Personal Finance Resources

Budgeting is a lifelong money management skill that can help you control your spending, save for the unexpected, and build a strong financial foundation. 

<p>Using a budget is a key part of being financially responsible. Understanding how budgets work and putting even the most basic budgeting techniques into practice can help you set a firm financial foundation and meet your future financial goals. Here&#39;s what you need to know about budgeting and why it plays an important role in your financial well-being.<sup>[1]</sup> </p><h2>Why is budgeting so important? </h2><p>The idea of setting up and using a budget may seem daunting—especially if you&#39;ve never had a budget before. It&#39;s important to remember that budgets are simply tools that can help you get where you want to be financially. No matter what life stage you&#39;re in, a budget can help you manage your everyday expenses, build your savings, pay down your debt, and plan for future goals like retirement.<sup>[1]</sup> </p><p>Here are some key reasons why budgets are so important.  </p><h3>1. Budgeting helps keep you honest about where (and how often) you&#39;re spending money </h3><p>Budgets shine a spotlight on your spending habits—the good, the bad, and the ugly. This is likely the reason many people put off making a budget to begin with. However, having a clear outline of how much money you have coming in and going out each month can help you make smarter financial decisions.  </p><p>When you take a hard look at your income, expenses, and financial goals, you&#39;ll be better able to see where you need to cut back. Plus, you may even find that you have some extra cash to put toward a short-term goal, like building up your emergency fund or paying down debt. You could even start saving for a dream vacation. Creating fun savings goals is one way to help you <a href="https://www.lendingclub.com/resource-center/personal-finance/sticking-to-a-budget-common-problems-and-solutions">stick to your budget</a>.<sup>[1]</sup> </p><h3>2. Budgeting curbs overspending  </h3><p>If you have a tendency to overspend, a budget can help you make sure essentials are covered before you spend on extras. While enjoying a meal out or shopping online are often well-deserved treats, the costs of these extras can add up quickly. Creating a budget can help you identify your needs, wants, and goals, so you can allocate how you spend and save your cash accordingly.  </p><p>While you may not need to cut out discretionary spending entirely, a budget helps set guardrails to keep overspending in check. For example, if you find you&#39;re spending too much on takeout, consider cutting back to one night of food delivery a week. Then you can put the cash you save toward another goal, like <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-the-debt-avalanche-method-and-how-does-it-work">paying down debt</a>.<sup>[1]</sup>  </p><h3>3. It can help you reach your personal financial goals </h3><p>Everyone&#39;s financial goals are a bit different depending on your individual financial values, lifestyle, spending habits, and other factors. However, no matter what your personal financial goals may be, a budget can help you meet them.</p><p>For example, let&#39;s say your goal is to build an emergency fund of $1,200 over the next year. You can then use your budget to allocate $100 a month into a high-yield savings account. If cash is tight, a budget can also help you figure out where you need to cut back on other expenses to make this goal happen. At the end of the 12 months, you may be able to celebrate reaching your goal and you may consider adjusting your budget to continue building your savings or set a new goal.<sup>[1]</sup>  </p><h3>4. Budgets help get you (and keep you) out of debt </h3><p>It&#39;s easy to rack up debt—especially if you have lots of high-interest credit cards or don&#39;t watch your spending carefully. By tracking your expenses carefully and setting specific goals each month, you can not only avoid reckless spending, but you may be able to pay down your debt faster.  </p><p>If you find you&#39;re having trouble paying off your credit cards each month or struggling to keep up with different accounts, a <a href="https://www.lendingclub.com/personal-loan/debt-consolidation">debt consolidation loan</a> could help. This type of loan rolls debt into one easy-to-manage monthly payment you can build into your budget, making it easier to stay on top of your debt. </p><h2>Types of budgeting that can help level-up your finances </h2><p>There is no one-size-fits-all approach to budgeting, and the type of budget you use can change over time. The most important thing when choosing a budget type is to find what works best for your money habits, spending needs, and savings goals.   </p><h3>Here are a few common types of budgeting strategies   </h3><ul><li><p><b>Zero-based budget: </b>With this method, your take-home pay minus your expenses should equal zero each month. So if you bring home $5,000, then you&#39;ll allocate every dollar into some type of category like rent, groceries, utilities, transportation, and discretionary spending. It&#39;s important to include financial goals, like paying down debt and building your savings, in those categories, too.<sup>[2]</sup>  </p></li><li><p><b>50/30/20 budget: </b>This approach involves dedicating 50% of your income to necessities like housing and food, 30% on discretionary expenses (like entertainment and personal-care items), and 20% on your financial goals, such as savings and retirement. This general rule of thumb may be easier to follow when setting your budget.<sup>[3]</sup>  </p></li><li><p><b>Pay yourself first budget:</b> This budgeting strategy makes saving the top priority. To start, you&#39;ll need to set a monthly savings goal. Then, with each paycheck, set those funds aside to essentially &quot;pay yourself.&quot; After that, you can spend your remaining money however you choose. Just be sure you&#39;re still covering your essentials and paying down debt, so you don&#39;t get behind on your bills or take a hit to your credit.<sup>[4]</sup> </p></li></ul><h2>The bottom line </h2><p>Budgeting is a money management skill that&#39;s important to building both short- and long-term financial success. Although creating a budget may feel intimidating at first, once you get started you may find it enlightening. Setting goals and milestones to celebrate along the way can help you stick to your budget. Remember, it&#39;s OK for your budget to fluctuate over time as your income, spending habits, and needs change.<sup>[5]</sup> </p><hr/><p>    </p><ol><li><p><a href="https://www.consumerfinance.gov/about-us/blog/budgeting-how-to-create-a-budget-and-stick-with-it/">Consumer Financial Protection Bureau</a>. “Budgeting: How to create a budget and stick with it.” </p></li><li><p><a href="https://www.incharge.org/financial-literacy/budgeting-saving/zero-based-budgeting/">InCharge Debt Solutions</a>. “Zero-based budgeting.” </p></li><li><p><a href="https://files.consumerfinance.gov/f/documents/cfpb_worksheet_my-spending-rule-to-live-by.pdf">Consumer Financial Protection Bureau</a>. “My spending rule to live by.” </p></li><li><p><a href="https://studentaid.gov/resources/prepare-for-college/students/budgeting/budgeting-tips">Federal Student Aid</a>. “Budgeting tips.” </p></li><li><p><a href="https://consumer.gov/managing-your-money/making-budget#what-to-know">Consumer.gov</a>. “Making a Budget.” </p></li></ol><p></p><p></p>

Your credit utilization rate measures the balances of your revolving accounts against your credit limits. Naturally, your ratio can influence your credit scores. A low utilization rate could improve your credit scores while a high utilization rate may hurt them. 

<p>Your credit utilization rate measures the balances of your revolving accounts against your credit limits. Naturally, your ratio can influence your credit scores. A low utilization rate could improve your credit scores while a high utilization rate may hurt them. </br></br>For that reason, it’s worth understanding exactly how credit utilization rates work and how they impact your credit. While the math is straight forward—you only need to know addition and division—it’s not always clear which numbers to use.</p><h2>How credit utilization ratio works</h2><p>Credit utilization refers to the percentage of your total available revolving credit, such as credit cards and personal lines of credit. The balance on installment loans, including <a href="/personal-loan">personal loans</a>, aren’t part of credit utilization rate calculations, though they can impact your credit score.</p><p>You actually have two utilization rates: Individual account utilization and your overall utilization. To determine your individual utilization rate, credit scoring models like FICO divide the reported revolving balance by the credit limit on each card or line of credit.<sup>[1]</sup> Your overall credit utilization rate is the comparison of all applicable revolving balances and the limits. </br></br>Both your overall credit utilization rate and the utilization rate of individual accounts can be important to your credit score.</p><h2>How does credit utilization affect your credit score?</h2><p>Credit utilization rates can be a major factor in your credit score. However, the specific impact will depend on the type of credit scoring model and your overall credit profile.</br></br>FICO, for example, lists revolving utilization as a subcomponent of the “amount owed” portion of its scoring formula, which can account for 30% of your FICO Score. </br></br>A low utilization rate—both overall and on individual accounts—is generally better for your score.</br></br>Lowering your utilization rate can be one of the fastest ways to <a href="/resource-center/personal-loan/how-to-improve-credit-score">improve your credit score</a> because most scoring models only consider your utilization rate as it is reported. Meaning, you may see a quick credit score boost if you’re able to pay off a high utilization rate at once.</p><h2>Why credit utilization is important for lenders </h2><p>Lenders use you credit score as a benchmark to determine if you qualify, among other things, for a loan, as well as its rates and terms. Because your credit utilization rate can be a major scoring factor, it could have a direct impact on the lender’s decision. </br></br>If you have high revolving credit limits and low balances, creditors take that as a sign that you know how to use credit wisely. If you are borrowing heavily against all your credit cards and revolving lines of credit, that can be a sign you’re not as financially responsible as you could be—or are under financial strain.</p><h2>How to calculate your credit utilization</h2><p>You can calculate your credit utilization rate by dividing the amount of revolving debt you owe by the amount of credit available. </br></br>For example, suppose you have a credit card and a line of credit, each with a limit of $5,000, for a total credit limit of $10,000. You owe $1,000 on the line of credit and $2,000 on the credit card, for a total of $3,000 owed. Given this, your credit utilization ratio is 30%.</br></br>There are several key points to remember when calculating utilization rates:</p><ul><li><p>Many credit card issuers report balances monthly, around the end of each statement period or billing cycle. </p></li><li><p>The bill for the statement period may be due around three weeks later. </p></li><li><p>Credit scoring models only calculate the balances reported on your credit reports at the time. </p></li><li><p>Typically, credit card companies will report your balances to the credit bureaus around the end of each billing cycle.<sup>[2]</sup></p></li><li><p>If the creditor reports to credit bureaus before you pay off the credit balance in full each month, you could still have a high credit utilization rate. </p></li></ul><p>To calculate the most accurate utilization rate, review your credit report rather than your current credit card balance. Some credit reports may also include your credit utilization ratio, saving you the math.</p><h2>5 ways to improve your credit card utilization</h2><p>In the end, there are only two numbers that matter—the balance and the credit limit—but there are ways to decrease your credit utilization rate and potentially boost your credit scores.</p><h3>1. Ask for a credit limit increase. </h3><p>As long as your balance doesn’t increase as well, a higher credit limit can lower your utilization rate and make it easier to maintain a low rate. You can ask card issuers for a credit limit increase. However, the request may lead to a hard credit inquiry, which might cause a temporary dip to your credit score.</br></br>Also, check the annual income amount you reported to the credit card company, which you can typically find in your online account. If your income has risen, updating the amount may help you get approved for a higher credit limit or lead to a credit limit increase initiated by the card issuer.</p><h3>2. Pay down credit card balances early.</h3><p>Lowering your credit card’s balance <a href="https://www.myfico.com/credit-education/blog/credit-score-factor-amounts-owed">before issuers report</a> it to the bureaus could also lead to a lower utilization rate. While the reporting often occurs around the end of each statement period, you could call your card issuer to confirm the exact timing. </p><h3>3. Open a new credit card. </h3><p>Opening a new revolving credit account, such as a credit card, can increase your total available credit. However, keep in mind that a new card may carry an annual fee and could increase the temptation to spend, racking up debt and increasing—rather than helping—your utilization rate. </p><h3>4. Keep your credit cards open.</h3><p>If you have a credit card you’re considering closing, you may want to keep it open to maintain your available credit limit to potentially have a lower utilization rate. </br></br>You could use the card for a small monthly bill and turn on autopay to ensure on-time payments and avoid account closure due to inactivity. Or, set a calendar reminder to use the card every few months (and another one to pay it down).</p><p>If there’s a specific reason you don’t want the card due to its annual fee or concerns about overspending, closing it may be a better option. <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-cancel-a-credit-card-without-hurting-your-credit-score">Learn more about closing a credit card account</a>.</p><h3>5. Become an authorized user on another person&#39;s card.</h3><p>Credit card issuers may report accounts to the credit bureaus under both the primary and authorized users’ names. As an authorized user, you could benefit from having the additional available credit limit. </br></br>Keep in mind, as an authorized user, you’re also giving up some control. For instance, if the primary cardholder generates a high utilization rate, it could show up on your credit report as well. If they fail to make on time payments, your credit scores could also be impacted.</p><h2>How personal loans help you lower credit utilization ratios</h2><p>There are two ways a personal loan might lower your credit utilization rate.</br></br>The first is if you use a personal loan rather than a credit card for a major purchase. Since personal loans are installment accounts, the balance and initial loan amount aren’t part of utilization calculations.</br></br>You can also use a <a href="/personal-loan/credit-card-consolidation-loan">personal loan to consolidate credit card debt</a>. In other words, you could take out a loan and use the money to pay down your debt. By eliminating your credit card balances and leaving the cards open, you could significantly lower your utilization rate.</br></br>By using a personal loan to pay down credit card debt, you will typically have a fixed interest rate, single monthly payment, and know exactly when the loan will be paid off. You can pre-qualify for a <a href="/personal-loan">debt consolidation loan</a> and check your rate with LendingClub Bank without impacting your credit score.</p><h2>Manage your credit utilization responsibly</h2><p>Tracking your credit card balances, credit limits, and statement period end dates can be prudent activities from a personal finance perspective. The most active way to manage your utilization rate is to make payments before issuers report your balances to the credit bureaus. </br></br>It’s generally better to avoid using credit cards for big purchases if cash is available to pay off your entire statement balance. This helps prevent high-interest credit card debt.</p><hr/><h2>Credit utilization FAQs</h2><p>Still have questions? Some of these commonly asked questions may provide the answer.</p><h3>When is credit utilization calculated?</h3><p>Credit utilization is calculated each month when credit card issuers report your balance to credit bureaus. Changes in your credit report, such as a new reported balance on a credit card, can lead to a different utilization rate. </p><h3>Does credit utilization matter if you pay in full?</h3><p>Yes, it still matters. Even if you pay your credit card bill in full, you could have a high utilization rate that may hurt your credit scores. Credit card balances are often reported weeks before the bill’s due date, and the reported balance is what impacts your utilization rate. </p><h3>How does credit utilization affect your credit score?</h3><p>Credit utilization rates can have a major impact on your credit scores. The specific amount of points will depend on the scoring model and the other information in your credit report. But if you have a high utilization rate, lowering it may be a way to increase your credit scores. </p><h3>What is a good credit utilization ratio?</h3><p>There’s no specific point where a utilization rate goes from good to bad. Keeping your overall utilization rate below 30% can be a helpful rule of thumb<sup>[3]</sup>—but the lower, the better. </p><hr/><ol><li><p><a href="https://www.myfico.com/credit-education/blog/credit-utilization-be">FICO</a>. &quot;What Should My Credit Utilization Ratio Be?&quot;</p></li><li><p><a href="https://www.experian.com/blogs/ask-experian/credit-card-balance-vs-utilization/">Experian</a>. &quot;What Is the Difference Between Credit Card Balance and Utilization?&quot;</p></li><li><p><a href="https://www.experian.com/blogs/ask-experian/how-to-calculate-credit-card-utilization/">Experian</a>. &quot;How to Calculate Credit Card Utilization.&quot;</p></li></ol><p></p>

Allowances are common in the U.S., but it’s important to weigh out the pros and cons before giving your kids an allowance.

<p>Around 79% of U.S. parents give their children an allowance, according to the <a href="https://www.moneyconfidentkids.com/content/dam/mck/pdfs/2022_Final_PKM_Deck_2022_Update.pdf"><b>2022 </b></a><a href="https://www.moneyconfidentkids.com/content/dam/mck/pdfs/2022_Final_PKM_Deck_2022_Update.pdf"><b>T. Rowe Price Parents, Kids, and Money </b></a><a href="https://www.moneyconfidentkids.com/content/dam/mck/pdfs/2022_Final_PKM_Deck_2022_Update.pdf"><b>Survey</b></a>.<sup>1</sup> It&#39;s clear allowances are popular with American families, and rightfully so. Allowances have benefits when used wisely, but there are also some downsides. As a parent or caregiver, it’s essential to understand both sides of the coin if you&#39;re considering giving your child an allowance.  </p><p>Here&#39;s a look at the benefits of allowances and their potential drawbacks, common reasons for paying kids an allowance, average allowances, and more.   </p><h2>Reasons for paying kids an allowance </h2><p>An allowance is a small amount of money parents give to their kids on a regular basis. Parents might pay their children an allowance for several reasons, including <a href="https://www.consumerfinance.gov/about-us/blog/heres-why-childhood-is-an-important-time-to-learn-about-money/"><b>teaching kids about money management</b></a> or introducing (and emphasizing) the concept of working to earn money.  </p><p>In past T. Rowe Price surveys, some parents indicated they paid their child an allowance because their child&#39;s friends received one. This suggests there may also be some societal pressure involved for today’s parents to give their kids an allowance.<sup>[1]</sup>  </p><h2>Pros and cons of allowances  </h2><p>Allowances are a staple in many U.S. households, but giving your kids cash regularly has both benefits and drawbacks. Weighing the pros and cons carefully can help you decide if an allowance makes sense for your family. </p><p><b>Pros: </b></p><ul><li><p>May encourage financial responsibility, saving, and budgeting skills in kids </p></li><li><p>Helps children understand the value of work if the allowance is tied to chores </p></li><li><p>May motivate kids to help around the house </p></li><li><p>Could help children be more responsible with their belongings if they&#39;ve used their allowance to purchase them </p></li></ul><p><b>Cons: </b></p><ul><li><p>Could make children feel entitled to rewards for all contributions at home </p></li><li><p>An allowance by itself may not teach kids about responsible saving and budgeting </p></li><li><p>Kids might spend the money they earn frivolously </p></li><li><p>Could stretch the household budget, depending on household income and allowance amount </p></li></ul><h2>What&#39;s the average kid&#39;s allowance? </h2><p>Here&#39;s a breakdown of the average child&#39;s allowance by age, based on numbers from a 2023 study conducted by kids&#39; money management app Greenlight.<sup>[2]</sup>  </p><table><tr><td><p><b>Age group</b> </p></td><td><p><b>Average allowance</b> </p></td></tr><tr><td><p>Ages 5–7 </p></td><td><p>$6.62 per week </p></td></tr><tr><td><p>Ages 8–10  </p></td><td><p> $8.46 per week </p></td></tr><tr><td><p>Ages 11–12 </p></td><td><p>$10.98 per week </p></td></tr><tr><td><p>Ages 13–15  </p></td><td><p>$15.02 per week </p></td></tr><tr><td><p>Ages 16–19  </p></td><td><p>$27.12 per week </p></td></tr></table><h2>How to set an allowance for your kids </h2><p>If you think an allowance is the right choice for your kids, it&#39;s important to consider these factors first: </p><ul><li><p>Your family budget </p></li><li><p>Whether the allowance will be tied to chores </p></li><li><p>How often you plan to give your child an allowance </p></li><li><p>What amount you think is reasonable for your child </p></li></ul><p>The best approach to allowances will differ by family, though many parents give their children an allowance of $1 per year of age. For example, a 10-year-old child might get a $10 allowance per week. You might also decide to give your younger children a smaller weekly allowance because they have fewer expenses than your older children. </p><h2>How an allowance can help teach your kids about money </h2><p>An allowance alone may not teach your kids too much about money, but it could if you also use it along with other teaching tools, like thoughtful conversations. Talk to your child about why you&#39;re offering them an allowance, and introduce the concepts of spending and personal savings. </p><p>Besides an initial conversation, checking in regularly about good spending and saving habits can help reinforce these concepts for your child. Potential conversation starters could include: </p><ul><li><p>What are you saving up for? </p></li><li><p>How are you using your allowance? </p></li><li><p>I&#39;m saving up for an item on my wishlist. Do you want to talk about how? </p></li><li><p>I just donated some money to my favorite charity. Is this something you&#39;d be interested in, too? </p></li></ul><p>If you tie your child&#39;s allowance to chores, it could also help teach them the concept of working to earn money. That way, they&#39;ll be familiar with it and potentially more motivated to apply for a first job once they&#39;re old enough.</p><h2>The bottom line </h2><p>An allowance alone may not help your child <a href="https://www.lendingclub.com/resource-center/personal-finance/financial-lessons-to-teach-your-kids-at-every-age"><b>learn about money</b></a>. Instead of just simply giving them cash each week, take the opportunity to have conversations about saving, spending, and working for those earnings. Thoughtful discussions combined with a weekly allowance will help your child build financial literacy skills they can apply in adulthood.    </p><hr/><ol><li><p><a href="https://www.moneyconfidentkids.com/content/dam/mck/pdfs/2022_Final_PKM_Deck_2022_Update.pdf">T. Rowe Price</a>. “2022 Parents, Kids &amp; Money Survey.” </p></li><li><p><a href="https://greenlight.com/learning-center/earning/average-allowance-by-age-for-kids">Greenlight</a>. “Average allowance by age for kids and teens.” </p></li></ol><p>   </p>

A growing number of school districts are adding financial literacy to the high school curriculum with the goal of increasing teen’s financial skills. Do you remember learning about money? 

<p>Whether your parents taught you how to manage your money or you learned on your own through painful trial and error, taking the time to teach your teens about money can equip them with crucial knowledge when it&#39;s time for them to leave the nest.<sup>1</sup> </p><h2>Personal finance lessons for teens </h2><p>Building a successful financial plan can be complicated, so when it comes to teens and money, it&#39;s important to stick to the basics, at least for now. Here are some important fundamentals to help you get started.  </p><h3>1. Earning money </h3><p>Up until now, you&#39;ve likely provided just about everything for your teenager financially. While they may not yet be ready to go out on their own, giving them opportunities to earn money can help them understand the value of the hard-earned dollar.<sup>1</sup>  </p><p>Some potential ideas include:  </p><ul><li><p>Paying an allowance for basic household chores </p></li><li><p>Giving them money for other projects, such as cleaning and organizing the garage or raking leaves  </p></li><li><p>Encouraging them to work during the summer or after school </p></li><li><p>Helping them come up with business ideas, such as mowing lawns, washing cars, walking dogs, or babysitting </p></li></ul><h3>2. Setting up a budget </h3><p><a href="https://www.lendingclub.com/resource-center/personal-finance/sticking-to-a-budget-common-problems-and-solutions"><b>Budgeting</b></a> is is a lifelong money-management skill that will help your teen stay in control of their spending, track where they can cut back on expenses, save money, and be financially prepared for the unexpected.<sup>2</sup>  </p><p>Discuss with your teen about how budgets can be a useful tool designed to help manage your monthly expenses, meet financial goals, and plan for the things they need and want. If you&#39;re comfortable with it, you may even consider sharing your monthly budget to show them how you manage your money.  </p><p>You can also provide some examples of popular budgeting methods and budgeting apps they can use to <a href="https://www.lendingclub.com/resource-center/personal-finance/simple-steps-to-building-a-better-budget"><b>create their first budget</b></a>. Examples include:  </p><ul><li><p><b>Zero-based budget: </b>With this approach, you&#39;ll budget in a way so your monthly income minus expenses, including savings, equals zero each month.<sup>3</sup> </p></li><li><p><b>50/30/20 budget: </b>This simpler approach involves spending 50% of your income on necessities, 30% on discretionary expenses (i.e. your lifestyle) and 20% on financial goals.<sup>4</sup>  </p></li><li><p><b>Pay yourself first budget: </b>With this method, you&#39;ll create a monthly savings goal and set those funds aside with each paycheck. After that, you can spend your remaining cash however you want.<sup>5</sup> </p></li></ul><h3>3. Building credit </h3><p>Your credit score is an important part of your financial identity, and it can influence the cost of a car, home, or other major purchase you <a href="https://www.lendingclub.com/personal-loan"><b>finance through loans</b></a> or lines of credit.<sup>6</sup>   </p><p>As a result, it&#39;s important to help your high school student understand <a href="https://www.lendingclub.com/resource-center/personal-finance/what-affects-your-credit-scores"><b>how credit scores work</b></a> and how the consequences of credit missteps can haunt them for years. While there are several factors that affect your credit score, the most important steps they should take include:  </p><ul><li><p>Paying bills on time </p></li><li><p>Applying for credit only when necessary </p></li><li><p>Minimizing credit card balances or paying in full every month </p></li></ul><p>You may also consider adding your teen as an authorized user on one or more of your credit cards. Once they&#39;re added, the full history of the account may be added to their credit reports—though some card issuers may wait until they turn 18 to start reporting. Keep in mind, adding a minor as an authorized user can increase debt and potentially negatively impact both parties&#39; credit scores, especially if there is a late payment.</p><p>Now may also be a good time for your teen to <a href="https://www.lendingclub.com/resource-center/personal-finance/getting-a-copy-of-your-credit-report"><b>request a credit report</b></a>. This step can help your child learn to monitor their credit and potentially <a href="https://www.lendingclub.com/resource-center/personal-finance/identity-theft-7-tips-to-reduce-your-risk"><b>prevent identity theft</b></a>.  </p><h3>4. The cost of borrowing </h3><p>Borrowing money can help you improve your way of living and possibly even your financial well-being. However, it&#39;s important for your children to understand the long-term cost of borrowing.  </p><p>Talk to your child about the difference between <a href="https://www.lendingclub.com/resource-center/personal-loan/apr-vs-interest-rate-whats-the-difference"><b>interest rates and APRs</b></a> (annual percentage rates), <a href="https://www.lendingclub.com/resource-center/personal-loan/compound-interest-vs-simple-interest-whats-the-difference"><b>compound vs. simple interest</b></a>, and how monthly payments can impact their ability to cover other important financial expenses and goals.<sup>7</sup>    </p><p>You can also discuss alternatives to borrowing. For example, federal student loans may be easily obtainable, but they are still a form of debt. Help your child research and pursue other ways to pay for college, such as getting a job, saving up, and applying for scholarships or grants. </p><h3>5. Setting financial goals </h3><p>Creating financial goals is a critical step in building a strong financial foundation. However, it&#39;s important to help your children learn how to <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-set-your-financial-goals"><b>set SMART goals</b></a>: specific, measurable, achievable, relevant, and time-bound. Here&#39;s a quick example:  </p><ul><li><p><b>Specific: </b>Save up for a prom date in April. </p></li><li><p><b>Measurable: </b>Save $500 for a tuxedo rental, dinner, flowers, and a shared limousine rental. </p></li><li><p><b>Achievable: </b>Open a savings account and set aside $100 a month, which is earned by doing odd jobs. </p></li><li><p><b>Relevant: </b>Saving up for prom is an important step in creating crucial memories for the future. </p></li><li><p><b>Time-bound: </b>Save up enough in five months to achieve your goal. </p></li></ul><h3>6. Saving for emergencies </h3><p>Life is unpredictable, and if you don&#39;t have an <a href="https://www.lendingclub.com/resource-center/personal-finance/your-emergency-fund-the-essential-guide"><b>emergency fund</b></a>, even a small unexpected expense can cause financial hardship.   </p><p>That&#39;s why it&#39;s key to help your teen learn the importance of <a href="https://www.lendingclub.com/resource-center/personal-finance/secrets-to-building-an-emergency-fund"><b>setting up an emergency fund</b></a><b> </b>to prepare them for things like car repairs, auto insurance deductibles, and even unemployment. As soon as your teen starts earning money, help them open a savings account.   </p><p>If you&#39;re already a pro at saving, consider sharing with your teen what specific steps you&#39;ve taken to build your own emergency fund, along with how it&#39;s helped you.<sup>8</sup> </p><h3>7. Investing for the future </h3><p>Your teen may be too young to open a retirement account, but you can still talk to them about the importance of investing and how returns can compound over time.  </p><p>You could encourage your child to try out a virtual stock exchange, which allows them to learn about investing without risking anything. Some brokerage firms even allow you to open custodial accounts where your teen can invest a little and get real returns. </p><h2>Discuss potential obstacles and setbacks </h2><p>No matter what you teach your teenager about managing money responsibly, you can&#39;t always make their decisions for them. That said, you can discuss potential obstacles that could affect their progress—now and in the future.  </p><h3>Spending more than they bring in </h3><p>As a teenager, it can be difficult to fully understand why it’s important to <a href="https://www.lendingclub.com/resource-center/personal-finance/how-little-can-you-live-on-tips-for-frugal-living"><b>live within their means</b></a> or the responsibilities of using a credit card. Even with a small credit limit on a starter credit card, it&#39;s possible to overspend.   </p><p>Credit card debt, in particular, can put a significant strain on your budget and potentially damage your credit score. As such, it&#39;s crucial that you discuss responsible credit card use and communication as your teen starts <a href="https://www.lendingclub.com/resource-center/personal-finance/best-creative-ways-to-pay-off-debt"><b>managing debt</b></a>.<sup>9</sup>  </p><h3>Trend-based spending </h3><p>Whether it&#39;s fashion, technology, appliances, or anything else, your teen is likely going to feel incredible social pressure to stay in line with the latest trends. Your child will be bombarded with advertisements on social media apps and may experience intense peer pressure to buy into the latest and greatest trends.  </p><p>Take some time to discuss this threat with your teen and help them learn how to find a balance between spending money on things they enjoy and preparing themselves for the future. This is also a good time to talk about <a href="https://www.lendingclub.com/resource-center/personal-finance/do-you-know-your-financial-values"><b>financial values</b></a> and how having them can help guide what they choose to spend their money on.  </p><h2>The bottom line </h2><p>As your children transition into adulthood, they&#39;ll need to learn how to make sound financial decisions on their own. However, teaching them valuable financial lessons in their teen years can give them crucial information to help flatten the learning curve a little.   </p><hr/><ol><li><p><a href="https://files.consumerfinance.gov/f/201501_cfpb_digest_financial-well-being.pdf">Consumer Financial Protection Bureau</a>. “Financial well-being: What it means and how to help.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/budgeting-how-to-create-a-budget-and-stick-with-it/">Consumer Financial Protection Bureau</a>. “Budgeting: How to create a budget and stick with it.” </p></li><li><p><a href="https://www.incharge.org/financial-literacy/budgeting-saving/zero-based-budgeting/">InCharge Debt Solutions</a>. “Zero-based budgeting.” </p></li><li><p><a href="https://files.consumerfinance.gov/f/documents/cfpb_worksheet_my-spending-rule-to-live-by.pdf">Consumer Financial Protection Bureau</a>. “My spending rule to live by.” </p></li><li><p><a href="https://studentaid.gov/resources/prepare-for-college/students/budgeting/budgeting-tips">Federal Student Aid</a>. “Budgeting tips.” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-credit-report-and-a-credit-score-en-2069/">Consumer Financial Protection Bureau</a>. “What is the difference between a credit report and a credit score?” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-loan-interest-rate-and-the-apr-en-733/">Consumer Financial Protection Bureau</a>. “What is the difference between a loan interest rate and the APR?” </p></li><li><p><a href="https://www.consumerfinance.gov/an-essential-guide-to-building-an-emergency-fund/">Consumer Financial Protection Bureau</a>. “An essential guide to building an emergency fund.” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-credit-counseling-and-debt-settlement-debt-consolidation-or-credit-repair-en-1449/">Consumer Financial Protection Bureau</a>. “What is the difference between credit counseling and debt settlement, debt consolidation, or credit repair?” </p></li></ol><p></p>

Self-care doesn't have to be expensive. Here are some creative, low-cost strategies to boost your mental well-being.

<p>When the occasional retail therapy becomes a regular habit, your financial well-being could suffer, potentially leading to high-interest debt.<sup>1</sup>  </p><p>The good news is there are plenty of self-care activities that can provide a respite from life&#39;s stressors without breaking the bank.  </p><h2>7 realistic ideas to practice self-care on a budget </h2><p>There&#39;s nothing wrong with treating yourself now and then with money you&#39;ve saved, but going into debt for your personal well-being can ultimately lead to more stress in the long run. Here are some ways you can practice self-care on a budget. </p><h3>1. Take a break from social media </h3><p>Social media can be a great way to connect with family members and friends, especially those who live far away.   </p><p>However, the drawbacks tend to outweigh the benefits, particularly with excessive use, according to a meta-analysis of 78 studies published about the connection between social media use and mental health.<sup>2</sup>  </p><p>If you find yourself turning to social media to improve your mood, taking a break may help free up time for other meaningful activities, reduce your anxiety, improve your sleep, and boost your overall well-being.<sup>3</sup> </p><h3>2. Spend some time in nature</h3><p>Research indicates that spending time in nature comes with a host of benefits, including reduced stress, increased attention, better mood, and even a lower risk of psychiatric disorders.   Even if you don&#39;t live near the mountains, the beach, or other natural wonders, a stroll in your local city park may be enough to get some free or inexpensive self-care. Regularly tapping into the healing powers of nature can provide significant cognitive benefits.<sup>4</sup>   </p><h3>3. Take care of your body&#39;s basic needs </h3><p>Sometimes, all it takes to improve your <a href="https://www.lendingclub.com/resource-center/personal-finance/money-and-mental-health-is-burnout-affecting-your-finances">mental health</a> is tending to your body&#39;s needs. That includes the following:  </p><ul><li><p><b>Get enough sleep: </b>Both the American Academy of Sleep Medicine and the Sleep Research Society recommend that adults get between seven and nine hours of sleep every night. While an occasional late night won&#39;t hurt, cutting your sleep short on a consistent basis can increase your chances for depression, weight gain, heart disease, and other health risks.<sup>5</sup>  </p></li><li><p><b>Hydrate: </b>Men typically need at least 15.5 cups of water every day, while women need 11.5 cups—and if you live in a hotter climate, you may need more.<sup>6</sup> Even mild dehydration can negatively impact your energy level, overall mood, and ability to think clearly.<sup>7</sup>  </p></li><li><p><b>Eat well: </b>If you consume a lot of processed food, you may not be getting all the nutrients your body needs. Eating more whole grains, fruits, vegetables, and lean meats—or other protein sources if you&#39;re a vegetarian or vegan—can improve your mental health.<sup>8</sup> Careful meal planning can allow you to eat better without a significant change to your budget.  </p></li><li><p><b>Exercise:</b> Working out isn&#39;t a cure-all for mental health challenges, but scientific research is conclusive that physical activity can help reduce anxiety and depression.<sup>9</sup> The Centers for Disease Control and Prevention recommends 150 minutes of moderate-intensity physical activity per week.<sup>10</sup> However, if you&#39;re limited due to time or physical constraints, remember that some exercise is better than none. </p></li></ul><h3>4. Rediscover old hobbies </h3><p>When you were young, many of your hobbies were free. Returning to what made you happy as a child can evoke feelings of nostalgia, which researchers indicate can improve your emotional well-being.<sup>11</sup>   </p><p>Whether it&#39;s reading, playing video games, taking a hike, or learning a new craft, filling your time with hobbies can be an excellent form of self-care on a budget. </p><h3>5. Follow a guided meditation </h3><p>Meditation apps can have expensive subscription fees, but there are countless alternatives on YouTube and other platforms that you can access for free. It may take some research to find videos you like, but the savings can be worth it.   </p><p>According to the Mayo Clinic, meditation can be a fast way to reduce stress by clearing your mind of daily stressors, helping you get a different perspective on managing stress, and reducing your heart rate and blood pressure. It can even improve your sleep.<sup>12</sup> </p><h3>6. Have a DIY spa day </h3><p>A day at your favorite spa can be relaxing, but it can also cost hundreds of dollars. Instead, consider running your own spa day at home. You can often find relatively inexpensive supplies online to give yourself a full-body treatment at a fraction of the cost. Some examples include:  </p><ul><li><p>Bath bomb, bubble bath, or Epsom salts </p></li><li><p>Scented candles or diffused essential oils </p></li><li><p>Face or eye mask </p></li><li><p>Manicure tools and nail polish </p></li><li><p>Exfoliator, oil cleanser, and other facial products </p></li><li><p>Flavored water or tea </p></li></ul><p>Before you get started, set the mood by cleaning up your spa space and putting on a relaxing music playlist. If possible, turn down the lights to enhance the relaxing atmosphere. Have clean towels, washcloths, and a robe nearby, so you can focus on yourself during your routine.  </p><h3>7. Do a little cleaning </h3><p>While it might seem contradictory, spending time cleaning up your living space can help you feel like you&#39;re in control, minimize distractions, and manage your stress and anxiety. In some cases, it can also be a form of exercise.<sup>13</sup>  </p><p>If tackling your entire house feels overwhelming, consider focusing on the rooms where you spend most of your time, such as the kitchen, living room, office, and bedroom. Putting on your favorite music playlist, audiobook, or podcast can also enhance your mood and keep you motivated.  </p><h2>Why self-care still matters, even when you&#39;re on a budget </h2><p>If you have a low income or a <a href="https://www.lendingclub.com/resource-center/personal-loan/signs-you-have-too-much-credit-card-debt">significant amount of debt</a>, you may be more likely to experience psychological distress compared to someone who has more discretionary income.<sup>14</sup> As a result, practicing self-care may be all the more important when you&#39;re on a budget.  </p><p>The only caveat is that you may need to get more creative with your self-care activities to get the benefits you&#39;re looking for while saving money along the way. </p><h2>The bottom line </h2><p>Practicing self-care is crucial for your mental health, but it can be challenging to find inexpensive self-care activities that work for you.  </p><p>While you may not be able to afford a tropical getaway, a day at your local spa, or a fancy dinner, there are many affordable ways to practice self-care in a meaningful way. If some of the above recommendations don&#39;t speak to you, take some time to think about activities that help improve your mental well-being and pursue those with your budget in mind.    </p><hr/><ol><li><p><a href="https://health.clevelandclinic.org/retail-therapy-shopping-compulsion">Cleveland Clinic</a>. “Why ‘Retail Therapy’ Makes You Feel Happier.” </p></li><li><p><a href="https://www.sciencedirect.com/science/article/pii/S2666560324000367">ScienceDirect</a>. “Does social media use make us happy? A meta-analysis on social media and positive well-being outcomes.” </p></li><li><p><a href="https://summer.harvard.edu/blog/need-a-break-from-social-media-heres-why-you-should-and-how-to-do-it/">Harvard Summer School</a>. “Need a Break from Social Media? Here’s Why You Should — and How to Do It.” </p></li><li><p><a href="https://www.apa.org/monitor/2020/04/nurtured-nature">American Psychological Association</a>. “Nurtured by nature.” </p></li><li><p><a href="https://pmc.ncbi.nlm.nih.gov/articles/PMC4434546/">National Library of Medicine</a>. “Recommended Amount of Sleep for a Healthy Adult: A Joint Consensus Statement of the American Academy of Sleep Medicine and Sleep Research Society.” </p></li><li><p><a href="https://www.mayoclinic.org/healthy-lifestyle/nutrition-and-healthy-eating/in-depth/water/art-20044256">Mayo Clinic</a>. “Water: How much should you drink every day?” </p></li><li><p><a href="https://today.uconn.edu/2012/02/even-mild-dehydration-can-alter-mood/">UConn Today</a>. “Even Mild Dehydration Can Alter Mood.” </p></li><li><p><a href="https://mhcsandiego.com/blog/nutrition-and-mental-health">Mental Health Center of San Diego</a>. “Nutrition and Mental Health: Foods that Boost Your Mood.” </p></li><li><p><a href="https://pmc.ncbi.nlm.nih.gov/articles/PMC4434546/">National Library of Medicine</a>. “A meta-meta-analysis of the effect of physical activity on depression and anxiety in non-clinical adult populations.” </p></li><li><p><a href="https://www.cdc.gov/physical-activity-basics/guidelines/adults.html">Center for Disease Control</a>. “Adult Activity: An Overview.” </p></li><li><p><a href="https://pmc.ncbi.nlm.nih.gov/articles/PMC9826762/">National Library of Medicine</a>. “Can Good Memories of the Past Instill Happiness? Nostalgia Improves Subjective Well-Being by Increasing Gratitude.” </p></li><li><p><a href="https://www.mayoclinic.org/tests-procedures/meditation/in-depth/meditation/art-20045858">Mayo Clinic</a>. “Meditation: A simple, fast way to reduce stress.” </p></li><li><p><a href="https://my.clevelandclinic.org/podcasts/health-essentials/decluttering-your-life-how-cleaning-and-mental-health-are-connected-with-dr-dawn-potter">Cleveland Clinic</a>. “Decluttering Your Life: How Cleaning and Mental Health Are Connected with Dr. Dawn Potter.” </p></li><li><p><a href="https://pmc.ncbi.nlm.nih.gov/articles/PMC4434546/">National Library of Medicine</a>. “The Relationship Between Financial Worries and Psychological Distress Among U.S. Adults.” </p></li></ol><p></p>

Your credit score is a big factor in determining your interest rate and whether you qualify for a loan. By better understanding the key factors that make up your credit score, you can feel more in control.

<p>Your credit score is a big factor in determining your interest rate and whether you qualify for a loan. By better understanding the key factors that make up your credit score, you can feel more in control. </p><h2><b>What is a credit score?</b> </h2><p>A credit score is a numerical representation of an individual&#39;s creditworthiness, based on their credit history. It typically ranges from 300 to 850, with higher scores indicating better credit reliability.   </p><p>Lenders use credit scores to assess the risk of lending money, with factors like payment history, credit utilization, and the length of credit history playing a key role in determining the score. A higher score can help you qualify for loans with better terms and interest rates. </p><h2><b>What is a FICO score?</b>​</h2><p>Many lenders use your​ <a href="https://www.myfico.com/credit-education/whats-in-your-credit-score">FICO</a><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score">®</a>​​<a href="https://www.myfico.com/credit-education/whats-in-your-credit-score">Score</a>​​​, or credit score, to determine whether to offer you credit. Your FICO score is calculated using a mathematical formula for your credit report data.<sup>[1]</sup> “FICO” is an acronym for the Fair Isaac Corporation, the company that created the FICO ​​score.  Your FICO score may also be a big factor in determining your interest rate. Generally, lenders consider people with higher scores to be more desirable borrowers, as they typically have a lower risk of defaulting on their loans. </p><h2><b>What factors affect your credit score the most?</b> </h2><p>When it comes to understanding your ​​<a href="https://www.lendingclub.com/resource-center/personal-finance/what-affects-your-credit-scores">credit </a>​<a href="https://www.lendingclub.com/resource-center/personal-finance/what-affects-your-credit-scores">score</a>​, knowing the factors that influence it is crucial. Your credit score isn&#39;t just a random number—it&#39;s calculated based on specific financial decisions and patterns. These key factors help lenders determine how reliable you are as a borrower. In this section, we’ll break down the essential components that impact your credit score, so you can take steps to improve and maintain a strong credit profile.  </p><h3><b>On-time payment history</b> </h3><p>Your credit report shows your credit and loan balances and your track record for repaying them. Paying on time can help improve your credit score, while just one or two late payments can lower your score. Automatic bill pay or calendar reminders are easy ways to help you avoid late payments. </p><h3><b>Credit utilization rate</b> </h3><p>Your credit card usage is represented as a percentage that’s equal to your total credit card balances divided by your total credit card limits. </br> </br>Example: </p><ul><li><p>You have two credit cards with limits of $5,000 and $20,000. </p></li><li><p>The first credit card has a balance of $500, while the second credit card has a balance of $2,000. </p></li><li><p>The credit bureaus calculate your credit card usage: </br>($500+$2,000) / ($5,000+$20,000) = 0.1, or 10%. </p></li></ul><p>Creditors may use this percentage to decide whether to approve or deny a loan or credit card. While low overall credit card usage can help your credit score, it’s important to note that a high balance on any one card may lower your score. You can help this by paying off high balances on cards with a lower credit limit first, or by requesting a credit limit increase from your credit card provider. Keep in mind that to raise your limit, some companies make a <a href="https://www.lendingclub.com/resource-center/personal-finance/key-differences-of-a-soft-credit-check-vs-hard-credit-check">hard credit inquiry</a> that may affect your credit score. </p><h3><b>Diversity of accounts</b> </h3><p>The longer your credit history—and the older your accounts are—the better. That&#39;s why keeping older credit cards open and active can be a good idea as long as you are able to pay the full balance on time each month to avoid racking up interest. </p><h3><b>Total accounts</b></h3><p>People with more accounts or open lines of credit often have higher credit scores because it shows that lenders are willing to give them credit. Having a good mix of different types of credit helps your credit health as well. That said, it&#39;s definitely a balance, so only open accounts you really need. </p><h3><b>Hard inquiries</b> </h3><p>When you apply for a credit card, mortgage, loan, or other credit, a hard credit inquiry appears on your credit report. One hard inquiry usually has little impact on your credit score, often a decrease of 1 to 5 points. Multiple inquiries can add up and have a larger impact. </p><p>In contrast, a soft inquiry doesn&#39;t affect your credit score. Only you can see it on your credit report. Others, like lenders, can&#39;t see it. When you check your rate through LendingClub, we use a soft inquiry. We’ll only do a hard pull of your credit (which could affect your credit score) once your loan is approved. There&#39;s no need to worry if your loan application isn’t approved. ​​<a href="https://www.lendingclub.com/resource-center/personal-loan/what-to-do-if-you-are-declined-a-personal-loan">Being declined</a> for a loan doesn&#39;t hurt your credit. </p><h3><b>Public records</b> </h3><p>Public records, like judgments, tax liens, or bankruptcies, can appear on your credit report as negative items. These records typically stay on your credit report for seven years. Certain bankruptcy types might remain for 10 years. A negative public record indicates to a lender that you may have mismanaged your credit in the past. </p><h3><b>Paying off installment loans</b> </h3><p>Installment loans include personal loans, auto loans, student loans, or any loan paid over a set period with a set schedule of payments. Unlike balances on credit cards or revolving lines of credit, an installment loan account closes once the debt is paid in full. While paying off an installment loan is great for your financial health, doing so won’t always increase your credit score—in some cases, your credit score may even temporarily drop. A few reasons for this are: </p><ul><li><p><b>You paid off your only installment loan</b>: Credit bureaus like to see a mix of different credit types. If you paid off your loan and your only other credit history comes from credit cards, this may lower your score. </p></li><li><p><b>You have a low number of total accounts</b>: If you have a small number of accounts, closing one can impact your score. </p></li><li><p><b>The loan you paid off is one of your older accounts</b>: If you pay off a long-term loan, like a student loan or mortgage, you lose the history that goes with those accounts when they drop off your credit report, which can reduce the average age of your accounts and may lower your score. </p></li></ul><p>It may be tempting to delay paying off your loan to avoid a possible drop in your score. Keep in mind, though, that making consistent payments on your loan and paying it off on time helps your credit in the long run. Closed accounts in good standing still appear on your credit report for up to 10 years. They no longer count toward credit age or your account mix, but a good payment history is a crucial part of your <a href="https://help.lendingclub.com/hc/en-us/articles/360038385312">credit health</a>. </p><p>If your credit score drops because you have high balances on your credit cards, a <a href="https://help.lendingclub.com/hc/en-us/articles/215427278">balance transfer loan</a> can be a great solution. Rates for balance transfer loans tend to be lower than other types of personal loans with LendingClub—and most credit cards—and have higher approval odds. When you pay off your credit card balances and add a personal loan to your credit mix, it may help raise your credit score. </p><h2><b>Credit score types</b>​ ​​</h2><p>Credit scores come in many different types. The score you see when you pull your report or get from a monitoring service may not match the score a financial institution uses to make a lending decision. ​​While 90% of top lenders consider your FICO score, a lender may base your rates on other popular credit-scoring models, <a href="https://www.vantagescore.com/press_releases/the-complete-guide-to-your-vantagescore/">VantageScore</a>.​​</p><h2><b>How to check your credit </b>​<b>scores</b> </h2><p>Many factors affect your credit scores, however your payment history and credit utilization make up nearly two-thirds of your scores. By paying close attention to your finance and money habits, you can work on <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-improve-credit-score">improving your score</a> over time. Checking your credit scores and credit reports regularly can help you keep tabs on your scores. </p><p>You can request a free copy of your credit reports from Equifax, Experian, and TransUnion once a year through <a href="http://annualcreditreport.com/">AnnualCreditReport.com</a>. </p><hr/><p>1.<a href="https://www.myfico.com/credit-education/whats-in-your-credit-score"> FICO.</a> &quot;What&#39;s in my FICO<sup>®</sup> Scores?&quot;</p>

Skipping bill payments, carrying more debt, or applying for a lot of credit at once may cause your credit scores to take a dip. 

<p>Credit scores have a tendency to fluctuate based on the information in your credit reports and the credit-scoring company that&#39;s running the calculation. When scores rise or fall by a few points, it&#39;s not usually something you need to worry about—especially if you&#39;ve been managing your credit responsibly. However, if you notice a significant drop, it&#39;s important to find out why and take action to <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-improve-credit-score"><b>improve your score</b></a>.<sup>1</sup>  </p><h2>6 reasons why your credit scores dropped </h2><p>An unexpected dip in your <a href="https://www.lendingclub.com/resource-center/personal-finance/what-affects-your-credit-scores"><b>credit scores</b></a> can be frustrating. You may think you&#39;ve been managing your credit wisely, only to discover a sudden drop. Credit scores can go down for a variety of reasons—missed credit card or loan payments, an unusually large purchase, or an application for a new line of credit, to name just a few. They can even vary, depending on scoring systems.<sup>1</sup>   </p><p>While FICO<sup>®</sup> Score and VantageScore are the two main scoring companies, about 90% of creditors use your FICO Score when you apply for a loan, credit card, or other type of credit account.<sup>2</sup> Five factors affect your FICO Score, including: payment history (35%), credit utilization (30%), length of credit history (15%), credit mix (10%), and applications for new credit (10%).<sup>3</sup>   </p><p>VantageScore and other companies use slightly different criteria and proprietary software to determine your scores, but they generally consider the same types of factors as FICO.<sup>4</sup>  </p><p>Here&#39;s a closer look at some common reasons why your credit scores dropped and what you may be able to do about it. </p><h3>1. Missed or late payments </h3><p>Your payment history is a factor in determining your credit scores. This factor helps predict the likelihood you&#39;ll fall behind on future bills. Even just one payment that&#39;s 30 days late can cause your scores to drop. More serious issues, like missed payments or an account that&#39;s been sent to collections, can cause significant score decreases.<sup>3</sup>  </p><ul><li><p><b>What to do about it: </b>Pay your bills on time, every time. To avoid missed payments, enroll in autopay so you&#39;ll never have to worry about forgetting to pay a bill or missing a due date. If you&#39;re struggling with your payments, reach out to your creditor to see if they can help. Over time, if you consistently demonstrate a more positive payment history, your credit scores will likely improve. </p></li></ul><h3>2. High credit card balances </h3><p>Credit utilization, or the amount you owe compared to your available credit, is the second-most important scoring factor. If you&#39;ve been using your card frequently or you&#39;ve made any recent large purchases, it may cause your credit utilization to go up and most likely your scores to go down. Credit-scoring models typically calculate utilization for each account separately as well as your total utilization across all of your accounts.<sup>3</sup>  </p><ul><li><p><b>What to do about it: </b>It&#39;s best to keep your credit utilization rate under 10%, but if you have to carry some debt, try not use more than 30% of your available credit. To lower your credit utilization, cut back on your credit card spending and try to pay off all of your balance (or as much as you can) each month. If you&#39;ve got a lot of high-interest debt and you&#39;re struggling to pay more than your minimum due, it may be worth considering a debt consolidation loan.  </p></li></ul><h3>3. Recently closed accounts </h3><p>It may seem intuitive to <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-cancel-a-credit-card-without-hurting-your-credit-score"><b>close an old credit card</b></a> you don&#39;t use much, but this can actually cause your credit score to drop. A portion of your credit score is determined by the age of your credit accounts as well as your &quot;mix&quot; of different types of credit, like loans and credit cards. Although the length of your credit history and account mix are less significant than your payment history or credit utilization, they&#39;re still important factors because they show card issuers and other lenders that you have a solid history of managing different types of credit.<sup>3</sup>   </p><ul><li><p><b>What to do about it: </b>Keep old accounts open whenever possible, even if you don&#39;t use them. Unless you&#39;re paying a pricey annual fee for a credit card, it&#39;s usually a good idea to leave old credit card accounts open. It&#39;s also important to consider how you leave an account before it&#39;s closed. For example, when you pay off a loan, it will show up as &quot;closed&quot; on your credit reports. If the account was in good standing, meaning no history of missed or late payments, that positive payment history remains on your credit for 10 years. Negative remarks remain for seven years.  </p></li></ul><h3>4. New credit applications </h3><p>Any time you apply for new credit—like a credit card, <a href="https://www.lendingclub.com/personal-loan"><b>personal loan</b></a>, auto loan, or mortgage—the lender may perform a credit check known as a &quot;hard inquiry.&quot; Your score typically only drops a few points temporarily after a hard hit to your credit, but you may experience a bigger dip if you submit too many applications in a short window or apply for credit often.<sup>3</sup>  </p><ul><li><p><b>What to do about it: </b>A <a href="https://www.lendingclub.com/resource-center/personal-finance/key-differences-of-a-soft-credit-check-vs-hard-credit-check"><b>hard inquiry</b></a> usually only affects your scores for about a year, even though it stays on your report for up to two years. Spacing out credit applications can help minimize the number of hard inquiries in your credit file. However, credit-scoring companies recognize that rate shopping is a typical part of comparing loan offers. So submitting your applications in a short window, like two weeks, has less of an impact on your credit. </p></li></ul><h3>5. Issues with a loan you cosigned </h3><p>The mere act of cosigning on a loan (or being a co-borrower) doesn&#39;t negatively impact your credit score. However, if the primary account holder (or your co-borrower) has missed or late payments, your credit score will be impacted. Remember, when you cosign or serve as a co-borrower, you&#39;re also financially responsible for the loan.<sup>5</sup>  </p><ul><li><p><b>What to do about it: </b>Make sure you understand the responsibilities and potential risks before deciding to cosign a loan with a friend or family member or take out a loan as a co-borrower. Be prepared to cover the loan payments, if necessary, to avoid default.  </p></li></ul><h3>6. Identity theft or fraud </h3><p>Fraudsters who get their hands on your personal financial information can do a number on your credit. They can open accounts in your name, run up debt on your credit cards, and more. Fraud is on the rise, and your private information could be exposed in many ways, from physical theft of a wallet to digital data breaches or phishing scams.<sup>6</sup>   </p><ul><li><p><b>What to do about it: </b>Monitor your <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-read-your-credit-report-identify-red-flags"><b>credit reports</b></a> closely. If you discover anything that&#39;s not correct, it could be a simple mistake or could indicate you&#39;re a potential victim of fraud or identity theft. Either way, you&#39;ll want to report inaccurate information to each of the three major credit bureaus and consider placing a fraud alert on your credit reports. You may also want to put a lock or freeze on your credit. If identity theft is suspected, report the fraud to the police or visit ​​<a href="https://reportfraud.ftc.gov/#/"><b>ReportFraud.ftc.gov</b></a> to report it.  </p></li></ul><h2>The bottom line </h2><p>Credit scores frequently fluctuate. To avoid being blindsided, get to know all the factors that impact your credit scores, manage your credit responsibly, and <a href="https://www.lendingclub.com/resource-center/personal-finance/getting-a-copy-of-your-credit-report"><b>monitor your credit reports</b></a> regularly for fraud and inaccuracies. You can request a free copy of your credit reports from Equifax, Experian, and TransUnion once a year through <a href="http://annualcreditreport.com/"><b>AnnualCreditReport.com</b></a>.    </p><hr/><ol><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-a-credit-score-en-315/">Consumer Financial Protection Bureau</a>. “What is a credit score?” </p></li><li><p><a href="https://www.fico.com/en/newsroom/fico-score-remains-most-widely-used-credit-score-securitization-market-keeping-lender">myFICO</a>. “FICO Score Remains the Most Widely Used Credit Score in the Securitization Market, Keeping Lender Confidence.”  </p></li><li><p><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score">myFICO</a>. “What&#39;s in my FICO Scores?”  </p></li><li><p><a href="https://www.vantagescore.com/press_releases/the-complete-guide-to-your-vantagescore/">VantageScore</a>. “The Complete Guide to Your VantageScore.” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/why-would-i-need-a-co-signer-for-an-auto-loan-en-811/">Consumer Financial Protection Bureau</a>. “Why would I need a co-signer for an auto loan?” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-do-i-do-if-i-think-i-have-been-a-victim-of-identity-theft-en-31/">Consumer Financial Protection Bureau</a>. “What do I do if I’ve been a victim of identity theft?” </p></li></ol><p></p>

Shift from scarcity to abundance by focusing on financial growth, saving, and investing. Prioritize long-term goals, celebrate progress, and adopt a mindset of opportunity rather than limitations.

<p>If you believe that your wealth and opportunities are limited, and fear you’ll never have enough, your mindset could be directly impacting your money and your life. Whether it stems from your upbringing, or the widespread job and income losses brought on by the pandemic, a money scarcity mindset can cause you to focus only on what you lack, and keep you from moving forward or achieving personal and financial success. </p><p>Fortunately, there are ways to overcome and let go of scarcity beliefs around money–and shift your perspective toward abundance. Learn what a scarcity mindset is, how it can keep you from achieving your financial goals, and practical steps to transform your attitude and take charge of your financial life. </p><h2><b>What is a scarcity mindset?</b> </h2><p>The term “scarcity mindset” was coined by Stephen Covey in his book “<a href="https://bookshop.org/p/books/the-7-habits-of-highly-effective-people-30th-anniversary-edition-sean-covey/12583202?ean=9781982137274&gad_source=1&gclid=Cj0KCQiAz6q-BhCfARIsAOezPxkKQ_BONH4P1UXyg1HxP-WmK6WeKe_eo-uA4CqflfEs7lpp3c0RF2YaAv7xEALw_wcB">The 7 Habits of Highly Effective People</a>.” Its basic tenets are: the belief that your wealth and opportunities are limited, and the fear that you will never have enough (or that not enough is available to go around for everyone). Whether you feel you lack time, money, connection with others, or something else entirely–a scarcity mentality can affect anyone, whether you’re living paycheck to paycheck or have millions of dollars in the bank. </p><p>Particularly when it comes to money, a scarcity mindset can lead to “thinking small.” For example, rather than taking the steps needed to make your money grow, you may be narrowly focused on pinching every penny. </p><p>Tunneling your vision and seeing only where you’re lacking, a scarcity mentality can keep you from thinking broadly or clearly, and from making good decisions that will benefit you in the long run. For example, you might not contribute to a 401(k), assuming you can’t afford to do so. If you do contribute, you might invest conservatively—in cash instead of mutual funds, for instance—for fear of losing your hard-earned savings. </p><p>A scarcity mentality often arises from your life experiences. For example, if your childhood was financially unstable, your parents fought about money, or you’ve experienced a layoff, you may have developed a money scarcity mindset. Negative attitudes toward wealth can also create a money scarcity mindset. You might believe that people with money are shallow or greedy, and that if you had more money, you’d turn out that way, too. </p><p>The opposite of scarcity mentality is abundance mentality–the belief that there is plenty out there for you and more than enough to go around for everyone else. It’s the belief that the money you have now is enough, and that it’s possible to make more if and when you may need to. According to Covey, people with an <a href="https://www.franklincovey.com/the-7-habits/">abundance mentality</a> generally view the world as full of opportunity and possibility and experience this as a deep inner sense of personal worth and security. </p><h2><b>10 Steps to shift your money scarcity mindset into one of abundance</b> </h2><p>Ready to move your mindset from scarcity to abundance? Follow these steps and begin embracing the opportunities and possibilities that can help you shift your perspective on your money and your life. </p><h3><b>1. Identify your scarcity beliefs.</b> </h3><p>What negative messages did you receive about money growing up? How did your parents think and act about money? What are your beliefs around money now? Write down everything you can think of. </p><p>Once you’ve got all your limiting beliefs down on paper, it’s easier to see them for what they are–stories you are continuing to tell yourself, and not necessarily the facts as they are now (or as they could be). </p><h3><b>2. Define what abundance means to you.</b> </h3><p>Abundance can mean different things to different people. So, try to define what abundance really means to you? Try not to make it about numbers, like saving up $X in your retirement account. With a scarcity mentality, even if you reach that goal, it won’t feel like enough. </p><p>Instead, think about how financial abundance would make you feel. Would you feel more restful, peaceful, healthy, secure, or some combination of these? What other feelings would you add? </p><p>Also ask yourself what your abundant financial life would look like. Would you invest in being more adventurous, helping your community, or spend more time creating more meaningful friendships and enjoying more time with family members instead of working long hours and weekends? </p><p>Establishing what abundance really means to you personally can help you take the next step of defining your goals. </p><h3><b>3. Set personal goals.</b> </h3><p>Give yourself something to aim for. Is it the trip of a lifetime, or paying down credit cards? Is it going back to school to earn a degree that will land you a better paying job or new career? Or is it buying your first home, or moving to a new city? </p><p>Write down what actions you’d have to take to achieve your goal and how much money you’d need to set aside to realize your goals. </p><h3><b>4. Create a realistic budget.</b> </h3><p>Budgeting may sound like the penny-pinching opposite of abundance, but it’s simply a plan for directing your money toward your goals. If you have enough income to meet your financial needs—and some left over—count yourself fortunate. Actually seeing this on paper can help you let go of some of the fears you may be holding around not having enough. </p><p>On the other hand, if money is tight and you’re living paycheck to paycheck, <a href="https://www.lendingclub.com/resource-center/personal-finance/tips-for-financial-success-in-budgeting-your-money">creating a budget</a> will help you look for ways to save and make the most of what you have to work with. </p><h3><b>5. Start saving money.</b> </h3><p>Bolster an attitude of abundance by prioritizing saving. This can be building emergency fund that covers three to six months’ worth of living expenses, or by starting to save more for your retirement. Automating your savings makes saving even easier. </p><p>For example, you can set up a transfer to an emergency <a href="https://www.lendingclub.com/personal-deposits">high-yield savings account</a> each pay period and start having pre-tax retirement contributions (at least up to your company match) taken out of your paycheck automatically. </p><h3><b>6. Move on micro-actions that feel “abundant.”</b> </h3><p>Taking small steps in the direction of some of your goals and aspirations (that may feel a little out of reach at first) can help you build some momentum toward shifting into abundance. Build these micro-actions into your budget so you won’t feel guilty about spending. </p><p>For example, if you aspire to to save for a down payment on a house, go ahead and start window shopping new starter or fixer-upper homes in your area. If your goal is to travel more, research far-flung vacation ideas. Instead of thinking, “I’ll never be able to afford to do XYZ,” imagine yourself living the abundant life you envision for yourself, and nurture that feeling. </p><h3><b>7. Practice gratitude.</b> </h3><p>A scarcity mindset focuses on what you lack, which is why taking a step back to look at the big picture can offer a more realistic, and hopeful, view of your future. A growing body of evidence shows that starting a gratitude journal can help you sleep better, reduce stress, and improve interpersonal relationships. It’s as simple as making a habit of writing down the three things you’re most thankful at the start or end of each day. </p><h3><b>8. Be generous.</b> </h3><p><a href="https://www.psychologicalscience.org/news/giving-rather-than-receiving-leads-to-lasting-happiness-study.html">Research suggests</a> spending our money or time helping others makes us happier than if we spent it on ourselves. Look for ways to give, financially or otherwise. Donate to a charitable cause. Volunteer your time and resources to a local non-profit. Mentor a co-worker or offer to tutor an at-risk teen for free. </p><p>Giving builds connections, expands your network of resources and support, and, ultimately, can increase your overall sense of abundance and personal fulfillment. </p><h3><b>9. Flip the script.</b> </h3><p>With a scarcity mindset, your first instinct is to think, “I can’t afford this.” Turn that around by asking, “How can I make XYZ attainable by XYZ time?” Suppose you want to grow your retirement savings. Instead of saying “I can’t afford to put any more money away,” look for ways that you can. Could you commit to stashing the entirety of next year’s tax refund in a high-yield savings account? </p><p>Thinking more broadly about all your options instead of focusing only on what’s difficult about the situation could help you find new solutions to old problems. </p><h3><b>10. Seek expert financial advice.</b> </h3><p>A certified financial planner may be able to help you identify your financial goals and the right steps to reach them. Financial planners are all about growth and possibility, and their abundance mindset is likely to be contagious. If you’re struggling to make ends meet or <a href="https://www.lendingclub.com/resource-center/personal-finance/steps-to-decimate-debt-the-debt-snowball-method">dealing with high-interest debt</a>, getting the advice of a reputable fiduciary advisor (someone with your best interests in mind) may help you gain control of your finances and lessen your sense of scarcity. </p><h2><b>The bottom line</b> </h2><p>Shedding a scarcity mindset can feel like letting go of a heavy anchor that you didn’t realize had been weighing you down all this time. Shifting to a mindset centered around abundance can help build your confidence and your ability to recognize more of the personal and financial opportunities that are often right in front of you. </p><p>As you practice abundant financial habits such as making a budget, saving for the future, giving generously, and learning to manage money, you’ll feel your perspective toward your money and your life change. Embracing abundance can open you up to the limitless possibilities for making the most of your life, financially and otherwise. </p>

For centuries, American women have fought for gender pay equality, lobbied for financial autonomy, and more than earned their places of leadership in the economy. Women and their legacy have impacted today’s world and economy in countless ways.

