How many times are you going to say I wish? I wish I could do what you do with your money. I wish I knew how to pay off my debt quicker. I wish I knew how vital investing in my future could be. So here is a good piece of advice: STOP WISHING and start making moves. Hoping for something doesn’t make it happen any sooner than it would if you completely forgot about it.

These days it’s all wishing and no planning. So many of us have become accustomed to settling for how things are because we don’t want to fear failure. We have put off our dreams, goals, and even our day-to-day duties because life is — well — a lot. I get it. I feel overwhelmed, too. But having debt can make that stress feel like a weight sitting on your chest. 

It’s even harder to face debt because today, it’s become natural to have something immediately when you want it instead of having to wait. If you don’t have it now, you don’t want to wait longer than necessary. Everything that comes along with money and success takes time! 

Here are some tips to help you avoid wishing for financial success and start acting on it.

1) Take risks 

My dad gave me some great advice the other day when I told him how I felt about my salary cap. He told me that he thought the same when in his 20s, and instead of staying in that role, he left. He took a job at the ground level in a new field, making less money, but he worked his butt off to change that. He changed fields because the income was better, the quality of life was better, and he needed to risk it.

So many of us become too comfortable with stability and our benefits that we forget how big of a risk it is to stay in a role with stagnant income. Of course, there is nothing out there saying you can’t stay at your current job and find another way — especially if the burden of looking for a new job feels too heavy. But, risks are sometimes worth the hardship.

2) Dive headfirst into your debt 

This should go without saying, but if you’re sick of your debt, it’s time to do something about it. First off, I need you to hear that you’re not alone. You deserve financial stability. You can make a change for the better. So now you try: say those same things aloud to yourself. 

Diving headfirst is one way to face the fear and anxiety that comes alongside this reality.

3) Put the numbers at the forefront 

If you don’t force yourself to physically see your goals and plans every day, who will do that for you? If you put something out of your mind for long enough, you can subconsciously forget about it. Financial denial is very real. But, eventually, avoiding those problems rears its head. When it gets to the point that forgetting about it is no longer possible, you have already forced yourself into an uncomfortable situation. Embrace those fears and show them who is in control.

Write it in your calendar, put a post-it on your mirror, and leave a note on your refrigerator. Whatever makes it easier for you to remember what you need to do and why you are doing it will become the only motivation you need.

4) Accept that it takes time

Unfortunately, no matter how hard you Google, it’s unlikely you’ll find a miracle solution to delete your debt or invest in an alt-coin that will send your money to the moon. Instead, patience can be one of the best realizations we have during debt repayment. 

You need a plan with a realistic timeline and the understanding that sometimes the best pay off-plan is to set up your automated payments, add extra cash to your bills as you can, and wait.

5) Make the time to do it 

How often have you used this generation’s catchphrase, “I don’t have time?” I say it myself nearly every day. But in reality, the time I have is there if I make time for this value. Someone once told me that humans are very good at lying to themselves. How true is that? We can convince ourselves of pretty much anything we want. Our minds are that powerful.

You can always make time to do something important to you. If you can’t, it’s about prioritizing. What do you need most to accomplish your goals and plans today? Decipher what is more valuable to be financially successful, and all will be good.

The post 5 Ways to Stop Blowing Off Your Debt appeared first on Mixed Up Money.

I ask my followers which financial brands or institutions they’re most interested in learning about each year. This time around, Neo Financial was the most common response. So, because I never offer information about products or services until I’ve used them myself, I figured it was time to do my research on their credit card and savings accounts.

Since the pandemic, I did a lot of reassessing what credit cards made sense to have given the *gestures everywhere* current state of the world. For example, I had a travel card that became useless and another credit card that collected points that were only good to buy specific items through that financial institution.

Neither of those options was helpful and didn’t make me feel like I was winning when I went to swipe my card. I needed an excellent cashback card, which is surprisingly hard to find in Canada. Well, it was tough to find — until Neo Financial. 

What is Neo Financial?

Neo is a Canadian financial services company that offers credit cards, savings accounts and investing tools. They are 100% digital, which means that Canadians can pay their bills, deposit money, send e-transfers and earn cashback rewards at any time and all from their phone or computer. 

They’re disrupting the more traditional way Canadians manage their money and spending, which I love. I’m a big fan of anything that helps support local small businesses and Canadian-specific brands and businesses, and that’s precisely what they do.

Why did I choose their credit card?

Choosing a credit card today can feel overwhelming because you need to make sure it works with your lifestyle. 

Some common considerations for me are always:

• Will this card help me save money?

• Will I earn rewards I’ll actually use?

• Does the credit card have an annual fee?

• What is the interest rate?

Neo was a yes on all counts. The credit card can help me save money by earning cashback. The rewards are cash (so, of course, I’ll use them), there are no annual or monthly fees, and the interest rate is in line with most financial institutions.

On average, you can earn 5% or more cashback and bonuses of up to 15% cash back at some of their partners. Not only that, but their partners are some of my favourite local and Canadian businesses that I use regularly. 

Some of my favourites that they have partnerships with include The Keg, Well.ca, Cobbs Bakery, and more. Even the fact that I can get 1% cashback at some of my most frequented grocery stores was game-changing to my budget and how I spend. 

How many credit cards does one need?

Many people argue that you only need one credit card, but for me, it makes sense to use certain cards for certain purchases to take advantage of their rewards best. I have five credit cards, but most of them don’t make sense to use given their less than favourable rewards point systems and the fact that I haven’t been able to travel recently. 

Aside from that, for more local travelling, Neo has partnered with many excellent hotels and restaurants that I know I can take advantage of for my family road trips and weekend getaways. 

I think it’s perfectly fair to have multiple credit cards as long as you:

• Are capable of managing to pay each of them on time and in full

• Don’t *need* additional access to credit limits

• Aren’t carrying a balance on other credit cards

• Will use the cards for different purchases

Every situation is different, but having multiple cards helps me compartmentalize my purchases and ensure that I’m spending on what will make the best use of the rewards systems offered by the lenders.

How does the Neo Secured card work?

One of the most common questions I get from followers is which card is best for building credit and learning to manage debt responsibly. For most, I’d easily recommend the Neo Secured card for a few reasons.

1.  Guaranteed approval for all Canadians

2. Your credit score won’t be impacted upon application as there is no hard credit check

3. 15% off your first purchase at thousands of brands

How much cashback did I earn in just one week?

To make sure the Neo credit card worked for me and my lifestyle, I did a lot of research to ensure I’d be able to get cashback on some of my more significant purchases. When I found out they partner with Clearly (where I get my contacts), I was immediately sold on the cashback. 

In just five days of using the Neo credit card, I have earned $8 in cashback just for buying things I needed, regardless of the reward. 

How do you sign up?

In just four steps and without leaving the comfort of your own home, you can start spending your cashback. It took me about 10 minutes, and I was approved instantly.

1. Create a Neo Profile 

2. Sign up for your Neo Card 

3. Set your limit with a security fund 

4. Start earning up to 15% cashback on your purchases

If you’re looking for a new credit card that has the perks and rewards that make sense for you, do a lot of local shopping and are looking to build credit, the Neo Secured card is a great option.

The post Why I Chose the Neo Financial Credit Card appeared first on Mixed Up Money.

