With a Recession on the Horizon, the Time to Pay Down Debt is Now

The time to pay down debt is now

The nearly double-digit inflation that ripped through the American economy in spring and summer of 2022 left most financial experts asking a key question: Is a recession next? That’s because the Fed (aka Federal Reserve System, or America’s central bank), has hiked interest rates three times since the beginning of the year in response to inflation and in an attempt to slow down the economy. And financial experts are predicting another rate hike this month

Paying down debt is always a number-one piece of advice to build financial stability, but when the economy is unstable and a recession is possible, it becomes critical to dump debt. 

Why Pay Down Debt to Prepare for a Recession? 

Recessions are defined by slow economic growth and greater uncertainty. This slowdown shows up in several ways on a macro level, like decreased GDP (Gross Domestic Product, i.e. how much America is producing and selling). But for people (as opposed to economies), recession usually leads to 3 telltale things: 

  • Cost of living goes up
  • Wages are cut and layoffs become more common
  • A decrease in consumer spending caused by (1) and (2) above, which further deepens the economic slowdown

“Recessions cause consumers to almost instinctively protect their financial position, by spending less and looking for ways to protect their income” says Jessica Owens, financial advisor at Brice Capital “Both are smart moves. But if you are carrying significant credit card debt, now is the time to make aggressive moves to resolve that debt.”

Owens details the reasons:

You want to free up your credit as protection

A less-secure job market means you need to put yourself in a position to be resilient, should you experience job loss or wage cuts. And part of that resilience comes from having a solid emergency fund in place or ensuring there’s wiggle room on your credit cards.

You want to avoid increasing interest rates

With interest rates likely going to continue to rise, carrying a lot of credit card debt is likely to get even more expensive than it already is. An additional percentage point of two added to already sky-high interest rates can push your balances into the danger zone, and possibly max you out. 

This is why debt consolidation loans are a good option at this moment, before a recession strikes. If you have sufficient household income, you can qualify for a loan that is likely a much lower rate than your high-interest credit cards. But you’ll want to roll all your credit card debt into a consolidation loan soon. After a recession, interest rates are likely to continue to climb.

You may not be able to access loans as economy contracts

Once the economy is in a full-blown recession, capital tends to freeze and stay in place and accessing new debt – i.e new loans or new credit cards — becomes much more difficult and burdensome. In other words, lenders become more cautious in the same way consumers become more cautious. 

Debt Consolidation Loans are a Good Option to Pay Down Debt — If You Act Now

With all the above looming economic changes in the wings, now is the time to make a definitive plan to manage any credit card debt you are carrying. And transferring that debt to a debt consolidation loan is a relatively straightforward manner for doing just that if you don’t have the means to pay debt down right now. 

“Debt consolidation loans allow you to basically pay off all of your high-interest credit card debt with a single loan,” says Owens from Brice Capital, which specializes in debt consolidation loans. “And many people qualify for a lower interest rate than what they are currently paying,” she says.

Both your monthly income and your credit rating will both play a role in determining what kind of interest rate you can get for a debt consolidation loan. And your total debt load also plays a part. You are able to do some online research to see what your new monthly payments might be with a debt consolidation loan, using online calculators

But the surest way to find out if a debt consolidation loan is right for you is to speak with a consultant. The consultant will ask you a few questions and be able to provide an analysis of your situation right away. The most important step is to take the first step, before a recession further dampens consumers’ ability to manage their finances.

Guide to Money Management

Being able to manage your money responsibly is a skill that is simple to learn but difficult to implement in our everyday lives. That being said, here are some essential steps to take when looking to improve your money management.

Create a realistic budget

One of the first steps to money management is setting a realistic budget that you can stick to. You’ll need to make a list of all your monthly expenses such as rent, transportation costs, and living expenses. This will help you see exactly where your money is going and highlight areas where you can make changes to your spending habits. It is also a good idea to refer to your budget frequently to make sure that you won’t exceed it by the end of the month.

