Don’t Let Instagram Envy Get You Into Debt

When was the last time scrolling through Instagram made you feel better?

If you’re like me, the puppy photos on your feed momentarily boost your mood, but the parade of carefully selected and artfully edited experiences leaves you feeling depleted. How can these people afford to travel to New Zealand? When will it be your turn to road trip along the Pacific Coast Highway, drinking wine on sunlit rooftops along the way?

You know by now that social media leaves out the fender benders, arguments and weather mishaps essential to any vacation. You can add financial faux pas to that list.

A full 48% of U.S. households have credit card debt, according to a recent NerdWallet analysis. The average household with debt carries $6,929 in balances from month to month, which means paying about $1,141 in interest per year.

You can’t really know how much money your friends have. But it’s safe to say that at least some of them may not be able to afford the trips that make you feel inferior without going into credit card debt. Here’s how to keep Instagram from bullying you into overspending.

Find the source of your FOMO

If a friend’s vacation photo really got under your skin, explore why. The destination or trip itself may not be the source of that FOMO, or fear of missing out. Has it been a while since you’ve taken time off work, and you’re resentful of how relaxed this person seems? Are you jealous of how close they appear to their partner or friends?

There could be ways to ease your anxiety for free, without vacationing at all. Consider scheduling a mental health day and going to a local museum on a day with free or reduced-price admission to get your mind off work. Round up friends interested in starting a book club or hiking group that meets monthly so you can feel part of a community.

Vacation for cheap

If traveling is what you crave, plan a debt-free vacation by estimating how much you’ll spend on transportation, lodging, meals and activities and saving that amount in advance. Some online savings accounts let you create sub-accounts for specific purposes, so setting aside money each month for travel means you save passively over time.

But if you haven’t been saving and need a getaway stat, stay flexible on dates and locations and use price-tracking apps to find hotel and flight deals. Consider staying local and taking a short road trip to an attraction in your area you’ve never been to. Split an Airbnb nearby with a group of friends and spend a weekend doing activities that don’t involve screens, like playing cards, exploring nature and making art.

Credit cards aren’t always the enemy; with a good credit score and a commitment to paying off your balance each month, you can get a rewards card that lets you earn points or cash back that will subsidize future trips. Be realistic about your ability to spend responsibly and avoid carrying a balance, though. The interest you could end up paying, and the anxiety that comes with ballooning credit card debt, can quickly erode any post-vacation glow.

Cut back on scrolling

There’s another, potentially nuclear-sounding option to prevent social media-influenced spending: Don’t look at Instagram at all.

You don’t have to go cold turkey. You can continue to post your own photos or communicate with friends via direct message, but rein in mindlessly perusing other people’s feeds. Start by setting a goal to wait until noon to open the app, or choosing two specific times of day to check it. Like any behavior you’re trying to change, it will be hard at first, but you’ll likely be surprised by how little you miss the app. Fill the time you get back with activities you enjoy.

The ideal outcome? Making plans and choosing travel experiences based on what makes you happy, not on a highly filtered version of someone else’s life.

This article was written by NerdWallet and was originally published by The Associated Press.

The article Don’t Let Instagram Envy Get You Into Debt originally appeared on NerdWallet.

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5 Tips for Cutting the Cost of Having Your Taxes Done

Many taxpayers stress about the size of their tax bills this time of year, but many more may be stressing about the size of the bill to calculate their tax bills. It now costs $188, on average, to have a tax preparer do a Form 1040, according to the National Society of Accountants. Itemize and add a state return, and the average rises to $294.

For many people, the struggle to find affordable, high-quality tax preparers is real, but experts say five things can help rein in the cost.

1. See if you can get free help

The IRS programs — Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) — provide free tax prep services generally to people who make $54,000 or less, have disabilities, are older than 60 or speak limited English. This can be a huge money-saver if you qualify. To find locations in your area, go to

2. Shop around (but thoughtfully)

Comparison shopping for tax preparers can save money, but it can be tricky, too. Not all tax preparers charge by the form — some charge by the hour and some charge per return, says Christine Freeland, president of the National Society of Accountants.

“You’re going to pay also by the level of experience and background that somebody has,” she says.

