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BANKRUPTCY

Uncategorized Feb 20, 2019

Definition

Bankruptcy is a legal preceding that involves a person (or business) that is unable to repay their outstanding debts

Why It's Important

Declaring bankruptcy gives the filer a chance at regaining financial traction after a hard fall.  Depending on the type filed, some or all of the debts could be discharged.  All bankruptcies have a negative effect on your credit score for up to 7 years!  So, this should be a last resort!  I hope that none of my followers get to this point but if you do, it is good to know your options.  There are three popular types of bankruptcies:

Chapter 7 - This is the most common type of bankruptcy.  It allows the filer to have all of their debts forgiven after their "non-exempt" assets are sold and the proceeds are used to pay off as much as possible.

Chapter 11 - This is only for businesses.  I won't go into detail but it allows businesses to restructure their assets and debts.  The business also stays...

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HOW I SAVED MORE THAN $1000 LAST YEAR AT THE GROCERY STORE

saving saving money Feb 08, 2019

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OK, so I felt like this was a timely post in light of the government shutdown and the possibility of families not receiving food assistance in the coming months.  If you aren't aware of all the changes, you can read about it here.  I want to keep this post focused on how families can save money whether they receive government assistance or not.  It is essential to squeeze every penny at the grocery store because eating is a necessity and is usually one of our most significant monthly expenses. Let's begin...

Plan Your Meals
Grocery shopping starts before you even walk into the store.  Thinking ahead of time about what you plan to cook for the week is extremely important.  I usually have my meals laid out for the week, OR I will opt to cook whatever is available in the house.  Either way, I have a plan!  Disaster strikes when you go to the store without a list and start picking up random items.  Then, you get home and realize nothing goes...

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INCOME TAX

Uncategorized Feb 06, 2019

Definition

Income tax is a tax that the government imposes on both individuals and businesses.  These funds go to support our government infrastructure. 

Why It's Important

Because it's tax season, I thought it would be appropriate to discuss income taxes.  You probably get them taken out of your check every payday but do you really know how it works?  When you start a job, you fill out a W4 and a state tax form (i.e. NC-4).  On this form you are declaring how many exemptions you would like to take to therefore lower the amount of income tax taken out of each check.  If you put 0 exemptions, you will have the maximum amount taken out every pay check.  This money is then forwarded to the government by your employer.  Every year, employees and businesses file tax returns to see what their tax obligation to the government is.  If they paid too much throughout the year, they get a refund.  If they didn't pay enough, they end up owing. ...

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NET WORTH


Net worth is calculated by subtracting your liabilities from your assets.  If your liabilities are more than your assets, you have a negative net worth.  If your assets are more than your liabilities, you have a positive net worth.

Why It's Important

We have finally reached the last piece to the formula, net worth!  Everyone wants to work towards a positive net worth.  Keep in mind that a net worth calculation is just a snapshot in time.  Your net worth changes very frequently, sometimes even daily or hourly.  It doesn't provide information about cash flow or your monthly income and expenses.  There are other financial statements for that!  

I calculate my net worth officially once a year.  In between time I may take a peek on RightCapital or Personal Capital (both free apps) to see if I am on track. 

You can see my full net worth calculation for this year here.

The formula is Assets - Liabilities = Net...

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5 RIDE SHARING STRATEGIES I USED TO EARN MONEY

Uncategorized Jan 16, 2019

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I am always trying to find ways to pay off my debt faster!  One of my favorite ways is to participate in the gig economy, particularly ride sharing (driving for Uber & Lyft).  Now, I try to drive every other weekend when I don't have my kids.  Last year, I made about $2,500 just from this gig and I didn't even drive that much!  Here are some things I do to maximize my time and earnings:

 

Use Both Platforms
There is no rule or law saying that you can only work for one.  As a matter of fact to be considered a contractor, which you are if you work for either company, they can not restrict you from doing similar work or they will have to classify you as an employee.  I usually sign in to both apps at once and if I get a ride on one, I turn off the other until the trip is complete and then I continue that cycle until I log off for good.  This way I am able to make more money than if I was depending on one source.  In my local market,...

