Should You Become Your Own Boss?

Maybe you’re cringing at the thought of going back to an office. The seed of a business idea floats around in your head between work videoconference calls, after the kids are asleep or while you tend your pandemic garden. Or perhaps you were laid off during the pandemic and forced to work for yourself, and now you’re wondering if you should continue down this path.

“In 2020, there was an explosion in new business applications, reaching nearly 4.5 million by year’s end,” according to a February report by the Economic Innovation Group, a Washington, D.C., think tank. That’s an increase of 24.3% from 2019 and was the highest on record — 51% higher than the average from 2010 to 2019.

“COVID-19 was a social, cultural and emotional shock the likes of which we have not experienced for generations. Becoming an entrepreneur is a deeply personal decision, and the pandemic may have delivered the push for many to embrace it,” the report said.

Deciding if self-employment is right for you depends on your personality, your financial situation and your ability to adapt. Here are tips from people who became their own bosses.

See if you’re right for the job

Many of us now appreciate the flexibility of working from home. As a freelancer or independent contractor, you would have the power to set your own schedule.

“Being in charge is very, very attractive to many people,” says Keith Hall, president and CEO of the National Association for the Self-Employed, or NASE, a resource and advocacy group. “The other side of that coin is that when you are in charge of your own destiny, you are also responsible for it.”

Evaluate your abilities as a prospective employer.

“Freelancers need to be self-motivated, work well independently, be organized, learn how to market their services well and be comfortable with a certain level of uncertainty,” CEO Sara Sutton said by email. She runs two companies focused on remote and flexible job opportunities:  FlexJobs, a job search site, and, which provides resources for companies considering remote work.

Hall suggests asking yourself if you have the motivation to be in charge of your own destiny. “If you wake up Monday morning and decide to stay in bed late, that’s a financial loss. Nobody is going to be standing over you making you get out of your bed.”

Make a plan that fits your finances

Before deciding whether to freelance, become a consultant or turn your side hustle into a business, take a close look at your finances.

Many cobbled together a budget during the pandemic. Revisit that plan to make sure you understand your hard costs, such as food, rent and day care. (The 50/30/20 approach is a quick way to divide your dollars into three buckets: needs, wants and savings.)

Isolate what you can put toward a business. Small costs like purchasing a domain name, buying the premium version of a software or membership fees for a networking group can add up.

Use your budget to set short- and long-term business goals, Hall says. “Know exactly what you need to earn to meet your family goals and translate that into a time schedule.”

Evaluate your timing

You may need to keep your day job for a while, but you can still build your business muscle.

“Being an entrepreneur was never a goal for me,” says Afenya Montgomery, founder and CEO of iCAN Collective, a creative workspace and event venue for women entrepreneurs of color in Chicago. Montgomery, a registered nurse and health care administrator, started health care consulting on the side. Her hunt for resources and support inspired the idea of building a community for women entrepreneurs of color.

Montgomery and her husband were raising three children and had no business experience, so leaving her day job wasn’t an option. She spent four years learning the ropes of entrepreneurship before she felt confident enough to quit.

She hosted networking events, opened a business bank account and finally registered her business as a limited liability company. Taking small steps can make the process less overwhelming, she says.

Seek support

Between strategies, goals and budgets, the thought of working for yourself might seem daunting, but entrepreneurs say you don’t have to do it alone.

Laura Licursi, founder of Elite Virtual Assistants, an agency that connects employers with remote assistants, says the pandemic was surprisingly hard on her online-only business as clients cut back. Licursi, who works from the Cleveland area, navigated through the uncertainty with a mentor from SCORE, a network of volunteer business mentors that partners with the Small Business Administration.

“My mentor helped me work through the inner workings of the business when things were slow, which really helped when business picked up again,” she says.

Entrepreneurs have more resources available than they realize, Hall says:

  • The SBA provides local resources to support aspiring entrepreneurs.
  • The NASE offers a business development grant program for members.
  • SCORE has mentorship resources, webinars and other online resources.
  • The IRS website has information on the tax implications of self-employment.

This column was provided to The Associated Press by the personal finance website NerdWallet.

Amrita Jayakumar writes for NerdWallet. Email: Twitter: @ajbombay.

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Finances Unscathed by Pandemic? Seize the Moment and Tackle Debt

After close to a year of living with the pandemic, the effect on people’s finances has varied widely. If you’re in the fortunate position of still having a steady income, you can plan for what lies ahead in 2021.

A good first step is dealing with debt. Maybe you leaned on credit cards to get through the ups and downs of 2020 or you’re wondering how to get a head start on student loan payments once the forbearance period ends. Perhaps you’re feeling the aftereffects of holiday spending — 75% of holiday shoppers said they planned to put 2020 gift purchases on a credit card, NerdWallet’s 2020 holiday shopping report found.

