Which Debt Repayment Strategy Is Right for You?

We’ve focused on giving you the information you need to know to get rid of your credit card debt once and for all this month. So far, we’ve explained how to get your debts organized and how to balance building up your savings while paying down debt.

Today, we want to discuss how you can choose a debt repayment strategy to make sure you stay on track and reach debt freedom as soon as you can. These methods can help you power through and repay every last balance.

The Debt Snowball

The debt snowball is a debt repayment strategy popularized by financial guru Dave Ramsey. This method asks you to take stock of all your debts — loans, credit cards, mortgages, and other lines of credit with balances — and list them in order of smallest balance to biggest.

That’s the only factor you need to take into account. So, for example, if you have three student loans and owe $5,000, $10,000, and $15,000 respectively, that’s exactly the order you list them out in. And that’s the order you’d work to pay them off in, too.

The debt snowball has you put as much money as you can toward your debt with the lowest balance first, while still maintaining minimum payments on your other balances. Once you repay that first debt, you take the amount of money you were applying toward it, and combine it with the minimum payment you were making on the loan with the second-lowest balance.

Your payment on this second-lowest balance loan “snowballs,” because the payment is the combination of what you paid toward the first loan and the minimum payment you were already paying on the second.

You’ll continue to snowball your payments and knock out your debts one by one, until you’re debt free.

The Debt Avalanche

The debt avalanche is another system for repaying your debt. With this strategy, you again take stock of all your debts and list them out — but this time, you’ll order them by interest rate.

With the debt avalanche, you’ll list them out in order from highest interest rate to lowest (regardless of balance). Then you’ll work to repay the balances in that order, taking out the loan with the highest interest rate first, then the second-highest, and so on.

The only difference from the debt snowball is the order in which you repay your loans. The biggest advantage to the avalanche is, from a mathematical standpoint, you come out ahead because you’re getting rid of your most costly loans first. Because you’re knocking out loans by interest rate, you’ll gradually pay less in interest over your repayment period.

Choosing a Debt Repayment Strategy

There’s no “wrong” way to knock out balances and become debt-free. But there’s probably one strategy that works best for you over other options. So how do you choose the ideal system for your personal situation?

Start by understanding your own personality. The right strategy is likely the one that’s a good fit for you and the way you think. It’s not necessarily about the details of your debt.

The debt snowball does a good job of taking the emotional and behavioral part of personal finances into account. For many of us, money is about more than just the numbers — it’s how we feel and think about it.

The snowball can keep you on track because it gets you to a “win” quickly. Since you’re paying off the lowest balance first, this repayment strategy will likely knock out your first loan faster than other methods of paying down your debt.

This can be the difference between sticking to the hard work it takes to become debt free, and getting frustrated and overwhelmed by the process.

The debt avalanche is, mathematically speaking, usually better than the snowball. That’s because you focus on getting rid of the debt with the highest interest rate first, regardless of balance. This should save you money over the long-term because you’re lessening how much you’re paying in interest.

But if your highest-interest loan also comes with a bigger balance than your other loans, it’s going to take you longer to repay that debt than if you focused on knocking out loans with balances in order from smallest to largest. For some, it’s emotionally tough to have that first milestone be further down the road.

And that’s okay — it feels good to get rid of loans or balances on your lines of credit!

It all depends on what motivates you. If paying off your first loan ASAP will keep you going and prevent you from feeling discouraged or hopeless, choose the debt snowball. If you want to put an end to interest rates eating up your discretionary income, choose the debt avalanche.

2016-04-15_13-44-43

What About Debt Consolidation?

Debt consolidation is another strategy that may be helpful if you’re struggling to keep track of multiple loans and their payments, due dates, and other information. Consolidation can also help those who have high interest rate loans but good credit scores (be sure to check your credit score with a free credit report on a regular basis).

When you consolidate, you start by taking out a single loan for the total amount of the debt you want to repay. You take the borrowed money from the new loan and repay all the individual loans with balances you already had. Then, you work to repay the single, new loan.

This is a good option if you’re feeling overwhelmed because it simplifies your financial situation. Instead of having multiple loans to keep track of, consolidating leaves you with a single loan — with a single interest rate, monthly payment, and due date.

It’s also worth looking into if your current loans carry high interest rates that cost you money. There’s no guarantee, but you can shop around with different lenders to possibly consolidate existing loans for a lower interest rate. This not only simplifies your debts — since, again, there will only be one balance to keep up with — but it could also save you money if you can get a lower interest rate.

Just make sure you take all the fees into account. A new loan may come with a lower interest rate, but the loan origination fees may mean it’s a wash when it comes to saving money. Everyone’s situation is different, so do the math before making any decisions.

Learn more about security

Mint Google Play Mint iOS App Store

Source: mint.intuit.com

Family Matters: Affording Care for a Family Member

Twenty-three year-old Emilie Lima Burke has started to save $20 per day.

It’s not for a vacation or her retirement fund. Instead, she’s preparing for the moment she expects she’ll need to take care of her aging dad and all his expenses.  Burke, who runs the site BurkeDoes.com, a financial, health and career resource for millennial women, says that her parents used to joke that she and her sister would be “their retirement plans.”

But that’s seems no longer a laughing matter.

“My dad has struggled with long bouts of unemployment…He has no money saved at all,” says the 23 year-old. “I know that at some point I will be [his caregiver]. When there is no retirement fund or any assets for aging parents to fall on, you just have to make a plan.”

We’re living longer these days, which means that many of us have the great fortune of growing older with our parents. The number of Americans ages 65 and older expected to nearly double by 2050, according to the U.S. Census.

With longevity, though, comes the increasing responsibility and financial pressure to care after our aging family members, especially, if like Burke, our family doesn’t have a financial plan already in place. The average working household has “virtually no retirement savings.”