If it were a sport, a credit score of 650 would get you in the game. 800 would get you on the starting lineup and 850+ would make you an all-star.

Your credit score can impact your life in a variety of ways. Whether it’s to obtain a mortgage, score a new rental unit or gain approval for your choice credit card — having a good score is important.

Personally, I didn’t realize how important it really was until it impacted accomplishing a financial goal that mattered to me. 

In 2019, myself and my not-so-pretty credit score walked into a car dealership. After neglecting my financial health almost entirely for a year and blowing right past my savings and into the dark and deviant world of credit card debt, I had money monsters in my closet. When it was time to apply for a loan to buy a car, the lenders wanted to take a look around, which is common practice. 

Spoiler alert — they found the monsters.

At the time, my credit score was 599. I had recently started a new job and I was going to be on the road a lot. I wanted something newer, more fuel-efficient, and reliable. I knew this wasn’t the absolute best time for me to be buying a new car because of my financial position and credit score at the time. But, that didn’t matter to me because this purchase meant a lot. It was a statement to myself that I was ready to commit to a new career path. To me, it symbolized a commitment that I was embarking upon at a new stage in my career and in my life. I was willing to absorb the less-than-ideal terms in order to further engrain that belief in myself as I continued to press on and forge this new identity. 

Despite the high total cost of borrowing, I went ahead with the purchase. My rate on this auto loan is ridiculously high at around 8% APR. Yeah, not great. 

What I realized from this less than ideal scenario was how important your credit score could be in determining the rate at which you pay for things — or your ability to be approved for some purchases at all. 

Enduring this situation also led me to focus a lot more on my credit score over the past few years. I am happy to report I now regularly float around the 800 mark. But, this took time, work, and an understanding of how the system works. If you are here, I can only assume you want to learn more about what credit scores mean, how they impact you, and how they are calculated. So let’s get into it.

What is a Credit Score?

Credibility is the quality of being trusted and believed in. In other words, your ability to do what you say you will.

Quite literally, then, your credit score reflects your level of credibility in the eyes of a lender. In this case, you’re promising to make regular payments on time and in full of at least the minimum amount allowable. 

Every time you make the required payment on time, a little checkmark floats into the universe and lands on your credit history report. These checkmarks add up over time and boost your rating. Unfortunately, the opposite is also true. When you miss payments, your credit score decreases. 

There are other factors as well, which we will get into, but your proven ability to repay is the most basic and controllable factor determining your credit score.

How is Your Credit Score Calculated?

When it comes to your credit score, there are a variety of factors at play that determine where you stand financially.

#1. Payment History (35%)

This is why paying all of your bills on time and in full is so critical. It is the most heavily weighed factor in determining your credit score. 

Being behind and consistently missing payments will damage your score. Keeping up with your bills for long periods of time will allow you a little buffer that if you somehow end up missing one, it will still impact your score, but it will not be as detrimental as a consistent inability to pay your bills on time. 

This is yet another case for automating payments. The more we can remove human error and reliance on our own memory to keep up with all of the million things we have going on in our lives the better. Take the time to implement automated payments whenever possible.

#2. Credit Utilization (30%)

If you were to add up the limits on all your credit cards, lines of credit and other interest accruing access lines to capital, you’d have your total credit available. How much of that you currently use is your utilization rate. We can express this as a percentage by dividing what you’re using versus what’s available to you. 

For example, if you have the following:

• $7000 credit card limit with a balance of $2500

• $5000 credit card limit with a balance of $1000

• $10,000 line of credit with a balance of $3000

Say you are using $6,500 of $22,000 available. This would give you a credit utilization percentage of ($6500/$22000) = 29.5%. 

The rule of thumb is that anything below 30% is considered a good, healthy and acceptable level of credit utilization percentage. 

That doesn’t mean that if your credit utilization is about the same as the example above that you should be content with continuing to carry these balances. If your goal is to improve your score, lowering this number is a great place to start. Focus on lowering the balance you have on your credit cards and you’ll see your credit card inversely rise up.

#3. Length of Credit History (15%)

The longer you’ve had access to credit the higher your score will be in this category. This is why it often makes sense for parents to have a credit card in their children’s name before they have established the earning power to justify having one on their own, not to mention the self-discipline required to keep themselves out of trouble. Even a card with a $500 limit will help establish a baseline of credit history which will help them later in life.

However, we also realize that having a parent who is also financially equipped to help you build credit at a young age is a privilege. If you don’t have access to this, don’t worry. Your credit score will build with time.

A common question regarding credit history is whether you have to keep the first credit card you ever had just to keep a solid score. It’s not a bad question — considering many of us don’t have a choice in our first card and may not use it as much once we find one that’s better suited to our needs. But, this card is important to keep if you can. Even if you don’t use it, it’s still great to keep. If you really want to switch, consider asking your creditor if they can swap the card to a different type within their decision to keep the same card but upgrade.

#4. A Mix of Credit Types (10%)

Not all types of credit are the same. For example, revolving credit, like credit cards, come with the ability to spend up to a certain limit and then manage the balance with payments on your own timeline. 

For installation credit, such as loans, there is a fixed-payment schedule component to the agreement. These types of loans are often long-term with consistent payments of the same amount at the same time. Examples of this type of debt would be a vehicle loan or mortgage.

Lenders like to see a mix of credit because it gives them the sense that you can manage your finances and maintain your end of the obligation in various types of loans. Your ability to do so shows you’re a trustworthy and yet again, “credible” lendee. 

Keep in mind, though, adding more credit just to obtain a variety is not a good course of action to build your credit score. Each time you add an additional form of debt, lenders are on high alert, as this may look like you’re in need of access to more credit.

#5. Application Frequency (10%)

When applying for a new source of credit, whether it be a credit card, loan, vehicle, etc. the lender will run a “hard” credit check on your name. This is done out of necessity for the lender to understand your financial position and ability to pay back your loan as a way of managing their risk. When these reports are pulled, it slightly impacts your credit score. It’s annoying, but it’s a very minor adjustment, and it’s nothing to worry too much about.

Before applying for purchases or access to credit, be sure to clarify whether this is a “soft” check, which won’t impact your credit score, or a “hard” check, which will.

What is a Good Credit Score?

If credit scores were a sport, a credit score of 650 would get you in the game. 800 would get you on the starting lineup. 850 would make you an all-star. 

To obtain a mortgage in Canada, you’ll need a credit score of 680 and above. A score of 670 and above is a great way to score a vehicle loan with an ideal interest rate.

If you’re not quite in the game just yet, don’t be discouraged — you can still work your way up! Just like in the sporting world, the best way to improve is through deliberate practise and learning from others around you who are already performing at the level you aspire to. 

That is what has brought you here. You want to learn. Keep at it. Continue to absorb information and focus on your goals by improving the things within your control.

How Do I Check My Credit Score?

There are a variety of options for checking your credit score for free in Canada. Two of my favourite places for this are Borrowell and Credit Karma. Using these two platforms does not impact your credit score, as checking your own free report is considered a ‘soft’ check.

