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Should You Save Money or Pay Off Debt First?

February 9, 2017

One of the most challenging things about setting financial goals is managing two short-term goals at once. What should you do if one of your goals is to pay down debt as quickly as possible, but you want to build an emergency fund or save for a down payment on a home as well? If you are currently in this situation, you know that deciding what to do with that extra chunk of cash in your bank account each month is difficult. The longer you wait to pay off debt, the more you may end up paying in interest — but having solid savings is essential, should emergencies arise. If you are trying to juggle saving and paying off debt at the same time, here are some questions to ask to help you decide which to prioritize.

How Much Do You Have in Savings Right Now?

Do you have money set aside in case of an emergency? Ensuring that you are prepared for anything life throws your way is a fundamental step toward financial health. Experts recommend having an emergency fund of three to six months of living expenses set up to protect against unexpected events. Without it, you could risk falling into more debt. If you do not have an emergency fund set up, that should be your first priority. Pay down what you owe each month on your education loans and credit card balance(s), then allocate extra cash to your rainy day fund.

How Much Does Your Debt Cost You?

Examine the interest rates of your debts in comparison to how much your savings earn you. For example, if you have credit card debt with an interest rate of 10 percent, and a savings account earning you 1 percent, it may be more beneficial to tackle that credit card debt before saving for a down payment or putting more money in a retirement fund.

If you have multiple loans and credit card balances, it could help to list all of them and include the corresponding interest rate beside each. Multiply the interest rate by the debt amount to see how much each debt or loan is costing you per year. Then, write out the total amount of cash you have in savings and multiply it by the interest rate of the account. What is the rate of return on your savings? How does that compare to what your debts are costing you per year? This could help put everything in perspective, not only to help you decide to start focusing on paying off your debts faster, but to know which debt to tackle first.

Remember, the earlier you pay off debt, the less you may end up paying in interest. Therefore, after establishing a solid emergency fund, your next priority is working toward paying off your debt.

Can You Potentially Lower the Cost of Your Debts?

Whether you have credit card debt, student loan debt, or both, there are a few tactics you can look into that could potentially lower the cost of your debts.

If it is credit card debt that is weighing you down, you could transfer your balance onto a new card. On her blog, Suze Orman recommends looking for cards that charge no interest for at least a year, allowing you to have a longer amount of time to pay off your debt without incurring interest. For transferring the balance, she recommends searching online for transfer deals that do not charge a fee for the amount of the transfer. From there, the goal is to use an online calculator to calculate the amount you will need to pay per month to knock out your credit card debt by the time the zero percent interest rate expires.

For education loans, find out if you qualify for student loan refinancing or consolidation through a private lender. People who possess a strong credit history and a reliable source of income may be able to take advantage of one single payment with potentially lower interest rates or lower monthly payments. With the possibility of lower interest rates or lower monthly payments, refinancing or consolidation could take you one step closer to achieving your financial goals.

To Save or to Pay Off Debt? That Is the Question.

You might think the answer is simple — but the truth is, it is a little more complicated. Both options are great financial moves, but the answer varies depending on where you are in your saving and repayment journey. A typical rule of thumb is to focus on establishing an emergency fund first, then shift to paying off your debts as quickly as possible so that you can move on to your other (more fun) goals like purchasing a home or a car. If you already have that fund set up, assess your debts to decide which ones to begin paying off first. Look at what your options are for minimizing the interest on your debts, and put those plans into action. While it might require determination and sacrifice, the feeling of being debt free with a secure savings account is worth it in the end.

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Woman practicing yoga
2018-12-17
Experiential Gift Giving Guide

We’ve all heard the millennial generation has shifted their focus from material possessions to experiences. They don’t want a thing that’s just going to take up space they don’t have, they want to do something. It should come as no surprise that for the holidays they’d prefer experiential gifts. If you have a Millennial in your life here are a few gift ideas we’ve gathered. Before making a purchase, consider the person you are buying for and their unique taste, your location and obviously your budget. For ease, we’ve broken it up into the categories Mind, Body, Soul, and Stomach.  