<p>In 2023, women earned just 83.6 cents to every dollar that men earned, according to data from the U.S. Bureau of Labor Statistics.<sup>1</sup> Further disparities exist for women of color and mothers, with Black women earning around 70%, Hispanic women earning around 65% compared to the average White man.<sup>2</sup> </p><p>While ongoing wage and savings gaps are often financial hurdles for women, understanding these challenges can motivate all of us to advocate for higher wages and affect positive change. Here are some resources and tips to help you get started.   </p><h2>Invest in your financial literacy </h2><p>Many companies are now focused on sharing free financial education and investment guidance for women. If you&#39;re wondering where to start, the following organizations offer no-cost resources to improve your <a href="https://www.lendingclub.com/resource-center/personal-finance/money-and-mental-health-is-burnout-affecting-your-finances"><b>financial well-being</b></a> and build confidence:  </p><ul><li><p><a href="https://www.ellevest.com/"><b>Ellevest</b></a><b>:</b> Ellevest is an investment company focused on providing guidance and education for women investors interested in setting aside money for short- or long-term goals.  </p></li><li><p><a href="https://www.wife.org/"><b>Women&#39;s Institute for Financial Education (WIFE)</b></a><b>:</b> WIFE is a nonprofit dedicated to empowering women with financial education, through articles, videos, and more. </p></li><li><p><a href="https://www.clevergirlfinance.com/"><b>Clever Girl Finance</b></a><b>:</b> Clever Girl Finance provides free financial articles and courses, as well as paid one-on-one money coaching and more. </p></li><li><p><a href="https://womensmoneymatters.org/"><b>Women&#39;s Money Matters</b></a><b>:</b> Women&#39;s Money Matters offers free financial workshops, mentoring, and peer discussion groups to support women.   </p></li><li><p><a href="https://hermoney.com/"><b>HerMoney</b></a><b>:</b> HerMoney provides women-focused educational articles on saving, earning, investing, borrowing, and more.  </p></li><li><p><a href="https://www.savvyladies.org/"><b>Savvy Ladies</b></a><b>: </b>Savvy Ladies is a nonprofit offering a free financial helpline for women, no-cost courses, webinars, and money-focused articles. </p></li><li><p><a href="https://narrowthegap.co/"><b>Narrow the Gap</b></a><b>:</b> Narrow the Gap is a project focused on identifying and eliminating women&#39;s wage gaps in the workplace. It lets you search by profession to better understand pay disparities, and it shares resources for negotiating higher wages at work. </p></li><li><p><a href="https://iwpr.org/"><b>Institute for Women&#39;s Policy Research (IWPR)</b></a><b>:</b> The IWPR educates people on how policy changes impact women&#39;s finances and economic equity.       </p></li></ul><h2>Set your financial goals </h2><p>Once you&#39;ve armed yourself with knowledge, it&#39;s time to start setting your financial goals. Since money is very personal, your goals might differ from someone else&#39;s. For instance, your priority might be becoming a more confident investor and boosting your retirement savings, while someone else may want to pay down their debt. There&#39;s no one right path for everyone.<sup>3</sup>  </p><p>These actionable financial tips for women can help you create and track progress toward your money goals, putting you in a stronger financial position over time:  </p><h3>1. Assess your financial situation </h3><p>Assessing your current financial situation is a good starting point for setting your goals. Review your bank accounts and credit cards, and check your credit. What do you notice? Is your savings account smaller or your debt larger than you&#39;d like? Does your credit need improvement? Answering these questions will help you determine which financial goals to work toward.  </p><h3>2. Create a list of specific and measurable money goals </h3><p>Instead of creating a lofty goal, like building an <a href="https://www.lendingclub.com/resource-center/personal-finance/your-emergency-fund-the-essential-guide"><b>emergency fund</b></a> or putting money in your retirement savings, consider <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-set-your-financial-goals"><b>setting SMART goals</b></a> that are specific and measurable. For example, if your lofty goal is building an emergency fund, your specific goal could be putting $500 each month into a <a href="https://www.lendingclub.com/personal-savings/high-yield-savings"><b>high-yield savings account</b></a>. </p><p>You may aim to put $250 from each paycheck into your 401(k) or another employer-sponsored retirement account. Or you could prioritize asking for a raise at your next performance review and determine how you&#39;d like to approach that.  </p><p>With specific goals in mind, seeing your progress and staying motivated will be easier. A large, nebulous goal can be much harder to track. It can also be smart to divide your goals into buckets—short-, medium-, and long-term—and assign deadlines for yourself where possible. For instance, you might give yourself one year to save $6,000 in an emergency fund. If it&#39;s helpful, you could create a table outlining your goals and how you plan to achieve them.<sup>4</sup>   </p><p>Here&#39;s a basic template with some sample goals:  </p><table><tr><td><p><b>Lofty goal</b> </p></td><td><p><b>Specific goal</b> </p></td><td><p><b>Goal type</b> </p></td><td><p><b>Deadline</b> </p></td></tr><tr><td><p>Build emergency fund </p></td><td><p>Save $500 a month (or $6,000 in a year) </p></td><td><p>Short-term </p></td><td><p>One year </p></td></tr><tr><td><p>Save for retirement </p></td><td><p>Contribute $250 per paycheck to retirement account </p></td><td><p>Long-term </p></td><td><p>Ongoing </p></td></tr><tr><td><p>Increase income </p></td><td><p>Ask for raise </p></td><td><p>Short-term </p></td><td><p>Next performance review </p></td></tr><tr><td><p>Earn professional development certificate </p></td><td><p>One year </p></td><td><p></p></td><td><p></p></td></tr><tr><td><p>Build credit </p></td><td><p>Pay off $6,000 in credit card debt </p></td><td><p>Medium-term </p></td><td><p>Two years </p></td></tr></table><h3>3. Prioritize your goals  </h3><p>Once you have your list ready, it&#39;s time to prioritize and <a href="https://www.lendingclub.com/resource-center/personal-finance/sticking-to-a-budget-common-problems-and-solutions"><b>set a budget</b></a>. Consider putting the essentials first, such as growing your emergency savings or paying down your high-interest debt. These essential goals are very important for your financial well-being. </p><p>Also, your &quot;wants&quot; should be lower on the priority list than your &quot;needs.&quot; For example, saving for a vacation or new furniture might be a lower priority than <a href="https://www.lendingclub.com/personal-loan/debt-consolidation"><b>consolidating credit card debt</b></a> to facilitate repayment.<sup>5</sup>   </p><h3>4. Stay on track with the right tools </h3><p>Creating and prioritizing your goals is the easy part, while working toward those goals is often more challenging. Fortunately, several budget-tracking apps and other financial tools exist to help you stay on track.<sup>6</sup> </p><p>For example, when you open an account with Ellevest, its platform creates a road map for your investments that you can rely on for motivation. Other organizations, like Savvy Ladies, offer free budgeting worksheets and calculators.   </p><p>Besides using tools for financial support, set up automatic contributions to savings and investment accounts, as this step can take the guesswork out of saving money.   </p><h2>The bottom line </h2><p>It&#39;s no secret that wage and savings gaps are often hurdles for women seeking to improve their finances. Fortunately, investing in your own financial literacy, setting actionable goals, and advocating for <a href="https://www.lendingclub.com/resource-center/personal-finance/tips-on-how-to-negotiate-a-salary"><b>higher wages</b></a> could make it easier to achieve your goals. Some of the tools and tips we&#39;ve shared above can help you get started.    </p><hr/><ol><li><p><a href="https://www.bls.gov/opub/ted/2024/womens-earnings-were-83-6-percent-of-mens-in-2023.htm">U.S. Bureau of Labor Statistics, TED: The Economics Daily</a>. “Women’s earnings were 83.6 percent of men’s in 2023.” </p></li><li><p><a href="https://www.pewresearch.org/social-trends/2023/03/01/the-enduring-grip-of-the-gender-pay-gap/">PEW Research Center</a>. “The Enduring Grip of the Gender Pay Gap.” </p></li><li><p><a href="https://files.consumerfinance.gov/f/201501_cfpb_digest_financial-well-being.pdf">Consumer Financial Protection Bureau</a>. “Financial well-being: What it means and how to help.” </p></li><li><p><a href="https://files.consumerfinance.gov/f/documents/cfpb_your-money-your-goals_SMART-goals_tool_2018-11.pdf">Consumer Financial Protection Bureau</a>. “Setting SMART goals.” </p></li><li><p><a href="https://files.consumerfinance.gov/f/documents/cfpb_building_block_activities_reflecting-needs-versus-wants_guide.pdf">Consumer Financial Protection Bureau</a>. “Reflecting on needs versus wants.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/budgeting-how-to-create-a-budget-and-stick-with-it/">Consumer Financial Protection Bureau</a>. “Budgeting: How to create a budget and stick with it.” </p></li></ol><p> </p><p></p>

 Giving yourself time to prepare can help you maximize your success when you go from two household incomes to one.

<p>Switching from a dual-income household to living on one income may seem daunting, even if it&#39;s by choice. However, with a bit of planning and time spent shoring up your financial plan, it&#39;s possible to accomplish your goal and achieve financial security. Here are some tips to help you with the transition.<sup>1</sup> </p><h2>Start by preparing ahead of time, if possible  </h2><p>The decision to learn how to live off one income may not necessarily be yours. A job loss, a divorce, or a medical crisis can come out of nowhere and make it difficult to plan.   </p><p>However, if you&#39;re switching to living on one income by choice, it&#39;s important to start preparing for the transition as early as possible. For example, if you&#39;re starting a family and want one parent at home or you&#39;re planning to homeschool your children, you&#39;ll want to outline when you expect to make the change, so you can lay out your plan. </p><h2>How to transition from a dual-income to single-income household </h2><p>No matter why you&#39;re planning to live on one income, it&#39;s important to take a step back and evaluate your situation and opportunities to make it work. With some careful planning, you can adjust your finances and come out thriving. Here&#39;s what to do if you find yourself living with only one paycheck. </p><h3>1. Build a budget </h3><p>With a dual-income household, budgeting may not have been a necessity. Now that you&#39;re living on less, however, a proper budget may be crucial for your success.   </p><p>To <a href="https://www.lendingclub.com/resource-center/personal-finance/tips-for-financial-success-in-budgeting-your-money"><b>build a budget</b></a>, start by listing your expected income and basic expenses. Then, add in your expected discretionary spending to get an idea of whether you&#39;re living within your means. If not, make adjustments to your monthly spending goals until you get there.<sup>2</sup> </p><h3>2. Cut discretionary spending </h3><p>While earning more money can certainly make <a href="https://www.lendingclub.com/resource-center/personal-finance/sticking-to-a-budget-common-problems-and-solutions"><b>budgeting</b></a> easier, it&#39;s often more feasible to spend less, at least in the short term. This can be especially true if you experienced a bit of &quot;lifestyle creep&quot; with two incomes—adding services and amenities as your household income increased.  </p><p>Go over your expenses from the last two to three months line by line, looking for things you can reduce or cut altogether to save extra money. For example, you can cancel subscriptions you can live without, dine out less frequently, or minimize your online spending.<sup>2</sup> </p><h3>3. Look for opportunities to reduce necessities </h3><p>While some expenses can&#39;t be completely removed, you may still be able to save some money. For instance, you can shop around for car insurance to see if you can secure a lower rate with a different insurer, or you can adjust your thermostat to reduce your utility bill.  </p><p>You can also look for ways to cut your grocery bill, such as learning how to use coupons or switching to generic brands.<sup>3</sup>  </p><h3>4. Establish an emergency fund </h3><p>If you have time to prepare for your transition, work on building an <a href="https://www.lendingclub.com/resource-center/personal-finance/your-emergency-fund-the-essential-guide"><b>emergency fund</b></a> to protect you in the event of a financial emergency. Financial experts recommend maintaining three to six months&#39; worth of basic expenses, but you can evaluate your situation and money needs to determine the right amount for you.  </p><p>If you don&#39;t have time to build an emergency fund, try to incorporate some savings into your budget as you get used to living on one income. Even if it&#39;s not much, it can still give you some peace of mind, especially if you generally live <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-stop-living-paycheck-to-paycheck"><b>paycheck to paycheck</b></a>.<sup>4</sup> </p><h3>5. Eliminate high-interest debt </h3><p>While your budget may be tight, tackling high-interest credit card debt can reduce your interest costs and free up some cash flow every month.  </p><p>If you have good credit, a <a href="https://www.lendingclub.com/personal-loan/debt-consolidation"><b>debt consolidation loan</b></a> can potentially help you save money with a lower interest rate. Consolidating multiple balances can also simplify your budget and make it easier to stay on top of payments.  </p><h3>6. Refinance other debts </h3><p>Take a look at your other debts to see if there are opportunities to save money through refinancing. If you have a mortgage or <a href="https://www.lendingclub.com/auto-refinancing"><b>auto loan</b></a>, for instance, compare your interest rate to the current market rates to get a sense of whether refinancing can help.  </p><p>You can also get preapproved with a few lenders to get an idea of what your terms would look like based on your credit profile. If you qualify for better terms, it could potentially save you money.</p><h3>7. Downsize your residence </h3><p>If you&#39;re not expecting to go back to a dual-income household anytime soon and your mortgage or rent payment is steep, you may consider downsizing to a less expensive home or apartment.   </p><p>If you&#39;re a homeowner, selling your home can also give you access to the equity you&#39;ve built up, which you can use as a buffer or a rainy-day fund for financial emergencies.  </p><h3>8. Tap into community resources </h3><p>If you&#39;re struggling to get by despite your efforts to cut back, research government programs and community resources to see if you can get help with rent, groceries, utilities, and other basic needs.   </p><p>If you&#39;re unsure where to start, you can <a href="https://www.211.org/"><b>call 211</b></a> to learn more about assistance options in your area.  </p><h3>9. Check in with your finances regularly </h3><p>Once you put your financial plans in motion, schedule some time to reevaluate your approach to ensure you&#39;re meeting your needs and still on track with your goals.  </p><p>In the early stages, you may need to check in once a month or so. But over time, you may be able to stretch that out to every few months or even longer. The important thing is to avoid getting complacent and to maintain a <a href="https://www.lendingclub.com/resource-center/personal-finance/how-little-can-you-live-on-tips-for-frugal-living"><b>frugal lifestyle</b></a>. </p><h2>The bottom line </h2><p>Learning how to budget on one income can be challenging, especially if you&#39;re used to a dual-income lifestyle. However, meaningful changes to your spending habits and other efforts to manage your money more efficiently can help you not only accomplish your goal but also thrive.   </p><p>As you consider your options, it&#39;s important to focus on your specific situation and financial needs to determine which strategies work best for you.  </p><hr/><ol><li><p><a href="https://files.consumerfinance.gov/f/201501_cfpb_digest_financial-well-being.pdf">Consumer Financial Protection Bureau</a>. “Financial well-being: What it means and how to help.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/budgeting-how-to-create-a-budget-and-stick-with-it/">Consumer Financial Protection Bureau</a>. “Budgeting: How to create a budget and stick with it.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/track-your-spending-with-this-easy-tool/">Consumer Financial Protection Bureau</a>. “Track your spending with this easy tool.” </p></li><li><p><a href="https://www.consumerfinance.gov/an-essential-guide-to-building-an-emergency-fund/">Consumer Financial Protection Bureau</a>. “An essential guide to building an emergency fund.” </p></li></ol><p></p>

Setting a wedding budget may not be as difficult or overwhelming as you think. This guide will help you keep it simple. 

<p>Wedding costs can vary widely, depending on factors like location and what you have planned for the big day. No matter what type of wedding you&#39;re planning, though, one thing is certain: Budgeting can feel like an overwhelming task. Fortunately, it doesn&#39;t have to be. Breaking down the process into several steps will give you a clear plan and make things much easier. There are also tools available to help you estimate and track costs.  </p><p>Here&#39;s what to know about average wedding costs, creating a wedding budget, and how much to earmark for each type of expense.  </p><h2>How much does the average wedding cost? </h2><p>According to The Knot&#39;s annual Real Weddings Study, <a href="https://www.theknot.com/content/wedding-data-insights/real-weddings-study"><b>weddings averaged $35,000</b></a> in 2023. However, wedding costs vary based on several factors, including your guest list, venue, and vendors. For instance, if you opt for a backyard wedding with a dozen people and hand-cut bouquets from your mom&#39;s garden, it&#39;ll probably be much less expensive than if you invited 200 guests to celebrate at an upscale hotel.  </p><p>Location also plays a big role in costs. If you&#39;re located in a big city, such as Chicago, your wedding venue will likely be more expensive than a venue in a rural town with less demand. The cost of living in a particular area affects prices, too.  </p><h2>How to create your wedding budget </h2><p>Here are some actionable steps you can take to make budgeting for your wedding simpler.  </p><h3>1. Set a rough budget </h3><p>Think about your vision for your big day, including the guest list, ideal venue, vendors, attire, and other costs, and come up with a basic estimate of costs. If you&#39;re planning a small, backyard wedding, you might start with a rough budget of $5,000. Remember that you can tweak this number as you go; it&#39;s just a starting point.  </p><h3>2. Understand who&#39;s contributing </h3><p>Are you paying for your wedding on your own? Or will you have help from your parents, other relatives, or close friends? Understanding who&#39;s contributing can also help guide your wedding budget. A couple getting a large gift from their parents, for example, might have a bit more wiggle room with their budget than a couple paying for their big day independently.   </p><h3>3. Look into average costs </h3><p>Tools like <a href="https://www.theknot.com/wedding-budget"><b>The Knot&#39;s free Budget Advisor</b></a> can offer some valuable insight into average costs of vendors and venues in your area. You can also do a deeper dive into the costs of specific vendors if you have them in mind. Take notes on everything you research, so you can easily reference the information later. </p><p>Here are the types of costs you&#39;ll want to research:   </p><ul><li><p>Venue </p></li><li><p>Catering </p></li><li><p>Entertainment </p></li><li><p>Photographer </p></li><li><p>Flowers </p></li><li><p>Cake </p></li><li><p>Transportation </p></li><li><p>Hairstyling and makeup </p></li><li><p>Attire </p></li><li><p>Officiant fees </p></li><li><p>Favors </p></li></ul><h3>4. Ask for recommendations  </h3><p>Once you have an understanding of average wedding costs in your area, it&#39;s time to compare potential vendors. Start by asking your friends and family for recommendations if you&#39;re feeling overwhelmed by the idea of poring through search engine results. Chances are good that your loved ones will weigh in with recommendations. As a backup, consider asking for recommendations on your city or town social media pages. </p><h3>5. Formally compare venues and vendors </h3><p>Create a short list of venues and vendors based on the recommendations you&#39;ve received, and start contacting them to request quotes. Be ready to provide details about your wedding, such as the number of guests you&#39;ll have, potential dates, and the type of food you&#39;d like. These details will help prospective vendors come up with more accurate quotes, giving you more concrete details for your wedding budget.   </p><h3>6. Track expenses </h3><p>Go back to your rough estimate and determine if it&#39;s on track with the estimates you&#39;re getting. If not, make adjustments—just ensure that you won&#39;t be overextending yourself financially if you&#39;re on a tight budget. You&#39;ll want a bit of wiggle room in your <a href="https://www.theknot.com/content/wedding-budget-ways-to-save-money"><b>wedding planning budget</b></a> in case unexpected costs come up.  </p><p>Once you&#39;ve determined if your initial number aligns with the estimates, you&#39;ll want to start formally tracking costs. Fortunately, several tools are available to help you do this. You could rely on a simple spreadsheet, a general budgeting app, or a tool that allows you to specifically track wedding costs, such as WeddingWire&#39;s <a href="https://www.weddingwire.com/wedding-planning/wedding-budget.html"><b>free</b></a><a href="https://www.weddingwire.com/wedding-planning/wedding-budget.html"><b> wedding spend tracker</b></a>. </p><h3>7. Update as needed </h3><p>While it might feel satisfying to come up with cost estimates based on real quotes, you&#39;ll need to tweak those numbers as you finalize the details of your big day. Your actual expenses may be higher or lower, and unexpected costs might also arise. Accounting for those changes will help you stay on track and avoid derailing your wedding planning budget.  </p><h2>What&#39;s a good wedding budget? </h2><p>Your wedding budget will be subjective based on your preferences for your big day. That said, we&#39;ve outlined some common expenses below, and provided an estimate of wedding budget percentages for each. This example assumes you&#39;ve allocated approximately $25,000 for your big day.  </p><p>Note that this is just a starting point, and your actual costs will vary depending on your unique situation.   </p><table><tr><td><p><b>Expense</b> </p></td><td><p><b>Percentage of Budget</b> </p></td><td><p><b>Approximate Cost (with $25,000 budget)</b> </p></td></tr><tr><td><p>Venue and catering </p></td><td><p>40% </p></td><td><p>$10,000 </p></td></tr><tr><td><p>Furniture rental </p></td><td><p>10% </p></td><td><p>$2,500 </p></td></tr><tr><td><p>Photography </p></td><td><p>10% </p></td><td><p>$2,500 </p></td></tr><tr><td><p>Flowers and decor </p></td><td><p>10% </p></td><td><p>$2,500 </p></td></tr><tr><td><p>Bride and groom attire </p></td><td><p>10% </p></td><td><p>$2,500 </p></td></tr><tr><td><p>Hair and makeup </p></td><td><p>2% </p></td><td><p>$500 </p></td></tr><tr><td><p>Cake </p></td><td><p>2% </p></td><td><p>$500 </p></td></tr><tr><td><p>Stationary/invitations </p></td><td><p>2% </p></td><td><p>$500 </p></td></tr><tr><td><p>Party favors </p></td><td><p>2% </p></td><td><p>$500 </p></td></tr><tr><td><p>Transportation </p></td><td><p>2% </p></td><td><p>$500 </p></td></tr></table><h2>How to pay for your wedding </h2><p>If you&#39;re like many couples, you might choose to pay for a portion of your wedding using savings. However, if you don’t have a specific wedding fund set up, you could end up draining your savings completely.   </p><p>A <a href="https://www.lendingclub.com/personal-loan/wedding-loan"><b>wedding loan</b></a> is another alternative if a credit card doesn&#39;t feel like the best choice. These <a href="https://www.lendingclub.com/personal-loan"><b>personal loans</b></a> typically have fixed rates that may be lower than a high-interest credit card.     </p><h2>The bottom line </h2><p>Whether you’re envisioning a casual party or a lavish, big-budget production for your wedding, it’s wise to start with a financial plan. A wedding budget breakdown can help make your dream a reality. Aside from keeping costs in line, your budget can act as a blueprint for everything needed to make your big day unforgettable—including how you choose to cover the cost.</p>

Credit cards are a widely accepted, convenient form of payment, but they come with potential drawbacks like high interest rates and fees when not used responsibly. 

<p>Credit cards can offer a convenient way to pay for everyday purchases, like groceries, and come handy in an emergency. </p><p>While it’s easy to get excited about the convenience and perks credit cards can provide, it’s also important to be aware of the potential risks of overspending and high interest charges. Understanding the advantages and disadvantages of credit cards can help you decide if a credit card makes sense for you.<sup>[1]</sup>   </p><h2>What are the pros and cons of credit cards? </h2><p>To determine whether using credit cards is the right move for you, here’s a closer look at some of the top credit card pros and cons.  </p><table><tr><td><p><b>Top 5 credit card pros</b> </p></td><td><p><b>Top 5 credit card cons</b> </p></td></tr><tr><td><p>Convenient payment method </p></td><td><p>Potential for overspending </p></td></tr><tr><td><p>Good way to build credit </p></td><td><p>Usage may negatively affect credit scores </p></td></tr><tr><td><p>No interest when monthly balance is paid in full by the due date</p></td><td><p>Potential high interest rates   </p></td></tr><tr><td><p>May offer fraud protection on unauthorized purchases  </p></td><td><p>May charge fees </p></td></tr><tr><td><p>Potential for rewards, discounts, or cash back </p></td><td><p>Credit limits vary </p></td></tr></table><h2>Pros of using credit cards</h2><p>There are a lot of reasons to consider using credit cards in your everyday life. Here are some of the more prominent benefits of using credit cards that can add value to your financial life. </p><h3>Convenient payment method </h3><p>There was a time when cash was king, and it was difficult to use credit cards. Now, the opposite is true. If you use a credit card for a good chunk of your spending, you don’t have to worry about always having cash on hand, and you can even add your credit card to a digital wallet for additional convenience. And if you travel, you don’t have to worry about finding an ATM or converting your currency as long as the local merchants accept your credit card’s payment network.<sup>[1]</sup> </p><h3>Good way to build credit </h3><p>One of the keys to building solid credit is a history of on-time payments, and prudent use of a credit card is an easy way to do that. In fact, if you use a credit card for modest purchases each month, keeping your balance relatively low compared to your credit limit, and then pay off the balance in full by your monthly due date, you can build credit without paying interest charges.<sup>[2]</sup> </p><h3>No interest when monthly balance is paid in full </h3><p>Credit card interest rates can make the cost of borrowing expensive—and <a href="https://www.lendingclub.com/resource-center/personal-loan/apr-vs-interest-rate-whats-the-difference"><b>interest charges</b></a> can add up quickly. For some credit cards, if you pay off your balance in full by the due date each month, you won’t be charged interest. To avoid getting caught in a cycle of debt with high interest costs, only put charges on your credit card that you know you can pay off at the end of the cycle.   </p><p>Paying off a charge immediately after using the credit card can also help you avoid interest. For example, if you regularly spend $50 on your rewards card to fill up your gas tank, transfer a $50 payment to such credit card immediately from your checking account.<sup>[3]</sup>   </p><h3>Fraud protection on unauthorized purchases </h3><p>Most major credit card issuers offer zero-liability protection on unauthorized charges. If you spot and dispute unauthorized charges before you pay your monthly bill, you may withhold payment for the disputed charge as long as the dispute is upheld. Also, credit card technology has improved to the point where if you use your card’s chip or tap to pay, the transaction is encrypted to help prevent hackers from stealing your card information.<sup>[4]</sup> </p><h3>Potential for rewards, discounts, or cash back </h3><p>Many credit card companies frequently offer rewards with every purchase you make, or on certain types of purchases. Depending on the rewards program, you could get cash back, or you could earn points or miles and redeem them in a variety of ways, such as travel, gift cards, online shopping, and more.  </p><p>Some credit cards also offer sign-up bonuses to new cardholders after you meet a minimum spending requirement. You might even receive additional perks, such as cell phone protection, travel insurance, travel or dining credits, and more.<sup>[5]</sup>  </p><h2>Cons of using credit cards </h2><p>While there are some clear benefits to using credit cards, there are also some inherent risks that can damage your credit and threaten your financial well-being. Here’s what to consider. </p><h3>Potential for overspending </h3><p>It can be tempting to put a purchase on your credit card, however it’s still important to budget for the expense and be sure you can pay your bill in full to avoid interest. If you’re prone to overspending, you could end up spending more than you can afford to pay back or rack up costly interest charges.   </p><h3>Usage may negatively affect credit  </h3><p>How you use your credit cards plays a large role in your credit score calculations. In particular, your <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-credit-utilization-and-how-to-improve-it"><b>credit utilization rate</b></a> is one of the most influential factors in your FICO score. This rate is calculated by dividing your card’s balance by its credit limit, and it’s done for each individual card, as well as for all of your accounts.  </p><p>For example, if you have a $2,500 balance on a credit card with a $10,000 limit, your utilization rate on that card is 25%. If you have three credit cards with a combined balance of $6,000 and a combined limit of $15,000, your credit utilization rate for all accounts is 40%.  </p><p>Generally, a lower credit utilization is better for your credit versus a higher one. If your utilization rate gets too high, it could negatively impact your credit score until you pay down the balance. This can even be true if you pay your bill in full every month, so keep an eye on your balances and consider using your cards less or making multiple payments throughout the month to keep your credit utilization rate low.<sup>[2]</sup> </p><h3>High interest rates </h3><p><a href="https://www.lendingclub.com/resource-center/personal-loan/signs-you-have-too-much-credit-card-debt"><b>Carrying credit card debt</b></a> can be expensive thanks to high interest rates. Since 2022, average credit card rates have reached a record of high 21.76%, according to the <a href="https://www.newyorkfed.org/microeconomics/hhdc"><b>Federal Reserve</b></a>. Data from a recent <a href="https://ir.lendingclub.com/news/news-details/2024/Nearly-50-of-Americans-Unaware-Federal-Interest-Rate-Hikes-Raised-Their-Credit-Card-APR-by-Over-5-Percentage-Points/default.aspx"><b>LendingClub Bank study</b></a> reports that almost half (47.1%) of Americans are unaware of the current APR on their credit cards, and 49.5% are unaware that their credit card APR automatically rose by over 5 percentage points following the Federal Reserve’s rate increases between March 2022 and July 2023. </p><p>When using a credit card, it’s important to pay your balance in full by the due date every month to avoid paying interest. Carrying debt can limit your opportunity to achieve your other financial goals.  </p><h3>May have fees  </h3><p>Some credit cards have annual fees, which can range from around $50 a year to several hundred dollars. For example, certain travel cards have annual fees of $500 or more. While this type of rewards card may come with many perks for frequent travelers, it may be a waste of money for some. </p><p>If you don’t pay your bill on time, you may also be hit with a penalty late fee and a higher interest rate. Credit card issuers may charge fees for other services like balance transfers or cash advances. It’s important to understand what fees a credit card has before applying, so be sure to read the fine print when researching cards.<sup>[6]</sup> </p><h3>Credit limits vary  </h3><p>The amount you’re able to charge on your credit card depends on your credit limit. Credit card limits are set when you first open the card. People with <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-a-good-credit-score-and-how-to-boost-yours"><b>good credit</b></a> generally qualify for higher credit limits than those with poor credit—and the difference can be thousands of dollars.  </p><p>For instance, if you’re new to credit or working on rebuilding your credit, your credit card could have a spending limit of just a few hundred dollars, compared to someone with excellent credit who may have a $10,000 limit. If you demonstrate a solid payment history and keep your spending in check, you may be able to request a credit card limit increase. However, in some cases, your credit limit could be reduced if you rarely use the card or your credit situation changes.<sup>[7]</sup>  </p><h2>What else to consider about credit cards </h2><p>When used responsibly, credit cards can provide a lot of value, and you may even be able to avoid some or all of the potential drawbacks. However, if you’re concerned about going into debt or paying unnecessary fees and interest, they might not be worth it. Before applying, take the time to consider why you want a credit card and how using one might affect your financial well-being.  </p><p>Think carefully about your situation, spending habits, and preferences to determine the right path for you. Spend time considering whether a credit card is a financial tool that makes sense for you. Evaluating credit card issuers, rewards programs and perks, and how the card can help move you toward your financial goals is a key part of making the right decisions for your wallet. </p><h2>The bottom line  </h2><p>Like most financial tools, credit cards aren’t inherently good or bad. Used properly, they can help you build a strong credit profile and give you access to appealing perks and rewards. On the other hand, they can lead to overspending, excessive interest charges, and potential damage to your credit score.  </p><p>If you decide to use credit cards, be mindful of your usage and be diligent about reviewing your spending. Your vigilance can help you enjoy the benefits while limiting the risks. And If you’ve built up more debt than you can handle, a personal loan may help you <a href="https://www.lendingclub.com/personal-loan/credit-card-consolidation-loan">consolidate your credit card debt</a> and save you money on interest over time.    </p><hr/><ol><li><p><a href="https://www.fdic.gov/system/files/2024-06/ch2.pdf">FDIC</a>. “Credit Cards - General Overview.” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/how-do-i-get-and-keep-a-good-credit-score-en-318/">Consumer Financial Protection Bureau</a>. “How do I get and keep a good credit score?” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/how-does-my-credit-card-company-calculate-the-amount-of-interest-i-owe-en-51/">Consumer Financial Protection Bureau</a>. “How does my credit card company calculate the amount of interest I owe?” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/am-i-responsible-for-unauthorized-charges-if-my-credit-cards-are-lost-or-stolen-en-29/">Consumer Financial Protection Bureau</a>. “Am I responsible for unauthorized charges if my credit cards are lost or stolen?” </p></li><li><p><a href="https://www.consumerfinance.gov/data-research/research-reports/issue-spotlight-credit-card-rewards/">Consumer Financial Protection Bureau</a>. “Credit Card Rewards.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-bans-excessive-credit-card-late-fees-lowers-typical-fee-from-32-to-8/">Consumer Financial Protection Bureau</a>. “CFPB Bans Excessive Credit Card Late Fees, Lowers Typical Fee from $32 to $8.” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/why-did-i-get-a-low-credit-limit-on-a-credit-card-en-11/">Consumer Financial Protection Bureau</a>. “Why did I get a low credit limit on a credit card?” </p></li></ol><p></p>

Wondering when to teach kids about money? Here's a helpful guide for every age group, from toddlerhood to early adulthood.

<p>According to the <a href="https://www.moneyconfidentkids.com/content/dam/mck/pdfs/2022_Final_PKM_Deck_2022_Update.pdf">2022 T. Rowe Price Parents, Kids &amp; Money Survey</a>, over half of American parents are reluctant to talk to their kids about money. So if you&#39;re struggling with this, you aren&#39;t alone. However, getting comfortable discussing money with your children will help them build a stronger financial foundation—and it could also help you develop more positive views about money.     </p><p>Here&#39;s when to <a href="https://www.lendingclub.com/resource-center/personal-finance/financial-lessons-to-teach-teens-before-they-graduate-high-school">teach kids about money</a> and actionable strategies for doing so, no matter your child&#39;s age. </p><h2>When to teach kids about money </h2><p>You might be surprised to find out you can start teaching your child about money in toddlerhood, and your lessons can carry through to their teen years—and hopefully into adulthood. Here are some tools and strategies for teaching your kid about money at any age.   </p><h3>Ages 2–5 </h3><p>They may not yet understand the value of money or why you can&#39;t afford an expensive toy at the store, but you can teach younger kids about exchanging cash for goods and services.   </p><p>Playing store or restaurant is a fun and engaging way to help toddlers start to understand commerce. You can use real goods like cereal boxes or cans, or opt for a toy cash register and products or foods. Asking about prices can teach kids the concept of costs, even if, at first, they think an apple is worth $100.  </p><p>While preschool-age children will enjoy playing store or restaurant, they can also help trace and identify coins or clip coupons before a grocery store or shopping trip. Just ensure you supervise, so they don&#39;t put coins in their mouth. </p><h3>Ages 6–8 </h3><p>Kids learn math concepts like addition, subtraction, and money identification in their earliest school years. As you help with homework or reinforce these concepts outside of school, you can bring money into the discussion. Consider having them play with real coins (or play money if you have it), and introduce how to add and subtract money.   </p><p>For instance, you might start by counting coins, then have your child add up different combinations of coins to make a dollar. If you have several coins lying around, you could also have your child collect them and bring them to the bank to cash in for paper money.    </p><p>It can also be smart to introduce a <a href="https://www.lendingclub.com/resource-center/personal-finance/should-you-give-your-kids-an-allowance">monetary allowance</a> at this age, and consider discussing the concepts of saving and spending. Your child can earn their allowance by doing chores, or you could simply choose to give them some money each week, allowing them to save for something they really want.<sup>2</sup>  </p><p>If giving an allowance is out of budget, there are still ways to teach the foundations of earning and saving. For example, you might use marbles as currency, and create a system where a certain number of marbles earns treats—like extra screen time or a scoop of ice cream.  </p><h3>Ages 9–11 </h3><p>By age 9, your child may understand the concept of money fairly well. Chances are they&#39;ve watched you pay at checkout countless times, overheard family financial discussions, and browsed for toys and other items online. And if they earn an allowance, they likely have basic knowledge of working for their money.   </p><p>Opening a custodial savings account and teaching kids about banking can be smart strategies for kids in this age bracket. Note that your child won&#39;t be able to open a new custodial savings account on their own; instead, you&#39;ll need to open it on their behalf. You can work together on:  </p><ul><li><p>Making regular deposits from their allowance into their savings account. </p></li><li><p>Routinely logging into their account online to review their balance and transaction history. </p></li><li><p>Helping them understand what happens to their savings balance if they withdraw money.  </p></li></ul><p>This is also a good time to teach your children about the basics of <a href="https://www.lendingclub.com/resource-center/personal-loan/compound-interest-vs-simple-interest-whats-the-difference">earning interest</a>. Explain that the bank gives account holders a special reward for saving money, and show them how much interest they earn on their balance in a given month.<sup>3</sup> </p><h3>Ages 12–15 </h3><p>Kids in this age bracket are old enough to start learning about investing using a kids app or a custodial account. Introduce the concept of investing, what it entails, how to do it, and what the purpose of investing is. Explain that you can earn or lose money on investments, and discuss the risks of common investments like company stocks, exchange-traded funds (ETFs), and bonds.  </p><p>By using investment tools while they&#39;re still under your roof, you can instill in them the importance of putting money away so that it works for them in the future. This could give your child an edge when they enter the workforce as a young adult and start putting money into a workplace retirement account.<sup>4</sup> </p><h3>Ages 16–18 </h3><p>Many teens start driving at 16, so it&#39;s an ideal time to teach your child about real-life expenses. For example, by walking them through the true costs of car ownership—including monthly loan payments, insurance, gas and maintenance—they can have a better understanding of how to budget and save for a car of their own some day.<sup>5</sup>  </p><p>If your teen doesn&#39;t drive or have a car, you can teach similar concepts by having them contribute to their phone or phone plan. Though many kids share their parents&#39; accounts, having to pay a set amount each month puts their <a href="https://www.lendingclub.com/resource-center/personal-finance/sticking-to-a-budget-common-problems-and-solutions">budgeting knowledge</a> into practice. You could even siphon that money into a separate account and give it to them after their high school graduation.   </p><p>Besides applying budgeting concepts to real life, this is a great age to teach your kids about <a href="https://www.lendingclub.com/resource-center/personal-finance/what-affects-your-credit-scores">credit score</a>. Start by explaining what building credit means, why it&#39;s important, and how to do it. </p><h2>The bottom line </h2><p>No matter your child&#39;s age, you can start teaching them important financial lessons, either through play or real-life activities. Teaching your child about money helps build financial literacy and understand their <a href="https://www.lendingclub.com/resource-center/personal-finance/do-you-know-your-financial-values">financial values</a>, which can give them an edge when they become adults. Ideally, they&#39;ll carry the knowledge you&#39;ve given them about saving, budgeting, and investing through their lives, making them more likely to reach their financial goals. </p><hr/><ol><li><p><a href="https://files.consumerfinance.gov/f/201501_cfpb_digest_financial-well-being.pdf">Consumer Financial Protection Bureau</a>. “Financial well-being: What it means and how to help.” </p></li><li><p><a href="https://greenlight.com/learning-center/earning/average-allowance-by-age-for-kids">Greenlight</a>. “Average allowance by age for kids and teens.” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-loan-interest-rate-and-the-apr-en-733/">Consumer Financial Protection Bureau</a>. “What is the difference between a loan interest rate and the APR?” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/budgeting-how-to-create-a-budget-and-stick-with-it/">Consumer Financial Protection Bureau</a>. Discovering the benefits of investing early.” </p></li><li><p><a href="https://files.consumerfinance.gov/f/documents/cfpb_building_block_activities_discovering-benefits-investing-early_guide.pdf">Consumer Financial Protection Bureau</a>. “Budgeting: How to create a budget and stick with it.” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-credit-report-and-a-credit-score-en-2069/">Consumer Financial Protection Bureau</a>. “What is the difference between a credit report and a credit score?” </p></li></ol><p></p>

Closing your credit card can hurt your credit temporarily, but there are steps you can take to minimize the effect.  

<p>You can choose to close a credit card for many different reasons. Maybe you want to simplify your personal finances. Or, perhaps you want to avoid an upcoming annual fee on a card you no longer use. Maybe you want to remove the temptation to spend by having one less card in your wallet, especially if you used a <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-debt-consolidation"><b>debt consolidation loan</b></a> to pay down your credit cards.  </p><p>Before closing a credit card, it’s important to keep in mind that your credit score may take a dip. However, with careful planning, it’s possible to minimize the impact.   </p><h2>How to cancel a credit card without hurting your credit score </h2><p>Your <a href="https://www.lendingclub.com/resource-center/personal-finance/understanding-your-credit-score"><b>credit score</b></a> could take a dip when you cancel a credit card. However, you may be able to reduce the impact by following these steps.  </p><ul><li><p><b>Don’t close your oldest card.</b> If possible, try not to close your oldest credit card. Doing so could affect the average age of your accounts, which is a factor credit-scoring companies use when calculating your credit score.<sup>[1]</sup> </p></li><li><p><b>Pay your bills on time before canceling.</b> Your payment history also impacts your credit score. A closed account in good standing remains on your credit report for 10 years after it’s closed. So, check your account status and catch up on any payments before shutting down the card.<sup>[1]</sup> </p></li><li><p><b>Pay down or limit use of other credit cards.</b> Canceling a card lowers your available credit and can lead to a higher utilization rate, but that’s only true if your overall balance stays the same. Before you cancel your card, consider paying down your other cards, too. At the very least, try limiting your credit card usage, which helps minimize an increase to your utilization rate.<sup>[1]</sup>  </p></li><li><p><b>Make early payments on your other credit cards.</b> Credit utilization depends on the balance reported to the credit bureaus. Ask your credit card issuer when it reports balances, and pay off yours before that date to maintain a low reported utilization rate.<sup>[1]</sup> </p></li></ul><h2>How canceling a credit card impacts your credit history </h2><p>The length of your credit history accounts for about 15% of your <a href="https://www.myfico.com/credit-education/whats-in-your-credit-score"><b>FICO</b></a><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score"><b><sup>®</sup></b></a><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score"><b>Score</b></a>. Generally, keeping your accounts open longer will help lengthen your credit history, which can help boost your credit score. When you close a credit card, your credit score may temporarily dip because the closure lowers the average age of your accounts. However, your score should rebound if you continue to make timely payments on other lines of credit.   </p><p>Your payment history—which is different from credit history—also impacts your credit score. A closed account in good standing can remain on your credit report for 10 years after you close it. So, you should consider your account status before canceling the card. An account that’s in “good standing” means it doesn’t have a history of missed or late payments. On the other hand, if you had late payments, those entries can remain on your credit reports for up to seven years—even if you close the account.<sup>[1][3]</sup>  </p><h2>How closing a credit card affects credit utilization </h2><p>Closing a credit card can lead to a higher credit utilization ratio and a lower credit score. Credit utilization is an important factor when determining a credit score, including the amount of debt owed which makes up 30% of a FICO score. When you close a credit card, you reduce your total available credit.<sup>[1]</sup>  </p><p>For instance, let’s say you have two credit cards: a cash-back card with a $2,000 credit limit and a $0 balance, and a travel rewards card with a $3,000 credit limit and a $1,000 balance. Factoring in your $5,000 overall credit limit, your aggregate credit utilization rate would be 20%.  </p><p><b>$1,000 combined balance ÷ $5,000 available credit = 20% credit utilization ratio</b> </p><p>If you close the cash-back credit card (without paying down any of the outstanding $1,000 balance on the other card), your utilization rate would increase. This is because you have less credit available to you, yet you carry the same amount of credit card debt.  </p><p><b>$1,000 combined balance ÷ $3,000 available credit = 33% credit utilization ratio</b>  </p><p>Keep in mind that credit scores consider your utilization rates on individual credit accounts (each account separately), as well as your overall combined rate (all accounts taken together). You can use a credit utilization calculator to keep close tabs on your overall utilization rate. As a rule of thumb, most financial experts suggest keeping your overall utilization below 30%.<sup>[1]</sup>  </p><h2>When should you close a credit card? </h2><p>Before closing a credit card, it’s important to consider why you want to cancel. Are you looking to switch to a new type of card? Do you want to ditch an annual fee? Or perhaps you simply don’t want credit cards around because you use them too much. It may make sense to close a credit card if you want to do one of the following.   </p><ul><li><p><b>Avoid a high annual fee:</b> Credit cards sometimes have annual fees, especially rewards cards. If a card is costing you more than it’s earning you, it may be time to close the account. </p></li><li><p><b>Prevent overspending:</b> Credit cards are a convenient way to pay for purchases. However, if you tend to overspend when you have access to credit, you may want to close the card to cut back on unnecessary spending.  </p></li><li><p><b>Switch to a different type of card:</b> You might want to take advantage of another issuer’s promotional sign-up bonus. Or perhaps you want to exchange your card for one that offers cash back or travel rewards. If you want to limit the number of credit cards you carry, canceling a current card in favor of a new one might make sense.   </p></li></ul><h2>When shouldn’t you close a credit card? </h2><p>When closing a credit card, it’s important to get the timing right. Here’s when it could make sense to close your card.   </p><ul><li><p><b>It’s your oldest account.</b> Since the length of your credit history impacts your credit scores, canceling your oldest account could hurt your credit. Keeping an account open can help round out your credit profile—even if it’s minimally used.<sup>[1]</sup>  </p></li><li><p><b>You’re about to finance a large purchase.</b> Keeping the concept of utilization rates in mind, a big purchase would raise your outstanding balance. Without an offsetting repayment, your utilization rate would increase significantly. For that reason, it might make sense to keep a card open until you’ve made (and paid off) your expected major purchase.<sup>[1]</sup> </p></li><li><p><b>You’re feeling indifferent about the card.</b> Sometimes, we glance at our wallets and notice a credit card collecting dust. We think, “Hmm, I barely use that card anymore,” and consider closing the card. However, if you’re canceling simply for the sake of canceling, that might not be the wisest decision. You could potentially increase your utilization ration and hurt your credit scores.<sup>[1]</sup> </p></li></ul><h2>How to safely close your credit card </h2><p>When closing a credit card, you can avoid financial headaches if you approach the process the right way. Here are a few tips to safely close your credit card with your issuer. </p><h3>Send a written cancellation request </h3><p>Although you should be able to cancel your credit card via phone or online, it’s wise to get written verification for your records. This can help protect against errors in your credit report and expedite potential disputes down the road. Ask your issuer to send a written notice of your account’s closure. You can also send a short confirmation letter that details your request to your card issuer.<sup>[2]</sup> </p><h3>Ask the credit card issuer for a product change  </h3><p>Instead of canceling, some card issuers will let you keep the same account and credit limit, but they allow you to “product change” to another card they offer. For instance, consider this option if you’re hoping to switch from a standard card to a rewards card or want a card without an annual fee.  </p><p>Transfer recurring payments It’s convenient to use credit cards for recurring payments, such as utility bills and subscription fees. Before you cancel your card, remember to update your service accounts. Connect them to a new payment method to avoid missed payments and service disruption. </p><h3>Pay off your balance </h3><p>Closing a credit card won’t resolve any outstanding debt. If you leave a balance on your credit card past the grace period, your creditor could charge off your debt. This typically happens after 120 to 180 days of nonpayment, and it can result in a major black mark on your credit reports. The card issuer may also send your account to collections, leaving you with additional fees and a second negative mark. If you’re canceling a credit card, make sure you have a plan in place to pay off any remaining debt.<sup>[2]</sup>  </p><h3>Check your credit reports </h3><p>After you cancel a credit card, check your credit reports to make sure everything has been reported accurately. You can check your credit reports for free once a year at <a href="http://annualcreditreport.com/"><b>AnnualCreditReport.com</b></a>.  </p><h2>The bottom line </h2><p>Closing a credit card may <a href="https://www.lendingclub.com/resource-center/personal-finance/what-affects-your-credit-scores"><b>hurt your credit score</b></a>. When you cancel a credit card, it usually affects your credit history and credit utilization rate—two important credit-scoring factors. Before canceling, consider your reasons and whether the time is right. Keep in mind, you don’t have to actively use a credit card for your credit scores to benefit. As long as the card is open and in good standing, you’re earning a positive history.<sup>[1]</sup>  </p><p>However, your credit card company may eventually close your account due to inactivity. To keep your account open, ask the issuer about its cancellation policy. Alternatively, consider using a card only for a small monthly bill, such as a streaming service subscription. This can also help you improve your credit as long as you make timely payments.  </p><hr/><ol><li><p><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score"><u>myFICO</u></a>. “What&#39;s in my FICO Scores?”  </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/i-want-to-close-my-credit-card-account-what-should-i-do-en-84/"><u>Consumer Financial Protection Bureau</u></a>. “I want to close my credit card account. What should I do?” </p></li><li><p><a href="https://www.experian.com/blogs/ask-experian/when-are-closed-accounts-deleted/"><u>Experian</u></a>. “When Are Closed Accounts Deleted?” </p></li></ol><p></p>

Taking stock of your situation and hedging your risks are crucial for maintaining peace of mind. 

<p>Having an income that fluctuates can sometimes make it tricky to manage your day-to-day finances. If your job has irregular hours, you rely on commissions or tips, or you’re a small business owner, budgeting can come with some extra challenges. However, understanding your income history and basic expenses, establishing a buffer, and carefully tracking your expenses are a few ways you can manage your money effectively.<sup>[1]</sup>  </p><h2>7 ways to budget if your income fluctuates month to month </h2><p>Budgeting on a fluctuating income may require a little extra work, but it&#39;s still possible to meet your financial goals and protect yourself from unexpected changes to your income and expenses. Here are some tips on how to budget when your income varies. </p><h3>1. Determine your baseline monthly income </h3><p>While you may not be able to control the fluctuations in your earnings, consider whether there&#39;s a minimum amount you can count on earning on a consistent basis.   </p><p>To see if this is possible, take a look at your monthly earnings over the past year. If your income doesn&#39;t fluctuate too much, you could simply calculate the average as your baseline. Otherwise, it may be more sensible to use your lowest-earning month as your benchmark.<sup>[2]</sup> </p><h3>2. List your basic expenses </h3><p>With no way of knowing what your earnings will be from one month to the next, it&#39;s important to make sure you always have your non-negotiable expenses covered, at the very least. Some examples of necessary costs include:  </p><ul><li><p>Rent or mortgage payment </p></li><li><p>Utilities </p></li><li><p>Phone bill </p></li><li><p>Insurance premiums </p></li><li><p>Groceries </p></li><li><p>Debt obligations </p></li><li><p>Transportation (such as fuel, train tickets, or tolls) </p></li><li><p>Child care </p></li></ul><p>While some of these expenses are fixed, others may change from month to month. However, looking back several months can help you determine a reasonable outlay amount for each category.<sup>[2]</sup> </p><h3>3. Evaluate other expenses </h3><p>In addition to your non-negotiable costs, you&#39;ll also want to assess other expenses where you might need to be more flexible. Examples include:  </p><ul><li><p><b>Other savings goals: </b>When you have some extra cash flow, think about which savings objectives you want to prioritize. Examples may include retirement savings, educational savings for a child, a home or vehicle down payment fund, an upcoming vacation, or home renovations. </p></li><li><p><b>Additional debt payments: </b>If you have high-interest debt you want to eliminate more quickly, consider how much you want to allocate during higher-earning months.  </p></li><li><p><b>Lifestyle expenses: </b>These may include streaming subscriptions, dining out, live entertainment, travel, and other big-ticket purchases.  </p></li></ul><p>Ordering all of your negotiable expenses based on how important they are to you can make it easier for you to determine where to put your extra cash when you have it.<sup>[2]</sup> </p><h3>4. Track your expenses </h3><p>Using past income and spending data can help you plan for the future, but it&#39;s still crucial that you track your spending to understand whether your forecasts are realistic.   </p><p>Tracking your expenses once or twice a week can tell you whether you&#39;re in line with your spending goals, or if you need to make further adjustments. This process can be particularly important if your irregular income is a recent development and you&#39;re not used to it yet. <sup>[2]</sup> </p><h3>5. Look for ways to minimize your costs </h3><p>Even if your baseline income is enough to cover your necessary expenses plus some, it&#39;s still worth looking for opportunities to cut back on your expenses. This may even be possible with some of your non-negotiable costs.<sup>[2]</sup>   </p><p>Here are a handful of examples to consider:  </p><ul><li><p><b>Share subscriptions. </b>Whether it&#39;s a streaming subscription or a retail membership, consider sharing some or all of your subscriptions with friends or family members to reduce your monthly or annual expenses. Before setting up your account, make sure the service provider allows account sharing. </p></li><li><p><b>Buy generic brands. </b>Whenever possible, consider buying generic brands over name brands. This can help you save on groceries, over-the-counter medications, clothing, and more. </p></li><li><p><b>Evaluate your insurance. </b>If it&#39;s been a while since you&#39;ve shopped around for auto or homeowners insurance, take some time to do so. Insurers often provide discounts to new customers, which could translate to hundreds or even thousands of dollars in annual savings.<sup>[3]</sup>  </p></li><li><p><b>Consolidate your debt. </b>If you have high-interest debt, a <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-debt-consolidation"><b>debt consolidation loan</b></a> could potentially give you a lower interest rate and possibly even a reduced monthly payment. It may also help you pay down your debt more quickly, freeing up that cash flow for other financial goals.<sup>[4]</sup>    </p></li></ul><h3>6. Build up a buffer </h3><p>An <a href="https://www.lendingclub.com/resource-center/personal-finance/your-emergency-fund-the-essential-guide"><b>emergency fund</b></a> is an important part of any strong financial plan, but it&#39;s all the more critical for people living with unstable income. When you get a month with some excess cash flow, try to prioritize building up your savings buffer so you can cover shortfalls when they occur.   Having a robust emergency fund can also make it easier to manage bigger financial emergencies, such as home or car repairs, medical bills, or a short-term income adjustment.<sup>[5]</sup>    </p><p>While many financial experts recommend building up three to six months&#39; worth of basic expenses in your emergency fund, evaluate your situation to determine the <a href="https://www.lendingclub.com/resource-center/personal-savings/how-much-of-your-paycheck-should-you-save"><b>right amount to save</b></a> for you.<sup>[6]</sup>   </p><p>Regardless of how you approach your financial buffer, it&#39;s a good idea to stash your savings in a <a href="https://www.lendingclub.com/resource-center/personal-savings/do-you-need-a-high-yield-savings-account"><b>high-yield savings account</b></a> to take advantage of better interest rates.<sup>[7]</sup>  </p><h3>7. Revisit your budget regularly</h3><p>Flexibility is the biggest part of <a href="https://www.lendingclub.com/resource-center/personal-finance/simple-steps-to-building-a-better-budget"><b>setting up a budget</b></a> with an uneven paycheck. While standard budgets rely on setting a goal and hitting it every month, budgets made for irregular incomes need to be reviewed and updated throughout the year to align with your changing work situation.  </p><p>Ideally, your expenses should remain the same. But when you have budget surpluses or deficits from one week to the next, you can assess where you&#39;re falling short and adjust accordingly.   </p><p>It&#39;s also important to reevaluate your income to determine if you&#39;re experiencing an upward or downward trend in your earnings. If you start seeing months where your income is below your baseline, you may need to cut back further. On the other hand, if you&#39;re regularly earning more than you expected, you may be able to comfortably expand your savings, debt payoff, and lifestyle expenses.<sup>[2]</sup>  </p><h2>3 budgeting methods to try </h2><p>Using an established budgeting method can save you some time and energy as you take steps to hone your budget. Some even offer some flexibility to customize your budget to your liking. Here are some budgeting approaches you can try. </p><h3>1. Zero-based budget </h3><p>With a zero-based budget, you&#39;re allocating every single dollar you earn. Once you meet your spending limit for a particular expense category, you&#39;ll stop spending in that area unless you&#39;re willing to pull money from other categories.   </p><p>A zero-based budget is worth considering if you want full control over where your money goes, and you&#39;re willing to spend extra time tracking and categorizing your expenses. </p><h3>2. 50/30/20 budget </h3><p>This budgeting approach allocates your money to just three categories. The idea is that 50% of your monthly income goes toward necessary expenses, 30% toward your lifestyle, and 20% toward your financial goals, such as saving and paying down debt. However, you can adjust the proportions however you&#39;d like based on your priorities.</p><p>Consider this option if you want a simpler approach to budgeting with less oversight on a monthly basis.<sup>[8]</sup>  </p><h3>3. Envelope system </h3><p>The envelope system is essentially a zero-based budget, but it goes one step further by restricting you to using cash only.   </p><p>Like the zero-based budgeting system, the envelope system has you divide your income into different spending categories, and you&#39;ll put cash in individual envelopes for each category. Once you&#39;ve spent all your cash from one envelope, you can&#39;t spend any more money in that category unless you pull from another envelope.   </p><p>This option can be beneficial for people who have had trouble with overspending on credit cards in the past or who simply prefer to use cash. </p><h2>The bottom line </h2><p>Budgeting with fluctuating income may require a little more diligence, but it&#39;s certainly possible, especially if you&#39;re taking steps to <a href="https://www.lendingclub.com/resource-center/personal-savings/ideas-to-build-passive-income"><b>increase your income</b></a> over time. Regardless of which steps you take, it&#39;s important to fully understand your financial situation and goals, so it can inform your budgeting approach. </p><p>As you look for opportunities to save money, consider whether a <a href="https://www.lendingclub.com/personal-loan/debt-consolidation"><b>debt consolidation loan</b></a> or a <a href="https://www.lendingclub.com/personal-savings/high-yield-savings"><b>high-yield savings account</b></a> with LendingClub Bank can make it easier to achieve your objectives.     </p><hr/><ol><li><p><a href="https://files.consumerfinance.gov/f/201501_cfpb_digest_financial-well-being.pdf">Consumer Financial Protection Bureau</a>. “Financial well-being: What it means and how to help.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/budgeting-how-to-create-a-budget-and-stick-with-it/">Consumer Financial Protection Bureau</a>. “Budgeting: How to create a budget and stick with it.” </p></li><li><p><a href="https://www.iii.org/article/how-can-i-save-money-auto-insurance">Insurance Information Institute</a>. “How to save money on car insurance.” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-credit-counseling-and-debt-settlement-debt-consolidation-or-credit-repair-en-1449/">Consumer Financial Protection Bureau</a>. “What is the difference between credit counseling and debt settlement, debt consolidation, or credit repair?” </p></li><li><p><a href="https://www.consumerfinance.gov/an-essential-guide-to-building-an-emergency-fund/">Consumer Financial Protection Bureau</a>. “An essential guide to building an emergency fund.” </p></li><li><p><a href="https://www.cnbc.com/select/how-much-to-save-in-emergency-fund/">CNBC</a>. “3 to 6 months of savings might be ‘tried and true wisdom’ but this expert has advice if you’re living paycheck-to-paycheck.” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/should-i-get-a-checking-account-that-pays-interest-en-925/">Consumer Financial Protection Bureau</a>. “Should I get a checking account that pays interest?” </p></li><li><p><a href="https://files.consumerfinance.gov/f/documents/cfpb_building_block_activities_learning-about-budgets_guide.pdf">Consumer Financial Protection Bureau</a>. “Learning about budgets.”</p></li></ol><p></p>

These vacation ideas can feel like a getaway, even if you're not going far or are on budget. 

<p>A staycation is a vacation from your usual routine that doesn&#39;t involve much (or any) travel. Staycations can be a great way to avoid the stress and cost of a travel vacation while still enjoying the rewards that come from taking a break. If you&#39;re not sure what to do, here are some budget staycation ideas for families, couples, and friends. </p><h2>Family (and budget) friendly staycation ideas </h2><p>Whether your kids are still in diapers or they&#39;re rolling their teenage eyes at your dad or mom jokes, here are some inexpensive staycation ideas to help improve your family bond—and <a href="https://www.lendingclub.com/resource-center/personal-finance/how-little-can-you-live-on-tips-for-frugal-living"><b>live within your means</b></a>. </p><h3>1. Set up a home theater </h3><p>The average cost of a movie ticket is $10.78, according to Nash Information Services, which translates to nearly $45 for a family of four, and that&#39;s not including concessions. In some cities, the cost is much higher.   </p><p>To save some money, set up a theater in your home. You can do this by blacking out your windows, setting up comfortable seating with pillows and blankets, and cooking your favorite style of popcorn on the stove.  </p><h3>2. Camp out in the backyard </h3><p>If you have a backyard, set up a tent and spend the night together. You can even come up with some fun camping activities, such as telling stories and roasting marshmallows over a small fire, stargazing, or playing flashlight tag.  </p><p>Then, you can spend the night together in the tent or, if your kids are old enough to stay out on their own, let them finish the night with a slumber party. </p><h3>3. Take a day trip </h3><p>Taking a staycation doesn&#39;t mean you can&#39;t leave your house. Consider taking a day trip to a local landmark, national park, or another nearby place you&#39;ve never been before. You can pack lunches, play car games, and take turns choosing your music playlist.  </p><p>If your kids are younger, potential activities may include taking them to a new indoor playground, park, or planetarium.  </p><h2>Inexpensive staycations for couples </h2><p>If you&#39;re looking for a local getaway for just you and your partner, there may be several opportunities to try something new without leaving city limits. Here are just a few.  </p><h3>1. Sample the local restaurants  </h3><p>If you and your partner love to dine out, use websites like Yelp, Eater, or local foodie blogs to find some of the best-kept secrets in your area.  </p><p>If you live in a bigger city, you can search for <a href="https://www.findrestaurantweeks.com/"><b>restaurant week events</b></a> where you can enjoy discounts on lunch and dinner menus—even at high-end eateries. Since the first restaurant week was established in New York City in 1992, it&#39;s become a popular trend nationwide.   </p><h3>2. Stay overnight at a local hotel </h3><p>Look for hotel options in an area of town you&#39;re unfamiliar with, so it still feels like a getaway. If you want a full night-on-the-town experience, consider going out for dinner and an activity.  </p><p>Some ideas include visiting a new museum, figuring your way out of an escape room, and taking a tour of a local brewery or distillery. Alternatively, you can stay in your hotel room, order room service, share a bottle of wine, and enjoy a night in together. </p><h3>3. Swap houses with friends </h3><p>If you can&#39;t afford to stay at a local hotel, an alternative is to ask another couple to swap homes with you for a night or even a full weekend. Whether they live in another city or across the street, a change of scenery may be all you need to relax and enjoy yourselves.  </p><h2>Cheap staycation ideas for you and your friends </h2><p>Whether you&#39;re single or coupled, here are some staycation ideas for you and a group of friends to consider.  </p><h3>1. Stay at a unique rental home </h3><p>Vacation rentals can be pricey, but sharing the cost of an Airbnb can make it much more affordable for everyone involved. To make it special, look for vacation rentals with unique features, such as a cabin, houseboat, or treehouse.   </p><p>Some websites make it easy to find local privately owned campsites near national or state parks and <a href="https://www.nationalforests.org/blog/sixteen-national-forests-near-national-parks">national forests</a>, giving you a chance to enjoy the outdoors. </p><h3>2. Host a movie marathon </h3><p>Invite your friends over for a double feature or even a movie marathon of a popular film franchise. Alternatively, you could ask each friend to pick one of their favorite movies, so you can get to know each other a little better.   You can even pick a theme based on a favorite actor, director, or genre and have your guests rate and discuss each film. Just make sure you have enough snacks and drinks to get everyone through the day. </p><h3>3. Organize a tournament </h3><p>A little healthy competition never hurt anyone, and in some cases, it can bring you and your friends closer together. Create teams and set up different events throughout the day or evening. Potential ideas include board or video games, pool, table tennis, foosball, and outdoor events.   </p><p>You can ask everyone to bring food and drinks to share and even pool some money together to provide prizes for the winning team. </p><h2>The bottom line </h2><p>A staycation won&#39;t feel like getting away unless you&#39;re truly able to break from your everyday routine. So set an out-of-office message on your email, silence your phone, stay up past your bedtime, and plan to treat yourself. Just like you would an out-of-town vacation, allow yourself a few splurges within your <a href="https://www.lendingclub.com/resource-center/personal-finance/sticking-to-a-budget-common-problems-and-solutions"><b>budget</b></a>.<sup>1</sup>  </p><p>While you can easily take a last-minute staycation, taking the time to plan can help you get creative in developing a lasting memory for you and your loved ones.      </p><hr/><ol><li><p><a href="https://www.consumerfinance.gov/about-us/blog/budgeting-how-to-create-a-budget-and-stick-with-it/">Consumer Financial Protection Bureau</a>. “Budgeting: How to create a budget and stick with it.” </p></li></ol><p> </p>

Learn how to plan and budget for moving expenses with a comprehensive moving expenses checklist.

<p>Relocating can be a costly process, especially if you don&#39;t take the time to plan ahead. According to <a href="http://moving.com/">Moving.com</a>, the average cost of a local move is $1,250, while long-distance relocation expenses average $4,890. However, the actual cost will depend on your current and new locations, your home size, and what your move will entail.<sup>1</sup>   </p><p>Creating a moving expenses checklist can help you prepare and also save some money. </p><h2>What are the most common costs associated with moving? </h2><p>The expenses you&#39;ll incur during the moving process will depend on several factors, such as where and how far you&#39;re moving, how much stuff you need to relocate, and the amount of assistance you need.  </p><p>With that said, here are some of the more common costs you&#39;ll want to plan for. </p><h3>Movers </h3><p>Moving companies typically charge between $38 and $75 per hour for local movers.<sup>1</sup> For a long-distance relocation, however, you may need to hire two separate moving services to help with loading and unloading.  You may also pay extra if the movers need to:  </p><ul><li><p>Pack and unpack your belongings </p></li><li><p>Carry items up multiple flights of stairs or an elevator </p></li><li><p>Make multiple stops </p></li><li><p>Expedite a long-distance move </p></li><li><p>Move bulky, valuable, or especially heavy items </p></li></ul><p>On the flip side, if you don&#39;t have a lot to move and decide to &quot;hire&quot; some friends and family members, you may only be out the cost of pizza and drinks for those who show up.  </p><h3>Moving truck or container </h3><p>If you opt for a DIY move, you may pay anywhere from under $100 for a single-day local move to thousands of dollars for a cross-country relocation.<sup>2</sup>   </p><p>On top of the rental cost, you may also want to purchase insurance protection for your belongings and the vehicle. Insurance typically costs $20 per day<sup>3</sup> but can be higher or lower than that based on the type of coverages you choose.<sup>4</sup>   </p><p>Some companies offer portable moving containers you can use instead of—or in addition to—a moving truck. Depending on how much stuff you have, the distance you need to travel, and the company you choose, you may pay anywhere from under $500 to more than $5,000.<sup>5</sup>   </p><h3>Travel expenses </h3><p>If you&#39;re moving to a different state or country, you&#39;ll need to consider potential travel expenses. Depending on how you plan to make the trip, costs may include:  </p><ul><li><p>Airfare </p></li><li><p>Baggage fees </p></li><li><p>Airport transportation </p></li><li><p>Fuel </p></li><li><p>Hotel stays </p></li><li><p>Meals </p></li></ul><h3>Packing supplies </h3><p>If you need to purchase boxes for your move, you can expect to pay between $1 and $4 apiece depending on the size and provider.<sup>6</sup> On top of that, you may also need packing tape, bubble wrap, moving blankets, permanent markers or labelers, ratchet straps, box cutters, heavy-duty trash bags, and a padlock for the truck or storage container.  </p><h3>Other costs </h3><p>Some of the other moving expenses you&#39;ll want to plan for may include the following:  </p><ul><li><p>Cleaning services </p></li><li><p>Security deposit for an apartment lease </p></li><li><p>Utility connection fees and security deposits </p></li><li><p>Renters or homeowners insurance premiums (monthly or annual) </p></li><li><p>Temporary housing, if needed </p></li></ul><h2>How to make your moving expenses checklist </h2><p>The moving costs you incur will be unique to your situation, so it&#39;s important to create a checklist based on the details of your relocation. Here are some steps to help you get started.  </p><h3>1. Price out packing supplies </h3><p>Start by figuring out which packing supplies you already have on hand, then list the supplies you still need. Take stock of your belongings to determine how much you&#39;ll need of each, and don&#39;t be afraid to buy a little extra.  </p><p>While it&#39;s important to look for opportunities to save, underestimating the number of boxes, spools of packing tape, blankets, and other materials you&#39;ll need can leave you scrambling for supplies at the last minute. </p><h3>2. Compare moving methods </h3><p>When it comes to the logistics of getting your belongings from Point A to Point B, you can opt to hire movers or do it yourself with a moving truck or portable storage container. If you decide to enlist the help of a moving company, shop around so you can compare services and prices for different movers in your area.  </p><p>If you have a willing support network, though, you may be able to cut your costs considerably by asking for help instead of hiring professional movers. That said, you&#39;ll still want to carefully compare costs between truck and storage companies to minimize your expenses. Pay special attention to mileage costs and insurance fees.  </p><h3>3. Map out your travel </h3><p>If you&#39;re making a long-distance relocation, determine how you plan to get to your new residence. If you expect to fly, research flights with different airlines based on your travel dates, and consider other incidental expenses.  </p><p>If you plan to drive, you can use average prices for gasoline or electric vehicle charging and the distance to get an idea of what your costs will be. Depending on the distance, you may also need to consider the cost of snacks, meals, and hotel stays along the way. </p><h3>4. Make a list of other expenses </h3><p>Once you&#39;ve covered some of the major costs you&#39;ll incur, take some time to make sure you have all your other potential costs written down. Again, that may include things like cleaning services, utility setup fees and deposits, and renters or homeowners insurance premiums. </p><h3>5. Look for opportunities to save </h3><p>After you&#39;ve laid out your expected costs, take some time to pinpoint areas where you may be able to save money.  </p><p>For example, instead of buying cardboard boxes, you may be able to find some for free—or at least much cheaper—through local classified ads and marketplaces. You may also opt to pack and unpack your belongings on your own instead of paying professional movers to do it for you.  </p><h2>The bottom line </h2><p>Moving can be both expensive and hectic, but making a moving expenses checklist can help make the process go more smoothly. What&#39;s more, it can help you cut down on your costs, which is particularly important if you&#39;re moving out of state.  </p><p> While it&#39;s best to save up for moving expenses, that may not always be possible. If you need help financing your relocation, consider a <a href="https://www.lendingclub.com/personal-loan">personal loan</a>.   </p><hr/><ol><li><p><a href="https://www.moving.com/movers/moving-cost-calculator.asp">Moving.com</a>. “Moving Cost Calculator for Moving Estimates.” </p></li><li><p><a href="https://www.consumeraffairs.com/movers/how-much-does-a-moving-truck-cost.html">Consumer Affairs</a>. “How much does a moving truck cost?” </p></li><li><p><a href="https://www.angi.com/articles/moving-insurance-worth-cost.htm">Angi</a>. “Is moving insurance worth the cost?” </p></li><li><p><a href="https://www.uhaul.com/Blog/2023/06/30/better-safe-than-sorry-damage-protection-for-your-move/">U-Haul</a>. “Better Safe Than Sorry – Damage Protection for Your Move.” </p></li><li><p><a href="https://www.hireahelper.com/moving-101/transportation/moving-storage-containers/">Hire A Helper</a>. “Moving Containers.” </p></li><li><p><a href="https://www.apartmentguide.com/blog/how-much-do-moving-boxes-cost/">Apartment Guide</a>. “This is How Much You Should Spend on Moving Boxes.” </p></li></ol><p></p>

With tax-filing season in full swing, if you're expecting a refund and plan to submit your taxes electronically, without errors, and using direct deposit, the IRS says your refund could arrive within three weeks. Here are some smart money moves.

