Money Tips

Apache is functioning normally

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Almost  nineteen years into early retirement now, I’ve come to realize that the complete freedom of this lifestyle can be a double-edged sword.

You’ve already heard me raving plenty about the upside: having the freedom to raise a son from the day he was born to beyond his eighteenth birthday with no compromises. And then to put thousands of hours into everything else I value as well: family, health, friends, adventures, building stuff, and even writing the occasional blog post. No complaints about any of this.

But if I can indulge you to play me a brief Tiny Violin of First World Problems solo, even this perfect life comes with one flaw: I never have to do anything I don’t want to do.

To most people, this sounds like a dream come true. Especially if you combine total freedom with plenty of money, life is just a non-stop blissful playground of self actualization, right?

Well, maybe, but maybe not. In reality, the answer depends on who you are.

 Freedom and money reveal a person’s true strengths and weaknesses, and the result is a spectrum with “Unlimited drugs and booze on the couch” at one end, and “Create and manage a series of nonprofit foundations which employ thousands of people to research and invest in medical advances and clean energy” at the other.

For most of my journey so far, I seem to have found the balance pretty naturally. My Dad job was very intense for the first decade, but somehow I also had time to build and restore quite a few houses in the neighborhood, take plenty of intense trips to interesting places, give some talks and make some videos, and still write a few hundred blog posts. 

But in these last few years, I have started slowing down, and it has become more and more difficult to wrangle and focus myself to get these things to happen as often.

Instead of constantly bouncing around the construction site building cool things, or falling into laser focus on the keyboard finishing an article that I just had to share with you, I found myself retiring to the couch earlier and earlier each afternoon, seeking distraction on the phone and wishing I had the energy and focus to do those other more enjoyable things.

So I fought back, by learning more about health and wellness. Trying to study and train my way into more energy and focus and motivation. And you’ve seen some of the results here, in articles I’ve shared about daily habits, steering clear of excessive comfort, and more.

And all of these things really work, IF you take the knowledge and actually put it into action. And therein lies the problem:

I kept learning effective new things, and successfully incorporating them into my life. They would work for a while, but gradually my brain would invent various excuses to stop doing them consistently, leaving me with plenty of knowledge but far too little accomplishment to show for it. 

Until finally, just a few months ago, I realized that I had been sabotaging my own progress by turning my biggest life advantage into a disadvantage:

I have been using my freedom too much – in order to avoid doing things that I didn’t feel like doing.

See, freedom is great if it frees you from leaving your children at 5am so you can drive an hour through a traffic jam to sit in an office building for nine hours. But that same freedom goes to waste if you then just plunk the kids down in front of a playlist of cheap cartoons while you lounge in the corner to scroll Facebook all day.

You need to use it to do things that are even more valuable than the job you just quit. And if you can’t do that, you might as well just keep the damned job.

This is what I was doing, while lying about it to myself. I would focus on the easy things which are still good for me, like taking care of the house or hanging out with friends who live nearby. But I avoid doing the harder things – which for me means the things that require more planning, energy or focus. Even though these are the things that allow me to lead the life I enjoy most.

Let’s use workouts as an easy example. I already know that on a minute-for-minute basis, this is the single most effective thing almost anybody can do with their time because it drastically improves every other area of life. But despite knowing this, I was still following this pattern:

“I want to get in a really good weight training workout today.
Because I know it’s the best thing I can possibly do for my health and wellness. 
But I don’t feel like doing a workout because it’s hard.
So I’ll try to grease the wheels for myself so it’s easier to achieve. 
I’ll pick the perfect time of day when the weather is nice, and my energy level is high.
 I’ll set up my gym in advance the night before.
And when that golden moment of perfect conditions hits,
I’ll hit the gym!“

But between you and me, that moment didn’t always come. Some weeks I’d achieve it 2-3 times, some weeks I’d get “busy” and make excuses like “well at least I walked a lot today”. Some days I would complete a great workout, but when recording it in the journal I’d see that the previous one was over a week ago.

And the results of this lackluster effort were exactly what you’d expect: lackluster fitness.

Then something changed and I learned that there’s a much better way to get those workouts done. It’s by replacing the long, meandering, frankly wussypants dialog above with this one:

I want to work out today.
I don’t feel like it.
^^^ AHA!! I JUST CAUGHT MYSELF TRYING TO SELF SABOTAGE! ^^^
I am now already putting on my shoes and walking to the gym.

I’m using workouts as an example because this is the behavior I managed to change most successfully, but the exact same technique applies to everything else that you or I want to do, but fail to do regularly. 

The key is learning to watch over yourself like an Eagle and identify that exact moment of hesitation.

And then instead of using it as a trigger for excuses, you use it as a trigger for action.

It’s so counterintuitive at first, but then obvious in retrospect. Hesitance feels shitty in the moment, and it really can ruin your life if you listen to it too often. But the ultimate solution is usually to run directly towards, rather than away from, the stuff you don’t want to do.

So really, Hesitation can be the ultimate life coach.

Using Extremely Badass People as Fuel

As part of writing this article, I shared the idea around with friends to test it out first. And I was initially surprised to get mixed results. About half of them could relate with me: they felt they were underachieving in life and wanted to do more. The other half though I was crazy: these people feel they are already doing too much, raising multiple kids and managing multiple businesses and training for ironman triathlons in the mountains.

The overachievers go through life nicely buzzed but often stressed. When hearing them describe their schedules, I was absolutely not envious. At the same time, they weren’t impressed with my schedule either because it’s too easy. We could both benefit from making adjustments towards the center.

