Create Your Path to Financial Success

A new year usually means new year’s resolutions. But we’re wary of new year’s resolutions, because they’re often hard to keep. We have a much better and easier way for you to meet your 2024 goals. So let’s get started!

Consolidated Credit is a HUD Approved, nationally recognized Housing and Credit counseling agency.  We are headquartered in Fort Lauderdale, FL and our mission is to assist families throughout the United States in ending financial crisis, and solving money management problems through education and professional counseling.

The problem with new year’s resolutions is that they require superhuman effort to resist temptation. That’s probably why most resolutions never make it past the first quarter of the year. When it comes to improving your finances, we prefer to show you how to create a path to financial success that doesn’t mean denying yourself fun and enjoyment.

As it turns out, finances is the second-most popular new year’s resolution, after physical fitness. In third place is mental health, which we often see tied to financial health. Stress over money has been proven to affect your mental health. So if we can set you on a path to financial freedom, it’s possible we can help you achieve two of those three goals.

Before we talk about making more money and spending it better, let’s talk about money itself. You know the expression, “Money can’t buy happiness”? Well, it’s true – if you don’t know what really, truly makes you happy. The problem is, we buy things that make us happy only for a short time. We don’t prioritize the things that TRULY make us happy.

It’s no great revelation that friends and family are important. But we sometimes think we can buy their affection with expensive gifts. Or we convince ourselves we need to buy expensive items to give our children a leg up in the world. That’s simply not true. The best thing you can give to your family is a debt-free life. For starters, being debt-free means less stress for you, which means you’ll be in a better mood. You’ll be able to focus on your loved ones and not worry about money. Then there’s the lesson you’re passing onto your children and young relatives. You’re living within your means, and you’re leading by example.

You can’t save money until you know how much you earn and how much you spend. Poll after poll shows that three-fourths of households keep a budget, and one-fourth doesn’t.  Now, no one likes to hear the words, “make a budget.” But it’s so easy to do these days. If you don’t relish the idea of putting pen to paper, there are scads of websites, apps, and programs that handle the drudgery of budgeting. Many of them cost nothing, and the ones that do charge, well, it only costs a few dollars. Here’s how they work.

There are a lot of free apps that are safe and proven. They have names like Goodbudget, EveryDollar, and Empower, and they all charge extra for their “plus plans.” But most people don’t need those extras. Besides, a lot of banks and credit unions offer similar programs on their websites for their customers. And those are totally free. But how do they work?

These apps safely sync with most bank accounts, so they automatically pull in your financial data — all with tight security. Then, you just type in your income and expenses, and these programs do the math for you. You can even project your savings if you eat one less takeout dinner, or if you refinance your mortgage. The software does the heavy lifting!

When you hear “financial success,” you think about investing in the stock market or launching a business. But financial success can come much easier than that, and with much less risk. Even better, there are experts who will help you. I know that sounds too good to be true, so let me explain how it works.

The number one way to save money is to get out of debt. That sounds odd until you consider this: The average credit card is charging you 25 percent interest right now. That’s just the average, which means some people pay more. So the easiest way to save money is to pay off your steep credit card balances. You’ll instantly save up to $1 for ever $4 in balances. That’s a return on investment every stockbroker would be jealous of!

Of course, it’s easy to KNOW you should pay off your credit cards. It’s much harder to actually do it. Thankfully, you have help. There are proven programs that have gotten millions of Americans out of debt. It’s a little surprising more people don’t know about them, but that’s probably because they all have similar-sounding names, and that can be confusing. Let’s un-confuse them for you. There are three main programs: debt consolidation, debt management, and debt settlement. Let’s review them now, and you’ll see how you can save a lot of money in just a few minutes.

A debt consolidation loan is simply a personal loan you use to pay off all your credit card bills with steep interest rates. You might be able to get a personal loan of between 36 and 60 months from your bank or credit union at 6 or 8 percent, then use the money to pay off your credit cards that are charging you 20 or 25 percent. Then you simply make one monthly payment on the personal loan. Usually, you get out of debt faster AND make a smaller monthly payment, which is the definition of a win-win. It’s not a perfect solution, though. If you have too much debt and bad credit, no one will give you the loan in the first place. In that case, you might want to try our next option…

A debt management program, or DMP for short, is basically an agreement between you and your credit card company. They’ll freeze your penalty fees and lower your interest rate if you agree to make regular payments. Those payments go through a credit counseling agency you partner with, and you make one payment that covers any credit cards you put under the DMP. So you pay less and save time, too. So what’s the catch? DMPs aren’t free. It costs money for staff to administer them. But that fee is rolled into your monthly payments, and it’s miniscule next to the savings you’ll reap. That’s probably why DMPs have been around for decades, and they’ve saved Americans millions of dollars. Sadly, you can’t just sign up for a DMP on your own. The credit card companies work exclusively with nonprofit credit counseling agencies.

