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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!

 

Avoid These 7 Money Mistakes

 

 

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How to Budget for a Wedding

Adulthood comes with several significant financial decisions — purchasing a home, making payments on a new car, and getting married are just a few. While marriage is often regarded as one of the most important life decisions one can make, planning for the big day can still be a large financial commitment. According to a recent survey conducted by The Knot, the average wedding carries a hefty price tag of around $32,000. There are many hidden costs associated with a wedding that newly-engaged couples are simply unaware of before and as they begin the planning process — and these costs can add up quickly! If you are a future groom or bride-to-be, the following tips can help you create the wedding of your dreams without breaking the bank.

1. Figure Out What You Want

Whether it is an intimate elopement, a casual backyard wedding, or a big celebration with all your friends and family, a wedding can be anything you want it to be. Keep in mind that larger weddings come with greater financial obligations. Decide on the type of wedding that works best for you and your partner. Create a guest list of friends and family members that you would love to attend your special day. Draft a firm budget based on these factors, and decide what is a feasible amount to spend on your wedding.

2. Start Saving

Once you have a general number of what you can afford to spend, the next step is to determine which sources will provide the money needed to match your budget. Will you be receiving financial support from your family, or will you be financing your own wedding entirely? Are you planning to wed in a few months, or do you have over a year until the big day? These factors will affect how much you need to be saving each month. Develop a savings plan with your partner — decide on an amount or percentage of your paycheck to put back each month. If necessary, you can also adjust your monthly budget to allocate more money to your wedding fund. For more creative ways to save money, check out this post.

3. Get Specific

There are so many details that go into planning a wedding, so it is essential to itemize your budget by creating specific allowances for each aspect of your wedding. Make a list of what is most important and least important to you. For instance, would you rather save on flowers and splurge on photography? Would you sacrifice an intricate cake and five-star catering for your dream venue? Determining what you are willing to splurge and save on are great ways to prioritize your costs and figure out how much to allocate to each part of your wedding. Next, create an itemized breakdown of the percentage of your budget you want to spend in each category. You can do this yourself or use a budgeting calculator like this one from The Knot. Either way, be sure to set aside a percentage for contingency, just in case you end up needing some extra cash.

4. Identify Ways to Cut Costs

Just because you have the money in your budget does not mean you have to spend it all. You can easily find ways to save money in various aspects of your wedding, allowing you to have more money to spend elsewhere (like your honeymoon), or simply put back into your bank account. Pinterest features thousands of creative ideas to cut back on wedding costs, but here are a few of our favorite ways to get the most out of your budget:

  • Flowers can be surprisingly expensive. Instead of having lush centerpieces made for every table at your wedding, consider using candles, framed pictures, and inexpensive greenery like moss.
  • Cut down your guest list. The overhead cost of your reception increases with each guest, so reevaluating who you absolutely need at your wedding can be an easy way to save a lot of money.
  • In lieu of an open bar at the reception (which can cost upwards of $2,000), try to get permission to buy beer, wine, and champagne in bulk. However, if your venue does not allow you to bring in outside beverages, consider simply limiting drinks to beer and wine.
  • You do not have to spend a fortune on your wedding dress. Check out designers like BHLDN, David’s Bridal, and Alfred Angelo for affordable but breathtaking dresses. You can also get great deals on pre-owned wedding dresses on websites like Once Wed.
  • Saturdays are the most popular days for weddings — and, thus, carry the highest costs — so opt for a Friday or Sunday wedding instead.
  • Skip the seated, multi-course meal. If your wedding is in the evening, go for a delicious buffet meal instead. You can also host a morning or early afternoon wedding and serve brunch or finger foods.

You can still host the wedding of your dreams while keeping your expenses in check. In the long run, creating and sticking to a wedding budget will do wonders for keeping your financial and emotional stress low and help you focus on the aspects that matter most. With the above budgeting and money-saving tips — along with countless others on the web — we hope you and your partner create a day you will never forget. Happy planning!

 

How to Talk About Finances with Your Partner

How to Write a Monthly Budget

According to Dave Ramsey, a person’s biggest wealth-building tool is their income, and the best way to harness its power is to create a monthly budget.