Enter Goggins

Typical Goggins results on Youtube

Impressive overachiever friends are one thing, but the thing that really flipped the switch for me was hearing a podcast interview with our planet’s most extreme example of driving yourself beyond your former limits, David Goggins.

I learned about his life story with a mix of awe and horror. Severely beaten as a child, he grew up with a looming wall of psychological demons and issues, but his reaction was the unique part: he has been driven to compulsively seek out and overcome extreme hardship, not just to unimaginable levels but hundreds of times beyond that.

From pushing through several near-death experiences just to qualify for a Navy SEALS career, to breaking his own legs, heart and lungs from the constant exertion of things like running 240 miles over four days without sleeping, to setting a world record of 4025 bar pull ups over 24 hours (shredding his hands to look like ground beef in the process), the man does things I would never have thought are even close to possible for a human.

And that flipped a switch for me, by putting my own incredibly easy, under-achieving life into perspective. 

Because while I absolutely do not want any part of the Goggins life, and I’ll would gladly live my life never having run more than 10 miles at a single stretch, I do find it incredibly helpful to learn that pretty much all of our barriers are entirely mental, not physical or placed upon us by the outside world. 

Sure, we do have different starting points and different amounts of luck. But instead of thinking of life like this:

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I now realize that things are more like this:

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And that’s a really empowering way to think about life, that feels like the sky has opened way up.

Ongoing Inspiration

So the podcast was just an introduction. I wrote down a particularly concise quote “You already fuckin’ know what to do.” on a piece of cardstock, stuck it to my bathroom mirror, and started acting on it immediately.

Suddenly, I was able to hit the gym every single day because I had two ways to approach it: wanting to put in a workout, and not wanting to put in a workout, either of which became a trigger to work out immediately.

And of course, once I finally put in the effort, it started working. Even though I’ve been sorta into this type of training since I was a teenager, I have mostly floated along on a plateau for years. But with this change in attitude, I gained ten pounds of lean weight over the first four months, returning to the strength and flexibility that I had at age 25, and every single joint in my body feels like it has been upgraded to a study, well oiled spring.

Middle aged man reclaims youth through motivation.

I also used the “catch yourself at the moment of hesitance” to get myself to run instead of walk more often (over 20 runs since I got back to Colorado last month), get over to the MMM-HQ coworking space for more work and socializing visits, and even to sit back down at the computer to write this post for you. While I’ve found that too much blogger work (and internet “success”) is a bad thing, there is still a right level that works for me. But it takes a lot of discipline to be willing to do it, because of all the other easier and more thrilling activities I could be doing with this same stretch of time.

Refilling the Inspiration Tank

For me, fully internalizing this one powerful piece of inspiring profanity has been transformative. But I still find that returning regularly to the well makes all this work even better. So I downloaded both of the Goggins audiobooks and worked through them in little chunks on my morning walks over the period of a month. Then I moved on to Peter Attia’s Outlive, and Jocko Willink’s Extreme Ownership. 

While the intellectuals fret about the perils of “Bro Science” or the “Toxic Masculinity” of today’s tribe of health podcasters and question their motivation, I simply absorb the messages that work for me and discard the rest. Find people who make you reach a little higher, and feed on their energy.

And for me, being exposed to successful, strong, athletic people who squeeze a lot of work out of themselves is a big source of inspiration. It helps me do more with my day, which is exactly what works for me right now at this phase of life.

And I wish you more of what works for you too!

Source: mrmoneymustache.com

Apache is functioning normally

Inside: Unlock the secrets of debt types and management. Explore everything from mortgages to student loans, and devise savvy debt strategies for financial health.

Understanding debt is essential as it is a common financial obligation that, must be managed wisely, if mismanaged, can lead to financial strain.

Most importantly, comprehending the fundamentals of debt is crucial for financial literacy. Debt spans various forms of credit, from mortgages to personal loans to credit cards.

Debt is a powerful force in the consumer’s financial life; it has the power to either create opportunities or trigger economic stress.

You must realize the multifaceted role that debt plays is a prerequisite for achieving and maintaining financial stability. As such, a comprehensive understanding of the various types of debts is not merely beneficial—it is indispensable.

Right now, consumer debt has reached $17.1 Trillion in 2023. 1

With this knowledge, you can navigate the financial tides with confidence, distinguish between advantageous and precarious borrowing, and ultimately wield debt as a tool for prosperity.

This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.

The Mainstream Maze Examples of Debt Types

Understanding the various types of debt is crucial for anyone looking to maintain or improve their financial health.

Debt, often viewed in a negative light, can actually be leveraged as a powerful tool if managed correctly. Each category of debt — from secured to unsecured, installment to revolving — functions differently and influences your financial profile in its own unique way.

Recognizing these differences enables individuals to make informed borrowing decisions, repay their debts more effectively, and develop strategies tailored to their personal financial goals.

With this background in mind, let’s understand the different types of debt:

Navigating Through Secured and Unsecured Loans

  1. Secured loans require collateral, reducing risk for the lender, like a mortgage or auto loan.
  2. Unsecured loans rely on creditworthiness and come with tighter requirements.

Understanding Revolving vs. Installment Debt

  • Revolving debts, like credit cards, offer flexible borrowing limits.
  • Installment debts involve fixed payments over a period.

Fixed-Rate vs. Variable-Rate

Choosing between fixed-rate and variable-rate debt shapes your financial commitment and interest rate.

  • Fixed rates provide predictability in repayments.
  • Whereas variable rates fluctuate with market trends, potentially lowering costs or introducing variability.

Short-Term Debt vs. Long-Term Debt

  • Short-term debt, to be settled within a year, requires immediate attention.
  • Long-term debt, with extended maturities, often permits strategic repayment over time.

