You’ll Never Follow a Budget. Here’s How to Retire Rich Anyway

Budget? Me? Heck, I can’t even stand to read the directions when I have to assemble something, you say. Have a written plan for my finances? You’re kidding, right?

If this sounds familiar, we feel you. Budgeting isn’t for everyone. But here’s the thing: You don’t have to follow a budget to keep your finances on track for life-after-work. You just have to keep score.

Track what you own minus what you owe

“Sometimes people get really intimidated by doing budgets, which is understandable. They’re tedious and a pain,” says Charlie Farrell, CEO of Northstar Investment Advisors in Denver. “But if you follow the old practice of removing your savings first from your paycheck, and then you force yourself to live on what’s left, that’s kind of a self-imposed budget, right?”

To measure your progress, you can track your net worth. That’s where the keeping score part comes in.

You simply add up all the stuff you own, including what you’ve saved, and subtract all the money you owe — that’s called net worth. Take the result and keep an eye on it now and then. That will tell you whether you’re on track for a beach and a back rub when you’re ready for retirement.

Your net worth may be a negative number

If you’re just starting out, it may be a jolt to find that your net worth isn’t a positive number.

“It’s always negative in the beginning because you’re going to have more liabilities than assets. It’s discouraging, but it’s reality,” Farrell says.

That’s especially true for those with student loans and early-career earnings.

“I think that’s why net worth is important, because it’s a valid number for where you’re at,” says Dallen Haws with Haws Financial Planning in Sierra Vista, Arizona. “Because if you do have debt, whether it’s car loans or mortgages or student loans, that’s real, and it’s going to stay with you for a long time unless you say, ‘Hey, my net worth is negative. I’ve got to work on this.'”

Haws often works with federal employees. Come retirement time, he says many of them have saved tremendous wealth — despite often modest salaries. “I’ve also worked with some doctors and dentists who make great incomes but can’t seem to save anything,” he adds.

So, income and net worth aren’t always related.

Improve your net worth with more savings, less debt

“Eventually, by the time you retire, you want a boatload of assets and basically no liabilities,” Farrell says.

Retirement savings will make up the bulk of assets for most people: things like a 401(k), 403(b) and IRAs. The key is to ultimately have a sizable amount of assets that generate income that you can live on. And with less debt, such as a paid-off house and a free-and-clear car, more of that income can go to your after-work lifestyle.

“Just hammer away at your savings rate and put yourself on a path to be primarily debt-free … By the time you retire, you’ll see that your net worth basically takes care of itself over the long term. But you need to hit rough benchmarks as you move along,” Farrell adds.

One benchmark is a comparison of your net worth to a multiple of your income. Consider what you make — the amount that currently supports your lifestyle — and know that you’ll need 20 to 25 times that amount to fund your after-work lifestyle, Farrell says. So if you make $100,000 annually, you’ll likely need $2 to $2.5 million to retire with a similar standard of living.

Compounding builds net worth momentum

Whoa. That’s a tall order. Break it down by your age to get some momentum on your side. By age 30, have an amount equal to your annual income in retirement savings, Farrell says. Save three times your current annual income by age 40, and keep ratcheting it up from there.

“If you keep your savings rate relative to your earning power every single year, then the numbers pretty much self-adjust over time,” Farrell says.

Compounding helps build momentum.

“Once you get to two to three times your household income in savings, your portfolio begins to do more and more of the heavy lifting,” he adds. At that point, investment returns combine with current contributions to accelerate the growth of the balance.

Net worth: It’s a long game

Calculating and tracking your net worth sounds simple enough, but there are a few additional considerations:

  • Say you rent an apartment and lease your car. You’ve got no debt, right? Not exactly. You need a place to live, and rent never ends. And that lease on a car is debt.

  • There are things that may not seem to factor into a net worth calculation, such as passive income from rent, royalties, dividends and the like. All of these can be part of an income stream that feeds your after-work lifestyle.

  • With rising property values, net worth can also be skewed by the market value of your house. You may have a ton of equity in your home, but it’s not a liquid asset that you can tap on demand unless you take out a loan — or move. Since debt should be avoided during retirement, you’d have to sell your home and downsize into something cheaper, perhaps by moving to a less expensive area of the country, Farrell says.

“It’s a long game. It takes a while for noticeable results to appear,” Haws says. “It’s the big picture. Are we making progress or not? Are we getting closer to our long-term goals or not?”

Farrell suggests taking a look at your net worth every six months to a year.

Source: nerdwallet.com

Smart Money Podcast: Buying Crypto and Dealing With Debt

Liz: Welcome to the NerdWallet Smart Money podcast, where we answer your personal finance questions and help you feel a little smarter about what you do with your money. I’m Liz Weston.

Sean: And I’m Sean Pyles. In this episode, Liz and I are talking about debt and debt forgiveness. First though, in our This Week in Your Money segment, Liz and I are talking about a new interest of mine, cryptocurrency.

Liz: So how did you get involved in this, Sean?

Sean: I have to admit, it was a little bit spontaneous. I was just scrolling through Twitter the other day, as one does, checking in on the status of our republic, doing a little bit of doomscrolling, checking out Dionne Warwick’s Twitter account — which I will tell you is the antidote to doomscrolling. And I saw that Dogecoin was trending, and this is something I’ve been kind of curious about for a while. So I wanted to check on it, see why it was trending on Twitter and the big news . . .

Liz: OK, what in the world is Dogecoin?

Sean: OK. Dogecoin is a cryptocurrency that effectively started as a joke. For those who aren’t familiar, there is this meme that goes back, I want to say almost a decade at this point, of a Shiba Inu, and it is called Doge. It is the Doge dog, and it’s just a meme that circulated for a long time. And so, the creators of Dogecoin wanted to make a cryptocurrency that was a joke, kind of a satire on the whole financial industry.

For that, I found it really appealing. Anything that takes away a little bit of power from the way that money rules our lives I’m all about. So I thought it was interesting. And when I was looking through the trend, I saw that the big news was that it hit a penny in value, which was a big momentous occasion for a Dogecoin, which had been around since 2013 and had not even hit a penny yet.

Liz: So this is what got you involved in crypto?

Sean: Yes. Yes.

Liz: I love it. OK.

Sean: So, I do want to say from the outset here, we’re not endorsing this kind of money. Cryptocurrency is pretty volatile and is a risky investment. This is something that I was doing with some fun money. I only spent $50 on this and I got a lot of Dogecoin for that, because it was a penny at the time. So I just thought it would be something that would be worth dabbling in, because I’ve been curious about it for a long time. So I bought it through a cryptocurrency exchange, and there are a number of these. And I was really surprised by how complicated the process was to get set up. I assumed that much like opening a bank account or applying for a credit card, you’d put in your info and you wait a little bit, and then you are approved. That was not the case.

I had to upload photos of my identification and put in my address, give them my Social, and I had to wait a couple of days for them to verify all of my information before I could then, at that point, wire money from my bank to an intermediary bank that would then be uploaded to this cryptocurrency exchange. So what I thought was going to be maybe a half-an-hour impulse adventure into cryptocurrency took me maybe three days to do.

Sean: So in my few days having this cryptocurrency so far, it really reaffirmed to me that the way that we think about it at NerdWallet, which is that cryptocurrency is an incredibly speculative and volatile buy. We like to think that stock trading of more established companies is less risky than investing in cryptocurrencies because it just goes up and down all the time. So again, it’s not for the faint of heart or those who are going to be putting all of their money into this. That’s maybe a very risky thing to do, but for me it was fun to do at the time.

Liz: Well, I think people see or hear about cryptocurrencies when they go up and people don’t hear as much about when they crash. So that’s something that’s just constantly beat into people’s heads and beat into our own heads, this is gambling. This is like going to Vegas, and there’s no guarantee that you will get anything out of this. The smart thing, if you’re going to do this, is to only risk money that you can easily lose. When we’re talking about investing, we’re talking about something different. We’re talking about investing and putting money into the productivity of companies and actually the productivity of the world. And we know over time that that particular kind of investment pays off. We don’t know that with cryptocurrency. We don’t know which one is going to be the one that actually is in it for the long haul.

I’m not sure one that was created as a joke is going to be the one that really takes off. This is not a way to get rich. This is a gamble and you’ve got to be prepared to let that money go.