It’s OK to ask a preparer for an upfront estimate, says Melissa Labant, director of tax policy and advocacy for the American Institute of Certified Public Accountants. “Bring in a copy of your prior year return, and let them know if there were substantial changes in this year versus prior year,” she says.

And if the final bill is significantly higher than what you were quoted, ask why. “It may be that your return was more complicated than they anticipated, but if they don’t have a reason for why your return ended up being twice as much as what they had quoted you, that would be a red flag to me,” she says.

3. Read the contract

“Typically, tax preparers that want a long-term relationship with you will have some type of an engagement letter,” Labant says. That will help you understand how the preparer’s fees work, and it may give you a heads-up on whether there will be charges for things such as extra copies of your return.

Preparers can’t base their fees on a percentage of your tax refund amount, Freeland says, and they can’t charge you a separate fee for having the IRS direct-deposit your refund.

4. Ask for a break if you need it

Negotiating tax-prep fees isn’t very common, but sometimes it’s OK to ask for a discount, Freeland says.

“If you’re having a bad year and you’ve been with somebody for a long time and something’s happened, somebody’s lost a job, you’ve lost a spouse, you’ve had something that’s out of the ordinary, I think there’s nothing wrong with calling your preparer and saying, ‘Look, this is the bind I’m in this year. Is there anything you can do for me?’” she says.

5. Start early, get organized

Tax preparers often charge more as the April filing deadline nears, so the earlier you get your documents to them, the more you could save. Many preparers draw a line in the sand somewhere around the last week of March, Freeland says. After that, fees often start rising.

Furthermore, even though the complexity of the return and the quantity of records heavily influence the cost of human tax preparation, so does your level of organization, Labant says.

“Are they coming to you April 14 with a box of receipts? OK, that person’s not organized. It would be reasonable to expect a preparer to charge them more, as opposed to someone who had all of their forms, they completed the organizer [and] reached out in January,” she says.

The article 5 Tips for Cutting the Cost of Having Your Taxes Done originally appeared on NerdWallet.

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The Biggest Financial Mistake Women Make

Financially and otherwise, the deck tends to be stacked against women.

The wage gap, which stood at 20% in 2017, is the most blatant example of that. If current trends continue, that gap is unlikely to close in the U.S. for another 40 years, according to an analysis by the Institute for Women’s Policy Research.

While they wait, women might aim to close a gap over which they have more direct control: the investing gap. When compared with men, women are much less likely to invest their savings — and we miss out on significant wealth as a result. In a recent survey from Fidelity Investments, only 29% of women said they see themselves as investors. That needs to change.

Not investing deepens the disadvantage

Due to the wage gap, even if women save a greater percentage of our income than men — and research repeatedly shows we do — we accumulate less money. We’re also more likely to spend time out of work, caring for children and other family members.

As a result, a study from the National Institute on Retirement Security found that women are 80% more likely to be impoverished in retirement.

Any advice to save more falls flat; many women are undoubtedly saving as much as they can. But if you’re not also investing that savings in the stock market, you’re only widening the gap.

Women are natural investors; many just don’t realize it

Women tend to lack confidence when it comes to investing.

Annamaria Lusardi, a financial literacy expert and economist at the George Washington School of Business, says this frequently shows up in her research.

“When I ask people to self-assess their economic knowledge on a scale of one to seven, women are less likely than men to pick high numbers, in particular the highest,” Lusardi says.

In her research, women are not only more likely to answer financial literacy questions incorrectly, but they also disproportionately answer those questions with “I do not know.”

But perhaps there’s money to be made by knowing what you don’t know: Women are actually good at investing; better, arguably, than men. A separate Fidelity Investments analysis of client accounts published in 2017 found that on average, women outperformed men by 0.4%. In the U.K., a behavioral economist at the Warwick Business School found an even larger advantage, with women outperforming men by 1.8%.

Research shows one reason for men’s underperformance is actually overconfidence — they tend to trade investments more frequently and make riskier decisions. Women, on the other hand, tend to seek out financial advice and invest for the long term, trading less frequently as a result.

Getting comfortable with risk

The downside to women’s lack of confidence is that we tend to be more risk-averse.

There’s no doubt that investing is risky — but in many ways, not investing is even riskier. There’s a cost to holding cash, and over time, it can add up to six or even seven figures in lost returns.

Stacy Francis, a certified financial planner and president of Francis Financial in New York City, says she walks overly conservative clients through models to prove this out.