I like these tools for the following reasons:

• They provide a full credit report

• Bi-weekly updates via email notification

• A log of your credit inquiries

• An update on current debts owing

• User-friendly 

• Educational content

Regardless of the platform you choose, but especially if you go with a free one, you’re going to be “pitched” a lot of products. Remember, whenever a product is free, it is very likely that you are the product. 

So with these types of “free services” such as credit monitoring, one way or another the company is monetizing your data and your attention. They’re selling the aggregate data for analysis to lending agencies and they’re also selling ad space for financial service products. A certain percentage of users will click the ads and ultimately acquire the products; the mortgage, the line of credit, the credit card, etc. 

Remember that the purpose behind your utilizing this service is to improve your credit. Especially early in your credit repair journey, do not chase seemingly attractive opportunities. There is very likely fine print which makes the deal not so great. Ironically, so long as some people keep clicking these ads and the odd clicker eventually buys – these types of products will continue to be “free”.

My personal bank, Bank of Montreal, recently started to offer credit score monitoring which is kind of sweet. It’s fairly basic and doesn’t provide the level of detail I have grown to enjoy, but it still gets the job done and provides a basic understanding of where I am at. If all you’re looking for is the credit score number itself, check to see if your bank can already give you that.

One of the main benefits of checking your credit score is to confirm there is no fraudulent activity and protect yourself from any unwanted activity.

Stick to the Basics

It always comes back to basics. Don’t borrow more than you can afford or even close to what you think you can actually afford. Expect the unexpected and plan on the plan not going according to plan. Leave yourself a buffer and you’ll mitigate your risk. Spend less than you earn, save the rest. Your credit score will thank you for it.

The post Your Credit Score and How it Impacts Your Life appeared first on Mixed Up Money.

In his best-selling book, Atomic Habits, James Clear eloquently suggests: “We don’t rise to the level of our goals, we fall to the level of our systems.”

For most people, establishing a savings system while climbing out of debt is an excellent long-term strategy.

It seems counterintuitive to do anything other than put every extra cent toward our debts. While this may feel like the best approach, it also fixates on only one mechanism of wealth management. If all we do is worry about our bills. Bills might be all that we get.

Instead, it’s best to make a case for implementing healthy saving habits that will help boost your net worth in the long term, even before you are entirely out of debt.

Compartmentalizing your money works

I didn’t believe it was necessary or even beneficial for the longest time to separate my money into different accounts or categories depending on its intended use. So up until a couple of years ago, when I truly began my financial recovery journey, I had one big messy slush fund. 

If I could generally afford the things I wanted, I felt I was doing okay. However, if I had to lean on the credit card(s) a bit too much, then I knew I’d have to dial back the spending for a bit. That’s it, that was the “system.” 

Not surprisingly, this led to no emergency fund, no savings account, no investing account, no appreciating assets. And in the long run, a whole bunch of consumer debt.

All I had was an avoidant attitude toward money and an underappreciation of personal finance’s psychological art and mathematical science.

How do you get on track financially?

Once I started to track my money (a critical step to any financial recovery plan), I could see all the places it was going — without psychological justifications or biased mathematics. 

Allocating funds in advance of monthly and one-time expenses better allowed me to understand my financial situation. I also found the objectivity of a spreadsheet to be surprisingly comforting. 

For years, I feared that if I took a good hard (honest) look at my finances, I would be crushed by the dark reality of how deeply in debt I had become. Instead, what happened was that I became empowered by the courage and commitment I showed myself by stepping up to the challenge of turning things around.

My money compartmentalized: income, assets, liabilities and expenses replaced the slush fund approach. Whenever circumstances change, I reflect those changes in my spreadsheet and objectively track against my goals.

The objectivity of having my finances in this format reduces poor financial decisions because I can immediately see the impact unnecessary spending has on my net worth. Of course, I’m not perfect, but as long as I keep tracking and stay committed to the process, my situation continues to improve.

The focus can’t just be on your debt

By only paying off debt and not establishing a savings plan where you make consistent contributions, you may fall into the trap of a never-ending reality of debt. 

If all you do is make monthly payments on things, you’re not practicing building wealth. You’re just getting better at financing debt. As you increase your means via raises, side hustles, negotiation terms, eliminating non-essential spending, etc., you may be drawn to adding another monthly bill with your newfound money. 

A fancy car, the newest iPhone, and a premium subscription will always be attractive options for spending our money. And when we don’t have to pay up-front, it feels like we can afford it. Acquiring the credit do to so is relatively easy, by design, but it also keeps us in the same lending cycle.

What if, instead of borrowing, we started saving those additional funds we’ve worked for? What if we exposure ourselves to delayed gratification instead of the instant type we’ve likely become addicted to in one way or another?

We don’t know what we’re missing until we see firsthand the psychological benefits of accruing money in a savings account. It is not until you start saving that you can truly get your head around the fact that being wealthy isn’t about how much you make; it’s about how much you keep.

When saving, even if your net worth will be negative for a while, it is still an incredible feeling to see those savings pile up. It gives you a glimpse into your potential to build wealth. Set it up. Give it time. Be patient. Thank yourself later.

Separate your savings and investments

The most critical part of this plan is to save in a place that you cannot easily access. This started with a Registered Retirement Savings Plan (RRSP) that my employer set up. 

I was so in the dark with my own money; I didn’t even realize that I had over $10,000 in my account when I decided to resign from that job. I never checked on it online or bothered to review the statements I got in the mail. I just kind of just forgot all about it. Unwittingly, I was taking a wise approach to saving.

At the outset, I opted to go with the 3% contribution amount to maximize my employer’s matching incentive; also 3%, and I left it at that. These programs vary in how they are structured and the maximum contribution your employer will provide, but they are an instant return on your savings efforts. So, if you’ve got an employer contribution savings plan, max it out! If you don’t, ask them why not!?

If you’re like me, and you’ve tried to amass some money in a savings account that is on the same online platform as your chequing account, it may not have worked. It sure didn’t for me. It is as simple as making a quick transfer from one account to another, which takes seconds and comes with no consequences. That is an example of failing to design your system. 

It would help if you made it difficult to access the money — even better, if removing the funds came at a cost. With the RRSP contribution plan I mentioned above, withdrawals are taxed, which removes the temptation. You’re not going to forego some of that money to tax, so you may as well keep it there. That’s why RRSP plans are great for long-term investing, such as your retirement or goals that exceed ten years. If you have a history of difficulties with accruing savings and want to save up outside of an RRSP, think of other ways to make the removal of funds non-attractive or impossible.

Starting small is better than not starting at all

Even if it is only $5 per paycheque, set up your system for saving with and commit to it. Over time you’ll contribute more and more to your savings plan, and you’ll be happy you started with something.

Even amongst the wealthy, there is a common regret: “I wish I started earlier.” Well, the best time to start saving was yesterday, and the next best time to start is today, so don’t wait until tomorrow! 

The post Is It Possible to Save or Invest While in Debt? appeared first on Mixed Up Money.

Trigger warning: Gambling Addiction, Suicide

Hi, my name is (anonymous), a problem gambler, and my last bet was placed June 11, 2021.

Those are the words I say before sharing bits and pieces of my story during my weekly online problem gambling meetings.

I have always had an affinity for risk, games, sports, and gambling. Throw that in the bag with a few other life experiences and personality traits, and I have long been predisposed to have a higher risk of developing a gambling problem.