Sean: The value of it just depends on people’s interests at the time. And actually over the summer of 2020, there was a big TikTok meme around trying to get Dogecoin up to a dollar. And obviously they failed, because it’s only around a penny right now as we’re recording this. And there was a lot of speculation of, “Oh, is this the time that Dogecoin has its moment?” It seems like 2020 or 2021 would be a great time for meme money to take off, right, in this crazy world that we’re living in.

But you just never know. And in fact, at that time, Dogecoin put out a tweet saying, “Be mindful of the intentions people have when they direct you to buy things. None of them are in the spot to be financially advising all this great advice.” They also said, “Make choices right for you. Do not ride other people’s FOMO or manipulation. Stay safe, be smart.”

Liz: Yeah. In the stock market world, there’s something called a pump and dump. And what that is, is with penny stocks, somebody goes on and tries to hype it up. And their whole point is just to get it bid up, and then they sell and poof, the value goes away. So I would think of any cryptocurrency, any speculative investment, as really, really subject to those kind of pump-and-dump schemes.

Sean: And obviously, there’s always going to be risk when it comes to investing. There’s never a guarantee of return of any sort, really. But that is especially true when it comes to cryptocurrency. And yet, despite that, I decided to take this little adventure and again, as you said, I’m doing it with money that I can lose and feel OK with losing, but that’s just what I wanted to experiment with really.

Liz: Yeah. Well, that makes sense.

Sean: All right. So for those who are interested in learning more about crypto, we’re going to link to one of our key articles on this. It’s called “What is Cryptocurrency? Here’s What You Should Know.” It includes seven different things that you should know about cryptocurrency, but we will link to that on our show notes post. So, please check that out. And with that, I think we can get onto this episode’s discussion around debt in 2021.

Liz: Sounds good. Let’s do it.

Sean: All right. So for the next installment of our #NewMoneyGoals series, Liz and I are focusing on the perennial goal of getting debt-free. But I’m actually of the perspective that we are in a really unique moment in the history of consumer debt in this country, and I’m kind of convinced that we’re in the middle of a debt crisis and we have been for a while, and it’s just really boiled over in the past 12 months or so. So to start, Liz and I are going to set the context for where we are right now. And then we’re going to talk about managing debt in 2021.

Liz: Yeah. And Sean, you just read a book about this topic, right?

Sean: Yeah. And this is the book that inspired this conversation. It’s called “Debt: The First 5,000 Years,” by the late David Graeber, an anthropologist who was really active in the Occupy movement. And this book is mammoth. It’s around 400 pages with a following 200 pages of just footnotes, basically.

Liz: Oh, wow!

Sean: Very deeply researched, but it truly opened my eyes around the way that money and debt and credit had been intermingled and have had so many different shapes throughout human history.

Liz: And one of the things that you mentioned was that credit actually predates money.

Sean: Credit really was the first form of money. And this is dating back to Sumerian credit ledgers that go back to around 3,000 BC. And throughout history, money was virtual and then it became metal-backed, and then it became virtual again. Then it became metal-backed, and now we’re again in a virtual form of money with the dollar not being backed by the gold standard, so many different shapes of money throughout history. And that has helped me understand how a lot of what we’re in right now is of our own making and design and we have these very strict rules around paying debt and feeling morally obligated to do so, but much of this is a somewhat recent convention and has changed over time.

Liz: Well, yeah. And that’s I think important for people to know, is a lot of times people think the rules around debt have been engraved in stone for those 5,000 years that Graeber’s talking about. In reality, there have been a few changes in the past few decades that have led to the current situation. And one of those changes was the repeal of usury laws. Back in the day, states had limits on how much you could charge on interest rates. Isn’t that right?

Sean: Yeah. I mean, historically, an interest rate of 20% was around as high as you could go. That was a standard in ancient Egypt, actually. And even before that, charging any kind of interest was deemed immoral and has been illegal at certain points and in certain places in history. But now, we have just sky-high interest rates. A 20% APR on a credit card is actually pretty good in our current context, and we don’t even need to talk about payday loans, which just have astronomical interest rates.

Liz: What happened was in 1978, the Supreme Court basically said that companies were only limited by the usury laws of the state where they were located. So obviously, a bunch of lenders moved to states that had no limits on interest rates. And this did a couple of things. One of the things it did is it greatly expanded availability of credit because lenders could charge more for riskier borrowers, and then we saw a real expansion of who could borrow and how much they could borrow. That expanded credit made credit much more a part of our everyday lives.

Sean: But at the same time, since that’s happened, we’ve seen wages stagnate from around the 1970s or so. And so, at the time where people have been able to take on more debt, more expensive debt, they’ve also been less and less able to pay off this debt. And now we have debt in so many endless shapes in our country. We have student loan debt, we have medical debt, we have children who have lunch debt. It’s kind of mind-blowing, the fact that we just accept all of this, and people are suffering so greatly and they really aren’t able to move ahead in their lives because they’re limited by what they owe.

Liz: Well, and one of the problems is when people’s ability to repay isn’t considered. We want people to go to college. We want people to be able to get an education because that increases their ability to earn, which increases tax receipts, all that good stuff. But we’re allowing 18-year-olds, 17-year-olds to sign up for mind-boggling amounts of debt, perhaps that they can’t repay. And that situation has led to what we’re seeing, which is so many people with more student loan debt than they can possibly repay.

Sean: Yeah, and you’re right. Debt can be a tool, but it’s about having debt within reason. And historically, debt was seen as an obligation between equal parties where one would pay the other back. And I think that equality has eroded over time as wages have stagnated and people just take out debt to get their groceries, or now they’re putting rent on a credit card, and this has led to the debt crisis that we’re in right now.

Liz: So I know, Sean, that you are really hoping for some kind of student loan forgiveness to come out of the Biden administration. And that actually has some historical precedent, right?

Sean: Debt forgiveness goes back thousands of years. Graeber points out in his book that dating back to Babylon, kings would often forgive debt. Let me read this brief passage here. He said, “Faced with the potential for complete social breakdown, Sumerian and later Babylonian kings periodically announced general amnesties, which was a period of debt forgiveness.” And if there was ever a time for us to have this because of social unrest and because of overwhelming debt, I think right now is the perfect moment to have some kind of debt forgiveness beyond student loans. Think about all of those people who have nine months of back rent and how are they expected to pay that off while also managing keeping the lights on and feeding their kids and all the other things that you need to have an existence beyond just mere subsistence?

Liz: Bankruptcy law has evolved over time so that at least people will have that option to get rid of their rent debt and their other debt that’s been built up. And the whole point of bankruptcy is so people can have a fresh start, and it’s essential to capitalism. You have to have an ability to wipe the slate clean, otherwise, you wind up in the equivalent of a debtor’s prison, where there’s just no way to pay off what you owe. Unfortunately, because of the way the bankruptcy law has evolved, we do have that situation with student loans.

There is a debtor’s prison there. And it wasn’t meant to be that way. It used to be that you could get rid of student loans, if you were insolvent. The current situation is just sort of a weird confluence of court cases and Congress kind of not coordinating, so we have this horrible situation. And hopefully, even if we don’t get student loan forgiveness, there will be some progress in changing bankruptcy laws so that people who are completely unable to pay those debts can get some relief.

Sean: Well, one thing that’s so interesting to me that came out of this book is the connection between debt and morality, especially in this country. The United States was actually fairly late in the game in adopting bankruptcy laws, even though it’s in our Constitution. And we have this idea that you must pay what you owe, your debts must come due, and this is your obligation.

Liz: Well, I think most people do feel that obligation. I think it’s pretty innate. Most people take out loans or use credit cards fully intending to pay them back.

Sean: But again, bringing it back to the idea of being able and being in an equitable position in society to be able to pay your debts, that’s just not where many people are. And I think the more that we can separate you as a person versus you as a dollar amount that you owe to a financial institution that was made up in the last hundred years, the more we can live happy, fulfilled lives, and hopefully get out from this burden of debt that so many people are experiencing.

Liz: And Sean, you and I have both come across people who are so unwilling to file for bankruptcy that they’ve depleted their home equity and depleted their retirement accounts and they wind up in bankruptcy anyway, so that huge stigma is still there. And unfortunately, it’s preventing people from getting the relief that they are entitled to. One thing that we’ve also noticed is that there are a lot of people going into retirement who have this kind of debt, just crippling debt. That didn’t used to be the case. You had your mortgage paid off. Now people are entering retirement with student loans, which is just kind of insane.

