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https://docs.google.com/document/d/1IHugkVqSn8c8EipiURk005M76VjQ5n0Lt_VVcZZ-9xM/edit

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https://money.usnews.com/money/personal-finance/articles/2017-05-10/10-easy-ways-to-pay-off-debt

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The shift from college to the working world has always been a blur of living-on-your-own excitement and what-do-I-do-now anxiety. That's truer than ever today, with 70% of 2016 grads owing for their education (the average college debt is about $30,000). So while you've set yourself up to make a decent salary (you hope), you've never faced this many expenses, and you're probably starting out in the hole.

Scary? A little. But you really can learn how to handle yourself on the road to smart money management. This guide, featuring questions submitted to MONEY from recent and soon-to-be graduates, can help.

Question: How much of my salary should I devote to paying off my student loans? - Alejandra Carraza, class of 2016, Fort Pierce, Fla.

Answer: Let's prioritize: Eat first, then pay rent, then worry about the loans. Financial planners say not to spend more than 15% of your salary (before taxes are taken out) paying off your loans, but plenty of people can't even manage that. In fact, the federal government recently expanded its student loan repayment options so that anyone can limit his or her monthly bill to 10% of income after paying for essential living expenses. To qualify for lower payments, you'll need proof of your income, like a pay stub or tax return. For more information, go to StudentAid.ed.gov.

On the other hand, you may get ahold of extra cash from time to time, particularly at raise or year-end bonus season. That's a good time to pay down some extra principal, which will cut your overall interest costs and trim the length of your loan, says Myles Newborn III, a financial planner in Stony Point, N.Y. Pay off private loans first; they tend to have higher interest rates. And tell the company that sends your monthly bill to apply extra payments to the loan with the highest interest rate. Otherwise the money will be split equally among all loans.

Tip: Use some of your annual tax refund to pay extra on your loans, and don't forget to deduct your student loan interest (up to $2,500 a year) from your taxes.

Tool: You can estimate your monthly payments, calculate total interest paid, and compare various government repayment options on the Department of Education's StudentLoans.gov website.

Question: I'd need to drive to my dream job, but I can't afford a car. How can I save up enough to buy one? -David O'Brien, class of 2016, St. Leo, Fla.

Answer: This one will require some math-specifically, keeping a budget. Start by jotting down all your essential living expenses: rent, utilities, transportation, food. They should eat up only half your take-home pay. Loan payments should be about 15%. That will leave roughly a third of your salary (after taxes are taken out) for savings and the occasional fun run. The best way to stay disciplined is to squirrel away your cash before you can even touch it.

Tip: Bump up your savings by earning extra money through flexible side gigs. Search for odd jobs through Taskrabbit, Gigwalker, or Airtasker. Don't have time for a second job? Get a roommate to cut your expenses.

Tool: Use apps such as Mint (free) to create a budget. Follow your spending over a month or two. Then look for areas to cut, such as dining out.

Question: I have health insurance through my company, so I don't need to budget for this, right? -A composite question based on several we received.

Answer: Your paycheck will still have a deduction if you enroll in your employer's health insurance program. And health insurance premiums (that's the amount you pay each month to be insured) can eat up a noticeable part of a small salary. ADP research found that for earners in the $30,000 to $45,000 range, health plan premiums cost 5.8% to 6.9% of income. On average, single workers contributed $1,071, or about $90 a month, for employer-sponsored coverage in 2015, according to the Kaiser Family Foundation.

If your employer doesn't offer health insurance, you can buy it through the Health Insurance Marketplace. Bronze plans, which have higher co-pays and deductibles but less expensive monthly premiums, are usually a fine choice for someone who's young and healthy, says Erin Hemlin, national training director with Young Invincibles, a nonprofit organization that advocates for healthcare and economic policies that benefit young adults.

But if you expect to have medical work done in the coming year or you have a chronic illness, you'd be better off with a silver plan, Hemlin says.

The average marketplace shopper was able to get a plan for a monthly payment of $75, with the help of tax credits for workers earning less than $46,000.