It’s no surprise then that about one in four Americans (with parents ages 65 and older) is helping a parent with his or her affairs, offering financial help or caring after them.

And not to cause alarm, but more than half of the country – 29 states – have so-called “filial support” or “filial responsibility” laws that could potentially require adult children to pay for their parents’ care if they don’t have the means to do so for themselves.

If you’re struggling to support a family member or anticipate needing to care after a loved one down the road, here are some ways to help make your efforts more affordable.

Know Their Bottom Line

If a family member is turning to you for help, particularly financial help, then it’s more than appropriate to have a candid money talk – no matter how uncomfortable it may be.  Ask to see how much they have in the bank, as well as what other streams of income they may be receiving (e.g. social security, a pension, insurance payout, a portfolio distribution, etc.). Create a budget to pay for as much as possible with your parent’s income and assets before tapping your own bank account.

“I see people who take on credit card debt or stop paying their own bills to care for their parents, but a much better option is to first exhaust all of the resources that the parents can have access to,” says Belinda Rosenblum, a financial strategist at OwnYourMoney.com.

Having a paper trail of statements showing income and expenses will also prove helpful if your parent needs to apply for Medicaid, the health insurance program designed to help those with little money. Here’s where you can learn more about Medicaid eligibility.  Care facilities sometimes have a Medicaid expert on staff to assist with your application, too.

Reach Out to Local and National Resources

When business coach Amanda Abella’s grandmother was diagnosed with Alzheimer’s a year ago, her family needed to find a way to pay for her extra care. The adult day care alone, she estimates, would have cost $100 per day.

For guidance, they turned to her grandmother’s doctor and the social worker at the hospital and discovered the Alliance for Aging, a Florida-based private, not-for-profit that provides a range of services to older people, including personal care, legal help, transportation, meals, etc. After several rounds of interviews and almost a year of being on the wait list, Abella’s grandmother succeeded and now receives free nursing care.

The lesson: Never assume that you have to go it alone. Help is out there. Local and national resources offer grants and support to seniors. To start your search for funding visit: Family Caregiver Alliance and Paying For Senior Care.

Also worth mentioning: If your aging parents are veterans look into the Department of Veterans. “Often veterans overlook or are not aware of the benefits they are eligible for such as medical care or prescriptions, especially if they’ve been separated from the military for a long time,” says military money life coach Lacey Langford.

Look Into The Family and Medical Leave Act (FMLA)

If you need to take time off work to care for a family member, be it a parent, child or even yourself, but worried about losing your job in the process, you may benefit from the Family and Medical Leave Act (FMLA).

The federal law grants certain workers up to 12 weeks of unpaid leave per year with the promise of getting their jobs back. You can also keep your company health benefits during your time off. Some states such as California, New Jersey and Rhode Island allow qualified workers to earn at least part of their paycheck during this time.

Remember the Tax Deduction

Track expenses and if you afforded more than half of your parent’s needs during the tax year (including utilities, medical bills, food and general living expenses) and he or she earned less than $4,050 (not counting social security), then you may be able to claim mom or dad (or both) as a dependent on your 2016 tax return. Doing so offers you additional tax benefits. You can find more information on how to claim a parent as a dependent on TurboTax.com.

Keep in mind that whether or not your parent qualifies as a dependent, you might be able to deduct the medical expenses (including prescriptions and doctor visits) you paid for on his or her behalf from your taxable income. The IRS requires the total of these expenses to be more than 10% of your adjusted gross income in order to claim the deduction.

Consider Long-Term Care Insurance

If your parents have yet to reach the age where they may need some assistance, see if they’ve looked into long-term care insurance. This can come in handy if they think you may need to afford a nursing home or at-home care later down the road. (And about 70% of Americans who reach age 65 will likely need some time of long-term care before as they age). Medicare does not cover these costs and they can be very expensive.

For example, the average cost of a home health aid, which long-term care would cover, can be anywhere from $34,000 to $57,000 a year depending on where you live.  If your parents don’t have enough saved to cover this, it may fall on your shoulders. It’s just as beneficial to you for them to seriously consider long-term care.

You may decide to purchase a policy yourself and have your parent(s) be the beneficiary.

Keep in mind that the ideal time to buy long-term care is when your parents are in their 50’s and 60’s (specifically between 52 and 64). The younger and healthier the beneficiary is, the more likely he or she will qualify (and the lower the monthly premium). For a couple in good health applying for long-term health care in their mid-50s, the average annual cost is about $2,350 (or less than $200 a month).

Create a Family Fund

Finally, like Burke, it pays to start saving early for the financial what-ifs surrounding our family members.

You can hope for the best, but should also prepare for the worst. Tucking away even $10 or $15 a week for the next five or ten years while your parents are still able to take care of themselves could yield an essential nest egg for everybody when life takes a turn.

Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at farnoosh@farnoosh.tv (please note “Mint Blog” in the subject line).

Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.

Learn more about security

Mint Google Play Mint iOS App Store

Source: mint.intuit.com

How To Strike A Balance In Real Savings And Extreme Couponing To Save Time And Money

Everyone loves a good deal. Collecting coupons can help you balance your budget and save big, but it can also eat up your time. To succeed at couponing, you’ll need to find a system that helps you get the most bang for your buck without spending all your free time searching for the lowest prices on your favorite products.

Coupons are everywhere

Coupons aren’t just for groceries. In fact, 74.7% of available coupons are for non-food items. Billions are distributed every year, and once you start looking, you’ll begin to spot them everywhere. The bad news? It’s easy to get overwhelmed.

