your credit cards
  • This can take time. Saving money is a grind, and that’s totally okay! 
  • Though you won’t earn a ton of interest, it's worth it to build this insurance policy to prevent you from using cards.
  • However, there are still ways to be mindful of the interest you’re paying - one is through the debt avalanche approach.
    
    
• THE DEBT AVALANCHE APPROACH 
• • Tackle the highest interest debt first. If you have an extra $500 to put somewhere (and your emergency fund is fully funded), use that total amount and put it towards one debt, rather than spreading it across a few. This is mathematically the best way to pay down debt if you’re going to make additional payments. 
  • You may not like math, but you can use it to your advantage by paying down your highest interest rate debt first by putting extra money towards it. 
  • You can reduce your debt payments even further with a few tools - one I would consider a little tricky, which is debt settlement, and one I would consider more straightforward, which is balance transfer cards and personal loans. 
  • • The Snowball Method is another option for paying down debt. Instead of working on the highest interest debt, extra payments are made to the smallest balance debt. This method works well for a lot of people. It comes down to knowing yourself and using whichever method works for you!
      
      
• DEBT SETTLEMENT VS. DEBT MANAGEMENT 

Debt Settlement

• The pros: you can potentially reduce the amount of money you need to pay for your debts, and you can use the money you were spending on debt minimums to save for your emergency fund or make ends meet.
• The cons: your creditors may not agree with debt settlement, your credit score will likely tank, and you could be charged more debt and fees.
• This is also tricky because you can get in hot water if you choose to not pay your debt obligations to have more bargaining power in the settlement.
• There are other somewhat shady companies that handle the debt settlement process for you. What they provide is nothing that you can’t do yourself. Always be careful and ask a lot of questions when looking into these companies. 
• They’ll typically ask you to still make monthly payments that they save on your behalf so they can pay the reduced amount for you later.
  
  

Debt Management 

• In contrast with debt settlement companies and strategies, there are debt management nonprofits that work with your creditors on your behalf to help lower interest rates, lower fees, and sometimes monthly payments. 
• They help you keep your credit from suffering if you’re struggling with your monthly payments and can work with you to create better cash management habits 
• It’s important to do your research and ask questions. ‘Nonprofit’ does not mean they have your best interest in mind. At the end of the day, it is a corporate filing. 
• They look at your full debt picture. If you have cards open, they require you to shut down your cards, keeping just one open. They have relationships with lenders and will go to them and negotiate the interest on your behalf. Instead of paying the lenders directly, the minimum payment goes to the nonprofit. Programs like this have advantages, but you can also do this on your own, though it takes some time and you might have to make a few rounds of phone calls. 
• If you miss a payment, all bets are off. You cannot miss a payment. There is risk there, but that’s pretty much how it goes. 
• There are other ways to lower your interest and / or your monthly payments. They are balance transfer cards and personal loans
  
  

• BALANCE TRANSFER AND PERSONAL LOANS 
• • Balance transfer cards usually offer a 0% or lower APR, and you move the balance from one card onto this new one, giving you more time to pay down the debt. 
  • While helpful to reduce interest payments, this can enable you to spend more because you now have more available credit. 
  • Before consolidating, make sure to give yourself some time to get used to a new spending plan that is sustainable for your income. Knowing yourself and your habits is important. 
  • To find a list of BFF Approved Balance Transfer cards, check out this page! 
  • Nerdwallet is also a great resource when looking for cards. 
  • If you already have credit cards, there may be balance transfer options available, so make sure to check those out when you do your research.
    
    
• INCREASE YOUR INCOME
• • This can come from getting a promotion, switching jobs, getting a second job, or starting a side hustle (with low to no startup costs). 
  • Earning more money is something Kadri encourages all of his clients to do. It’s easier said than done, but Trainers see it all the time with their clients. They’ll get a new job with a 40k salary increase or really advocate for themselves and get a raise in their current roles. 
  •  Think about all of your talents, expertise, and get creative when thinking about how you can make more money. 
  • Once you start making more money, be mindful of lifestyle creep. It’s important to know yourself and have a plan in place. 
  • Take a look at your expenses and ensure they’re helping you reach your debt repayment goals. When it comes to building wealth, look at both sides: increasing income and reducing expenses is the key.
    
    
• REDUCE EXPENSES 
• • The first step, add up all of your fixed expenses, including debt minimums.
    How much is left over for your variable expenses, savings, and extra debt repayment?
  • There is a minimum you want to have for your variable expenses, especially in high cost of living areas. 
  • When Myriam makes financial plans, she aims to have at least $860 per month or $200 per week for variable expenses. The bare minimum for lower cost of living areas is about $530 per month or $125 per week. 
  • It can feel like a lot of sacrifice. You want to check in with yourself and ensure your physical and mental wellness is being taken care of. 
  • It’s easier said than done. There is only so much that can be cut. 
  • Closing the gap between your income and spending is the only way to truly break out of the debt cycle. It is a process and takes time. Be patient and find what works for you.
    