Mind

  Art   If someone on your list is into art, consider getting them a membership to the art museum in your area. Memberships often include more access and special events. If they’re really into art you can’t beat this VIP tour of an empty Met museum in New York City. You’ll have the ability to go before the museum opens. Groups are 25 people max allowing you to see some of the world’s greatest artwork like you’ve never seen it before.  

Travel

  For most of us, travel is one of the most eye-opening experiences. To be in a place that’s uniquely different from normal awakens the senses and expands your imagination. We could recommend a number of travel experiences like sand boarding at Sand Dunes National ParkExploring ancient caves in South America, but travel is so personal. We recommend sites like IF ONLY that offer more curated experiences in the United States and you can’t beat an AirBnB gift card that lets people choose their own adventure.    

Body

  Gym   Now, if the person you buy for spends most of their evenings on the couch, this probably isn’t the gift for them. If they are into sports and fitness and they don’t already have a gym membership, it may be just the right thing. You could do a month or even a year. You could even get one yourself and go together – built-in gym partners. If you’re gifting to someone who is always on the go, look into getting them a Classpass. This allows them to take classes at a gym located in different areas. For a person who is traveling a lot or is always moving, it’s great.   Salon   When you look good you feel good, but a lot of us don’t splurge for the fancy salon. When you can take advantage of a fancy salon, without the guilt of spending money it’s all the better. Find their salon and let them get their hair or nails did. Places like Drybar offer gift cards and you can get a wash and blowout for around $40. The best part that includes wine!   Massage   With the stress of the holidays, most of us just want to be in a quiet room for an hour. Throw in a relaxing massage that lets your friend unplug and escape the world for a bit. It may not be the most personal gift, but it never goes unappreciated.    

Soul

  Zen   If they’re down with the downward dog, you could get them some local yoga classes or consider one of the many companies that offer amazing yoga retreats like Yogascapes, where you can join a small group of like-minded people for an amazing yoga retreat in “off the beaten path locations.”   Music   There’s nothing more personal than music. Consider tickets to a show one of their favorite artists or a subscription to a music service if they don’t have one. For those that are a little more free-spirited consider finding music in a really intimate setting through sites like Sofarsounds.com.    

Stomach

  There’s no experience more common or universal than food and eating. And you have to do little more than scan Instagram to see how much people love food. With this in mind, there are so many directions you can go with food. From cooking classes to meal delivery services to full-on molecular gastronomy experiences it’s hard to go wrong with the food. Don’t have a big budget? Then you can always give actual food that you’ve made, it’s almost sure to be appreciated.  

7 Money Mistakes Young Professionals Should Avoid

  NOTICE: Third Party Web Sites Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the web sites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.
2018-11-28
Stop the Trend Spending™

From hoverboards and iPods to boy bands, trends will come, and they will undoubtedly go. Anyone who has experienced and come through the other side of a trend can look back and laugh, but we aren’t sure about their wallets. At Education Loan Finance, we refer to spending on the latest “it” items as “trend spending™”. Always following the latest trends can wreak havoc on your personal finances.  We are not saying don't do anything trendy and live under a rock. What we are saying is that rewarding yourself for making good decisions is important, but evaluate that choice carefully. Let’s take a look at the latest trend spending™ taking place, how much money is actually being spent and how it could add up over time.  

Vaping

We’ve all been there, walking or driving along when you see the occasional cloud of vape on the sidewalk. If you’re lucky, that cloud of vape isn’t directly in front of you while you’re walking and you’re able to dodge that second-hand vape cloud. In addition to the envied clouds vaping creates, the flavors can range from cereal flavors to candy flavors.  Just like the flavors, the mods come in a variety of sizes too, from huge mod kits that make tons of vapor to tiny USB chargeable vapes like the JUUL®.   Vaping has become one of the biggest trends in the U.S. The more vapor you can produce the “cooler” you are according to the vaping community. According to a
CDC report released in October 2018, JUUL Labs® account for nearly one in three e-cigarette sales, nationally. While vaping might be the latest trend, remember that its long-term health effects are still unknown. Couple the possible health effects with the cost and you might just convince yourself to stop.   JUUL® Starter Kit - $45 Four pack of pods $16. Let’s assume those are purchased twice a month, so that is 24 x $16 = $384 Total Cost of Vaping for a Year= $429    Assuming that you bought a JUUL® unit to do your vaping and you bought a new pack of pods every two weeks or twice a month, you’d be spending $429.00 a year. Over the course of four years, that’s about $2,000! We didn’t even include any sales tax in this equation, but many states are rolling out taxes on vaping products.  

