Getting your first car is a big step. You don’t want to screw it up. Figure out whether it makes sense to buy or lease.

It’s time to get your first car.

This is an exciting time, a time that heralds adulthood.

With all their bright and shiny and “new-car-smell,” even those adulting hard can make a child’s mistake.

Don’t let emotions cloud your judgment.

I’m not a car person – most cars look like Jettas to me. But even I get a euphoric high when I sit in a new car with its new leather, unblemished windshield, latest technology, and spotless dashboard.

The problem is that those dastardly auto dealers are marketing and money masterminds. They’ve figured out how they can oversell and overfinance even people like me who don’t really care about cars.

When getting your first car, you want to leave emotion at the door and realize that you’re probably not going to be driving your dream car.

You may have the budget for a Ford Pinto, but they’ll get you into a Mercedes Maybach if they have their way. It’ll just take 15 years to pay off and cost you more than most people’s mortgage and your first-born child.

But, hey, that new car smell.

Therein lies the birth of car leasing. Why buy a practical car you can afford and own outright when you can buy an impractical car you can’t afford and will never own but will look good on you?

Some things to consider when considering leasing a car.

Lessees don’t own.

The first thing to realize if you decide to lease those hot wheels is that you never own your car unless you choose to buy out your lease at the end of your term.

Most people don’t buy out their leases at the end of their term, no matter how committed they are.

Your ideals are usually high when you sign the lease. However, just like you say you’ll only have one mimosa at brunch, you almost never buy out your lease. At the end of your three to

At the end of your three- to five-year term, unless you have a large sum of money and want to do so, you’re without a car. This is why people become habitual lessees.

You’re always a guest.

All the while, as you lease a car, you’re borrowing it. You must treat the car like you’re borrowing it. This may sound like the above concern, but that’s about managing your money.

This is about living life.

For starters, leased cars come with mileage limits. The mileage limit is usually capped at 12,000 a year or 36,000 miles over three years, the most common term for leases.

Even if you’re an average driver, the U.S. Department of Transportation Federal Highway Administration (FHWA) says you’ll probably average 13,476 miles a year.

So, unless you’re below average, toward the end of each year or your lease term, you’ll probably have to be conscious of your mileage limit. You could find yourself paying a penalty if you go above that limit.

The other way you’re always a guest in your leased car is that if your vehicle experiences wear and tear beyond the norm, you must get it fixed.

Of course, the definition of “normal” is subjective. And, of course, most responsible car owners repair and maintain their cars to keep them in good condition. As a lessee, though, you don’t have the option. Your leased car must be repaired and maintained to keep it looking as good as possible.

Lessees need better credit.

Most people who lease cars do so because they can’t afford to purchase them outright or finance them.

Likewise, those who lease cars tend to have less money to use as a down payment on their car. Therefore, the manufacturer or lender assumes more risk. To mitigate financial risk, manufacturers and lenders require higher credit scores to lease cars.

If you’re getting your first car, there’s a good chance you have a short or non-existent credit history and, likewise, a lower credit score. This will make finding favorable leasing terms harder.

Some things to consider about buying a car.

By now, you’re saying, “Okay, leasing a car sucks, but buying one is hard.”

That’s not necessarily so. By being strategic about buying your first car, you can save yourself money with little complication.

The best way to get a car is to pay 100% cash for it up front. Because most people can’t do that, the second-best way to get a car is the most practical. That’s by putting as much down as possible, ideally no less than 20%, on a certified pre-owned car with low-interest rate financing.

Occasionally, dealerships offer 0% financing. If there isn’t an ideal promotion when you’re in the market to buy a car, credit unions offer great financing terms.

By getting approved through a credit union before shopping for your first car, you’ll save yourself a lot of frustration by not negotiating these terms with a car dealership.

When to lease your first car.

I can only think of one situation when leasing a car makes sense. That’s when someone or something else leases it for you.

For example, my father sold steel to manufacturers. For several years, he was in charge of the Tri-State region and did a lot of driving to sales calls. One perk of his job, because of his required travel, was his company gave him a car.

Even though this was his work car, he used it for work and personal driving. His employer wasn’t in the business of owning cars, so they leased him a car, and he got a new car every three years. Other than the gas he used for his personal travel, all the expenses of his leased cars were his employer’s.

Unless someone or something else to leases a car for you, it likely doesn’t make sense to lease a car. Even if you can get someone or something else to lease a car for you, plan for the day you can buy your own car. Save $200 to $400 a month in an account for when you do buy your own car.