Extreme “couponers” spend huge amounts of time accumulating and using them to amass major savings. While the money saved can add up, collecting paper or online coupons is a time-consuming hobby. It takes time to track down the deals you want or need, organize the coupons based on when you want to buy the product, and find the store carrying the item. You’ll also need to consider the additional time it takes to store the purchased items in your home.

With so many deals to be had, it can be easy to go overboard. The good news? You don’t need to resort to extreme couponing for it to have a positive impact on your budget. It’s easy to find coupons in print publications, on product displays, and posted on coupon-devoted websites. Grocery store websites even let you instantly load their coupons directly onto your loyalty card.

<img data-attachment-id="10576" data-permalink="https://mint.intuit.com/blog/budgeting/how-to-strike-a-balance-in-real-savings-and-extreme-couponing-to-save-time-and-money/attachment/women-couponing-on-computer/" data-orig-file="https://blog.mint.com/wp-content/uploads/2019/06/Women-couponing-on-computer.jpg" data-orig-size="1000,771" data-comments-opened="1" data-image-meta=""aperture":"0","credit":"","camera":"","caption":"","created_timestamp":"0","copyright":"","focal_length":"0","iso":"0","shutter_speed":"0","title":"","orientation":"0"" data-image-title="How To Strike A Balance In Real Savings And Extreme Couponing To Save Time And Money" data-image-description="

How To Strike A Balance In Real Savings And Extreme Couponing To Save Time And Money

” data-medium-file=”https://blog.mint.com/wp-content/uploads/2019/06/Women-couponing-on-computer.jpg?w=300″ data-large-file=”https://blog.mint.com/wp-content/uploads/2019/06/Women-couponing-on-computer.jpg?w=1000″ loading=”lazy” class=” wp-image-10576 aligncenter” src=”https://blog.mint.com/wp-content/uploads/2019/06/Women-couponing-on-computer.jpg?w=300″ alt=”How To Strike A Balance In Real Savings And Extreme Couponing To Save Time And Money” width=”536″ height=”413″ srcset=”https://blog.mint.com/wp-content/uploads/2019/06/Women-couponing-on-computer.jpg 1000w, https://blog.mint.com/wp-content/uploads/2019/06/Women-couponing-on-computer.jpg?resize=768,592 768w, https://blog.mint.com/wp-content/uploads/2019/06/Women-couponing-on-computer.jpg?resize=453,349 453w, https://blog.mint.com/wp-content/uploads/2019/06/Women-couponing-on-computer.jpg?resize=414,319 414w” sizes=”(max-width: 536px) 100vw, 536px”>

Couponing time management

Before you start hunting, create ground rules to help manage your time. Remind yourself that your time is as valuable as your money—maybe even more so. These tips can help ensure that the time you spend couponing is worth it.

  • Clip coupons for products you know you will use and skip the ones you might not use. Clipping and sorting all of them to have “just in case” will eat up your time.
  • Look for coupons for the brands you prefer. Buying a cheaper product and discarding it because you don’t like it is the opposite of saving money.
  • Remember, a great deal doesn’t necessarily make it good for your family. For example, a pile of cheap candy isn’t a bargain in nutrition. Purchase products you approve of and skip the ones you don’t, no matter the savings.
  • Acquire products that you can use in a reasonable amount of time. Stockpiling means time spent organizing what you bought.
  • Hunt for coupons as needs arise. For example, if your kids need new jeans, look for a coupon to one of their favorite clothing stores.
  • Be organized. Searching through your clipped coupons is a time drain. Set up a system so you can quickly sort and find them.
  • As you file your coupons, weed out any that have expired.

Track your payoff

It’s just as easy to track your progress as it is to collect coupons. Create a timecard and keep track of the time you spend couponing for one month. During that same month, keep your receipts.  At the end of the month, total up your coupon savings and divide it by your time spent. How much did you make an hour? Seeing the numbers can help you decide how much time you want to commit to couponing.

Even if being a regular “couponer” isn’t for you, occasionally using coupons for big and small purchases is still a smart idea. After all, any money saved is time well spent.

You can find savings and coupons for a variety of home goods on Groupon’s Bed Bath & Beyond page here. 

Learn more about security

Mint Google Play Mint iOS App Store

Source: mint.intuit.com

Hey, Big Spender! Can You Afford It?

Big goals can carry price big tags. Whether you plan to buy a home, a new car or treat yourself to a much-needed vacation, you’ll need the money. And before you can really start planning for these big expenses, you’ll want to ask yourself, “Can I (or should I) afford it?”

If the answer is yes, then begs the question, “What’s an appropriate amount to spend?”

Here’s some advice on how to tackle a few big-ticket buys. And, if saving money isn’t exactly your strong suit, keep reading. I’ve included some of my favorite resources to get a jump-start at the end.

Buying a House? Cap Monthly Payments at 30%

When it comes to budgeting for housing costs, my rule of thumb is to spend no more than 30% of your take-home pay. That includes the mortgage, property tax and maintenance payments. The truth is that becoming a homeowner comes with hefty responsibilities and often, unforeseen costs.

Should your new home require a repair, you’ll want to be able to comfortably afford it without stretching yourself too thin. A rookie homeowner mistake is assuming you can spend the same monthly cost on a mortgage as rent. But renters aren’t necessarily required you to pay for plumbing damage or repair broken major appliances on their own dime.

Once you’ve calculated how much you can spend per month, figure out what size mortgage that equates to and that should help you narrow down homes by price. Home search website Zillow.com has a calculator that produces your target home price based on your annual income, monthly debt payments and the size of your down payment.

Speaking of, you’ll want to prepare to put down 20%, especially in competitive markets. For more on the specifics of home buying, check out my previous blog post.

Save more: To minimize monthly mortgage payments, be sure your credit is in great standing. Borrowers with high credit scores (often a 760 or greater) are best suited to qualify for the lowest interest rates on a home loan in today’s market.

