The student loan moratorium, also known as a suspension or pause in loan payments, was a temporary relief measure implemented in response to the COVID-19 pandemic. It was introduced to provide financial assistance and alleviate the burden on borrowers who were facing economic hardships and uncertainty during the crisis. The moratorium aimed to offer some breathing room for individuals struggling with their student loan repayments, allowing them to redirect their resources towards more immediate needs.
Under the moratorium, borrowers were granted a suspension of their monthly loan payments, and in some cases, interest accumulation on their federal student loans was also temporarily halted. This relief measure was initially enacted by the U.S. Department of Education and later extended by Congress through legislative actions.
The primary objective of the student loan moratorium was to provide relief to millions of borrowers, recognizing the unprecedented challenges posed by the pandemic. The sudden economic downturn, job losses, and financial instability faced by many individuals made it difficult for them to meet their financial obligations, including student loan payments.
The moratorium period varied over time, but during its duration, borrowers were not required to make payments towards their federal student loans. This temporary suspension offered much-needed financial relief to countless individuals, allowing them to allocate their resources towards essentials such as housing, healthcare, and basic necessities.
It is important to note that the moratorium applied to federal student loans, including Direct Loans, Federal Family Education Loans (FFEL), and Perkins Loans. Private student loans, which are issued by private lenders, were generally not subject to the moratorium unless the lenders voluntarily provided relief options.
As the pandemic progressed and the situation evolved, discussions and debates around student loan relief and forgiveness gained momentum. Advocates argued for more comprehensive measures, including potential forgiveness of a portion or all of the outstanding student loan debt. However, the student loan moratorium, although a temporary measure, provided immediate relief for borrowers during a time of immense financial strain.
Now that the moratorium has come to an end, borrowers are faced with the resumption of their student loan payments. This transition presents new challenges and considerations for individuals who must navigate the post-moratorium landscape, evaluate their financial situation, and explore available repayment options.
The end of the student loan moratorium marks a significant turning point for borrowers and raises important discussions about the long-term impact of student loan debt on individuals, families, and the broader economy. As borrowers resume their repayment obligations, it becomes crucial to understand the support and resources available to navigate this transition effectively.
The end of the Student Loan moratorium and its implications
The announcement of the end of the student loan moratorium has significant implications for millions of borrowers who have been relying on this temporary relief measure. As the moratorium draws to a close, borrowers are now required to resume their monthly student loan payments, signaling a shift in their financial responsibilities and obligations.
For many borrowers, the end of the moratorium means a resumption of financial strain and the need to adjust their budgets accordingly. The relief provided by the suspension of student loan payments allowed individuals to redirect their limited resources towards other essential needs, such as rent or mortgage payments, utilities, groceries, and healthcare. With the end of the moratorium, borrowers will have to re-prioritize their financial commitments and allocate funds towards their student loan repayments once again.
The implications of the moratorium’s end extend beyond individual borrowers. The resumption of student loan payments is expected to have a broader impact on the economy as well. As borrowers redirect their income towards loan repayments, their disposable income may decrease, which could affect consumer spending patterns. This reduction in spending can potentially impact various sectors, such as retail, hospitality, and services, which rely heavily on consumer activity.
Moreover, the end of the moratorium raises questions about the potential financial stability of borrowers. Some individuals may face difficulties in transitioning back to repayment, especially if their financial situation has not improved significantly since the onset of the pandemic. Unemployment rates, underemployment, and wage stagnation in certain industries continue to be ongoing challenges that can hinder borrowers’ ability to meet their loan obligations.
Additionally, the end of the moratorium may renew conversations and debates surrounding student loan forgiveness and broader reforms in the education financing system. Advocates for comprehensive student loan relief argue that the moratorium was a temporary measure and that a more substantial solution is needed to address the underlying issues of student debt. The conclusion of the moratorium serves as a reminder of the persistent challenges faced by borrowers and the potential need for more significant policy changes to alleviate the burden of student loans.
While the end of the moratorium presents challenges and uncertainties, it also serves as an opportunity for borrowers to reassess their repayment strategies and explore available resources. Borrowers are encouraged to consider various repayment options, such as income-driven repayment plans, loan consolidation, or refinancing, which can help make their monthly payments more manageable based on their current financial circumstances.
Furthermore, it is essential for borrowers to seek out financial literacy resources and guidance to better understand their rights and responsibilities as they navigate the post-moratorium phase. Loan servicers and financial aid offices can provide valuable information about repayment options, loan forgiveness programs, and other support services available to borrowers.
Background on the student loan moratorium
The moratorium’s initiation during the COVID-19 pandemic
The student loan moratorium was initiated as a response to the economic fallout caused by the COVID-19 pandemic. As the pandemic spread globally in early 2020, it resulted in widespread job losses, furloughs, and financial uncertainty. Many borrowers found themselves struggling to make ends meet and were at risk of defaulting on their student loan payments.
Recognizing the unprecedented challenges faced by borrowers, the U.S. Department of Education, along with other government entities, swiftly implemented a moratorium on federal student loan payments. The moratorium was initially enacted in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which aimed to provide financial assistance and relief to individuals and businesses affected by the pandemic.
What was the purpose and goals of the moratorium?
The primary purpose of the student loan moratorium was to alleviate the financial burden on borrowers during a time of economic crisis. The moratorium aimed to provide immediate relief to individuals facing job loss, reduced income, or other financial hardships caused by the pandemic.