The strategies for paying down debt aren’t different in a pandemic, but keeping yourself motivated in stressful times may take a little more effort. Don’t beat yourself up; just get started and do your best.

Help yourself — and others — with a budget

First, understand your cash flow.

NerdWallet’s 2020 household debt study found that 14% of U.S. adults said their household financial situation had gotten better since the onset of the pandemic, and 43% said their household financial situation has stayed about the same.

If you’re doing OK, you’re probably feeling grateful when so many others are going through a hard time. Making a budget lets you plan how much you can put toward debt and savings — and what you can donate to help your community.

You might have great intentions, but putting everything down on paper will help you visualize how much you actually have left over, says Elaina Johannessen, program director of debt management operations and support at LSS Financial Counseling in Duluth, Minnesota.

“The best way, not the most fun way, is creating that good, old-fashioned budget,” she says.

The 50/30/20 budget is a simple way to think about your money:

  • Use 50% of your take-home pay for essentials, which include shelter, food, utilities and paying the minimums on all your debts. Your budget should earmark money for regular bills as well as expenses you know will pop up during the year, Johannessen says, such as vet bills or insurance payments.
  • Thirty percent of your after-tax income goes toward “wants,” which covers all your discretionary spending, including giving back. If you know which causes you want to support, websites like Charity Navigator and GuideStar provide information on nonprofits that best serve those causes.
  • Finally, 20% of your income goes toward savings and extra debt payments. If the pandemic has taught us anything, it’s the importance of having a rainy day fund. “Even though you have the means to pay off your debt, if you don’t have savings, that needs to be a focus,” Johannessen says. A savings cushion will let you navigate bumps without adding more debt.

Johannessen encourages anyone thinking about paying down debt to also take advantage of a free budgeting session with a nonprofit credit counselor.

Know your debt numbers

Next, understand how much you owe.

From your budget, extract a list of all your debt accounts, the interest rate on each and how long it would take to pay off each balance at your current pace. You can use a debt calculator to figure out that timeline.

This exercise will help you prioritize your debts and pick a repayment strategy that works for you.

Pick a debt repayment strategy

Once you know your debt numbers and cash flow, it’s time to pick a strategy.

There are two popular methods of paying down debt: the debt snowball and the debt avalanche. In both methods, you pick one debt to focus extra payments on, while paying at least the minimums on all the others.

Using debt snowball, you knock off debts from the lowest balance to the highest. Once you’re done with the smallest debt, you roll that amount into payments on the next-highest debt amount. This strategy gives you quick wins to stay motivated.

Using debt avalanche, you pay off the debt with the highest interest rate first, which can reduce how much interest you pay overall and may get you debt-free faster.

Amrita Jayakumar writes for NerdWallet. Email: Twitter: @ajbombay.

The article Finances Unscathed by Pandemic? Seize the Moment and Tackle Debt originally appeared on NerdWallet.

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Be Your Financial Valentine

Valentine’s Day: a day to celebrate your partner or a day to celebrate yourself. And while it may not sound romantic, this time of year is also an opportunity to show your finances some love.

Whether you’re single or in a relationship, build toward your future by defining your goals, budgeting for splurges and getting started with investing.

Know your goals

Setting a goal is the first step in any kind of money decision. After all, money is just the means to live the life you want.

If you’re single: This is the fun part: Grab a glass of something you like and write down goals, whether it’s going on a dream vacation, buying a new car or maybe pursuing the business idea you’ve been chewing on forever. Don’t second-guess your ideas — having them all in front of you will help you prioritize the goals you truly value.

If you’re paired up: Turn this into a date night and work on shared goals together, says Angela Moore, a certified financial planner at Modern Money Advisor in Miami.

Moore suggests asking each other basic money questions over dinner. To prevent a fight, stay open to hearing your partner’s way of doing things, she says.

She recommends open-ended questions like:

  • “What do you feel you’re really good at with money?”
  • “What do you think you can work on?”
  • “What are your dreams for the future?”

Once you have a list of goals, estimate how much it will cost to achieve them and how long each will take. Print out the list and pin it up to track your progress.

Make a budget

Prioritizing your goals in the first step allows you to create a budget that matches your spending to your values. “Focus on the things that bring you great joy,” Moore says.

The 50/30/20 budget is a good way to divvy up your money: 50% goes to needs like housing and utilities, 30% goes to wants like your coffee habit or eating out, and 20% goes to savings and debt repayment.

If you’re single: Knowing what you value means you can cut spending in other areas. At the same time, the “wants” category lets you stick to a realistic budget so you don’t feel like you have to give up on splurges.

If you’re paired up: You’re probably aware of whether you and your partner have different spending and saving styles. Use your strengths and weaknesses to hold each other accountable to the budget, Moore says. Spenders and savers can draw inspiration from each other, for example.

Whether you have separate or combined accounts, you can agree to each have some money to spend as you wish (like on a Valentine’s Day treat for your partner). The key is to have an open dialogue about it, Moore says.