Eyeing a Car? Ideally, Budget 15%

When it comes to purchasing a new car, aim to spend no more than 15 to 20% of your take-home pay. This includes maintenance and gas. if you pay with cash, take your annual salary and multiply it by .15 to calculate a max spend.

If you plan to finance or lease the vehicle, take your monthly take-home pay, multiply that number by .15 and that is a healthy budget for car payments (assuming you don’t have other major outstanding debt).

Save More: Go pre-owned. If you’re okay with a few scratches and some wear and tear but with the assurance that the car comes with a manufacturer’s warranty, then opting for a pre-owned vehicle could be a great way to save anywhere from probably 10 to 25%. This option can be more costly than going with a regular used car. But CPO’s come with benefits like a longer warranty and proper inspections.

If you’re set on purchasing a new car, wait until the end of the year when dealers are desperate to unload the current year’s models to make room for new inventory.

And for what it’s worth, waving cash at the dealer won’t necessarily earn you any discounts (unlike in years past). I recently purchased a new car and thought we would get a lower price by offering to pay entirely in cash. Wrong. Turns out, by signing up for auto-financing I was able to score a discount. With the loan interest rate at only 2% I decided to finance the car and commit to paying it off within the year (as opposed to four years) to keep interest payments to a minimum.

Fancy a Piece of Jewelry? Or any Luxe Item? Mind Your Savings.

Who doesn’t want to treat themselves to a little something every once in a while? Personally, I’ve been eyeing the new iWatch.  But for such discretionary expenses (aka “splurges”) it’s best to pay them with cash on hand. If you can’t pay it off in a month, then I question whether it’s really something you can afford. If it’s a financial stretch, perhaps it’s wiser to hold off on the purchase?

For discretionary or miscellaneous expenses, I think it’s responsible to cap spending at no more than five percent of income and that includes things like luxury items and recreational spending. If you need to tap savings, just be sure you replenish the account within the next month and aim to leave yourself with at least a six-month rainy day cushion at all times.

Save more: Similar to pre-owned cars, what about buying secondhand? Tradesy and Poshmark are two websites that have a large inventory of gently used (or in some cases brand new, but discounted) designer goods. These online vendors verify that items are authentic and match the seller’s description.

Sallie Krawcheck, Wall Street veteran and co-founder and CEO of the online investment platform Ellevest, revealed to me on my podcast So Money that discount site The RealReal is her go-to place to splurge. She calls it “financially savvy.” Hey, if it’s cool for her, then it’s cool for me!

Longing to Getaway? Time it Right.

I always say it’s most rewarding to spend on experiences, especially travel. It’s important to recharge your mind, body and soul or to simply learn about other cultures.

For vacations, again, coming from your discretionary budget, aim to spend within 5% of your take-home pay.

Save more:  Depending on when you book your flight you can earn more bang for your travel buck. Data from FareCompare show airfare tends to fall to its lowest level all week on Tuesdays starting at 3pm. That’s typically when airlines release the greatest number of deals and subsequent pricing wars lead to low prices.

Need Help Saving?

All of the above assumes that you have money left at the end of the month after covering your bills to save up and spend on big-ticket items. That may be a big assumption. Many of us live paycheck to paycheck and quite frankly, as humans, we’re not exactly hard-wired to save. As famed behavioral expert Dan Ariely once told me, “We see something, we want it and we go for it without thinking very much. The world is designed to tempt us and we follow and get tempted.”

Here are some free tools that can help us to curb some of that ill-fated temptation.

  • Digit – Save money without really having to think about it. Sign up for Digit by creating a free account. After a few days, Digit checks your spending patterns and moves a few dollars from your checking account to your Digit account, if you can afford it. Users can easily withdraw money any time, quickly and with no fees.. Over time, you’ll build a nice slush fund for yourself
  • Qapital –Qapital lets you set a savings goal and then create rules that trigger automatic transfers toward your goal. For example, users can charge themselves a determined amount for a guilty pleasure. Say they choose to charge $5.00 every time they order takeout, that $5.00 will go toward a goal of their choosing. Or, users can round purchases to the nearest dollar and the change will be allocated toward their specified goal. On this platform, the average user saves $44 each month.
  • SmartyPig – This is a free, high-yield savings account that lets you allocate money toward different financial goals. It can be hard to save for a big purchase if you’re lumping it in with your regular savings or checking account. But by compartmentalizing your savings for a particular goal (e.g. a new car, vacation, etc.) you can better track your progress. Like Digit, you can transfer funds at any given time.

Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at Farnoosh@farnoosh.tv (please note “Mint Blog” in the subject line).

Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.

Learn more about security

Mint Google Play Mint iOS App Store

Source: mint.intuit.com

Financial Planning Investing Money Management Personal Finance

[Survey] Who Do You Ask for Financial Advice?

admin 0 Comment

A study conducted by Charles Schwab just last year found that three in five Americans live paycheck to paycheck, yet only one in four has a written financial plan. In fact, the majority of Americans are hesitant to receive any outside help when it comes to managing their money, even though those who do reach out tend to exhibit more positive investing and saving behavior. 45 percent of U.S. adults aged 40 to 59 said they’d rather visit the dentist than make an appointment with a financial advisor, due in large part to the fact that they feel uncomfortable sharing financial missteps with a stranger.