By suspending student loan payments, the moratorium aimed to free up financial resources for borrowers to address more pressing needs, such as healthcare expenses, housing costs, and basic necessities. It provided a temporary reprieve from the obligation to make monthly loan payments, offering some financial stability during an uncertain and challenging period.
Key provisions and benefits provided to borrowers
The student loan moratorium came with several key provisions and benefits to assist borrowers:
Suspension of Loan Payments: Under the moratorium, borrowers were not required to make monthly payments on their federal student loans. This suspension period varied over time but typically lasted several months, providing immediate relief from the financial burden of loan repayment.
0% Interest Accrual: In certain cases, the moratorium also included a temporary halt to the accumulation of interest on eligible federal student loans. This meant that during the moratorium period, interest did not accrue on the outstanding loan balance, reducing the overall cost of borrowing for borrowers.
Administrative Forbearance: The Department of Education automatically placed eligible borrowers in an administrative forbearance status during the moratorium. This allowed borrowers to temporarily pause their loan payments without penalty or negative impact on their credit scores.
Suspension of Collection Activities: The moratorium also included a suspension of collection activities on defaulted federal student loans. This meant that collection calls, wage garnishments, and other debt collection efforts were halted during the moratorium period, providing further relief to borrowers in financial distress.
These provisions and benefits provided borrowers with significant financial relief and helped alleviate the immediate burden of student loan repayments. The moratorium played a crucial role in assisting individuals during the challenging times brought on by the pandemic, allowing them to focus on their well-being and navigate the economic uncertainties with greater financial stability.
It is important to note that the specific details and provisions of the student loan moratorium varied based on the legislation and subsequent executive actions taken by the government. Borrowers were encouraged to stay informed about the latest updates and guidance from the Department of Education and loan servicers to fully understand the benefits and provisions applicable to their specific situation.
Changes and challenges after the end of the Student Loan moratorium
Resumption of student loan payments
With the end of the student loan moratorium, borrowers are required to resume their monthly student loan payments. This transition marks a significant change in financial obligations for millions of borrowers who have relied on the temporary relief provided by the moratorium.
Borrowers will need to adjust their budgets and allocate funds to cover their student loan payments once again. For many, this means reevaluating their financial priorities and making necessary adjustments to accommodate the added expense. The resumption of payments can have a substantial impact on individuals’ cash flow, particularly for those who were relying on the moratorium to meet other financial obligations, such as rent or mortgage payments, utilities, and daily living expenses.
Impact on borrowers’ financial situation
The end of the moratorium can have varying impacts on borrowers’ financial situations depending on their individual circumstances. For some, the resumption of student loan payments may be manageable, especially if they have experienced improvements in their financial standing since the onset of the pandemic. However, for others who continue to face financial challenges, the resumption of payments can exacerbate their financial stress.
Borrowers who have experienced job losses, reduced income, or ongoing financial instability may find it particularly difficult to meet their loan obligations. The burden of student loan payments can hinder their ability to cover basic living expenses and address other financial priorities. This can lead to increased financial strain, the need to make tough choices about resource allocation, and potential challenges in maintaining overall financial well-being.
Potential challenges in transitioning back to repayment
The end of the student loan moratorium presents several potential challenges for borrowers as they transition back to repayment:
Financial Adjustment: After a period of not making payments, borrowers will need to readjust their budgets to accommodate the reinstated student loan payments. This adjustment may require careful planning and evaluation of other financial obligations and discretionary spending.
Income and Employment Uncertainty: Some borrowers may still face income and employment uncertainty as the effects of the pandemic continue to linger. Job market fluctuations, reduced working hours, or difficulties finding stable employment can impact borrowers’ ability to meet their loan payments.
Accumulated Interest: Depending on the specifics of the moratorium and the type of loans, interest may have accrued on the outstanding loan balance during the suspension period. This accumulated interest can increase the overall amount owed, making it important for borrowers to understand how it affects their repayment plans.
Lack of Financial Preparedness: The moratorium may have provided a temporary reprieve from loan payments, but it also meant that some borrowers may not have been actively managing their loans or preparing for future repayment. The transition back to repayment requires borrowers to gather the necessary information, assess their repayment options, and ensure they have a clear understanding of their obligations.
To navigate these potential challenges, borrowers are encouraged to seek support and resources. Loan servicers, financial aid offices, and financial counseling services can provide guidance on available repayment options, loan consolidation, or income-driven repayment plans. It is crucial for borrowers to proactively engage with these resources to ensure a smooth transition and mitigate any potential financial difficulties.
The end of the student loan moratorium brings about changes and challenges for borrowers. The resumption of payments requires adjustments in budgets, potentially impacts borrowers’ financial situations, and presents obstacles in transitioning back to repayment. However, with careful planning, access to resources, and a proactive approach to managing student loans, borrowers can navigate these challenges and work towards achieving financial stability.
Political and economic considerations
Government and legislative actions surrounding the moratorium’s end
The end of the student loan moratorium has been accompanied by various government and legislative actions. As the expiration date of the moratorium approached, policymakers and lawmakers engaged in discussions and decision-making processes regarding the future of student loan relief measures.
Government agencies, such as the U.S. Department of Education, have provided guidance and information to borrowers about the expiration of the moratorium and the resumption of loan payments. They have communicated updates on repayment options, loan forgiveness programs, and resources available to assist borrowers during the transition.
Legislative actions have also been taken to address the broader issue of student loan debt. Some lawmakers have proposed bills aimed at extending the moratorium or implementing additional relief measures to alleviate the burden of student loans. However, the outcome of these proposals and legislative debates remains subject to the political landscape and ongoing negotiations.