Debt settlement is the next step up in both results and complexity. Debt settlement seems like the best option of them all. In a nutshell, you negotiate with your creditors and pay them only a fraction of what you owe. Why would your creditors agree to this? Because they don’t want you going broke and paying nothing. The national average over the past few years is 48 percent – which means most folks in debt settlement don’t pay back 52 percent of their debts. Sounds like a great deal, right? Sadly, it’s not always the case. Because debt settlement is now being advertised so widely, it’s worth spending a few moments reviewing the three major downsides.

First, some creditors will outright refuse to settle with you. And they don’t have to. Second, while a DMP doesn’t hurt your credit score longterm and can actually help it, debt settlement will RUIN your credit score. You’ll have trouble getting a decent mortgage, auto loan or even credit card. Finally, debt settlement has many ethical practitioners, but there are also many scams out there that you need to watch out for.

Before we move onto how to save money and safely invest it, let me reassure you: At the end of this presentation, we’ll point you to experts who can help you with everything we’ve just talked about and everything we’re gonna talk about next. So don’t panic if you didn’t totally understand everything.

Now let’s talk about saving. Why not get paid while you’re saving money? More than 9 in 10 Americans are paid through direct deposit, and almost all of them have access to a neat feature: You can direct some of that money AWAY from your checking account. You can send it DIRECTLY to a savings account you don’t normally see. Imagine if you send even $10 a week to a savings account. At the end of the year, you’ll have more than $500. And you literally spent a few minutes setting it up, then did nothing the rest of the year!

Direct deposit also works very well when you get a raise. Just divert that extra money into a savings account. You won’t be tempted to spend it because you never got used to having it, and you don’t constantly see it in your checking account. To set up multiple direct deposit streams, simply talk to your Human Resources or payroll department. They can walk you through this easy process. It’s basically a form you fill out, sometimes on your work computer. Then you’re good to go.

All right, now let’s talk investing instead of saving. Where you work might offer valuable services that can save you big. One of the most popular is a 401(k), which helps you save for retirement. What’s so special about a 401(k)? Many employers match a portion of your contribution to this retirement account.

According to government research, the average is 4.3 percent. That means for every dollar you sock away for later, you get 43 cents. Doesn’t sound like much, but when you consider a savings account is paying less than 1 percent in interest these days, that’s suddenly a lot. Also, the IRS gives you some money, too: It doesn’t tax you on what you contribute. And since this is for your retirement, which is a long way’s off, those savings will build up over time.

All you need to do is ask your Human Resources department how to get started. You fill out some paperwork, set aside maybe 1 or 2 percent of your salary automatically, and suddenly you’re saving money. Even better, you don’t notice it’s gone, because it comes off the top of your paycheck. Ask your HR department about 401(k)s as soon as you can.

A 401(k) isn’t just a tax-free way to save for retirement, and the employee match isn’t the only way to make money. You also invest your savings inside the 401(k). In other words, the money doesn’t just sit there like a savings account, earning a little interest over time. No, you get to choose different ways to invest your 401(k) – from safer to riskier.

Depending on your 401(k), you can invest in different ways. For instance, you can invest in stocks (which are riskier) and bonds (which are safer). But historically, stocks can usually make you more money than bonds. What’s the difference? A stock gives you partial ownership in a company, while a bond is a loan from you to the government. So stocks can keep rising, while a bond’s return is determined when you buy it. Of course, those stocks can lose value, too. That makes them riskier but potentially more profitable.

In all kinds of investing, “risk tolerance” is an important concept. Simply put, risk tolerance is how much of a financial loss you’re willing to endure if it means a good chance at making a huge gain. There are three broad categories of risk tolerance: aggressive, moderate, and conservative. Most people start off conservative as they learn how investing works, and we fully endorse that idea. Otherwise, it’s like going all-in during a poker tournament when you’ve never played poker before.

If your head is already starting to spin, don’t fret. If your employer offers a 401(k), they often don’t start it up on their own. They work with big financial companies you’ve probably heard of: Vanguard, Fidelity, Merrill. These 401(k) providers offer a range of educational services. They won’t tell you what exactly to invest in, but they’ll help explain the concepts. Some even offer online quizzes to help you determine your risk tolerance. And all of this is free.

Before we stop talking about how your workplace can help you save money, there’s  one other benefit we quickly want to mention. It’s called a Health Savings Account, or HSA. It does the same thing as a 401(k), except you set aside money for healthcare instead of retirement.

We could spend an entire webinar talking about these lucrative benefits, but we suggest you chat up your HR department. Believe it or not, they WANT you to take their money. Why? Because companies that offer these benefits know their employees will appreciate them. Those employees are more likely to stick around and work hard. So let your bosses help you save! Just talk to your HR department. They WANT to help.

So we reviewed a lot today in a very short time. We talked about how much you can save by simply getting out of debt. We showed you easy ways to save without having to think about it all the time. And we revealed ways to invest for your own retirement. But what if you don’t remember all that?

Thanks for taking the time today to learn about how to make 2024 the year you start walking the path to financial freedom…