To gain a better understanding of who people trust when it comes to financial advice, we polled 1,000 Americans to find out who, if anyone, they turn to for money-related questions. We found that while those in older age brackets (65+) still enlist the help of a financial planner, many younger demographics actually go to their parents before resorting to the internet. Some key findings included:

Millennials Most Likely to Reach Out to Their Parents for Advice

Each year, the internet continues to grow in staggering amounts, with users utilizing the web for everything from social media consumption to eCommerce. Today, roughly nine out of ten American adults use the internet. Because there are millions of active internet users searching Google daily, we were surprised to find that still, most respondents would go to their mothers for financial advice over the web.

illustrated graphic showing more people trust their parents for financial advice than the internet

Our survey polled Americans ages 18 to 65+ and found that of those under 24, 44% would go to their parents for financial advice versus just 33% who would trust Google to answer money-related questions.

Men More Likely to Go To a Financial Advisor Than Women

Around 31% of respondents said they felt most confident reaching out to a financial advisor. Of this number, 33% were men versus just 26% women. Conversely, 14% of women are most likely to turn to their mothers versus just 9% of men.

illustrated graphic showing men trust a financial advisor more than women

Those Aged 55+ Most Confident in Financial Advisors

It appears the older generation is less hesitant to reach out to certified financial advisors. Of the 29% who listed financial advisors as their go-to, 40% of respondents were 55 and older. This could lean heavily into the fact that those of this age are nearly retired and feel more inclined to consult an expert in things relating to their retirement income strategy.

illustrated graphic

Studies have shown that a handful of Americans over the age of 30 don’t understand basic financial terminology such as determining their 401k, knowing what interest is, or understanding how inflation works. Many of these people also feel lost when it comes to a long-term, stable financial plan. Financial planning, however, enables you to create an ongoing process that will not only help with current cash flow but also help build a nest for retirement. Regardless of who you visit for financial advice, be it mom, the internet, or a financial adviser, it’s important to become educated on the terminology, processes, and ways to ensure a secured future.

Sources: Charles Schwab | The Motley Fool

Learn more about security

Mint Google Play Mint iOS App Store

Source: mint.intuit.com

First Time Home Buyers Home Buying Market News Money Management Mortgage Roommate Tips

‘I Worked Five Jobs To Afford My First Home’: Was It Worth It?

admin 0 Comment

I never thought I would buy a house at 25. Like most 20-somethings, I was pushing through school, working odd jobs, and just trying to get by.

Then, after a death in the family, I came into a little money. It wasn’t a fortune or a happy occasion, but it was an opportunity to do something good with this cash. I realized it might cover a down payment on a small condo. The idea of becoming a homeowner was exciting, so I started shopping for real estate in the suburbs of L.A. where I was renting an apartment.

In spring 2016, I found a small, one-bedroom condo that I loved. My inheritance would easily cover the down payment, and the mortgage payments would be only a little more than the rent I was paying. I made an offer, and it was accepted.

I bought my first condo at 25.
I bought my first condo at 25.

Jillian Pretzel

At the time, I had a full-time sales job at a natural food company, plus a side hustle working as a host at Disneyland. With steady income and the down payment taken care of, I knew I could easily swing the monthly costs of owning a home.

But being a homeowner proved to be much harder than I imagined. After a few miscalculated costs, I found myself running out of money. I had to take on another side job. And another, and then another.

Ultimately, I had to work five jobs simultaneously to afford my home. Here are the hard lessons I learned that I hope will help you avoid the same fate.

My side hustle was being a host at Disneyland.
My side hustle was being a host at Disneyland.

Jillian Pretzel

It’s not just about the mortgage

I’d heard plenty of horror stories of friends who, after buying a house and moving in, realized they didn’t have enough money to buy anything else, from furniture to cable service.

So when calculating whether I could handle homeownership, I was careful to look beyond my mortgage. I also factored in HOA fees, property taxes, maintenance, moving costs, utilities, and even new furniture.

But I’d underestimated one massive money drain: home maintenance and repairs.

Me working my sales job at a natural food convention after a long day of walking around
Me working my sales job at a natural food convention after a long day of walking around

Jillian Pretzel

While it’s simple to factor in a set HOA fee or estimate a monthly electric bill, maintenance costs are hard to plan for. You could find yourself spending money on nothing but paint and Drano one year, then the next find yourself needing to replace a dead refrigerator and reshingle the roof.

A year after moving in, I learned my water heater had started leaking while I was away for the weekend. By the time I’d returned home and saw the mess, I learned that I’d need to test for mold, install a new floor, repair the walls, and replace my water heater.

The total cost: over $10,000.

My home insurance would not cover this, arguing that the water heater leak had been ongoing and that I’d been negligent. I’d have to pay for this out of pocket.

This immediately threw a giant wrench in my budget. Clearly, I was in over my head.

One or two jobs may not be enough

I already had a full-time job and a side hustle. But I knew I couldn’t yet negotiate a pay raise at my sales job and I wasn’t going to get more hours at the theme park. So, I started looking for a third job.

I applied at local shops and restaurants. I felt a bit silly, as a homeowner in my mid-20s applying for the same jobs I had in high school. But I had bills to pay, and I took the first job I was offered: working nights at a movie theater.

Job No. 3 was at this movie theater.
Job No. 3 was at this movie theater.

Jillian Pretzel

About the same time, I got a fourth job, tutoring a college student once a week. Job No. 5 came when I was asked to write for a small dating and relationship website.

I was tired from working all the time, but I was able to starting paying off the bills that were rolling in.

Don’t be afraid to borrow money

I knew I couldn’t handle working 80-hour weeks forever. After a few months, I was exhausted.

My bedroom—a room I didn't see much while working five jobs
My bedroom—a room I didn’t see much while working five jobs

Jillian Pretzel

I was managing to stay afloat, but I worried about getting sick and falling behind. To keep my sanity, I needed to borrow money and give myself a buffer.

It took me a while to reach this decision—after all, it seemed irresponsible for someone who already had a hefty mortgage to borrow some more. But borrowing was better than skipping mortgage payments—and potentially losing my condo.