Invest in your goals

Once you know your goals and what it will take to achieve them, figure out your “investment strategy.” This just means how quickly you want your money to grow for your goals.

A quick heads-up: Investing for goals isn’t the same as saving for retirement. Make sure you have retirement savings in place first; check whether your workplace offers a retirement account and company match. “The most important thing is to just get started. Time is one of the most important factors when it comes to compounding your initial contributions into significant wealth,” says Eric Roberge, a certified financial planner at Beyond Your Hammock in Boston.

If you’re single: Investing doesn’t have to be scary or mysterious. Robo-advisors have made it easy to get started even with small amounts of money. You can answer a few questions to set your risk tolerance and invest your money accordingly.

“When you’re just getting started, keep it simple. Stick to things you can understand and are relatively safe and reliable rather than trying to shoot for the moon,” Roberge says.

Low-cost index funds and exchange-traded funds are two good options for millennials in particular, Moore says.

If you’re paired up: How you manage investments depends on your equation as a couple and both your incomes. You could invest together equally or in proportion to your income. One of you might also be more inclined to organize money matters.

“Even if one person takes the lead, the other should check in along the way to see how the money’s grown,” says Rebecca Provder, a matrimonial attorney and partner at Moses & Singer in New York City.

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

Amrita Jayakumar is a writer at NerdWallet. Email: Twitter: @ajbombay.

The article Be Your Financial Valentine originally appeared on NerdWallet.

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Smart Ways to Establish Credit in 2020

Dipping your toe into the world of credit? You’re in luck: There are more ways to establish credit now than there were in decades past.

You build your credit score by adding positive information to your credit reports, which are files of financial data about you. These files are compiled by the three major credit bureaus, Experian, Equifax and TransUnion. Lenders, landlords and employers may check one or more of those files while reviewing your application.

Here are three well-known ways to establish credit, plus some new products designed to give you a leg up.

Traditional credit-building tools

These three approaches can quickly build your credit.

Authorized user

Ask someone with good credit habits to add you as a user on their credit card. They don’t have to let you use the card; just being added to the account is enough.

Pro: You can benefit from their credit history.

Con: Not all card issuers report authorized user activity to the bureaus, so check that first.

Secured credit card

These cards are relatively easy to qualify for because they require an upfront deposit.

Pro: Payments are usually reported to all bureaus.

Con: Your credit limit is typically small.

Credit-builder loan

These help you improve your credit and save at the same time.

Pro: Payments are usually reported to all bureaus.

Con: You cannot access funds until you’ve paid back the loan.

New tools that can help

Qualifying for credit when you are new to credit is tough. These new tools try to recognize or reward you for paying bills that don’t normally factor into your score.

Rent reporting

Paying rent is traditionally not counted toward your credit score. But many companies, including Rent Reporters, RentTrack, Rock the Score, and CreditMyRent, will let you or your landlord report your rent payments to the bureaus.

Pro: You can opt in or out of having rent reported.


  • Not all credit score models incorporate the data. The widely used FICO 8 scoring formula doesn’t consider rent. But VantageScore, FICO’s competitor, does.
  • Reporting companies charge a monthly fee of $6.95 to $9.95 and a one-time enrollment fee of $25 to $95.
  • Some companies report payments to only one or two credit bureaus. You want payments reported to all three.

Experian Boost

This free service lets you add on-time cell phone and utility payments to your Experian credit report. This information, which is not typically counted toward your score, is used to calculate your FICO score and can push it up higher.


  • You don’t need to qualify for Boost. As long as you pay utility and cell phone bills through your bank account, that information can be added to your Experian report.
  • Only on-time payments are added. This is different from how credit usually works, where both on-time and late payments go on credit reports.


  • Payments show up only in your Experian credit report, not the other two.
  • You have to let Experian’s data partner scan your bank account transactions.
  • Lenders unfamiliar with this new product may interpret your utility and cell phone information as part of your debt load, which affects your chances of qualifying for credit. Experian is “working with lenders to ensure they understand these positive payments,” spokeswoman Amanda Garofalo says.


This new score is not yet widely available, but FICO says it will roll out this spring. Unlike the traditional FICO score, UltraFICO takes into account how much you have in savings, how long your bank accounts have been open and how active they are.

If you cannot qualify for a credit product with your score, you can ask lenders to pull your UltraFICO and give you a second shot.


  • Free.
  • Rewards responsible spending and saving.


  • You have to let FICO’s data partner scan your bank account transactions.
  • You cannot see your UltraFICO score unless you’ve been rejected.

Experian Lift

Experian is also working on a new credit score, meant for lenders, that uses nontraditional data to paint a finer picture of your finances. The data includes on-time rent payments, payday loans, prepaid cards, check cashers and public records such as evictions and professional licenses, Experian says. It also looks at whether you pay your bills in full or minimums.