As someone who has experienced financial struggles from gambling of all sorts, the dangers of online gambling are apparent to me. For those who have dabbled with or considered entering the world of online gambling, I hope a small sample of my story coupled with some relevant statistics is enough evidence to make you reconsider that decision. 

If you happen to find yourself in the trappings of online gambling, I’ll offer up some resources and advice on where to start and how to work toward tackling this addiction.

What is online gambling? 

In 2021, online gambling comes in many forms. Pick your poison. Online poker, traditional casino games, live casino dealers, sports betting and daily fantasy sports are just some of the more popular options. 

Thanks to design innovation, frictionless accessibility, and its products’ inherent addictiveness, the online gambling industry has seen tremendous growth in recent years. In 2020, the online gambling industry boasted revenues of over $65 billion, and experts predict this figure to eclipse $100 billion by 2026. That’s Dr. Evil type of money!

While all that is growth occurs on a macro-level, the individual users feeding that ecosystem are experiencing losses from as little as $20 to life-crushing disasters. The potential for a fun past-time to develop into a costly addiction has never been higher. 

But, of course, the cost doesn’t merely impact your bank account. The emotional, social, psychological, logistical and several other types of consequences pile up the more deeply the player becomes immersed. It may sound extreme to those not familiar with this type of addiction. Still, it is not entirely uncommon for gamblers to take their own lives due to their treacherous financial position post-gambling. Not to mention the shame and overwhelm that comes with it. Problem gamblers are 15 times more likely to commit suicide.

What is different about online gambling?

The instant gratification of a big win coupled with the next opportunity can become highly addictive, and somewhere along the way, it can be all too easy to forget that you’re playing with real money. 

In a world akin to a video game, the numbers on the screen feel more like a scoreboard than a bank account balance. Except, this time, when it is game over, you can’t just press restart and be back at the beginning. You don’t get any extra lives for chasing down a golden mushroom.

With instant bankroll re-loads (often placed on credit cards) and endless types of games available, it can be easy to lose sight of the amount of time you’re spending and the real money you’re losing. Since the losses are void of the tactile experience of losing cold, hard cash, they just don’t feel the same. Casinos use chips, so the money doesn’t feel as real. Numbers on a screen feel even more fictitious. 

On the flip-side, even if you find yourself operating from the rational part of your brain and decide it is time to cash out, in some cases, it can take up to two weeks for the funds to reach your bank account. This deliberate inconvenience often deters players from removing funds from the site: two seconds to re-load, two weeks to remove.

Here are some of the findings that stuck out to me during my research for this article:

• According to the Money and Mental Health Policy Institute, 24% of gamblers experience financial problems.

• Over 10 million Americans have a gambling addiction. 

• 64% of players increased their online gambling activities during the Covid-19 lockdowns.

• US online gambling statistics show that 57% of online gamblers in the US are female.

Those are some of the stats. Scary enough. Now, how about some real-life horror stories from yours truly?

How does gambling impact my financial life?

Well, the short answer is, it has put me further into debt. Despite having large five-figure wins on my gambling resume, I eventually lost control of my gambling behaviour.

I would lose large portions of my paycheque over the course of one weekend. I never really let it progress to the point where I couldn’t pay my bills, but I wasn’t always paying them with cash. I was in the quicksand of high-interest consumer debt, right up against the brink of financial destruction. 

Instead of quitting and moving on, I would try to win again. Big wins had gotten me out of jams many times before. Gambling was what got me into the mess, but it also felt like the only thing that could get me out. 

Looking back at the bank statements is a sickening feeling. Multiple $100 to $300 deposits in succession made at all hours of the day symbolize the chasing of losses. So often, I would keep going until I hit my daily limits, and I had no choice but to stop.

“Game responsibly” has become the widespread euphemism deployed by marketing teams to suggest such a thing is possible for an addict. If this is the tagline, clearly gaming irresponsibly is very possible. Once some people reach a certain point, there is no such thing as gaming responsibly. Of course, you never think it is going to be you — until it is.

What red flags should I be aware of?

Gabor Mate, an expert on addiction, defines it as “any behaviour that a person finds relief and therefore craves in the short-term, but suffers negative consequences in the long-term and doesn’t give up despite the negative consequences.”

I knew that gambling was a problem for me long before I decided to quit. But, unfortunately, it often takes a rock bottom event to catalyze change. I had mine when I lost more than a month’s salary in a matter of minutes. 

For those reading this that think they might have a problem or fear their recreational gambling could develop into problematic behaviour, here are some tell-tale signs that you’re losing control. 

• Breaking your own rules and going behind your limits.

• Chasing losses.

• Emotionally gambling.

• Using gambling to escape your problems.

• Constantly thinking about the next time you will get to play.

• Investing increasing amounts of money for the same feeling of high/enjoyment.

Where should you start to control your addiction?

As someone who eventually lost control of their gambling, I can’t help but primarily suggest that you refrain from online gambling entirely. 

Think about it. If you lose, you’ll probably want to win it back. If you can let it go, then you’re down money overall. If you win, it will feel like such easy money that you’ll think, “Wow, that was fun and easy, let’s do that again!” Heaven forbid you win a large sum of money like I did. Good luck doing that just one time…

If you think online or any other form of gambling might be a problem for you, it probably is. Still not sure? Take the 20 questions from Gamblers Anonymous to objectively assess how much of a problem gambling is for you. At my worst, my score was 15/20. Anything beyond 7 is considered problem gambling. 

If you have recently decided to quit any form of gambling and are looking for more content on the subject, I highly suggest the After Gambling Podcast.

With addiction, it’s easy to find small stop-gaps that can help you take a momentary pause of relief from your habits. Maybe if you tell a friend, maybe if you cut up your credit card, you’ll have no reason to go back. But, the reality of any addiction is that it requires more than band-aid solutions. For most problem gamblers, individual and group therapy sessions are an integral part of their recovery. 

For that reason, it’s always best to speak to a professional for guidance and steps you can take to build the necessary tools to control your addiction.

• Find support services near you

• Read more about gambling addiction

Whether gambling is currently a problem for you or not, it is smart to be aware of the addictive nature of these games and if you choose to wager your hard-earned money – do so with caution or even with that expectation that you will eventually lose. Remember, only an incredibly small percentage of those who gamble, especially online, end up profitable.

The increasing number of billions-of-dollars the industry is churning in revenues comes directly from its users. Of course, many think they can win, and at times, they will. But eventually – the house always wins. 

The post The Real Financial Dangers of Online Gambling appeared first on Mixed Up Money.

To invest or pay off debt? This widely popular and essential financial question can be complicated and has even stirred up disagreement from experts. While the infamous Dave Ramsay errs on the side of pay off any form of debt first, other experts in the space feel a combination of the two is the way to go. 

Through my research and experience, I can only share my beliefs. But, keep in mind, I am not a licensed professional, and if you are struggling with debt, I would highly recommend speaking with a Credit Counsellor or Money Coach to discuss your options.  

First, let’s start by stating that no one likes paying off debt. I understand it can feel like your money disappears *poof* every month without feeling like you’re making a difference or getting closer to your goals. It’s certainly not sexy like investing in the stock market or investing in cryptocurrency and seeing your account value go up each month. You may feel investing FOMO and scared for your future since you feel behind.