Subscriptions

Subscriptions used to be associated with Highlights® magazine or catalogs your Grandma would receive in the mail, but the 21st century has revitalized the subscription. Now, subscriptions can get us movies, vitamins, clothes, music, even dating sites and all are currently available at our fingertips. The subscription box industry, in particular, is experiencing rapid growth. Since 2014, the subscription box industry has increased by 890% according to a 2018 report by Hitwise. Subscriptions, though convenient, can really end up costing you in the long run.   The danger is that once your card is on file, it’s so easy to forget about the service. Here’s a list of the most popular monthly subscription services of 2018. Let’s say, you signed up for the FabFitFun® subscription box for a year. Now, this box is sent only four times a year based on the season. The box comes with full-sized premium products. In addition to the box you receive, you get access to the FabFitFunTV which shares workouts, access to exclusive member sales, and you have access to the entire community online.  Now, that box is $50.00 per season or $200 a year.  

Fancy “Dranks”

It’s hard for a month to pass without seeing some crazy coffee creation from your local Starbucks®. Recently, the Witch’s Brew Frappuccino outshined the previous favorite, Unicorn Frappuccino and became an Instagram® trend.  Drink trends can really spiral out of control and quickly. If you actively participate in social media by checking your Instagram® or Facebook® every once in a while, you can’t help but notice them. In some weird way, all these Frappuccino drinks and IPAs flooding your news feed put pressure on you to join in and go purchase one of these beverages.
 
This pressure to join in on the cool coffee trend can come down on your wallet like a hammer. The average cost for a latte at Starbucks® as of 2018 was $5.75 for a Grande, and that doesn’t include any fancy cake pops! If you bought yourself a latte, once a week for a year, what are you really spending? 52 weeks a year x 5.75 = $299.00 a Year! You’re paying about $300 on lattes a year. Think of how far that money could go towards your student loan debt.  

Health Food

The latest trend in the food and beverage industry is likely to come from your favorite online health influencer. It’s also likely that drink ends in a vowel like Kombucha, Matcha, or bubble tea. These drinks have been around for decades, but lately, they are skyrocketing due to a new health movement. Kombucha and other fermented drink sales were up 35.6% in 2017 according to FoodNavigator-USA. This fancy probiotic drink can really end up costing you at $3.75 per bottle. If you’re looking to drink it once a day, it adds up to $1,368 a year in total cost on Kombucha. We aren’t saying to deprive yourself of the latest health trends, but we’re suggesting to think wisely before deciding to purchase it. Really understand how that small amount of money can add up to a lump sum that can easily be applied to debts. Maybe even try making your own Kombucha, there are tons of websites and directions available online.   Bubble Tea or as some may know it as pearl milk tea, boba juice, or just boba, has been in the US for years, but it’s recently gaining major trend status in 2018. There have been multiple chains arising that specialize in Bubble Tea. You may know these chains as Kung Fu Tea® or Boba Guys®.  Bubble Tea could make a great date or even a trendy place to stop with friends. It offers a nice alternative to the usual coffee or beer we’ve all grown accustomed to. We wouldn’t recommend making Bubble Tea a daily habit or even a weekly habit because like Kombucha the small amount spent could really end up adding up.  The average cost for a Bubble Tea is $3.50, and if you choose to go every day for a year, it equates to about $1,277. That is some serious money that can be used to get out of debt or start investing in retirement fund money.  