Debate and discussions regarding student loan forgiveness
The end of the student loan moratorium has reignited debates and discussions surrounding student loan forgiveness. Advocates for widespread student loan forgiveness argue that the pandemic has further highlighted the systemic issues associated with student debt and the need for a more comprehensive solution.
Supporters of student loan forgiveness argue that forgiving a portion or all of the outstanding student loan debt could provide substantial relief to borrowers, stimulate the economy, and address socioeconomic disparities. They argue that student loan debt has hindered individuals’ financial well-being, hindered their ability to invest in the economy, and limited their opportunities for homeownership and saving for the future.
Opponents of student loan forgiveness argue that it could have unintended consequences, such as moral hazard, where borrowers are less incentivized to make responsible financial decisions if they believe their loans will be forgiven. Additionally, critics contend that student loan forgiveness may disproportionately benefit higher-income individuals who have pursued advanced degrees, rather than those who truly face financial hardship.
The debate on student loan forgiveness remains a contentious issue, with differing opinions on the most effective approach to addressing the challenges associated with student loan debt.
Economic impact of resumed student loan payments
The resumption of student loan payments following the end of the moratorium has potential economic implications. As borrowers redirect their income towards loan repayments, their disposable income may decrease. This reduction in spending can have a ripple effect on various sectors of the economy, including retail, hospitality, and services that rely on consumer activity.
Additionally, the resumption of loan payments may impact borrowers’ ability to engage in other economic activities, such as homeownership, saving for retirement, or pursuing higher education. The financial strain of student loan repayment can limit individuals’ capacity to invest in these areas, potentially impacting long-term economic growth and personal financial stability.
However, the economic impact of resumed student loan payments must be considered within the broader context of the entire student loan system. The potential benefits of loan repayments include the replenishment of funds for future lending, enabling educational access for future students. Balancing the economic consequences with borrowers’ financial well-being and addressing the systemic challenges of student loan debt remains a complex issue that requires thoughtful consideration.
The end of the student loan moratorium has prompted political and economic considerations. Government agencies and lawmakers have taken actions surrounding the moratorium’s end, while debates on student loan forgiveness continue to shape the discourse. The economic impact of resumed student loan payments must be evaluated in the context of borrowers’ financial well-being and the broader challenges associated with student loan debt. As discussions and actions on student loan relief continue, finding a balanced approach that addresses both individual and systemic concerns remains a critical goal.
Support and resources for borrowers
Information on repayment options and loan forgiveness programs
In the face of the end of the student loan moratorium, borrowers have access to a range of repayment options and loan forgiveness programs. It is crucial for borrowers to gather relevant information and understand the options available to them. Government agencies, such as the U.S. Department of Education, provide comprehensive resources on their websites to help borrowers navigate the repayment process.
Repayment options may include income-driven repayment plans, which base monthly payments on borrowers’ income and family size. These plans can help make payments more affordable and manageable, especially for those with lower incomes. Additionally, loan consolidation or refinancing may be viable options for borrowers seeking to streamline their loans or secure more favorable terms.
Loan forgiveness programs are also available for certain borrowers who meet specific criteria. These programs, such as Public Service Loan Forgiveness (PSLF) or Teacher Loan Forgiveness, provide opportunities for borrowers to have a portion or all of their loans forgiven after fulfilling certain requirements, such as working in qualifying public service or educational roles for a designated period.
Importance of financial literacy and seeking assistance
Financial literacy plays a vital role in navigating student loan repayment and making informed financial decisions. Borrowers should seek out educational resources and workshops to enhance their understanding of loan terms, repayment options, and long-term financial planning.
Financial aid offices at educational institutions can provide guidance and support to borrowers, assisting them in understanding their rights and responsibilities. Additionally, nonprofit organizations and online platforms offer free or low-cost financial literacy resources that can empower borrowers to make informed choices about their student loans.
It is essential for borrowers to actively engage with these resources and seek assistance when needed. Asking questions, seeking clarification on loan terms, and understanding the potential implications of various repayment options can help borrowers make informed decisions that align with their financial goals and circumstances.
Role of student loan servicers and their responsibilities
Student loan servicers play a significant role in assisting borrowers throughout the repayment process. These entities are responsible for managing borrowers’ loan accounts, providing customer service, and collecting payments. Borrowers should maintain regular communication with their loan servicers to ensure they stay informed about any changes, updates, or available assistance programs.
Student loan servicers have a responsibility to provide accurate and timely information to borrowers regarding repayment options, loan forgiveness programs, and any changes in loan terms or regulations. They are expected to address borrowers’ inquiries and concerns promptly, offering guidance and assistance when needed.
Borrowers should proactively reach out to their loan servicers to discuss their financial circumstances, explore available options, and address any challenges they may encounter during the repayment process. Open and regular communication with loan servicers can help borrowers navigate the complexities of student loan repayment more effectively.
Borrowers have access to support and resources to aid them in the repayment process. It is important for borrowers to gather information on available repayment options and loan forgiveness programs, enhance their financial literacy, and actively engage with loan servicers to address their individual needs. By utilizing these resources, borrowers can make informed decisions, develop sustainable repayment strategies, and work towards achieving financial stability.
Future prospects for student loan relief or reform
While the end of the student loan moratorium marks a significant milestone, the issue of student loan debt and potential relief or reform measures remains an ongoing concern. The future prospects for student loan relief depend on various factors, including political dynamics, economic conditions, and public sentiment.