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LIABILITIES

Definition

Liabilities are anything that you owe (debt). They can be divided into Current and Non Current Liabilities, depending on how soon you have to return that debt.

Why It's Important

It is important to know what liabilities are on your personal balance sheet because it allows you to make sure you are current with your bills and obligations.  Yes, this includes items that are on your credit report!  If you don't know what you owe, how could you possibly get rid of it?!

Businesses break liabilities down to two categories, current and long-term.  Current liabilities are any debts that are payable within one year while long-term liabilities are payable over longer periods.  To translate this to personal finance, short term liabilities would be your credit card balances (hopefully) and small loans.  Long-term liabilities would be your car and your mortgage.  
 

Knowing what liabilities you hold also allows you to calculate your net worth as I did...

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5 C'S OF CREDIT

Definition

The 5 C's of Credit is a system that lendors use to determine your creditworthiness.  
The 5 C's are:

Character
Capacity
Capital
Collateral
Conditions


Why It's Important

Having all of your "C's" in great shape increase your chances of getting loans and/or better interest rates.  

Character is your credit history.  How have you treated other lendors in the past?  Did you pay on time?  Did you pay at all?

Capacity is your ability to pay back the loan.  What is your debt to income ratio?  Are you already over your head?

Capital can also be called your down payment.  Do you have enough of a down payment to lower the potential risk to the lendor?

Collateral is what you are willing to give up to ensure the debt is paid.  When you get a home loan, the collateral is the house.  When you get a car loan, the collateral is the car.  These are also called secured loans.

Conditions are the terms of the loan.  They...

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401K

Definition

A 401K is a retirement plan offered by most companies to help you save and invest for the future.

Why It's Important

I hope that everyone reading this is contributing to their 401K at work if they have one available (especially if the company matches).  There are two types of 401Ks, Roth and Traditional.  Roth 401Ks allow you to contribute funds post tax but, when you withdraw, money is tax-free.  A traditional 401K allows you to contribute money pre-tax but when you withdraw all funds are taxed.  

So, here is how to pick which one you should invest in.  If you are early in your career and in a low tax bracket, you should pick a Roth.  Why?  Because the money is taxed at the lower rate instead of being taxed higher later when you make more money.  If you are seemingly at the height of your earning years, you should contribute to a traditional because the money is not being taxed as it's going in, it is going to be taxed as it...

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MY 2019 FINANCIAL BENCHMARKS AND RESOLUTIONS

Uncategorized Jan 01, 2019

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Wow!  Sitting down with these numbers is both empowering and depressing.  LOL!  I mean the massive amount of debt that I have taken on between school, cars, and business expenses, it's amazing!  I use this blog for motivation and accountability so an important part of that is transparency.  In this post, I will break down all of my debt, investments, and bank balances so I can use it as my baseline for progress throughout the year.  Well, without further ado, here we go...

I wanted to talk about this first because it is the most daunting for me.  I had some major victories but I also have a looong way to go.  One student loan was paid off in 2018 (First Student Loan Paid).  I also downgraded my car to take care of a huge chunk debt (She's Gone).  I started with a total of $107,454.83 and I am currently at $67,604.23 left to pay off.  That means I paid off $39,850.60 so far!  Here is the...

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WEDNESDAY WORD OF THE WEEK RECAP

Uncategorized Dec 31, 2018

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It's the end of the year and if you are subscribed to my newsletter, you know that I send a financial word of the week every Wednesday!  It is a financial term that you should know and will be helpful on your financial journey.  The whole purpose of my blog is to educate and improve financial literacy so that goal is always at the forefront.  With that said, I wanted to do a recap of all 2018 WWW terms (in case you missed it).  If you want to subscribe, just click here and type in your email at the top.  Ready?  Let's Go...

 

Federal Reserve
Definition
The Federal Reserve is the central bank of the U.S.  It conducts monetary policy (print more money, raise interest rates, etc.), regulates banks, makes sure the financial system remains stable, and provides financial services to U.S. banks, foreign governments and the public.
Why It's Important
The Federal Reserve directly affects the interest rates you pay on your debt and the interest...

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