Debt Consolidation Strategies: Streamlining Your Financial Obligations

A guest post by Myrtle Bautista

Debt: a tricky topic, but a must if you want financial stability. Managing various loans, credit card bills, and financial obligations often leads to stress and confusion.

Enter debt consolidation strategies, your ally in simplifying financial obligations. In this article, we’ll delve deeper into what debt consolidation is and share insights, tips, and strategies to empower you to regain control of your financial well-being.

What is Debt Consolidation?

Debt consolidation is a savvy financial strategy that revolves around the integration of multiple debts into a single, more manageable debt. This can be achieved in a variety of ways, like obtaining a consolidation loan, executing a balance transfer, or implementing a comprehensive debt management plan. The overarching objective is to simplify your financial life and alleviate the weight of high-interest debt.

Types of Debt to Consolidate

• Credit Card Debt

• Personal Loans

• Medical Bills

• Student Loans

• Other Unsecured Debts

Benefits of Debt Consolidation

Debt consolidation offers a host of advantages that can significantly improve your financial situation:

• Simplified Repayment: The beauty of a single monthly payment is that it streamlines debt management. No more keeping tabs on numerous due dates, which drastically reduces the chances of accidentally missing a payment. 

• Lower Interest Rates: Among the most appealing benefits is the potential for lower interest rates. Debt consolidation may secure a reduced overall interest rate, saving you a substantial amount of money in the long run.

• Reduced Monthly Payments: Debt consolidation often leads to lower monthly payments, freeing up more of your income for savings, investments, or essentials.

• Improved Credit Score: Paying your consolidated loan on time can boost your credit score, leading to better financial opportunities and lower interest rates on future loans.

• Structured Repayment Plan: Having a debt consolidation plan in place offers a structured and clear path toward achieving debt-free status. This, in turn, can alleviate the stress and anxiety commonly linked with managing multiple debts.

Debt Consolidation Strategies

Consolidation Loans

A consolidation loan is a straightforward approach. It entails acquiring a new loan to pay off your existing debts, effectively merging various high-interest debts into one. The key benefit is often securing a lower interest rate, which can lead to savings and more manageable monthly payments.

Balance Transfers

If you're grappling with high-interest credit card debt, consider balance transfers. This method allows you to move your debt from a high-interest card to a new one with a lower or even 0% introductory interest rate. It's a smart way to cut down on interest expenses, but do remember that introductory rates can expire, so understanding the terms is crucial.

Debt Management Plans

Debt management plans involve working closely with a credit counseling agency. Together, you create a structured plan to repay your debts over time. These plans often come with reduced interest rates, making it easier to manage your debt. It's a method that adds organization and expertise to your journey toward financial stability.

Choosing the Right Strategy

Assess Your Debt

Before deciding on a consolidation strategy, it's crucial to assess your total debt and the interest rates associated with each debt. This assessment provides the insight needed to determine which method is most suitable for your unique financial situation.

Credit Score Consideration

Your credit score matters when evaluating consolidation options. Certain strategies may impact your credit score temporarily, so it's important to be aware of these potential effects. However, with proper management, consolidation can ultimately have a positive impact on your credit.

Debt Consolidation Tips

Stick to Your Plan

Once you’ve chosen a consolidation strategy, commit to it, pay on time, and avoid more debt. Remember: consistency is success.

Avoid Scams

When consolidating debt, it's essential to remain vigilant and avoid insurance scams, identity theft, and phishing. Be cautious of offers that promise debt relief in exchange for upfront fees or personal information.

Here are just a few tips on how you can steer clear of scams: 

• Research Thoroughly: Investigate the company or organization offering debt consolidation services.

• Read the Fine Print: Scrutinize any agreements and contracts before signing.

• Consult a Professional: Consider seeking advice from a financial advisor or attorney.

Budget Wisely

Creating a realistic budget is extremely crucial. It should be designed to help you meet your financial obligations without relying on credit. A well-structured budget is your tool for financial control.