Advocacy for comprehensive student loan reform, including discussions on loan forgiveness, interest rate reductions, or changes to repayment options, continues to gain traction. Some policymakers and lawmakers recognize the need to address the challenges associated with student loan debt and are actively proposing measures to alleviate the burden on borrowers.
Public opinion and grassroots movements play a crucial role in shaping the future of student loan relief. Continued activism, public discourse, and engagement with elected officials can influence policy decisions and push for meaningful changes in the student loan landscape.
Potential policy changes or legislative actions
The end of the moratorium does not necessarily signify the end of potential policy changes or legislative actions. Lawmakers at the federal, state, and local levels may continue to introduce bills or initiatives aimed at addressing student loan debt.
Potential policy changes could include expansion of existing loan forgiveness programs, modifications to income-driven repayment plans, or adjustments to interest rates and fees. Legislative actions may focus on enhancing financial literacy programs, streamlining loan repayment processes, or implementing stricter regulations on loan servicers.
It is important for borrowers and advocates to stay informed about proposed legislation and actively participate in the democratic process by engaging with elected officials, sharing personal stories, and expressing support for initiatives that align with their interests.
Advice for borrowers navigating the post-moratorium landscape
As borrowers navigate the post-moratorium landscape, there are several key pieces of advice to consider:
Stay Informed: Stay updated on changes in student loan policies, repayment options, and potential relief measures. Regularly review information provided by government agencies, financial aid offices, and reputable resources to ensure you have the most accurate and up-to-date information.
Evaluate Repayment Options: Assess your repayment options and choose the one that best suits your financial situation. Explore income-driven repayment plans, loan consolidation, or refinancing options. Consider consulting a financial advisor or student loan counselor to help you understand the pros and cons of each option.
Budget and Plan: Create a realistic budget that takes into account your student loan payments and other financial obligations. Prioritize essential expenses and consider ways to increase your income or reduce discretionary spending to allocate more towards loan repayment.
Seek Support and Assistance: Don’t hesitate to reach out to loan servicers, financial aid offices, or nonprofit organizations for guidance and assistance. They can help you navigate the repayment process, explore loan forgiveness programs, and answer any questions or concerns you may have.
Advocate for Change: Engage in advocacy efforts by sharing your personal story, contacting elected officials, or supporting organizations that advocate for student loan reform. By joining collective efforts, you can contribute to the push for changes that benefit borrowers on a broader scale.
Focus on Financial Wellness: Take steps to improve your overall financial wellness. This includes building an emergency fund, managing other debts responsibly, and investing in your long-term financial goals. Prioritize financial literacy and continue to educate yourself about personal finance to make informed decisions.
The end of the student loan moratorium does not mark the end of potential student loan relief or reform. Future prospects depend on various factors, including advocacy, public sentiment, and legislative actions. It is important for borrowers to stay informed, evaluate repayment options, seek support, and actively engage in the process of shaping the future of student loan policies.
Conclusion on the Student Loan Moratorium
The end of the student loan moratorium represents a significant turning point for borrowers and the broader conversation on student loan debt. It marks the resumption of loan payments and a shift in focus towards addressing the long-standing challenges associated with student loans.
While the end of the moratorium brings about new challenges, it also presents opportunities for reform and relief measures that can alleviate the burden on borrowers. The debates and discussions on student loan forgiveness reflect the growing recognition of the need for comprehensive solutions to address the systemic issues of student debt.
As borrowers navigate the post-moratorium landscape, it is essential to stay informed, explore available resources, and actively engage in the conversation surrounding student loan reform. By advocating for change and seeking support, borrowers can play an active role in shaping the future of student loan policies and ensuring that the system becomes more equitable and accessible.
Ultimately, the end of the student loan moratorium is a reminder of the complexity of the student loan landscape and the importance of ongoing efforts to address the challenges faced by borrowers. By working together, policymakers, advocates, and borrowers can strive towards a system that promotes affordable education, financial well-being, and opportunities for future generations.
The end of the student loan moratorium is not the end of the conversation but rather a call to action. It is an opportunity to create meaningful change and support borrowers on their journey to financial independence.
Navigating finances in your 30s can be a transformative period filled with important milestones and decisions. SoFi, a leading financial technology company, understands the unique needs of individuals in this stage of life. With its tailored suite of products and services, SoFi empowers 30-year-olds to make the most of their finances, providing benefits such as high APY savings, direct deposit perks, a robust investing platform, retirement accounts, and a commitment to their financial growth.
SoFi, short for Social Finance, is a leading financial technology company that offers a wide range of financial products and services. With a mission to help people achieve financial independence and success, SoFi combines technology, innovation, and a member-centric approach to deliver a comprehensive suite of offerings. From student loan refinancing and personal loans to mortgage solutions, investment accounts, banking services, and more, SoFi provides individuals with the tools and resources they need to simplify their finances, grow their wealth, and pursue their financial goals. Through its user-friendly platforms, competitive rates, educational resources, and commitment to fostering a strong community, SoFi has become a trusted partner for individuals seeking to take control of their financial well-being.
Why SoFi is the best bank for 30 year olds
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For 30-year-olds seeking financial empowerment and a bank that understands their unique needs, SoFi is the ideal choice. With its high APY savings, direct deposit perks, robust investing platform, retirement accounts, tailored lending solutions, and commitment to personal and career growth, SoFi supports individuals in their journey toward financial success. Embrace the benefits of SoFi and embark on a path to financial prosperity as you navigate this transformative stage of life.