“Lenders can use the new score as their primary score, as a second-chance score (for loan application declines) … or as an overlay to an existing score to create a more complete picture of a person’s creditworthiness,” says Alpa Lally, vice president of Experian Data Business.

Experian Lift will roll out to lenders early this year, she says.


  • Considers data from financial institutions that don’t usually report to the major credit bureaus.


  • You cannot see your Lift score unless you’ve been rejected.
  • You cannot opt in or out of sharing your data.

Amrita Jayakumar is a writer at NerdWallet. Email: Twitter: @ajbombay.

The article Smart Ways to Establish Credit in 2020 originally appeared on NerdWallet.

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One Credit Score Factor to Check Twice During the Holidays

You probably know that paying your bills on time is crucial for your credit score. But there are other factors that play into your score, as well.

One factor that you might not know about: how much of your available credit you use. You probably know it’s bad to max out a card, but even modest changes in your spending can have an impact on your score.

That’s because this factor, known as your “credit utilization ratio,” accounts for 30% of your FICO score. The other major credit scoring model, VantageScore, calls it “highly influential.” Put simply, it’s the second-most important part of your score after paying on time.

To calculate your credit utilization, add up the credit limits across all your credit cards. Next, add up the balances on your cards. Divide total balances by total limits and multiply it by 100 to get a percentage. For example, if your balances add up to $5,000 and the credit limits across all your cards add up to $10,000, your credit utilization ratio is 50%.

Ideally, you shouldn’t use more than 30% of your available credit on any card, a guideline supported by FICO and VantageScore. And the lower your usage, the better it is for your score. People with excellent credit scores tend to have a utilization ratio much lower than 30%.

As you prepare your lists and plan your budget for the holiday shopping season, it’s worth paying attention to your credit utilization. Here are tips for protecting your credit score as you shop.

Make multiple payments throughout the month

Credit card issuers typically report balances to the credit bureaus once a month. If your issuer reports your balance after you’ve charged quite a bit and have yet to pay, your utilization will be high. That can ding your credit score, even if you routinely pay off your balance every month.

Consider making multiple small payments throughout your billing cycle, so your utilization is consistently low, rather than building up to one big payment.

Note that this strategy won’t help if you only pay the minimums on your cards, says Elaina Johannessen, a program director at LSS Financial Counseling in Duluth, Minnesota.

“If you are making your minimum payments and paying half of it now and then later, it’s not making a difference. Pay down debt as fast as possible to increase your score,” she says. If possible, pay in full. Carrying a balance on your cards does not help your score — that’s a common myth.

Ask for an increase in your credit limits

A higher credit limit will automatically lower your overall utilization ratio. If your issuer offers you a credit limit increase, take it. You can also request a higher limit, especially if you have been a good customer and paid on time, or your income or score has gone up. Ask the issuer if there will be a type of credit check called a hard inquiry, as that can temporarily knock a few points off your score.

Johannessen warns that having a higher limit may tempt you to spend more, which would defeat the purpose. As long as your spending remains the same, the higher limit should help your utilization, and in turn, your score.

Use cash or rewards points instead of charging

Using cash or your credit card’s rewards points is an easy way to control how much you charge to your cards during the holidays, says Daniel Milks, a certified financial planner and founder of Woodmark Wealth Management in Greenville, South Carolina.

Milks says he plans for the holidays by saving up rewards points from purchases throughout the year. Some credit cards also offer cash back at department stores during the holiday season or for using their online portal to make purchases. You can find these offers by logging into your credit card account online.

In the long term, think about creating a budget for next year’s holidays and saving money ahead of time, says Johannessen, so you don’t need to worry about your credit utilization at all.


The article One Credit Score Factor to Check Twice During the Holidays originally appeared on NerdWallet.

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How to Give Back Without Busting Your Budget

It may not come as a surprise that millennials are passionate about giving back.

Millennials as a generation believe in supporting causes more than individual organizations, are likely to be influenced by peer networks when it comes to giving and want to give back in terms of money, time and leadership, according to the Millennial Impact Report, a decade-long study of millennial philanthropic behavior.

As you move through your career, you’ll likely have more room in your wallet to give back. Here’s how to prioritize causes you care about and be strategic about giving, regardless of your income.

Create a giving plan

The environment. Women’s issues. Children’s education. Animal welfare. There are so many causes that could benefit from your time and money that it can be overwhelming.

Begin by writing down the issues you care about most, says Andrea Pactor, interim director of the Women’s Philanthropy Institute at Indiana University.

The act of making the list gives you clarity about what’s important to you and how to direct your spending or your time. (Financial planners say this is also a handy technique for prioritizing your financial goals, like saving for a down payment or getting rid of student loans, and creating a budget.)

“The next step is to do a real assessment of what you’re giving now,” Pactor says. “Is what I’m doing now aligned with my values?”

If you find yourself contributing to causes only when a friend or family member asks for help or clicking yes to Facebook pledge requests, having a giving plan can help you focus on the issues you really care about.