Seek Professional Guidance

Given the intricacies of debt consolidation, it's a prudent choice to seek guidance from a financial advisor or credit counselor. Small business owners can also benefit from the insights of an accountant. Their expertise ensures that you're making the best decisions aligned with your unique financial circumstances. The value of their guidance on your path to financial freedom is immeasurable.

Conclusion

Debt consolidation is a powerful tool that streamlines your financial obligations, slashes interest rates, and even has the potential to improve your credit score. With the right strategy and the wisdom you've gained from the tips above, you're primed to take the crucial first step toward a future free from debt!

For more finance advice, check out the UnOrthoDoc Blog!

About The Author:

Myrtle is a journalism major, a social media marketer and is now exploring freelance writing. She's fond of anything related to health and wellness, and when she's not writing, you'll find her doing long-distance cycling, ultramarathons, hiking, or in a local cafe enjoying a good cold brew

How To Set Short-Term Financial Goals for Yourself

This is a guest post by Bash Sarmiento

Your lifestyle and risk tolerance with money is different from everyone else’s. How you approach your finances is entirely unique. Regardless of how you spend and save money, it’s helpful to establish short-term financial goals if you want to achieve financial security. 

Without short-term financial goals, you have less guidance in handling your day-to-day finances. You may end up overspending and taking on debt, putting your long-term financial goals in stagnation. In a nutshell, short-term goals are the result after you break down your long-term financial goals, making them easier to achieve.

What are short-term financial goals?

Short-term financial goals are goals that you can achieve in a relatively short time frame. Ideally, a short-term goal can be achieved within three years. These goals can contribute to your progress towards long-term goals such as retirement and paying off a mortgage. Examples of the most common short-term financial goals are paying off credit card debt, saving for a vacation, and saving for an expensive gadget.

Follow the SMART criteria

Standing for specific, measurable, actionable, relevant, and time-bound, SMART is a criterion created to guide people in establishing goals and objectives. By following the SMART criteria, you can set clear goals that have specific steps towards their achievement and a definite indication of success. 

For instance, a goal not following SMART will just say “save money”, not indicating what the money is being saved for and how much should be saved at a given time. On the other hand, a SMART goal will say “Save $50 USD per month to afford a week-long vacation next year”. 

Short-term financial goals for everyone

How you set short-term financial goals should center on following the SMART criteria. The following are examples of SMART goals that everyone can set for themselves.

• Start saving for an emergency fund

Nobody wants disasters and tragedies, but life is unpredictable and the only thing we can control is how prepared we are. This is why everybody needs a safety net, a pool of money you can take from in times of emergency. Building an emergency fund should be at the top of your short-term financial goals.

Your emergency fund's size depends on your income and risk tolerance. The more you earn, the bigger your emergency funds should be. The general rule in building an emergency fund is “out of sight and out of mind”, meaning you should automate depositing into it and only access it during emergencies.

• Track your spending

It’s hard to set short-term financial goals if you don’t know how much exactly are you spending in a given time. Having no sense of your spending habits is synonymous to being cavalier with your finances. You will be prone to overspending and it will be a lot harder to save money. 

To start tracking your spending, you can choose from the best budgeting apps available today. Most of these applications link together all your accounts and place your credit and debit card transactions under budgeting categories. On the other hand, you can track your spending manually by gathering receipts and billing statements and organizing them in an electronic spreadsheet or on paper.

Once you’ve got a good grasp of your spending, you can set a realistic budget that can help you make better spending decisions. It can be a weekly or monthly budget, just make sure you aren’t setting it too low or too high.

• Improve your financial literacy

Among the biggest roadblocks to financial wellness is the lack of financial literacy. Many people get overwhelmed by financial jargon they don’t understand so they fail to take control of their finances. By improving your financial literacy, you will gain the competence and confidence to manage, save, and invest your money. Financial literacy enables you to implement strategies such as taking personal loans to save money or open opportunities like investing in bitcoin and other cryptocurrencies.

