Paying Down Debt vs. Investing vs. Saving

Best tactics to improve your bottom line

Paying down debtCut Card is a tricky process. Not only is it hard finding the money to do so, and it takes a while, but there are different strategies to employ based on your goals. Some people may contemplate saving throughout the year to get a solid nest egg before starting to pay down on that debt. Others opt to invest in hopes to make more money back in order to pay money off more quickly later. There are many considerations when it comes to deciding what to do with your money. Here are just a few of them.

Paying down debt
It’s never a bad idea to work on improving your credit score by paying down debt. Furthermore, there’s no right or wrong way to do so. There are multiple schools of thought regarding how to go about the process:

  • Pay down the loan with the highest interest rate first. Debt with high interest costs you more money over time, so you may want to take care of them primarily.
  • Pay down the loan with the smallest balance first. Clear up many smaller loans more quickly, giving you more money to apply to big loans later.
  • Combine the two approaches. “Average” the methods in a way where you use both approaches at different points in the year. For example, knock out a few of your small loans in a few months and then work on larger interest debt before going back to paying on small loans again.

Regardless of the plan you choose, just make sure to stick with it. However, it is okay to change your approach if your financial circumstances change. Also, don’t use any money saved on frivolous items; keep it in the budget for loan payments only or for the next two options.

Investing
Now, should you pay off those bills using one of the above methods, or should you use your finances instead to invest? This head-to-head debate is not cut and dry. There are many questions to ask regarding the amount of your debt, its interest rate, the possible return on investment and the legitimate likelihood of that return. Neal Frankle, a financial expert writing for Forbes, said that aside from the factual considerations, there are also the emotional aspects at play, such as how you’d feel if you paid off the debt, if you opted not to invest, or if you did and it didn’t work out?

“I have found that these emotional questions are just as important as the financial questions. What good is it to make an otherwise smart financial decision if at the end of the day you are left feeling miserable?” Frankle asked.

There are four inquiries Frankle conjured up to address both the financial and emotional issues:

  • What happens if you decide to pay off the debt and the other investment does well? The answer will likely depend on each unique situation. Would you be giving up the chance of a lifetime to pay down your debt, or are the upsides of the investment actually very limited?
  • What happens if you pay off the debt and the other investment does poorly? Good for you! Do a little dance because you made an amazing choice.
  • What happens if you don’t pay off the debt, make the investment and it turns out well? Be honest—what reasonable outcome can you expect? Will it be enough to cover the interest rate that you are paying on your debt? Will your money double? Be practical in your expectations.
  • What happens if you hold the debt, make the investment and it turns out badly?

What is the risk involved? Can you afford to lose the money at stake and still be stuck with the debt?

By taking a look at how you would feel and how your life would be impacted from two competing alternatives, you can likely make a better decision for your specific situation.

Saving
If investing isn’t for you, maybe you would rather save up some money in a rainy day fund. Actually, some personal finance experts say building a safety net of cash should come before any other money move, according to Casey Bond in U.S. News and World Report.

“The idea is you need to be prepared for financial emergencies — car repair, job loss, etc. — so that you don’t load up on more debt should an unexpected bill arise. Not to mention, it’s psychologically satisfying to see a positive savings account balance,” Bond said.

However, Bond added that feeling good just doesn’t pay the bills. Statistically, you are losing money by saving, as interest rates against debt are much higher than the interest you would be earning in a savings account. The solution, again, is to average the points of view. Strike a balance between saving and paying on debt that is feasible for you and your family.

Regardless of what you choose to do with your money, carefully considering all factors at play in the situation should always be the first step. Hasty decisions regarding your finances are never beneficial.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Shopping In Store vs. Online

Deciding between taking a ride or going online
Are you the kind ofOnline Shopping person who enjoys perusing store by store at the mall in the hopes of finding what you need? Or do you prefer to sit at your computer or tablet in the comfort of your own home, filling virtual shopping carts with items?

The truth is, there’s no right or wrong; it’s purely whatever floats your boat. However, there are certain items that you may be better off purchasing from a good old brick-and-mortar store, and ones that you may benefit from buying online. Next time you’re in the market for one of these items, you may want to consider the venue in which you buy them.

Books – Best to buy: Online
Why: Independent bookstores such as Barnes & Noble or local booksellers sell most of their products at full retail price. But at e-commerce stores such as Amazon or Half.com, you can typically save a staggering 30 to 50 percent. Plus, when you’re ordering a book, you know exactly what you’re getting (whereas with something such as clothing, it could look different in the picture). You can buy a book online anytime you’d like, new or used, and most of the time, sellers will offer free shipping or shipping at a minimal fee, (which is usually still less than what you’d pay at a retail bookseller).