“The benefit of a giving plan is that it enables the person who’s been asked to say no without feeling guilty,” Pactor says.

Determine your do-good fund

Financial experts say there’s no rule of thumb about how much of your income you should dedicate to charitable giving.

Religious communities that practice tithing recommend giving 10% of your income, but unless you adhere to that, there’s no “right” amount, says Christine Centeno, a certified financial planner at Simplicity Wealth Management near Richmond, Virginia.

“It all goes back to what you can afford,” she says. “Charitable gifting is important, but you have to make sure you are saving for retirement and building a cash reserve.” Centeno notes that volunteering your time or expertise can be an alternative to cash donations.

Regardless of how much you make, you can pick a percentage of your income and set it aside for giving, says Theresa Stevens, a financial coach who works with millennials at Declutter Your Money in Providence, Rhode Island.

Stevens says starting now — with as little as 1% — instead of waiting until you reach some target number helps you build a savings habit that you can apply to other aspects of your finances.

When your income changes, revisit your giving plan to see if your priorities have changed and how much you can afford to donate, Pactor says.

Stevens recommends dividing your giving allowance into two buckets — one for causes you choose and one for spontaneous giving. “If I have 5% [set aside] for giving, I might earmark 3% for an organization I’ve chosen and 2% for Facebook fundraisers or causes that come up randomly,” she says. The key is making room in your budget for both your own charitable causes and those of others.

Make a meaningful impact

Even if you feel like your donations are modest, you can ensure every dollar you give counts.

Both Pactor and Centeno recommend looking at websites like Charity Navigator and GuideStar,  which allow you to research nonprofits, see their tax filings and identify organizations that make the most impact on your chosen cause.

Since charity begins at home, your local Community Foundation website is also a good place to start. Many have a list of vetted organizations in your community you can help.

Lastly, if your company matches your charitable donations, use that to double the amount you give to your favorite cause, Centeno says.

The article How to Give Back Without Busting Your Budget originally appeared on NerdWallet.

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How to Stop Anxiety From Ruling Your Finances

Financial decisions are rarely easy, whether it’s buying your first car or home or deciding whether to refinance student loans.

The anxiety can be heightened for millennials who witnessed economic turmoil during the Great Recession as they weigh milestone financial choices as adults.

“Many [millennials] grew up and saw their parents lose a house or have to delay retirement,” says Brad Klontz, a financial psychologist and associate professor at Creighton University. “Of course, they are going to be anxious.”

In fact, a survey this year by insurance company Northwestern Mutual found that this generation not only has a stronger inclination to make financial plans compared with older generations, but also has a higher level of anxiety about whether they are following the right strategy.

The survey found that 66% of millennials (those born from 1981 to 1996) said they were “highly disciplined” or “disciplined” financial planners, compared with 60% of Generation X (born 1965-1980) and 52% of baby boomers (born 1946-1964). At the same time, 70% of millennials said their financial planning needs improvement. That’s compared with 68% of Gen Xers and 52% of baby boomers.

There are ways to reduce the stress of financial decisions. Start by identifying your attitude toward money. Then, take action in a way that’s tailored for you and turn to others who’ve been there.

Know your attitude toward money

Most of us grow up with a specific approach toward money, often learned from our parents, imbibed from those around us or informed by our own experiences.

Being aware of your relationship with money can help you avoid pitfalls like worrying too much. Klontz, the author of several books on finances and psychology, says he’s found four common approaches to money: worship, avoidance, vigilance and status.

For example, those who are vigilant about money always worry about having enough and experience trouble making spending decisions. On the other hand, avoiders don’t look at bills or statements until they absolutely have to, Klontz says.

“Your ‘tendency’ shapes your perspective on the world and influences what kinds of [financial] strategies will work for you,” Rubin says. For example, a “questioner” likes doing their own research and will only seek outside counsel they trust, Rubin says.

Take actions tailored to you

Once you’ve identified your attitude toward money, use that knowledge to ease the anxiety of financial decisions.

Make a to-do list

People who don’t know where to begin can start by making a financial to-do list, says Eric Tyson, author of “Personal Finance for Dummies” and a former financial advisor. You could calculate how much money you earn and spend every month or add tasks like saving money for a goal or getting your credit in shape for a loan.

“Prioritize it, get some early victories,” he says. “Don’t beat yourself up thinking you’ve got to do it quickly.”

Stay accountable

If you’re an “obliger” and want to save up for a goal, use accountability to get started and stay motivated, Rubin says. That may be in the form of friends, a financial advisor or thinking about what you want in the future, she says.

Visualize the end goal

If you are a “rebel” who doesn’t like being told what to do and wants to pay off debt, think of the freedom you’ll have when you’re debt-free. Set up automatic payments so you don’t have to think about them, Rubin says. The automatic payments option is effective for anyone, she notes.