There is no shortage of resources for improving your financial literacy. You can subscribe to financial newsletters, listen to podcasts, read finance books, or hire a financial expert. Whichever you prefer will work if you open yourself up to learning.

• Reduce spending

Once you’ve tracked your spending and become financially literate, you will better understand your expenses and determine which ones are unnecessary. Reducing your spending is a great way to make ends meet and help increase how much you can save every month. In times of inflation, furlough, job loss, or other setbacks, it will be critical to prioritize your spending in order to keep expenses to a minimum. 

• Pay off debts one at a time

Among most people’s long-term financial goals is to be debt-free, and the best way of achieving that is to pay off debts one at a time. If you have multiple debts, focus on paying one before moving on to the other. You can approach paying off debt in two ways:

1. Snowball Method, in which you pay off smaller debts first so you can see your progress. 

2. The Avalance Method, in which you prioritize debts with higher interest rates so you can avoid paying compounding interest and save money.

Conclusion

Short-term financial goals are the building blocks of your long-term financial goals, and by extension, your long-term life goals. You’ll have no trouble finding financial advice on the internet and once you’re financially literate, you’ll be mostly fine on your own. However, what your short-term financial goals should be will depend on your circumstances and priorities. Always remember that how you handle your finances is unique and you shouldn’t go out of your way to imitate others.

Meet Bash Sarmiento

Bash Sarmiento is a writer and an educator from Manila. He writes laconic pieces in the education, lifestyle and health realms. His academic background and extensive experience in teaching, textbook evaluation, business management and traveling are translated in his works.

Find him on Instagram and LinkedIn

Next Investing Step: Cryptocurrencies

Updated January 3, 2022

If you’ve been here for a while you know Investing is one of my favorite topics. I did a mini series of blog posts a while back and many found them quite beneficial. If you missed them here they are:

Investing 101: Invest In Yourself

Setting Up Your First Investment Account

How To Start Investing In The Stock Market

6 Questions To Ask Before Investing

6 Tips on Getting Into Real Estate Investing

5 Ways To Invest in Real Estate

Before diving in, I want to preface by saying that I am by no means a cryptocurrency expert or any kind of investment advisor. I will try to keep this short and sweet with some actionable steps I used to get started with investing in crypto. The information shared are my thoughts and based on my personal experience on the topic. I’m only sharing these because I feel that if you’re not on board with crypto at this point i.e if it’s not part of your investment portfolio, you’re seriously missing out on an opportunity to build wealth.

What is Cryptocurrency?

According to nerdwallet, cryptocurrency (or “crypto”) is a digital currency that can be used to buy goods and services, but uses an online ledger with strong cryptography to secure online transactions. They work using a technology called blockchain, which is a decentralized technology spread across many computers that manages and records transactions. Part of the appeal of this technology is its security. The most popular cryptocurrency at the moment is, you guessed it, Bitcoin.

I will admit that several years ago when cryptocurrency was being introduced I was, like many, quite skeptical. It sounded highly volatile, very risky (aka scammy) and sometimes the returns sounded too good to be true. Fast forward several years later after spending quite a bit of time educating myself on the topic and speaking in depth with my financial advisor, crypto educators and other professionals, my only regret is that I didn’t invest in them a lot sooner.

Bitcoin is the world’s first digital asset, is slated to be the currency of the future and as as such, supporters are racing to buy them now in hopes that it will be more valuable later. Just like the internet changed the world many years ago, Bitcoin is expected to usher in a similar change.

My first real introduction to Bitcoin was at the beginning of the pandemic when there was a lot of time to devote to learning something new (the good old days). My husband and I dabbled in a bit of investing and trading during those times with some really good returns. During that time Bitcoin was under $10K. Today (at the time this post is being written) bitcoin sits at around $65K and is predicted to get to upwards of $80K by end of November and north of $100K by December.

There has been a lot of developments lately in the crypto space - major banks around the world and some politicians have sent out pro-bitcoin sentiments. The SEC has approved a Bitcoin ETF, New York’s mayor will be receiving his first 3 paychecks in bitcoin, so are athletes like Aaron Rogers and podcaster Joe Rogan, and El Salvador has made Bitcoin its currency (with more countries to follow suit). It sounds like Bitcoin is here to stay. In my opinion, it would be unwise to not invest, if even a small portion, in cryptocurrency.