Sean: Right, really mind-blowing. But there is a little bit of good news. Credit card balances went down over the course of 2020, because people who were in the top part of this K-shaped recovery, who were doing better and weren’t spending as much on travel or going out to eat, were able to reduce their balances. And also a bit of good news is that if people do want to pay off their debt in 2021, the nuts and bolts strategies that we talk about really haven’t changed all that much.

Liz: That’s true.

Sean: So let’s dive into some of these practical tips here.

Liz: Obviously the first thing you need to do is catalog what you owe, who you owe it to, how much you owe, the interest rates, minimum payments, stuff like that.

Sean: Maybe make a spreadsheet. We have calculators at NerdWallet that will gather all of your debts in one place for you. Just get something sorted, so that you can visualize what you owe, and that way, you can begin to figure out how you might want to approach it. I also think it’s important for people to dig deeper into their budgets and see where they can maybe trim some expenses to channel more cash toward their debt payoff. One area that I’ve been trying to cut down in my budget personally is groceries, because I’ve been spending more and more because I’m cooking more. And I’ve been trying to pivot and buy things in bulk, so that I can shave down my grocery budget, which has just ballooned over the past year.

Liz: Yeah. And in general, what you’re looking for is paying off the toxic debts, the stuff that’s high-rate, like payday loans, credit cards, things like that. You don’t need to be in such a rush to pay off student loans necessarily, or your mortgage. And you need to come up with some kind of a payoff strategy. Again, I will include links to our various calculators so you can figure out the one that works for you.

Sean: Right. Debt snowball and debt avalanche are two really popular methods. And they’re kind of similar, but they have a couple of key differences. With the debt snowball, you pay off your debt with the smallest balance first, while paying minimums on your other balances. And then once that smallest debt is paid off, you roll that amount into your next-largest debt and so on and so forth. Like you’re rolling a snowball down a hill, gaining momentum as you go.

And then with debt avalanche, in contrast, you pay off your debt with the highest interest rate first, while of course paying minimums on your other accounts. And then once that first account is paid off, similar to the snowball, you roll that amount into the next debt and continue to cascade across all of your debts until you are debt-free. People like this method because it can save time and money.

Liz: Yeah. It’s the one that technically allows you to spend less money and get out of debt faster. The problem is, is that people tend to get more of a sense of victory and more a sense of motivation if they start with the smaller accounts first, right?

Sean: Yes. That’s why I’m personally more a fan of snowball, because I think that people are more motivated by having wins and feelings of success than the bottom line. Obviously, we all want to pay as little for our debt as possible, but at the end of the day, what matters is the debt payoff path that will have you stay motivated and stick to it over the long run.

Liz: Yeah. And there’s also ways to use financial products maybe to speed this up, especially if you have good credit scores, you can get credit cards with 0% balance transfer offers. You can get personal loans. The great thing about personal loans is that the payment is the same every month and you get out of debt in a certain amount of time. Typically, you don’t want a personal loan for more than three to five years, but at least you are out of debt at that point. You can also refinance. Refinancing student loans, auto loans, your mortgage, to free up more money.

Sean: Right. I have a friend who took out a personal loan to consolidate a few different credit cards that he had. He really wanted the simplicity of having a single monthly payment. And for him, that was why the personal loan was so appealing.

Liz: All these options are available to folks who have steady income, good credit scores. If you don’t, or if you are simply struggling to make minimum payments, you have some other options in the debt relief category.

Sean: Yes. Credit counseling is one that I am a big advocate for. A lot of people aren’t aware of credit counseling, but these are nonprofit agencies that can help you understand your debt and your budget. They provide a lot of free help. They also offer what’s called a debt management plan, where they can cut your interest rate and put you on a plan to pay off your debt over three to five years. The reason that they can do this is because they have agreements with the credit card companies to allow you to cut your interest rate, because that way the credit card companies know that they’re going to get this money eventually.

But interestingly, some credit counseling agencies are now offering what they call a less-than-full-balance program, which is basically their form of debt settlement. And again, you’re still on good terms with your creditors compared to a more traditional debt settlement program, where you can actually tank your credit pretty severely and leave yourself open to lawsuits. So they are trying to adapt to make it easier for more consumers to handle their typically credit card debt in ways that keep them in good standing with their creditors, but they can pay down their debt faster as well.

Liz: It’s really important when you’re considering debt relief options to also make an appointment with a bankruptcy attorney who can look at your individual situation and let you know all of your options. Credit counselors typically want to steer you away from bankruptcy and sometimes, bankruptcy is the best option in a bad situation. What it does typically is erase your debt within three to five months and allow you to get a fresh start, really start over in terms of building your credit and getting on with your life.

Sean: I wouldn’t be surprised if we saw a spike in filings this year. There was a huge drop in people filing for bankruptcy in 2020, according to the American Bankruptcy Institute. Overall, bankruptcy filings fell by nearly 30% in 2020 compared to 2019.

Liz: Yeah, there’s good reason for that, right?

Sean: Right. Well, courts weren’t really open in the same way. A lot of people didn’t really have money to file.

Liz: Well, another thing that was going on is all the hardship programs, remember? That you could put your mortgage on hold for up to a year, student loan payments were paused. Most of the credit card companies expanded their hardship programs to allow you to pay less or even skip payments. So a lot of people found relief there, which took the pressure off and allowed them to put off bankruptcy. But I think you’re right. I think we’re going to start to see as the courts reopen, more bankruptcy filings and more people seeking that kind of relief.

Sean: All right. So while we are in a really difficult moment with consumer debt in this country, I still think that if people want to take the approach of paying off their debt this year, it’s absolutely doable. These methods can really help you make a big dent and hopefully even get completely out of debt in 2021. And with that, I think we can move on to our takeaway tips. Liz, do you want to kick us off?

Liz: Yes. First, understand the moment. Our country is in a debt crisis, so try not to feel so guilty if you’re struggling with debt.

Sean: But at the same time, some of the nuts and bolts debt payoff tactics still work. That means cataloging your debts, finding the best way to pay them off, and sticking to your plan.

Liz: If you’re really struggling, don’t be afraid to ask for help. Think about calling a nonprofit credit counseling agency for free budgeting and debt help.

Sean: And that is all we have for this episode. Visit NerdWallet.com/Podcast for more info. And remember to subscribe, rate, and review us wherever you’re getting this podcast.

Liz: And here’s our brief disclaimer, thoughtfully crafted by NerdWallet’s legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This Nerdy info is provided for general educational and entertainment purposes, and may not apply to your specific circumstance.

Sean: And with that said, until next time, turn to the Nerds.

Source: nerdwallet.com

COVID-19 Scams

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Disclaimer

As if fearing the health-related consequences of the COVID-19 coronavirus wasn’t enough, there’s also a fair amount of financial uncertainty related to recession and an unstable economy. People all across the United States are wondering how they’ll pay their bills and make ends meet as they file for unemployment and wait for a one-time stimulus check that may not cover the bills.

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Privacy Policy

It’s unfortunate, but some bad actors will always take advantage of situations like coronavirus. In addition to everything else, individuals also need to be on the lookout for COVID-19 scams that are cropping up. In fact, there are so many coronavirus scams out there right now that the FTC created an FTC Scam Bingo game to try and spread the word.

Read up on what COVID-19 scams to look out for and how you can protect yourself and your finances.

COVID-19 Stimulus Check Scams

Some scammers are tricking people into thinking they need to provide personal information to obtain their government relief check. Consumers do not need to sign up for the federal stimulus checks. The government plans to distribute them based on consumers’ 2018 or 2019 federal tax returns starting April 2020. Keep in mind that the IRS does not initiate contact by email, text, or social media.

How to Protect Yourself

Do not respond to any correspondence claiming to be the IRS or other branch of the government requesting personal information in exchange for access to your stimulus check. For accurate information about the federal relief checks and when you can expect yours, visit the IRS’s coronavirus resource.