You’ll be happier if you do and will be closer to buying the car you want.

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Ready to take things to the next level with your S.O.? Not until you have the money talk. You need to make this happen.

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Any relationship requires work. There are plenty of situations that can stress you out. But nothing quite matches the stress that comes when you talk money with your boo.

Are you ready for that talk? Do you know what you will say? And how can you make it less stressful and contentious for everyone involved?

Concepts

  • How we handle money reflects our values.
  • Why it’s so hard to talk money with your S.O.
  • The ways money goes beyond just spender vs. saver.
  • Different styles of money management.
  • How to pinpoint what matters most to you.
  • Tips for setting the tone before you talk money with bae.
  • Suggestions for money topics you should be discussing.
  • When it’s time to start talking about money.
  • How to gauge your partner’s money values before you talk money.
  • The importance of setting shared financial goals.
  • Tips for setting time to talk money so that you are both more likely to be open and willing.
  • What to do if things get too heated during the discussion

Our “do nows” this week focus on actually getting the money talk taken care of. Figure out your own money values, review your financial situation, and schedule a time to talk money with your S.O.

This week’s listener question deals with someone not really ready to trust bae with joint accounts. We look at the pros and cons of granting your S.O. access to your money.

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Resources

How money stress impacts relationships

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Living the dream as your own boss? Don’t let it become a budgeting nightmare. Stay on top of things when you have a variable income.

When former cubicle-jockeys switch to a freelance career, it’s almost always in pursuit of one elusive goal: freedom.

But with that freedom comes uncertainty. Many newly self-employed individuals find themselves missing the income consistency that came with their old gig.

But variable income doesn’t have to mean a dubious financial situation. There are a few methods you can use to create the consistency you’re looking for. This allows for the kind of stability you’d enjoy at an office job.

Here’s how I manage my own variable income:

Calculate how much you need.

Living on a variable income is stressful if you’re also living in the dark. If you don’t know how much you need to survive, how can you know if you’re budgeting correctly?

Go through your spending and add up your necessary expenses, including rent, groceries, gas, utilities, debt payments and other bills.

Then divide that number by 75% to calculate your target income.

That will be the minimum you need to earn each month. Anything left over can be used for discretionary spending or saving.

Live on last month’s revenue.

While salaried individuals know how much they’re going to bring in every month, people living on a variable income have no clue.

A long-term client could take an extended vacation or an assignment might be delayed indefinitely. One of my favorite ways to combat this uncertainty is to live on last month’s invoices.

If you grossed $3,000 last month, then you can only spend $3,000 this month — even if you project to make $4,500 this month.

This budgeting philosophy is all about spending the money you have, not the money you think will have. After all, things can and will go wrong every month. The technique also eases your cash flow, since many freelancers don’t get paid until 30 days after they’ve submitted an invoice.

Save most of your surplus.

A friend of mine who worked in the dance industry once told me about a mentor who would go designer shopping every time she got a choreography gig. These jobs paid exceedingly more than teaching gigs and left her with more cash than she was used to.

Instead of saving that dough, she’d go shopping for name-brand purses and clothes. I was shocked when I heard that story, but not surprised. It’s human nature to go on a shopping spree when you land a big windfall. However, budgeting responsibly (especially on a variable income) is all about denying those urges.

It’s ok to celebrate a new client or big project as long as you’re tucking some of it away for a rainy day. Try to save between 70% and 80% of your surplus income and enjoy the rest responsibly.

Keep an emergency fund.

Everyone who works for themselves has a slow period where the work seems to dry up. You can plan ahead for these months by having a larger-than-normal emergency fund.

I keep a six-month emergency fund since my husband and I are both self-employed. Having half a year’s worth of expenses keeps us afloat during the off-season. It’s a good buffer to have and prevents me from picking up a McDonald’s application when the work starts to dwindle.

Multiply your baseline income by how many months you want to save for. Most people with variable income should have between six months and a year’s worth of bills saved in an emergency fund.

Make your expenses the same every month.

One of my favorite ways to regulate my finances has been budget billing for our utilities. Most gas, water, and electric companies allow you to pay the same amount every month instead of the amount you use.

Having budget billing has simplified my finances since I know our water bill will be static, no matter the season. I don’t have to worry about high gas statements in the winter or AC costs in the summer. Contact your energy company to see if they offer this service.