<p>With tax-filing season in full swing, if you&#39;re expecting a refund and plan to submit your taxes electronically, without errors, and using direct deposit, the IRS says your refund could arrive within three weeks. With last year&#39;s average federal tax refund topping $3,004, you may already be thinking about how you can make the most of money coming back to you this year.<sup>[1]</sup></p><h2>5 smart ways to use your tax refund</h2><p>Here are five of our favorite strategies for how to use your tax refund in 2025.</p><h3>1. Add to your emergency fund.</h3><p>Given that unexpected financial setbacks will occur—a blown water heater, a major medical bill, an expensive car repair—having a well-stocked emergency cash reserve can help keep you afloat or out of unnecessary debt.</p><p>One of the tried and true ways to <a href="/personal-savings">build your emergency savings</a> is to fund it slowly over time with monthly automatic contributions. By using your tax refund to make a large lump sum deposit, you’ll reach your goal much faster.</p><p><b>How to save it:</b> Assuming you regularly contribute $100 a month and your target balance is $5,000, it will take you four years to get there. Next, let’s assume you receive last year’s average federal tax refund. If you continue making regular contributions <i>and</i> deposited your entire tax refund directly into your emergency savings fund account, you’d reach your target savings goal in just under 2 years.</p><p><b>&gt; ProTip:</b> How big should your emergency fund be? Find out using this <a href="https://www.moneyunder30.com/emergency-fund-calculator">easy calculator from Money Under 30</a>.</p><h3>2. Pay down debt.</h3><p>How would it feel if you could knock out a debt that’s been hanging over your head for far too long? Or what if you could take a bite out of an overwhelming credit card balance? When you use your tax return to pay off debt faster, you can save yourself years of worry and potentially thousands of dollars in accumulated compound interest with this creative way to pay off debt.</p><p><b>How to spend it:</b> Suppose you typically pay the minimum owed ($200 for example) toward an outstanding $5,000 credit card balance. Assuming a 15% interest rate on that card, and that you don’t add any more to it, you’ll be paying off that card for six and a half years, and shelling out $2,900 in interest before you’re done.</p><p>Instead, what if you applied your $3,000 tax refund to that debt while continuing to pay the monthly minimums? You could be debt-free in about 2 years and save yourself more than $2,500 in interest payments. Now that’s progress.</p><p><b>&gt; ProTip:</b> If you want to see how much time and money you can save by making a lump-sum payment toward your debt, punch your numbers into Student Loan Hero’s <a href="https://www.lendingtree.com/student/prepayment-calculator/">Extra Payment Calculator</a>.</p><p><b>&gt; ProTip:</b> Need to tackle even more of your debt than your tax refund can handle? Try <a href="/personal-loan">bridging the gap with a personal loan that can transfer balances for you.</a></p><h3>3. Upskill your income.</h3><p>Fine-tuning your skills and taking a look around for better opportunities can mean more money in your pocket. The rewards of being more effective in your current line of work, more confident when you ask for that raise, or positioning yourself for a better, higher-paying role, is an investment that can pay you back many times over.</p><p><b>How to spend it:</b> Whether you field customer service calls, write code, or clean homes for a living, consider spending part of your tax refund improving core job skills. Or, try learning something new altogether. This could mean paying someone to rewrite your resume, going back to school to obtain a special certification, or buying the tools you need to improve your work productivity. No matter what, investing in yourself and improving your skills can help you increase in your future earning potential.</p><h3>4. Reach a big goal faster.</h3><p>You probably have several medium-to-long-term goals for your cash, such as:</p><ul><li><p>Covering the cost of your kids’ continuing education</p></li><li><p>Paying up front for the wedding of your dreams</p></li><li><p>Putting a down payment on a home, or investing in the best home improvements</p></li><li><p>Starting a small business</p></li><li><p>Leasing or buying a car</p></li><li><p>Retiring by the time you’re 70</p></li><li><p>Budgeting your money for a dream vacation</p></li></ul><p>If you’ve prioritized building a strong financial foundation, most likely you already have a plan in place to reach one or more of your dreams. When you pour any tax refund dollars directly into your savings goal, you’ll get there much faster.</p><p><b>How to make it happen:</b> If your goal is savings, opening a dedicated, <a href="/personal-savings/high-yield-savings">high-yield savings account</a>, certificate of deposit, or money market account is a good way to safely grow your dollars while keeping them within easy reach. If your goals include planning for retirement or putting money away for future use, look into specialized accounts that offer tax benefits such as an IRA or a custodial account to grow your cash for your children’s future expenses.</p><h3>5. Invest, and fight inflation.</h3><p>If you’ve got a good handle on your emergency savings, credit situation, and other near-term financial needs, consider maximizing the impact of your tax refund over the long haul by investing it. With prices rising for many consumer goods, experts say careful investing can be a good way to <a href="https://www.cnbc.com/select/where-to-put-your-money-during-inflation-surge/">hedge against inflation</a>.</p><p><b>How to invest it:</b> Consider this: by investing the average 2024 Federal tax refund amount of $3,004 and any dividends, and assuming an annual return of 7%, after 10 years you’d nearly double your money. The longer your time horizon, the more you could see your money grow. Of course, investing comes with a measure of risk, and the market is constantly moving so it’s important you research the track record of the securities or other investment instruments you put your money into.</p><p>How will you spend, save or invest this year&#39;s tax refund? Choose one of these smart money moves and make a big impact on your financial future.</p><hr/><p>1. <a href="https://www.irs.gov/newsroom/filing-season-statistics-for-week-ending-oct-18-2024">IRS.</a> &quot;Filing season statistics for week ending Oct. 18, 2024&quot;</p>

We’ve rounded up some of the most essential personal finance to-do’s.   

<p>Your goals and money habits can change over time, but no matter what stage of life you find yourself in, everyone can benefit from regular financial housekeeping.  </p><h2>LendingClub&#39;s essential financial checklist </h2><p>We&#39;ve rounded up some to-do&#39;s to help get you started with your financial checklist.  </p><h3>1. Conduct a quick financial inventory </h3><p>Set aside about an hour to look back at the past 12 months through a personal finance lens. Jot down your findings in a notebook or on the computer, and be as honest as you can. Reflect on what you achieved versus your goals and where you may have come up short. Did you stay on <a href="https://www.lendingclub.com/resource-center/personal-finance/sticking-to-a-budget-common-problems-and-solutions"><b>budget</b></a> or spend more than you planned? Did you save more or less than you hoped to? Were you able to pay down debt, or did unexpected expenses set you back?  Did you actually set goals or just wing it? </p><p>Celebrate your financial achievements from the past year and think through what else you still need to work on. Understanding your successes and determining areas for improvement helps set the foundation for goal-setting for the year ahead, and you may identify new strategies to stay on track and better <a href="https://www.lendingclub.com/resource-center/personal-finance/how-little-can-you-live-on-tips-for-frugal-living"><b>live within your means</b></a>.<sup>[1 ]</sup>    </p><h3>2. Review insurance policies </h3><p>Review any existing insurance policies you and your family have. This may include health insurance, homeowners insurance, auto insurance, or pet insurance—and don&#39;t forget life insurance. Consider if the plans still meet your coverage needs and budget. Do you need to adjust your deductibles? Do you need a different type of coverage in the coming year?   </p><p>It never hurts to compare rates. For example, you may be happy with your current auto insurer, but shopping around could result in better rates or more coverage for the same price.  </p><h3>3. Check your employer benefits </h3><p>For people who get benefits, like health insurance or a 401(k), through an employer, the end of the year is a great time to check in. Did you use all of your health benefits? Did you maximize contributions to your health savings account (HSA), flexible spending account (FSA), or 401(k)? Do you need to make any adjustments to your plans or amounts deducted from your paycheck?  </p><p>In some cases, your employer may prompt you to make changes at the end of the year, like during health insurance open enrollment period. However, other tasks, like adding life insurance or updating your 401(k) portfolio mix, may be something you need to do on your own. Look into any new benefits your employer may be offering, like discounted gym memberships, charitable contribution matching, and more.  </p><h3>4. Plan for major life changes </h3><p>Are you expecting any major life events within the next year, like a <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-create-the-ideal-wedding-budget"><b>wedding</b></a>, divorce, birth, or a <a href="https://www.lendingclub.com/resource-center/business-loan/how-to-get-a-small-business-loan"><b>new business</b></a>? Is your child going off to college, or do you have dental work or a big medical procedure on the horizon? Maybe your home needs repairs, you need a more reliable car, or you&#39;re planning to adopt a new puppy.  </p><p>Whatever your financial situation is, when it comes to paying for large expenses, you may want to consider adjusting your budget to cover the cost. Decide if you&#39;ll save up, use your existing savings, pay with a credit card, or take out a <a href="https://www.lendingclub.com/personal-loan"><b>personal loan</b></a>.  </p><h3>5. Access your emergency savings  </h3><p>Any unexpected expense, such as medical bills and uncovered auto or home repairs, can set you back financially. A good rule of thumb is to have three to six months&#39; worth of basic living expenses stashed away in an emergency savings account. Check in on your <a href="https://www.lendingclub.com/resource-center/personal-finance/your-emergency-fund-the-essential-guide"><b>emergency fund</b></a>. Did you meet your savings goal? Are you able to save more? Did you dip into the account and need to replenish funds?  </p><p>Whether you have $500 in your emergency fund or a year&#39;s worth of expenses tucked away, reviewing your emergency savings at the end of the year is an important step to feeling financially protected in the new year.<sup>[2]</sup> </p><h3>6. Review your debt and credit  </h3><p><a href="/resource-center/personal-finance/best-creative-ways-to-pay-off-debt"><b>Managing your debt</b></a> and credit responsibly is an important part of your overall financial well-being. Take a look at your debt. Did you rack up more than you wanted to this year? Do you have a lot of high-interest debt, like credit cards? Are you on track to pay it off quickly? Or could you benefit from using a debt management strategy, like the <a href="https://www.lendingclub.com/resource-center/personal-finance/steps-to-decimate-debt-the-debt-snowball-method"><b>debt avalanche or snowball methods</b></a>? Does it make sense to consider a <a href="https://www.lendingclub.com/personal-loan/debt-consolidation"><b>debt consolidation </b></a><a href="https://www.lendingclub.com/personal-loan/debt-consolidation"><b>loan</b></a> instead?  </p><p>Check your latest credit scores. Are they where you thought they would be, or do you need to take steps to <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-improve-credit-score"><b>improve your credit</b></a> in the new year? This is also a good time to pull your credit reports and look for anything that&#39;s incorrect. You can get a free copy of your credit reports from all three major consumer credit bureaus through <a href="http://annualcreditreport.com/"><b>Annual</b></a><a href="http://annualcreditreport.com/"><b>C</b></a><a href="http://annualcreditreport.com/"><b>redit</b></a><a href="http://annualcreditreport.com/"><b>R</b></a><a href="http://annualcreditreport.com/"><b>eport.com</b></a>.<sup>[3]</sup>  </p><h3>7. Maximize retirement savings </h3><p>Retirement plans, like 401(k)s and IRAs, all have annual contribution limits. For example, the Internal Revenue Service (IRS) limits individual 401(k) contributions to $23,000 per year in 2024. Annual IRA contribution limits are set at $7,000 in 2024. If you&#39;re over age 50, you may be eligible for catch-up contributions that let you save a bit more. Limits are even higher for self-employed individuals in some cases.<sup>[4]</sup>   </p><p>The end of the year is a good time to review how much you contributed in 2024. If you haven&#39;t maxed out your contributions yet, you still have time to add more to your retirement account and take advantage of potential tax breaks.  </p><h3>8. Conduct a year-end tax review </h3><p>Changes in dependents, income, and marital status can all affect your tax bill. Use the <a href="https://www.irs.gov/individuals/tax-withholding-estimator"><b>IRS&#39;s tax withholding calculator</b></a> to decide if you need to make adjustments with your employer or how much you pay in estimated taxes if you&#39;re self-employed.  </p><p>If you&#39;re expecting a tax refund, the end of the year is also a good time to consider how you may want to use the extra cash. Do you want to stash it away for a rainy day in an emergency fund? Or does it make more sense to use the funds to pay down some debt? Planning how you&#39;ll spend your refund can help prevent spontaneous purchases when you get the check.  </p><h2>The bottom line </h2><p>Taking time to evaluate your finances and money goals can help you see how far you&#39;ve come—and what steps are still needed to build a healthy financial future and create a budget. </p><p>When you get in the habit of conducting annual financial reviews, you&#39;ll start to gain more insight into what <a href="https://www.lendingclub.com/resource-center/personal-finance/tips-for-financial-success-in-budgeting-your-money"><b>financial strategies</b></a> work best for you and set the foundation to feel more in control of your finances in the year ahead and beyond.     </p><hr/><ol><li><p><a href="https://files.consumerfinance.gov/f/201501_cfpb_digest_financial-well-being.pdf">Consumer Financial Protection Bureau</a>. “Financial well-being: What it means and how to help.” </p></li><li><p><a href="https://www.consumerfinance.gov/an-essential-guide-to-building-an-emergency-fund/">Consumer Financial Protection Bureau</a>. “An essential guide to building an emergency fund.” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/how-do-i-get-a-free-copy-of-my-credit-reports-en-5/">Consumer Financial Protection Bureau</a>. “How do I get a free copy of my credit reports?” </p></li><li><p><a href="https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000#:~:text=Highlights%20of%20changes%20for%202024,to%20%247%2C000%2C%20up%20from%20%246%2C500.">Internal Revenue Services</a>. “401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000.” </p></li></ol><p></p>

From obtaining a loan or credit card to landing a new apartment or job, having a strong credit score helps open certain doors in life. Yet many of us cling to incorrect assumptions about, or simply don't understand, what factors are used to determine our scores. 

<p>From obtaining a loan or credit card to landing a new apartment or job, having a strong credit score helps open certain doors in life. Yet many of us cling to incorrect assumptions about, or simply don&#39;t understand, what factors are used to determine our scores. </p><p>Here we separate credit score fact from credit score myth to help you better understand the impact a good credit score has on your financial life.</p><h2>Myth #1: Checking your credit report will hurt your credit score</h2><p>Contrary to popular belief, checking your own credit report won’t hurt your credit scores. Requesting your credit report or checking your scores registers as a soft inquiry, which does not influence your credit. </p><p>It’s smart to monitor your credit history, especially if you’re considering applying for a new loan soon. You’re even entitled to free credit reports from each of the major credit bureaus (Equifax, Experian, and Transunion). Typically you can access your reports at <a href="https://www.annualcreditreport.com/index.action">AnnualCreditReport.com</a> once every 12 months.</p><p>On the other hand, if you apply for a new loan, your scores may take a slight hit. That’s because loan applications (known as hard inquiries) can appear on your credit reports and are a credit scoring factor. Keep in mind—if you’re <a href="https://www.equifax.com/personal/education/credit/score/will-checking-your-credit-hurt-credit-scores/">rate shopping</a> and make multiple hard inquiries within a set timeframe, your applications should register as only one hard inquiry. </p><h2>Myth #2: You only have one credit score</h2><p>You’ll often see commercials, advertisements, and other forms of media refer to your credit score as though there is only one magical number. In reality, borrowers have multiple credit scores—that’s right: scores, plural. </p><p>Credit scores are based on information within credit reports. Since there are many different credit scoring models and given that each credit bureau produces its own unique credit report, you will have multiple credit scores. On top of that, some account activity may not be reported to each bureau, so it’s possible for reports to differ slightly as well. </p><p>Those ever-fluctuating three-digit numbers are calculated based on complex algorithms, known as credit scoring models. Two popular models are FICO Score and VantageScore, both of which have <a href="https://www.myfico.com/credit-education/credit-scores/fico-score-versions">multiple model versions</a> for various lending situations. For instance, a personal loan lender might see a different score than an auto or mortgage lender. </p><h2>Myth #3: Closing a credit card increases your score</h2><p>Ridding yourself of a credit card can seem like a wise decision. After all, what good does a piece of plastic do if it’s just collecting dust in your wallet? Actually, more than you might think. </p><p>Although canceling credit card accounts may help you cut down on the temptation to spend, may not improve your credit score right away. In fact, canceling a card could hurt your scores because it may raise your total <a href="/resource-center/personal-finance/what-is-credit-utilization-and-how-to-improve-it">credit utilization rate</a>, which is a major component of scoring models. </p><p>Your utilization rate measures your total outstanding credit balance against your total available credit. Typically, from a score perspective, the lower the utilization rate, the better. For example, let’s say you have two credit cards—one has a $3,000 credit limit and the other has a $2,000 credit limit. Now let’s also assume that the former has a $1,000 outstanding balance while the latter has no balance at all. In this case, your aggregate credit utilization ratio would be 20% ($1,000 balance divided by $5,000 of total credit). </p><p>If you canceled the $2,000 card, your credit utilization would increase from 20% to 33% ($1,000 balance divided by $3,000 of total credit) and your score would likely take a hit. In other words, just having that available credit helped cushion your utilization rate. </p><p>Unless your credit card carries an unwanted annual fee or encourages poor spending habits, it may be best to leave a credit account open—even if you don’t use it very often. </p><h2>Myth #4: Getting a better job will improve your scores</h2><p>If you got a raise or moved up the career ladder recently, congratulations are in order. Unfortunately—and we hate to be the bearer of bad news—increasing your income doesn’t increase your credit scores. At least, not on its own. That said, you could apply that extra cash to your outstanding loan balances and pay down your debt. In that case, you would likely experience a score bump. </p><p>If you’re applying for a loan or line of credit, a raise can still help your chances of qualifying. Increasing your income can lower your debt-to-income ratio, which measures your monthly debt payments against your monthly income. By lowering your ratio, you can enhance your appeal as a loan applicant in the eyes of lenders and improve your chances of qualifying for a lower interest rate and better terms.</p><h2>Myth #5: Paid-off accounts don’t affect your credit</h2><p>Congratulations—you’ve paid off your debt. Though it feels good to say “sayonara” to payments, that loan isn’t going anywhere for a while—at least in terms of your credit report. </p><p>If you close an account in good standing, meaning you made timely payments and no longer carry a balance, your account activity will remain on your reports for 10 years. In this case, you actually want your debt to remain in your credit reports. A lengthy history of on-time payments can help your scores. </p><p>On the other side, if you closed a credit account with missed payments or an outstanding balance, it could stay on your report for up to seven years—and potentially weigh down your score. That’s why it’s so important to make your loan repayments on time and pay off balances in full before you close your accounts. </p><h2>Myth #6: You need a credit card to build credit</h2><p>You don’t technically need a credit card to build credit, at least not your own. One way to build your credit score is to become an authorized user on someone else’s credit account—particularly someone with strong credit habits. The primary cardholder would still be responsible for making payments, but you’ll be linked to the account. </p><p>Your scores could benefit because the card issuer may share the account’s activity with the credit bureaus for both the primary cardholder and the authorized user. In that case, you don’t even need to use the card to build credit. </p><p>Keep in mind, this benefit can easily backfire. If the primary cardholder starts missing payments or carrying a higher card balance, this could have a negative impact on your credit report as well. </p><h2>Myth #7: Your credit doesn’t matter if you don’t need a loan</h2><p>It’s important to manage your debt responsibly, such as making on-time payments and maintaining low balances. However, if you prefer a plastic-free lifestyle and choose to instead pay with cash (or a debit card), you might wonder if a credit score is important to your life. </p><p>In most cases, the answer is yes, especially if you plan on renting a home. Many landlords will pull your credit report to determine if you’re a good candidate for home rentals. If they see a history of on-time payments and a low debt-to-income ratio, they might consider you a more qualified renter, especially when compared to someone with no credit. </p><p>Potential employers may also check your credit history. While they can’t access your actual scores, they can evaluate your general activity to see if you’re financially distressed. </p><h2>Next steps</h2><p>Now that you’re aware of common credit myths, you may want to focus on what you can do to improve your scores. For starters, you can <a href="/resource-center/personal-finance/getting-a-copy-of-your-credit-report">check your credit report</a> and check for any discrepancies. You can access your report for free from each of the three credit bureaus once every 12 months. If you come across any errors, report them immediately.</p><p><b>If you have less-than-ideal credit or no credit whatsoever, don’t worry. </b>There are several types of credit accounts that help you build your scores. Consider looking for a secured credit card or a credit-builder loan. These accounts can help you build responsible personal credit habits. Compare several credit card companies to find the most accommodating terms and best rates. </p><p><b>If you have debt, work to pay it off. </b>While that’s easier said than done, you can prioritize your loans with the highest interest rates, such as credit card debt. By doing so, you can minimize your interest payments and apply savings to other loans. You may even lower your credit utilization rate and improve your scores in the process.</p><p><b>Last, but certainly not least, pay your bills on time, every time.</b> Whether it’s debt, utility bills, or some other line of credit, your payment history significantly factors into your credit scores, and timely payments are crucial for good credit scores. If a past-due debt becomes a collection account, that can be bad news for your scores.</p><h2>The bottom line</h2><p>Your credit scores play a crucial role in your personal finances, particularly when you have to borrow money. Though most aspects of your life—like your age and income—don’t influence your score. However, there are a few factors that all three credit bureaus take into account. Your ability to pay bills on time, how much debt you take on, and how often you apply for a new line of credit are all components you can control to impact your score. </p>

Rising prices are making the necessities of life—food, housing, healthcare, transportation costs—and just about everything else, more expensive. What’s behind inflation? And how can you manage your money as your buying power shrinks?

<p>Rising prices are making the necessities of life—food, housing, healthcare, transportation costs—and just about everything else, more expensive. What’s behind inflation and how can you <a href="https://www.lendingclub.com/personal-loan">manage your money</a> as your buying power shrinks?</p><h2>What is inflation?</h2><p>Inflation happens when prices rise across a broad range of goods and services as demand outpaces supply. It’s not an entirely bad thing, as some degree of inflation may help drive economic growth. The Federal Reserve aims for inflation of about 2% to maximize employment while keeping prices relatively stable.</p><p>Economists use broad economic indicators to describe inflation. While most of us don’t need complicated metrics: we measure it by our buying power. If you’ve been putting fewer groceries into your cart—or paying more for them—you know the effects of inflation first-hand.</p><h2>What’s causing inflation?</h2><p>There are a number of factors that cause inflation.</p><ul><li><p><b>Demand-pull inflation. </b>Demand-pull inflation occurs when demand for goods and services exceeds supply. This often happens when consumer spending rises, interest rates are reduced, or demand for exports from other countries grows, all of which can push prices higher.</p></li><li><p><b>Cost-push inflation. </b>Cost-push inflation happens when the costs of production rise, such as raw materials. Businesses pass these costs onto consumers by raising the prices of goods and services. </p></li><li><p><b>Built-in inflation. </b>There is a built-in inflation assumption that is caused by the expectation that workers will demand higher wages to keep up with the rising prices, and businesses will in turn raise prices to cover the higher labor costs. It&#39;s a cycle.</p></li></ul><h2>How does the government combat inflation?</h2><p>Adjusting interest rates is a well-known measure the Fed takes to fight inflation. By increasing the cost of borrowing money, rising interest rates can cause consumers and businesses to think twice about spending on credit. Less spending means lower demand, so the thinking goes, which theoretically slows down price increases.</p><p>Cooling the economy in this way is tricky. Too little action, and prices continue to soar. Too much intervention, and a slowing economy could lead to recession.</p><h2>How does inflation affect your finances?</h2><p>The term “inflation” refers to global and nationwide changes, but you’re more likely to feel the economic effects of inflation personally:</p><ul><li><p>Rising prices can overwhelm your budget, making it harder to make ends meet</p></li><li><p>Rising interest rates can make it harder to afford loans and other credit</p></li><li><p>Economic uncertainty makes it difficult to plan and prepare for the future</p></li></ul><p>If you have some wiggle room in your budget, it’s easier to cope with rising prices. Having three to six months’ worth of living expenses in an emergency fund gives you resources to tap—or a bit of security if you have to reduce the amount you save temporarily. The more tightly your budget is stretched, the more challenging it is to cut back or find the additional dollars you need to cover essentials.</p><h2>6 steps to help beat inflation</h2><p>Wherever you fall on the inflationary impact scale, you can take steps to make rising prices less shocking and more manageable. Here are six suggestions for dealing with inflation:</p><h3>1. Actively re-budget.</h3><p>Inflation turns your budget into a moving target. Even if your spending habits haven’t changed, your costs are likely to be trending up.</p><p><b>Revisiting your monthly budget</b> is key to knowing exactly where you stand. This means understanding exactly how much income you’re bringing in compared to how much you’re spending on fixed expenses like rent or mortgage, plus variables like groceries, gas, utilities, dining out, memberships and subscriptions.</p><p><b>Reviewing your recent income and expenses</b> can help you know whether you’re making ends meet despite rising prices. Is your bank account balance dangerously low? Are you still contributing to savings? Have you tapped your emergency fund? Are you using credit cards to bridge the gap?</p><p><b>Upping your money management game</b> can make a challenging time a little easier. Consider using your bank’s mobile budgeting features to track and categorize spending if you aren’t using a mobile finance app already. Set up text alerts to let you know when your bank balance is low.</p><h3>2. Pinch your pennies.</h3><p>Prices are rising everywhere, so save money everywhere you can. Some possibilities to consider:</p><p><b>Shop sales and warehouse stores.</b> Make meal plans that focus on sale items or use this time to experiment with a plant-based (and cheaper-than-meat) menu. Taking time to compare prices can make a meaningful difference.</p><p><b>Inventory your cabinets, pantry, freezer, and refrigerator.</b> Rotate food with the earliest sell-by dates to the front. Half-empty bottles of shampoo or body wash hiding under your sink or in your unpacked travel bag are still usable.</p><p><b>Shop for better values or negotiate better prices.</b> You may find lower rates on car and home insurance, internet service, or a mobile phone package—with a new carrier or with your current ones. Offer to sign a two-year lease in exchange for reduced rent.</p><p><b>Use retailer and credit card rewards.</b> Are cash back points stacking up, out of sight and out of mind? Go ahead and use them. Make notes to yourself about how to deploy your cards to maximize rewards.</p><p><b>Get the most from your bank or credit card issuer.</b> Check the bank fees, rewards, and interest rates on your credit cards, checking account, and saving account. High-yield savings, for example, can <a href="https://www.lendingclub.com/personal-savings/high-yield-savings">earn you significantly more interest</a> than a regular savings account. Plus, a rewards checking account may <a href="https://www.lendingclub.com/personal-checking/rewards-checking">provide useful cash back while eliminating fees</a>.</p><p><b>Dial back your water and energy usage.</b> Programmable thermostats can conserve energy, and so can scheduling things like washing clothes or running the dishwasher during non-peak hours.</p><h3>3. Boost your income.</h3><p>Think about how to bring in additional income. With the labor market holding strong, this could be a good time to ask for a raise or promotion—or to look for a higher-paying job.</p><p>Getting a side gig is another option. Picking up a few hours a week doing gig work, freelancing, or using your professional skills as a consultant could generate the cash you need. If you have an extra car, furniture, household goods, clothing, accessories, or collectibles you’re ready to part with, these too can raise additional funds.</p><h3>4. Be cautious with credit cards.</h3><p>Credit card balances are <a href="https://www.newyorkfed.org/microeconomics/hhdc">increasing nationwide</a>. The Federal Reserve Bank of New York reports credit card balances rose by $24 million in the third quarter of 2024, compared to the second quarter.</p><p>Credit cards are useful when unexpected expenses—or unexpectedly high prices—bust your budget. Running up and carrying large credit card balances that aren’t paid in full within a month or two, especially while interest rates are rising, can leave you with significant debt, and at a higher interest rate than you’ve been paying.</p><h3>5. Consider consolidating and refinancing debt.</h3><p><b>Rolling your credit card balances into a fixed-rate personal loan</b> might <a href="https://www.lendingclub.com/personal-loan">save you money on interest</a>, especially as credit card interest rates tick up. Interest rates on personal loans are generally lower than they are on credit card balances, and personal loans often come with fixed rates and fixed monthly payments. Personal loans are designed to be paid off in regular installments over a set period of time. With credit cards, you can add to credit card balances as you make payments and interest rates can fluctuate. Both of these factors can prolong paying off your credit card balance.</p><p><b>Refinancing your car or home might make sense</b>, even though interest rates on car loans and mortgages are generally higher now than they were last year. For example, if you have significantly improved your credit score since you took out your car loan, you may <a href="https://www.lendingclub.com/auto-refinancing">qualify for a lower interest rate</a> now.</p><p>Additionally, if the soaring cost of housing means that you now have enough equity in your home to drop PMI, it’s worth a call to your lender to ask about getting an updated appraisal on your home. Even if you have to pay for the appraisal yourself, the savings could be worth it over the long term.</p><h3>6. Protect your credit.</h3><p>Good credit can help you secure the best interest rates and terms on loans and credit. That’s valuable whether interest rates are high or low, so maintaining your score should be a priority. Here are a few tips to keep your credit in top shape:</p><p><b>Pay your monthly bills on time.</b> On-time payments are the single most important factor in <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-understand-your-credit-score">determining your credit score</a>. Make at least the minimum monthly payment by your due date to avoid penalty interest and late fees. Setting up automatic minimum payments can help ensure that you don’t miss a deadline. Any late payment reported to the credit bureaus can bring down your credit score and linger on your credit report for up to seven years.</p><p><b>Keep your balances low.</b> When you use too much of your available credit, your credit score may drop. Aim to <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-credit-utilization-and-how-to-improve-it">keep your overall credit utilization under 30%</a>; 10% or less is ideal. To figure out your overall credit utilization, add up all of your (revolving) credit card limits and credit card balances, then divide your total balances by your total limits and multiply by 100 to see the result as a percentage. For example, if you have $20,000 in total credit lines and $2,000 in total balances, your overall credit utilization is 10%. Credit utilization can also be calculated in the same way for each individual card to come up with a per-card ratio (e.g., a credit card with a $25,000 limit and a $5,000 balance has a per card credit utilization ratio of 20%).</p><p><b>Check your credit scores and reports regularly.</b> Knowing your credit score can help when you’re shopping for loans and credit online, but it’s also wise to <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-understand-your-credit-score">monitor your score regularly</a> to make sure your credit is on track. Review your credit report from all three major credit bureaus (Equifax, Experian and TransUnion) for free at AnnualCreditReport.com to spot issues and errors, and check for signs of identity theft. A good rule of thumb is to obtain and review your credit report at least once a year at minimum.</p><h2>The bottom line</h2><p>No one knows how long the current cycle of inflation will last. Tracking your money carefully, spending less, monitoring your credit, and being a wise banking consumer are smart money moves no matter the economic climate.</p><p>Finding <a href="https://www.lendingclub.com/">the right banking partner</a> can help you make the best of inflationary times by giving you access to competitive rates on personal loans for debt consolidation or home and auto loans for refinancing. If you’re a saver, a <a href="https://www.lendingclub.com/personal-savings/high-yield-savings">high-yield savings account</a> may help you reap some benefit from rising interest rates. Plus, if you switch to or use a rewards checking account, you may earn interest and a bit of cash back to help defray your rising costs.</p><p>None of this makes dealing with inflation fun or easy. If you can stay flexible and vigilant, the money skills you develop can help you through this inflationary period and on to whatever the economy brings next.</p>

Paying down debt can be challenging, but with a little creativity you may be able to tackle your debt faster.

<p>Having debt can be stressful, especially if you’re struggling to keep up with payments and receiving collection calls. Debt can affect your credit, your ability to build savings, and your overall budget. However, with some careful planning and discipline, you may be able to pay down your debt faster. </p><p>From having a part-time job to sharing expenses with a roommate, there are many creative ways to find extra cash you can put toward tackling your debt.  </p><h2>13 creative ways to pay off debt </h2><p>From getting a side gig to using your tax refund, there isn’t a one-size-fits-all way to pay down debt. However, it’s important to find a strategy that makes sense for your financial situation, money management style, and budget. Don’t be afraid to try out different methods, or mix and match, until you find a solution that works best for you.  </p><p>Here’s a closer look at some of our favorite clever ways to tackle your debt.  </p><h3>1. Consider a DIY debt-payoff strategy </h3><p>The debt snowball and <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-the-debt-avalanche-method-and-how-does-it-work"><b>debt avalanche</b></a> methods are two common ways some people choose to tackle debt head-on. Both use a DIY approach, but they work a bit differently.<sup>[1]</sup>   </p><ul><li><p><b>Debt snowball method: </b>This method is a simple way to get started and typically works best if you have a small amount of debt. You’ll see small wins quickly, so it’s a good way to stay motivated. First, pay the minimum due on all of your debts except for your smallest balance. Then put all of your extra funds each month toward your smallest debt. Once that debt is paid off, move on to the next-smallest balance. Do this until you work your way up to your largest balance.  </p></li><li><p><b>Debt avalanche method:</b> The avalanche method requires more discipline, but if you have a large amount of debt with high interest rates, you’ll save more money in the long run. Begin by paying the minimum due on all of your debts, then putting your extra funds toward the balance with the highest interest rate. Once the high-interest debt is cleared, move on to the debt with the next-highest rate, and so on. </p></li></ul><h3>2. Consolidate your debt  </h3><p>If you’re getting hammered by high interest rates, transferring one of your balances to a card with a 0% intro APR could be a great way to eliminate spiraling interest while paying down the debt. You’ll need good credit to qualify for a balance transfer card, so <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-check-your-credit-score"><b>check your score</b></a> and <a href="https://www.lendingclub.com/resource-center/personal-finance/getting-a-copy-of-your-credit-report"><b>credit report</b></a><b> </b>before applying. Keep in mind, there’s usually a fee of around 3% to 5% of the transferred balance. If you’re trying to avoid paying interest, you’ll need to keep the account in good standing and pay off the debt before the intro APR period ends. </p><p>A <a href="https://www.lendingclub.com/personal-loan/debt-consolidation"><b>debt consolidation loan</b></a> is another way to consolidate high-interest debt into one easy-to-manage payment at a fixed rate and term. Compared to a credit card, you typically get a longer time frame to pay off the debt, and rates are often lower if your credit situation has improved. When shopping around, look for lenders, like LendingClub Bank, that let you check your rates without affecting your credit score.<sup>[2]</sup>  </p><h3>3. Make extra payments </h3><p>If you can swing it in your budget, try to make extra payments on loans and credit cards to help pay down faster. When you make additional payments toward the principal on accounts that charge interest, each payment going forward is calculated on a smaller balance. The benefits of extra payments can add up quickly, even if you’re only able to contribute a small amount.<sup>[3]</sup>  </p><h3>4. Use financial windfalls to your advantage </h3><p>It may be tempting to spend those happy financial surprises—like tax refunds, bonuses, credit card or <a href="https://www.lendingclub.com/personal-checking"><b>checking account</b></a> cash back rewards, or that big birthday check from Grandma—on something fun. However, if you weren’t expecting the extra money, why not use it to take a big bite out of your debt? Our members and financial experts alike have found that unexpected windfalls can come in handy when struggling with debt payments.<sup>[4]</sup> </p><h3>5. Negotiate terms with your creditors </h3><p>It’s in a creditor’s best interest to help borrowers repay the debts they owe. If you’re not happy with your current terms, you may be able to get a lower rate, longer repayment period, or an adjusted monthly payment. Ask your credit card company or lender if there are any options to switch things up.<sup>[5]</sup>  </p><h3>6. Get a side hustle </h3><p>Today’s gig economy offers lots of opportunities to earn extra cash with part-time work that fits into your schedule. Many gig companies, like rideshare and delivery services, let contractors decide when to work—so you can work as much or little as you want. To get started, all you typically need is some free time, a phone, and a car. </p><p>If in-person gigs aren’t your cup of tea, consider joining an online freelance network to search virtual side hustles based on your area of expertise. Just remember, a gig job is still a job, so you be sure to set aside some of your earnings to cover taxes.<sup>[4][6]</sup>  </p><h3>7. Find a part-time job </h3><p>A part-time job usually requires a more steady time commitment than gig work, but it may be a good fit if you’re looking for set hours and predictable income. You can choose a part-time job that’s something more fun than your regular job—or maybe even a role that’s a stepping stone into a new career. </p><p>If you don’t want to commit to extra work for the entire year, you can look for seasonal positions, like holiday retail sales. With a steady paycheck, you can project exactly how much you’ll earn each week so you’ll know how much you allocate toward debt payments.<sup>[4]</sup>   </p><h3>8. Spend wisely </h3><p>If you want to see how to pay off debt fast, it’s important to closely look at your spending. In addition to budgeting and cutting down on nonessentials, try to take advantage of as many discounts, sales, and promotions as possible. From cyber sales to coupons, finding ways to trim your spending can make a huge difference over time.  </p><p>However, be careful not to buy things you may not need just because they’re on sale. To benefit the most from your newfound savings, be sure to put any extra cash toward debt payments, not new spending.<sup>[4]</sup>  </p><h3>9. Consider short-term rentals and shares </h3><p>Plenty of services allow you to rent out your home or even your car, RV, or pool. This can be a good option if you’re near a popular tourist destination, live in a city with lots of business travelers, or don’t mind guests in your home. You might also choose to make an investment in something you can rent out, like an in-law apartment, yurt, or camper. Or, if you’re never home or have an extra vehicle you don’t use, short-term rentals and shares can generate passive income on the things you’re not using.    </p><p>Remember, renting out or sharing your property for a fee is often considered a business. Before getting started, make sure you understand any applicable laws, insurance needs, and tax information. You’ll also need to set aside a portion of your income to cover taxes for your new business venture. If you rent your home, check your lease to see if short-term subletting is allowed, so you don’t unknowingly break your lease.<sup>[6]</sup>  </p><h3>10. Get a roommate </h3><p>If you’re not comfortable hosting strangers, consider sharing living expenses with a friend. With a roommate, you not only split the rent but also share household bills like internet, utilities, and even groceries. Check with your landlord to make sure roommates are allowed. Your new roommate may also need to complete a rental application, depending on your lease. </p><p>If you own your home and rent out a room, keep in mind that renting a room out counts as income, so you’ll be on the hook for taxes. It’s also a good idea to check in with your home insurer to make sure your renter is covered. </p><h3>11. Sell your stuff </h3><p>Whether you have clothes, furniture, handmade items, or collectibles to sell, there are many simple ways to sell your stuff—from online resale websites and consignment shops to social media marketplaces. If you’re not sure what to sell, start by looking in your closet for unworn clothing that’s in good condition. Or, clean out your garage or basement. If you’re paying for a storage unit, think about cleaning it out and selling (or donating) what you don’t need, so you can save money on the monthly storage fee.<sup>[4]</sup>  </p><p>You may have to pay taxes on anything you sell, so make sure you know what to set aside. However, the rest of the cash can be used to help pay down debt.<sup>[4]</sup>   </p><h3>12. Be a cord cutter </h3><p>It’s easier than ever to give up cable TV. Today, there are many options for watching your favorite shows and movies online—for free. Instead of subscribing to an expensive cable package, you can watch free channels, subscribe to one or two inexpensive platforms, or pay as you go for specific programs. If you’re already using streaming services, think about which subscriptions go unused and cancel them to save even more.<sup>[4]</sup> </p><h3>13. Share your knowledge </h3><p>Lots of companies will pay you to participate in online or in-person focus groups. This can mean anything from testing products to simply giving your opinions on products and services you’re already using. If you happen to live near a college or university, try enrolling in a paid research study. If you have something to teach, consider building a course and selling it on an online platform.<sup>[4]</sup> </p><h2>Why should you try to pay down debt actively? </h2><p>If you plan on one day owning a home, retiring early, or taking that big trip you’ve always dreamed of, you’ll need to get your personal finances in order—and that often starts with managing your debt as part of <a href="https://www.lendingclub.com/resource-center/personal-finance/sticking-to-a-budget-common-problems-and-solutions"><b>your budget</b></a>. If you have several high-interest credit cards that you’re not paying the full balance on each month, those fees can quickly multiply. The longer you keep the debt, the more you’ll end up paying in interest over time. Plus, carrying high balances can affect your credit scores, since your utilization rate is a key scoring factor.<sup>[7]</sup>  </p><h2>How quickly can you get out of debt? </h2><p>How quickly you can get out of debt depends on many factors, including how much debt you have, the types of debt you’re carrying, and the amount of cash you can pay toward your debt. Installment loans have set repayment terms, so you’ll know how quickly you can get out of debt if you stick to the payment schedule. For instance, a 15-year mortgage will take 15 years to pay off unless you make additional payments.<sup>[3]</sup>   </p><p>Setting goals can help you figure out the best debt-repayment strategy and timeline. For example, if your goal is to pay off your credit card debt in five years, a five-year debt consolidation loan may be a good choice. Your efforts to pay down debt can also be affected when you take on new debt. While a new car loan might be necessary, it’s often a good idea to curb new charges on credit cards you’ve paid off.<sup>[8]</sup>  </p><h2>The bottom line </h2><p>Paying down debt can help ease financial stress, improve your credit scores, and lower your debt-to-income ratio. You may not be able to pay down your debt overnight—but with the right strategies in place, you can tackle your debt head-on and learn ways to stay on top of your debt in the future. Don’t be afraid to experiment with different ways to pay off your debt or evolve your methods over time.   </p><p>If you’re in over your head and want to stop collection calls, consider working with a professional, like a credit counselor from an accredited association like the <a href="https://www.nfcc.org/"><b>National Foundation for Credit Counseling</b></a> (NFCC). They can help you put together a <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-a-debt-management-plan"><b>debt management plan</b></a> to tackle some types of debt, such as credit cards, with a single monthly payment.<sup>[9]</sup>    </p><hr/><ol><li><p><a href="https://www.consumerfinance.gov/about-us/blog/how-reduce-your-debt/">Consumer Financial Protection Bureau</a>. “How to reduce your debt.” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-do-i-need-to-know-if-im-thinking-about-consolidating-my-credit-card-debt-en-1861/">Consumer Financial Protection Bureau</a>. “What do I need to know about consolidating my credit card debt?” </p></li><li><p><a href="https://files.consumerfinance.gov/f/201501_cfpb_digest_financial-well-being.pdf">Consumer Financial Protection Bureau</a>. “How does paying down a mortgage work?” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/two-ways-save-extra-money/">Consumer Financial Protection Bureau</a>. “Two ways to save extra money.” </p></li><li><p><a href="https://www.cnbc.com/select/how-to-lower-credit-card-interest-rate/#:~:text=Fortunately%2C%20you%20may%20be%20able,secure%20a%20lower%20interest%20rate.">CNBC</a>. “How to lower your credit card interest rate.” </p></li><li><p><a href="https://www.irs.gov/businesses/small-businesses-self-employed/manage-taxes-for-your-gig-work">IRS</a>. “Manage taxes for your gig work.” </p></li><li><p><a href="https://files.consumerfinance.gov/f/201501_cfpb_digest_financial-well-being.pdf">Consumer Financial Protection Bureau</a>. “Financial well-being: What it means and how to help.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/budgeting-how-to-create-a-budget-and-stick-with-it/">Consumer Financial Protection Bureau</a>. “Budgeting: How to create a budget and stick with it.” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-credit-counseling-and-debt-settlement-debt-consolidation-or-credit-repair-en-1449/">Consumer Financial Protection Bureau</a>. “What is the difference between credit counseling and debt settlement, debt consolidation, or credit repair?” </p></li></ol><p></p>

Your credit score is typically updated every 30 to 45 days, depending on when lenders report your account activity to the credit bureaus.

<p>When you’re making a big financial decision, understanding what affects your credit scores, how often they update, and why fluctuations occur is key. Whether you’re looking to buy a car, refinance a home loan, or consolidate credit card debt, a higher credit score can help you qualify for a loan with more favorable rates and terms. </p><p>Here we clarify some of the mystery surrounding credit scores, how often they&#39;re updated and more, to help you stay on top of this important financial tool.</p><h2>How long does it take for a credit score to update?</h2><p>It’s easier than ever to track your credit score, which can make it feel like it’s constantly being updated and needing to be checked. But that isn’t actually the case. To answer the root question of how long it takes for a credit score to update, let&#39;s first explore when and how a credit score is created. </p><h3>There’s no credit score without a credit report.</h3><p>Credit scoring models (there are many) analyze the information in consumer credit reports from Equifax, Experian, or TransUnion to generate a score. A credit scores isn&#39;t created on its own—it&#39;s an additional piece of information that you can request along with your credit report. </p><h3>Your score might be different depending on where you look.</h3><p>If you’re checking your own credit scores using one of the many online credit tracking tools available today, you might get different results depending on which one you&#39;re looking at, even if you&#39;re checking all your scores on the same day. Sometimes this happens because one tracking tool offers credit score updates daily, while another might only update their records on a weekly or monthly basis. Often, any differences between scores using these tools are due to the scores being sourced from different scoring models, or because they’re based on different credit reports from different reporting agencies. </p><p>For example, one tool might score you using a VantageScore 3.0 scoring model while another uses the FICO Score 8. While both scoring models range from 300 to 850, how these are calculated is not necessarily the same, leading to completely different scores. Because your credit report at one agency will not always be the same as it looks at another, the same scoring models can easily lead to three different credit scores between your Equifax, Experian, and TransUnion reports. </p><h2>How often do credit reports update, causing scores to fluctuate?</h2><p>Much of the information in your credit reports come directly from your creditors, such as lenders, banks, and credit card issuers. These companies typically send updates to the credit bureaus with new information about your credit history every 30 to 45 days. </p><p>If you&#39;re someone who watches your credit scores closely and checks them frequently, you may notice a lot of fluctuation throughout the month. Because the information being reported to the bureaus can change at any time, these fluctuations are common. Other factors such as the age of your accounts or how long it’s been since a late payment was reported can also cause your scores to fluctuate. </p><h2>7 factors that affect your credit scores</h2><p>Most consumer credit scores look at the information from one of your credit reports. Each model may have different weighting or consider slightly different data points. But you don’t necessarily have to overthink every scoring factor.</p><p>Many FICO and VantageScore credit scores have the same goal—predicting whether someone will be 90 days late on a payment in the next 24 months. As a result, they tend to move in the same direction as your credit reports are updated. </p><p>Here are some important factors that can affect your credit scores. </p><h3>1. Payment history</h3><p>Whether you’ve paid your bills on time or missed payments in the past, it’s all part of your history. On-time payments are best, as late payments can hurt your credit scores and stay on your credit reports<a href="https://www.experian.com/blogs/ask-experian/how-long-does-it-take-information-to-come-off-your-report/"> for up to seven years</a>. </p><h3>2. Public records</h3><p>Filing for bankruptcy can hurt your credit score, and the public record may <a href="https://www.experian.com/blogs/ask-experian/how-long-does-it-take-information-to-come-off-your-report/">stay on your credit reports</a> for seven (for completed Chapter 13 bankruptcies) or 10 years (for Chapter 7 bankruptcies). </p><h3>3. Collection accounts</h3><p>Unpaid bills that get sent or sold to a collection agency may be reported to the credit bureaus and hurt your credit scores.</p><h3>4. Revolving credit utilization ratio</h3><p>The portion of the credit limits you’re using with revolving credit accounts, such as credit cards and lines of credit. A lower credit utilization rate is better for credit scores. </p><h3>5. A credit mix with different types of accounts</h3><p>Having experience with revolving and installment credit accounts can be better for your credit scores than only using one type of account. </p><h3>6. The age of your accounts</h3><p>A higher average age of accounts and old accounts in your credit reports can also be good for credit scores. A new credit card or new loan might lower your average age of accounts. Paid off and closed accounts could still be considered in age-related factors. </p><h3>7. Hard inquiries</h3><p>When you apply for a new credit account, a record of the credit check—called a hard inquiry or pull—is added to your credit report. Credit inquiries aren’t a major factor, but they may hurt your credit scores a little. </p><h2>Best ways to maintain and improve credit scores</h2><p>Getting a good credit score can take time, and maintaining it could be difficult. But there are some general guidelines that will put you well on the way to getting an excellent score. </p><h3>Pay your bills on time.</h3><p>Your payment history is one of the most important scoring factors, and having a long history of making your payments on time can go a long way toward getting a good credit score. </p><p>Generally, a payment has to be at least 30 days past due before the late payment can be reported to the credit bureaus. If you missed a payment, try to bring your account current right away. If you’re having trouble affording your payments, try reaching out to your creditors right away. </p><h3>Pay down credit card balances.</h3><p>Large credit card balances can lead to a high credit utilization rate that hurts your credit scores. It can be difficult to pay off credit cards that have high interest rates. But focusing on paying down credit card debt could help you save money and improve your credit scores. </p><h3>Make early credit card payments.</h3><p>Because credit card balances generally get reported to the credit bureaus before your payments are due, you could have a high utilization rate even if you pay off your card in full each month. If you’re paying off your cards anyway, making early payments (before the end of each statement period) could lead to a lower utilization rate. </p><h3>Understand what leads to hard inquiries.</h3><p>Credit applications can lead to hard inquiries that may hurt your credit scores. But credit scoring companies also recognize that shopping for a good rate on a loan isn’t necessarily risky behavior. After all, you may apply for several mortgages to see which lender offers you the best rate, but only wind up taking out one loan.</p><p>With <a href="https://www.myfico.com/credit-education/credit-reports/credit-checks-and-inquiries">some scoring models</a>, hard inquiries from auto, mortgage, and student loans that occur within a 14-day period only count as one inquiry for scoring purposes. Some scoring models may “deduplicate” inquiries from other types of accounts or a longer period. </p><h3>Check for and dispute credit report errors.</h3><p>Closely review your credit reports for errors that may be hurting your credit score. Some errors could be mistakes—such as a late payment that you had paid on time. Others may be an indicator of identity theft or fraud, such as an account that you didn’t apply for or open. </p><p>If you<a href="https://consumer.ftc.gov/articles/disputing-errors-your-credit-reports"> notice an error</a>, you can file a dispute with the credit bureau, which must investigate your claim unless they deem it frivolous or irrelevant. When you suspect fraud, you can also reach out to the creditor to close the account. </p><h2>How to check your credit score</h2><p>You can get a free credit report from each of the credit reporting agencies from <a href="https://www.annualcreditreport.com/index.action">annualcreditreport.com</a> at least once every 12 months. However, these credit reports don’t come with a credit score.</p><p>If you want to check your credit score, there are free options from lenders, banks, credit card companies, and online apps. Paid credit monitoring programs also exist, and they may come with additional features, like credit score simulators or identity protection monitoring.</p><p>You don’t necessarily need to check your credit scores every day, or even every month, however, a tracking service that alerts you to suspicious or important credit score changes can be useful. And if you plan on shopping for a loan, you may want to check your scores a few months ahead of when you apply to give yourself time to make any improvements your score might need. </p><h2>Credit score FAQs</h2><h3>How often do lenders report to the credit bureaus?</h3><p>Generally, lenders, creditors and financial institutions report new information about you to the credit bureaus every 30 to 45 days. Timing on this varies greatly, which can lead to new information being added to your credit reports (and fluctuations to your scores) throughout the month. </p><h3>Which credit bureaus do my lender report to?</h3><p>Check with your lender to find out. Many large lenders report to all three major credit bureaus—Equifax, Experian, and TransUnion. But some may only report to one or two bureaus, or to none at all. </p><h3>How long does it take for a credit score to update after paying off debt?</h3><p>Credit scores can be generated each time a new credit report is requested. Once the new zero balance is reported to the credit bureaus and your credit report is updated, credit scores based on the new report will reflect that you paid off the debt. </p><h3>How often do credit score trackers update your credit score?</h3><p>Many credit score tracking programs request new credit reports and scores on a regular basis. Check with the program for specifics, because it may be every day, week, month, or quarter depending on the program. </p>

If the thought of creating a budget makes you want to run for the hills, you aren’t alone. Budgeting can often feel overwhelming, especially if looking at bank statements or even just thinking about your money makes you feel uncomfortable. 

<p>If the thought of creating a budget makes you want to run for the hills, you aren’t alone. Budgeting can often feel overwhelming, especially if looking at bank statements or even just thinking about your money makes you feel uncomfortable. The truth is, your budget is simply a plan for your money—one that has the potential to improve your financial health, empower you to live within your means, reduce financial stress, and help you build the life you want.</p><h2>Why you need a budget</h2><p>A successful budget can reduce your day-to-day stress by helping ensure you’ve got all your financial needs and responsibilities covered. Though there are all sorts of budgeting methods available, the goals remain roughly the same. </p><h3>Tracking your spending</h3><p>When you see exactly where your money is going, you can pinpoint areas where you may be overspending and find ways to reallocate those funds for better use.</p><h3>Reaching your financial goals</h3><p>Whether you’re more focused on short-term goals, like a home repair project, or long-term goals like saving for retirement, you’ll have a much better chance of achieving them with a budget. Creating and sticking to a budget gives you the opportunity to take your goals out of the realm of wishful thinking and turn them into reality. </p><h3>Controlling your debt</h3><p>When you create a budget, you may be able to see the bigger picture and gain a clearer understanding of your debt. You might find that you can better manage your bills simply by being more frugal with your income. Or you may discover <a href="/personal-loan/debt-consolidation">consolidating your debt</a> or taking out a personal loan can help you save money over time. Creating a budget lets you tackle your debt head-on with a realistic plan to pay it down. </p><h3>Improving your discipline around money</h3><p>Budgeting can help you form habits that affect much more than your bank account. A well-thought-out budget can teach you to be more intentional with your choices, increase discipline, develop better boundaries, and better understand what you truly value. Plus, effective budgeting can help decrease anxiety and foster more positive feelings about your future. </p><h2>How to build a better budget: 6 simple steps</h2><p>Like many endeavors in life, the hardest part is getting started. Taking a methodical, step-by-step approach can help simplify the process and minimize any anxieties you have about creating your budget.</p><h3>1. Determine your annual spending capacity</h3><p>Rather than starting with your monthly income and expenses, try looking at how much you typically make and spend in a full year. Why? Because there’s no such thing as a “typical month,” and some expenses aren’t monthly. Add up all your income sources together—even your occasional boosts like bonuses, commissions, or tax refunds. Then, divide by 12 to give you a good estimate of what you may have to spend each month. From there, you can determine which months may have more expenses—like around the holidays—and let you plan which months you may need to cut back to save. </p><h3>2. List your non-negotiable expenses</h3><p>For this step of the budget-making process, write down each of your non-negotiable costs. This list may include: </p><ul><li><p>Rent or mortgage payments</p></li><li><p>Car payments</p></li><li><p>Groceries</p></li><li><p>Basic utilities</p></li><li><p>Childcare or school tuition</p></li><li><p>Insurance premiums</p></li><li><p>Minimum debt payments (credit cards, car loan payments, etc.)</p></li></ul><p>Some costs are fixed expenses, meaning you know exactly how much they cost each month—like your rent or car insurance. Variable expenses, on the other hand, can be harder to calculate.</p><p>To figure out your variable expenses, try to find the average cost by looking over the past 12 months of bills. For example, gather 12 months&#39; worth of electric bills, add up the total and divide by 12 to get an average cost. For partially documented expenses, like trips to the grocery store where you pay with cash, do a review of the past few weeks to get a good estimate of how much you spend. </p><h3>3. Create spending categories</h3><p>Create categories for all your expenses—like housing, transportation, food, utilities, healthcare, and insurance. Make sure to separate your “needs” from your “wants,” so you know how to prioritize if you ever need to tighten your budget.  For example, you need to budget for groceries and food each month, but you may want a nice dinner out. By putting these into separate categories, you are able to better see how much money you can save if you need it. </p><h3>4. Compare multiple months to see trends</h3><p>Comparing your expenses from month to month can give you a clearer understanding of your spending habits, particularly when it comes to problem areas. You may find, for example, you’re spending way more on takeout meals than you realized. Once you see these patterns, you can make changes until you find a better balance in your spending.. </p><h3>5. Prioritize savings and debt repayment</h3><p>Most Americans have <a href="https://www.cnbc.com/2018/08/20/how-much-debt-americans-have-at-every-age.html">some kind of debt</a>. A budget can help you pay it down and start saving for the future—as long as you’re willing to commit. Within every month, set aside funds for paying back your debts—like student loans or credit card bills. Don’t stop there. Making room in your budget to save can help you in the long run. </p><p>Some savvy budgeters find success in prioritizing savings by “paying yourself first.” When you pay yourself first, you set aside money for your financial goals before you spend it on immediate wants. </p><p>Depending on your goals, paying yourself first may include: </p><ul><li><p>Building an emergency fund for unexpected expenses</p></li><li><p>Contributing to a retirement account</p></li><li><p>Saving for your kids’ education costs</p></li><li><p>Getting out of debt faster</p></li><li><p>Purchasing a home</p></li><li><p>Replacing a car</p></li><li><p>Buying insurance</p></li><li><p>Contributing to your health savings account (HSA)</p></li></ul><p>If you live paycheck to paycheck, prioritizing these non-immediate needs may sound daunting. Don’t worry too much about the number you’re contributing. “Almost everyone can save <a href="https://www.getrichslowly.org/pay-yourself-first/">at least 1% of their income</a>,” notes financial blogger J.D. Roth. It all adds up. </p><h3>6. Allocate for fun</h3><p>No matter your approach, you won’t stick to any budget for very long if you don’t make room for enjoying life. Once you’ve committed money toward your necessities and your financial goals, give yourself permission to budget in some fun: sports or music lessons for the kids, dining out, local travel, etc. Even while you&#39;re prioritizing saving for the future, it&#39;s important to take care of your mental health and budget for the present moment, too. </p><h2>How to maintain your budget</h2><p>Your budget is an essential part of your financial health. Once you’ve created yours, set yourself up for success by reviewing your finances regularly. </p><h3>1. Check in often</h3><p>Check in on your budget on a regular basis to ensure everything is on track. Remember that a budget is simply a money management plan, not a rigid set of rules. The more you nurture it, the healthier it will be. </p><h3>2. Automate where possible</h3><p>Worried you may forget important bills and throw your budget off course? Automating your recurring payments can be a budget lifesaver. Set up autopay for your credit cards, utilities, and other regular expenses, making sure to keep track of when those payments are due so you’ll always have enough to cover them. You can even set up automatic withdrawals for your savings and 401(k) contributions with your bank and employer. </p><h3>3. Use budgeting software and apps</h3><p>Personal finance apps are popular options, and there’s now an app for practically any activity connected to your budget. Whether you want to track your spending, set savings goals, make mobile payments, view all your accounts in one place, get customized alerts, or do just about anything else, your favorite finance app can probably do it.</p><h3>4. Listen to financial podcasts</h3><p>Similar to mobile apps, podcasts have become a <a href="https://www.nielsen.com/news-center/2020/nielsen-at-podcast-movement-2020-opportunities-in-a-skyrocketing-industry/">huge part of our culture</a>. With countless options available, you can find podcasts covering everything from money-saving tricks to advice on retiring early. </p><h3>5. Join a budgeting community</h3><p>Feeling alone in your budgeting journey? Join a <a href="https://www.cnbc.com/select/best-personal-finance-communities/">financial community</a>! Money is a stressful and emotional topic, and talking with others who are on a similar path can make you feel heard, supported, and understood. It’s also a great way to get tips from more seasoned budgeters and learn from others’ past mistakes. </p><h2>The bottom line</h2><p>Creating and maintaining a budget can change the way you think about and manage money for the long term. Not only can building a budget help you curb your spending, <a href="/personal-loan">pay down debt</a>, and save, it can also help you develop better financial habits that can have a positive impact on other areas of your personal life. </p><h2>FAQ</h2><h3>1. I’m a first-time budgeter. Where do I start?</h3><p>If you’re a first-time budgeter, start with the basics to avoid getting overwhelmed. Calculate your after-tax income, write down all your recurring expenses (both fixed and variable), categorize your expenses, and prioritize saving for the future and paying down debt. Revisit your budget regularly to get to know your spending habits and make adjustments as needed. </p><h3>2. How can I live off my budget and still save money?</h3><p>Saving money can be challenging on a tight budget, but even setting aside just 1% of your income can make a difference over time. Try gradually increasing that percentage so you can boost your savings without seeing too much of an impact on your daily expenses. </p><h3>3. How do I tackle debt on a budget?</h3><p>Use the “pay yourself first” method to ensure you’re putting money toward your outstanding debts each month. Try also paying more than the minimum on your recurring debts, cutting out unnecessary expenses where you can, using budgeting apps, and revisiting your budget regularly to find and address key areas of overspending. </p>

The ideal number of credit card accounts depends on your financial goals, but 2-3 is a good balance. It helps build credit without overcomplicating management or hurting your credit utilization.

<p>According to Experian&#39;s State of Credit survey, the average American carries 6 credit cards in their wallet. You might wonder, is this too many, and how many credit cards should I have?  </p><p>It all depends on your credit history and your personal financial needs. So, instead of focusing on how many open card accounts you should have (or may think you need), consider what impact your current cards have on your overall credit score, and whether or not those cards are helping you reach your financial goals.  </p><h2><b>How do I know if I have too many credit cards?</b> </h2><p>Certain situations may indicate you’re juggling more than you can manage:  </p><h3><b>You spend over your monthly budget.</b> </h3><p>If you have a hard time sticking to a budget and have several credit cards with high limits, you could wind up overspending your way into debt. </p><h3><b>You struggle to make payments on time.</b> </h3><p>If you’re habitually late paying your bills—or worse, if you miss payments altogether—you may be managing too many cards. Missing payments doesn’t only trigger late fees; your credit score can take a nosedive, too.  </p><h3><b>You are declined for new card offers.</b> </h3><p>If you’re having trouble paying what you currently owe and you have too many inquiries on your credit report, this signals to lenders that you might be seeking more credit than you can handle. Before you apply for a new card, ask yourself if you truly need it. If you’re seeking out more credit because you’ve reached your credit limit on other cards, maybe it&#39;s time to consider a debt consolidation loan instead. </p><h2><b>Your financial goals can help determine what&#39;s right for you</b> </h2><p>Below are some examples of financial goals, and whether or not a credit card can help you meet them: </p><h3><b>You’re building your credit history and score.</b> </h3><p>If you&#39;re just starting out and your credit history is still new, or if you’re trying to repair your credit, you may want to consider a secured card. With secured cards, you pay a cash deposit upfront that serves as collateral for the card issuer in the event you are unable to make your payment. Your cash deposit is typically equal to your credit limit. Your payment history will be reported to all three credit bureaus, so keeping up with your payments can help improve your credit score. </p><h3><b>You&#39;re maximizing rewards earnings.</b> </h3><p>Rewards programs can vary greatly between credit card providers. While one card may offer great cash back, another may help you quickly rack up travel points. That’s why some people choose to have multiple cards they use in tandem to maximize reward benefits. However, earning rewards isn’t as important as having a healthy credit score. It&#39;s always a better idea to apply for credit only when you need it and are able to manage it. </p><h3><b>You&#39;re buying a new house or car.</b> </h3><p>If you’re planning on making a big financial move such as buying a home, recent credit card applications (and the ensuing credit inquiries from card issuers) can backfire. Each new credit application triggers a hard inquiry, temporarily lowering your credit score. The Consumer Financial Protection Bureau recommends avoiding any new credit applications in the months leading up to securing a new mortgage, refinancing, or taking out a substantial loan of any size. </p><p>If you want the most favorable interest rates and terms on a new mortgage or auto loan, your best bet is to use your existing credit cards to improve your overall credit score. This means paying your bills on time and keeping your balances and credit utilization as low as possible. </p><h3><b>You&#39;re managing a large amount of debt.</b> </h3><p>While it might seem easy to apply for another new credit card to expand your available credit if you already have a large amount of debt that you don&#39;t foresee paying off within a couple of months, there are better, smarter options. Before filling out another credit card application online, consider instead setting yourself up on a budget and taking back control by consolidating your debt with a balance transfer personal loan. </p><h2><b>What should I do if I think I have too many cards?</b> </h2><p>Having multiple open credit card accounts won&#39;t impact your credit score. In fact, keeping older cards you&#39;re not using open can increase your average credit history length and <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-credit-utilization-and-how-to-improve-it">credit utilization ratio</a>. As long as the card doesn’t carry an annual fee or other charges, think twice before closing the account.  </p><p>Of course, if keeping a card open that you&#39;re no longer using creates too much temptation to overspend, you can try cutting it up, or putting it under lock and key. While closing your account with the credit card issuer is always an option, it will most likely impact your credit score temporarily.  </p><p>If you’re struggling to manage your credit card debt and need help getting back on track, consider a debt consolidation loan. A <a href="https://www.lendingclub.com/glossary/c/credit-history">debt consolidation loan</a> is a form of debt refinancing that combines multiple balances from credit cards and other high-interest loans into a single loan with a fixed rate and term. Debt consolidation can help you pay down debt faster, save you money by reducing your interest rate, and even improve your credit score by diversifying your credit mix and reducing your total debt (as long as you’re not adding any new debt). </p><h2><b>3 Ways credit cards affect your credit score</b> </h2><p>How you use the credit cards in your possession matters, especially when it comes to building and maintaining a good credit history and credit score. Here are important ways credit card use (or misuse) can affect your score: </p><h3><b>1. Payment history</b> </h3><p>Payment history has the most significant impact on your credit—making up 35% of your FICO score. Your payment history—the official record of how you’ve historically repaid money owed—shows potential lenders how reliable you might be as a potential borrower.  </p><p>The best way to maintain a positive payment history is by paying your bills on time, all the time. Missing a due date can deliver a big blow to your credit score. If you&#39;re already struggling to keep up with multiple credit card payments, setting up automatic payments and bill reminders can help you keep track of what&#39;s due and when. Before you apply for a new card, be sure you can make the payment on time so you don&#39;t become overextended or overwhelmed beyond your capacity to repay. In fact, first consider whether you should be consolidating some or all of that credit card debt instead.  </p><h3><b>2. Credit utilization</b> </h3><p>Credit utilization is the amount of credit you’ve used compared with the total amount that has been extended to you by all your lenders combined. To maintain a healthy credit score, experts recommend keeping your total <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-credit-utilization-and-how-to-improve-it">credit utilization ratio</a> at or below 30% across all of your accounts. While some people spread monthly purchases across multiple cards to keep their utilization low, that same strategy may also tempt you to overspend and max out all of your cards. </p><p>When you max out (i.e., reach your credit limit and have no more credit to use) even just one of your cards, it can hurt. If you don&#39;t act quickly to lower your credit balance, keeping a high balance may cause your scores to plummet, your minimum payment to increase, and any potential new transactions to be declined. </p><h3><b>3. Credit history</b> </h3><p>The average age of your open credit accounts is important because it shows lenders how long you’ve been managing credit. The longer your <a href="https://www.lendingclub.com/glossary/c/credit-history">credit history</a>, the better for your credit score. That’s why it’s a good idea to keep old accounts open and in good standing in order to maintain excellent credit, even if you’re no longer using those cards. </p><p>If you have an unused credit card that you want to keep open, consider making a small purchase at least once a year and paying it off immediately. Doing this can help prevent your credit card issuer from closing your account due to inactivity. </p><h2><b>The bottom line</b> </h2><p>When it comes to applying for credit cards, consider your financial goals, not a specific number (or perks offered by credit card companies). If a new credit card won’t help you reach those goals—or worse, sets you back—be careful. If you’re carrying credit card debt, consider all of your options to help you manage.  </p><h2><b>Credit card FAQs</b> </h2><h3><b>How many credit cards should I have to improve my credit score?</b> </h3><p>There is no magic number of credit cards to hold in your wallet that will boost your credit score. Instead, focus on applying only for what you need, making payments on time, and keeping your card balances low. If it&#39;s possible, get to the point of paying your balances down in full every month if you can.  </p><h3><b>Does having multiple credit cards hurt my credit score?</b> </h3><p>If you stay on top of your monthly payments and keep your total credit utilization under 30%, you may be able to manage multiple credit cards without harming your credit. However, as a general rule, most experts recommend only applying for the credit you need.  </p><h3><b>Should I open another card to increase my score?</b> </h3><p>Your credit score is determined by several factors such as your credit utilization, credit mix, and payment history. By opening another card you may lower your credit utilization and improve your credit mix, but it depends on your personal financial situation. Keep in mind that opening a new card may lower your score temporarily. If you’re struggling with your credit or trying to improve a low credit score, it’s better to focus on properly managing the cards you already have.  </p><h3><b>Should I get another credit card or personal loan?</b> </h3><p>Whether to apply for a new credit card or a personal loan depends on how you plan on using the line of credit or money borrowed, and how long it will take you to repay. If you want to use credit to make everyday purchases and earn rewards, having access to a revolving line of credit (i.e., a credit card) can be a good option. On the other hand, a personal loan is often a better choice if you want to finance a large, major purchase or need a longer period of time to pay down accumulated debt. Either way, shop around to find the credit option that best matches your financial goals.  </p><h3><b>Will closing a credit card hurt my credit score?</b> </h3><p>Sometimes closing a credit card can raise your credit utilization rate and reduce your average credit age and number of accounts, all of which can negatively affect your score. After taking in to consideration any annual fees you may be paying, in some cases it may be better to keep older, unused credit card accounts open. </p>

You have the right to request a free yearly copy of your credit report from each of the three major credit bureaus, but you may be able to check your reports more frequently online at no cost. 