“We actually show them year by year how their nest egg will be valued over the next 35 years, based on their current spending: ‘This is how much you have invested, and this is the portfolio you feel comfortable with. By 81, you will have nothing left and you’ll be moving in with your children,’” Francis says.

It’s hard to imagine that doesn’t drive the point home, but she also shows them another scenario with a more balanced portfolio that easily gets them to age 95 or beyond without sleeping on their offspring’s couch. You can loosely mimic this process on your own with a retirement calculator, playing with different expected returns to see how long your money will last.

Investing doesn’t have to be complicated

There are plenty of complex investing strategies, and women are just as capable of mastering them as men. But the truth is, we don’t have to — and doing so could actually waste time and money.

If you have a 401(k), you’re already an investor — likely in mutual or index funds, which are baskets of investments designed to make getting into the market very easy. You can put your entire account balance into a target-date mutual fund — a common 401(k) investment — and it will automatically adjust for risk as you approach your planned retirement age.

For money in other investment accounts, such as an IRA, you can opt for the same type of fund. Or, if you want some investment guidance on the cheap, you can open your account at a roboadvisor, which is an automated portfolio management service.

Finally, you might find it motivating to align your investments with your values, by choosing socially responsible investments. SRI index funds will either exclude certain industries — tobacco, for example — or include companies that meet specific criteria.

One idea? Invest in other women, Francis says: “There are great mutual funds that will invest in companies that support women, or that put women in the CEO room.”

And yes: Men can benefit from these investing strategies, too.

This article was written by NerdWallet and was originally published by Forbes.

The article The Biggest Financial Mistake Women Make originally appeared on NerdWallet.

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3 Money Tasks You Need to Do Right Now

Most financial to-do lists focus on what you need to get done by Dec. 31, but there’s also a brief window early in the new year to save yourself some significant cash. Here are three tasks to consider doing now:

1. Avoid tax penalties

If you live in a high-tax area, have a bunch of children or otherwise take a lot of deductions, you may face an unpleasant surprise on April 15. It won’t just be a big tax bill. You may also face penalties for not having withheld enough taxes in 2018.

Some people “are going to be in really sad shape,” says Cari Weston (no relation), director of tax practices and ethics for the American Institute of CPAs.

Tax experts say many people are still unaware of how many tax rules have changed. Personal exemptions no longer exist, for example, which can be a problem for people with many dependents. People also can only deduct up to $10,000 of state, local and property taxes combined, when there used to be no limit.

Free income tax calculators can help you estimate your tax bill, or you can turn to a tax pro. You may face a penalty — essentially interest on the amount you should have paid, but didn’t — if you’ll owe more than $1,000 on April 15, Weston says. But there may still be time to avoid it.

Most people can dodge the penalty if their withholding in 2018 at least equaled the total tax they owed the year before (that’s the amount shown on line 63 of your 1040 form for 2017). People with adjusted gross incomes over $150,000 must have withheld at least 110% of the previous year’s tax.

Those who withheld too little can still avoid the penalty by making an estimated tax payment by Jan. 15. Instructions are on the IRS’ payment page.

2. Consider front-loading your medical expenses

Scheduling routine health appointments and screenings early in the year helps make sure they get done. You could catch problems before they get bigger and more expensive.

Front-loading your costs can also help if you have big medical expenses later in the year. Most health insurance comes with out-of-pocket maximums, which is the most you’re expected to pay in a year counting copayments, deductibles and coinsurance amounts but not counting premiums. The average out-of-pocket maximum for employer-provided health plans was $3,872 for a single person in 2018, according to the Henry J. Kaiser Family Foundation. Once you hit your plan’s limit, your insurance typically starts picking up the entire bill for medical care for the rest of the year.

If you have a flexible spending account for medical care through your employer, draining it early in the year can be a good plan. Although payments for FSAs are deducted from your paycheck throughout the year, you don’t have to contribute the money before you can spend it, says Sander Domaszewicz, principal at consulting firm Mercer. You can submit claims and be reimbursed for the full amount you’re scheduled to contribute for the year (up to $2,700 in 2019) at any time. If you lose your job or quit, you don’t have to pay back the difference between what you’ve contributed and what you’ve spent.