Look for other ways to normalize your bills so that you have the same expenses each month.

Save by percentage, not dollar amount.

Writer Jackie Lam of Cheapsters became a freelancer after she got laid off at her full-time gig. To make the transition smoother, she started saving a percentage of what’s left over after she’s paid the bills, instead of a specific dollar amount.

For example, instead of saving $200 a month for a vacation, she sets aside 5% of her budget. Using percentages makes it easier to hit her savings goals, even if she hasn’t had the most productive month.

In busy times, she might save more than $200, and during slowdowns she might only save $100. That percentage tends to average out over the year.

It’s a way to feel a little more secure and avoid feeling like a failure if you don’t hit a set dollar amount.

Be your own CEO.

If you really miss the stability of office life, consider paying yourself a salary. Once you’ve calculated your baseline, it’s simple enough to choose a stable wage to take going forward. Overage income can be applied to your savings, while consistently coming in under budget can be a warning sign that it’s time to take a pay cut.

This isn’t exactly the most efficient method listed, but it can take a lot of psychological weight off of planning your finances. It’s simple. Pay yourself a little less than you typically make and save the rest.

Do you live on a variable income? How do you make it work? What’s your favorite budgeting technique? Let us know in the #Adulting community on Facebook.

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The things you do each day are draining your finances. Here are the things you need to stop doing. Now.

There is a mind-numbing range of mindless and expensive habits that get in the way of creating long-term and sustainable financial success. 

Let’s be honest. Most of us have financial habits that we have fallen into blindly because we’re not honest about the habits that may be getting in the way of our financial future.

The following three habits are so expensive that it may be time to kick them to the curb:

Fake hair.

The first one is tied to self-esteem. I totally get it, but your expensive fake hair habit is making you broke.

My hair broke off really badly and I needed a way to feel good about myself so I started wearing fake hair. Fortunately, this isn’t that big a deal, but my hair loss was a demoralizing experience.

I accepted that to get a great fake hair look that I would have to pay through the nose and so I paid big bucks (for me) to achieve the right look.

Like me, there are a lot of women who are dealing with hair loss or just would like to achieve a different look and spend way too much on their fake hair. I didn’t realize I had this habit and felt like I managed the expense really well.

I would stretch the times between getting an expensive weave and would try to consistently care for my fake hair with constant TLC.

But, what I didn’t realize was that I was paying too much for weaves and fun lace-front wigs and I discovered that I could get the same look for 75% less than what I was spending.

Instead of paying between $175-$200 for a weave or lace-front wig (including shipping), I discovered that there are inexpensive options that create the same look for less!

I discovered the amazing world of YouTube low-cost wig reviews. There were wigs that looked the same as what I was buying before, but for $30. It was a life-changing information.

I jumped on that savings, I still feel good about myself, and my wallet loves me for it.

Recreational pot habit.

One of the most expensive habits of all is a pot habit. You should break the weekly pot habit ASAP. 

Hey, I’m not judging you. I’m from Colorado. But that legal bud is not cheap.

If you’re smoking a bowl a couple of times a week, getting the newest in pot-related gear, and snacking like it’s going out of style, it may be time to do an audit of how much you’re spending on your legal weed.

According to the Colorado Pot Guide, the cost of an ounce of pot ranges between $100-$300 dollars depending on where you purchase it.

If you purchase just one ounce a month you’re spending $1200-$3600 in pot each year. That’s almost like shoving $20 bills into your bong and smoking it up. And, we haven’t even factored in the snacking costs.

For many people who embrace the 420 life, the expense may not always be top of mind. And, I’m not saying what you should or shouldn’t do. But your pot habit can be painful to your bottom line.

Instead of always having a reserve at home perhaps you could just indulge at your favorite concert like everyone else does?

When factoring in the cost of pot also consider the potential for losing your job if your employer does drug checks. In Colorado, employers have the right to terminate employment for off-the-job cannabis consumption, even if it’s medicinal.

Lack of research before purchases.

The first two expensive habits were pretty specific. This one, though, applies to most people.

Many of us make big (and small) purchases without doing research. I can’t even begin to tell you what a difference doing basic research on my purchases has made to my finances. I’ve discovered that there is always a deal to be found on any item I want to buy.

For example, if you hope to purchase a car, spend some time researching the following: gas mileage, if the car has had any recalls, cost for maintaining it, and if there is a place where you could buy it for less than the listed price.