Quick Food

Food is important because it keeps us alive, but that doesn’t mean we need to spend all of our income on it. Simple changes to your everyday life like packing lunch for work could really help you save in the long run. Eating out can be expensive, time-consuming, and even dissatisfying. Before you pick up your cell and place an online order, let's take a look at these stats. According to the 2017 Bureau of Labor Statistics’ Consumer Expenditure Survey, Millennials ages 26-34, spent $3,416 annually on food away from home.   Imagine for lunch every day at work you bought a burrito from Chipotle®. Just a burrito is about $8.00. Now, our cost has no fancy drinks because we learned our lesson on trend spending™ on sparkling water when the office has free and classic H2O available. We’ll assume that you work five days a week and it’s typically Monday through Friday. We aren’t going to account for vacations or days off in our math. Let’s see what your yearly cost for lunch is…   $8 Burrito Cost x 5 days in a work week = $40 a week spent $40 x 52 work weeks per Year = $2,080 spent a year   Though it’s so easy to get sucked into the trend of going out to lunch and grabbing something easy, please be cautious. Apps like UberEats®, GrubHub®, and Seamless® may seem convenient, but they can cause unnecessary costs.  Try to cut back on eating out or ordering in food. We know, easier said than done. Especially, when it comes to working all day and having to make yourself dinner when you get home.  Add to it cleaning up any dishes you may have used, and it just gets overwhelming. This doesn’t have to be an all or nothing situation though, try packing your own lunch weekly. If that seems like a lot maybe only purchase lunch on Fridays. These small life changes could have an impact on your finances, and they are just creating good spending habits as you move further on into adulthood. Just remember that the amount of money spent on food could pay off student loans, or be added to the down payment on a house.  

Give & Take

Whether you are trying to get out of debt or save up money to achieve a financial goal, there is always a little give and take. You deserve to enjoy yourself and treat yourself every once in a while with the latest trend, but don’t get so caught up in the trend spend™ craze that you lose any sense of the amount you’re spending.  Trends may be great - I mean, after all, they did become a trend, but you need to stay focused. If you are finding it difficult to stay focused on your financial goal, try making a compromise of the situation. It will always help to remind you that it’s just that, a trend. Trends will come, and they will go, but your finances will be with you forever. Be the financially responsible you that we know you can be!  

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    NOTICE: Third Party Web Sites Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.
2018-11-04
8 Ways to Earn Quick Cash in Your 20’s

Life is expensive, especially when you are first figuring it out. Whether we want to admit it or not, we’ve all had that moment where we have found ourselves strapped for cash.  To combat these instances, here is a list of 8 ways you can earn cash fast and help you make it to your next paycheck.

Take out the Trash

Get rid of things you no longer use! Consider it your winter cleaning. All those old video games you have lying around or those old jackets and dresses.  You may not get retail price, but it’s easier than ever to sell your old things on the web. Sites like ThredUp® will ship you a bag to put all your old clothes in and then they will give you money for what they sell and give away the remainder.  Have old furniture, instruments, baby carriers, even video games try using LetGo®, an app that you can use locally. Be sure that if you meet up to proceed with the online transaction, you do so in a safe place. Many police stations offer parking spaces for this purpose specifically – safety first! Selling things that have been hanging around your home is an effortless way to make extra cash. Save that additional money for your
“fun” account or put it towards your student loan bills. Not only is selling your things a great way to make extra cash, but it’s a great way to make more space in your home. Once you start seeing your things sold you’ll be surprised at the difference a few bucks and some space can do.

DIY Babes

If you are crafty and think you may make something worth selling, try selling your creations on sites like Etsy®, eBay®, or Zazzle®. Be sure that before you make a large investment you can do it and you aren’t stretching outside your means to do so. It can be an easy way to make money from the comfort of your own couch. Crafting can be a great money maker around the holiday too. There are typically many craft fairs locally during the holidays where you can take your creations offline and sell them at vendor events and craft fairs. If you want to look more into selling your creations at craft fairs, be aware there is usually an upfront fee for a table. Do your math and if the upfront table cost is more than what you think you’ll sell, don’t do it. To keep your finances organized you may even want to consider opening up a separate account to keep your new found hobby/job finances separate. This additional account will allow you to easily track your expenses and income on your creations to determine if this is something you want to continue long term!

Work It

While maybe less appealing, picking up an extra shift at work or working overtime is a sure fire way to earn some extra bucks. Overtime isn’t always available, but if you work somewhere that you can indeed get overtime- try too. Overtime can be tiring but once you get your paycheck you’ll feel that it was worth it. If you’re in the medical professions summer can often present multiple opportunities. Many other workers will go on vacation and will need their shifts covered.