Defining Callable Debt vs. Noncallable Debt

  • Callable debt allows issuers an early exit option, granting them the ability to retire debt before maturity.
  • Noncallable debt, in contrast, guarantees the term’s completion, offering predictability for both investor and issuer.

Delving into Secured Debt Details

Secured debt plays a pivotal role as it hinges on collateral to assure lenders of repayment.

This type of debt brings with it the potential for lower interest rates and higher approval chances, but also the risk of losing valuable assets should a borrower default.

Collateral Commitment: Risks and Rewards

Rewards of Secured Debt Risks of Secured Debt
Lower interest rates due to reduced lender risk. Risk of losing the collateral property, such as a house or car, on failure to make payments.
Access to larger loan amounts because of collateral provision. Limited use of borrowed funds typically for a specific purpose (e.g., a home or vehicle).
With continued payments, a credit score increase is likely. Possibility of incurring additional fees or penalties if the loan goes into default and the property is seized.
Increased likelihood of loan approval because the loan is secured by an asset. Potential negative impact on credit score and financial stability if unable to repay the loan.

Notable Nuances of Mortgages, Auto Loans, and More

Mortgage interest rates generally fluctuate between 3% and 5%, influenced by economic conditions, with the option of fixed rates or adjustable rates that can change annually within set limits. Typically, a fixed interest rate is the best option for homeowners. Most common mortgage lengths are 15 or 30 year terms.

In contrast, auto loan interest rates tend to be high with shorter terms of 5 or 7 years. Many times, these loans are often subsidized by automakers’ promotional offers to attract buyers with good credit, thereby varying considerably based on the loan’s duration and the borrower’s creditworthiness. Another option is to secure a car loan at a local credit union.

With mortgages tied to real estate and auto loans to vehicles, both present unique terms and implications for borrowers navigating the nuances of substantial purchases.

National Debt Relief

While this isn’t our first choice to pay off debt, for some of readers, it is the only option to get ahead on their debt.

Either way, it is helpful to confront your situation, and then find out your debt relief options – with no obligation.

Free Debt Relief Quote

Unmasking Unsecured Debt

Unsecured debt is a form of financing that does not require borrowers to pledge assets as collateral.

This type of debt is granted based on an individual’s creditworthiness and typically carries a higher interest rate due to the increased risk to lenders. The typical interest rates start at about 15% and go upwards from there.

Credit Cards and Personal Loans: No Collateral Needed

Credit cards and personal loans exemplify unsecured debt, with no collateral needed to secure them. Their accessibility hinges on the borrower’s credit history, representing a choice for financing without asset risk.

Many college students start with their first credit card and have no idea how it works.

The Pros and Perils of Unsecured Borrowing

Unsecured borrowing can offer financial flexibility without collateral, a clear advantage.

However, the perils include higher interest rates and the potential for a strained credit history if repayments falter, necessitating cautious consideration. This is how many people quickly rack up large amounts of debt without realizing the consequences of their actions.

Thus, why young adults need basic financial literacy.

Rolling with Revolving Debt

Revolving debt is a type of credit that lets you borrow money up to a certain limit, repay it, and then borrow again as needed, often seen with credit cards or home equity lines of credit (HELOC).

Unlike fixed installment loans, this type of credit emphasizes the borrower’s ability to manage and repay borrowed funds over time, which can have a significant influence on their credit score.

Mastering the Mechanics of Credit Lines

Credit lines empower consumers with fluid financial options, replenishing funds as balances are paid. Understanding their mechanics is critical in leveraging such revolving credit without succumbing to debt traps through accumulated interest.

Evaluating the Ubiquity and Utility of Credit Cards

Credit cards are ubiquitous in modern-day finance, serving as a versatile tool for electronic payments. They offer convenience and the potential for rewards but can lead to costly interest charges for those who fail to manage them judiciously.

Personally, I received a $942 cash back from my credit card. But, I pay off my balance monthly.

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Installment Debt Explored

Installment debt is a financial mechanism that allows individuals to borrow a lump-sum amount of money and repay it over a fixed period through regular payments, known as installments.

These debts, which can be secured or unsecured, usually involve fixed interest rates and include common financial products like mortgages, auto loans, student loans, and personal loans.

How Student Loans and Mortgages Shape Long-term Debt

Student loans and mortgages are pivotal in shaping long-term debt landscapes. They represent significant financial commitments with enduring impacts, facilitating education and homeownership while posing substantial repayment responsibilities.

You need to be wise in how much you decide to take out for either student loans or a mortgage. It is always best to take out less than offered by your lender.

Paying Off Different Types of Debt

Around here at Money Bliss, I stress the importance of paying off debt fast!

  • To effectively pay off different types of debt, starting with high-interest rate debts, such as credit cards, is essential because it reduces the amount of money paid on interest over time, allowing for more significant savings. This is the core idea behind the “avalanche” approach.
  • Alternatively, paying off smaller balances first using the “snowball” method can provide psychological wins and motivate continued debt repayment efforts.
  • For structured debts like student loans and mortgages with lower interest rates, adhering to the standard repayment plan while focusing extra payments on higher-interest debt can be a balanced strategy.
  • Additionally, employing methods like debt consolidation or transfers to lower APR vehicles can further aid in reducing the cost of borrowing and accelerate debt payoff.

Learn more about debt snowball vs debt avalanche.

Striking a Balance: Managing Varied Debts Wisely

Crafting an effective debt management strategy is a fundamental step toward financial health.

Implementing tailored repayment plans, such as debt consolidation or debt management programs, can alleviate the stress of multiple liabilities.