TVs – Best to buy: Online
Why: More often than not, online prices will be lower than in store (unless the store is one to match the online price, which is becoming more common). And while stores typically have a range of TVs where you can evaluate its pictures, you can also use Consumer Reports TV Ratings to get an accurate picture quality assessment. Additionally, many retailers often set their TVs to a retail or store mode, which heightens brightness and color in a way that looks perfect under fluorescent lights. Do some research before you buy, and that way, the right TV for you can be delivered directly to your door.

Party supplies – Best to buy: Online
Why: When buying décor for a birthday party, bridal shower or other celebration, you’re likely looking for products that fit a specific theme, and that can be hard to come by or take up a lot of time when searching by walking the aisles in stores. When you shop online for party supplies on sites like Amazon or eBay, or retailers such as Oriental Trading or Party City, you can easily sort through the products and find exactly what you’re looking for. Another plus: Many online stores that specialize in party supplies offer promotions, discounted items and even free shipping offers on select orders.

Clothing – Best to buy: In store
Why: Ever bought a shirt or pair of pants online, happily opened the box when it arrived at your home, only to be disappointed in the look and fit? Buying clothing online is risky; you never know fully if the sample picture is off or if sizes vary store by store. Plus, even when you return clothing after buying online, you typically won’t be refunded the shipping costs, and some retailers’ return policies may not be ideal.

Cell phones – Best to buy: In store
Why: Despite how many reviews you read about phones, you won’t get a true depiction until you hold it in your hands. Everyone’s different, and the features on a phone are important to one person may not be as necessary for another.

Food, beer, wine – Best to buy: In store
Why: While online food and beverage shopping may seem like a time saver, in the end it can actually cost you more money than going to a traditional grocery store. Many products sold at online stores can be marked up to prices similar to those of a convenience store. And, many online retailers don’t take coupons, which limits your ability to save in that respect. It’s also rare for an online store to practice price matching, which is a practice many stores are executing now. And don’t forget about shipping costs — a price you won’t have to incur at a supermarket.

There’s always a bargain if you do the research, so take your time and you’ll be on your way to extra savings in no time.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Fuel Sippers for All Budgets

There is a fuel-efficient model out there for you

Even with gas prices falling again, fuel economy is still among the biggest factors people consider when buying a new vehicle. Spending less at the pump can help you spring for the model that you may not have been able to afford before. Here is a list of some of the best:

Toyota PriusToyotaPrius
The Toyota Prius has become synonymous with green driving. Starting at an affordable MSRP of $24,200, the 2015 Toyota Prius achieves up to 51 mpg city and 48 mpg highway. Impressively, around 95 percent of Prius models sold in the past 10 years are still on the road. Unique features like Toyota Hybrid Synergy Drive, regenerative braking and Eco-sensitive driving help the Prius strike an optimal balance between fuel economy and everyday drivability.

“Thanks to some very clever drivetrain programming, you’ll get excellent fuel economy almost regardless of how heavy you are on the gas pedal,” noted Kelley Blue Book. “It does this with all the practicality of any hatchback, with a decently sized rear seat and plenty of cargo room.”

Mazda 6
The Mazda 6 is a vehicle that tends to be skipped over when people shop for a mid-size sedan. But those days seem to be coming to an end thanks to its impressive array of features and a starting MSRP of $21,190, which is lower than a large chunk of competitors. Named a Car and Driver “10Best,” the Mazda 6 is available in Sport, Touring and Grand Touring, the latter bring the most fuel-efficient when the GT Technology Package is added. In addition to advanced safety items like Forward Obstruction Warning System and Mazda Radar Cruise Control, the package adds fuel savings features like active grille shutters and the i-ELOOP regenerative braking system that helps the Mazda 6 achieve up to 28 mpg city and an awesome 40 mpg highway.

“After undergoing a complete makeover last year, the 2015 [Mazda 6] has emerged as a clear winner,” according to the experts at AutoTrader. “Although priced on par with other popular family sedans, Mazda has infused its five-passenger sedan with a sleek and sophisticated body, outstanding driving dynamics and an interior that is technologically savvy without being overly complicated.”

Ford Fiesta
If you’re looking for a small car that’s big on features and fun, but small when it comes to fuel expenses, check out the Fiesta and its starting MSRP of $13,965. With seven fuel-efficient models available, the Fiesta can achieve up to 31 mpg city and 43 mpg highway when equipped with the 1.0-liter Manual EcoBoost Package. Even with those excellent numbers, performance is still zippy with 123 horses and 125 lb/ft of torque.