Limit recurring charges

If you are currently subscribed to services that you barely use, then you are missing out on potential savings every month. It can be very easy to forget about these payments as they are charged to your account automatically by default. With a budget in place, you can easily identify which services are charging you at the end of each month. After tracking your expenses, make sure to cancel all unnecessary recurring charges in order to better manage your money.

Build an emergency fund

Building an emergency fund is an essential step in money management that is often overlooked. Life is full of uncertainties so it is a must to have some extra money saved up for when things go bad. The easiest way to build an emergency fund is to set up automatic contributions that are deposited into a savings account every month. The goal is to separate this emergency money from your checking account in order to reduce the temptation of spending instead of saving it. The minimum amount that you should have saved up is three months’ worth of expenses, but having, even more, is always better. Even if you aren’t able to add much to your emergency fund, a small amount can still save you from unexpected emergencies.

Pay off high-interest debt

High-interest debt can be a huge obstacle when trying to achieve financial freedom and manage your money. Paying off high-rate debt like one of unpaid credit card balance is a must. In order to save the most money, you should make the minimum payments on all debt while prioritizing paying off the card charging the highest interest rate. Then you can start gradually moving on to paying off cards with lower rates. While this method isn’t the most motivating, it will always result in paying less interest over time.

Top 4 Investing Strategies

There are plenty of different ways to invest your money nowadays, but strategies may be more advisable than others for maximizing your returns. So here are the top four investing strategies that you should be aware of.

Diversifying with Index Funds

Index funds attempt to reduce the risks of individual stocks by allowing investors to own a well-diversified list of stocks. Popular choices include S&P 500 and the Nasdaq Composite which feature companies from almost every industry. Index funds can yield great results with reduced risk thanks to your diversified portfolio. Also, they are simple as you won’t need to research individual companies and corporations. On average, S&P 500 has returned around 10 percent annually which is excellent in the long run. Furthermore, these funds can be purchased with incredibly low expense ratios which makes them even more appealing.

Dollar-cost averaging

Dollar-cost averaging (DCA) is an investment strategy used to reduce risk when buying your investments. Instead of purchasing your assets at all at once at one price, DCA lets you make several small purchases.  This decreases the risk that you are purchasing the asset at a higher price than necessary. This is contrary to the strategy of timing the market where investors attempt to purchase assets at the lowest price possible. Of course, correctly timing the market will yield the best results, however, it is practically impossible to predict short-term changes in prices. Therefore, dollar-cost averaging can help minimize downside risk by dividing large investments into smaller equally-spaced payments.

Cryptocurrency

Cryptocurrency is a kind of digital electronic-only currency that is intended to act as a medium of exchange. It’s become extremely popular recently thanks to the possibility of getting incredibly high returns on your investment. In addition, Cryptocurrencies are usually liquid assets that can be bought and sold at virtually any time. However, this type of investment is also very risky since cryptocurrencies are highly volatile. This means you could end up losing all your money by making a bad investment.

Income Investing

Income investing is an investment strategy that focuses on building a that regularly returns cash payouts, usually on a quarterly basis. This can help investors create a steady income stream in the form of dividends. The cash returns can be used for anything or reinvested to purchase more stocks. Dividends can either increase or decrease depending on how well the company is doing financially. Just like regular stocks, income stocks can still drop in value and lead to losses which is the main risk in this type of investment.

Debt-To-Income Ratio: What Is It and Why Is It Important?

Debt-To-Income Ratio What Is It and Why Is It Important

A recent study found that only approximately 29% of American adults are considered financially healthy. A big part of improving financial health is paying off debt. Some people seem to think that the best way to obtain the little extras they need in life is by taking out loans or using credit cards. Debt-to-income ratio is vital to your financial standing.

While using credit or loans will help you buy something faster, it can also affect your financial health. When applying for any loan, one of the main things a lender will consider is your ratio. Below is information about this term and the importance of a low debt-to-income ratio. 

What is Debt-To-Income Ratio?

The term debt-to-income ratio is used to compare a person’s monthly gross income and their monthly debt expenses. If you want to calculate your own ratio, you will need a few basic pieces of information. 