You don’t want to be at a point where you must get out of debt ASAP. Employing debt payoff methods such as the Snowball and Avalanche techniques can accelerate the journey toward being debt-free.

Credit counseling is often necessary to dig into the root of spending problems because it provides professional guidance on budgeting and debt management. Thus, helping individuals restructure their financial practices and develop a targeted plan to overcome excessive spending habits.

Frequently Asked Questions (FAQs)

Debt represents money owed across various agreements, while a loan is a specific form of debt where money is borrowed under agreed repayment terms and interest rates.

The most common debts include mortgage debt, credit card debt, auto loans, and student loans, reflecting the widespread financial needs for housing, education, transportation, and consumer spending.

Opting to pay off higher-interest revolving debt first generally saves money and boosts credit scores more effectively than tackling installment loans, due to the compounding effect of revolving debt interest.

This is a personal decision and one you must decide on yourself.

Which Consumer Debts Make Sense to You?

In conclusion, the takeaways are not all debt is created equal, and each type can affect your financial future differently. By recognizing whether a debt is secured or unsecured, or if it revolves or is due in installments, you can better strategize how to handle your obligations.

This knowledge is not only beneficial for making decisions about new loans or credit lines but also for creating a robust plan to tackle existing debt.

Comprehending this area of financial literacy, you position yourself to make wiser decisions that align with your financial aspirations. Ultimately, striving for a future where debt works for you, not against you.

By gaining a deeper understanding of the characteristics and consequences of each debt type, you can not only avoid common pitfalls but also harness debt as an instrument to build wealth and secure a robust financial future.

Then, you can stick with these debt free living habits.

Source

  1. Experian. “Experian Study: U.S. Consumer Debt Reaches $16.84 Trillion in Q2 2023.” https://www.experian.com/blogs/ask-experian/research/consumer-debt-study/. Accessed May 7, 2024.

Know someone else that needs this, too? Then, please share!!

Did the post resonate with you?

More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!

Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.

Source: moneybliss.org

Apache is functioning normally

Inside: Uncover the realities of financial aid repayment for students. Learn about FAFSA, loan forgiveness, credit impacts, and strategies for managing your student debt. Find out which types of debt you must pay back.

Financial aid is a beacon of hope for many aspiring students, granting them the financial support they need to access higher education.

Yet, understanding the basics of FAFSA makes applying for financial aid confusing for most students. When considering aid options, it’s crucial to differentiate between the various available types.

Navigating your repayment obligations can seem daunting, but with proactive management, they needn’t be overwhelming.

Take stock of your financial aid package and parse out which portions require repayment.

Understanding these details is the first step towards fulfilling your obligations without compromising your financial well-being.

Remember to read the fine print and don’t hesitate to reach out to your loan servicer for clarification. They are there to help guide you through the repayment process.

This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.

Do you have to pay back FAFSA money?

Technically, FAFSA indicates how much financial aid you can qualify for. Whether you need to repay depends on the type of financial aid you received:

  • Grants and scholarships: These forms of aid do not require repayment.
  • Work-Study: These funds are earned through part-time work and do not require repayment.
  • Loans (subsidized, unsubsidized, and Direct Plus Loans): These must be repaid with interest.

It’s important to note that while grants typically don’t have to be paid back, certain circumstances, such as withdrawal from a program or changes in enrollment status, may require you to repay federal grant money.

Start filling out your FASFA properly with these tips.

Do you have to pay scholarships back?

When it comes to scholarships, the name of the game is financial support without the strings of repayment. Generally, scholarships are like gifts—they do not have to be paid back. Perfect for the undergraduate!

Scholarships are awarded for various reasons such as academic excellence, artistic or athletic talent, or involvement in community service, among others. That said, it’s imperative to understand the terms set by the scholarship provider.

Most scholarships are commitment-free, but some may carry conditions such as maintaining a certain GPA, completing a degree in a specified field, or requiring the recipient to follow through with certain obligations. If these conditions are not met, there could be repercussions, including the requirement to repay the funds.

Learn how to pay for college without loans.

Types of Financial Aid That Require Repayment

I’m not going to lie when I was looking at borrowing for financial aid for college I was confused with the names and types of aid offered. Now, I know the best course of action is to get paid to go to school.

Thankfully, there is more information readily available for this type of information rather than relying on your guidance counselor.

So, here is the info you need.

Unraveling Federal Student Loan Repayment

First, you must understand the different types of Federal Student loans to know their repayment requirements.

Each loan type has its own set of rules and repayment schedule, typically beginning after you graduate, leave school, or drop below half-time enrollment.

Federal loans boast flexible repayment options.1

  • The Standard Repayment Plan for federal loans entails a fixed monthly payment amount, ensuring that the loans are fully repaid within a standard period of 10 years, and extends to 30 years for direct consolidation loans. This plan is often the quickest way to pay off loans, providing a consistent monthly payment over the repayment term.
  • The Graduated Repayment Plan starts with lower monthly payments that increase every two years, designed to pay off all student loans within 10 years, or 30 years if it’s a direct consolidation loan.
  • The Extended Repayment Plan offers borrowers with over $30,000 in federal student loans the flexibility of fixed or graduated payments over a 25-year period.
  • If affordability is a concern, you might settle on an income-driven repayment (IDR) plan, which keys your monthly payments to your earnings and family size. Should your finances take a downward turn, relief is available through programs like deferment or forbearance, allowing you to temporarily suspend payments.

