The joy of shouting to your friends over the roar of a crowded bar, the giddiness of seeing the world rushing by below you from the seat of an airplane, the weirdly constricting sensation of wearing pants that aren’t elastic — the summer of 2021 brought back many experiences we had forgone during the past year and a half of the pandemic.
But this push to re-create a world that felt something like “normal” may have brought back another familiar feeling: the anxiety of racking up debt.
If your summer of “revenge” spending has come for a payback of its own in the form of lingering debt, make a plan for paying it off. Then, think about how to prevent yourself from getting into more debt as you navigate progress and setbacks on the path to normalcy.
Take stock of your debt — and find your payoff path
Whether you’re back to spending most of your time at home or killing time at an airport terminal before a flight, find time to sort out your debt and pick a payoff strategy.
First, understand exactly how much you owe and to whom. If you don’t know all the details, certified financial planner Pamela Rodriguez in Sacramento, California, suggests pulling your credit reports, which you can do for free.
“Pulling your credit report is probably the fastest way to know what you owe because there’s no hiding from your credit report,” Rodriguez says.
Using a spreadsheet, pencil and paper, or a debt payoff app, list your debts. Include the balance, interest rate and monthly minimum payment for each. Be sure to account for all forms of debt, like buy now, pay later loans.
Then, dig into your income and expenses to see how much money you can put toward debt and where you can cut spending. If you’re spending more on dining out than you were six months ago, for example, try cutting back on that to free up cash for debt payoff.
Next, pick a strategy for paying it off. Here are a few common tactics:
Debt snowball: With the debt snowball, you channel your debt payoff energy toward the smallest balance first while making minimum payments on the rest. Once the smallest debt is knocked out, roll the amount you were paying on it to the next smallest debt. As you wipe out more debts, the payment amount keeps growing like a snowball until you’re debt-free.
Debt avalanche: With this method, you pay off the debt with the highest interest rate first. Then, similar to the debt snowball method, once that is paid off, you cascade the payment onto your debt with the next highest interest rate.
Balance transfer credit card: If your credit score is high enough to qualify for one, a credit card with a 0% APR promotional period can help you pay off debt faster and cheaper than keeping it on the original credit card. Be sure to wipe out the balance before the 0% promotional period ends to avoid paying interest.
If you don’t see a way to pay more than the minimums on your debts monthly, think about calling a nonprofit credit counseling agency for free budgeting and debt help.
Know your spending habits and triggers
If your summer debt was the result of revenge spending, dig into the triggers that led you to overspending so you can avoid sliding back into debt in the future.
For many, that may have been the opportunity to experience something that they were deprived of during the first year of the pandemic.
While travel and eating at restaurants may be safer for those who are vaccinated, these activities can wear down your budget. Rodriguez suggests finding more-affordable ways to enjoy activities you’re seeking.
“If you can think of the one thing you were deprived of, find a smaller scale of that,” Rodriguez says. “So a smaller scale of travel would be going on a local adventure, and that is so much more manageable financially.”
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Three hundred thirty-one years ago, the first piece of paper money was printed in the United States. The Massachusetts Bay Colony supposedly issued those first bills to fund military action in King William’s War. Flash forward to today, and those bills are as ubiquitous as the British pound or Chinese renminbi. In recent years, however, there have also been talks that those bills may be replaced with a newer form of money altogether: cryptocurrency.
What is cryptocurrency? Is it really likely to replace our current cash system? Stacker answers all these questions and more in our closer look at Bitcoin and the world of cryptocurrencies. Using news reports, financial websites, and industry resources, we’ve answered the 10 most pressing questions you have about cryptocurrencies. While the topic is a complex one, we’ve done our best to discuss it in layman's terms and have avoided the more highly technical aspects that tend to bog down the discussion rather than carry it forward.
So read on to learn who invented this new form of money, how it’s mined, and what, exactly, Elon Musk has to do with it all. You’re sure to walk away with a better understanding of what Bitcoin is and how it affects your life.
First things first: What is a cryptocurrency? In short, they are digital currencies that are protected by cryptography (a method of safeguarding information through complex codes). This encryption makes them incredibly secure and almost impossible to counterfeit or double-spend. Most cryptocurrencies work using a new technology called blockchain, a decentralized technology that's spread across many computers.