Student Loan Scams

Americans owe over $1.64 trillion in student loan debt, so it’s no wonder that scammers are preying on this financially vulnerable population. Watch out for offers to forgive your student loan debt in its entirety or change your repayment plan for a fee, or requests for other personal information in order to suspend your payments in response to coronavirus. There is no such thing as instant student loan relief, and you should not need to pay a fee for help from your loan servicer. All federally backed loans have automatically suspended payments and set interest to 0%.

How to Protect Yourself

Do not accept unsolicited offers to help you with your
student loan payments and never give out your personal information. If you are
having trouble making payments because you’ve lost your job, reach out to your
loan servicer for options.

Social Security Scams

Social Security scams are common, but coronavirus has put a new twist on the scam. Now, in addition to watching out for scammers claiming that your Social Security number is about to be suspended, you also need to watch out for calls or letters claiming that your benefits will be canceled due to coronavirus-related office closures. Social Security offices are closed, but officers are still working, and your benefits will not be suspended. And your Social Security number will never be suspended.

How to Protect Yourself

If you are unsure if a call or email is from the Social Security Administration, reach out to them yourself for confirmation before sharing any personal information. If you have already given you Social Security number to a scammer, visit IdentityTheft.gov/SSA for steps on how to protect your credit and identity.

Medicare Scams

Because older individuals are particularly susceptible to COVID-19, scammers have been targeting them with Medicare scams. Be on the lookout for fraudulent Medicare representatives asking you to verify personal information, like your bank account, Social Security, or Medicare numbers. Medicare representatives will never call you to verify your account number, offer you free equipment or services, or try to sell you anything.

How to Protect Yourself

If you’re
not sure if a phone call is legitimate, hang up and call Medicare yourself.
That way you can confirm that you are talking to an actual Medicare
representative. To reach the Medicare office, call 1-800-633-4227.

Fraudulent Charities

Whether it’s a natural disaster or worldwide pandemic
like the coronavirus, legitimate charities work hard to aid people in need.
This can include providing food, funds, housing or other forms of assistance. Unfortunately,
fake charities can crop up too. They might use names that sound similar to real
charities and may even have emails, websites and phone numbers that seem
legitimate but aren’t.

How to Protect Yourself

Donate to charities that you are already familiar with. If you’re questioning the legitimacy of a charity, you can use third-party websites to check credentials. Options include Charity Navigator and Give.org, which is maintained by the Better Business Bureau.

Protect Yourself from COVID-19 Scams

As you continue to navigate the uncharted waters of a
worldwide pandemic, be on the lookout for COVID-19 scams. If you’re ever unsure
about something, you can consult trustworthy government resources or well-known
news outlets to verify information. Share this information about scams with
others so they know what to be on the lookout for as well.

More resources on scams:

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How Can You Get Credit Card Rewards for Buying Gift Cards?

November 9, 2020 &• 4 min read by Jason Steele Comments 0 Comments

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Advertiser Disclosure

Disclaimer

The gift card market is worth more than $130 billion annually. Is that any surprise? You’ve probably bought at least one gift card in the past year for a friend or family member. It’s an easy way to show someone appreciation and to make sure they can get whatever they want. But what if we told you both you and the gift-giver can benefit from gift cards? That’s right—you can get credit card rewards for buying gift cards.

How Can Buying Gift Cards Earn You Rewards?

If you have a rewards credit card, you earn points or miles on some—or all—of your purchases. Unless your credit card terms of service say gift card purchases don’t count for rewards, you can get points or miles when you use your credit card to buy a gift card.

For example, let’s say you earn one point per dollar spent. You’re planning to buy your mom a $50 gift card for her birthday and your niece a $25 gift card for her special day. Use a credit card to buy those gift cards at retailers, and you can earn 75 points just for buying gifts you were already going to purchase.

Maximizing Rewards When Buying Gift Cards

But it does get better. If you plan ahead just a little, you can maximize the rewards you get. For example, imagine you want to buy a $100 gift card for a couple for their wedding.

Your credit card gives you one point per dollar for any purchase. You could buy that gift card at a department store or drug store and earn 100 points. But what if you get three points per dollar when you shop at grocery stores? You may be able to purchase the gift card at a grocery store and earn 300 points.

But you don’t have to limit your gift card rewards earning to actualgifts. Are you planning to buy an appliance from a store such as Best Buy? Imagine it’s going to cost around $500. You might purchase $500 in Best Buy gift cards at the grocery store with your credit card and use them to buy the appliance. And if you’re earning three points per dollar, that’s 1,500 points!

Use Gift Card Purchases to Meet Signup Bonus Requirements

If your new credit card requires you to spend $3,000 in three months to get the signup bonus points, gift cards might help you get there. Perhaps you’ve spent $2,000, but you really don’t need anything else. You don’t want to spend $1,000 on random things just to earn the bonus points. But you could buy $1,000 worth of grocery, restaurant and other gift cards that you can use to fund your life in the next few months.

Avoid Abusing the System

Of course, you need to approach getting rewards from buying gift cards with moderation. If a credit card company thinks you’re abusing the system, they may cancel your points—or even your account.

So how could you abuse the system? If you’re spending thousands a month buying gift cards at grocery stores to maximize category rewards points and then selling those cards to friends, that’s abuse.

But imagine that you need to buy medication and other supplies at a drug store every month. If those costs are around $150, you might use your credit card to buy a $150 gift card at a grocery store chain every month. That’s because the credit card in question gives you six points per dollar spent at grocery stores.

You’ll earn an extra 900 points a month, while buying medications you already would be paying for. That probably won’t be seen as abuse.

Should You Use Credit Card Rewards for Gift Cards?

This really isn’t a two-way street. While you canuse credit card rewards to get gift cards in most cases, it’s usually the most expensive way to redeem your rewards. That’s because you need more points for every dollar redeemed on gift cards than you might on travel rewards or other options.

Reward Credit Cards

If you’re planning to use your credit card to buy gift cards at grocery stores or other retailers to earn more rewards, make sure it’s allowed first. If you don’t already have a rewards card, you can shop for one in Credit.com’s credit card marketplace. Here are a few options:

  • Chase Sapphire Preferred Card, which lets you earn one point for every dollar spent and comes with a generous signup bonus

Chase Sapphire Preferred® Card

Card Details
Intro Apr:

Ongoing Apr:
15.99% – 22.99% Variable

Balance Transfer:
15.99% – 22.99% Variable

Annual Fee:

Credit Needed:
Excellent-Good

Snapshot of Card Features
  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $750 toward travel when you redeem through Chase Ultimate Rewards®
  • 2X points on dining at restaurants including eligible delivery services, takeout and dining out and travel & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for travel through Chase Ultimate Rewards®. For example, 60,000 points are worth $750 toward travel.

Card Details +

  • Mastercard Black Card, which lets you earn 1.5% cash back or 2% airfare rewards

Mastercard® Black Card™

Card Details
Intro Apr:

Ongoing Apr:

Balance Transfer:
0% introductory APR for the first fifteen billing cycles following each balance transfer that posts to your account within 45 days of account opening. After that, your APR will be 14.99%.

Annual Fee:
$495 ($195 for each Authorized User added to the account)

Credit Needed:

Snapshot of Card Features
  • Patented black-PVD-coated metal card—weighing 22 grams.
  • 2% value for airfare redemptions with no blackout dates or seat restrictions. 1.5% value for cash back redemptions. Earn one point for every one dollar spent.
  • 24/7 Luxury Card Concierge®—available by phone, email and live mobile chat. Around-the-clock service to help you save time and manage tasks big and small.
  • Exclusive Luxury Card Travel® benefits—average value of $500 per stay (e.g., resort credits, room upgrades, free wifi, breakfast for two and more) at over 3,000 properties.
  • Annual Airline Credit—up to $100 in statement credits toward flight-related purchases including airline tickets, baggage fees, upgrades and more. Up to a $100 application fee credit for the cost of TSA Pre✓® or Global Entry.
  • Enrollment in Priority Pass™ Select with access to 1,300+ airport lounges worldwide with no guest limit. Includes credits at select airport restaurants for cardholder and one guest.
  • Cell phone protection for eligible claims of up to $1,000 each year. Plus additional World Elite Mastercard® benefits.
  • Annual Fee: $495 ($195 for each Authorized User). Terms and conditions apply.