It’s normal to be questioning whether to invest over paying down your debt these days, especially with interest rates so low, with stock markets at a high, and with investing becoming more accessible and cheaper for the average person.  

Before you change your current debt-repayment strategy, consider this: 

• Not all debt is equal;

• and credit utilization matters

Debt is emotional, so sometimes, it’s not always just about the numbers. 

Your emergency fund comes first

Before you even begin the process of deciding whether to pay off debt or invest, you must have an emergency fund saved up. This is non-negotiable. Things come up (hello, 2020), and you don’t want to be in a sticky position. For example, say you’ve paid down part of your student loans with your savings. Then, for unanticipated reasons, you’re forced to put money on a credit card with twice the interest and no tax advantages. 

Not having an emergency fund leaves you unprotected and without the control in your corner. I would recommend saving a minimum of six months’ worth of your living expenses, plus other essentials. You may even want to keep more with these unpredictable times we’re having. 

Check out this previous Mixed Up Money article titled ‘Emergency Funds: Why, What Type, and How Much?‘ to get to the bottom of all things emergency funds. 

Not all debt is created equal

There are many kinds of debt, and it’s not uncommon for people to have multiple forms — a mortgage, student loans, a car lease, credit card debt, a line of credit, etc. You may be thinking debt is debt, but that’s not necessarily true, as debt has different characteristics and, above all, cost. 

I wouldn’t say I like to use the term “good debt” and “bad debt” since that paints a very black and white picture, but some debt is at least funding appreciating assets, while others are simply eating away at your investment returns through high interest.  

The latter is worth paying off before investing. However, what I feel is high-interest debt, along with what the Securities and Exchange Commission (SEC) feels, is debt with an interest rate of 8% or more that does not offer any tax advantages. This debt will primarily take the form of credit card debt and should be heavily prioritized as no other use of that money will make it worth your while.  

Don’t put your credit score in jeopardy

Above simply looking at interest rates is the effect of your credit utilization on your credit score. Having a low credit score can be detrimental to your financial future, as you may have a more challenging time securing financing or be charged a higher interest rate at the very least. Even if it’s paid in the future, the idea of investing over paying off your debt is to earn you money, not cost you more.  

A significant factor in calculating your credit score is your credit utilization rate. In fact, according to Borrowell, your credit utilization determines 30% of your credit score! It shouldn’t be discounted. Your credit utilization refers to the amount of credit you’re using out of the total amount that you have available. If you’re using all of the credit you have available, that’s a poor sign for creditors about your current financial position.  

Calculate your credit utilization by adding up all of your outstanding debt on your credit cards and lines of credit and dividing it by your total credit available. It is recommended that you keep your credit utilization around 30%. So, if it’s currently too high, this may be a sign to pay off debt until you reach a reasonable level.  

It’s a balancing act

After you’ve paid off your high-interest debt and made sure that your credit utilization is at a reasonable level, the rest is a balancing act.  

I feel that at this point, it’s a good idea to consider investing in the market to some degree and starting to build retirement savings, even if you’re only putting away $25 each month. By starting early, you benefit from the power of compounding, you feel good to be saving for your future (the best and most sustainable debt pay off plans are the ones that feel good), and it builds crucial financial habits.  

There are, however, some things to be aware of when considering if it’s worth it to invest over paying down debt. These include where you’re investing and for how long. Money market and fixed income products likely won’t be worth it, as although they are less risky than the stock market, they won’t make up the difference between the interest rates on your debt and what you’re making. You’d have to invest in the stock market to potentially recuperate your debt interest payments and make gains on top of it.  

Another thing to consider is the volatile nature of the stock market and how returns are not guaranteed each year. The only way to ensure a positive average annual return is time in the market. If you plan on investing only for a little while (less than five years), it’s a better financial decision to take that money and put it towards debt.  

Debt is emotional

Dave Ramsey or other financial experts often fail to take into account that debt is emotional to a great extent. I believe Bridget Casey of Money After Graduation coined the term ‘Emotional ROI’ or Net Return on Investment, and I love that term to this day because it’s so true. 

Essentially, it means that financial decisions like paying down debt also have an emotional factor outside of the numbers. This factor should be taken just as seriously and weighed into any cost-benefit analysis.  

Although stock markets are booming with low interest rates, it may seem wise on paper to put a more significant amount of money towards investing over paying down your debt. But that decision might not feel good or sit well with you at night. It’s perfectly ok to know that about yourself and decide that you need to feel good to pay down your debt as fast as possible.  

You know yourself best, and you need to make sure that you feel emotionally secure in whatever decision you choose.  

Make sure you’re investing for the right reasons

It’s easy to feel confident in a bull market. Unfortunately, over the pandemic, the surge of meme stocks and cryptocurrency has tempted people to be overly aggressive and invest outside their risk tolerance. That is never the goal of investing over paying down debt and should be done safely and securely.  

Remember, save at least six months of essential expenses in an emergency fund. Second, make sure you’ve paid down your high-interest debt first, prioritizing debt with the highest interest rate. Third, calculate your credit utilization rate to ensure you’re not negatively affecting your credit score. Finally, make sure you’re able to keep up with your remaining minimum monthly debt payments — all before you’ve even thought about investing in the stock market.  

Once you’ve done that, the rest is up to you. As long as you stay within your risk tolerance and invest for the long-term, you have my blessing. Dave Ramsey’s advice on debt is outdated, and you deserve to know your options.  

The post Should You Pay Off Debt or Invest? appeared first on Mixed Up Money.

Paying off debt can be a gruelling experience. It challenges your patience, it pushes you to trim the fat on your budget, and then, after all of that struggle, you finally have room to breathe. 

The best part of all? Once you repay your debt, you can finally tackle all of the new things you want to put your money towards, such as saving for a down payment or travelling the world.

However, let’s not forget one last step that most of us might miss: rebuilding your credit. 

*lights fade, thunder crashes, the wine bottle is suddenly empty*

Before you have a mild (or major) panic attack because even just hearing the word “credit” makes your heart sink into your belly, it’s not as scary as you think. It’s also not as hard.

What is a credit score?

Credit scores are a ranking that determines how responsible you’ve been with your credit cards or loans. The scores range from 300 to 900. 

You’re likely at 300 if you’re just getting started building credit, and you’re likely at 900 if you’re the valedictorian of all things money. For the rest of us average joes, 650 is an excellent place to start – but 700 is even better.

Where can you check your credit score (for free)?

Before we get into the tricks and tips, you must know your credit score to see what we’re working with. Maybe you’re already doing better than you thought, or perhaps you’re doing worse than you thought. Either way – there is no point in guessing when we can find out for free.

You can currently find your credit score on the following sites:

• Equifax

• Credit Karma

• Borrowell

Who decides what your credit score is and how?

Credit bureaus are the places that determine your score, and they have a few categories that they monitor to see where you stand. Because we use money and move money around so frequently, your credit score can change many times over a few months. 

Let’s break down the five categories that credit bureaus use to determine your score. The percentage next to each category is how much this factor wagers into your final score.