We may receive a commission for referring new users. If you decide to sign up after reading my Personal Capital review, you’re helping support our free content at no cost to you, so thanks!You should sign up because it could change your future.
We got a call from someone in Denver, Colorado and they asked if we would be willing to place a financial calculator on our website that was created by Personal Capital. I politely declined because I had never heard of the company before and didn’t want a bunch of noise on our website.
After the call, I looked into it and decided to create an account. I connected a few accounts and then completely forgot about it for about 6 months. It felt very overwhelming at first and I didn’t want to take the time to learn it.
After 6 months, I was reading a post from Millennial Money and saw that he was a big fan of Personal Capital. A lot of bloggers were big fans!
Because of the online positivity, I spent a little more time setting it up and I’ve been hooked ever since.
Here’s my Personal Capital review and why I think it’s the best free financial planning software of 2020.
What is Personal Capital?
Personal Capital is an online wealth management company that believes the power of technology can make the financial services industry more affordable, accessible, and honest.
You can think of the company as two main divisions:
Free financial planning software
Online wealth management
I have never used their paid online financial planning and wealth management services and so I’m not going to be reviewing that today, only their free tools.
They also offer their free Personal Capital app that I’m guilty of logging into nearly everyday.
After the initial set up, and once I became comfortable with Personal Capital, I discovered some powerful features.
Here are 5 powerful features that I love about Personal Capital.
1. Accurate & Visual Graphs
One of my favorite features is seeing my complete financial picture in one simple dashboard.
By connecting all of your financial accounts, it’s able to create a nice-looking picture of your where you are with your finances. And it updates on a daily basis to give you accurate information and visuals.
Seeing how my assets are going up and my liabilities are going down is super motivating to me.
It’s nice to see each bank account along with my credit cards, mortgage, and investments.
If I wasn’t able to see all of my accounts in one place I would probably forget that some of them existed.
It also shows you all of your spendings and compares that with the previous month to see how you’re doing.
As you can see, it automatically categorizes transactions and shows you what percentage of your spending that category represents. It will compare what you’re spending this month to what you spent last month.
To be honest, I think Personal Capital is lagging when it comes to robust budgeting tools. For that, I use my favorite free budgeting software.
When I first created an account, I was also in business school learning about investments.
I was becoming very familiar with terms like index, benchmark, blended, S&P 500, DOW, foreign markets, and so on.
At the time, none of these terms meant anything to me personally.
After connecting my investments to Personal Capital, I started understanding these terms better. I was able to see how my portfolio was doing compared to the S&P 500, foreign markets, and so on.
Before that, when I would hear how the markets did today on the radio, it didn’t make sense to me. But because of the Portfolio and the Holding & Allocations section of the app, these things began to make sense.
I could see the percentage change of my investments for the day and see the dollar amount change as well.
Certain days when the markets did well, and I saw how it impacted my net worth, I was a happy camper.
On days when markets are volatile and down, I try not to let it bother me.
Each week, I continue to get a summary email like this.
4. Net Worth Tracker
When you track your net worth, you’re more motivated to make better financial decisions.
Personal Capital has literally forced me to make better financial decisions because I want to see that graph going up.
I will mention that checking your net worth too frequently can cause undue stress and I do try and limit how much I log into the app.
Anyone else know what I’m talking about?
I also find ways to have a balance between saving and spending. Because of the way I manage my money, I force myself to spend money on fun things as well.
You shouldn’t bee 100% extreme all the time with your savings. You have to have balance.
5. Fee Analyzer
I never really knew how much I was paying in fees until I was able to see the expense ratio for each individual security within the Personal Capital fee analyzer.
Investment companies make it difficult to see what exactly your expense ratio is. The fee analyzer made it really easy to see how much money I was paying for each investment and get rid of the ones that were too expensive.
It was one of the main motivating factors that pushed me to invest in an ETF at Vanguard (VTI) with an expense ratio of 0.03%.
Personal Capital is safe to use. They use many layers of security to keep your money and your information safe and private.
Like Mint, the don’t actually have access to any funds. You’re simply aggregating the information and then they’re able to analyze it.
Of course, nothing is un-hackable but they definitely take extra safety precautions. So much so that I would have to update my USAA connection every day by logging into my bank with 2FA if I wanted to see accurate bank information.
How Much Does Personal Capital Cost?
After everything I’ve mentioned, you may be thinking, “is Personal Capital really free?”
And the answer is, yes! It really is free. But if it was completely free they wouldn’t be in business. So that brings up the next question.
How Does Personal Capital Make Money?
Personal Capital uses it’s amazing software to draw people in. They’ve been able to amass quite a large amount of users who use their tools frequently. But if it’s all free, how. do they make money.
Once a user has over $100,000 in investable assets, that person then becomes a lead for their wealth management department. You don’t ever have to invest any of your money with them if you don’t want to.
But if you decided to invest with them, they charge an asset management fee of 0.89% for portfolios between $100,000 and $1 million. Which is actually quite high for a robo-advisor. Once you have over $10 million, the fee becomes 0.49%.
Personal Capital is different than Betterment or Wealthfront in a sense because it is more expensive but they promote their Certified Financial Planners being willing and able to meet more frequently.
What Are The Downsides of Personal Capital?
There are two major downsides to Personal Capital:
As soon as you have $100,000 in investable assets, their financial planners will start reaching out to you. You don’t have to work with them though unless you want to. You can politely decline and they won’t reach out to you again.
Their budgeting software is not as user-friendly and easy to use as many of the free budgeting apps out there. I recommend using Mint or even Qube Money.