Tell a Friend!

Many businesses have come to understand the value of references that come from friends. Any mainstream business targeted to younger audiences is going to offer a referral program. Typically, these programs consist of getting a customized link to share on your social media accounts and with friends. If your friend signs up and becomes a customer you both will receive money, credit, or something similar. At Education Loan Finance we are no fools and offer our own referral program. We feel that there is no better compliment than our customers sharing their experience and referring us to their friends and loved ones. We offer a $400 referral bonus* to anyone who successfully refers individuals to refinance their student loans. What are you waiting for?

Answer Some Questions

How about that? A gig where you can get paid for giving your opinion. All you have to do to be a market research participant is give your opinion on various products and services to the companies that make them, and then you get paid for it. Sites like FocusGroup and MediaBarnResearch Services are great places to start. Before you sign up be sure that you understand how your payment will be dispersed. Some sites utilize a point system and with a certain number of points, you can get a gift card. Typically using these types of programs aren’t a stable way to make a lot of money but it’s good around the holiday and summer to make a few extra dollars for that “Fun” account we love to talk about.

Watch a Baby or Some Pets

Offering to watch over your neighbor’s house while they go on vacation, using websites like Care.com to land babysitting jobs, or offering your services as a dog walker can be great ways to make money. There are so many simple apps out there to get some additional cash using gigs like babysitting, pet sitting, and house sitting. Once you work with someone and they are comfortable with you they’ll be likely to use your services again. If you’re using an app you can accept or reject jobs depending on your schedule. You can also use the app to find local gigs around where you are, and you usually will get paid immediately after the job is done. Some of these apps do run background checks and some do require a small fee for sign up, so be aware what you are signing up for before doing so.

Donate blood/plasma

If you can stomach the needle and don’t get queasy too easily, this may be the option for you. You can make between $20-$50 donating blood depending on your blood type.  Donating plasma is a little more intrusive, but you can donate up to twice a week and earn around $40-$60 for every donation.  There are websites where you can locate the nearest blood plasma donation center near you. In order to do any donation whether blood or plasma you’ll need to be healthy and pass a screening exam. If you do not pass a screening exam you will not be eligible to make any donations. If you aren’t sure that donating plasma or blood is the right choice for you, check out the videos online to understand what the process entails.

Teach/Consult

Is your career in a subject that you can easily help to educate children on? Maybe you want to educate adults or become an Adjunct Professor. These are great ways to make additional funds. This type of work isn’t for those with little time on their hands. Teaching or tutoring is time-consuming and will take some weeknights and maybe most of your Saturdays.  Before signing up be aware of the time sacrifice that will come along with it. If you go the route of tutoring students, you should consider charging by the hour. Depending on how often and how many students you tutor, you could make upwards of $100 a week. If the idea of being back in a classroom makes you want to run and scream consider consulting. You can help a small business out on the weekends or maybe work remotely part-time. Before signing up for part-time, you’ll want to be sure that your full-time employer is okay with it and doesn’t see it as a conflict of interest for you. If you get the green light go for it. Regardless of how you decide you want to make extra money, be sure that you have time available. As professionals, we can all understand what is expected of us and you’ll need to decide if that sacrifice is worth what the money being earned is. If you determine that it is, go get it!  

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  *TERMS AND CONDITIONS Subject to credit approval. Program requirements apply. Limit one $400 cash bonus per referral. Offer available to those who are above the age of majority in their state of legal residence who refers new customers who refinance their education loans with Education Loan Finance. The new customer will receive a $100 principal reduction on the new loan within 6-8 weeks of loan disbursement. The referring party will be mailed a $400 cash bonus check within 6-8 weeks after both the loan has been disbursed and the referring party has provided ELFI with a completed IRS form W-9. Taxes are the sole responsibility of each recipient. A new customer is defined as an individual without an existing Education Loan Finance loan account and who has not held an Education Loan Finance loan account within the past 24 months. Additional terms and conditions apply. Click www.elfi.com/referral-program for more info. NOTICE: Third Party Web Sites Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.