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As stated above, blockchains are a new form of technology that records information. Termed distributed ledger technology, these blockchains keep records across a large number of computers (rather than on a single computer server), grouping the data in sequential blocks. Once locked into place, these blocks cannot be changed or altered, meaning that records of who mined a currency or spent it are never called into question, and cryptocurrencies can never be stolen the way a credit card can.
No. By their very definition, Bitcoin and other cryptocurrencies are completely democratic and aren’t overseen by a central authority in the way that the U.S. dollar is. A true peer-to-peer payment network, cryptocurrencies can only work if all participants use the same software and abide by the same rules. This provides a strong incentive for a consensus to be maintained, or else Bitcoin will cease to have any value and all users will lose their cryptocurrency wealth.
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The interesting thing about cryptocurrencies, and bitcoin, in particular, is that they are largely self-perpetuating (with the exception of the genesis block). New bitcoins are mined (or minted) by being the first person to correctly verify one megabyte of existing bitcoin transactions. This is incredibly time-consuming work that involves a lot of computation power, but these days it is not the only way to obtain bitcoin. Bitcoin can also be bought or earned by doing things like publishing an article on a website that pays via cryptocurrency.
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Yes, and no. In 2021, much of what cryptocurrencies are is more theoretical than practical, which is further demonstrated by their purchasing power—or lack thereof. While bitcoin can and has been used to buy real things (you can use a third-party app called Purse to use bitcoin to buy items on Amazon, and it has often been used on the Silk Road to buy drugs), you certainly can’t just walk into a grocery store and buy a gallon of milk with a bitcoin or two. In fact, even apps like Purse or PayPal, which allow purchases to be made with bitcoin, convert the cryptocurrency into fiat money before making the transaction, so you aren’t technically spending that bitcoin or Dogecoin, but rather its legal tender value.
So if you can’t spend a bitcoin or unit of cryptocurrency, why were they invented? The answer may lie in the text of the genesis block of Bitcoin, which reads: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” (Alluding to a headline from The London Times.) This seems to imply that the founder had a lack of faith in the banking system and was looking for an alternative way to store and protect their wealth, as well as wanting to disrupt the control of the money supply and empower the individual when it came to their finances.
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Bitcoin is widely considered to be the world’s first cryptocurrency. Yet, despite having existed for just over a decade, no one actually knows who founded it. The original Bitcoin whitepaper thate outlines how the currency works was published by Satoshi Nakamoto, the same person who mined the first bitcoin block, but the individual’s (or group of individuals’) identity remains a mystery. There are dozens of theories out there about who they are, but none have been definitively proven, making this a Holy Grail-level mystery of our time.
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Financial pundits aren’t yet convinced that Bitcoin, or similar cryptocurrencies, will replace the dollar, pound, or yen in any real way. However, as a scientific and technological innovation, cryptocurrencies are massively important. In particular, the blockchain system that governs most of these currencies has the power to change the future. Blockchain allows us to move information securely and authentically and can be adapted for things like voting, maintaining inventory records, and identifying exploited labor practices.
The number of cryptocurrencies is always growing, so it can be difficult to pin down an exact count, but as of April 2021, there were over 10,000 different types of cryptocurrency. This includes coins, like bitcoin and Dogecoin, as well as tokens, which represent a tradable asset or utility (like 10 hours of free streaming on a service or a certain number of loyalty points from a company).
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Almost every discussion of cryptocurrency winds its way to Elon Musk, so how does he fit in with all of this, exactly? Only as an ardent supporter of and believer in cryptocurrencies, really. Many have theorized Musk is actually Nakamoto (he’s not) or the mastermind behind Dogecoin (that would be Jackson Palmer), but really, Musk is simply one of the most outspoken tech leaders on the topic. Both of his companies, Tesla and SpaceX, are heavily invested in cryptocurrency and have engaged with the idea of accepting them as cash-equivalent payments for goods and services, but aside from that, Musk is no more special in the development or growth of these cryptocurrencies than you or me.
