The Broadstar Financial blog

3 Effective Ways To Beat Financial Stress

stressing over billsAre you losing sleep over financial troubles? Is anxiety and worry eating at you everyday because debts are piling up? Well, financial stress can definitely get the best of us; however, you can fight back by beating it! In order to leave financial stress behind, you must first identify what is causing your worries and Broadstar Financial Group has compiled the most common causes and has paired them with simple solutions to get you out of that rut.

Reasons Behind Financial Stress

Financial stress is occur from a variety of things and may even take a toll on your health, in fact, it can alter you appetite, sleep patterns and much more according to an article from Fox News. This, of course, makes it even more important to beat financial stress because it can have adverse health effects if you’re not careful. At any rate, some of the common causes of financial stress include a change in salary (job loss, pay cut, living on fixed-low income), credit card debt and lacking a financial plan.

Each stressor could be a combination of many things like medical bills, divorce fees, living paycheck-to-paycheck and much more. But, you can fight back to recover – it just takes some savvy solutions and strategizing to overcome the stress. With that said, here are some effective ways to beat financial stress!

  1. Make A Budget

One of the simplest ways to get back on track with your finances is to make a budget because it will help you see exactly where your money is going. First, record your monthly spending and make a note of all your bills that are fixed or variable. For instance, your mortgage/rent is most likely a fixed payment, which means it doesn’t change. A variable bill would be something like gas for your car or your groceries because these can fluctuate. Once you’ve got the list in front of you, plan for next month’s expenses and make sure you know your net income so you are not taken by surprise. After you have this information in front of you, look for ways to spend less – perhaps you can buy groceries from a discount store, clip coupons or take public transportation to reduce travel expenses. Small savings here and there can really add up to a lot of money!

  1. Consider Debt Consolidation

If you have been reliant on credit cards because you are suffering from a job loss, a pay cut, a divorce, numerous medical bills and other unexpected financial implications, you may be able to seek immediate payment relief from a debt consolidation loan to reduce the strains of your credit card debt. Credit cards are notorious for having high interest rates that make repayment a constant struggle because it adds more and more to your amount owed. Instead of dealing with numerous credit card payments and sky-high interest rates, a debt consolidation loan through Broadstar Financial Group could help. It’ll provide you with a low, single-digit interest rate by combining your credit card debt into one loan that makes managing the debt much easier with one simple monthly payment. This can give you more flexibility when it comes to your money and will save you thousands of dollars in the long run.

  1. Create Goals

This tip goes hand-in-hand with budgeting because the lack of a financial plan can cause stress. That means you should establish financial goals as it will give you something to look forward to. Perhaps you want to start an emergency fund, save for retirement or have enough money to go on a dream vacation. The point is to create financial goals that you can eventually attain and having a strategy to save for these goals can help you alleviate financial stress.

Are you ready to beat financial stress with these tips?

The Dangers of Raiding Your IRA and 401K

retirementYou may be in a financial position where you’re considering raiding your IRA or 401K retirement fund: Maybe you want the money to pay off existing debt or have immediate cash needs. While your retirement fund may seem just like an ordinary saving account with a sum of money that’s accessible and waiting to be spent, you should avoid dipping into these accounts at all costs. Raiding your IRA or 401K will likely hinder your ability to satisfy your financial goals in the future.

Tax Implications

In most cases, if you withdraw money from a Roth IRA or 401k before age 59 ½, you will be charged a 10% penalty and standard income taxes on the account. Though you can avoid the penalty and taxes on the withdrawals of your contributions with a Roth IRA, you will be charged the penalty and taxes on the withdrawals of profits—there are some exceptions to this rule, such as death, disability and medical expenses.

Despite these exceptions, most Americans who make early withdrawals are not exempt from the charges. The Internal Revenue Service (IRS) reported Americans paid almost $6 billion in retirement penalties in 2011. Between 2007 and 2011., Americans workers lost over $5 billion each year on average due to early withdrawals.

Missed Opportunities

Along with paying taxes and penalties, you are missing out on opportunities to grow the money you withdraw.  By withdrawing the funds, you no longer allow that money to be invested in the market and grow over time. Even if you pay back the amount you withdrew, long-term returns have been significantly impacted. With a retirement plan, your money is being invested in the stock market, and every day counts. Being out of the market for just 20 days can cost you $10,000 in investments.

What Can You Do?

Raiding your retirement fund early jeopardizes your future. While your immediate needs may seem more important, you will regret tapping into your retirement fund, as many Americans do. If you are considering withdrawing from your account, instead contact Broadstar Financial Group. We can help you get a debt consolidation loan and get some of the monetary relief you need right now.