Card Details +

  • TD Cash Credit Card, which lets you earn 2% cash back at grocery stores among other perks

TD Cash Credit Card

Card Details
Intro Apr:
0% Introductory APR for 6 months on purchases

Ongoing Apr:
12.99%, 17.99% or 22.99% (Variable)

Balance Transfer:
0% Introductory APR for 15 months on balance transfers

Annual Fee:

Credit Needed:
Excellent-Good

Snapshot of Card Features
  • Earn $150 Cash Back when you spend $500 within 90 days after account opening
  • Earn 3% Cash Back on dining
  • Earn 2% Cash Back at grocery stores
  • Earn 1% Cash Back on all other eligible purchases
  • $0 Annual Fee
  • Visa Zero Liability
  • Instant credit card replacement
  • Digital Wallet
  • Contactless Payments

Card Details +

Want to Get Approved? Have a Good Credit Score

Getting approved for top rewards cards does usually require good credit. Before you apply, make sure you know where you stand. Consider signing up for ExtraCredit to get details about your credit score as well as cash-back rewards when you’re approved for certain offers, including credit cards.


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Source: credit.com

Is a Fixer-Upper Home Worth the Investment?

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Disclaimer

Buying fixer-upper homes is currently a popular investment in the housing market, especially since lower-priced houses increase housing confidence in home buyers. On the one hand, it is a great way to purchase a home below market value and sell it for more than you paid. On the other hand, it often seems to be more work than people anticipate, and sometimes the final product doesn’t end up being worth as much time, effort, and money as people put into it.

So, is a fixer-upper home worth it? The answer depends on a variety of factors and your current situation. Thankfully, we have a list of pros and cons as well as tips and recommendations if you’re trying to decide if a fixer-upper home is the right decision for you.

The Pros

  • You have more creative leeway. You can build, renovate, and design the house the way you want.
  • You can decide what places in the home you want to spend more money on (i.e., a better kitchen or a better bedroom).
  • You have the opportunity to make the home worth a great deal more than you paid.
  • You can likely flip the home for more money
  • Fixer-upper homes are typically 8% below the market value.
  • You will pay less in property taxes because they are calculated based on your home’s sale price.
  • If you have a home warranty, you can save money on replacing and repairing broken appliances and systems.

The Cons

  • Most fixer-upper homes are not move-in ready.
  • Renovations are costly.
  • You also don’t have an exact total of what everything will cost, making the financial bottom line uncertain.
  • Fixer-upper homes can be a risk. You never know when things are going to go wrong, so you have to anticipate possible complications.
  • If you need to make structural changes, you’ll need a building permit, which is around $1,000, according to HomeAdvisor.
  • It can take months or even longer to finish a fixer-upper.

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Do a Home Inspection

If you are interested in a fixer-upper home, you want to begin with a home inspection. The inspector will likely be able to determine whether the home is worth the investment or not, depending on the severity of the necessary renovations.

Note that if the necessary improvements in the house are structural, such as roof and/or wall issues, it’s likely not worth the investment. These type of renovations are complicated and extremely expensive. They are also not typically noticeable by potential buyers, so they fail to raise the value of your home enough to make up for the money you invested. However, if you have a written report from your home inspector listing the major issues and the estimated repair costs, you might be able to get the seller to lower the cost of the house to account for the added repairs you’ll have to do.

Get an Estimate of Renovation Costs

Deciding if a fixer-upper home is worth it is heavily influenced by the estimated cost of renovations. As stated above, home inspectors can often help you with this. Note all of the necessary renovations and how much they will cost by using a home inspector or a contractor; it’s better to over quote this than under quote. Then you want to subtract this from the home’s projected market value (after repairs and renovations). You can estimate a home’s market value by researching the neighboring homes’ values. Finally, you need to deduct 5 to 10 percent more for possible complications and other possibilities.

Determine If You Need Permits

Depending on your area, you might need permits to do certain renovations. If you build without obtaining the proper permits, you could have difficulty selling the house in the future. Make sure you have the money to get the required permits before committing to remodeling.

Identify the Skills You Have and What You Can DIY

Part of purchasing a fixer-upper is having to do much of the work on your own. Decide if you have the skills to do the necessary renovations. If you can do most of the repairs by yourself, figure out what you can DIY and hire someone to do the rest. If you’re doing most of the labor, all you need are the parts and equipment for the renovations, and you won’t have to waste money paying someone else.

If you don’t have the ability to do a large chunk of the workload yourself, consider staying away from a fixer-upper home. Hiring someone to do most of the work for you will likely cost more than the renovations are worth in value.

Make Sure You Have the Time—and the Motivation

Fixer-upper homes require a considerable amount of time. If you think you’re too busy to manage the home renovations, consider going with a move-in ready home instead. Especially if you delay pressing repairs, you could risk losing money and value in your home.

Along with a time sacrifice, fixer-uppers require motivation to deal with such a huge project. Ensure you have the motivation and determination to finish renovations before committing to a fixer-upper home. You don’t want to take the plunge and buy the home just to get burnt out halfway through and regret your decision.

Check Financing Options

Buying a fixer-upper home is more financially complicated than your typical finished home; you will need money for the routine down payment and closing costs, but you will also need money for the home repairs and any possible complications in the renovation process.

If you don’t have enough money for the renovations up front, there are borrowing options such as the 203(k) loan that is meant for home repair, improvement, and reconstruction. A multitude of other loan options can ease the financial difficulty.

Avoid Being House Poor

Being house poor is when you spend the majority of your income on your home ownership. This can include your mortgage payment, property taxes, utilities, maintenance costs, etc. If choosing a fixer-upper home is going to take the majority of your money, you’re most likely better off to wait until you have additional income to handle the financial burden.

Take into account your debt-to-income ratio (DTI) when deciding if a fixer-upper home will make you house poor. Your DTI is all of your monthly debt payments divided by your gross monthly income. Generally, a 36 percent or lower DTI is ideal.

Plan for Complications

With fixer-upper homes comes unpredictability. There are unexpected issues and costs that can leave you scrambling if you’re not prepared. Although you can’t predict the future, you can still take precautions so you are as prepared as possible if something goes wrong, whether that be additional expenses, time constraints, etc. You don’t want to be left in a tough spot because you assumed everything would go as planned.

The Bottom Line

Fixer-upper homes can be a great home investment, but a great deal of responsibility and financial burden comes with it. Make sure you have the resources and the time to manage such a project. If you do, use the above tips in your fixer-upper journey. If not, maybe consider a move-in ready home or you could postpone the fixer-upper project until you are more prepared.

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If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get a free credit score updated every 14 days.

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Money Market Vs Savings: What’s The Difference?

Money market accounts and savings accounts have a lot of similarities than you may think. Among other things, both allow you to achieve your saving goals risk-free or very low risk.

However, the choice between money market vs savings accounts often boils down to interest rates and fees. So, before you decide on which account to open, it’s important to compare many of their features.

Money Market vs Savings: Overview

Money market accounts and savings accounts have a lot in common.

Both types of accounts allow you to deposit a certain amount of money with a bank and you get some type of interest on your money in return.

Your money in a savings account and a money market account are FDIC insured. There are some key differences, though. Money market accounts offer a higher interest rate than savings accounts.

CIT Bank Member FDIC Savings Builder that fits your lifestyle.
Earn up to 0.95%APY.

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Minimum monthly deposit of $100 OR minimum balance of $25k.

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Most savings accounts require no minimum balance, while money market accounts usually require a high minimum balance–around $1,000.

Savings accounts are very liquid, meaning that you can easily transfer money between checking and savings accounts.

On the other hand, money market accounts, while also liquid, will penalize you if you fall below the minimum required deposit.

Money market accounts have check writing privileges, while savings account have none.

Click here to open a money market account today.

Money Market vs Savings: Table

This table below compares some of the features found in savings and money market accounts. 

Money Market Accounts Savings Accounts
FDIC-insured Yes–up to $250,000 Yes–up to $250,000
Checks 6 check per month No
Minimum balance Yes –usually $1,000 None
Transactions 6 per month 6 per month
Interest rate Yes Yes
Best Account CIT Bank Money Market Account CIT Savings Builder
Money market vs savings

What Is A Money Market Account?

A money market account or MMA is a type of bank savings account, but with some additional and different features than a regular savings account.

The interest rate on money market accounts are better than that of savings accounts. Moreover, they offer check-writing privileges.