Finally, if you're not working or are working part-time, you might qualify for Medicaid for free if your state is one of 32 that approved Medicaid expansion. That would be a good option for someone enrolling in graduate school, Hemlin says. Not sure if your state participates? Check the Status of State Action on Medicaid Expansion Decision table on the Kaiser Family Foundation website..

Tip: You may be able to save some money by staying on your parents' health insurance plan for a few more years. But check to make sure the plan's network is available where you live. Also compare costs first, as plans for single adults are often much cheaper than family plans. So it might be less expensive, in total, for you and your parents to insure separately.

Tool: Healthy Young America, an app from Young Invincibles, offers a crash course in health insurance. It includes a glossary of terms, FAQs about how to get coverage, a calculator to estimate your costs, and the ability to search for nearby doctors-though it won't tell you whether those doctors are in your network. For that, try Zocdoc to search doctors and schedule appointments.

Question: How can I negotiate a fair salary with my limited experience and income history? -Tom McMorrow, class of 2018, Moorestown, N.J.

Answer: Rule one (stolen from the Boy Scout handbook): Be prepared. Websites such as Glassdoor, PayScale, and Salary.com contain intel on hundreds of companies, down to the specific job titles in specific cities. That said, you'll be in much better shape if you let the interviewer start the salary discussion. If you throw out the first number, you might undersell yourself with a price that's at the low end of what the company is willing to pay. If the interviewer tries to coax you into making the first move ("What salary range are you looking for?"), deflect him or her-nicely. ("Why don't you tell me your expectations for the job so I can get a sense of what you're looking for?")

When you do start talking numbers, back up your request by touting the specific goals you can help the company reach with your skills. "It is your job to explain what you're worth, and why," says Robin Pinkley, a professor of management and organizations at the Cox School of Business at Southern Methodist University

Tip: To boost your confidence and get ready for anything that's thrown at you, rehearse your talking points with a friend.

Tool: For more pointers, check out the "Negotiating Your Salary" video on Lynda.com (free for a 10-day trial).

Question: How much should be earmarked for urgent expenses, and where do I put the money? -Heidi Smith, class of 2015, Cranston, R.I.

Answer: You eventually want to have banked three to six months worth of expenses in case you lose your job. But it's okay to start small-. For now, you're looking to cover unexpected expenses-say, a car repair or your best friend's last-minute destination wedding in Hawaii-without using your credit card. A good goal: Save $1,000 your first year out of college by putting aside $85 a month.

Tip: Open a separate savings account and set up an automatic deposit after each pay period so that you can't even be tempted to spend your stash.

Tool: Have a little fun--and maybe win a gift card or two-by joining SaveUp. Linked to your savings account, SaveUp is a free website that rewards you with points for every dollar your save. The points can then be used to enter lotteries that pay cash prizes, gift cards, vacations, and more.

Question: Do I need to put aside money for retirement now, or can I wait until I'm in my thirties? -Lina Saud, class of 2015, Princeton, N.J.

Answer: Start now. "You have the power of time on your side," says Denver financial planner Bob Morrison. "Leverage that." That said, don't freak out. Anything you put away is better than nothing. Set aside just $500 a year (about $10 a week) over your first five years, and you'll have nearly $30,000 more at retirement than if you had saved nothing then. If your company has a program that matches your contributions to a 401(k) retirement account, take advantage of that. It's like free money (albeit money you can't touch for another 40 years). And it's a smaller chunk out of your check than you may realize. Unlike your salary, the government doesn't take taxes out when you put money into a 401(k), so funneling $100 to your account takes only about $85 from your take-home pay.

If your company doesn't have a retirement plan, open a Roth IRA, which allows your contributions to grow and be withdrawn tax-free. They're offered by most banks and investment companies; Vanguard and Fidelity, which offer many low-cost investment options, are good places to start. Look for funds with low costs or "expense ratios" below 0.5%.

Tip: Bring your lunch four out of five days a week, and you'll save $800 to $1,000 a year on average. That's a good bit of your first year's retirement contribution.

Tool: Use our retirement calculators to see how fast your savings can grow. You'll be feeling rich in no time.

Question: How can I balance being a renter with simultaneously saving for a down payment on a house? -Tom McMorrow, class of 2018, Moorestown, N.J.