“Affordable to buy, cheap to operate and entertaining to drive are three of our primary criteria for a desirable economy car, and the 2015 Ford Fiesta has no problem scoring high on each,” Edmunds said. “A classier-than-expected interior and fully up-to-date infotainment equipment only underscore our feeling that the Fiesta is a subcompact car that punches well above its price class.”

Audi TDI Models
For those who demand a luxury vehicle, but still want excellent fuel economy without committing to a hybrid, Audi offers a full lineup of TDI clean diesel vehicles. From the A3, A6, A7 and A8L luxury sedans, to the Q5 and Q7 SUVs, you’re sure to find a model that fits your needs. The benefits of TDI technology include more torque and reduced CO2 emissions, all while helping you achieve fuel economy as high as 38 mpg highway. On A7 TDI models, you can get fuel economy that’s dramatically improved. With 36 percent better highway fuel economy, 33 percent less fuel emissions and 24 percent fewer estimate trips to the pump, the A7 TDI can cut over $5,000 off your fuel bill per year.

There are plenty of great fuel saving models out there for you to buy so be sure to do your research. Stop by and let us help you choose a loan with an excellent rate so you can go have the financing before you even walk into the dealership.

 

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Can Attending a Community College Save You Money?

Are you lookingCommunity College Students to get your degree but feel discouraged by the skyrocketing financial statistics? You’re not alone. It’s no secret that college tuition bills have been soaring over the years, which means that many of us become weary about being able to afford a four-year college. But what about a community colleges, are they cheaper?

On the one hand, some finance experts say that getting a two-year degree at a community college and then transferring over to a four-year school may be the key in cutting costs on your education.

So how much can you save by attending a community college? Between $6,800 to $35,000, according to a study by the Chronicle of Higher Education. And, when including additional expenses such as transportation, books, food, insurance, health costs and living expenses, savings were even greater. So in this sense, it may make sense to earn your two-year degree and then transfer afterward. By doing this, you’re able to accumulate class credits at a community college and then finish your degree at a four-year college, which is the university that will be stated on your resume.

Community college sometimes has a stigma about whether course content is as competent.

“Course content is fairly standard for Math 101 or English 101. Furthermore, the odds are your community college teacher will be as competent, skilled in the classroom and dedicated as a university professor (or teaching assistant). In many instances, your community college instructors will be better,” says Dr. Robert Ronstadt, a former vice president of Boston University. “That’s the good news for students pursuing the community college option.”

It sounds too good to be true, doesn’t it — a champagne education at a beer price? Maybe so. On the downside, transferring to a four-year school may not be as easy as you may think. In fact, many students actually wind up losing financial aid dollars, as well as class credits in the process — and that would essentially defeat the whole purpose of beginning your education at a community college.

“Let’s say a student completes 2.5 years at an institution, but when they go to transfer, it’s required that they do another 60 credits at the new institution. That’s 15 credits lost,” explains Jane Dessoye, executive director of enrollment management at Misericordia University in Dallas, PA. “That means a student isn’t just incurring another year of fees and tuition and room and board, but that’s another year that they aren’t in the workforce.”

Conversely, this caveat doesn’t mean that beginning at a community college and transferring is out of the question if you want to save money. In some instances, the transfer may still be financially worth it. The key to making sure you’re getting the most out of your college transfer is to do your research beforehand. One way to do this is to send your transcript to the school you’re looking to transfer to before applying for admission. If you find out that your credits won’t make the cut, you can look into whether or not it’s worth it.

Something else to keep in mind is that in order to earn a degree in four years, you must be a full-time student at the community college (instead of taking a few classes here or there, and earning a two-year degree in more than two years) — and that means taking (and being able to pay for) a full course load. And typically, if a student can’t meet the expense of a four-year college off the bat, they may have a hard time coming up with the funds for five courses per semester. In that case, it’s important to be sure that you’re fully aware of how much your tuition will cost, including expenses such as transportation, textbooks and others.

“I encourage all students to ask each college, ‘What will my total cost of attendance be?’” says Tyler Peterson, director of recruitment for Birmingham-Southern College in Birmingham, Alabama. “Financial aid offices should be able to give a good faith estimate of what the costs will be for next year.”

All in all, while attending a community college for the first two years may be financially worth it for some, it could potentially cost others more in the end. It’s important to do your research before leaping into the decision and make sure you’re making the choice that’s financially fitting for you.

 

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.