Turn to others for guidance

Tyson says the biggest mistake he’s seen people make is that they don’t get advice — or rely on one source — before making a financial decision.

“If your Uncle Joe seems financially savvy, you can run your thinking by him, but you should be selective about taking one person’s advice as gospel,” Tyson says.

If you want an expert’s perspective, turn to a fiduciary fee-only financial advisor. Advisors who are paid by fees only, not commissions, have fewer conflicts of interest; those who follow the fiduciary standard put clients’ interests ahead of their own. Or you can set up a free consultation with a nonprofit credit counselor.

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

The article How to Stop Anxiety From Ruling Your Finances originally appeared on NerdWallet.

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Sneaky Ways Burnout Hurts Your Bottom Line

Millennials are a burned-out bunch.

Millennial workers are more likely than older generations to report being burned out at work, according to a 2018 Gallup study. The gig economy, the temptations of social media and the high expectations millennials have of themselves contribute to this trend, behavioral finance experts say.

Add to that record student debt levels, the cost of health care, slow wage growth and little work-life balance, and you have a recipe for emotional exhaustion.

“Millennials have this double whammy of anxiety coupled with a really strong work ethic,” says Kit Yarrow, a consumer psychologist and professor emerita at Golden Gate University. “Before they even get started, millennials approach their tasks in life with a [base] level of anxiety, which depletes their resources for managing stress.”

This is not to say “adulting” is especially difficult for this generation or to assume that all millennials are struggling. But understanding how burnout harms financial decision-making can help you or a loved one break through it and achieve goals.

Burnout tricks the mind

Burnout isn’t the same as stress.

The World Health Organization, which added burnout to its handbook of recognized health conditions this year, says symptoms include “feelings of energy depletion or exhaustion; increased mental distance from one’s job, or feelings of negativism or cynicism related to one’s job; and reduced professional efficacy.”

Burnout is linked to your job, but it can also affect your financial decisions outside of work in the following ways:

You pay more for convenience. You could be spending money regularly on takeout, Uber rides or grocery delivery, for example.

People are often willing to pay more for convenience because they’re exhausted — from working multiple jobs, long hours or being available for work all the time — and because it makes mundane tasks easier, says Theresa Stevens, 26, a financial coach who works with millennials at Declutter Your Money in Providence, Rhode Island.

You splurge as a reward. “Treat yourself” isn’t just a hashtag; it can be a coping mechanism. When it comes to rewarding ourselves, “our mind tricks us into taking us off the hook,” Yarrow says.

“You might think: I already have student loans and credit card debt and my rent is half my income so I might as well go out and eat, because what difference will it really make?” Stevens says.

Social networks and the ease of online shopping make it harder to resist temptation, says Mariel Beasley, co-founder of the Common Cents Lab, a behavioral science research lab at Duke University that focuses on improving financial well-being for low- and middle-income households.

“We see the food people are getting at fancy restaurants, the cute new shoes they bought or the places they’re traveling to,” Beasley says. “We’re seeing their spending; rarely do we see what they’re saving.”

How to break through burnout

You can’t fix the economy or wish away debt. But by recognizing burnout, you can make things easier on yourself. Here’s how:

Know your “why.” Your values motivate you when you’re paying off debt or saving for a dream vacation. They can also help you prioritize what you’re willing to spend money on and cut back on.

Values aren’t the same as goals. Paying off a credit card is a goal, but achieving financial freedom is a value, Stevens says.

Budget strategically. Budgeting isn’t about cutting out the small things that give you joy, like the occasional Uber or your latte habit.

Taking a big step to save money — think moving into a cheaper living situation, refinancing your student loans or canceling subscriptions — is more sustainable in the long run than, say, resolving to eat out less, Beasley says.

“Every day when you’re making a decision to spend less, it’s hard to keep going,” she says. “We naturally bounce back to our old habits.”

After you’ve identified your values, a budget is a tool to help you live them. The 50/30/20 budget, which divides spending into needs, wants and savings, is a good place to start.

Channel money motivation. When you’re feeling motivated, take a one-time action that will save you effort, Beasley says.

Set up a small transfer — perhaps 5% of your income —  to a savings account so the money is out of sight, out of mind. Or cut up a credit card (but don’t close the account) to make it a little harder — but not impossible — to buy things you don’t value.

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

The article Sneaky Ways Burnout Hurts Your Bottom Line originally appeared on NerdWallet.—

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How I Ditched Debt: Small Wins Help Achieve a Big Dream

Bernadette Joy and AJ Maulion

How much: $309,800 in 3 years

Bernadette Joy Maulion, 34, went to business school part time after a career in human resources, hoping to start a new chapter in her professional life. School wasn’t cheap, and she took out $72,000 in student loans.

She and husband AJ, 37, had a $57,000 mortgage on the first house they’d bought in Charlotte, North Carolina, and were using it as a rental. They also had a $180,800 mortgage on a second home they’d bought after becoming inspired by Chip and Joanna Gaines from HGTV’s “Fixer Upper.”