Answer: Start by making sure you're not busting your budget by spending too much on rent. Rent and associated bills (like utilities) shouldn't take up more than a third of your income before taxes are taken out. You should also prioritize paying off any credit cards and having some emergency savings set aside before putting away money for a house.

Once you've done that, redirect the amount you were spending toward those goals to your new goal, a house fund. If you get a raise or a bonus, sock away that cash for your home, too.

It may also help to open a separate savings or conservative mutual fund account, one that's primarily invested in bonds, since saving for a home is a relatively short-term goal, says Scott Moffitt, president of Summit Financial Group in Loveland, Ohio. (See the next question for more on mutual funds.) Aim to save at least 20% of the cost of the house before you buy.

Tip: Planning for a house is great, but don't rush to buy. To make up for the closing and legal costs of buying a home, you'll want to be sure you're going to stay put for at least five years. When you do buy, Moffitt recommends budgeting an extra 5% of the purchase price for annual upkeep and maintenance-expenses that longtime renters may overlook.

Tool: If you're open to relocating, focus your job hunt on parts of the country with affordable housing as well as quality jobs. A good place to start: the American Institute for Economic Research's Employment Destinations Index, which ranks cities based on wages, employment opportunities, and living costs.

Question: I know I should be investing in stocks, but how do I actually begin buying them? How do I pick companies to invest in? -Morgan Wolf, class of 2016, Jacksonville, Fla.

Answer: Successfully investing in individual companies' stocks requires a lot of time and energy to research and manage your portfolio, says Bill Pratt, an author of personal finance books for college students and a vice president of The Money Professors, a group of finance professors focused on financial literacy on campus.

Even then, picking the winners is incredibly hard. And odds are, your long-term returns won't beat the market.

So, for most busy people, investing in an index fund, which simply mirrors the stocks or bonds in a popular market index, such as the S&P 500, is a better bet. Because your money is spread across many different companies, index funds offer built-in diversification that insulates you from the risk of a particular stock or industry losing value.

You can buy an index fund through a brokerage firm or directly from a mutual fund company; the latter will tend to have fewer fees. Look for a low-cost fund with a minimum initial contribution you can afford.

Many funds have fees of less than 0.2%, but you may have to pay slightly more if you don't have a lot of money to start with. For example, Vanguard's 500 Index Fund has a 0.17% expense ratio and a $3,000 minimum initial contribution. The company's STAR Fund's minimum is $1,000, but the expense ratio is double, 0.34%.

If you don't have a lump sum for a large initial contribution, look for funds that allow you to make smaller, automatic monthly deposits. Or, consider managing your investments through newer services, such as Betterment or Wealthfront (these are Internet companies sometimes called robo-advisers), which have modest account minimums.

Tip: Investing is a great way to build long-term wealth, but only after you've checked off other, more basic financial boxes, such as paying off credit cards and building an emergency fund.

Tool: Check out the MONEY 50, our annual list of the best mutual funds and exchange-traded funds to invest in. And use our investing calculators to compare different types of investments, assess your risk tolerance, and more.

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The shift from college to the working world has always been a blur of living-on-your-own excitement and what-do-I-do-now anxiety. That's truer than ever today, with 70% of 2016 grads owing for their education (the average college debt is about $30,000).

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The Problem With Financial Literacy Is That It Doesn’t Work

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The Problem With Financial Literacy Is That It Doesn’t Work

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Second to health, money is probably the second most popular thing Americans think about this time of year while everyone is making resolutions. This is the year I'm going to be better with my money, we say to ourselves. It's a wonderful goal: We all want to be the kind of people who are good with money. And I used to believe that financial literacy was one of the keys to that - that if we had only taken some kind of class about money and budgeting while we were young and impressionable in school, we would have been in a better position to avoid so many of the financial mistakes we make today. I've since changed my mind about the effectiveness of financial literacy classes.