That means you can write checks to 3rd parties, typically up to 3 per month, against your balance. They even offer debit card privileges as well.

Lastly, the FDIC insures MMA up to $250,000, just like a savings account.

One thing to note is that you should not confused MMAs with money market funds.

While they are great place to park your money as they invest in short-term investments such as certificate of deposit, treasury bills, and other government securities, they are not the same thing.

Pros & Cons of Money Market Accounts

Pros

1) Interest rates

One of the reasons most people prefer an MMA is the fact they offer a much higher interest rate than savings accounts.

2) Check writing and debit card privileges

MMAs offer check writing and debit card privileges. But there is a limit. You can only write six checks per month against your balance.

So, MMAs are best for those who do not need to write more than six checks. Also, there is no penalty when withdrawing your money.

3) FDIC insured

The Federal Deposit Insurance Corporation (FDIC),an independent federal agency, insures money market accounts, just like savings accounts, up to $250,000. 

Cons

1) Account minimums

MMAs generally require a deposit minimum amount to open the account and requires you to maintain a minimum balance to receive the best interest rate.

So MMAs are a good choice for those investors and savers who can maintain a high daily balance in the account.

2) Account fees

Another drawback of MMAs is the fee. If you don’t maintain the required minimum balance, a fee will apply.

So, maintaining the minimum balance is important because any fee will eat out your interest or earnings.

What is a savings account

A savings account is a deposit account that you can open at a bank or other financial institution. This account pays very little interest.

However, it is very safe and it is a good option to save your money.

Savings accounts are generally good for students or those with very little money and those who want easy access to their funds without penalty.

They are a good place to save money for short-term goals such as saving money to buy a house, or building an emergency fund.

You have unlimited money withdrawals. However, you can only make six withdrawal transactions.

Click here to open a savings account now.

Pros and Cons of Savings Accounts

Pros

1) FDIC insured

Savings accounts are FDIC insured-or NCUA insured (if offered by a credit union)

2) Liquidity

Savings accounts are very liquid. That means you get quick access to your funds at any time without any penalty.

3) Minimum balance

Unlike money market accounts, savings accounts typically have no initial deposit or minimum balance requirement.

However, a high-yield savings account may require a minimum balance. And a maintenance fee or a penalty may apply if your balance falls below the required minimum.

Cons

1) Interest

A regular savings account pays interest just like a money market account, though the interest paid by a savings account is very, very low.

Money Market vs Savings: which one should you choose?

Best Money Market Accounts

CIT Bank Money Market Account

The CIT Bank money market account is one of the best ones out there. Currently, the money market account offers a 1.0% APY.

This is very competitive comparing to other MMAs.  Moreover, CIT Bank’s MMA has a required account minimum of only $100.

Open a CIT Bank Money Market Account.

Best Savings Accounts

CIT bank Savings Builder

SAVINGS ACCOUNT

The CIT Bank Savings Builder is among the best savings accounts where you can a very competitive interest rate.

In fact, you can earn a better rate with CIT bank Savings Builder than most money market accounts. The Savings Builder is currently offering a 0.95% APY.

To get this competitive rate, you can 1) open the account with a minimum of $100 and deposit at least $100 per month afterwards.

Or, (2) open an account with a minimum of $25,000.

Open a CIT Bank Savings Builder today.

What should you use a money market account and savings account for?

Both MMAs and savings accounts are great places to park you hard earned cash safely. Indeed, they are great places for short term goals like:

Emergency fund: If you’re saving money for a rainy day such as a loss of job, paying medical bills, major car repairs, an MMA or savings account is a good place to do it. The reason is because the money is safe there and you have quick and easy access to it. According to experts, you should have at least 3 to 6 months of living expenses in that fund.

Down payment: Savings accounts and money market accounts are great places for a down payment on a house.

Other popular reasons for saving money in a savings accounts and MMAs are for large purchases such as a car or vacation.

Money Market vs Savings: the bottom line

Deciding on a money market account and a savings account depends largely on what is important to you. For example, are you looking for a better interest rate? If so, an MMA is a better choice.

However, if one of your concern about whether you choose an MMA or a savings account is liquidity, then a savings accounts may be appropriate.

Another factor to consider is how frequently you will need to access your funds. Both accounts however are safe. They are both insured by the federal government up to $250,000.

One thing to keep in mind, however, these accounts generally offer interest rates that are inferior to other investments such as mutual funds or stocks are offering.

For that reason, use these accounts for short-term solutions.

Related:

Speak with the Right Financial Advisor

  • If you have questions about your finances, you can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc).
  • Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

Source: growthrapidly.com

What Is Phone Insurance?

What Is Phone Insurance? – SmartAsset

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Most adults in the U.S. consider a cell phone to be one of life’s essentials. We’re so reliant on our phones that losing or accidentally damaging a cell phone would constitute a major crisis. And because cell phones can be expensive, many Americans couldn’t afford to replace a cell phone right away. That’s why phone insurance can seem like an appealing option. Here’s what to know about phone insurance. 

Find out now: Is it better to rent or buy? 

Phone Insurance Basics

Like other forms of insurance such as life insurance, phone insurance is a hedge against risk. Specifically, phone insurance provides some protection against the loss, theft or destruction of your phone. Phone insurance may be offered to you when you buy your phone through your provider. Alternatively, you can buy a separate phone insurance policy.

Many phone plans and phone purchases come with basic phone insurance, through the phone manufacturer, the phone service provider or both. Generally, these built-in forms of insurance cover things that are the manufacturer’s fault. If your phone simply stops working, you’ll probably be able to get a new one at no cost.

But what about phone-related misfortune that isn’t the result of a manufacturing default? If you drop your phone in the bath tub, leave it at a restaurant or discover that someone has stolen your phone, what do you do? In most cases, your phone plan doesn’t come with built-in protection against these eventualities. You won’t be able to walk into, say, Verizon and ask for a new, free phone because you dropped yours on the sidewalk. But if you purchased additional phone insurance, whether through your provider or from another company, you would be covered against loss, theft and damage. Your phone would be repaired or replaced with a refurbished phone.

Find out now: How much life insurance do I need? 

Is phone insurance worth it? 

Phone insurance can add a significant expense to your budget. Like health insurance, phone insurance generally comes with both monthly premiums and a deductible. Phone insurance deductibles are usually around $200. The deductible is the amount you must pay before the insurance kicks in. Phone insurance plans generally limit the number of replacement phones you can get – so if you’re a chronic phone-loser, your policy might cut you off.

So is it worth it? Well, you may already have some coverage for your phone. Some phone plans come with built-in phone insurance, so before you evaluate whether to buy an add-on policy, take a look at your current plan to see whether you’re already covered. It’s also worth taking a look at the terms of your credit card, which may offer an extended warranty on your phone if you used the card to purchase the phone. And if you have homeowners insurance or renter’s insurance, take a look at those policies, too. Your phone might be covered through your homeowners insurance or renter’s insurance policy.

If you don’t have phone insurance, deciding whether to buy an add-on policy is largely a question of your comfort with risk and your budget. If you pay for phone insurance and nothing happens to your phone, you will have lost the money you spent on premiums. On the other hand, if you opt out of phone insurance and your phone is stolen, you’ll have to come up with the money to replace your phone. You won’t automatically get a refurbished phone, as you would if you had phone insurance coverage.

Check out our budget calculator. 

Bottom Line

If your phone is lost, stolen or damaged, you might want to dip into your savings to get a new, used or refurbished phone as a replacement. If you have some liquidity in your budget in the form of cash savings, opting out of phone insurance and buying a replacement phone could turn out to be a cheaper option. Before you decide, consider your budget and the likelihood that something might happen to your phone. If you do opt for phone insurance, look for an affordable option with a short (or non-existing) waiting period. Policies with waiting periods leave consumers out of luck if their phone is lost, stolen or damaged before the policy kicks in.

Photo credit: ©iStock.com/MilosStankovic, ©iStock.com/xavierarnau, ©iStock.com/Portra

Amelia Josephson Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia’s work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.
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Source: smartasset.com

5 Ways to be Better at Conscious Consumption

This post may contain affiliate links. Please read my disclosure for more information.

We’ve all been there. You walk into your favorite store, the one with the amazing branding and the conveniently set up dollar bins and somehow walk out with $100 worth of stuff when you just went in for conditioner. Or is it just me?

