"I'm living so far beyond my income," wrote e.e. cummings, "that we may almost be said to be living apart."
If you find yourself in a similar financial predicament, it's likely time to stop making poetic quips and take a hard look at your financial reality. Is it time to ask for help? Asking for money from friends and family can be a dicey proposition, but if it's the difference between you and the poorhouse, it's time to put your pride aside and ask for help. How do you do it? Take our best advice.
Step 1: Get Real
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"You can't ask for help when you're still going out on weekends and blowing a couple hundred bucks on cocktails and breakfast," writes Puckermob. "You have to go through your expenses with a fine tooth comb and see where you can really be saving and what's just nonsense."
Weekend warrior fun might be the tip of the iceberg. Are you spending $9.99 per month on apps you don't use? Do you subscribe to magazines that hit the recycling bin before your bedside table? When's the last time you actually went to the gym that costs $89 a month?
A site like Mint can help you see trends in your spending, where you're overspending, and where to cut back. It can be tempting to stick your head in the sand, but when it comes to finances, knowledge is power; being more aware can help you set a budget you can stick to.
Financial responsibility is not just about slashing costs. Can you make more money by driving Lyft after work or asking for a raise?
"Before you ask for a loan, make sure you've already taken positive steps towards improving your finances," advises Consumerism Commentary. "You aren't ready to take the responsibility of a loan from a friend or relative before improving your financial situation."
Step 2: If You Need Help, Don't Wait
"It is easier to admit that you need help than it is to deal with the consequences of being too prideful and allowing a situation to get too far out of hand," writes Eric Nisall. "The worst time to accept the fact that you need assistance is when it is too late."
Don't wait until the bank has started foreclosure proceedings and your bank accounts are so empty that they're incurring overdraft fees upon overdraft fees.
Step 3: Ask the Right Person
Ask someone who has money to give and isn't in a financially perilous position themselves. If they're retired and on a fixed budget, out of a job, or dealing with stacks of their own bills to contend with, your request may seem inconsiderate and tone deaf.
Step 4: Come Prepared
Create a document that shows how exactly how much money you need and what it will go toward. Not only will this demonstrate your competence and responsibility, it will help give the person you're asking a clear vision of what this money is for.
Step 5: Come Up With the Terms for Repayment
If you were to approach a bank or financial institution for a loan, terms of repayment would be outlined out the outset. Give your friend or family member the same clear-cut vision for how they'll get their money back. How long will it take you to pay back the loan? How often will you send them payments? Even small payments, made regularly, will establish trust.
Step 6: Pay Interest
This offer demonstrates that you're not just casually hitting someone up for cash because you can. By offering to pay interest, you're not only showing your responsibility, you're also expressing a form of respect. "Hey," your offer says. "I know you could be racking up compound interest on this money, but you're helping me out instead. Thanks." Insist on paying interest at the minimum rate they'd be able to earn from a high-yield savings account, about 2 percent.
Step 7: Put It All In Writing
Promissory note templates designed specifically for loaning money to family and friends are available online. Putting the agreement in writing is another way to make the loan official and not just some loosey goosey handshake agreement.
Step 8: Pay the Loan Off Early
If your financial situation improves sooner than anticipated, pay the loan off early. "It will be a nice surprise, and on the personal relationship side, it might win you back 'points' you may have lost," says Consumerism Commentary. "At the very least it shows that you are not only a man or woman of your word, but you make extraordinary efforts not only to meet your obligations but outperform."
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While it's possible to be frugal with many aspects of your lifestyle, there are certain events and possessions that will require you to spend a substantial amount of money. Thus, a wise course of action is to begin saving well ahead of time while thinking about your goals for the future. This way, you'll be able to maintain a stable financial state even when faced with those large expenses. The following are a few major life purchases that you should plan for.
Marriage is a joyous occasion that many people look forward to. However, a wedding can be quite expensive, often costing thousands of dollars. Your family and your future spouse's family will often contribute to covering this, but you should still prepare to spend a good deal of your own money on the ceremony. If you're in a serious relationship and are considering marriage, you should plan where the funds for the wedding will come from and take the necessary actions to accumulate them. It's also crucial to discuss financial matters with your partner, since your property will merge once you get married.
A New Car
Automobiles remain one of the top modes of transportation. As a result, you may want to purchase a new car at some point in your life. Although you may be fine with an old or used vehicle at present, you may one day be motivated by a desire to acquire something nice for yourself or by the practical needs that arise as you raise children. Whatever the case, obtaining a new car is a major life purchase that you should plan for.
In addition to setting aside funds to eventually put towards a vehicle, you should also aim to build you credit score. This is because your credit score will determine your available car loan options. The higher your credit score, the more you may be able to lower your interest rates on your car.