For one thing, financial literacy classes - at least the ones that exist today - haven't really done much. In a recent story in Pacific Standard, Helaine Olen went over some of the data that proves this:

Financial literary promotion may sound perfectly sensible - who wouldn't want to teach children and adults the secrets of managing money? - but in the face of recent research it looks increasingly like a faith-based initiative. Consider one recent paper, scheduled for publication in a forthcoming issue of the journal Management Science. In a meta-analysis, Lynch and the marketing experts Daniel Fernandes and Richard Netemeyer compiled the results of more than 200 studies of financial literacy programs, adjusting for subjects' family background and personality traits that had been ignored in the previous research. The result? Financial education has a "negligible" impact on subsequent financial decisions and behavior. Within 20 months, almost everyone who has taken a financial literacy class has forgotten what they learned.

These findings echo the results of another recent working paper, by the economists Shawn Cole at the Harvard Business School, Anna Paulson at the Federal Reserve Bank of Chicago, and Gauri Kartini Shastry at Wellesley College, on the efficacy of state laws requiring financial literacy to be taught in schools. Their conclusion: "State mandates requiring high school students to take personal finance courses have no effect on savings or investment behavior."

Another study, from 2009, tested the financial literacy of recent high school graduates who had taken a highly regarded personal finance class. They did no better than graduates who had not taken the class. One of the study's authors, the economist Lewis Mandell, was a founder of the modern financial literacy movement, but the evidence has prompted him to turn his back on the mainstream financial literacy paradigm. "Financial education doesn't work when it's given in advance of when the consumer needs it," he says flatly.

Why does financial literacy in high school - which would presumably be helpful for teenagers graduating school and entering the workforce, or heading off to college with a critical need of understanding how their student loans will eventually affect them - not work? Well, for one thing, remember when you were in high school? Did you retain everything you learned? Can you say (without Googling!) what the War of 1812 was, and why it was so significant? If high school students can get bored in a history class, they certainly can get bored in a financial literacy class.

Another thing - and possibly the most crucial - is passing a financial literacy class with flying colors does not make you a person who is good with money.

J.D. Roth, the founder of the popular finance site Get Rich Slowly, and a regular contributor to TIME and Entrepreneur, wrote a piece a few years ago about the time he told a reporter:

"I don't think this country needs more financial literacy education. Time and again, financial literacy efforts have failed. They don't make any noticeable difference in the way we spend and save. When I was in high school, all seniors were required to take a financial literacy class. It covered topics like compound interest, the Federal Reserve, how to write a check, and the dangers of credit cards. I took that class. I aced every test. And five years later, I had the beginnings of a debt habit."

That last word there, habit, is an important one, because one major reason why so many of us are so bad with money is not because we are financially illiterate, but because of the way we behave. So much about getting better with our money is about changing our behavior.

Logan is an example of this. One of the reasons Logan became a part of this site is that her story is relatable: She, admittedly, isn't great with money, and at one point racked up $20,000 in credit card debt, but decided things needed to change and that she needed to get a better handle on her money. So many people are in her position and want to be better with their money.

Her journey so far, as documented on this site, wasn't to become more literate about money. She came into this knowing how credit cards worked, why saving for retirement early is important, and what compound interest is. In order to get a better handle on her finances, she had to come to understand the role depression played in her financial life and that her spending was often a way to make herself feel better. So: She cut up her credit cards, found a therapist she liked, and is gradually paying down her debt.

She also came to the understanding that she wasn't earning enough money to live the life she wanted to live, so she got a second job as a hostess, which allowed her to continue paying down her debt, while also giving her the option to go out to dinner every now and then (it's all about balance).

So part of our problem with money is the way we behave, and another part of our problem with money is that we're not earning enough of it while the costs of things like housing, education, and health care are increasing significantly. As Olen writes in her piece:

The United States is an increasingly class-stratified country, where the engines of mobility appear to have stalled. Minimum wage jobs lead to other minimum wage jobs. Salaries are stagnant. College tuition has soared at rates well beyond that of inflation, forcing students to turn to loans to get by, which in turn leaves them servicing massive amounts of debt in their 20s, a time when financial literacy classes - citing the power of compound interest - say they should save. The leading cause of bankruptcy is not overspending, nor lack of adequate financial planning, but the financial free fall caused by a health crisis.

Financial literacy isn't going to help fix stagnating wages or get the federal minimum wage, which has remained unchanged for nearly five years now, to keep up with inflation. And this is why the attempt by McDonald's to help their minimum wage-earning workers create a budget last summer failed so miserably and was so laughably crazy.