#1. Your payment history (35%)

Payment history is exactly how it sounds. Credit bureaus will determine whether you pay your bills on time, if you’re ever late to make payments, and whether or not you have any delinquencies. Delinquencies are late payments or missed payments. Even one late payment can impact your credit score, which is why it’s essential to do your part to make payments on time and in full.

#2. Credit utilization (30%)

Credit utilization is the amount of money you owe versus how much debt you can access. If you owe more than 30% of your credit limit, they’re going to call that “bad news bears.” For example, if you have a credit card with a $1,000 limit and owe $500, but can’t afford to pay the total amount off right away, try to at least get the amount under $300.

#3. Length of credit history (15%)

More often than not, credit bureaus base your score on how long you have had credit for, used it for, and how responsible you’ve been with it. So, “make good choices” is a critical saying when using debt to pay for items.

#4. New credit (10%)

Every time you apply for another credit card, a loan, a mortgage, or any other lending option, you’re at risk of lowering your credit score. That’s why, when you open a new account or go to purchase a vehicle, lenders sometimes advise you that the credit check may temporarily impact your credit score. Try to be cautious with how often you are applying for new cards or other forms of debt, as it may make you look desperate (and no one wants that).

#5. Types of credit (10%)

Although it’s not always a good idea to carry a lot of debt, for some reason, credit bureaus weigh the different types of debt you hold into consideration when ranking your credit score. I’m not particularly eager to spend too much time on this one because I’m honestly unsure how much of a difference it makes, but if you have a car loan and a credit card, and you’re making regular payments on time. Good for you!

How do you rebuild your credit score?

Bouncing back from bad credit (which you most likely have after years of ignoring your debt) can be easy, especially since you’re already taking the appropriate steps to set yourself up for financial success by paying off what’s left of your debt.

When it comes to any financial task, tackling everything all at once can make the process feel overwhelming. For that reason, the best thing to do is break down each step into a small and tangible action.

Always make your payments on time

Being late for payments on credit cards and loans is always the number one downfall of a credit score, as it is worth 35% of your total. Never had delinquency? You’re a rock star. Maybe had one or two? That’s okay! Just ensure that you don’t let it happen again. Plan to make a payment on the 1st of every month, or (even better) set up automatic payments.

Be aware of your credit limits

Did you know that credit bureaus care how much debt you hold on your cards or loans? It turns out that “credit utilization” is worth 30% of your total score. If you keep your used credit at less than 30%, you will be on your way to getting that A (rhymes are cute)!

How long have your accounts been open?

Before you finish paying off your debt and vow to cut that credit card up because it’s what got you into this mess, think! How long have you had this credit card or line of credit? The card that you have had around the longest is the one that is going to help you the most (potentially). Credit history is worth 15% of your overall score, and the bureaus would prefer your accounts be open for a minimum of six months to collect data.

Don’t apply for any more credit

Every single time you apply for a new line of credit, credit card, or loan, you’re at risk of jeopardizing your credit score. A soft inquiry (you checking your score) is fine, but a hard inquiry (potential creditor checking) may not be. 

Just be smart!

I know (believe me, I know) that credit scores and credit, in general, can be boring to learn about, but you must know the basics. If you want to take out a mortgage one day, you’ll need to have a good credit score or be capable of getting there.

Since you’ve been patient as you’ve continued to make payments on your debt, it won’t hurt to be patient while making changes to improve your credit score either. So say “SEE YA NEVER” to that bad credit score, and “HELL TO THE O” to that high ranking we’ve all been dying to get.

Have you checked your credit score yet in 2021? When do you normally check? Let me know in the comments!

The post How Do Credit Scores Work and How Can I Improve My Score? appeared first on Mixed Up Money.

Debt is an ordinary reality for many Canadians. In fact, we lead the global pack in terms of household debt. While household debt may not say much in terms of our future economy, it makes you quickly realize that you are not alone if you currently hold debt, as a consumer or otherwise.

In a recent Instagram poll, nearly 50% of my followers acknowledged that they are currently repaying their debt. Of the 50% on the other side, debt may be inevitable at some point in the future. 

Why traditional debt payoff methods fail

Paying off debt gets a bad reputation for being restrictive, all-consuming, and never-ending. The way I like to think of it is that if your debt payoff method resembles a fad diet, it’s setting yourself up for failure and likely continuing the never-ending debt loop. 

All of these things are red flags and should be avoided:

• A restrictive plan that budgets the bare minimum and leaves no room for fun or unanticipated expenses

• A time-intensive plan that has you working double-time to increase your income

• Setting a date that your debt has to be paid off that is unrealistic for your situation

A debt payoff method needs to be sustainable and shouldn’t put your life on hold. Expenses for the things you love should be kept and your time valued. Your debt payoff schedule should be tailored to your lifestyle and not the other way around – drastically altering your lifestyle to pay off debt. If you take these things into account, you’re more likely to stay motivated and ultimately succeed. 

How much can I afford to put towards my debt each month?

Before you set a debt payoff schedule, I recommend sitting down with a glass of wine and three months of your bank statements to analyze what money is coming in and where it’s going. Are you currently saving, breaking even, or going into more debt? The answers to these will determine how much you need to increase your savings from now on. You must meet your minimum monthly debt payments, and you’ll greatly benefit from lower interest payments and a shorter time frame if you can put down more. 

How do you cut expenses without going overboard?

The most accessible place to start is with your fixed expenses – these are costs that come out of your account every month, such as utilities, cable, phone bills, and subscriptions. This is because a one-time cancellation or price negotiation will continue forever and requires no ongoing decision-making. 

Call your cable company or phone provider and try to negotiate a lower deal. It’s certainly possible, and companies will often give you a discount if you’ve been a loyal customer. The worst they can say is no. If you struggle with confidence negotiating, check out the previous Mixed Up Money article titled ‘How to Negotiate Monthly Bills.’

The next step is looking at monthly subscriptions. Are you using these services as much as you thought you’d be? Probably not. Cut the ones you haven’t used enough to justify and keep the ones you enjoy on an ongoing basis. 

The same goes for all expenses. Look through your statements and think back to when you made each purchase. How were you feeling then, and how does it make you feel now? Are you still happy with your purchase, or are you feeling buyer’s remorse? A sustainable savings plan removes things we may be buying for the wrong reasons and keeps the things we genuinely love. 

Increasing your income 

Although this may not be an option for everyone, and it may not always feel like the right time to explore new opportunities or ask for more money, another way to increase your savings is to increase your income. 

You can do this by negotiating a raise at your current job, leaving for a higher-paying job, or taking on additional jobs or “side hustles.” You know your circumstance best and what route should be taken for your particular situation. 

Side hustles have become all the rage because of the rise of digital products and services. You can “hustle” from the comfort of your home and get paid for it. The key to knowing whether a side hustle is manageable is figuring out the time commitment. 

Again, running yourself into the ground each week isn’t sustainable and is sure to make you dread your debt payoff journey. Check out this list of 48 ways to make extra money in your spare time in Canada if you think a side hustle may be right for you. 

Debt payoff methods for multiple forms of debt

Once you’ve found that sweet spot of monthly savings that you can put towards your debt, it’s time to start your plan. It’s easy to have only one form of debt, such as student loans since your savings have only one place to go, but what if you have multiple? For example, a student loan, credit card debt and a line of credit? In this case, you might not know where to send your money. 

