Regardless of how much experience you have with managing your finances—be it decades or days—a common psychological challenge I see when it comes to managing money is low self-esteem. Psychological research suggests that people with high self-esteem focus on growth and improvement, whereas people with low self-esteem tend to focus on not making mistakes in life. So, the key challenge for most when it comes to managing money is figuring out ways to boost self-esteem so that growth and improvement can happen.
This is where self-compassion comes in. Self-compassion is the act of being less critical of yourself and potential shortcomings. It’s also a form of optimism that takes shape by giving yourself permission to relax a little bit. In fact, I would argue that self-compassion is not only a key skillset for financial improvement, but also for overall quality of life. Here are five strategies for practicing self-compassion today:
#1 Daily positive affirmations
Self-encouragement can go a long way when it comes to boosting self-esteem, however, sometimes positive affirmations can backfire for people with low self-esteem, which is why it’s important to build yourself up in a realistic and authentic way. Instead of waking up and telling yourself, “I’m going to be a millionaire”, try something more like “I am resilient and I’m going to get through tough financial times.”
Pro tip: Write down your affirmation on a piece of paper and tape it to your bathroom mirror. You can read it to yourself as you’re getting ready for the day.
#2 Make a list of past financial achievements
The best way to challenge the negative voice inside your head is to use facts to disprove your beliefs. Past financial achievements are proof that you have what it takes to be financially successful. Don’t worry so much about the quantity of achievements, and whatever you do, don’t give someone else credit for your achievements. Even if someone helped you out financially, YOU were the one who asked for help. YOU were the one motivated to make the change. Don’t forget that.
Pro tip: Document your achievements in a financial journal or diary. Be sure to look at your achievements list from time-to-time as a reminder of your success and a quick self-esteem boost.
#3 Be your own best friend
Have you ever noticed how easy it is to be kind to a friend when they’re feeling down or having a bad day? It’s possible to do the same for ourselves. If you’re like me, you may make the initial mistake of thinking that being kind to yourself will force you to lose your edge, but it’s just the opposite! Remember that high self-esteem is related to growth…and growth means success, so believe it or not, people who are successful have a keen ability to bounce back faster after a setback because they aren’t as hard on themselves.
Pro tip: Use a financial journal or diary to vent about a financial problem you’ve encountered. Now pretend to be one of your best friends and write down the advice you think they’d give you.
#4 Ask for advice and welcome compliments
One of the underlying problems when it comes to financial management is a lack of feedback. Think about other life domains: work, school, sports, hobbies, and relationships. What they all have in common are mentors! Managers, teachers, coaches, experts, and partners are often there for us providing feedback and sometimes praising us when we’re doing well. With money management, on the other hand, most of us don’t have an expert or coach to get feedback about our performance. I highly recommend paying for at least one financial advising session to find out what you’re doing well. Be open to getting feedback about areas to improve, but really soak in and acknowledge the compliments about what you’ve achieved so far.
Pro tip: I’d recommend hiring a Certified Financial Planner (CFP®), someone who is more interested in looking at how you organize your money. If a CFP® isn’t within your budget, consider talking to a trusted friend or family member about your high-level financial goals and the progress you’ve made so far (no need to discuss specific numbers if you don’t feel comfortable).
#5 Don’t let your net worth define your real worth
If you’re struggling with low self-esteem I caution you when looking at your net worth. I’m not saying live in ignorance, but what I am saying is that it’s extremely unfair to let a single number define who you are. At Mint, our intent is not for you to see the net worth number and feel like you are worthless. The real intent is to use your net worth as a starting point for creating financial improvement goals. That being said, seeing it without context can do damage to your ego and work against your goal of improved self-esteem. To counter this feeling, I recommend writing down a list of qualities that make you good at managing your finances.
Pro tip: Look for clues in other areas of your life that have helped you save money and earn money. Perhaps it’s that you’re really organized so you end up paying your bills on time, or that you’re a good chef so you don’t eat out a lot which helps you save money.
If you’re struggling with low self-esteem, know that you’re not alone. Give these five strategies a try, and let me know if you notice a difference in your ability to be more self-compassionate.
The post Self-compassion: The only thing holding you back from mastering your money appeared first on MintLife Blog.
No one intends to drop out of college. If you show up to campus for your freshman year, chances are you plan to graduate in four years and use your degree to land a job. Maybe you even have the whole thing mapped out, step-by-step.
But then life happens. Whether it’s a family emergency, deteriorating health, stress burnout, or just the realization that college isn’t the right choice, plenty of people choose to drop out of their university every year. The problem is, your student loans don’t go away just because you never ended up with a degree.