None of this is to say that financial literacy is a bad thing - there are certainly people out there who don't know the basics of saving and investing, and they should. But they don't need a formal class to pick up these basics.

Here is the one big open secret to getting a hold on your finances: Live within your means.

Want some more tips? Tess Vigeland, who spent 11 years working at Marketplace says this is all you need to know:

* Don't spend more than you earn.
* Contribute to your 401(k) at LEAST to the match.
* Don't carry a balance on your credit card.
* Save for retirement before you save for the kids' college.
* Don't listen to the clowns on CNBC.
* And mamas, don't let your babies grow up to be cowboys... unless they can find a good health plan.

She's especially right about those clowns.

The Billfold continues to exist thanks to support from our readers. Help us continue to do our work by making a monthly pledge on Patreon or a one-time-only contribution through PayPal.

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The Problem With Financial Literacy Is That It Doesn't Work

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Second to health, money is probably the second most popular thing Americans think about this time of year while everyone is making resolutions. This is the year I'm going to be better with my money, we say to ourselves.

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America Has a Financial Literacy Problem

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America Has a Financial Literacy Problem

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We don't teach financial literacy in schools

One common theme that I heard across all the interviewees was that everything they learned about personal finance was learned outside of the classroom.

It seems that people learn about finances in one of two ways: 1.) From their parents/guardians OR 2.) From personal experience.

In high school they never taught us about our credit score, budgeting or finances. I had to learn all of that on my own. - Interviewee

For the people that had learned from their parents, they tended to be in a better financial position relative to those who had received little guidance from their parents growing up.

As you can probably imagine, those that learned from personal experience had to learn the hard way. In other words, most people's early financial paths were all but decided from a young age.

I was left asking the burning question:
Why are we not teaching students about financial literacy in our schools?
People don't learn until they have hit rock bottom

Building off the last theme, it became apparent that those raised without proper financial guidance, didn't begin to learn until they were forced to.

For most of the people, their financial journey lines went something like this:

Moved out of their parents' homes & started taking care of themselves.

Unknowingly made a number of poor financial decisions that led to debt.

Ignored their financial problems until the situation rapidly escalated & they hit rock bottom.

Realized that they needed to make changes and start taking action.

It's unfortunate that one of the main paths to financial literacy is having to hit rock bottom first.

For most of the people we talked to, their early struggles could have been completely avoided if they had been taught a few basic aspects of personal finance at an early age.

Most of our society doesn't understand credit

One of the things that I found shocking, was how poor of an understanding people had with regards to credit. In general, no one really understood how credit actually works.

Many of our interviewees had suffered from major credit card debt at some point in their lives. When we dug into why, it became apparent that they didn't understand the implications of a credit card.

One of the participants told us that she started buying things with her credit card "because [she] could." It didn't occur to her that she was spending beyond her means, until she began falling behind on payments and had to pay high interest.

The credit score was also another black box for people. Most of the interviewees said that they check their credit score on a recurring basis, but only because it is so easily available through banks and 3rd party applications.

During one of the interviews, the participant told us that he thought the credit score system was deeply flawed. He referenced past periods when his score had increased, despite his overall financial situation worsening & vice-versa.

For a structure that is so embedded in our overall financial system, it is worrisome how few people actually understand how credit works.

Debt is a trap

I've been fortunate to never experience what it is like to live with major debt, and as a result I was shielded from the haunting reality of how much of an anchor debt can be.

Many of the participants described the vicious circle of debt that they were trapped in. What usually began as seemingly reasonable debts, quickly spiraled out of control. All it took was one unexpected event or a few missed payments to send their interest rates soaring. Once the interest became high enough, it became all but impossible to pay off their principal quickly.

One participant's story in particular stood out to me:
One month I was really behind on my payments. So much so that the lenders actually came and repossessed my car overnight. Unfortunately their offices were closed the next day, so I didn't have my car to drive into work. The next morning I had to call in and beg my boss not to fire me. He understood the situation, but I lost money from missing work; money that I could have put towards my bills. Luckily, my mom helped me pay to get my car back otherwise I don't know what I would have done.
It's unfortunate, because our current financial system seems to prey on those who are struggling the most. While many of these problems could have been prevented with some basic financial education and behavioral adjustments, it's the edge cases that really worry me.