3. Set up (or adjust) your savings buckets

“Savings buckets” are savings accounts for a specific purpose, such as vacations, property taxes, life insurance premiums, car repairs and so on. You figure out roughly how much money you’ll need and when, then set up automatic transfers so the money is there when you need it. Having the cash on hand means you don’t have to charge it (and pay high credit card interest rates) or take out expensive loans.

Some people who do this have a single savings account at a traditional bank, using a spreadsheet to keep track of how much has been accumulated for each purpose. But online banks make it easier and more intuitive. These banks typically allow you to set up multiple sub-accounts, with labels you choose, and don’t charge monthly fees or require minimum balances.

If you’re already saving for nonmonthly expenses, see if you need to tweak the amounts. Property taxes typically go up every year, for example, but you may have to save less for car repairs if you recently bought a newer vehicle.

A few minutes spent on these chores now could save you money, time and stress throughout 2019.

This article was written by NerdWallet and was originally published by The Associated Press.

The article 3 Money Tasks You Need to Do Right Now originally appeared on NerdWallet.

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5 Credit Card Trends to Watch in 2019

Credit card users enjoyed a bounty of rewards in 2018: Thanks to a relatively healthy economy and competition for consumers, issuers launched new products with attractive incentives.

But there was a downside: Rising interest rates made carrying credit card debt more expensive. NerdWallet found that the average U.S. household with credit card debt carries almost $7,000 of it. Given current rates, that means paying over $1,100 a year in interest charges alone.

Card issuers last year also cut back on some of the ancillary perks, citing low levels of use. Discover eliminated several benefits, including extended product warranty, purchase protection and auto rental coverage. Citi and Chase also trimmed their price protection benefits.

Some credit card experts say 2019 might usher in a more austere period for credit card rewards, especially if interest rates continue to rise and the economy struggles.

“If there is an economic slowdown, or even a strong belief that one is coming, consumers are likely to start looking more strongly at card rates and fees, 0% [APR] offers and their length, and less at rewards,” says Mike Berinato, vice president of research and consulting for Market Strategies International, a financial services research and consulting company.

For now, consumers can continue to enjoy rich credit card rewards, as long as they take care to avoid high-interest debt.

Here are five credit card trends to look for in 2019:

1. More dining and entertainment rewards

In 2018, Wells Fargo launched the Wells Fargo Propel American Express® Card, which offers triple points on things like dining out, ordering in, travel, transit and streaming services. Other non-bonus-category spending earns one point per dollar. Terms apply.

Also last year, the Capital One® Savor® Cash Rewards Credit Card began offering additional rewards in the dining and entertainment categories. Plus, the issuer launched the no-annual-fee Capital One® SavorOne℠ Cash Rewards Credit Card, which also offers bonus rewards on dining and entertainment.

All three cards target consumers looking to offset the expense of some splurges, and we can expect to see more issuers try to get in on that action as long as the strong economy continues.

2. More co-branded retail cards

If your favorite store still doesn’t have its own co-branded credit card, there’s a good chance it will before 2019 is over.

Over the past 12 months, we saw even more retailers offering co-branded credit cards, including Ikea and Starbucks. Such cards can be lucrative for the merchant and can also encourage greater shopper loyalty. What’s more, store cards have greatly improved their reward offerings recently, making them more useful for everyday spending.

Consumers should be mindful of the fees and high interest rates associated with many store-branded cards.

3. More credit card spending

As more merchants eliminate cash as a payment option, consumers will continue to increase their credit card usage as a proportion of their overall spending. Some businesses, especially restaurants that cater to lunch crowds, say going cashless can save them time and money. They don’t need to count cash at the end of the day, and transactions at the register often move more quickly.

Given the cashless trend, 2019 will likely see more merchants joining the likes of salad chain Sweetgreen and Dos Toros, a taqueria, which have already opted to eschew cash in favor of plastic. This isn’t ideal news for those who can’t qualify for rewards credit cards, or those who find that cash works better for their budgeting. But for rewards-chasing consumers, it can mean opportunities.

4. More contactless options

Paying with your credit card without swiping or inserting it might sound futuristic if you’re not already a convert, but a growing number of consumers are using contactless cards, and even more will do so this year.

More card issuers are adding such options to their cards: Chase says it will offer contactless payment on all of its Visa credit and debit cards by the end of the year, and others, such as Capital One, already do so on many cards.