There is no reason to purchase clothing at the listed price. It always goes on sale. By researching ways to get rebates on spending, savings apps, and places where you could purchase the same items at a discounted price.

Research doesn’t have to be an annoying and onerous process. And it’s at the heart of how I have been able to save substantial amounts of money on trips, shopping, and even my home purchase.

Once you kick your expensive habits to the curb, you will be more likely to have more money to spend on things that really matter to you.

What are your expensive habits? How do you plan to break them? Let us know at the #Adulting community on Facebook.

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Financial stability is a requirement for successful adulting. Here’s how you achieve stability and recognize it when you are stable.

If financial independence is the dream, financial stability is the first adult step along the path towards that vision.

On the final day of the year, fifteen years ago, I returned home from a weekend away to find my belongings on the lawn in front of the house I was renting. (I used the Internet Archive’s Wayback Machine to fact-check myself using my old, anonymous personal blog, my first time reading those entries in over a decade.)

My roommate thought I was moving out at the end of December, and when I wasn’t around, she moved two people into the room I had been occupying for several months. I had been planning to move out at the end of January, and the roommate knew this. But my name wasn’t on the lease, so perhaps she thought she could do whatever she wanted.

A later entry brought back the memory of a related event: I visited that apartment again ten days later to pick up a few remaining items, and the new occupants were moving out because that roommate committed some kind of check fraud. But I digress…

Being forced out of my living space with no notice on New Year’s Eve was the end of a particularly bad year. I lost a job, lost my car, and lost my girlfriend. I had moved to northern New Jersey for a job I no longer had. I was in my mid-twenties, but I wasn’t financially an adult. I survived by spending on credit cards, avoiding student loan bills, and accepting help from parents.

With the necessity of moving in with family as 2001 became 2002, I vowed to turn things around for myself.

I wasn’t necessarily aware of the idea of financial independence, but thankfully, that is how I can describe my situation today. In early 2002, I just wanted financial stability. And I had to figure out how to get there.

How I became financially stable.

After college, I chose a career somewhere between education and nonprofit. The organization I was working for was meant to be a stop-gap while looking for a teaching position, but I did enjoy it, and I didn’t put enough effort into moving forward. It cost me more to work as a nonprofit employee than I was earning — and I wasn’t even spending a significant amount of money.

1. I found a new job.

Instead of looking for my ideal career, my priority was earning money and getting back on my feet, taking control of my situation. Nothing is permanent. I could work on my loftier life goals while at least working somewhere during the day that would allow me the flexibility to plan for the future.

Without a car, I was limited to jobs that were accessible by walking or by traveling on the train. I turned to a technical temp agency. That’s how I earned money over breaks during college, and I knew I had many skills that would serve me well in corporate settings. I found something right away — an executive administrative assistant at a major financial firm.

This had no relation to my degree, but it was a job. And it paid 50 percent more than what I was earning at the nonprofit organization. Theoretically, I could even stay involved with the activity I was passionate about on weekends while working a “regular” job.

2. I designed a budget.

My dad helped me brainstorm a basic budget on the back of an envelope. That’s how I remember the situation. This budget had to take into account paying off a cash advance from my credit card, consumer spending on my credit card, and my student loans. I intended to move out and be less of a burden on family as soon as possible, so I budgeted for rent, as well. And savings for the future.

Partly because I wanted to stick to my budget and partly because I needed some self-reflection time to recover from bad choices, I also saved money in the first few months of my new job by staying in a fortress of solitude.

The budget was essential for setting myself up for financial stability.

3. I tracked every penny.

I used free software to meticulously track my spending, making sure I was staying within my budget and paying my bills on time.

You can only have a clear picture of where you’re going financially if you know where you are. It is incredibly easy today to get a full snapshot of your finances at any time thanks to technology. Apps communicate directly and securely with banks, so you all you need to do is check your phone to see where you stand. The app adds your bank balances and subtracts your debt, and the result is your financial net worth.

And beyond your net worth, you need to know how that changes over time, so you track your income and expenses, too. Today, I use Personal Capital and Quicken.

4. I started saving for the future.

It wasn’t enough to have a bank account whose balance was increasing every month. My new job offered a retirement plan with a matching contribution. Always say yes to a matching contribution. It’s free money.

How do you know when you’re financially stable?

To be considered financially stable — a true sign of adulting — you must meet these criteria.