    
• DON’T BE AFRAID TO CONSIDER BANKRUPTCY 
• • Bankruptcy gets a bad reputation, but it can be an amazing tool, especially if your debt to income ratio is 50% or above. 
  • A quick rundown on bankruptcy: it gives you a lot of protection. Your creditors cannot contact you, sue you, put liens on your property or garnish your wages. You can also sometimes be protected from any income tax penalties for the forgiven debt.
  • It is a tremendous tool to give yourself a clean slate. Once you have gone through the process, the debt is gone. 
  • It is a long process and can take months. While bankruptcy does not need to be scary, it should be taken seriously. You can only declare bankruptcy every ten years, so having a plan of action for once the debt is clear is incredibly important! 

Martinis and Your Money Episodes about bankruptcy 

• Declaring Bankruptcy with Colleen 
• Life After Bankruptcy with Natalie Jean Baptiste 

From The Financially Free Blog: 

• How to File For Bankruptcy 
  
  

THE BIG TAKEAWAY: 

• Stop using your credit cards (if you can, and there are some situations where you temporarily have to)
• Build your Emergency fund
• Debt avalanche approach
• Debt management vs settlement
• Debt consolidation using tools like balance transfer cards and personal loans
• Increasing your income
• Reducing your expenses
• Don’t be afraid to consider bankruptcy
  
  

One of the newest programs at The Financial Gym is our Trainer on Demand, where you can schedule a call every month to chat with a Certified Financial Trainer. If you’re looking for someone to help you make a debt management plan and click this link to learn more! 

 

MEET THE TRAINERS

• Level 3 Certified Financial Trainer, Kadri Augustin
• Level 2 Certified Financial Trainer, Myriam Robinson 

On this episode of Financially Naked: Stories from The Financial Gym, our host is Mike Poulin, a DC-based Financial Trainer, and he is joined by fellow trainer, Hector Lopez, who is based in LA. Today, they are going to talk about debt and credit management.

Podcast Notes

• Prior to working with the Gym, Mike worked at a credit union for seven years. Part of this was in the ‘debt solutions’ department (basically in-house collections).
• For so many, debt is a normal part of life but there are many mysteries around it.  
• Collections in general seem to be the biggest mystery and monster when it comes to debt.
• Hector uses the word ‘monster’ specifically because collections feel like a huge, daunting process.
• Knowledge is power when it comes to debt collectors. Knowing the logistics on the other side will help you be prepared when in this situation. 

Practical tips for handling collections:

• Some institutions handle collections in-house while others sell the debt to a third party. 
• Each state has its own laws regarding consumer protection, which means the number of calls you receive can vary.
• It can be tempting to ignore calls, but it is better to have a conversation with someone on the other end.
• An unanswered call means they’re more likely to keep calling as the laws allow this kind of activity. 
• Try to work out an arrangement with the creditor. They’re usually happy to get any sort of payment over nothing at all. 
• If you have debt, before it goes to collections, paying even $1 keeps the account from going inactive and can help buy a little bit of time. 

CREDIT SCORES 

• The credit score system in America is relatively new and has many flaws.
• There are three credit bureaus in the United States: Equifax, Experian, and TransUnion.
• While credit score is one aspect of financial health, it is not the most important. 
• 35% of credit score is utilization - how much you use on a month to month basis
  35% of credit score is payment history. The rest encompasses types of accounts, lengths of accounts, and the number of inquiries. 
• Obsessing about your credit score isn’t great for either your financial or mental health.
• Once you start focusing on other aspects of financial health, the credit score usually improves over time. 
• There are times when credit score is incredibly important, like when you are looking for more credit to buy a home, car,  or even renting an apartment. It is a way for banks and lenders to determine whether they think you’re a good person to lend money to. 
• Even as someone who has worked in the business, Mike feels like there is still some mystery. 
• Scores  750+ earn you bragging rights. Anything over that is extra credit. Those 800+ scores come down to time and credit length.
  

DEBT vs. SAVING

• It is important to build your savings while paying down debt. 
• While it can be tempting to throw all of your money at debt for a number of reasons, building an emergency fund will help you truly break the debt cycle.
• You will no longer need to go deeper into debt when something pops up. Your debt payoff journey will not happen in a vacuum, there will be surprise expenses along the way.  Having cash saved means you’ll be prepared.
  

BUDGETING 

• One way we focus on saving and paying down debt is by looking at spending. 
• The traditional idea of budgeting can feel restrictive or limiting, but that’s not what we do at the gym. 
• We focus on empathy, sustainability, and the WHY. Does the spending reflect your current goals? 
• Most debt does not happen overnight, rather over purchases or other expenses over time. 
•  Our focus is to help clients spend intentionally on their goals and joys and cut in the areas that do not. 
• The reason trainers ask about your goals is because that is what they want to focus and plan for. If owning a house isn’t your goal, it won’t be in the plan. If your morning coffee is important, let’s put it in the budget! 

