When you got a pay raise, what hopes did you have for this new money in your budget? Maybe you thought you’d have enough money to put toward your financial goals, such as saving more or paying off debt.
But now, all your efforts to manage your higher income feel like you’re spinning your wheels. Any gains you saw when you started earning more have disappeared — and you don’t seem to have anything to show for it.
If you’re earning more than before but feel as broke as ever, you may be financially stuck. Here are some common issues that could be blocking your financial progress, even as you’re making more money.
1. You’re missing your main money motivation
A growing savings account or shrinking debt balance aren’t inherently rewarding for most people. The typical person probably doesn’t find it exciting to manage money.
If you feel the same, then improving your finances might not be a motivation for you. But remember it can allow you to pursue the bigger goals that you care about. By making the connection between your bank accounts and your aspirations, you’ll see why managing your money matters.
Consider a major life step you’re working toward, such as starting a business, moving in with a significant other, becoming a parent, or buying your first home. You may want to achieve financial freedom and reduce the stress you feel over money. Then, determine the financial steps you’ll need to take to achieve the goal. Having a financial plan built around what you want out of life will keep you motivated.
2. You’re spending mindlessly
As you earn more, it’s natural to be less strict with your budget and spending. But this relaxed approach can turn into mindless spending when you buy items based on impulse, convenience, or even boredom, rather than on what’s important to you.
This overspending can show up in two areas: eating out and entertainment. The top 20% of income earners spend nearly six times as much on alcoholic beverages than the lowest 20% of earners, according to a 2017 analysis by Business Insider. Higher earners also spent 5.7 times money more on reading and 4.7 times more on entertainment.
Revisit your budget, and audit your expenses to see which nonessentials are eating into your spare cash. Practice being mindful with your money by checking in with yourself whenever you spend to ensure that your purchases align with your bigger money goals.
3. You’re deep in debt
Whether you have six-figure student loans or credit card balances that are out of control, high debt payments can feel like a financial trap that not even a higher salary can help you escape. You might not feel like you’re in a crisis, but your debt could be holding you back from making the financial progress you want.
If your debt payments are high compared with your income, consider strategies that can help you manage them. You might want to hit the reset button on your debt through student loan consolidation. With this option, you might be able to lower your monthly payments and interest rate.
With a decent income, you likely can find money in your budget to make extra debt payments, too. The debt snowball and debt avalanche methods can help you pay off debt in smarter, faster, and cheaper ways. And with each loan you pay off, you also will eliminate a monthly payment and increase your cash flow.
4. You don’t know what to do with money
Earning more money doesn’t mean you automatically know what to do with it. As your pay increases, you’ll have more money to manage — and you’ll need to update your financial strategies to keep up with it.
Start expanding your personal finance knowledge, and you’ll find ideas and strategies to help you do more with your money. It could be as easy as picking up a new book about personal finance or subscribing to a podcast that talks about money.
Learning more about money will equip you with the knowledge to transform your higher paychecks into financial security and lasting wealth. You may find yourself making more informed decisions about your money and building sustainable wealth faster.
5. You’re falling into the comparison trap
Perhaps you question yourself and your financial situation when you feel you’re falling short. This could be a sign you’ve fallen into the trap of comparing yourself to other people or hold yourself to an unrealistic standard.
For example, you might wonder why other people have a nicer lifestyle or fewer money worries than you. It can feel like no matter how financially comfortable you get there’s always someone else who appears to be doing better.
Such irrational money thoughts and feelings of discouragement don’t motivate you to keep working on your finances. Instead, they blind you to the progress you’ve made and can leave you feeling powerless.
Try to practice recognizing this trap and working your way out of it. Keep a money journal or other record of your financial wins, and use it to remind yourself of the progress you’ve made. If you compare yourself to others, remind yourself that you may not always have everything you want — but with a focused effort, you can achieve your most important financial milestones.
Make your money work for you
Money alone won’t solve financial problems. You may have a decent income, but you need to actively manage your money to make the financial progress you want. If you’re stuck living paycheck to paycheck even as your earnings grow, it’s time to make changes.
Identify a financial goal that will build lasting wealth, such as upping retirement savings, paying down debt, or building an emergency fund. Then tweak your budget and reallocate funds toward your main money goal. You might be amazed by how fast you see results.
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.99% – 6.65%1||Undergrad & Graduate|
|1.99% – 7.10%2||Undergrad & Graduate|
|2.99% – 6.44%3||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|1.99% – 6.43%4||Undergrad & Graduate|
|3.18% – 6.07%5||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of June 23, 2020. Information and rates are subject to change without notice.
2 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Splash Financial loans are available through arrangements with lending partners. Your loan application will be submitted to the lending partner and be evaluated at their sole discretion. For loans where a credit union is the lender, or a purchaser of the loan, in order to refinance your loans, you will need to become a credit union member.
The Splash Student Loan Refinance Program is not offered or endorsed by any college or university. Neither Splash Financial nor the lending partner are affiliated with or endorse any college or university listed on this website.
You should review the benefits of your federal student loan; it may offer specific benefits that a private refinance/consolidation loan may not offer. If you work in the public sector, are in the military or taking advantage of a federal department of relief program, such as income based repayment or public service forgiveness, you may not want to refinance, as these benefits do not transfer to private refinance/consolidation loans.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 1, 2020.
Fixed APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rate options range from 2.88% (without autopay) to 7.27% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Rates are subject to change without notice. Fixed rate options without an autopay discount consist of a range from 2.88% per year to 6.21% per year for a 5-year term, 3.40% per year to 6.25% per year for a 7-year term, 3.45% to 5.08% for a 8-year term, 3.89% per year to 6.65% per year for a 10-year term, 4.18% per year to 5.11% per year for a 12-year term, 4.20% per year to 7.05% per year for a 15-year term, or 4.51% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan).
Variable APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Variable rate options range from 1.99% (with autopay) to 7.10% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Our lowest rate option is shown with a 0.25% autopay discount. Our highest rate option does not include an autopay discount. The variable rates are based on the Variable rate index, is based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of April 27, 2020, the one-month LIBOR rate is 0.43763%. The interest rate on a variable rate loan is comprised of an index and margin added together. The margin is a fixed amount (disclosed at the time of your loan application) added each month to the index to determine the next month’s variable rate. Variable rate options without an autopay discount consist of a range from 2.01% per year to 6.30% per year for a 5-year term, 4.00% per year to 6.35% per year for a 7-year term, 2.09% per year to 3.92% per year for a 8-year term, 4.25% per year to 6.40% per year for a 10-year term, 2.67% per year to 4.56% per year for a 12-year term, 3.44% per year to 6.65% per year for a 15-year term, 4.75% per year to 6.93% per year for a 20-year term, or 5.14% per year to 7.10% for a 25-year term, with no origination fees. APR is subject to increase after consummation. Variable interest rates will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. The maximum variable rate may be between 9.00% and 16.00%, depending on loan term. The floor rate may be between 0.54% and 4.21%, depending on loan term. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
3 Important Disclosures for SoFi.
4 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.19% APR (with Auto Pay) to 6.43% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.43% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of June 15, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 6/15/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.19% effective June 10, 2020.