  • You must be spending less than you’re earning. It doesn’t matter which side of the equation you try to improve, but it helps to focus on both your expenses and your income. You can only cut your expenses back so far — but income potential is unlimited. When you spend less than you earn, you have a surplus. The surplus allows you to have some control.
    • Living paycheck-to-paycheck — spending every penny you earn — means you have no surplus and you are not moving towards flexibility or control.
  • You don’t have to be debt-free, but you must be paying down your debt and not accumulating any more. If you’re able to make your minimum payments on your debt and then some, you’re in good shape.
  • You’re not relying on loans or gifts from family. This is the cornerstone of stability. You can make it on your own, just with your income and your expenses. It’s true that you may be in financial trouble if your income disappears, especially if you’re only beginning to establish savings, but for now, you are making it on your own.
  • You are building your future through savings and investment. Your nest egg might not be too big just yet, but it’s growing. You’re putting aside extra money to create an emergency fund and you have a systematic transfer to an investment account, preferably a low-cost index mutual fund.
  • Your friends support your goals. Don’t waste time around people who give you a hard time for being responsible. Often, when one starts acting more grown-up, the friends still wading through adolescence grow bitter. Or maybe you’re the last one to cross the threshold into actual adulthood.
    • People reach this point at different times in their lives. I wasn’t financially adulting until I was in my late twenties. Some start when they’re 40. And I’ve seen some sixteen-year-olds who are taking control of their future I never would have considered.
  • You’re moving forward steadily in your career. How you progress is often up to you, even when are faced with resistance was you’re trying to gain more responsibility, authority, and compensation at your job. You do know that often you have to accept more responsibilities before being granted more authority and increases in compensation. This type of success proceeds at different speeds, but you should always be aware of where you stand, and you make decisions that move you forward.
  • You have health insurance and you take care of yourself. Your health and well-being affect your ability to have a life of any sort in the future, so you watch your health and have an appropriate health insurance plan. You see a doctor once every one or two years, at least, if you’re otherwise healthy, and you see a dentist and dental hygienist every six months. If you need work, you get it done.
  • You pay your credit card balance in full every month. Credit cards can be great tools for people who are financially stable. They allow you to time-shift your spending, just like the DVR time-shifts The Walking Dead. They allow you to collect cash back and points that can be used for travel. But only if you avoid interest charges, late payments, and pay your balance in full every month.
    • This could be considered an “advanced technique,” and many people start messing with credit cards before they are prepared to handle the responsibilities. So watch out.

Financial independence is the next step after financial stability, but it could take a lifetime to achieve. Imagine if you no longer had to rely on your job. Imagine if you could live the life that you wanted to live, go where in the world that you wanted to go, and do anything that you wanted to do — without any concern about what the financial consequences would be.

That is financial independence. And you can’t get there without financial stability first.

Are you financially stable? If so, when did you finally achieve it?

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With a real savings or checking account, you can handle emergencies and think about the future.

I understand the objections to owning a bank account, and I share many of the concerns. But proper adulting is nearly impossible without one of these best bank accounts, like it or not.

There may be some people in modern society who live a cash-only life, but that’s going to continue to get more difficult as time goes on unless they make many other sacrifices as well.

Why you absolutely need a bank account.

A bank account may be the only thing that gets you thinking about the future. When all of your mental energy is spent worrying about how you’ll make it through the week, you have no capacity for any kind of higher-order thinking. But that concern for the future is what is going to sustain you and your family over the long term.

Are any of these goals important to you?

  • Retiring from work and enjoying life all day instead of working until you die.
  • Buying a house.
  • Being able to support your children and eliminate unnecessary barriers for them.
  • Remaining calm when an emergency means you have to spend more money than you planned, sooner than you planned.

If at least one of these sounds appealing, start considering your future needs and saving for them.

Putting money aside is the gateway to flexibility. When you have access to cash, you have more choices. You have more freedom. It is the first step. It’s not enough to just save cash in your home. While it’s not a bad idea to stash some in case of emergencies, it’s dangerous to keep too much in your home or in your hand. It’s unprotected. It’s vulnerable. It could disappear, either by somebody finding it who shouldn’t, or by spending it when it would better for it to remain untouched for later.

Money in a bank account is safe. It will not disappear. In the many years of bank accounts being insured by FDIC, no one has ever lost money in a bank account. Even when banks fail — and some did during the latest recession — every customer had access to their money. The same cannot be said for cash hiding under the mattress or sitting on the shelf in a pickle jar.