 

RESOURCES MENTIONED: 

The only place you should check your credit report is annualcreditreport.com. It is backed by the federal government and you can request one free report each year  

 

READ MORE ON OUR BLOG:
Ask a Trainer: What Can I Do to Raise My Credit Score 

How to Rebuild Your Credit Over Time

How to Use 0% Interest Credit Cards the Smart Way 

 

Meet The Trainers  

Meet Hector Lopez

Meet Mike Poulin

On this episode of Financially Naked: Stories from The Financial Gym, our host is Danielle Thomas, Level 2 Certified Financial Trainer at The Financial Gym. She is joined by Lindsay Clark from Savi. Lindsay is a fierce champion for the student loan borrower - having accumulated enormous student debt over the course of her undergraduate and graduate studies at Yale and Columbia, respectively. Having worked in advocacy and financial technology for nearly a decade, Lindsay brings a deep understanding of the urgency behind providing solutions for student loan borrowers. As Director of External Affairs, Lindsay built and continues to lead our front-line efforts to assist America’s 46 million borrowers.

It’s been over two years since the government first paused federal student loan payments and interest, and for so many borrowers it’s been out of sight and out of mind. With the possibility of cancellation and updates to policies passed with Covid relief, there’s a lot of news and support for borrowers out there. Savi helps America's 46 million student loan borrowers easily lower their payments and find forgiveness. Lindsay is here to share some of the highlights and things to watch out for if you’re a borrower. 

Podcast Notes

• Savi was founded in 2017 by student loan policy experts and advocates. Since repayment options and forgiveness programs are new, clunky, and can be challenging to comprehend, Savi is designed to help! 
• They work with borrowers across the country to help them be more informed and empowered as borrowers and consumers. From understanding repayment options to navigating the application process, all the way to crossing the finish line. 
• Where to get started if you have student loans: 
• • Understand the different repayment options. For federal student loan debt, there are programs and various payment plans (some income based) available.
    When considering which is the best fit for you, think about where you will be five and ten years in the future. 

Income Based Repayment: 

• Excellent for people who may be struggling to make the monthly payment for folks newly out of school, looking for their first job. 

• The required payment is based on your income and considers tax filing, rather than basing it on the amount of debt. 
• Some borrowers do not take advantage of these plans, including Lindsay when she was first paying back her loans.  
• These income-based plans are a much better option than forbearance. At the end of these plans, loan forgiveness is an option if you’re eligible. While the programs aren’t perfect, there are planned improvements in the coming years. 
• In general, any debt forgiven under an income-based repayment plan is considered taxable income on your taxes that year. 
• There was recently a law passed that grants tax-free forgiveness for these repayment plans through 2025. It may be extended past that, but we don’t know yet. 

Public Student Loan Forgiveness Program (PSLF):

• This program started in October of 2007. Unfortunately, there are a bunch of technicalities required for forgiveness to be granted that a lot of borrowers were not aware of. Out of the 100,000 applications, less than 1% were accepted. 
• Requirements: 
• • Be employed by an eligible institution
  • 120 qualifying payments
  • Be on an income-based repayment plan and have a qualifying loan type

• In general, people met the employer requirement, but did not have the correct type of loans and weren’t on the right type of payment plan. 
• Right now, there is a limited waiver for the PSLF program where they’ve expanded the requirements around loan type and payment plan. This will only be available until October 31, 2022, but expands the number of eligible borrowers. 
• If you applied and were rejected in the past, you may now be eligible and should take action before October. Since the expansion, over 100,000 borrowers have been granted forgiveness. 
• If your loans are forgiven through the PSLF program, the forgiveness is tax-free. 
• One of the biggest issues surrounding the student loan crisis is that there is hardly any communication from the institutions supporting borrowers and there is a barrier to entry. You can read studentaid.gov all day long, and still not be clear on all of the information. 
• This waiver did not get a lot of attention, and a majority of people don’t know they might qualify for forgiveness. 
• Any news on another extension on payment pauses or possible cancellation? 

• Loan cancellation was a huge campaign promise and there is pressure on lawmakers to make it happen. It might look like $10,000 may be forgiven and have income limits. 
• The rising cost of higher education is what is fueling the debt crisis and while forgiveness will provide relief to some borrowers, it does not fix the problem. This is not a matter of either or, it’s a matter of addressing both sides of the crisis. 
• If someone has debt out there and has never logged in or made a payment, what should they do? 
• • The government recently announced Fresh Start, which will bring any borrowers out of default once payments resume. It would be a mass reset for roughly 8 million borrowers who are in default, many of whom have balances less than $10,000. 
  • This is separate from loan rehabilitation, which is a process that can take up to nine months. 
• Lindsay assures us the momentum and direction of the policy are positive and we’re going to see good changes come through. She’s more optimistic than she’s ever been and hopes these will help improve the system. 

 

Read more about student loans:
FAQs About Student Loans
6 Questions to Ask Before Refinancing Student Loans
5 Things to do Before the Student Loan Pause is Over
Mythbusting Student Loans

Connect with Savi 
BySavi.com

Meet The Trainer
Meet Danielle Thomas, Level 2 Certified Financial Trainer

For many, creating a budget is a dreaded task. But you can do it. These tools will help — and maybe even make it fun.

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