In the end, I was fortunate to be able to borrow money from my mom, but bank loans can be just as helpful for those without the option of borrowing from family.

After a long spring and summer of working in the movie theater, I was able to quit and focus more on my sales job. Soon after, my tutoring client was back on track with school and didn’t need my help anymore.

By fall, I was still doing my writing gig and working at the theme park, in addition to my sales job. They were still a lot to juggle, but I felt that I could handle the workload. I was paying my bills, and saving a good amount.

By the time I got back on track, I’d learned a valuable lesson: The costs of being a homeowner can’t always be calculated, and surprises are bound to pop up.

But was it worth it? Absolutely.

Me in my home office, working as a freelance writer
Me in my home office, working as a freelance writer

Jillian Pretzel

Source: realtor.com

Budgeting House Architecture Money Management

Balancing Saving for Retirement and Your Kids College? This is What You Need To Know

admin 0 Comment

The choice between saving for retirement and saving for your child’s college education is a microcosm of the dilemma many parents face: How do you balance your own needs with the needs of your child?

The argument for putting your child first is obvious. Parents have a solemn responsibility to prioritize the wellbeing and future success of their offspring, even if it means sacrificing their own short term happiness. Most parents do this without thinking.

But if you completely ignore your own needs, you’ll end up being miserable, unhealthy and a much worse parent. The key is striking the right balance.

So when it comes to saving for retirement and saving for college, how do you find that balance?

Analyze Your Situation

Before deciding how to split your money between retirement and college, take stock of your general financial health and the status of your retirement accounts. Look at your Mint account to see if you’re ahead or behind on retirement contributions.

Use the Goals feature to set up a Retirement goal. You’ll need to link your IRA and 401(k) accounts, decide when you want to retire and input your desired annual income in retirement. The app will then decide if you’re on track or falling behind. You can play with the numbers and see if retiring a few years later gives you more leeway.

If you’re already on-track, feel free to start saving for your child’s college education. If you’re desperately behind, it’s best to focus on retirement until you’re caught up.

Choose Retirement First

When deciding between saving for retirement and your child’s education, it’s always best to choose retirement. That might seem selfish at first glance, but skimping on retirement contributions could actually make things harder for your children.

Your kids can borrow money, earn scholarships or attend community college to lessen their burden. If they still can’t afford to go, they can take a year off to work and save money.

But you can’t borrow money if you reach retirement age and don’t have enough in your nest egg. There’s nothing you can do to make up the difference – except ask your children to take care of you. Student loan debt might be expensive, but not as expensive as funding your parents’ retirement.

Make sure you’re saving at least 10-15% for retirement. You should also make sure you’re receiving any matching 401(k) employer contributions. This is free money that shouldn’t be left on the table.

If you have money left over or receive a significant windfall, feel free to stash the rest in your child’s college fund.

Another reason to prioritize retirement contributions is that money in an IRA or 401(k) doesn’t count as an asset on the Free Application for Federal Student Aid (FAFSA). By saving more money in those accounts, you might inadvertently help your child qualify for more need-based aid.

Earn Free Money for Your 529

Many states provide tax credits or deductions if you save money in a 529 account. These accounts are like IRAs for your child’s college tuition. Every state has their own rules, but about 30 states provide some sort of tax benefit if you contribute to a 529.

There’s no federal tax deduction for 529s, so the state deduction or credit is the only tax benefit. If you really plan ahead, you can calculate how much you’ll save in taxes and then increase your retirement contribution.

Use the Right Credit Card

There are several credit cards on the market that provide rewards in the form of 529 contributions.

The Fidelity® Rewards Visa Signature® Card provides 2% cash-back that can be deposited in a Fidelity 529 account. There’s no limit on how many rewards you can earn, and rewards never expire. The card has no annual fee and was named “Best Credit Card for College Savings” in 2018 by Money Magazine.

The Upromise Mastercard from Barclays has 1.25% cash back on all purchases and a 15% savings bonus when you connect the card to a 529 account.

Using one of these credit cards for your everyday purchases will increase your college savings without affecting your retirement contributions.

Talk to a College Counselor

If you’re worried about paying for college and don’t want your kids to take on significant debt, talk to a college counselor. A professional can identify schools that fit your child’s interests and your wallet. They can also provide guidance for your child’s application and essay to make them a great candidate for scholarship money.

It’s best to start the conversation way before applications are due. If your school doesn’t provide a college counselor, ask around for recommendations on an independent counselor.

Encourage your child to apply for every scholarship they’re eligible for, even if the chances seem slim or the payout is small. Every year, students leave billions of dollars in scholarship and financial aid money on the table. Just applying for lesser-known scholarships could be enough to get the money.

Have the Conversation with Your Kids

Telling your child you can’t pay for their college is a conversation no parent wants to have – but the issue won’t just go away if you avoid it. As your child starts exploring college options, sit down with them and tell them what they should expect from you financially. Lay out exact numbers if you have them.

They may be disappointed – especially if you had promised to cover tuition – but waiting until they start the application process will only turn that disappointment into anger.

Giving your kids a heads up allows them to plan realistically for college. I always knew how much my parents planned to pay toward my college education, so I was able to make decisions based on that knowledge.

I applied to more public universities instead of private institutions with a higher price tag – even though going to a prestigious private university was a dream of mine. Over a decade later and five years after making my last student loan payment, I’m grateful that I was given the information needed to make a more financially sensible choice.

Learn more about security

Mint Google Play Mint iOS App Store

Source: mint.intuit.com

Careers College Debt Early Career Education Financial Planning Financing A Home Money Management Personal Finance Retirement Student Finances Student Loans

Transitioning Your Finances to Life After College

admin 0 Comment

Just graduated from college? Congratulations! You’ve made it to one of the major milestones in life, and you’re looking at a world of possibility.