Too many people in this country are one unfortunate event away from having the rug pulled out from under them.

College might not be worth it anymore

For all of the participants in the under 30 demographic, there was another common theme that was unique to their segment: massive student loans.

I wasn't necessarily surprised to hear that many of the participants had accumulated student loans, after all, it is now the second highest consumer debt category. However, I was surprised to learn was how little their degrees helped in paying off their loans.

Many of the participants had gone on to work jobs that fell outside of their fields. In a twist of cruel irony, the jobs that they were now working to pay off their student loans, did not even require college degrees.

I was surprised to learn was how little their degrees helped in paying off their loans.

Whenever we pressed the participants on why they chose to take out loans and go to college, they pretty much all agreed they did it because "it's what you do to succeed."

One has to question if these participants will feel the same way in a few decades when it is their children's turns to graduate high school. Will the scars of their own student debts lead them to suggest alternative paths for their kids?

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America Has a Financial Literacy Problem - Alex Valaitis - Medium

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One common theme that I heard across all the interviewees was that everything they learned about personal finance was learned outside of the classroom. It seems that people learn about finances in one of two ways: 1.) From their parents/guardians OR 2.) From personal experience.

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A Sound Investment: Changing the Way We Teach Financial Literacy

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A Sound Investment: Changing the Way We Teach Financial Literacy

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Schools offer the best opportunity to reach the greatest number of young people through a wide variety of programs. But as with all subjects, effective financial education must be rigorous, relevant, standards-based and engaging-and must be taught by confident, well-qualified and well-supported teachers.
Backbone in education
Financial education has been around for a long time, though not necessarily identified as "financial literacy" or "financial capability" and other terms we use commonly today. Financial topics were found in math, business, consumer science-called Home Ec. back in the day-and other subject areas.

But those started to disappear in the latter part of the last century, as focus shifted to preparing students for college. A renewed effort to promote and improve financial education in schools took hold in the 1990s. That effort included the formation of the Jump$tart Coalition, where many of the stakeholder organizations committed to working collaboratively toward shared goals.
Updating the curriculum
Over the past two decades, the financial literacy community has developed thoroughly vetted educational programs and resources-many offered free or at a minimal price-to help teachers and budget-strapped school systems integrate financial content with few barriers.

Financial institutions, other corporations, government agencies, associations, non-profit groups and others have contributed their broad expertise and resources to developing educational products and programs to the point where educators have turned to tools, such as the Jump$tart Clearinghouse, to help them narrow down their selections.

"Personal finance lessons are well suited for hands on activities and real-life applications, and are best when adapted to student demographics and local economics."

The National Standards in K-12 Personal Finance Education, published by Jump$tart since 1998, has helped curriculum developers and educators maintain quality, consistency, comprehensiveness and age appropriateness in classroom financial education and materials.

Notably, these standards focus not only on what students should know, but what they should be able to do to prepare to manage their money effectively throughout their lifetimes.
Modern edition
For the first time, the 2015 edition of these national standards added learning benchmarks for kindergarten students, acknowledging the importance of introducing basic money concepts as young children are forming their thoughts and behaviors. Twelfth grade benchmarks help to ensure that young adults are sufficiently prepared for their lives as independent consumers.

Today, discerning educators look for resources that are timely and relevant and encourage students to think, evaluate and make decisions. Personal finance lessons are well suited for hands on activities and real-life applications, and are best when adapted to student demographics and local economics. Optimally, financial education products intended for classroom use include tools to help teachers assess their students' progress and measurements of effectiveness beyond simple increases of knowledge.
Keeping teachers educated
In the early years of the financial literacy movement, much of the focus was on the creation of educational resources, because so few existed at the time. In recent years, a good deal of attention has turned toward preparing and supporting teachers who bring financial topics to life in their classrooms every day.