 

Updated April 10, 2020

 

Writing a budget is the first step — and possibly the most successful way — for a person to take control of their money, their finances, and pay off any outstanding bills (like student loans). In fact, most financial experts recommend that those who wish to save money for the future and any upcoming expenses, as well as pay down outstanding loans and bills, should create some type of a monthly budget. Most who find their way to this budgeted path will agree that writing and sticking to the budgeted plan can be painstaking — at first — but once it is in place, and they see the financial gains, it is well worth the initial trouble.

 

For those who are uneasy about writing a budget, are unsure where to start, or simply need a little push in the right direction, we are here to help. The following information is dedicated to helping first-time budget writers — with all levels of debt and income — find their ideal monthly budget. We hope it guides every reader toward financial freedom and independence!

 

How to Create a Simple Monthly Budget

Step 1: Calculate Total Income

Budgeters should begin their monthly budget process by figuring out how much they (and if applicable, a spouse or partner) bring home each month. Start by calculating the total take-home pay (after tax) for the household. This figure should include every ongoing source of income.

 

Step 2: List and Tally All Expenses

Step two involves calculating all regular bills (mortgage, utilities, student loans, credit cards, insurance, cell phones, etc.) and any irregular bills (quarterly payments like insurance) that are due the following month. The next step involves totaling what is generally spent on all other expenses: groceries, eating out, coffee, gas, entertainment, etc. Every dollar spent should be accounted for.

 

Step 3: Subtract Expenses from Income to Equal Zero

Subtracting total expenses from the total income will reveal how much each individual or household is (or is not) spending each month. Some financial experts suggest configuring this part of the budget to create something called a “zero-based budget,” where the total income minus all expenses (including any savings, loans, or investments) equals zero. This method ensures that money is told exactly “where” to go — into savings, towards paying down student loans, etc. — and therefore, cannot be spent in any other way. These free accounting forms and programs may help: Dave Ramsey’s Monthly Cash Flow Plan form or Dave Ramsey’s Irregular Income Planning form.

 

Step 4: Monitor and Track Expenses Each Month

Diligence and commitment are necessary elements of all financial budgets, and staying on track — and minding the original monthly budget — can be a hard task for even the most dedicated budget-master. To help those who are serious about their budget, or simply need a little extra accountability, special tracking tools, and apps exists to help users monitor and maintain their expenses. Here are some free options and community favorites:

  1. Write one down on pen and paper.
  2. Develop a personal Excel spreadsheet.
  3. The Envelope System. This system involves acknowledging and setting up categories in which a person usually overspends (eating out, clothes, groceries, etc.). Each month, money for these categories is cashed out (so money is not in the bank) and carried with the person in dedicated envelopes or clips. This enables each person to visually see how much money is being spent in each category, as well as how much money remains throughout the month.
  4. Dave Ramsey’s Every Dollar software and budget app is a quick and easy way to see what is planned for the budget, what has been spent, and what remains.
  5. Mint by Intuit is a well-known budgeting app that automatically tracks a user’s finances. Users simply enter basic financial information and the program tracks the rest. Other benefits include goal setting options and data that feeds into TurboTax at tax time.
  6. PearBudget is a really simple budgeting and expense tracking service. It contains common and customizable expense categories, is secure, and it is easy-to-use for first-time budgeters. Some may find it less automated than Mint, but users do get some extra goal setting and planning features. PearBudget costs $4.95 a month after a free, 30-day trial.
  7. Clarity Money is a free budgeting app that can also help you manage your finances and track your spending by recommending ways to lower your bills, manage your subscriptions, and get the best credit card deals.
  8. GnuCash is a fairly robust accounting software program that is both free and suitable for most operating systems — as well as home and small business use. Along with its ability to track income and spending, the software also tracks banking, investing, and retirement accounts.

 

Final Thoughts on the Monthly Budget

Saving money, paying down student loans, and getting out of debt takes time. With a plan and a dedicated budget, the journey can be much shorter and less stressful. When budgeting, it is also important to live reasonably and spend within — and possibly below — your means whenever possible. A generous cut-back on unnecessary and frivolous expenses is a necessary part of creating a budget, but remember that it is ok to live comfortably and have some fun every now and then. Just make sure some “fun money” is written into the budgeted plan so that these expenses do not hinder the main objective — getting out of debt and saving money.

 

Click for Tips on Cutting Your Budget

 


 

Please note that we are not affiliated, getting paid to mention, or specifically endorse any of these budgeting products or programs.

 

Notice About Third Party Websites: 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.