Making a list of your monthly personal loan, car loan and credit card payments is the first step in this calculation process. Once you have the total amount of payments you are making monthly, you need to figure out your monthly gross income. 

You will then divide the debt payments you have by your income and that percentage is your debt-to-income ratio. Be sure you calculate your monthly income before taxes to ensure you get an accurate ratio. 

The Importance of a Good Debt-To-Income Ratio

When applying for a loan, the lender you use will consider many factors before approving your request. One of the main things a lender wants to know is how much debt you currently have. If your debt-to-income ratio is high, it will be difficult to get a loan for a significant amount of money approved. 

Calculating your ratio before applying for a loan can help you greatly. Most lenders will approve loans for applicants with a ratio of 36% or below. If your current debt-to-income ratio is higher than this, you may need to address this issue before applying for a loan. Avoid making money mistakes by applying with low ratio.

Great Tips For Lowering Your Debt-To-Income Ratio

Is your current ratio high? If so, it is time to do something about it. One of the first things you can do to lower this ratio is to pay off your outstanding debt. Most American consumers have around $3,000 worth of credit card debt

Regardless of how much debt you have, it is crucial to make a comprehensive plan to pay it off quickly. This is a good way to reach financial stability. You also need to avoid taking on any new debt until you get your current debt-to-income ratio down. By recalculating your ratio monthly, you can estimate how much progress you are making. 

Education is Power

The more you know about what lenders look for when inspecting a loan application, the easier it will be to get approved. By following these tips, you can lower your debt-to-income ration and get the funding you need with ease.

3 Outdoor Activities for a Great Labor Day Weekend

3 Outdoor Activities for a Great Labor Day Weekend

Most people view Labor Day weekend as the official end of summer. After this holiday, most children will be back in school. If you are trying to have a great time with your family this Labor Day weekend, now is the time to start planning activities. 

Over 60% of Americans claim they plan on traveling this Labor Day. Whether you plan to travel or stay home to celebrate this holiday without spending much, consider participating in the outdoor activities for Labor Day weekend below. 

1. Explore Nature on a Family Hike

During the summer months, the weather outside is absolutely beautiful. This means it is a great time to take your family on an excursion into nature. One of the best ways to give your children a sense of how enjoyable the outdoors can be this Labor Day is by taking them on a hike. 

Luckily, there are around 6,000 state parks in the United States. These parks have a combined total of 14 million acres of land. Many of these parks have great hiking trails that are perfect for individuals and families. 

If you plan to go hiking with your family this holiday weekend, be sure to check the weather in the area you will be traveling to. The heat during this time of year can be brutal. If the temperatures are going to be hot where you are hiking, be sure to bring along plenty of water and sunscreen for the family. 

2. Biking Can Be Lots of Fun

Getting your children off of their electronics and into nature can be difficult. As you start to plan outdoor activities for Labor Day weekend, be sure to poll the family. With the results from this poll, you can start to narrow down the list of outdoor activities at your disposal. 

Taking a family bike ride can be a lot of fun. Most children love riding their bikes. If you plan to travel to an area to take a bike ride, you need to make sure you can safely transport them in your vehicle. 

If some of your children cannot ride a bike due to their age, investing in a rear-mounted seat for them is crucial. With these rear-mounted seats, your baby or toddler will be able to enjoy the bike ride with the rest of the family. This activity is fun without making a money mistake.

3. Plan a Beach Day

A day at the beach is perhaps one of the most popular outdoor activities for Labor Day weekend. If you live relatively close to a beach, now is the time to start booking your accommodations.

The best way to make your day at the beach enjoyable is by planning ahead. Getting to the beach early will help to ensure you and your family get a great spot right on the water. You also need to make sure you have plenty of sunscreen, sandwiches and drinks to go around. 

Making Memories with Your Family 

Now that you know more about great outdoor activities for Labor Day weekend, it is time to start planning. By planning your trip well in advance, you can focus on making memories with your family yet maintaining financial stability.

Can you Make Money Trading Lithium?

make money trading lithium

Lithium is well known for manufacturing rechargeable batteries and other industrial uses. This is mainly because of its excessive low density preferred by electric cars, Smartphones, digital cameras, and laptop production. For this reason, the valuable metal has steadily become popular in the market. 