There are several methods showing ways to divide up your income among your debt to maximize impact. Here are two of my personal favourites: 

1. The Debt Avalanche Method

The debt avalanche method involves making the minimum payments across all outstanding debt balances and putting the excess amount toward the debt with the highest interest rate, like a credit card. 

This method is excellent if you can stick to it because it will save you the greatest amount of interest and reduce the time it takes you to pay off in the long run. It does, however, require discipline and looking at the bigger picture because you may feel like you’re chipping away at your debt without making much progress for a while. 

2. The Debt Snowball Method

The debt snowball method involves making the minimum payments across all outstanding debt balances and putting the excess amount toward the debt with the smallest balance first, no matter the interest rate. 

Although this method does not reduce your interest rate as the debt avalanche method, some people find it more motivating because you go from four forms of debt to only one in a short time. This can create a greater sense of accomplishment and a greater purpose to progress towards your goals. 

Surround yourself with support

Although some personal finance experts feel strongly toward one method or the other, the “right” method is the one that works for you. 

Debt is very emotional. There may be debt that carries a higher emotional weight than others. It may not make sense to pay off that debt considering the numbers alone, but it may make sense for you to feel good and ultimately be successful in your journey.  

Paying off debt is no easy feat and requires tremendous amounts of discipline and support. Talk to family, friends, and an online community. 

Resources for paying off your debt

One fantastic resource that I read and would recommend to all those paying off debt was fellow Canadian Shannon Lee Simmon’s book called Living Debt-Free: The No-Shame, No-Blame Guide to Getting Rid of Your Debt. Shannon is a Certified Financial Planner that helps clients with their money every day. You probably wouldn’t think that someone with her knowledge and experience could be in debt, but in reality, she was. 

In the book, Shannon describes how she felt like a failure when she went into debt after launching her business. Now looking back, she doesn’t regret the debt itself, only the shame and guilt that she attached to it. She wished that she had been easier on herself because debt is inevitable for many of us. How you choose to navigate those periods emotionally and intentionally is what matters more.  

Second, the founder of Mixed Up Money, Alyssa Davies, wrote The 100-Day Financial Goal Journal for anyone who is sick of feeling behind when it comes to their money situation. Rather than pick up the typical personal finance book about how to pay off your debt by living life bare bones, this modern diary can get you on the right track with your financial situation, without having to skip the fun parts of what money is really for: to be enjoyed.

In other words, if you care about your money or want to care more about your money, I highly recommend this journal.

Make sure that you’re surrounding yourself with people that encourage you and understand your goals. There is a fantastic debt-free community on Instagram. Some of my favourite creators talking about their debt-free journey are @sometimessensible, @literallybrokeblog, and @babeonabudgetblog. 

You will conquer your debt and come out the other side. There is no one-size-fits-all strategy for how that happens, only that you make it across the finish line. 

The post How to Pay off Debt Without Being Too Restrictive appeared first on Mixed Up Money.

Hello, all! It’s finally the last time you’ll have to read this italicized introduction about how I’m still on my six-week blogging maternity leave. Fortunately, for both myself and for my readers, I have some awesome female friends who love money just as much as we do and they’ve willingly shared some of their favourite blog posts. This week, my brilliant friend Jennifer has shared her very personal story about debt repayment and how she managed to change her habits to effectively pay off $40k of student loans!

If you’d like to still chat with me (even though I’m not as dope as Jennifer), you can join me on Twitter or Instagram for small life updates and cute pics XOXO. Now let’s get to the good stuff. 

When I graduated law school $50,000 in student debt, I did not have a system for my money. It’s embarrassing, and humbling, to admit that all I did was set an arbitrary line as to how much I could spend whenever I got paid and threw the remainder towards my loans. The result? I, obviously, was too lenient with myself and barely made any progress towards conquering my mountain of debt.

Since then, I’ve built a system that’s worked for me. Over the past 2 years, I’ve paid off 80% of my debt all the while eating out, going on vacation, buying several books, and adopting a dog, despite that during that time I left a well-paying job to work somewhere that fulfilled me but came with, at first, a 50% pay cut. If you have solid systems in place, you can take professional risks and not completely deprive yourself, all because you have debt that you’re actively working towards paying off. If you want to know more, feel free to shoot me an email and I’d be happy to talk to you.

Budget

The first thing I did was make a budget. I didn’t know how, so I asked someone. My girlfriend, to be specific. She had just finished paying off $25,000 of student loans in 10 months. I asked her if I could see her budget. I then took a piece of paper and wrote out all my expenses, and divided them into two categories: fixed expenses and variable expenses.

My first budget was far from perfect. I chalk this up to the fact that I had no idea what I was doing. I never tracked my expenses before so I didn’t know if I was budgeting too much or too little for things like dining out and entertainment. Eventually though, after tracking my spending for the next few months, I managed to nail down the perfect budget — not too restrictive so I could still enjoy life, but not too lenient so that I could start putting a dent into my student loans.

Two years later, the skeleton of my first budget still remains. Now, whenever I receive my last pay cheque of the month, I open up my budget template (a very basic one on Microsoft Word — I’m not fancy) and see if I need to alter anything for the month ahead. If I know there are several birthdays coming up, I’ll slightly modify the numbers so I’m prepared.

The biggest lesson I learned is that you need to be open to tweaking your budget every month if your life circumstances call for it. Don’t try to fit a square peg into a round hole. You need to make your budget work for you, not the other way around. Hands down, this made me stick to a budget that much easier. Now, I actually look forward to checking in with my budget each month because I get to see exactly how much money I can throw towards my debt the next month. It gives me something to look forward to.

I also don’t live on the paycheques as they come. The money I spend this month is what I earned last month. If you can, I strongly encourage you to do this. It’ll help you sleep easier at night.

Separate

As author Adam Kirk Smith once wrote, “Research shows that willpower is more important than IQ. That’s why the point isn’t to become smarter but to become more self-disciplined.” Do you know how hard it is to stop yourself from spending everything in your chequing account? The answer is: very.

To this day, I divide up my money into various savings accounts, mostly to keep the balance of my chequing account artificially low. I don’t ever feel like I have a ton of money to burn since they’re spread out over 5 savings account (one of which is at a different bank institution altogether) and an RRSP and TFSA account.

This method tricks me because the only money in my chequing account is what I can spend for the month — my fixed expenses including rent is stashed in savings accounts. No matter what, I won’t accidentally dip into the money I’ll use next month.

Simplify

I’m all about simplicity. I’m an anxious person by nature, and I don’t need another thing to worry about. Here are all my financial tools:

• Tangerine Money-Back Mastercard (no annual fee)

• Tangerine Chequing (my debit card)

• EQ Bank Savings Account (my emergency fund and long-term savings live here)

• ScotiaGold Passport Visa (I literally only use this when I travel/rent cars)

• RBC Visa Classic Low Rate Visa (I don’t use this card at all. I keep it because I’ve had this card since I was 17 years old)

As you can see, I use Tangerine for my daily banking. I normally use my debit card for my daily purchases and then I automate my bills to my credit card. I use my ScotiaGold Passport Visa about once or twice a year since I don’t travel very much. Other than that, I regularly transfer money over to my savings account at EQ Bank, which are for my long-term savings goals. Everything else is divided into savings accounts at Tangerine.