Owning your own residential property is a worthy objective that you may hope to make a reality one day. Ideally, you should save about 20 percent of the total cost of a house before you buy it. This will allow you to make a larger down payment and thereafter face less interest on your mortgage.
As with acquiring a car, the mortgage options that you'll have can change based on how strong your credit score is. You'll want to increase your score as much as possible in the years leading up to buying a house so that you can get more favorable interest rates. In addition to contemplating down payments and mortgages, you must also remember that you'll need to deal with property taxes, insurance, maintenance and repair fees, and sometimes homeowners' association charges.
It's also necessary to hire a real estate agent to help you with the buying process. There are different types of real estate professionals. You should know how to distinguish between buyer's agents and seller's agents so that you can obtain favorable prices on homes as well.
Many people live together before getting married and have begun the process of combining accounts and sharing responsibilities. However, some people wait to do this only after marriage, and others wait until they're married to live together. Whichever path you've chosen, it's still crucial to know a few tips to manage money together as newlyweds to determine where you should begin and how you can remain on the same page.
Discussing Money Motivations
As we begin to share money with our significant other, we soon find out what one person may rank as a priority regarding money and the other may not. As such, sitting down and discussing money motivations is important. Two people who cannot agree on how to handle money may cause serious issues. This should include:
- How to deal with money following payday. Is a percentage put into savings? Is that the day to splurge on dinner, drinks, and more?
- The frequency and size of payments made to debts. Some people like to pay minimums, whereas others pay in full or make double payments.
- What do you each consider money well spent? Is it a new 70" 4K television? Is it an investment? Is it paying as much debt off as possible?
- How do you go about consulting each other before making purchases over a certain amount?
Establishing Financial Goals
After you evaluate the motivations behind your money and how it should be spent, you'll need to spend time together hashing out financial goals. As newlyweds, there are certain things on your list that you're going to want to save for. How do you go about that? How much of each paycheck will you dedicate to a particular fund?
Some things in the future worth making a financial plan for include savings and paying down debts. This is the time to be honest about your current financial standing. If you're looking to buy a home, you'll want to assemble a first-time homeowner financial checklist to begin to develop topics of conversation. Some of the things to consider setting goals for are:
- Student loans
- Car loans
- Future children
- A house
- Medical bills
- Delinquencies on credit reports
- Vacation and rainy-day funds
- Emergency funds
The more honest and open you can be with each other about the money you have and now the debts you share, the better. Implementing plans for the best ways to have the things that you both desire while still taking care of existing demands is important. These can be uncomfortable things to talk about; however, these conversations are necessary.
Following these tips to manage money together as newlyweds will allow you to have a starting point for conversations that can be tough to start. The sooner you and your partner get on the same page with finances and the responsibilities that come with them, the easier the transition will be and the sooner you'll find success.
It's the dream: money you can count on to keep rolling in, even while you sleep.
Passive income isn't entirely passive, of course. You'll put in work up-front to get the profits rolling, so don't relax in your recliner just yet. But with so many potential sources of passive income available to you, picking one or several will mean that the day you can finally kick back will draw steadily closer.
Real estate is a tried-and-true wealth builder for a simple reason: people will always need somewhere to live. Research the market in a growing community until you know a good deal when you see it. You can maximize rent by fixing up a deteriorating property or upgrading a mediocre one. The key is to hire a property manager to do all the day-to-day landlord duties for you—and you'll need a good one. Smart investors put their profits in another property and repeat the process until they have a diverse portfolio.
A YouTube Channel
You can start a blog if you're more comfortable hiding behind a computer, but consumers are more likely to prefer video content. Post a series of “how-to" videos to answer questions about whatever you're an expert in.
You can put up any content you want, but if you don't want to commit to regularly updating it, focus on “evergreen" topics that will draw clicks for eternity. Ads will create your income, especially if your channel grows in popularity. Better yet, sign up for affiliate marketing. If you recommend a product and provide a link to buy it, you'll get a small percentage of those transactions.
If you don't mind vinyl-wrapping your car with an ad for a company, you can get cash just driving around and running your errands. Make sure you contact a reputable company that doesn't ask for any money from you; if they're the real deal, they'll evaluate your car, your driving habits, your area, and more. Bonus: the brighter the ad, the easier it'll be to find your vehicle in the parking lot.
What's something that people will pay for but doesn't require shipping on your part? Finding that item is what can supplement your income indefinitely. Write an e-book, charge for your cross-stitching patterns, design prints that people can digitally download, invent an app, record a “masterclass," or whatever else you want. Every time someone new discovers it, the cash register rings. With a little more effort, this is a potential source of passive income for you that can continue to grow. Once you build up a customer base, they might want more products. The good part is that it's up to you whether you wish to give it to them.