After 20 to 25 years on an IDR plan, you might even be eligible for loan forgiveness for any remaining balance. This doesn’t nullify your entire debt but can relieve a significant financial burden. Teacher Loan Forgiveness and Public Service Loan Forgiveness (PSLF) are two such avenues, provided eligibility requirements are met.

Deciphering Private Student Loan Responsibility

These private loans are offered by non-government entities such as banks, credit unions, and online lenders, and repayment rules can be more stringent. As such, it is best to start with traditional federal loans.

While you typically aren’t required to repay private student loans while you’re in school, interest accrues during this time, increasing your eventual debt. After leaving school, some lenders allow a grace period similar to federal loans, but this isn’t guaranteed. Check with your lender for specifics on repayment commencement and grace periods.

Repayment plans with private loans are usually less flexible and often lack income-driven options. Monthly payments are fixed, and lender offerings on deferment and forbearance can be less generous, with some providing no options for such measures.

This is why it is best to learn how to pay for college without parents’ help.

Scholarship System

The Scholarship System is changing how parents and students look at paying for college. 

Learn how real people found real scholarships. Their students have been awarded $12,060,000 in scholarship money (as of October 2023).

Join the Free Training

Our Review

When You Need to Start Paying Back Financial Aid

Federal Loans: Grace Periods and Repayment Plans

Federal student loans, notably, offer a six-month grace period following graduation, leaving school, or dropping below half-time enrollment status. During this period, no payments are due, offering you time to get financially settled and choose a repayment plan.

Repayment plans span the Standard, where you’ll pay a fixed amount each month for a term of usually ten years, to Graduated, where payments start lower and increase over time. Income-Driven Repayment Plans adapt to your income level, ensuring that your student loan payments are manageable relative to your earnings.

Each plan has unique advantages depending on your financial situation and long-term goals. The key is to select one that corresponds with your ability to pay, aligns with your career trajectory, and manages your debt effectively over time.

Always be proactive in contacting your loan servicer to discuss plan options or changes in your financial status.

Private Loans: Lender-Specific Timelines and Terms

Private loans come with lender-specific timelines and terms that can vary widely from one lender to another. Unlike federal loans, private loans don’t come with a standardized grace period, although some lenders may offer a similar post-graduation moratorium on payments.

Borrowers must check their loan agreements to determine when repayment should begin.

The terms of repayment for private loans are also set by the lender and typically don’t offer the same flexibility found in federal programs. Fixed and variable interest rates are based on credit scores, and while some lenders might offer loan modification options in cases of financial hardship, such policies are not universal.

Remember, with private loans, leniency for late or missed payments is not a given.

Consequences of Defaulting on Financial Aid

The Effects on Credit Scores and Future Borrowing

Missing payments, or worse, defaulting on your student loans, are red flags to future creditors that appear on credit reports and can significantly lower your credit score. A lower score can make securing further credit from lenders—whether it’s for a mortgage, a car loan, or a credit card—an uphill battle.

Moreover, the repercussions ripple outward: Not only might you face higher interest rates due to perceived risk, but landlords and employers can reference credit scores during their tenant or employment screening processes.

Maintaining on-time payments is an investment not only in your education but also in your broader financial stability and opportunities.

Legal Repercussions and Wage Garnishment Risks

Wading into the murky waters of default on student loans can unleash legal repercussions that ripple through your financial landscape. The government has tough mechanisms to recoup defaulted federal student loans, ranging from wage garnishment — where a portion of your paycheck is allocated to your debt without your consent — to seizing tax refunds and other federal benefits you may be entitled to receive.

The prospect of wage garnishment adds a level of complication to an already tense situation. In such cases, the government can legally claim up to 15% of your disposable income. This can strain your finances even more, potentially forcing you to make hard choices about your monthly budget.

These same consequences do not typically apply to private student loans, which are subject to state laws. However, private lenders can bring lawsuits against borrowers in default, leading to potential wage garnishment or asset liquidation as decided by a court.

The message is stern yet simple: Stay vigilant with student loan repayments to forestall these severe outcomes.

Options for Managing Repayment Challenges

Loan Forgiveness, Cancellation, and Discharge Opportunities

Navigating the sea of student loan debt isn’t without its lifelines. Loan forgiveness, cancellation, and discharge programs can serve as financial floatation devices, providing necessary relief in an ocean of repayment.

  • Loan forgiveness is typically occupation-specific. For instance, Public Service Loan Forgiveness (PSLF) absolves remaining federal loan debt after 120 qualifying payments for professionals in government or non-profit sectors.
  • Cancellation might occur under circumstances like your school closing prematurely or if you’ve been defrauded by the institution.2
  • Additionally, if you become totally and permanently disabled, you may qualify for a discharge, relieving you from the obligation to repay your federal student loans.

Exploring these opportunities requires patience and diligence, as each comes with strict eligibility criteria. Nonetheless, they can significantly lighten the burden of student debt.

Strategies for Keeping Student Loan Payments Affordable

Crafting a strategy to keep student loan payments within the realm of affordability hinges on exploring all available options and making informed choices. Consider the following ways to ensure your loans remain manageable:

  1. Income-Driven Repayment Plans: Federal loans offer several plans that base your monthly payment on your income, notably capping payments at a fixed percentage of your discretionary income. These plans can significantly decrease your monthly obligations if you’re starting with a lower salary.
  2. Refinancing or Consolidation: You might find a lower interest rate through refinancing, which can reduce your monthly payments and the total cost over the life of the loan. Consolidating multiple federal loans can streamline payment processes, though it may average out to a higher overall interest rate. This is what I did.
  3. Applying for Deferment or Forbearance: In times of financial hardship, job loss, or returning to school, you can apply for a temporary suspension of payments. While interest may still accrue, it can provide short-term relief.
  4. Making Extra Payments: By paying more than the minimum or making bi-weekly payments, you can reduce the principal balance faster and save on interest in the long run.
  5. Setting a Budget and Cutting Expenses: Sometimes, the most effective strategy is tightening your budget. By trimming unnecessary expenses, you may free up funds for your loan payments.