While in business school, Bernadette Joy had an idea for her own company, a local version of online clothing store Rent the Runway. She got the business off the ground with AJ’s help but quickly realized that debt was standing in the way of her entrepreneurial future. The Maulions knew it was time to face their debt.

They set out to pay off the student loans — selling things, taking on part-time jobs and adding a roommate while living mainly off of AJ’s salary as a project manager. Motivated by their success, they also paid off the rental home, then later sold it and put the proceeds toward paying down their primary mortgage.

Now, Bernadette Joy runs her business full time without debt. She connected with NerdWallet to share the highs and lows of her experience, which may inspire your own journey to pay off debt. 

How much debt did you have starting out?

Bernadette Joy: We had approximately $72,000 in student loans, $57,000 left to pay on the rental property and $180,800 on our primary home. Our salaries at the time were $91,000 for AJ as a project manager and $30,000 for me as an executive recruiter. AJ was eligible for annual bonuses and I was eligible for commissions.

(Note: The Maulions paid off the rental property in 2017 and sold it in 2019 for $153,000, using the proceeds to pay down their remaining mortgage.)

What triggered your decision to get out of debt?

BJ: We thought the business had great potential, and I was itching to quit my day job. I looked at my student loans my last semester of my program in January 2016, and I was completely overwhelmed. The only thing keeping me in my day job was the debt. After much crying and stress, we decided that if we could pay off the student loans it would make us feel comfortable enough for me to quit.

What strategies did you use to pay off debt?

BJ: We started with the student loans using the debt snowball method. We paid off the series of loans from smallest to largest [by amount owed]. The snowball method spoke to me specifically because I am the type of person [who] likes to see things checked off my list.

From a budgeting standpoint, being able to reduce the amount of variability in your expenses is important. It made more sense to mentally allocate AJ’s salary because it was consistent. We started living off of his income. Anything I made was like icing on the cake.

We halted any unnecessary expenses, including vacations, professional development, and I also chose to grow the business more slowly to keep it debt-free.

AJ: We put a hold on my 401(k) contributions for a year until we paid off the student loans. We really wanted to focus and put our resources into the debt. We thought it through and said once we are done with this debt, we can contribute the maximum amount. [Editor’s note: NerdWallet recommends saving for retirement even while paying off debt, to allow time for your money to grow.]

How else did you free up money for debt paydown?

BJ: My car was on a lease, AJ’s 2009 Kia Spectra was fully paid off. We got rid of the leased car, and that saved us a couple hundred bucks a month. I kind of went crazy and sold everything; we had a yard sale. AJ’s younger brother was our roommate from 2016 until April of this year. He paid us rent.

AJ: I would drive for Uber on the way home from work. I pretty much did that for six months. I was also an extra on TV shows, like “Banshee” on Cinemax and “Shots Fired” on Fox.

We also cut down on eating out and bought everything on sale at the grocery store, even Cheez-Its.

Were you ever discouraged? How did you stay motivated?

BJ: There were instances where we had to slow down because we were exhausted.

Once, I went to the mall and bought a bunch of stuff because I thought I deserved it. I went home and felt so guilty — I realized a lot of my personal spending was triggered by emotion. Knowing my trigger, I would divert that energy into [building] my business.

I used to hang Post-its on my refrigerator of our current debt number. Even if I could knock off a couple dollars I put it on a Post-it. For example, there’s this pair of shoes I really wanted at the store. Instead of buying them, I put that money toward the debt and put up the Post-it. I put photos of them up on Instagram and people reached out to me. They would ask, “Hey, where’s your Post-it?” That accountability from people was great.

AJ: You get so engrossed in [paying off debt], but don’t forget to acknowledge your successes.

You gotta keep taking those small wins. For us it took three years to pay off debt, for others it might take more. Celebrate the small wins so you can last longer.

What would you have done differently?

BJ: I would have given myself a lot more grace during that time. The reason we were able to pay off debt soon was because I was so mad about it.

Our original timeline to pay the student loan was two years. But once we started getting momentum, I thought we could pay it off sooner. I didn’t recognize that in the beginning, it’s a bit easier to trim from your budget. I wish I could have told myself: You’re still being really good; people don’t usually pay this off in two years.

How did this experience influence your business?

BJ: I chose to grow my business more slowly, not rush it. My business model was influenced by wanting to make it affordable for me to run and for my clients. It forced me to be super creative. I think if I had gone the traditional route, I would have taken a small-business loan. But it was all self-funded, no outside investors, no loans.

In reality, we didn’t stop investing [for our future] completely. We were diverting funds toward building this business.

AJ: It took me a while to get comfortable with this investment. She got me to believe in the long term, the future vision. I was taking a lot of pictures for inventory. We have a room in our house where we had clients come in to browse dresses. I felt like I was a part of something bigger for our future.