Just as we wouldn't expect a single lesson to prepare a young person sufficiently for a lifetime of smart money management, neither can we expect cursory training to provide a teacher with adequate background to teach financial content effectively. As our next strategic objective, the financial literacy and education communities must commit to supporting, educating and supplying our teachers to enable them to succeed.

As a distinct educational discipline, financial literacy is still young and evolving. With that recognition, we must accept that having not yet achieved all our goals is not a reason to give up. Rather, it's a reason to redouble our efforts, because the next generations of American consumers deserve nothing less.

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A Sound Investment: Changing the Way We Teach Financial Literacy

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Schools offer the best opportunity to reach the greatest number of young people through a wide variety of programs. But as with all subjects, effective financial education must be rigorous, relevant, standards-based and engaging-and must be taught by confident, well-qualified and well-supported teachers.

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After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors

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Tony Yoo, a financial analyst in Los Angeles, invested more than $100,000 of his savings last fall. At their lowest point, his holdings dropped almost 70 percent in value. Credit Credit Rozette Rago for The New York Times

SAN FRANCISCO - Pete Roberts of Nottingham, England, was one of the many risk-takers who threw their savings into cryptocurrencies when prices were going through the roof last winter.

Now, eight months later, the $23,000 he invested in several digital tokens is worth about $4,000, and he is clearheaded about what happened.

"I got too caught up in the fear of missing out and trying to make a quick buck," he said last week. "The losses have pretty much left me financially ruined."

Mr. Roberts, 28, has a lot of company. After the latest round of big price drops, many cryptocurrencies have given back all of the enormous gains they experienced last winter. The value of all outstanding digital tokens has fallen by about $600 billion, or 75 percent, since the peak in January, according to data from the website coinmarketcap.com.

The virtual currency markets have been through booms and busts before - and recovered to boom again. But this bust could have a more lasting impact on the technology's adoption because of the sheer number of ordinary people who invested in digital tokens over the last year, and who are likely to associate cryptocurrencies with financial ruin for a very long time.

"What the average Joe hears is how friends lost fortunes," said Alex Kruger, a former banker who has been trading in the cryptocurrency markets for some time. "Irrational exuberance leads to financial overhang and slows progress."

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A screen showing exchange rates of cryptocurrencies at the Bithumb exchange in Seoul, South Korea, in June. The damage from the big price drops in virtual currencies is likely to be particularly bad in places like South Korea, where ordinary investors jumped in with abandon. Credit Jung Yeon-Je/Agence France-Presse - Getty Images

It is hard to know how many cryptocurrency investors are now in the red, with holdings worth less than the money they put in. Many who have lost money in recent months had gotten into the markets before the big run-up last year, and their holdings are still worth more than their initial investments.

But by many metrics, more people put money into virtual currencies last fall and winter than in all of the preceding nine or so years. Coinbase, the largest cryptocurrency brokerage in the United States, doubled its number of customers between October and March. The start-up Square began allowing the users of its mobile app, Square Cash, to buy Bitcoin last November.

Almost all of the new customers on Coinbase and Square would be in the red if they bought cryptocurrencies at almost any point over the last nine months and held on to them.

The damage is likely to be particularly bad in places like South Korea and Japan, where there was minimal cryptocurrency activity before last year, and where ordinary investors with little expertise jumped in with abandon.

In South Korea, the biggest exchanges opened storefronts to make investment easier for people who didn't feel comfortable doing it online. The offices of one big exchange, Coinone, had just one customer walk in during a two-hour period in the middle of the day last week. An employee, Yu Ji-Hoon, said, "The prices of the digital tokens have fallen so much that people seem to feel upset."

Kim Hyon-jeong, a 45-year-old teacher and mother of one who lives on the outskirts of Seoul, said she put about 100 million won, or $90,000, into cryptocurrencies last fall. She drew on savings, an insurance policy and a $25,000 loan. Her investments are now down about 90 percent.

"I thought that cryptocurrencies would be the one and only breakthrough for ordinary hardworking people like us," she said. "I thought my family and I could escape hardship and live more comfortably, but it turned out to be the other way around."

In the United States, Charles Herman, a 29-year-old small-business owner in Charleston, S.C., became obsessed with virtual currencies in September. He said he now felt that he had wasted 10 months of his life trying to play the markets.

