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How to save responsibly and spend wisely.



No one expects the worst to happen. But jobs aren’t permanent. Good health isn’t guaranteed. In general, bad things can happen. Which is why it’s so important to have a fiscal safety net to catch you and your family while you figure out the next move. The general rule of thumb is to save three to six months worth of pay as an emergency fund.

Alexandra has 45 months squirreled away in her rainy day fund.

Growing up poor with a single mom, Alexandra was often unhoused. And so as an adult she’s worked hard to find financial stability. For the last seven years she’s earned a good salary as an attorney as has her partner who’s an engineer. Logically, Alexandra knows she doesn’t need that much money sitting in her savings account. Her friends say she should invest it in the stock market or even buy the new house she and her partner have been eyeing. But she can’t bring herself to part with the money because, on some level, it’s the one thing that’s preventing her from feeling financially insecure.

On a recent episode of How To!, Athena Lent, Slate’s Pay Dirt columnist and founder of Money Smart Latina, opens up about her similar upbringing to Alexandra and how it affects the way she views money. She advises Alexandra on how to change her relationship with her bank account so she can make big purchases without feeling panicked. This transcript has been condensed and edited for clarity.

David Epstein: Alexandra, your savings seems to operate as an auxiliary plan if the rug was taken out from under you. But it also seems like a source of anxiety, correct?

Alexandra: It makes me feel sick to think about spending money because, to me, money is security.

My dad left us when we were young, leaving my mom to be a single mother. She worked as a teacher and had a low income. She also suffered from mental illness but was a wonderful mom and loved us a lot. However, there was a lot of instability. There were times when we didn’t have enough food to eat or we couldn’t afford to pay the heating bills. We lived in a hotel for a period and with family. Because of this, I’ve always had a lot of anxiety around becoming homeless, having to depend on other people, and not having money.

David: Are you frugal in general or just with big decisions?

Alexandra: I’ve always been very frugal. My boyfriend is an engineer and grew up in very different circumstances. Luckily he’s a saver but we’ve had fights about money. I remember early on in our dating life I wanted to buy a doughnut but didn’t have cash. He offered to pay for it using a credit card but there was a 50 cent charge. I was like ‘no, we can’t waste that money. We might need that 50 cents.’ So we had a fight about it. I realize that sounds so ridiculous but to me you never know if you are going to need that 50 cents.

David: Is this still a source of conflict with your boyfriend or has he come around to it?

Alexandra: He’s sort of adjusted to it and, for this reason, we do keep our finances pretty separate. When my parents separated, my dad bought a car in my mom’s name and did some other things to give her bad credit as revenge. So that’s another source of fear. I never want anyone to have access to my money.

Athena Lent: You’ve had some pretty traumatic stuff happen to you as a child and just because you aren’t standing on the street corner asking for money doesn’t take away from your childhood and your experience. I just want to share that because it’s OK to say ‘hey, this bad thing happened to me.’ A lot of dealing with our trauma is admitting it.

Alexandra: Yeah, it feels disloyal to my mom though.

Athena: You know what? It’s totally going to and that’s fine.

I was homeless as well growing up. My mom was a single mom and passed away right in front of me when I was a freshman in high school. I was passed around from relative to relative to be used for my social security checks. I ended up living with friends off and on in high school. I was truly homeless and that sucked. And I just want to tell you I’m sorry that happened to you. No wonder you flinch when you think about spending money.

Have you heard of a money script? A money script is your belief system. It’s things you tell yourself about money and it doesn’t have to be right or wrong. It’s just what you believe. Like a lot of other beliefs in life, it comes from when you are younger.

You associate money with your living situation. Your mom didn’t have money to pay the bills and you guys ended up living with a relative. So, in your head, you’re automatically thinking ‘OK, if I don’t make rent or my mortgage, I’m going to have to live with a relative. Your boyfriend is an engineer so I’m going to assume that if for some reason you couldn’t make your mortgage one month, he could cover for you. So you don’t necessarily have to live with a relative if you can’t make your mortgage. But your mind is going to consistently tell you that because that’s what you believe. That’s what happened when you were younger.

I don’t think you give yourself enough credit because you were so busy trying to survive when you were younger that now you’re thriving and it’s scary to you, right?

Alexandra: Yes. It feels like it will be taken away. Like if I do something wrong it could just disappear.

David: Athena, I was wondering if you had to work on your own money scripts to get to where you are now? 

Athena: Oh gosh, did I ever! When I started actually making money, I couldn’t hold onto it because, in my head, it could be gone at any moment. As a result I developed a shopping addiction. So for me that looked like having a new purse all the time or spending money to get my hair done or makeup done instead of actually fixing what was wrong with me and why I needed that happy hit in the first place.

Alexandra: That’s so funny. My sister is exactly the same way.

Athena: Because everyone is different and you’re either going to hoard your money or you’re going to spend it out of control and that’s what I did.

David: Athena, you reacted to your history with money in the polar opposite way than Alexandra. How can she start changing her money scripts or excavate the core problem? 

Athena: Alexandra, you are resilient. You now have a career. You have a partner who, I’m assuming, loves you to bits. So the hardest part of your life is over and you survived it.

So one of the things I recommend to help you work on your perception of yourself is to journal for 30 days. You can ask yourself: ‘Why do I have this belief about money? Why do I hold on to money?’ No one is judging you. You’ll be surprised what your brain will tell you.

What would a healthy relationship with money look like?

Alexandra: Oh my gosh, I can’t even imagine that. I guess it would be knowing I have enough money and not feeling anxious about spending it. But making sure I’m not living outside of my means.

Athena: So you can start by telling yourself: ‘I have enough money. I’m good.’

Alexandra: OK, so right, so right now I have forty five months of emergency fund, so to speak, and I know that I only need to have six. So does that mean that if I spend the rest on, let’s say, a down payment, that I can tell myself ‘You’re OK?’

Athena: You said you have forty five months. Almost four years. So maybe 12 months goes into a high yield savings account for an emergency fund and then maybe 12 of those months you go open up a money market account or an index fund, get some index funds going, and then maybe you can spend like one year or two years of that towards your down payment.

Alexandra: That makes sense. I do think that would help.

Athena: You know, I remember earlier in the conversation you were going on about that 50 cents and you were like, ‘No, we can’t spend that 50 cents!’ And I think when you catch yourself doing those kinds of things, you need to just be nicer to yourself, if you can, and just say, ‘You know what, I’m sorry I freaked out about that 50 cents, but I no longer need to worry about that 50 cents. I’m OK. I’m safe.’

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To hear Alexandra and Athena discuss how to feel comfortable shrinking your fiscal safety net, listen to the episode by clicking the player below or subscribing to How To! wherever you get your podcasts.

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Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



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