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Why You Need Financial Cheat Days

By U.S. News & World Report

When we think of “cheat days,” we tend to think of a sweet treat or indulgent meal that breaks a cycle of strict dieting. A cheat day is meant to satisfy cravings, and it’s a great way to incorporate foods you normally wouldn’t include in your diet without ruining your metabolism. Similarly, a financial cheat day can help you budget better and prevent an overindulgent, perhaps impulsive, shopping spree.

There are plenty of financial resolutions that can help fatten your wallet this year. You can check your credit card history, increase your savings or adjust your lifestyle to live well below your means. The Internet and mobile apps make it easy to monitor spending, and even blogs like this one provide helpful tips on how to maximize your savings. But sticking to a strict money diet can be mentally exhausting, and even the most diligent saver can suffer the occasional slip up here and there.

The discipline and patience needed to stick to your financial resolutions can be taxing, just like how following a strict diet can drive you crazy. Just like a cheat day when you diet, allowing yourself the occasional financial celebration can help you feel indulgent without going overboard. “Overspending and not showing cash available to support your debts can make it hard to get home mortgage financing or get a commercial or business loan,” says Brad Hettich, founder of the finance and loan company Commercial Lending X. “But that does not mean you have to reserve all of your cash. I usually tell my clients they can still make a purchase here and there, but the key is not to overindulge every month but just occasionally, making it so most months they continue to build up their cash reserves.”

Culprits of Overspending and Indulging

It’s difficult to live a frugal lifestyle when we’re surrounded by messages telling us to buy, buy, buy. We’re pressured by our peers to spend money in order to keep up with our social lives; fashion trends encourage us to always be on the hunt for the latest styles so we can fit in with our friends. Shopping is a sport that requires time and mental energy. Last year, the National Association for Professional Organizers found that 54 percent of Americans feel overwhelmed by all the stuff they have, and 78 percent don’t even want to deal with it. This habit of overspending has led to roughly $712 billion in credit debt owed by U.S. consumers, according to a NerdWallet analysis, and is why many financial advisors recommend planning and sticking to a monthly budget.

Triggers such as stress or a bad day at work can also lead to trigger-happy spending habits that may leave you with buyer’s remorse the next day. Extreme emotions like depression or sadness can encourage people to shop or make purchases as an easy way to cure their emotional state. Have you ever gone out and impulsively ordered something from Amazon when you were upset? Or how about dropping Benjamin’s at a club to celebrate a bonus you received at work? Instead of waiting for a moment of overindulgence though, make it a point to reward yourself every now and then for your hard work. Small, semi-regular treats are a welcomed break from your regulated money diet and can provide an additional incentive to help you stay on track with your financial milestones.

Moderation Is the Name of the Game

A financial treat doesn’t have to be a large purchase; it could be something as simple as buying a grande mocha from Starbucks or buying lunch instead of bringing leftovers to work. Or a financial indulgence can be an investment toward a more expensive reward, like a piece of clothing or a new bag. Giving yourself a specific reward or goal to work toward can help you to avoid temptation and keep you from spending your paycheck on a single item. It also helps to keep some sort of schedule in order to keep track of your financial rewards. Consider creating a calendar with an end goal so you can always keep your eye on the prize. For example, mark in your planner when you want to treat yourself with a trip to your favorite coffee shop.

It’s important to remember that financial cheat day’s only work when they’re incorporated into your regular saving habits. If you find you’re overspending monthly, try holding on to your pay stubs and calculating how much you spend in one week. Consider switching to cash and leaving your debit and credit cards at home to avoid spending on a whim. Sometimes all it takes is bringing your lunch to work everyday to help you reach your financial goals and free up cash so you can reward yourself.

More from U.S. News

10 Foolproof Ways to Reach Your Money Goals

12 Ways to Be a More Mindful Spender

10 Money Leaks to Shut Down Now

Why You Need Financial Cheat Days originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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