How To Invest in Crypto

At the time of writing this, Bitcoin sits at about $65K. If you have that kind of cash to spare you can go ahead and purchase an entire bitcoin. However, you do not need to. You can purchase fractions of bitcoin, whatever dollar amount you can afford. One of the most popular platforms (and what I use) to purchase bitcoin (and other crypto) is Coinbase. However, there are other places where you can purchase bitcoin such as Paypal, Cash app, Venmo and if you use Robinhood for investing you can purchase there too. If you’re a Paypal user, grab my referral link to buy your first $5 of crypto and we can both get $10 (use it to buy even more crypto).

What is Coinbase?

Coinbase is a secure cryptocurrency trading and investing platform that offers users the ability to buy, sell, and exchange over 100 tradable cryptocurrencies such as Bitcoin, Ethereum, and more. It is very user friendly and an account is easy to set up. By using my referral link you will receive your first $10 in Bitcoin after buying or selling $100 of any cryptocurrency you want.

If I were you, I would start investing ASAP as Bitcoin is predicted to get to upwards of $80K by end of November 2021 and north of $100K by December 2021.

*This prediction has changed as the markets changed due to the new COVID-19 strain, Omicron*

If you are very risk averse or still think putting your money in crypto is scary you can earn crypto in other ways. I no longer use my regular debit card for purchases. I now use the Fold debit card where I earn satoshis (a small portion of bitcoin) with my everyday purchases.

What is Fold?

Fold is a bitcoin app and debit card that gives you free bitcoin for qualifying purchases.

Fold lets you earn free bitcoin while you shop. It works just like a regular debit card from any major bank where you would earn rewards (like cash back) on purchases but instead earn free crypto. The average purchase provides 25% cash back in bitcoin. Downloading the app and signing up for a Fold debit card is really easy and there’s benefit in getting both. The app is available in the App Store and if you use my referral link to sign up you can earn 5000 satoshis or sats for short. Satoshis, what’s that? The name is a moniker for bitcoin’s founder Satoshi Nakamoto and is a fraction of bitcoin. In the app, you will also have the opportunity to win additional bitcoin daily with the spinwheel. They have a range of prizes with the ultimate being an entire bitcoin. Read more about that here. There are two different types of debit cards, the Spin or the Spin+. The spin has no annual fee but has a $21 activation fee, while the spin+ has an annual fee of $150 but no activation. With the latter, you are able to earn more rewards and up to 100% cash back. Personally, I have the spin card - I get the benefit of getting fractions of bitcoin (which over time will add up to a large sum) with all my purchases without paying an annual fee. Plus, I am already investing in Bitcoin elsewhere so I don’t feel the need to try to get 100% cash back. After you’ve accumulated at least 50,000 satoshis you can transfer your crypto to a wallet, such as the coinbase wallet (there are others but this is what I use). Ultimately, if you’re looking for a relatively easy way to join the world of cryptocurrencies without investing your own money this is a great option.

There you have it! I have touched on my experience with investing in crypto and hopefully it gives a little insight on making it a part of your investing portfolio. It is very easy to get started, but as with any investment vehicle, do your due diligence, speak with your financial advisor, take caution and be aware that any form of investing is risky.

Next Investing topic will be on NFTs. Be on the look out for that.

Financial Planning Checklist for Dental & Medical Professionals

I can’t believe I’m saying this but, a new year is fast approaching! I don’t know about you but this time of year usually means getting my financial ducks in a row (it’s always a great time to do this). As 2022 approaches, let’s start to think about ways we can improve and be better for our future selves. One way to do this is to re-assess to finances. Here’s a quick checklist to follow:

Create and Stick to a Budget

Develop good financial habits early by setting a budget. There are several guidelines out there as to how an ideal budget should be set up. I personally follow the 50-30-20 rule (with some variation). Essentially this means, 50 percent of your money each month should go to essentials like bills and housing, 20 percent should go towards your financial goals like savings, investments, saving for retirement and paying off debt/student loans, and 30 percent should go towards wants like vacation, entertainment, etc. If you want to, you can switch the 30-20 around if that makes more sense for you. Of course, your budget sometimes need a little wiggle room but for the most part try to stick to this plan. Automate it so that you don't have to think about it.