As trends and environmental standards embrace energy efficiency, there is a great need for safer and cost-effective products. The mounting demand undeniably instigates the use of lithium products because of their higher voltage capacity, energy density, and reduced self-discharge levels. 

In addition, there is the explosion of lithium stocks that engage organizations involved in the processing and mining of the metal. While most people speculate whether the industry is productive enough, investing in the best lithium ETF is not a bad idea at all. This topic will take you through an imperative process on how you can make a kill with Lithium investing.

How to Invest in Lithium

It is the dream of every investor to make an extra coin out of it. Enthusiastic individuals can consider Exchange Traded Funds (ETF) and lithium stocks. An EFT is a security sold on a stock exchange that monitors commodity, index, and sector. Often, they contain several investments like bonds, stocks, and commodities. If you have to choose between stocks and EFTs, it is worth noting that the former has several concentrated risks.

On the other hand, EFTs offers diversification and broad exposure. Nonetheless, for experienced lithium investors, buying lithium stocks act as a valuable alternative venture. All in all, experts advocate that individuals can get better results if they invest in focused ETFs or trade with startup firms using low-cost lithium. Another ideal option is to invest in reputable lithium manufacturers who run low-cost operations. 

Although ETFs behave similarly with stock investments, they gain their value from concentrating in several related companies. In other words, it translates into investing in numerous slices of Lithium through ETF instead of settling with a particular company with stocks. 

However, ETFs can be more susceptible to market downturns popular with batteries and lithium companies. As a result, they may not offer the broad diversification or cynical properties expected. Here are some of the top best Lithium ETFs you should consider.

The Global X Lithium & Battery Tech ETF

This ETF invests in a variety of organizations making lithium batteries or producing Lithium. In the process, they provide much-needed exposure to battery and lithium markets. Most of them have a market value of approximately 50 dollars per share, with the most investment in Asian companies. At the moment, Albemarle stands out among the fund’s best holdings.

Other prominent brands include Tesla, LG Chem, BYD, Samsung SDI, Ganfeng Lithium, Sumwoda Electronic, etc. This option is suitable for individuals eager to achieve intensive exposure in the lithium world compared to other ETFs.

ETFs Battery Tech and Lithium ACDC

In contrast with the previous option, investment here involves companies creating batteries and the mining firms that manufacture commodities needed for the process. Over 50% of the stock in this range is in Asia, while the rest splits between the US and Europe. 

Some of the best holdings include Tesla, LG Chem, Mineral Resources, BYD, Galaxy Resources, Pilbara Minerals, Renault, and Solar Edge Technologies.

 Top Best Lithium Associated Company

Before investing in Lithium, it is crucial to pinpoint prominent lithium companies. Mainly, this involved brands that mine, produce and refine the commodity.

1. Albemarle Corp

Thanks to the company’s capacity to scale, Albemarle is the most favored lithium partner globally. Situated in Charlotte, North Carolina, the geographical location is perfect for the company’s access to the worldwide lithium market. Also, the company operates on a minimal operating resource which makes it stand out amongst others.

2. Galaxy Resources

The Australian-based company produces Lithium from a hard-rock venture known as Mount Cattlin. Currently, the famous brand has two other upcoming projects in Chile (Sal De Vida Catamarca brine) and Canada (James Bay Hard Rock).

3. Livent Corp

Compared to other lithium companies, Livent is more established and likely to earn you some good money. A 2020 report about a long-term coalition with Tesla prompted a 50% growth by the end of the year. As Livent Corp continues to supply Tesla with higher quantities of Lithium, the future looks promising for interested investors.

4. Lithium Americas

Currently, the Canadian-based firm has two developing lithium projects in the US (Thacker Pass hard-rock) and Argentina (Cauchari-Olaroz brine). The firm is listed in New York and Toronto, with the US project taking pride in its capacity of holding the most considerable quantity of Lithium in America.