Credit Card Debt: A Roadblock to Financial Security

financial security concept shutterstock_287890331Achieving financial security is a goal for many Americans, and for good reason – most people have some kind of debt in the form of a mortgage, student loans, or credit card bills. It can be quite difficult to attain stability if you have mounds of debt, as interest and other life expenses can conspire to put you further and further in the red. According to NASDAQ, the United States has racked up over $884 billion of outstanding credit card debt as of January 2015 and, if you among the 183 million Americans who are cardholders, this could be holding you back from financial security.

In fact, the average household has $16,140 of credit card debt, according to current data. Keep in mind that is just the average – there are plenty of Americans who have much more debt than that. Credit cards can be a major roadblock for those who are trying to become financially secure, as these accounts often come with high interest rates that make them hard to pay off. While there are plenty of factors that determine credit card interest rates, the average fixed interest rate is 13.1% and the average variable interest rate is 15.73%.

Before we delve into a solution to this problem, let’s use the figures above to provide an example of just how long it could take you to pay off $16,140 in credit card debt. Using the fixed interest rate of 13.1% and a minimum of $200 a month payment on $16,140 (without any new charges), it’ll take you 195 months of payments (over 16 years) to pay the card off. Guess how much that’ll end up costing you in the long run? $39,000! That’s more than double the original amount! Are you ready to get your financial freedom back with one simple solution?

Your Solution

Most Americans have more than two credit cards and the more you have, the more difficult it can be to manage the balances since they all come with different interest rates and due dates. Thankfully, it’s possible to bundle all of those credit cards into one single monthly payment with a low interest rate by opting for a debt consolidation loan. This type of loan can simplify credit card debt and cut your interest rates in half (or more), which would immediately reduce your financial burden. This, of course, would make it much easier to obtain financial security because you’d be able to pay down your debt faster and finally see your savings grow.

Additionally, when you establish a firmer financial footing, you can use long-term strategies to stay out of debt and in the green. Start taking control of your finances today with a debt consolidation loan from Broadstar Financial Group!

Smart Ways to Save for Retirement

According to a recent article from Forbes, Americans will need to save 25 times their annual spending to be comfortable in retirement. This follows the 4 percent rule, developed by financial planner Bill Bengen, which factors in an individual’s assumed annual spending based on salary. To put it simply, an individual that plans to live on $40,000 a year in retirement should have $1,000,000 saved by the time he or she retires. Understandably, this can seem a daunting expectation. However, by saving for retirement wisely, reaching an important savings goal isn’t as challenging as it may seem.

Consider these smart ways to save for retirement:

Invest in your Employer’s 401(k)

Never pass up the opportunity to participate in your employer’s 401(k) program. A 401(k) is a retirement fund that allows employees to invest in various mutual funds via automatic paycheck deductions. Rather than remembering to invest money into your retirement account at the end of each month, a 401(k) ensures it happens automatically. Most employers will also contribute to each employee’s 401(k) account if an employee contributes the maximum amount possible each month or pay cycle. An employer may match 10%, 25%, or even all of what you contribute. Because a 401(k) retirement fund is convenient and often involves employer contribution, it’s the most popular choice for retirement savings among American workers.

Open a Roth IRA

A Roth IRA is similar to a 401(k), but is established independently from an employer. A Roth IRA is an after-tax, individual retirement fund that allows account owners to withdraw all earnings tax-free after the age of 59 ½. Money is also invested into mutual funds, and unlike a 401(k), contributed money (not earnings) can usually be accessed at any time without penalty. Of course, the idea is that money is left untouched until you’re ready for retirement. Roth IRA contributions can also be made via an automatic withdrawal system for convenience and consistency.

Stick to a Budget

While this may seem like an obvious word of advice, a recent Gallup poll finds that just 32 percent of American adults actually adhere to a firm budget on a month-to-month basis. To be serious about retirement, you’ll need to practice strong financial habits throughout the entirety of your working life (and beyond). This means that not only should you stay committed to participating in a 401(k) and contributing to other investments, but you should be highly contentious of living within your means on a monthly basis and capitalize on opportunities to save even more.

Manage Debt Effectively

While adhering to a budget will likely keep you from accruing overwhelming debt, we understand that sometimes unexpected circumstances can result in significant debt. When this happens, it’s imperative to take action quickly. There are a number of customized solutions, such as those we offer here at Broadstar Financial, for easing the burden of debt and improving your financial situation. By addressing these challenges early on, you’ll be better positioned to transition into retirement in the right financial circumstances.

Learn more about savings and money management solutions by reaching out to Broadstar Financial today.