Savings means the bank is working for you. When you deposit money, you are giving the bank the right to invest even more, and they often do by granting loans to community businesses and organizations. Banks earn money on these loans, and in general, some of that is passed onto you in the form of interest. Interest rates have been low lately, but those rates will eventually improve.

In the past, banks offered savings and checking accounts for free because they were making enough money from loans. As the depositor, your money is helping the bank earn a profit. But low interest rates have changed the situation, so now customers often have to shop around to find the best deals for bank accounts, but a free account shouldn’t be too hard to find.

There’s the ugly side of banking…

7 percent of households in the United States were unbanked in 2015, and that means that more than 15 million adults and more than 7 million children do not have access to a savings or checking account.

So how are these households, plus the more than 50 million adults and 16 million children who do own savings or checking accounts but are still considered underbanked, manage their money?

They use alternative services: check cashing at special storefronts or inside other retail stores like Wal-Mart, payday loans, pawn shop loans, and auto title loans. These services are expensive and tend to take advantage of individuals who feel they have no other alternatives.

… And there’s the uglier side of banking.

Why You Need a Bank Account Right Now

Why does it seem like the traditional banking route is no longer the best way to handle finances?

There never seems to be enough money. 76 percent of Americans live paycheck-to-paycheck. After taxes, every cent is spent on things that seem necessary. Often, this means rent (or mortgage payment), food for the family, and basic utilities. That’s if a paycheck is coming in at all. Living on disability, Social Security, or unemployment results in even thinner income available for necessities — if any.

This is a difficult situation, and the lack of cash flow makes a bank account seem unnecessary, even if that’s not true.

The banks don’t behave well. Every week, there’s another news story about a major financial institution taking advantage of its customers. Wells Fargo just happens to be the latest bank to be caught in a scandal, opening accounts for customers without their knowledge.

The financial industry has a powerful lobby, and they will continue to make things difficult for customers for the benefit of their shareholders, and even the shareholders lose out in the end.

Credit unions don’t run into as many problems because there are fewer conflicts of interest. Credit unions don’t have shareholders, so any profit they may have finds its way back to customers — who are members — in some form.

You may not be able to open a traditional account. I look at my debit card, and it says I’ve been a customer since 1989. That means that an account has been open in my name since I was thirteen years old. My parents opened an account for me and showed me how to use a checkbook. (Neither debit cards nor ATM cards were widely available when big hair and pastels informed the zeitgeist.)

Not everyone has the benefit of financial role models. Those lacking are slower to build credit history and positive financial skills. Without a history in the banking system it’s difficult to get approved for that first account on your own, but it’s never too late or too early to take some steps forward.

Here’s what you can do right now.

Online bank accounts are the best options. If you’re comfortable buying items from Amazon.com online, you should be comfortable banking online. It’s more safe and secure than banking in person. Unfortunately, opening a bank account online often requires that you have an existing account to transfer money. There are ways to get around this, but it’s not easy.

Let’s go right to a bank or credit union first.

Find a credit union in your town. There are seven within five miles of my apartment, and that’s a fact I discovered by using the credit union finder at A Smarter Choice. An urban neighborhood nearby has more than 14. Take any cash you’ve collected recently and bring it in. Talk to a banker about your free options for checking and savings accounts.

When you have a real bank account, you break the cycle of paycheck-to-paycheck living. You begin thinking about the future. You stop wasting money on services like check cashing and short-term loans. You set yourself up for success. You set a good example for your family, now and for future generations.

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It would be nice if you could have an easy solution to student loans. You will have to work your ass off to get on top of the situation. Make it happen.

You went to college after high school because, well, that’s what you do and everyone else did it.

You took out student loans to pay your way through school because, well, that’s what you do and everyone else did it.

You went to school, got your degree, and just started your adult life. It’s just that now you have $100,000 in student loan debts and a low paying job.

What do you do? Here are five ideas.

Control current living expenses.

The first thing to do is get control of your current living expenses. The only way to make sure your debt doesn’t grow any faster is to immediately stop acquiring debt.

Calculate your net or true take-home pay per month. This is what you receive after you pay your taxes and benefits.

Then, calculate your total monthly living expenses, including minimum student loan payments, car expenses, entertainment, rent, and every other monthly expense you have.

If your monthly living expenses exceed your take-home pay, you must cut your monthly living expenses, increase your monthly income (more below) or a combination of the two.