I’m a big fan of Personal Capital’s free tools and I think it’s the best personal finance software to help you reach your retirement goals.
If you haven’t signed up for an account before, I encourage you to get started by clicking the link below!
With bills, rent/mortgage, student loans, credit cards, savings, and much more, how do you keep track of all of it? And is there a free budget software that makes it easy?
Someone recently told me, “I know exactly how much I spend each month. I keep track of it in my head.”
Keeping track of your finances in your head, may not be the most effective. Especially if you’re not a budgeter!
The good news is, you don’t need to keep a running tab stored in your brain. We all know what happens when you miss a payment.
Many years ago, I met with a financial planner who wanted to help me set up my first investment.
He said, “We take care of all the confusing stuff for you. You don’t need Mint or other budget software.”
I thought, “what’s Mint?”
After the appointment, I went home, set up an online account, and never spoke with him again.
Since then, Mint has become a huge part of my life and has done more for me than the gold based annuity he was trying to sell me.
I want to share with you why I’ve used Mint so much and the benefits it’s brought to me.
What is Mint and Why Should You Use It?
Mint is a free money management software that was acquired by Intuit in 2009, the same company that owns Quickbooks and Turbotax.
It’s super easy to use with a clean user interface. It gives you a clear overview of your finances.
It connects to all of your existing accounts to help you stay on top of managing your money in one place.
“Every time you visit their site, your financial data gets updated automatically. It presents your financial information in a slick easy-to-use web interface, with pretty graphs and all.”
– Investor Junkie
Mint has helped over 10 million Americans reduce their debt, pay their bills on time, and increase their overall net worth.
You’ll find boatloads of other great software to use for your money, but none of them really come close to Mint.
So, what are the features?
It’s incredible that Mint offers this budget software for free!
They receive their funding through companies that offer deals such as credit cards, investments, and recently, loans, and many other offers.
You can ignore the advertising links, but if you really are in the market for different products, it’s a great place to shop around.
With the amount of online fraud, it’s common to worry about your personal information being stolen.
It’s usually a concern for people to connect a third-party to their bank account. However, Mint uses bank-level security.
They cannot transfer funds or access your account. They can only view it as read-only. Kind of like taking a picture of your bank account balances and putting it all in one place and giving you a quantitative analysis.
Mint is also analyzed and certified by prominent third-party providers like TrustArc, VeriSign and other trusted professionals in online security.
We love having everything in one easy-to-see dashboard. Mint gives you a complete overview of your finances and having it in one place brings peace of mind.
Imagine the days before Walmart when you went to multiple stores to buy what you needed.
Now you get everything at one store.
Mint does the same. No need to go to each bank, loan, or credit card website separately to view your balances.
Free Credit Score
Mint gives you a free credit score!
But you’ve probably heard of free credit scores and how they are not really accurate.
Let’s be honest, what credit score is actually accurate?
Once you sign up for the free credit score, it may be off, but the biggest benefit is the summary of your overall credit situation.
From payment history, credit limit and usage, inquiries, and more information that explains why your credit score sucks or is really good.
Although it may not be your exact credit score, it’s smart to have a rough ballpark estimate of where you are.
How easy is it to forget when your bills are due?
It’s a good idea to set up automatic payments, but for those bills that are variable, set up an alert to be sent to your phone or email a number of days in advance so you’ll never miss a payment.
Mint has more than 20 types of alerts to notify you of fees, warn you if you’re going over budget, or let you know if something seems suspicious.
I get an alert every time a purchase of $200 or more is made with one of my credit cards, in case it get’s stolen.
One of my favorite things about Mint is the Trends section.
Have you ever had these questions?
How much did I actually spend last month?
What categories do I spend the most on?
Or how has my net worth changed over the past year?
You can answer all of these questions and many more in the Trends section.
“You can’t manage something you don’t measure”
A few years ago, I was asked to write down all of my expenses for the month. I wrestled with myself to think of everything I spent my money on. It seemed like things changed every month.
When I finished with my expense sheet, I knew in my mind that it was not accurate.
With trends, you can take the average amount spent each month throughout the entire year, or multiple years. This gives you an idea of the actual amount of money that is spent on different categories each month.
This is a great way to get started with a budget and setting goals to spend less and save more. Which brings me to my last point.
Each of us has goals:
Going on a vacation
Saving for a home
Paying off student loans
Saving money for Christmas gifts
Mint helps you reach those goals by assessing the amount the goal requires. It then gives you a specific date in the future and tells you how much money each month needs to be allocated to that goal.
It will let you know each month where you put enough or not enough money towards your goals and whether or not you are on track to achieve it.
With all the services this free budget software offers at no cost, why wouldn’t you use it?
I’m not affiliated with Mint, I’m simply a raving fan. Whenever they release an update, I get excited. And I love it when other people tell me they started using Mint and that I was the one that introduced them to it.
The only downside with Mint I’ve found is the investments section.
I haven’t understood how my investment accounts are aggregated and how I did compared to the market.
Mint is great for basic money management and budgeting but if you’re looking for something a little more in-depth that gives you a clear idea of how your investments are performing, I use Personal Capital. You can read more about my review of Personal Capital.
If you haven’t opened a Mint account yet, I urge you to do so.
Stick with it for a few months or years and I hope to hear from you on how your experience has been.
It’s safe, free, accurate, easy to use, and convenient. This free budget software has many more capabilities and features that I didn’t mention, but that you’ll soon discover.
If you let them sit around and do nothing, it will hurt your business.
If you “employ” them, which means to put to work or make use of, it will benefit your company.