<p>You are entitled to one free copy of your credit reports every year from each of the three consumer credit reporting agencies (Equifax, Experian, and TransUnion). You can choose to request all of your reports at once, or order them separately throughout the year.<sup>[1]</sup>  </p><ul><li><p><b>Online: </b>Visit <a href="http://annualcreditreport.com/"><b>AnnualCreditReport.com</b></a> and follow the step-by-step instructions. </p></li><li><p><b>Phone: </b>Call (877) 322-8228 to request your report(s). </p></li><li><p><b>Mail:</b> Send a completed<b> </b><a href="https://www.annualcreditreport.com/manualRequestForm.action"><b>Annual Credit Report Request form</b></a> to: </p></li></ul><p>Annual Credit Report Request Service </br>P.O. Box 105281 </br>Atlanta, GA 30348-5281 </p><h2>How to get additional free credit reports </h2><p>You may also be eligible to request additional free credit reports throughout the year if any of the following situations apply.<sup>[1]</sup>  </p><ul><li><p><b>Online request:</b> Free weekly credit reports are available online at <a href="https://www.annualcreditreport.com/gettingReports.action">AnnualCreditReport.com</a> from Equifax, Experian, and TransUnion.  </p></li><li><p><b>Adverse action:</b> If you were denied credit, insurance, or employment based on the information in your credit report, you’re entitled to request a free copy of the report from the credit reporting agency. Typically, you’ll need to make the request within 60 days after receiving notice. Follow the instructions you receive with your denial.  </p></li><li><p><b>Fraud:</b> If you believe your credit file has inaccuracies because of fraudulent activity, you can get a free copy of your credit report from a nationwide credit reporting company. You’re also eligible for two additional free copies for an extended fraud alert. </p></li><li><p><b>Unemployment:</b> You can get a free credit report if you’re currently unemployed and plan to apply for jobs within 60 days of your request. </p></li><li><p><b>Public assistance:</b> If you receive government-funded assistance, you may be eligible to get a free copy of your credit report.  </p></li><li><p><b>State law:</b> For example, California Credit Reporting Agencies Act (CCRRA). Check your state’s laws for availability.  </p></li></ul><p>You can also pay for additional reports—but by law, the credit reporting agency can’t charge more than $15.50 per report.<sup>[2]</sup>  </p><h2>Start monitoring your credit regularly </h2><p>When you apply for credit, like a <a href="https://www.lendingclub.com/personal-loan"><b>personal loan</b></a>, lenders typically consider the information on your credit reports as well as your credit score. Credit reports show a list of your accounts and your activity on the accounts, like payment history and balances. It also includes details about your applications for new credit, like loans, credit cards, and mortgages. Scoring systems like FICO<sup>®</sup> score and VantageScore use the information in your reports when calculating your credit scores.<sup>[3]</sup>   </p><p>Checking your credit reports and credit scores regularly can help you quickly <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-read-your-credit-report-identify-red-flags"><b>spot errors</b></a> and potential fraudulent activity. For instance, you may see an account you don’t recognize or a new application for a credit card that you never applied for. Report anything that doesn’t look right to the credit bureau immediately. If you suspect fraud, you can place a fraud alert on your credit report or set up a security freeze in more serious situations.<sup>[4]</sup>  </p><h2>The bottom line </h2><p>Keeping tabs on your credit reports can help you spot errors and potential fraud attempts. If you’re working on improving your credit, staying on top of your credit reports is also a good way to see what may be affecting your scores, like payment history and age of accounts. Remember, checking your own credit doesn’t affect your credit scores, and it’s free to check your report annually.   </p><hr/><ol><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/how-do-i-get-a-free-copy-of-my-credit-reports-en-5/">Consumer Financial Protection Bureau</a>. “How do I get a free copy of my credit reports?” </p></li><li><p><a href="https://www.consumerfinance.gov/rules-policy/final-rules/fair-credit-reporting-act-disclosures/">Consumer Financial Protection Bureau.</a> &quot;Fair Credit Reporting Act Disclosures&quot;</p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-credit-report-and-a-credit-score-en-2069/">Consumer Financial Protection Bureau</a>. “What is the difference between a credit report and a credit score?” </p></li><li><p><a href="https://consumer.ftc.gov/articles/free-credit-reports">Federal Trade Commission Consumer Advice</a>. “Free credit reports.” </p></li></ol><p></p>

A 700 credit score is generally considered “good” among common scoring systems that range from 300 to 850.

<p>People with good credit generally qualify for the best rates on <a href="https://www.lendingclub.com/personal-loan"><b>personal loans</b></a>, credit cards, and other types of credit. Strong credit also helps you get better insurance rates and housing. A good credit score shows lenders you’re financially responsible, make on-time payments, and can be counted on for repayment.<sup>[1]</sup> </p><h2>What is considered a ‘good’ credit score? </h2><p>Many types of credit scores exist. However, <a href="https://www.myfico.com/credit-education/what-is-a-fico-score"><b>FICO</b></a><a href="https://www.myfico.com/credit-education/what-is-a-fico-score"><b><sup>®</sup></b></a><a href="https://www.myfico.com/credit-education/what-is-a-fico-score"><b> Score</b></a> and <a href="https://www.vantagescore.com/press_releases/the-complete-guide-to-your-vantagescore/"><b>VantageScore</b></a> are the two main credit-scoring companies, with the Fair Isaac Corporation (FICO) score being used by about 90% of top lenders.<sup>[2] </sup>Both companies use a scoring range of 300 to 850, with 850 being the highest score. FICO generally considers a score between 670 and 739 as good.<sup>[3]</sup> VantageScore models define good as a score 661 to 780.<sup>[4]</sup> </p><h2>VantageScore vs FICO score </h2><p>FICO and VantageScore credit-scoring models use unique (and proprietary) scoring methodologies to calculate your credit score. However, both models typically consider the following factors: </p><ul><li><p>Your payment history </p></li><li><p>How much you owe </p></li><li><p>The age of your credit history </p></li><li><p>Your credit mix </p></li><li><p>New credit accounts </p></li></ul><p>Your score may differ between different scoring systems. However, since your score is based on many of the same factors in your credit history, if you have a good FICO score you most likely also have a good VantageScore.<sup>[4] [5]</sup> </p><h3>What is a good VantageScore? </h3><p>The VantageScore model was developed in 2006 by the three major consumer credit bureaus—Equifax, Experian, and TransUnion. Your VantageScore is based on credit report data from each of the bureaus. The latest versions, VantageScore 3.0 and VantageScore 4.0, generally consider a “Prime” score of 661 to 780 to be good. Lenders that check your VantageScore typically use the VantageScore 3.0, but VantageScore 4.0 is expected to become more popular as more lenders transition over.<sup>[5]</sup> </p><h3>What is a good FICO score? </h3><p>The FICO score model was introduced in 1989 and is the credit score most lenders use when you apply for credit. FICO has <a href="https://www.myfico.com/credit-education/credit-scores/fico-score-versions"><b>several types of scores</b></a> lenders can choose from, some of which are industry-specific. FICO 8 is the base scoring model, and it’s most commonly used when you apply for loans and other types of credit. However, if you apply for a car loan, for example, the lender might check your FICO Auto Score instead. Generally a FICO credit score range of 670 to 739 is considered good across the different FICO versions.<sup>[3]</sup> </p><h2>What is the average credit score? </h2><p>Most Americans have good credit, according to the latest data from both FICO and VantageScore. In 2023, <a href="https://www.fico.com/blogs/average-us-fico-score-717-more-consumers-face-financial-headwinds"><b>FICO scores averaged 717</b></a>, and <a href="https://www.vantagescore.com/press_releases/vantagescore-creditgauge-may-2024-the-credit-gap-consumer-credit-diverged-older-and-more-affluent-borrowers-continued-to-spend-and-pay-on-time-as-younger-consumers-increasingly-we/"><b>VantageScores averaged 704</b></a> in 2024. However, many consumer trends affect score averages like changes in people’s ability to pay their bills on time, rising consumer debt, and falling rates of new credit applications. Where you live can also affect credit score averages. </p><h2>What does a good credit score get you? </h2><p>People with good credit often qualify lower rates and better credit terms. Some of the benefits of having a good credit score include: </p><ul><li><p><b>A stronger chance of approval:</b> A good credit score indicates to lenders that you are a trustworthy borrower. </p></li><li><p><b>Better interest rates:</b> A good credit score can help you qualify for loans and credit cards with more favorable rates and terms. </p></li><li><p><b>Higher credit limits:</b> Lenders base your credit limits or loan amounts on many factors, including your credit score. A good credit score can help you qualify for higher amounts. </p></li></ul><p>Remember: Lenders consider more than your credit score when you apply for credit, and each has its own lending requirements. Shop around to make sure you’re getting the best rates.<sup>[1]</sup> </p><h2>How to get a ‘good’ credit score </h2><p>Building good credit may take time. However, using the following strategies can help you <a href="https://www.lendingclub.com/resource-center/personal-finance/what-affects-your-credit-scores"><b>improve your credit</b></a> and maintain a good credit score over time. </p><h3>Pay on time, every time </h3><p>Of all the factors that affect your credit score, your payment history carries the most weight. For this reason, the number one thing you can do to improve your score is to pay your bills on time and avoid missed payments.<sup>[6]</sup> </p><h3>Pay down debt </h3><p>To keep your credit utilization low, aim to pay as much as possible toward your debt each month. Consider a <a href="https://www.lendingclub.com/personal-loan/debt-consolidation"><b>debt consolidation loan</b></a> to pay down high-interest debt, like credit cards. </p><h3>Maintain a consistent credit history </h3><p>The longer you’ve been borrowing money, the more detailed your credit report will be. Lenders prefer a longer credit history because it reveals the borrower’s spending habits and reliability. So keep those older credit cards open even if you don’t use them.<sup>[6]</sup> </p><h3>Opt for different types of credit </h3><p>Lenders like to see you can manage different types of credit accounts. Although your credit mix only determines about 10% of your FICO credit score, for example, it’s still a good idea to maintain a varied mix of credit cards, auto loans, personal loans, mortgage loans, and other credit products.<sup>[6]</sup> </p><h3>Limit applications for new credit </h3><p>Applying for credit can cause your score to dip thanks to a <a href="https://www.lendingclub.com/resource-center/personal-finance/key-differences-of-a-soft-credit-check-vs-hard-credit-check"><b>hard inquiry</b></a> from the lender. Numerous applications within a short timeframe for credit can also signal to a lender that you’re not able to manage credit responsibly.<sup>[6]</sup> </p><h3>Ask for higher credit limits </h3><p>You may be able to lower your credit utilization rate by asking creditors for a credit limit increase. However, this is only helpful if your spending stays low.<sup>[6]</sup> </p><h3>Dispute credit report errors </h3><p><a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-read-your-credit-report-identify-red-flags"><b>Errors on your credit report</b></a> can affect your score negatively—especially when fraudulent activity occurs. So, it’s a good idea to check your credit reportregularly. If anything looks off, report it immediately. You can request free copies of your credit reports from each of the three major credit bureaus—Equifax, Experian, and TransUnion—once a year at <a href="http://annualcreditreport.com/"><b>AnnualCreditReport.com</b></a>.<sup>[6]</sup> </p><h2>The bottom line </h2><p>Your credit score is an important factor lenders consider when you apply for credit, like a personal loan or credit card. If your credit isn’t perfect, don’t worry; a good score is usually all you need to qualify for the best loan and credit offers. If your credit is still a work in progress, you can take steps to improve your scores over time. Remember, <a href="https://www.lendingclub.com/resource-center/personal-finance/getting-a-copy-of-your-credit-report"><b>checking your own credit</b></a> is a good way to keep tabs on your score and look out for fraudulent activity—without affecting your score. </p><h2>FAQs </h2><p>Staying on top of your credit score is an important part of managing your finances. Here are some commonly asked questions to learn more about credit scores. </p><h3>Can you get a perfect credit score? </h3><p>Though it’s possible to achieve a perfect score of 850, credit scores often fluctuate for many reasons. Instead of trying to keep your score “perfect,” aim to keep your credit in the good-to-excellent credit range. </p><h3>What credit score should I aim for? </h3><p>A credit score of 670 or higher is generally considered good and will help you access better insurance rates, credit cards, and housing options. Keep in mind that your score may go up and down slightly, depending on when you make payments, how much available credit you have, and other factors. </p><h3>What is a decent credit score to buy a car? </h3><p>While there’s no industry-wide standard, you’ll get the best deal on an auto loan if your credit score is good. You can still buy a car with lower scores, but your interest rates will be much higher. </p><h3>Can you apply for a personal loan with average credit? </h3><p>If your credit score is on the lower side, you’ll likely have a harder time finding a personal loan or debt consolidation loan with good rates and terms. Take steps to improve your credit before applying to qualify for the best offers. </p><hr/><ol><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/how-do-i-get-and-keep-a-good-credit-score-en-318/">Consumer Financial Protection Bureau</a>. “How do I get and keep a good credit score?” </p></li><li><p><a href="https://www.fico.com/en/newsroom/fico-score-remains-most-widely-used-credit-score-securitization-market-keeping-lender">myFICO</a>. “FICO Score Remains the Most Widely Used Credit Score in the Securitization Market, Keeping Lender Confidence.” </p></li><li><p><a href="https://www.myfico.com/credit-education/what-is-a-fico-score">myFICO</a>. “What is a FICO Score?” </p></li><li><p><a href="https://www.vantagescore.com/press_releases/the-complete-guide-to-your-vantagescore/">VantageScore</a>. “The Complete Guide to Your VantageScore.” </p></li><li><p><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score">myFICO</a>. “What&#39;s in my FICO Scores?” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/how-do-i-get-a-free-copy-of-my-credit-reports-en-5/">Consumer Financial Protection Bureau</a>. “How do I get a free copy of my credit reports?”</p></li></ol><p></p>

A personal loan can be a smart financial move to pay off credit card debt, but it’s important to weigh out the pros and cons before you apply. 

<p>Credit card debt can rack up fast—especially if you’re only able to pay the minimum amount due each month. Using a personal loan to pay off credit card debt comes with several benefits like one monthly payment, potentially lower rates, and an end date to your debt. Plus, your <a href="https://www.lendingclub.com/resource-center/personal-finance/what-affects-your-credit-scores"><b>credit score</b></a> might get a boost when your credit card balances drop to zero. However, paying off credit card debt with a personal loan may not always make sense. Here’s what you need to know about using personal loans for credit card debt.  </p><h2>Should you use personal loans to pay off credit cards? </h2><p>Managing credit card debt often comes with headaches, and you might be considering a <a href="https://www.lendingclub.com/personal-loan"><b>personal loan</b></a> to consolidate your balances. Commonly known as <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-debt-consolidation"><b>debt consolidation</b></a>, using a personal loan can help you streamline multiple debts into one easy-to-manage payment—and sometimes pay it off faster and with less interest. No more keeping track of multiple due dates or scrambling to pay more than the minimum.   </p><p>To consolidate your credit card debt with a personal loan, it’s best to shop around and compare rates with different lenders. Ideally, you want a personal loan with an interest rate lower than your existing credit cards. For instance, if your credit cards have an average interest rate of 20%, a loan with a 10% interest rate could help you save.  </p><p>When comparing loans, consider the monthly payment amount, repayment period, and fees.   </p><p>To get the most benefit, try to qualify for a loan that’s large enough to cover your credit card debt, with a lower interest rate, better terms, and little or no fees. Keep in mind that while you’ll no longer have credit card debt, a new personal loan is still considered debt. So it’s important to make your payments on time and understand how a <a href="https://www.lendingclub.com/personal-loan/credit-card-consolidation-loan"><b>debt consolidation loan</b></a> can affect your credit scores.   </p><p>Keep in mind, a <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-a-personal-loan-how-to-apply-in-3-simple-steps"><b>personal loan</b></a> may be able to help you pay off your credit card debt, but it won’t change your money habits. So if you tend to use your credit cards often, you could rack up new debt quickly after you pay them off. To avoid getting into credit card debt again, limit new spending and try to only charge what you’re able to pay off completely each month. If the temptation to overspend is overwhelming, it’s okay to take a break from using your credit cards for a while.<sup>[1]</sup> </p><h2>Pros and cons of using a personal loan to pay off credit card debt </h2><p>Before using a personal loan to pay off credit card debt, it’s important to weigh the pros and cons. Here’s a closer look at some of the advantages and disadvantages that come with paying off your credit card balances with a debt consolidation loan.<sup>[1]</sup> </p><table><tr><td><p><b>Pros</b> </p></td><td><p><b>Cons</b> </p></td></tr><tr><td><p><b>Fixed interest rate and terms: </b>Personal loans often have a fixed interest rate that’s usually lower than credit card <a href="https://www.lendingclub.com/resource-center/personal-loan/apr-vs-interest-rate-whats-the-difference"><b>APRs</b></a>. </p></td><td><p><b>May not get a lower interest rate: </b>You may not always qualify for a lower interest rate than your existing credit cards. </p></td></tr><tr><td><p><b>Single monthly payment: </b>Streamline multiple payments into one easy-to-remember loan payment, which may be lower than your combined monthly credit card bills.  </p></td><td><p><b>Potential fees: </b>Some lenders charge origination fees, prepayment penalties, late fees, and more, which affects the overall cost of borrowing.  </p></td></tr><tr><td><p><b>Improved credit scores: </b>Credit utilization, or your credit card balance relative to its credit limit, is an important scoring factor, so paying off your cards completely might boost your credit scores. </p></td><td><p><b>Potential to overspend:</b> It may be tempting to rack up charges on the cards you pay off, which could result in a costly cycle of debt. </p></td></tr><tr><td><p><b>Quick loan processing: </b>With online lenders, like LendingClub Bank, the loan typically has a fast turnaround time from application to funding.  </p></td><td><p><b>You still have debt: </b>Although potentially less costly than credit card debt, personal loans are still a type of debt. </p></td></tr></table><h2>Example of using a personal loan to pay off credit card debt </h2><p>To see how if using a personal loan for credit card debt makes financial sense, it’s important to run the numbers.   </p><p>Let’s say you have three credit cards with a total balance of $15,000 and an average 27% APR. You decide to consolidate the debt using a personal loan, which has a three-year term, a 14% interest rate and a monthly payment of $512.66. At the end of three years, you’d pay a total of $3,455.92 in interest costs.   </p><p>If you decided to instead keep the debt on the credit cards and put the same $512.66 toward the balances each month, it would take a little more than four years to clear the debt, and you’d pay $9,744 in interest.   </p><p>Between the two strategies, the debt consolidation loan helps you save about $6,290 in interest and gets you out of debt quicker. When using a personal loan to pay off credit cards makes sense Using a personal loan to clear your credit card debt may be a good idea in the following situations:  </p><ol><li><p><b>You qualify for a lower interest rate. </b>Personal loans generally have lower <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-get-a-good-personal-loan-interest-rate">i</a><a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-get-a-good-personal-loan-interest-rate">nterest rates</a> than credit cards, so you may qualify for a lower rate, especially if your credit score is in good shape. </p></li><li><p><b>You want to consolidate your debt. </b>If you’re tired of juggling multiple monthly payments, a debt consolidation loan can help you make the switch to one simple monthly payment. </p></li><li><p><b>You plan to pay off your credit card balances in full. </b>If you’re working on becoming free of credit card debt, a personal loan is a commonly used strategy to bring credit card balances to zero. </p></li></ol><h2>When using a personal loan to pay off credit cards doesn’t make sense </h2><p>While a personal loan can be used to pay off a credit card, it may not be the best option in every situation. Here are some scenarios when you may be better off skipping a personal loan.<sup>[2]</sup>   </p><ol><li><p><b>You have a small amount of credit card debt. </b>If your debt can be paid off over a short time, consider using the debt snowball or debt avalanche methods to pay off your cards. </p></li><li><p><b>Your spending habits need work. </b>If overspending is an issue, try to improve your money management skills and learn how to stick to a budget. This strategy may help you avoid an ongoing cycle of racking up your cards and using a loan to pay them off.  </p></li><li><p><b>Your debt feels overwhelming. </b>If you can&#39;t afford to pay off your debt, even with a loan, a nonprofit credit counselor may be able to help you stop collection calls with a <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-a-debt-management-plan"><b>debt management plan</b></a>.  </p></li></ol><h2>The bottom line </h2><p><a href="https://www.lendingclub.com/resource-center/personal-loan/personal-loan-vs-credit-card-how-to-decide-which-is-right-for-you"><b>Credit cards</b></a> are a convenient financial tool to pay for day-to-day expenses or an unexpected emergency. While it’s generally best to pay your credit card balances in full every month, it’s not always possible. High interest rates can make your debt climb fast—and if you’re late on a payment, you could get charged a late fee and take a hit to your credit. Paying off your credit cards with a personal loan can be a savvy financial move. Just be sure you’ve considered all the pros and cons before you apply.    </p><hr/><ol><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-do-i-need-to-know-if-im-thinking-about-consolidating-my-credit-card-debt-en-1861/">Consumer Financial Protection Bureau</a>. “What do I need to know about consolidating my credit card debt?” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-credit-counseling-and-debt-settlement-debt-consolidation-or-credit-repair-en-1449/">Consumer Financial Protection Bureau</a>. “What is the difference between credit counseling and debt settlement, debt consolidation, or credit repair?” </p></li></ol><p></p>

Negotiating a salary is often expected after a job offer, and with the right preparation you may be able to meet your career, personal, and financial goals faster. 

<p>Negotiating your salary after getting a job offer is an important part of the job hunt—and often expected by employers. However, an <a href="https://www.indeed.com/career-advice/pay-salary/how-to-negotiate-salary"><b>Indeed</b></a> study reports that more than half (58%) of respondents don&#39;t typically negotiate their salary. Negotiating a salary after an offer doesn’t have to be intimidating. With a little bit of research, planning, and practice, you’ll be ready for the negotiations and one step closer to meeting your money goals.<sup>[1]</sup>  </p><h2>5 Tips to prepare for negotiating your salary </h2><p>Preparation is a key component of salary negotiation. Here are some of our favorite tips to consider before you make a counteroffer.  </p><h3>1. Do your research </h3><p>Look into typical rates for the job and industry around your location, so you can confidently ask for the top of your range. Salary transparency and information sharing is becoming more commonplace. This can help you gauge whether the salary offer is fair. Check online, ask recruiters, or talk to your network about average salaries for the role.  </p><p>Did the employer give you a salary range upfront? Was it specific to your location and experience level? How does it compare to your research? If it&#39;s about average, you may have some wiggle room when you negotiate. Or if you notice that the offer is on the high end for the employer&#39;s range or industry average (or both), you may choose to negotiate for additional benefits or perks instead. </p><h3>2. Consider perks and benefits </h3><p>It&#39;s likely your offer included perks and benefits beyond the paycheck. Evaluate the employer&#39;s total compensation package to see if it makes sense for your personal, professional, and financial goals—in both the short and long term.   </p><p>Is health insurance a must-have benefit, or do you already have a great plan through your spouse&#39;s employer? Are you looking for a job with just the basic benefits like health care, paid time off (PTO), and a retirement plan? Or do you want an offer that also includes extra perks like tuition reimbursement, paid parental leave, bonuses, stock options, or equity? What about remote or hybrid working options, flexible hours, or unlimited vacation? </p><h3>3. Know what you bring to the role </h3><p>Understanding your true value as a new team member is important when negotiating. You already know that the employer wants to hire you since they&#39;ve made an initial offer. However, does the offer reflect your actual worth?  </p><p>If the number feels too low—based on what you bring to the table—this is your chance to reiterate all the great qualities that set you apart from other candidates in the first place. Do you have a specific type of training or a particular area of expertise? Do you have proven experience that uniquely benefits the employer? Remind them.  </p><h3>4. Rehearse the conversation </h3><p>The idea of negotiating a salary may feel intimidating or uncomfortable. Organizing your talking points ahead of time can help you feel more prepared for the conversation. Jot down your desired salary and any notes you need for the negotiation. Consider whether you&#39;ll be speaking with someone in human resources, the direct hiring manager, the owner of the company, or a recruiter. Will the meeting be in person, a video chat, or phone call?  </p><p>Then practice, practice, practice. You can rehearse on your own in the mirror, record yourself, or ask a trusted friend for help. Ask for feedback to ensure you&#39;re coming across confident, but not cocky. Run through different scenarios—like the employer making a counteroffer, refusing your suggestion, or needing time to run the numbers.  </p><h3>5. Know when to end negotiations </h3><p>When salary negotiations get dragged out, it can be frustrating for you and the employer. It&#39;s usually best practice to make one or two counteroffers. If you&#39;re not able to come to an agreement after a few conversations, it may be time to walk away respectfully. Or if the employer&#39;s revised offer isn&#39;t exactly what you wanted, but still fits within your range, you can consider taking the role.  </p><h2>What not to do when negotiating your salary </h2><p>Keep these tips in mind to get the most out of your salary negotiation. </p><h3>1. Don&#39;t show your cards first </h3><p>The timing of compensation discussions varies widely by employer, industry, and even by state. Try to wait for the employer to make an offer before you tell them your salary goals. However, this may not always be possible if the employer or a recruiter asks about your salary expectations before making an offer. If this happens, provide a range that&#39;s acceptable to you—and don&#39;t lowball yourself. Remember, you can always negotiate down, but it&#39;s much harder to negotiate up from a lower number.  </p><h3>2. Don&#39;t settle for less than you&#39;re worth </h3><p>If negotiations are unsuccessful, you may be stuck with an offer that&#39;s less than you deserve and be tempted to take the job anyway. Accepting an offer that&#39;s less than your worth or below market value can have major financial consequences, like loss of income or less money for retirement. It may also mean the company won&#39;t have the budget for future salary increase, raises, or other perks. Consider taking a job with a lowball offer carefully. If the final offer is too low, it could be best to move on. </p><h3>3. Don&#39;t forget the written documentation </h3><p>A verbal agreement, handshake, or email is a great start to wrapping up a final negotiation. However, once you&#39;ve agreed on new terms, it&#39;s best to get the final offer in writing—ideally in a format that both you and the employer sign. Ask for written documentation of the salary, job description, benefits, perks, and any other details you negotiated. This may be a contract, offer letter, or other type of paperwork confirming what was discussed.  </p><h2>Can you lose a job offer by negotiating salary? </h2><p>It&#39;s unlikely a job offer will be rescinded just because you tried to negotiate the salary. However, if you&#39;re rude, arrogant, or too pushy, the employer may choose to pull their offer or leave you hanging with a &quot;We&#39;ll get back to you.&quot; If you do decide to walk away, be sure not to burn any bridges. Once you&#39;ve reached a stopping point in the salary negotiations, turn down the offer graciously. Consider writing a quick thank-you note or email to show your appreciation, and ask the employer to keep you in mind for future opportunities that may be a better fit. </p><h2>Why it&#39;s important to learn how to negotiate your salary </h2><p>Negotiating a salary isn’t usually just about the money, especially if you’re currently living <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-stop-living-paycheck-to-paycheck"><b>paycheck to paycheck</b></a>. Yes, you&#39;re asking for a higher income, but you&#39;re also advocating for your career, family, and financial future. Keep that in mind if you&#39;re second-guessing your decision to negotiate.<sup>[2]</sup>  </p><p>Some job seekers worry that asking for more money will make potential employers view them negatively. However, many employers actually expect potential hires to negotiate their initial salary offer—and the employer&#39;s initial offer often reflects that. Solid negotiation skills can help you boost your income, but it can also boost your work-life balance with a strong compensation package.   </p><h2>The bottom line </h2><p>Salary negotiations can feel intimidating at first, but remember, they&#39;re considered common after an employer makes you an initial offer. Plus, a higher salary can help make it easy to <a href="https://www.lendingclub.com/resource-center/personal-finance/how-little-can-you-live-on-tips-for-frugal-living"><b>live within your means</b></a> and meet your financial goals. While it may not always be possible to get the salary you wanted, with the right negotiation skills you may be able to find a happy compromise. Or, if you&#39;re still not feeling valued, you can pass on the offer and continue finding a better-paying role.  </p><hr/><ol><li><p><a href="https://www.roberthalf.com/us/en/insights/career-development/how-to-negotiate-salary-after-getting-job-offer#:~:text=Yes%2C%20it's%20absolutely%20okay%20to,want%20to%20ensure%20fair%20compensation.">Robert Half</a>. “How to Negotiate Salary After You Get a Job Offer.” </p></li><li><p><a href="https://files.consumerfinance.gov/f/201501_cfpb_digest_financial-well-being.pdf">Consumer Financial Protection Bureau</a>. “Financial well-being: What it means and how to help.” </p></li></ol><p></p>

Higher credit scores provide access to lower interest rates and better terms when you apply for credit. However, if your credit score needs work, there may be credit hacks you can take to improve your score.

<p>An excellent score usually means you’ll likely qualify for the lowest interest rates on <a href="https://www.lendingclub.com/resource-center/personal-loan/top-reasons-to-get-a-personal-loan">personal loans</a>, credit cards, auto loans, home loans, and other types of credit. However, if your score is low, your credit options may be limited and often come with high interest rates.  </p><p>You may also not be able to qualify for certain necessities like an apartment or mobile phone plan, and even your auto insurance rates can be affected by a poor credit score. Taking steps to <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-improve-credit-score"><b>improve your credit score</b></a><b> </b>can help you qualify for the best rates and other goals that involve credit checks.  </p><h2>7 impactful hacks to increase your credit score</h2><p>Building great credit takes time, but you can take action right away to start giving your credit a boost. And if you focus on factors that matter most when determining your credit score, you’ll likely see improvement quicker.   </p><p>Whether you simply need to improve your score or are building credit from scratch, here’s a closer look at seven helpful hacks to increase your credit score fast.  </p><h3>1. Pay every bill on time </h3><p>Payment history is the most important factor in your credit score—accounting for 35% of your <a href="https://www.myfico.com/credit-education/whats-in-your-credit-score"><b>FICO</b></a><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score"><b><sup>®</sup></b></a><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score"><b> Score</b></a>, the most widely used credit-scoring model.<sup>[1][2]</sup> Paying your monthly credit card or personal loan payments late even a few times can knock valuable points off your score. So, the single best thing you can do to beef up your creditworthiness is to <a href="https://www.lendingclub.com/resource-center/personal-finance/steps-to-paying-bills-on-time"><b>pay your bills on time</b></a>.<sup>[3]</sup>  </p><p>Creditors typically report your payments once a month to the credit bureaus—noting if they’re on-time, late, or missed—so you’ll likely see your score change a few months after consistently paying your bills on time. Payments that are more than 30 days late can remain on your credit report for seven years, but you can lessen the impact by paying bills on time moving forward.<sup>[4]</sup>  </p><p>Need some help sticking to a bill-paying schedule? Try these tips:  </p><ul><li><p><b>Alert yourself.</b> Use technology to your advantage. Log into your loan or credit card accounts and set up notifications. You can choose to receive text or email notifications when a bill’s due date is approaching. </p></li><li><p><b>Set up automatic bill pay.</b> Have your credit card issuer or lender automatically pull the payment owed from your bank account before the bill is due. </p></li><li><p><b>Align your payment dates. </b>Check with your lenders to see if they’ll allow you to change your monthly due dates. It’s much easier to remember one or two due dates a month than to keep tabs on all your bills separately. </p></li></ul><h3>2. Use less credit </h3><p>Your <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-credit-utilization-and-how-to-improve-it"><b>credit utilization rate</b></a>—or the percentage of how much credit you’re using compared to your total available revolving credit. For instance, if you have a $200 balance on a credit card with a $1,000 limit, your credit utilization would be 20%. Your credit utilization rate makes up 30% of your FICO<sup>®</sup> Score.<sup>[1]</sup>  </p><p>Ideally, experts recommend using less than 10% of your available credit to qualify for the best rates. Try these tips to minimize your credit utilization ratio and improve your credit score:  </p><ul><li><p><b>Charge less on credit cards</b>. If swiping your plastic too often is driving up your credit utilization ratio, try a different payment method whenever possible. Pay with a debit card, initiate a bank transfer, use a cash app like Venmo, or pay with plain old cash.<sup>[3]</sup> </p></li><li><p><b>Pay down debt.</b> Any balance you carry on your credit cards adds to your utilization ratio. If you’re struggling with high-interest debt, try a proven strategy for paying off your debt faster, like the <a href="https://www.lendingclub.com/resource-center/personal-finance/steps-to-decimate-debt-the-debt-snowball-method"><b>snowball</b></a> or <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-the-debt-avalanche-method-and-how-does-it-work"><b>avalanche</b></a> methods. Or, a <a href="https://www.lendingclub.com/personal-loan/credit-card-consolidation-loan"><b>debt consolidation loan</b></a> can help you pay off all your credit cards at a lower interest rate with one convenient payment. </p></li><li><p><b>Consider timing your payments. </b>Credit card issuers usually report your account balance to the credit bureaus at the end of the statement period.<sup>[4] </sup>You&#39;ll receive your statement at this time, and your bill is due a few weeks later. If you had a balance when your card issuer reported your account details, your utilization rate could rise unexpectedly—even if you paid off the balance when you got the bill. To help lower your utilization ratio going forward, pay off your balance before your statement period closes.  </p></li></ul><h3>3. Request an increase to your credit limits </h3><p>Keeping credit card balances low is one way to reduce your credit utilization. However, you can also lower your ratio by increasing your credit limits.<sup>[3]</sup>  Here’s an example: Suppose you still charge $200 to your card. Only now, your limit has increased from $1,000 to $5,000. Your new credit utilization ratio is just 4%—well below the recommended 10% cap.   </p><p>Check with each of your creditors to see if you’re eligible for an increase to your credit limits. (If you’re not, find out when you will be.) While this hack is a good way to lower your credit utilization, it’s important not to increase your credit credit balances at the same time. Otherwise, you’ll be back to square one.   </p><p>Keep in mind that requesting an increase to your credit limit might initiate a hard inquiry, which will appear on your credit reports. This might impact your credit score in the short term, but as long as you’re keeping your spending the same (or lower) and practicing good credit habits, it should bounce back quickly. </p><h3>4. Don’t close old credit cards </h3><p>The length of your credit history makes up 15% of your FICO<sup>®</sup> Score.<sup>[1]</sup> Potential lenders want to see that you have a long history of being responsible with debt, and credit cards you’ve carried for years can provide some of that evidence. While it may be tempting to close an old credit card you don’t use often, keeping it open can help you maintain a long credit history.<sup>[3]</sup>   </p><p>In general, leaving older cards open may help your credit score, but it&#39;s important to consider other factors as well, such as any annual fees you may be paying, or the need to reduce the temptation to spend. Be sure to use your open cards and try to pay them off each month to get the best scores.<sup>[3]</sup>  </p><p>Applying for new credit cards can also affect your credit history by decreasing your average age of accounts and potentially lowering your credit scores. A lengthy account history often takes years to establish, but closing an account may have an immediate negative effect.<sup>[3]</sup> </p><h3>5. Avoid applying for new credit (if possible) </h3><p>New credit applications for credit cards and loans typically result in a hard credit inquiry, which can often lower your score by a few points temporarily. New inquiries make up 10% of your FICO<sup>®</sup> Score.<sup>[1]</sup>  </p><p>To keep your credit healthy, try to only apply for new credit when you need it, and avoid making multiple credit inquiries in a short time frame—especially with credit cards. When shopping around for a new credit card or loan, check to see if the lender offers a prequalification tool. This can show whether you’re eligible for the credit and display your potential terms with just a soft credit pull, which won’t affect your score. <a href="https://www.lendingclub.com/resource-center/personal-finance/key-differences-of-a-soft-credit-check-vs-hard-credit-check"><b>Learn more about soft vs. hard credit </b></a><a href="https://www.lendingclub.com/resource-center/personal-finance/key-differences-of-a-soft-credit-check-vs-hard-credit-check"><b>inquiries</b></a>. </p><p> In some cases, like comparing home, auto, or student loan rates, your credit may not be affected if you complete your rate shopping during a consolidated window of time, usually 14 to 45 days.  </p><h3>6. Become an authorized user </h3><p>Having a family member or partner add you as an authorized user on their credit card can improve your score. It can take a month or two for the card issuer to report the account’s history to the credit bureaus with your name, but this hack is a great strategy to establish credit quickly—especially if you’re new to credit or rebuilding a poor credit history.<sup>[5]</sup>  </p><p>Keep in mind that how the credit card is managed will directly affect your score—even if you’re not the person using the card or paying the bills. Ideally, you’ll want to make sure the account has a low credit utilization rate and a positive payment history. However, this won’t be entirely in your control since you’re not the account owner.<sup>[5]</sup> </p><h3>7. Add to your credit mix  </h3><p>While not nearly as important as your payment history or age of accounts, your credit mix still makes up 10% of your FICO Score.<sup>[1]</sup> Having a diverse range of credit shows lenders you can manage different kinds of debt.   </p><p>People with high credit scores often have a mix of accounts, including auto loans, personal loans, and credit cards. However, before opening a new account for the purpose of adding to your credit mix, it’s still important to make sure you can take on the extra debt.<sup>[2]</sup>  </p><p>The bottom line No matter where you’re starting from, applying these valuable credit score hacks now to increase your credit score can make a difference. Like anything that is worth doing, building your credit score takes time. So, the sooner you incorporate these practices into your everyday life, the sooner you’ll be on your way to an amazing score and a brighter financial future.  </p><p>It’s also a good idea to <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-read-your-credit-report-identify-red-flags"><b>check your credit reports</b></a> regularly to keep tabs on your scores and look for inaccuracies. You can request free copies of your credit reports from each of the three major credit bureaus—Equifax, Experian, and TransUnion—once a week at <a href="http://annualcreditreport.com/"><b>AnnualCreditReport.com</b></a>. And if you find anything that doesn’t look right, be sure to get in touch with the credit bureau.<sup>[3]</sup>   </p><hr/><ol><li><p><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score">myFICO</a>. “What&#39;s in my FICO Scores?”  </p></li><li><p><a href="https://www.fico.com/en/newsroom/fico-score-remains-most-widely-used-credit-score-securitization-market-keeping-lender">myFICO</a>. “FICO Score Remains the Most Widely Used Credit Score in the Securitization Market, Keeping Lender Confidence.”  </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/how-do-i-get-and-keep-a-good-credit-score-en-318/">Consumer Financial Protection Bureau</a>. “How do I get and keep a good credit score?” </p></li><li><p><a href="https://www.experian.com/blogs/ask-experian/credit-information-is-updated-continuously/">Experian</a>. “How Often Is a Credit Report Updated?” </p></li><li><p><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score">myFICO</a>. “How do authorized user accounts impact the FICO Score?  </p></li></ol><p></p>

Helping your money grow may feel like a daunting task, especially if you’re not used to keeping a close eye on your cash. However, making your money work for you doesn’t have to be complicated or time-consuming.

<p>Prioritizing and gaining control over your financial well-being is more important now than ever. A recent <a href="https://www.pymnts.com/consumer-finance/2022/pymnts-intelligence-61-pct-of-us-population-living-paycheck-to-paycheck/"><b><u>LendingClub study</u></b></a> revealed 60% of working Americans are living paycheck to paycheck—across all income brackets and age groups.<sup>1</sup>  </p><p>However, with some planning, it’s possible to make your money stretch further. From budgeting and paying down debt to using high-yield savings accounts and setting your bills to autopay, there are many strategies that can help you put your money to work and meet your financial goals.   </p><p>Here’s a closer look at five ways to help maximize your money.  </p><h2>1. Identify your most important financial goals </h2><p>Setting goals can help keep your finances in order. Whether you’re saving for a dream vacation, an emergency fund, or paying off debt, it’s important to clearly define your financial goals. Goals often vary from person to person, depending on age, current place in life, family needs, current income, and even past debt. So, don’t worry if what’s important to you is different from what’s important to others.   </p><p>Once you’ve identified your financial goals, you can start taking steps to achieve them and launch a plan to manage your money resources. As you map out your goals, think about your start date, end date, and any key milestones you want to reach along the way. For instance, if your goal is to save up for a wedding, your financial goals may include a mix of saving for the perfect dress, paying a venue in advance, expenses due on the big day, or pre-paying for your honeymoon.<sup>2</sup>  </p><p>Whatever your financial goals, consider using a budget to stay on track. And don’t forget to celebrate meeting mini-goals along the way. If you’re not sure how to prioritize your money goals, a financial professional can help you figure out what’s most important and create a roadmap.  </p><h2>2. Learn to budget (and stick to it) </h2><p>Knowing where your money is going is one of the best ways to make money work for you. <a href="https://www.lendingclub.com/resource-center/personal-finance/sticking-to-a-budget-common-problems-and-solutions"><b><u>Budgets are an important tool</u></b></a> for managing your cash and improving your relationship with money. Setting a realistic budget can help you keep your finances on the right path, cover your expenses, track spending, manage debt, and reduce financial stress.<sup>3</sup>   </p><p>However, sticking to a budget isn’t always easy. Many people put off budgeting because it can feel too restrictive or complicated—but it&#39;s OK to simplify things. Start by jotting down your income and expenses to see where you stand. Then, create budget categories. You can keep your categories broad, like housing, bills, food, entertainment, savings, and more. Or, drill down into specific areas, such as subscriptions, groceries, takeout food, rent, utilities, and so on.<sup>4</sup>   </p><p>Writing your budget on paper (or in a budgeting app) can help you see where you can make cuts without making major sacrifices—freeing up money to pay down debt or boost your savings.  </p><h2>3. Pay down your debt </h2><p>High-interest debt often compounds each month. If you’re carrying credit card debt and only making the minimum payment, it could take many months—or even years—to pay off your original balance. Making a plan to pay off your debt now will free up your funds for a brighter future.<sup>5</sup>   </p><p>Two common ways to pay down debt are the <a href="https://www.lendingclub.com/resource-center/personal-finance/debt-snowball-vs-avalanche-which-should-you-choose"><b><u>debt snowball and debt avalanche</u></b></a> methods.   </p><ul><li><p><b>Debt snowball method:</b> Using this strategy, you’ll build momentum by paying off smaller debts first. You might extend your payoff timeline and increase your interest costs—but early wins often help people stay motivated when using this method.<sup>6</sup> </p></li><li><p><b>Debt avalanche method:</b> With this method, you’ll tackle debt with the highest interest rate first. While you’ll save on interest in the long run, paying down debt with this method often requires ongoing discipline and self-motivation.<sup>6</sup>  </p></li></ul><p> If you’re tackling multiple debts or saddled with <a href="https://www.lendingclub.com/resource-center/personal-finance/ways-to-pay-off-credit-card-debt-fast"><b><u>high-interest credit cards</u></b></a>, you may want to consider a <a href="https://www.lendingclub.com/personal-loan/debt-consolidation"><b><u>debt consolidation loan</u></b></a>. These loans combine all your debts into one monthly fixed payment—often with a lower interest rate—so you can get out of debt faster and spend less on interest overall.<sup>7</sup> </p><h2>4. Open a high-yield savings account </h2><p>If you have to stash your cash somewhere, you might as well earn interest. <a href="/personal-savings/high-yield-savings"><b><u>High-yield savings accounts</u></b></a> tend to offer higher interest rates than standard savings accounts, boosting your cash reserves over time.   </p><p>Check to see if your current bank offers high-yield savings accounts. Or shop around to compare rates. High-yield savings accounts are typically offered at traditional banks, credit unions, and online financial institutions. Once you have your account set up, consider scheduling automatic transfers from your checking account. These could happen on a weekly or monthly basis, or intervals that work for your budget.   </p><p>Many high-yield savings accounts provide tools to help you set up “buckets” for each of your savings goals. For instance, you can set up a bucket for an emergency fund, vacation expenses, or vehicle repairs. And if you choose to schedule automatic transfers, you may be able to designate how much cash goes into each bucket.  </p><h2>5. Automate bill payments </h2><p>Paying bills on time is an important part of managing money. Not only is your payment history a factor in calculating your credit scores, but late payments often result in costly late fees and penalties. To avoid the risk of paying your bills late, consider setting up automatic bill payments. Often you can do this right from your bank account. Or you can set up autopay directly with each account.   </p><p>Without late payments to worry about, you can direct more funds to investments or other savings vehicles. And while you’re automating your bill payments, it may also be a good time to automate money transfers. For instance, if you schedule bill payments for the first of each month, you could also set up deposits for your savings or retirement accounts.   </p><p>Automatic bill payments (and other types of automatic transfers) can usually be paused or canceled at any time. So if you need to change the date or amount you pay, you&#39;ll have flexibility to do so. You can also decide to make extra payments on top of your autopays to help pay debt down faster. For example, if you have your credit card payments set to pay the minimum each month, you can always make an extra payment.<sup>8</sup> </p><h2>The bottom line </h2><p>Creating real financial growth in your life may feel a bit overwhelming, but it doesn’t have to be. Practicing good money habits and making small financial moves now can pay off big in the future. Plus, you’ll get the added benefit of watching your money grow and celebrating when you meet your goals.   </p><hr/><ol><li><p><a href="https://www.pymnts.com/consumer-finance/2022/pymnts-intelligence-61-pct-of-us-population-living-paycheck-to-paycheck/"><u>PYMTS</u></a>. “PYMNTS Intelligence: 61% of the US Population Living Paycheck to Paycheck.” </p></li><li><p><a href="https://files.consumerfinance.gov/f/documents/cfpb_your-money-your-goals_SMART-goals_tool_2018-11.pdf"><u>Consumer Financial Protection Bureau</u></a>.”Setting Smart Goals.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/budgeting-how-to-create-a-budget-and-stick-with-it/"><u>Consumer Financial Protection Bureau</u></a>. “Budgeting: How to create a budget and stick with it.” </p></li><li><p><a href="https://consumer.gov/managing-your-money/making-budget#what-to-know"><u>Consumer.gov</u></a>. “Making a Budget.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/how-get-handle-debt/"><u>Consumer Financial Protection Bureau</u></a>. “How to get a handle on debt.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/how-reduce-your-debt/"><u>Consumer Financial Protection Bureau</u></a>. “How to reduce your debt.” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-do-i-need-to-know-if-im-thinking-about-consolidating-my-credit-card-debt-en-1861/"><u>Consumer Financial Protection Bureau</u></a>. “What do I need to know about consolidating my credit card debt?” </p></li><li><p><a href="https://files.consumerfinance.gov/f/documents/cfpb_adult-fin-ed_ways-to-pay-your-bills.pdf"><u>Consumer Financial Protection Bureau</u></a>. “Ways to pay your bills.” </p></li></ol><p></p>

We all experience costly, unplanned expenses from time to time—a broken appliance, an auto accident, a surprise medical bill, a loss of income. Having a dedicated emergency fund can not only provide the reassurance you’ll be able to meet unanticipated financial needs, it’s also one of the first essential steps you can take to start saving. Putting even a small amount aside for emergencies can help you recover more quickly and get back to meeting your financial goals that much faster.

<p>Unplanned expenses happen from time to time—like a broken appliance, surprise medical bill, or loss of income. Having a dedicated emergency fund helps provide reassurance you’ll be able to cover some (or all) of the cost when the unexpected happens. Let’s take a closer look at some of the common types of emergency expenses, how much you need to save, and how to build an emergency fund.  </p><h2>What is an emergency fund? </h2><p>An emergency fund is typically a dedicated savings account set up to cover unplanned expenses and financial emergencies. Emergency savings differ from other types of savings you may have set aside when planning for expenses like leisure travel, holiday gifts, a down payment for a home or car, or other financial goals.<sup>[1]</sup>  </p><p><b>Some examples of unforeseen expenses include:  </b></p><ul><li><p>Unexpected medical bills </p></li><li><p>Vehicle repairs to keep your car on the road </p></li><li><p>Urgent home repairs, like a leaky roof </p></li><li><p>Appliance repairs or replacement </p></li><li><p>Emergency veterinary bills </p></li><li><p>Unemployment or reduced wages </p></li><li><p>Natural disasters </p></li><li><p>A global health crisis  </p></li></ul><h2>Why you need an emergency fund  </h2><p>Remember, emergency funds should only be tapped to cover unexpected expenses that aren’t part of your routine monthly budget spending or other savings goals. The types of situations you can cover with your emergency fund depend on how much you have saved—but remember, every little bit counts.<sup>[1]</sup>   </p><p>If you’re wondering what’s the goal of an emergency fund, here are a few reasons why you can benefit from having money set aside for a rainy day.    </p><ul><li><p><b>Pay for minor unplanned costs.</b> An emergency fund helps you cover small unexpected expenses, like fixing a broken washing machine or taking your dog to the vet.  </p></li><li><p><b>Protect against loss of income.</b> If you’re out of work for an extended time or lose your job, your emergency fund helps pay for essential expenses like rent, utilities, and groceries. </p></li><li><p><b>Avoid extra debt.</b> Without an emergency fund, even a small financial setback could turn into debt that’s hard to pay off and have a lasting impact on your financial outlook. This is especially true if you need to use an <a href="https://www.lendingclub.com/personal-loan/emergency-loan"><b><u>emergency loan</u></b></a>, high-interest credit cards or tap other savings, like retirement accounts, to cover an unplanned cost.   </p></li><li><p><b>Gain peace of mind. </b>Having a nest egg set aside for unplanned expenses helps ease the <a href="https://www.lendingclub.com/resource-center/personal-finance/money-and-mental-health-is-burnout-affecting-your-finances"><b><u>financial stress</u></b></a> in the event of an emergency, allowing you to put your focus on dealing with the situation instead of worrying how you’ll cover the cost.   </p></li></ul><h2>What’s a good amount to have in an emergency fund? </h2><p>Experts generally recommend saving at least three to six months’ worth of expenses. However, the amount of money needed in your emergency fund varies widely depending on factors like your income level, the rate at which you can save money, and your other financial obligations and goals. </p><p>For example if you have a lot of high-interest debt, you may be more focused on paying that down instead of saving. However, even if you’re paying off debt, it’s still a good idea to put some cash toward an emergency fund.<sup>[2]</sup>    </p><p>To determine how much you need to save, it’s important to consider how you’d pay for a small emergency—like a $500 vet bill, for example—as well as covering your essential expenses in the event of job loss. Also think about your personal financial situation, including your income, bills, and who you’re financially responsible for.   </p><p>Are you the sole earner with dependents? Do you share expenses with a partner and have no children? Is your income steady, or are you a freelancer with a fluctuating cash flow? Don’t forget to think about your debt. Do you have lots of credit card debt, a car payment, student loan, or other obligations? It’s also important to consider your essential expenses like rent or mortgage, groceries, utilities, and insurance premiums.<sup>[1]</sup>  </p><h3>Here’s when to save 3 months’ worth of expenses </h3><p>An emergency fund with three months’ worth of expenses can help you financially navigate a major emergency, like being out of work after a car accident. While it won’t cushion you for the long haul, it can help cover your essential bills while you get back on your feet. If you share expenses with a partner, three months might also be a strong savings goal, since you’ll have another income source to lean on.<sup>[2]</sup>   </p><h3>Here’s when to save 6 months’ worth of expenses </h3><p>Consider saving six months’ worth of expenses to get through a major emergency, like getting laid off. This is especially important if you’re the sole earner or don’t have any other financial resources to tap into. While saving six months of expenses might seem overwhelming, it’s okay to start small. Save up for one month, then two, and so on. Before you know it, you might be surprised to see how much you’ve saved.<sup>[2]</sup> </p><h2>How to start building your emergency fund  </h2><p>If you’re not sure how to get started building your emergency fund, here are a few strategies to begin saving. </p><h3>Set a goal </h3><p>Start by setting a small savings goal you can easily reach, and increase your goal amount as you progress. For example, what was the last unplanned expense you had difficulty paying? If paying a $300 dental bill was a struggle before, then set an initial emergency fund goal of $300. Once you reach that goal, set a bigger goal, and so on. </p><p>Some banks let you create savings “buckets,” which can come in handy if you want to set separate savings goals for different kinds of emergencies, like medical expenses, car repairs, or veterinary fees.<sup>[1]</sup>  </p><h3>Build saving into your budget </h3><p>Examine your current budget and spending habits to find areas where you can cut back, and put that money toward your emergency fund. Consider forgoing some “extras,” like pricey entertainment tickets or restaurant visits and streaming services. If you don’t have a <a href="https://www.lendingclub.com/resource-center/personal-finance/sticking-to-a-budget-common-problems-and-solutions"><b><u>budget</u></b></a>, now is a great time to create one.<sup>[1]</sup>  </p><h3>Automate your savings </h3><p>Decide on an amount you can afford to have <a href="https://www.lendingclub.com/resource-center/personal-finance/simple-steps-on-how-to-start-saving-money"><b><u>automatically transferred</u></b></a> to a savings account on a regular basis. For example, saving just $25 a week adds up to $1,200 a year. Typically you can set up automatic transfers between two bank accounts, like a checking and high-yield savings. </p><p>If you get paid by direct deposit, ask your employer to split up your paycheck between two accounts. Freelancers can try designating a small percentage of every client payment to an emergency fund.<sup>[1]</sup> </p><h3>Use a financial windfall </h3><p>Whenever you come into extra money, like a tax refund, stimulus payment, or cash for a birthday gift, put it into your emergency fund. Similarly, if you get a raise or earn a bonus, try to keep living on your previous income and set the difference aside for a rainy day.<sup>[1]</sup>  </p><h3>Earn extra income </h3><p>Starting a side job or gig—like selling items you no longer need or use, driving for a rideshare service, or working retail during the holidays—can all jump-start your emergency savings. If you’re a freelancer or have inconsistent income, instead of automating transfers (which may leave your checking account short of funds), you might try designating a certain percentage of every deposit—say, 5% or 10%—into your emergency fund. </p><h3>Don’t spend your emergency cash </h3><p>Remember, your emergency fund is supposed to be used for unexpected expenses and needs. For example, you’d use the fund to buy a new washing machine if yours breaks down, but not just because you want the latest model. It’s also important to replenish any funds you take out of the account. So, if you use $500 to buy that replacement washer, set a new goal to replace the $500 you used so you have it for the next emergency.  </p><h2>Where should you keep your emergency fund? </h2><p>When choosing the type of account for your emergency funds, consider easy-to-access, interest-bearing savings or checking accounts. Generally, unless there are additional associated fees, the account should be separate from your existing accounts, such as a vacation savings account or a regular checking account used to pay your monthly bills. </p><p>Look for an account that lets you earn interest to help you build your savings faster. Good examples of emergency fund accounts are typically <a href="https://www.lendingclub.com/personal-savings/high-yield-savings"><b><u>high-yield savings accounts</u></b></a> or money market accounts that offer a higher annual percentage yield (APY) than regular savings accounts. A rewards checking account may be another good option for your emergency fund. These types of accounts are also usually easy to access if you need to make a quick withdrawal. </p><p>However, depending on your financial habits, it might be helpful if your emergency funds are a little bit harder to get to. To create some friction, consider establishing an account at a different bank than where you have your regular checking or savings accounts. Confirm how long it takes to transfer money from one bank to another in case you need to withdraw funds quickly.   </p><p>Some accounts come with fees, a minimum opening deposit, or a monthly balance requirement. So be sure to check the fine print when comparing accounts. It’s also a good idea to look for insured financial institutions to keep your money safe. </p><p>Federally insured banks are covered by the Federal Deposit Insurance Corporation (FDIC), and federally insured credit unions are covered by the National Credit Union Administration (NCUA). This protection means your deposits are insured up to the maximum amount allowed, which is $250,000 per depositor, per ownership category at each institution.<sup>[3][4]</sup> </p><h2>The bottom line </h2><p>An emergency fund not only ensures you’ll be able to meet unanticipated financial needs, but it’s also one of the first essential steps you can take to start saving. Putting even a small amount aside for emergencies can help you recover more quickly and get back to meeting your <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-build-a-strong-financial-foundation"><b><u>financial goals</u></b></a> that much faster. </p><p>Setting aside at least three to six months’ worth of essential living expenses is ideal, but if you’re on a tight budget, saving even just a few hundred dollars may be enough to cover smaller emergencies like a broken dishwasher.    </p><hr/><ol><li><p><a href="https://www.consumerfinance.gov/an-essential-guide-to-building-an-emergency-fund/"><u>Consumer Financial Protection Bureau</u></a>. “An essential guide to building an emergency fund.” </p></li><li><p><a href="https://www.cnbc.com/select/how-much-to-save-in-emergency-fund/"><u>CNBC</u></a>. “3 to 6 months of savings might be ‘tried and true wisdom’ but this expert has advice if you’re living paycheck-to-paycheck.” </p></li><li><p><a href="https://www.fdic.gov/resources/deposit-insurance"><u>Federal Deposit Insurance Corporation</u></a>. “Deposit insurance.” </p></li><li><p><a href="https://ncua.gov/consumers/share-insurance-coverage/frequently-asked-questions-about-share-insurance#:~:text=The%20National%20Credit%20Union%20Administration,by%20Share%20Insurance%20Fund%20protection."><u>National Credit Union Administration</u></a>. “Frequently asked questions about share insurance.” </p></li></ol><p>  </p>

Creating the discipline necessary for saving money on a regular basis is one of the keys to establishing a solid financial future. Whether that means not letting late fees eat away at your bank account, or methodically setting aside a certain amount of money for your next great adventure, saving takes patience and practice.

<p>Saving money on a regular basis is one of the keys to establishing a <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-build-a-strong-financial-foundation"><b><u>solid financial future</u></b></a>, but it takes time and practice. However, automating your savings can help you “set it and forget it,” so you can build your <a href="https://www.lendingclub.com/resource-center/personal-savings/understanding-average-americans-savings-by-age"><b><u>savings</u></b></a> faster and stick to your goals.  </p><h2>Why you should you consider automating your savings </h2><p>Automating your savings means transferring funds from one account to another automatically, typically on a set schedule. Thanks to technology, there are many different approaches you can use, from depositing a portion of your paycheck into a savings account every week to rounding up “spare change” from every debit purchase into an IRA. The most effective strategies don’t require you to do anything once they’re set up, aside from changing the schedule or amount you want to save.  </p><p>Manually adding funds to a savings account takes effort, and it can be hard to resist the temptation to spend your paycheck once it hits your account. However, when you automatically direct a recurring deposit into a savings account, you may be more likely to stick to your savings goal. Then, all you have to do is sit back and watch your nest egg grow.  </p><h2>5 ways to automate your savings </h2><p>If you’re ready to start making saving second-nature, check out these easy ways to watch your dollars add up and transform the way you think about saving money for both short-term and long-term goals. Here are five ways to put your savings on autopilot.  </p><h3>1. Send a portion of your paycheck to savings </h3><p>Taking money from your <a href="https://www.lendingclub.com/resource-center/personal-savings/how-much-of-your-paycheck-should-you-save"><b><u>paycheck</u></b></a> before it even hits your account is one of the best ways to automate your savings. If you get paid through direct deposit, meaning your employer transfers your paycheck electronically into your account on payday, you may be able to split up where the money goes.  </p><p>Some employers let you add multiple accounts for deposit and designate how much goes into each account. So you could, for example, designate 80% of your paycheck into your regular <a href="https://www.lendingclub.com/personal-deposits"><b><u>checking account</u></b></a> and 20% into a <a href="https://www.lendingclub.com/personal-savings/high-yield-savings"><b><u>high-interest savings account</u></b></a>. </p><p>Even if your employer doesn’t offer this option, most banks let you schedule transfers, so you can set up your own automatic deposit from your checking account to a savings account on payday.  </p><h3>2. Take advantage of apps </h3><p>Many apps allow you to set up automatic savings or investment accounts. For example, you may be able to schedule transfers into interest-earning savings accounts, college savings accounts, retirement accounts, or even stocks, bonds, and bitcoin. Look for apps that offer flexibility, like the ability to transfer small amounts or round up spare change.  </p><p>Some apps may charge a nominal fee for this service, but you may be surprised how quickly investing $25 weekly adds up—all without needing to lift a finger. When comparing apps, look for companies that offer extras, like bonus cash when you refer a friend to the app or hit certain milestones. Some apps also allow you to choose the types of companies you want to invest in, so you make investments that align with your financial goals.  </p><h3>3. Save your spare change </h3><p>Although you might not have an actual change jar in your kitchen anymore, you can still find ways to save your “spare change.” Many banks and other financial platforms offer the option to round up debit purchases and put the extra change into a savings account. For example, your bank may round up every debit purchase and put the change into a connected savings account.  </p><p>You can also link an account to an app that offers round-up savings. In some cases, you can round up with multiple financial institutions and boost your savings even more. For instance, you may have both your bank and an app rounding up your spare change. So if you make a $1.50 debit purchase, both your bank and the app deposit $0.50 into a savings account, and you end up with $1 saved. </p><h3>4. Set up savings goals </h3><p>Whether you’re saving for a rainy day or a dream vacation, automating savings into specific accounts or categories within an account can help you meet your goals faster. It can also help ensure the money you save for emergencies doesn’t commingle with the cash you&#39;re setting aside for holiday spending. You can use separate accounts to split up your goals. Or look for accounts and apps that let you set up “savings buckets.”  </p><p>Depending on the app, you may be able to customize the name of the bucket and set your savings goal, end date, and deposit amount. Some apps even let you schedule how you’d like an automated deposit split among the buckets. For instance, if you transfer $100 into a savings account every month, you can designate 20% to a vacation fund, 30% to a car down payment goal, and the remaining 50% to your emergency fund.    </p><h3>5. Contribute to employer retirement plans </h3><p>Many employers let you automatically contribute to a retirement fund, health savings account, or flexible savings account. In some cases, your employer might even match a percentage of your deposit—which is like getting free money every time you make a deposit. Money may also be taken from your paycheck before taxes, which can help you save even more in the long run by lowering your taxable income.  </p><p>Check with your employer to understand your options and get your contributions set up. If you’re already set up for automatic contributions, but haven’t hit the maximum allowable amount, consider adding more.  </p><h2>The bottom line </h2><p>Your financial future is up to you, but having a disciplined mindset for saving is your first step. Automating your savings can help you keep your savings goals on track. Look carefully at your <a href="https://www.lendingclub.com/resource-center/personal-finance/simple-steps-to-building-a-better-budget"><b><u>budget</u></b></a> to see how much you can put toward your savings goals while still staying on top of your day-to-day expenses and debt obligations.  </p><p>Make sure you’re<b> </b><a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-stop-living-paycheck-to-paycheck"><b><u>living within your means</u></b></a>, and look for any extra expenses you can trim from your budget to put toward savings or paying down debt. If you have a lot of debt, you may be able to pay it down faster by using the debt avalanche or debt snowball method. Or consider rolling high-interest credit card balances into a <a href="https://www.lendingclub.com/personal-loan/debt-consolidation"><b><u>debt consolidation loan</u></b></a>.  </p>

Your spending habits play a big role in your overall financial well-being. How you spend (or don’t) can influence how much debt you carry, what your emergency fund looks like, and even play a part in how you feel emotionally about your financial picture.  