Every borrower’s situation is unique, so consider your financial circumstances and long-term goals when choosing the best strategy for you. Always maintain open communication with your loan servicer to stay abreast of changes or additional assistance programs that may become available.

Should I refinance my Student Loans?

Refinancing your student loans can be a strategic move to manage debt, potentially offering lower interest rates and different repayment terms to suit your financial situation. It involves replacing your current loan with a new one, typically through a private lender, and may provide relief if you’re struggling with high payments.

However, borrowers should carefully consider the loss of federal loan benefits, like loan forgiveness, before proceeding with refinancing their student loans.

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Making Informed Financial Aid Decisions – How to Review and Understand Your Aid Offer

When the much-anticipated financial aid offer lands in your hands, taking the time to thoroughly review and understand it ensures you’re making an informed decision. Here’s how you can break down your aid package:

  1. Identify Free Money: Distinguish between grants and scholarships that don’t require repayment from loans that do. These are the parts of your offer that you’ll want to maximize.
  2. Assess Work-Study Opportunities: If your offer includes federal work-study, understand that these funds must be earned and are not guaranteed. They depend on your finding an eligible job and fulfilling work hours.
  3. Analyze Loan Details: Look closely at the type of loans offered, their interest rates, and repayment terms. Remember, federal loans generally offer more favorable terms than private loans.
  4. Calculate Net Cost: Subtract the total aid package, excluding work-study, from the overall cost of attendance to determine what you’ll need to cover through savings, income, or additional loans.
  5. Consider Cost of Living: Ensure that you take into account living expenses and indirect costs like books and supplies when reviewing your aid offer.

If anything is unclear, don’t hesitate to contact the school’s financial aid office for clarification. The goal is to fully understand your commitments before accepting any part of the aid offer.

Remember Not All Financial Aid Offers Must Be Accepted

Not every portion of the financial aid offered to a student needs to be accepted.

It’s crucial to carefully evaluate the components of the financial aid package, as some elements, such as loans, will need to be repaid with interest. Ultimately, it’s important to make informed decisions about which types of aid to accept based on one’s financial circumstances and long-term educational costs.

Frequently Asked Questions (FAQ)

FAFSA, the Free Application for Federal Student Aid, is a form that determines your eligibility for different types of financial aid, not money in itself.

Some aid offered via FAFSA does not need to be repaid, like grants and scholarships, while other types, such as federal student loans, do require repayment with interest.

If you withdraw from college, your student loans remain in place and need repayment.

Following withdrawal, usually a six-month grace period for federal loans before repayments start. However, interest may accrue during this time, except for subsidized federal loans, which don’t accumulate interest until after the grace period.

Yes, FAFSA loan debt, which generally refers to federal student loans obtained through the FAFSA application process, can be forgiven, canceled, or discharged under certain conditions, such as public service work, teaching in low-income areas, or permanent disability.

However, these options have specific eligibility requirements. So, be careful and read the fine print.

If you don’t pay back financial aid that is in the form of a loan, you risk defaulting, which can lead to wage garnishment, withheld tax refunds, lowered credit score, and other financial consequences.

It can make future borrowing more difficult and become a legal issue. Always seek help before defaulting.

What Happens If You Don’t Pay Back the Financial Aid?

If you don’t pay back financial aid that is in the form of a loan, you risk defaulting, which can lead to wage garnishment, withheld tax refunds, lowered credit score, and other financial consequences.

It can make future borrowing more difficult and become a legal issue. Always seek help before defaulting.

Source

  1. Federal Student Aid. “Federal Student Loan Repayment Plans.” https://studentaid.gov/manage-loans/repayment/plans. April 28, 2024.
  2. Student Loan Borrower Assistance. “Borrower Defense to Repayment.” https://studentloanborrowerassistance.org/for-borrowers/dealing-with-student-loan-debt/loan-cancellation-forgiveness-bankruptcy/cancellation-forgiveness-options/borrower-defense-to-repayment/. April 28, 2024.

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More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!

Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.

Source: moneybliss.org

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The following is a sponsored partnership with Kudos. Have you heard about Kudos – the free AI-powered wallet that helps you get more out of your credit cards? In this Kudos Review 2024, I’ll explain how this desktop browser extension and iPhone app helps you earn the maximum rewards and benefits when shopping online. With…

The following is a sponsored partnership with Kudos.

Have you heard about Kudos – the free AI-powered wallet that helps you get more out of your credit cards? In this Kudos Review 2024, I’ll explain how this desktop browser extension and iPhone app helps you earn the maximum rewards and benefits when shopping online. With the average Kudos member earning $750 per year, you won’t want to miss out on this game-changing tool!

With Kudos, you can always choose the best card for maximum rewards at checkout, easily autofill your card information (including CCV) with just one click, find new cards that match your shopping preferences, and more.

Plus, Kudos has helped its members earn $150 million in rewards and counting!

The best part? Kudos is completely free. That’s right—no hidden fees. Just shop like you normally do, and Kudos automatically helps you during checkout to maximize your rewards.

If you don’t want to leave money on the table, there’s no reason not to use Kudos to take the guesswork out of deciding which credit card to use for each online purchase.

Personally, I find Kudos incredibly helpful. As someone with multiple rewards credit cards, each with their own unique benefits, Kudos saves me a ton of time by instantly identifying the best card to use for each transaction. This not only simplifies my life but also helps me earn more money!