For consumers who enjoy convenience and speed, that’s something to look forward to.

5. Higher interest rates

If you’re carrying credit card debt, make a plan to pay it off as soon as possible in 2019. Interest rates are expected to continue to rise this year, meaning debt could become more expensive to carry as the year goes on.

If credit card debt is a concern, focus less on the flashy rewards your cards may offer and more on ways to pay down your balances.

Offers for 0% introductory APRs could get harder to find, which makes it a good idea to lock one in while you can. A credit card with a 0% introductory APR can help you pay off credit card debt without accruing additional interest, as long as you pay it off before that introductory period ends and make all minimum payments along the way.

This article was written by NerdWallet and was originally published by Forbes.

Kimberly Palmer is a personal finance writer at NerdWallet. 

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How to Invest During a Bear Market

Stock charts make it easy to see how the market’s doing at any given time — green means up, red means down — and during a bear market, it’s generally red as far as the eye can see.

For many people, the color red means one thing: stop. But to stop investing generally is a bad idea when the market gets scary. Worse yet? Selling stocks out of fear.

It takes resolve to keep investing during a bear market. These market events, defined as declines of at least 20% in asset prices from a recent high, likely will happen a handful of times during your investing lifetime. In the past 50 years, the S&P 500 has experienced six bear markets, according to data from Yardeni Research. (Confused? Get some background on bear markets.)

Given that bear markets are somewhat inevitable, here are some tips for how to make the most of investing during these times.

Make dollar-cost averaging your friend

Say the price of a stock in your portfolio slumps 25%, from $100 a share to $75 a share. If you have money to invest — and want to buy more of this stock — it can be tempting to try to buy when you think the stock’s price has cratered.

Problem is, you’ll likely be wrong. That stock may not have bottomed at $75 a share; rather, it could tumble 50% or more from its high. This is why trying to pick the bottom (or “time” the market, as many people call it) is a risky endeavor.

A more prudent approach is to regularly add money to the market with a strategy known as dollar-cost averaging. This helps smooth out your purchase price over time, ensuring you don’t pour all your money into a stock at its high (while still taking advantage of market dips).

There’s no doubt that bear markets can be scary, but the stock market has proven it will bounce back eventually. If you shift your perspective, focusing on potential gains rather than potential losses, bear markets can be good opportunities to pick up stocks at lower prices.

Diversify your holdings

Speaking of picking up stocks at lower prices, boosting your portfolio’s diversification — so it includes a mix of different assets, including stocks, bonds and index funds — is another valuable strategy, bear market or not.

During bear markets, all the companies in a given stock index, such as the S&P 500, generally fall — but not necessarily by similar amounts. That’s why a well-diversified portfolio is key. If you’re invested in a mix of relative winners and losers, it helps to minimize your portfolio’s overall losses.

If only you could know the winners and losers in advance, right? Because bear markets typically precede or coincide with economic recessions, investors often favor assets during these times that deliver a more reliable, or steady, return — irrespective of what’s happening in the economy.

Often referred to as a “defensive” strategy, such an approach might mean loading up on the following stock types:

  • Shares of noncyclical companies. These companies don’t see a precipitous fall in demand if the economy’s in trouble, because they sell essential goods or services like food (sold at a grocery store), health care or utilities, for example.
  • Dividend-paying stocks. Even if stock prices aren’t going up, many investors still want to get paid in the form of dividends. That’s why companies that pay higher-than-average dividends (including utilities) will be appealing to investors during bear markets.

And speaking of steady, bonds also are an attractive investment during shaky periods in the stock market because their prices often move in the opposite direction of stock prices. Bonds are an essential component of any portfolio, but adding more money to these assets may help ease the pain of a bear market.

Focus on short-term strategies

If you can’t stomach watching the value of your portfolio plummet during a bear market, it may be best to ignore it. That’s right, don’t log into your account — just let it be.

In a bear market, just like in normal times, continue adding money to your retirement vehicle, a 401(k) or IRA; experts recommend a target of about 15% of your gross income. With savings beyond that amount, it’s perfectly fine to focus on short-term goals. If you have a life event coming in the next five years — buying a home, having a baby, sending a kid to college or retiring — it’s best to keep that money out of the stock market anyway.