<p>There’s no expert consensus on how long it takes to make or break a habit. However, one thing’s for certain: Changing your habits, including your spending habits, is possible, but it requires some work. Examining your finances, creating a budget, setting savings goals, and starting with small changes can make it easier to form better spending habits. </p><p>If you’re grappling with how to change your spending habits, following these manageable steps and remaining consistent can help you improve your situation.  </p><h2>How do spending habits form? </h2><p>While everyone is different, multiple sources probably helped you form your spending habits. Here are some of the most common influences: </p><ul><li><p><b>Family influence:</b> According to the Consumer Financial Protection Bureau (CFPB), our attitudes and values toward money start to form in early childhood. Thus, our family’s financial habits often influence your own. For instance, if your parents were frugal growing up, you might be more likely to prioritize saving.<sup>[1]</sup>   </p></li><li><p><b>Media influence:</b> The media you consume also influences your spending habits, from the characters you related to on television as a child to the news you read and ads you view as an adult.<sup>[1]</sup>   </p></li><li><p><b>Individual influence:</b> Your own personality, goals, and how you perceive your past experiences around money also influence your spending habits.<sup>[1]</sup>   </p></li></ul><h2>7 Steps to stop spending money and improve your spending habits </h2><p>Changing your spending habits won’t happen overnight, but with time and effort, you can improve your spending habits. These steps can help you along the way.  </p><h3>1. Examine your finances </h3><p>The first step to shifting your spending habits is understanding where your money is going. Examining a few months’ worth of bank and credit card statements and your monthly financial obligations can help you identify spending patterns and the categories where you’re spending the most. You could do this audit manually or use a budgeting app that syncs up with your accounts to simplify the process.<sup>[2]</sup>  </p><p>Reviewing your current debts and their interest rates is also important. If you have a few thousand dollars in high-rate credit card debt, for instance, you might benefit from consolidating it with a lower-rate <a href="https://www.lendingclub.com/personal-loan"><b><u>personal loan</u></b></a> or a balance transfer credit card with a 0% introductory APR.  </p><h3>2. Prioritize your spending </h3><p>Once you understand where your money is going, prioritizing your spending is your next step. Your monthly debt obligations and essential expenses should come first, followed by what’s most important to you. For example, if your family bonds over take out a couple of times a month, you might put that cost high on your priorities list.  </p><p>Prioritizing your spending can help you understand which expenses are essential, important, and not-so-important, so you can allocate your money accordingly. However, you don’t have to make sweeping changes, like cutting out non essential spending, since that may be overwhelming.<sup>[2]</sup> </p><h3>3. Make small, incremental changes </h3><p>Changing your spending habits starts with small, incremental changes rather than a sweeping overhaul. For instance, instead of completely cutting non essential spending, you could look at your low-priority expenses and decide to reduce your monthly spending by $15 in a couple of categories. That might mean sacrificing one weekly trip to your favorite lunch spot or trading a few brand names for generic items at the supermarket.<sup>[3]</sup>  </p><p>Small, incremental changes can be less overwhelming and easier to stick with, increasing the likelihood that your new behaviors will become habits.  </p><h3>4. Set savings goals and track progress </h3><p>Want to grow your <a href="https://www.lendingclub.com/resource-center/personal-finance/your-emergency-fund-the-essential-guide"><b><u>emergency fund</u></b></a>? Save for a home down payment? Stop <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-stop-living-paycheck-to-paycheck"><b><u>living paycheck to paycheck</u></b></a>? Taking a more organized approach toward your savings goals could help you achieve them faster. You can set and track your progress on your own, but it’s often easier to rely on a budgeting app. Many apps let you set savings goals, allocate money toward them, and easily view your progress.<sup>[2]</sup>  </p><h3>5. Make saving automatic </h3><p>Consider saving money automatically, either by regularly allocating a portion of your paycheck to your savings account or scheduling routine transfers. When you save automatically, it becomes part of your routine. Even if you’re only saving a small amount, it will eventually add up. Also consider increasing the amount you save as your spending habits start to shift, or after you experience a windfall, such as a raise or bonus at work.<sup>[3]</sup>   </p><h3>6. Start meal planning </h3><p>According to a U.S. Bureau of Labor Statistics Consumer Expenditures <a href="https://www.bls.gov/news.release/cesan.nr0.htm"><b><u>report</u></b></a>, U.S. adults spent an average of $9,985 on food in 2023. Grocery spending accounted for nearly two-thirds of this cost. Fortunately, it’s possible to reduce your spending by meal planning each week and sticking to a grocery list. Both strategies can help you avoid impulse buying, saving you money on food.</p><p>Bonus: Meal planning can also help save you time at home and reduce food waste.<sup>[3]</sup>  </p><h3>7. Create a budget and stick to it </h3><p><a href="https://www.lendingclub.com/resource-center/personal-finance/sticking-to-a-budget-common-problems-and-solutions"><b><u>Creating a budget</u></b></a> can help you stay on track toward better spending habits. Your budget can be as simple or detailed as you’d like. For instance, some people prefer to categorize their spending in a detailed spreadsheet, while others find it simpler to use a budgeting app. You can also use a more high-level budgeting strategy, such as the 50/30/20 budget.<sup>[2]</sup>   </p><p>This method allocates 50% of your monthly income toward essential expenses, 30% toward nonessential expenses, and 20% to savings or debt payments. Choosing a budgeting tool and strategy that aligns with your needs can increase the likelihood that you’ll stick to your budget in the long term.<sup>[2]</sup>  </p><h2>The bottom line </h2><p>Your family, the media, and your personality shape your views about money. These are strong influences, so changing your spending habits can seem complicated. However, building a <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-build-a-strong-financial-foundation"><b><u>strong financial foundation</u></b></a> isn’t as difficult as you think, and the steps outlined above can help you figure out how to create better spending habits.<sup>[1]</sup> </p><p>Start by auditing your finances to understand your spending and debt obligations. You might find you could save on interest by <a href="https://www.lendingclub.com/personal-loan/debt-consolidation"><b><u>consolidating high-interest debt</u></b></a> with a lower-rate personal loan. Doing so might give you some wiggle room as you work toward improving the ways you spend.   </p><hr/><ol><li><p><a href="https://files.consumerfinance.gov/f/201501_cfpb_report_financial-well-being.pdf"><u>Consumer Financial Protection Bureau</u></a>. “Financial well-being: The goal of financial education.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/budgeting-how-to-create-a-budget-and-stick-with-it/"><u>Consumer Financial Protection Bureau</u></a>. “Budgeting: How to create a budget and stick with it.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/two-ways-save-extra-money/"><u>Consumer Financial Protection Bureau</u></a>. “Two ways to save extra money.”</p></li></ol><p></p>

If you’re feeling a pinch in your wallet this year you’re not alone. With inflation, supply chain issues, high gas prices, and wage stagnation, many Americans are feeling anxious about their financial well-being heading into the holiday season. 

<p>The holidays can be a wonderful time to spend time with loved ones, but the cost of gift giving, travel, festivities and other holiday cheer often adds up fast. However, with the right strategies in place, you can find ways to save money.  </p><h2>How can you save money during the holidays? </h2><p>If you’re feeling a pinch in your wallet this holiday season, you’re not alone. According to recent <a href="https://www.usatoday.com/story/money/shopping/2024/09/05/holiday-shopping-already-starting/75014305007/"><b><u>Bank Rate data</u></b></a>, more than a quarter of Americans (28%) are feeling stressed about holiday shopping costs and 27% plan to take on debt to cover holiday costs.<sup>[1]</sup> To cut costs, consider some of the below strategies to save on gifts, travel, and more.  </p><h3>1. Make a holiday budget </h3><p>Before the holiday season kicks off, <a href="https://www.lendingclub.com/resource-center/personal-finance/sticking-to-a-budget-common-problems-and-solutions"><b><u>create a budget</u></b></a> that includes all of your anticipated holiday costs, like gifts, travel, pet boarding, events, extra groceries, and seasonal home decor. As the holidays approach, make sure to stick to your budget and avoid temptations that may cause you to overspend.<sup>[2]</sup>  </p><h3>2. Set up a holiday savings account </h3><p>Based on your holiday budget, put money aside periodically into a holiday fund. You can stash $20 a week into an envelope or have a percentage of your paycheck automatically deposited into a savings account. Try not to dip into your holiday cookie jar for other expenses. </p><h3>3. Shop early </h3><p>Consider what you’ll need this holiday season, and start buying early. Whether it’s stocking up on party supplies, buying gifts throughout the year, or purchasing clearance holiday decorations for next season, there are many strategies to get a head start. Shopping early helps spread out spending over time, allowing you to avoid the holiday rush. In some cases, you may be able to save when you buy in bulk or shop sales.  </p><h3>4. Make a shopping list </h3><p>To avoid overspending or impulse purchases, create a list of what you need to buy. When shopping in person or online, be sure to stick to your list. From gifts to groceries, a well-thought-out list can help you more easily comparison-shop and stay on budget. </p><h3>5. Don’t pay for shipping </h3><p>Shopping online is convenient, but it can come with added shipping fees. To save money, take advantage of free shipping offers. If you’re a last-minute shopper, consider waiting until National Free Shipping Day<sup>[3]</sup>, an annual December event where thousands of retailers offer free shipping. Some participating stores also waive minimum ordering requirements and offer additional discounts. </p><h3>6. Skip Black Friday </h3><p>It may be tempting to take advantage of Black Friday and Cyber Monday, but the deals aren’t always what they’re cracked up to be. Still, the hype often lures people into piling their carts high with budget-busting impulse buys. This year, consider opting out altogether or if you do feel the need to shop on these sale days, stick to your list and budget. </p><h3>7. Plan travel carefully </h3><p>Staying home for the holidays saves the most cash, but it’s not always possible to skip holiday travel. The cost of airfare tends to increase in the last six weeks of the year. Book early and be flexible about what days you choose to fly. In some cases, it’s less expensive to fly on the holiday itself instead of the days leading up to it. Try to book rental cars and hotels early, and if you have travel rewards, the holiday is a great time to cash in. While it may not be as comfortable as a hotel, staying with friends and family can also help you save.  </p><h3>8. Keep festivities simple </h3><p>Throwing a holiday party or hosting a holiday dinner can be a big investment of time, money, and energy. Keep meals simple to minimize costs and trips to the grocery store. Skipping the alcohol can help you save, too. Or if you feel comfortable, ask guests to bring their favorite side dishes, desserts, or drinks. You can also skip the full sit-down meal, and host a holiday open house or gathering with finger foods, pastries, appetizers, or just dessert.  </p><h3>9. Pay cash </h3><p>It may be tempting to put all of your holiday spending on your credit cards, but you could rack up interest charges if you’re not able to pay off balances in full. Instead, limit credit card use, and try to pay for gifts and other holidays with cash. If you have trouble <a href="https://www.lendingclub.com/resource-center/personal-finance/sticking-to-a-budget-common-problems-and-solutions"><b><u>sticking to your budget</u></b></a> when gift shopping, you can even consider giving cash for gifts. Although it’s not the most creative, sometimes it’s more than fine to be the one who pops a $20 in a card.<sup>[2]</sup>   </p><h3>10. Get creative </h3><p>Whether it’s gifts, cooking, or decorations, thinking outside the box can help you save during the holidays. Upcycle holiday decor, make cookies from scratch, or give people something you made with love. You can also thrift your holiday outfits and even give gently used items, like books and jewelry, as gifts. Think about ways to get crafty when you wrap presents, too. Recycle old wrapping paper or use something unexpected, like old newspapers. Mother Nature is also a great source of inspiration during the holidays—pinecones and evergreen branches work well for free (and fragrant) holiday decor.  </p><h3>11. Limit gifts </h3><p>Rather than exchanging gifts with everyone in your family or friend circle, consider setting up a holiday gift exchange like a Secret Santa or Holiday Swap. Or, you can set boundaries, like only giving gifts to children under 18. Some families decide to chip in on one big-ticket gift or a family experience that everyone can enjoy, like a trip. Another option is to skip gifting entirely and focus on togetherness.  </p><h3>12. Use technology </h3><p>Buying holiday cards and postage can add up quickly. Instead, send e-cards to friends and family or find an online service that will print and mail holiday cards at a discount. Shopping apps can help you get cash back and discounts online. You can also use budgeting apps to help you stick to your holiday budget.  </p><h3>13. Check out free activities  </h3><p>The holidays come with many types of family-friendly activities, usually at no cost. From town and city tree lightings and holiday walks to light displays and pond ice skating, you can usually find something to do every weekend during the holiday season. Many schools and churches also offer free holiday concerts, too.  </p><h3>14. Watch out for porch pirates </h3><p>Don’t let a package thief ruin your holiday. Sign up for UPS<sup>®</sup> My Choice, USPS<sup>®</sup> Informed Delivery, or FedEx<sup>®</sup> Delivery Manager—free services that let you know when your packages are scheduled to arrive. You can also have Amazon<sup>®</sup> orders delivered to an Amazon Hub Locker near you. USPS and UPS will also hold and redirect mail and packages for you. </p><h2>The bottom line </h2><p>A little planning can go a long way to help you save and feel in control financially this holiday season. Choose a strategy that makes sense for your family’s needs and budget. Remember, it’s okay to start new traditions or pass on things that align with your budget or <a href="https://www.lendingclub.com/resource-center/personal-finance/do-you-know-your-financial-values"><b><u>financial values</u></b></a>. If you’re still paying off last year’s holiday debt, don’t beat yourself up. There are solutions available to help you get back on track, like a <a href="https://www.lendingclub.com/personal-loan/debt-consolidation"><b><u>debt consolidation loan</u></b></a> for your high-interest credit card.     </p><hr/><ol><li><p><a href="https://www.usatoday.com/story/money/shopping/2024/09/05/holiday-shopping-already-starting/75014305007/">USA Today</a>. “Forget Halloween, it&#39;s Christmas already for some American shoppers.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/budgeting-how-to-create-a-budget-and-stick-with-it/">Consumer Financial Protection Bureau</a>. “Budgeting: How to create a budget and stick with it.” </p></li><li><p><a href="https://nationaltoday.com/free-shipping-day/">National Today.</a> &quot;National Free Shipping Day.&quot;</p></li></ol><p></p>

From buying gifts to traveling, entertaining, decorating, and even cultivating a holiday wardrobe, you may have a lot on your shopping list. By preparing a holiday budget ahead of time—and sticking to it—you’ll be better equipped to make it through the holiday season without breaking the bank.   

<p>Holiday spending can add up quickly. From buying gifts to traveling, entertaining, decorating, and even cultivating a holiday wardrobe, you may have a lot on your holiday shopping list. However, a holiday budget can help you avoid racking up debt that carries over into the new year—all while still being able to pay your day-to-day expenses. By preparing a holiday budget ahead of time—and sticking to it—you’ll be better equipped to make it through the holiday season without breaking the bank.   </p><h2>6 ways to build a holiday budget that will work every year  </h2><p>The holidays are often a joyful time, but they can come with steep expenses and lots of stress if you’re not financially prepared. A holiday budget can help ensure you’ve got enough money to cover your holiday expenses—as long as you stick to it. Consider these strategies to build a holiday budget that will work year after year.<sup>[1]</sup>  </p><h3>1. Consider last year’s spending </h3><p>The first step to planning your holiday budget is to understand what you spent money on last year. Take a look at your bank account or credit card statement to gauge your holiday expenses in the past. Make a list of everything you bought or spent money on for the holiday season. Don’t forget to include holiday-specific purchases you made in advance, like gifts and flights.  </p><p>Reviewing last year’s expenses can help you understand how much you spent, what you bought, and how you paid for everything. Look closely at your purchases. What payment method did you use—cash, credit cards, a special savings account? How much did last-minute purchases add up to? How much did you spend on gifts? On travel? On hosting? What about holiday pictures or cards? Are you still paying off any debt from last year? </p><h3>2. Set your spending limit </h3><p>Just like a traditional budget, your holiday budget should be limited to the cash you have available after paying all your monthly expenses. If you’re coming up short, you might consider using some of your savings, but be sure to leave extra padding for your emergency fund. It might also be a time to eliminate extras—like paying to have your groceries delivered—at least until the holiday season is over.  </p><p>The goal is to set a spending limit based on your cash flow without putting too much strain on your overall budget. Don’t forget to consider ways you can <a href="https://www.lendingclub.com/resource-center/personal-finance/best-ways-to-save-money-this-holiday-season"><b><u>stretch your holiday budget</u></b></a> like making DIY gifts, skipping travel, or upcycling decorations.  </p><h3>3. Create holiday budget categories </h3><p>To better track your spending, create categories for all your usual holiday expenses. Categories can include things like gifts, holiday cards (plus postage), decorations, entertainment, hosting, and travel. Split up your holiday budget among these categories, making sure not to exceed your spending limit.  </p><p>You can still shift the dollar amounts around to different categories if needed, as long as the total stays within your budget. For example, you may plan to spend 75% of your gift budget on family presents, leaving the remaining 25% to be spent on holiday tips, host gifts, and other types of gifting. If you decide you need more of the budget for family gifts, you can cut spending on others.   </p><h3>4. Make a gift list </h3><p>Deciding ahead of time who will be on your gift list—and assigning a dollar amount for each of them—is just as important as setting your spending limit. At first, you may feel a little stingy if you have to make some cuts. However, effective budgeting often comes down to making tough decisions.  </p><p>If you can’t cut back on the number of people you have to buy for, consider revising your budget to afford smaller items for friends, coworkers, and extended family. Or, you can choose to keep your gift lift the same, but make cuts in other areas of your budget, like skipping expensive tickets to a holiday show. Remember, it’s your budget, so you get to make the rules.  </p><h3>5. Plan ahead </h3><p>To maximize your time, reduce stress, and make the most of your budget, start preparing for holiday spending about six months in advance. Even if you’re not quite in the holiday spirit during the summer months, planning early offers many benefits. </p><p>Setting your holiday spending limit and getting your budget in order early helps minimize holiday stress and allows you to prepare financially. You’ll have more time to bulk up your holiday savings, pay off past holiday debt, and take advantage of any sales or promotions during the summer months. Good planning can also help you avoid impulse purchases and stick to your budget. </p><h3>6. Figure out how you’ll pay </h3><p>To avoid racking up debt, commit to a cash-only holiday budget from your income, savings, and any money you earn on the side. This can be especially helpful if you think you’ll overspend when using credit cards. If you do use your credit cards, try to pay off the balance by the end of the grace period to avoid interest.  </p><p>You may also consider using a <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-buy-now-pay-later"><b><u>Buy Now, Pay Later</u></b></a> (BNPL) service to split the cost of purchases over time. BNPL can be helpful for large purchases like expensive airline tickets or large gifts—especially if you’re able to secure interest-free financing. Just be sure you can make your scheduled payments on time.<sup>[2]</sup>  </p><h2>How to stick to your holiday budget </h2><p>Creating a holiday budget can help you stay organized financially and avoid overspending, but <a href="https://www.lendingclub.com/resource-center/personal-finance/sticking-to-a-budget-common-problems-and-solutions"><b><u>sticking to a budget</u></b></a> isn’t always easy. It can be tempting to just get one more thing, or to dip into your holiday savings for a vacation. Setting goals can help you stay on track with savings or early gift-giving.  </p><p>For instance, set a goal to save a certain amount each week or to hit a certain amount in your savings by a specific date. You can also set goals around when you want to have all your shopping done. Consider what works best for you. Do you want more time to save and make all your purchases during the holiday? Or will shopping early help you save, reduce last minute purchases, and give you more time to relax? Remember, you can make adjustments based on what works for you.  </p><h2>The bottom line </h2><p>Just like any other budget, a successful holiday budget comes down to planning. The sooner you start making your plan, the better. Committing to a cash-only budget, setting a spending limit you can stick to, and saving enough to cover holiday expenses can help you make the most of the giving season and avoid lingering debt. If you’re still paying off last year’s holiday credit card bills, don’t be too hard on yourself. A <a href="https://www.lendingclub.com/personal-loan/debt-consolidation"><b><u>debt consolidation loan</u></b></a> can help you get back on track.  </p><hr/><ol><li><p><a href="https://www.consumerfinance.gov/about-us/blog/budgeting-how-to-create-a-budget-and-stick-with-it/"><u>Consumer Financial Protection Bureau</u></a>. “Budgeting: How to create a budget and stick with it.” </p></li><li><p><a href="https://www.consumerfinance.gov/compliance/compliance-resources/consumer-cards-resources/buy-now-pay-later-bnpl-products/buy-now-pay-later-product-faqs/"><u>Consumer Financial Protection Bureau</u></a>. “Buy Now, Pay Later Product FAQs.” </p></li></ol><p></p>

If credit card debt is piling up and you're worried about making only minimum payments into the foreseeable future, this accelerated debt paydown method could be your way out.

<p>Are credit card balances and other debts creeping up on you? Credit card debt has reached record highs post-pandemic, with rising interest rates and stubbornly high inflation making it difficult to pay off credit cards and other debt. Making minimum payments may keep you in debt for the foreseeable future. Enter: the debt avalanche paydown method. </p><p>By combining a few extra dollars each month with a strategy for tackling your highest-interest debts first, you may be able to pay down your debt more quickly. Here’s how it works.</p><h2><b>What is the debt avalanche method</b>​<b> &amp; how does it work</b>​<b>?</b> </h2><p>The debt avalanche method is a debt repayment strategy that helps you pay off your credit card balances and other debts starting with your <i>highest-</i>interest debt first. </p><p>You begin by pledging extra dollars toward paying down your debts every month. While you continue making minimum payments on all your accounts, use those extra dollars to add to the minimum payment on your highest-interest balance. The more extra cash you can commit to paying over and above your minimum payment, the faster that balance will be paid off.</p><p>When your first account is paid off, you’ll roll all the money you budgeted to pay off that first debt into your next highest-interest account. Continue paying that balance down until it’s gone, too. Keep repeating this method of accelerated debt paydown until all your debts are completely paid off.</p><p>If you have high-interest debt, including credit card balances at 25% or higher, tackling your highest-interest accounts first may save you money and help you get out of debt faster. By rolling or “avalanching” money each month toward debt paydown, you can accelerate debt repayment faster than if you continued with making only minimum payments.</p><h2>How does it work?</h2><p>The idea behind the debt avalanche is simple and executing it can be easy as long as you’re able to budget some extra dollars for debt paydown in the beginning. Make the debt avalanche work for you by following these five steps. </p><h3>1. List your debts by highest to lowest interest rate.</h3><p><b> </b>Make a list of the debts you want to pay off, sorting them by highest to lowest interest rate:</p><table><tr><th><p></p></th><th><p><b>Balance</b></p></th><th><p><b>Minimum Monthly Payment</b></p></th><th><p><b>Annual Percentage Rate (APR)</b></p></th></tr><tr><td><p>Account A</p></td><td><p>$10,000</p></td><td><p>$325</p></td><td><p>27%</p></td></tr><tr><td><p>Account B</p></td><td><p>$3,000</p></td><td><p>$85</p></td><td><p>22%</p></td></tr><tr><td><p>Account C</p></td><td><p>$6,000</p></td><td><p>$155</p></td><td><p>19%</p></td></tr></table><h3>2. Pay extra toward your highest-interest debt.</h3><p>Since account B has the highest interest rate, you’ll start paying down that account balance first. Let’s say you have an extra $120 a month to put toward paying down debt in addition to the money you’ve already budgeted to cover your minimum payments. Continue making minimum payments on accounts A and C. Add $120 to the $325 minimum payment on account B and pay $445 every month until account B is paid off. </p><h3>3. Add your payment into the next highest-interest balance.</h3><p>When you’re done paying off account B, add the $445 you were paying monthly on that account to the minimum payment amount on account C. Pay $530 monthly on account C until it’s paid off.</p><h3>4. Repeat until all your debts are eliminated. </h3><p>Now that accounts B and C are paid off, you now have $685 monthly ($530 plus $155) to pay down the balance on account A. Keep paying $685 monthly until your debt on account A is gone. </p><h2>How does the debt avalanche method pay down debt faster? </h2><p>By paying off the highest-interest debts first, you pay down your principal balance faster, reduce the amount of interest you pay over the life of the loan, and save yourself money. Here’s how the debt avalanche method compares to making minimum payments on your accounts.</p><h3>If you make the minimum payments only.</h3><p>If you made your current minimum payments only on your three accounts, this is an estimate of how long it would take to pay off your debts and what it could cost you in interest:</p><table><tr><th><p><b></b></p></th><th><p><b>Balance</b></p></th><th><p><b>Annual Percentage Rate (APR)</b></p></th><th><p><b>Minimum Monthly Payment</b></p></th><th><p><b>Payoff Period</b></p></th><th><p><b>Total Interest</b><b><i><sup>†</sup></i></b></p></th></tr><tr><td><p>Account A</p></td><td><p>$10,000</p></td><td><p>27%</p></td><td><p>$325</p></td><td><p>53 months</p></td><td><p>$7,216</p></td></tr><tr><td><p>Account B</p></td><td><p>$3,000</p></td><td><p>22%</p></td><td><p>$85</p></td><td><p>58 months</p></td><td><p>$1,873</p></td></tr><tr><td><p>Account C</p></td><td><p>$6,000</p></td><td><p>19%</p></td><td><p>$155</p></td><td><p>61 months</p></td><td><p>$3,365</p></td></tr></table><p><i><sup>†</sup></i><i>The information provided is for educational purposes only. Your lender may charge other fees which have not been factored in these calculations.</i></p><p>In this scenario, you would finish paying off all three accounts, a total debt of $19,000, in just over five years. Assuming all payments were made timely and in full, your total interest paid on all three accounts would be $12,454.</p><h3>If you use the debt avalanche method:</h3><p>If you budgeted an extra $120 a month and started with the highest-interest account first, the debt avalanche method would pay off your debt almost two years faster with a 33% savings on interest costs. Here’s how the debt avalanche method could be used to pay off $19,000 in credit card debt in three years and four months:</p><table><tr><th><p><b></b></p></th><th><p><b>Payoff Period</b></p></th><th><p><b>Total Interest</b></p></th></tr><tr><td><p>Account A</p></td><td><p>32 months</p></td><td><p>$4,090</p></td></tr><tr><td><p>Account B</p></td><td><p>36 months</p></td><td><p>$1,488</p></td></tr><tr><td><p>Account C</p></td><td><p>40 months</p></td><td><p>$2,802</p></td></tr></table><p>When you use the debt avalanche method to pay down high-interest debt, your extra money chips away at your highest-interest principal balance first. As your principal balance gets smaller, you pay less in interest, which allows more of your payment to go toward paying down principal, and so on. </p><p>The difference is real: Debt avalanche pays off your debts in 40 months versus the 61 months you would need using your current minimum payments only. You stand to save $4,074 ($12,454 minus $8,380) in total interest using the debt avalanche method.</p><p>Even paying as little as $20 a month toward your highest-interest debt would chop eight months off your payoff date and more than $1,000 from your total interest.</p><h2>Who should use the debt avalanche method?</h2><p>The debt avalanche method is most effective for people who have high-interest debt they want to pay it down as fast as possible. By reducing your highest-interest debt first, you maximize the amount you save in interest costs. This can help you get out of debt months, or years, faster than you would making minimum payments alone.</p><h2>Debt avalanche pros and cons</h2><p>The debt avalanche method is effective if you can follow it for as long as it takes to pay off your debts. The benefits are saving money, paying off debt faster, and—maybe most important of all—giving yourself a strategy for tackling debt. Without a clear plan for reducing (and ultimately eliminating) debt, it can be hard to make headway and maintain the focus you need to reduce your debt all the way down to zero.</p><p>This method works best when it’s part of an overall financial plan that includes careful budgeting and saving. </p><p>While you’re paying down debt, try not to use your credit cards to cover your daily expenses if possible. Otherwise, your balances will increase even as you’re working to pay them down. But if you can’t avoid it, use the card with the lowest APR.</p><p>Savings can help you avoid charging up unexpected expenses on your cards, so you can continue to make progress on paying down balances. <a href="https://www.lendingclub.com/resource-center/personal-finance/50-30-20-rule-the-easy-budget-method-that-works">Budgeting</a> can help ensure you save for emergencies and still have enough money every month to make your debt payments according to plan.</p><h2>Other debt repayment methods to consider</h2><p>There are other methods for paying down debt. Here are a few you might want to consider:</p><h3>Debt snowball method</h3><p>The debt snowball method is similar to the debt avalanche method, but instead of paying your highest-interest balance first, you start with your smallest balance. Starting small gives you a quick win: Your first balance may be eliminated fast, which can be motivating when you’re facing what feels like a mountain of debt.</p><p>Applying the <a href="/resource-center/personal-finance/debt-snowball-method">debt snowball method</a> to the accounts in our earlier example allows you to pay off $19,000 in debt in 41 months at a total interest cost of $9,079. That’s about a month longer and $699 more in interest than it would take using the debt avalanche method. </p><p>On the other hand, debt snowball lets you pay off your first card completely in 18 months versus 32 months with debt avalanche. Of course, your outcome will vary depending on the number and size of your accounts, and the interest rates you pay. You may want to work out debt repayment plans using both the avalanche and snowball methods, then pick the one that’s most appealing to you.</p><h3>Debt snowflake</h3><p>Every time you walk instead of taking an Uber, skip your afternoon latte, or redeem a cash-back reward, you save a few dollars you could use to pay down debt. With the debt snowflake method, you capture these small savings and apply them toward your balances. This method may work best in tandem with the debt avalanche or snowball methods, where a small amount of additional paydown adds to the overall effect, without having you rely on solely small incidental savings to pay off your debt.</p><h3>Debt consolidation</h3><p>With debt consolidation, you roll multiple credit card and loan balances into a single loan, often a fixed-rate personal loan that you pay off in monthly installments. If you have good credit, you may be able to secure a <a href="https://www.lendingclub.com/personal-loan/debt-consolidation">debt consolidation loan</a> at a far lower interest rate than you’re paying on credit cards. A fixed-rate installment loan also gives you a built-in plan for paying off your debt: Assuming you’ve made all your payments on time, when your loan term is finished, your debt is, too.</p><p>Financing $19,000 in credit card debt using a 4-year debt consolidation loan at 12% would cost you $500 monthly and $5,016 in total interest. Compared with $685 monthly and $8,380 in interest using the debt avalanche method, a debt consolidation loan may be an option worth considering. </p><p>However, be aware that your interest rates will vary, and your ability to qualify will depend on your credit score and income. Debt consolidation loans usually come with origination fees that can add to your principal balance, so review your terms carefully to understand the pros and cons before you sign on a new loan.</br></br>Unlike debt consolidation, the debt avalanche method doesn’t require you to take out (or qualify for) additional loans: It’s entirely DIY. You can work out a debt avalanche strategy yourself and start implementing it right away. You can also stop at any time with relatively little downside, although sticking with it is what gets you to zero debt.</p><h2>3 common debt avalanche mistakes to avoid</h2><p>If you’re thinking about using the debt avalanche method, here are a few common mistakes to avoid:</p><ol><li><p><b>Not enough money to pay your bills: </b>Make sure there’s room in your monthly budget to cover your regular monthly expenses plus your avalanche payments with a little left over for savings. If you’re running short month after month, you may be forced to cut back on your extra debt payments to make ends meet or worse, go further into debt.</p></li><li><p><b>Not enough savings to cover unexpected expenses: </b>Surprises happen. If you don’t have the savings to pay for a new transmission or your middle schooler’s week at space camp, you may resort to using your credit cards and adding to your debt.</p></li><li><p><b>Not enough motivation to make it to the finish line: </b>Paying off your debts may take months or years. During that time, you’ll need to stick to your budget, avoid running up additional debt, and make your payments as planned. Look for an easy way to track your progress to help keep your focus and motivation up.</p></li></ol><h2>What&#39;s better for getting out of debt: Debt avalanche or debt snowball?</h2><p>Debt avalanche may be better than debt snowball if you have high-interest debt that’s making it difficult to pay your balances down. As a simple example, let’s say you have a credit card balance of $5,000 at 23.9% interest and a car loan of $4,000 at 4% interest. Budgeting extra dollars to pay off your credit card balance first will save you money in interest charges, pay your combined debt off faster, and get you to zero debt sooner.</p><p>The differences aren’t always so clear-cut, however. The extra motivation you get from paying off an account in full early on might really help you stay with your program. If the interest rates on your accounts are similar, it may not make much of a difference whether you choose debt avalanche or debt snowball.  </p><p>Ultimately, it may be most important to choose <i>something.</i> Starting with either of these methods—or an alternative like debt consolidation—puts you on the right path. You may decide to alter your course or encounter a few hiccups along the way. Still, making a plan and executing it is the surest way to start making progress.</p><h2>The bottom line</h2><p>Getting into debt can be accidental; getting out of debt rarely is. Using a payoff strategy like the debt avalanche method can help you wrangle out-of-control credit card debt, pay it down faster, and free yourself from a negative cycle of revolving debt. Better still, you don’t need a degree in finance to get started. Get your debts in order, get your budgeting tools in gear, and start taking on your debt now.</p>

Take control of your money and personal wellbeing with tips to recognize burnout and restore your physical, financial, and emotional health.

<p>Workplace burnout was already a serious issue for many Americans before the pandemic. In 2024, the problem is even more widespread and has a major impact on our mental and physical well-being. Because money issues and mental well-being are closely correlated, burnout can also threaten your financial stability. </p><p>We explore how our mental health and finances interact, explain how to recognize the warning signs of burnout, and share practical tips and strategies to improve your mental, physical, and financial health.</p><h2>What is burnout?</h2><p>The American Psychological Association (APA) defines burnout as “physical, emotional, or mental exhaustion” caused by stress and tension, especially from extreme and prolonged physical or mental exertion or an excessive workload.</p><p>According to a survey, about 65% of employees said they suffered from burnout in 2023 and 72% said it&#39;s impacting their performance at work.<sup>[1]</sup> Nearly half (48%) of 18-to-29-year-olds said they feel drained compared with 40% of their peers aged 30 and up, while women (46%) reported higher levels of burnout than men (37%).<sup>[2]</sup> But even outside the workplace, the post-pandemic world continues to present a host of mental health challenges.</p><p><b>Economic uncertainty. </b>Ripple effects from the job losses, deaths, and financial upheavals of the pandemic continue. Consumers face ongoing <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-inflation-and-how-can-you-beat-it">inflation-related concerns</a>, a rollercoaster stock market, rumors of recession, an uncertain climate future, and worry over the impact AI could have on our society and work. Meanwhile, pandemic-era financial supports such as stimulus payments and eviction protections have largely expired. Some 83% of U.S. adults report feeling stressed about inflation, according to a poll conducted for the APA in late 2022; 69% say the economy in general is a major source of stress.</p><p><b>Socio-political issues. </b>Large-scale problems such as war, gun violence, political divisiveness, racial and gender injustice, and fears around artificial intelligence and climate change all impact our mental health. Repeated exposure to negative news cycles can make us feel powerless and hopeless, while a constant deluge of information causes mental fatigue and difficulty focusing.</p><p>The primary symptoms of both personal and professional burnout are “decreased motivation, lowered performance, and negative attitudes toward oneself and others,” according to the APA. Such mental health struggles can cause physical fatigue, difficulty making decisions or concentrating, memory problems, and a general lack of motivation. More than one-quarter of U.S. adults the APA surveyed say that most days, they are so stressed they can’t function.</p><h2>How mental burnout can result in financial burnout</h2><p>Money and mental health are closely connected. If seeing your hefty credit card balance makes you anxious, you might ignore the bill instead of paying it. That compounds your financial problems—and your stress.</p><p>Here are warning signs burnout may be affecting your finances:</p><h3>Emotional spending</h3><p>Do you use retail therapy to cope with your feelings? Shopping sprees may provide temporary relief or distraction, but ultimately mean more stress when the bill arrives. </p><h3>Convenience spending</h3><p>If work keeps you too busy to cook or shop, you might get takeout every night or pay for grocery delivery.</p><h3>Poor work performance</h3><p>Burnout often lowers your motivation and productivity. Failing to meet your work obligations could cost you a promotion, a raise, or even your job.</p><h3>Neglecting financial responsibilities</h3><p>Failing to review your retirement statements might cost you opportunities to improve your investment returns. Procrastinating on paying taxes could result in hefty penalties.</p><h3>Increased dependence on credit</h3><p>If stress is straining your finances, you may find yourself relying more heavily on loans, borrowing from family or friends, or using <a href="/resource-center/personal-finance/ways-to-pay-off-credit-card-debt-fast">high-interest credit cards</a> for day-to-day expenses.</p><h3>Late or missed payments</h3><p>Late payments can mean costly late fees and ballooning credit card balances. In addition, late payments that appear on your credit report can significantly hurt your credit score, making it harder to get credit in the future.</p><h3>Relationship strain</h3><p>Frequent arguments with your partner or family about money matters may signal financial stress is spilling over into your relationships.</p><h3>Not planning for the future</h3><p>When you&#39;re mentally exhausted, it may be difficult to focus on long-term financial plans and goals. Burnout can divert your attention away from important financial goals such as building a budget or emergency fund or saving for retirement or a home.</p><h2>12 strategies to help improve your mental health and avoid financial burnout</h2><p>The combination of financial difficulty and mental health problems can quickly become a vicious circle. A study from Hartford found that denial, anger, stress, depression, and anxiety all rose dramatically among workers facing financial problems.<sup>[3]</sup></p><p>Fortunately, you can combat burnout—and improve both your mental and financial health—by taking the following actions.</p><h3>Mental Health Strategies</h3><h4>1. Practice self-care.</h4><p>Healthy habits such as getting enough sleep, eating a balanced diet, and exercising can improve your mood and prepare you to face financial challenges. Find relaxing activities, like doing yoga or spending time in nature.</p><h4>2. Start meditating.</h4><p>Mindfulness meditation is proven to reduce stress and fight anxiety and depression, according to the APA. Join a meditation group, look for mindfulness resources online, or use free mindfulness apps to guide you.</p><h4>3. Revisit your priorities; set boundaries.</h4><p>Adjust your work-life balance by re-evaluating your priorities and eliminating less important activities or commitments. If you can’t stop doing something, set boundaries. For example, ask your boss about taking some responsibilities off your plate, or ask your partner for more help with childcare or housework.</p><h4>4. Ask for help.</h4><p>Talking to a friend may be all you need to feel better. If not, consult your primary care doctor and research the options your health insurance offers for mental health care. If you don’t have insurance, a <a href="https://data.hrsa.gov/data/reports/datagrid?gridName=FQHCs">Federally Qualified Health Center</a> can provide services based on your ability to pay. Mental health apps can match you with licensed therapists you can access as needed for a monthly fee (check out the reviews first).<sup>[4]</sup></p><h4>5. Be a friend to yourself.</h4><p>Negative self-talk heightens anxiety, depression, and stress. Practice positive, supportive self-talk—the way you’d speak to a friend with your problems. Viewing your worries as you would a friend’s can help you be more objective and maintain a healthy perspective.</p><h3>Financial health strategies</h3><h4>6. Assess your income and expenses.</h4><p>Write down all sources of income and regular expenses. Divide your expenses into essentials, such as rent, cellphone and loan payments, and extras, such as eating out or streaming subscriptions.</p><h4>7. Create a budget.</h4><p>If building a detailed budget feels too complicated, start with <a href="https://www.lendingclub.com/resource-center/personal-finance/50-30-20-rule-the-easy-budget-method-that-works">a simple approach to budgeting</a>. You can use a budgeting app or pen and paper—whichever works for you. Budgeting provides a sense of control over your finances and a better picture of your financial obligations. For example, if your expenses exceed your income, you’ll either need to cut back or bring in more money.</p><h4>8. Prioritize debt repayment.</h4><p>Debt is a top cause of financial stress, according to investment firm T.RowePrice. Develop a plan to <a href="https://www.lendingclub.com/resource-center/personal-finance/debt-snowball-vs-avalanche-which-should-you-choose">pay down your debts</a> systematically. <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-debt-consolidation">Debt consolidation</a> options, such as using a personal loan to pay off multiple high-interest credit cards, can make repaying your debt more manageable.</p><h4>9. Start an emergency fund.</h4><p>An <a href="https://www.lendingclub.com/resource-center/personal-finance/your-emergency-fund-the-essential-guide">emergency fund</a> provides a safety net against unexpected expenses. Ideally, save enough to cover three to six months’ worth of essential living expenses should you lose or quit your job. You can start with a smaller goal, such as $500, and put aside a little each month.</p><h4>10. Save for the future.</h4><p>Contribute to any retirement plan your job offers. If your employer makes matching contributions, put in at least enough money to get the maximum match. You can also open an individual retirement account (IRA) on your own.</p><h4>11. Automate your finances.</h4><p>Put your financial goals on autopilot by scheduling automatic contributions to your retirement plans and automatic transfers to your savings account each month. You can also set up automatic payments for bills to eliminate worries about missed payments and late fees.</p><h4>12. Reach out for help.</h4><p>Take advantage of your workplace&#39;s programs to help with budgeting, emergency savings, or financial education. The more you know about managing your money, the less intimidating it will feel. If you’re struggling with debt, connect with a non-profit, licensed credit counselor who can help you make a budget and <a href="/resource-center/personal-finance/ways-to-pay-off-credit-card-debt-fast">get out of debt</a>. </p><h2>The bottom line</h2><p>Burnout can wreak havoc on your mental health and finances, but recognizing the warning signs of burnout and taking action can gradually bring your life back into balance. As you work to improve your money and mental health habits, be patient with yourself and focus on what you can control, not what you can’t. </p><p>By setting realistic goals, taking small steps, and making consistent efforts, you can find your way to a happier, healthier, and financially stable life.</p><hr/><p>1. <a href="https://www.hrdive.com/news/employee-burnout-productivity/703405/">HR Dive.</a> &quot;65% of employees said they suffered from burnout in 2023 and 72% said it&#39;s impacting their performance at work.&quot;</p><p>2.  <a href="https://futureforum.com/research/future-forum-pulse-winter-2022-2023-snapshot/#which-groups-are-at-the-greatest-risk-of-burnout">Future Forum.</a> &quot;46% percent of women say they are burned out compared with 37% of men.&quot;</p><p>3. <a href="https://newsroom.thehartford.com/newsroom-home/news-releases/news-releases-details/2023/The-Hartfords-New-Study-Finds-Most-U.S.-Workers-Are-Happy-At-Work-Yet-Burnout-Persists/default.aspx">The Hartford.</a> &quot;A study from Hartford found that denial, anger, stress, depression, and anxiety all rose dramatically among workers facing financial problems.&quot;</p><p>4. <a href="https://psychiatry.ucsf.edu/copingresources/apps">University of California, San Francisco</a>. &quot;Mental health apps can match you with licensed therapists you can access as needed for a monthly fee (check out the reviews first).&quot; </p>

Your credit score plays a key role in nearly every aspect of your financial life—from the rates you receive on loans to applying for utility services and cellphone plans. Given how often those numbers will come into play, it is a smart move to aim for the best scores you can. 

<p>Your credit scores are designed to predict how likely you are to repay a loan as agreed. These scores are calculated using information found in your credit reports—including payment history, length of credit history, outstanding debt, and more. Having higher credit scores can make it easier to qualify for a loan, credit card, or mortgage. In this article, we’ll take a look at what factors affect your credit scores the most.<sup>[1]</sup>  </p><h2>What factors make up your credit score?</h2><p>Credit-scoring companies use software to analyze the information found in your credit reports. <a href="https://www.myfico.com/credit-education/whats-in-your-credit-score"><b><u>FICO</u></b></a><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score"><b><u><sup>®</sup></u></b></a><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score"><b><u> Score</u></b></a> and <a href="https://www.vantagescore.com/press_releases/the-complete-guide-to-your-vantagescore/"><b><u>VantageScore</u></b></a> are the two main credit-scoring companies, with the Fair Isaac Corporation (FICO) Score being used by about 90% of top lenders.<sup>[1] [2] [3] [5]</sup>  </p><p>Many other credit scores exist, so it’s important to note that a lender may base its decision on another score entirely.<sup>[1]</sup>  </p><p>Scoring software programs use algorithms to review your credit history and financial habits. Scoring model calculations are a trade secret, but the factors that affect your FICO score and how they’re weighted are public knowledge.<sup>[1]</sup>  </p><p>Below is a list of the factors that influence your FICO score and how each factor is weighted. The percentages reflect the importance of each factor. <sup>[2]</sup> </p><ul><li><p>Payment history: 35% </p></li><li><p>Credit utilization: 30% </p></li><li><p>Length of credit history: 15% </p></li><li><p>Credit mix: 10% </p></li><li><p>New credit: 10% </p></li></ul><p>VantageScore and other credit models may use slightly different criteria, but knowing how the FICO score works can help if you’re trying to improve your credit in general.<sup>[4]</sup> </p><h2>These 5 factors impact your credit score the most</h2><p>Understanding how your credit scores are determined can help you improve your credit over time. Here’s a closer look at what’s considered during the scoring process. </p><h3>Payment history: 35% </h3><p>Payment history is the most important factor affecting your credit scores because it helps predict whether you’ll fall behind on future bills. Even just one payment that’s 30 days late can cause your scores to dip. Foreclosure, bankruptcy, or an account sent to collections can have more serious consequences to your credit scores. <sup>[2]</sup> </p><p>Consistently making on-time payments can help keep your credit scores high. Missed payments can happen, but it’s important to get caught up on your bills as soon as possible. Over time, if you’re able to demonstrate a more positive payment history, your credit score will likely improve.  </p><h3>Credit utilization: 30% </h3><p>Credit utilization is the amount you owe compared to your available credit. It’s calculated as a percentage and is the second most important factor in determining your credit scores. For example, if you have a $200 balance on a credit card with a $1,000 limit, then your utilization on that card is 20%. Credit-scoring models usually calculate utilization for each of your accounts separately as well as your total credit utilization across all accounts.<sup>[2]</sup> </p><p>People with credit utilization under 10% tend to have the highest credit scores, while utilization rates over 30% can negatively affect your credit scores. Try paying down credit cards with high balances to help improve your credit utilization and give your scores a boost. Then, stay on top of your balances to keep utilization as low as possible.  </p><h3>Length of credit history: 15% </h3><p>Credit-scoring models also check how long each of your accounts has been open to evaluate your experience with managing debt. The age of your accounts carries less weight than other factors. In general, the longer your credit history, the higher your score is likely to be. The FICO score checks the age of your newest and oldest accounts, plus the average of all your accounts.<sup>[2]</sup> </p><p>The length of time you’ve had open credit cards and loans collectively make up your credit history. Keeping your credit cards open can help improve your credit history over time. (Keeping a loan account open for the long haul may technically help your credit. Open loans will elevate your DTI ratio and increase your interest costs, so it’s best to pay off any loans as soon as possible.) </p><p>You may close a credit card or loan because you paid off the debt or closed the account by choice. FICO can still use your closed accounts to calculate the age of your credit history. When you close an account in good standing, with no late payments, it often remains on your credit report for up to 10 years.<sup>[6]</sup> </p><h3>Credit mix: 10% </h3><p>Your credit mix, or the different types of accounts on your credit report, also helps determine your credit scores. While your credit mix isn’t nearly as important as your payment history or age of accounts, it can help show lenders that you can handle multiple types of debt. For instance, you may have taken out auto loans, student loans, mortgages, revolving credit such as credit cards, and installment loans like <a href="https://www.lendingclub.com/resource-center/personal-loan/top-reasons-to-get-a-personal-loan"><b><u>personal loans</u></b></a>. People with high credit scores often have a mix of several different types of accounts.<sup>[2]</sup>  </p><p>You may decide to open a new account to boost your credit scores. For instance, if you only have a student loan in your credit history, you may consider opening a retail credit card with a lower limit. Before opening any accounts, be sure you can afford to take on extra debt and make any payments on time. </p><p>Keep in mind that your credit mix is a relatively minor factor—so adding the new account might have a small impact on your scores.   </p><h3>New credit: 10% </h3><p>A new credit account can help improve your credit mix and increase your total available credit. It’s important to be aware that each credit-scoring system may look at new credit differently. Applying for new accounts may ding your credit—especially if you apply for several cards in a short period.<sup>[2]</sup> </p><p>Credit-scoring models know that people often shop around for the best rates before taking out installment loans, such as mortgages. If you submit applications for installment loans in a short time frame, typically two weeks, the credit-scoring system usually counts all of the applications as one hard inquiry. This has less of an impact on your credit scores.  </p><h2>What doesn’t affect your credit score? </h2><p>Payment history, credit utilization, age of accounts, type of accounts, and how often you apply for new credit all play a role in how your credit scores are calculated. Other factors won’t have an impact at all.<sup>[7]</sup> </p><p>Here’s a look at some pieces of information that aren’t factored into your FICO score: </p><h3>Checking your own credit scores </h3><p>Checking your own credit score regularly is a good way to keep tabs on your credit scores and look out for any unexpected or fraudulent information. You may also choose to check your score before applying for a credit card or loan. Checking your own credit score is considered a soft inquiry. Unlike hard inquiries, these won’t impact your credit.<sup>[7]</sup> </p><h3>Checking your loan rates </h3><p>With some creditors, like LendingClub Bank, checking your loan rate generates a soft credit inquiry, which won’t impact your scores. Just keep in mind a hard inquiry is likely when your loan is funded which could affect your credit score.<sup>[7]</sup> </p><h3>Debt-to-income ratio </h3><p><a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-debt-to-income-ratio-how-to-improve-it"><b><u>Debt-to-income</u></b></a> (DTI) ratio, a comparison of your monthly income and bills, is often an important factor in lending decisions. A lower DTI ratio may help you get approved with more favorable loan offers because it means less of your income goes toward debt payments. Your DTI ratio doesn’t impact your credit score. However, having a lot of debt or maxing out your credit cards can negatively impact your credit scores.<sup>[7]</sup> </p><h3>Your personal information </h3><p>A credit report has a section that contains personal information such as your name, Social Security number, date of birth, current address, and previous addresses. This information helps verify your identity and doesn’t affect your credit scores. </p><p>Your credit reports won’t include demographic information like gender, ethnicity, race, religion, immigration status, political affiliations, or marital status. This information also won’t affect your credit scores.<sup>[7]</sup> </p><h3>Your employer, income, and net worth </h3><p>Your credit reports won’t include information about your income or net worth but may contain information about your current and previous employers. Lenders may consider your employment status and financial health when you apply for credit, but this information won’t affect your credit scores.<sup>[7]</sup> </p><h3>Medical debt </h3><p>As of 2023, credit reporting companies removed medical debt that’s less than a year old and all paid medical debt from credit reports. Steps are also being taken to remove medical debt under $500. If you find medical debt on your credit reports, you may be able to take action to have it removed.<sup>[8]</sup> </p><h2>Do personal loans affect your credit scores?</h2><p>A personal loan is a type of installment loan that can be used for almost any purpose, including <a href="https://www.lendingclub.com/personal-loan/credit-card-consolidation-loan"><b><u>debt consolidation</u></b></a> or paying for a large expense like a wedding, vacation, or home repairs. Personal loans are generally <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-an-unsecured-personal-loan"><b><u>unsecured</u></b></a>, require no collateral to qualify, and are available at banks, credit unions, and online lenders.   </p><p>Personal loans may impact your credit scores in a few different ways. Here are a few things to consider:</p><ul><li><p><b>Credit inquiries:</b> Checking your rate may only generate a soft credit inquiry on a person’s credit report, which is visible only to that person. A hard credit inquiry, which is visible to that person and others, and which may affect that person’s credit score, only appears on the person’s credit report if and when a loan is issued to the person. Credit eligibility is not guaranteed. <a href="https://www.lendingclub.com/resource-center/personal-finance/key-differences-of-a-soft-credit-check-vs-hard-credit-check">Learn more about soft vs. hard credit inquiries</a>. </p></li><li><p><b>Reported to credit bureaus: </b>Making on-time loan payments can help boost your payment history and improve your credit scores, while late or missed payments have a negative effect.<sup>[9]</sup> </p></li><li><p><b>Adds to credit mix:</b> Personal loans make a great addition to your credit mix, which can help raise your scores—even after the loan is closed (as long as you have a positive payment history).<sup>[2]</sup>  </p></li></ul><h2>5 quick tips to improve your credit score</h2><p>Once you understand what affects your credit, it can be easier to take action to <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-improve-credit-score"><b><u>improve your credit score</u></b></a> and build long-lasting credit habits.   </p><ol><li><p><b>Pay your bills on time.</b> Show you can manage credit by making your minimum monthly payment on time each month.<sup>[10]</sup>   </p></li><li><p><b>Pay down revolving accounts. </b>Tackle balances on revolving credit accounts, like credit cards, personal lines of credit, and home equity lines of credit (HELOCs), to help lower your credit utilization.<sup>[10]</sup>  </p></li><li><p><b>Bring past-due accounts current.</b> Pay off past-due balances or work with your lender to bring your account current.<sup>[10]</sup> </p></li><li><p><b>Limit how often you apply for new credit.</b> Be selective when applying for new loans, credit cards, and other types of credit to avoid opening too much credit during a short amount of time.<sup>[10]</sup>  </p></li><li><p><b>Don’t close unused credit card accounts.</b> Keep credit cards open, even if you don’t use them often, to keep credit utilization low.<sup>[10]</sup> </p></li></ol><h2>The bottom line </h2><p>Many factors affect your credit scores—and some more than others. But with careful attention to your finances, you can often improve your score over time. Keep in mind that payment history and credit utilization make up nearly two-thirds of your scores, so it’s important to pay your bills on time and keep balances low.<sup>[1][2]</sup>  </p><p><a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-read-your-credit-report-identify-red-flags"><b><u>Check your credit reports</u></b></a> regularly to keep tabs on your scores and look for inaccuracies. You can request free copies of your credit reports from each of the three major credit bureaus—Equifax, Experian, and TransUnion—once a week at <a href="http://annualcreditreport.com/"><b><u>AnnualCreditReport.com</u></b></a>.<sup>[10]</sup>     </p><hr/><ol><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-credit-report-and-a-credit-score-en-2069/"><u>Consumer Financial Protection Bureau</u></a>. “What is the difference between a credit report and a credit score?” </p></li><li><p><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score"><u>myFICO</u></a>. “What&#39;s in my FICO Scores?”  </p></li><li><p><a href="https://www.fico.com/en/newsroom/fico-score-remains-most-widely-used-credit-score-securitization-market-keeping-lender"><u>myFICO</u></a>. “FICO Score Remains the Most Widely Used Credit Score in the Securitization Market, Keeping Lender Confidence.”  </p></li><li><p><a href="https://www.vantagescore.com/press_releases/the-complete-guide-to-your-vantagescore/"><u>VantageScore</u></a>. “The Complete Guide to Your VantageScore.” </p></li><li><p>MyFICO </p></li><li><p><a href="https://www.experian.com/blogs/ask-experian/when-are-closed-accounts-deleted/"><u>Experian</u></a>. “When Are Closed Accounts Deleted?” </p></li><li><p><a href="https://www.myfico.com/credit-education/credit-scores/whats-not-in-your-credit-score"><u>myFICO</u></a>. “What&#39;s not in my FICO Scores.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/medical-debt-anything-already-paid-or-under-500-should-no-longer-be-on-your-credit-report/"><u>Consumer Financial Protection Bureau</u></a>. “Have medical debt? Anything already paid or under $500 should no longer be on your credit report.&quot; </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-a-personal-installment-loan-en-2114/"><u>Consumer Financial Protection Bureau</u></a>. “What is a personal installment loan?” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/how-do-i-get-and-keep-a-good-credit-score-en-318/"><u>Consumer Financial Protection Bureau</u></a>. “How do I get and keep a good credit score?”</p></li></ol><p></p>

Identity theft happens when your personal information is stolen and used without your permission. Understanding the warning signs, knowing how to protect your information, and what to do if your identity is stolen can help keep your identity safe and recover faster. 

<h2>What is identity theft? </h2><p>Identity theft is the fraudulent collection and use of your private personal or financial information, like your Social Security number, name and address, credit card numbers, bank account numbers, and medical insurance numbers. At the very least, identity theft can cause unwanted stress. </p><p>In worst-case scenarios, identity thieves can attempt to apply for new credit accounts in your name, make fraudulent purchases, submit health care claims, or file fraudulent tax returns in an attempt to collect your tax refund. In some cases, identity thieves sell the stolen information to other identity thieves on the dark web.<sup>[2]</sup> </p><p>Identity theft can result in financial loss, credit damage, medical debt, and IRS penalties and investigation. If you’re a victim of identity theft, you may need to set up new accounts and get new copies of your debit and cards. Depending on the severity and nature of the identity theft, you may need to file an identity theft report with the Federal Trade Commission (FTC) and get the police involved. Recovering from identity theft often takes months—and sometimes years.<sup>3</sup> </p><h2>Common types of identity theft and warning signs</h2><p>Understanding the most common types of identity theft can help you protect your personal information and finances. Here’s a closer look at what to watch out for and what to do if you suspect you’ve been an identity theft victim. </p><h3>Digital identity theft </h3><p>Digital identity theft happens when your personal information is accessed through the internet. It can take many forms including Wi-Fi hacking, malware activity, phishing attacks, and data breaches.  </p><p>Here’s a closer look at warning signs of digital identity theft and what to do next. </p><h3>Wi-Fi hacking </h3><p>Using public Wi-Fi to browse the web can put you at risk for identity theft. Major sites are generally safe. On lesser-known sites, thieves can easily intercept private information on unsecured networks. Never enter private information like credit card details or your Social Security number on unknown sites.  </p><p>If you see suspicious charges on your financial statements or new accounts on your credit reports, you may need to report the fraud to your bank and the three major credit bureaus. Your bank can freeze your accounts and reimburse any fraudulent charges. You can also freeze your credit to prevent new accounts from being opened in your name. If someone has already opened new accounts under your name, reach out to the provider to close them, and report the information to the credit bureaus. In severe cases, you may need to call the police. <sup>[2] [4]</sup> </p><h3>Phishing emails and text messages </h3><p>Watch out for messages that look like they’re coming from reputable sources. These messages are often an attempt to get you to open a malware-infected attachment or click through to fake websites where you enter your personal information.  </p><p>If you receive a suspicious-looking message, do not open it. When possible, report as “phishing” or “spam” and then delete the message. Try not to click on any links or attachments if you open a phishing message by accident. For additional protection, consider adding malware-protection software to your devices. <sup>[2] [4]</sup> </p><h3>Data breaches </h3><p>Data breaches occur when identity thieves gain access to sensitive data, like usernames, passwords, addresses, and credit card information. You may hear about a data breach on the news, or if you have a compromised account, you may be notified to take special action like resetting your password.  </p><p>You can minimize risk after a breach by using different login information for all of your accounts and signing up for identity theft protection services. These services will track your accounts, monitor the dark web for your personal information, and help you recover after the breach. <sup>[2] [4]</sup> </p><h3>Mail theft </h3><p>Fraudsters may also steal from your mailbox, trash, or recycling to get their hands on documents like your bank and credit card statements. If they find personal and financial information in the paperwork, they may be able to use it to make purchases, open new accounts, or run other scams. Thieves may also intercept credit card offers or other credit promotions to open new accounts in your name.  </p><p>Shred mail and financial statements before tossing them in the trash to prevent private data from getting into the wrong hands. Or sign up for digital statements to reduce the amount of mail you get. To further deter thieves, consider setting up cameras and locking your garbage and recycling cans.  </p><p>If you suspect someone has stolen or tampered with your mail, keep an eye out for fraudulent activity. Check your financial statements for fraudulent charges, look through your credit reports for new accounts opened in your name, and review your health insurance claims for fraud. Alert your bank and all three credit agencies, so they can take appropriate action to close your accounts and freeze your credit file. Consider calling the police to file a report. <sup>[2] [4]</sup> </p><h3>Credit card theft </h3><p>Thieves may be able to steal your credit card information<b> </b>using different methods. For instance, this may happen online when you enter your credit card information without using a secure internet connection or when you enter your card details into an unreliable website. Hackers may intercept information like your credit card number, security code, and expiration date.  </p><p>Thieves can use various methods to steal your credit card information. They might watch you type your card details in public settings such as libraries or cafes. They could also call you and attempt to phish for your credit card details or steal your smartphone to access the cards stored in your digital wallet. Additionally, new technology allows thieves to scan your card information while it’s inside your wallet or when you use it to make a purchase in public.  </p><p>If you suspect you’ve been a victim of credit card theft, contact your card issuer immediately. The issuer can cancel any fraudulent charges made on your card. Consider reporting the theft to the police, especially if your wallet or phone was stolen. You can also contact the credit bureaus to freeze your credit.<sup>[2] [4]</sup> </p><h2>7 steps to prevent identity theft</h2><p>You can never be too careful when it comes to protecting yourself from identity theft. Below are seven steps you can take to help protect yourself from identity theft and keep your information safe. </p><h3>1. Protect your devices with a password </h3><p>Add a password to your smartphone, laptop computer, tablet, and any other devices you use to connect to the internet. In the unlucky chance your device is lost or stolen, a password helps prevent access to personal information, mobile wallets, apps, and other private data stored on your device.   </p><p>For added security, consider using biometric tools like facial recognition or touch identification, commonly found on mobile phones, tablets, and some laptops. Be sure all device-tracking settings are turned on so you can locate your device if it goes missing. Some devices also allow you to remotely lock access or wipe all data. <sup>[2] [4]</sup> </p><h3>2. Use strong passwords </h3><p>Secure your online accounts and apps with strong passwords that include a mix of numbers, letters, and characters. Stay away from easy-to-guess passwords like pet names or important dates. For added security, consider using computer-generated passwords. A password manager, like iPhone’s Keychain, can help keep passwords safe.  </p><p>If you’re unable to use a strong password, experts recommend using a lengthy phrase with numbers and characters to better secure your private information. Try not to use the same password on multiple sites or apps. That way, if your password is compromised, criminals won’t be able to hack multiple accounts. <sup>[2] [4]</sup> </p><h3>3. Use two-step authentication </h3><p>Two-step authentication provides an additional layer of protection beyond a standard username and password. When you have two-step authentication turned on, you’ll sign into your account using your credentials and then provide additional information to verify your identity. For instance, you may need to type in a personal identification number (PIN) or a code sent to your phone or email.  </p><p>More advanced apps, like banking tools, may even allow you to add facial recognition or fingerprinting for additional protection. Ideally, two-step authentication should be used whenever available. At the very minimum, you should add two-step authentication to protect financial information in your online credit card and bank accounts, P2P payment apps, and social media accounts. <sup>[2] [4]</sup> </p><h3>4. Protect personal information </h3><p>Identity thieves are typically after personal details like your name, address, phone number, date of birth, and Social Security number. Keep your guard up when entering personal information into websites and apps—especially if you’re using a public internet connection. Don’t let anyone see what you’re typing, and consider adding a privacy screen protector to shield your device from prying eyes. Install a VPN, or virtual private network, for further protection.  </p><p>When sharing personal information by phone, be aware of who may be listening to your conversation. It’s also important to protect your personal documents. Don’t carry private paperwork like your Social Security card or birth certificate. And be sure to shred ATM receipts, credit card statements, actual credit cards, and bank statements before throwing them away. Criminals have been known to rummage through garbage and recycling bins looking for sensitive information. <sup>[2] [4]</sup> </p><h3>5. Be careful when disclosing financial information </h3><p>Never give your credit card number over the phone, unless you made the call and you’re certain you&#39;re dealing with a legitimate company. And if a random caller contacts you, don’t provide any private or personal information—like your full name, birth date, or Social Security number. Learn how to spot the <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-protect-yourself-from-scams"><b><u>tricks scammers use</u></b></a>.   </p><p>For example, representatives from a legitimate lender or financial institution will never ask you to wire them money over the phone. Thieves may also try to access your financial information online or over text. You may receive a phishing email asking you for credit card information to cover the cost of an order or shipping. Never provide financial details online unless you’re sure the company is trustworthy. <sup>[2] [4]</sup> </p><h3>6. Be mindful on social media </h3><p>Think carefully about what you post on Facebook, Instagram, TikTok, LinkedIn, and other social media apps. Identify thieves may use information shared on social media to hack usernames and passwords. For example, avoid sharing your pet’s first name on social media, especially if you’ve used the name to answer a security question.  </p><p>Additionally, watch out for connection requests or messages from people you don’t know. These could be attempts to steal your information. Sharing personal details or financial information over social media (or dating apps) is also not advised.  </p><h3>7. Regularly review credit reports and financial statements </h3><p>Review your bank account and credit card statements monthly. Notify your financial institution, bank, or credit card company if you find any unauthorized transactions. Make sure you review your <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-read-your-credit-report-identify-red-flags"><b><u>credit reports</u></b></a> at least every few months. You can access free copies of your credit reports once a week from the three major credit bureaus—Equifax, Experian, and TransUnion—at <a href="http://annualcreditreport.com/"><b><u>AnnualCreditReport.com</u></b></a>. <sup>[2][4]</sup> </p><p>Alert the credit bureau in writing if you find errors or signs of identity theft, such as new accounts you didn’t open. Follow up with the credit bureaus until they remove any inaccurate information. If you lose your wallet, credit card, or debit card, don’t wait for a fraudulent charge before contacting your bank or financial institution. Immediately freeze the accounts to prevent fraudsters from making purchases, and sign up for a credit-monitoring service that will alert you about suspicious transactions.<sup> [2][4]</sup> </p><h2>How to report identity theft</h2><p>Falling victim to identity theft can be a stressful time—both mentally and financially. You aren’t alone, and there are processes in place to help you recover. </p><h3>1. Add a fraud alert to your credit report </h3><p>A fraud alert prevents an identity thief from opening up more accounts. As soon as you make the report to one credit bureau, that bureau is required to notify all the others on your behalf. You can contact any of three major credit bureaus to place a fraud alert on your credit report:  </p><ul><li><p>Equifax: (800) 685-1111 </p></li><li><p>Experian: (888) 397-3742 </p></li><li><p>TransUnion: (800) 909-8872 </p></li></ul><p>Keep in mind, that a fraud alert essentially freezes your credit report. You won’t be able to open new accounts unless you contact the bureau and ask it to temporarily lift the security freeze. This is helpful in preventing fraudsters from opening new accounts, but it adds a step if you need to apply for credit.<sup>[5]</sup> </p><h3>2. Report and close all fraudulent accounts and activity </h3><p>Contact the fraud department of each company where a fraudulent account was opened in your name. Ask for written confirmation that the accounts have been closed. Report unauthorized charges on existing accounts; your lender may cancel any unauthorized charges and change your account number. <sup>[2] [4]</sup> </p><h3>3. File a police report </h3><p>The police report creates an official record that you were the victim of a crime. This will support your claims with the credit-reporting agencies and creditors as you work to remove fraudulent debts or accounts from your credit record. <sup>[2][4]</sup> </p><h3>4. File a complaint with the Federal Trade Commission </h3><p>Filing a report with the FTC helps the government track and respond to identity theft. You can file a report online or by calling (877) 439-4388. <sup>[2][4]</sup> </p><h2>The bottom line </h2><p>Identity theft is a very serious matter that can cost you time and money. Depending on the severity you may need to get the police involved, and it can take months or even years to recover. New scams and technology to steal your data occur frequently.  </p><p>Take steps to protect your personal and financial information, and consider using one of the many identity theft protection services available for added security. If you suspect you’ve been a victim of identity theft, take action immediately, or visit <a href="http://identitytheft.gov/"><b><u>identitytheft.gov</u></b></a><b> </b>to learn how to report identity theft and get help with a recovery plan. <sup>[2][4]</sup> </p><hr/><ol><li><p><a href="https://www.iii.org/fact-statistic/facts-statistics-identity-theft-and-cybercrime"><u>Insurance Information Institute</u></a>. “Facts + Statistics: Identity theft and cybercrime.” </p></li><li><p><a href="https://www.usa.gov/identity-theft"><u>U.S. Government</u></a>. “Identity theft.”  </p></li><li><p><a href="https://www.irs.gov/newsroom/taxpayer-guide-to-identity-theft"><u>Internal Revenue Service</u></a>. “Taxpayer guide to identity theft.” </p></li><li><p><a href="https://consumer.ftc.gov/articles/what-know-about-identity-theft"><u>Federal Trade Commission</u></a>. “What To Know About Identity Theft.” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-do-i-do-if-i-think-i-have-been-a-victim-of-identity-theft-en-31/"><u>Consumer Finance Protection Bureau</u></a>. “What to do if I’ve been a victim of identity theft?” </p></li></ol><p></p>

Sticking to a budget can be challenging, but having a clear goal and rewards can help you stay on track.

