1) Student Loan ForgivenessI fell in love with Tania after the first 3 minutes of our meeting because she told me about a the Public Service Loan Forgiveness program for federal student loans. These have been a financial stressor for me for some time so it felt so great to learn there is help. How does no one tell you these things?!
Basically, if you work in public service (a government organization, or a non profit organization/501(c)3) you may qualify to have your federal student loans forgiven after 10 years of employment and payments. Something to keep in mind when applying for loans as a college student or when looking for a job. Sallie Mae/Navient and other private loans do not qualify...would have been good to know when looking for loans in college. For more information, or to see if your loans qualify, visit this Federal Student Aid website.
2) Financial PlanningI always hear mixed things- should you trade your car in before it loses value or should you drive it until it quits?
Tania says that once a car is paid off, drive that car until "the wheels fall off", but continue to make those monthly "car payments" to yourself in a separate savings account. Then, eventually, you will have the funds to buy your next car with cash and avoid taking out a car loan. The goal is to not have a car loan. She solidified our friendship when she told me she would rather spend money traveling than paying loans for car companys. Preach it, sister.
What about savings? She recommends starting a "baby emergency savings account" of around $1,000 to begin with and keep adding to the account in small increments with a long-term goal of 3-6 months worth of bills and expenses in savings just in case something happens. That one seems like the hardest goal to meet to me!
Finally, she recommends paying off credit card debt and having 2-3 lines of open credit to aid in credit scores. Student loans count, so with that, one credit card is plenty. She also suggests not cancelling already opened credit cards, unless they carry a large annual fee. Lastly, she reminded me that just because a limit is set, doesn't mean we should be using it. She recommended no more than 30% of credit card limit being used. For example, with a $10,000 credit limit, $3,000 should be the max one puts on the card in order to not adversely affect credit scores. Who knew?!
3) Money ManagementHere are the baby steps Tania (CFP) laid out for me during our visit:
1) Track your income and spending. How can you change if you don't know what you are already doing? Funny- I use this in my nutrition counseling, but never carried it over into finances.
Tania says there are two parts to money management:
- Creating a spending plan to account for every dollar you earn- you are assigning your money to different categories. She also noted to not make your topics too specific. By keeping them broad, you can track more easily. For example, coffee, date night, and movies can be grouped into "entertainment".
- Then, track your spending to make sure that you are on track and to see areas where you may be overspending.
- First step in tracking is to track your spending for one month using a tracking worksheet.
- Then, after one month, use the worksheet to set up your preliminary budget. Tania reminded me to be patient and that we will likely have to adjust, but before you know it you will be a budgeting guru.
It was so very helpful and while it can all seem a bit overwhelming, her step by step plan encouraged me to take it one step at a time.
My current job supplies this service for free, which is a huge blessing. Check into your own employer to see if financial planning is an option and visit Financial Finesse online for more information. After all, being well is more than just diet and exercise!