And there you have it! Nothing fancy. I don’t care for credit card reward programs because I think it’s just an attempt by credit card companies to gamify adding debt into your life. I don’t need to buy more things to get the occasional freebie in return. The cash I get back each month from my credit card is enough for me.

This system is truly bare bones. I don’t pay fees on any of my financial products (the fee for my ScotiaGold Passport Visa is waived since my professional student loan is with Scotiabank) and it gives me enough friction that I never dip into money that I shouldn’t. It’s not sexy, but then again, organizing your money shouldn’t be. Once you set things on autopilot, it’s uncanny how much you’re able to let it work in the background while you do other things with your time.

The post I Paid Off $40,000 Of Student Loans By Organizing My Finances Like This appeared first on Mixed Up Money.

Hello, all! Alyssa here. As you know, I’m currently taking a six-week hiatus to spend time with my newborn baby whom you’d all obviously love. Fortunately, for both myself and for my readers, I have some awesome female friends who love money just as much as we do and they’ve willingly shared some of their favourite blog posts. This week, my squirrelfran Des from Half Banked, has generously shared her personal story about debt and how she changed her expectations.If you’d like to still chat with me (even though I’m not as cool as Des), you can join me on Twitter or Instagram for small life updates and cute pics XOXO. Now let’s get to the good stuff. 

I have debt.

A few years ago that sentence would have sent me into a total tailspin. I was always so adamant about not carrying credit card debt (still am, btw) and I even bought my first car in cash. Debt was not a part of my financial life.

But right now, it is.

I’ve always avoided writing about debt before now. As someone who never had it, I much preferred to let other people tell their stories, and I didn’t feel like I had anything to add (…because I didn’t). Not to mention, every debt story I heard was a bad one, and the people telling them were so, so, so excited to be out of debt. I wasn’t going to contribute from my “I’ve never had debt” perspective, but I was happy to listen and learn from them.

Of course, going into debt, I assumed I’d feel the same way as my personal finance friends, and want to prioritize paying down debt above all else. This was my chance to experience what paying down debt was like! I was going to crush it! I was so prepared!

Paying off debt isn’t what I expected

I could never have predicted that I would be totally chill about my debt, especially given that I am an aggressively un-chill person in general, and especially when it comes to money. But against all odds, that’s been my reaction more than anything.

Having debt kind of feels the same as not having debt, which is a bit unnerving. It made me feel like maybe I was doing money wrong like maybe I missed some crucial memo that I should be panicked about this.

But the more I thought about my reaction, the more I realized that I wouldn’t be reacting this way in every situation involving debt.

The first type of debt: unplanned

For example, if I found myself with a credit card balance that was going up every month, I would not be calm about it. It would be a sign to me that something had to change ASAP, and would serve as a clear warning sign that the balance between “money coming in” and “money going out” needed to shift.

That type of debt—unplanned debt—I wouldn’t be chill about, and I think that’s most of the debt people write about trying to get out of. It makes sense, because having the support of an online community as you make those changes, and adjust your money systems, is huge.

And controversial opinion coming in hot: I think most student debt falls into this category as well.

Say what you will, but I don’t think any 18-year-old really understands what it’ll feel like to start paying off $25,000 (or more, or much more) on an entry-level salary. I think that realization, when your debt repayment kicks in after school, is definitely unplanned—as is the impact it’ll have on your money while you repay it.

So if you’re hustling to pay down credit card debt, or student loan debt, my reaction probably feels an unnerving chill, like I very much did miss a memo somewhere.

The second type of debt: planned

But not all debt happens to you. Debt is a financial product, and just like any financial product, it can get you into trouble if you use it poorly—but that doesn’t mean it’s inherently evil.

Right now, my debt is a car loan I’m sharing with The Fiance, and I feel really comfortable with our choice to use this particular financial product. We went into it with a clear, short-term payoff plan, and we’ll have the car paid off in under three years. We made sure to pay attention to the total cost first, and then figure out how that amount worked with our monthly budget and our payoff timeline.

Basically, this was an informed, planned decision to use a financial product, with a full understanding of the cost.

Do I think you can get yourself into trouble with planned debt? Yes, of course.

It’s far too easy to look at your monthly payments and think adding just one more isn’t a big deal and end up stretched beyond your limit for years thanks to long payoff periods and rising interest rates. This is not carte blanche to take on whatever debt you want as long as you plan it.

But if you plan it well, make an intentional choice to use this financial product, and stay within your means… I don’t think debt needs to be a total panic emergency.

Exactly how I’m handling my debt

That doesn’t mean I’m not excited to pay off this debt, though. I’d love to get the $500 a month back in our shared budget, and throw that towards retirement savings in my RRSPinstead—but I’m not abandoning my other goals to do it.

We made the choice to keep our payoff timeline short (and strict) as part of our debt payoff plan, and in most months, I’m comfortable with our payments being a good and realistic portion of our budget to put towards the goal of being debt free. We could have gone with much lower payments over a longer timeframe, but we didn’t—so most months, that’s all we do about the debt.

On top of that, when I have “extra” money, I put a portion of it towards the debt to accelerate our progress, save money on interest, and move up our debt-free date. For example, about 30% of my tax refund is going straight to the car loan—but notably, and obviously, that’s not 100%.

I still have other goals, and the biggest one is to build up my personal emergency fund. That’s where the bulk of my tax refund is going this year, and for the first time ever, I’ll have a fully funded emergency fund. Sure, that money could go towards debt if I wanted it to… but I don’t. Debt payoff doesn’t always have to be your sole and only priority, especially if you’re not comfortable abandoning your other financial goals.

You might be! Which is just as legitimate a choice, but it’s always going to be a personal choice.

There’s no single right way to pay off debt

Even when you’re talking about the two really standard methods of getting out of debt, the debt snowball and the debt avalanche, there’s no single “best” way or “only” way to pay off debt. Sure, mathematically, you can find the most cost-effective way, but to do that ignores that we’re human beings who feel things and have thoughts that aren’t “maximize efficiency at all costs.”

Could I potentially save some money if I threw all my savings efforts at paying off the car loan, since the interest rate on it is higher than I’ll earn on my emergency fund savings? Sure. Would I be comfortable with the plan? Heck no.

It turns out, every wishy-washy email I’ve ever sent to readers who ask me how to tackle their debt is really what I would do in real life: “It depends, and I think you should do what makes you most comfortable, while still paying it off in a reasonable-to-fast way. Oh and don’t cut out your entire fun budget.”

Sure, there are some basics, with unplanned or planned debt, including:

• Understand how much your debt is going to cost you, and adjusting accordingly (high-interest debt is much more urgent than a line of credit with a reasonable rate, for example)

• Figure out how it fits into your financial priorities

• Make a plan to pay it off, and stick to it

• Understand how much you’ll save by paying it off early, and do that when you can

But if you’re doing all those things, and feeling like you missed the “panic” memo?

Don’t. It is possible to have debt, manage it, pay it off on a reasonable timeline, and not let it become your sole financial focus.

The post Paying Off Debt — Did I Miss The Panic Memo? appeared first on Mixed Up Money.