<p>Sticking to a budget can be challenging. The good news is that making mistakes is part of the learning process. When you start to get the hang of it, you’ll have a better understanding of your relationship with money and more control over your personal finances. We can’t give you a magic spell to keep your budget on track, but we’ve rounded up a few tips that can help you overcome challenges and stay inspired to stick to your budget.<sup>[1]</sup> </p><h2>Why it&#39;s important to stick to your budget </h2><p>A <a href="https://www.lendingclub.com/resource-center/personal-finance/simple-steps-to-building-a-better-budget"><b><u>budget is an important tool</u></b></a> to help you keep your finances on the right path. But using a budget can also help you in other ways. Here’s a closer look at why sticking to a budget matters.<sup>[1]</sup></p><ul><li><p><b>Cover your expenses: </b>A budget helps ensure you have enough money to cover your bills and other financial responsibilities like housing, utilities, and transportation.<sup>[1][2]</sup>  </p></li><li><p><b>Track your spending:</b> Your budget provides visibility into your spending, so you can see where your money is going and pinpoint areas where you may be overspending.<sup>[1][2]</sup>  </p></li><li><p><b>Reach financial goals:</b> Whether you want to save for long-term goals, like retirement, or short-term goals, like a home repair project, a budget gives you the opportunity to turn your goals into reality.<sup>[1][2]</sup>  </p></li><li><p><b>Manage your debt:</b> A budget provides a clear picture of your debt, helping you determine the best path to <a href="https://www.lendingclub.com/resource-center/personal-finance/debt-snowball-vs-avalanche-which-should-you-choose"><b><u>tackle debt head-</u></b></a><a href="https://www.lendingclub.com/resource-center/personal-finance/debt-snowball-vs-avalanche-which-should-you-choose"><b><u>on</u></b></a>.<sup>[1] [3]</sup> </p></li><li><p><b>Improve your relationship with money:</b> A well-thought-out budget can teach you to be more intentional with your money choices, increase discipline, and help you understand what you truly value.<sup>[1][2]</sup>  </p></li><li><p><b>Reduce financial stress: </b>Paying bills and planning for the future can be stressful, but effective budgeting can help decrease money woes and create positive feelings about your financial future.<sup>[1][2]</sup>   </p></li></ul><h2>5 ways to stick to your budget</h2><h3>1. Get excited about your goal </h3><p>Although <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-stop-living-paycheck-to-paycheck"><b><u>paying your bills on time</u></b></a> and <a href="https://www.lendingclub.com/resource-center/personal-finance/your-emergency-fund-the-essential-guide"><b><u>saving for an emergency fund</u></b></a> are certainly solid budgeting goals, sometimes it helps to have a goal that you can get really excited about. Maybe it&#39;s saving for a kitchen remodel, planning a wedding, or putting money away toward a down payment on a house. As you think about creating your budget, choose a goal that will keep you motivated, even when it gets tough to stay on track.<sup>[4] </sup> </p><h3>2. Set a date </h3><p>Choosing a deadline to reach your goal is often a good way to stay on top of your budget. When you have a tangible finish line, like a dream vacation, you’ll have something to look forward to at the end of a certain amount of time. You can also set milestones along the way to celebrate your progress for extra motivation.  </p><h3>3. Create a visual reminder that you interact with daily</h3><p>From a simple spreadsheet to budgeting apps or even your bank’s online services, you’ve got many tools available to help you manage your budget. Just be sure to choose a tool that requires you to engage with your budget daily. Maybe you receive a reminder from an app every morning or put $20 a day in a jar. Research different budget tools and ideas to find the best fit for your lifestyle and money goals. Don’t be afraid to switch things up if something isn’t working for you. </p><h3>4. Remember why you created your budget </h3><p>Sometimes it can be hard to stick to a budget when you lose sight of why you set financial boundaries for yourself in the first place. When you get the urge to veer from your budget and spend impulsively, try to pause and remind yourself of your original goal. You can try techniques like putting up sticky notes, creating a vision board, or sending yourself “countdown” reminders.<sup>[4] </sup> </p><h3>5. Build in some fun </h3><p>Budgeting is a great way to save for serious goals and keep up with your bills. But it doesn’t have to be all work and no play. Try adding some fun things to your budget like an occasional meal out, special gift, or other treat. Rewarding yourself occasionally, like getting takeout only on Fridays, can help give you something to look forward to. It also makes getting through a week (or month) of sticking to a budget a little bit easier.  The </p><h2>Bottom line </h2><p>Making a realistic budget often involves setting a goal, making a plan, and finding ways to stay the course. If you’re a beginner budgeter, remember it’s okay to start small. Try saving up $100, paying off a small bill, or skipping takeout on weeknights. </p><p>Once you’re feeling more confident in sticking to a budget, you can work your way up to bigger financial goals. If you’re feeling overwhelmed about where to start, many professionals are available to help, including financial coaches, financial advisors, or certified public accounts (CPAs).<sup>[1][2][3]</sup> </p><p></p><hr/><ol><li><p><a href="https://www.consumerfinance.gov/about-us/blog/budgeting-how-to-create-a-budget-and-stick-with-it/"><u>Consumer Financial Protection Bureau</u></a>. “Budgeting: How to create a budget and stick with it.” </p></li><li><p><a href="https://consumer.gov/managing-your-money/making-budget#what-to-know"><u>Consumer.gov</u></a>. “Making a Budget.” </p></li><li><p><a href="https://www.consumerfinance.gov/about-us/blog/how-get-handle-debt/"><u>Consumer Financial Protection Bureau</u></a>. “How to get a handle on debt.” </p></li><li><p><a href="https://files.consumerfinance.gov/f/documents/cfpb_your-money-your-goals_SMART-goals_tool_2018-11.pdf"><u>Consumer Financial Protection Bureau</u></a>. “Setting SMART goals.” </p></li></ol><p></p>

Are you making only minimum payments on multiple credit card and other debt balances? If you’ve got a bit of extra cash earmarked for debt repayment and need a little motivation to start paying those balances down, now could be just the right time to consider putting the debt snowball method into action.

<p>Are you making only minimum payments on multiple credit card and other debt balances? If you’ve got a bit of extra cash earmarked for debt repayment and need a little motivation to start paying those balances down, now could be just the right time to consider putting the debt snowball method into action.</p><h2>What is the debt snowball method &amp; how does it work?</h2><p>The debt snowball method is a debt payoff strategy that advocates paying down debt starting with your <i>smallest</i> balance first. While you continue making minimum payments on all your cards, initially, you’ll need extra cash to pay more toward your smallest debt. Once your first smallest balance is completely paid off, you’ll roll all the money you were using to pay that debt into paying down your next smallest debt (accelerating or “snowballing” your paydown), and so on, until all your debt is eliminated.</p><p>The idea is that by focusing on paying off smaller debts first you will build the motivation and momentum needed to fight debt payoff fatigue and continue rolling your debt repayment money into the next debt until they’re all gone. </p><p>The quick win from paying off your smallest balance first feeds your motivation to keep going. And as you watch your debt balances decline, the idea is that as you make even more progress this motivation to pay down more continues.</p><h2>6 Steps to start paying down your debt with the snowball method</h2><p>Here are six steps you can use to quickly put the debt snowball method into action:</p><h3>1. List your debts.</h3><p>Write down the name of all credit cards and outstanding loans (e.g., personal, auto, medical), along with their balances and minimum monthly payments. For example, say your debt includes the following:</p><ul><li><p>Auto loan: $3,000 balance and $350/mo minimum payment</p></li><li><p>Personal loan: $700 balance and $125/mo minimum payment</p></li><li><p>Credit card: $10,000 balance, $200/mo minimum payment</p></li></ul><h3>2. Sort debt balances from smallest to largest.</h3><p>Using our example, you would reprioritize your debt balances for payoff from lowest to highest, like this:</p><ul><li><p>Personal loan with $700 balance—plan to pay this one off first</p></li><li><p>Auto loan with $3,000 balance—pay off second</p></li><li><p>Credit card with $10,000 balance—pay off last</p></li></ul><h3>3. Pay extra toward your smallest debt.</h3><p>Continue paying the monthly minimums on all your debt balances (this is essential to avoiding late fees and maintaining your credit score). Then, once you’ve met the minimum payment obligation for each of your balances, put any additional debt repayment funds you have toward your <i>smallest</i> balance first to begin accelerating debt paydown. Our example would look like this:</p><ul><li><p>Personal loan with $700 balance—make minimum payment of $125 + extra amount</p></li><li><p>Auto loan with $3,000 balance—make minimum payment of $350/mo</p></li><li><p>Credit card with $10,000 balance—make minimum payment of $200/mo</p></li></ul><p>So, you would continue paying the required minimums of $350 and $200 toward your auto loan and credit card balances, respectively. Then suppose you stop ordering in expensive takeout meals, freeing up an extra $300 per month. You would add this extra $300 you’re no longer spending on takeout to the $125 monthly minimum you’re making on your personal loan, effectively accelerating, or “snowballing,” your debt repayment by $425 per month.</p><h3>4. Continue until your smallest debt balance is zero.</h3><p>Continue paying the most you can each month toward your smallest debt until it reaches zero balance. If you’re able put an extra $300 toward that balance over consecutive months, you would have completely paid off your personal loan in less than two months. Making progress feels good—which provides you the motivation you need to start paying down your next debt balance.</p><h3>5. Snowball the paid off payment amount from your first debt into your next smallest balance.</h3><p>Now that you’ve quickly eliminated your smallest debt first, repeat the same process on your next smallest debt balance, in this case, the auto loan. Continue making the minimum payment on both remaining debt balances while redirecting the $425 you used to make on your now paid off personal loan to accelerate debt repayment on the auto loan, your next smallest balance. </p><p>This is where the snowball method really starts to kick in. Now, you’re already paying the minimum payment of $350, plus the additional $425 you’re rolling into that for a combined auto loan debt repayment amount of $775. If you kept up this pace of paydown over consecutive months, your auto loan could be completely paid off in less than four months. (Of course, all of this assumes you’re not adding to your balances.)</p><h3>6. Keep going until all your debt balances are eliminated.</h3><p>Repeat the debt snowball method outlined above until your auto loan debt is paid off. Then continue the strategy of rolling the payments you used to make on your personal and auto loans into your credit card balance—the last debt on your list. The idea is to keep paying, rolling, and accelerating debt repayment funds from one debt payment to the next, until all the debts you’ve targeted for payoff have been eliminated, one at a time.</p><h2>Who should use the debt snowball method?</h2><p>The debt snowball method can be a good strategy if you need some quick wins early in the debt elimination process to help you get motivated. Paying off that first small debt can feel extremely rewarding, and provide the momentum you may need to continue until all your debts are paid.</p><h2>Who should not use the debt snowball method?</h2><p>The debt snowball method of debt repayment is not for everyone. Keep in mind the debt snowball may not work for you if:</p><ul><li><p>You’re unable to consistently pay more than the minimum amount on your smallest debt balance each month while also making the minimum payments on all your other debts throughout the process.</p></li><li><p>You’re unable to continue rolling the accumulated debt repayment amounts into your </br>next smallest balance to achieve the “snowball” effect.</p></li><li><p>You’re more concerned with overpaying on interest. If your smallest debt balances (which you’ll start paying off first with this method) carry lower interest rates than your largest debt balances, there is an increased likelihood of paying more money in interest because the debt snowball method doesn’t take interest rates into account.</p></li><li><p>You’re unable to stop accumulating more debt while working on the debt snowball process.</p></li></ul><h2>7 Common mistakes to avoid when using the snowball method</h2><p>If you’re thinking about giving the debt snowball method a go, here are some common missteps to watch for:</p><h3>1. Trying to pay off multiple debt balances at once.</h3><p>The debt snowball method is all about tackling one debt at a time, starting with your lowest balance debt first. It may be tempting to put additional cash toward more than one debt at the same time, but this could cause you to get overwhelmed, slow down your progress overall and put your forward momentum in jeopardy.</p><h3>2. Missing other important payments.</h3><p>While you focus on using the debt snowball method to pay down your larger debt balances, be sure to keep a close eye on your other household bills and debt obligations. You don’t want to put yourself in the position of missing rent, mortgage, utility, or other important payment that could cause you to incur late fees, your account to go into collections, or risk the roof over your head.</p><h3>3. Not rolling over your payments.</h3><p>To effectively use the debt snowball method, once you’ve fully paid off a debt balance it’s essential you continue rolling the entirety of those now available debt repayment funds into your next smallest debt payment. The temptation to use your debt repayment money for anything other than debt repayment can be strong but doing so could impact your motivation and momentum toward becoming debt free.</p><h3>4. Adding to your debt.</h3><p>Do whatever you can to prevent yourself from accumulating additional debt while you’re using the debt snowball method. It helps to have a realistic budget in place and set some boundaries around your spending, especially as you first get going with the debt snowball method. Also, you can try leaving your credit card at home, relying exclusively on cash instead. As an extra deterrent, try removing your credit card information from your favorite online shopping sites.</p><h3>5. Using emergency savings to make debt payments.</h3><p>Hold off dipping into your emergency savings to finance your debt snowball payments. Regardless of the total amount of debt you may carry, it’s always prudent to have at least three to six months of living expenses set aside for any unexpected financial setback. If you don’t have an emergency savings account yet, consider building one before you begin paying down debt. And an emergency savings account can provide great peace of mind as well.</p><h3>6. Forgetting to track your progress.</h3><p>Part of the magic of the debt snowball method is the ability to see your debt balances decrease over time. Tracking your progress and recognizing how far you’ve come can help you better visualize the forward momentum and success that comes when you stick to it.</p><h3>7. Giving in to debt paydown fatigue.</h3><p>Paying down debt is no easy feat, so remember you’re doing this for a reason. Make a list of financial and personal benefits you expect to gain by paying off your debt: an improved credit score, greater financial security, access to better credit rates and terms. Write down and regularly revisit your reasons for paying off debt. Seeing your goals on paper can help fight debt paydown fatigue.</p><h2>Alternatives to the debt snowball method</h2><p>Many have found success with the debt snowball strategy, however, it’s not the only way to go about eliminating debt. One of these other following strategies may work better for you:</p><h3>Debt avalanche method</h3><p>The debt avalanche method is a debt repayment strategy that has you focus on paying down the balances with the highest APR first. Like the debt snowball method, the <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-the-debt-avalanche-method-and-how-does-it-work">debt avalanche method helps you stay motivated</a> for paying down debt through a process that builds your confidence and momentum as see your debt balances decrease. But by tackling your high interest rate debt first—the debt that’s costing you the most money—you can reduce the total amount of interest you would otherwise have to pay over time.</p><h3>Debt snowflake method</h3><p>The debt snowflake method involves finding daily micro-savings that can help you slowly chip away at debt. The small savings you can find when, for example, you split lunch with a friend or use a cash-back app. Compatible with the debt snowball or the debt avalanche, the concept with the debt snowflake method is that finding and capturing tiny savings over time can have an outsize effect. And you must be quick to catch them: snowflakes disappear quickly.</p><h3>Refinancing your debt with a personal loan</h3><p>In some cases, it might make sense to refinance your existing debt by taking out a personal loan. This could be a good option if your credit score has improved, or you can get a lower interest rate on a personal loan than you have with your existing lines of credit.</p><h3>Consolidating debt</h3><p>With a debt consolidation loan, you <a href="https://www.lendingclub.com/personal-loan/debt-consolidation">roll all your debts into a single loan</a> and then pay down your debt with one fixed monthly payment. Depending on your credit score, you may be offered a lower interest rate, lowering your total cost of debt overall.</p><h2>The bottom line</h2><p>If you’re juggling thousands of dollars of debt, it’s common to feel like your financial life is out of control. Fortunately, the secret to gaining control over your money could be simpler than you think. Using the debt snowball method to tackle one debt balance at a time starting with your smallest balance first can make paying down debt feel much more manageable. </p><p>If motivation is what you need along with a solid plan that can help accelerate the debt paydown process as you move along, the debt snowball method could be the way to finally eliminate your debt.</p><h2>Debt Snowball Method FAQs</h2><h3>How do I get out of debt with the debt snowball method?</h3><p>To get out of debt with the debt snowball method, list all your existing debts from smallest to largest, continue making the minimum payments on all your debts while allocating additional money toward the smallest debt first until it’s paid in full. Repeat this process using the next smallest debt until all debts are paid off.</p><h3>Which is better: debt snowball method or debt avalanche method?</h3><p>Whether you choose the debt snowball method or the debt avalanche method to eliminate debt depends on your financial goals. If paying less in interest and saving money over time is your primary goal, the debt avalanche strategy will have you paying down high-interest rate debt first, saving you on the cost of financing. If you need a debt paydown strategy that will help you build momentum and keep you motivated, the debt snowball method will have you paying off your lowest balances first, providing quick wins that can help you stick with it.</p><h3>Is it better to pay off small debts first?</h3><p>When it comes to paying off large amounts of debt spread over multiple account balances, paying off small debts first can provide the positive reinforcement needed to continue making debt repayment less of a burden and help you stick with it. Every debt that’s paid off brings you closer to the realization that debt elimination is within reach which helps you stay motivated to keep paying down even more debt until it’s gone.</p><p></p>

Having a money plan in place before you turn in your resignation can make the transition smoother. Learn ways to prepare your finances before you go.  

<p>Many people dream of quitting the 9 to 5 hustle. For some, the idea of going into business for themselves or taking a travel-sabbatical sounds exhilarating. Others may need to exit a toxic workplace before they’ve found a new job with a different employer. Whatever the reason for wanting to quit your job, if you’re like most, you’ll still have bills to pay. </br></br>Quitting your job without a plan for keeping up with your financial obligations could prove challenging without a regular paycheck, steady benefits, or a smart exit strategy. So, if you’re already plotting your resignation, here are six money moves to consider first—and well before you quit your job for good. </p><h2>6 Steps to Financially Prepare to Quit Your Job</h2><p>The drop in income that usually comes with quitting a job can cause a lot of anxiety and fear. Along with reducing spending, increasing saving, and paying off debt, having an exit strategy can make the transition smoother. </p><h3>1. Build up your emergency fund.</h3><p>Experts recommend having three to six months of living expenses in <a href="https://www.lendingclub.com/resource-center/personal-finance/your-emergency-fund-the-essential-guide">emergency savings</a> to cover surprise bills or ongoing costs if you’re out of work. If your essential expenses are roughly $3,000 per month, that would mean having at least $9,000 to $18,000 set aside in emergency savings before quitting your job. However, if you plan to have no income for longer than six months or want more of a financial buffer, setting aside even more is recommended. </p><p>According to April 2024 data from the <a href="https://www.bls.gov/news.release/pdf/empsit.pdf">Bureau of Labor and Statistics</a>, it’s been taking about five months on average for unemployed workers to find a new job. Saving up as much money as possible can provide a buffer in case it takes you longer than expected. </p><h3>2. Create a bare-bones budget.</h3><p>A bare-bones budget means cutting your spending down to the bare minimum—covering only the most basic, necessary expenses—with minimal to no discretionary spending. Bare-bones budgets are very restrictive, so they’re typically used only as a temporary measure (not as a long-term budget plan) to dramatically reduce spending. Cutting back to just the basics for a few months (or more) before quitting your job can help you build savings faster and help your savings last longer once you decide to leave.</p><p>Start building a bare-bones budget by isolating your necessary expenses from your other spending. Your credit card and bank statements can help you quickly identify and highlight those transactions. Basic expenses generally will include items such as rent or mortgage payments, utilities, health insurance, groceries for meals cooked at home, childcare, minimum debt payments, and basic transportation. Once you’ve identified your necessary expenses, it’s much easier to decide what expenses should be cut. </p><p>Ordinarily, it makes sense to <a href="https://www.lendingclub.com/resource-center/personal-finance/50-30-20-rule-the-easy-budget-method-that-works">budget for things you want or enjoy</a>, such as concerts, dining out, or streaming services. But when you’re reducing your spending to save as much money as you possibly can before quitting your job, every penny counts. Contributions to a retirement plan should remain a priority, however, this may mean temporarily reducing the amount you set aside each month.</p><h3>3. Consider your options for medical insurance.</h3><p>Once you quit your job, you’ll continue to need medical coverage in the event of injury or illness. COBRA allows you to continue coverage (usually for up to 18 months) after you leave your employer. You can also buy an Affordable Care Act (ACA) plan through a public exchange or the health insurance marketplace. Or switching to your spouse or partner’s plan may be a possibility. </p><p>When it comes to cost, marketplace plans are usually more favorable, however, COBRA has no pre-existing medical conditions clause that would prevent you from receiving treatment. If you’re under age 26 you may be able to get coverage under your parent’s health insurance plan.</p><h3>4. Consolidate high-interest debt.</h3><p>Well before you decide to leave your job, plan for how you’ll continue paying off debt, such as credit cards and student loans. For example, while you’re still employed, you might consider taking out a fixed-rate personal loan to <a href="https://www.lendingclub.com/personal-loan/credit-card-consolidation-loan">consolidate multiple high-interest credit cards</a> into one single monthly payment. Consolidating at a lower interest rate than you’re paying on all those cards combined could reduce your overall cost of borrowing.   </p><p>After you leave your job, in some instances student loan borrowers may be able to pause payments with a deferment or hardship forbearance during an employment gap, depending on whether you have a federal or private student loan. Check with your lender if you think you may have trouble repaying your student loans. Generally, for federal loans, you must be receiving unemployment benefits or actively seeking work to get an unemployment deferment. Also, interest may still accrue even with payments suspended, increasing your balance. Making interest-only payments during deferment or forbearance can prevent your loan balance from growing. </p><h3>5. Decide what to do with your 401(k).</h3><p>If you have a 401(k) or other employer-sponsored retirement plan, log into your account to review your balance and other details that may require attention. For example:</p><ul><li><p><b>Will you need to do an IRA rollover?</b> Typically, you can keep your 401(k) with your former employer, roll it over into an IRA, or cash out the account when you leave your job (though cashing out may result in a substantial tax penalty). Rolling the funds into an IRA is usually best to avoid penalties. Be sure to compare the fees from your existing plan versus an IRA and make a cost-effective choice.</p></li><li><p><b>Did you borrow money from your 401(k)?</b> While some employer plans may allow you to continue making installment payments on a 401(k) loan, others may expect immediate repayment when you leave. If you don’t repay what is owed according to your employer plan, it could result in an unexpected tax bill.</p></li></ul><p>If you leave your retirement savings with your employer, just don’t forget about it. A <a href="https://www.hicapitalize.com/resources/the-true-cost-of-forgotten-401ks/">2023 study</a> found that there are an estimated 29.2 million “forgotten” 401(k)s representing $1.65 trillion in assets. Even if your account is small, it’s worth keeping an eye on given the potential long-term growth you could see from those returns.</p><h3>6. Start your new business (or job search) while still employed.</h3><p>A common exit strategy is to stay at your current job to keep a steady income flow until you’ve either received a new offer from another employer or are truly ready to launch out on your own. If you’re not anxious about making your rent or mortgage payment, you’ll be able to focus your attention on what is important, such as making sure your idea is viable, pricing your services, or taking your time to interview potential new employers. It will also give you time to prepare for whatever comes next: opening a business bank account, setting up bookkeeping and tax software, creating a go-to-market plan, or obtaining a certification.</p><h2>The Bottom Line</h2><p>Quitting a job before lining up another one was once considered taboo. Ultimately, it’s a personal decision, and depending on the circumstances, it could be the right one for you. If you want to plan for what to do before quitting your job, the steps above can help get your money in order before you make a move. </p><p>With enough savings in the bank, debt and expenses under control, and an exit strategy in place before you say goodbye, you’ll have more peace of mind whenever you finally do decide to quit. </p>

A recent survey shows 60% of U.S. adults, including more than four in 10 high-income earners, are living paycheck to paycheck. How can we all get to a place where we’re empowered with our money?

<p>A <a href="https://ir.lendingclub.com/news/news-details/2023/60-of-Americans-Now-Living-Paycheck-to-Paycheck-Down-from-64-a-Month-Ago/#:~:text=As%20of%20January%202023%2C%2060,improved%20some%20consumers'%20financial%20situations.">recent LendingClub survey</a> found that 60% of U.S. adults, including more than four in 10 high-income earners, are living paycheck to paycheck. While not entirely surprising given the economic volatility of the past few years, this still translates into a large segment of the population who are carrying a financial backlog into the foreseeable future and who may need some guidance and support. How can we all get to a place where we’re empowered with our money? Let’s first start with a definition.</p><h2>What Does It Mean to Have a Solid Financial Foundation?</h2><p>Having a solid financial foundation means owning more than you owe (positive net worth) and having more money coming in than going out (positive cash flow). Building a solid financial foundation starts with taking care of your immediate needs in a way that also supports the financial goals you’ve set for your future. This means not only setting some basic financial goals, but also being responsible with your daily purchasing habits on top of long-term financial planning. At first, taking even the smallest of steps toward improving the way you manage money can help you make big strides in the direction you want to go.</p><h2>5 Steps to Build a Strong Financial Foundation</h2><p>Putting a strong financial foundation in place is surprisingly straightforward. To help you get started, give your confidence a boost and set yourself up for success using this five-step method to build a strong financial foundation.</p><h3>1. Get organized</h3><p>The first step is to know exactly where you are right now with your money. You’ll need to round up some documentation, but this one-time exercise can provide an invaluable baseline view into your financial health.</p><p>Start by building a personal balance sheet—a summary of your assets (what you own) and liabilities (what you owe). Your assets may include your bank and investment account balances, the market value of your home, vehicles, valued possessions, and more. </p><p>Your liabilities are the debts that you owe, such as home and auto loans, personal loans, student loan, credit card debt, and so on. List out each asset and liability individually in a document. This is your personal balance sheet. Once you’ve assembled your personal balance sheet, add up all of your assets and subtract your liabilities to come up with your net worth.</p><img src="//images.ctfassets.net/orqped9h4wgz/4kMlVRcmu7HkKLccSWbvbI/bc0b5f13036cac0f2a5a498da7b841e1/balance-sheet-assets-liabilities.png" alt="Balance sheet example of potential assets and liabilities"/><p>Now let’s look at your weekly and monthly cash flow—your income minus your expenses over a set period of time. Use a <a href="https://files.consumerfinance.gov/f/documents/cfpb_your-money-your-goals_cash_flow_budget_tool_2018-11_ADA.pdf">cash flow budget template</a> to see how much money is coming in and how much is going out. On some weeks you may see more expenses going out than income flowing in. Use this template to see how adjusting your weekly expenses could <a href="https://files.consumerfinance.gov/f/documents/cfbp_your-money-your-goals_adjust_cash_flow_tool_2018-11_ADA.pdf">improve your cash flow</a>.</p><p>Lastly, check in on your credit health by requesting a free copy of your credit report from each of the three major credit bureaus. Carefully review all three of your credit reports, identify any errors or inaccuracies and, if possible, contact each of the credit bureaus—TransUnion, Experian, Equifax—to have them corrected. If the same error appears on all three of your reports, you’ll need to contact each credit agency separately to make corrections. </p><h3>2. Protect yourself</h3><p>Now that you know where you stand, it’s essential to set up a plan that will keep you financially safe along your journey.</p><h4>Emergency Fund</h4><p>If you don’t already have one, focus on this first. (Check out our <a href="https://www.lendingclub.com/resource-center/personal-finance/your-emergency-fund-the-essential-guide">emergency fund essential guide</a>.) An emergency fund is a must-have for keeping you afloat financially (not dipping into debt) when faced with an unexpected expense, temporary loss of employment, or any other financial setback.</p><h4>Insurance</h4><p>Check your insurance coverages—home or rental, auto, health, life and disability. Insurance policies could limit your out-of-pocket expenses when the unforeseen occurs such as surprise medical bills, a car accident, disability, or death of a wage-earner. If you already have coverage in place, review your policies to ensure they still meet your needs or warrant an update since you purchased the insurance. It’s smart to shop around and compare coverage across a few insurers every couple of years. You may be able to find a less expensive policy that provides the same or better coverage.</p><h4>Estate Plan</h4><p>Create or update your estate plan, an action plan and legal document used to determine what happens to your assets while you’re alive and after you die. Estate plans may include naming your heirs, dividing up your assets, creating a living trust, and assigning guardians for minors. Laws vary by state, so you may want to consult with an estate planning attorney to help.</p><h3> 3. Prioritize reducing high interest rate debt</h3><p>While some debt may benefit your financial situation (such as a home loan), be mindful about over-extending yourself because paying interest on money you’ve borrowed can keep you from putting money toward your other important financial goals. If you have high interest revolving credit card debt, focusing on paying it down is a smart way to eventually free up cash to put toward savings, and building a strong financial foundation.</p><p>An accelerated debt repayment strategies like the <a href="/resource-center/personal-finance/steps-to-decimate-debt-the-debt-snowball-method">debt snowball method</a> or the debt avalanche method can help you get started. And to simplify your debt payments and possibly lower your interest rate, look into <a href="https://www.lendingclub.com/personal-loan/debt-consolidation">consolidating multiple loans or credit cards</a>.</p><h3> 4. Define your most important financial goals</h3><p>Now that you’ve put the pieces in place to start building a strong financial foundation, let’s focus on what you want your future to look like. Now is the time to spell out the specific financial goals you want to work on in both the short- and long-term. Here are a few goals that are worth putting on your list:</p><ul><li><p>Start or increase dollars held in an emergency fund. A good rule of thumb is to have at least three to six months of living expenses saved;</p></li><li><p>Start (or increase your contributions to) a retirement account or 401(k), especially if your employer offers a match;</p></li><li><p>Pay off high-interest credit card debt;</p></li><li><p>Save for a down payment on a home;</p></li><li><p>Pay all of your bills on time (and improve your credit score);</p></li><li><p>Learn how to invest with confidence;</p></li><li><p>Set up a vacation fund and budget (to avoid adding to your credit card balance);</p></li><li><p>Establish a second stream of income.</p></li></ul><h3> 5. Put your plan into action</h3><p>Once you’ve got your balance sheet, cash flow, and financial goals set, start prioritizing the changes you want to make. For instance, identify what changes you can make to your spending that could help you reach your savings goals faster. Or perhaps you want to take advantage of higher interest rates by moving your emergency savings from a regular checking account into a high-yield savings account. </p><p>Regardless of where you begin, building a strong financial foundation may at first feel like a big hill to climb. Just remember you don’t need to accomplish everything all at once. Here are a few more tips it may help you to keep in mind:</p><h4>Get your budget in place.</h4><p>Continuing to spend beyond your means and live paycheck to paycheck will not support building a strong financial foundation. Leverage your balance sheet, cash flow statement, and your financial goals as guides to create a realistic budget and plan that reflects your actual income and expenses.</p><h4>Automate your savings and payments.</h4><p>Make life easier by automating your savings and bill paying as much as possible. Setting up recurring money transfers from your paycheck into your savings accounts or automating your bill payments so you never miss a due date can help you remain disciplined and on track.</p><h4>See your financial plan through.</h4><p>No matter what your goals are, sticking to the plan you’ve created and checking off your accomplishments one by one can help you stay motivated and on track.</p><h2>The Bottom Line</h2><p>Building a financial foundation takes some focus, planning, and effort. But when you have a step-by-step process to follow, you’ll start to see real results. Ultimately, this will provide you with the momentum and confidence you&#39;ll need to continue to believe in your ability to create greater financial well-being for yourself and your family.</p>

Soft inquiries won’t impact your credit scores, and hard inquiries can hurt your scores slightly. Here's what you need to know.

<p>When a company or individual sends a request to one of the national credit reporting agencies (Equifax, Experian, or TransUnion) to look at your credit file, it’s known as a credit inquiry, or credit check. Credit checks generally fall into one of two types: soft inquiries and hard inquiries. </br></br>Here are the ways soft credit inquiries and hard credit inquiries are used, how they’re different, and how they impact your credit score.  </p><h2>What’s the Difference Between a Soft vs. Hard Credit Check?</h2><p>Generally, a soft credit inquiry is a request for a review of your credit file, including a review of existing accounts and your own requests to see your annual credit report. A soft credit check is a request for your credit report or credit score for any purpose other than issuing credit. These will not impact or change your credit scores.</p><p>A credit check is considered a hard inquiry if it is used in a decision about issuing you a loan, credit card, or financing on goods (such as a car or cell phone) or services. Typically, hard inquiries are initiated by lenders after you apply for credit. A hard inquiry can also occur if you’re renting something of significant monetary value (such as an apartment or car) from a company, for example, to determine a security deposit amount for an apartment you want to rent. Generally, hard inquiries are used to evaluate whether you’ll be able to meet your current and potential future financial obligations.</p><p>Soft and hard credit inquiries are recorded in your credit files, where they can remain for up to two years. Each credit bureau records only inquiries it has received, so you may see differences in the inquiry listings on reports from different bureaus. For instance, if you apply for a car loan and the potential lender only checks your Equifax credit report, you’ll see that inquiry on your Equifax credit report, and not on your Experian or TransUnion reports. </p><h3>How Do Credit Inquiries Impact Your Credit Score?</h3><p>Soft credit pulls won’t impact your credit scores, however hard pulls can. Typically, you may see your credit score temporarily dip by a few points after a lender or credit card issuer does a hard credit check. Hard credit inquiries may stay on your credit report for up to two years, however, they may only affect your score for one year. </p><h3>Why does a hard credit inquiry hurt your credit score?</h3><p>Statistics show that taking on new debt makes a borrower more likely to be unable to pay their existing bills. When you apply for new credit, credit scoring models <a href="https://www.lendingclub.com/resource-center/personal-finance/fico-score-update-heres-what-you-need-to-know">such as FICO® Score</a> and VantageScore® typically will recalculate your scores by a few points. If you continue paying your bills on time, your scores can typically bounce back within a few months. Hard credit pulls account for 10% of your overall FICO<sup>®</sup> Score and 5% and 11% of your VantageScore<sup>®</sup> 3.0 and 4.0 scores, respectively. </p><p>While hard inquiries can impact your score, other factors carry more weight with some of the popular credit scoring models. Both the FICO<sup>®</sup> Score and VantageScore<sup>®</sup> models rank payment history as one of the most important factors in determining credit scores. Other factors weighted more heavily than hard inquiries include how much you owe and the length of your credit history. </p><h2>Examples of Soft Credit Checks</h2><p>Here are some examples of when a new soft inquiry may show up on your credit reports. </p><h3>1. Checking your rate with a potential lender</h3><p>Many lenders let you <a href="https://www.lendingclub.com/personal-loan">check your rate</a> online before you apply. This soft “rate check” can give you a fairly good idea of whether you would qualify for a loan and the potential interest rate and other loan terms you’d potentially receive, without impacting your credit score. </p><h3>2. Prescreened offers </h3><p>The national credit bureaus provide prescreening and marketing services to a variety of companies such as financial institutions, credit card issuers, and insurance companies. These companies may use credit report data or credit scores to target potential new customers with specific product offers.  </p><p>If you receive a prescreened offer of credit or insurance, you’ll likely see a soft credit check on one of your credit reports.</p><h3>3. Checking your own credit report</h3><p>Using a credit monitoring service or requesting a copy of one of your own credit reports is a soft inquiry. This is why checking your own credit <a href="https://www.lendingclub.com/resource-center/personal-finance/what-affects-your-credit-scores">does not hurt your credit score.</a> </p><h3>4. Current creditors checking your credit</h3><p>Creditors also regularly check current customers’ credit reports to monitor their creditworthiness and manage their accounts. For example, your credit card issuer might decide to increase your card’s credit limit if you have a good payment history. Alternatively, the issuer can lower your credit limit if a major drop in credit score suggests you have problems managing your debts. </p><h3>5. Prospective or current employers checking your credit</h3><p>Current and potential employers may also check your credit reports as part of a background check, but they need to have your written permission first. Credit reports issued to employers omit certain information, such as date of birth. Some states limit or ban the use of credit checks for employment purposes. </p><h2>Examples of Hard Credit Checks</h2><p>As mentioned, hard credit checks typically happen when you apply for loans or credit lines, however, you may be subject to a hard credit inquiry in the following situations. </p><h3>1. Applying for a loan</h3><p>Lenders typically conduct a hard credit check if you formally apply for a mortgage, auto loan, student loan, or personal loan. They review your credit to help determine if you&#39;re a lending risk and how likely you are to make your monthly payments. </p><h3>2. Applying for a credit card</h3><p>A credit card issuer will also do a hard credit pull when you apply for a new credit card. As with lenders, they do this to determine if you’re likely to make your monthly payments on time. </p><h3>3. Applying for a rental, phone, or utilities (sometimes)</h3><p>You’ll often undergo a credit check when you apply to rent a home or apartment, open a new phone plan, or start a utility or telecom service. These credit checks are typically soft inquiries. However, it’s important to ask the provider, as sometimes it will be a hard inquiry. </p><h3>4. Unauthorized inquiries</h3><p>Hard inquiries require your permission (which is included in a loan or credit application and more explicitly in employment or rental screenings). If a hard inquiry is run without your permission, it may mean someone has used your personal credentials to apply for credit in your name, for purposes of credit fraud or identity theft. If you believe someone has or is trying to steal your identity, immediately contact the credit reporting companies (Experian, Equifax, TransUnion) and <a href="https://www.identitytheft.gov/#/">report it to the FTC</a>.</p><p>ProTip: Inquiry entries on credit reports will sometimes list company names or abbreviations that are not immediately recognizable, which can make legitimate inquiries appear unfamiliar. So before assuming something criminal is happening, verify using the contact information included in the inquiry entry on your credit report.</p><h2>3 Ways to Reduce the Impact of Hard Inquiries</h2><p>If you’re concerned about hard inquiries damaging your credit score, there are a few ways to reduce their impact. Here are some strategies that could help. </p><h3>1. Check your rate before applying.</h3><p>Many lenders let you see if you might be eligible for a loan by checking your rates with a soft credit check before you submit, or complete, a formal application. Checking your rate before you apply helps you shop lenders without it impacting your credit scores. Also keep in mind that checking your rate isn’t a guarantee you’ll be approved, but it can help you avoid submitting loan applications that may not work for you. </p><h3>2. Be strategic about applications.</h3><p>When you’re ready to apply for a loan, shopping around by checking your interest rate online can help you find the best rate you can qualify for among a sea of lenders. Fortunately, popular credit scoring models account for rate shopping, as it’s a common and smart strategy for consumers. If you rate shop within a specific timeframe, usually 14-45 days depending on the scoring model, multiple hard inquiries may only count as one. </p><h3>3. Focus on improving your credit.</h3><p>A hard credit check might impact your credit scores, but it’s a minor scoring factor. Focusing on major factors, such as building a long history of on-time payments and only using a small portion of your available revolving credit balances could help <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-improve-credit-score">improve your overall credit</a>. Once you have a good or excellent credit score, a small and temporary drop might not matter as much. </p><h2>The Bottom Line</h2><p>Both soft and hard credit inquiries may appear on your credit report, but these reviews of your credit are typically done for different reasons. For example, if you check your rate for a personal loan, for instance, the lender typically does a soft credit check. However, you’ll be subject to a hard credit check when you formally apply by completing your application. </p><p>Another key difference between soft vs. hard credit checks: while soft inquiries won’t impact your credit scores, hard inquiries can hurt your scores slightly. Fortunately, any decreases to your scores are temporary and may only impact your scores for up to a year or less.</p><h2>Soft vs. Hard Credit Check FAQs</h2><h3>Will checking my own credit score result in a hard credit check?</h3><p>Checking your own credit scores will not result in a hard credit check. But it’s important to note that your credit scores do not generally appear on your credit reports. Instead, you may be able to view your credit score for free through your credit card issuer, bank, or a third-party credit scoring service. You can also purchase a report that lets you see your credit score through one of the national credit reporting agencies.</p><h3>Will a soft credit check affect my credit score?</h3><p>A soft inquiry has no impact on your credit score. If you formally apply for a loan or credit line, your creditor will do a hard credit check, which may cause a temporary, small drop (a couple of points) in one or more of your credit scores. </p><h3>What does a hard credit inquiry show?</h3><p>A hard credit check or hard inquiry is a record of when an organization checked one of your credit reports to assess your credit behavior in response to an application for a loan, credit card, auto financing, or lease. A hard inquiry can stay in your credit history for two years, even if you don’t take out a new credit line or loan.</p>

Identifying red flags and knowing how to correct inaccuracies in your credit report can help keep your credit score in good shape. Here's what you need to know.

<p>Your historical record of on-time bill payments, credit mix, debt utilization, and more, as compiled in your credit report, can have a critical impact on your personal finances and life. That’s because lenders, landlords, insurers, and employers may use this information to predict your future credit behavior, such as how likely you are to repay a loan on time. </p><p>Knowing how to read and detect the red flags on your credit report, as well as dispute and correct inaccuracies, could help you maintain or improve your credit score. It could also help you know what changes you might need to make to reach your financial goals faster. </p><p>Here’s what you need to know to dig into yours. </p><h2>What is a credit report and what does it show?</h2><p>A credit report contains all the information that one of the three major credit bureaus—Equifax, Experian, or TransUnion—has compiled about you. </p><p>Each credit bureau, also known as a consumer reporting agency or credit scoring company, maintains credit files filled with personal financial information on millions of people. Your credit report contains historical information about your borrowing and payment habits, including: </p><ul><li><p>Original loan amounts and credit limits</p></li><li><p>Current loan and credit card balances</p></li><li><p>Account opening dates</p></li><li><p>Payment history, including late payments, and accounts in collection</p></li><li><p>Inquiries into your credit report</p></li><li><p>Personal information, such as your name, address, and employer</p></li><li><p>Public records, such as bankruptcy and foreclosure</p></li></ul><p>While all consumer reporting companies collect similar information about you, each one produces its own unique credit report which is also why you can have different credit scores.</p><h2>How to get your credit report</h2><p>You can get a free copy of your credit report from all three major credit bureaus at least once every 12 months at <a href="https://www.annualcreditreport.com/index.action">AnnualCreditReport.com</a>, although the credit bureaus may allow you to access them more frequently. Some lenders, credit card companies, banks, and credit unions may also provide free access to your credit score as a benefit of being a customer or member.</p><p>If you have ever been denied credit for any reason, you have the right to request a free copy of your credit report from the credit bureau the lender used to make its decision. You’re also entitled to one additional free copy of your credit report during any 12-month period if you’re on welfare assistance or are unemployed and seeking employment within 60 days.</p><p>Outside of these situations, you can request a copy directly from the credit bureaus at any time, though you may have to pay a fee. </p><h2>How to read your credit report &amp; identify red flags </h2><p>Your credit report will look different depending on where you got it, but it’s usually broken up into a few different sections. Generally, here’s how to read your credit report and the red flags you should watch for in each section:</p><ul><li><p>Identify incorrect personal info (name, date of birth, social security number, etc.)</p></li><li><p>Check the summary for any missed payments</p></li><li><p>Review the consumer statement</p></li><li><p>Review all your accounts and identify any that don’t belong to you</p></li><li><p>Identify hard inquiries you don’t recognize</p></li><li><p>Look for collection accounts you don’t recognize</p></li><li><p>Validate the information listed under public records</p></li></ul><h3>Summary section</h3><p>Near the top, you may see a summary of the information contained in your credit report, including: </p><ul><li><p>Date when the report was created</p></li><li><p>Average age of your accounts </p></li><li><p>Length of your credit history</p></li><li><p>Accounts with potentially negative information </p></li></ul><h4>Potential red flags</h4><blockquote><p>If the summary section shows accounts with negative information and you’ve never missed a payment, take a closer look at those accounts. You may need to contact those creditors to learn more and file a dispute to correct the reporting.</p></blockquote><h3>Identifying Information</h3><p>You may also find an overview of the personal information that the credit bureaus have about you near the beginning of your report. This may include your legal name, aliases, date of birth, and part of your Social Security number. There could also be current and previous addresses, employers, and phone numbers listed here. </p><h4>Potential red flags</h4><blockquote><p>Read your credit report carefully to identify any misspellings of your name, addresses you don’t recognize, or an incorrect Social Security number, as these are all potential red flags. Closely review the following for errors:</p></blockquote><ul><li><p>A different first or last name on your report could be a sign of identity theft. </p></li><li><p>Addresses you don’t recognize could indicate someone attempted to open a card in your name and had it mailed to a different address. </p></li><li><p>Incomplete or incorrect Social Security numbers could simply be a technical error or a warning of identity theft. </p></li></ul><blockquote><p><b>Pay careful attention to this section: </b>If you spot something unusual, immediately file a dispute. </p></blockquote><h3>Consumer statement</h3><p>You can choose to add a consumer statement to your credit report to provide an explanation for why you missed a payment or why you believe something is being reported incorrectly. </p><h4>Potential red flags</h4><blockquote><p>If an account with negative information falls off your credit report, be sure to review your consumer statement to make sure you remove any reference to a late payment or other negative information that someone wouldn’t otherwise know about. </p></blockquote><h3>Accounts</h3><p>The accounts section typically holds the most information and is where you’ll find your credit cards, <a href="https://www.lendingclub.com/personal-loan">personal loans</a>, student loans, mortgages, auto loans, lines of credit, and other types of credit accounts listed. </p><p>Your accounts may be separated into one section for accounts in good standing, and another for accounts that are past-due or have previously missed payments. Closed accounts can stay on your credit report for up to ten years but may be listed separately. </p><p>Each account, also referred to as a tradeline, will include details about the loan or line of credit, including: </p><ul><li><p>Type of account</p></li><li><p>Account number</p></li><li><p>Date of last payment</p></li><li><p>Monthly payment amount</p></li><li><p>Current payment status, current balance </p></li><li><p>List of previous payments</p></li></ul><h4>Potential red flags</h4><blockquote><p>Look for accounts you don&#39;t recognize, as those may be fraudulent. If you&#39;ve missed payments, those usually appear in the payment history section and will indicate how late your payment was (30, 60, 90, etc.). Look over these details carefully to make sure you agree with any negative information listed, and that whatever is reported is error-free and accurate. Dispute any incorrect information and keep in mind, if you have multiple inaccuracies you may need to file multiple disputes</p></blockquote><h3>Inquiries</h3><p>An inquiry is a record of requests for your credit report. These are separated into hard credit inquiries, such as when a creditor needs to make a lending decision, and soft credit inquiries, generally for non-lending purposes. </p><p>For example, your current credit card issuer may request your credit report and perform a hard credit inquiry to determine if it should change your credit limit. Or, lenders may do a soft credit pull to provide you with an estimated loan offer.  It’s important to know the difference between hard and soft credit inquiries, and that <a href="https://www.lendingclub.com/resource-center/personal-finance/key-differences-of-a-soft-credit-check-vs-hard-credit-check">soft inquiries do not affect your credit score</a>. Certain soft inquiries show up as &quot;promotional&quot; on your credit report, such as those performed by an existing creditor who wants to extend you a new offer of credit. These also do not impact your credit score. </p><h4>Potential red flags</h4><blockquote><p>If you see an account with a hard inquiry on your report that you don&#39;t remember applying for, it could indicate someone has tried to get credit in your name. If you see an account you don&#39;t recognize, start by contacting the creditor&#39;s fraud department to have the account investigated. Next, file an identity theft report online with the <a href="https://www.identitytheft.gov/">Federal Trade Commission</a> (FTC). Finally, dispute the account. The bureau may recommend freezing your credit temporarily while it investigates</p></blockquote><h3>Collections</h3><p>If one of your accounts is sold or sent to collections, the account may appear closed in the accounts section, however, the collection agency may report your collections account. This can include credit cards and loans, but also bills not usually reported to the credit bureaus, such as cellphone plans, utility bills, and subscription services. </p><h4>Potential red flags</h4><blockquote><p>Collection accounts may include fees and interest, so the amount due might be more than you remember (which is not unusual). However, a collection for an account you never opened could potentially be identity theft. <a href="https://www.lendingclub.com/resource-center/personal-finance/identity-theft-7-tips-to-reduce-your-risk">Identity theft</a> is on the rise. If you don&#39;t recognize the original creditor, open a dispute and file an identity theft report with the FTC.</p></blockquote><h4>Public records</h4><p>If you’ve filed for bankruptcy within the last 10 years, it may show up in the public records section of your credit report. Previously, civil judgments and tax liens were included in credit reports as well, but that’s no longer the case. </p><h4>Potential red flags</h4><blockquote><p>A misreported bankruptcy filing could be disastrous for your credit. If the filing dates are incorrect, it can have a negative impact to your credit report, potentially for longer than is necessary. Be sure to double check dates, filing information, and dispute any public record inaccuracies immediately.</p></blockquote><h2>How to dispute inaccuracies in your credit report</h2><p>Learning how to read a credit report can help you identify errors, which you can then correct by <a href="https://www.lendingclub.com/help/general-faq/how-do-i-correct-discrepancies-in-my-credit-report">filing a dispute</a>.</p><h2>Who can access your credit report &amp; how can they use it?</h2><p>Another person or organization can access and read your credit report only in certain situations, and there are limitations on how your credit report can be used. The Fair Credit Reporting Act states that consumer reporting agencies may provide consumer reports only for purposes related to credit, employment, and insurance, and in accordance with the written instructions of the consumer.</p><p>For example, when you apply for new credit and give permission to pull your credit report. Or, if you’re already a customer, the company can continue to review your credit. However, you don’t always have to give permission for a company or person to have a permissible purpose to request a copy of your credit report. For example, a credit bureau doesn’t need your permission to send a copy of your report to an organization in response to a court order. </p><p>Also, if you received a credit card or loan offer in the mail, your contact information was likely part of a prescreened list. Credit bureaus compile prescreened marketing lists based on specific criteria, such as credit records and demographics, and, as a result, you may see a record of a soft credit pull in your credit history. </p><p>There are limitations on how organizations can use your credit reports, and these may vary from state to state. For example, employers can often request special reports that won’t contain certain personal information (such as your age or your credit score). But in some states, employers are not permitted to review your credit report at all as part of the hiring or promotion process. Also, some states limit how insurers can use credit when offering or pricing insurance policies. </p><h2>How your credit reports relate to your credit scores</h2><p>Your credit reports are often the sole basis for your credit scores. However, credit scores only examine certain parts of your credit reports to determine your scores. </p><p>For example, with VantageScore® and FICO® Score scoring models, your personal information won’t impact your credit scores, however, your account information, public records, and hard inquiries will. </p><p>There are many different credit scoring models, and you won’t necessarily know which credit score a creditor will use to evaluate your application. That’s why learning how to read your credit report and understand what’s included in it is important because the different scoring models will determine your scores based on the same underlying credit report. </p><p>You want to make sure there aren’t any errors in your reports, because erroneous negative items could hurt your credit scores. In turn, lower credit scores can make it more difficult to <a href="https://www.lendingclub.com/personal-loan">get a new loan</a> or credit card, and lead to higher interest rates if you’re approved. </p><p>Keep in mind, that most credit reports—including the free copies you can obtain once per year through <a href="https://www.annualcreditreport.com/index.action">AnnualCreditReport.com</a>—will not include your credit scores. You’ll need to order your credit scores through <a href="https://www.myfico.com/">MyFICO</a>® or the credit reporting agency, or purchase a combined credit report and credit score, to see both. </p><hr/><h2>FAQ</h2><h3>How do credit bureaus get their information?</h3><p>Much of the information found in your credit reports is voluntarily sent to credit reporting companies by creditors and collection agencies. Creditors do this, in part, to incentivize their customers to pay on time (as customers know a late payment can hurt their credit). Additionally, credit bureaus actively collect or purchase data from public records. </p><h3>What if I&#39;m new to credit?</h3><p>If you&#39;ve never applied for or taken out a loan or credit card, your information might not be in the credit bureaus’ credit files. As a result, you might not have a credit report and won’t be “scorable” as the scoring models may not have enough information about you to analyze. </p><h3>What&#39;s a good credit score?</h3><p>Credit scores commonly range from 300 up to 850. A score in the mid-600s or above may be considered a good score, however, higher scores may make it easier to get approved for a new loan or line of credit with favorable terms. Regardless of your score, creditors will also consider the underlying information in your credit report to make their determination on whether or not to lend. </p><h3>Can I dispute my credit score?</h3><p>You can&#39;t dispute your credit scores. However, if you think your score is lower than it should be, closely review your credit reports for negative information that may be influencing your credit scores. If you find any inaccuracies, file a dispute and have the information corrected.</p>

Often a measure of last resort, reasons for filing bankruptcy frequently involve overwhelming medical debt, financial strain due to a divorce, or an unaffordable mortgage.

<p>Bankruptcy provides relief for people who are overwhelmed by debt. Common reasons for seeking protection from creditors include medical debt, credit card bills, a lost job, divorce, or a personal crisis. Because bankruptcy may involve the court-ordered liquidation of your assets and remain on your credit report for several years, bankruptcy is often a measure of last resort.</p><p>Why do people file for bankruptcy? Every story is unique, but most of them share at least some contributing factors. Here’s a closer look at some of the most common reasons for personal bankruptcy.</p><h2><b>Top 7 Reasons People File for Bankruptcy</b></h2><p>Most bankruptcies happen for one reason: too much debt and too little income. In 2022, there were 374,240 non-business bankruptcy filings in the U.S., each with its own story – and, most likely, multiple contributing causes behind it. Someone took on a sizable mortgage, then lost their job. Another was injured in a car accident and ended up with medical expenses and a prolonged leave of absence from work without pay. </p><p>Though there are a million possible reasons why people might file bankruptcy, the following contributing factors are commonly cited.</p><h3>1. Loss of Income</h3><p>Job loss, pay cuts, disability, and business failure can all leave people unable to keep up with their monthly debt payments. The financial fallout of unemployment isn’t limited to lost wages: Many who lose their jobs pay high insurance premiums through COBRA. </p><h3>2. Medical Expenses</h3><p>A Kaiser Family Foundation Health Care Debt Survey found that 41% of adults had debt caused by medical or dental bills, and nearly one in five of those with medical debt thought they would never be able to pay it off. Nearly half who owed medical debt had used up all or most of their savings, while 40% took an extra job or worked more hours; 41% increased credit card debt; and 37% skipped or delayed paying other bills.</p><p>In a study published in the <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6366487/">American Journal of Public Health</a>, medical expenses and medical problems causing work loss contributed to 66.5% of bankruptcies.</p><h3>3. Unaffordable Mortgage</h3><p>Mortgages are often the largest debt people carry—and the most consequential. Defaulting on a mortgage could mean losing your home and your equity in a foreclosure. </p><p>Filing for bankruptcy can put a pause on foreclosure activities. Although bankruptcy may not stop a foreclosure altogether, it may provide you the option of eliminating mortgage debt if you give up your home or avoiding foreclosure by enacting a repayment plan.</p><h3>4. Student Loans</h3><p>According to the Federal Reserve, four in 10 people who attended college took out student loans to fund their education. Among people who had outstanding debt from their own education in 2022, the median student loan balance was between $20,000 and $24,999.</p><p>Given that student loan payments have resumed and there’s still uncertainty about additional forgiveness, some people carrying student loan debt may have difficulty meeting other debt obligations or even basic living expenses.</p><h3>5. Overwhelming Debt</h3><p>Debt can easily become unmanageable. While overspending is a possible culprit, debt also adds up when you’ve used student loans to pay for college, financed a car so you can commute to work, or used credit cards to cope with the rising cost of necessities.</p><h3>6. Helping Friends or Relatives</h3><p>Helping loved ones in need is a kindness, but it can create financial problems if they’re unable (or unwilling) to repay you.</p><h3>7. Divorce</h3><p>Divorce is a major financial disruptor. Splitting a single household into two may double your monthly expenses (without increasing your monthly income). Shouldering legal costs, dividing assets, and untangling joint debt can add to financial stress. Child and spousal support often feel like too little for the recipient and too much for the payer. And for many, divorce isn’t the beginning of financial trouble: Money difficulties can be both a symptom and a cause of marital problems.</p><h2>Strategies to Help Avoid<b> Bankruptcy</b></h2><p>Bankruptcy is an extreme measure that can have far-reaching consequences for your credit score and financial wellbeing. Before you decide to file for bankruptcy, first consider these other strategies:</p><h3>Financial DIY</h3><p>Getting a firm grip on your financial situation is a good place to start. Fully understanding your income, expenses, assets, and debts may help you find a way to avoid bankruptcy, or, if not, give you information to make solid decisions going forward. Get started by:</p><ul><li><p><a href="https://www.lendingclub.com/resource-center/personal-finance/50-30-20-rule-the-easy-budget-method-that-works">Creating a budget</a></p></li><li><p>Looking for ways to cut your costs</p></li><li><p>Boosting your income with a second job or side hustle</p></li><li><p>Selling property to raise cash</p></li><li><p>Finding a <a href="https://www.lendingclub.com/personal-loan/debt-consolidation">strategy to pay down debt</a></p></li></ul><h3>Credit Counseling</h3><p>You don’t have to review your finances alone. A nonprofit credit or debt counseling service can work with you to set a budget and find a strategy for repaying your debt. Accredited nonprofit counseling services work with you at a low cost and may offer some advice for free. Find an accredited agency with certified credit counselors, such as through the <a href="https://www.nfcc.org/">National Foundation for Credit Counseling</a>.</p><h3>Debt Management Plan</h3><p>As part of their service, a credit counseling agency may be able to help you negotiate lower interest rates, reduce penalties, and establish manageable monthly payments by<a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-a-debt-management-plan"> setting up a debt management plan</a>. Generally, a credit counselor speaks to each creditor on your behalf to try to negotiate a repayment plan that fits your budget. </p><h3>Debt Consolidation</h3><p><a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-debt-consolidation">Consolidating debt</a> generally means taking out a single loan to pay down outstanding higher-interest debts. Although a debt consolidation loan doesn’t erase your existing debts, it can simplify your finances and make it easier to manage your monthly payments. If you’re currently paying high interest rates on credit cards, a debt consolidation loan may save you money on interest as well. For this approach to work, it&#39;s important not to drive up debt again on those credit cards you just consolidated.</p><h3>Negotiate with Creditors</h3><p>You can contact creditors on your own to let them know your circumstances and try to negotiate a modified payment plan. Although creditors aren’t obligated to work with you, many will offer temporary hardship assistance, workouts, and lump sum settlements depending on the type and contractual age of the account. Keep in mind, reducing your debt obligation by settling with a creditor for less than the full balance owed will have a negative impact on your credit score,</p><h3>Debt Settlement</h3><p>Debt settlement involves <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-a-debt-management-plan">settling your debts for less than you owe</a>, often using the services of a debt settlement company. While debt settlement may lower your debt by as much as 50% to 80%, debt settlement companies charge significant fees, and the process could damage your credit score. The Consumer Financial Protection Bureau is a good place to <a href="https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-relief-program-and-how-do-i-know-if-i-should-use-one-en-1457/">understand the pros and cons of proceeding with a debt settlemen company</a>. Keep in mind, other types of creditor settlements with may also negatively impact your credit scores (settling for less than the full balance).</p><h2>The Bottom Line</h2><p>If you’re struggling with overwhelming debt, experienced a dramatic loss of income, or facing any other reason causing you to consider filing for bankruptcy, ask for help. You may be able to negotiate with your creditors or take advantage of credit counseling or use a debt management plan that can put your finances back on track. If you’ve determined you’re unable to repay your debts and decide to move foward with bankruptcy proceedings, it’s a good idea to contact a qualified attorney who can help guide you through the process.</p><h2>Frequently Asked Questions</h2><h3>How does bankruptcy work?</h3><p>Bankruptcy is a complex process. Generally, after demonstrating you can’t repay your debts and completing some credit counseling, if you choose to move forward you’ll need to decide whether to proceed with a Chapter 7 or Chapter 13 bankruptcy filing. While both types of bankruptcy relieve debt in different ways, they both can also help provide relief from unsecured debt (such as personal loans or credit cards), put a stop to foreclosure or repossession of your home or car, as well as end wage garnishments, utility shut-offs, and debt collector activity. In both cases, you can usually expect to pay your own attorney fees and court costs.</p><p>To ensure you receive proper guidance, it’s probably best to discuss your financial situation with a bankruptcy attorney, as well as the rules, regulations and possible options and outcomes you may face.</p><h3>Does bankruptcy erase all debts?</h3><p>A bankruptcy can erase all your debts, but it doesn’t always. Nondischargeable debts include tax claims, child or spousal support, debts for willful or malicious injury, government fines, and some condominium or cooperative housing fees. Debts that are not listed in bankruptcy court filings may not be included in the discharge. </p><h3>Will bankruptcy ruin your credit score?</h3><p>A bankruptcy significantly affects both your credit score and credit report. Bankruptcies appear in the public records section of your credit report for up to 10 years from the date of discharge. Your creditors may also mark any accounts discharged in bankruptcy as “included in bankruptcy.” This information can stay in your credit file for seven years. </p><h3>How many times can you file bankruptcy?</h3><p>There are limitations to how often you can receive a discharge of debts through bankruptcy. It’s important to discuss your situation and options with a bankruptcy attorney before proceeding.</p>

There are several reasons your credit score may have dropped. Here are six solid ways to focus your efforts and start rebuilding your score.

<p>Whether you had a recent late or missed payment or there was a change to your credit limit or usage, there are plenty of reasons your credit score may have dropped. Here are six ways to focus your efforts and start rebuilding your credit score.</p><h2>1. Review your credit reports for inaccuracies.</h2><p>Improving your credit score starts with a careful review of the information found in your credit reports from the three nationwide credit reporting companies: Experian, Equifax, and TransUnion. You can get a free printed copy of each of your credit reports every 12 months at <a href="https://www.annualcreditreport.com/index.action">AnnualCreditReport.com</a>. Equifax offers six additional free credit reports every 12 months, through December 31, 2026. When you visit the site, you may see steps to view more frequently updated reports online which gives you greater ability to monitor changes in your credit. </p><p>Carefully review your reports for inaccuracies such as incorrect account status, accounts listed twice, inaccurate credit limits and payment history, someone else’s information mixed in with your file, or other concerns. If you find inaccurate information, it may be bringing your score down. If you do, file a dispute both with the company and with the credit reporting agency.</p><h2>2. Pay your bills on time.</h2><p>Your payment history is one of the most important factors in determining your credit score. Even one late or missed payment can have an impact. Credit reporting companies generally report most negative information for up to seven years, so it’s important to have a system (like auto pay) in place to ensure you pay on time each month. If you have any past due accounts, bring them current as quickly as possible, and make it a priority to make your payments on time each month going forward. </p><h2>3. Leave your old credit accounts open.</h2><p>Once you pay off a credit card balance, it’s natural to consider closing the account—especially if you’re attempting to curtail a history of overspending on credit cards. However, if it’s a card you’ve had open for a long time or that has a high credit limit, it may help your credit score to keep it open. Closing a card account lowers your total available credit. This can lead to a higher credit utilization ratio which can have a negative impact on your credit score. Of course, if you have a compelling reason to close a credit card account (such as due to a high annual fee), you don’t have to keep it open, but keep in mind closing it may affect your credit score.</p><h2>4. Keep your credit balances to 30% or less of your available credit.</h2><p>Ideally, you’re able to pay off your credit card balance in full every month to avoid finance charges. However, if you carry large balances from one month to the next, it could signal a problem with how you’re using credit. Because carrying high credit card balances can indicate a higher credit risk, when you’re rebuilding your credit, experts recommend using no more than 30% of your total credit limit on any card. Using less is even better.</p><p>While using a <a href="https://www.lendingclub.com/personal-checking/rewards-checking">debit card</a> doesn’t help rebuild your credit, you might consider reaching for one instead of a credit card when you need to make a purchase, especially if that debit card offers rewards. </p><h2>5. Avoid multiple applications for new credit. </h2><p>Applying for too much new credit (hard credit inquiries) in a short period of time could be seen as a sign you’re trying to take on more debt than you can reasonably manage. Opening new credit also lowers the average age of your total accounts, which lowers your length of credit history and may adversely impact your credit score. However, if that new credit is for debt consolidation and reduces high interest debt, this may have a positive impact on your credit score. </p><p>If you need to apply for more credit while you’re rebuilding your credit score, be strategic about when, how, and who you apply with. If you have a close friend or relative with good credit who is willing to add you as an authorized user on their credit card, or cosign on an auto or <a href="https://www.lendingclub.com/personal-loan">personal loan</a> with you, it may help you qualify for better terms and interest rate and potentially have less of an impact on your credit score overall. Another alternative is using a secured card. With most of these cards, you start with a small credit line and you put an amount equal to it in an account as a deposit. It may be another way to help you establish a credit record. </p><h2>6. Maintain a diverse mix of credit accounts.</h2><p>Building and maintaining a variety of credit accounts (such as credit cards, mortgages, and installment loans) demonstrates well-rounded and responsible credit usage and contributes to a more comprehensive credit profile. Over the long term, having a diverse mix of credit accounts is worth taking into consideration as you rebuild your credit. Taking a balanced and calculated approach to borrowing and showcasing financial competence through your ability to manage different types of credit and repayment terms can have a positive impact on your credit score.</p><p>Generally, it might take several years to establish a well-rounded credit profile with a mix of different types of credit accounts. With patience and consistent responsible credit management, you can successfully build and maintain a diverse credit profile over time.</p><h2>The Bottom Line</h2><p>Rebuilding your credit score is a gradual process that involves adopting some simple yet effective strategies. By consistently paying bills on time, reducing credit card balances, watching your credit utilization, and diversifying your credit mix, you can lay a strong foundation for improving your credit score over time. Monitoring your credit report for errors and practicing responsible credit behavior will further contribute to improving your credit score. While the journey may require patience and persistence, the result of a healthier credit score can open doors to better financial opportunities and greater peace of mind.</p>

With six in 10 U.S. consumers living paycheck to paycheck, could budgeting, saving, debt management, or side income be the antidote?

<p>If you’re struggling to stay ahead of your finances, you’re not alone. According to a Reality Check: Paycheck to Paycheck survey conducted by LendingClub and PYMNTS, 60% of employed U.S. adults, including more than four in 10 high-income earners, are living one paycheck to the next with little to no financial cushion. </p><p>Living paycheck to paycheck means there’s no wiggle room in your budget for rising costs or unexpected expenses. Depending on your personal financial situation, you might be one trip to the grocery store or a couple of large, unexpected medical bills away from financial trouble. </p><p>If this sounds like you, there’s hope. You can reverse course by digging into your monthly expenses, taking steps to manage debt, and looking for opportunities to boost your income and save. Here are the basic steps to help you stop living paycheck to paycheck and gain control over your finances. </p><h2>1. Track Your Expenses</h2><p>Budgeting starts with tracking expenses. Even if you’ve done this before, you may have good reason to review your spending again. If you’re coping with the rising cost of living or you’ve recently gone through a life change—like the birth of a child, sending a kid off to college, or transitioning from remote work back to the office—your spending (and costs) may have changed significantly. Whatever the reason, if you’re out of cash at the end of every month, putting effort into tracking your expenses will shine a light on what’s causing it.</p><p>Take 30 days to account for every dollar spent. From automatic payments to every cash, credit card, and debit transaction you make—divide your expenses into categories and take a look at on what and where you’re spending money.</p><h2>2. Evaluate Your Spending</h2><p>Once you know where you’re spending, you can make decisions about <a href="/resource-center/personal-finance/tips-for-financial-success-in-budgeting-your-money">how to  allocate your money</a>. Be prepared to accommodate increases in some categories. If the price of gas, utilities, or groceries has risen, you may need to cut back elsewhere to make room.</p><p><b>Get rid of waste.</b> Look at your spending and cut out expenses you don’t need or want. Forgotten subscriptions and unused gym memberships are classic examples. </p><p><b>Tighten up spending</b> by shopping at less expensive stores, choosing cheaper brands, getting your hair cut less often, eating in—you know the drill. Set daily or weekly spending targets to help you stay on budget, rather than finding out mid-month that your whole month’s grocery allowance is already spent. </p><p><b>Look at essential spending: </b>If your lifestyle is relatively lean but you’re still having trouble making ends meet, you may want to consider further cuts to your spending, for example, finding a less expensive place to live. These decisions aren’t simple or easy, but making a major change in your monthly spending can go a long way toward easing the pressure on the rest of your budget—and your peace of mind.</p><h2>3. Build Up Your Savings</h2><p>Experts suggest keeping three to six months’ worth of living expenses in an emergency savings account. That’s a worthy short- to medium-term goal, and it starts with building a serious savings habit. </p><p>When you live paycheck to paycheck, generally nothing (or very little) is going into your savings. Instead, try setting aside 1% of every paycheck—that’s only $10 for every $1,000 you earn. As your finances improve, you can increase your rate of savings gradually. As your emergency fund grows, you and your finances will become more resilient. Eventually, you’ll create room in your budget to build up additional regular savings beyond what you set aside only for emergencies.</p><p>Also, consider automating your savings by having a set amount automatically routed to savings each time you get paid. This means you won’t see (and therefore won’t spend) the money you transfer to savings, and you won’t forget to make the transfer. Fund a “goal” savings account with recurring automatic transfers to save for a new roof, a weekend away, or holiday gifts. </p><p>Make sure your money is working for you. Interest rates on <a href="https://www.lendingclub.com/personal-savings/high-yield-savings">high-yield savings accounts</a> have risen with inflation and rising interest rates, which means it’s worth your time to open an account that earns a better return. Once you’re set up, the interest you earn is effortless.</p><h2>4. Manage Debt</h2><p>One of the potential pitfalls of living paycheck to paycheck could be relying on high-interest credit to cover costs. When you don’t have the cash to meet an unexpected expense—or an unexpectedly high utility bill—you might turn to using credit cards to help bridge the gap.  </p><p>Most credit card interest rates are variable, and generally are moving up as interest rates rise. For example, according to Bankrate, as of July 2023 the average credit card APR is 20.58%. Rates on individual cards may be significantly higher—25% or more—with even higher APRs if you were to take a cash advance or miss a payment. </p><p>Getting a handle on your spending and building up your savings can help you avoid over-reliance on high interest credit cards for your daily expenses. If you already have revolving, variable rate credit card balances, now is the time to find room in your budget to pay them down as quickly as possible. </p><p><a href="https://www.lendingclub.com/personal-loan/debt-consolidation">Getting a debt consolidation loan</a> may help if you carry balances on multiple cards. By rolling high-interest credit card debt into a single, unsecured fixed-rate installment loan, you may be able to streamline your monthly payments, lower your interest costs, and put an end point on your debt. </p><p>Managing debt is not only critical to reining in your monthly expenses and minimizing your overall costs, it’s key to <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-improve-credit-score">maintaining good credit</a>. Making a single 30-day late payment or over-utilizing your credit accounts can lower your credit scores, which makes it more difficult to secure a mortgage, car loan, personal loan, or low-interest credit card in the future. If you’re curious about the state of your credit, check your credit reports for free from all three credit reporting agencies at <a href="http://www.annualcreditreport.com/">AnnualCreditReport.com</a>.</p><h2>5. Boost Your Income</h2><p>Cutting costs isn’t the only way to rebalance your budget. According to the Reality Check survey, fewer than four in 10 consumers say their current jobs meet their wage expectations. Consider boosting your income with one of these strategies:</p><ul><li><p> <b>Ask for a raise. </b>In a tight labor market, your proven skills and track record are worth money to your employer.</p></li><li><p> <b>Ask for a promotion. </b>Where can you move within the company to improve your income and long-term prospects?</p></li><li><p> <b>Look for a better-paying job. </b>If your current employer can’t (or won’t) raise your wages, salary, or offer a promotion, perhaps another employer will.</p></li><li><p> <b>Sell what you don’t need. </b>Furniture, clothing, bags, sneakers, collectibles, computers, and any other items you no longer need may earn you a few dollars. Bonus: you’ve decluttered and simplified your life.</p></li><li><p> <b>Start a side gig. </b>You don’t have to take on a second full-time job: try doing odd jobs from an online marketplace or rent out a spare room or garage space if that’s an option.</p></li></ul><h2>The Bottom Line</h2><p>Budgeting, saving, paying down debt, increasing your side income—any steps you take to shore up your finances—is work. But putting yourself on solid financial footing can also alleviate the stress that comes with falling short month after month. It puts you on track to meet your financial goals, whether that’s saving for a much-needed vacation, putting money away for a home or college, or enjoying a guilt-free night out without worrying how you’ll pay for it. </p><p>As the cost of living fluctuates and your life circumstances change, living within your means can be an ongoing challenge. But it’s also the definition of living comfortably. Figuring out how to meet your expenses with money to spare<i> is</i> the bottom line. Master this skill and you’ll start gaining control over your money and getting ahead.</p>

Review your financial plan to stay on track by adjusting your saving, budgeting, and spending as needed and reflect on the progress you've made.