So how should someone in this position approach student loan repayment? Are there any unique considerations to take into account? Here’s what you need to know.
Choose an Income-Based Repayment Plan
If you have federal student loans, you’re eligible for the same repayment options available to borrowers with a degree.
You may currently be on the standard 10-year repayment plan, which will have the highest monthly payments and the lowest total interest. You have the option of switching to a less expensive option if you’re struggling with those payments. Use the official repayment calculator to see which plan lets you pay the least.
When you choose an extended, income-based, or graduated repayment plan, you’ll pay more interest overall than if you stuck with the standard plan. If you’re not working toward a specific forgiveness program, then it’s best to switch back to the standard plan as soon as you can afford it to minimize the interest.
Refinance Private Loans
Private student loans have fewer income-based repayment options than federal loans, and they rarely offer deferment or forbearance options. But you can refinance private loans for a lower interest rate, even if you dropped out.
There are a few lenders that service borrowers with uncompleted degrees.
These may include:
- RISLA Student Loan Refinance
- Wells Fargo
- Discover Bank
- Advance Education Loan
- Citizens Bank
To be a good candidate for a student loan refinance, you must have a high credit score and no recent bankruptcies or defaults on your credit report. You also need a low debt-to-income ratio, and some lenders may have income requirements.
Financial aid expert Mark Kantrowitz of SavingforCollege.com said borrowers are unlikely to be good refinance candidates immediately after college because lenders usually require a minimum amount of full-time employment.
If you dropped out recently, you may want to wait a year before trying to refinance private loans. During that time, check your credit score through Mint, pay all your bills on time, avoid opening new loans or lines of credit, and pay your credit card bill in full every month.
Explore Deferment and Forbearance
Once you leave school, you’re eligible for a six-month grace period where federal student loan payments are put on hold. You won’t accrue interest during this time if you have subsidized loans, but you will if you have unsubsidized loans.
If you still need more time after the grace period has expired, you can apply for deferment or forbearance. Borrowers have to apply for deferment and forbearance manually and wait to be approved.
Deferment and forbearance are both federal programs that let borrowers avoid paying their student loans while still remaining current. The main difference between the two options is that interest will not accrue on your loan balance during deferment, but it will accrue during forbearance. For that reason, it’s harder to qualify for deferment.
Be careful about putting your loans in deferment or forbearance for a long time. The interest that accrues will capitalize, meaning it will be added to your loan’s principal. This will increase your total monthly payments and could delay your debt payoff timeline.
Apply for Public Service Loan Forgiveness
Public Service Loan Forgiveness (PSLF) is a program that encourages borrowers to choose a non-profit or government job. In exchange, your remaining loan balance will be forgiven after 10 year’s worth of payments, which do not have to be consecutive. It’s even available to borrowers who dropped out and never finished a degree.
“PSLF is always an option because it’s employer-dependent,” said student loan lawyer Joshua R. I. Cohen.
PSLF is only available for federal loans, and only those loans that are part of the Direct Loan Program. If you have FFEL or Perkins loans, you’ll have to consolidate them as part of the Direct Consolidation Program. This process will render them eligible for PSLF.
Be sure not to consolidate loans that are already part of the Direct Loan Program. If you’ve already been making payments, consolidating loans will restart the clock on PSLF, and you could lose credit for eligible payments you’ve already made.
The employer you work for must also be an eligible non-profit or government entity. Only full-time employees qualify for PSLF, which excludes part-time workers and independent contractors.
To be eligible for PSLF, you should fill out the employment certification form every year. This form asks for your employer’s contact information, your employment status, and more.
Once you submit the form, you should receive a notice verifying your employer and how many eligible payments you’ve made. Doing this every year will make it easier when you apply for forgiveness after your 120 payments have been made.
“It also gives borrowers an opportunity to dispute any errors or undercounts well before they reach eligibility for loan forgiveness, giving them plenty of time to address disputes,” said student loan lawyer Adam S. Minsky.
Borrowers can save money while working toward PSLF by choosing an income-based repayment plan instead of the standard 10-year plan. They also won’t owe taxes on the forgiven amount, so it’s best to choose the least expensive monthly option.
Try to Discharge Your Loans
If you couldn’t complete college because the department you were studying in closed, or your school committed fraud, you may be a good candidate for discharging your student loans completely. If this happened to you, contact a student loan lawyer who can help you file a case.
The post I Dropped Out of College: My Student Loan Repayment Options appeared first on MintLife Blog.