Is every dollar of yours benefiting your personal finances or are there lazy dollars sitting around doing nothing for you?
Where Should You Stash Cash?
Here are 5 places to stash your cash for goals that are 1 to 5 years away to get the maximum value from each of your little green employees.
Depending on your financial goals, where you stash your cash will determine if you reach those goals.
If you plan to spend the money within 1 year, be safe! If you plan to spend it in 1 to 5 years, go for a higher rate of return.
Where I save my money depends on the goal.
I’m willing to invest my savings for something like a vacation fund because the cost of a vacation varies and when we go is flexible. On the other hand, if I’m going to put money down on a house soon I don’t want to lose any of that money.
Here are 5 places you can stash your cash. Some are better than others.
1. Under Your Mattress
Some people suggest you keep cash somewhere in your house. Other than the internet disappearing or banks seizing to exist, it doesn’t do you good to have cash under your mattress because those are lazy dollars that need to wake up!
Some people like cash because it’s tangible. If you’re new to budgeting or teaching your kids to manage money, using cash is powerful!
Cash is good for teaching. It’s a powerful tool because you can hold it and feel it. And let’s be honest who doesn’t love holding a wad of cash!?
But cash is becoming obsolete. We live in a world where money is more of an abstract idea than a physical object.
Cash is good for changing behavior. I used cash for years as a teenager to manage my money. Now, I don’t have more than $5 – $10 of cash on me unless I am traveling (thieves wouldn’t be happy to rob me).
$100 today will buy you less in 10 years because of inflation. Inflation can fall between 2-4% per year.
So if you’re not earning at least enough interest to keep up with inflation, the value of your dollar decreases over time.
It’s not a good idea to leave too much money in a savings account for a long period of time.
3. A High-Yield Online Savings Account
Many online banks now are willing to pay a higher interest rate to keep up with inflation.
Online banks have lower overhead costs because they don’t have to pay for physical branches. That means they can pass the savings to the consumer by offering higher rates.
The interest rate is important when you’re looking for a place to keep your money, but it’s not the most important thing.
Other things to consider are:
Your savings rate
The credibility of the bank
Terms and conditions
One of the downsides of a high-yield savings account is not having all of your money in one place.
If you need to transfer money into your primary bank quickly it could take a couple of days.
Don’t put your everyday spending money in one of these accounts.
High-yield online savings accounts are actually one of my favorite places to stash cash. I’ve looked into savings accounts that offer up to 3% APY (Annual Percentage Yield) which is changing all the time.
As of May 2020, the high-yield online savings bank that I use is offering up to 2.80% on cash deposits. The bank I’ve used for high-yield savings is Varo Money.
Banks vs. Credit Unions
When deciding where to stash your cash, should you use a bank or a credit union? There are pros and cons to both.
Banks are for-profit enterprises, while credit unions are nonprofits. Credit unions also offer higher interest rates on deposits, lower rates on loans and lower fees.
Why Choose a Bank?
More branches in the region or across the country
Typically quicker to roll out new apps and new tech
Why Choose a Credit Union?
Typically has lower fees and higher interest rates on deposits
Emphasis on customer service
I go for the best of both worlds and use USAA for my personal banking and Wells Fargo for my business banking. I’m happy with USAA and would recommend them to anyone (you must be a service member or be related to one to access their banking).
Think of it as an online credit union with low fees, great customer service, and always at the front of technology. They were the first bank to introduce biometric sign in. I was using my face to log in to my account back in 2014.
Although I’m happy with USAA as my primary bank, I’m always looking for an online bank that’s going to offer a higher APY for savings.
4. A Money Market Account (MMA)
Money market accounts are federally insured short-term interest-bearing instruments that generate a variable yield while preserving principal.
They tend to have interest rates that are higher than savings accounts, but they often require a higher minimum deposit.
The difference between a savings account and an MMA is what the bank can do with your money.
The bank is restricted in how they can loan your money. With an MMA the bank may put your money in a CD, low-risk mutual fund, or government securities.
It’s easy to confuse an online bank that offers a high-yield savings and a bank/investment company offering money market accounts because sometimes they are used interchangeably.
Many people have an MMA already and don’t realize it. That’s because in your investment account there is typically cash waiting to be invested that is stored in an MMA. For example, I have cash sitting in my Vanguard account when I don’t have enough money to purchase an entire share of VTI in my Roth IRA.
I wouldn’t be too concerned about these accounts for your goals.
5. A Certificate of Deposit (CD)
A certificate of deposit (CD) acts as a savings account and has a fixed interest rate.
It also has a fixed date of withdrawal, known as the maturity date.
I call these Certificates of Depression. 😁
Why would I do that? Because, if you want to invest your money for the long run, the interest rate is measly.
Although it’s higher than a typical savings account or money market account, your money is going to be locked up for a period of time. For example, at my local credit union the terms of a CD are:
2.00% 1-year CD
2.50% 4-year CD
3.15% 5-year CD
That means you can’t touch your money for 1,4, or 5 years to earn that percentage rate.
I don’t use CDs anymore because I had a bad experience in the past.
Here’s what happened.
I deposited $5,000 into a 2.5 year CD when I was 19. After 2 years, I’d made $50!
But unfortunately, my car broke down and I needed to access the money early.
I had to pay a $25 fee. Eating 50% of my profit. Then, I had to pay taxes on that $50 which was $7.50.
So my $50 return went to $17.50 which is a 0.0035% return.