<p>Without regular attention and ongoing maintenance, financial plans tend to be forgotten or simply fall apart. Reviewing the plan you made six months ago not only allows you to reflect on the progress you&#39;ve made, it&#39;s an organizational opportunity to ensure you stay on track by adjusting your saving, budgeting, and spending as needed—before it&#39;s too late.  </p><h2>Why Mid-Year Financial Checkups Work </h2><p>Setting your financial goals and developing a budget at the beginning of the year helps you focus on what you want to achieve in the year ahead. Life events like the birth of child, a job change, or economic fluctuations can trigger tax and other financial implications that require immediate attention. </p><p>Checking in on your financial plan mid-year can help you reflect on the progress you&#39;ve already made, but also be an opportune time to make any changes and adjustments necessary to ensure you reach the financial goals you set out to achieve. It is also a great time to reevaluate your overall plans. </p><p>Maybe your savings priorities changed, you got a new job, or your expenses are more than you anticipated. Regardless of where you are mid-year, pausing midway through the year to review your financial picture can help you map out the best plan for the remaining months ahead.</p><h2>8 Ideas for Your Mid-Year Financial Review </h2><h3>1. Rethink your budget. </h3><p>Your budget should be a top priority for any financial checkup. If you created a new budget at the beginning of the year, now is the perfect time to reflect on how well that budget is working for you. Have you made progress toward your goals? If not, consider cutting spending and building savings to help build momentum for the remaining months of the year.  </p><p>This is also a good time to decide if your budget is really working for you. If you created a detailed budget that you’re having a difficult time sticking with, consider shifting to a more realistic (flexible) spending plan. Remember, there&#39;s no one right way to manage your money.  </p><h3>2. Look at your credit report. </h3><p>Checking your credit report throughout the year helps you make sure you’re in good shape should you need to apply for new credit. But even if you’re not actively looking to borrow money right now, checking your credit report allows you to make sure you’re not a victim of identity theft or fraud. It’s also the first step in correcting any information that may be inaccurate. Visit <a href="https://www.annualcreditreport.com/requestReport/landingPage.action">AnnualCreditReport.com</a> to obtain free copies of your reports from all three national credit bureaus (Equifax, Experian, TransUnion). </p><h3>3. Renegotiate your lease. </h3><p>Over the past two years, rent prices have generally increased by more than 15% nationally. The national median rental now stands at $2,029. If your lease is up for renewal soon, it may be time to re-evaluate your lease agreement to ensure you’re getting your money’s worth and paying for only what you need. Usually, landlords want to keep good tenants and so the good news is you may not have to move to find a better deal. You can start by looking at similar nearby rental rates to get a sense of the market and determine a price that seems fair and manageable. About two to three months before your lease expires, approach your landlord to ask if they would be willing to negotiate on the rent. Offering them something in return—such as signing a longer lease or paying the last month’s rent upfront—may help swing things in your favor. Timing often matters when it comes to negotiating your rent so it’s best to know whether you’re in a buyer’s market or your landlord plans to sell the property soon.</p><h3>4. Check your health benefits.</h3><p>If you’ve experienced a qualifying life event or your financial situation has changed, you may not have to wait for the open enrollment period (November through January, typically) to buy a new health plan or makes changes to an existing plan. While it varies by state, some common ways you can qualify for a special enrollment window include:</p><ul><li><p>Loss of employer-sponsored coverage, aging out of your parent’s health plan, becoming ineligible for student health coverage </p></li><li><p>Relocation</p></li><li><p>Marriage or divorce </p></li><li><p>Birth or adoption of a child</p></li><li><p>Low-income families</p></li><li><p>Returning from active-duty military service</p></li><li><p>Gaining citizenship or permanent legal residency</p></li></ul><h3>5. Reevaluate your retirement accounts. </h3><p>When was the last time you reviewed your 401(k) plan and/or IRAs? Not only does making the maximum allowable contribution using pre-tax dollars add up significantly over time, if you&#39;re not taking advantage of a company 401(k) match, that&#39;s money you&#39;re leaving on the table. </p><p>Mid-year is also a good time to look at your investment strategy. How have market fluctuations affected your portfolio? Are your investment choices holding up? This isn’t something you have to do alone. Many companies offer assistance with retirement planning, or you can reach out to a certified financial planner to help you develop or make any needed adjustments.  </p><h3>6. Anticipate tax implications.<b> </b></h3><p>Assessing your taxes halfway through the year can help you reduce your tax burden and mitigate any potential tax consequences. It’s always a good idea to review your tax withholdings mid-year to ensure you’re not over- or under-contributing and adjust accordingly. Also, think about any major life changes, such as marriage, divorce, the birth or adoption of a child, or starting a business, and how it may affect your taxes at the end of the year. </p><h3>7. Reexamine your debt strategy. </h3><p>If you’re having trouble finding the motivation to repay your debt, consider the <a href="/resource-center/personal-finance/steps-to-decimate-debt-the-debt-snowball-method">debt snowball</a> method. With this strategy, you pay as much as you can each month toward your smallest debt while paying only the minimum due on your other debts. When the first debt is paid off, you move on to the next smallest, and so on until you work your way up until all your debt is paid off.  </p><p>If you’re motivated to pay off your debt but feeling overwhelmed by interest rates and overall costs, the <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-the-debt-avalanche-method-and-how-does-it-work">debt avalanche</a> method could be the strategy you need. It works by paying your debts with the highest interest rates first, paying only the minimum on your other debts, then moving on to the next highest, and so on. This method requires more discipline, but it could save you more money in the long run.  </p><h3>8. Revisit your personal financial goals.</h3><p>If over the past year you’ve had to delay plans that would help you move forward financially, such as buying a new home, landing a new job, relocating to a more affordable area, or retiring early, you’re not alone. Though disappointing, financial setbacks are usually good chances to revisit how to bring about true financial change. </p><p>Looking back over the past several years, many of us have had time to assess what’s next as individuals and a society. We have a fresh opportunity to envision what our future could look like outside the box of what makes a ”good” life. When we go through periods of disruption, loss, or major change, it’s an excellent time to rewrite the rules for ourselves and build a stronger, more resilient and sustainable way of living that enables even greater financial security for you and your family.</p><h2>Taking Action After Your Mid-Year Financial Checkup </h2><p>A mid-year financial checkup should give you a clear idea of what actions you need to take to stay on track for your goals. Here are some tried-and-true recommendations to help you keep moving forward through the remainder of the year. </p><h3>1. Build or maintain your emergency fund. </h3><p>Putting even a small amount aside for emergencies can help you recover more quickly from financial setbacks and keep your finances on track. If you don’t already have three to six months of living expenses set aside, recommit to allocating money each month to rebuild or contribute even more to your emergency fund. It might take a while, but it’s worth it. Plus, stashing the money into a <a href="https://www.lendingclub.com/personal-savings/high-yield-savings">high-yield savings account</a> can help your money grow faster compared to a regular checking or savings account.</p><h3>2. Monitor your spending. </h3><p>Go through your bank and credit card statements from the past couple of months and make a list of all expenses you can either cut back on or eliminate altogether. Don’t stop at just the shopping and dining out expenses. Instead, take a close look at all your monthly subscriptions, memberships or similar expenses. Chances are there are at least a few services you’re paying for that you’ve forgotten about or no longer really need.  </p><h3>3. Get a break on your insurance rates. </h3><p>Many insurance carriers offer discounts to loyal customers with safe driving records. If you’ve been paying the same rate for years, consider contacting your provider about potential discounts. It can also pay to shop around. Compare rates against a few insurance companies to ensure you’re still getting the best deal.  </p><h3>4. Get cozy with your credit score.  </h3><p>A higher credit score can generally help you access more favorable interest rates on credit cards, auto insurance premiums, as well as higher borrowing limits and terms on personal loans. If your score dropped since the beginning of the year, don’t be discouraged. Instead, find out why your credit score dropped, focus on making on-time payments across all your credit accounts, and work on paying down debt. These are major factors credit reporting companies use in determining your credit score.  </p><h3><b> </b>5. Renegotiate cable and internet bills. </h3><p>If you want to lower your cable and internet bills, try renegotiating with your current provider before switching over to another company. You might be surprised by how much you can knock off your bill just by asking. A quick phone call could help you uncover a special deal you didn’t know about, or your provider might be willing to offer you a discount to keep you from leaving.  </p><h3>6. Consider your loan options. </h3><p>If you’ve improved your credit score over the past year and you’re looking to pay down high-interest debt, consider a <a href="https://www.lendingclub.com/personal-loan/debt-consolidation">debt consolidation loan</a>. A debt consolidation loan is a form of debt refinancing that combines multiple balances from credit cards and other high-interest loans into a single loan with a fixed rate and term. It can help you save money by reducing your interest rate or make it easier to pay off debt faster. A debt consolidation loan may also lower your monthly payment. Shop around for the best APR and loan terms by checking your rate with several different lenders before making a decision. And avoid the temptation to accumulate new debt while you’re paying off your debt consolidation loan. </p><h2>The Bottom Line </h2><p>Examining your finances midway through the year is a good habit to get into. A mid-year financial checkup allows you to assess how well you’re progressing toward your annual financial goals and make adjustments along the way—like retooling your budget, cash flow, spending, living expenses, and health benefits.</p><p>These checkups, combined with everyday financial health practices, can help you keep your personal finances on track, no matter what life may throw your way. </p>

Your credit score plays a role in nearly every financial move you make. Having a great credit score can save you hundreds (or thousands) of dollars a year through lower interest rates on your credit card accounts, personal loans, moving loans, car loans, or mortgage. 

<p>Credit scoring models evolve over time, creating a more accurate prediction of your credit behavior with every new update. The FICO<sup>®</sup> Score 10 and FICO<sup>®</sup> Score 10T, known as the FICO<sup>®</sup> Score 10 Suite, are the latest credit scoring models from the Fair Issac Corporation (FICO). Introduced in 2020 and expected to be more commonly used in the future, the FICO<sup>®</sup> Score 10 Suite includes some of the biggest changes the popular credit scoring model has seen in years.</p><p>Here’s everything you need to know about the latest FICO<sup>®</sup> Score update and what it means for you.</p><h2>What&#39;s a FICO<sup>®</sup> Score?</h2><p>Your FICO<sup>®</sup> Score is a particular brand of credit score developed and calculated by the Fair Isaac Corporation (FICO). FICO is one of the credit scoring models commonly used by lenders to predict credit behavior and estimate credit risk, such as how likely you are to repay a loan on time based on information collected. Scores range from 300-800 or 250-900, depending on the specific FICO scoring model used.</p><p>While each FICO<sup>®</sup> Score model calculates scores somewhat differently, generally FICO pulls credit information from the three main credit bureaus (Experian, TransUnion, and Equifax) and cites five <a href="https://www.lendingclub.com/resource-center/personal-finance/what-affects-your-credit-scores">key factors that influence how all scores are calculated</a>. These five factors, or behaviors, are your:  </p><ul><li><p>Payment history</p></li><li><p>Total credit used (amount of debt owed)</p></li><li><p>Length of credit history</p></li><li><p>New credit accounts</p></li><li><p>Mix of credit types</p></li></ul><p>Since FICO pulls information from all three bureaus, you’ll have three different credit scores, which may vary somewhat, as not all bureaus report information in the same way. Your credit score will also change frequently, and sometimes even daily as new information in your credit reports become available.</p><h2>What’s Different About the FICO<sup>®</sup> Score 10 Suite?</h2><p>The FICO<sup>®</sup> Score 10 Suite is the newest update to the FICO credit scoring model and is comprised of two scores: FICO<sup>®</sup> Score 10 and FICO<sup>®</sup> Score 10T. Designed to be the most predictive and comprehensive credit score model developed by the company to date, the FICO<sup>®</sup> 10 Suite allows lenders who use it to make better decisions when measuring credit risk. With the FICO<sup>®</sup> Score 10 Suite, your credit score is still determined by the five key factors mentioned above and you’ll still be graded on the same three-digit scale, however, the new model has made two important changes.</p><h3><b>FICO</b><sup>®</sup><b> Score 10</b> </h3><p>FICO<sup>®</sup> Score 10 changes the weight of factors in your credit file. Late payments and credit utilization may have a greater impact on your score than in the past. However, FICO 10 is similar to previous FICO versions—lenders who use the base FICO 10 model see a snapshot of your credit profile based on those key factors.</p><h3><b>FICO</b><sup>®</sup><b> Score 10T</b></h3><p>FICO<sup>®</sup> Score 10T uses a powerful new set of predictive characteristics generated from both traditional and “trended” credit bureau data. Instead of providing a simple snapshot of your credit reports, FICO<sup>®</sup> Score 10T shows lenders how your financial health evolves over time. FICO<sup>®</sup> Score 10T looks at your credit balances, payments made, and credit debt over the past 24-plus months, versus simply giving you a score based on a monthly reported balance.</p><h2><b>What Does the FICO</b><b><sup>®</sup></b><b> Score Update Mean for You?</b></h2><p>FICO<sup>®</sup> Score 10T adapted trending data as a way for lenders to determine if you’re moving toward financial health, away from it, or largely staying the same. By looking at a full 24-plus months of data, in theory, lenders can better predict recent trends to see how you may repay in the future. </p><p>The change in the way data is presented also means some actions may impact your score more under the new model. If you’re steadily paying down your debt balances (or you pay in full every month) your FICO<sup>®</sup>Score may improve. However, taking on a lot of debt or letting large debts revolve over several months may hurt your credit score more under the FICO<sup>®</sup> Score update. It will also be even more important to pay your bills on time each month and keep your accounts current. Under FICO<sup>®</sup> Score 10, missed payments will have a bigger impact on your score.</p><p>If you’re planning to apply for new credit or take out a loan soon, keep in mind that not all lenders will use FICO<sup>®</sup> Score 10 or FICO<sup>®</sup> Score 10T. Adopting an updated credit scoring model can be costly and time-consuming for lenders. Since FICO keeps older versions active, many simply opt to stick with what the model they’re currently using. The new FICO<sup>®</sup> Score 10 Suite does not replace older FICO credit scoring models such as FICO 2, 4, 5, 8, or 9. Many lenders may still be using older models in making credit approval decisions.</p><h2><b>What’s My Credit Score?</b></h2><p>While credit reports do not usually include your credit score, you can get a free copy of your credit report every 12 months from each of the three nationwide credit bureaus (Experian, Transunion, and Equifax). Through December 2023, you can also get a free copy of your credit report each week at <a href="https://www.annualcreditreport.com/index.action">AnnualCreditReport.com</a>. </br></br>In the past, to get your actual credit score you typically had to pay a credit score service. However, recently many major credit card companies (and some banks and auto loan companies) have begun providing credit scores for their customers on a monthly basis, free of charge. Experian now includes your credit score for free on reports they mail to you. </p><p>If you decide to pay a fee to see your credit score, check several free sources to understand your potential range of credit scores. But keep in mind these scores may be different than the score your lender ends up using.</p><h2><b>The Bottom Line</b></h2><p>The latest FICO<sup>®</sup> Score update, FICO<sup>®</sup> Score 10 and FICO<sup>®</sup> Score 10T are designed to outperform all previous FICO scoring models, helping lenders to better evaluate consumers’ credit risk. Whatever scoring model your lender uses to make lending decisions, similar factors determine whether you have excellent, good, fair, or poor credit. By borrowing only what you need, <a href="https://www.lendingclub.com/personal-loan/debt-consolidation">taking control of your debt</a>, and paying your bills on time, you’re on your way to a great credit score, no matter the scoring model. </p><p></p>

Learn four of the best ways to check your credit score, plus types of scoring models, what your credit score means, and the importance of checking your credit score on a regular basis.

<p>Your credit score is an important indicator of your financial health. It indicates to lenders how likely you are to repay a loan or credit account on time which influences the loan terms and interest rate you may receive. Knowing how to check your credit score can potentially save you thousands of dollars every year. </p><p>Here&#39;s what you need to know about the best ways you can check your credit score, types of scoring models, what your credit score means, and why it’s important to check your score regularly.</p><h2>4 best ways to check your credit score</h2><p>There are several ways you to access your credit score, both for free and on a paid basis. Paid credit monitoring services typically offer many extra features that you may or may not want to take advantage of. Here are four of the main ways to access and check your credit score.</p><h3>1. Check with your credit card company or lender. </h3><p>Many lenders, major credit card companies, banks, credit unions, and some auto loan companies offer free credit scores access to all their customers as a benefit of doing business with them. Your score may be listed on your monthly statement or found by logging in to your online customer account portal. Some financial institutions may even allow you to access their free credit score services even if you&#39;re not a current customer. </p><p>In addition to your free credit score, you may also receive other benefits, such as access to your credit reports, report highlights, real-time alerts when changes are made to your score, weekly or daily score updates, and more. Additionally, you may also be offered free credit monitoring services in the event of a data breach.</p><h3>2. Talk to a non-profit financial counselor.</h3><p>Not-for-profit credit and housing counselors trained by the U.S. Department of Housing and Urban Development (HUD) can usually provide you with a free credit report and score, as well as assist you in reviewing them.</p><h3>3. Use a credit score monitoring service.</h3><p>You may have noticed many services and websites advertising a “free credit score.” While some of these sites may not charge a fee (because their services are funded by advertisers), others may require you sign up for a credit monitoring service that carries a monthly subscription fee before you’ll get your “free” score. Often advertised as “free” trials, if you don’t cancel these services within the specified period (often as short as one week), you could wind up being charged a monthly fee. Before using one of these services, be aware of any monthly subscription fees, and make sure understand what you’re signing up for and how much it could cost you.</p><p>Credit monitoring services offer all kinds of other features, such as access to your credit score from all three credit bureaus, identity theft protection, dark web surveillance, and other premium features that usually come with fees. If you’re interested in any of those, be sure to shop around.</p><h3>4. Buy your credit score.</h3><p>You can buy a score directly from the credit reporting companies. For instance, you can buy your FICO<sup>® </sup>Score credit score at <a href="https://www.myfico.com/">myFICO<sup>®</sup></a>. There are other companies and services that may also offer scores for purchase. Keep in mind, if you choose to buy your credit score, you’re not required to also purchase credit protection, identity theft monitoring, or any of the other services that may be offered to you at the same time.</p><p>Sometimes, credit score services are offering an &quot;educational&quot; credit score, instead of a score that a lender would use. The Consumer Financial Protection Bureau (CFPB) published a <a href="https://files.consumerfinance.gov/f/201209_Analysis_Differences_Consumer_Credit.pdf">report on how to tell the difference between educational scores and the scores lenders use.   </a>The CFPB found that educational scores will be quite different than the score that used by a lender in one out of every four people. When deciding where to get your credit score, it’s important to know what kind of score it is.</p><h2>Types of credit scores</h2><p>Depending on where you look, there are several different credit scores you may come across. The two major credit scoring companies are FICO<sup>®</sup> and VantageScore<sup>®</sup>, and both have multiple credit scoring models:</p><ul><li><p><b>FICO</b><sup>®</sup><b> Score: </b>Developed by the Fair Issac Corporation and launched in 1989, FICO was a pioneer in developing a method for calculating credit scores in the U.S. When calculating your score, FICO evaluates five factors: payment history, total credit used, length of credit history, new credit accounts, and credit mix. There are a few dozen different versions of the FICO<sup>®</sup> Score credit score out there, including specialized models for auto loans, credit cards, and mortgage loans.</p></li><li><p><b>VantageScore</b><b><sup>®</sup></b><b> Credit Score: </b>VantageScore is another popular credit scoring model, developed jointly by the three major credit bureaus: TransUnion<sup>®</sup>, Experian<sup>®</sup>, Equifax<sup>®</sup>. This score was launched in 2006, and while it includes the same factors as the FICO<sup>®</sup> Score, it weighs them differently. </p></li></ul><p>While the VantageScore scoring model is available to thousands of lending institutions, the FICO<sup> </sup>scoring model is more widely used in individual lending decisions. Usually, you won’t know which model a lender will look at when you apply for credit.</p><p>You may come across other credit scores as well. For example, the three major credit bureaus all have their own proprietary credit scores, but these are only for “educational” purposes and aren&#39;t used in lending decisions.</p><h2>What your credit score means</h2><p>Credit scores are designed to predict credit behavior, such as how likely you’re to repay money borrowed. If you&#39;re relatively new to credit or you&#39;ve made some mistakes in the past, you may have a lower credit score. This is an indicator to lenders that you could be at risk of defaulting on payments in the future. In contrast, a high credit score generally suggests you’re more likely to pay on time. </p><p>Here&#39;s a quick look at the credit score ranges for FICO and VantageScore:</p><table><tr><th><p><b>FICO</b><b><sup>®</sup></b><b> Score Categories</b></p></th><th><p><b>Range</b></p></th></tr><tr><td><p>Exceptional</p></td><td><p>800 - 850</p></td></tr><tr><td><p>Very Good</p></td><td><p>740 - 799</p></td></tr><tr><td><p>Good</p></td><td><p>670 - 739 </p></td></tr><tr><td><p>Fair</p></td><td><p>580 - 669</p></td></tr><tr><td><p>Poor</p></td><td><p>300 - 579</p></td></tr></table><table><tr><th><p><b>VantageScore Categories</b></p></th><th><p><b>Range</b></p></th></tr><tr><td><p>Excellent</p></td><td><p>781 - 850</p></td></tr><tr><td><p>Good</p></td><td><p>661 - 780</p></td></tr><tr><td><p>Fair</p></td><td><p>601 - 660</p></td></tr><tr><td><p>Poor</p></td><td><p>500 - 600</p></td></tr><tr><td><p>Very Poor</p></td><td><p>300 - 499</p></td></tr></table><p>Generally, to qualify for the best interest rates on <a href="https://www.lendingclub.com/personal-loan">unsecured personal loans</a> or credit cards, you need to have good credit or better. You can still get approved for loans and credit cards if you have fair or poor credit, but you can typically expect lenders to charge higher interest rates and fees to compensate for the additional risk.</p><h2>Check your credit score regularly</h2><p>It&#39;s a myth that checking your credit score hurts it. While it&#39;s technically an inquiry, it’s a soft credit inquiry, so there&#39;s no impact to your score. In fact, it&#39;s a good idea to check your credit regularly because it can help you:</p><ul><li><p>Understand how your actions affect your score, particularly if you&#39;re new to credit.</p></li><li><p>Track your progress in improving your credit score.</p></li><li><p>Spot potential issues before they cause long-term damage.</p></li><li><p>Address potential inaccuracies or even fraud before it wreaks havoc on your life.</p></li></ul><p>As you work to build your credit, you&#39;ll be able to benefit from lower interest rates, better credit card rewards and benefits and even potentially qualify for lower homeowner&#39;s insurance and <a href="https://www.lendingclub.com/auto-refinancing">auto loan refinance</a> rates. Additionally, landlords may review your credit score when you apply for a lease, and while employers can&#39;t check your credit score, they can, with your consent, review your credit reports. So, having good credit can give you an advantage over other lease applicants or job candidates.</p><h2>The bottom line</h2><p>There are several ways to get your credit score, including from your credit card issuer or other lender, a non-profit counselor, a credit reporting agency, or from a credit monitoring service. While there are plenty of credit monitoring services offering your credit score for a fee along with other premium features, for most people, free credit monitoring services are enough. Take your time to compare what&#39;s available to determine which one is best suited for your needs.</p>

When paying down debt quickly is your main goal, using either the debt snowball or avalanche method can work. We examine the benefits and drawbacks of each.

<p>When it comes to paying down debt quickly and effectively, you may be weighing the pros and cons of the debt snowball method vs. avalanche to accelerate debt paydown, and wondering which would work best for you. No matter what method you go with, using either the debt snowball or the debt avalanche method is far better than continuing to make only the minimum payments on your loan balances. </p><p>For example, let’s say you make minimum payments of $700 a month on a total of three debts.</p><table><tr><th><p>Account Type</p></th><th><p>Balance</p></th><th><p>Annual Percentage Rate (APR)</p></th><th><p>Minimumm Monthly Payment</p></th></tr><tr><td><p>Credit card</p></td><td><p>$5,000</p></td><td><p>23%</p></td><td><p>$100</p></td></tr><tr><td><p>Personal loan</p></td><td><p>$10,000</p></td><td><p>9%</p></td><td><p>$450</p></td></tr><tr><td><p>Student loan</p></td><td><p>$2,000</p></td><td><p>6%</p></td><td><p>$150</p></td></tr><tr><td><p>Total</p></td><td><p>$17,000</p></td><td><p></p></td><td><p>$700</p></td></tr></table><p>If you made only the minimum payments on these balances, it would take about 14 years and $12,795 in interest before they would be paid off in full.</p><p>In contrast, using either the debt snowball or avalanche method would help you pay off all these balances more quickly, reducing your total cost of borrowing. However, while both strategies can help you accelerate your repayment progress over time, they do differ in a few important ways. Here’s how to compare debt snowball vs. avalanche and choose the approach that works best for you. </p><h2>Debt Snowball vs. Avalanche: How Are They Different?</h2><p>As you compare the debt avalanche and debt snowball repayment methods, these are the major differences to keep in mind:</p><table><tr><th><p>Debt Avalanche</p></th><th><p>Debt Snowball</p></th></tr><tr><td><p>Pays down highest interest rate debts first</p></td><td><p>Pays down smallest debts first</p></td></tr><tr><td><p>Continue minimum payments on all balances</p></td><td><p>Continue minimum payments on all balances</p></td></tr><tr><td><p>May help pay down debt faster</p></td><td><p>May take longer to pay down debt (depending on the number and size of balances)</p></td></tr><tr><td><p>May help maximize interest savings over time</p></td><td><p>May cost more in interest over time</p></td></tr><tr><td><p>Requires discipline and self-motivation</p></td><td><p>Early wins help you remain motivated</p></td></tr></table><h2>What Is the Debt Avalanche Method?</h2><p>While you continue to make minimum payments on all your loans and credit card accounts, with the debt avalanche method, when you have extra cash to put toward debt, you add it to your monthly payment on the account with the highest interest rate first.</p><p>Once you&#39;ve paid off that first high interest debt balance, you then roll the money you were putting toward it into the monthly payment amount of the account with the next highest interest rate. The idea is to keep repeating this method until all your balances are paid off.</p><p>Here’s how a debt avalanche would work using the debts exampled above ($17,000 in debt with minimum monthly payments totaling $700). For example, let’s say you can afford to put an extra $100 each month toward debt paydown. </p><p>With debt avalanche, you would add your extra $100 to the $100 minimum monthly payment on the credit card. Once that credit card is paid off, you would then roll that $200 payment into the $450 minimum payment on your personal loan. Once that personal loan is paid off, you would apply the now $800 to your student loan balance until it is also paid in full. </p><h3>Pros and Cons of the Debt Avalanche Method</h3><p>The debt avalanche approach to paying off debt can save you hundreds, if not thousands, of dollars on interest over the life of your loans. However, there are some potential downsides to consider, especially if your highest interest rate accounts are also the ones with larger balances. While paying these off first will save you the most in interest over time, they will also take longer to pay off.</p><h4>Pros</h4><ul><li><p>May help maximize interest savings.</p></li><li><p>Shortens your debt payoff timeline.</p></li><li><p>Good for those who are self-motivated to pay down debt.</p></li></ul><h4>Cons</h4><ul><li><p>May take longer to pay down your first few accounts.</p></li><li><p>May be difficult to stay motivated.</p></li><li><p>May not make a significant difference on interest savings compared to debt snowball.</p></li></ul><h2>What Is the Debt Snowball Method?</h2><p>Just like the debt avalanche strategy, the debt snowball method involves making the minimum payment on all of your debts, however, you would instead apply any extra cash you have to paying down the account with the <i>lowest</i> balance first. </p><p>Once you&#39;ve paid off your first lowest-balance account, you would roll the amount you were paying on that balance into the payment on the account with the next-lowest balance. Like the debt avalanche, you would continue this process for each account until you had paid off all your debt balances.</p><p>Here’s how a debt snowball would work using the same debts exampled at the beginning of this article ($17,000 in debt with minimum monthly payments totaling $700). Let’s again assume you can afford to put an extra $100 each month toward debt paydown. </p><p>With debt snowball, you add the extra $100 to the $150 minimum monthly payment you&#39;re paying on your student loan—your smallest balance—first. Once that loan is paid off, you then roll that $250 payment on to the $100 minimum payment on your credit card. Once that credit card is paid off, all $800 will go toward paying down your personal loan until it&#39;s paid in full.</p><h3>Pros and Cons of the Debt Snowball Method</h3><p>Like the debt avalanche method, the debt snowball approach also has its advantages and disadvantages. Generally, the biggest takeaway here is paying down smaller balances first can make you feel like you’re making a lot of progress. However, depending on your debt situation, you may or may not be sacrificing some of the interest savings you could get with debt avalanche.</p><h4>Pros</h4><ul><li><p>Allows you to pay down smaller debts quickly.</p></li><li><p>Can help you stay motivated for paying down debt.</p></li><li><p>Could provide similar interest savings compared to debt avalanche.</p></li></ul><h4>Cons</h4><ul><li><p>Can potentially take longer than the debt avalanche method.</p></li><li><p>Could provide lower interest savings compared to debt avalanche.</p></li><li><p>Still requires discipline.</p></li></ul><h2>The Bottom Line</h2><p>As you to start to compare the debt snowball vs. avalanche methods and think about ways to <a href="https://www.lendingclub.com/personal-loan/debt-consolidation">free yourself from credit card and other debt</a> once and for all, it&#39;s important to think about your situation, your goals, and your mindset. </p><p>The debt avalanche method focuses on interest rates rather than balances. So, if you have accounts with both high interest rates and high balances, it may take a while before you start to feel like you’re making any significant progress. That’s why the debt avalanche approach is best for budget-oriented people who don&#39;t need the psychological boost of paying off smaller balances quickly to remain motivated for debt paydown. </p><p>In contrast, the debt snowball method is designed to help you stay motivated with early wins by having you focus on paying down your smallest balances first. So, if you&#39;ve struggled to stick to a debt payoff plan in the past, this option may be a better fit for you. However, depending on your account balances and interest rates, using debt snowball may mean it takes longer to pay down your debt and you could end up pay more in interest than you would if you went with debt avalanche. So, make sure you&#39;re satisfied with that trade-off. </p><p>In some cases, the difference between the debt avalanche and debt snowball methods in terms of interest savings may be insignificant. Using online debt avalanche and debt snowball calculators, you can get an idea of how each approach helps to accelerate your debt payoff plan and choose the one you believe would help you stick to your goal. </p>

Having honest conversations about money before you tie the knot can minimize financial disagreements and put you on track to reach #couplegoals.

<p>Finances are one of the most common causes of conflict between married couples. As your wedding date approaches, having honest conversations about money before you tie the knot can minimize financial disagreements and put you on track to reach #couplegoals such as buying a home, having children, and retiring comfortably. </p><p>Talking about finances before you marry isn’t as much fun as taste-testing wedding cake or choosing your honeymoon destination, but ultimately, it will have a much bigger impact on your future life together. Learn why couples need be on the same page about money, how to talk about money before marriage, and the best money questions to ask before marriage.</p><h2>How Important Is Money in Marriage?  </h2><p>Money can’t buy you love, but it can make the road to marital bliss a lot smoother. Poor money habits, on the other hand, can throw roadblocks in your way. For example, living above your means can make it challenging to save for a down payment on a home or put away funds for retirement. Carrying too much debt or paying your bills late can lower your credit scores, making it harder to qualify for a mortgage, car loan, or other types of credit.</p><p>Many people recognize the risks of bad financial habits and are eager to avoid them. In fact, three in five Americans say they’ve considered delaying marriage to avoid inheriting a partner’s debt, while 54% say a partner’s debt could lead them to consider divorce, according to a recent One Poll survey.</p><p>If you’re the one with less-than-stellar finances, worries about your partner’s potential reaction may cause you to hide the truth. While common, lying about money can have harmful consequences. Among adults who admitted to “financially deceiving” a partner in a 2021 poll by the National Endowment for Financial Education (NEFE), 42% said their behavior caused an argument and 32% said it damaged their partner’s trust. </p><p>Now that you know how important it is, how do you talk about money before marriage? We break it down into three main areas for discussion: your past financial experiences and attitudes, your future goals, and your current financial situation.</p><h2>Money Questions to Ask Before Marriage</h2><h3>1. What are your past experiences and attitudes toward money?</h3><p>The first set of money questions to ask before marriage start by digging into each of your previous experiences with money. Use these discussions to uncover each other’s attitudes toward money and the roots of those feelings. Here are some of the key questions to ask yourselves that you can use as conversation starters to begin exploring this topic:</p><ul><li><p>How did your parents communicate about money? Was it a source of friction? Did the family have enough money to meet everyone’s needs?</p></li><li><p>What have been your experiences with money as an adult, and how have these experiences affected your feelings toward money? For example, did you run up credit card debt that you struggled to pay off?</p></li><li><p>What’s your attitude toward money? Some people see money as signifying security, freedom, or success. Others view it as corrupting. What does money mean to you?</p></li><li><p>What household income level do you need to feel financially secure?</p></li><li><p>When do you feel stressed about money? How do you handle the stress?</p></li><li><p>What are your biggest priorities for your money? For example, you might want to travel the world, save for a home, or be generous to charities and friends.</p></li><li><p>If one of you won the lottery, what would you do with the money?</p></li></ul><h3>2. What are your future goals and expectations?</h3><p>You and your partner have probably already shared a few deep conversations about your life goals and dreams. The next set of money questions to ask before marriage explore the financial aspects of those goals to uncover expectations your partner may have and learn how they align with yours. Here are some money questions to ask yourselves and discuss as they relate to career, home and family, retirement, and more:</p><h4>Career</h4><p>How do you see your career progressing? Are you happy with your current career trajectory, or do you want to make a change? Will advancing in your current career or making a career change require going back to school for additional training? If so, how much will that cost? How could a career change impact your future earning potential?</p><h4>Power</h4><p>If your incomes are very different, how would that affect your relationship? Do you feel the partner with a higher income should make most of the money decisions? What do you think about sharing a joint account? How can you equitably make joint purchases and investments?  </p><h4>Home</h4><p>Do you want to buy a home in the future or are you happy renting? Do you envision owning a second home or income rental property someday? Do you imagine settling down somewhere in particular?</p><h4>Children</h4><p>Do you want to have children? If so, will one of you stay home to raise them? For how long? How might that affect your family’s income? If both of you want to work, how will you handle childcare? Do you agree on public vs. private school education? Will you pay for their college tuition, or does one of you expect your children to finance their own education through work and scholarships?</p><h4>Family members</h4><p>Do you plan to support your parents financially or have them live with you when they get older? Do your parents expect this? Do you currently support any family members by paying child support, alimony, rent, or tuition? What would you do if a family member asked you to give or lend them money?</p><p>On the flip side, do your family members support you financially (for example, do your parents help pay your rent)? Do you expect them to help you financially after marriage (such as by making a down payment on a home, paying your children’s private school tuition, or starting a college fund for your kids)?</p><h4>Retirement</h4><p>How do you picture your retirement years? Will you be content to stay home and play with your grandchildren or do you want to travel the world? When do you expect to retire? <a href="https://www.lendingclub.com/resource-center/personal-savings/essential-guide-to-planning-for-your-retirement">Are you currently saving for enough for retirement</a> to meet your joint goals? If so, what type of retirement plan do you have and what is your progress toward your goal? When it comes to investing, what is your risk tolerance? How comfortable are you both about managing your retirement savings and other investments on your own, or will you hire a professional financial advisor? </p><h4>Wedding and honeymoon</h4><p>If you don&#39;t already have a firm wedding plan and wedding budget in place, the answers to your previous questions may help guide your plans. Do you want a big wedding, a small wedding, or a destination wedding? How will you pay for the wedding? If you can’t afford the wedding or honeymoon of your dreams, what are some alternatives?</p><p>You may find that your and your partner’s answers to the questions from this topic area are surprising, or somewhat mismatched. For example, you might discover your partner expects you to become a stay-at-home parent after the children are born, while you had dreams of making partner at your law firm before you turned 40. Or, while you daydream about buying a home down the street from your parents, your partner envisions living in an apartment overseas. Or, perhaps your idea of the “golden years” is playing shuffleboard at the senior center, but your partner’s idea is more like trekking Machu Picchu. Once you’re aware of the other’s expectations, it will be important to talk through any differences and find common ground. At the very least, you can move toward your financial future together with eyes wide open.  </p><h3>3. What is your current financial status?</h3><p>As you plan how you’ll join finances, this last set of money questions to ask your partner before marriage revolve around your partner’s current financial situation.</p><h4>Money management</h4><p>How do you handle your money? Are you a spender or a saver? Do you constantly check your accounts or rarely look at them? Do you follow a budget? Do you use financial apps to track your spending? </p><h4>Your incomes</h4><p>What is your annual salary and monthly take-home pay? Is your income stable or does it vary (for example, does one of you freelance or rely on tips)? Are any deductions made from your paycheck (such as contributions to a retirement plan or automated savings transfers)?</p><h4>Your assets</h4><p>Be open about any assets you bring to the marriage, including investments, savings, retirement accounts, real estate, or cars. Do these assets bring in income? If so, how much per month?</p><h4>Your liabilities</h4><p>It’s important you both lay out your debts and obligations, and understand each other’s attitudes toward debt in general. Do you have student loans, auto loans, mortgage loans, or credit card debt? How much do you owe, what is the interest rate, and what is the monthly payment? </p><h4>Your credit scores</h4><p>Get a copy of your credit report for free at AnnualCreditReport.com to make sure it’s accurate. Your credit score may be available from your bank, your credit card company, or directly from the three major consumer credit bureaus (Equifax, Experian, and TransUnion).</p><p>Your credit score won’t merge with your spouse’s after marriage; each person maintains their own credit score. However, if you apply for credit together as co-borrowers, such as on a car loan or mortgage, lenders will take both credit scores into account. It could be more difficult to <a href="https://www.lendingclub.com/personal-loan">get a loan</a> if one of you has poor credit, so now’s the time to work on improving it.</p><p>Whenever you discuss your finances, be careful not to criticize or judge your partner. NEFE’s poll found that 34% of people who hid money issues from a partner did so to avoid disapproval, while 33% did so because they were embarrassed or fearful.  Be supportive: The goal is to gain perspective on your partner’s feelings about money. If you don’t understand something, probe deeper to find out why your partner feels the way they do.</p><h2>Best Ways to Manage Money in a Marriage</h2><p>Once you have all the details of your current finances in front of you, you can make joint decisions about how to manage your money going forward. When deciding how to handle money as a couple, here are the choices you’ll need to make:</p><ul><li><p>Should you have joint or separate checking and savings accounts? Some couples keep joint checking and savings accounts for joint spending (such as rent or groceries) and maintain separate checking accounts with smaller balances they can use for “fun” spending without feeling guilty.</p></li><li><p>Who will monitor online bill paying and other financial tasks? You may want to share these obligations or trade off every few months. That way, you’ll both be knowledgeable about your bills, accounts, and other financial information you choose to share. This way, if one person is hospitalized or dies, the other can easily take over the finances.</p></li><li><p>Will you create a couples budget?</p></li><li><p>Will you use the same financial app to budget and track your spending?  </p></li><li><p>How will you handle paying down debt? This includes the debt you came into the marriage with and the debt you incur as a couple.</p></li><li><p>How much do you need to save to <a href="https://www.lendingclub.com/resource-center/personal-finance/your-emergency-fund-the-essential-guide">build an emergency fund</a>?</p></li><li><p>How will you save for short-term financial goals (such as a vacation or a home)?</p></li><li><p>How will you save for retirement together?</p></li></ul><h2>The Bottom Line</h2><p>There’s a lot to talk about when it comes to keeping your financial partnership on solid ground, so don’t feel you have to cover it all in one sitting. Separate your topics of discussion into ongoing <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-a-money-date">money dates</a> will make it easier to talk about money, which can be an emotional topic. </p>

The movement to ditch private cars in favor of walking, biking, and taking public transportation has been gaining traction across the country. 

<p>With increased work flexibility and high gasoline prices, the movement to ditch private cars in favor of walking, biking, and taking public transportation has been gaining traction across the country. As more cities invest in public transport and bike lanes to reduce traffic and carbon emissions, at some point you might think about selling your car, too. But is this a good idea?</p><h2><b>8 Questions to Ask Before Selling Your Car</b></h2><p>Financially, selling your car may make sense if the savings or cash you could get would be more helpful to you than keeping the vehicle. In some situations, selling your car and replacing it with something cheaper or going without one entirely can be a great way to save money, make some quick extra cash, or pay off debt. Before making your decision, here are 8 questions to ask yourself first. </p><h3><b>1. Why do you want to sell your car?</b></h3><p>Clarifying the real reason(s) behind why you’re considering selling your vehicle can help you make a decision that will benefit you both personally and financially. Are you facing a temporary financial difficulty and need to raise cash quickly to make ends meet? Are high monthly auto loan payments preventing you from meeting your savings goals? Has paying off debt recently become a higher priority for you? Or maybe you’re rethinking how you’re spending money in general and want to reallocate expenses so they’re more aligned with your values and beliefs (e.g., reducing your carbon footprint).</p><p>If your future income is not dependent on having a vehicle and alternative ways of getting around are available and accessible in your community, selling your car can be a good way to raise extra cash quickly or pay down debt. For example, maybe you’re primarily working from home now and no longer require a car to commute to the office. Giving up your car in this situation could make a lot of sense, especially if you live in a two-car household. </br></br>Not owning a car can also help you save money on the cost of gas, registration, insurance and vehicle maintenance, reducing your expenses. Many people are choosing to embrace the slower pace and neighborhood connection that comes with not owning a vehicle, opting for active transportation (walking, biking, public transportation, ridesharing) instead. </br></br>If you find that growing your savings or increasing your cash flow is your true goal, selling your car for one that’s less expensive, or refinancing your existing auto loan may make more sense. </p><h3><b>2. What’s the true cost of owning your car?</b></h3><p>The cost of owning your vehicle is more than its purchase price. The true cost of car ownership is the total ongoing expense of owning and operating your vehicle on a monthly and annual basis. It’s important to know the true (or total) cost of car ownership because it gives you a baseline for comparison and how those expenses fit into your overall budget. When calculating the true cost of owning your car, you’ll want to take into consideration all the following:</p><ul><li><p>Payments of principal and compounded interest (if you have an auto loan)</p></li><li><p>Auto insurance premiums</p></li><li><p>Gasoline (and the rising cost of)</p></li><li><p>Parking fees and tolls</p></li><li><p>Licensing and registration</p></li><li><p>Maintenance and repair costs</p></li></ul><p>Once you’ve added up all the costs of owning your vehicle, you can more accurately assess how much you’ll save (going forward) if you decide to sell it and pocket the cash. You’ll also be able to compare the cost of owning your current vehicle more accurately with one that’s less expensive should you choose.</p><h3><b>3. How much can you sell your car for?</b></h3><p>Online tools like <a href="https://www.kbb.com/">Kelley Blue Book®</a> can help you research average selling prices and establish an approximate value for your car. Note that your car will likely be worth less as a dealership trade-in than if you sell it to a private individual. When it comes to depreciation, a new car’s value is most heavily impacted by depreciation in the first year, then again in the fifth year and beyond. Typically, the low-depreciation years two through four are a good time to sell and recoup as much value from your vehicle as possible.</p><h3><b>4. Do you still owe money on a car loan?</b></h3><p>Assuming you don’t own your car outright and have an auto loan, check your current interest rate and the payoff amount. Owing significantly more than the car’s worth is what’s known as being “under water” or “upside-down” on the loan, and it can complicate the decision to sell. In this situation, you might consider “driving through” the loan: Keep making payments until you own the car outright, or you owe less than the car is worth. </p><p>If your goal is to save money on interest or lower your monthly payments (or both), <a href="https://www.lendingclub.com/apply/site/auto-refinancing">auto refinancing</a> might be an attractive alternative to selling your car. Refinancing makes sense if you don’t have a great rate on your current loan, or if your credit score has improved since you got the loan, as you may qualify for a lower rate now.</p><h3><b>5. What’s the maintenance and mileage outlook on your current vehicle?</b></h3><p>Depending on the make and model of your car, looming maintenance needs can impact the price your car fetches. Generally, major maintenance hurdles are typically around 30,000, 60,000 and 100,000 miles. If your car is coming up on a big milestone, its value can drop. Maintenance costs also influence the “fix it or sell it” debate. Consider whether the repair will add value. Say your car is worth $5,000 if you don’t fix it, and worth $6,000 if you do. If the repair costs $2,000, it’s probably a bad idea—after all, you only gain $1,000 in value. </p><p>Another factor impacting the price you can sell your car at is mileage. The average miles driven per year in the U.S. is about 13,500 for most vehicles. When it comes time to sell your car, if your vehicle’s mileage is under the average for its age, it could be an attractive selling point to potential buyers.</p><h3><b>6. Are you ready to go carless?</b></h3><p>If you’re thinking about giving up your car altogether, slashing all car-related costs can be tempting. Nowadays, there are multiple ways to haul groceries and get yourself and your family from point A to B locally with cargo bikes, e-bikes, strollers, wagons, not to mention buses, subways, trains, and carsharing services. Be sure to think through your current lifestyle or commute and test drive the other available options before ditching your car altogether. Owning a car may not be all that important to you after all. And you may find going car-free brings you unexpected perks, adventure, and a better quality of life. </p><h3><b>7. If you still need a car, can you downsize?</b></h3><p>Let’s say you’re considering selling your car to pay off debt, but you still need a car to get around. Could you afford a smaller, less expensive vehicle? If you would need to borrow money to pay for it, think twice before selling your current vehicle. If you can sell your car, eliminate some of your debt with the proceeds from the sale, and can still afford to pay cash for a less expensive car, then it might be worth selling. And if you can downside into an slightly older model EV with low miles, you could also save a considerable amount of money on gas.</p><h3><b>8. What do you need to sell your car to a private party?</b></h3><p>Before you post an ad anywhere, get your paperwork in order and understand the documents you’ll need to close the deal. Your state will have specific requirements, but generally you’ll need the following:</p><ul><li><p><b>Vehicle bill of sale</b> documenting the terms and conditions of the sale (purchase price, VIN, model year, odometer reading, warranty, buyer/seller contact info and signatures)</p></li><li><p><b>Current vehicle title</b> proving the vehicle belongs to you; a duplicate title can be obtained from the Department of Motor Vehicles (DMV)</p></li><li><p><b>Vehicle title transfer</b> <b>form</b> transferring vehicle ownership from seller to buyer</p></li><li><p><b>Valid smog certification</b> (if your car isn’t exempt or state does not require it)</p></li><li><p><b>Lienholder signature and release</b> (if you have a loan)</p></li><li><p><b>Vehicle maintenance records</b> (if requested by the prospective buyer)</p></li></ul><h2><b>The Bottom Line</b></h2><p>Each car owner’s financial goals are unique, but reviewing these considerations should help you get to a confident answer. While one person might choose to embrace public transportation and fully eliminate car costs, another could be better served by trading in a high-maintenance car for a more affordable ride.</p><p>Are you curious if refinancing could be a better alternative to selling your car? Find out in minutes whether <a href="https://www.lendingclub.com/auto-refinancing">refinancing your existing auto loan</a> could reduce your cost of car ownership.</p>

Guide your teens to start making good financial choices now and enter young adulthood with more confidence. 

<p>We’re addressing the most common teenage money mistakes and what you can do to guide your older teens so they can start making good financial choices early in life and enter young adulthood with confidence.</p><h2><b>Teen Money Mistake #1: Living Beyond Their Means and Without a Budget</b></h2><p>If you want your teen to live within their means as an adult, it’s critical you model this behavior yourself. Most teens live in the moment which means they have difficulty seeing too far into the future, resulting in impulsive buying decisions. You can help by setting a good example.</p><h3><b>Guiding your teen to avoid overspending by setting goals and a budget:</b></h3><ul><li><p>Explain that living within your means is what you do by not overspending beyond the money you already have or know with certainty you will receive. </p></li><li><p>Show your teenager that by establishing very specific goals influences how they set up their budget, which then dictates what they will save and spend money on. Show them that tracking their spending and <a href="https://www.lendingclub.com/resource-center/personal-finance/50-30-20-rule-the-easy-budget-method-that-works">setting up a budget</a> is simple and easy.  </p></li><li><p>Help your teen by talking about the goals you’ve set for your own life, and what financial goals they might want to set for themselves in one year, two years, and five years. </p></li></ul><h2><b>Teen Money Mistake #2: Spending Every Dollar They Make</b></h2><p>Help your teenager understand that by saving at least 10% of what they earn and having at least three months of living expenses saved up for emergencies are among the most important things they can do to build a strong financial foundation for life. </p><h3>Guiding your teen toward building a &quot;saver&quot; mindset:</h3><ul><li><p>Ask your teen to track and categorize their spending so they can see exactly where their dollars are going. Ask them what they notice about their spending habits and if they want to make any changes or start spending less in one category to start saving up for something important. </p></li><li><p>Give your teen responsibility for some of their personal living expenses while they’re still living with you, such as paying for their own gas or cell phone plan.</p></li><li><p>Talk about how to keep their emergency savings in a safe place, like a <a href="https://www.lendingclub.com/personal-savings/high-yield-savings">high-yield savings account</a> or an interest-bearing checking account. Explain that they’ll not only receive a good rate of return, but the money will be easy to get to should they need it quickly, and the funds will be FDIC insured up to the maximum amount allowed ($250,000 per depositor for each ownership category).</p></li><li><p>Explain that having three to six months of living expenses saved up can make them feel more relaxed than having only three. (They may not achieve this until they’re working regularly, but it’s important they understand now what they should be aiming for.)</p></li></ul><h2><b>Teen Money Mistake #3: Not Understanding the Difference Between Good Debt and Bad Debt</b></h2><p>Not only do credit card companies sell on college campuses, teens could easily wind up overextended on car loans, quick loans, or student loans used to fund an extravagant lifestyle while away at school. Spell out what’s considered good debt vs. bad debt—and the importance of paying off their credit card balance each month.</p><h3><b>Guiding your teen on how to tell good debt from bad:</b></h3><ul><li><p>Explain that good debt is money borrowed that can increase your net worth or significantly improve your personal wellbeing. For example, a loan on an appreciating asset (such as a home mortgage), or a low interest federal student loan that provides marketable skills and paves the way into a solid career. </p></li><li><p>Explain that bad debt is money borrowed to buy a rapidly depreciating asset (such as a factory-new car, computers, or other technology), or discretionary disposable goods and services (like fast fashion or dining out). Revolving high interest credit card balances are also considered bad debt. </p></li><li><p>If your teen is over the age of 18, shop with them for a credit card. Show them how to compare annual interest rates, fees, as well as any perks or rewards offered.</p></li><li><p>Help them understand that paying bills late, such as a credit card, can quickly damage their credit score which may affect their ability to get a job, rent an apartment, or obtain the lowest possible rate on an auto or home loan later in life. </p></li></ul><h2><b>Teen Money Mistake 4: Trying to Keep Up With Social Media Influencers</b></h2><p>Help your teen see that social media is full of self-appointed “experts” who work hard to persuade them to indulge in pricey cosmetics, fashion, and other expensive trends. No matter how convincing or attractive these may appear, resist the urge to match other people’s spending habits, vacation reels, or personal values. </p><h3><b>Guiding your teen to shop safely on social media:</b></h3><ul><li><p>Help your teen keep their spending aligned with their own values and financial goals by asking them to list and rank these in order of importance.</p></li><li><p>Have your teen track how much time they spend on social media daily, weekly, and monthly, and ask if setting some limits would help them feel better about themselves.</p></li><li><p>Watch for social media spoofing, phony websites, health or beauty scams, and fake scholarship scams. Point out that scammers targeting teenagers are difficult to detect and will attempt to take their money and sell them nothing. </p></li></ul><h2><b>Teen Money Mistake 5: Not Protecting Their Credit Scores, Health, or Property</b></h2><p>Let your teen know their credit history and credit scores must be guarded, and that most people buy insurance to protect against loss of health, home, are, and income.</p><h3><b>Guiding your teen to keep their credit scores, health, and possessions safe:</b></h3><ul><li><p>Stress the importance of paying bills on time. It’s one of the biggest factors of building and maintaining a good credit score. Given they may not have bills of their own right now, if they’re an authorized user on one of your credit cards, ask them to reimburse you for the charges they make at the end of each month.</p></li><li><p>Show them your credit report and help them understand that their credit card spending behavior will be documented and recorded as part of their credit history. With a few exceptions, your teen can stay on your health insurance until they turn 26 years old. </p></li><li><p>Help them establish a pattern of regular preventive care checkups, including vision and dental, while they have access to your health insurance, so they can continue with this pattern as they get older and go out on their own.</p></li><li><p>Make sure your teen is aware that disability insurance offered by many employers can provide income should they become injured or disabled.</p></li><li><p>If your teen plans to rent an apartment after they leave home, talk about the importance of rental insurance and comparison shop providers.</p></li><li><p>Should your teen own or lease a vehicle, go over the details of how an auto insurance policy works. In case your teen needs to rent a car, explain the collision damage insurance (and waiver) and why it may not be necessary if it’s already covered by their personal auto policy, by your homeowners policy, or by the credit card issuer used to rent the vehicle.</p></li></ul><h2><b>The Bottom Line</b></h2><p>By talking with your teenager about money, setting a good example, and clearing up the common mistakes and misperceptions they may already have, you’ll help them build financial knowledge and skills they’ll carry with them for the rest of their lives. Empowering teens to be smart with their money as they enter into young adulthood is good for them, and good for you.</p>

Expenses and planning for the future is essential to your financial resilience and peace of mind. Yet, paying down debt can often feel like it should be your highest priority.
Which should you do first? It depends. Generally, it’s best to find a balance and do both at the same time if you can. Here are some ways to help you think about how to approach saving or paying off debt first.


<p>Expenses and planning for the future is essential to your financial resilience and peace of mind. Yet, paying down debt can often feel like it should be your highest priority.</p><p>Which should you do first? It depends. Generally, it’s best to find a balance and do both at the same time if you can. Here are some ways to help you think about how to approach saving or paying off debt first.</p><h2>Should You Save or Pay Off Debt First?</h2><p>Balancing the competing goals of saving more money or paying down debt is a challenge many face. Ultimately, the approach you take will depend a lot on your current financial situation, your personal work-life circumstances, plus a little math.</p><p>For example, if your employer offers a matching 401(k) contribution, it’s a good idea to contribute up to the amount necessary to fully maximize that match. Doing so gives you a 100% return on your contribution up that threshold By simply making that contribution to your retirement account, you’re receiving a 100% return on that contribution. While you’ll also need to consider all aspects of your financial situation, this is a return on investment you don’t want to pass up.</p><p>Deciding whether to save or pay off debt is a balancing act, and this is just one example of how to think through it. Regardless of how you approach it, weighing your options and developing a strategy that makes sense to you can help you along your path to financial wellbeing.</p><h2>When Should You Prioritize Saving?</h2><p>Saving money for the future can make it easier to weather financial storms, avoid debt, and build wealth. Assuming you’re always meeting your minimum debt obligations, depending on your financial situation it might make sense to focus on your savings goals first (up to a certain point) before adding in any additional debt payoff strategy. Here are some examples of when prioritizing savings makes sense:</p><h3>You don&#39;t have emergency savings.</h3><p>With no money set aside for financial emergencies, any debt payoff strategy you may have put in place could be upset by even the smallest, unexpected expense. According to LendingClub research , the average emergency expense is about $1,400. And nearly half of consumers reported having had to pay at least one unexpected expense in the 90 days preceding the survey.</p><p>While you don’t have to wait until you have the recommended three to six months&#39; worth of basic living expenses saved up before you start thinking about paying down debt—generally, it’s a good idea to put extra funds toward building your emergency savings first. Especially if you have zero dollars in emergency savings, the peace of mind and ability to avoid unexpected debt in the future can make it more worthwhile to save first and focus on paying off debt later.</p><h3>Your employer matches your retirement contributions.</h3><p>Your employer’s matching 401(k) contributions can have a significant impact on your ability to save for retirement.</p><p>For example, let’s say your employer offers a 6% 401(k) match. This means that your employer will match up to a total of 6% of your overall compensation to your 401(k) account on top of what you’re already contributing. Assuming you earn $75,000 per year and max out your 401(k) contributions, your employer’s match could be as much as $4,500. So, not taking advantage of this benefit is essentially the same as turning away free money.</p><p>Note that some employers don&#39;t vest their contributions immediately, meaning you would have to remain with the company for a certain period of time before the matching funds would be yours to keep.</p><h3>Your debt is (relatively) inexpensive.</h3><p>If most or all of your debt is at relatively lower interest rates, it may make sense to focus your attention on building your savings over paying down debt (or in addition to, if you can manage it).</p><p>For example, let’s say you want to pay down your auto loan faster by making additional payments to principal. However, if you’re earning an average annual return of 4.5% APY on your savings while your auto loan interest rate is only costing you 1.5% APR, in this case, prioritizing contributing more to savings versus paying off your auto loan at a faster clip would make more sense. As long as the return on your savings is available, it makes more sense to focus your attention there versus paying down the lower cost debt.</p><h2>How to Start Building Savings</h2><p>If you&#39;ve decided to prioritize saving money, consider building an <a href="/resource-center/personal-finance/your-emergency-fund-the-essential-guide">emergency fund</a> first. That may be true even if you have an employer match on your retirement contributions, although making both retirement and emergency fund contributions are extremely important to your financial wellbeing.</p><p>While it may be true that skipping your employer match is like leaving money on the table, consider that if you need to withdraw from your retirement account in a financial emergency, you might have to pay penalties and taxes. Also, without an emergency fund, you might have to turn to expensive debt like credit cards and short-term loans to help make ends meet.</p><p>Once you’ve saved a small cushion in your emergency fund, you can start working toward maxing out your matching retirement contributions on the side. If you&#39;re not sure about your ability to do both simultaneously, consider creating a budget to find areas of spending where you could cut back on your expenses and save more.</p><h2>When Should You Prioritize Debt Payoff?</h2><p>While saving is a critical part of a healthy financial plan, high-interest debt can put a significant strain on your budget and your ability to save. Credit cards, payday loans, auto title loans, rent-to-own payments and other high-interest loans, in particular, can be extremely burdensome, both financially and psychologically.</p><p>Here are some situations when it makes sense to focus on paying off debt first.</p><h3>You have zero room in your budget to save.</h3><p>If your debt payments take up so much of your income every month that you don&#39;t have the ability to save money, it may make sense to look for ways to curb some expenses and earn extra income to build a small emergency fund, then start paying down your debt until you have a little more breathing room.</p><h3>You&#39;re already (or at risk of) missing payments.</h3><p>Missing a loan or credit card payment by 30 days or more can damage your credit score significantly , making it more difficult to get affordable financing in the future. To avoid getting caught in a vicious cycle of expensive debt, research ways to tackle your debt or to obtain relief—more on that in a minute.</p><h3>You have a safety net.</h3><p>If you already have three to six months of basic living expenses set aside and you&#39;re getting the full employer match on your retirement contributions, you may be in a strong enough position to focus on paying down debt without worrying about the impact of unexpected expenses.</p><h2>How to Start Paying Off Debt</h2><p>Depending on your circumstances, there are several different ways to approach <a href="/resource-center/personal-finance/benefits-of-paying-off-your-credit-card-debt-with-a-personal-loan">paying off debt</a>. If you can afford to put even a little extra toward debt payments every month (on top of making all of your minimum payments), the debt snowball method or debt avalanche method can help you accelerate your debt payoff by focusing on your lowest balances or highest interest rate cards first.</p><p>If your credit is in good shape, you may consider a <a href="/personal-loan/debt-consolidation">debt consolidation loan</a> or a balance transfer credit card to simplify your monthly payments. These could help you pay down debt more quickly and possibly save you money on interest with a lower APR.</p><p>That said, if you&#39;re at risk of falling behind on debt payments, consider consulting a credit counselor, who can provide personalized advice and potentially set you up on a <a href="/resource-center/personal-loan/what-is-a-debt-management-plan">debt management plan</a>, which may offer you some relief on interest and monthly payments.</p><h2>Finding a Balance Between Building Savings and Paying Off Debt</h2><p>Based on your circumstances, you may choose to either build your savings or pay down debt first, at least in the short term. But in the long run, it&#39;s prudent to search for a balance between the two. Here are some strategies to consider:</p><ul><li><p><b>Stick to a budget:</b></p><p>Knowing where your money is going every month can make it easier to allocate money toward your financial goals. In addition to setting monthly goals for expenses, savings and debt payments, monitor your expenses to ensure you stay on track.</p></li><li><p><b>Consider debt consolidation:</b></p><p>If your credit is in good shape, <a href="/resource-center/personal-loan/what-is-debt-consolidation">debt consolidation</a> can potentially reduce your monthly debt payments, freeing up some cash you could put toward building your emergency fund or other savings goals.</p></li><li><p><b>Focus on eliminating toxic debt:</b></p><p>High-interest debt poses a great risk to your ability to both save and pay off debt, so it&#39;s crucial to prioritize paying down those balances as early as possible in the process.</p></li><li><p><b>Increase your income:</b></p><p>Look for opportunities to earn more money based on the amount of time you have available. This may include working overtime hours, adding a second job, looking for a higher-paying job, or starting a side hustle. The more money you earn, the more effective you can be with your goals.</p></li></ul><h2>The Bottom Line</h2><p>Is it better to save or pay off debt first? Ultimately, the right approach depends on your financial situation and goals. As you use these tips and strategies to navigate your personal circumstance, try to seek a balance between building and maintaining sufficient savings while at the same time paying off high-interest debt that can, ultimately, end up holding you back.</p>

According to recent government data, the frequency of natural disasters that cost over a billion dollars has increased over the past 40 years, rising from an average of only three to now thirteen occurrences per year. Not only are the number of natural disasters going up, but the average cost and death toll from each is rising as well.