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While he is essentially back to the $4,000 he put in, he has soured on the revolutionary promises that virtual currency fanatics made for the technology last year and has resumed investing his money in real estate.

"I guess I thought we were 'sticking it to the man' when I got on board," Mr. Herman said. "But I think 'the man' had already caught on, and had an exit strategy."

Two technicians at Bitfarms, a cryptocurrency mining operation in Saint-Hyacinthe, Quebec. Credit Lars Hagberg/Agence France-Presse - Getty Images

Much of the anger that investors feel is toward the smaller virtual currencies, or alt coins, that entrepreneurs sold in so-called initial coin offerings. These coins were supposed to serve as payment mechanisms for new software the entrepreneurs were building.

But almost none of these companies have delivered the software they promised, leaving the tokens useless, except as speculative assets. Several coins have been exposed as outright scams.

"I think I'd like to see most alts go to zero before I feel like the whole space isn't overpriced," Mr. Herman said.

Bitcoin has generally held on better with investors. It is down about 70 percent from all-time highs, rather than the 90-percent losses that lesser-known digital tokens have suffered. But it, too, has struggled to win much use beyond speculative investments.

"We also saw that Bitcoin isn't ready for mass adoption and day-to-day use," Mr. Herman said.

Despite this pessimism, the social networks where cryptocurrency fanatics gather to trade information are full of people talking about their intention to hold on to their coins, in the hope that they will recover once the technology has time to catch up with the hype.

Tony Yoo, 26, a financial analyst in Los Angeles, invested more than $100,000 of his savings last fall. At their lowest point, his holdings dropped almost 70 percent in value.

But Mr. Yoo is still a big believer in the idea that these tokens can provide a new way to transact online, without the big corporate middlemen we rely on today. Many of the groups that raised money last year are still working on the products they promised, with lots of serious engineers drawn to the projects.

Despite his investment losses, Mr. Yoo said he was still a big believer in the idea that cryptocurrencies could provide a new way to transact online, without big corporate middlemen. Credit Rozette Rago for The New York Times

"There's just so much more behind this new wave of technology and innovation that I'm sure will take over our society in due time," Mr. Yoo said.

With prices down so much, he said he was actually looking to put more money into the markets.

That thinking has been encouraged by the people who invested in Bitcoin in 2013, when it first topped $1,000. That bull market was followed by a crash in which the price of Bitcoin dropped more than 80 percent. But after a long fallow period, the price recovered. Even with recent losses, the value of one Bitcoin was hovering around $6,300 on Monday - up more than 500 percent from the peak of 2013.

"Five years ago, I was broke, unemployed, and ashamed to use my real name," Ryan Selkis, a popular virtual currency personality, wrote on Twitter last week. "For the new fanatics, stick around for your own 14 month, 85% downdraft and you'll not regret it."

Twitter is also filled with complaints, like the one from a user named @Notsofrugaljoey, who wrote: "It's really hard to stomach losing all my hard earned money. Just broke down and cried."

On Reddit, a user in the United Arab Emirates posted a picture of the $100,000 loan that he had taken out in December to buy cryptocurrencies - and that he will now be paying back out of his salary for the next three years.

Mr. Roberts, the British investor who has seen most of his $23,000 vanish, is holding on to his coins in case they turn around. But for now he has stopped trading and is looking for another job.

"I'm living off the little savings I have left still in my bank account," Mr. Roberts said. "I've made a mistake, and now I'm going to have to unfortunately pay the cost for the next few years."

Follow Nathaniel Popper and Su-Hyun Lee on Twitter: @nathanielpopper and @esuhyuni. Nathaniel Popper reported from San Francisco, and Su-Hyun Lee reported from Seoul, South Korea.
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A version of this article appears in print on , on Page B1 of the New York edition with the headline: Learning From the Cryptocurrency Bust. Order Reprints | Today's Paper | Subscribe

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After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors

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SAN FRANCISCO - Pete Roberts of Nottingham, England, was one of the many risk-takers who threw their savings into cryptocurrencies when prices were going through the roof last winter. Now, eight months later, the $23,000 he invested in several digital tokens is worth about $4,000, and he is clearheaded about what happened.