Short-term strategies are good for just that — the short term. In 2018, for example, high-yield savings accounts delivered higher returns than the major stock indexes, most of which ended the year in negative territory. But the stock market’s still the long-term winner, with the S&P 500 delivering average annual returns of about 10%.

When saving for the short term, make sure your vehicles deliver a competitive return. Here are some current ranges:

  • CDs (certificates of deposit). Potential annual return: 2% to 3%.
  • High-yield savings or money market accounts. Potential annual return: 1% to 2%.
  • Peer-to-peer lending. Potential annual return: 3% to 8%.

Be patient

Bear markets test the resolve of all investors, professionals included. While these periods are difficult to endure, history shows you probably won’t have to wait it out too long. Bear markets tend to be shorter than bull markets (1.4 years, on average, versus 9.1 years) and less severe (with average cumulative losses of 41% compared with average cumulative gains of 470%-plus), according to data compiled by First Trust Advisors.

The article How to Invest During a Bear Market originally appeared on NerdWallet.

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Take the Next Step With Your Student Loans in 2019

It’s great to think big with your New Year’s resolution, like saying you’ll pay off your student loans in 2019. But a goal that big often doesn’t even make it to the end of January.

Instead of letting an unrealistic resolution frustrate you, focus on a small change that moves the needle for your student loans for 2019. That means taking the next step toward successful repayment, no matter your situation. Here’s how.

If you’re struggling with payments

“There’s almost always something that can be done to help a borrower who’s struggling,” says Betsy Mayotte, president and founder of The Institute of Student Loan Advisors. The key is figuring out why you’re having trouble and whether it’s a short- or long-term issue. Then you can match a solution to your needs. For instance:

  • You’re struggling only temporarily: Opt for a deferment or forbearance. These short-term options can help you through a rough patch, such as being unemployed. Deferment is preferable to forbearance, as interest won’t accrue on any subsidized federal loans you have.
  • You don’t earn enough money, and maybe never will: Enroll in an income-driven repayment plan. These plans cap monthly payments to as little as 10% of your discretionary income, and payments can be as small as $0. Paying less now can increase how much you pay overall due to accrued interest. Income-driven repayment plans counteract that by forgiving your remaining balance after 20 or 25 years of payments. But if your earnings jump, your payments will too — potentially costing you those savings. So, this is a long-term strategy.

Your next step: Contact your loan holder. You can apply for income-driven repayment or a postponement with them. Federal student loan borrowers are entitled to these options, but private lenders are more likely to offer only forbearance or deferment. Still, any of these actions is better than letting loans default.

If your loan has defaulted

Federal student loan borrowers have options to get out of default: rehabilitation, consolidation and payment in full. Payment in full likely won’t be possible for many borrowers. Choosing between rehabilitation and consolidation will depend on your goals:

  • To repair your credit and save money: Rehabilitate your loans. Borrowers can do this by making nine voluntary, on-time payments over a 10-month period. The major benefits of rehabilitation: It wipes the default from your credit report and decreases collection costs you have to pay. But you can rehab loans only once, so make sure you’ll be able to repay after completing the process.
  • To get out of default as quickly as possible: Consolidate. This option requires just three voluntary, on-time monthly payments in a row or agreeing to repay your loan under an income-driven repayment plan. Getting out of default faster lets you regain access to federal aid, if you want to re-enroll in school, or avoid other consequences of default. But consolidation doesn’t remove the default line from your credit report or reduce collection costs as much as rehabilitation does.

Borrowers who default on private loans have fewer options; even so, your first call should be to the lender to see what it offers. Otherwise, the next step may be a debt collector or even a courtroom.

Your next step: Don’t avoid your defaulted student loan. Borrowers often feel too worried or ashamed to reach out for help. But Mayotte says those anxieties are way worse than the actual call to your loan holder will be.

If you’re paying on time

If you’re comfortably making your student loan payments each month, see if it makes sense to pay more. This will depend on your debt management goals.