It may feel like a cold reality, but you’ll do yourself no favors by overspending what you bring home from month-to-month.

If this means you must continue living at home or find more roommates to lower your rent, then do so. If you must switch from a premium phone company to a discount service company, such as Republic Wireless or Cricket Wireless, do it sooner rather than later.

Look for as many ways as possible to lower your living expenses. Just as every little calorie counts, so does every little cent as you work to get your student loans under control.

Pro tip: Apps such as Mint and Personal Capital can help you manage your budget all from your phone that’s now on a discount service plan.

Increase your income.

This is a two-part step.

First, increase your W-2 income. W-2 income is the income you earn from working for someone else and not contract employment. Because you currently have a low paying job, it’s in your best interest to increase this income.

Tell your current boss that you need to increase your income. Work with your boss to come up with mutually agreed-upon performance expectations to increase your pay in a specified period of time. This time is commonly relegated to your annual performance review, but some companies have more flexibility.

Then, work your butt off to exceed your agreed-upon expectations. Document every success. Save every email with even an ounce of praise. When you have your next performance review, sell yourself so hard it’s impossible for your boss to not give you a raise.

In the meantime, look for other, higher-paying jobs both within your current company and outside if only to improve your interview skills. If you find a higher paying job, use your improved performance and skills to sell yourself for a higher income.

Pro Tip: You can respectfully decline to answer questions about your current pay, but to decline to answer questions successfully you must do so impressively.

Something like, “Thank you for that question, however, I’m going to decline to answer that. I’m focused on the value that I can provide you going forward with my current skills and knowledge. This is different from what I was capable of when I was hired for my last job.”

The second part to increase your income is to make money outside of your primary job. Yes, this means getting a second or even a third job. While that’s painful, it’s not unheard of. Many people have several jobs until they get on their feet. I had multiple jobs at once, myself.

Pro Tip: You don’t have to increase your income with more W-2 jobs. You, too, can become your own boss.

Become your own boss.

I’m amazed by the opportunities of today’s gig economy.

Bloggers and YouTube stars you’ve never heard of are making millions of dollars a year. Peripheral workers, such as social media experts and virtual assistance, are springing up to help those bloggers and YouTube stars — and are making sustainable incomes of their own.

Could you be the next million-dollar internet guru or billion-dollar app creator?

Possible, but not probable.

What is possible is that you could create a nice income for yourself to supplement the income from your W-2 and better tackle your student loans. It’s even possible that you could create enough income from being your own boss that you don’t need a W-2.

Pro Tip: This strategy is playing the long game. An overnight success actually takes years to accomplish. While there are lots of winners in the gig economy, most of them won because they persisted.

Avoid more debt.

Not unlike controlling your living expenses, avoid adding more debt to your portfolio of debt.

Avoid taking on a mortgage, a car loan, if possible, more student loans, loans for a cell phone or furniture, payday loans, or any other opportunity to finance an improved lifestyle. Debt is debt.

The less you take on until your student loan balance is paid off, the better.

Pro Tip: The possibility of increasing your income by earning another undergraduate or graduate degree is enticing. Many employers will pay for some or all an employee’s additional education. Before going back to school, see if your employer will help pay your way. If not, consider bouncing to another employer who will.

Refinance your student loans.

Under certain conditions, you can refinance both federal and private student loans and there are several banks and other businesses to help you.

If approved, you could lower your interest rate, lower your monthly payments, or lower both your interest rate and monthly payments.

Each year, you can apply for an income-based repayment plan. There’s no fee to apply and if you qualify for one of four different kinds of repayment plans, it may help you meet month-to-month expenses until the following year.

Understand the fine print of your income-based repayment plan. For example, if you’re married, you may have to file taxes separately from your spouse. There’s also the possibility that your remaining balance will be forgiven in 20 to 25 years.

This hasn’t happened for anyone yet and there’s the possibility that you’ll receive a tax bill for any amount forgiven, which could be expensive. (Public Service Loan Forgiveness happens sooner, and doesn’t come with a tax bill.)

Pro Tip: Simply lowering your monthly payment will likely mean that you’ll pay more money over the life of your loan. Put as much money that you free up from lowering your monthly payment towards your highest interest debt to pay your debt off more quickly.

Bottom line.

The best way to improve a bad situation is to have an improvement plan.

This five-point plan should get you headed in the right direction. As you proceed, tweak as necessary to continue heading in the direction of paying your student loans off and increasing your income fast.

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