This is great so that you are using the full potential of your credit cards.

And, even if you only have one credit card, Kudos is still helpful! This is because, at many online stores, you can still double your rewards for using the Kudos browser extension and earn points to put towards free gift cards.

You can download Kudos for free by clicking here. Plus, use code “CENTS” to earn $20 back after your first eligible Boost purchase.

Key Takeaways from this Kudos Review 2024

  • Kudos is a free AI-powered wallet that maximizes your credit card rewards when you shop online, whether you’re buying groceries, clothing, travel packages, furniture, or anything else—all with a single click.
  • With Kudos, you no longer have to guess which credit card to use for each purchase. Just shop like normal and Kudos will automatically recommend the best card to make sure you always earn the highest cashback, points, or miles on every transaction.
  • Kudos supports over 2 million stores, so you’re virtually guaranteed to find your favorite retailers and maximize your rewards with them.
  • Even if your credit card doesn’t typically offer rewards, you can still earn rewards by shopping through the Kudos browser extension at participating merchants.
  • Kudos is compatible with all major desktop browsers (Chrome, Safari, Edge) and is also available as an iPhone app, making it easy to boost your credit card rewards across every device.

Kudos Review 2024

Below is my Kudos review.

What is Kudos?

Kudos (also known as Kudos Technologies, Inc.) is a helpful AI-powered browser extension and app designed to help you make the most of your credit cards, particularly when shopping online. It was founded by Tikue Anazodo and Ahmad Ismail, and Kudos has been featured on Forbes, Yahoo Finance, Bloomberg, The Motley Fool, Nasdaq, and more.

Think of it as a smart wallet for your browser. Driven by the complex world of credit card rewards, the Kudos team created this tool to simplify the process.

Here’s how it shines: Select the cards you commonly use (without the need for any sensitive bank details) and Kudos tells you which one to use at checkout. You see, your cards might be packed with potential rewards for different spending categories—travel, groceries, or dining.

Different credit cards have so many different benefits (such as the rewards percentage, extended warranties, purchase protection, insurance, and more), which can be difficult to keep track of.

Kudos makes sure you’re using the best card possible to earn the most rewards, which is especially useful if you have more than one rewards credit card.

Members have collectively earned over $150 million in rewards with Kudos. On a personal level, you could boost your annual shopping rewards by an average of $750 just by using Kudos.

Plus, Kudos is super user-friendly. You can add it to your preferred desktop browser (Chrome, Safari, Edge) or use it on your iPhone, and it’s completely free. The service makes money by earning a small commission when you shop at participating stores or sign up for a card through their recommendations.

When you shop without Kudos, you could be missing out on opportunities to earn rewards with your purchases. Why miss out on potential earnings when Kudos provides a free and simple solution?

Kudos also has a really helpful Instagram account full of helpful credit card tips. I highly recommend checking that out here.

How Kudos works

Imagine you’re online shopping, ready to checkout, and you pause, thinking, which credit card do I use? That’s where Kudos steps in, always there to give you the best advice.

Kudos knows your cards and suggests which one to use at checkout. But how? First, you add your credit cards to the Kudos wallet. It’s safe and simple. When it’s time to buy something, Kudos pops up and says, “Hey, use this card!” Why? Because it’s the card that will give you the most rewards or savings for that purchase.

Here are the steps to get started:

  1. Download the Kudos browser extension (takes less than a minute to do) on your desktop browser (Chrome, Safari, Edge) or iPhone. You’ll also answer basic questions like your name and the type of credit card you have (such as the Chase Freedom card).
  2. Shop like you normally do.
  3. Once you’re ready to checkout, Kudos will automatically appear to let you know which credit card you should use to get the most rewards and benefits.
  4. Click the card you want to use and Kudos will then autofill the card info, making checkout a breeze.

What stores does Kudos work on?

Kudos works at over 2 million online stores and with over 3,000 credit cards – so there’s a very good chance that it’ll work for you.

Don’t see a store supported or can’t find your card? Their support team is super responsive and will help you out!

After I told Kudos what credit card I wanted to add, the site then told me what benefits I have.

Kudos vs. other rewards tools: What sets Kudos apart?

When it comes to maximizing credit card rewards, Kudos stands out from other popular tools like Rakuten, Honey, and Capital One Shopping.

While these platforms primarily focus on providing cashback offers or coupon codes, Kudos takes a more comprehensive approach to optimize your entire credit card strategy.

What sets Kudos apart is its AI-powered technology that analyzes your specific credit cards and spending habits to recommend the best card for each purchase.

This makes sure that you’re not only earning cashback but also maximizing your points, miles, and other card-specific perks. By considering factors like bonus categories, statement credits, and exclusive benefits, Kudos helps you get the most value out of your credit cards.

Key Features of Kudos

When shopping online, you want to stretch your dollar as far as it can go. Kudos has features that make this easy by helping you get the most out of your credit cards such as:

Maximize your credit card rewards

When you’re shopping online, Kudos helps you pick the best card to use to maximize your rewards and benefits.

With Kudos, you no longer have to guess which credit card to use. This AI-powered wallet automatically recommends the best card for each purchase, making sure you always receive the highest cashback, points, or miles possible.

I personally didn’t even know that one of my credit cards had some of the benefits that Kudos listed, and I can’t believe I had been wasting so much money by skipping out on such a valuable benefit! Kudos makes it very easy for me to see my card’s benefits all in one easy place.

Plus, if you’d like, you can add your credit card information to Kudos, and Kudos will autofill your card info (including CCV) to make checking out fast.