<p>According to recent government data, the frequency of natural disasters that cost over a billion dollars has increased over the past 40 years, rising from an average of only three to now thirteen occurrences per year. Not only are the number of natural disasters going up, but the average cost and death toll from each is rising as well.</p><p>If your home suffers damage during a hurricane, wildfire, earthquake, flood, or severe storm, it can be personally and financially devastating. Will you be able to cover repairs? Fortunately, disaster loan assistance and aid may help cover certain costs while you’re waiting on an insurance claim.</p><p>Here’s what to know about financial assistance after a natural disaster, how to apply, plus an alternative to consider if you need funding fast.</p><h2>What Is Disaster Loan Assistance for Homeowners?</h2><p>Disaster relief loans and aid are types of emergency funding issued by federal agencies after a government-declared natural disaster. Funding types differ and may include grants you don’t need to repay or low-interest disaster relief home loans you pay over a set term.</p><p>Examples of government-declared natural disasters include:</p><ul><li><p>Earthquakes</p></li><li><p>Floods</p></li><li><p>Fires</p></li><li><p>Hurricanes</p></li><li><p>Severe ice storms</p></li><li><p>Snow</p></li><li><p>Tornados</p></li><li><p>Tropical storms</p></li></ul><p>To qualify for a disaster loan, you’ll need to meet certain eligibility criteria and be located in a government-declared disaster area. Those who have insurance will need to provide information about their coverage, as your insurance benefits will help determine the amount of assistance you get. Those who aren’t insured can also apply for federal assistance.</p><h2>How Can You Use Disaster Loan Assistance Funds?</h2><p>Qualifying homeowners can use disaster loans or federal aid to offset rebuilding and repair costs that aren’t covered by their insurance company. These funds may also help pay for temporary housing or rent if your property is uninhabitable due to a covered event.</p><p>For instance, if your Florida home sustained severe wind damage during a hurricane and your homeowner&#39;s insurance will only pay for certain repairs, a disaster loan could help cover the remaining costs.</p><h2>Types of Disaster Loan Assistance</h2><p>Different programs are available for homeowners or renters seeking disaster loan assistance, including the following options:</p><h3>Federal Emergency Management Agency (FEMA) Individual and Household Assistance</h3><p>FEMA offers individual and household aid through its Individuals and Households Program (IHP). The IHP is a grant program, meaning you won’t need to repay any funds you receive if you qualify.</p><p>For those who meet certain eligibility criteria, IHP assistance can help cover temporary housing costs, as well as home repairs and personal property replacement costs not covered by your insurance.</p><ul><li><p>Learn more about <a href="https://www.fema.gov/assistance/individual">FEMA IHP assistance</a></p></li><li><p>Apply for <a href="https://www.disasterassistance.gov/">FEMA IHP assistance</a></p></li></ul><h3>U.S. Small Business Administration (SBA) Disaster Assistance Loans</h3><p>While you may assume the SBA only offers business loans, homeowners or renters seeking financial assistance after a declared disaster may also qualify for an SBA loan. The SBA currently offers low-interest loans of up to $200,000 for home repairs and $40,000 for personal property replacement. Insurance payouts will factor into how much you can borrow from the SBA, and SBA loans over $25,000 are generally secured by the property they’re used to repair.</p><p>As a homeowner, you might also qualify for a loan that’s 20% higher if you use funds to make home improvements that help mitigate the risk of future damage. In certain cases, the SBA may also refinance an existing mortgage if your primary residence has sustained serious damage your insurance company won’t cover. The SBA offers loan terms of up to 30 years, and current interest rates won’t exceed 4% for applicants unable to get other financial assistance or 8% for those able to get assistance elsewhere.</p><ul><li><p>Learn more about <a href="https://disasterloanassistance.sba.gov/ela/s/article/Home-and-Personal-Property-Loans">SBA disaster loans</a></p></li><li><p>Apply for <a href="https://www.sba.gov/">SBA disaster loans</a></p></li></ul><h2>Alternatives to Disaster Loan Assistance</h2><p>If a disaster loan or federal aid doesn’t sound like the right option or doesn’t meet all of your needs, a <a href="https://www.lendingclub.com/personal-loan/home-improvement-loan">personal loan for home upgrades and repairs</a> may be worth considering. For example, after a disaster, you may find yourself underinsured or waiting a long time for an insurance payout or for federal assistance. Personal loans typically offer competitive, fixed interest rates, and you may be able to borrow amounts up to $40,000 (or more from certain lenders) if you qualify. Unlike some SBA loans, personal loans are often unsecured, meaning they don’t require your home or car as collateral. Loan funds may be disbursed within days, which means you can make urgent repairs quickly instead of waiting weeks or months to address them.</p><h3>Make sure your home is properly insured.</h3><p>Your home is most likely your biggest asset, which is why it’s critical you avoid being underinsured in the event of a disaster. Here are some important questions to ask your insurance professional before one occurs:</p><ul><li><p>Do I have enough of the right kind of coverage to rebuild my home at today’s costs?</p></li><li><p>Would I be able to replace all of my possessions?</p></li><li><p>Do I have enough coverage for living expenses if my home is inaccessible or being rebuilt?</p></li></ul><h2>FAQs About Disaster Loan Assistance for Homeowners</h2><h3>Can a homeowner apply for an SBA disaster assistance loan?</h3><p>As a homeowner, you can apply for an SBA loan if your home is in a government-declared disaster area and you meet certain eligibility criteria. The SBA offers home repair and personal property replacement loans to qualifying homeowners impacted by natural disasters.</p><h3>How much can you get from disaster loan assistance?</h3><p>The amount you can borrow with an SBA loan depends in part on what your insurance company will cover. While qualifying homeowners can borrow up to $200,000 through the SBA, insurance payouts will usually be deducted from its damage estimates. For example, if your insurance will cover $50,000 in home repairs, you could only borrow a total of $150,000 with an SBA loan.</p><p>FEMA does not disclose its average aid amounts but typically will also account for insurance payouts before disbursing any funds.</p><h3>How long will it take to get approved for a disaster loan?</h3><p>The SBA states it tries to make loan decisions within 2-3 weeks of receiving an application. If approved, in some cases you could receive an initial loan disbursement of up to $25,000 in as little as five business days after closing on your loan.</p><p>FEMA doesn’t specify how long it takes to distribute IHP aid.</p><h3>What if insurance won’t cover the cost of repairs or disaster loan assistance or aid is delayed?</h3><p>If you’re underinsured or waiting on an insurance payout or federal assistance, a <a href="https://www.lendingclub.com/personal-loan">personal loan</a> could be a good solution to tide you over. Personal loans are often unsecured (don’t require your home or car as collateral) and loan funds may be disbursed within days. This means you can make urgent repairs quickly instead of waiting weeks or months for disaster loans or aid to address them.</p><h2>The Bottom Line</h2><p>While natural disasters can be both personally and financially devastating, federal disaster loans or aid could help pay for home repairs your insurance won’t cover. However, you’ll need to meet strict requirements to qualify for federal assistance, and it can take a while for those funds to be disbursed. A personal loan for homeowners could be a good alternative for quickly covering repairs or losses that aren’t covered by your insurance policy or federal assistance.</p>

With the cost of consumer goods increasing, many Americans have less available cash to pay down credit card balances. At the same time, rising interest rates make carrying a balance on your credit cards even more expensive.

<p>With the cost of consumer goods increasing, many Americans have less available cash to pay down credit card balances. At the same time, rising interest rates make carrying a balance on your credit cards even more expensive.</p><p>Under these circumstances, quickly paying down credit card debt may seem overwhelming. However, knowing your options can help you pay off thousands of dollars of credit card debt, putting you back in control of your finances. When you&#39;re looking to pay off credit card debt fast, here are six ways to consider doing it.</p><h2>How to Pay Off Credit Card Debt Fast</h2><ol><li><p>Debt avalanche method</p></li><li><p>Debt snowball method</p></li><li><p>Personal loan (for debt consolidation)</p></li><li><p>Balance transfer credit card (for debt consolidation)</p></li><li><p>Debt management plan</p></li><li><p>Bankruptcy</p></li></ol><h3>1. Use the debt avalanche method.</h3><p>The <a href="https://www.experian.com/blogs/ask-experian/what-is-the-avalanche-method/">debt avalanche method</a> prioritizes paying off credit cards with the highest interest rate first, regardless of the balances. Start by making a list of all your credit cards, their current balances, and their interest rates. Then, make sure you’ve got a debt repayment budget that allows you to pay more to the credit card with the highest interest rate in addition to making the minimum payments on all of your outstanding card balances. Once you’ve paid off your highest-interest rate card, focus on the card with the next highest rate, and so on. Paying off the balances of credit cards with the highest interest rates first (while simultaneously maintaining payment on all of your other cards) can reduce the overall amount of interest you’ll pay over time. And the more you can allocate to repayment, the faster you’ll pay down that debt.</p><h4>Pros</h4><ul><li><p>Reducing the total amount of interest you pay can save you money in the long run.</p></li></ul><h4>Cons</h4><ul><li><p>If you don’t allocate enough to your debt repayment budget, it may take a long time to pay down a high interest rate credit card that also has a high balance</p></li><li><p>If you don&#39;t feel like you’re making progress, you may lose motivation for paying down debt.</p></li></ul><h3>2. Consider the debt snowball method.</h3><p>If you want to know how to pay down credit card debt fast, the <a href="/resource-center/personal-finance/steps-to-decimate-debt-the-debt-snowball-method">debt snowball strategy</a> can help you stay motivated by having you pay off your smallest debts first before tackling the larger balances. Start by making a list of all your credit cards and their current balances. Then pay the most you can toward the card with the lowest balance debt, and the minimum balance on the others. Once you’ve paid off the first card, move on to the card with the next lowest balance, and so on, until all your card balances are paid off. While you might wind up paying more interest versus the avalanche method, the snowball method can help you build momentum and maintain motivation, keeping your attention focused on debt repayment.</p><h4>Pros</h4><ul><li><p>Paying down smaller balances first give you “quick wins,” building momentum needed to keep you motivated to tackle the rest of your credit card debt.</p></li><li><p>As you pay down each card, you’ll have fewer monthly payments to keep track of.</p></li></ul><h4>Cons</h4><ul><li><p>Balances on higher-interest credit cards will continue to accrue compounding interest, costing you more in the long run.</p></li></ul><h3>3. Get a personal loan to consolidate and pay off debt.</h3><p>A personal loan can pay off your credit cards fast by consolidating them into a different type of debt. Depending on your financial situation, it’s possible you could get a personal loan with a lower interest rate than the combined average rate on your current credit cards. And unlike credit cards, the interest rate on a personal loan is often fixed, which means your payment remains stable over the life of the loan.</p><p>With cash personal loans, you receive a lump sum and use it to pay your creditors. However, some lenders such as LendingClub Bank offer a <a href="/personal-loan/balance-transfer-loan">balance transfer personal loan</a> that may be simpler. Generally, you choose which account balances to consolidate and how much of your loan amount you want applied to each. Any funds remaining from your loan amount after your creditors are paid are deposited directly into your bank account. A balance transfer loan can be a good option if you think you might be tempted to spend a cash loan on something other than paying down your debt.</p><h4>Pros</h4><ul><li><p>One fixed monthly payment can make budgeting easier than keeping track of and paying multiple credit card bills.</p></li><li><p>You can reduce your <a href="/resource-center/personal-finance/what-is-credit-utilization-and-how-to-improve-it">credit utilization</a> and improve your credit mix, both of which may help improve your credit score.</p></li><li><p>You may be able to qualify for a personal loan with a lower interest rate than the average interest rate on your current credit cards combined.</p></li></ul><h4>Cons</h4><ul><li><p>A personal loan is another form of debt.</p></li><li><p>Less flexible than credit cards in that you must pay the same fixed amount every month.</p></li><li><p>You may have to pay loan fees, such as an origination fee.</p></li><li><p>Depending on your credit score, you may not qualify for a personal loan, or you may only qualify for a loan with a higher interest rate than your current credit cards.</p></li><li><p>You may be tempted to accumulate new debt balances on the credit cards you just paid off.</p></li></ul><h3>4. Use a credit card balance transfer to consolidate and save on interest during the promotional period.</h3><p>Some credit cards offer promotional, 0% interest rates for a limited period on balances transferred to the card. While you might have to pay a balance-transfer fee, transferred balances won’t accrue interest during the promotional period, potentially giving you time to catch up and pay down the debt faster. Of course, this assumes you don’t accumulate additional debt on this new card. Balance transfer 0% credit card offers aren’t for everyone; you’ll want to compare balance-transfer offers for both credit cards and personal loans.</p><h4>Pros</h4><ul><li><p>You won’t accrue new interest during the 0% interest promotional period, potentially saving your money.</p></li><li><p>During the promotional period, 0% interest keeps your balance from growing (as long as you don’t accumulate new debt), which may make it easier to pay down debt faster.</p></li><li><p>You may be motivated to pay off the balance before the promotional period ends.</p></li></ul><h4>Cons</h4><ul><li><p>A balance transfer credit card transfers debt from one card to another.</p></li><li><p>You’ll likely pay a balance transfer fee, typically 3% to 5% of the transferred balance.</p></li><li><p>Balance transfer credit card offers generally require good to excellent credit.</p></li><li><p>If the amount you transfer is close to the new card’s credit limit, it will increase your credit utilization, which may adversely impact your credit scores.</p></li><li><p>If you don’t pay off the card balance before the promotional period ends, your remaining balance will begin accruing interest at the card’s regular interest rate.</p></li><li><p>A late payment could eliminate your promotional offer and trigger a higher penalty annual percentage rate (APR).</p></li><li><p>You may not be able to transfer your entire balance to the new card.</p></li></ul><h3>5. Consider a debt management plan.</h3><p>If you’re having trouble paying off credit cards using the options above, credit counseling organizations may be able to help you set up a debt management plan (DMP). A credit counselor may be able to negotiate lower interest rates and monthly payments on your behalf and get you on a plan to pay off your debts, typically within three to five years. Make sure you understand all the rules that come with debt management plans. For example, in certain cases, you may need to close and stop using all of your credit cards while on a DMP.</p><h4>Pros</h4><ul><li><p>A debt management counselor may be able to negotiate lower interest rates on debt, saving you money.</p></li><li><p>A debt management counselor could negotiate lower monthly payments, which could be more affordable than making multiple minimum credit card payments.</p></li></ul><h4>Cons</h4><ul><li><p>Debt management plans may prohibit applying for or using credit cards until the debt is paid off.</p></li><li><p>Some plans require closing your credit card accounts, which could negatively impact your credit score.</p></li><li><p>Some plans may have set up and monthly maintenance fees.</p></li></ul><h3>6. Consider filing for bankruptcy.</h3><p>Bankruptcy should be a last resort. However, if you’re overwhelmed by debts and the methods above haven’t worked or aren’t available to you, it’s something to consider.</p><p>Both Chapter 7 and Chapter 13 bankruptcy may help provide some relief from creditors, however, every situation is different. A Chapter 7 bankruptcy, called liquidation bankruptcy, may require selling your nonexempt assets to pay your debts. You may also need to meet certain income requirements to qualify. A Chapter 13 bankruptcy allows you to keep more personal property and creates a court-mandated plan to repay your creditors, typically within three to five years.</p><p>Generally, filing for bankruptcy is a major decision that will have a significant impact on your ability to obtain credit in the future. A Chapter 13 bankruptcy typically remains on your credit report for up to 7 years after the date you file, while a Chapter 7 won’t be removed until after 10 years. Although you can eventually rebuild your credit, many consumers struggle to access loan products in the first few years after filing for bankruptcy.</p><h4>Pros</h4><ul><li><p>Debt collectors cannot try to collect on debts that were discharged in bankruptcy.</p></li><li><p>Bankruptcy eliminates some unsecured debt (such as credit card debt) entirely.</p></li></ul><h4>Cons</h4><ul><li><p>You may have to sell certain personal property to pay debts.</p></li><li><p>Bankruptcy has a major negative impact on your credit score; it can take years to recover.</p></li><li><p>Not all debts may be discharged by the bankruptcy.</p></li></ul><h2>The Bottom Line</h2><p>How to quickly pay off credit card debt depends on your financial situation, credit score and motivation. There are many options, and for some people, using a combination of strategies works best. A personal loan may help you consolidate your debt into a lower-interest payment with a fixed monthly interest rate, saving you money and time in the long run.</p>

According to the FTC, Americans reported losing almost $8.8 billion to fraud in 2022—a 30% increase over the prior year. Given that more people are shopping online and with their phones, it’s not surprising that nearly half of all reported fraud cases were related to online banking.

<p>According to the FTC, Americans reported losing almost $8.8 billion to fraud in 2022—a 30% increase over the prior year. Given that more people are shopping online and with their phones, it’s not surprising that nearly half of all reported fraud cases were related to online banking.</p><p>Bank fraud is constantly evolving. Protecting yourself against it means learning to defend against a variety of threats such as phishing, social engineering, synthetic identity fraud, and scammers who may try to impersonate your bank. In this article, we focus on four common types of bank fraud, and provide some tactics to help you keep your accounts safe.</p><h2>What is bank fraud?</h2><p>Bank fraud is an illegal act that involves using deception to obtain money, assets, or other property from a financial institution or its customers. Bank fraud can take many forms, including accounting fraud, check kiting, card skimming, and advance fee loan scams where a fraudster promises you a loan or credit card in exchange for an up-front fee.</p><p>Banks invest heavily in security measures to prevent and detect fraud. Much of this takes place behind the scenes. For example, your cards and accounts are monitored continuously for signs of unauthorized use, and your bank or credit union may also have added multi-factor authentication (single-use passcodes delivered by email or text for added security during sign-in) or card features that let you turn your credit or debit card on and off for safety.</p><p>It’s also critical that you personally take measures to protect your accounts and data. While all consumers are at risk of fraud, those under the age of 34, immigrants, college students, women, and senior citizens are especially vulnerable and need to take extra precautions. For example, you might avoid using public Wi-Fi to shop or make financial transactions and consider shredding any documents that may contain your sensitive or private financial information. And while these tactics are help prevent fraud to some degree, recent changes in consumer behavior—notably, increases in shopping and transacting online and by mobile device—have created a surge in online bank fraud tactics such as:</p><ul><li><p><b>Phishing and social engineering:</b> Emails, texts, phone calls, or social media posts and direct messages deceive you into providing passwords, account information, or other personal data by posing as a legitimate company.</p></li><li><p><b>Stolen or illegally purchased data: </b>Scammers hack into a financial institution’s data or purchase stolen card credentials, passwords, and personal data.</p></li><li><p><b>Credential stuffing bots: </b>Automated systems systematically guess usernames, passwords, and 3-digit CVV codes to gain access to accounts or apply for new ones using your identity.</p></li><li><p><b>Synthetic identity theft: </b>A real person’s Social Security Number (SSN) is stolen and then applied to a fake name, date of birth, email account, mailing address, and phone number to create a new, separate identity.</p></li></ul><h2>Common types of online bank fraud</h2><p>What does online bank fraud look like in real life? Here are four common types of online bank fraud and a few defensive moves you can make to help prevent, or circumvent, it: </p><h3>1. Scammers take over your bank account.</h3><p>Criminals may use your account information to gain access to your account, change your passwords and contact information, and siphon off your funds. They may obtain your credentials by any combination of phishing or social engineering, purchases on the dark web, bots, as well as cybersecurity breaches at banks, investment firms, or any other company that stores your card or account information.</p><p><b><i>Defensive moves: </i></b>Secure your account and be wary of responding to any kind of unsolicited call or message. Use the tips below as a starting point:</p><ul><li><p><b>Beware of text messages and email </b>asking you to click a link and log into your account.</p></li><li><p><b>Don’t answer phone calls </b>from numbers you don’t recognize, but also be cautious with calls that appear to be coming from known contacts: Scammers can fake the numbers that appear on caller ID. For example, if a “bank representative” caller asks for information they should already have–such as your account number—don’t be afraid to end the conversation and call back using a number you know is trustworthy. A service rep who is truly concerned with your security will accept that decision gracefully; a scammer will do all they can to keep you on the call. Hang up if necessary.</p></li><li><p><b>Monitor your bank accounts</b>regularly for suspicious activity.</p></li><li><p><b>Set up multi-factor identification </b>on your accounts for an extra layer of security.</p></li></ul><h3>2. Identity thieves open new accounts.</h3><p>The FTC received 156,099 reports of consumer identity theft related to bank fraud in 2022 , a 21% increase over the prior year. Identity theft is when identity thieves steal your personal data and use it to open new accounts in your name. They may also file false tax returns to collect your tax refund or collect unemployment checks or Social Security benefits and other government funds using your identity. There are various ways to help prevent this.</p><p><b><i>Defensive moves: </i></b>Be aware of suspicious activity—for example, receiving an unexpected 1099-G form showing unemployment benefits you never applied for. Review your credit reports for new accounts and consider setting up credit monitoring to be notified of new activity in your credit files. Federal law gives you the right to get a free copy of your credit report every 12 months from each of the three nationwide credit reporting agencies. However, through December 2023, you can get your free credit report weekly from each of the three credit reporting agencies at <a href="https://www.annualcreditreport.com/index.action">AnnualCreditReport.com</a>.</p><p>Credit reporting agencies offer services that may help both before and after you suspect you’re the target of identity theft.</p><ul><li><p><b>Fraud alerts </b>place a notice on your credit report that you have been a victim of fraud or identity theft and notifies lenders that they should verify your identity before processing any loan or credit card applications they receive in your name. Requesting an alert on your credit file at any one of the three national credit bureaus (Equifax, Experian, and Transunion) automatically places one on your credit files at all three bureaus. Fraud alerts last for one year, but you can renew them indefinitely. Placing a fraud alert is a free service that you can easily do online.</p></li><li><p><b>Credit freezes </b>restrict access to your credit report so new credit accounts can’t be opened in your name. To freeze your credit reports, you must contact each credit bureau individually. In the event you want to open a new loan or credit card account yourself, you’ll need to contact all three credit bureaus again to “unfreeze” your credit report(s) temporarily. Requesting, or temporarily removing, a credit freeze is a free service that you can easily do online.</p></li><li><p><b>Credit monitoring </b>is a service that issues alerts when hard inquiries are made to your credit report, new accounts are opened, address and name changes are made to your credit file, and your personal information is detected on the dark web. Free credit monitoring is available through all three credit bureaus, as well as some credit card issuers and banks. Paid credit monitoring is available from the three credit agencies as well as private identity theft protection companies.</p></li></ul><h3>3. Imposters ask you to transfer money to them.</h3><p>Impersonation scams have a thousand faces. You may hear from the “IRS” demanding immediate payment in gift cards. You may start an online romance, only to be hit up for emergency funds. Scammers may pose as mobile phone providers, utility companies, or online merchants, contacting you about account problems or pending refunds. Scammers often ask for payment by bank transfer, wire transfer, gift cards, or cryptocurrency.<b><i> </i></b></p><p><b><i>Defensive moves: </i></b>Be wary of anyone who asks for money, whether it’s someone you met online or someone who contacts you out of the blue. And be doubly aware of any demand that you act <i>right</i> <i>now</i> to “prevent catastrophe.”</p><p>As a rule, government agencies and legitimate businesses like utilities send payment-collection information by postal mail. If you owe them money, they will give you a reasonable amount of time to pay. Legitimate businesses will not call you demanding immediate action to prevent your service from being shut down. Legitimate businesses also won’t demand you pay them using a gift card. </p><h3>4. Criminals impersonate your bank.</h3><p>In this variation on an imposter scam, criminals pretend to be your bank, looking for account information or trying to collect money from you. </p><p>Here’s an example: Scammers reach out with a loan offer that features a low interest rate and/or a generous loan amount. They provide a fake loan application for you to fill in with all the personal information they need to steal your identity. They may also ask you to pay loan fees via gift cards or wire transfer.</p><p><b><i>Defensive moves: </i></b>Check out any bank or financial institution that offers you a loan or credit card to make sure it’s legitimate—especially when they reach out to you—and <a href="/resource-center/personal-loan/how-to-protect-yourself-from-scams">verify the “bank” that contacted you is who they say they are</a>. Before you submit any application, provide any personal data, or send any money, research the lending institution online and contact them using information listed on their website. Ask if the offer you received really came from them.</p><p>Be skeptical of any financial institution that requests fees up front before a loan is processed. For example, LendingClub Bank never asks for payment before a loan is approved or processed. Be leery if a financial institution demands payment in gift cards, prepaid debit cards, or cryptocurrency. Only wire money if you’ve confirmed that the loan application or other transaction and the financial institution requesting it are legitimate. </p><h2>What to do if you notice bank fraud</h2><p>If you think you’ve been scammed, take immediate action by contacting your financial institution and the credit reporting agencies to investigate and/or report any of the following issues:</p><ul><li><p>Suspicious activity on your bank statement, credit card account or credit report;</p></li><li><p>New loans or card accounts you don’t recognize;</p></li><li><p>Calls, texts, or emails from someone impersonating a loved one, a company you do business with, or your financial institution; or</p></li><li><p>Any suspicious request for account information, personal data, or payment.<b> </b></p></li></ul><p><b>Call your financial institution:</b> If you think you’re a victim of bank fraud, contact your financial institution immediately. They can put a fraud alert on your account, freeze it, or close it proactively. Also, make your bank or credit union aware of any suspicious communications that claim to come directly from them. LendingClub members can contact Member Support at 888-596-3157. Your financial institution may ask you to file a report with your local police as well.</p><p><b>Contact credit reporting agencies: </b>All three credit reporting agencies (<a href="https://www.equifax.com/personal/credit-report-services/credit-fraud-alerts/">Equifax</a>, <a href="https://www.experian.com/consumer-products/identity-theft-and-credit-protection.html">Experian</a>, and <a href="https://www.transunion.com/fraud-victim-resources">TransUnion</a>) can put a fraud alert on your credit report and/or freeze it. They may also provide credit monitoring for a monthly cost, if you feel this is a service you may want.</p><p><b>Report fraud to the FTC: </b><a href="https://reportfraud.ftc.gov/#/">File a report with the FTC</a> to help them track fraud trends and compile data on how much fraud is occurring in the U.S.</p><h2>The bottom line</h2><p>Bank fraud is an ongoing problem that appears to be getting worse. And though it’s hard to thwart fraud entirely, you aren’t defenseless against some of the most common types of bank fraud happening today. Keeping a close eye on your accounts and credit, being skeptical of unsolicited requests for information or money, and taking fast action when a problem is detected can all help minimize your exposure to fraud—and help stop it if it occurs.</p><p></p>

Talking about money with your partner can be difficult. While you might be a saver, your signifiant other might be a spender. When planning for the future, you may be looking at what your financial needs will be in 10-15 years, while they may be thinking about next month.

<p>Talking about money with your partner can be difficult. While you might be a saver, your signifiant other might be a spender. When planning for the future, you may be looking at what your financial needs will be in 10-15 years, while they may be thinking about next month.</p><p>A money date is time you set aside to align with your partner around money. Sharing your financial history, as well as your hopes for the future can help build trust. Having regular conversations about money can help you develop shared financial goals—and the plans to achieve them.</p><p>A money date is time you set aside to align with your partner around money. Sharing your financial history, as well as your hopes for the future can help build trust. Having regular conversations about money can help you develop shared financial goals—and the plans to achieve them.</p><h2>How to Have a Money Date</h2><p>If you’re at the stage in your relationship where developing shared financial goals and building trust around money are important to you, using regular money dates to get on the same page can be a good way to go. Here’s how to make a money date work for you.</p><h3>Set a day and time.</h3><p>Keep your money date focused—and fun—by treating it like a real date. This means setting aside time just for the two of you in a space that’s comfortable, private, and free from interruptions. A quiet restaurant, a picnic table at your favorite park, or snuggled up on the sofa are all good options. Pick a time when both of you will be fresh, rather than exhausted from a long work week. If you have children at home, ask a family member or neighbor to watch them so you can focus on your conversation. Stow cell phones and other distractions out of sight.</p><h3>Decide what to talk about.</h3><p>Before your money date, think about what you want to focus the conversation around. For example, if this is your first money date, start by exploring bigger questions, like:</p><ul><li><p><i>Did your family talk about money growing up?</i></p></li><li><p><i>What does ‘being good with money’ mean to you? </i></p></li><li><p><i>What’s your biggest money mistake? </i></p></li><li><p><i>What does ‘being retired’ look like to you?</i></p></li></ul><p>If you already know the answers to these bigger questions, or if this isn’t your first money date, try focusing on what’s coming up financially right now. For example:</p><ul><li><p><i>What about our finances keeps you up at night?</i></p></li><li><p><i>On a scale of 1-5, how would you rate how we spend money? </i></p></li><li><p><i>What do you think are our financial goals right now? </i></p></li><li><p><i>Do you think we’re meeting our financial goals? </i></p></li><li><p><i>If one of us lost our job (or we had a child), how would we handle money differently?</i></p></li></ul><p>Also,consider where you are in your relationship. The questions you ask and,most importantly, the information you share, on your money date will be a lot different than if you’re still getting to know each other versus if you’ve been together for years and are in a committed relationship.</p><h3>Get a grip on your finances.</h3><p>After determining what you want to focus on, take the next 30-45 minutes to jot down all your current debts along with your income and savings. Of course, this steps assumes you’re in a committed relationship and you feel comfortable sharing with this person. If that’s not the case, or you’re not ready to, or you just don’t want to share this level of financial detail, consider disclosing only your FICO score.</p><h3>Be open; reserve judgment.</h3><p>When you’re ready, take turns sharing what you’re comfortable sharing. You can start by talking about your money attitudes and beliefs, anything you might be hiding, or are afraid to admit. Approach what your partner has to say with an open mind. Listen, and try not to judge. This may take some patience. Be prepared for surprises and feeling a bit uncomfortable at first. Remember that honesty and taking it slowly builds trust in any relationship.</p><h3>Watch your language.</h3><p>Avoid making accusations or using words like “always” or “never.” Using “I” statements will help keep the focus on your feelings, rather than what you may think your partner is doing wrong. Focus on how you can work together. For instance, saying, “You always run up our credit cards by impulse shopping,” can create tension and put your partner on the defense. Try instead, “I feel anxious when our credit card bill gets too high. I’d really like to see us pay our balance in full every month. How could we make that happen?”</p><h3>Remember you’re a team.</h3><p>You and your partner may have diametrically opposed views about money, which can lead to disagreements on a money date. Remember that you’re on the same side. Making eye contact, holding hands while you talk, or sitting together on the sofa instead of facing off across a table can help you keep your relationship top of mind even if it the money topic is stressful.</p><h3>Keep it short.</h3><p>Unless talking about money for hours is your idea of a good time, it’s best to limit your money </br>date to an hour or so. Discussing finances can be stressful, and as you get tired, tempers can flare. (If you feel yourself getting upset or angry, you may want to call a time-out.) If you don’t cover all the topics you planned during this time frame, just pick up where you left off at your next money date.</p><h3>Stay positive.</h3><p>Even if you’re tackling big challenges like credit card debt or a big medical bill, make an effort to focus on the positive. After all, teaming up to figure out how to tackle student loan debt, or any money issues together can be incredibly bonding. End each money date by celebrating your progress, whether big (paying off your student loan) or small (shaving $100 off last month’s grocery bill).</p><h2>Financial Topics to Cover on a Money Date</h2><p>Your money date conversation can vary from one money date to another. If your financial life is going smoothly, for example, you might simply want to revisit what you discussed on your last money date, the decisions you made, and how they’re working out.When you have immediate money needs, however, you’ll want to make them a priority. For instance, you might be dealing with a sudden job loss, healthcare expense, or a cross-country move. In this case, devoting a money date to mapping out immediate, or short-term, money goals can help you address how to adjust your spending and how to grow your savings plans together. Even if you’re not in a financial bind, you can still talk about what you each want more of in the short term, such as more dinners at home, to <a href="/resource-center/personal-finance/best-ways-to-save-money-this-holiday-season">save money for the holidays</a>, a job closer to home, or agreement on sticking to a budget. As the year draws to a close, completing an <a href="/resource-center/personal-finance/financial-health-tips">end-of-year financial checklist</a> together is a good way to review your progress toward your financial goals. Regular,ongoing money dates are for solving problems or inconsistencies that inevitably crop up in daily life together. Here are some topics you can address any time of year to keep the money conversation going strong:</p><h3>1. Splitting expenses</h3><p>Some couples split everything 50/50, even if one makes more money. Others divvy up expenses based on income. Some couples opt for more creative solutions, such as one person paying all living expenses while the other saves up for a big purchase or vacation. Talk about how you’re currently dividing expenses and whether it’s working for you.</p><h3>2. Bank accounts</h3><p>Are your savings and/or checking accounts separate or shared? Does the way you’re doing it still make sense for you? If you’re juggling separate accounts, jointly saving for a large purchase or down payment on a new home, or sharing a joint checking from which you pay for groceries or recurring expenses, can help you streamline and simplify your money life.</p><h3>3. Emergency planning</h3><p>Having a financial safety net is critical to long-term financial health. A good rule of thumb is </br>to build emergency savings that will cover your essential living expenses for three to six months. Use money dates to track your progress toward that goal and figure out ways to cut expenses so you can save more. Once you’ve got an emergency fund tucked away, then you can drill into your options for life insurance and disability insurance.</p><h3>4. Renting or buying a home</h3><p>Are you happily renting or looking to buy? You can use money dates to plan how to save for a down payment on a home and monitor your progress. Talking to a lender can help you figure out your mortgage loan options and how to avoid loan scams, <a href="/resource-center/personal-loan/how-to-improve-credit-score">why your credit score matters</a>, and how much of a down payment you’ll need.</p><h3>5. Retirement goals</h3><p>Are you on track toward your shared retirement goals? Online retirement planning tools can help you both assess your personal situations, and if appropriate, merge them to come up with a complete retirement picture as a couple. Try using your money dates to identify what you may need to work on and create, or make adjustments to, your plan. You may even want to consider bringing in a fiduciary financial advisorwho can help you plan for your retirement together—and keep you both accountable. Most fiduciary advisors offer both flat and hourly rates, making their services both customizable and affordable.</p><h2>The Bottom Line</h2><p>When you’re building your lives together, the path to money stability and financial health requires a commitment of time and energy from both of you. Schedule money dates monthly or until you discover your own rhythm.As you get more comfortable talking about money, having conversations about your personal finances will become second nature, and eventually, a normal part of daily life.</p><p></p>

Using your annual bonus money to reduce debt, save more into an emergency fund, or maximize retirement contributions can improve your financial outlook and sense of financial security. Any bonus money you receive throughout the year creates an excellent opportunity to make headway on your personal and financial goals.

<p>Using your annual bonus money to reduce debt, save more into an emergency fund, or maximize retirement contributions can improve your financial outlook and sense of financial security. Any bonus money you receive throughout the year creates an excellent opportunity to make headway on your personal and financial goals.</p><h2>5 Financially Smart Ways to Save or Spend Your Bonus</h2><p>Depending on your bonus amount, you may want to allocate bonus dollars in more than one way and across multiple accounts. To make the most of any cash windfall, consider these five financially smart ways to know what to do with your bonus money.</p><h3>1. Pay down revolving, high-interest debt.</h3><p>If your credit card balances ballooned over the past year, using bonus money to pay down revolving, high-interest debt more quickly can save you on the cost of borrowing over time and improve your credit outlook.</p><ul><li><p><b>Revolving credit is expensive.</b>Paying down a high interest rate credit card balance generally saves you more money than you’d make by putting the same money into a high-yield savings account. (However, if you need the money to start or build your emergency savings account, that should be weighed into your consideration.)</p></li><li><p><b>Reducing your credit utilization may help your credit score.</b>Using more than a small portion of your available credit can hurt your credit score. Putting your bonus money to pay down or pay off revolving debt could lower your credit utilization ratio—the percentage of your credit limit in use—and possibly help maintain, or improve, your credit score.</p></li><li><p><b>You may lower your monthly expenses</b> by reducing or eliminating your credit card bill.</p></li></ul><p>If using your bonus money puts only a small dent in your credit card debt, you might consider getting a personal loan to <a href="/personal-loan/debt-consolidation">consolidate your debt</a>. By rolling the remainder of your high-interest credit card balances into a single installment loan, you’ll not only have a fixed payoff date, you may be able to lower your cost of borrowing, reduce your monthly payments, or both.</p><h3>2. Grow your emergency fund.</h3><p>Having at least three to six months’ worth of living expenses tucked away into a <a href="/personal-savings/high-yield-savings">high-yield savings account</a> is another smart way to use your bonus money. You may want to accumulate even more if you’re concerned about a possible layoff or other large financial setback. And if you’ve already had to dip into your emergency savings over the past few months or years, using your bonus money to build your emergency savings account back up makes good </br>financial sense.</p><h3>3. Reach specific savings goals more quickly.</h3><p>Holding enough in savings is one of the most important ways to <a href="/resource-center/personal-finance/recession-proof-your-money-life">recession-proof your finances</a>.Consider using your bonus money in any of the following ways to reach certain savings goals faster and give yourself a better hedge against inflation, unemployment, or a planned financial need:</p><ul><li><p><b>Large expenses:</b> Is there a home repair or other major improvement you’re planning? By setting aside some of your bonus money now, you won’t need to rely on high-interest credit cards or pull from your emergency account when the time comes.</p></li><li><p><b>Education:</b> A 529 plan is a flexible, tax-advantaged investment account that helps you save for K-12, graduate school, and apprenticeship educational program expenses for yourself, your child, or a qualified dependent. Even your friends and family can contribute to a 529 plan that you set up. Check with your tax or financial advisor to know if a 529 plan could work for you.</p></li></ul><h3>4. Maximize your retirement contributions.</h3><p>If you’re not already maximizing contributions to your 401(k) or an individual retirement plan such as a traditional or Roth IRA, consider using your bonus money to get you there.</p><p>Generally, in 2023 you may be able to contribute up to as much as $22,500 to an employer-sponsored 401(k), 403(b), and other such plans. If you’re 50 or older you may also make an additional $7,500 catch-up contribution.Additionally, you may be able to contribute up to as much as $6,500 to either a traditional or Roth IRA (with a $1,000 catch-up contribution for taxpayers 50 and older).</p><p>Review <a href="https://www.irs.gov/newsroom/taxpayers-should-review-the-401k-and-ira-limit-increases-for-2023">IRS retirement contribution limits and guidelines</a> and always check with a tax or financial advisor about what will work given your particular income, taxation, and financial situation.</p><h3>5. Invest in yourself.</h3><p>Using some of your bonus to make your personal life more fulfilling or your work life more productive and balanced can help you create a healthier financial future.</p><ul><li><p><b>Career development:</b> Investing in your professional development can help you stay motivated on the job, position you for growth and promotions, and build your professional network. Adding a new skill to your resume, joining a professional organization, attending a conference, or taking a prospective mentor to lunch are all valid reasons for allocating some of your bonus dollars.</p></li><li><p><b>Home office improvements:</b> If expanding your work area, better ergonomics, faster internet, or an extra monitor will make work more comfortable or add to your productivity, consider using your bonus money to upgrade your home office setup.</p></li><li><p><b>Wellness: </b>Using your bonus money to bring some balance into your life and recharge is a good thing. Investing in an outdoor activity you enjoy (e.g., paddleboarding, yoga, fishing) or pursuing a creative outlet like painting, culinary, or mindfulness classes can bring joy and fulfillment and lower your stress.</p></li></ul><h2>The Bottom Line</h2><p>If you’re thinking about what to do with your bonus money, give serious consideration to paying down debt, building your emergency and retirement savings, or investing in your personal development. Not only would using your extra bonus dollars in one or more of these ways demonstrate financial responsibility, it could provide you peace of mind in an uncertain economy.</p>

Financial goals can help you lay the groundwork for your financial plan and work toward long-term financial security and independence. Setting financial goals can also change how you look at your income opportunities and spending habits, helping you align your behavior with what’s most important to you.

<p>Financial goals can help you lay the groundwork for your financial plan and work toward long-term financial security and independence. Setting financial goals can also change how you look at your income opportunities and spending habits, helping you align your behavior with what’s most important to you.</p><h2>5 Steps to Setting Your Financial Goals</h2><p>These five steps can help you develop and track your progress toward the financial objectives that make the most sense for you and your situation.</p><h3>1. Identify and evaluate your priorities.</h3><p>Financial experts recommend you start setting financial goals by identifying you priorities. So, what’s most important to you right now? Maybe it’s building an emergency fund in case you lose your job. Perhaps you’re nearing retirement and want to save more. Or, do you want to pay off high-interest debt before you start saving for a down payment on a home?Start by thinking about what matters most to you, breaking your priorities down into a few categories. Here are a few ideas:</p><h4><b>Controlling debt</b></h4><p>If you have existing debt, do you want to pay it off as soon as possible? Or do you want to prioritize other financial goals instead (such as more education) while you continue paying down your existing debt?</p><h4><b>Building savings</b></h4><p>How important are financial security and independence to you, and what does that look like? Do you plan on building retirement savings slowly over a long period of time with a diversified portfolio and retire in your 60’s, 70s, or 80s? Or, do you think about drastically reducing your living expenses now so you can save the majority of your income over the next 10-15 years and retire in your 30s, 40s, or 50s?</p><h4><b>Establishing lifestyle</b></h4><p>Do you want to rent or buy a home? Where do you want to live? Do you want to make traveling the world a way of life? What other ways do you want your lifestyle to change over time?</p><h4><b>Reducing risk</b></h4><p>How will you deal with potential unforeseen events, such as a layoff, death or disability, that could derail your financial plans?After writing down your goals, rank their importance. This process can take some time as you think about your future, but it can help you better visualize your goals, provide inspiration, and help you solidify the reasons why you want to achieve certain goals and not others.</p><h3>2. Define your goals and make them SMART.</h3><p>To make your financial goals effective and easier to obtain, experts recommend using the SMART goal-setting model to ensure your objectives are <b>S</b>pecific, <b>M</b>easurable, <b>A</b>chievable, <b>R</b>elevant, and <b>T</b>ime bound.Here’s an example of defining the goal of buying a home using the SMART model:</p><ul><li><p><b>S – Specific:</b> Save money for a down payment on a home.</p></li><li><p><b>M – Measurable:</b> Save $25,000, allowing you to put down 5% on a $500,000 home.</p></li><li><p><b>A – Achievable: </b>Open a savings account where you will set aside $500 per month plus annual bonuses.</p></li><li><p><b>R – Relevant: </b>Owning a home is an important step in building the life you want.</p></li><li><p><b>T – Time-Bound:</b> Depending on the amount of your annual bonus, you can save up the money for the down payment over the next three to four years.</p></li></ul><p>You can apply this process to any of the financial goals on your list. If you’re having trouble identifying the criteria to make your financial goal SMART, you may need to adjust your expectations or consider talking to a financial advisory who may be able to offer some guidance.</p><h3>3. Get on a budget.</h3><p>Once you’ve laid out your financial goals, <a href="/resource-center/personal-finance/tips-for-financial-success-in-budgeting-your-money">developing a realistic budget</a>can help you achieve them one by one. If you’re not already on a budget, take some time to look at your income and expenses over the last few months. Categorize each expense so you know exactly where your money is going.If you find some additional cash flow every month, you could allocate that into one or more of your financial goals by setting up automatic transfers into emergency savings, <a href="/resource-center/personal-finance/steps-to-decimate-debt-the-debt-snowball-method">paying debt down faster</a>, or another financial goal to increase your chance of success.Try to pinpoint where in your budget you could cut back and put that money toward your goals instead. For example, if you’re spending a lot on eating out or food delivery, consider cooking at home more often and re-allocating those dollars toward one of your goals.You could build your budget on your own or research and compare various budgeting apps that can help you improve the way you manage money.Check in on your budget periodically to make sure it’s still working for you and make any adjustments, if necessary.</p><h3>4. Maximize (and research) your money management.</h3><p>Once you’ve laid the groundwork for your financial goals, do some research on the array of financial products and services available that can help you better work toward them.For example, if you have some short-term savings goals, such as building an emergency fund, you could compare <a href="/personal-savings/high-yield-savings">high-yield savings accounts</a> and choose one with a high APY to maximize your progress. If you have high-interest credit card debt, consider a <a href="/personal-loan/debt-consolidation">debt consolidation loan</a> that could help you save money or lower your monthly payment (depending on your goals) while you pay it down.If you’re saving for retirement, understand the value of taking full advantage of matching employer contributions. Also, learn about the differences between Traditional and Roth IRAs, self-employment retirement plans (if applicable), and other tax-advantaged ways to make the most of your investments.Finally, you may consider new job opportunities that can help you bring in a higher regular income, which you can use to accelerate your progress toward your goals.When it comes to researching financial products and services, it can be difficult to know where to start, especially if you don’t have a lot of experience with money-related tools. Depending on your goals, there’s a wealth of knowledge online that you can use as a springboard to find the best approach for you. You can also connect with a financial advisor for expert, personalized advice.</p><h3>5. Make adjustments as you go.</h3><p>What’s most important to you, including your financial priorities and goals, will change over the course of your life. For example, your goals as a single person in your 20s most likely will be quite different from the priorities you may have as a parent in your 40s.It makes sense to track your progress toward your financial goals and reevaluate your approach over time. Consider doing this every six or 12 months or if you experience a big life event, such as a big change in your income, marriage, divorce, the birth of a child, or a major medical concern. Review your goals, and if you’re on track, consider whether it’s possible to accelerate your progress. If you’re not on track, think about the reasons and whether or not it’s within your control to get to where you need to be.If you’re falling behind due to circumstances outside of your control, consider reprioritizing your goals and adjusting them based on your new situation.</p><h2>The Bottom Line</h2><p>Setting financial goals using SMART principles can help you improve your chances of achieving the life and financial security you desire. Because financial goal setting will be different for everyone, it’s important to consider your situation in context, take a structured approach, make full use of available tools and resources, and apply your best judgment to determine your best path forward. And if your goals include consolidating debt, a <a href="/personal-loan">personal loan</a> from LendingClub Bank could be a smart choice.</p>

Understanding how to pay your bills on time is an important part of effective money management. Not only does timely bill payment impact your credit score, late and missed payments could cause penalty interest rate increases, late fees, or your account to be sent to collections. Having a pattern of not paying bills on time could also result in credit denials, or higher interest rates when applying for loans or credit cards.

<p>Understanding how to pay your bills on time is an important part of effective money management. Not only does timely bill payment impact your credit score, late and missed payments could cause penalty interest rate increases, late fees, or your account to be sent to collections. Having a pattern of not paying bills on time could also result in credit denials, or higher interest rates when applying for loans or credit cards.</p><h2>How to Pay Your Bills on Time, Every Time</h2><p>If you have many types of bills, irregular income, or are living paycheck-to-paycheck, keeping your bills organized and paying them on time can be especially challenging. Here are six simple steps to help you understand how to pay bills on time and make bill paying easier.</p><h3>1. Compile a list of your monthly bills.</h3><p>Getting a handle on how to pay your bills on time starts with knowing what bills you have. </br>Using a spreadsheet or pencil and paper, make a list of your bills. Start with your largest bills first, such as your rent, mortgage, and credit cards, followed by auto loans, personal loans, or any student loan payments. Add recurring bills and expenses such as auto insurance, utilities, phone, internet, streaming services, gym memberships, childcare, etc. Include the following information for each item on your list:</p><ul><li><p>Name of account/provider</p></li><li><p>Monthly payment amount</p></li><li><p>Payment due date</p></li><li><p>Payment method</p></li></ul><p>Be sure to include any buy now/pay later bill payments and capture any other recurring payments. It can help to look at your bank and credit card statements to be reminded of all your creditors and the bills you pay on a regular basis.</p><h3>2. Create a bill calendar.</h3><p>Now that you’ve compiled a list of all your bills, it’s time to create a monthly bill calendar to help you track when each bill is due. Probably the easiest way to set this up is to use a digital calendar (such as on your phone or laptop) and color code your bill calendar entries so they stand out from your other calendared events. Or you can <a href="https://files.consumerfinance.gov/f/documents/cfpb_well-being_bill-calendar.pdf">create a bill calendar</a> using paper and pencil instead.To create your bill calendar, look at your current bill list and start calendaring your bills by their current due date. Include key information from your bill list, such as the creditor’s name and amount due. Next, calendar the dates you expect to receive money and how much, such as your monthly or bi-weekly paychecks. If you’re on a regular payroll schedule, note your payday schedule and the amount you normally receive. You can also include other regular anticipated income, such as a work bonus, child or spousal support, etc.</p><h3>3. Review your bill due dates.</h3><p>Now that you’ve created your monthly bill calendar, understanding how to pay your bills on time becomes a lot easier. Use the calendar to get a birds-eye-view of how your income fluctuates throughout the month, where your bill due dates land, and what amounts are due when. Being able to see when money is flowing in and out helps you know if you’ll have enough money in your bank account to cover those payments (and avoid overdraft and late fees). A bill calendar also makes it easier to see where you may need to adjust certain payment due dates.If a bill’s due date doesn’t align with your pay schedule, or you see that there are too many bills stacked up in one week, consider contacting your bill provider to request a change of your payment due date. Most bill payment due dates default to the beginning or the middle of the month, e.g., the first/last day or around the 15th of each month. So, if you’re paid once at the end of each month, you may want to explore whether you’re able to schedule your due dates in the beginning of the month. If you’re paid weekly, it may make more sense to spread your due dates out more evenly over the course of the month.You may be able to go into your online account to see if you can change your bill due date there. If not, contact your creditor by phone. If it makes it easier for you to pay on time, ask about splitting up larger bills so you’re making two or three payments over the course of the month, or if you can pay a bill quarterly, annually, or some other option—whatever works for you. Know your grace periods—the window of time between the date your bill is due and when you’re charged a late fee. Grace periods are usually about 15 days and can give you some flexibility in timing your bills.</p><h3>4. Automate your bill paying.</h3><p>One of the easiest ways to make sure you never miss a bill payment is to schedule your payments in advance. Most creditors offer some form of automated bill payment now, or you can set it up through your <a href="/resource-center/personal-checking/guide-to-banking-online">online bank account</a>.If you pay directly to your creditor, you’ll need to provide a payment source to keep on file, such as a debit card or bank account information. And you’ll usually be able to select the date of your recurring payment and how much you want to pay, such as the minimum amount due or a custom amount. If you set up payments through your bank, you can also choose how much you want to pay and when.Continue to use your bill calendar to track your due dates and income. And,  especially in the beginning, keep an eye on your bank balance to ensure you’ve got the funds in your bank account to cover any upcoming payments.</p><h3>5. Receive alerts and reminders.</h3><p>Not all bills can be automated, so if you’re having trouble remembering when a bill is due—even with a bill calendar—set up automatic reminders to help you remember. Most creditors offer a bill reminder feature built into their platform and provide options to be alerted by text or email. You could also set up reminders manually on the calendar in your phone, laptop, or daily journal (5 days before the payment due date is a good rule of thumb). Whatever you choose, bill reminders are there to alert you about upcoming payments a few days before they’re due.You may also be able to opt-in to receiving notifications about payments made, received, and any missed payments. You can also add daily, weekly, or monthly reminders to check your account balances.</p><h3>6. Dedicate organized space.</h3><p>How you pay your bills is just as important paying your bills on time, and that starts with keeping your bills organized. Dedicate an area in your home where you pay bills and manage financial paperwork. Whether it’s a designated folder on your laptop or a kitchen drawer, keeping everything organized and in one place is key to knowing how to pay your bills on time. Figure out what works best given your living space and organizational habits—and don’t be afraid to adjust as you go along.</p><h2>The Bottom Line</h2><p>Knowing how to pay your bills on time in an organized and efficient manner can help you establish a track record of on-time payments, which could have an impact on your credit score. If you’re struggling to pay your bills, check in with your creditor or lender as soon as possible. They may be able to work with you to provide solutions such as forbearance, temporarily reduced interest rate, loan extensions, or other payment options.Or you may want to consider consolidating some of your variable high-interest credit card balances, medical bills, and other outstanding debt into a fixed, lower rate <a href="/personal-loan">personal loan</a>. You could save money over time, lower your combined monthly payments, or both.</p><p></p>

At first glance, the process of paying off debt seems like a pretty straightforward concept. You borrow money, you make payments each month, and eventually the debt is paid. But what if there was a strategy you could use to pay down debt even sooner—and stay motivated along the way?

<p>At first glance, the process of paying off debt seems like a pretty straightforward concept. You borrow money, you make payments each month, and eventually the debt is paid. But what if there was a strategy you could use to pay down debt even sooner—and stay motivated along the way?</p><p>That’s the basic premise behind the debt snowball method, a popular approach to paying off loans and credit cards that could be your ticket to tackling debt once and for all.</p><h2>What is the Debt Snowball Method?</h2><p>The debt snowball method is a strategy that uses motivational momentum to reduce, and eventually eliminate, your debts. You pay off each debt starting with your smallest and work your way up to your largest. The quick wins from paying off smaller debts give you the motivation you need to keep going until you are debt free.</p><h2>How the Debt Snowball Method Works in 6 Easy Steps</h2><p>How does it work? A debt calculator can do some of the number-crunching for you, but if pencil and paper is more your style, here’s what to do:</p><h3>1. List all your outstanding debts.</h3><p>Write down the name of each loan or credit card, its balance, and the minimum monthly payment you owe. For example, suppose your debts include:</p><ul><li><p>An auto loan with a $3,000 balance and a $350 monthly payment</p></li><li><p>A personal loan with a $700 balance and a $125 monthly payment</p></li><li><p>A credit card with a $10,000 balance and a $200 monthly payment</p></li></ul><h3>2. Sort your debts from smallest to largest outstanding balance.</h3><p>Using our example, you would reorder your list like this:</p><ul><li><p>Personal loan with $700 balance—$125 per month</p></li><li><p>Car loan with $3,000 balance—$350 per month</p></li><li><p>Credit card with $10,000 balance—$200 per month</p></li></ul><h3>3. Pay extra toward your smallest debt.</h3><p>It’s essential that you keep paying your monthly minimums to avoid late fees and dips in your credit score. But, once you’ve paid that, use any additional debt repayment funds you have to put toward your smallest debt payoff.</p><p>Going back to our example, you would keep paying the required minimums of $350 and $200 toward debts two and three, respectively.</p><p>After making those minimum payments, let’s say you discover an extra $100 on hand to accelerate your debt repayment. You add that $100 to the $125 monthly minimum you’re already paying toward debt one, your low-balance personal loan.</p><h3>4. Keep at it until you pay off your smallest debt.</h3><p>Repeat step three, paying the most you can each month toward debt one until your balance hits zero. If you’re able to continue contributing that extra $100, you’ll pay off your $700 balance within just four months (take a moment to celebrate your awesome achievement!).</p><h3>5. Roll your money into your second-smallest debt.</h3><p>Now that your personal loan debt is a thing of the past, it’s time to focus on debt two, your auto loan. Again, keep paying the minimum toward debt three. But now, in addition to the $350 you were already paying toward debt two each month, lump in the $225 you had been putting toward debt one. Now, you’ve snowballed your money and are able to pay a whopping $575 on your car loan every single month.</p><h3>6. Keep going until your debt is gone.</h3><p>Repeat the payment structure outlined in step five until debt two is gone. Then, roll your payments once more, and tackle the next debt on your list. Keep at it, paying and rolling money from one debt to the next, until you’ve crossed off every liability on your list.</p><h2>Who Should Use the Debt Snowball Method?</h2><p>The debt snowball method is a good option for those who are motivated by fast results. Paying off that first small debt can feel very rewarding, giving you the motivation you need to keep going until all your debts are paid. </p><p>However, it’s important to understand that this method of debt repayment works best if you earn a regular income and have a bit of wiggle room in your budget. It doesn’t have to be much, but you do need to be able to pay a bit more toward debt than the minimum. </p><h2>7 Debt Snowball Method Mistakes to Avoid</h2><h3>1. Trying to pay off multiple debts at once.</h3><p>The debt snowball method is all about tackling one debt at a time. It may be tempting to put your extra cash toward more than one debt, but this can slow your progress and cause you to feel overwhelmed, potentially derailing the whole process. </p><h3>2. Avoiding other important payments.</h3><p>Make sure not to get so caught up in the debt snowball method that you neglect your other bills. If, for example, you miss mortgage or utility payments, your credit score will almost certainly take a hit, canceling out much of the progress you’ve made with your debt repayments. </p><h3>3. Not rolling over your payments.</h3><p>For the debt snowball method to work, it’s essential that you roll over your payments into the next smallest debt once you’ve paid off the previous one. Using any of that money for other purposes will only slow you down. </p><h3>4. Adding to your debt.</h3><p>It may seem like a no-brainer to not rack up credit card debt while you’re working on paying it off, but old habits die hard. If you think you’ll be tempted, leave the card at home or remove the saved data from your favorite online shopping sites. </p><h3>5. Burning through emergency savings.</h3><p>Don’t use your emergency fund to finance your debt snowball payments. Regardless of your amount of debt, you’ll still want to have money set aside in case you&#39;re blindsided by an unforeseen expense. Don’t have an emergency fund? Consider building one up before you begin paying down debt. </p><h3>6. Forgetting to track your progress.</h3><p>Part of the magic of the debt snowball method is the ability to see change happening quickly. So keep close track of your progress and give yourself a gold star for each win. You’ve earned it. </p><h3>7. Losing sight of your goals.</h3><p>Paying down debt is no easy feat, so remember you’re doing this for a reason. Make a list of all the advantages you hope to gain by paying your debts (a better credit score, financial security, access to better loans, etc) and revisit it regularly. Seeing those goals written down can help you make it to the finish line. </p><h2>Is the Debt Snowball Method the Right Strategy for You? (+ Alternatives)</h2><p>Countless people have found success with the debt snowball strategy, but it isn’t the only approach out there for debt reduction. One of the following strategies may work better for you:</p><h3>Debt avalanche method</h3><p>The debt avalanche method is a method of paying off your debts with the highest interest rate first. The advantage of the debt snowball strategy is that it increases your confidence. You can build momentum as you pay off entire lines of high-interest debts one by one. It also saves you money in the long run. By paying off the accounts with the most interest first, you reduce the interest you pay.</p><h3>Debt snowflake method</h3><p>The debt snowflake method involves finding extra money in your budget and making extra micropayments to chip away at your debt. You can combine the debt snowflake method with the debt snowball or the debt avalanche. Or, you can use it to pay off a single debt faster and save money on interest.</p><h3>Refinancing with a personal loan</h3><p>In some cases, it might make sense to refinance your existing debt by <a href="/personal-loan">taking out a personal loan</a>. This could be a good option if your credit score has improved, you have a co-borrower, or you can get a better interest rate on the refinanced loan than with your existing lines of credit. </p><h3>Consolidating debt</h3><p>With a <a href="/personal-loan/debt-consolidation">debt consolidation loan</a>, you roll all of your debts into a single loan and then pay down your debt with one fixed monthly payment. Depending on your credit score, you may be offered a lower interest rate, lessening the total cost of your debt. </p><p><b>The Bottom Line</b></p><p>When you’re juggling thousands of dollars of debt, it’s easy to feel like your financial life is out of control. But fortunately, the secret to conquering your money could be simpler than you think. By committing to tackling your debt one account at a time and allowing yourself those small victories, you might find your whole financial situation more manageable. If this sounds like it could work for you, the debt snowball method might just be what you need to accelerate your journey to a debt-free life.</p><hr/><h2>Debt Snowball Method FAQ</h2><h3>How do I get out of debt with the debt snowball method?</h3><p>To get out of debt with the debt snowball method, first list all of your existing debts from smallest to largest. Then, make minimum payments on all your debts, but allocate as much as you can towards the smallest debt until it’s paid in full. Repeat this process using the next smallest debt until everything is paid off.</p><h3>Which is better: the debt snowball method or the debt avalanche method?</h3><p>It depends. With the debt avalanche method, you’ll pay off debts with the highest interest rate first, which can save you more money overall. With the debt snowball method, you’ll pay off your lowest balances first, which can help keep you motivated and encouraged to keep going. No matter which method you choose, the secret to success is commitment.</p><h3>Is it better to pay off small debts first?</h3><p>Sometimes. Paying off small debts first can give you the positive reinforcement you need to continue healthy financial habits and meet your goals. With every debt you pay off, you might feel more motivated to continue forward.</p>

It’s the end of another pandemic year and it’s safe to say we’re all ready to bid 2021 goodbye. But before you let the holidays take over completely, set aside some time to get your finances in order. So grab a notebook and some snacks and get ready to tackle your year-end financial checklist. 

<p>It’s the end of another pandemic year and it’s safe to say we’re all ready to bid 2021 goodbye. But before you let the holidays take over completely, set aside some time to get your finances in order. So grab a notebook and some snacks and get ready to tackle your year-end financial checklist. </p><h2>Your Year-End Financial Checklist</h2><p>Every suggestion may not apply to your situation, but they can offer you an annual roadmap and some ideas to explore down the road. After all, you don’t want to waste money, incur penalties, or pay any more taxes than you absolutely have to.</p><h3>1. Do a 60-minute end-of-the-year review.</h3><p>With pen and paper in hand, (and your partner, if you have one), take time to look back at the past 12 months. Did you stay on budget, or spend more than you had planned? Did you save more or less than what you hoped to? Were you able to pay off debt, or did unexpected expenses set you back? </p><p>Be honest as you write down your answers. Even if there are some areas that need improvement, whatever your situation, you can gain mastery over your money by committing to making those changes.</p><h3>2. Go over your insurance policies.</h3><p>Life has been full of uncertainties recently which means ensuring that you’re protected is more important than ever. Review any existing policies you or your family have, especially life insurance, homeowner’s or renter’s insurance, car insurance, and health insurance, and ask yourself a few questions:</p><ul><li><p>Does the original reason you needed coverage still exist or should you look at other insurance products?</p></li><li><p>Do you need more or less insurance in the coming year?</p></li><li><p>Do your deductibles need to be adjusted?</p></li><li><p>How do your insurance policies fit into your budget for the year? What changes might you need to make?</p></li></ul><p>Going through each of your policies one by one will help you get a better sense of where your money’s going and help you feel a bit more prepared, just in case.</p><h3>3. Plan for large expenses coming up in the next 6-12 months.</h3><p>Are you expecting any major life events within the next year, such as a wedding, divorce, birth, or starting college or a small business? Is there dental work or a big medical procedure on the horizon? Maybe your home needs repairs, or you need a more reliable car. </p><p>Whatever your financial situation, when it comes to paying for large expenses, you have options: <a href="https://www.consumerfinance.gov/start-small-save-up/">saving up</a> the cash, taking out a personal loan, using a credit card, refinancing your existing car loan, and more. Just be sure you do it without hurting your finances. Take on new debt only if you can fit the monthly payments into your budget. And do your research to find the best terms and lowest rates possible.</p><p>And if the past couple of years have taught us anything, it’s to expect the unexpected, so remember to factor in an emergency savings plan for unforeseen costs that may come up.</p><h3>4. Review your credit card rewards and offerings.</h3><p>2020 and 2021 were huge for e-commerce and digital banking but also saw Americans being more conservative with <a href="https://www.forbes.com/advisor/credit-cards/how-covid-has-changed-americans-credit-behavior/">credit card ownership and usage</a>. This (and the recession) led a lot of major credit card companies to <a href="https://time.com/nextadvisor/credit-cards/covid-card-benefit-expiration/">expand their rewards programs</a> and offer pandemic specials, like limited-time bonus points or free subscriptions. </p><p>As you go through your financials, take a second look at your current credit card offerings. Are the terms as favorable as they could be? It might be worth checking with your credit card issuers to see if they have any additional offers that you can jump on to maximize your rewards and make a bit extra.</p><h3>5. Get ahead of next year’s tax return.</h3><p>On December 31, your personal tax year is over. Grab a large envelope, accordion file, or box, and gather your year-end bank statements, tax documents, and receipts. If you prefer to go digital, organize all your paperwork into an accessible, secure online storage space.</p><p>Employers typically mail W2s and 1099s in January. If you collected unemployment insurance, the state sends Form 1099-G. Your lender will send Form 1098-E if you paid student loan interest. Don’t forget to make sure all these institutions have your current address on file. </p><p>Skim your latest tax return for potential deductibles and note down any tax losses, credits, and payments to share with your tax professional. Remember to review your tax bracket for the year to get a better sense of what you might owe. If you start preparing now, come tax season you’ll feel less stressed, be ready ahead of time, and avoid those late filing fees.</p><h3>6. Revisit your tax withholding.</h3><p>Changes in dependents, income, and marital status can all affect your tax bill. Use the IRS’s <a href="https://www.irs.gov/individuals/irs-withholding-calculator">tax withholding calculator</a> to decide how much you want to be withheld from your take-home pay moving forward. </p><p>If you find saving on your own difficult to do, having more taxes withheld from your paycheck could mean a bigger tax refund (and a bigger savings cushion) come April. On the other hand, if you’re in debt and got a big tax refund last year, consider having less money withheld and use that cash to pay off your debt faster.</p><h3>7. Make a plan for your flexible spending account (FSA).</h3><p>A <a href="https://www.healthcare.gov/have-job-based-coverage/flexible-spending-accounts/">flexible spending account</a> allows you to set aside pre-tax money to pay for health care or dependent care expenses not covered by your health plan. If you have unspent money left in the account, find out the deadline for using it, or ask your employer if they permit balance carryovers into the following year. And while you’re at it, reevaluate how much you want to set aside next year.</p><h3>8. Contribute to a health savings account (HSA).</h3><p>If you’re on a high-deductible health plan (HDHP) and not enrolled in Medicare, you may qualify to make tax-free contributions (up to a maximum amount) to a <a href="https://www.healthcare.gov/glossary/health-savings-account-hsa/">health savings account</a> to pay for medical expenses and lower your taxable income. The money in the account can be invested tax-free, and if you use it for qualified medical expenses you won’t owe any taxes on it.</p><h3>9. Consider charitable donations as holiday gifts.</h3><p>Many charities and nonprofits see their biggest fundraising dollars come in at the end of the year. And for good reason. Making a charitable contribution in a loved one’s name can make a great holiday gift. And if you itemize expenses on your tax return, your charitable contribution may be deductible. Just gather those gift receipts so you’re ready when April rolls around.</p><h3>10. Set up your social security benefits sooner than later.</h3><p>Even if you’re under 60, it’s a good idea to <a href="https://www.ssa.gov/myaccount/">set up an online account</a> with the Social Security Administration now. Not only will you receive personalized information about projected retirement benefits (or what you’d receive if you became disabled), it’s cool to see what you’ve earned over your lifetime on one page. </p><p>Knowing what your benefit could be will help you with retirement planning. Whatever benefits you do receive will depend on what you’ve paid social security tax on. So make it a habit to revisit your account at least once a year and correct any mistakes.</p><h3>11. Double-check your designated beneficiaries.</h3><p>When you apply for a life insurance policy, 401(k), IRA, and even some non-retirement accounts, you will be asked to name one or more beneficiaries. A beneficiary is the legal name of the person or persons you want to inherit the proceeds from your accounts or policies after you die. </p><p>This can make a huge difference to your estate planning because many people don’t realize that a will (if they have one) does not control who receives all of their assets when they pass away. So not naming beneficiaries when you’re asked to could mean your money gets tied up in probate (a big hassle) for months or years. Know the <a href="https://www.kiplinger.com/article/retirement/T021-C032-S014-beneficiary-designations-5-big-mistakes-to-avoid.html">critical mistakes to avoid</a> when naming beneficiaries.</p><h3>12. Get a free copy of your credit report.</h3><p>You’re entitled to one free copy of your credit report from each bureau, every year. The <a href="https://www.consumer.ftc.gov/articles/0155-free-credit-reports">Federal Trade Commission (FTC)</a> website explains your right to a credit report and provides contact information for their authorized vendor. </p><p>During COVID-19, this offering has been extended so that everyone can get <a href="https://www.annualcreditreport.com/index.action">weekly free credit reports</a> from the three major bureaus: Equifax, TransUnion, and Experian. The offer ends in April 2020, so take advantage of it while you still can. Once you’ve got your report in hand, carefully review it and correct any errors.</p><h3>13. Pay down your credit card debt.</h3><p>For many, the pandemic and recession have led to less credit card usage and better overall credit scores. But even if you’ve been good with your spending, that doesn’t mean you should sleep on debt. Gather all the information you can about your credit cards, your remaining balances, and their due dates and interest rates.</p><p>A good rule of thumb for paying off credit card debt is to start with the cards that have the highest interest so you don’t pay a penny more than you need to. You could also <a href="/personal-loan">consider consolidating your debt with a loan</a>. </p><h3>14. Make a financial New Year’s resolution.</h3><p>Every new year presents a fresh, new beginning. What are your financial goals? Will you finally pay down your credit card debt, or improve your credit score? How much would you like to see in your emergency fund in 6 or 12 months from today? Maybe you’d like to get some retirement planning advice or investment advice from a financial advisor. Or maybe you want to diversify your existing portfolio, or start investing for the first time (even if it’s just a small amount). Whatever your financial goals, write them down, create some milestones, and think positive.</p><h2>The Bottom Line</h2><p>When you take time at the end of the year to look back at how far you’ve come, and what steps you still need to take to plan ahead for a healthy financial future—you’ll feel more in control of your money and your life.</p><p>Remember, it’s always a good idea to consult with a licensed tax professional or financial professional for answers and advice about questions related to your specific tax and/or financial situation. LendingClub does not provide tax advice.</p><h2>Year-End Financial Checklist FAQs</h2><h4>What is a financial planning checklist?</h4><p>A financial planning checklist is a list of steps that you can take to keep your personal finances in order and work towards financial goals. It helps promote healthy decision-making and preparedness.</p><h4>How do you create a financial checklist for a year?</h4><p>A good annual financial checklist starts with knowing exactly where you’re at financially, which means taking a close look at your income, expenses, and short and long-term goals.</p><h4>What should a financial plan include?</h4><p>A successful financial plan should help you assess your budget, cash flow, and other assets to reduce bad spending habits and make sure you’re moving towards your financial goals. It’ll also help you manage taxes, savings, debt, and any major short or long-term expenses.</p><h4>What if I need help creating a financial plan?</h4><p>Many aspects of financial planning, such as taxes, insurance, and investments, may require professional help. Talk to a financial planner, finance professional, or tax professional before you make any major decisions.</p>

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