What are your financial goals now?

BJ: We want to retire early, and now that I’m not in a 9-to-5 job, we want to see how we can get AJ there, too. The picture on our fridge now is about our next vacation home. Every first Sunday of the month, we talk about how are we going to get that.

How to ditch your own debt

Inspired by the Maulions’ commitment to ditching debt? Here’s how you can get started:

  • Build a budget that gives every dollar a job to do. We like the 50/30/20 budget, which allocates 50% of your take-home pay to necessities, 30% to wants and 20% to savings and paying off debt.
  • The Maulions said staying on the same page as a couple helped them succeed. Set up regular money conversations with your partner to check in on goals, stay motivated and hold each other accountable.
  • Don’t shortchange your retirement. If your employer offers a retirement plan with a match, NerdWallet recommends contributing at least enough to get the match even while you’re paying off debt. The sooner you put money into your retirement fund, the longer it has to compound for your retirement.


In this series, NerdWallet interviews people who have triumphed over debt. Responses have been edited for length and clarity. 

The article How I Ditched Debt: Small Wins Help Achieve a Big Dream originally appeared on NerdWallet.

Photo courtesy of Bernadette Joy Maulion via

Renting Isn’t the Ripoff It’s Made Out to Be

“Renting is just throwing money away.”

“Renting is like paying someone else instead of paying yourself.”

You may have heard these opinions from family and friends, but it’s not that simple. In some areas (looking at you, San Francisco), renting is far more economical than buying a home. But renting can be used to fatten your credit profile as a steppingstone to your financial goals.

Millennials want to buy but face barriers

Millennials are delaying homeownership and staying in rentals longer than previous generations, multiple studies show.

Student debt — that bane of millennial existence — is one factor pushing back the age of homeownership. Rising rents and home prices coupled with slow wage growth also make it hard to save for a down payment.

The vast majority of Americans — 9 out of 10 — still equate homeownership with personal success and economic security, according to a survey released in July by the website Apartment List. The survey of a nationally representative sample of people found both renters and homeowners believe there is a social stigma associated with renting.

How to make rent work for you

You cannot fully control how much money you make. But your credit score — the key to qualifying for rewards credit cards, financing a car or even a home — is largely under your control. Rent payments can be used to beef up your score.

For many millennials, rent payments are a great way to demonstrate responsible behavior to potential creditors. But rent payments — unlike credit card, mortgage and loan payments — don’t automatically appear on credit reports. And your credit scores rely on what’s in your credit reports.

There are two ways to get rent added to your reports:

  • Ask your landlord. Two of the three major credit bureaus — Experian and TransUnion — accept payment information from landlords. Both bureaus’ websites have a simple process for landlords to sign up.
  • Do it yourself. You can use third-party companies such as RentTrack, Rock The Score and others to report rent payments directly to one or more bureaus for a monthly fee.

A 2017 TransUnion study followed 12,000 renters for a year. Scores rose 16 points on average within six months after rent reporting began, says Maitri Johnson, vice president of multifamily at TransUnion. The largest increase was for scores below 620, generally considered bad credit.

With rent reporting, payments show up on your credit report like any other account. Positive payments help your score; missed or late payments can damage it. If there are errors, you can dispute them with the bureaus.

What to know

Rent reporting lets you get credit for something you’re already doing. Better credit can get you a cash-back credit card or a cheaper car loan, saving you money in the short term and strengthening your finances for the long term. But rent reporting also has some drawbacks:

  • Not all credit scores factor in rent payments. FICO 8, the most widely used score by lenders, and the FICO versions used in mortgage lending do not use rental information to calculate scores. But newer versions, such as FICO 9 and FICO XD, do. VantageScore, FICO’s main competitor, also uses rental payment information.

“Even if it’s not something considered in your score, it’s still cosmetically on your credit report,” says John Ulzheimer, a credit expert who has worked at Equifax and FICO. “A lender considers information in good standing and that’s going to benefit you as an applicant.”

  • Reporting is not free. If you use a reporting service, you’ll pay a monthly fee ranging from $6.95 to $9.95 depending on the company, plus a one-time enrollment fee of $25 to $95. Extras like adding past rental information cost more.

Other ways to build credit

Ulzheimer points out that traditional credit-building methods are more effective than rent reporting: They don’t cost much, payments are typically reported to all three credit bureaus, and they influence all types of FICO scores and VantageScores.

  • You can become an authorized user on someone else’s credit card, preferably someone with a long history of responsible credit use.
  • You can get a secured credit card, which requires an upfront deposit. Charge a small amount on it every month and always pay on time.
  • You can apply for a credit-builder loan, available at credit unions. Your monthly payments are reported to the credit bureaus. The money you borrow is released to you once the loan is paid off.


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

The article Renting Isn’t the Ripoff It’s Made Out to Be originally appeared on NerdWallet.

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