So how do you make the most of starting this new, post-university phase of life? One of the most important things to understand as you transition from college student to real world, on-your-own adulting is how to start managing your money so you can not only pay all your expenses, but also start saving and build wealth.

Create Your Own Systems

Have you ever heard of engineering your environment to successfully build a new habit? Just like you might make a morning workout habit stick faster if you lay out your gym clothes the night before, you can take actions to set up systems that make building good financial habits easier.

In terms of your finances, engineering your environment means taking steps like:

Using a budget creates a framework within which you can use your money. Tracking your spending makes you more aware of how you’re using your money within that budget. And automating transfers between your checking and savings accounts makes it easy

You can use a number of tools to help you develop and stick with a money management environment that works for you. For example, a tool like Mint provides a comprehensive overview of nearly every aspect of your finances — from your budget and spending to your credit score and investments — which makes it a great place to start.

Another app to consider is Digit, which makes small automated transfers from your checking into your savings. If you’d rather get a jumpstart on investing, try Acorns too. Acorns works in much the same way as Digit, but instead of putting small amounts of money into a savings account, the app invests the money for you.

Remember that there’s no right or wrong way to set up budgets, track spending, or create automated savings plan. What’s important is recognizing the need for a structure, and developing one that works for you.

Manage Your Money When You Make More

After graduation when you start your career in earnest, you’ll likely make more money than you did back in your college days. This is great for you, but it can also cause some financial problems if you don’t think ahead. In other words: mo’ money, mo’ problems

The biggest pitfall of earning more is succumbing to lifestyle inflation. This happens when you spend more as you earn more. Essentially, you build a spending habit — not a savings habit. And this is a problem because it’s extremely difficult to cut back your spending once you’ve adjusted to a certain level of luxury or lifestyle.

If you avoid lifestyle inflation from the very beginning and make saving at least 10% of your income a priority, you’ll always find it easier to save money no matter how much you make. You don’t have to start off saving 10% right away, but it’s a great goal to work toward as your income increases.

You should also take advantage of a full-time job with all the benefits it comes with as you start your career. Don’t wait to open a 401(k) or other employer-sponsored retirement plan if any are available to you. If your company offers to match your contributions, put in at least enough to get the full match. That’s free money!

If you don’t have access to an employer-sponsored retirement account, you can still save as soon as you start working. Open a Roth IRA and save what you can. And remember, as you earn more, contribute more to retirement (instead of getting caught up in spending more).

Continue Your (Financial) Education

You may have just graduated from college, but don’t let learning end here. The best way to set yourself up for financial success in life is to continually seek to learn more about your money. Ask questions and seek answers. Do research. Get multiple opinions and consider different perspectives.

There are more resources available to you than ever before. In addition to personal finance, money management, or investing books that you can buy, tons of information about these subjects is available for free on blogs and podcasts. While most bloggers are sharing from personal experience, there’s a lot that you can learn from what other people have tried — and if nothing else, tuning into the conversation can keep you inspired and motivated to reach your own financial goals.

Staying interested and involved in your finances will help you better manage your money on a day-to-day basis and for the long-term. No one will care more about your cash than you do, and continuing to learn is without a doubt a prerequisite for building wealth.

Kali Hawlk is a freelance writer and the co-founder of Off The Rails, a free mentorship platform for creative women. She’s passionate about helping others do more with their money, their work, and their lives. Get in touch by tweeting @KaliHawlk.

Learn more about security

Mint Google Play Mint iOS App Store

Source: mint.intuit.com

Careers College Debt Early Career Education Financial Planning Financing A Home Money Management Personal Finance Retirement Student Finances Student Loans

Transitioning Your Finances to Life After College

admin 0 Comment

Just graduated from college? Congratulations! You’ve made it to one of the major milestones in life, and you’re looking at a world of possibility.

So how do you make the most of starting this new, post-university phase of life? One of the most important things to understand as you transition from college student to real world, on-your-own adulting is how to start managing your money so you can not only pay all your expenses, but also start saving and build wealth.

Create Your Own Systems

Have you ever heard of engineering your environment to successfully build a new habit? Just like you might make a morning workout habit stick faster if you lay out your gym clothes the night before, you can take actions to set up systems that make building good financial habits easier.

In terms of your finances, engineering your environment means taking steps like:

Using a budget creates a framework within which you can use your money. Tracking your spending makes you more aware of how you’re using your money within that budget. And automating transfers between your checking and savings accounts makes it easy

You can use a number of tools to help you develop and stick with a money management environment that works for you. For example, a tool like Mint provides a comprehensive overview of nearly every aspect of your finances — from your budget and spending to your credit score and investments — which makes it a great place to start.

Another app to consider is Digit, which makes small automated transfers from your checking into your savings. If you’d rather get a jumpstart on investing, try Acorns too. Acorns works in much the same way as Digit, but instead of putting small amounts of money into a savings account, the app invests the money for you.

Remember that there’s no right or wrong way to set up budgets, track spending, or create automated savings plan. What’s important is recognizing the need for a structure, and developing one that works for you.

Manage Your Money When You Make More

After graduation when you start your career in earnest, you’ll likely make more money than you did back in your college days. This is great for you, but it can also cause some financial problems if you don’t think ahead. In other words: mo’ money, mo’ problems

The biggest pitfall of earning more is succumbing to lifestyle inflation. This happens when you spend more as you earn more. Essentially, you build a spending habit — not a savings habit. And this is a problem because it’s extremely difficult to cut back your spending once you’ve adjusted to a certain level of luxury or lifestyle.

If you avoid lifestyle inflation from the very beginning and make saving at least 10% of your income a priority, you’ll always find it easier to save money no matter how much you make. You don’t have to start off saving 10% right away, but it’s a great goal to work toward as your income increases.