I have accumulated stuff over the years sitting in drawers and boxes, cluttering up my closet and I have no idea how it got there or why it is there.

Since taking a closer look at my finances and being more aware of my purchases, I was embarrassed by the number of foods from the grocery store that went uneaten and scented candles gone unlit. I’m not against candles, I love candles! But I’m starting to realize that I don’t need every scent just because they’re $3.

And I also care about the story of my purchases. Where did it come from, how did it get here, and is it beneficial for the future if I buy it? It’s a common trait in millennials; we want to be good stewards of the earth’s resources and ethical to people around the world. It’s transformed the way I look at shopping.

So now, I pay attention to what I buy.

It didn’t start out so well. Thinking about my purchases looked more like just staring at the bottle of wine a little harder as I put it in my cart. But I’ve developed 5 habits that make me more confident that what I’m consuming is good for me and good for the rest of the world.

Reduce, Reuse, and Recycle

We’ve all heard the phrase before. But did you ever think there’s a reason they’re put in that order? Recycling gets a lot of hype but priority #1 is actually to reduce as much of our consumption as possible. Priority #2 is to reuse what you already have for as long as you can. I’m not talking kids crafts with leftover egg cartons. I mean repurposing and upcycling. Then as a last resort recycle whatever’s left.

Buy Secondhand

I’m known for being a big proponent for gently used fashion but my love for all things secondhand goes far beyond wearing it. Buying secondhand cars, home décor, and furniture can not only save you money but also reduce the quantity of items that have to be made to keep up with demand.

My logic is most definitely flawed but regardless I think of it like this: even if that Forever 21 top was made in a sweatshop, buying it secondhand instead of new, saves someone from having to produce one more top. It gives me more freedom in the thrift stores and my favorite online consignment shops like ThredUp.

Shop Local

I live in a city where local is a way of life. Big box stores and restaurants can’t touch our downtown because the city is committed to shopping at independent businesses. And for produce, the Saturday Morning Market is always packed.

Buying local means you can help more people without spending more money. Each dollar you spend returns 3 times more money into the local economy than one spent at a chain and almost 50 more than one at an online mega-retailer.

Pro tip: Be cautious at farmer’s markets to make sure the produce is actually local. Big agriculture farms will often outsource to dealers meaning you’ll buy from a 3rd party vs. buying from an actual local farm.

Buy Quality

Ask yourself: How long will this last? Will I still want to wear it in 3 years? A classic shirt that costs $35 but will last you twice as long as a $19.99 fast fashion shirt is actually a better deal. Things that can break easily or you know you replace often are worth the extra money for better quality.

Minimize Waste

I’m bringin it full circle for this last one, just to emphasize: use less, waste less. This trick not only saves your money from thoughtless buys but is the easiest way to be better to the environment. After all, you don’t have to think about the quality and source of your purchase if you just don’t purchase it.

Don’t feel overwhelmed by all the steps you need to take and money you need to spend to become the ultimate conscious consumer. Make small changes day to day and you’ll see that the more you ask yourself these questions, the more they’ll become a way of life. And your wallet and the earth will thank you.

5 Ways to be Better at Conscious Consumption

5 Ways to be Better at Conscious Consumption

<img data-attachment-id="4966" data-permalink="https://www.modernfrugality.com/save-money-online/mf-5-easy-ways-to-practice-conscious-consumption/" data-orig-file="https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2016/11/MF-5-Easy-Ways-to-Practice-Conscious-Consumption.png?fit=600%2C900&ssl=1" data-orig-size="600,900" 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="Want to be a more conscious consumer?" data-image-description="

If you’re looking for easy ways to be a conscious consumer, read this. Tips and tricks to help you spend your money better. #consciousconsumer #consciousconsumption #spendbetter #wisespending

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Jen Smith is a personal finance expert, founder of Modern Frugality and co-host of the Frugal Friends Podcast. Her work has been featured in the Wall Street Journal, Lifehacker, Money Magazine, U.S. News and World Report, Business Insider, and more. She’s passionate about helping people gain control of their spending.

Source: modernfrugality.com

The Best Money Market Mutual Funds To Consider

The best money market mutual funds are a good place to keep your cash while earning interest. Bank checking and savings accounts and money market accounts are good alternatives for your cash.

But money market funds offer a higher rate of return than these other short-term investments.

One of the best money market mutual funds is the Vanguard Prime Money Market Fund. This fund has a current yield of 1.69%. That is way more than any checking and savings account are offering.

Money market funds are considered very safe. However, they are not FDIC insured. If the lack of FDIC insurance concerns you, you may wish to invest in online savings accounts, money market accounts, or certificate of deposits (CDs).  

In this article, we will define what a money market fund is. We will list the cons and pros of those funds. We will address the main situations you will need these type of funds. Finally, we will list the best money market mutual funds to choose from.

What are money market funds?

Money market funds are a type of mutual funds. They were launched in 1975 as a way to provide investors quick liquidity to their cash, provide current income and protect the investors’ principal.

Since then, they have become extremely popular. Unlike other mutual funds which focus on other securities such as stocks and bonds, they invest in “money market” securities.

Large companies and corporations, financial institutions and the U.S. government borrow money by issuing “money market” securities as promises to repay the debts.

SAVINGS ACCOUNTCIT Savings Builder – Earn 0.85% APY. Here’s how it works: Make at least a $100 minimum deposit every month. Or Maintain a minimum balance of $25k. Member FDIC. Click Here to Learn More.

For instance, the U.S. government borrows money by selling bonds or Treasury bills or notes. Banks borrow money by selling certificate of deposit (CDs).

Big companies borrow money by issuing IOUs called commercial paper. These money market securities make up the money market fund.

Mutual fund and investment companies such as Vanguard and Fidelity offer these investments. They are low risk and they provide high yield.

Some funds are intended for retail investors. Retail investors are natural investors like you and me.

On the other hand, there are funds that are intended for institutional investors. Those funds usually require high minimum investments.

Money Market funds vs. Money Market Accounts

The names may sound the same. But, they are two different types of investments.

To recap, a money market fund is a type of mutual fund. A mutual fund company such as Vanguard or Fidelity offers this type of investment. These funds invest in short-term debt. They offer higher returns than money market accounts.

On the other hand, a money market account is a type of savings account. Banks offer them.

But the rates of return are typically higher than that of a typical savings account. Unlike money market funds, they are insured by the FDIC.

Money market fund advantages:

Money market funds are one of the best and safest places to invest your hard-earned money. You will earn more interest than in a regular savings or checking account. Here are some of the advantages of these funds.

They are very safe. Money market funds are not FDIC insured, like savings accounts and CDs are. But, they are very safe.

Since they were launched, only 2 out of hundreds have run into trouble. If you concerned about the lack of insurance, you may wish to consider an online savings account or a money market account.

They are liquid and easily accessible. Another advantage of money market funds is that you have immediate access to your money.

You may withdraw your money anytime you wish without incurring penalty. Also, you can cash in your shares by phone, online, by mail or through your broker with relative ease.

You may write checks. Another positive aspect of a money market fund is that you can tap your money by writing checks against your account with no charge.

And some funds allow you to write checks for any amount for free.

They provide higher yields. They pay higher yields than a traditional savings account.

The reason is because the borrowers, i.e., the US government and big corporations are solid institutions and they agree to repay the debts at high interest rates.

Tax advantages. Some funds invest in securities where the interests are exempt from federal taxes, and in some cases state income taxes.

All of these factors make money market funds popular with people who want to invest for their short term goals.

Disadvantages:

While there several pros to investing in money market funds, there are some cons as well.

Lower return. Because access to your money are relatively easy in a money market fund, they have lower returns than other investments such as stocks, bonds and index fund.

They are not FDIC insured. As mentioned earlier, the federal government does not insure these funds .

Other investments such as online savings accounts, money market accounts, certificate of deposits are. But again they are very safe.

However, if the lack of FDIC insurance bothers you, stick with bigger mutual fund companies.

Situations when investing in money market funds makes sense?

You have a short-term investment goal. You may want to invest in these funds for short-term goals.

If you’re planning on buying a house in the next year or so and looking for safe place to save for the down payment, then they’re a good place for your cash.

You’re saving for a rainy day. If you’re saving for an emergency fund, a money market fund is also a good place to park your cash.