  • You want those loans gone: Paying extra on student loans saves you money on interest and gets you out of debt faster. See just how far an extra $50 or $100 a month goes by using this student loan extra payments calculator. If you have good credit, look at refinancing your student loans at a lower interest rate as well.
  • You want to best use your money: Mark Struthers, a certified financial planner at Minnesota-based Sona Financial, recommends prioritizing an emergency fund and retirement savings before prepaying student loans, as well as looking at your finances as a whole. For instance, he says, if you have a federal student loan at 3.5% interest, but a car loan or mortgage at 6%, paying off the higher-interest loan first could save you more money. In this instance, you should still continue making your minimum student loan payments.

“It depends on the person,” says Struthers, noting that people often make student loan repayment decisions based on emotion instead of numbers. “You’re paying 2% more each year just to be done with that student loan.“ He advises borrowers to be aware of this trade-off.

Your next step: Take a look at your finances overall before paying extra on your student loans. If you feel comfortable, put more money toward your loans. Just remember: Long-term financial health should be your highest priority.

The article Take the Next Step With Your Student Loans in 2019 originally appeared on NerdWallet.

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This Winter, Your Credit Should Freeze, Too

Before you tackle lofty financial resolutions like paying off debt this year, do yourself a quick favor and freeze your credit reports. It’s free, doesn’t affect your credit score and helps protect your financial future.

Credit reports summarize your payment history with creditors and are automatically generated by the three major credit bureaus: Equifax, Experian and TransUnion. Freezing them prevents fraudsters from opening a new line of credit using your personal information.

Data breaches may feel like an annoying fact of life, but the 2017 Equifax breach dramatically increased the likelihood that your personal information is out there, waiting to be misused.

“The Equifax data breach exposed the critical financial information of more than half of the American adult population,” says Chi Chi Wu, staff attorney at the National Consumer Law Center, a nonprofit advocacy organization. Data exposed includes Social Security numbers, names, birthdates, addresses and some driver’s licenses.

If the Equifax breach or any others have put your information in the hands of scammers, they could get a credit card or loan in your name, rack up debt and wreck your credit.

Why you should freeze your credit

Choosing to place a credit freeze — or not — boils down to how you think about your personal information being exposed. You could ignore it and hope nothing bad happens, or you could take action now to prevent damage.

In a world where data breaches are commonplace, freezes aren’t a luxury, they’re a necessity. You’re better off protecting your credit as soon as possible.

Think of it as adding a deadbolt on your front door. You hope no one will be able to get through your existing lock, just as you hope personal data like your Social Security number stays private. But by adding the deadbolt, you have an extra layer of protection in case that first lock is picked.

How free credit freezes work

The process for placing a freeze differs slightly at each credit bureau, but you can do it online or over the phone. The freeze then blocks lenders from accessing your credit reports. If a bad actor applies for credit in your name, the lender can’t see your reports to make a lending decision and won’t approve the application.

When you want to apply for credit, you unfreeze one or more of your reports by logging in to your account. (Experian gives you a special PIN to unfreeze the report). “It’s something you can do with your phone even as you’re walking into your lender’s office,” says John Ulzheimer, a credit expert who has worked at Equifax and credit scoring company FICO. You can also designate a period of time to temporarily lift the freeze, such as when shopping for a mortgage, Wu says.

Your credit score — the three-digit number that is based on information in your credit reports — is not affected. (You can check your own credit reports with no consequences to your score, whether you have a freeze or not.)

Freezing and unfreezing your credit reports is now free, thanks to congressional action after the Equifax breach. Parents also have the right to have credit reports created for their minor children and freeze them for free, Ulzheimer says. Freezing your children’s credit helps protect them from identity theft.

What a credit freeze does not do

Protect against some forms of identity theft: A freeze stops new credit from being opened, but if someone has the details of your existing credit card, they could make fraudulent charges on it. If they have your Social Security number, they could file a fake tax return or claim Social Security benefits in your name. It’s still essential to monitor your credit card transactions and other financial accounts and to report suspected identity theft immediately, Wu says.

Prevent existing creditors from seeing your reports: Lenders with which you already have a relationship can still see your credit reports. Debt collectors can also access them.

Stay vigilant

It’s a good idea to check your credit reports and credit score regularly so you can act quickly if you spot an anomaly.

Many personal finance websites, banks and credit card issuers offer a way to check your credit. Look for one that offers both credit score and credit report information, updates it routinely and is free.

This article was written by NerdWallet and was originally published by The Associated Press.

The article This Winter, Your Credit Should Freeze, Too originally appeared on NerdWallet.

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