5. Pilbara Minerals

The Australian-based company also runs the Pilgangoora project, famous for tantalum and Lithium. The hard-rock project hopes to produce over one million pounds of tantalum and 1.2 million tonnes of spodumene if things go as planned. 

Conclusion

A worthwhile investment should fit in your long-term strategies and should not affect your risk lenience. More participants consider the investment worth a trial with a predictable demand for electric vehicles and other lithium uses. Yet, there is much need for extensive analysis for individuals to understand Lithium’s market value and how to trade wisely.

Stock Trading Is One of the Most Lucrative Forms of Investment

stock trading

Stock trading is one of the most lucrative forms of investment. You make passive income by betting on the performance of a company that you are not involved in daily running. However, before you start investing in stocks and shares, you need to learn the basics of stock trading and how you can make money from this form of investment.

Learn About Stocks and Shares

Take your time to learn about stocks and shares and how the stock market works. For starters, it is better to start with stocks because they are less complicated than shares. Stock is a general term for equities sold at a stock market, while shares refers to owning a piece of a particular company.

There is plenty of free educational resources that you can use to learn about stocks and shares. What’s more, the best brokers offer free education to investors and have knowledgeable and experienced staff who will advise you on the best stocks. You can also practice virtual trading before investing real money into stocks.

Find A Reliable Online Broker

To trade in stocks, you need to open a stock account with an online brokerage firm. Brokerage firms range from small upstarts to established brokers with a large portfolio of investment options.

Take your time to research the best trading platforms in terms of customer experience and commission fees by reading online reviews and consulting experienced investors. Compare the fees charged by different brokers. Check whether they provide investor training, ease of using their website or app, and the investment options they offer.  

Buy Your First Stocks

After finding a suitable brokerage firm, open an account and transfer money from your bank account. Most online brokers have very low minimum deposit requirements, so you can start by investing as little as $200.

Only invest money from your savings because stock trading is a long-term investment that you can’t recoup in a few months. Don’t use funds that are budgeted for near-term expenses such as electricity bills or rent.

It takes time for the funds to transfer and become available for trading. However, some brokers allow you to trade while the transfer is being processed while others require you to wait for a few days. Once the money is available, select the stock or share you want to buy and place an order.

Market and Limit Orders

Typically, the brokerage firms give you several investment options, but there two common types of orders you can use to buy or sell stocks.

Market order: instructs the broker to buy or sell the stock at the best price available on the market.

Limit order: requires the broker to buy or sell stocks at prices better than the specific price you set.

Bundled Stocks

If you are not sure which stocks to buy, you can invest in Exchange Traded Funds (ETFs). ETFs are bundled stocks that allow investors to buy stocks of different companies. The large portfolio protects investors from exposure to wild fluctuations in share prices.

Risk Tolerance

Stock trading comes with risk because you can make or lose money on the stock markets. You need to have some level of risk tolerance because sometimes a stock may plummet to unprecedented levels due to some odd events. If you panic and sell the stock, you might lose money only for the stock to rebound in a few months’ time.

You can start by selecting safe stocks whose prices have been stable for the past five years. Later on, when you start making profits, you can try the riskier stocks, such as promising startups or undervalued stocks.

Learn to Analyze Stocks

If you are to engage in stock trading on the long term, you need to learn more about the dynamics that determine stock prices. Your first stock buys may be informed by advice from your broker, but you should be more proactive about future buys.

Learn about stock valuations by analyzing the performance of different stocks. Use publicly available information such as earnings reports, financial reports, and analysis by reputable financial analysts to gauge the performance of different stocks.

Your broker may chip in with information about the major performance indicators and risk ratings of different companies, so you don’t have to do the calculations. However, you should understand the meanings of different ratios and other metrics used in analyzing stocks. Further, take time to learn the core business of different companies so that you can determine if their model is sustainable.

Tax Implications of Stock Trading

Income from stocks attracts capital gain taxes. Typically, the amount of tax levied reduces if you hold a stock for more than a year. You can also invest some of your salary in stocks as a part of the retirement savings. The benefit of salary-based investments is that they are deducted from income before tax, reducing the tax burden.