You certainly don’t want to invest in the stock market, because you can lose money within a relatively short period of time due to market volatility.

You want to diversify your portfolio. Money market funds are not aggressive investments such as stocks or bonds.

That’s why these funds are safer and very conservative. When the stock market plunges, these funds can balance your portfolio out.

So, you can use this type of investment as a complement to your other and riskier investments.

The best Vanguard money market mutual funds:

Fund name Fund Ticker Min.
Investment
Expense
Ratio
Vanguard Prime Money Market VMMXX $3,000 0.16%
Vanguard Treasury Money Market VUSXX $50,000 0.09%
Vanguard Federal Money Market VMFXX $3,000 0.11%
Vanguard Municipal Money Market VMSXX $3,000 0.15%
List of best money market funds

1. The Vanguard Prime Money Market Fund (VMMXX).

This Fund is perhaps one of the best out there.

However, this fund requires a minimum deposit of $3,000 just to open an account. This can be steep for a beginner investor with little money. The expense ratio is 0.16%.

There is no purchase or redemption fees. The fund has a total asset of $127.5 billion as of January 2020.

The Vanguard Prime Money Market primarily invests in foreign bonds, U.S. treasury bills, and U.S Government obligations.

2. The Vanguard Treasury Money Market Fund (VUSXX).

As the name suggests, this Vanguard money fund only invests in U.S. Treasury bills. However, the fund has a minimum initial investment of $50,000.

It may be out reach for beginner investors with little money. But the expense ratio is 0.09%.

The current yield is 1.58% while the 10 year yield is 0.55%. If you are a wealthy investor, you should consider this fund.

3. The Vanguard Federal Money Market Fund (VMFXX).

This Vanguard money fund is perhaps the safest and most conservative of all funds, simply because they invest in U.S. government securities.

U.S. guaranteed securities are considered risk-free investments. It intends to provide current income while maintaining liquidity.

This Vanguard fund requires a $3,000 initial minimum investments. It has a 0.11% expense ratio.

The current yield is 1.58% and a 10 year yield of 0.55%.

So, if you have a short term goal and are interested in a Vanguard fund that invests in U.S government securities, you may wish to consider this fund.

4. Vanguard Municipal Money Market Fund.

This Vanguard fund invests in short-term, high quality municipal securities.

What makes this fund a great one is that it provides income that is exempt from federal personal income taxes.

If you are in a higher tax bracket and are looking for a competitive tax-free yield, you should consider this fund.

Similar to other funds, the initial minimum investment is $3,000 with a 0.15%. This fund has a current yield of 1.20% and a 10 year yield of 0.44%.

Overall, you should consider investing in these best money market funds, because they generally pay you better than bank savings accounts and money market accounts.

But the FDIC does not insure you. However, they are very safe. If the lack of FDIC insurance does not bother you, you should try them.

Decide whether investing in money market is best for you

While a money market fund may sound great, it’s not for everyone. It won’t help those with a long term investment strategy, such as retirement.

For those with a long term focus, investing in individual stocks, real estate, or index funds may be an option instead.

Moreover, younger and aggressive investors should keep less money in money market funds than older investors who are approaching retirement.

However, if you’re looking to make a purchase soon (in the next year or so), such as buying a home, these funds make sense.

In addition, investors who want to diversify their portfolio may find that money market funds are great investments as they are very safe when compared to risky alternatives such as stocks and bonds. 

Work With A Financial Advisor Near You

If you have questions beyond the best money market mutual funds, you can talk to a financial advisor who can review your finances and help you reach your goals. Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

Source: growthrapidly.com

3 Tips for Finding an Affordable Life Insurance Policy

September 12, 2019 &• 5 min read by Alice Stevens Comments 0 Comments

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Disclaimer

Life insurance offers protection for your family’s financial security. Many people buy themselves a life insurance policy that will protect their family. It’s also possible for people to purchase life insurance policies for someone else. For example, children can purchase policies for their parents and vice versa.

Life insurance coverage offers valuable financial protection. You need to find a policy that meets your coverage needs and fits your budget. Here are three tips that will help you find the right fit:

Understand Policy Options

Premium rates vary based on the kind of policy you choose. There are two broad categories of life insurance—temporary and permanent.

Temporary life insurance, or term life insurance, offers a death benefit payout if the insured passes away during the timeframe the policy covers.

Policyholders can choose the length of the term and the death benefit amount. Some companies offer additional coverage options, called rides, that can be attached. These range from accelerated death benefit riders to return of premium riders. These additional riders add more value to the policy, which also affects the rates.

Permanent life insurance has its own two categories—whole life and universal life. Both kinds of permanent life insurance accrue cash value over time. The cash value can be used to purchase paid-up additions, pay premiums or be borrowed against.

Like term life insurance policies, policyholders can choose to add additional coverage with riders. Riders vary by company and affect the monthly premium.

Whole life policies typically have the highest premiums because the coverage is permanent, and there’s generally a guaranteed cash value growth rate. Most whole life policies come with high death benefit amounts. Policyholders can choose the amount when they sign up for the policy.

However, for those who need less coverage or only enough to cover funeral expenses, final expense insurance policies are a great option. Final expense insurance is designed for seniors. It’s a type of whole life insurance, but the death benefit amounts are much lower. Because the death benefit is only enough to cover funeral expenses, premiums tend to be lower.

There are a few kinds of universal life insurance policies. The biggest difference with these policies is how the funds are invested. The cash value of variable universal policies is invested in multiple accounts, including stocks and bonds. The cash value of indexed universal policies is invested in indexes, which are diversified investments.

Because there is no guarantee of how the cash value will grow in the investments, universal life insurance premium rates tend to be lower than whole life insurance premium rates.

Work with an independent agent

While the various types of life insurance are common among life insurance companies, not all companies carry every kind. It’s a good idea to know what kind of life insurance policy you want before starting to work with companies.

If you’re not sure what kind of life policy you want, work with a life insurance agentto ensure that you find an affordable policy that meets your coverage needs. A licensed agent can help you through the entire process of selecting and applying for a policy.

Working with a licensed independent agent also has other advantages. The specific terms, riders and premium rates can vary by company. Independent agents sell policies from multiple companies, so they can help you compare similar policies across companies.

An independent agent can help you understand the underwriting process and find a policy that is a good fit for your situation. In addition to comparing coverage and terms across companies, an independent agent can help you compare premium rates.

Working with an independent agent makes the research process easier for you because you don’t have to reach out directly to companies. Instead, you can work with one person to find the best company and rate for you.

Use quote websites wisely

While some people like working with an agent, others may prefer to do independent research. Quote websites come in handy because they make it easy to quickly view your options.

There are many life insurance quote websites to choose from. So, how do you know if you’re working with a good company?

First, it’s important to understand what kind of quote website you’re using. Some websites, like Geico and Progressive, show quotes from multiple life insurance companies. These quotes allow visitors to compare their policy options across companies. However, these companies just show quotes and connect their visitors to companies.

Others, like Bestow, Haven Life and Ladder, only show quotes for the policies they offer. These companies help their clients through the application process, which is another benefit of working with them.

Others, like Quotacy, show quotes from multiple life insurers and help their clients through the application and underwriting process. Quotacy agents even assist their clients in making updates to their policy after they purchase a policy.

Second, it’s important to know what kinds of policies the website shows. Many online tools focus solely on term life insurance. While this is a shared characteristic across many quote websites, each one has its unique features.

For example, Ladder stands out because its policies allow policyholders to adjust coverage during the term as their needs change.

In contrast, other quote websites show quotes for different kinds of permanent life insurance. This is true of many sites that only offer quotes, like Geico and Progressive. Websites that offer more comprehensive services, like Quotacy and Policygenius, also offer quotes for permanent life insurance policies.

Finding affordable life insurance

Life insurance offers valuable financial protection for your family. It can pay off remaining debt, cover funeral expenses and even replace income.

While the protection offered is highly valuable, it’s important to find a plan that fits into your monthly budget. The first step is determining what your needs are and which kind of life policy best meets those needs. From there you can work with an independent life insurance agent and do your research into policies and premium rates offered by different life insurance companies.


Alice Stevens loves learning languages and traveling. She currently manages debt and tax relief, life and health insurance, and car warranty content for BestCompany.com.

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