(Yo everyone – another incredible guest post for you to get your week started off right! WIM over at Two Guys Podcast has some time-tested money wisdom for you. My favorite thing about this post is that it has information about something I've been asked about recently – The 0 percent interest balance transfer. Check out these money management tips, give the guys at Two Guys One Show some love in the comments and check out what they are all about!) – M$M

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Hello, my name is WisdomIsMisery and I’m a recovering millennial. I was born in the 80s, which according to most media analyses appears to be something I should apologize for. Now I’m on the wrong side of 30 and doing my best adulting impersonation, which mostly includes nursing a part-time quarter-life crisis while working full-time for The Man. Part of pretending to be a grown up included paying off over $30,000 in debt by the time I turned 30. I share how I manage my debt and finances as a co-host on the family-friendly mostly PG-13 podcast @TGOSPodcast. I’m here today to tell you to do as I say and not as I did. Thanks for the venue @GenYMoneyMan!

Let’s get started with these 5 money management tips…

Tip #1: Buyer beware of the “0 percent interest” balance transfer!

If you read the fine print, most of those “low introductory” rate, 0% interest balance transfers actually have a 2-5% balance transfer fee; whereas, your APR is usually a flat annual interest rate. Let’s crunch some numbers to see why this is important to know.

Let’s say you have an outstanding balance of $5,000 @ 12.99% on your current credit card. You have a 12-month 0% interest “low introductory” balance transfer offer with a 5% balance transfer fee and 15.99% interest after 12 months.

Current Card: $5,000 @ 12.99% APR

Estimated Monthly Payments: $100
Estimated Monthly Interest = (12.99%/12*$5,000) or $54

0% Low Introductory Rate Balance Transfer:

New Balance = (5,000+(5%*5,000)) or $5,250

In other words, just through the act of transferring your debt to that new “low introductory” rate credit card you actually increased your total balance to $5,250 because of the 5% transfer fee. Since you’re paying $54 a month in interest on your credit card, you actually set yourself back almost 5 months ($250/$54 = 4.6 months of interest). On top of that, in this example, your new APR will be 3 percentage points higher (from 12.99% to 15.99%).

I’m not against balance transfers but know what you’re getting yourself into. Usually you should keep three things in mind before transferring:

Is there a 0% transfer fee? (If no, be sure to add the transfer fee to see what your new total balance be)
Will I be able to pay off the total debt within the “low introductory rate” window?
Will the APR on my new credit card be higher than my current one?

If you answered “no” to any of these questions, I would seriously give pause to taking the transfer offer. You’ll likely be better served making extra payments on your current card(s), using a consolidation loan, or looking into potential peer-to-peer lending services (if you have a high credit card score). There is ONE exception: see if you qualify for a card with a 0% transfer fee.

Tip #2: Decide what to pay first

Quick tip! The folks over at NerdWallet explained this, so I don’t have to reinvent the wheel. You can read more there but I really like their ‘Road Map to Debt Freedom’ infographic.

Via:NerdWallet

Tip #3: Automate Automate Automate

Back in my day, and at age 32 I believe I’m more than qualified to use this clause, there weren’t as many widely-available, free automated tools as there are now. I grew up in a time before smartphones. Terrifying, I know. But, my pain is your gain! For my budgetary needs, I use Mint.com. I’ve heard both pros and cons about Mint, so in full disclosure, I want to clarify that I do not work for Mint nor am I paid by Mint to sponsor Mint. I simply cite them because they’re user-friendly and I like them.

I recommend using any free budgetary site or app you prefer that meets your specific needs. Regardless of your choice, you need a budget. You’re a millennial for godsake, life is already hard enough! Automate anything and everything you can when it comes to your money and finances. This will free up time for you to binge watch Netflix and play on social media while your money works for you instead of against you. I’ve also found it’s always easier to responsibly manage my money before it hits my direct deposit than after. Once it’s in the land of direct deposit, how I’ll spend it is anyone’s guess.

Tip #4: The plan is less important than the goal

You can adjust the plan, but don’t adjust the goal. A lot of debt and money management “experts” would have you believe there is one plan and only one plan. For $19.99 they’ll be happy to sell it to you. I disagree. In my opinion, the best plan is the plan that works.

I tried several different plans. Some worked. Some failed. I never gave up. The point is every plan moved me towards my goal: debt freedom. I would try whatever works for you, until it stops working, then try something else. Whatever you do, do not give up until you’ve reached your goal. However, because I don’t want to completely waste your time, I’ll quickly share 4 different plans I used on my way to becoming debt free.

Pay extra debts down with “whatever is left” – Simple strategy. Not very effective, because they’re usually nothing left.
Pay the minimum balance + a set dollar amount. – Slightly more effective but dependent on how much extra you decide to pay.
Pay a random, but set-dollar amount. – You’re making progress but it will be completely dependent on how much you randomly decide to pay.
Pay a fixed dollar amount that is specifically tied to a final payoff date. – Now we’re getting serious! You’ll need to use a debt payment calculator. The easy part: calculating a plan for how much you’ll need to pay each month to pay off your debt. The hard part: sticking to the plan.

Tip #5: The more I learn the more I realize how little I know

I’ve been humbled over the years. I completely paid off my debts once, but I’m still learning new tips everyday. That’s why I’ve left Tip #5 for you. What’s some great advice you’ve used when paying off your own credit cards (websites, apps, etc)? What tips would you like to share with others? Don’t have any advice, encouraging words are always welcomed (and needed) when your debts seems insurmountable. Leave those in the comment section below as well as your thoughts, questions, and general advice.

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WisdomIsMisery–spoiler alert this is not my government name–is a former blogger and current podcaster. He is half of the TwoGuysOneShow.com dynamic duo where together with @IamRichJones he discusses Caeer Advice and how to live Debt Free as two millenials trying to make sense of the senselessness. In 2016, WisdomIsMisery will release an e-book covering in detail exactly how he managed to get into and pay off over $30,000 in debt by age 30. You can find us on Twitter @TGOSPodcast, via our official hashtag #TGOS, or on Facebook at Facebook.com/TwoGuysOneShow.

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