Another way that Kudos helps you earn more rewards is because Kudos helps you build your Dream Wallet so you can get the most out of your everyday purchases. You’ll go through a quick quiz to help Kudos gather information about your needs.

Double your rewards with Kudos Boost

With Kudos, you can increase the amount you can get in credit card rewards with just one click.

If you usually earn 4% cash back when shopping at sites like Walmart or Sephora, you’ll now earn a total of 8% back with Kudos Boost. The best part? You can earn Boost at participating stores even if your card doesn’t offer its own rewards.

Kudos Boost are reward points you earn by shopping at Boost merchants.

It works like this:

  1. Shop at one of Kudos’ 15,000 participating Boost merchants
  2. Click “Activate Boost” on the bottom right corner of the screen
  3. Use Kudos at checkout – At checkout, Kudos will find your best credit card to use, autofill the payment forms, and match your credit card rewards.
  4. Redeem rewards for a gift card

You’ll receive an email from Kudos around 1-2 days after completing an eligible transaction. After the store confirms your purchase it usually takes between 60 to 120 days for your rewards to be available, and you can then find your rewards on your Activity page on Kudos.

When you’ve earned 1,000 Kudos Boost points (equal to $10.00 USD), you can exchange them for an Amazon gift card.

Receive personalized credit card recommendations

Stop wasting time opening up credit card application pages on incognito. You can receive access to elevated card offers on Kudos’ Explore Tool through their partnership with The Points Guy.

So, if you are looking for a new credit card, use Kudos to help filter the best one for you and your situation and compare different cards in one easy place.

For example, Kudos member Christina L. was able to get 150,000 Membership Rewards points after spending $6,000 on the Amex Platinum card within the first three months of account opening. That’s almost double the 80,000 points after spending $8,000 found on the American Express website!

Answer all your credit card questions with MariaGPT

Maria GPT is an AI-powered, personalized assistant designed to answer all your credit card questions, available on the Kudos mobile app.

She can help you understand the benefits of your current cards and offer personalized suggestions for new cards based on your spending habits, goals, and objectives.

Frequently Asked Questions about Kudos Review 2024

Below are common questions about Kudos, the free AI-powered wallet.

Is Kudos free to use?

Kudos is free to use.

How does Kudos make money?

Kudos earns a small affiliate commission when you make an online purchase at one of their participating merchants. Additionally, if you use the Kudos Explore Tool to apply for a new credit card, Kudos may receive a payment from the credit card issuer.

Is there a Kudos referral code?

Yes! Sign-up for Kudos for free and use the Kudos referral code “CENTS” to earn $20.00 back after your first eligible Boost purchase.

How much can you earn with Kudos?

On average, Kudos members earn $750 per year in rewards by using the app to maximize their earnings.

Do I need to provide my credit card numbers to use Kudos?

No, you don’t need to enter your credit card numbers to use Kudos. Simply select the cards you have in your wallet, and Kudos will help you maximize your benefits at checkout. Providing your credit card information is optional if you want to speed up the checkout process.

Can I use Kudos with other browser extensions?

If you use Kudos Boost and then activate another rewards program like Rakuten, Honey, Capital One Shopping, or others during the same shopping session, Kudos may not be able to earn an affiliate commission. To make sure you get maximum rewards, it’s best to use Kudos exclusively during your online shopping.

Is Kudos wallet legit?

Yes, Kudos is a legitimate browser extension and app used by over 200,000 shoppers who have earned over $150 million in rewards. You can find genuine user reviews on trusted platforms like Trustpilot, Chrome Web Store (4.8/5 stars from 667+ reviews), and the Apple App Store (4.7/5 stars from 3,500+ reviews).

Is Kudos safe and secure?

Yes, Kudos prioritizes user security and employs industry-leading protocols, including bank-grade 256-bit encryption, to safeguard your data. Kudos handles your personal and financial information with the utmost care and never sells or shares it with third parties. You can feel confident and secure when using the Kudos browser extension and app.

My Kudos Review 2024: Final Thoughts

I hope you found this Kudos review informative and helpful in understanding how this AI-powered wallet can help you maximize your credit card rewards.

Navigating the world of credit card rewards can be overwhelming, but Kudos simplifies the process with its intelligent recommendations. By analyzing a database of over 3,000 cards, Kudos ensures you always use the best card for each purchase, boosting your rewards effortlessly.

In addition to its AI-driven recommendations, Kudos streamlines your online shopping experience with a one-click autofill feature. This not only saves you time but also guarantees that you’re always using the card with the most advantageous benefits for each transaction.

Personally, I find Kudos to be a must-have shopping tool. As someone with multiple rewards credit cards, each with their own unique perks, trying to determine which card to use for every purchase can be time-consuming and confusing. Kudos eliminates this hassle by automatically identifying the best card for each transaction, allowing me to maximize my rewards efficiently.

Even if you only have a single credit card, Kudos can still help you earn more rewards. By shopping through the Kudos browser extension at thousands of participating online stores, you can accumulate points that can be redeemed for free gift cards. This means that regardless of how many credit cards you have, Kudos enables you to optimize your rewards earning potential.

Kudos also helps users find new credit cards through its partnership with The Points Guy, a well-known credit card rewards and travel website. By using the CardMatch service, Kudos helps users find the best credit card offers tailored to their specific needs and spending habits. This feature is particularly useful for those looking to expand their credit card portfolio and maximize their rewards earning potential across multiple cards.

You can sign up for Kudos for free by clicking here.

Do you use Kudos? What other questions do you have for this Kudos review?

Source: makingsenseofcents.com