You should also take advantage of a full-time job with all the benefits it comes with as you start your career. Don’t wait to open a 401(k) or other employer-sponsored retirement plan if any are available to you. If your company offers to match your contributions, put in at least enough to get the full match. That’s free money!

If you don’t have access to an employer-sponsored retirement account, you can still save as soon as you start working. Open a Roth IRA and save what you can. And remember, as you earn more, contribute more to retirement (instead of getting caught up in spending more).

Continue Your (Financial) Education

You may have just graduated from college, but don’t let learning end here. The best way to set yourself up for financial success in life is to continually seek to learn more about your money. Ask questions and seek answers. Do research. Get multiple opinions and consider different perspectives.

There are more resources available to you than ever before. In addition to personal finance, money management, or investing books that you can buy, tons of information about these subjects is available for free on blogs and podcasts. While most bloggers are sharing from personal experience, there’s a lot that you can learn from what other people have tried — and if nothing else, tuning into the conversation can keep you inspired and motivated to reach your own financial goals.

Staying interested and involved in your finances will help you better manage your money on a day-to-day basis and for the long-term. No one will care more about your cash than you do, and continuing to learn is without a doubt a prerequisite for building wealth.

Kali Hawlk is a freelance writer and the co-founder of Off The Rails, a free mentorship platform for creative women. She’s passionate about helping others do more with their money, their work, and their lives. Get in touch by tweeting @KaliHawlk.

Learn more about security

Mint Google Play Mint iOS App Store

Source: mint.intuit.com

Careers College Early Career Financial Planning Financing A Home Money Management Personal Finance

5 Tips on How to Negotiate an Entry-Level Salary

admin 0 Comment

Now that you’ve crushed it with your cover letter, blown everyone away with your resume, and aced your interview, it’s time to do what half of all new hires never even attempt: negotiate your salary.

If you’re a recent graduate hunting for work or a twentysomething switching careers, the thought of telling a potential employer how much you want to be paid probably makes you feel a little uncomfortable. But negotiating your entry-level salary could be one of the most important conversations of your professional life, and it can actually be a lot less intimidating if you’re prepared.

Start a new entry-level job earning the paycheck you deserve with these five salary negotiation tips.

 1. Identify your ask.

Before entering into any negotiation, you’ve got to know what you want. Ask for a salary that’s too high, and you won’t be taken seriously. Too low, and you’re leaving money on the table. To find the sweet spot, get advice from friends in the industry or any job recruiters you might know.

Also check out sites like Salary.com and PayScale.com to learn what pros in your area are actually earning. You’ll end up with a range of results, and, if you’re confident in your abilities, assume you’re worth an amount on the higher end. Just be realistic about the number you land on, because if you don’t believe you’re worth what you’re asking for, neither will the person you’re negotiating with.

 2. Be prepared to brag.

Before talking about your salary, make a bulleted list of your qualifications and previous accomplishments. Highlight anything that increased sales, reduced costs, or streamlined processes for former employers, and include any unique skills that could give you an edge compared to other candidates.

If you’ve never actually held a full-time job before, jot down any notable internship projects or relevant experience you’ve acquired from extracurricular activities. The idea is to impress your potential employer by letting her know everything you’ve done that makes you qualified to fill the position.

Stand in front of a mirror (or with some patient friends) and rehearse your spiel until it’s perfect. When you’re finally sitting down with the decision maker, hand her a copy of your list and draw attention to whichever items are most relevant to the position you hope to fill.

 Improve your salary negotiation skills with #Mint

 3. Act like you’ve been there before.

If this is your first time negotiating, keep that under wraps. It’s normal to feel nervous, but stay confident by remembering you’ve made it this far for a reason. Give the impression that you’re an experienced negotiator by acting like one. You don’t need to be some Don Corleone, making offers your would-be boss can’t refuse, but it helps to maintain good eye contact, a positive attitude and a firm tone of voice.

If you’re sending a salary negotiation email, be sure to express your enthusiasm for the company and the position. In either case, it’s a good idea to fire away with any insightful questions you might have—just be sure not to over-communicate. If you find yourself talking too much, shut the front door and wait for your interviewer to make the next move.

4. Don’t be first to mention money.

When it comes to talking numbers, don’t be the one who brings up the topic, and never mention the salary you’d settle for. If you’re repeatedly asked to state the figure you had in mind, ask for 10 percent more than the number you settled on. This provides a solid buffer if and when your hopeful boss tries to talk you down. It’s also a good rule of thumb to request for a precise figure, rather than a nice round number. This is merely a psychological tactic, but it seems to work. In the case that your interviewer suggests an initial salary along the lines of what you had in mind, calmly restate the number then bite your tongue. More often than not, this approach results in increased offers.

5. Stand your ground.

If the amount your interviewer offers isn’t quite what you had in mind, don’t get ruffled. Keep your emotions in check, don’t take anything personally and repeat the reasons why you’re the best candidate for the job.

If your potential boss simply won’t budge, find out if there’s flexibility as far as benefits are concerned. If you can’t afford to pass up this opportunity, ask what you can do to increase your compensation in the near future. Set a date to revisit the topic and ask your new employer to put it on her calendar. And if, in the end, you’re just not feeling the offer, don’t be afraid to turn it down. It’s better to hold out for the pay you want than accept an amount you’re not able to live on.

You owe it to yourself to negotiate for every penny you’re worth. This is especially true considering that many companies calculate raises and pensions based on an employee’s initial salary.  So start your career with confidence and earn what you deserve.  Good luck in your negotiation.

Learn more about security

Mint Google Play Mint iOS App Store

Source: mint.intuit.com