Basically the same as if I would have left it in the bank. 😢
I could have planned better. I could have found a better CD and accessing the money early wasn’t smart. But, either way, I’m not a fan of CDs.
I want control over my money and I’m willing to take more risk if I’m going to be saving that money for a few years.
However, CDs seem to fit some people very well and there are many reasons why they may make sense for you. Something that seems to be effective with CDs is called a CD ladder.
How it works is, you open multiple CDs to have access to your money at different times in the future without locking all of your money into one long-term account. Then you’re able to access certain amounts at different times because your CDs are maturing.
I still think there are better places to stash your cash.
The Bottom Line
To be honest, I stash my cash in two places. I use traditional savings accounts at USAA and one online high-yield savings account at Varo Money.
Then, if I’m putting money away for retirement or for goals more than 3-5 years away, I contribute to my Roth IRA at Vanguard or purchase individual stocks or cryptocurrency with Robinhood. Very carefully.
Let’s be honest, there are hundreds of ways to manage your money. But today, I’m going to tell you why the money jars system that I use to manage my money is the most effective.
I tried the cash envelope system (which became messy), I tried saving everything in one savings account (which felt like deprivation), and I even tried not managing my money at all (bad idea).
None of these things worked for me.
When I Learned About the Money Jars System
We were poor growing up. And I never wanted to be poor again. I needed to change things to make sure I never had money problems.
When I was 16, I learned the importance of managing my money so I could reach financial freedom one day. Luckily, I applied what I learned with a simple money jars system to manage my money.
This set the foundation for the rest of my life. I have successfully used the money jars system to manage my money for over 10 years. I’m well on my way to becoming financially independent by simply using the money jars system I’m about to share with you.
Before we jump in, download the free PDF so you can get started.
What is the Money Jars System?
After learning about the jars money system, I purchased 5 mason jars and used a random popcorn box because Walmart didn’t sell mason jars in packs of 6. To get started you’ll need 6 physical mason jars.
The second money jar is your financial independence jar. 10% of EVERY dollar you make—no matter what—goes into your financial independence jar. Even if it’s a small amount of money, this will help you build the habit of saving money each time you get paid.
What about debt? Should you put money in this jar if you’re paying interest?
The answer depends.
Don’t wait to save money until all of your debt is paid off and you have an emergency fund of 3 to 6 months. You should be doing both.
Once you understand compound interest, this will make more sense. The more money you can save early in life the better off you will be. So get started saving 10% of your income no matter what even if you have debt.
Money Jar #3
The third jar of money is long-term savings of 10%. How is this different than money jar #2? Financial independence money will be spent when you become financially independent. That money will sustain your lifestyle.
Long-term savings has two functions:
Save for long-term things like a down-payment on a house, car, starting a business, etc.
This money jar serves as your emergency fund.
I’ve discovered setting money aside in a savings account labeled “emergency fund” doesn’t work.
Because guess what happens?
And the money gets spent on things that may not actually be an emergency.
I’ve honestly tried building an “emergency fund” at least 10 times and the money always gets spent.
It hasn’t worked for me.
What allowed me to have money in case of an actual emergency was if the funds were going toward a long term savings goal.
In the event of an ACTUAL emergency, I had the money and it simply meant we had to delay our goal.
Money Jar #4
The fourth money jar is tithing/give.
I believe in paying a 10% tithe to my church. However, It goes a lot deeper than simply giving 10% to my church.
When you have a giving mentality, you’re looking at life with an abundance mentality. And that will spill over into other areas.
Avoid having a scarcity mindset. It’s no way to live!
10% doesn’t have to go to a church, it could go to your favorite charity or you could even use the money for birthday and Christmas gifts.
Either way, when you give, you look at life in a different lens.
What if you’re thinking, I’ll start giving when I have more?
No amount is too small to give. Just get started.
Money Jar #5
The 5th money jar is play money to blow.
10% of your income will be set aside and spent on whatever the heck you want. This is non-guilty spending that will help you maintain balance in your life.
Your hard-earned dollars should be going toward things you love to spend money on. And if you could choose to spend more, you would totally do it.
Things like weekend getaways, expensive date nights, massages, concerts, fairs, whatever you want.
“Life is meant to be enjoyed, not just endured.”
There is one caveat.
If you’re paying more than 5 – 7% interest on any debt, you should be paying that off and not spending money on play.
This is about priorities and you can’t afford to be flushing money down the drain each month on high-interest debt. Pay off that high-interest debt first, then you’ll be able to start spending more money on things that you value.
Money Jar #6
The last money jar is for education and is the most flexible jar.
Invest 10% in yourself and your skills.
Pay for college, buy courses, books or anything that will help you increase your skills.
“The best investment with the highest ROI is an investment in yourself.”
Setting aside money for education could do more for you than any other jar. You should be doing this if you’re able to master all of the money jars above.
However, If you’re unable to live off 50% of your income or you’re paying off high-interest debt, you should be using the money from your education jar to pay for those things.
If you’ve tried managing your money in the past and it didn’t work, what do you have to lose by giving the money jar system a try?
This will help you build a foundation for financial wellness and allow you to live the life you’ve always wanted.
Using cash can be difficult. A question I’ve been asked is, “how can I use this money jars system digitally?”
You absolutely don’t have to use physical jars. I recommend it starting out but you can do the exact same thing with your online bank accounts.
Hi, I’m Scott. Welcome to my website! I’m an Accredited Financial Counselor, husband, and father. I love writing and learning about personal finance, fintech, simple living, and sharing my personal story. I hope you’ll join me on our journey to financial independence!