Build an Emergency Fund

Make sure you have at least three (3) to twelve (12) months of funds saved up for a rainy day.  Personally, I think 12 months is a good buffer. This is where part of the 20 percent savings portion of your budget should go, and it's there in case you lose your job, become ill, or encounter an unexpected expense. Keep this money in a separate savings account at a separate bank from your checking account and forego a debit card for that account. Also, automate your contributions.  Ask your employer to direct debit a portion of your salary into your emergency fund account or you can do this yourself. You can also consider placing the funds into an account with high yield interest. Another smart thing to do is put this money in a short term investment vehicle where you can access it immediately if needed.

Create a Plan For Student Loan Repayment

The pandemic gave us a nice break from the pressures of repaying student loans every month. Hopefully we were smart about taking advantage of the 0% interest period as the end of that is fast approaching (after Jan. 31, 2022). Explore all the options for student loan repayment that is available to you and choose the best one for your situation. Look into options like public service loan forgiveness (PLSF), the different repayment options available through the federal government and/or take advantage of the benefits of student loan refinancing or consolidation. If you are still not clear about the best option for you, seek a professional help. I have personally used Travis Hornsby, The Student Loan planner and he was able to help me figure out a repayment option that fits my goals all while saving me money in the long run.

Pay Down Debt and Build Good Credit

All debt are not created equal. There is what we call good debt and there's bad debt.  Things like credit card debt are considered bad debt because it grows pretty quickly and doesn't help you in the long term. Interest rates are usually higher and can take much longer to pay off. On the contrary, student loans are considered good debt because it's an investment into your future earning power. Put as much money as you can towards credit card bills first starting with the with the one with the highest interest. Once that's paid off, prioritize the next highest interest debt, and so forth. Also consider automating the contribution to your debt payment so that you never have to worry about a missed or late payment.

Protect Your Paycheck

An injury or illness could limit your ability to practice. Ensure you have enough disability insurance coverage to cover you in case of sickness or injury. Supplemental insurance options are available specifically for health/medical professionals, but be sure you understand how the policy defines total and partial disability. Finally, remember to update this coverage as you grow in your career and into your practice.

Put Additional Protections In Place

As your career grows, explore the various life circumstances and get the right insurance to protect against potential impacts to your budget:

• Malpractice Insurance

• Life Insurance

• Renters/homeowners Insurance

• Auto insurance

• Umbrella Insurance

Save and Invest For Retirement

It is really important that you get on this early! It is vital that you prioritize creating and contributing to a retirement fund and take advantage of compounding interest. Compounding interest will do a lot of the hard work for you if you start early. Try to maximize your contributions and take advantage of any match system your job has to offer. If your job does not offer retirement options, you can do this on your own. Speak with your financial advisor and your accountant about the tax benefits.

Explore Attorney Assistance

Utilize attorney expertise to review employment contracts, help protect your assets from malpractice, maximize tax planning and discuss estate planning.

Start a College Savings Plan

You certainly know the value of a good education - and the cost of getting one. If you have a child or children and their education is a priority, start saving now. A 529 plan is a great place to start.

Talk To a Professional

Financial planning can feel overwhelming, but it doesn’t have to be. A financial representative can help you design a plan and implement strategies to meet your specific goals with confidence.

Getting your finances together means stability, security and dear I say it, freedom. It’s okay if you don’t have all this together just yet. The important thing is that you start, now. I will have the 2022 planner, budget and financial tracker ready in a few days so be on the look out for that. Let’s make 2022 the year we get our lives together. Our future selves will thank us for it.